Tags: Koskinen | IRS | tax | foreign

New Taxpayer Compliance Rules Really Just Politics As Usual

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Monday, 23 Jun 2014 08:22 AM Current | Bio | Archive

The IRS announced new rules to help U.S. taxpayers who are having problems with the foreign account disclosure compliance rules.

Of course, it is always a bit suspicious whenever the IRS, which has been beating the tar out of taxpayers who have foreign connections, suddenly says they are here to help.

According to IRS Commissioner John Koskinen, the crackdown on undisclosed foreign accounts has been quite successful.

Some 45, 000 taxpayers have come forward to ask for forgiveness, thereby avoiding potential criminal prosecution. This sort of forgiveness comes with a price — $6.5 billion in the form of taxes, interest and penalties.

If this crackdown is doing so well, then why did the IRS suddenly decide it wants to be helpful?

Koskinen describes this as providing "additional flexibility in key respects while maintaining the central components of our voluntary programs." Huh?

So what's going on here really?

Well, the foreign account crackdown has problems. From the Obama administration's point of view, the problems are political ones.

What the administration has apparently realized is that there are some 7 million U.S. taxpayers and probably millions more who are caught up in potentially criminal and certainly almost confiscatory civil liability exposure merely for having a foreign financial account connection.

All these people have one thing in common that is of critical importance.

Besides all being in the crosshairs of the IRS, they are also all voters.

Some might even be political campaign contributors, which then leads to getting more voters.

Koskinen says that this change in making it easier for taxpayers to become foreign account disclosure compliant happened because "we discovered that there were people, including many here in the U.S., for whom the existing program penalties were too harsh or restrictive."

I agree. Clearly, there is a vocal and rather hostile backlash by foreign financial account holders who feel they are being besieged by their own government and they don't like it.

Politicians know that angry voters are not docile voters.

Up until now, the Democrats could safely rely on the fact that U.S. voters living outside the United States or just having a foreign financial account connection mostly vote for the Democrats.

That trend would have likely continued through the 2014 election cycle and perhaps even into 2016, but for the foreign account crackdown.

The Republican National Committee seems to have awoken and discovered that this could be an opportunity for them to get a few million votes that might otherwise have slipped through their fingers.

They have announced that if they get control of Congress, they will repeal the foreign account compliance law altogether.

That, potentially, could translate into millions of voters who suddenly have a big impetuous to vote Republican instead of voting Democratic.

While the new rules are indeed helpful to taxpayers, what they really show is just politics as usual.

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The IRS announced new rules to help U.S. taxpayers who are having problems with the foreign account disclosure compliance rules.
Koskinen, IRS, tax, foreign
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2014-22-23
Monday, 23 Jun 2014 08:22 AM
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