AS a writer - and now that I am in my 'golden age', where I simply do not have to be as 'involved' as I was, previously, in tax work, I actually am listing my occupation on my individual income tax return as writer - I do not feel that there is really 'writer's block'. True, there are days when I just do not wish to sit in front of the keyboard and type away - but that's no block.
There are times, though, when so much new material comes about that the only blockage is a result of information overload and just not wanting to get involved with it all because one could literally sink under the weight of new material. Such is the case with the IRS, exacerbated a bit by Apple. Boy oh boy! Has the IRS made headline news as of late.
Do many of you out there occasionally go to Yahoo's Financial page? I'm not sure if there is actually one every day but on 21 May there was one that definitely caught my eye within the Yahoo financial pages. Now undeniably, this is not in any way, shape or form, a scientifically prepared poll. Those who are online and tempted to check the box can make their feelings felt. It's a subjective poll, at best, but take a look at this one - just look at the numbers ....
DO YOU TRUST THE IRS IN LIGHT OF ITS RECENT SCANDALS?
Yes I do (14% - 15,183)
I used to (8% - 8,605)
I'm not sure (11% - 11,724)
No I never have (63% - 73,798)
What does this tell you about American democracy and the tax system that supports it? Yeah, it is not a true poll but it does show overwhelming sentiment in opposition to American taxation, as practiced, as enforced by the U.S. Internal Revenue Service.
By and large, I have absolutely nothing against the IRS officers I have worked with in the past. They are bright, they are, for the most part, dedicated to their professional tasks. It is at the upper levels, though, where things need change. Frankly, there is an 'arrogance' at the top. The fact that former Commissioners Doug Shulman and Stephen Miller 'stonewalled' the Congressional committees before which they appeared during the past week is something we simply should not tolerate. Who gave the IRS officialdom the right to put themselves above the law? They had responsibilities and they blew it. Where does the buck stop? That Lois Lerner the IRS officer in charge of the not for profit exemption unit that has been accused of malfeasance took shelter under the U.S. constitution's fifth amendment to protect herself from self-incrimination is something for which I cannot personally blame her - why should she be the scapegoat? But someone is to blame for letting this get out of control and I seriously wonder how flawed the system is - not just the not for profit department.
Frankly I blame a U.S. public that is not sufficiently outraged to vent emotions - or brain dead from watching mind altering video. How prophetically true Aldous Huxley proved to be in Brave New World, 80+ years ago. To what extent does the public fear further intimidation in standing up to voice disapproval of the actions over the past few years, making the law, rather than just enforcing it. FATCA and F(u)BAR are IRS 'made'. If you really think that there are more than a small few members of the U.S. Congress who actually understand taxation, then you are indeed misleading yourself. Sadly, I can only think of one or two of them - but logic would dictate that there must be more...not many, though!
And then there's Apple. Tim Cook, the successor to Steve Jobs as helmsman of Apple appeared before a Congressional committee last week, arguing for corporate tax law overhaul because Apple has simply been doing what America's multinationals have always been best at: taking advantage of a set of tax laws, rules and regulations that total close to 78,000 pages and are so full of flaws, ambiguities and loopholes that approximately $U.S. 1.9 trillion is held offshore, not subject to taxation because of the way U.S. tax laws are written. The U.S press went into accolades about Cook's presentation - testament to the value of having public relations to control the spin. Cook stated that Apple paid $U.S. 6.5 billion in taxes last year. Lee Sheppard, in a brilliant Tax Analysts article of 28 May discussed the fact that Apple avoided approximately $US44 billion in taxes because of laws written - to a large extent by the lobbyists paid by the Apples, Googles and Facebooks of this world. Is it wrong? That's for the American public to judge. When U.S. developed apps sold to U.S. persons but paid for (and therefore tax exempt) in Luxembourg, I think there are some issues of corporate responsibility that should be discussed. Where is a company resident? As per U.S. law, residency of a corporation is solely based upon where that corporation was incorporated. The U.S. is one of the few countries in this world where this is permitted. Most of the rest of the world bases corporate residency for tax purposes as where the management decisions are made. To most of the world, a post office address is not sufficient.
And then there's Ireland. Is Ireland a low tax jurisdiction or a tax haven? When one can negotiate a tax rate down to 2 %, with management decision making taking place outside of Ireland, I think the place is 'haven on earth'. Is it legal? Yes. Is it correct? That's for you to be the judge.
Enough of tax philosophy - let's look at a tax form draft that you should probably become 'acquainted' with...the new IRS Form 8938, Statement of Specified Foreign Financial Assets.
On 23 May, the IRS issued a draft for public input of this form, first issued two years ago. If you are a US tax filer, filing as either single or married filing separately, and you have bank/brokerage accounts that at any time during the previous year were valued (if only for a nanosecond of time) at $US200,000 or over....or if you had a fraction of a percent of a non-US stock whose value was that amount or over, and you have not been filing this form then you had better start looking at what your potential 'damage' could be by not filing it. It is no longer 'safe' to own a portion of an overseas corporation and be exempt from declaring it because your ownership is under 10 percent, exempting you from filing Form 5471.
Regardless, the form attached to this essay squeezes a whole lot more questions into its two pages than the 2012 version. There is a summary at the start of page one of the form, including answering a question about closing foreign accounts and one about acquiring foreign assets during the year. This might be fine to ask of a U.S. based person or corporation shifting money, assets, profits outside of the U.S. But what about the legitimate U.S. expat who banks, invests, lives his or her life outside of the U.S. on a permanent basis? The new reporting and filing requirements are undoubtedly invasive and are, I feel, 'wrong'. Yet there ain't a thing you can do about it - breaking the law is not worth it.
At least we have the right to be vocal about it and complain - as did the 73,000+ respondents to that Yahoo pole who never trusted the IRS. Unfortunately, no one in the U.S. government is listening.....
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