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man amends tax returns and declares offshore bank account-is forced to pay 2 mil
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2014 May 28, 11:43pm 12,870 views 45 comments
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Dan8267
2014 May 29, 9:29am
The fine is for lack of reporting not for evasion.
I know. That's why I said it's pure greed.
smaulgld
2014 May 29, 10:17am
More information on the case
http://www.bloomberg.com/news/2014-05-28/florida-man-87-owes-150-of-swiss-account-jury-says.html
Can someone more knowledgeable give a hand... Has he been evading taxes for 50 years (or were the accounts not taxable)?
From the Bloomberg article:
The account, opened in the 1960s, was held in the name of two foundations, according to the Justice Department statement.
“Zwerner was able to use the proceeds of the account whenever he wanted and used it for personal expenses, including European vacations,†the department said.
The USA is turning into something that the East germans only dreamed about.
It's the tip of the iceburg. It's going to get worse, much worse.
SFace
2014 May 29, 4:23pm
The IRS merely enforces the law. (revenue)
approved by congress house, senate and signed by the president. You vote for these things. (at least the lawmakers who gets bills done and vote for them)
It's like the police, you want to lock up criminals, well, the IRS functions to collect tax based on the law. Nothing wrong with an enforcer.
These FBAR penalties are ridicolous. But you kinda know why they are there, its to overcompensate for the ridicolous amount of cheating/hiding in this area. There were many instances of windows for self-disclosures. So you knowlingly hide the bank accounts, FBAR rules are put into place and well advertised, then voluntary disclosure opportunities and you still ignore it, too bad.
and from my perspective, revenues have to come from somewhere in the end. (and government at its core is just how the pie is arrived and divided or who to tax and where to spend) If you are not collecting from the tax cheats, it is compensented someone else to collect the same level of tax in the end. and that means the tax the government is not collected from tax cheat A means indirectly you are paying for that shortfall. If the government collects every cents of tax, the tax rate acorss tha board should drop by 20%.
If you are not collecting from the tax cheats, it is compensented someone else to collect the same level of tax in the end. and that means the tax the government is not collected from tax cheat A means indirectly you are paying for that shortfall. If the government collects every cents of tax, the tax rate acorss tha board should drop by 20%.
I doubt that. The IRS claims 385 billion a year in tax evasion, but doesn't say how much is domestic and how much is overseas. I seriously doubt the overseas portion is all that high. Since the IRS is hardly a disinterested party, it's entire budget depends on convincing congress there are tax cheats to pursue, I don' think the number is anywhere near that high. Closing some of the corporate loopholes would raise far more money than FATCA will without totally pissing off the rest of the world.
I'm not saying tax cheats shouldn't be pursued, they should be pursued aggresively. But FATCA is going to end up costing far more than it ever produces in revenue. The rest of the world bitterly resents being forced into being agents for the IRS and having it cost them money to add insult to injury. Even more insulting, the US is one of the hardest countries to get tax information out of. It's already a lot harder to bank overseas for US citizens and companies than 5 years ago. Banks are dropping US accounts by the thousands. Opening a new account as a US citizen is almost impossible in some area's. More and more countries and business are bypassing the US financial system whenever possible.
None of this is a surprise. It was discussed in congress and by tax experts. So why go ahead with FATCA if it actually costs money overall? Why the obsession with knowing every cent US citizens have overseas to the point of simply confiscating all of someones money plus huge penalties for simply not filling out forms? I can't decide if FATCA is in preparation for a more sinister end game (like a wealth tax or capital controls) or if congress just wants to have political talking points to bleat about at press conferences to prove they are doing something while knowing the end result is negative (that part won't be reported by the useless lapdog news media).
smaulgld
2014 May 30, 3:08am
The IRS merely enforces the law. (revenue)
approved by congress house, senate and signed by the president. You vote for these things. (at least the lawmakers who gets bills done and vote for them)
Actually that is not true- the IRS makes up its own regulations that have the force of law- congress doesn't pass IRS regulations, so we don't vote for them
smaulgld
2014 May 30, 3:13am
I'm not saying tax cheats shouldn't be pursued, they should be pursued aggresively. But FATCA is going to end up costing far more than it ever produces in revenue. The rest of the world bitterly resents being forced into being agents for the IRS and having it cost them money to add insult to injury. Even more insulting, the US is one of the hardest countries to get tax information out of. It's already a lot harder to bank overseas for US citizens and companies than 5 years ago. Banks are dropping US accounts by the thousands. Opening a new account as a US citizen is almost impossible in some area's. More and more countries and business are bypassing the US financial system whenever possible.
Does more harm than good- it forces foreign banks and US citizens to make alternative arrangements than to deal the with US dollars and US accounts.
While we don't want tax cheats, we do want people to transact in dollars and to engage in international commerce with us. The more onerous it becomes -either through the cost of compliance or confiscatory fines, the less tax revenues we will get as more people abandon dealing with us (ex pat citizens and companies and banks)
Can someone more knowledgeable give a hand... Has he been evading taxes for 50 years (or were the accounts not taxable)?
My guess is that the articles are being a bit sensationalist. I doubt this guy has spent nothing from the account and has just left it alone for 50 years. Just because the fine is disproportional to what the value of the account is today doesn't mean the fine is disproportional to the benefit he got from the account.
Actually that is not true- the IRS makes up its own regulations that have the force of law- congress doesn't pass IRS regulations, so we don't vote for them
That's a bit too facile an analysis. The IRS can only issue regulations within the scope permitted by Congress. If Congress disagrees with the regulations, as it sometimes does, it can pass new legislation to overturn them, and it has done so.
smaulgld
2014 May 30, 3:42am
Odd twist- Russia wont' enforce FACTA http://rt.com/politics/160764-russian-banks-fatca-ban/
smaulgld
2014 May 30, 3:44am
That's a bit too facile an analysis. The IRS can only issue regulations within the scope permitted by Congress. If Congress disagrees with the regulations, as it sometimes does, it can pass new legislation to overturn them, and it has done so.
Not really- keep in mind that there are dozens of Federal agencies with thousands of lifetime employees on staff writing thousands of regulations each year- they are FAR more efficient in turning out regulations than Congress is in passing laws.
Congress has a political process , regulatory agencies don't so they overwhelm Congress' ability to repeal regulations because Congress has enough on its plate trying to pass its own laws, without the burden of trying to repeal endless regulations passed by the all the government alphabet agencies.
Not really- keep in mind that there are dozens of Federal agencies with thousands of lifetime employees on staff writing thousands of regulations each year- they are FAR more efficient in turning out regulations than Congress is in passing laws.
The scale you're claiming is a bit excessive. Congress also has numerous committees and subcommittees where all the real work gets done. These groups are backed by "lifetime employees" (whatever that means) who have expertise in these issues. Actual Congresspeople are figureheads who don't know their ass from a hole in the ground about drafting legislation.
In any case, as I said, the agency can't exceed the scope of what Congress allows. If Congress wanted to be more specific, it could be, and in some cases it has been.
smaulgld
2014 May 30, 6:02am
Actual Congresspeople are figureheads who don't know their ass from a hole in the ground about drafting legislation.
Correct and the lifetime regulators at the agencies are far more expert and adroit at drafting regulations than Congress.
In any case, as I said, the agency can't exceed the scope of what Congress allows. If Congress wanted to be more specific, it could be, and in some cases it has been.
and there is the point- Congress has no effective oversight over anything! Nor does the President- look how often Congress has to hold hearings into things that happen at agencies, or Obama's often honest answer- "I found out about it like you did in by reading it in the news." So these agencies basically do what they like and only when a problem arises does Congress or the President pay attention.
Dan8267
2014 May 30, 6:05am
Actually that is not true- the IRS makes up its own regulations that have the force of law- congress doesn't pass IRS regulations, so we don't vote for them
Yes, this is an important point. The IRS operates in an Unconstitutional manner. In effect, the IRS, which is part of the executive branch of government, writes law and it should not be able to do that as it's a clear conflict of interest and the entire point of the separation of branches is to prevent just this very thing.
If the Constitution were to be respected, the courts would throw out all IRS regulations and the people would not have to submit any tax returns period. The fact that the IRS, not Congress, is legislating what you need to do is very wrong. Unfortunately, the courts don't give a damn about the Constitution and support this clear and undeniable violation of one of the most fundamental aspects of the Constitution, separation of powers.
The founding fathers wouldn't have bothered fighting the revolution if they had know we'd end up with a system like this.
smaulgld
2014 May 30, 6:09am
Just because the fine is disproportional to what the value of the account is today doesn't mean the fine is disproportional to the benefit he got from the account.
There are other bad facts in the guy's case if you research other accounts of the story but the FACT (A) remains that the IRS regulation in place allows them to confiscate half of money in an account if it is not reported. This makes inaction very costly:
Penalties and fines, jail time are justified for purposeful action- intentional murder, money laundering, purposeful tax evasion or arson - but are not justified for failing to tell the government that you have an account in another country.
Failing to pay any tax due is a different story, but failing to notify the government of a perfectly legal act is going too far. If it was illegal to hold an account overseas then they would be justified in imposing a penalty.
The IRS operates in an Unconstitutional manner. In effect, the IRS, which is part of the executive branch of government, writes law and it should not be able to do that as it's a clear conflict of interest and the entire point of the separation of branches is to prevent just this very thing.
No, the IRS doesn't operate in an unconstitutional manner. Congress is explicitly able to delegate this under Mistretta v. United States after setting up general principles.
Dan8267
2014 May 30, 7:28am
Mistretta v. United States after setting up general principles.
There is a huge difference between allowing agencies administrative control of minor details and allowing them to effectively write law and punishment without accountability to the voters. This completely undermines the principles of the Constitution that we the people can vote out people who pass laws we find objectionable.
We cannot vote the IRS administrators out of their positions. Therefore, there is absolutely no accountability to the people. The case of Mistretta v. United States is just another example of a travesty of justice, like Citizens United and many others.
And the IRS has been operating like this since 1913. Mistretta v. United States was argued in 1989 and was about an act passed in 1984. That's over 70 years of illegal operations even if you agree with both the Sentencing Reform Act of 1984 and Mistretta v. United States.
Of course, the central issue is whether or not you think it's a good idea for persons who have no accountability to the people to be able to decide law and punishment for the people. I think this is a terrible idea and it runs counter to the very idea of self-government. We do not have a government of the people, by the people, for the people if the people have no say in who writes the laws, what they are, and no way to address grievances about those laws. Complain to the IRS and you just get a fuck you. You can't hold them accountable for their injustices. At least you can vote against a politician.
At least you can vote against a politician.
A lot of good that does you!
I can't help wondering about the Constitutionality of IRS shifting from penalties based on income tax evaded to penalties based on information omitted
There are other bad facts in the guy's case if you research other accounts of the story but the FACT (A) remains that the IRS regulation in place allows them to confiscate half of money in an account if it is not reported.
There is a huge difference between allowing agencies administrative control of minor details and allowing them to effectively write law and punishment without accountability to the voters.
Btw, I've been humoring you guys on this scope of authority discussion, because the civil penalty applicable here for willful violations is determined by Congress under 31 USC 5321, which none of you bothered to look up:
http://www.law.cornell.edu/uscode/text/31/5321
Look at (a)(5)(C)(i)(II). But please, keep spewing nonsense about what the IRS is or isn't allowed to do in this case. Dey tuk arrr jubs!
Also, last I checked FinCEN usually issues FBAR regs under the authority given to Treasury in 31 US 5314, not the IRS.
smaulgld
2014 May 30, 9:03am
Look at (a)(5)(C)(i)(II). But please, keep spewing nonsense about what the IRS is or isn't allowed to do in this case. Dey tuk arrr jubs!
Also, last I checked FinCEN usually issues FBAR regs under the authority given to Treasury in 31 US 5314, not the IRS.
The Treasury Secretary is not elected. That department like the Justice Department does whatever it likes, not subject to voter approval
smaulgld
2014 May 30, 9:09am
civil penalty applicable here for willful violations is determined by Congress under 31 USC 5321, which none of you bothered to look up:
Thanks
another example where the congress has delegated its authority and given it to the Treasury.
Congress is too busy taking bribes to enact constructive legislation
There is a huge difference between allowing agencies administrative control of minor details and allowing them to effectively write law and punishment without accountability to the voters. This completely undermines the principles of the Constitution that we the people can vote out people who pass laws we find objectionable.
Dan you need to revisit civics 101. Congress writes the laws which state what is going to be done, agencies write the regulations which state how the laws will be run . Regs aren't minor details, it's the entire outline of how the law is implemented. There is nothing in the constitution that outlines how laws are to be implemented. If agencies overstep the boundries of what is in the law then congress is compelled to act by passing amendments to the law that clarifies congresses intent. Not that congress always does, but if they don't then you can vote them out.
The Treasury Secretary is not elected. That department like the Justice Department does whatever it likes, not subject to voter approval
No secretary is elected, nor should they be. Departments operate under the administrative branch and aren't subject to direct control by congress. If congress wants to control something an agency is doing then it must pass a law to do so. Agencies are under the direct control of the president, who is subject to voter approval. No way should congress have direct control to meddle in the agencies. That would be a disaster.
Doesn't anyone here except contrillo know how your own government works? That's scary.
another example where the congress has delegated its authority and given it to the Treasury
How is that? The penalties and therefore the authority to enact them are part of the statute.
Congress is too busy taking bribes to enact constructive legislation
True, always been true, always will be true. But how is this relevant?
smaulgld
2014 May 30, 10:31pm
No secretary is elected, nor should they be. Departments operate under the administrative branch and aren't subject to direct control by congress. If congress wants to control something an agency is doing then it must pass a law to do so. Agencies are under the direct control of the president, who is subject to voter approval. No way should congress have direct control to meddle in the agencies. That would be a disaster.
Congress is supposed to make laws not the Treasury Department
smaulgld
2014 May 30, 10:31pm
No way should congress have direct control to meddle in the agencies.
The agencies themselves are a disaster and were not contemplated by the constitution
elliemae
2014 May 31, 10:11am
To many, pursuing multiple year, maximum penalties following submission of amended returns and delinquent FBARs appears punitive. The Excessive Fines Clause of the Eighth Amendment and relevant Supreme Court case law support a conclusion to the effect that a civil penalty or forfeiture is unconstitutional if the penalty or forfeiture is at least in part “punishment†and such punishment is grossly disproportionate to the conduct which the penalty is designed to punish. The touchstone of the constitutional inquiry under the Excessive Fines Clause is the principle of proportionality – the amount of the penalty must bear some relationship to the gravity of the offense that it is designed to punish.
The judge in Zwerner will hear arguments on June 6 whether the penalties violate the constitutional prohibition against excessive fines. Many will continue to watch U.S.A. vs. Carl R. Zwerner before making any decision to pursue any form of voluntary disclosure regarding previously undisclosed interests in a foreign financial account.
smaulgld
2014 May 31, 10:13am
Excessive Fines Clause of the Eighth Amendment and relevant Supreme Court case law support a conclusion to the effect that a civil penalty or forfeiture is unconstitutional if the penalty or forfeiture is at least in part “punishment†and such punishment is grossly disproportionate to the conduct which the penalty is designed to punish.
On its face it appears to be unconstitutional.
Congress is supposed to make laws not the Treasury Department
Congress did write the relevant section on civil penalties under title 31 USC 5321, it is a law published in the United States Code. That's why it's called 31 USC 5321 as in title 31 United States Code 5321. If it were a regulation it would published in the Code of Federal Regulations and be designated 31 CFR 5321 as in title 31 Code of Federal Regulations 5321.
Did you really manage to get through school without learning the basic fundamentals of how your own government works? That's sad.
The agencies themselves are a disaster and were not contemplated by the constitution
Many things were not contemplated by the constitution. Constitutions are an outline, not a blueprint. What would your constructive suggestion be for how to administer the laws?
On its face it appears to be unconstitutional
It is almost certainly not constitutional. That will have no bearing at all on how the current insane supreme court will rule.
smaulgld
2014 May 31, 8:24pm
It is almost certainly not constitutional. That will have no bearing at all on how the current insane supreme court will rule.
That is close to a fact!
smaulgld
2014 May 31, 8:41pm
Did you really manage to get through school without learning the basic fundamentals of how your own government works? That's sad.
You are correct for pointing out the difference between a Code (law) and a regulation. The Code you cited refers to the Treasury Dept's ability to levy a fine. The FACTA Code itself was a product of Congress 26 USC §§ 1471-1474, 26 USC § 6038D
pushed through by a Democratic Congress, not as a primary bill that received full congressional attention, but like most bills, via committee and added as an appropriations bill as an amendment sponsored by Harry Reid.
Thanks for your opinion on the state of my education. I will not comment on yours as you may find your own glass house not sturdy enough to withstand a counter volley.
smaulgld
2014 May 31, 8:47pm
There is a huge difference between allowing agencies administrative control of minor details and allowing them to effectively write law and punishment without accountability to the voters.
Even when Congress passes laws they are not accountable as they often pass a slew of laws in one bill such that a congressman can claim he voted for something that his constituents didn't like in order to get an appropriation of their district. (see FACTA as an example)
Thanks for your opinion on the state of my education. I will not comment on yours as you may find your own glass house not sturdy enough to withstand a counter volley.
Counter volley away. I'm always willing to learn where my knowledge base is deficient. Why in god's name does it matter if a statute was presented as a bill or as an amendment to a bill? It still has a final vote by congress and is the law either way.
The code I cited (actually not me who cited it first) was in response to your persistent claim that treasury didn't have the authority to levy fines. If you want to be technical about titles then the fatca form 8938 and associated penalties are under 26 USC 6662 (fatca) while the FinCEN Form 114 and penalties are under 31 USC 5321 (bank secrecy act).
Even when Congress passes laws they are not accountable as they often pass a slew of laws in one bill such that a congressman can claim he voted for something that his constituents didn't like in order to get an appropriation of their district. (see FACTA as an example)
Do you actually read what you write? Of course they are accountable. The voters being too lazy, indifferent, self interested, and/or stupid bother to hold them to account isn't the same thing as not having the ability to do it.
The IRS is a government entity that gets to declare you guilty before trial.
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The USA is turning into something that the East germans only dreamed about. No wonder so many people abandoning US citizenship.
http://news.yahoo.com/florida-man-must-pay-2-2-million-penalty-012050141--sector.html