Will the Justice Department and Criminal Investigation Division of the IRS Turn Their Sights on USCs or LPRs living Overseas?

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To date, there have been numerous indictments of non-U.S. resident persons in the “offshore financial account world” which has been a great focus of the U.S. federal government starting in 2008.  An updated list of indictments of these persons can be found at Jack Townsend’s federal tax crimes blog here where he keeps a spreadsheet of cases.

To date, the author is not aware of any tax indictments (solely based upon a tax crime) of any United States Citizens or LPRs who have lived most all of their lives overseas.  Is this an anomaly?  Will the government be interested in bringing criminal charges against non-resident USCs or LPRs in the future?

Those persons living outside the U.S. who have been indicted (typically for conspiracy/aiding and abetting charges) have been so-called enablers;  non-U.S. bankers, lawyers and accountants.    Some of these cases can also be reviewed at  at the federal tax crimes blog of Jack Townsend, which is the most comprehensive source of this information.



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One thought on “Will the Justice Department and Criminal Investigation Division of the IRS Turn Their Sights on USCs or LPRs living Overseas?

    BrutusMaximus (@Equitykingkong) said:
    March 20, 2014 at 10:34 am

    I am not sure if the title of your blog post was just a rhetorical question or if you are just looking for more “blood” ?
    I am sure you must know that when taking into account FEIE and FTC that approx. 90% of US expats do not owe any taxes to the IRS. Further you must know that the resources and manpower of DOJ and IRS are very limited. You must also know that a cost-benefit analysis is performed by DOJ and IRS CI around whether or not to assert penalties, and that only penalties that have high dollar amounts attached to
    them are worth enforcing. This view leads not to a policy based on the deterrent value of penalties, but rather a policy that says that penalties most likely to be imposed should be high because the cost of asserting and defending them will be offset by the proceeds of the penalty.
    Is it possible that expats will hear from DOJ or IRS CI ? Of course it is but due to the nature of their facts and circumstances their RC arguments for NW behavior are much stronger and a lot of litigation would be necessary to change that. So far the public and professional opinion was kind of supportive for the fight against offshore tax evasion but this perception could change very quickly if the headlines turn to “IRS bankrupts english teacher in Paris” or “DOJ indicts divorced single mom in Zürich”.. etc.
    As Mark E. Matthews, a member of Caplin & Drysdale’s Tax Controversies and Tax Litigation practices who was an IRS Deputy Commissioner from 2003 to 2006 and a Department of Justice prosecutor correctly pointed out last week : “There are about 20 million tax cheats in the U.S., and of those the IRS goes after about 1,500-2,000, mostly strategically,” …… I think it is clear were the priorites will be going forward ! You don’t need a CI probe to understand impacts and consequences.
    I’ve seen the devastation of promethean law-makers stemming back to William Proxmire who regularly seem to relish in bashing all overseas Americans, devastating our expat communities, disrupting our trade and indeed handing it over to our competitors because of their supercilious “boogeyman” adventures of trying to swat at the shadows of the ever mythical “tax evaders”.
    As you know, more Americans are now having to choose between trying to live a normal life with a regular bank account by giving up their US citizenship, or be “fined” for doing nothing wrong, if only by having to pay accountants thousands of dollars to fill out US tax forms when they owe no money in taxes at all! Indeed, the ugly irony here is that the IRS’ only real source of revenue will come by them imposing $10,000 fines on expats for clerical errors ( I call it “Form Crime”) because there will hardly be “lost revenue” at all.
    The US has an awful history of wasting its time and resources on profitless ventures (Prohibition, the Drug War, Citzenship-based taxation, the Vietnam War, Gulf Wars, McCarthyism, and the Cuban Trade Embargo). All these could have been handled in a better way for both the US and the countries / persons involved.
    Indeed Winston Churchill, whose mother was American, once said “Americans can always be counted on to do the right thing…after they have exhausted all other possibilities.”
    And he’s right. The US will never admit it’s wrong until all the collateral damage has been done. In terms of citizenship-based taxation, they are now running out of possibilities (FBAR, FATCA, Expatriot Act etc). Senators, there must be something rotten in the US at its core if people choose renunication these days.

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