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Thursday, January 15, 2015

IRS Closes International Tax Offices

From Bloomberg:  IRS Will Shut Last Overseas Taxpayer-Assistance Center.

They report that IRS offices in Beijing have already been closed down and the Paris, London and Frankfurt offices will be closed soon.  These offices were located at the US Embassies in those cities.  All the staff will be sent back to the US and all international taxpayer assistance will now be done from the US.

Great timing.  As more and more US Persons abroad are being FATCAed, they are desperately in need of reasonably priced assistance and reliable information.  Now as they try to make sense of US tax rules and reporting requirements that they never heard of and don't understand, they have fewer resources to make good decisions and get compliant.

That just doesn't make any sense, folks.  Before there was a Compliance Gap, there was a Communication Gap.  Keeping those IRS offices open and giving the staff the autonomy and resources to craft information campaigns to reach US Persons abroad would have been a damn good idea.  This would have sent an important signal to America's population overseas - yes, you have to file but we are here to help.

Before I get too worked up about this, I would like confirmation that these closures will indeed take place.  I checked and could not find an official IRS statement about it.

If the Bloomberg article is indeed correct then I would very much like to know what the IRS' Plan B is.  Assuming that they won't simply give up providing taxpayer assistance to US Persons abroad, how might they deliver those services from the US?  Is there any possibility that Americans abroad organizations and even citizens abroad panels could participate in the design of service delivery solutions?

All good questions to ask the IRS Taxpayer Advocate Service and you can do so right here.

21 comments:

Tim said...

Speaking strictly from a Canadian/non US citizen perspective I never liked the idea of these overseas IRS offices to begin with. They have always seemed to me to be an infringement of host country sovereignty and I am happy to see them disappear. In fact I don't believe any other country in the world has overseas tax collectors like this although I will have to do more research. This will also be a blow to the FATCA compliance complex which has frequently used "fear" of IRS overseas offices to sell their services.

Tim said...

Here is at least one answer to the question of whether other countries have overseas tax offices.

http://www.ambafrance-uk.org/Description-of-the-Tax-Attache-s

http://www.ambafrance-us.org/spip.php?article422


The French tax office in Washington, DC appears to really not be that much of tax office from the description on the website. It seems as if they don't to be seen as performing tax duties on US soil in Washington.

LarryC in Seattle said...

Found this online tonite:

http://www.newsmax.com/Newsfront/irs-budget-shrinks/2015/01/14/id/618441/

Yup, all to save $4 million a year.

But, hey, the IRS feels more American tax cheats overseas will take advantage of this.

Victoria FERAUGE said...

@Tim, I've heard good things about the Paris tax office and one person who managed to bypass all the OVDI/streamlined by talking to them directly. They simply took care of things for her. My own experience was trying to get help via phone which was frustrating. They would also hold annual tax assistance events. But I can't help but see the closures as an opportunity lost. So much more could have been done with this resource.

@LarryC Thank you! 4 million USD in savings compared to the billions they are claiming exists abroad in potential revenue. Makes no sense, does it? And yet the IRS is stretched so thin and is being asked to do so much. Congress threw FATCA and ACA at them and then cut their budget? That's just nuts. And now everyone gets to suffer because the IRS doesn't have the staff to properly help US citizens in the US and the Commissioner is warning that refund checks will be delayed this year. What a mess.

DL NELSON said...

Why do we think what the government does has to make sense?

Anonymous said...

The London office was negatively impressive.

http://isaacbrocksociety.ca/2013/02/09/what-are-you-hiding-just-file-it-a-personal-account-of-a-norwegian-tax-seminar-hosted-by-the-u-s-embassy/

But, it would be better if they would send the ambassadors home than the IRS offices.

Tim said...

@Victoria

I don't agree that Congress threw FATCA at the IRS. The IRS wanted FATCA quite badly. Plus the Congress that voted in FATCA was of a different political stripe than that of today's Congress.

The IRS arguing that Congress imposed FATCA simply plays into the BS "Congress has spoken" narrative.

LarryC in Seattle said...

Could the closures could prompt a spike in passport/citizenship renunciations?

In response, the US might extend the "waiting" period to some incredibly long time (ten years?), post a list of "traitorous citizens" who wish to turn in their passports, and raise the price of renunciation...to some unaffordable level.

It doesn't look pretty, however you cut it.

Anonymous said...

As an ex-pat Brit in the US I would never use an IRS office for advice anyway. The IRS pretty much state that whatever their people tell you can not be relied upon or used as evidence. In addition they are minimizing or elimination the service except during tax season which is not, to them, the full year but more like January to April.

Here AndThere said...

Tim's oomment is spot on.

The GAO report of the 1990's has shown that they have been wanting this crud for a long time.

The response to cut down their budget that will show that the legislators need to start cutting out junk food in the IRS diet.

Bruce B. said...

My only interactions with the IRS in Paris is from 20+ years ago. At the time, I was living in Paris, and had received a computer generated letter from the IRS office in Brooklyn, NY. It said that if I didn't pay them the past due withholding taxes for the past 5 years for a company I had never heard of, in a place I had never lived in, they would attempt to attach my account in France. All I had to do to avoid further action was to send them a check for $1,567,000. (!) At the time, I wasn't sure whether I should laugh or cry.

I called the office in listed office Brooklyn. The first person I talked with immediately started screaming at me, accusing me of being a criminal and blah-blah-blah. Hung up and called back, hoping I could talk to someone sane. The second person, after I said that I had never heard of the company, and that I hadn't even been in the US for some of the years mentioned, basically said "OK, just ignore the letter then". When I mentioned that my name and Social Security number were on the letter, and the letter was computer generated (i.e.: I was personally connected to this potential tax fraud in their records), the guy said, "Don't worry, we'll take care of it."

"Can you send me something of written so that I have proof that you won't pursue me?"

"No, don't worry about it, if you don't respond, we won't follow up."

WTF?!?

This is where the Paris IRS office was of invaluable assistance. The person I dealt with there, after I explained the situation, was very understanding. She actually seemed very disturbed that this had happened in the first place, said that this should never have happened, apologized (!) and said she'd try to help, and get something written getting me off the hook.

Long story short, it was a fishing expedition from the Brooklyn office trying to find someone with my name from the greater NY area who hadn't paid 5 years of withholding taxes for their company. From what I was told, they had sent out exactly the same letter to at least 15 people in the NYC who had the same name. The woman in the Paris IRS followed up for the next 3 months, and finally was able to give me letter with the Paris IRS letterhead saying, basically, that I was not the correct recipient of the letter.

Try and do that by telephone to Washington (or wherever they are).

Victoria FERAUGE said...

That is a *great* story, Bruce. Wow.

I talked to a woman the other day who is dealing with the IRS in the US and she reported that the experience is frustrating. For one thing, she is having to explain how Foreign Tax Credits work to the IRS person handling her case. :-)

Anonymous said...

I am for closing the offices forever and abolishing CBT.

So the first part is already underway, now lets get on with the second part.

Anonymous said...

The Democrats Abroad are busy engaging in disingenuous redirection of criticism of these closures and reduction of the IRS service to those abroad by blaming it on the Republicans.
http://t.co/PrxFqtlKTc

Instead of helping those abroad, they seek to excuse and deflect well deserved criticisms of yet another burden and inequity piled on those abroad - this time by the IRS withdrawing the last remnants of any 'service' to those living outside the US. The US asserts the right to extraterritorially tax, penalize, FBAR and FATCAnize 6-7 million deemed US citizens living 'abroad', around the globe, but the IRS refuses to meet their ownobligation to service that same population.

One of the rationalizations for US extraterritorial citizenship/parentage/birthplace taxation is the 'benefits' rationale. But obviously, even the 'benefit' of receiving assistance 'overseas' with understanding IRS compliance demands and forms is non-existent.

The IRS services in Canada had already been discontinued "due to budget cuts" since AT LEAST 2011 - (co-incident with the ramping up of the IRS campaign of terror known as the OVD programs) as the notice on the US Ottawa embassy site has stated for at least the last 4 years:

"..The information on this page is intended especially for taxpayers residing in Canada. Note: Owing to budget cutbacks, the Internal Revenue Service will not/not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada"
http://canada.usembassy.gov/service/taxpayer-assistance2.html

The IRS is claiming that; ".....technological advances in communication have made the overseas field offices expendable....". what they mean that they have revised their website.

The IRS has claimed previously in their responses to criticisms leveled at their failures to assist taxpayers in general (see several most recent Reports to Congress by the Taxpayer Advocate), and specifically those they deem to be "US taxable persons abroad" that the mere existence of a website is an adequate replacement.

Who can afford to wait on hold long distance for >45 minutes for the IRS helpline staff to provide an answer - which often is not even accurate? Frequently staff does not have enough understanding of filing from 'abroad' to assist.

The hypocrisy of the US Treasury and IRS is staggering - slander people outside the US as taxcheatingmoneylaunderingdruglordterrorfunders, treat their legal local post-tax savings as if they are all likely the proceeds of criminality, demand that children report their local birthday and education savings accounts to a FINANCIAL CRIMES agency, create layers of draconian and labyrinthine forms and confiscatory penalties, YET, decrease and then virtually eliminate any local or meaningful assistance with meeting US extraterritorial demands.

Disgusting and shameful.

Anonymous said...

HI
Yes this is definitely happening. I just came back from the office here in London and they are all done and gone by 30/06/2015.
It's a dumb move and if anything that particular office is actually very helpful to anyone who does file tax on a lower income bracket living overseas or runs a business overseas here in the UK.
Someone pointed out to me that if the Republicans win than FATCA compliance won't count for much.
In the US I overheard an IRS person say they only get through 50% of their calls.

Anonymous said...

London closing date is crucial to those of us who have to travel to the UK.
Was informed by staff member at that office they may close early April. Would a definitive date be too much to ask...

Victoria FERAUGE said...

I have to wonder (in reponse to both anonymous' comments) if the IRS really wants to enforce CBT? Sure the management has to make all the right noises and show that they are committed to enforcing the law but the people who actually have to do the work of enforcing it? Maybe not so much. It is a pain in the ass for them. I talked to a woman in France who is being audited and frankly she doesn't have the impression that the person on her case has much motivation to work on it. The calls and request for information come months apart. And the last one she described to me was the IRS caseworker asking questions about how the Foreign Tax Credits worked. :-)

@anonymous, Thank you for the news from the UK office. Does anyone have news about the Paris office?

David in UK said...

David in UK

I've been living abroad since 1992 and have just been given notice that my Foreign Earned Income Allowance has been disallowed for tax year 2011! And attempting to contact my auditor in Puerto Rico is proving most difficult.
I can't find out why this was disallowed, nor have I been given any response for all the information I've sent to prove my living status.
I had planned on visiting the IRS office at the U.S. Embassy here in London but now read that it's closed.
Any advice out there would be greatly appreciated.

Victoria FERAUGE said...

@David, Disallowed? And they gave you no reason for it?

I think the Paris office is still open. You might want to try them. Also you could leave a comment on Phil Hodgen's blog http://hodgen.com/blog/ and see what he says.

Anonymous said...

I had to go to the US Consulate in Paris today to ask a simple question about whether my social security benefits were taxable as my only other income is excluded foreign earned income. The pleasant but overworked IRS person I spoke to did not know the answer and told me that most of his colleagues had returned to the US and that the IRS office would be closing soon. When I asked him how US taxpayers in Paris could get assistance he said they could use "international tax accountants"! I finally found the appropriate information after trawling the Internet and then had to wade through 16 pages of worksheets to find the answer to my question… Given the onus (FBAR, FATCA) on honest taxpayers without representation, the closing of IRS offices abroad is shameful.

Victoria FERAUGE said...

@Anonymous, Thank you so much for that update. Looks like they are indeed shutting down. I will post your comment tomorrow so that others will be in the loop as well. Many thanks.