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by high net worth individuals in the US who park their money abroad. Yesterday, we also discussed that the only practical way for the administration to reduce its massive budget deficit is to target the richest 1% in America with tax rates that could potentially spike to as much as 91% according to Brookings. Sure enough, also yesterday, the IRS took the next step to create what is slowly becoming a global capital outflow prevention system, by establishing the “globalization of tax administration” in anticipation of other countries’ attempts to lure America’s richest. As CNSNews reports, IRS commission Doug Shulman had this to say to the National Press Club on Monday: “Through our new global high wealth operating unit we are taking a unified look at the entire web of business and economic entities controlled by high wealth individuals so we can better assess the risk such arrangements pose to tax compliance. The IRS is using our robust and evolving enforcement program that ensures that everyone pays what they owe.” It is near certainty that once the system is in place, the hammer will fall on not just the uber-wealthy but middle class expats who no longer reside in the US. And since the entire world is bankrupt, all other countries will be happy to apply a game theory construct to this development so that all can share from the money extracted by those who attempt to evade what is rapidly becoming an oppressive US tax climate.

More details from CNSNews:

 

 

The IRS initiated its Global High Wealth Industry group in the fall.  Schulman told an October 26 meeting of the American Institute of Certified Public Accountants that it would be part of “the globalization of tax administration,” which he called a “game changing trend” in tax enforcement.

 

“This brings me to another important development–a game-changing trend–the globalization of tax administration,” said Shulman.

“While we are in the early stages of this work, this new unit will centralize and focus IRS compliance expertise involving high-wealth individuals and their related entities – which can often have an international component,” Shulman said. “Tax agencies around the world, including those in Japan, Germany, the UK, Canada and Australia, have also formed high wealth groups.

“Now, high wealth individuals are not your typical Form 1040 filers with a W-2, some 1099 income, and maybe a Schedule C enclosed with their return,” Shulman said. “And you cannot assess compliance among the nation’s wealthiest individuals by looking only at their 1040s. Their tax picture is much more complicated than this.

“For a variety of reasons – including valid business reasons – many high wealth individuals make use of sophisticated financial, business, and investment arrangements with complicated legal structures and tax consequences,” Shulman said. “Many of these arrangements are entirely above board. Others mask aggressive tax strategies.”

Shulman also mentioned the program at the George Washington University International Tax Conference in December.

“So what’s our game plan here?” Shulman said. “At least initially, we will be looking at individuals with tens of millions of dollars of assets or income. Going forward, we will take a unified look at the entire web of business entities controlled by a high wealth individual, which will enable us to better assess the risk such arrangements pose to tax compliance and the integrity of our tax system.

“We want to better understand the entire economic picture of the enterprise controlled by the wealthy individual and to assess the tax compliance of that overall enterprise,” he said. “We cannot do this by continuing to approach each tax return in the enterprise as a single and separate entity. We must understand and analyze the entire picture.

“Over the past few months, we have begun hiring some agents and specialists, such as flow-through specialists and international examiners, to conduct examinations of high wealth individuals and their related enterprises,” Shulman said.

“In due course, we will grow the new unit by adding examination agents and individuals with specialized skills and expertise, such as economists to identify economic trends, appraisal experts to advise on valuation issues, and technical advisors to provide industry or specialized tax expertise,” Shulman said. “We will also build new risk assessment techniques to identify high income and high wealth individuals and their related enterprises that should be reviewed holistically.”

Very soon, we expect that the animus created by the administration’s media propaganda machine will slowly shift away from Wall Street, which Obama has now realized can not be touched, and any attempts to reform will result in further massive humiliation (does anyone recall the fervor with which the president announced the Volcker Rule?) and instead will start singling out those 1% of US society who are individually “at fault” for the fact that Obama and his cronies have allowed the net debt issuance run rate of America to hit $200+ billion and to guarantee that America will be bankrupt in a few years. But such is life in America 2.0: from each according to his ability, to each according to his needs.

h/t Jorgen

www.bearmarketinvestments.com/capitaltax-controls-go-global-as-irs-pursues-globalization-of-tax-administration-targets-high-net-worth-individuals

April 13, 2010