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[The audit is now mentioned in Tax Connections from, I think, a tax compliance perspective]
A commenter on Brock found this link to a recent September 28, 2020 TIGTA audit, a “review to determine the effectiveness of the Internal Revenue Service’s efforts in ensuring compliance with the expatriation tax provisions under Internal Revenue Code Sections 877 and 877A…”
Expatriation is a human right.
However the United States Congress and the U.S. Treasury Inspector General for Tax Administration (TIGTA) aim to discourage anyone who renounces because they don’t want the burden of annually filing those US tax forms — there must be disincentives for these persons.
TIGTA specifically argues that without a much better IRS “Centralized effort, Congress’s attempts to create disincentives for tax-motivated expatriation via I.R.C. § 877A will not be effective”. Of course, the disincentives would be applied also to “Accidental ‘Americans’”.
The audit concluded that IRS tax compliance efforts for expatriates is a mess and found, for example:
“TIGTA found that the IRS database of expatriates was incomplete for 16,798 expatriates who did not file Form 8854. In addition, TIGTA found instances of potential nonfiling, underreporting of income, and/or payment compliance issues by expatriates. From a sample of 26 expatriates who did not file a Form 8854, five had potential unreported income over $6 million. From a sample of 61 expatriates who filed a Form 8854, 15 had potential unreported income over $17 million. Lastly, TIGTA also found that expatriates with high net worth appear to not be paying their exit tax.”
… and TIGTA made some recommendations.
A new organisation, Stop Extraterritorial American Taxation (SEAT), which is singularly focused on ending CBT, has been formed by John Richardson, Keith Redmond, Karen Alpert, Laura Snyder, David Johnstone and Suzanne Herman.
“While there are several organizations for American expatriates that address the tax issues, none is solely focused on extraterritorial taxation. SEAT is a non-partisan international organization created under the laws of France (Law of 1901). Furthermore, SEAT does not accept sponsorship from anyone in the tax compliance industry, so you can be sure that information on this site is independent. You can learn more about SEAT and its founders on our website.”
I encourage current and former US citizens to take SEAT’s Survey. Deadline is November 30th. Your participation in the Survey will enable SEAT to better educate policymakers, the media and the public.
Interesting article that accurately explains WHY people are renouncing US citizenship – AKA #citizide: "COMMENTARY: U.S. citizenship is not as coveted as it once was – National" | https://t.co/r5V8GeCTh7 https://t.co/WRVgZ3ZijC
— U.S. Citizen Abroad (@USCitizenAbroad) September 12, 2020
The above tweet references the article written by Brett Goodin. Although not entirely free of technical errors (let’s not point out the errors in the comments to this post), the article debunks the absurd suggestions that individuals are renouncing for political reasons or because of the coronavirus.
Mr. Goodin writes that:
Rewarding nonresident aliens who filed a 1040 instead of a 1040NR …
Foreign Workers Living Overseas Mistakenly Received $1,200 U.S. Stimulus Checks https://t.co/paaAkliTPF
— U.S. Citizen Abroad (@USCitizenAbroad) September 10, 2020
As has been widely discussed on Brock, there has been much discussion of:
2. The fact that certain US citizens whose spouse does not have a Social Security number were disentitled by statute from receiving the payment.
It appears that the media has woken up this reality. The NPR article was referenced in a September 9, 2020 article in the Washington Post. The comments to the article are fascinating and I think worth the read. For example:
FWIW, I live in Germany and have still not received my stimulus check either. I spent hours on the phone with IRS to find out why. The representative I spoke with said they had not received my 2018 or 19 tax returns, both of which I had filed. I checked with my accountant, who informed me that when they tried to do an electronic filing, it had been rejected and they had to send a paper filing. We have followed up both by fax and by paper, again, and still nothing. I’m not sure if I’ll ever see a dime, don’t know if it’s the IRS or USPS holding things up, but am to the point that I wonder why I have to file every year if they aren’t going to bother to process my returns.
I know of at least one non-resident who received a check overseas. I assumed it was because he was receiving Social Security payments from 10+ years of working in the US. How many others are there?
Its been 5 months, told twice they mailed a check to us overseas. Never received it. I was told no International mail came from the US postal service, guess that was a lie too.
Checks to deceased U.S. citizens?
Checks to non-citizens?
And people wonder why the national debt is exploding under “Only I can fix it” Chump
Could it be that the United States is actually establishing a new “Marshall Plan” to assist the rest of the COVID-19 afflicted world?
In March of 2020, @LizT1 warned that CDN Financial Institutions would come under increasing pressure to tighten the compliance requirements in #FATCA IGAs. "U.S. tax rules raising the stakes for Canadian residents with American citizenship" | CBC News https://t.co/2FdUY78ZlV
— U.S. Citizen Abroad (@USCitizenAbroad) September 6, 2020
March 2020: From Elizabeth Thompson of CBC …
“PHILIP YAMALIS: Welcome to today’s webinar, Relief Procedures for Certain Former Citizens. We are certainly very glad you are joining us today. My name is Philip Yamalis and I am a Stakeholder Liaison with the Internal Revenue Service and I will be your moderator today’s webinar which is slated for 100 minutes. Before we begin, if there is anyone in the audience that is with the media…”
“Phil, how about stopping here first for a polling question. YAMALIS: That sounds like a great idea. Let’s do it. Our first polling question, folks. Here it is. What are some of the common tax responsibilities of United States citizens? Now is the correct response, A, annually file income tax returns reporting worldwide income if income is over a specified threshold. B, annually file all required information returns, C, annually file Foreign Bank and Financial Accounts or FBAR on FinCEN Form 114, or, D, all of the above? Please click on the radio button that you believe most closely answers this question. I’ll give you a few seconds to make your selection. OK, let’s stop the polling now and we’ll share the correct answer on the next slide. And the correct response is D, all of the above. OK. I see that 97 percent of our audience responded correctly. That’s an awesome response rate. Thanks for your attention, folks. So with that, let me turn it over to Lara…”
“Philip, why do[n't] we stop here for our second polling question? YAMALIS: Lara, that sounds very good to me. So, audience, are you ready for the second polling question? Here it is. I’ve heard this enough, so I think we all got this, but here it is. On what IRS form must individuals who relinquished citizenship certify compliance for the five years before expatriation? Is the correct response Form 911, B, Form 5471, C, Form 8854, or D, Form 8939? You know how this goes. Click on the radio button that you believe most closely answers this question…I’m glad that 90 percent of you responded correctly, the Form 8854, Initial and Annual Expatriation Statement. Available where? Yes, on IRS.gov. That’s a great correct response rate, by the way, 90 percent. Thanks so much for paying attention, folks…”
“So, in Hypothetical 1, we have John, who was born in the U.S. and became a U.S. citizen at birth. He renounced his citizenship on October the 1st, 2019. In making a submission, he tallies up his total tax liability and it’s under the 25,000-dollar threshold. Now, here’s an important point. It was stated in the Hypothetical. John uses his best efforts in computing his total tax for each year. John computed the income from his foreign [?]mutual funds and reported them as ordinary income on the other income line of his Forms 1040. Anybody that’s familiar with foreign [?] mutual funds knows that they’re treated as special categories of investments. John should have used a Form 8621. The title of that form is Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. We often refer to these as PFICs. So, John should have reported his PFIC on a Form 8621 with some special computation, but he didn’t. He tried his very best…”
“The term, Accidental American, is not a term used by the government…”
“…Thanks again for your time and attendance. We wish you much success in your business or practice.”
The United States engages in a human rights violation by making it difficult/impossible to renounce U.S. citizenship because of the high citizenship renunciation fee it imposes.
The Association des Américains Accidentels (AAA) seeks Canadian plaintiffs in a lawsuit against the U.S. Department of State that will contest the unreasonably high citizenship renunciation fee.
The lawsuit will be launched in early 2021.
It is expected that some plaintiffs, for example,will have already have paid the fee and have renounced, but others were not able to renounce because they could not afford the high fee.
You will have to provide your name, residence, facts surrounding your U.S. citizenship (e.g., you might have no meaningful relationship with the U.S. but had citizenship imposed) and your renunciation/desire to renounce details.
Assume that your name will be published in a public record and that you might have to sign a written declaration at some point in the future.
If you are interested in being a plaintiff your questions will be answered by emailing firstname.lastname@example.org with subject line “Plainte USA”
August 13, 2020: On the one hand (at least in Toronto) U.S. Citizen Services are opening up …
U.S. DIPLOMATIC MISSION TO CANADA
Message to U.S. Citizens in Canada: U.S. Consulate General Toronto resumes most American citizen services
AUGUST 13, 2020
Event: U.S. Consulate General Toronto resumes public appointments for American citizen services
BEGIN Message for U.S. Citizens
The U.S. Consulate General Toronto is now accepting a limited number of appointments for most U.S. citizen services. You can request an appointment for routine and emergency passport services, Consular Report of Birth Abroad (CRBA) services, and adult citizenship claims by emailing us at TorontoPassport@state.gov. Please note that appointment numbers are limited to prevent crowding, and therefore wait times for appointments will be longer than normal. We appreciate your patience and support for our mutual efforts to prevent the further spread of COVID-19.
We are not offering routine visa services at this time. For information on visa appointments, visit https://ais.usvisa-info.com/en-ca/niv.
August 15, 2020: On the other hand renunciation appointments are closed down with no reopening in sight …
The health and safety of those who work at and visit the Embassy and Consulates is our highest priority. In response to the global pandemic COVID-19, and in line with the Canadian government’s call to increase social distancing, the CLN Processing Center has suspended Loss of Nationality services until further notice. We will resume routine services as soon as possible but are unable to provide a specific date at this time.
Please be advised that at this time, appointments through the end of July have already been canceled and we have yet to determine if further cancelations are to be made. Canceled appointments will be rescheduled prior to scheduling new appointments from the current queue when we eventually resume with this service. Please note that we have suspended scheduling and rescheduling for the foreseeable future and will resume when we have returned to normal routine operations. It will take several months to recover from the backlog, however your place in the queue remains unchanged.
We regret any inconvenience caused by the suspension of this service and appreciate your support for our efforts to safeguard U.S. facilities and prevent the further spread of COVID-19 in Canada.