Please note this thread is an archive and no longer current. The conversation is continued here:
Please ask your questions here about US Expat tax and FBAR.
Participants will need to provide their e-mail address (which will remain confidential) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
PLEASE NOTE: If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
does anyone know a link to the history of the OVDP OVDI saga? 2011,2009, 200?, etc?
Well, there is my history, if that is any help, but are you looking for a narrative that spells out what happened when?
It all arose out of the UBS tax evasion prosecution, so this the beginning of the 3 year IRS offshore jihad…
http://en.wikipedia.org/wiki/UBS#U.S._tax_evasion_controversy
@Mark, this might help:
http://www.capdale.com/ovdi-is-over-whats-next-for-voluntary-disclosures
“OVDI is Over: What’s Next for Voluntary Disclosures?, Tax Notes (October 17, 2011)”
Here is a bit of a report on US expat characteristics, from Dr. Amanda Klekowski von Koppenfels http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC0QFjAA&url=http%3A%2F%2Fbsmlegal.com%2FPDFs%2FvonKoppenfels.pdf&ei=TaGtULq2BsT7ygGR7YHwBg&usg=AFQjCNFZ1gyiPp186YSsNADz5WPbRwpDtg
bsmlegal.com/PDFs/vonKoppenfels.pdfFile Format: PDF/Adobe Acrobat – Quick View
23 Apr 2012 – Dr. Amanda Klekowski von Koppenfels ak248@kent.ac.uk. 4. What do Americans do when they live overseas? Based both on my survey data …
Thanks for posting that, badger. Dr. Amanda Klekowski von Koppenfels wrote in September that she would have the first draft of her book in a few months time. She has since run by me the portion she will include regarding those “Accidental Americans” with a developmental or like disability:
I look forward to the book’s completion. (It was a sincere pleasure to correspond back and forth with her as I gave her material she asked about!)
@badger
Good selection on the capdale piece. I forgot about that one.
Badger, that was the one—now pasted into the protocol
I discussed the ECONOMIC PATRIOTS, FATCATS, TAX EVADERS, AND GLOBAL ELITES. He (more cynical than I) “You understand the environment and people we were talking about, don’t you?” “you mean the tourist with the pants suits, who had to interrrupt her Eurail pass in order to traipse over to the current crisis in the middle East?” “ah, so you understand what’s going on then”
Here is another report that merits some reading and review…
Tax Notes Special Report: The ABCs of Foreign Bank Accounts, by Robert W. Wood and Christopher A. Karachale – An excellent appraisal of OVDI issues and permutations of depositor types.
“The government and many taxpayers and practitioners see the 2009 OVDP and 2011 OVDI as successes. Many formerly noncompliant taxpayers have been brought back into the system. Hence- forth, they presumably will continue to fulfill their reporting and filing obligations. On many levels, that is a good thing.
“However, peel back the layers, and one could reasonably conclude that the 2009 and 2011 pro- grams are indications of a more systemic problem. The failure of education and tax professionals, and the system overload for so many, create a perfect storm. The aggregate unreasonable complexity of some tax filing and reporting obligations shows that the system needs fixing. It’s everyone’s responsibility to contribute to the overhaul, perhaps from A to Z.”
http://www.woodllp.com/Publications/Articles/pdf/ABCs_of_Foreign.pdf
@badger
Thanks for posting that report. Among her respondents, the majority of Americans who live abroad say they do it for love. Can it get any worse than to have policies in place that for the most part cause us to inflict this kind of punishment on those we love? This is just awful. I think renounceuscitizenship is right, dating services must require full disclosure of US personhood by its users.
@calgary411
That’s very exciting. It must be gratifying for you to have participated in this significant piece of work.
Thanks, Just Me.
From the ABC’s of Foreign Bank Accounts:
How many of us who comment here and were educated in the US learned in high school or even in university anything about US citizenship-based taxation? Some graduating from high school didn’t even come away with the concept of having to pay taxes. That is where the start of any blame game lies. Our education system failed us — and our parents didn’t, for the most part, know since the education system failed them as well. While we were memorizing the trivia of the superiority of the US and other inaccurate facts of history, we did not come away with proper basic financial literacy, including income taxes, including the fact that the US will tax us wherever we may move because we will forever be a citizen of the US (at least until after they changed that law). The education system further didn’t sufficiently educate the accountants many of us relied on for proper advice in preparing our taxes. I was one that was told in passing I didn’t have to worry about US tax returns by Canadian tax preparers — until my OMG moment when I engaged more educated and more expensive professionals who, in turn, educated me — actually gave me my rude awakening.
We didn’t get the basics we needed to know to get out there in the real world without screwing up. Hopefully that is changing. Without proper education, it wasn’t hard to be lulled into the complacency so many have been — and here we are paying the price.
Doing the math on how good has the OVDP been with increasing FBAR compliance.
http://isaacbrocksociety.ca/2012/11/21/is-resistance-to-fatca-starting-to-build/comment-page-2/#comment-96002
From Badger at http://isaacbrocksociety.ca/2012/11/21/is-resistance-to-fatca-starting-to-build/comment-page-2/#comment-95974
“As
Olsen noted at a conference sponsored by the Tax Section of the
American Bar Association, there may be as many as 5 to 7 million U.S.
resident taxpayers and perhaps tens of millions of nonresident U.S.
taxpayers who are subject to the FBAR rules this year. Only 741,000
taxpayers filed FBAR returns in 2011….”
…..”Olsen
reasons that, given the number of taxpayers who are subject to the FBAR
rules, there may be many different reasons for taxpayer non-compliance.
But instead of taking this diversity into account, Olson argued that
IRS’s approach in this area has been driven solely by the view that all
non-compliance stems from a willful disregard to the FBAR rules.”………
………….”
If the Ratzlaf standard
for willfulness isn’t satisfied, then Olson said that the taxpayer
should be given a break and permitted to only pay the accuracy-related
penalties. “Such an approach would increase voluntary compliance and
would stop terrorizing the entire country of Canada,” Olson observed.”
from http://oicattorney.blogspot.ca/2012/11/taxpayer-advocate-fbar-penalties.html
*The only US tax form I ever filled in was as part of a geography/social studies class in junior high. I can’t even remember why we were doing it now, though I suppose it might have been something to do with the way the US tax system worked and how it came about.
I posted the minutes of my meeting with the local Senator and Congressman. FATCA is a tough subject to cover in a short period, to the offices of elected officials who are not aware of their legislation.
I owe a one-pager to one of the offices and I hope to follow up.
Put up any corrections you might have there, as I hope to resuse the content again in another state.
http://samuelclemmons.wordpress.com/
give feedback if the links don’t work
I steered a lot of the discussion to the FBAR form itself, where by itself eliminates the possibility of a US person being a CEO or CFO of an international corporation overseas, and connecting it with the correlations Roger Conklin has made with German/Japanese/Danish boots-on-the-ground in China.
Then, it is necessary to steer the discussion to that particular state’s interest, as the job of a legislator is not what is good for US citizens, but what is good for their constituents.
I reminded them that I am now their constituent. Also, that it is not possible for ME to be a Business Manager.
@Mark Twain- I guess that I would like to see that the ideal that the FEIE is spending through the tax code be debunked.
The Congressmen/women have to understand that the FEIE and the FTC are not a case of the U.S. legislature subsidizing the incomes of expats because those incomes were never a part of the Treasury system. The expats never have an account with the U.S. treasury because they do not use its none interest bearing publicly circulating debt issuance and therefore since there is no individual account the Congress cannot enact anything that affects a none existent account.
What Congress is in fact doing under citizenship based taxation is taxing the treasury of another country. The obligation for the individual to pay tax does not exist based upon his/her citizenship but solely upon his/her economic ties to the taxing authority’s treasury. This is why residency is the universal criterion that is used for taxation. It seems that only America and Eritrea cannot understand this principle.
A taxable event is triggered through only two means; one is passive such as receiving government benefits, eg. management of the currency, education, infrastructure etc. or actively through receiving market compensation in the form of treasury dollars for work or investment.
None resident citizens fit into neither of these categories. None resident Americans are not allowed to hold U.S. domiciled financial accounts and they certainly are not receiving any government benefits. All of their public benefits, including military protection, are received by the government of their territory of residence.
Also just as it is not within the Constitutional power of Congress to exercise spending authority beyond the geographical boundaries of the U.S. it is also not possible to exercise Congressional taxing authority beyond the borders of the U.S. Both powers are part of the Congressional power of the purse and are bound by the same limits.
Overall I would say that it is a good start and I certainly do appreciate your efforts. Having people like you and bubblebustin, who are an average people and not paid lobbyist, put your efforts into this should help to make our case.
The exclusion will go over the cliff. No doubt. If you are going to work in Dubai, use your 2nd passport and tell everyone you are retiring there.
The lady who wrote this oped piece for the Minneapolis Star Tribune surely has no idea about FATCA nor is she aware that the FEIE will be put on the chopping block again.
Finding the American Dream Overseas
http://www.startribune.com/opinion/180763881.html?refer=y
From her article:
“After applying for 279 jobs over two years, my husband finally got the offer he’d been hoping for: a well-paid position teaching philosophy at a respected university. We should have been thrilled. There was just one little thing. The job was in Hong Kong.”
“We didn’t know we would be part of a wave of educated young Americans heading overseas in search of better employment opportunities.”
My oh my, are they gonna be in for a big surprise.
@John Brown- all of those innocent and well intentioned people are in for a rude awakening. Little to they know that the government which rules the economy that failed them believes that it has the right to tax their lives in an economy that now sustains them.
What a human tragedy. I guess that citizenship based taxation is the U.S.’s way of rummaging and pillaging under the guise of law and treaty. Who needs a gun when you can impose (blackmail) a 30% penalty that will instill fear in the hearts and minds of the unarmed civilian population?
Emily Matchar, the young lady who wrote the piece for the Star Tribune is a professional writer.
http://emilymatchar.com/
Once she finds out about the nightmare of FATCA she might become inspired to write about its impact on expats.
Just a guess on my part, but I bet as many as 75% of the Americans who go overseas to work, do not have a clue that their country taxes on citizenship (no matter where you go, you are obligated to file that tax return). When you read in articles like the one above things like “Hong Kong’s taxes are less than the U.S.” – it is obvious that the assumption is the only tax return necessary to file will be one to Hong Kong (or any country you might be working in). What a rude awakening – especially if they tinker with the FEIE.
If she knew about FATCA, FBAR etc she probably would have written:
“We didn’t know we would be part of a wave of educated young Americans heading overseas in search of better employment opportunities,” — and then forced to choose between renouncing US citizenship or returning to the homeland.
@John Brown.
Thanks for the alert to that article. I registered as FBARFATCA and posted “A warning” about their taxation requirements. Don’t know if it will come out of moderation or not.
I see Mark Twain posted one, and kept it simple. I should learn to do that! LOL
Many contributors here are corporates with a paid-for US tax lawyer from the get-go. It takes a long time before such a person even realizes that only US citizens report—it took me about 13 years before I started questioning why I was wasting 2 intense weekends on my US taxes.
The others are unknowing of the snakes—either the same as I was 10 months ago, doing things 95% correctly, or not doing anything at all.
Cheers Just Me.
Your comment was posted. Hopefully the writer will receive more comments and be inspired to write about the injustice of citizenship-based taxation and its impact on Americans abroad.