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From the article: “I.R.S. computers now assume such a patch will be passed, but if nothing is done before Jan. 1, the agency will face a Herculean task of reprogramming its system. “I want to reiterate that most taxpayers may not be able to file their 2012 tax returns until late in March 2013, or even later,” Mr. Miller wrote”
Apparently my morning coffee hadn’t kicked in yet. Coupled with the small print on my smartphone and the early morning rush hour distractions in the U-Bahn, I had mistakenly read the March 2013 date as March 2014. As I am well aware of the severe penalties of not filing 8854 on time, I was quite concerned that the USG would themselves prevent us from filing on time. (Given their track record, I wouldn’t put it past them!). As it stands, March 2013 would be OK for that, so no cause for alarm. Thanks for your replies, monalisa1776 and calgary 411. I’ll just go back to sleep now. 😉
From The City Weekly in Utah:
“Exit America: How to be a 21st-century expatriate”
http://www.cityweekly.net/utah/article-459-16910-exit-america-by-alexander-billinis.html
Something interesting from the article:
“Certain actions can cause you to lose your U.S. nationality, such as taking up arms against the United States, formally renouncing your U.S. nationality or, surprisingly, entering the U.S. on a foreign passport. This is a lesser-known detail passed on to me when I lived in London. We were registering our London-born daughter as a U.S. citizen, and the consular official warned us not to travel with her to America before she got a U.S. passport, “’as she could forfeit her nationality.’”
Perhaps some Brockers may be interested in commenting on this. If true, it may help make relinquishments easier.
*John Brown, what the author of the article reportedly was told might apply to children born outside the US to US citizens, but it almost certainly does not apply to US citizens generally. The official list of “potentially expatriating acts” is found at http://travel.state.gov/law/citizenship/citizenship_778.html and does not include entering the US on a foreign passport. We can only wish it were that simple.
The author also seems blissfully unaware that by registering his daughter as a US citizen born abroad, he has committed her to filing US tax returns and FBARs, and possibly dealing with FATCA, for the rest of her life. Or else she will have to go through the onerous and costly process of renunciation at some point.
When ever I hear Senator Carl Levin’s name and Bank Secrecy Act in the same story, I pay attention. I have seen their work before and the serious collateral damage they do, with what seems to be one good intention, but due to the DOJ, IRS and Treasury bureaucracy always gets misdirected to many unintended targets.
Here is a link to the recent story on NPR, Morning Edition. DOJ wants Banks to be Quasi Cops.
Take the FBAR report, that they took of the shelf of the Bank Secrecy Act, where it was molding and dusty from disuse, and then suddenly applied it with draconian penalties against Americans long time resident abroad, or new immigrant to America who were not informed that they had to report their accounts back in their homeland. This was always represented as going after Rich Tax cheats, but the impacts were more on average middle class Americans and benignly innocent immigrants.
Look at FATCA, the Worst Law ever passed that Most Americans have never heard of, that is causling all kinds of collateral damage around the globe, where they are unilaterally requiring banks (actually ALL financial institutions) to act as Quasi Tax Spys for the IRS and collect a broad range of data on “US persons” living around the globe and turn it over to the IRS. Americans have become pariahs, and financial institutions are looking for ways to avoid investing in America as a result. Those renouncing their citizenship as a result of this act alone, should surprise no one.
I am sure, there is way more to this story than superficially told here. I say that, as much as I love NPR, I have learned how poorly they covered the IRS offshore Jihad that started in 2009 (totally got the story wrong), and how they have ignored the FATCA story which was passed in 2010 buried in the HIRE Act. If you want to know what FATCA is, you will have to start googling, but you won’t find it on a search term on NPR or PBS. Sad.
One benefit of this story, at least it will make me investigate more to learn the Real Story of what they are doing, and discover what the collateral damage will be. Given the history of FBAR and FATCA, it will not be insignificant. So it goes
Has anyone seen a good article about yesterday’s tax changes as they apply to those married filing separately (which I assume a lot of expats use)? The articles I have been looking at skip any reference to this filing status. Thx.
@aaa123, The text of the law specifies that the income thresholds for married filing separately are half of those for married filing jointly. So for married filing separately, the tax rates increase for income above $225,000 (half of $450,000), and itemized deductions and personal exemptions become limited for income above $150,000 (half of $300,000).
Why do the European banks bother searching for indicia? In Europe and Asia, everyone knows that Jews, Muslims, and Americans are the only ones that are circumcized—-when they ask for my passport, I’ll give them my identification.
Couldn’t resist this one from NPR’s Morning edition…
Big Project In Vermont Banks On Immigrant Investors
Comment in moderation:I hope these immigrants are doing their due diligence as to the U.S. tax, Form and Penalty club that they are joining. I would pay the $1,000s required for good international tax advice. Their accounts left back in their homeland, are now subject to reporting via the FBAR and the now duplicative FATCA form 8938. VERY serious penalities for not disclosing these accounts, even if the failure is ‘non willful’.
Also, with FATCA, the IRS is attempting to get EVERY financial institution in the World to report a broad-brush of data on your account activity, and so, if they have their way, they will eventually find your failures. Remember that old account your father or mother set up for you, or the joint account with your wife or business partner? All subject to disclosure if you have signing authority and it meets as low of a threshold of an aggregate $10K for all accounts.
If you haven’t noticed, the IRS, Treasury and Congress are on an offshore jihad right now. They need money, and they think salvation is offshore. FATCA was an out growth of this, passed in the 2010 Hire Act, it is basically the Worst Law ever passed that most Americans know nothing about. Don’t be one of those Americans! It is NOT a pleasant development and for all it’s good intentions, the collateral damage, and unintended consequences to YOU far out way the original target of Homeland Americans hiding funds offshore.
So, BEWARE dear. immigrant. Be sure you know what you are getting yourself in for. Once you get that greencard, or proceed down the path to Citizenship, you might someday come to regret it if you decide to return home. You will find nothing about this in your Visa package, and it is left up to you to avoid the FBAR / FATCA penalty trap that is affecting thousands of Americans Abroad that are going the opposite direction, I.E. renouncing their citizenship. You might want to ask some of them why? It is so much the taxation as much as the complexity, hassle and penalties.
Good luck, and welcome to America. I would make IRS.gov your browser homepage, and then search for all things FBAR and FATCA related. It is a daunting compliance regime you are entering. 🙂 .
cheers
No action here–in fact the opposite—he will continue to Watch FATCA implementation.
This is an official letter, meaning that whatever his tax assistant Eric Oman might have told me, the Senator will continue watching as FATCA is implemented——after having been fully informed of what those consequences are and what entrapment has occurred.
THE SENATE (even those that have been informed) WILL NOT ACT TO CORRECT THE SITUATION.
(for those of us who cannot renounce) and don’t have a hope of getting their govt of residence to help) WHAT ACTIONS HAVE THE POTENTIAL TO CHANGE CONGRESS MIND?————————————————— Dear : I appreciate the concerns you raised about the Foreign Account Tax Compliance Act (FATCA). This is why I love representing folks in Wyoming – you pay attention to the issues and offer valid criticisms and ideas. It’s my understanding that the Treasury Department is taking steps to better enable compliance by foreign financial institutions with these new rules and to avoid the situation whereby U.S. accounts at foreign financial institutions are simply closed in response to the compliance burden. To that end, the U.S. recently entered into agreements with the governments of Japan and Switzerland that provide a framework for reporting under FATCA. These agreements come on the heels of similar agreements the U.S. has made with the governments of France, Germany, Italy, Spain, and the United Kingdom. By developing approaches that are tailored to countries’ particular circumstances, the Treasury Department seems to be listening to concerns and taking steps to ease the FATCA compliance burden for other nations and their financial institutions. I’m hopeful these actions will prevent situations where U.S. accounts are closed. My staff and I have met with American Citizens Abroad (ACA) and understand the concerns folks like you have with these provisions. I want to make sure American citizens aren’t unduly burdened by any unintended consequences of FATCA and will closely follow its implementation and the continued actions of the Treasury Department. Thanks for taking the time to write – I value your input and will certainly keep your email in mind. Diana and I hope you and your family are well. Sincerely,Michael B. Enzi
Please lift Shadow Raider comment
Shadow Raider
January 2, 2013 at 7:54 pm
Now that the tax part of the fiscal cliff is over, the Ways and Means committee is highlighting tax reform in its website again, specifically its international aspects. Chairman Dave Camp is also talking about it again. The debate is still focused on corporations, but the discussion draft does say “individual tax reforms to be provided”. There is an email for comments about international tax reform: wmtaxreform@mail.house.gov. I sent my comments last year, I’m thinking about sending my bill draft now, and maybe more of us should send comments too.
from
http://isaacbrocksociety.ca/2012/12/28/americansabroad-need-to-think-carefully-about-the-message/#comment-128915
to a header.
This is a unique chance to engage Ways and Means, which I have not seen previously as an opportunity
*I will follow Mark Twain’s lead. I am sending my comments regarding international tax reform to wmtaxreform@mail.house.gov
I really hope that our administrators will lift Shadow Raider’s comment to a header. The request for comments seems uniquely a possibility to get Heard.
*Territorial based taxation is the way to go! The Ways and Means Committee said so.
And here is one from the fear mongers—-http://www.youtube.com/watch?v=F8vXBxkiWjQ
Regarding Shadow Raiders suggestion:
And what is the chance they will actually do anything other than what they do, and that is lard up the tax code with special provisions for their special contributor friends? As we know, the tax code exists, not to promote good ‘fair’ simple taxation and revenue to run the government, but is the tool of the politicians to get reelected. However, I will make a submission too..
And now the details! Fiscal Cliff New Tax Bill Extends an Amazing Number of “special” Tax Benefits http://bit.ly/136q9Ok Do I hear #Cynical
@Mark Twain
Isn’t it amazing how uninformed your Senator Michael B. Enzi is when he says this…
He doesn’t even know what is actually happening, God help us!
He has been reading Treasuries own press releases or the FCC parroting of whatever the IRS says.
Maybe you need to send him the Treasury Web site. These deals are NOT done. Only 3 signed agreements on their own web site for god’s sake. Ireland, as of December 28th, is not even listed. As far as the UK (poodle leading the “Coalition of the Willing Dupes”) signing goes, it has yet to have Parliamentary enabling legislation passed.
So, with 3 in hand, by their web site out of the 50 they trumpeted they were working on back in February, what about those other 194 countries around the world that FFIs are believing they have to surrender their rights and be PFFIs. Might they just be getting rid of Americans in a mistaken belief that somehow that saves them?
There is no hope when these dopes are in charge.
*Basically at this point they don’t want to repeal FATCA(even Jim Jatras would attest to that) short of a major stink by the banks(which so far they seem unwilling to do) so they have to say SOMETHING.
@mark twain
I’m wary of anyone who calls themselves the “Real” news.
Topic : No bank account
While worrying about the situation of long-time Canadian citizens being retroactively re-enrolled as American persons, this thought came to mind :
What if they don’t have a bank account?
That may sound radical, but there may be a good number of people who could use this way out.
Example of a worried retired friend who might be considered an “American person”: Income : OAS, QPP and private pension; no investments ( Canadian born common law spouse has investments ); no debts; spouse’s bank account and credit card sufficient.
Could this person just close his bank account, take his pensions in cheques which could be cashed ( banks must cash federal and provincial pensions; at worst, private pension at a cheque- cashing service ) and then deposit into his spouses account whatever is needed to pay bills?
This whole FATCA business is likely to lead a lot of peiple to think this way.
@Old&Simple: Well, it depends on how much you trust your spouse. Also, what about income splitting issues. And finally, why should Canadians inconvenience themselves to this degree in order to escape the reach of hostile foreign government? That’s why we have government and pay the salaries of people like the RCMP–it is to protect us from illegal activity which would deprive us of our well being.
But if you gave up your citizenship a long time ago, then just go to a US Consulate and ask them to give you CLN. It’s not that hard and there are likely no tax filing obligations if your expatriation was before 2004.
*Hi Petros. Thanks for your comment. No problem about trusting the spouse. Income splitting for Revenu Canada fortunately is not affected by where pension income is banked ( or whether it is banked ).
As to the CLN for expatriation before 2004, I think some people would both trust the Department of State and expect the IRS to respect the back-dating. However, I have come across several people’s comments saying the IRS may only accept the date you requested the CLN, and others worry that the State Department employees at the consulate would send their name straight on to the IRS.
So, you see why someone with a simple income and investment situation might just like to avoid banks altogether…. beyond a certain age, when health is going and the mind is less strong, there’s just not as much fight left in a person.
Now is the time to reread Alice in Wonderland and Alice through the Looking Glass. How totally normal Alice’s world seems compared to IRS in FATCAland.
Anybody else want to comment on how safe the no banking solution might be?
*Old & Simple. There is no reason NOT to have a bank account. Accounts with less than $50,000. are exempt. Accounts with less than $ 1 million. will pass an “electronic search” for US “indicia”
@Duke of Devon.
That may be, but that still does not escape the FBAR requirement that is $10k aggregate, and that is the bottomline gotcha! 🙁
@JUST ME: Regarding the comment about Shadow Raider’s suggestion for connecting with Ways and Means, what other Communication methods are available which enact legislative Changes regarding FATCA?
Regarding Enzi’s comments, I wasn’t happy to receive them and discussed that with the field rep with no good response. It conflicted with previous conversations I had had with his legislative tax assistant. The letters that they write are manufactured in their Washington office by a small army of interns–I am holding hope that it was disconnected from reality.
@Mark Twain
I know it is discouraging for you, but frankly, you are doing yeoman’s work in this regard. At least you are getting communication back, wrong headed though it is. Those interns know nothing of the world, and certainly don’t understand the actual actions Treasury is taking, so not surprised that it is dis-connected from reality That said, you have a communication channel, and that is more than I have, so I salute you!
@Old&Simple:
This past fall there was a panic among average-earning Americans living in Switzerland that the Postfinance would terminate their accounts. Postfinance, which is a banking arm of the Swiss Post, has been the refuge of last resort for Americans living in Switzerland for (limited) banking services. This resulted in a number of posts on at least one message board about how Americans could deal without banking services. One post, which I recall but cannot locate, discussed a meeting that was held at a company between the finance manager, HR and possibly others on how to pay its American citizen employees if this happened. The alternatives discussed were, as I recall:
1) Pay American citizen employee in cash (rejected)
2) Make payroll payment for American citizen employee into non-US spouse’s account (yes, but not every American has a non-US spouse or even a spouse)
3) Issue payroll check to American citizen employee which could be cashed (yes, although checks are a rarity here)
4) Transfer the payroll payment to a bank account outside of Switzerland, possibly even in the US
Fortunately, the Postfinance decided to allow Americans residing in Switzerland to continue to bank with it and so the panic among average earning Americans here is over, at least temporarily.
To your point: because cash can be brought to the Postfinance, even without an account there, for transfer into the landlord’s, the health insurance company’s, government tax, etc. bank account, I believe it would be possible to receive a paycheck, cash it and then pay for everything with cash here. On the other hand, I am not sure whether it would be possible to have a credit card here without a bank account. It would clearly not add to the quality of life but it could be possible.
As an additional comment on the Postfinance situation: a newspaper reported that the Swiss-American Chamber of Commerce protested vehemently the impending Postfinance decision to cancel American citizen accounts. A rumor circulating among expats here is that the US Ambassador also applied pressure to reconsider this impending decision. If so, was this one of the reasons why the ACA gave him the Thomas Jefferson award?
http://americansabroad.org/about/thomas-jefferson-award-2012/
The December 20, 2012 article below says: “At any rate (the Postfinance) will continue to accept Americans with residence in Switzerland and Swiss with residence in the US.”
http://www.aargauerzeitung.ch/wirtschaft/die-postfinance-hat-ihre-us-kunden-vor-die-tuer-gesetzt-125821372