After commenting many times that I would like to see a case where the US Government / IRS actually went after Americans living overseas, I finally found something. The story (dated 2009) is here: http://ticotimes.com/costa-rica/irs-goes-after-us-income-expats-in-costa-rica
The article states that the couple sent a letter to the IRS stating that they weren’t going to pay taxes. They also encouraged other Americans to do the same, and they set up a company to promoted this message. Verdict: $200,000 fine. I believe the American couple got into more trouble by encouraging others not to pay taxes. But we’ll never know if it they were extradited based on “encouraging others” or just by defying the IRS in the first place.
The message I get from this is:
Just file taxes in America, even if you have nothing to pay. Then when you’ve finally come to the realization that a blue passport is more of a headache than it is worth, due to the FACTA, taxes, aggression, wars, etc.., just renounce quietly and be done with it.
Horrifying. I think that my home country does not extradite its own citizens outside of the EU, but who knows. I think that the absolute worst country to be located in as a US expat would be the UK, since the extradition agreement there does not even protect UK citizens from being extradited there. Gary McKinnon is course a well-known example and here is another one:
http://www.guardian.co.uk/law/2012/jan/13/tvshack-student-founder-extradition
I imagine that somewhere like France would be a good place to be located as a “non-compliant US-Person”. If you are a French-US dual I don’t think that France would extradite you under any circumstances, I mean, Roman Polanski has avoided being extradited for more than 30 years…
As to the article, I would think that the US probably was able to get this couple extradited not because they avoided paying taxes, but rather probably because they were actively promoting non-compliance with others. I take it from the article though that they weren’t also Costa Rican citizens, which I suppose would have blocked their extradition .Anyone know for sure?
Thanks Geeeez, you’re a great asset to the Isaac Brock Society.
This story is as Tim says, truly horrifying, and it is a reminder for everyone to consult a lawyer before defying the IRS openly in this manner. I am one of the few here using my real name. I asked my lawyer, and he says that the Canada US extradition treaty does not include include tax evasion (or FBAR for that matter), on the list of offenses.
It very much depends on the (bilateral) extradition treaty in question. Some treaties require dual criminality, while others list a schedule of offences and don’t require dual criminality (but fiscal offences aren’t always scheduled). Some treaties allow a country to refuse to extradite their own nationals (and some country’s laws explicitly state that they will not extradite their own nationals, e.g. France, Montenegro, Taiwan).
Crucially for US taxation purposes, some treaties specify a territorial limitation: if the Requesting State is requesting extradition for an offence committed outside its territory, the Requested State is only obligated to extradite if its own laws also try to claim extraterritorial jurisdiction for the same offence. But the US-UK treaty has precisely that provision and we can all see in the news now how much it was worth to Richard O’Dwyer.
Obviously the facts here are rather exceptional. But, once the dust settles the real point is that the U.S. must end citizenship-based taxation and end it now.
It makes no economic sense for the U.S. to go after people like this. Clearly the IRS is using them as a scapegoat. Why not just end citizenship-based taxation altogether and just let everybody (including the IRS) get on with their lives.
Citizenship based taxation is doing lots of harm to the U.S. economy.
http://renounceuscitizenship.wordpress.com/2012/01/12/u-s-citizenship-based-taxation-harms-u-s-economy/
and
http://renounceuscitizenship.wordpress.com/2012/01/14/citizenship-based-taxation-the-u-s-trade-deficit-and-the-destruction-of-u-s-capital/
@DonPomadoro
Shocking! That student should be tried under UK laws, since he is a UK citizen with no ties to America. This kind of thing is so distrurbing. I think Argentina won’t extradite either. I saw something about a guy who worked for FEMA who said he has evidence to prove 9/11 was an inside job. He lives in Argentina with his Argentinian family and the US claims he murdered his wife in America, but it really looks like a suicide. Anyway, I don’t know if any of it is true, but Argentina won’t extradite him.
I think it a lot of it depends on how much the country actually cares about their citizens. Argentina (and many other countries) know that if they send people to America, they would most likely end up in jail and the family would starve to death. So that’s why they refuse US demands.
In the first place, America makes lots of accusations, but everyone is just supposed to take their word for it? Where are their claims throroghly substantiated? I have seen so many cases in recent years where foreign nationals are extradited to America, but cases bear resemblance to “kagaroo courts” or arguments are withheld. It is all very disturbing to me.
If I were British, I would be especially outraged over this! This just shows you that Britain is now the “The United Kingdom of Amerika.”
@ Petros – ahh.. I understand where you’re coming from, but if you owe anything, just pay it and be done with them. Personally, I am against US policy, but I wouldn’t break any local or US laws to point this out to them. I just want to go quietly and forget that I was ever born there.
@renounce – we all see that very clearly like the blue sky, but the US does whatever it wants to. As I stated on another comment today (I think on Victoria’s post), I think the actions of everybody on here are quite noble (trying to get the word out), but you are trying the change the minds of 300 million people, and the government is against you. I hate to sound like the pessimist, but the chances of success are very low. So low that I have already resigned to the fact that the only way is to renounce. It’s not like I want to, but I have comittments overseas; I just can’t pack up and move back.
@Geeeez, I am not a tax evader. I am a loyal Canadian–Revenue Canada is my not-so-silent C shareholder, you know, the one who gets paid whether I make anything or not.
@geeeez
You are right – go ahead and renounce.
The people on this blog are talking about two general points:
1. The problems of U.S. laws and what can be done about them – in a general, prospective way that will affect future expats and those who do not want to renounce.
2. What to do about one’s own situation regardless of what the future may hold.
My comment was aimed at point 1. I was not talking about point 2.
With respect to point 2, renunciation is your option and for many people it is the only viable option. The way I see it, the only people who can afford to retain U.S. citizenship are the very poor or the very wealthy. There is no room for anybody in between.
U.S. citizenship has been priced out of the market for most people.
http://renounceuscitizenship.wordpress.com/2012/01/17/u-s-citizenship-has-been-priced-out-of-the-market/
@Petros – Yeah, I know what you mean. The US is like the angry customer that thinks they are right, even though they are clearly wrong. They scream and scream, and threaten till you just give them what they want so they will go away and you never have to see them again.
The US wants to believe that if you were born there, you are their slave until you pay a fee to be free. We can argue about the constitutionality all we want to, but — it’s CLEARLY wrong compared to existing world views today (and a back-slap in the face to Human Rights).
But some things in life just aren’t fair.
“U.S. citizenship has been priced out of the market for most people.”
That’s exactly what I was thinking today. I just might not be able to afford this.
@geeez
Yes, people in the UK are VERY intune to the disparities of the US-UK Extradition Treaty. I lived in the UK until a couple of years ago and everyone hates the treaty since the amount of evidence required for the US to extradite from the UK is much less stringent than what the UK would need to have to get someone from the US extradited. I would post a link to Wikipedia, but the site is down due to protesting over SOPA…
Anyway, for those who don’t know Gary McKinnon is a Scottish hacker who broke into the Pentagon and NASA’s computer mainframe about ten years and was looking for evidence of Aliens and UFOs. He suffers from Asperger’s Syndrome and even though all of his crimes were committed in the UK the US has been trying to get him extradited for years. Read more about it here:
http://www.dailymail.co.uk/news/article-2083667/Gary-McKinnon-faces-unthinkable-ordeal-extradited-US–says-NatWest-Three-banker-hurled-American-jail-alongside-wall-wall-psychos.html
@Renounceuscitizenship:
I think US Citizenship is the only WAY for foreigners to go to America without threat of deportation. For those who want to live abroad, you are right, renuncation is the only viable option.
My own personal reasons for wanting to renounce are more diverse than America itself. I’m not affected by the FBAR, but I hate the idea that I have to now (after discovering this info), file returns that say I owe nothing.
When I saw a video on Youtube of a woman being called a “white biatch” while waiting in line at McDonalds with her family, all I could do is shrug my shoulders and conclude that America has some anger-management and aggression issues to work-out before I would ever feel comfortable living there. Where I live, making a racist comment like that is illegal and will land someone in jail, even though I doubt you would hear a comment like that, even if the law didn’t exist.
My bet is that this is probably why America doesn’t want its citizens living abroad in the first place. Once someone lives abroad for a lengthy period of time, they start forming their own opinions and beliefs that may be contrary to what America what’s them to believe. That happened to me; I just don’t feel like an American anymore; my aggression level is almost at the zero level, and I am for peace and non-violence. So why should I have to pay to be an American, even though I don’t feel like one anymore?
@donpomodoro – I heard about the hacker case. I can somewhat understand that case because he hacked computers in America. But this student’s case!! That has nothing to do with America whatsoever.
@Petros – as far as I know, it is still legal to renounce and relinquish, but I don’t think it would be a bad idea to block any IP addreses originating from America. I”m here to promote news and facts based on “official” and “semi-official” sources but it seems like the US sometimes likes to twist facts to support their own agendas.
Because I say that renunciation is the only viable option in my case (Dept. of State, prove me wrong), I don’t want to get charged with promoting dissent. I’m just stating what is in accordance with my own circumstances and personal beliefs.
@geeeez, The unique problem is that tax compliance to the IRS gives them the evidence to be used against you in a criminal FBAR case. Thus, I think it best to consider my options before handing over information that could lead to indictment under the Bank Secrecy Act. I am now no longer a US citizen. So I am not sure what can go wrong, except perhaps going to the Caribbean in the Spring. Maybe the US Airforce will bring down my flight so they can arrest me. But am I worth it? What resources are the United States going to use to enforce their will against me, a poor minnow, who doesn’t even have enough wealth to pay for costs of bringing down such a jet, much less what it would cost to indict me and try me for criminal FBAR. The only reason it could potentially be worth it to them is if they bash over the head or break my knee caps, in mafia style, to show the rest of you that you better just pay up and stop asking questions. I don’t think it is likely, to be honest. But I am out in the open. If they do it, it will create a lot of bad publicity for them.
This is a case of low hanging fruit. I’m high up the tree. The low hanging fruit is this: Those who have entered the OVD programs, and say, here’s may money, help yourself.
@Petros, I doubt they would try to divert a flight for you. The last time I heard about that was a guy who was big in the offshore gambling business:
http://www.usatoday.com/sports/2006-07-18-online-gaming_x.htm
http://news.bbc.co.uk/2/hi/8339338.stm
Notice how in the second article, the US basically locks up the people and then tells them how they owe tons of money. In your case, where are don’t want to pay more than $2/month for website hosting 🙂 – I doubt you’ll have any problem. It’s always about the money.
@geeeez- hey they didn’t bring the flight down; they got him during a layover. So I am not planning to layover in the US. But I am planning to flyover in a direct flight (Canada-Caribbean). 🙂
The case I was referring to was a previous case to these. In the case I was referring to, the US either diverted a flight INTO US-airspace, or they ordered the plane to land in order to arrest the guy. When wikipedia comes back up, I’ll try to find it.
In all of the cases, the core element is money. It’s amazing to think of it this way: If someone who doesn’t live in the US makes a lot of money, the US tries to extradite them to extort money from them. That’s just crazy! Why does the US have to “allow” people to make money when they aren’t breaking any laws where they live? For you Peter, unless your investments have been making *THOUSANDS* of percent per year, I doubt you have much to worry about.
Darn wikipedia. I think a banner would have been better than a blackout.
There is actually an interesting case the US Supreme Court ruled on called Morrison which is starting to limit extraterriorial application of law basically reversing a trend going back to the 1920s. One of the more interesting elements of the case is that it has been heavily criticised by many “left wing” legal professors but it was actually a unanimous opinion of all the justices. In some current cases it is even being argued to overturn US vs Bowman from 1922(the previous standard for overseas enforcement).
http://blogs.reuters.com/alison-frankel/2011/10/17/morrison-v-nabs-2nd-act-way-beyond-securities-fraud-and-rico/
Interesting read Tim. Look back at the recent Deutche Telekom case I posted about. That company was fined several million dollars for bribing politicians in Hungary, and there was zero (0) involvment with the US or US Citizens.
I think the best way to describe US law is that it is applied by US authorities to whichever way best fits their case, as in the case of relinquishments not being honoured. You may end up winning, but who can afford lawyers and a fight with a government?
The case of the British student that was extradited has me beyond words. I think it gives a strong case to any website owner to blocking US-based IP addresses. You never know what kind of crazy law they are going to pass there, and it’s better to exclude the US altogether.
Here’s an interesting case, related to murder and not taxes. The US wants this woman (who appears to be quite diabolical) extradited, but Brazil says no.
http://www.vindy.com/news/2010/aug/05/brazil-refuses-again-to-extradite-claudi/?print
What’s interesting about this case is that the US says that when this woman naturalized to be a US Citizen, she renounced Brazilian citizenship. Brazilian citizenship is identical to the America in terms of never giving up your nationality in order to acquire another nationality. This is another case where the US appears to be twisting the results to suit their needs. After all, don’t US citizens lose citizenship after a relinquishing act?
Brazil most likely rejected extradition because the US still has the death penalty, which is outlawed in Brazil. The US turns around and says “We won’t pay Brazil $18 million in aid.” 18 million is chump change nowadays.
I’m trying to find more articles related to US tax issues, but I’m not finding a whole lot…
@geeez
The case you cited with Deutsche Telekom had to do with them being listed in a US exchange(something fewer and fewer foreign companies are doing) while this Morrison decision from the US Supreme Court was trying to prevent US jurisdiction from being “further” extendened to foreign companies who had US shareholders but weren’t listed in a US exchange as some the plantiffs lawyers were trying to attempt. I agree it is not absolutely black and white and is probably subject to further challenge but it is interesting to see some pushback from the courts after decades of going full speed ahead in this direction. What is interesting is all the ramifications it has caused for other cases that I suspect the government suspected were slam dunks.
@Petros – type in google “IRS extradites Americans abroad” and see how high this article is in the search results!
From the article that geeeez linked:
“Among the arguments presented to the Brazilians was that Claudia Hoerig swore her allegiance to the United States during her National Oath Ceremony in 1999 and renounced her allegiance to “any foreign state.”
Except that that oath has no legal force at all and everyone keeps their original citizenship unless they come from a country like Germany or Denmark. The only way to renounce Brazilian citizenship would be to do so at the Brazilian embassy, which this article does not mention her as doing. I bet that we couldn’t use the same argument to tell the US that we were no longer citizens after having taken an oath with a different country. That being said, unlike the Hacker case or the British student, I think that this is an example of someone who should indeed be extradited since the crime was committed on US soil and it looks like she just fled afterwards. My understanding is that countries which do not recognise the death penalty do regularly extradite those accused of murder to the US on the assurance that the death penalty may not be used.
@DonPomodoro:
Somethings they do here are questionble, but they always put the well-being of the citizens first. That I give them credit for.
If you want to see a lop-sided child custody case, check out the Sean Goldman case, after Wikipedia comes online. The US tried to follow the regulation to the T, whereas the Brazilian government was looking out for the Welfare of the boy. People who like regulations to be in black-and-white tend to side with the American father. But me, I know how life is in both countries, and based on the $$$ of the family, he most likely would be better off in Brazil. Cultural and language issues also got in the way because the US dad is monolingual and didn’t know too much about the culture at that time.
Brazilians can also renounce citizenship at the consulates. It costs around $75, at least it did last year. But there’s no reason for them to do that. There’s no such thing as a BRACTA 🙂 hovering over them wherever they go.
Some people may jump on my case about me saying “well-being of the citizen” because their equivlent to welfare tops out arond $120/month. People gasp what I tell them what the US pays for (Food stamps, section 8 housing, etc.. )
In the context of international affairs, they put the welfare of the citizens first.