The deadline has now passed to submit comments to the Ways and Means Committee on Tax Reform. Comments are posted here. There were (and hopefully continue to be) a large number of letters from U.S. citizens abroad. Who knows what will happen? I am hopeful that Shadow Raider’s optimism will “carry the day”. For those who missed his comment:
Shadow Raider says
@Just Me, You can keep your hopes up. The reporters who wrote that article on The Hill probably contacted both chairmen of the international tax reform working group, Devin Nunes and Earl Blumenauer, and I suspect that the Republican aide who responded is the same Devin Nunes’s assistant whom I met last year. Yes, he defends citizenship-based taxation, but he is the only aide that I met who does. His opinion is not representative of what Congress thinks about the subject, so I think we can safely ignore his comments. All other aides that I met were supportive or at least open to changing the tax system to one based on residence.
Speaking of congressional aides, most of them are young, as you noticed (20-40 years old), highly educated, motivated and friendly. Also, most of them have traveled abroad, and they live in or around DC, which has a substantial international presence. Perhaps because of these characteristics, they are open-minded about the rest of the world and are interested in new ideas. A 150-year old policy that restricts international mobility is not something that they support. I think citizenship-based taxation is not going to survive much longer.
Also, Earl Blumenauer responded himself to the article on The Hill, and his response seems positive. I think I finally found the point that makes Congress care about the subject: thecompetitiveness of Americans for jobs abroad. When Bill Alexander proposed expanding the FEIE to all kinds of foreign income in 1992, he titled his bill “Overseas American EconomicCompetition Enhancement Act”. When Jim DeMint and Gregory Meeks proposed making the FEIE unlimited in 2007, they titled their bill “Working American Competitiveness Act”. Earlier this year, Dave Camp wrote that tax reform is needed to make US workers more competitiveinternationally. Now Earl Blumenauer mentioned something similar. The Senate Finance Committee scheduled a meeting on “international competitiveness” for next month, and I don’t think they are just talking about corporations. So congressmen don’t care much about logic, simplicity or fairness in the tax code, banking problems, exports or additional tax revenue, but they don’t want Americans to be undesired for jobs outside of the US simply due to their citizenship. In the past, this problem could be mostly solved with the FEIE, but today, with FATCA and the enforcement of FBAR penalties, even excluding all foreign income wouldn’t be enough. For Americans and foreigners to be considered equally for jobs abroad, Americans abroad can’t have tax or financial reporting requirements to the US either.
The Joint Committee on Taxation should say something about the subject in its report on May 6, and the Senate Finance Committee should also say something after its meeting on May 23. I think we’re in for a pleasant surprise.
Here are some comments that really captured the life of “U.S. citizenship abroad”.
Somebody trying to live an “every day life” in Canada
I suspect that #americansabroad in Canada can relate to this waysandmeans.house.gov/uploadedfiles/… – Accurate portrayal of the burdens of US citizenship
— U.S. Citizen Abroad (@USCitizenAbroad) April 17, 2013
This is an excellent submission from a U.S. citizen in Canada who is nowhere near retirement and is faced with the prospect of trying to live and build a life. What is particularly interesting in this one is that she suggests that many U.S. citizens abroad are afraid to write because they are not compliant.
And from a person at a similar stage of life in Switzerland
Excellent description of how “US citizenship abroad” is a punishment and why #americansabroad must renounce waysandmeans.house.gov/uploadedfiles/…
— U.S. Citizen Abroad (@USCitizenAbroad) April 17, 2013
The complete community of U.S. citizens abroad owes a great debt to those who are writing to the Ways and Means Committee.
Not all letters have been posted! (at least yet)
For those who have not been following this discussion, comments on this blog reveal that at least three people have written letters that have not been posted. Hopefully they will show up. But I am beginning to wonder (some were clearly written before some that have been posted). Perhaps those who wrote and find that your letters were NOT posted should post them here.
In any case, many helpful letters have been posted.
@Em, which ones?
Interesting one from Cayman Finance:
“To many in the U.S., doing financial or investment business in Cayman has become short-hand for tax evasion. The repetition by U.S. officials of statements confusing registered office services with a business’ headquarters and concluding that registered offices assist tax evasion have been misleading, and it is astonishing how over and over a building in Cayman is quoted when there is an even smaller building in Delaware where a much bigger number of companies are registered. We are tax neutral; we do not assist or condone income tax evasion. Our Government supports transparency and law enforcement; it has had a Tax Information Exchange Agreement with the United States for over 20 years and now has similar ones with more than 30 other nations. Cayman participates in the EUSD, exchanging information automatically for European citizens and recently announced the decision to enter in a FATCA Model 1 Intergovernmental Agreement with the United States and a similar one with the UK.”
“Second, while the U.S. should draft its tax code as it sees fit, as an international financial centre we too have a strong interest in transparency, efficiency, simplicity, and especially harmonization. I would be remiss in my duties as the leader of Cayman Finance if I do not encourage the U.S. to consider if the root of many of the problems is not that the U.S. does not have a territorial tax system like most of the rest of the world.”
http://waysandmeans.house.gov/uploadedfiles/cayman_finance.pdf
@ Mark Twain
Marie Drobin, Lori Palmer and Gregory Simmons.
The submission that came closest to home for me was that of partially disabled Canadian Patricia d’Addario. It is the account of yet another OVDI victim who acquiesced and is paying $78,000 of her family’s retirement savings for simply being unaware of the FBAR form. She obviously participated in OVDP 1, which forced examiners to brutally question every foreign transaction. Things have lightened up a bit in OVDI. We in OVDI are benefitting because the injustices that were done in OVDP 1 to Americans abroad have been recognized.
By the way, my submission went up two days after I sent it in. I think the queue was being managed in a Last In First Out (LIFO) manner.
Not that Lisa!,
It can never be possible for any of us to ever get past the stage of anger and depression and into “acceptance” after reading Patricia d’Addario’s submission.
Bloomberg is now covering the story too:
Americans Paying Up Wherever They Reside Beseech Congress
The reporters contacted Earl Blumenauer and Devin Nunes again, but their answers are too vague. It sounds like they don’t know what to do.
From Somewhere:
“I am an American Citizen who, like many, went overseas on an adventure 15 years ago. Life happens and I met my current spouse (non-American) and we live and try to create a secure life for ourselves.
Every year I am faced with a mountain of paperwork to do what no American in the US would have to do, and no other person of non-US nationality would ever be required to do, regardless of where they lived: that is to settle my tax obligation in my residence country then file and pay again to the US, as well as to report on every account and every cent that I have.
I’ve been refused banking service and have had one bank close my relationship, claiming it had become too complicated to serve Americans.”
From Australia:
“Between the rather frequent penalty of $10000+ fines for getting something wrong and the (expensive) complexity of being caught between the tax laws of the US and Australia, I feel like I am being persecuted for marrying an Australian and choosing to move to his country.
I have found that the US tax treatment of expats to be in contrast to everything I thought America stood for. Most of us who are living abroad are just normal citizens, trying to live our lives, and I wish the American tax system recognized this.”
From Switzerland:
“I have been personally affected by this situation inbcluding being refused banking services, having to comply with exceptionally complicated and onerous paperwork to prove my compliance with US Tax Law as well as the additional expense to have these forms certified by a US based accountant just so that I can have a local current (checking) account here where I have lived for over half my life.”
From Somewhere:
“How would the US respond if Iran or North Korea imposed these kind of reporting laws on people who had left those countries and become citizens of the US?”
From Canada:
“Citizenship-based taxation should NOT be understood to be a “minor” imposition on the lives of U.S. citizens abroad. It is a very significant factor in their lives.
In many cases, (even the most Patriotic of U.S. citizens abroad) are forced to choose between their non-U.S. citizen spouse and retaining U.S. citizenship. The problems of U.S. tax compliance are forcing some to consider renouncing their U.S. citizenship. Is this really what U.S. tax laws are intended to do?”
From the US Chamber of Commerce:
“As with corporations, the United States has long taxed the foreign earned income
of its citizens residing abroad, resulting in double taxation and disincentivizing the
hiring of U.S. citizens. Studies have shown that U.S. expatriates employed as managers
in foreign affiliates of American worldwide companies are a powerful driver of U.S.
exports, so this practice significantly undermines the global competitiveness of
U.S. exporters. No other country taxes its citizens working abroad, and the any
transition to a territorial tax system should take this into consideration and end this
damaging practice.”
From France:
“The tax laws and regulations concerning overseas Americans ignore the reality of long-term or permanent residents abroad whose fiscal environment is totally different from domestic Americans who invest abroad.”
From Norway:
“I already pay a very high tax rate to the Norwegian government as I live and work in Norway. Having to pay tax to the American government as well causes undo stress and affects the quality of life for myself and my family as my average income already does not stretch so far here in Norway.
This dual taxation system doesn’t make it worth working to excel when one has to pay taxes to 2 different countries. I personally feel tax burdened and stressed by this system and feel almost like I am being punished by the US government for living and working abroad.”
From Somewhere:
“After eighteen years of living and working abroad and filing/reporting as required by US law, I find myself unable to obtain investment and banking services that I need. In the past year, I have been refused services by two institutions as I attempted to find a place to invest my savings. As I investigated investment in mainstream funds I found that many simply exclude US nationals. The choice for me, as an American, is a local savings account or nothing.”
Ok, my humble submission has been posted now. Of course, as Bloomberg argues, this accomplishes nothing, but at least we made some effort. 🙂
http://www.bloomberg.com/news/2013-04-24/americans-paying-up-wherever-they-reside-beseech-congress.html
From Sweden:
“When I first moved overseas I was proud to be an American. This pride has decreased with each passing year of increasing paperwork burden. Currently the only way to escape the incredible burden is to lose my citizenship. However, it is illegal to renounce US citizenship for tax reasons.”
From Spain:
“Exposure to double taxation or increased tax burden – there are different taxation rules: for ex, Spain has some tax benefits (non-taxable items) that are then taxed in the US. The current deduction for taxes paid abroad to avoid “double taxation” does not avoid it- I pay about 25% more taxes between the two countries than if I only declared in one country (the USA does not deduce the full amount of taxes I pay in my country of residence).”
From Somewhere in Europe:
“Banks won’t handle our investments, and we cannot fully benefit either from the US 401k/IRA retirement plans or their local equivalents, as the tax agreements don’t recognize them. Social security benefits and pension plans are also penalized due to differences in the two systems. In short, the cost and complexity are growing, and have led many overseas Americans to renounce their US citizenship. All this because of out-dated laws that don’t reflect the reality of an increasing number of Americans overseas.”
From Somewhere:
“I am concerned for the impact these regulations and potential penalties will have on myself and my family members who live abroad, even those who marry into our American family and never reside in the USA. We face unduly invasive and burdensome reporting duties, beyond those of resident Americans, and in many cases the reporting requirements violate the laws of our resident countries.”
From Somewhere:
“FATCA was supposed to uncover secret offshore financial accounts of wealthy
Americans residing in the US who do not pay their due share of taxes; not to destroy
the lives of honest law-abiding Americans living abroad! The US must immediately
join the rest of the world by repealing or revising FATCA so that it won’t apply to
Americans living abroad for several years. The US must immediately approve the
RBT proposal submitted by American Citizens Abroad (ACA).”
From Canada:
“A move towards a residence-based system, like the rest of the world, would resolve the issues of FATCA and FBAR while creating a simpler and fairer system for Americans living abroad and increasing more tax revenue than the current system, which wastes compliance resources for very little return.”
From Somewhere:
“If one of your family members walked a mile in an ex-pat’s shoes I am sure you would wonder why this situation has not been properly addressed to date.”
From Canada:
“I am not evading taxes. I have lived and worked in Canada since 1977 and am fully compliant with my local tax authorities. I have no particular desire to disassociate myself with the US, where I lived as a child and where some of my family still lives, but I feel I have no choice but to renounce my US citizenship as soon a I can.”
From Somewhere:
“… large companies have specific policies in place to limit the number of Americans they hire into overseas positions; and in several cases I have heard of, US based companies aim to eliminate all of their overseas American expatriates, for one reason…they cost a lot more to hire than non Americans because of the unique aspects of the American tax code.
Small American Owned overseas Businesses are largely excluded from these same tax advantages available to large companies and in fact they or their owners are also punished just like American individuals overseas.”
From Finland:
“the Finnish income taxes that I pay are almost double the US income tax liability. However, due to how the IRS tax calculations are done on the 1040s (and other IRS forms) I am only able to apply a smaller percentage of these foreign Finnish taxes against my US tax liability amount – which essentially results in double taxation.”
From Somewhere:
“Until March XX, 2013, I was a US citizen living abroad, paying US taxes, and obeying all laws. However, thanks to the taxation of US citizens and especially the prohibitive penalties for possible errors in filing taxes, I voluntarily renounced my citizenship. Taxation was the main factor in my decision.”
@Shadow Raider and @SwissPinoy Thanks for the Bloomberg article it is a good one. The issue is certainly getting press, but change is really hard to effect.
I am not sure what the costs are if RBT is implemented. Most Americans do not owe tax. Can anyone clarify what the Congressman is referring to when he states that? Does he mean it will cost him votes as most homelanders do not understand this issue?
I sent those Bloomberg reporters who are on my mailing list, and email thanking them for highlighting this story. We need more reports like this in the media, as every little bit of light helps!
@AbusedExpat
Thanks for continuing to put up those snippets out of the submissions. This is a GREAT resource to point reporters too, and I DO!! Really appreciate it.
From Canada:
“I am double-taxed on my earnings, and that is simply unfair. In addition, I am afraid to set up a bank account for my son, who also is a US citizen. He is 9 years old, and he should be able to save his money without worrying about filing tax forms, don’t you think?”
From Sweden:
“Today, US citizens are inferior to citizens of other countries. Other countries only tax their residents, whereas USA taxes its citizens and persons wherever they live. This is a serious disadvantage to US citizens versus citizens of other countries.”
From Somewhere:
“Citizens of no other country in the world find it necessary to renounce their citizenship in order to survive residing and working in a country other than their own. This is clearly a total disregard for the United Nations Declaration of Universal Human Rights which guarantees that every person shall have the right to freely leave and return to any country, including their own, which was ratified by the US Senate.”
From Canada:
“Our daughters, age 19 and 25, are unable to comprehend any rational for them needing to file annual tax returns, FATCA and FBAR reports and as parents, we are running low on reasons as well. They are considering renouncing their USA citizenship which would be very upsetting to us and also serve no purpose to the USA public.
In fact, with the demographic trends predicted for the future, the USA may find itself regretting having lost so many of our daughter’s generation (children born abroad to USA parents) who gave up their USA citizenship out of despair.”
From Switzerland:
“In 1776, the United States declared independence because the mother country on the other side of the ocean was imposing taxes on the colonies for the benefit of England. Resentment started when Britain tried to enforce the Navigation Act after 1763. Resentment increased with the Stamp Act in 1765, a way for Britain to tax the colonies. The British Tea Act of 1773 led to the Tea Party and we all know the outcome – the American Revolution and independence crying out “no taxation without representation”.”
From Denmark:
“I am an American citizen who has lived in Denmark for 23 years. People like me file “off-shore”
because we live outside the US, not because we are trying to escape our responsibilities as US
citizens. But regulations to catch tax evaders are applied blindly to us – and quite frankly, it feels
like a slap in the face.”
From Switzerland:
“I do not have access to the advantages of any tax free savings accounts. I am debarred from holding a 401K account and am subject to US tax on any overseas equivalent accounts.”
From ACA:
“For Americans abroad, U.S. tax filing is highly complicated… To ensure compliance with U.S. law, overseas tax filers generally engage a tax lawyer or accountant knowledgeable in both local and U.S. tax systems. Such specialists are expensive and in many countries are almost impossible to find.”
@NotthatLisa
Thanks for finding the Patricia d’Addario submission. It was not filed under International. For that reason, I suspect it was missed by many. I encourage everybody to read this and reflect on it.
http://waysandmeans.house.gov/uploadedfiles/patricia_anderson_daddario.pdf
She was in the 2009 OVDP. She is also obviously not the kind of person that OVDP was intended for. Yet, the IRS allowed her to stay in OVDP and was a willing perpetrator in the:
– rape of this woman’s finances
– rape of this person’s family
– rape of this person’s health
And, after their experience in the 2009 OVDP, the IRS continued with OVDI (2011), once again making no distinction between the minnows and whales.
Then after continuing the 2011 rape and pillage, they reopened the program in 2012.
As IRSCompliantforever says:
“It can never be possible for any of us to ever get past the stage of anger and depression and into “acceptance” after reading Patricia d’Addario’s submission.”
Last night I spent a very pleasant evening with some visitors from the U.S. The people in the U.S. are good, decent people. Their government is completely out of control, doesn’t represent any American citizen anywhere, and is on a collision course with the rest of the world.
I also note, once again, the very familiar narrative of somebody calling up the “U.S. based lawyer” and being told to go into the OVDP/OVDI. Stay away from U.S. lawyers!
When the history of America is written it might include the following excerpt.
“In 2008 the people of America elected Barack Obama. He was a man who promised them “change we can believe in”. In a manner similar to the IRS OVDP “Bait and Switch Program” of 2009, the administration of Barack Obama delivered “change we could never believe possible”. This change included terrorizing disabled U.S. citizens abroad into turning their life savings over to the IRS for not filing forms they didn’t know about. Because of this and similar examples, the U.S. lost all credibility and become the object of ridicule, scorn and disdain.
And that Dear Reader is how the United States of America ceased to be a world power. It still exists today and you can get a VISA to visit it. Make sure you visit the “PFIC Memorial” in Washington, DC.” Be careful of the U.S. residents begging you to take them with you when you return home.”
Thanks Just me.
It would be really great if somebody could consolidate the snippets into some sort of Expat Report to Ways and Means Directory which could perhaps then be e-mailed to interested journalists.
These first hand accounts are the stuff journalists want to write about and it is now all available on public record.
Also, the discrepancy between the Treasury and FBI figures regarding the numbers of renunciants should be pointed out to journalists as well. It reeks of manipulation/cover-up and is a story all by itself.
@ Not that Lisa!
Thanks for pointing out Patricia d’Addario’s submission. I’ve been collecting all of the international pdf files and I either missed that one or it was just posted today. It made be want to borrow Marg Delahunty’s sword (for non-Canucks, she’s a character from a Canadian TV series) and force the heartless, thieving b-turds at the IRS to return every penny of what they stole from this woman. Nobody can restore her LCUs or her health or her faith in a fair and just world though. I am so angry right now that I don’t want to write to any politician or publication — I want to DO something and that fake sword I mentioned was just to keep DHS spooks diverted from my actual thought crime. This is the woman who needs to be listed at the top of the class action suit when Flaherty signs that pending IGA. This is the woman and others we don’t even know about yet who we need to fight for.
@ Abused Expat
Thank you for putting together those excerpts. It helps to have an easy to read overview of the now overwhelming number of Ways & Means submissions (around 200 I think).
@Not That Lisa!, IRSCompliantForever, USCitizenAbroad,
Thanks for highlighting this example of travesty. That there is no recourse or justice is, again, immoral; shameful. Who is accountable?
What the Congressman must be referring to when he brushes aside the brutal way in which the US treats its citizens who live and work abroad reveals perhaps that the blood which flows in his veins contains traces of the DNA of Nero, the ancient emperor of Rome.
“Throw them to the lions! They don’t deserve to live.”
There is no other way to describe it. Even if such could afford to pay taxes simultaneously to two different governments on the same income under totally different tax laws and systems, they are required by US law to violate the laws of their country of residence (of which many are for reasons beyond their control also dual citizens) in order to comply with US law. Choose ye this day which prison system you judge you have the best chances of surviving because in order for you comply with the laws of one country you must violate the laws of the other.
Note 14 for Dual Citizens printed in every US passport warns US citizens that when they are in that other country they may be subject to the laws of that country which regards the person to be also a citizen of that country, and that this may hamper the efforts to provide US consular protection to dual citizens in the foreign country of the other nationality. It goes to advise dual citizens who encounter problems abroad that they should contact the nearest US embassy or consulate.
What this note does not state is that as a US citizen living and working abroad they will likely be required to willfully violate foreign laws in order to comply with US tax laws and that they should not contact a US embassy or consulate if they are placed under arrest for violating either foreign civil or criminal law in complying with US tax laws, because they will receive absolutely no help, sympathy nor assistance from the US.
The time has come that this clear warning also needs to be added as a note in US passports.
I just reread my last comment and apparently my anger affected my spelling cortex. It’s Marg Delahunty not Dehahunty. I had even looked her name up and still couldn’t get it right. Doh! Now I have to apologize to the Princess Warrior too. Maybe this will do …
@AbusedExpat
In a week, I will be in Sydney, trying to avoid my father-in-law, and might have sometime to devote to what you suggest! 🙂 That said, just sending journalists to this comment thread, starting on Page 1, should be an eye opener for many who have not considered what Citizenship taxation, and the IRS jihad plus FATCA mean.
Use this link, so they don’t have to keep paging back to get to the beginning…
http://isaacbrocksociety.ca/2013/04/17/excellent-submission-to-the-ways-and-means-committee/comment-page-1/#comments
@swisspinoy
I agree, if congress can accomplish that simple task, many problems would go away.
Would someone send Carolyn Mahoney our collection of sad anecdotes, to help her in her effort “to put focus on the concerns and interests of Americans living and working overseas?”
http://americansabroad.org/issues/representation/supporting-hr597/
I think a copy of Patricia d’Addario’s submission and others like it from Canadians, should go to every single Canadian MP we contact re FATCA. Patricia is a Canadian, and yet, Canada allowed for the US extraterritorial financial assaults on Canadian citizens and residents. She was not protected. She was not warned or assisted. The Harper government wouldn’t let Eritrea continue to do this on Canadian soil – so why is it acceptable that Canada should let the US assault Ms. d’Addario and her family?
Let’s point out that what happened to Ms. d’Addario was pre-FATCA. If Canada signs an IGA, how many more will there be in her situation? And that will be with the knowing and willful complicity of the Harper government, the CRA, and the financial institutions – simply because of the curse of US birthplace, US parentage, expired greencard, or lagging behind as a snowbird.
@ badger
Do you know what the legal aspects are of passing along a Ways & Means submission to another entity? Is that person’s consent implied because the submission has been made public? I’m just wondering if some people were even aware that the submissions were going to be published.
Good point @Em. I assumed that because they were published online by the committee, that they could be shared with politicians and others.
Alternatively, perhaps it would be okay to share the link to the submission, title, author, date, and some excerpts?
Oh the irony…..
Himes Applauds Effort to Reduce Double Taxation of Occasional Commuters
May 17, 2012 Issues: Taxes
WASHINGTON, DC—Congressman Jim Himes (CT-4) today applauded House passage of legislation that will reduce income tax and reporting burdens for Connecticut residents who occasionally commute to other states. The legislation mirrors the effort of Himes’ Telecommuter Tax Fairness Act, which prohibits states from double taxing workers who telecommute across state lines.
“While we depend on income taxes to fund our roads, education, and other investment in our future, it’s not fair that some employees have to pay income tax to two states a time,” Himes said. “This legislation is a win-win for us: Connecticut residents who work in New York occasionally will pay less in income taxes, and the state will realize increased revenue.”
The Mobile Workforce State Income Tax Simplification Act limits the authority of states to tax the income of non-resident employees who work for a limited amount of time in the state, allowing such individuals to be taxed only if they work in the state for 31 days or more. The Congressional Budget Office estimates that Connecticut would gain revenue if the bill becomes law.”
Support for commuters crossing state lines from being double taxed, but where is the equivalent concern for citizens born and / or living abroad? Who have already paid one set of taxes to their country of residence and permanent home.