This article by Bloomberg is their reporting on the submissions to House Ways and Means Tax reform. It has been mentioned in multiple threads here at Isaac Brock, and was highlighted at ACA, so thought I would pull it out for better visibility. It merits comments and email to the journalist. I did send them one to thank them for drawing attention to the U.S. Expat plight, and provided the link back to the anecdotal snippets from other submissions like those @AbusedExpat has been posting.
Thought I would also highlight whitecats response to this story which caught my attention.
It must be a full moon or something because FATCA and the USA war on ‘tax cheats’ is getting to me more than usual. I posted this as a comment to this article:
OMG, Israel Jackson, you are so misinformed, and very rude. How many times have you told someone to shutup or called them stupid in your comments to this article? This alone shows your lack of intelligence and inability to think ethically, empathetically and critically.
The foreign income exclusion amount of 92K (or so) applies to ‘EARNED’ income only – meaning money you receive from an employer. It does not apply to any other sources of income such as pension income, investment income, unemployment benefits, disability benefits, etc. Try being a pensioner who is a dual citizen living outside of USA and you will be double taxed. Imagine being unfortunate enough to have lost your job and be collecting unemployment benefits – you will be double taxed. Try buying non-USA mutual funds in the country you live in – you can’t because USA considers these to be ‘passive foreign investment income corporations’ and taxes the hell out of them.
I was born in the USA to Canadian parents and left as an infant thus am dual from birth – not by choice. I have never been schooled or worked or invested in the USA, yet USA expects annual tax returns at the cost of a couple thousand per year, and annual FBARS for all my bank accounts which USA says are ‘foreign’.I live where my accounts are, so HOW ARE MY ACCOUNTS FOREIGN?
Unlike other Canadian citizens, because I am tainted with a US birthplace, I cannot take advantage of any of Canada’s registered savings plans – cannot save for retirement, cannot save for my kids university, and am required to jump through hoops every year to prove I owe little or no taxes. In addition I am required to report on every detail of every bank account with my name on it which are held in the country where I live and am a citizen of. I must spend thousands every year preparing US tax returns and ‘foreign’ bank account reports which are much more complicated than the reporting required by US citizens living in US.
Do US citizens in US have to prepare detailed reports of each and every bank account they have in US? No, but I have to report all my locally held accounts to the USA and hope to GOD there are no breaches of privacy of my personal information that might subject me to identity theft. Even the government of Canada does not require me to annually report the details of each and every account I hold.
I pay high taxes where I live already – higher than Americans in USA do. I want to be able to save for retirement so the Canadian government won’t have to pay to take care of me in my old age – I know USA won’t. Who will take care of me if I am not allowed to take advantage of my own countries registered retirement plans?
Why not renounce you say? Because, I never had a clue until now (at age 50) that USA even considered me a taxpayer. Why would I? It makes no sense to tax people who DO NOT LIVE in USA, never worked there, never earned income there, and never plan to live there. No other country does this. Since all the publicity surrounding FATCA, I discover I am in big trouble for not filing all these years, even though I have always paid taxes to the Canadian government. USA will not let me renounce unless I can prove 5 years of US tax compliance which requires paying 10′s of thousands in lawyers and accounting fees and risking PENALTIES for previous non-filing of ‘foreign bank account reports’ (aka accounts in MY country of residence).
Soon, thanks to FATCA, my own local banks will be required to send all the personal details of every account my name is on (including those held jointly with my Canadian only spouse) to the IRS because USA thinks it owns a piece of me and apparently anyone who is remotely connected to me.
Isreal Jackson and others with similar mindsets, before you whine about people not ‘paying their fair share’, maybe you should RESEARCH and try to understand what is really happening instead of blindly taking up the pitchforks and assuming everyone who does not pay taxes to the US is a witch that should be burned at the stake.
I want to thank Petros very much for his very elucidative comment just above. We fully agree with the practical problems, including having to fight for one’s rights, particularly under the gun of the dual pressures of banks (FFIs, or even of NFFEs) due to FATCA and the various bilateral IGAs now signed, being negotiated, etc. (notwithstanding Sen. Paul’s one- man senate boycott of these), and of border guards who do not know or want to believe an expatriation has actually occurred (legally). Surely most of our clients feel damned if they do and damned if they don’t. But I would like to make it clear that we do our consulting for expats here and there around the globe (not even just in Canada of course) trying to help them clarify their own particular needs and circumstances and find the best solutions for them. The choices are often grim, I fully concede. If that weren’t so, you would have no readers. We do work with other professionals and make certain our clients are advised to do the same, as soon as necessary, about any of the aspects of the expatriation process, both emigration and taxation, and even in other areas such as travel, entitlement rights and so much more. But we specialize in these things. We do offer strategies. And we only deal in things that are entirely legal, but there are choices and sometimes they make huge potential differences. And each expat’s situation is remarkably different from someone else’s. I could not responsibly write generalizations for this forum, or any other, and I will not try to do so. No one could or should.
For the expat who has relinquished (or, by the way, renounced at the embassy), they may have a long wait for a CLN, we know. They may be denied, even for Sect. 5 renunciations. You can not rely on what the DOS says about these things any more can you believe the number of expatriations reported publicly. They are the adversary in all of this, and they have a very definite axe to grind. We do advise on what to do in the interim, before the CLN arrives, and the advice varies from case to case and from need to need. For FATCA and related issues, of course the CLN is the sine qua non of expatriation, the way this thing was set up, however imperfect that may be. However there are often ways to satisfy banks, etc. of expatriation even before the CLN arrives, and we deal with this all the time. If one waits for appointment after appointment, the time crunch only gets worse. Relinquishment actually speeds up that process often, and, anyhow, has definite other advantages too which can hardly be over- emphasizsed, and I think you would agree.
Someone has to fight for what is right and legal, or everyone suffers. This is the course to force the DOS to change its ways, something most of the readers agree is sorely needed, and soon. (The IRS is yet another story in all of this) If not, everyone will be steered to renunciation, with delays and with all of its grave inherent dangers. Renunciation, or relinquishment by (voluntary) appointment at an embassy is not benign, and it too is fraught with dangers. Reading here that “it is so easy” belies the full story for many expats. With dangers as to banking threats, forced disclosures, collateral disabilities under the laws of the countries of residence of our clients, problems for non- US spouses, problems with employers of these US expats, severe potential penalties, disruptions to one’s life in so many ways, and on and on, we can and do offer real value at a quite small and affordable cost.
Since you asked, I would commend, for example, that in Fox v. Clinton, 684 F3d, 67-2012, a recent case, that US Court of Appeals three-judge panel unanimously found that “the Agency’s (DOS’) denial of the CLN [this after a non- embassy visit relinquishment, totally without an interview or questionnaires or other forced requirements of any kind] was not based on reasoned decision making” and further said that “the judgment reached by the Department of State [in this case] (was) neither logical nor rational.” The DOS was forced to pay all attorney’s fees in this case, it might be added, because, at least sometimes, even this degree of machinating to get what is just and right can be rewarded in the end by entirely legal means. We follow these things for the benefit of our clients. The point in this, and other actions, was to try to disrupt totally arbitrary and capricious, if not worse, actions by DOS in expatriation matters which are not even close to being consistent with the (expatriation) law(s), and which deprive citizens of important rights, endangering them accordingly.
Les Fant, http://www.expatriationcopesthesia.com
I’d like to remind everyone that people with green (kryptonite) cards cannot “renounce” something we never had, i.e. US citizenship. We are called aliens and are treated as such. We are expected to bow down and grovel and offer perpetual tribute to the almighty IRS, no matter where in the world we live. I followed the advice of the Calgary consulate and mailed an I-407 (Abandonment of Legal Permanent Residence Status) to USCIS (address provided by the consulate) which included my long expired green card. Absolutely nothing happened. It has now been a year and I don’t believe I will ever get their official stamp of approval. I have sent numerous enquiries as to my status but to no avail. I have decided that I will not chase after them anymore. Therefore I will remain in status limbo for the rest of my life. I am not an American abroad, I am a Canadian at home and that’s it. Period. They can TD F’n 90 themselves! And lucky USA … I will NEVER darken its border door.
So how can can a green card holder prove that he abandoned his green card?
If not, what should the answer when the bank asks if she ever had a green card?
Just lie and say no, since there can be no proof that the person abandonned it?
This is just plain ridiculous. However, the problem WILL arise for expats who want to go home. i.e. they transfer a big sum of money to a bank back home. The bank obviously knows that the person had a life in the US and likely a green card. So now what. They’re going to be denied services in their home country just because there is no official paper that say that they abandoned their green card?
@Chris: So how can can a green card holder prove that he abandoned his green card?
Some US embassies ask you to surrender a green card in person, others will let you do it by mail. In both cases you hand over a completed I-407 and normally get a receipted stamped copy back. Perhaps in a week or two if handling by mail.
Em’s case appears to be… special. Nobody knows why. Probably USCIS just doesn’t know what action they should take when someone tries to surrender an already long-expired green card. It is useless for immigration purposes and immigration is their only focus, so doing nothing could seem entirely reasonable to them. Giving them the benefit of the doubt… they might even be mostly unaware that an official notice of loss of LPR, even one long ago useless for immigration, could have other uses.
@ Chris
Wish I could answer those questions but I can’t. I have proof my I-407 was received but as far as I know after that it fell behind someone’s desk or accidentally into a shredder. Like I said, I will remain in limbo until the day I die. I’m aging in dog years right now so it probably won’t be a problem for too many more years. Besides, Canada has plans to Cyprus our savings so it will be interesting to see which government gets to our retirement fund first and when it’s gone, it’s gone. For now there’s a roof over our heads (no mortgage, no debt of any kind) and food on our table so we have to be grateful for that.
For those interested in the Fox v Clinton case that Les Fant references, the web link for the court decision is here:
http://scholar.google.ca/scholar_case?case=2642777892278125181&q=Fox+v.+Clinton,+684+F3d,+67-2012,&hl=en&as_sdt=2,5&as_vis=1
I suggest anyone interested in pursuing the “do it by mail” approach read this case decision very carefully and judge for themselves how relevant it might be in their own case as it pertains to that proposed approach to getting a CLN. I’m not a lawyer and I’m not about to give anyone legal advice, but since Fant has quoted the case, I think it’s fair to steer readers to the court decision for their own perusal and consideration. I’m not saying any more on this, and I stand by everything I’ve said previously on this discussion thread on this subject.
@Schubert,
I am not a lawyer either but I would definitely have serious reservations about suggesting anyone “do it by mail.” Perhaps I am missing something but instead of all this legal adventuring, why didn’t Dr. Fox simply go to the consulate, advise that he had committed an expatriating act and get on with it?
I take exception to the notion that the DOS is the villian in this situation. Many of us had completely reasonable experiences at the consulate and encouraged others to do so. IMHO, it is the IRS and the Congress with whom we have issues.
I would expect if this approach to relinquishing was possible, we would have heard about it from other sources by now (after 19 months of reading and researching, for me). I have to admit that I find this statement “we can and do offer real value at a quite small and affordable cost,” a bit disturbing. Why is it necessary to bring this into the discussion?
I’d say that the DOS acted correctly in the Fox v Clinton case. All individuals should be treated the same regardless of religion. When I “returned” to Switzerland at the age of 10, I learned that I was a Swiss citizen and thus my situation should be the same as anyone who “returned” to the middle east or any other place.
Ah too bad, I thought this was gonna be about Kaufman v. Gonzalez or one of its many subsequent actions.
@Les Fant:
You seem to be running a business which appears to be unregistered in Ireland, if that is where it is located.
A search on the Irish commercial register for “Fant”, “Expatriation” and “Copethesia” yields no results.
http://www.cro.ie/search/CompanySearch.aspx
– I grant that it may be incorrect to assume that your business is physically located in Ireland, although your website is registered there (see next item).
The owner of your website “expatriationcopethesia.com” is listed as “WhoisPrivacy Ltd.”, which effectively hides the owner. WhoisPrivacy Ltd. replaces your actual contact details with those of the Whois Privacy service provider, i.e., Whois Privacy Ltd, according to their website.
http://whois.domaintools.com/expatriationcopesthesia.com
http://blog.blacknight.com/sometimes-you-want-to-wear-shades-whois-privacy-now-available.html
So, you/ your company is not registered in the Irish commercial register and the owner of your website remains confidential behind a service provider that protects your identity. Meanwhile, your website is asking for personal details from the start and your responses seem to contain snake oil. Just who are you?
He is Darth Vader ….. and let the force be with IBS !
@Les Fant
For the expat who has relinquished (or, by the way, renounced at the embassy), they may have a long wait for a CLN, we know. They may be denied, even for Sect. 5 renunciations.
I’ve never heard of anyone who renounced at a consulate being denied a CLN. (Yes, it often takes a long time, but eventually it will arrive). What reasons were given by the DOS in those cases of denial which you refer to?
@notamused, I received a phone call some month ago from a person whose relinquishment was 30 or so years ago, who went to a Consulate in Canada to request a CLN, and the examiner used many stall tactics and requested a second appointment many months later. Eventually the person had to consult a lawyer who wrote a letter; then the relinquisher took it to the next level (supervisor) and that Consulate has apparently now changed its policy. In any case, the person took the case to another consulate in Canada and received a CLN eventually.
This is to say that abuse happens and if a person relinquishing doesn’t know their rights, the State Department can walk all over them. Capricious, arbitrary and power mongering people can end up in US government jobs–just look at the TSA. A service like Les Fant’s could potentially help people who have no support network because they are not readers of Isaac Brock. But readers here have no use for such a service because all the information that they need to relinquish their citizenship is right here and it is free.
@Petros
Yes, I know there are no guarantees that a reliquishment will be accepted; I was referring to renunciations. Not to say that it can’t happen, but I’ve never heard of a renunciation being rejected and would be interested in hearing the reason(s) in those cases Les Fant is referring to.
@ Notamused
Weber. Renunciation. Issue was mental capacity.
http://law.justia.com/cases/federal/district-courts/district-of-columbia/dcdce/1:2012cv00532/153693/9
Fox. Relinquishment. Issue was DOS claimed that the person could not have relinquished upon obtaining Israeli citizenship due to Israel’s Law of Return, whereby a Jew born outside Israel has the right to Israeli citizenship. Court ruled in Fox’ favour and he now has his CLN.
http://caselaw.findlaw.com/us-dc-circuit/1603140.html
For those who don’t want to read raw judicial rambling, I posted my own smartass comments about Weber last year. In particular I was very concerned about some of Judge Huvelle’s obiter dicta in that case.
http://isaacbrocksociety.ca/2012/07/28/denial-of-cln-to-would-be-renunciant-upheld-by-dc-district-court/
Going to court is a very bad way of asserting your rights when the judges themselves clearly don’t understand the law.
Patrick Le Fort @p_le_fort 29 Apr
Being American in Switzerland… And Renouncing US Citizenship. Radio Report Featuring @USEmbassyBern @ACAVoice http://www.rts.ch/la-1ere/programmes/quinze-minutes/
Thanks to Just Me for link to Swiss radio RTS program “Avant, j’étais citoyen américain”. The following is a quick translation of one part of the written discussion on renunciations:
“Dual citizens rushed to the embassy to renounce their citizenship. Estimates by the Consul General were that there were three times more renunciations in 2012 than the previous year*. According to figures of American Citizens Abroad, relying on public statements by the ambassador, about 900 dual-citizens and green card holders waived their citizenship last year.”
* – Infoswiss.ch reported that there were 180 renunciations in 2011.
http://www.swissinfo.ch/eng/swiss_news/More_Americans_give_up_passports_over_tax.html?cid=33824180
The figure of 540, which is 3 x 180 mentioned by the Consul General, is similar to the extrapolation of the 411 renunciations for the period 1-9 2012, also mentioned in the Swissinfo.org article, x 12/ 9 to annualize: 548 renunciations at the US Embassy in Bern for 2012.
@Innocente
Ambassador Beyer may just be handed a pink slip soon. He’s getting a little too sympathetic with America’s most heinous tax evaders.
Below is a translation from French of the RTS Swiss radio report:
“I used to be an American citizen”
A report by Patrick Le Fort, directed by Sandro Lisci.
Jacqueline Bugnion, retired but very active, struggles to defend the interests of Americans abroad. (Picture of her working in the garden).
“Are you American? Wouaaah!’ The blue passport makes the eyes of relatives shine. A little envious, a little jealous. And yet, he did nothing for it: born on US territory to Swiss parents, returned to the country less than two years later. With this memory of his birth place: a US passport in addition to his passport with the white cross. Only problem is that in Switzerland the US nationality becomes a burden.
Thirty years later, the American dream is not dead. But it suffered some damage to its image. The IRS, the US tax authorities, has become much more severe with those who do not meet their tax obligations. The United States, it should be stated, is one of the only countries in the world to claim taxes on each of their fellow citizens, wherever they are on the planet. Although Washington takes a share of taxes abroad only from a certain level of income, there are significant costs. Virtually all the Americans of Switzerland appoint a tax advisor to complete the return. Cost: between CHF 700 and 1,000, sometimes more still.
Cumbersome procedures:
If there is a reason… Fatca, this tax agreement signed by Bern, forcing Swiss banks to deliver some data from their American customers to the IRS. Procedures are cumbersome, expensive, risky. Consequently, some banks no longer accept American clients for wealth management services.
The relationship is over for many Americans. The dual citizen rushed to the Embassy to renounce his nationality. According to estimates of the Consul General himself, they were perhaps three times more in 2012 than in the previous year. According to figures of American Citizens Abroad, who rely on public statements made by the Ambassador, about 900 dual citizens and green card holders renounced their citizenship last year.
A sometimes difficult step to make:
For those who have inherited US citizenship, without having lived a long time across the Atlantic, the break is easier to make. On the other hand, for those who have built their lives here, naturalized Swiss, but have their roots in the United States. For them, renouncing US citizenship is sometimes still an open wound.
http://www.rts.ch/la-1ere/programmes/quinze-minutes/
@bubblebustin
According to a newspaper report about two months ago, Beyer has not been re-appointed but, as I understand it, he is still in office until his successor is named. He stated he planned to return to the US in around May (this month) to lobby to improve US laws impacting Americans abroad. Sorry not to have a link to the interview or article.
He did a fair job of managing a difficult situation in his four years. From my perspective, he was far better than the two previous Bush appointees and appeared to take the job seriously.
@bubblebustin
Ambassador Beyer is having a going away party tomorrow and will complete his assignment in June, according to an interview in today’s Swiss Tages-Anzeiger newspaper:
http://www.tagesanzeiger.ch/schweiz/standard/Die-USA-wollten-die-Schweizer-nie-unfreundlich-behandeln/story/22832614
In the interview, he states his most satisfying accomplishment was obtaining Switzerland’s agreement to accept two Uigur prisoners from Guantanamo for re-settlement. He appears to regret the collateral damage to overseas Americans due to Fatca but also makes clear that US tax evaders must be brought to justice. Blah, blah.
Go home Ami and take your embassy with you. It uses the local infrastructure without paying its fair share of taxes.
@innocente
Thanks for the info. Although Ambassador Beyer was 15X better than our own Jacobson, whose comments may still be causing harm to US persons abroad. He grossly misjudged the USG’s intent by saying “We are not unreasonable. We are not unsympathetic. We are not irresponsible” and suggested that we “sit tight”. The cruelty is palatable when in the absence of an abolition of citizenship based taxation they don’t at least to provide a complete amnesty for USP’s abroad. Sadly however, amnesties or displays of compassion are counter to the direction the US is going in its Draconian pursuit of those who might be trying to wriggle out of their responsibility to their masters.
I suspect with Beyer back in the US, USP’s abroad will be out of sight out of mind for him.
@bubblebustin and others, check this out:
@anon5percent was generous enough to alert us and share important information about ongoing Streamlined program changes (at the behest of the Taxpayer Advocate) on Jack Townsend’s site:
http://federaltaxcrimes.blogspot.ca/2012/04/opting-out-3-4412.html#comment-879851153