Number of Americans who #RenounceCitizenship Surged in 2nd Quarter http://t.co/I84MIgTFbN – Will encourage #americansabroad to renounce!
— U.S. Citizen Abroad (@USCitizenAbroad) August 10, 2013
This is a rather disappointing article from an author who has written on this issue before. Why disappointing? The general tone seems to equate Americans Abroad with tax evaders and terrorists (whatever those are). That said, it’s one more article reporting the increasing numbers renouncing U.S. citizenship.
For example:
The U.S. launched the tax crackdown after the terrorist attacks of Sept. 11, 2001, and ratcheted up its efforts after 2009, amid evidence that UBS AG UBSN.VX 0.00% and other foreign institutions helped U.S. taxpayers hide assets.
Some taxpayers have applied for IRS limited-amnesty programs, in which they pay stiff penalties for past noncompliance but avoid prosecution.
Tax lawyers say the crackdown has ensnared smaller violators who weren’t intentionally evading U.S. taxes.
In addition, a law enacted in 2010, the Foreign Account Tax Compliance Act, or Fatca, requires foreign financial institutions to certify they aren’t hiding U.S. taxpayer assets, which lawyers say is leading some to reject U.S. customers.
Taxpayer penalties for failing to report assets can be severe, including up to 50% of an account balance for each year.
Although there is some suggestion that renunciations are caused by the time, expense and fear of compliance burdens, these suggestions are “too little and too late” in the article (at least that’s my interpretation). Therefore, I would suggest getting over to the comment section and offer them an “IBS Educational Seminar” on the impossibility of U.S. citizenship abroad.
Interestingly there was one rather good comment from some guy named Roger Conklin (amazing how much he seems to know). He argues, rather convincingly that a move to RBT/Territorial taxation would be good for the U.S. economy.
The US is one of the two nations of the world that belong to that very exclusive club of countries that subjects its citizens to citizenship-based taxation. The only other member nation is Eritrea, a” thriving” democracy in Africa. These two nations, in addiction to subjecting all of their residents to taxation on their world-wide income, also subject their citizens to homeland taxation if they live and work abroad, as if they never left home. Both US and Eritrean citizens living abroad are simultaneously subject to the tax laws of both their country of citizenship as well as the country where they reside. Both exert their “right” to assess and collect taxes from their citizens residing within the sovereign borders of every other nation. All other nations tax the world-wide income only of their residents, regardless of citizenship.
The UN Security Council condemned Eritrea by Resolution 2023 (2011) in December 2011 on the basis that its citizenship-based taxation violates the UN Universal Human Rights Declaration by depriving its citizens of the right to freely leave and return to any country, including their to own. They can leave, but they must continue to pay Eritrean tax no matter where they go. Heaven help them if they return home for a visit not being current in their tax obligations. Susan Rice, then US Ambassador to the UN, led the charge in securing this condemnation, thus asserting the right US to be the only nation permitted to violate the territorial taxation sovereignty of other nations with impunity.FATCA obligates all foreign banks, at their own expense, to violate the privacy laws of their countries by providing fully-detailed annual reports to the IRS on all of their accounts with any US-person ownership, including jointly owned by their foreign spouses and relatives, in English with foreign currency values converted to equivalent dollars. Prominent US citizens living abroad, having been born in the US, include the King of Thailand, the mayor of London, one dual-citizen Canadian provincial premier and 6 members of the Canadian parliament as well as the 2 adult children of recently-deposed Egyptian president Morsi, as well as all children born abroad to one US parent who speak no-English, have never been in the US or held a US passport who likely do not even know they hold US citizenship. All are subject to US taxation and FATCA. There are 16 IRS instructions for US citizens abroad with 7,332 pages, plus 667 pages of tax forms. The FATCA instruction for foreign banks has 544 pages. The middle-class US citizen abroad can expect to pay the equivalent of one month’s wages for competent professional assistance in filing his US tax return, even though foreign tax credits in very high tax countries may totally offset his US tax obligation. Citizenship based taxation is not a revenue generator for the US Treasury, but a punishment for Americans residing outside of the US.
It has become virtually impossible for the US citizen to survive living abroad, leaving them with the choice of citizenship renunciation, or abandoning their foreign spouse and family, shutting down their small business, resigning their job and relocating to the US to join the ranks of the unemployed. How this can possibly be in the best interests of the US defies explanation. No other nation punishes its citizens by criminalizing their living and working in another country.
Roger, it’s not “virtually impossible”. It’s actually impossible.
On a brighter note, the authors clearly believe that Canada is a country that is foreign to the U.S. This appears to contradict recent assumptions by the NSA which consider Canada part of the Homeland. The author’s note that compliance costs may be a factor in at least on Canadian renouncing U.S. citizenship.
The cost of complying with various rules and regulations can be steep even for people with small tax bills.
Carol Tapanila, who moved to Canada more than 40 years ago and is now retired, renounced her citizenship in November and appeared on the current list. She says her U.S. taxes amounted to about $250 last year and she didn’t take the step to avoid paying them.
Legal and accounting fees and other costs of making sure she was in compliance in recent years have added up to nearly $40,000, says Ms. Tapanila. “It is nothing but stress.”
And finally, we have the usual comments from our “friends” the cross-border professionals. Of particular interest is:
The U.S. is rare in that all income earned by citizens and permanent residents, even those living abroad, can be subject to U.S. tax, according to Bryan Skarlatos, a New York lawyer. The U.S. also confers citizenship on people who are born on American soil.
Note: the link was added by me and is NOT part of the article.
And an interesting acknowledgement from a former IRS prosecutor (could this be somebody worth reaching out to?):
The web of rules is “overly burdensome,” said Jeffrey Neiman, a former federal prosecutor who led the 2009 UBS case, which resulted in the bank’s agreeing to a $780 million settlement. He now is a lawyer in private practice in Fort Lauderdale, Fla. “You basically find yourself in this continuous nightmare.”
Note: the link was added by me and is NOT part of the article.
Your mission, if you choose to accept it, is to continue to educate these Homelanders, journalists, and U.S. based tax professionals!
bubblebustin, yes, people in Homeland really don’t understand that USC’s abroad aren’t receiving tax back benefits, which where the “gaming the system” thing comes from.
Really, they have little idea how being a USC and being permanently domiciled in a foreign country can even be legal. Not a surprise when the USG for all practical purposes pretends that dual citizenship doesn’t exist.
Of course, other govts don’t really comprehend the USG stance on dual citizenship either, which is what has led to this mess.
mjh49783, I was a major dissenter and caller of “bs” on the USG going back to my university days. Perhaps it was coming of age under Reagan? But it was a relief to me when I came to Canada and could simply dispense with all the rah-rah USA, which was pretty much forced on me as a public school teacher.
The only fear I have with relinquishing is that my child isn’t old enough to do the same for several more years (something that incenses her and when we finally take our oath, she wants it recorded so she can show it to the official at the consulate). I am probably being overly paranoid (a side-effect of being a former American) but I am uneasy with the idea of being free while Uncle Sam still have a paper claim on my kid. I just don’t trust them.
New article on The Hill. As usual, people are incorrectly assuming that those who are renouncing US citizenship have lived in the US their whole lives and are now physically leaving the US. Some praise them for escaping communism while others insult them for evading taxes. Ignorance is really irritating.
Today’s FT illustrates nicely how corporates handle expatriation equivalent:
August 12, 2013
US acquirers cut taxes by relocating to Europe after mergers
By Anousha Sakoui in London and James Politi in Washington
http://www.ft.com/cms/s/0/a4a88402-033a-11e3-9a46-00144feab7de.html
@Shadow Raider
It is my belief that there are two competing socialist ideologies going on in the USA, and that one of them is conveniently disguised as a conservative movement.
Yes, I do believe that corporate welfare, big government military spending, and taxpayer funded bank bailouts is just socialism in a different package. It is then wrapped up in the American flag, and shoveled onto the masses as patriotism and ‘conservatism’.
I got a response to my above ranting letter to US lawmakers from Rand Paul. For those who’ve never seen it, or have, it’s the latest edition of his FATCA form letter response:
August 12, 2013
Thank you for taking the time to contact me regarding the Foreign Account Tax Compliance Act (FATCA). I appreciate hearing your thoughts on this issue.
During the 111th Congress, Congress passed and President Obama signed into law, the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147). This legislation drastically expanded government involvement in the financial goings-on of Americans who live and work abroad. FATCA, the tax evasion provision in this bill, requires all foreign financial institutions (FFI) to provide a detailed report on American account holders to the Internal Revenue Service (IRS) beginning in 2014, or be subjected to a 30 percent withholding tax on income from U.S. assets. American account holders with more than $50,000 who fail to file a report with the IRS would also be subject to a 30 percent withholding tax. As a newly elected member of the 112th Congress, I did not participate in the debate of this law, nor would I have supported it.
Not only does FATCA allow the government to obtain a wide array of international banking records without evidence of such tax evasion, but the outrageous cost of compliance with this requirement has been estimated at $100 million per FFI. Rather than comply, many banks have refused to serve American clients and have begun shutting down their accounts. I have serious concerns with FATCA and that is why, along with my Republican colleagues, Senators Saxby Chambliss (Ga.), Jim DeMint (S.C.) and Mike Lee (Utah), I wrote a letter to Treasury Secretary Tim Geithner questioning the implementation of this onerous mandate. The response we received months later was wholly inadequate and all together avoided the questions we proposed.
I have long been a critic of government intrusion into the privacy rights of Americans. As a lead opponent of the May 2011 extension of the USA PATRIOT Act, which allows the federal government to engage in warrantless searches, I believe the right to privacy is critical to the preservation of other rights. We have to be very careful not to continue down the slippery slope that our current and previous Administrations has taken us.
I am fully aware of the effect FATCA is having on Americans overseas in addition to the burden of compliance costs on U.S. financial institutions. FATCA is a defective law that does not accomplish its objective of ending tax evasion. Furthermore, it infringes on basic constitutional rights, oversteps the limits of Executive power and unleashes a host of unanticipated destructive consequences. For these and other reasons, I have introduced a bill (S. 887) that will restore privacy to American citizens living abroad by repealing many provisions of FATCA. This legislation was referred to the Senate Finance Committee, of which I am not a member, where it awaits further consideration.
Rest assured as I represent the Commonwealth of Kentucky in the United States Senate, I will remain committed to defending the proper role of the federal government, as outlined by the Constitution, and defending the rights of all Americans citizens.
Again, thank you for sharing your concerns with me. Please do not hesitate to contact my office in the future regarding federal issues.
@bubblebustin, because the quarterly report just came out this is news now due to the much higher numbers. Many articles are being written. Most have head lines that miss the point but, it’s all about the clicks online so they are doing this on purpose to drive visits to the articles. They could care less that they are inaccurate. “Wealthy Americans Give Up Citizenship in Record Numbers” drives more traffic than say “U.S. Law Causes Rise in Renunciation of Citizenship”
We should strike while the iron is hot to clarify what this is. The more comments the more driven they are to write about it again and again. Since we have the facts and they don’t it’s a small chance to raise awareness until the next report.
just out on WSJ :
U.S. Expats Balk at Tax Law
American Citizen Renunciations Are Soaring
http://m.europe.wsj.com/articles/a/SB10001424127887323585604579007860126146566?mg=reno64-wsj
@FT, thanks. Already over there.
http://www.huffingtonpost.com/2013/08/12/americans-renounce-citizenship_n_3744166.html
By carefully omitting several facts and highlighting others the authors slanted the article about as far as they could have. Four hours old and already 645 comments. I scanned them and could not find a single one where the commenter had any grasp at all on the reality. What a cess pit that rag is.
I”ve been at Huffpo commenting. Some of the commenters are really lost as to the facts on what is going on here and happening to people. I’d like to think if they knew they would disagree with the way FATCA is being used to harm families abroad. Some I think would if they would actually learn about it.
I got some good response and some interest and some insults as usual. I wrote the author of that article.
Huffpo is a rag and the people who write there do so for the privilege of being able to say they write for Huffpo rather than actually get paid for their articles, so go figure.
I have no idea why anyone would think it was an honour to write for Huffpo! lol! it’s the fox of the middle. Kos is worse and more propagandized than the sheeple commenting there know. All of those sites are in the veal pen. They can’t write anything not pre approved or they will lose their access. TPM is not any better and I was viciously attacked there once so I won’t comment there even if the sun shines out of their posterior one day. Too bad Glenn Greenwald often links to TPM. UG! If you want to see the right wing equal to these sites go to Sodahead but, hold your nose just as you would on Huffpo. Scary stuff these U.S. comment sites. Hardly a fact to be seen anywhere.
@ AtticusinCanada
I share your opinion of the Puff Po. I only go there when I inadvertently follow a link to it and then I usually retreat before it has time to grind all the way open. Amazingly I began my journey into the alternative spaces of the internet at KOS but it wasn’t long before I detected the suppressive nature of that site (as in truth, that is). Amazing how the propaganda gets catapulted from both the left and the right. I don’t know how to deal with cognitive dissonance but I certainly appreciate your gallant attempts to set things straight with your comments so I’m going to hold my nose and go to Puff Po to see what you’ve written.
AtticusinCanada, when I was still freelancing, I had many a writer type friend who thought it a major coup to get something published there. It’s widely read and it’s considered very liberal. Writers who aspired to greater heights on the web desperately wanted at least one well-read Huff-Po piece.
The reality is that it’s a blogging sweatshop and that type of site needs all the content it can get. There are a lot of sites like Huff-Po that rake in ad money thanks to idiots who will write for free. I worked for a mommy blogging site like that but left for a paying gig (though it paid by the post and the pace was brutal (and we had to do a lot of extra crap like police the crazies in our comment sections), so I quit. And it wasn’t a hard choice given that the tiny bit of money I was making was being taxed dollar for dollar by the IRS. I paid so much in US tax that I didn’t owe Canada. It was crazy and it’s easier to not work/earn given the current madness. Fortunately we are in a position where that’s an option for me.
Huff-Po is the web version of tiny children chained to workbenches making runners for Nike except that the writer at Huff-Po are happy to be exploited and since they are getting paid – facts don’t matter.
@ AtticusinCanada
Good work! You actually got Dosadi on side. SueZBell is a write off I’m afraid. Thank you … and Steve Kraus too. I’m not sure I can stomach going though all nearly 900 comments but I got the gist of the problem at Puff Po and it is par for the course there I’m afraid. People dig very deep trenches to accommodate their misconceptions and protect them from truth attacks.
@ Yoga Girl
Your professional talents shine through here. So glad you are one of ours.
@Em I started out a Kos too but, as you said quickly saw some weird things going on. Some long time mainstay blogs like Riverdaughters were just shoved off on purpose when they didn’t agree with what she was writing. There was nothing wrong with what her stance was at ALL but, they were having a hive mind moment and she didn’t fit. She’s over on “The Confluence” now. Also the ability to rate up or down takes on scary attack mode at Kos sometimes. Just not worth it to get caught up over there. Dropped it like a hot potato about five years ago. Both Kos and Huff po are access veal pen blogs…they want that access. And surely don’t want to go outside the rulz of the blog conference memes..ever. So no truth there any more than any similar styled infoblog from the U.S. left or right.
Thanks for visiting at Huffpo…I waded back in when this issue came up. It’s not good over there at all..not as bad as TPM which I USED to enjoy. TPM is so vicious when you disagree with them they sound just like the Sodahead crowd they so love to think they are morally and intellectually superior to. lol. Both sides are circling the drain having arguments with talking points that are marketing tricks.
@AtticusinCanada, YogaGirl
Thanks for the interesting insight as to how some these blog sites work (or don’t).
@ AtticusinCanada
I don’t think I have ever read so many “door slamming” comments in one place before. UGH! You did well to remain so level headed — positively serene actually. The creme de la creme always distinguishes itself from the sour milk. Well done! I’ve never ventured into TPM and it sounds like I didn’t missed anything.
Robert Woods at Forbes…
Thousands Leave U.S. Over Taxes—5 Rules If You’re Tempted
I am too tired tonight to bother making any comments, but others are welcome. I am packing for a few days of time back in the mountains.
And Tax Girl at Forbes also did a story…
IRS Releases List Of Americans Hoping To Expatriate, Number Tops 1,000
She misses the point too
@Em yes, they were all about the door slamming weren’t they. It was hard to stay calm. I wanted to say “It’s people like you that make these others happier to renounce.” I just notice that they are so offended because they are SO insecure. It’s about not bursting the bubble, the myth that nobody would EVER want to leave us…ever, ever. Even if they have to lose their home and live in the street! It is truly brainwashing. It’s hard to get mad at someone so. so lost to reason.
Even if the U.S.said it wanted to murder your first born child born abroad they would STILL tell you not to let the door hit you. Nothing the U.S. does is any reason to renounce for them. And yet they are SO scared of the “socialist system” in places like Canada. LOL!
@JustMe enjoy your time in the mountains! My son will be home next week for a few days so I’ll go MIA then too.
@Just Me: “She misses the point too”. Want to get quoted in Forbes? No need to give out your real name. Just go write for Wikipedia, the source from which she cribbed pretty much her entire article:
Forbes: “It’s been widely speculated that most citizens on the list are leaving for tax reasons. That notion has been bolstered by the prior moves of such big names as Edward Tupper (yes, the founder of Tupperware), who bought an island off of Costa Rica to avoid taxes.”
Wikipedia: “Earl Tupper; Businessperson; Jus soli; Costa Rica; Tupper was born in Berlin, New Hampshire, and founded the Tupperware company in 1938. In 1958, shortly after selling his company and divorcing his wife, he bought an island off Costa Rica and renounced his U.S. citizenship to avoid taxes.”
Forbes: “It’s worth noting, however, that not everyone who makes the list is fleeing for tax reasons. You can renounce your U.S. citizenship for a number of reasons including running for office in a foreign country (like Andreas Papandreou who went on to become the Prime Minister of Greece)) or to retain citizenship in a foreign country that doesn’t allow dual citizenship. You may also opt to give up your citizenship to protest U.S. policies or actions.”
Wikipedia: “Key of reasons: (Blue) To take or run for a position in a foreign government. Spouses of foreign heads of state are included in this category. (Red) To naturalize as a citizen of a foreign country, or to retain citizenship in a foreign country disallowing dual citizenship. (Green) To protest U.S. policies or actions … Andreas Papandreou; Politician; Naturalized; Greece; A naturalized U.S. citizen, he renounced in 1964 to run in the Greek legislative election, 1964, and went on to become the Prime Minister of Greece.”
Forbes: “And while getting your citizenship back after you’ve renounced isn’t easy, it’s not impossible. Movie actress Elizabeth Taylor did it over a period of just over ten years. Taylor was a dual citizen of the U.S. and U.K. by birth. During her first marriage to Sir Richard Burton, she attempted to renounce her citizenship but due to an alteration on the form, her renunciation was declared invalid. She signed another one a year later and that one stuck… However, in 1977, Taylor applied to be U.S. citizen again while married to her sixth husband (seventh marriage since she was married to Burton twice), John Warner.”
Wikipedia “Relinquished and then regained citizenship … Elizabeth Taylor; Actor; Jus sanguinis; United Kingdom; Taylor was born in London to American parents in 1932. In October 1965, she signed an oath of renunciation at the U.S. Embassy in Paris, but with the phrase “abjure all allegiance and fidelity to the United States” struck out. State Department officials declared that her renunciation was invalid due to the alteration. Taylor signed another oath without the alteration in October 1966. She applied for U.S. citizenship again in 1977 during then-husband John Warner’s Senate campaign.”
@Eric. ROTFLMAO!! My son’s high school wouldn’t even accept a Wiki article as the only “reference” for god’s sakes! Scary but, hilarious! Journalism? Not so much.
@Eric…
I hope you are brave enough to call her on it in the comments. I am packing tonight, so just didn’t feel up to commenting…
BTW, I tweeted you and emailed you about some correspondence I have had with. Laura Saunders. She would like to contact you about the FBI renunciation list work you have done. I got her interest in that aspect of the “Bigger” story by sending her links to all your posts! I hope you take up the offer to discuss with her…
and this tonight…
Here’s The Law That’s Driving Record Numbers Of Americans To Renounce Their Citizenship
@FT
Thanks for the link to the WSJ Asia edition. At first I thought that was just going to be a repeat of Laura Saunders piece, but it is MUCH different and actually interesting with new news….
This made me laugh, when I think about the hubris of Senator Max Baucus who said FATCA would “root out tax cheats once and for all”
and this stunned me…..
That is a BIG price to pay to hang onto a travel document!
Finally, I almost thought they were talking about Phil Hodgen here.. Isn’t that where he is spending his time and making his money now. LOL