Thanks to comment on Brock from *Johnson*. Good find by Johnson, but merely a mention of individual expat submissions from the Senate International Tax Reform Committee.
The Senate International Tax Reform report is out.
It’s 82 pages all about corporate taxes until the final paragraph where they acknowledge receiving a large number of submissions from US expatriates regarding individual international tax issues. But they aren’t going to do anything about it.
In skimming through this, I see that there is reference to individual taxation issues (what is presently in place, I think).
This is what the final section, the one we’re most interested in, says (and doesn’t say):
F. Overseas Americans
According to working group submissions, there are currently 7.6 million American citizens living outside of the United States. Of the 347 submissions made to the international working group, nearly three-quarters dealt with the international taxation of individuals, mainly focusing on citizenship-based taxation, the Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign Bank and Financial Accounts (FBAR).
While the co-chairs were not able to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on the working group, the co-chairs urge the Chairman and Ranking Member to carefully consider the concerns articulated in the submissions moving forward.
Thanks so much for posting the link to my post, Calgary, and I’m glad you liked it. I was spitting nails this morning…
Muzzlednomore, Good catch! Yes, I wrote about the lawsuit based on the latest info I had which was a June 25th tweet saying that they were filing on June 29th. I’ve since learned what Charl says in his comment – that they have NOT filed yet.
I’m not sure what’s holding things up. Keith Redmond has said that he will contact Solomon Yue to find out what’s up. WE could also go to the RO FB page and ask them directly what’s going on.
https://www.facebook.com/republicansoverseas/posts/398174723699662
@monalisa
You echo my sentiments exactly. It was heart wrenching to relinquish, but absolutely unavoidable.
The real tragedy is that a simple change to the definition of “foreign account”, to mean an account located outside of ones country of residence, and outside of the US, would make all the difference in the world.
That way all of those Americans who have never heard of anything as obscure and obscene as CBT could back file three years of 1040s, with no risk of severe penalties. The IRS would then be treated to a warehouse filled to the rafters with maybe as many as 20 million 1040s, all with zero on the bottom line.
That a Republican dominated House and Senate failed to even consider such a simple change is a clear statement of their true concern for Americans living abroad.
Victoria wrote: “I call it as I see it – only the renunciations … are having any impact whatsoever. So that’s where I put my support.”
Renunciations increased by 78.0% from 1H 2014 to 1H 2015 (1,616 to 2,877), according to FBI records.
As a possibility of what the future portends, expatriations rose in Switzerland from 180 in 2011 to 550 in 2012 and to 800 in 2013 (includes green card abandonments) as the pressure on US citizens rose here.
Although the IRS will likely continue to under-report expatriations to curry favor with Treasury officials Robert Stack and Mark Mazar, at some point US politicians might just take notice. Whether they will act is, of course, something else.
We’re like abused dogs who are kicked and beaten by our ‘masters’ and yet we keep going back looking for a scrap of food only to be kicked and beaten again.
For duals in Canada, the only way to deal with the ‘master’ is to ignore him and move on. If necessary, lie to your bank. If you have a TFSA or a RESP or a PFIC or a private company, keep quiet.
I admit that if you are in Europe or elsewhere it is probably much more difficult. Our lawsuit is important and we must not get sidetracked by the US lawsuits. Trying to influence congress is a waste of your time. The big time corporate lobbyists have millions to spend. We have nothing.
@ Victoria
Loved your feisty blog posting today. Essentially I think you are saying let’s rumble because grumble got us nowhere. Lawsuits and relinquishments are the way forward now. Surgite!
Thanks, Em. Feeling better this week after my tests at the cancer clinic came back and all was OK. That certainly brightened the rest of my week here in France. 🙂
Yes, that’s exactly what I wanted to say. I think I’ve expressed it before but here I go again – we (Americans abroad) are just too damn polite and well-behaved. It’s like we have an inner nanny or expat Ms. Manners telling us to sit up straight, talk nicely to the Big People in Washington, and genuflect before the powers that be begging them to pretty please do something out of the goodness of their hearts. This treacherous little voice that tells us that if we just write enough reports, distribute enough issues sheets, wear our shoes out walking the halls of Congress and write We Really REALLY Want Residence-based Taxation 100,000 times on a blackboard while professing our undying love and loyalty to the United States of America we will one day be worthy of someone’s attention.
Piffle. This is not a cocktail party at the local US embassy for crying out loud where we need to make “friends” lest we not be invited back for the barbecue. So, yep, let’s lawyer up already and rumble. 🙂
Many of us had to renounce. But once the law changed and the Discrimination of Americans Abroad will end, will the U.S. government do the right thing of allowing us to re-apply for US citizenship?
Meanwhile, yesterday, from Democrats Abroad
https://www.democratsabroad.org/group/fbarfatca/junejuly-update-congressional-sign-letter-another-step-forward-fatca-reform
I see nothing regarding the Senate Finance Committee report at ACA.
@ Victoria
I was hoping your feisty attitude was a reflection of good test results. I’ve been thinking about you but afraid to say anything lest it jinx anything. Thank goodness for your good health report. And yes, let’s rumble.
Ran, is that just a rhetorical question?
Re-applying for US citizenship would be the last thing many of us, or I should just speak for myself, would ask for.
@Victoria,
I am delighted to hear the good news re: your health.
As to the Miss Manners syndrome, apparently you have not met any Catholic kids who were forced to go to an all-girls high school. WE sure know how to rock the boat…LOL!
@Victoria
“I call it as I see it – only the renunciations and the lawsuits are having any impact whatsoever. So that’s where I put my support.”
I could not agree more!
@Ran- if you are wondering whether or not a person who had renunciated his/her citizenship would be able to get it back, should the laws change, then you are only confirming to the powers that be that there is some real value in having American citizenship. And that is completely false. U.S. citizenship has absolutely no value outside of the U.S. You don’t get treated any differently in your country of residence or other citizenship because you are also a U.S. citizen. And why would anyone be so foolish as to trust that Congress would not change the laws again if it should prove expedient to do so?
@Calgary 411- I wish that people would realize that there is absolutely no value in having a so called home country exemption to financial account reporting under F.A.T.C.A. because it doesn’t do anything about the underlying irritant which is C.B.T. All that such a change would mean is a reverting back to the previous system which required the I.R.S. to rely on individual reporting. The U.S. person would still have that burden of C.B.T. to deal with plus all of the complications of paying taxes on foreign assets. Having the tax benefits of the country of residence being taxed away by the I.R.S., pension problems, issues with being a partner in a foreign corporation etc.
If anyone thinks that the I.R.S. is going to allow things to go back to the status quo without exacting its pound of flesh then such a person is seriously deluded. R.B.T./Territorial taxation is the only equitable answer and it isn’t hard to implement. All that it takes is Congress having the WILL.
@Ran: two possibilities, IMO both wildly unlikely:
1. The State Department, possibly under Supreme Court pressure, widens their interpretation of economic involuntariness in expatriating acts to include people who formed the intent to give up US citizenship because of FATCA or CBT. Well, we’ll see what Jim Bopp can do but I don’t think that’s even on his plate for the current lawsuit he’s announced.
2. Congress enacts statute allowing special non-quota green cards or instant renaturalisation. AFAIK happened only three times in US history: once for women stripped of citizenship by the Expatriation Act of 1907, and twice for US citizens who served in foreign militaries on the same side as the US belatedly entered during WWI and WWII. The former group enjoyed public sympathy, the latter group far less so (salacious media reports smeared them as golddiggers chasing after European nobility).
3. Don’t forget the lame possibility which already exists today (except for accidentals & only children): get your American siblings to sponsor a green card for you (takes more than a decade, though) and re-naturalise like any other immigrant after five years of living in the US. However, DHS statistics show that only a few dozen US-born people get green cards every year, and plenty are probably diplomats’ kids (who don’t get US citizenship at birth), not ex-citizens having second thoughts on renunciation.
Also note that despite Carter’s pardon for Vietnam War draft evaders who kept their US citizenship, no accelerated renaturalisation was offered for those who explicitly told State they didn’t want their US citizenship anymore. A few of them are still barred from visiting the US. I expect that the absolute fantasy best case scenario for CBT non-compliers is similar: absolution for those who kept their faith in the American civic religion, but nothing at all for the apostates, schismatics, and heretics.
(My view: I do not want US citizenship back either for myself or my posterity. I’m happy where I am, have not-particularly-attractive-but-survivable backup plans if that citizenship or residence makes things difficult, and would far prefer that nearly any other country besides the US get the benefit of what future contributions my kids may bring. Other posters may differ on the question of what is the worse form of “forcing your politics on your kids”: getting them a US citizenship they do not want, or preventing them from getting a US citizenship that they do want.)
I have really bad hay fever in America. I seem to be allergic to some plant over there. I would be just miserable if I went back. LOL No, I don`t really want my US passport back either. I`ll be staying in Europe for the rest of my life anyway. It`ll make spring a lot nicer and more tolerable for myself, too.
‘The real tragedy is that a simple change to the definition of “foreign account”, to mean an account located outside of ones country of residence, and outside of the US, would make all the difference in the world.’
Actually it wouldn’t. You’re making the same mistake on a smaller scale as homelanders make when they assume we’re all tax evaders (I evaded my $0, right).
I have a bank account in my country of citizenship, which is outside of my country of residence. It used to be one of my two countries of citizenship but now I only have one citizenship.
I have another bank account in my former country of citizenship, which is outside of my country of residence.
My wife has a bank account in her country of citizenship, which is outside of her country of residence.
There is a bit more.
I declared all of the interest income on US tax returns.
There was a reason why we had to rely on the 5th Amendment as upheld by US Supreme Court in US v. Sullivan and Garner v. US. We declared amounts but not sources. Administratively the IRS accepted it; the IRS did not try to violate the 5th Amendment or US Supreme Court. US Tax Court allowed testimony under seal. But other courts are not bound by the 5th Amendment or US Supreme Court, so they didn’t allow testimony under seal.
So your proposed simple change would make a big difference but would not make all the difference in the world.
=====
One time my wife had to estimate an amount of interest because no one could find the passbook. I expected that we would file an amended tax return after learning the actual amount of interest. It turns out that it is illegal to call an estimate an estimate. Legally we have to declare that the amount is true and correct to the best of our knowledge and belief, regardless of whether we know it’s an estimate and believe with 99% certainty that we’ll have to amend it. At first the IRS didn’t complain about it — they didn’t start to complain about illegal honesty until they discovered that my declaration about Form 1099 was true (Form 1099 is the one that Monica Hernandez stole from when she fraudulently altered IRS records).
Eventually the bank found the passbook of the account where my wife had to estimate interest. The bank had not returned the passbook when the account was closed. We declared the correct amount of interest in our refiled return. We also obeyed IRS instructions for other changes that were required in the refiled return. The IRS accepted the refiled return but refused to refund US withholding (because Monica Hernandez had altered the Form 1099 and someone had altered IRS records of our first return, but we didn’t know the reason then). The Federal Circuit overturned the IRS’s acceptance of the refiled return. Honesty is illegal, failure to fabricate a social security number is illegal, and compliance with the IRS’s compliance with US Supreme Court rulings is illegal.
So for us, your proposed simple change would not help at all.
=====
‘The IRS would then be treated to a warehouse filled to the rafters with maybe as many as 20 million 1040s, all with zero on the bottom line.’
Well, all of them with zeroes for the amount of tax, but some with refunds owing. The IRS even admitted they owe us the refund that they refuse to pay. (Though they can’t pay us now because the Federal Circuit overturned the IRS’s acceptance of our refiled return.)
“U.S. citizenship has absolutely no value outside of the U.S. You don’t get treated any differently in your country of residence or other citizenship because you are also a U.S. citizen.”
Here are counterexamples.
If my wife were a US citizen, she would be allowed to visit Cananada as a tourist and then go back home, even if her home is in Japan or in her country of citizenship. But due to her citizenship, she isn’t allowed to enter Canada until we’re sure that I’ll move back permanently and that she’ll move there permanently.
Japan had a big binder full of pages, which might be computerized now, detailing how the government discriminates differently against people of different citizenships.
European countries also discriminate differently against people of different citizenships. The Schengen arrangement, despite being beneficial in many ways, makes it harder to get a tourist visa than it used to be in some countries.
Even Mexico discriminates differently against people of different citizenships.
@Norman Diamond Says- okay. I’ll accept your examples but those exceptions don’t really figure prominently in day to day life. The U.S. also discriminates against non-citizens in some areas but not when it comes to their Constitutional rights in the U.S., which is my basic point.
As a landed immigrant in Canada you enjoy all of the same Constitutional rights as does a Canadian citizen. However your U.S. citizenship does not give you any superior rights in Canada.
Exceptions can always be found to any rule but those exceptions can’t be allowed to invalidate a rule that has general applicability.
If anyone wants the full benefit of U.S. citizenship then s/he has to live in the U.S.
@Victoria,
Glad to hear the rest results were ok.
And I agree, this report really puts the nail in the coffin of any hope for legislative change. Not that I had much to begin with, but this contemptuous treatment by the Senate Finance Committee just slams the lid with emphasis.
May the litigations commence!
“but those exceptions don’t really figure prominently in day to day life.”
They do in the lives of me, my wife, and anyone else in these situations.
“The U.S. also discriminates against non-citizens in some areas but not when it comes to their Constitutional rights in the U.S.”
I guess you mean because when US courts treat a constitution as a constitution of United States Persons instead of a constitution of the the United States Country and Government, US courts treat non-citizens who are physically present in the US are treated as US persons the same as courts treat everyone else who is physically present in the US? In such a case, I mostly agree with you.
My wife became a US person for tax purposes because of our tax returns, but US courts except for Tax Court treat her like shit, and then treat me like shit because I’m married to her.
“As a landed immigrant in Canada you enjoy all of the same Constitutional rights as does a Canadian citizen.”
I don’t think that’s true either. If I’d known my stay in Japan was going to grow to 27 years I wouldn’t have come here in the first place, but nonetheless, I still have my second-class Canadian citizenship (which was plain old Canadian citizenship until recent changes that I learned about from this forum). If I were a landed immigrant, I would have lost that status due to my stay in Japan.
“However your U.S. citizenship does not give you any superior rights in Canada.”
Huh? Oh wait, maybe I can figure out what you’re talking about. If I weren’t a Canadian citizen, if I wanted to visit Canada as a tourist, then US citizenship wouldn’t give me more rights than Canadian citizenship — but US citizenship would give me more rights than my wife’s citizenship. She’s the one who’s not allowed to visit Canada and return home, who can only enter Canada when we decide to stay there permanently.
Though oddly, hypothetically if I had renounced Canadian citizenship instead of US citizenship, then I’d be allowed to apply for a Canadian tourist visa with my wife as my dependant, whereupon maybe she’d be allowed to visit Canada. In this twisted way, some non-Canadians have more rights than Canadians under Canadian law. I wonder what will happen if the Canadian government decides to use my likely eligibility for Japanese citizenship (likely eligible despite not wanting it) to strip me of my second-class Canadian citizenship. I wonder what visas we might become eligible for.
@Norman Diamond Says- Well, yeah. If you’re a landed immigrant and you stay out of the country for a certain period of time then you lose your landed immigrant’s status. I think that this is preferable to the U.S. situation of a green card holder. A green card holder is considered to be a U.S. person until formal application is made that you have given up your status. I would much prefer the situation where you can let your green card/landed immigrant’s status simply lapse. There are many green card holders who never realized that there was a formal process involved to discontinuing their status.
I have no problems with Canada or any Western nation for that matter, telling naturalized Canadians who engage in acts of terrorism that their Canadian status cannot be used as a shield to escape the consequences of their actions. Being shipped back is probably preferable to being put in jail for years. It is certainly cheaper for the Canadian taxpayer.
Being a situation to receive a tourist visa does not place one in a superior position as compared to someone who is a Canadian citizen. Tourist have no rights and can be deported at anytime if they should transgress a law. Also all tourist must leave. So the two situations are not at all analogous.
Your cynicism isn’t adding anything productive to this discussion. It just seems like a lot of quiblling.
https://www.facebook.com/groups/citizenshiptaxation/permalink/875581042531645/
Bob Jones wrote:
geez…..quantity vs “quality?”
“This is complete bull. You cannot take just a number and ignore the severity of the situation. The closing of bank accounts, cancellation of mortgages, taxation of tax-deferred vehicles in countries of residence, capital gains tax on the sale of principal residences not taxed in resident country, unwarranted US citizenship bestowed on people with meaningless ties to US and merely being born there with the same tax and reporting requirements as those who lived there for decades, destroyed marriages, people with stress, anger, depression…and on and on it goes. I would like these committees to ask the people who HAVE been affected, “Was this a crisis for you and your family?” Or would they say to such people, “I’m sorry but unless there are thousands upon thousands of you, your misery doesn’t matter.” They have in fact, just said that. And many more will look at this and say “It’s time to get out.” Especially those who are already retired or very close to it. There really, are no options for these people.”
https://www.facebook.com/groups/citizenshiptaxation/permalink/875581042531645/?comment_id=875683472521402&offset=0&total_comments=7&comment_tracking=%7B%22tn%22%3A%22R%22%7D
“Only” 347?
Even though that was 3/4 of all submissions?!
I business we learned that no business should ignore the number of negative comments just because the quantity is low. This is because in business the rule is that each negative response stands for ten or so negative responses that were not submitted. The customers who don’t submit a negative comment just walk away and never come back. You can be assured though that they are telling everyone they know about their bad experience.
The people who take time to respond are the canary in the coal mine and they should be listened to because they actually care enough to take their time and give a response.
Congress is guilty of poor business practises. Because instead of listening to their customers about the bad service that they experience Congress double’s down on the bad service by making it even more expensive and difficult to not just stay but also to go. America is a poor company because it doesn’t care about how its brand is perceived in the public eye. Poor service is a crisis for the customer and they shouldn’t ignore that fact.
A lot of Americans abroad were immigrants from non-English-speaking countries and were not comfortable writing English compositions in school. How can they be expected to make submissions to the congressional committees? This partly explains why there were only 347 submissions. Another good explanation is that most of them are ostriches too afraid to out themselves. Therefore, the number of submissions is not a good gauge of crisis proportions. It’s the quality of submissions not the quantity that should be the gauge. The 347 submissions should be treated as a representative sample of the situation that the bigger population of expats find themselves in.