Also note: USA imposes excise tax on ‘foreign’ insurance of US Persons, w/ joint & sev liab https://t.co/Iw3qkwUoaR https://t.co/ulwxT9clAL
— Allison Christians (@taxpolblog) November 19, 2015
This is a superb interview of Allison Christians With Robert Goulder of Tax Analysts/Tax Notes
Published on Nov 20, 2015
Update – November 22, 2015
This interview has also been archived at the IBS YouTube channel.
The only thing I disagree with is that FATCA was never a good idea and same country exemption is not a solution.
Why? Because the obvious point that the USA doesn’t pay for FATCA, foreign financial institutions and foreign governments pay for it. Making other people pay for your regulations is the act of a bully. That’s one reason. But there are many other.
However, those disagreements aside, it is nice to have a law professor saying the same things that I’ve been saying for four years.
Simple yet powerful terms. Americans abroad have no better friend than Prof Christians.
“No other country tries to get you to leave your citizenship.” “Why?”
FATCA is “a failure of government”. Damn right.
FATCA was always a bad idea because it is a dragnet. That means people’s information is being gathered without reasonable cause.
Stunningly incisive interview.
Required watching for every homelander.
Bravo and thanks, Professor Allison Christians. Thanks for speaking for the many of us.
This is just the kind of thing Allison Christians discussed; a failure of US policy/governance in the arena of US extraterritorial CBT:
http://www.accountingtoday.com/news/tax-practice/irs-proposes-rule-changes-for-able-accounts-76475-1.html
The IRS is perfecting ways that US RESIDENTS – whether citizens or not – can save for disabled dependents – similar to our local Canadian RDSP, while at once simultaneousl insisting that RDSPs and the like are US taxable “foreign” accounts and trusts, and thereby extraterritorially penalizing and denying those deemed by the US to be ‘US persons’ outside the US their own local legal savings for disability and undermining the social policy goods fostered by our own local government.
As always, the hypocrisy is staggering; to create tax favoured savings for US RESIDENTS, and yet at once obdurately denying it to those outside the US who the US Treasury continues to insist are US property – and fictive ‘residents’. The wellbeing of US persons’s children and family members with disabilities who live OUTSIDE the US are of no interest at all to the US.
The obvious thing to do with RESPs, RDSPs, and TFSAs is to not mention them. It seems clear to me that is exactly what the Can. Government expects Canadians to do. Why else insist that they be excluded from reporting? All you need to do is read between the lines. T3s and T 5s aren’t issued so treasury has nothing unless we give it to them.
Prof. Christians mentions that US tax laws treat US citizens as resident in the USA no matter where in the world they live.
I wrote about this: http://isaacbrocksociety.ca/2012/01/03/do-united-states-persons-differ-substantially-from-residents-of-washington-d-c/
I have forwarded the interview to the Attorney General and suggested that it might provide some useful background information.
@Petros
This is precisely what I mentioned in the ‘what to tell homelanders’ post. Even most homelanders would find that absurd, I would think.
Re the interview, I can understand the angle Prof Christians is using in recommending same-country exemption in that it could one day result in the adoption of RBT, but in my opinion it would only work if the US granted a full amnesty for Americans abroad at the same time. I don’t see the US doing this. It’s RBT or bust for me.
A perfect preamble to a farcical charge of American exceptionalism!
Listen 8:15 to 11:10.
Why would homelanders and congressdroids listen to a professor when they didn’t listen to the IRS’s Taxpayer Advocate?
Things are not going to change. They still want their diaspora to renounce.
@Norman Diamond
The homelanders want their diaspora to renounce OR return home. Think about it. It is not just the 8 million odd Americans and Accidentals that would move to the USA. It is also all the immediate family members as well. All those people would bring assets and act as a fiscal stimulus. These people would need to buy houses and other property. They would bring investment money for new businesses. They would move their pension funds to American pension funds. They would need to buy cars (Preferably good, top quality American made cars……snigger).
On top of that many of them would have state pension rights in other countries. Which would mean they would start to bring in the state pension money into the USA from Britain, Canada, France, Germany,……
All in all, it could be a nice little earner for the USA. On top of that, the Democrat politicians would hope that all these people would be left leaning progresses who would vote democrat and support laws on more gun control and healthcare.
I would not be at all surprised that America “solves” this issue by saying that if you agree to come clean and move the USA, no fines would be applied. They might even create a super stream lined process to make the paper work even easier.
@Norman Diamond, @Salamander
I would love to know WHY they are doing this to us. I’ve certainly spent enough time contemplating it, without ever really coming to any firm conclusions. Norman, you say “They still want their diaspora to renounce.” I think this is (part of) what they want, but then why in the world would they put a $2350 roadblock in front of those renouncing? A family of four may literally be unable to afford that (although I will certainly pay – just as soon as humanly possible. I would love to self-relinquish when I gain my new citizenship in my country of residence without obtaining a CLN, but unfortunately we have family and I can’t imagine not being able to visit them. So, I’ll jump through the hoops, because basically they’re saying to me “pay up, or you’ll never see your parents again”).
This supports Salamander’s idea that this is being done to us to herd us back into the fatherland (er, I mean homeland) corral. BUT a large part of the reason why my wife (non-American) and I ended up living in her country and not the US is because the US government / bureaucracy was fairly hostile to her, while her country was fairly welcoming to me. I doubt if much has changed in that regard – and if it has, I’d bet it has changed for the worse.
I do know that they’ve gone to a lot of trouble and expense to create this intricate system of torture. As they are so heavily invested in it (for whatever reasons), I, like Norman, suppose that “things are not going to change” – or at least not easily.
Salamander, what you’ve written makes a lot of sense, but given what we know, who in their right mind would allow themselves to be coerced into returning to the US? It would be akin to a beaten wife being forced to return to her abusive husband. Better to just finalize the divorce, no?
Same Country Exemption is an idiocy. It does not Help a Canadian with US Taint who happens to work in Geneva or London or Timbuktu and who therefore also maintains bank accounts closer to where they work and live.
Same Country Exemption does NOTHING to protect people who live (and work) in terrorized circumstances – Syria, Iraq, Iran, Ukraine and many others ….
Petros is correct. Dragnet extraction of people’s personal information is an abomination … I go further to say that it is an abuse of their Human Rights to make it impossible for people to be able to quietly make provision to escape Tyranny.
Can someone with contacts to ACA suggest Allison be nominated for an award?
https://americansabroad.org/about/awards/
@Hard Pressed
It would depend how much you would have to pay to become tax compliant before paying the $2350 to renounce. The USA does not recognise foreign pension plans. Hence you might well have to pay back taxes on the capital gains of the pension plan. That could be an expensive bill. If you are close to retirement then you might want to take the deal and move to the USA.
Of course this is all speculation. We do not really know what the bigwigs in the USA are really thinking. My view there was really no plan behind FATCA other than to try and tax the tax dodgers. However that doesn’t mean the law will not be re-purposed to achieve another goal.
One such goal could simply be to provide a convenient magical money tree for legislative purposes.
Law makers always have the problem of how to justify a policy by proving that the policy can be funded. FATCA was added to the Hire act to provide the funding. The fact that it will not fund the Hire act is inmaterial.
That is the point of magical money trees. To provide a theoretical source of funding to allow controversial bills to be passed into law. FATCA could end up being a useful magical money tree for Congress.
All we can do is sit and wait and see how ultimately FATCA will be used.
@Hard Pressed,
the WHY is also what I have asked myself repeatedly from late 2011 (when I first found out about the shocking jeopardy my US birthplace created for me) until today – as someone who had to relinquish in order to be free of a burden and jeopardy I couldn’t co-exist with for any longer than I was forced to.
So many ‘why’s in this. My big one now is ‘why’ they continue on the same path of threats and punishment despite being made fully aware of the actual consequences of the situation they themselves have created. They continue to insist they want ‘compliance’ while piling on the complexities that make that ever more difficult or impossible to do so, and while simultaneously and steadily withdrawing any assistance to do so, (even in terms of service inside the US for actual US residents). They continue on the FATCA path despite being made fully aware of the consequences for the masses of ordinary people.
My best guess is that they do it BECAUSE THEY CAN – abusing US might to force the rest of the world to do their bidding is a time honoured US tradition. And because they know that our family ties might coerce us into needing to enter some time in the future. Back when this all started, I wouldn’t have gone the route I did had I not thought I would possibly be deprived of the future ability to see my US family members again (a mistaken fear). And they won’t stop unless they find that there are political, social or economic downsides large enough to justify the loss of face they would enjoy if they backtracked on it now.
I don’t think that the US will ever do the right thing by those it claims in the rest of the world. I think ‘Might Makes Right’ will continue as the US motto – in this as well as other arenas, and damn the consequences.
Some used to posit that if we could only make it clear what US extra-territorial CBT, FBAR and FATCA was doing to us that the US would change course somewhat. I think it is clear that they know and also don’t care.
And those who are no longer US persons – just a reminder – we’re still paying for US FATCA as non-US taxpayers – we’re paying via our local account fees and our local taxes for our government and institutions to implement FATCA and maintain it.
So we still have ample reason to continue to resist no matter whether we are expats, duals or non-US – resist the US free lunch that it is demanding that the rest of the world to pay for – forever and ever.
Although it’s generally associated with the military, I believe full-spectrum dominance is also the mantra of the USA in the economic sphere. The USA is using FATCA to control all the financial institutions in the world and collaterally the financial lives of its diaspora. It has forced foreign governments into submission with FATCA and is upping the ante with US corporate centric “trade” deals like TTP, TTIP and who knows what else is coming down the pike. (Obama recently spoke on behalf of our fledgling PM by saying Canada would sign on the TPP dotted line — a bit presumptive but undoubtedly true.) This full-spectrum economic dominance plot may well be the USA’s attempt to hang onto its reserve currency advantage which is now being challenged by China. And as Badger has pointed out, the USA is the epitome of “might makes right”. Unlike Prof. Christians I don’t believe FATCA was an unintentional failure to predict the collateral damage inflicted on the hapless diaspora. I think it was quite deliberate and an integral part of the bigger picture — full-spectrum dominance.
Although sympathetic, the homelander interviewer still comes up with his own unique variation on “go denounce.”
“They actually have to sort of let themself be hurt by FATCA and then renunciate (sic).
16:02
Same County Exemption is non-sense. It doesn’t get rid of the problem, for example in the UK, one resident EU/UK citizen having the comply with only 17,000 pages of UK tax code and the person next door having to comply with a combined 87,000 pages of UK/US tax code.
US tax code is about 70,000 pages.
To suggest otherwise is nonsense.
‘you say “They still want their diaspora to renounce.” I think this is (part of) what they want, but then why in the world would they put a $2350 roadblock in front of those renouncing? A family of four may literally be unable to afford that’
The fee is a moneymaker, just like penalties.
A family of 1 may also be unable to afford the fee. A commenter on one of Kelly Phillips Erb’s articles in Forbes last year had moved to Europe to assist her dying mother. She didn’t file US returns during that time, which turned out to be OK because her income was below the level that requires filing US returns. However, she also didn’t file FBARs during that time. The penalties were going to exceed the inheritance that she got from her mother, and the renunciation fee was also going to be unaffordable, more than a year’s income I guess.
How many people does the US really want to move to the US to collect welfare?
Person A’s mother had been born in the US and lived there long enough to make A an accidental.
Person B’s mother had been born in the US but lived there one day less, so B isn’t a US citizen.
I think the US wants A to pay a renunciation fee (even though he can’t afford it).
If the US wanted A to move to the US and collect welfare, they’d want B too.
‘I would not be at all surprised that America “solves” this issue by saying that if you agree to come clean and move the USA, no fines would be applied.’
The beneficiaries of that kind of move would be the 1%, the kind who really did leave the US to escape taxation (whether by legal avoidance or illegal evasion, they’d be the real beneficiaries).
“Same Country Exemption is an idiocy. It does not Help a Canadian with US Taint who happens to work in Geneva or London or Timbuktu and who therefore also maintains bank accounts closer to where they work and live.”
It also does not help a Canadian with US taint who happens to work in Japan but maintains a bank account in Canada.
Duke of Devon: your words are wise. Everybody concerned must take note. When complying with FBARs and filing taxes, not everything need be said. I for one have a small mutual fund (in the EU). I have declared it on my FBAR, but as a regular bank account.