GAO begins doublespeak already in the title “Economic Benefits of Income Exclusion for U.S. Citizens Working Abroad Are Uncertain ” The entire report –investigating removal of the FEIE “tax expenditure” reads like the script of 1980’s shortwave Radio Moscow—full of “some experts say” and “it can’t be shown” doublespeak. Already on the 1st page “GAO made no recommendations in this report.” . GAO doublespeak already says that “uncertain” in its title means it has “No recommendations.” The table of contents itself is full of doublespeak conclusions.
In order to fully understand what the 74 page General Accounting Office (GAO) report is saying, one really needs to have fluency in doublespeak—-to grasp the real meaning. For those who can read doublespeak, this report might best be read alone in that quiet place after having your morning coffee. Otherwise, I will attempt to provide a translation.
May 20, 2014, The Honorable Jim McDermott, The Honorable Michael Honda. The Honorable Carolyn Maloney, House of Representatives
Apparently the report was commissioned by the well-meaning, yet passively-aggressively naive Abroad Caucus, in response to repeated visits by ACA/AARO.
The immediate cause of the caucus naive error is in commissioning the study to G.A.O. –the General Accounting Office. This band of merry men has a self-interest in making as much form filing work as possible, even though its extra-territorial taxation method might never create any tax revenues.
GAO then went on to interview the normal lackeys “government officials, experts, and stakeholders, including groups representing citizens working abroad and employers”. The list (described in Appendix 1) is stacked with “experts” in creating complicated compliance law in their own interest. The last on the list is American Citizens Abroad who has been profiling itself as “THE Voice of Americans Overseas” . AARO with a similar approach. As we know, there are still no other expat organizations than these two 40-yr-old organization
As the biases are built into the report by its authors and experts, it understandably comes up with a list of options in Appendix 1, Table 7, which range from worse to bad:
-Repeal the FEIE & tax all foreign earned income.
-Reduce the maximum exclusion
-Increase the maximum exclusion
-Restrict eligibility,
-Expand eligibility
-indexed for the cost of living.
– convert the exclusion to a credit
-targeted to employees of selected industries. —(oil & gas, construction, engineering, UN work)
-Uncap the exclusion and exclude all foreign earned income from taxation (but not enact RBT).
-Impose an exit fee on U.S. citizens and U.S. resident aliens living in a foreign country & exclude all foreign income for eligible individuals living overseas (ACA proposal).
Note that well-meaning-but-submissive RBT-ish ACA proposal created some GAO interest–mostly the GAO was excited about an expat proposal for an exit tax upon its own (read closely–GAO empasis is on exit tax)
The title page already clearly states Treasury’s (GAO’s) incoming CBT given-assumption : “Because section 911 reduces income tax liability through special tax provisions, both the Department of the Treasury (Treasury) and the Joint Committee on Taxation (JCT) identify section 911 (FEIE) as a TAX EXPENDITURE. The costs and benefits of this tax expenditure have been the subject of policy and economic discussion. Some have defended the tax expenditure on the grounds that it enables U.S. workers overseas to better compete for jobs with non-U.S. foreign nationals (who typically pay no taxes on overseas earned income) and that it thereby encourages the overseas employment of Americans, who play an important role in promoting exports. However, others have highlighted that some of these claims lack evidence, or are based on outdated assumptions, given changes in the global economy over the past several decades. From a tax policy perspective, some have debated whether or not the tax expenditure provides economic and other benefits to the United States when compared to its costs.”
If the writer (GAO) already comes in with that given-assumption (that FEIE is an expenditure), it would be quite pointless commissioning that writer to produce a 78-page document which questions GAO’s own fast-held principle. Basically, it commissioned a confirmation of GAO’s previous beliefs.
I have translated some of the GAO doublespeak (in italics)
On the title page: “While about half of those GAO interviewed said that employers make overseas hiring decisions based first on the candidates’ qualifications, or that the cost of prospective employees was not a primary consideration, about half also told us the added tax costs of employing U.S. citizens could influence some employment decisions.” (We present this information at the end of a sentence to discount its importance, and early in the document so as to be able to discount its importance and validity with the rest of the document)
…”However, uncapping the exclusion could compound the challenge that IRS has in administering the tax expenditure, given the
misconception that those with excluded income do not have to file and report income to IRS. (GAO doesn’t want people to just experience RBT, it demands the right to continue demanding their tax-form slavery)
…”uncapping the exclusion could create incentives for higher-income professionals to move abroad to deliver their services” (the rats are leaving the ship!) “and to shift some investment income to be paid as earned income.”(gibberish)
…..”It would also reduce federal tax revenue (we need your money), and any perceived unfairness could erode voluntary compliance for domestic taxpayers (Homelanders are jealous over those who’ve left the plantation).
“In terms of good tax policy, there is room for debate regarding how potential revisions to the current tax expenditure may affect choices about where to work and who to hire. (Don’t forget that it is the U.S. government who shall decide where you should live). The current tax expenditure (just slipping it in that FEIE costs us money) may have positive and negative effects on both the efficient allocation of labor resources and on equity. The magnitude of these effects is unknown, making it unclear whether the tax expenditure provides any net economic benefits. (our “experts can’t prove that their FEIE gift is beneficial). These uncertainties also make it difficult to draw definite conclusions about certain policy alternatives. Repealing the tax expenditure (eliminating FEIE) would reduce the tax inducement for U.S. citizens to relocate to lower tax countries (leaving the plantation), but would also make U.S. citizens more costly for any employer to hire than citizens of most other countries, which do not tax foreign earned income. Removing the maximum limit ($99,200 for 2014) for the exclusion would eliminate the tax cost differential with other countries, but would allow high-income individuals to avoid U.S. taxes on foreign earned income (the entire expat policy is driven by the progressive chase after the 1%’ers). Targeted tax relief may be justified for extreme cost of living areas, and the design of any alternative would affect the complexity for taxpayers and the Internal Revenue Service (IRS), as well as the federal tax cost.” (we could try to recognize that some low-tax countries are also high-cost of living, but that would be too much work for us)
Regarding the GAO desire to unfairly tax citizens abroad, which begins on p 67: Is the Tax Expenditure Fair and Equitable?
……….. “In order to apply any of these equity principles, it is necessary to identify individuals who benefit from the exclusion. This identification is complicated by the fact that the individual or business that is legally obligated to pay a tax—or that receives a tax benefit—is not always the one (or, at least, not the only one) that bears the ultimate burden of the tax or receives the ultimate benefit. The ultimate burden or benefit is known as the incidence of the tax policy, and it depends on how various individuals and businesses respond to the policy. For example, in the case of the tax expenditure, even though individual employees claim the exclusion on their own tax returns, the resulting reduction in their total taxes may make them willing to work abroad for a lower pretax income than they would have accepted without the tax expenditure. As a result, the foreign employers may share in at least some of the benefit by being able to pay lower salaries than would otherwise have been needed to hire U.S. citizens.” (This isn’t really hurting you, this is hurting your corporation)
….”In terms of the benefits principle, some of the experts we interviewed noted that U.S. citizens working abroad for the long term receive significantly smaller benefits from U.S. government services than those living in the United States, and that this difference may justify some tax relief for the former. Other experts noted that a large portion of federal revenues pay for services—such as national defense, foreign affairs, income maintenance, and basic research—that produce social or humanitarian benefits that are not directly apportioned to specific individuals. U.S. citizens living abroad likely benefit from some of these services. Many of those citizens also benefitted from years of public investment, for example, in their education, the cost of which is typically recaptured from citizens over their lifetimes. (your American education makes you an indentured servant.) Moreover, some observers note that the choice to retain U.S. citizenship while living abroad provides some insurance with respect to being able to return and live within the United States whenever one wants. They maintain that citizens abroad should be willing to pay some tax for this insurance.” (“Some of the experts” say that homeland research and the wars in Syria Ukraine, Somalia, Yemen, and Libya are for your benefit)
….”Citizens living abroad benefit from services provided by their hostcountries’ governments to which they pay taxes. Given that credits for
foreign income taxes paid reduce the amount of tax that these citizens pay to the U.S federal government, any attempt to quantify discrepancies between federal benefits received and federal taxes paid should account for the foreign tax credit.” (You got the foreign tax credit crumb, now go eat it and be happy)
Appendix 3 analyzes 3 different tax situations — implying that each situation represents 33% of the situation. But, the 0% tax example only represents 2.2% of the expat population. And the 10% example represents less than 2.2% of the expat situation. (we “analyze” by looking at 4% of the population and make it look like it is 2/3rds of the population)
We could go on and on.
What to learn from all this? Recognize that GAO and other lackeys will always respond in its interest and against ours (we already know that) Recognize that the GAO stacks the cards against us. Recognize that other small groups have tried but with little success. More resistance, stronger resistance organization, litigation, flight, and voices louder than the big machine are needed.
I ran across this work of fiction while searching for something else. Hope that it hadn’t been posted by someone else when it was first fabricated. Or not. Sometimes you read a fiction one year, forget it, and need to read it over again later.
Thanks for an informative post.
“For those who can read doublespeak, this report might best be read alone in a quiet place after having your morning coffee. ”
Given the review above, I think I might need something a bit stronger than coffee to make this palatable. For the fatcats among us, I’ll suggest this nice drop. For the rest of us, a bottle of Two Buck Chuck (or whatever the local equivalent is) might fit in the budget a bit easier — especially after the IRS has taken its cut.
I particularly bristle at the suggestion that I should continue to pay US tax because I enjoyed a US education. That education was paid for by property tax (K-12) and by the state budget (I went to a state university). I paid the in-state tuition for university, and I believe that subsidy was funded from state tax revenue. While there would have been some federal subsidy (though not much in humanities), this was funded from current revenue. My parents paid into the federal and state tax system for years so that their children could have a good education. No other country feels the need to tax expatriates in order to fund their education system (or any other part of their government).
And …
Many “low tax” countries balance their budget through other forms of tax (VAT/GST, wealth taxes, etc). These taxes don’t qualify for foreign tax credits. Here in Australia we have both high income tax rates (top rate of 45% + 4% surtaxes hitting at AUD180,000 income) and a 10% GST (VAT). Does it sound like a place US expat fatcats would move to avoid taxes?
I think each of the authors of the GAO report should be forced to live outside of the US for 2-3 years and learn what it is really like to pay taxes to two different countries under rules written for resident taxpayers.
My entire life I have heard many complain that the Democtats acted as if ALL money in the US was theirs and what we had left after taxes was what they, in their benevolence deigned to allow us to keep. They sure speak that way. But I never knew nor even guessed that that was official government policy.
If I may suggest a couple of alterations to Mark Twain’s translation. “It would also reduce federal tax revenue” (we need more of our money back from you).
“(our “experts can’t prove that their FEIE gift is beneficial” to THEM)
As Karen wrote, local property and State taxes pay for education in the States.
And…
….”Citizens living abroad benefit from services provided by their host countries’ governments to which they pay taxes. Given that credits for foreign income taxes paid reduce the amount of tax that these citizens pay to the U.S federal government, any attempt to quantify discrepancies between federal benefits received and federal taxes paid should account for the foreign tax credit.”
Many “low tax” countries balance their budget through other forms of tax (VAT/GST, wealth taxes, etc). These taxes don’t qualify for foreign tax credits. Here in Australia we have both high income tax rates (top rate of 45% + 4% surtaxes hitting at AUD180,000 income) and a 10% GST (VAT). Does it sound like a place US expat fatcats would move to avoid taxes?”
Not only that, but non USCs residing in the US and paying taxes there also more than cover any revenue lost to the Fed via the FEIE. There are far more people going to live and work in the US from foreign countries than leave the US for other lands.
…”and any perceived unfairness could erode voluntary compliance for domestic taxpayers”. So, homelanders’ perception of fairness trumps the constitution and its amendments; in short, trumps the law.
When I am forced to part with my family and return to Der fatherland, either due to losing my passport or bank account, can anyone back there fighting this provide a corner and blanket and subsistence diet? In return I will dedicate myself to what ever task necessary to end this, proof reading legal briefs, photocopying, running errands, overall general lucky, whatever.
The bottom line is the USG continues to cut off its nose despite its face.
Removing the FEIE will raise little or no revenue, increase renunciations, and provide further incentive to thwart KYC procedures at banks.
Increasingly the world will see the US tax world and the remaining world. Why does the US think it can succeed at tax isolationism.
When a politician has already taken money from a lobbyist to represent a large donors position, you will get double speak.For instance, every congressman on The Committee On Ways and Means benefits in keeping the Marxist Income Tax, so when a regular citizen writes to him asking for the FairTax to be debated and voted out of committee, you could write the letter yourself that they send back.”It is always good to hear from you. Your views will be considered when the subject of taxes comes up”. It means they have had enough mail to find it necessary to gin up a form letter that is offensive enough to make one Puke when he reads it. IT REALLY SAYS STOP BOTHERING ME ABOUT SAVING THE COUNTRY, CAN’T YOU SEE YOU DIDNT CONTRIBUTE AND THEY DID. WE WILL KEEP THE MARXIST INCOME TAX BECAUSE CONGRESS IS MADE UP OF MARXISTS WITH AN AGENDA THAT BENEFITS CONGRESSMEN AND MY JOB IS KEEPING MY JOB, NOW BUG OFF YOU PESKY CITIZEN. I WORK FOR ME, NOT YOU.
Now that about sums it up!
@Don
The USG’s idea of success and your idea of success are not the same. Their idea of success is as many people as possible under their thumb. The state of the US economy, they couldn’t care less about.
The GAO should do a report on what it would cost the US if the entire world were to tax as the US does.
Double-speak comes with double standards for the GAO.
If America didn’t fight so many wars- wouldn’t there be enough tax income for all of these things they mention that expats “owe” for – like education and healthcare and train tracks, bridges and roads? So basically they should really write: “We need your taxes for the war machine” – period. This is the real reason why they don`t have enough for all the rest- so it is all obfuscation and smoke and mirrors of what expats “owe” for. Lack of constant warfare is the reason why other countries do have healthcare and free education- they are not trying to “save the world” and therefore have no need for huge armies. So maybe America is actually ruining ITSELF, and the world and the world economy in their efforts to remain dominant because their plan is not working and they are broke.
Their view of an American Abroad is dominated by the type of high-earning expat who is posted abroad in some megacorporation, on an expat package that compensates double-taxation of Americans.
The idea of duals born and living abroad, or someone taking a job outside the US on local conditions is completely lost on them.
This whole story is so pathetic and hopeless. I was told by my tax preparer, an ‘IRS enrolled agent’, that there is a very strong probability that the FEIE will be removed before the end of 2016 and there will be no FEIE for the current tax year! That is devastating! Also, the attention of the IRS regarding expats will soon also start focussing on whether they are reporting any businesses that they have outside of the U.S. They too are supposed to be reported. Yes, the entire business! Even if you are just one of several partners, the U.S. taint contaminates the entire business. If your non-U.S. partners refuse to have the business accounts, bank statements and profit and loss statements sent to the IRS, the IRS believes that it has the right to go after the foreign business, as long as a U.S. person holds over 10% of the business. Wait until this onslaught starts!
All of these law suits are great, and I wish them the best of success, but at the end of the day, it should be obvious to all that it is in their own, their family’s and their business partners best interests to renounce and get your lives back. It is just one thing after another. In just a short time we have seen the fee to renounce increase by over 400%, we have seen a new law to confiscate passports if tax is unpaid, we have now seen that there are very real and very advanced attempts to remove the FEIE and we now hear that the next area for extortion and attack are the companies that U.S. tainted Canadians might own or be partners in. It should be clear that things are getting worse, not better and even if the Canadian lawsuit is won, there will be a constant onslaught of ever more crippling, punishing and unjust actions taken against the expat community. The message should be very clear by now: U.S. persons can not live outside of the U.S. Much like the Soviet Union, in its time made living outside of the USSR nearly impossible for all but a privileged few, the U.S. is now attempting to do the same. Nobody can tell me, that with the hundreds of articles, several lawsuits, delegations pleading the case and foreign governments pushing back, that lawmakers in the U.S. are unaware. That is impossible. This is all intentional, with the objective of making residing outside of the U.S. impossible. RENOUNCE, BEFORE IT’S TOO LATE!
I really enjoyed your side comments Mark Twain and appreciate the translation because my brain is burned out from other govt doublespeak.
Like Karen indicated, I really do not like this attitude about education. For grade school and highschool, I went to Catholic schools who received NO FUNDING from any level of government. Yet my parents paid property tax to fund the public schools. They also paid for me to go to those schools instead. So there are the first tax credits against this nonsense.
I also went to state schools.. Karen mentioned humanities, I was in classical music. It sounds like some fields were not eligible for federal funding? If that is so, one knows for certain that being in a field that would certainly be considered worthless, it is doubtful I owe the Feds for university. Regardless, the amount would be a finite one and if they want to gripe about it, let them figure it out how much was actually contributed to fund my education.Take off a tax credit for my parents’ contributions (since they never received one for that whenthey were alive) and take off a tax credit for the amount I paid in tax when I still lived there (yes, I rented but a portion of rent includes a percentage of property tax paid by the owner). Then one could pay the difference or a tax on the amount or whatever it would be to “repay.” Since they reduce everything to a matter of dollar and cents, let them do the same here rather than some “doublespeak” about the eternal value. It does NOT entitle them to the idea that I am forever in their debt.
I once thought I would gladly pay a set fee each year (which would have been more than I would ever have owed in tax) in order to “pay” for the privilege of being able to return to the US. I am not so selfish or ignorant to not recognize there is a benefit in that. I mean, exceptionalism teaches that is your birthright, implying it is not a monetary issue. But they have made it one. I did what they asked in order to renounce and I am done with it. I am not confused about owing them one bloody dime.
@Everett
If that is true, we may see the beginning of mass civil disobedience. No warning? After the way they have instigated all this? For those who can give up ever entering the US, I would be willing to bet that resistance will become more obvious.
As USCitizenAbroad has been saying since 2011, “Renounce and Rejoice!”
@Everett
I wonder what policy objective it serves to make the lives of its non-resident citizens miserable?
Wouldn’t people just switch to claiming tax credits?
Re: the US government and the “you expats owe us because of the education you got before you left the US” crap. Just more Homelander-centric hogwash. When they start PAYING everyone who immigrates to the US for the education they are bringing in from outside the country, then that lame argument might have a leg to stand on. Until then they have zero credibility. No other civilized country does anything remotely similar to their expats. CBT is really about punishing expats for leaving, nothing more, nothing less.
If they remove the Foreign Earned Income Exclusion, then expats can simply “remove” their earned income from their tax returns. The IRS would never figure it out. Everett has got it right.
Many in the US believe the FEIE is a Loophole, when in fact expats get a Sinkhole.
One thing the FEIE does is mask the higher taxes paid by expats in other countries as the income and any overseas taxes on that income get excluded from consideration.
I believe the figure was 91.5% of expats live in equal or higher taxing countries.
Australia is considered a higher taxing country. And is said above if there is no FEIE then tax credits for taxes paid to Australia may be used to produce the same effect.
There is this exception: in Australia there is a higher tax free threshold of $AU18,200. So without FEIE you might get caught with your earnings as the US tax rate before deductions start at 10%., up to the point where the Australian 19% rate kicks in above $AU18,200 – so you would need to make an amount over this to counter the amounts the US 10% rate applies.
Sinkhole. The way it should work: total tax liability for Australia compared to total tax liability for the US. Why does no one here at Brock point this out? Perhaps they are too busy trying to get rid of CBT, rather then to make it more equitable.
The tax treaty works just fine for Australian only persons with investments in the US. It is when CBT comes into play is when it is unjust.
The way CBT works is that it looks at each category of taxes (earnings, interest, gains, dividends etc) between Australia and the US. Say you pay way higher rates on earnings in Australia than in the US, you are unable to use that excess and apply it as a credit against other categories of tax where the US rates are higher (ex: 15% on dividends in disregard of Australian 30% franking credits), the category is additional to Australian categories (ex: NIIT), or where the US tax is on the same category but calls it as a different name (ex: Australian pension superannuation which the US calls unqualified pension fund.
US tax on retirement vehicles is fundamentally different where Australia taxes on money going in (mandatory 9.5% of earnings must go to superannuation taxed at 15% in Australia), and Australia taxes along the way at 15% yet US comparable retirement vehicles tax on the way out, where in Australia tax on the way out is 0%. And the US nonqualified treatment for “high earners” is on the annual account gain at the US marginal rate in disregard of any Australian taxes paid.)
Too many of us are stuck on stupid. Despite our fancy written diplomas on fancy paper in fancy frames on the walls of our fancy offices we fail either in the comprehension of our own language or in critical thinking or both.
Many here would fail these points if they were students in my upper level English classes for Japanese.
If this thread were one of my classes I would ask, since it has been brought up, “How much of the US budget is spent on defense?”. Judging from comments here, “Over 50%” seems like the most likely answer.
Teacher: Oh really? Where did you get the information?
Students: It’s right here on such and such website. (Shows the teacher websites on their iPhones, iPads, etc).
Teacher: Please read aloud what it says.
Student: It says, “Over 50% of discretionary spending is spent on defense.”.
Another student: Mine says, “54% of the discretionary budget goes to the military.”.
Yet another student: According to this source, “57% of the discretionary budget is spent on defense.”.
T: So how much of its budget does the US spend on defense?
Students: Over 50%.
T: WRONG!
S: But all our sources say over 50%!
T: No, they do not. They report over 50% of DISCRETIONARY spending. How much of the budget is DISCRETIONARY?
Silence
T: OK, how much would you think is DISCRETIONARY?
S1: Most?
S2: Around 80%!
S3: Closer to 100.
T: Well, look it up.
Confused murmurs and embarrassed glances on the part of the students.
T: How much?
Silence.
T: How much, what percentage of the budget is DISCRETIONARY?
S. 30%
T: Yes, 30% is the percentage of the budget that is considered DISCRETIONARY. So, the US does NOT spend over half its budget on defense. It spends more than half of 30% of the entire budget on defense. The actual percentage is 16.2% (2015) of the entire budget.
16.2%
16.2% of a budget that leaves $19,000,000,000,000 in national debt unpaid.
16.2% of a budget with close to $60,000,000,000,000 of unfunded mandates.
We could cut the defense budget to ZERO and the US is STILL BROKE! So stop being stuck on stupid, it is NOT defense spending that bankrupted the US.
If you understand “DISCRETIONARY” to be the entire budget, you fail to comprehend the English language. If you understand that the “DISCRETIONARY” is not the entire budget but assume it to be the larger part of it, you fail critical thinking.
We love to state that other countries can afford their social programs because they do not have so much wasteful military spending. These countries are able to pay for their social programs because they believe the US military will bail them out when they get into trouble. In their minds, we are their military. A couple of years ago, a Canadian colleague angrily demanded that I write to Obama to get him to send the US military Syria to help the rebels there. I unloaded on her with,
“We do not join the US military so that YOU can dictate when and where we should go. If you want whomever you think the good guys in that conflict helped, get off YOUR lazy fat arse and write YOUR government in CANADA and demand that they spend CANADIAN treasure to send CANADA’S sons and daughters off to spill CANADIAN blood in Syria! Don’t you DARE demand that the US spend its treasure to send America’s sons and daughters to spill American blood anywhere! We are NOT your mercenaries! Especially when you condemn us every time we defend US interests!”
We no longer talk to one another which bothers me not.
But are these other countries able to pay for all these social programs? Last I heard all but one maybe a couple of Scandinavian countries are deeply in debt and cutting services or privatizing them. How can this be if they are not wasting money on defense spending? Because they are also wasting money on what takes up much of the 84% of the US budget that does not go to the DOD.
But where do we get the information that half the budget goes to the DOD? From the same sources that calls us tax cheats. Are we? No. We know this. We know that the information in the press and that put out by politicians and bureaucrats is incorrect at best and lies at worst. Yet we trust these very same sources on the budget. Stuck on stupid.
Homelanders at least of an excuse for their ignorance. Unlike us, most have not been forced to see the deceit and lawlessness of our government. We do not have that excuse for our willful stupidity.
I WILL lose my family. Either by losing my bank account and the the ability to receive any monies (pay or assistance) or by losing my passport. I WILL lose my family and we are whining about 16.2% of the budget.
Whining about 16.2% of a budget that leaves $19,000,000,000,000 in national debt unpaid.
16.2% of a budget with close to $60,000,000,000,000 of unfunded mandates.
Again, we could cut the defense budget to ZERO and the US is STILL BROKE!
We are stuck on stupid.
Too harsh to call some who are more highly educated than I useful idiots, and make no mistake, that is precisely what I am saying, you are useful idiots. Every particle of energy spent going off on the red herring of 16.2% of the budget is shooting an arrow of our sparsely filled quiver at a shadow. We have so very few arrows with which we can slay this beast and you are off shooting them at shadows. Further, why are we here in the first place? Because too many of us for far too long have been useful idiots. I am going to lose my family because too many have been useful idiots for too long.
For those of you chanting “Renounce and rejoice, renounce and rejoice”, you are no different than the IRS chanting “Comply, comply, comply”. If I could comply, I wouldn’t need to renounce. If I can’t comply with filing a yearly tax return, HOW IN THE BLOODY HELL am I going to be able to comply with FIVE YEARS of TAX AND INFORMATION RETURNS needed to renounce!?!!!!??!!?
It scares my to think this, more so to post it, but I am coming more and more into understanding of J’s motivations for his tragic action. Faced with losing my family or with becoming a parasite unable to contribute anything towards my own needs let alone the needs of my family yet fully dependent upon them for subsistence, while getting little more than “Serves you right for leaving the US.” from friends and family in the US and useful idiots on our side off shooting at shadows, and others telling me to do the impossible, what other options are left?
@JapanT Then there are the many US persons overseas who live in bliss from their ignorance of it all. Maybe time to spend time on other things in life. It is important to take breaks from all this.
In respect of the “education” argument – are they going to discount those who grew up abroad from this?
Thought not – they really are so focussed on those leaving the US as adults that they can’t see what they want to do to my kids.
@JapanT
So sorry for your pain and anguish. I honestly don`t think that the IRS would leave you with nothing to live on. Even people who declare bankruptcy are left with sustenance. Nina Olsen and TAS are there to help people. So even in worst case and you are found, you might get a pay off plan and then find yourself in a similar situation as students who have debt from financing their education. Yes- it sucks big time but all is not lost. Sometimes we have to make a decision between a rock and a hard place- it was a no brainer for me to renounce. I know some people who have renounced and have not paid their taxes at all. I don`t know if they will be called out one day or not- but they are also continuing to live their lives as if nothing had happened. Please don`t lose all hope in any future for yourself. I am hoping you can find some succor in the love of your family as well. The world has changed in so many many ways and I find it daunting at my age – but we have to find ways to adapt anyway. I`ll keep my fingers crossed for you in finding a solution that you can live with. And also for the court trials to succeed.
@Maz57
“If they remove the Foreign Earned Income Exclusion, then expats can simply “remove” their earned income from their tax returns. The IRS would never figure it out. Everett has got it right.”
The IRS will know my income through FATCA. All my pay is received via direct deposit. The IRS will know every single Yen I am paid and who paid it to me regardless of my reporting it on my tax return or not. Regardless of whether I file a tax return or not.
True for most if not all US persons in Japan.
There is no way for me to pay even a cent to the IRS. The reasons are too many and most are specific to my individual situation in Japan, but I am unable to meet my current financial obligations and many more are just around the corner for me from the gov. Of the nation I live in. Can’t meet those either.
In reality, I do not worry about paying these, as I simply can not. I worry about losing my passport and my bank account.
The bank account is particularly worrisome as I could be completely in compliance (assuming that is possible) and still lose my account by virtue of being a USC. No relief from the IRS nor the TAS will help with that.
@JapanT – don’t despair. As JC says above, it’s important to take a break. Can you talk to friends offscreen, go for a walk, maybe spend some time destressing?
Renouncing is a very empowering act. Although it doesn’t in itself solve all the problems, it does change the context.
As soon as you swear the oath, you’re no longer a US citizen. Renounce on Tuesday, and the money you earn on Wednesday is none of America’s business. And immediately you can say “No” to any bank or other entity that asks you “Are you a US person”. You can truthfully answer, “No, I’ve renounced and am waiting for my CLN.”. Straightaway, that makes you feel so much better!
I know it’s a lot of money to pay. If you can overcome that hurdle, it’s money well spent. Believe me, the IRS problems look far less scary once you’ve renounced. IRS are really just the Wizard of Oz, trying to sound big and powerful and scary, but surprisingly weak and incompetent, behind the scenes.
@JapanT – “The IRS will know my income through FATCA. All my pay is received via direct deposit. The IRS will know every single Yen I am paid and who paid it to me regardless of my reporting it on my tax return or not. Regardless of whether I file a tax return or not.”
The IRS don’t have the resources to look at FATCA reports and pick out an individual and decide from their bank balance whether or not they would be worth pursuing.