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.
just read the instructions for 1040 and 2555 and FBAR and do it. Its free if you figure it out, otherwise about $500 a year if someone else does it. 3 years of filing.
“don’t know” is a valid excuse for FBARs.
When you owe no tax, there is no ground for penalties on late filing.
Never guarantees.
Make a pseudo facebook account and ask questions here
https://www.facebook.com/groups/952367774780623/
@Mark Twain
Thanks.
I used to do my own tax return until the IRS, for reasons I have never learned, demanded that I compute the exact dollar amount paid each payday under threat of a $10,000 fine for each inaccuracy.
At this time time I was also told that there were grounds no fines on unfiled returns if no tax is owed. Threatened with fines if I made a mistake reporting and none for not filing, to not file was the only option for me.
Frankly, I am afraid I will be required to do this enhanced reporting if I enter the system again.
Japan T, I am truly sorry about your situation. You know, many many people are finding themselves in situations not dissimilar to your own (I would include myself). You mention that you don’t have enough time to deal with this mess. You also mention/hint about suicide potentially being your only option. I would suggest that you make time (and not by sleeping less). I would also suggest that you think long and hard about what your suicide would actually mean to your family. What it would do to them. When I first found out about this mess, I stopped accepting jobs and read this website nonstop, 18 hours a day, for three weeks straight. I lost a bunch of money in work I didn’t accept, and I quite possibly lost a couple of clients. Oh well. no big deal really – I got other clients later. What did I do with those three weeks? I absorbed the info here like a sponge (without mincing words, you seem to lack a basic understanding about what your options are – I strongly recommend reading the thousands of comments in the relevant threads. Yes, it will take time, but you really do need an overview of the possibilities before you decide what is best for you). I found out what my options really were. I came up with a plan (like many other lazy Americans, I never bothered getting the citizenship in the country where I live – so, I had to start the application process). I’ve been following that plan (took almost one year to organize the application for citizenship and it will take longer to actually get it – at this point I should only have about one year left. The day I get that citizenship will be the last day I am a US citizen).
You mention that you aren’t contributing enough to your family. And that is the reason you can’t reduce your workload? If I’m not mistaken, I also understand that your wife is independently wealthy? I would respectfully suggest that you seem to have your priorities a bit mixed up.
Yes, you can renounce without having your tax situation cleared up. From everything I’ve read here, with regard to renunciation, the tax side and the citizenship side are two absolutely separate things. I suppose in that case you may not want to ever visit the US again. But if the options are suicide or a break with the US that is not completely clean, I guess I would have to choose the latter (however, I don’t believe that those are your only options – and you won’t know your options until you’ve taken the time to read the relevant threads). That is definitely the option that will cost you the least amount of time though.
You could move your family to the US (it’s an option; again, if I had to choose between suicide and moving back to the US, I would definitely choose moving to Mordor)
You can also renounce WITHOUT having another citizenship, and become stateless. Legally it’s possible. Although I could take that option without too many adverse effects (not able to travel until my citizenship comes through), I have no idea what the ramifications would be for you in Japan.
You can also do it yourself (as others have mentioned), the 1040’s, the FuBARs, whatever. File everything you need to, to the best of your ability, to get to the requisite number of years and then renounce/relinquish when you get your Japanese citizenship. Do your final paperwork. All to the best of your ability. They can’t take money from you that you don’t have.
Good luck
@Japan T, regarding the “enhanced reporting” you mentioned. Something doesn’t sound right about that. I’ve never heard anything like that. Is it possible you misunderstood what they wanted? In any case, you might want to consider simply ignoring that.
The IRS sent a letter addressed to me within the tax return packet stating that from that year foreword I was required to provide the exact dollar amount for each payment and write an essay describing how I arrived at the dollar amounts I provided. Shocked by this sudden overwhelming requirement, I called-an non toll free international call in the middle of the night-the IRS and asked if this new requirement was really necessary. They confirmed that it was.
I called the IRS a couple more times for other issues and asked again about the enhanced reporting and they assured me that I must do so or be heavily fined.
In the more than ten years since the enhanced reporting requirement, I have not met a single other person who has been given this requirement nor even HAVE heard of it. I have no idea what it was about nor why I was required to do so. The IRS gave no reason but at the time I had the impression that it was a new and universal requirement. I have a couple of theories but I won’t waste your time with them.
I am not actively considering suicide but understand the thinking behind it. Since I found out about CBT and the rest three years ago I too have read as much about this as possible, especially here. I have not found mention until this thread that one can successfully renounce without getting caught up with their tax filings. If we can, why does anyone bother to spend the time and money to do so? In fact, if getting clear of the IRS via renouncing is as easy as some on this thread say, why the Charter Challenge? Why can’t they just renounce as their government suggests? Indeed, why are we even here discussing this? Why does IBS even exist if it is so easy to get clear of these obstacles? I do agree that I am missing something but what is it I am missing?
I can not make more time. Long before I learned of this problem and before my child’s arrival I routinely got 4 or 5 hours of sleep a night. A habit acquired in the navy, one I have been trying for two decades now to shake. I used to start work at 8 or 9 am and finish between 10 and 11:30 pm, depending on the day. Much of that time was spent commuting from one job to the next. But at least I got my college loans paid off.
After my child’s birth I gave up my early morning and evening lessons to take the kid to day care and to pick them up, my wife having by far the more important job. This greatly decreases the hours I have available to earn. The administrative work at my remaining positions has been becoming more and more burdensome, so much so that I had to leave one of my positions to free up a day with out the family around to do my paperwork.
Soon after leaving the one job I quickly lost several more. If I were superstitious I would say that I lost the others because I gave up the one. Every time I have left a position because I was too busy it has resulted in me losing several other jobs. I am beginning to think that I keep too many jobs too long. That my performance at the jobs I want to keep has slipped farther than I was aware and that those employers have decided on letting me go before I am able to get back on my game after leaving one of my jobs.
Having lost three very important positions in addition to the one I quit my family is in a precarious position. If I lose any more hours my child will be kicked out of day care. There is an extreme shortage of daycare facilities in Japan. We are very, very fortunate to have been able to get our child taken. Two other families we know with children the same age as ours did not get in. One could not find an opening for their child for a full year after ours got in. The other still hasn’t found a school for their child. The kids are now over two years old. However, twice a year we must reapply and certify our incomes and working hours. The income determines how much we pay the hours eligibility. I lose more hours he loses eligibility. So I must use time job searching instead of working towards a new citizenship.
While I have entertained the idea of being a house husband and raising my child, this would ruin their career opportunities, in short their future would be very bleak. If I am no longer with my family, they get the education they need.
I have nothing else to give up to make time for even working on Japanese or another citizenship. I do not watch tv and actually know how many hours I watched the past two years. This year so far has been zero. I have no control over my schedule. AH! I just remembered that I got an email from one of my bosses Friday! I have to proofread a submission to a medical journal by tomorrow. I have to relearn much of the Japanese language I learned in college, prepare the docs needed for the citizenship application and whatever is actually needed to renounce USC and get all this done before I lose either my passport or bank account. From where can I get the time?-A question to myself.
@JapanT, from many posts I believe that we share much in common and a similar mindset.
In another post, I believe you rightly took apart the straw man argument on the US and military spending in regards to how it is a rather small amount to the total pie. But let me add something to that which I believe ties the proverbial knot…..
The amount of revenue that FATCA generates based on the most favourable assumptions is far smaller than what the USA spends on neocon empire building enriching the military industrial complex.
I am heavily influenced by Ronald Reagan as he was the last man of peace to occupy the Oval Office. He built a lethal military force which was not used on his watch!! Clinton, Bush and Obama have diminished the lethality and decided they want to use the military.
Enough said…..
I relinquished a decade ago do not have a CLN but do have formal documentation from the USG that confirms I relinquish. My situation is far from cookie cutter….. To this day I continue to have a great love for the people of the USA.
FATCA drove me to alcohol abuse to the point where my body chemistry was at the breaking point. My doc who does not understand the psychological implications of FATCA told me to stop drinking while my body could still recover and then maybe move back to the USA as its so great to live there!!! Anyways, I did follow point one, am now dry and feeling healthy again with a far clearer mind………
Some of what I say is a repeat of what others say but hear me out……………..
First, google the Serenity Prayer and read it!!! They use it at AA.
You are the kind of guy that needs a plan….in writing with pencil and paper.
Long before FATCA I yelled that every expat needed another passport. Democrats Abroad at a conference in Italy said the same thing last month!!!
You need a plan to get another passport…..figure it out and start working on it. That is something you have control over and gives you a goal.
If you take JC you must renounce but you can always request that it be waived based on cost and by the time you do ask, they may be willing to listen like some other countries are now doing.
Backup plan is another nationality by descent from grandparents. Less appealling but its a plan.
Getting into US compliance is not something you do until you know what the lay of the land is!!! I have now run into persons who do returns on paper and never file them, they just want to know!!
BTW, fill the forms out the simplest way possible based on YOUR understanding. Allocate two hours per return and do them. Do not allow the returns to take over your life, put them in a mental box.
The day you get alternative citizenship, you relinquish on paper. Get someone to witness a statement of intent.
Next especially if JC and they insist you get a CLN, get an appointment.
After you check out with State, you and only YOU decide to do streamlined. But by then you have a stack of paper returns. Note doing five years with five years FBARS should only take 20 hours, do not spend any more time than that. YOU are in control not them!!!
If you file streamlined and you get a letter in the mail you can ignore it, return to sender or simply state you have no other information. But you are no longer American and do not live in the USA.
If you do not want to file after you get your CLN and that allows you to sleep at night, then that is what you do.
@jJapanT, “Why does IBS even exist if it is so easy to get clear of these obstacles? I do agree that I am missing something but what is it I am missing?”
It is a very deep ethos issue…..
You already know that Brockers are from a wide variety of political leanings!!!! Some to the right some to the left……………..persons of faith, persons that are militant athiest.
But on this issue we have joined hands!!!
I call it the Spirit of 1776 and have written that the American Ethos which built America is alive and well in it expats even those who are really accidentals!!
Look at Boris Johnson and his political actions, in 1776 he would have been a signer to the Declaration!!
I gave up my US Passport and it was voided by State. My place of birth is ambiguous so I can open accounts with peace but I remain in the fight because it is right.
Do you remember back in the day in the homeland when guys like us condemned those damn Europeans for telling us what to do in OUR Country?
In our respective Nations, we have constitution like documents that guarantee us all EQUAL rights and we will not stop until we are treated EQUAL in all regards to others.
Under Irish Law, you are Irish or Alien!!! FATCA creates a third Category and that is a Second Class Irish.
The Irish Gvt MUST hand over the financial information of ALL Irish Nationals in Ireland or hand over none.
So yes, we are fighting for a higher ideal……..fighting for what is right.
Emotionally….on par when you signed your enlistment document.
@Mark Twain
I don’t have Twitter. Tried to set it up a few years ago while my wife was working overseas but was unsuccessful. Haven’t tried since.
Should have added that I do have an use gmail.
George
Thank you for your advise. As I tell my students, it is impossible for most of us to give each subject our full attention. Some re easy and do not need it, others not so important to us and thus do not warrant it. Those we need or are difficult demand the greater share of our efforts.
A problem I had is that despite three years of studying what has been posted here, I have not been able to decipher that which requires my utmost effort and that which does not. Your post offers some much need clarity in this regard. If others have said similar in the past, I have either over looked it or was in a frame of mine in which it did not register.
I understood your points on why IBS exists and why even those who have freed themselves are still posting. Let me thank you and others for your continued support.
My point was more to the need of IBS. If it is so easy to free ourselves from these unjust obligations foisted upon us, then would there be a need for IBS? I don’t think there would, for the solution is easy and thus no need for a group such as this.
Clearly, there is a need for IBS, thus I have a difficult time believing it so easy to to free oneself from from this.
Your comments on Reagan and other topics are very much inline with my own thoughts. I have never advocated a second passport as I had not realized the importance, the possible need for one. I have, however been warning everyone I could about direct deposit and all this electronic data, financial and otherwise. And yet, even now with the almost constant news of this data bank being hacked or another most folks still respond with “If you have nothing to hide…” Or “”Oh come on! What’s the worst that can happen?” We are now living it and people still do not see the danger.
As some have suggested, I am willing to discuss this elsewhere instead of hijacking other people’s threads. Sadly, well not really sadly, I do not have have Twitter or Facebook or line any other of these. Apart from the privacy concerns, I just do not have the time. But I do have email.
One more question to George.
I used to have five accounts, still just twenty hours?
@Japan T, yes I stand with the total time commitment. We have both been giving jobs to perform in our past with strict timelines and we have both met those timelines. It is now part of our DNA.
Allocate the time, do the job and the end product is the end product. I mean that with great sincerity and with sound reasons. Spend no more and no less time on the task. That keeps you in control of your life not someone else controlling you.
@JapanT, in a few weeks ask one of the moderators as some know me to give you my email address.
@Japan T – Enhanced reporting: I’ve never seen or heard anything like it. If you can’t find instructions on it in the instructions for the 1040 and schedules, my advice is to forget about it. Perhaps the person you talked to was confused about your situation (personally, I refuse to call the IRS; it’s a huge waste of time. They know less than I do).
“I am not actively considering suicide”
I am very very glad to hear that!
I now understand your time situation. I see now that it is not simply work = money. Perhaps, in your specific case, you should consider relinquishing as soon as you get your Japanese citizenship, without getting caught up with your tax filings. This solution is not without consequences (see below). Heck, you might even want to look into what happens to you if you become stateless in Japan (i.e., renouncing without having another citizenship). However, obviously only YOU can make the final decision for your specific case, after weighing all the options.
“Since I found out about CBT and the rest three years ago I too have read as much about this as possible, especially here. I have not found mention until this thread that one can successfully renounce without getting caught up with their tax filings” and “As some have suggested, I am willing to discuss this elsewhere instead of hijacking other people’s threads”
There are many threads at IBS set up to discuss specific situations. You can see all the links on the right-hand side of the screen. Especially check out the links under the headings “Ask Your Questions About” and “Important information”. You need to read a lot (there are now several years of posts). It takes a lot of time. However, I found that I didn’t even have to ask any questions at all: all of my questions had already been addressed dozens of times (from slightly different angles – very valuable info!). I believe the answers to most or even all of your questions are embedded in those comments somewhere as well (for example, it has been mentioned many many times that you can renounce without getting caught up with your tax filings).
“If we can (renounce without getting caught up with tax filings), why does anyone bother to spend the time and money to do so?”
Renouncing/relinquishing means that we are no longer US citizens; it DOES NOT cancel the obligations that we had/have. I do not want to risk being barred from visiting family in the US or being nabbed at the border because I did not fulfill my tax filing obligations. The US does not seem to be doing anything like this at the moment, but I don’t want to have to worry about it now or in the future.
Basically I want as clean a break as possible, because I do not trust them and I do not trust what they may do in the future.
I’ll even do you one better: as George suggested, if you get your new citizenship with the intent of losing your US citizenship, then you have ALREADY lost your US citizenship. The CLN in this case is just confirmation and documentation of this fact and is not even legally necessary from what I understand (remember, I’m just regurgitating what I’ve read – I’m NOT a lawyer). HOWEVER, the US government wants you to jump through their hoops and I suppose they want the $2350 as well. Will they refuse entry into the US to an ex-US citizen who relinquished in this manner without a CLN? I don’t want to take that chance or worry about it, now or in the future. Also, if banks in Japan start closing accounts belonging to US citizens, they will want to see a CLN if you claim that you are not a US citizen. In such a situation, I think it is unlikely that they will accept a witnessed statement of intent (I’m assuming that they will know your birthplace, which I assume is in the US).
“I used to have five accounts, still just twenty hours?”
To be honest, filling out FBARs is not that difficult or time consuming. In fact, if you have account statements for all five accounts for all five years, it might take considerably less than 20 hours (obviously the first one will be the “hardest,” but then all the others after that will be much easier)
On the other hand, I don’t know if you’ll be able to stay within the 2 hours recommended by George for each return. My returns have all taken substantially longer than that (unfortunately, I’m self-employed).
For what it’s worth, a lawyer friend of mine, who is very aware of what is going on with FATCA and the U.S. cash grab and trying to extort and shakedown as many so-called U.S. persons as possible.
He advises all such clients, who don’t live in the U.S., and who may have never lived in the U.S. not to communicate or correspond with the IRS in the English language. If you are, for example, Korean, and live and pay taxes in Korea, and also hold Korean citizenship, but are considered to be a U.S. person, for tax purposes by the IRS, if for any reason you need to reply to the IRS from Korea, then you should only do your correspondence in Korean. Same for Canadians in Canada, as French is an official language in Canada, you too should only reply in French. This is completely legal, as these are the official languages of the countries that a victim of a U.S. IRS extortion attempt and shakedown overseas use in their daily lives.
If the U.S. IRS believes that it has tax jurisdiction over the entire world, both on targeted individuals and targeted businesses connected to them, all considered U.S. persons, then they must deal with people in the official and legal language used in each country that they believe they have jurisdiction over. You have a right to demand forms, translations of all laws pertaining to FATCA compliance, tax filing and FAQ questions in your country’s language. As long as you answer any demands, you are fine. They will need to hire translators, etc., making their extortion racket very complicated and impossible to manage. That would quickly put an end to this mafia-like system quite quickly.
@Norman Diamond – “Incompetent yes. Weak no. They even get to violate court orders and courts let them do it. Even when IRS exhibits contradict each other, courts blame the victims.”
In America, very likely. Not so where I live.
@Norman Diamond – According to what I’ve read online, the FEIE was cut in the Tax Reform Act of 1976 (Ford administration), and restored in the Tax Reform Act of 1978 (Carter administration). Have I got it wrong?
@Norman Diamond – “Isn’t the entire purpose of FATCA that the IRS will pick out individuals and pursue them?”
It’s the non-filers who (I’m guessing) will be most difficult for the IRS to target. The IRS may know nothing about them beond what they get in the FATCA stream. That makes it expensive and time-consuming to build a case, and difficult to assess whether there will be a payoff big enough to justify the investment.
@Bubblebustin – “I think it’s all going to depend on how big the bank balance is for the IRS to pursue anyone. They might also be happy with what they get from just shaking the trees without actually going directly after anyone.”
I think it will also, and perhaps primarily, depend how much information they’ve got, in addition to the FATCA data. They’ll have a lot of information about regular filers – and regular filers are also the most likely to have US income/assets. Non-filers will be much more challenging, it appears to me, unless the targeted person chooses to comply and provide the missing information.
However, no man/woman knoweth the mind (or the future budget/powers) of the IRS. I’m only speculating.
@JapanT
I meant the 2350$
Maybe I am mistaken, but I thought if you renounced it would give you a bit of breathing time to then decide how you want to proceed from there. Just renouncing gave me a sigh of relief. You need some relief to think clearly about how to proceed. Not everything jumbled together at once, but step by step with a clear head.
I also think it would be advantageous for your psyche to find some company in person – face to face with a bottle of sake. Somebody else in Japan in your kind of situation. IBS may not be enough and feeling alone always makes things so much worse.
@JapanT
Oh and don`t always think of the worst. Concentrate on the possibility of a best outcome for yourself.
I hereby ask the moderators to give my e-mail address to Japan T. Japan T, if we don’t reach each other by e-mail, please phone me on a Saturday, Sunday, or Wedesday at 042-555-1768. If you’re not near Tokyo it might be cheaper for you to phone 050-1349-5464, which is routed over the internet but still calls my phone. I’m not home all day those days but you could leave a message on my machine or try again if you miss me.
“I used to do my own tax return until the IRS, for reasons I have never learned, demanded that I compute the exact dollar amount paid each payday under threat of a $10,000 fine for each inaccuracy.”
Did the IRS write that demand and threat in a letter? If so, I need a copy. If the IRS told you orally over the phone, I might need you to sign a declaration though I’m not sure how to get it notarized while you’re in Japan.
The IRS proved in Tax Court that honest declarations are penalizable and the US Department of Justice proved the same in Court of Federal Claims. The IRS coerced me to sign false declarations and the IRS confirmed in writing that my perjured declarations met their needs. But if false declarations by you wouldn’t meet their needs, we have pretty powerful stuff. Both honesty and perjury are penalizable, so there is nothing that a US person can do.
“At this time time I was also told that there were grounds no fines on unfiled returns if no tax is owed.”
Did the IRS tell you that or did someone else?
“Threatened with fines if I made a mistake reporting and none for not filing, to not file was the only option for me.”
Except that by not filing you lose your FEIE, and by not filing you become a covered expat.
“You can also renounce WITHOUT having another citizenship, and become stateless. Legally it’s possible. Although I could take that option without too many adverse effects (not able to travel until my citizenship comes through), I have no idea what the ramifications would be for you in Japan.”
I think Bobby Fischer’s experience answers that for us.
“According to what I’ve read online, the FEIE was cut in the Tax Reform Act of 1976 (Ford administration), and restored in the Tax Reform Act of 1978 (Carter administration). Have I got it wrong?”
I didn’t recall the exact years but thank you for reporing this. In another thread here on IBS, someone blamed Carter for the elimination of FEIE in the 1970’s, but I’m glad to see that he was actually on our side.
@iota
“It’s the non-filers who (I’m guessing) will be most difficult for the IRS to target. The IRS may know nothing about them beond what they get in the FATCA stream. That makes it expensive and time-consuming to build a case, and difficult to assess whether there will be a payoff big enough to justify the investment.”
They find no filers, like myself, through our passport renewals. That is how I learned of this. Printed right on my passport renewal form were statements that State will share all information with Treasury. Now they also have info from FATCA to pair with the info from State. Those who have not renewed their passports with in the past couple of years are probably not on the radar yet. Those of us who have are on the IRS radar. Is anyone looking at the screen, who knows but they do have my information.