(10) Lying to prevent a crime is a virtue.
Commentary: USA citizenship-based taxation is a crime when applied to people living outside the USA jurisdiction. It is theft at multiple levels: (1) It is territorial theft of another country’s tax base. (2) It is theft to tax a person without representation. (3) It is theft to tax a person for the benefit of others. Furthermore, many of the reporting requirements of FATCA and FBAR cause crimes to be committed. The government of Canada, e.g., has committed a crime by sending the bank account information of Canadian residents and ciitzens to the IRS–it is national origin discrimination which is forbidden in the charter of rights, and it is a violation of their right to privacy.
It may be necessary to lie to prevent the IRS and one’s own local government from committing crimes. One may have to lie to a bank about where one was born. One may have to omit details when filling out forms.
While lying to prevent a crime is a virtue, lying to cover up a crime is politics as usual.
Previous Discussion:
Rahab’s renunciation of citizenship–Was she a harlot, liar, traitor and tax cheat or a heroine of faith?
California genocide and the Indian Tax Revolt of 1851
Fair tax, unfair tax: or When is it paying my fair share?
Is it taxation without representation if you can vote? Damn right!
Previous Petros Principles:
(1) What the IRS can’t know unless you tell them can’t hurt you.
(2) Fear makes the IRS more dangerous than it really is.
(3) Haste is the devil.
(4) Those most hurt by the IRS’s persecution of expats have engaged the services of cross-border compliance condors.
(5) Those least hurt have done nothing.
(6) Home is where you live.
(7) An unjust law is no law.
(8) Don’t feed the beast.
(9) Do the minimum in trying to achieve the least bad outcome.
(10) Lying to prevent a crime is a virtue.
(11) Cynical derision of Homelanders is healthy.
About: Petros is the alias of the founding administrator of the Isaac Brock Society. Petros Principles are guidelines that have helped him and others deal with the United States’ world-wide tax invasion.
@Publius
Yes I know. I used to file from Japan, never owing anything, and then they demanded more documentation than I could provide. Haven’t filed since. Now they want even more documentation and even on those around me who are not even USCs. It was too much back a decade ago when I stopped filing and and is even more so now.
But now, I can’t get out.
A very scary part in all this is their grossly misinformed notion of how much the expat community as a whole actual makes. They will never be satisfied with what little they get after telling themselves there is so much to be had.
All of this might cause us to speculate just how the IRS will enforce US tax laws against non-residents.
The only things that might prevent the IRS from fully trying to enforce US tax law against non-residents would be budgetary constraints and maybe politics (CBT will be out of the closet, making the US look like the idiots they are). Will the long-standing position of not pursuing non-residents (which is partially to blame for our current state of affairs) be allowed to stand in spite of the information deluge on non-residents FATCA brings? In sticking with the status quo, it’s really a penalty against those who are non-resident and tax compliant. I know a non-compliant US citizen in Canada who’s determined to vote against Trump, based on issues having nothing to do with CBT. I guess if you’re not paying US taxes in Canada, are happy to never go to the US again and aren’t having your bank account closed, the problems associated with CBT don’t affect you!
I’d like to know at what point in time and WHO within the IRS or US government made the official or unofficial/political decision to not pursue non-residents in general. Does anyone have any idea?
It’s a joke that the US would justify CBT as treating all USC’s equitably when there’s such a big discrepancy between how we’ve been pursued by the IRS. If the US has lost the will it had during the Civil war to start pursuing non-residents because they can no longer afford it politically or financially, then the law should reflect that and there should be a RETURN to RBT.
Good points.
On the budget. Yes the IRS has had their budget cut and they have indeed been pursuing fewer. However, actions against non resident citizens has been up. It think it was a Forbes article, can’t remember where I first saw it but it was over a year ago.
I’m guessing as to the why, but it seems that they have so bought in to the notion that we are all multimillionaires that they think they can get more bang for their buck going after us.
With the mention of how CBT’s roots originated during the (U.S.) Civil War, I’ve always wondered if the (Union) government tried to tax those living in the Confederacy or not while the states were seceded?
@Bubblebustin – “I suspect the IRS will be happy just to process people who present themselves on a voluntary basis, denying us the ensuing screams of a mass fleecing.”
I agree. By far the most cost-effective incentive for encouraging CBT compliance is the fact that a lot of US citizens abroad want to retain their US citizenship and continue their life as an American citizen in good standing, if they can see a feasible way to do that. Streamlined will have picked up a lot of those, at little cost to the IRS.
Intended renunciants who go through Streamlined in order to file 8854 are no doubt less valuable, since most will be leaving without paying the exit tax, but they’re still cost effective: a lot of them will be sending in a cheque without requiring any action at all on the part of the IRS.
Some renunciants won’t be sending a cheque and some (me included) won’t go through Streamlined at all but just file the minimum. And some renunciants won’t file anything.
Figuring out which of these non-payers might be worth chasing would probably not be easy, if the person has lived abroad without filing for many years, or perhaps has never filed. It might easily wreck an agent’s targets to spend time fruitlessly on a person who, it eventually turns out, can’t pay / won’t pay / doesn’t owe anything or can’t be proved to owe anything.
@Bubblebustin – “I’d like to know at what point in time and WHO within the IRS or US government made the official or unofficial/political decision to not pursue non-residents in general. Does anyone have any idea?”
Wasn’t it the other way round? There was never any systematic attempt to enforce CBT until the 1980s? That’s when US passports acquired a notice stating that US citizens abroad were still required to file. My expired passports from before that time don’t mention it, and the IRs never complained that I wasn’t filing, even though they had my UK address – they sent me a refund cheque for my last year of filing before I left the US.
Even after the notice appeared in the passports, there was no real attempt to enforce compliance. I suspect that if I hadn’t accidentally learned of the existence of CBT because of FATCA, after fifty years of non-filing, I could still be in blissfil ignorance today, and no IRS letters would be dropping on my mat.
@iota
“Figuring out which of these non-payers might be worth chasing would probably not be easy, if the person has lived abroad without filing for many years, or perhaps has never filed. It might easily wreck an agent’s targets to spend time fruitlessly on a person who, it eventually turns out, can’t pay / won’t pay / doesn’t owe anything or can’t be proved to owe anything.”
Except that FATCA will be delivering us to the IRS. They don’t have to do anything.
I was wondering, how did the IRS know the BoJo sold his home in the first place. UKRose learned of FATCA etc. via a letter from her bank. I learned through the passport renewal process.
How have others learn of this?
@Japan T – “Except that FATCA will be delivering us to the IRS. They don’t have to do anything.”
What makes you think so? Has anyone received a letter from the IRS saying “We see from FATCA that you are a US citizen so why aren’t you filing?”. How would they know whether you should be filing or not, just from a report of a bank account?
CBT enables FATCA – not the other way round.
@Japan T
I never even noticed the fine print in my US passport, never read it.
A friend of a friend who knew a US citizen here that might be able to recommend an accountant to me because I was looking for tax accountant recommendations said she found out when she inherited her mother’s estate in the US. before then she lived here in the UK blissfully aware. It became a real mess apparently. I didn’t ask too many questions though as I didn’t know her personally. Just got the name of the accountant from her.
@iota
CBT has been on the law books snce1860 something but was never an issue until FATCA. FATCA enables CBT. The IRS gets a report from a bank with all the US persons who have accounts with them. An IRS employee enters the name in the IRS taxpayer data baseto look for matches. Name comes back as either not in the data base or with a lapse in filing and that person is caught.
CBT is the original eabling legislation that gives purpose to FATCA but FATCA allows the IRS to enforce CBT.
@UK Rose
I didn’t catch it on my passport either. There were statements on my passport renewal. apliication that hinted at this and through lots of research I found out about FATCA etc.
“The IRS gets a report from a bank with all the US persons who have accounts with them. An IRS employee enters the name in the IRS taxpayer data baseto look for matches. Name comes back as either not in the data base or with a lapse in filing and that person is caught.”
Caught how? The IRS doesn’t have the power to “catch” a resident of another country. We do have laws, you know. Another person or organization, whether domestic or foreign, can’t just claim that a UK resident “must” owe them money and help themselves. In America, yes. In the UK, no.
FATCA can give the IRS evidence to support a tax evasion case in a US court, provided the IRS already has tax records to show that the balance reported under FATCA is not consistent with what the person has reported to the IRS. FATCA reports alone are not evidence of crime, even by the corrupt standards of the US criminal justice system.
Passport revocation. Passed into law Dec 03, 2016. If they don’t catch it before time to renew the passport, then passport renewal denial.
That’s how those who are still USC get caught.
For those fotunate enough to be exUSCs, law or not, it is all to easy to see the IRS bullying banks to withdraw money from USC bank accounts. Far fetched in some countries, at the present, but that is how it is done in Japan. Lost your joob and are behind in your national health care payments, you go to withdraw money from your account to buy food and your account iis empty. You ask the bank and kearn that the city office has drained it to pay your national health insurance bill. No judge, not court involvement, purely an administrative procedure. I know people personally who have suffered this.
Given that every nation on Earth has given the US sole power to determine who is a US person for tax purposes, given that ever nation has agreed to admend their laws protecting privacy to suit US demands, given the constant stream of new laws and regulations from the US, local legal protections are flimsy at best.
But again, for people trapped like me, it is through FATCA that they learn of us and our with passports that they catch us.
@Japan T
I think actually they have been trying to find US tax payers even through passport renewals. I never had to give my social security number when renewing until the last one and I didn’t even know my number because I never used it to work. I had to get my parents to look it up. never even thought twice about it and was never contacted.
Regarding Fatca even if your details eventually get sent, there will be mountains of data to sort through. You are already in the system and how would they know that you still had to file. You could be under the filing threshold now or be the parent that is staying home watching the kids. It’s when you start having big bank balances earning lots of interest that might be of concern because the IRS might be expecting to see this interest on tax returns. You probably don’t even owe tax so it’s just a compliance problem you have, not a tax problem. If you have accounts with over $10,000, you can just file fbars for peace of mind. I am sure there are many US citizen housewives or househusbands or pensioners that don’t earn enough to file but still need to file fbars.
Iota, don’t forget those FBARS that hardly anyone has been sending to the Financial Crimes Enforcement Network. FATCA helps identify those that are missing.
Not sure how you see CBT as enabling FATCA. FATCA data is useful whether CBT exists or not. There are resident US taxpayers who will be included in the FATCA reports for whom CBT is irrelevant but FBARS will trip them up. Also you said yourself you would likely be living blissfully
ignorant of CBT if not for FATCA, just like most of us who frequent this blog. FATCA is the tool used to both inform and arm twist people into complying with CBT. Without FATCA, CBT is toothless as there is no list of Bank accounts belonging to US owned persons being sent from their
country of residence and dominant nationality to a foreign country. FATCA empowers the US government to enforce CBT.
@UK Rose.
Yes, they began with passport renewals before the revocation was passed. My application of three years also required SSN and had statements that it would be shared with everyone who wanted it. This is illegal and researching into it I discovered FATCA etc.
I feel that the newly required information for passport renewal was in preparation for denying renewals and revocation once those laws were fnally passed. In other words, regs were published and implemented before the laws requiring them were passed.
As for mountsins of paperwork, that’s what computers are for. Very simple to just type in a name and see what their status is. As most of us owe no taxes, I do not, it was the fines they seemed to be after in addition to the data.
I maintain that it is really the data that they want hence the huge FBAR fines. You owe taxes but have been filing=problem. You owe no taxes but have not been filing=very big problem. However, it seems that the IRS may have stopped their recent practice of automatically applying the highest penalties to nonfiliers without tax owed.
@Black Kat
That is exactly how I read the situation.
“Passport revocation. Passed into law Dec 03, 2016. If they don’t catch it before time to renew the passport, then passport renewal denial.
That’s how those who are still USC get caught.”
For someone in your position, with no other citizenship, that’s indeed a lever the US can use, I agree. If someone in that position wants to travel, and has no other passport, that’s a strong incentive to comply. It has nothing to do with FATCA though.
“For those fotunate enough to be exUSCs, law or not, it is all to easy to see the IRS bullying banks to withdraw money from USC bank accounts. Far fetched in some countries, at the present, but that is how it is done in Japan.”
The IRS bullies banks in Japan into taking money from the accounts of USCs? I don’t see how that can be, as there is no IGA model which permits such a thing.
CBT is very unfair, and I wish you luck escaping. Until then, it would surely be better for your state of mind not to see it as even worse than it is, but to cheer yourself up by remembering that the IRS doesn’t have unlimited power, and you do have rights.
Don’t let them make you feel helpless, because that makes it harder to focus on the solution.
@BlackKat – “Not sure how you see CBT as enabling FATCA. FATCA data is useful whether CBT exists or not. There are resident US taxpayers who will be included in the FATCA reports for whom CBT is irrelevant but FBARS will trip them up. ”
Without CBT, FATCA would be similar to CRS – those with offshore accounts would get reported on, but those without offshore accounts would not. That’s how CBT enables FATCA.
“Also you said yourself you would likely be living blissfully
ignorant of CBT if not for FATCA, just like most of us who frequent this blog. FATCA is the tool used to both inform and arm twist people into complying with CBT. ”
Yes FATCA means that people who never heard of CBT find out about it, but it doesn’t determine what people do about it. It certainly didn’t cause me to feel I’d better comply, on the contrary it served to let me know I needed to renounce.
“Without FATCA, CBT is toothless as there is no list of Bank accounts belonging to US owned persons being sent from their
country of residence and dominant nationality to a foreign country. FATCA empowers the US government to enforce CBT.”
FATCA can provide additional evidence for the IRS to use in bringing a case in a US court, but without CBT there would be no case. It doesn’t work the other way around. The IRS can and does bring court actions against USCs who live abroad, without FATCA evidence.
Enforcing collection is a different matter, of course. Easy if the USC has US assets, or there is a collection agreement. Otherwise it may be impossible.
@iota
““Passport revocation. Passed into law Dec 03, 2016. If they don’t catch it before time to renew the passport, then passport renewal denial.
That’s how those who are still USC get caught.”
For someone in your position, with no other citizenship, that’s indeed a lever the US can use, I agree. If someone in that position wants to travel, and has no other passport, that’s a strong incentive to comply. It has nothing to do with FATCA though.”
This is a lot more powerful than just keeping one at home. No passport means no visa. No visa means I either return to the US or become an illegal alien in Japan.
FATCA is one method for the IRS to learn who is living overseas, where we are living and thus pull our passports causing us to leave our families, homes, jobs and friends and “return” to what has become an alien land.
““For those fotunate enough to be exUSCs, law or not, it is all to easy to see the IRS bullying banks to withdraw money from USC bank accounts. Far fetched in some countries, at the present, but that is how it is done in Japan.”
The IRS bullies banks in Japan into taking money from the accounts of USCs? I don’t see how that can be, as there is no IGA model which permits such a thing.””
No, not yet anyway. But there is a mechanism in place and the tradition and practice of seizing depositor’s (Japanese nationals included) cash at the request of the local government. Japanese law does not protect nonJapanese. Japanese prosecutors and judges are taught that foreignors and yakuza have no human rights. As Japanese banks report directly to the IRS, as there is already a tradition of raiding bank accounts on request by government and nonJapanese are without rights, it is very easy to see Japanese banks collecting on behalf of the IRS.
As the lawsuit it Canada shows, Canadians claimed by the US are also without protection of that nation’s laws.
But, yes, dual nationals are in a different boat. We are all sailing the same turbulant sea but are in different boats. Your’s has life vests(second nationality), mine does not.
@iota
CRS came after FATCA. FATCA is the driving force. Without FATCA, CBT would remain dormant as it had since 1860ish. CBT did not change the world, FATCA did.
True, FATCA would be meaningless without CBT, but CBT was toothless for well over a century until FATCA came into being. Yes, the IRS has successfully prosecuted tax evaders without FATCA, but so have other nations that do not have CBT. That is why we had tax treaties.
FATCA is not needed to provide additional evidence as tax treaties had mechanisms for the same. FATCA is a huge fishing expedition catching everyone in its net. Those caught must convince the fisherman that we are indeed small fry before we are realeased.
In others words, FATCA is not needed to enforce CBT as there were ways to do that. FATCA enforces filing compliance only. Filing compliance so that inappropriate fines can be levied unless information they have no legal right to is given and the tax payer’s rights waived.
FATCA is driving all this.
Iota, I’m thinking that you may have a different understanding of the meaning of the word ‘enable’ than I do.
JapanT, no one really knows for sure if FATCA would become meaningless if CBT were to end. Perhaps US would still like to know how much gold it’s US persons living outside USA have, just in case it needs to borrow some.
“FATCA is one method for the IRS to learn who is living overseas, where we are living and thus pull our passports causing us to leave our families, homes, jobs and friends and “return” to what has become an alien land.”
Knowing a USC exists and has a bank account does not inform the IRS whether they owe taxes and does not form the basis of a prosecution, even in the US courts. The IRS can’t revoke passports without showing that tax is owed.
“As the lawsuit it Canada shows, Canadians claimed by the US are also without protection of that nation’s laws.”
As I understand it, Canadian citizens are protected by the nation’s laws from collection of US taxes, but the IGA is local law. A similar situation to that in the UK. Japan does sound like a very uncomfortable place for a USC to live in unless they have Japanese citizenship.
“CRS came after FATCA. FATCA is the driving force. Without FATCA, CBT would remain dormant as it had since 1860ish. CBT did not change the world, FATCA did.”
Yes, CRS is modelled on FATCA but only applies to offshore accounts, whereas FATCA applies to all USCs even if they have never had an offshore account in their life. Neither CBT or FATCA changed the world, except for expat Americans.
“True, FATCA would be meaningless without CBT, but CBT was toothless for well over a century until FATCA came into being. ”
FATCA does not give CBT teeth. CBT is hard for the IRS to enforce because (a) the IRS doesn’t get spoonfed with information about overseas USCs financial affairs the way it does for domestic USCs; and (b) the IRS can’t seize assets or put liens on property when the assets and property are in other countries; and (c) most countries won’t collect tax for the US.
“FATCA is not needed to provide additional evidence as tax treaties had mechanisms for the same.”
It depends on the individual case, obviously.
“FATCA is a huge fishing expedition catching everyone in its net. Those caught must convince the fisherman that we are indeed small fry before we are realeased.”
FATCA is a fishing expedition, but it can’t “catch” anyone. For that the IRS needs evidence of wrongdoing, a successful court action, and a way to enforce collection.
“In others words, FATCA is not needed to enforce CBT as there were ways to do that.”
This is going in circles. CBT mostly can’t be enforced, FATCA or no FATCA. FATCA evidence can help US court case to succeed, but that’s not the same as collecting the money.
“FATCA enforces filing compliance only. ”
FATCA does not enforce filing compliance. How could it? Impossible. FATCA makes it harder for Americans overseas to open bank accounts, and can provide evidence for use in US court cases.
Imputing to the IRS powers they don’t possess does not help anyone.
FATCA is a huge fishing expedition catching everyone in its net. Those caught must convince the fisherman that we are indeed small fry before we are realeased.”
Its US persons, not it’s
Black Kat
“JapanT, no one really knows for sure if FATCA would become meaningless if CBT were to end. Perhaps US would still like to know how much gold it’s US persons living outside USA have, just in case it needs to borrow some.”
But without taxing it what excuse would they use to get it?