Here is the video of the meeting that took place this past Monday, December 5, 2016 at the Atwater Library in Montreal. Once again, John Richardson and Andrew Grossman meet up to discuss, analyze and muse over the situation expats find themselves thanks to the complexity to the U.S. tax code. Bizarre!
Super thanks to David Zimmerly for making the trek (through snow), setting up/videoing, and already having the finished product!
ENJOY & please share widely!
A set of posts form a perfect companion set to this video. On John writes:
This series of posts developed from my “Educational Outreach” program for Americans abroad. It is an effort to respond in a practical way to the questions that people have.
“When in Rome, live as a Homelander” does, when elsewhere, live as they live elsewhere.”
Chapter 5: Living Clean – How to live outside the United States in an #FBAR and #FATCA world
Results of search: "US citizens abroad come clean" https://t.co/MfcAU1EDPK … … – Q: Are #Americansabroad? Filthy, dirty, sweaty or grungy?
— Citizenship Lawyer (@ExpatriationLaw) April 19, 2015
Americans abroad are constantly told that they should “come clean”. They should file their U.S. taxes. This assumes that they are somehow “unclean” or perhaps “dirty”. The life of an “American abroad” is about three things:
1. “Thinking Clean” – The importance of “thinking clean” while living abroad.
2. “Coming Clean” – Atoning for the sins of “living abroad” and entering the U.S. tax system; and
3. “Living Clean” – Living as a Homeland American outside the United States
Whether you have yet to decide about coming into compliance or you have filed (but are unsure whether you or your tax compliance firm has actually done all that is required), check out this set of posts to get a taste of what’s involved:
“Coming Into Tax Compliance Book” – How Americans can come into U.S. tax compliance in a FATCA world
You can’t make this stuff up!
I just had the chance to listen to this in entirety. Bravo and thanks so much to John and Andrew for their discussion of many of the issues that US extraterritorial CBT and twinning of citizenship and taxation create and perpetuate.
It bears more than one hearing.
@Victor, I think that what you hear from the discussion might be considered more accurately as examples of *’sardonic’ humor, or a sardonic delivery and not a signal or indicator of treating these issues and their serious burdensome import lightly.
* http://www.differencebetween.net/language/words-language/difference-between-sarcastic-and-sardonic/
It reminds me of my US citizen father – who was born in and endured the segregated US South and survived (not without scars) that and the Great Depression. He often employed what I came to see as a regional and/or cultural “folksy” style and vernacular at times, though discussing very serious issues of current affairs, history, ethics and social justice – which he was dogged about making himself self-educated in.
While I agree in the main, comparing anyone living in their homeland with those living abroad is comparing apples to oranges.
A quote provided said that Germans would fight the German government if it required them to provide the information the US gov. requires us to provide. Perhaps so, however would doing so put them at risk of losing their families? Can they be forced to leave Germany if they are suspected of owing money to their government? With the passport revocation law, I can lose my passport and thus my visa to live in Japan, and thus my family. I should add that I have been told by tax professionals that the FEIE only applies to those filing tax returns, thus those of us who have not been filing may in fact owe taxes to the US and thus at risk of losing our passports. I am also of the belief and have read that at least some tax professionals share the belief that FBAR fines will trigger the revocation of a passport.
My one major beef with this presentation is the focus on what the law states with little or no concideration of how it is being responded to. While the two presenters mention what FFIs are doing they are still believing the myth that the IRS is hunting for anyone. Yes, it is a myth that the IRS currently need to hunt for any individual for that individual to be at risk. FATCA changed that. The IRS only needs to sit back and wait for our banks, insurance companies, etc to do the work for them.
The statement that the eldery have little to fear as it is unlikely that the IRS will discover them misses the fact that it is not only the IRS that we need to worry about but also our FIs. If our banks “turn us over” to the IRS, we’re done. If our banks require a CLN to prove we are no longer beholden to US tax law then we must have a CLN or lose our accounts.
For myself, and anyone similarly situated, relingishing requires what has been rightfully stated should not be done, turning over my spouse’s, a Japanese national, financial info to the IRS via FBAR due to the joint account we held. Some have pointed out the FBARs are not required to relinquish as long as we do not return to the States. This too ignores the fact that banks are closing USC accounts and that they are requiring CLNs for us to keep our accounts.
For many, reliquishing requires sending their spouses data to the US, or lose their accounts, while not reliquishing will eventually cause them to lose their accounts or their passports.
Standing up and announcing our existance to the US Gov. by fighting them will hasten the last two. Would Germans living in Germany face the same risks?
In the spirt of full disclosure, I have never been one to sit quietly back and allow injustices to stand. I have fought against them in high school, boot camp, a board the two naval vessels I served upon and in the work place both in the US and in Japan. Yet, it was only after great consideration that I sent my lengthly submission to the US Senate’s Subcomission on taxation a year and a half ago. While I have never shied away from such actions in the past, this was very different. I have a family now and it is not just I who will be directly affected by any potential extra scrutiny my standing up might bring about.
When I lose my passport, my children, Japanese nationals, will have to fight the US gov. on their own. When I lose my bank accounts I will be unable to receive pay for any legal employment and any benefits I might be eligible for as one must have a bank account to receive these in Japan. I will thus become a very heavy burden upon my family.
What would these German aquaintances do under these circumstances?
“I have been told by tax professionals that the FEIE only applies to those filing tax returns, thus those of us who have not been filing may in fact owe taxes to the US and thus at risk of losing our passports.”
I am not sure but think it likely that FTC (two Forms 1116) will still reduce your US tax to zero. I guess you file a Japanese tax return each year because you have multiple employers. Most people don’t have to file a tax return but just get a certificate from their employer that shows their earned income and Japanese national incom taxes. I think everyone gets a certificate or bill from their city hall showing municipal and prefectural (provincial) income taxes on earned income. The total of taxes on earned income go on one Form 1116, general. For the other Form 1116, passive income, calculate the pre-tax amount of interest (approximately 1.257 times the amount shown in your passbook) and amount of Japanese tax withheld at source (approximately 0.257 times the amount shown in your passbook).
“I am also of the belief and have read that at least some tax professionals share the belief that FBAR fines will trigger the revocation of a passport.”
I think that is not possible. Even though the IRS administers parts of both Title 26 US Code (income tax) and Title 31 US Code (spying and self incrimination), I think Title 31 penalties are not counted in passport revocation.
“When I lose my passport, my children, Japanese nationals, will have to fight the US gov. on their own.”
They have to get renunciation appointments between ages 18.0 and 18.5. Good luck getting the US embassy to meet such a tight schedule.
Upon further reflection, I do not believe that it is cowardice, nor laziness, nor obedience that cause the apparent lack of concern on the part of most USCs abroad. I believe for most it is the illogical belief that nothing bad can come of good intentions.
The poeple I have the opportunity to discuss this with in person in Japan were right indignant over the Bush era wire taping if phone calls to and from abroad and are really upset over the NSA yet feel it is OK to let the Obama admin. have all the data it requires to combat offshore tax evasion. They constantly ask me “What are you afraid of, if you have nothing to hide?”. I’m told that I nothing to worry about because Obama’s intentions are good. When I ask if they or Obama can personally vouch for each and every individual who will have access to this information, they call me paranoid.
They do not believe that Bush’s intentions were good, so they opposed his policies. They do not believe the NSA’s intentions are good so they are very vocally opposing them. They believe the intentions behind FATCA to be good so they willingly and eargerly comply and regard those who oppose it as unpatriotic and probably criminal.
Another group, some of whom may very well be of an opposing political belief system, seem to just chalk it up to another one of the very many illogical and expensive costs of doing business and have the attitude of “if you can’t take the heat, get out of the kitchen”.
This holds true not only for the people I know personally, but also many who post comments on these issues at various websites.
http://community.seattletimes.nwsource.com/archive/?date=19920329&slug=1483567
‘1915 — Some congressmen find they can’t fill out their returns because the instructions are too confusing. They turn to the House sergeant-at-arms, who thus becomes one of America’s pioneer tax preparers.
One congressman, trying to explain why the tax law is getting more complicated, says: “I write a law. You drill a hole in it. I plug the hole. You drill a hole in my plug.” The remark is widely reported, and a new tax word — loophole — enters the language.’
I wouldn’t count on Congress simplifying the income tax enough for Congress to understand it. Nor enough for courts or the IRS to understand it.
‘1945 — The Internal Revenue begins selling a booklet to the public — “Your Federal Income Tax” — on how to complete Form 1040.’
I wonder when they’ll sell booklets on how to complete Form 1116. Or 3520-A.
‘1985 — Because of computer snafus and gross mismanagement, the nation’s tax-collection system almost collapses. Hundreds of thousands of tax returns are lost, millions of returns pile up in IRS processing centers, refunds worth hundreds of millions of dollars are delayed or incorrect, and fully compliant taxpayers are subjected to unjustified dunning notices and threats to seize property.
Some IRS employees are so overworked and frustrated that they deliberately destroy tax documents and returns. Outside the IRS service center in Northeast Philadelphia, dozens of unprocessed tax returns, and tax payments totaling hundreds of thousands of dollars, are found in a trash barrel. Then-IRS Commissioner Roscoe Egger eventually admits a “serious breakdown” and issues a rare IRS apology to America’s taxpayers.’
Yeah, after he first naturally denied it.
As far as I’ve been able to find, the IRS illegally destroyed 40,000 returns in 1985 and 40,000 in 2001, and the IRS framed innocent filers with charges of failing to file. I couldn’t find how many in 1971.
Umm, If one is worried about losing the FEIE because they haven’t been filing, then they are not filing the forms you mention nor any other forms.
Found this article via Accounting Today.
Owe Back Taxes? Lose Your Passport
NEW YORK (MARCH 30, 2016)
BY BEN STEVERMAN BLOOMBERG
In it, the author links FBAR fines to the total needed to trigger revocation of one’s passport.
Besides, you are assuming that the USG would follow the law instead of revoking passports and making those affected challenge it in court.
“As far as I’ve been able to find, the IRS illegally destroyed 40,000 returns in 1985 and 40,000 in 2001, and the IRS framed innocent filers with charges of failing to file. I couldn’t find how many in 1971.”
And yet ypu say that in is not possible to lose one’s passport due to FBAR fines for not spying on my spouse, on nonUSC.
“Umm, If one is worried about losing the FEIE because they haven’t been filing, then they are not filing the forms you mention nor any other forms.”
If you lose the FEIE you still have the FTC. You can file FTCs retroactively up to 10 years.
Good info for some but not so useful after one loses their passport.