Final indignity perpetrated by @BarackObama admin: @USTreasury SLAMS DOOR ON SAME CNTRY EXEMPTION 4 #AMERICANSABROAD https://t.co/SbMHP8IZZX
— U.S. Citizen Abroad (@USCitizenAbroad) January 4, 2017
You can read it at the Americans Citizens Abroad site. Highlights include:
In denying the request for SCE, the Treasury Department’s final FATCA regulations focused solely on the risk of US tax avoidance. “The Treasury Department and the IRS have also decided that the risk of U.S. tax avoidance by a U.S. taxpayer holding an account with an FFI exists regardless of whether the U.S. taxpayer holds an account in his or her foreign country of residence or another foreign country.” The regulations say nothing about the problem of lock-out. They fix only on the unquantified and un-weighted risk that what must be a relatively small population of US taxpayers residing in a foreign country and banking at their local bank might evade US tax. The regulations do not say whether, and, if so, to what extent, Treasury Department took into consideration the widely-admitted fact that FATCA continues to put the community of 8 million Americans overseas at risk of lock-out from access to financial accounts needed for the management of basic living expenses (paying bills, paying rent, receiving paychecks). The problem of foreign financial account lock-out exists, and it has been proven that the FATCA rules are one of the root causes. The Congressional Americans Abroad Caucus, the National Taxpayer Advocate, and ACA, as well as other overseas organizations, have testified to the existence of the problem and have asked for redress by the adoption of SCE. ACA believes that Treasury Department either missed the point or failed reasonably to balance the considerations.
Updates January 6, 2017: From Treasury Regulations AKA “The Horse’s Mouth”
1. DEFINITION OF U.S. ACCOUNT
Comments requested that the definition of a U.S. account exclude accounts held by U.S. individuals resident in the same jurisdiction as the FFI with which the account is held. This comment is not adopted. The U.S. federal income tax system largely relies on voluntary compliance, and third party information reporting of the financial accounts of U.S. taxpayers is used to encourage voluntary compliance. For this reason, U.S. financial institutions are generally required to report under chapter 61 U.S. and foreign source investment income paid to account holders that are U.S. individuals. However, before FATCA, FFIs (in particular, non-U.S. payors) generally were not required to report foreign source payments made to U.S. taxpayers. The information reporting required by FATCA is intended to address the use of foreign accounts to facilitate tax evasion, and also to strengthen the integrity of the voluntary compliance system by placing U.S. taxpayers with accounts held with FFIs in a comparable position to U.S. taxpayers with accounts held with U.S. financial institutions. This is the case even for U.S. taxpayers resident abroad, since U.S. citizens and U.S. resident aliens are subject to U.S. income tax on their worldwide income regardless of where they reside and regardless of whether their accounts are maintained by U.S. financial institutions or FFIs. The Treasury Department and the IRS have also decided that the risk of U.S. tax avoidance by a U.S. taxpayer holding an account with an FFI exists regardless of whether the U.S. taxpayer holds an account in his or her foreign country of residence or another foreign country.” https://www.federalregister.gov/documents/2017/01/06/2016-31601/regulations-relating-to-information-reporting-by-foreign-financial-institutions-and-withholding-on
No, the administration of Barack Obama did NOT miss the point. The point is a simple one:
Time for #Americansabroad to understand. The @BarackObama admin is intent on destroying you. Renounce and rejoice! http://t.co/9KwyKQQx5D
— U.S. Citizen Abroad (@USCitizenAbroad) February 11, 2015
Unfortunately it’s the proponents of the FATCA Same Country Exemption Proposal who are missing the point! It’s simple: “All Roads Lead To Renunciation“.
******* UPDATE THURSDAY JAN 5, 2017
US Treasury Dept ‘slams door on Same Country Exemption’ for expat Americans https://t.co/MTbVdCzl0E via @intlinvestment
— Patricia Moon (@nobledreamer16) January 5, 2017
Great article on this here Brock gets a mention (and link to earlier one)
‘Final indignity’ Among the places expats turned to vent their anger on Wednesday, as the news about the Same Country Exemption came out, was the Isaac Brock Society website, where a regular blogger who goes by the name USCitizenAbroad referred to the decision as the “final indignity perpetrated by…Barack Obama”. The Isaac Brock Society is a Canadian website that was founded in 2011 by a number of Canadian-Americans who were fed up with the way FATCA and other relatively new US laws aimed at curtailing tax evasion were costing them money and causing them problems. President Obama had signed FATCA into law in March, 2010, in the wake of the global financial crisis.
As long as they file the requied forms and spy on all they have financial connections with.
“One of the most notable differences between the US and Canada is that in Canada, by paying a departure tax one need not renounce one’s citizenship to end one’s tax obligations.”
Mostly true. In my case the exit calculation resulted in a negative amount of tax and I’m still waiting for my refund. But Canada’s diaspora still have complications. A non-resident alien of Canada can invest in a Canadian limited partnership[*] and not have to file a Canadian return. As a non-resident citizen who made the mistake of investing in a Canadian limited partnership[**] I had to declare the flow-through of the Canadian sourced portion of the partnership’s losses and gains, but the general partner always refused to supply enough information, and I still don’t know the correct amounts of Canadian taxes for those years.[***] I hope never to repeat that mistake. I asked my mother to exclude me from inheritance of her shares. I hope she did.
[* For example the limited partnership that Brascan turned itself into; I don’t remember the name.]
[** Not Brascan, which was still an ordinary company at that time.]
[**** Which in turn means I don’t know the correct amounts to declare on US Forms 1116, and in the US it was illegal for me to declare the fact that I didn’t know the correct numbers.]
‘Wow, WTFO. That proposal is next to useless. Who do they think that would help?’
The 1%. Those who don’t need it, but who pay campaign contributions to get it.
‘This system is ripe for abuse and is abused. All that need be done is for one to make and unjustified claim against an innocent and the innocent must pay half the unjust claim.’
No minnows don’t pay 50% of the unjust claim. They pay 12,900%. Maybe I’m lucky because I’ve only paid 400% (and still climbing). Besides framing me for fraud when IRS employees embezzled my withholding, I still lose 100% of the amount withheld AND get socked by penalties[*] AND lose expenses of court fees, photocopying and postage[**], plane flights, etc.
[* Although the reason the IRS finally convinced me to settle and convinced a court to accept the settlement is that honest declarations are illegal, frivolous, and penalizable, isn’t it strange that the only years for which they actually penalized me are those where I declared amounts of US withholding which IRS employees had embezzled without my knowledge.]
[** Briefs need up to an original plus 7 copies going to a court (for which EMS is still usually cheaper than registered mail) plus 2 copies to the opposing party i.e. the thieves (by ordinary mail[***]). Photocopying and postage have now reached about one year’s salary. That’s more than the amount embezzled.]
[*** Usually I’ve sent them by ordinary air mail, but once, after the thieves repeatedly put insufficient postage on mail to me, I sent their copies by sea mail.[****]]
[**** By the way the latest letter I’ve received from the IRS (though not a court filing) was mailed by the IRS by sea mail from Great Britain with no date in the postal meter.]
‘The “fair share” Obama speaks so much of sounds a lot like “A belief that it’s better that everyone endures some degree of inconvenience rather than having one particular group coming out ahead.”.’
Sure. Obama just needs to be forced to pay his fair shares to both Kenya and Indonesia as well as the US. And within the US, he needs to be forced to pay his fair shares to Hawaii and Illinois as well as the District of Columbia.
==
‘Not having enough money to buy any investment instruments, I know little of them but it seems that certain of these have tax incentives that others do not. Choosing those then would be tax avoidance.’
That is correct. Obama should crack down on all those users of 401k’s. Too bad they can’t crack down on purchasers of municipal bonds because those purchasers are the 1%.
==
‘Wouldn’t it be a hoot to hear all the homelanders with Irish, Gerrman, Greek, French, Spanish, Japnese, Chinese or Korean surnames freak out when they find they owe more money than they ever earned to the lands of their ancestors?!’
Why did you forget English?
And of course Kenyan.
And German if Drumpf forgets to implement what his party platform promises.
@ND
“Why did you forget English?”
Gotta draw the line somewhere.
“That is to say, that if you are decendent of a Japanese you are Japanese, and apply it only to the offending nation, the US.”
“Wouldn’t it be a hoot to hear all the homelanders with Irish, Gerrman, Greek, French, Spanish, Japnese, Chinese or Korean surnames freak out when they find they owe more money than they ever earned to the lands of their ancestors?!”
Yeah, wouldn’t it? Mazie Hirono, Doris Matsui, Mark Takano and Colleen Hanabusa would have shit fits if Japan did that… Serves their “Democratic” asses right. Look up the list of Asian Americans in the Senate and House of Representatives and all the ones still alive are Democrats, more than likely having voted Yes on FATCA. That would be poetic justice.
Bubblebustin: “The US would rather have taxpayers than citizens.”
Actually, I liked your original, but they’re both good! I think you’ve hit the nail on the head, as you usually do.
I’m hoping that the incoming government recognizes that citizenship is NOT a monetary relationship. It is far more profound and far more valuable.
“Look up the list of Asian Americans in the Senate and House of Representatives and all the ones still alive are Democrats, more than likely having voted Yes on FATCA. That would be poetic justice.”
There is no call for racism. Look up those with English names and make sure they pay taxes to the UK as well as to the US. Look up those with Kenyan names (remember someone who was in Congress before he became president). Look up those with German names even if they anglicized their names (oops wait, Drumpf wasn’t in Congress before he became president). Anyway, there’s no call for racism in this endeavour.
@ND
Animal’s comment was in response to my statement of having my spouse, Japanese, write their government, Japan, to apply a Japanese version of CBT. Japan allows claims of Japanese citizenship for more than just the one generation removed the US uses to claim tax and reporting responsibilities. I have no idea what other countries do and do not allow, and am thus unable to comment.
Additionally, I speak of Japan as it is the country in which I live and the nationality of my spouse and my children. As my spouse is a taxpaying, voting citizen of Japan, it is hoped that they may have more pull with Japan that with the UK, Kenya, Germany or anywhere else they have no connection to.
Animal understands this and is himself of Japanese decent. I used my situation as an example of what I would like to do under the circimstsnces I live. If a US person living in the UK wishes to take similar actions that their circumstances may warrant, the focus on Japan and its decendants by myself and Animal in no way prevent them from doing so. We talk about Japan because we have connections to it. We did not mention other countries because we do not have connections to them. Don’t be like our common enemy and claim racism where none exists.
@ND
“‘Wow, WTFO. That proposal is next to useless. Who do they think that would help?’
The 1%. Those who don’t need it, but who pay campaign contributions to get it.”
The ACA takes campaign contributions?
‘This system is ripe for abuse and is abused. All that need be done is for one to make and unjustified claim against an innocent and the innocent must pay half the unjust claim.’
No minnows don’t pay 50% of the unjust claim. They pay 12,900%. Maybe I’m lucky because I’ve only paid 400% (and still climbing). Besides framing me for fraud when IRS employees embezzled my withholding, I still lose 100% of the amount withheld AND get socked by penalties[*] AND lose expenses of court fees, photocopying and postage[**], plane flights, etc.”
You are making my point. The idea behind chuto-hanpa is that neither side loses nor wins. That if I made an claim (unjust or just) against you for ¥1,000,000. I would not be a winner because I would only get half that amount and you would not be a loser because you would only have to pay me half that amount. Absurd, as you point out with your added details.
The ACA’s proposal seems to be very chuto-hanpaesque and not something I would have expected from an American organisation.
@DoD
“Meanwhile, the con Don or Liar-in-Chief hasn’t paid federal taxes for 20 years. Good luck with getting substantial change.”
He hasn’t owed any. Why should he pay what he doesn’t owe?
Just the kind of sweet guy he is. Self-effacing, generous, honest, truthful, chivalrous, As I said good luck!
@ND
Which thread was it that we were talking about fines being treated the same as tax by the courts? I found one of the references I was looking for.
@Norman:
“Sure. Obama just needs to be forced to pay his fair shares to both Kenya and Indonesia as well as the US. And within the US, he needs to be forced to pay his fair shares to Hawaii and Illinois as well as the District of Columbia.”
Indeed.
I think one argument that plays with homelanders is when you explain that if states had CBT then when you moved from New York to California you’d still need to file taxes in NY. And declare your NY accounts to CA. And NY wouldn’t be happy with it and would think not all your CA taxes are good for a tax credit, and that you’re not paying your fair share to NY. And you’d have to keep doing the double accounting for life. And CA banks would do what they can to avoid you.
Which leads me to suggest that modalities for RBT should be based on switching states within the US. Once you’re out, you’re out. As far as I know, nobody is shocked that people pay fewer taxes in some states. Nobody has tried to prevent people from moving, or fine them for doing so. And there are still a lot of people in NYC.
@Fred
Calififornia and New York both have some sort of tax obligation for certain residence long after they have lect the state. I have no idea how they are enforced, or indeed if they are, but they exist.
These two states seem to be the only two that do and few people not from there or have not moved from there seem to not know of these requirements.
When I have used that arguement I have had mixed results. Most recently was along the lines of ‘you should have looked in the rules before leaving…now pay!”
For many homelanders, it really seems that all they care about is that we too are inconvienced. Logic, law, rights do not count.
@ Japan T
I have had this said to me many times by homelander acquaintances (still there of course), that i should have looked into the rules when I left. The problem is I left as a minor and never worked there so there was no logic into looking into rules. even so, i have been told that they would certainly have looked into it so why didn’t I?
I was chatting with a homelander relative a few days ago. It was their birthday and somehow the conversation came up about the Fatca, Fbar, CBT. It used to be I had normal conversations with relatives in the US before all this crap. I had to listen to their justification of Fatca and catching tax evaders. This is the problem, they just don’t get it. I actually got asked, how does Fatca harm anyone, it just stops people hiding their assets abroad. Unbelievable really! they truly believe it’s for the better good because it’s stopping tax evasion.
The fair share mentality is always there and they have been brain washed into it. And it’s even worse since the Obama years. It just made me sick to my stomach and gave me a migraine in the process.
“I have had this said to me many times by homelander acquaintances (still there of course), that i should have looked into the rules when I left.”
Just like SCE, that pretence of an action wouldn’t accomplish anything.
What you really had to do was look into the rules early enough so you could stop your mother from going to the wrong country to give birth.
“Which thread was it that we were talking about fines being treated the same as tax by the courts? I found one of the references I was looking for.”
Probably several threads.
Actually the Supreme Court’s ruling in Flora is somewhat ambiguous on the matter of penalties and interest. It is clear that the entire amount alleged by the IRS to be actual alleged tax does have to be paid before litigating for refund in US district courts or Court of Federal Claims, i.e. you can’t litigate for partial refund and don’t get an opportunity to prove that the IRS obamaed up[*] the alleged amount of tax. However, the Supreme Court left open the question of whether penalties and interest also have to be paid in full before trying to get the withholding (tax) refunded. It is CIRCUIT COURTS and district courts and Court of Federal Claims who interpret that the Flora rule applies to interest and penalties as well.
However, 26 USC section 6665 says that penalties and additions to tax shall be ASSESSED AND COLLECTED in the same manner of tax, and says that other sections’ usages of the word “tax” shall also mean that they include penalties and additions in the meaning of “tax”. This seems to support the way lower courts have interpreted the Flora rule. However, I think this is unconstitutional. The 16th amendment does not give the government special privilege to collect penalties and additions without due process, the way it does for the tax itself.
Furthermore I finally figured out that since section 6665 requires ASSESSMENT of penalties to occur in the same manner as tax, section 6665 + one of the other sections together require that the IRS had to issue a Notice of Deficiency prior to assessing the penalty, so the victim would have an opportunity for due process in US Tax Court (the only forum where prepayment is not required).
But will any court finally agree that I should get the kind of due process that the 5th Amendment promises, for amounts that are not actually taxes, who knows. I’m still trying.
Meanwhile there seems to be no limit to the amount of penalties that the IRS could impose to prevent the victim from getting a refund. IRS employees embezzled US$10,000+ from me, and then raised the amount of obamaed up penalties to around US$35,000 before starting to admit that at least most of them were obamaed up. They could allege US$1 trillion in penalties to prevent even Bill Gates from suing for refund of overpayments of actual tax.
I very much want to see the reference you found.
[* Correct wording is “trumped up” but I don’t blame him for this, not yet, not for a few more days yet. The practice preceded Obama as well, but he’s as bad as any on this matter.]
Japan T: interesting, I didn’t know that. When I left Arizona in 1997, I stopped paying taxes and stopped filing there. I never heard from them again. I didn’t have to pay a fee or ask for permission to leave.
UK Rose: it always goes back to CBT, doesn’t it? That’s what homelanders cannot understand, and if they do, they don’t see anything wrong with it. They have a point about FATCA when it concerns US residents. Many countries have rules in place to keep tabs on foreign accounts, and it’s true that these accounts have been abused to hide money from taxation (tax evasion, not avoidance).
“Don’t be like our common enemy and claim racism where none exists.”
Thank you, Japan T for putting it so eloquently. I wonder how someone of Japanese descent can be “racist” towards a fellow Japanese. If the those Congressmen of Japanese descent had any common sense, they would realize that a Democrat signed Executive Order 6066 and stuck them all in the camps and would have exhorted fellow Japanese-Americans (George Takei included) to have nothing to do with the Democrats EVER.
@Norman Diamond,
Just so you are aware. I do not hate Obama’s guts because he’s black. I “hate his guts” because he’s trying to pick our collective pockets when we derive no benefits from the “homeland”. He and his ilk are the ones who keep clamoring about “fair share”. My question is how is it “fair share” when we don’t even get the benefits that American homelanders utilize every single day?
We drive on roads and use infrastructure that is paid for by our fellow citizens of the countries that we reside in. We don’t drive on American roads or receive Medicare or have Unemployment paid for by the Department of Labor. We get all those infrastructures by the magnanimous offerings of the countries that we live in through the taxes we pay to the country of our residence; no US involvement whatsoever. So why the hell should we in any case pay US taxes for the benefit of American Homelanders who would turn up their noses at our plight?
So do not make the mistake of calling RACISM when I call Barack Obama “a piece of scum-sucking shit who’d be better off being scraped off the side of a cattle-barn than be the President of the United States”.
@UK Rose.
Not only have I had homelanders, but homelanders abroad tell me that I should have learned what was required before I left. I think it may also be due to just how unbelievable our situations are. They simply can not believe that a country founded as the US was, would or could ever place such obligations upon its citizens. All the homelanders abroad I know file taxes with the US and believe they are in full compliance and thus have nothing to worry about. They do not know of FBAR and refuse to learn of it. They do not know of the insurance excise tax either and yet puff themselves up to be true patriots for bring in full compliance when in fact they are in the same boat as I. They just cannot believe it.
They don’t see any problem with CBT because they do not KNOW CBT. They know OF it but do not KNOW it.
Unlike you, thought I can no longer have a normal conversation with anyone anymore, not just homelanders. Everything comes to me through FATCA/FBAR/CBT filters.
@ND
It was in the Florida Bankers Association vs. Treasury case.
After rereading the judgement over the holidays (two paragraphs of which are povided below) it seems to much more narrowly applied that I thought. However, it does say that not only tax but also penalties can not be challenged until they have been paid. I came to the same conclusion as you, that all that the IRS need do is to assess penalties greater than our ability to pay and thus deprive us the ability to challenge them.
I too believe it is unconstitutional, but I also believe that FATCA, FBAR and CBT are as well, yet they exist. Further, I have been told numerous times that none of the protections provided suspects in in criminal cases apply to tax law. Tax law being held as a “civil” matter.
From the judgement.
“At first glance, the Government’s argument that the AIA and DJA apply seems misguided. The Bankers Associations are, after all, only challenging a reporting requirement – not the “assessment or collection of any tax.” 26 U.S.C. § 7421(a). As Defendants point out, however, failure to follow the Chapter 61A reporting requirements at issue here can trigger a $100 penalty under Chapter 68B, which is then treated as a tax. See 26 U.S.C. § 6049 (reporting requirement); id. § 6721(a) (penalty); see also Nat’l Fed’n of Indep. Bus. v. Sebelius, 132 S. Ct. 2566, 2583 (2012) (noting that such Chapter 68B penalties are treated as taxes for purposes of the AIA). So, in theory, gutting the regulations could restrain the assessment and collection of these yet-unaccrued penalties.
The Anti-Injunction Act, moreover, does have a broad sweep. The Supreme Court has held that “[s]o long as the imposition of a federal tax, without regard to its nature, follows from the” Government’s challenged action, then the suit is barred by the AIA. Alexander v. “Americans United” Inc., 416 U.S. 752, 762 n.13 (1974). But its sweep is not so broad as to cover the reporting requirements challenged here. In this case, the imposition of a federal tax does not necessarily follow from the promulgation of the reporting requirements, and no tax has yet been incurred. A tax would be imposed here only if one of Plaintiffs’ members refused to comply with the reporting requirements – and none has threatened to do so. The Bankers Associations take no issue with possible penalties; rather, their target is the regulation itself. ”
Another reference, which I looked for for hours yesterday but could not find, was from a recent case in which the IRS took the opposite view, and lost. The case involved two whistle blowers suing the IRS for a portion of the penalaties assessed to the person they blew the whistle on. The IRS argued that whistle blowing awards are based solely upon the amount of tax owed and not the penalties. The court disagreed and the whistle blowers were awarded the reward based upon the sum of the tax and penalties.
Legal or not, I have no doubt that I will lose my passport due to FBAR penalties unless stopped by the incoming admin.. When defending against a challenge to a penalty, the say that tax and penalties are the same. When defending against paying, they say taxes an penalties are different. They will use taxpayer dollars to deprive the citizen of their money, time, freedom, due process and any other right they see fit and we can not even defend against it unless we have not only the money to pay the tax and penalties, but then also enough left over to pay the legal team. They can assess the FBAR panalties and threaten my passport and I will be unable to challenge due to lack of standing until I pay the penalty, which I can not. Then I lose my passport. End of story.
Besides, in both of these cases the court ruled that they are the same in some instances. I have no lack of faith in the IRS’s ability to take these norrow decisions and apply them to FBAR penalties leaving it to me to first pay the fine before I can challenge it.
@Fred
When serving in California in the late eighties I was warned that if I drove in the state that I would be liable to California’s road tax even after leaving the state. I thought those telling this to me were BSing me. At the very least, how would it be enforced. Being shipboard, I never had my own car in Cali. and never looked in to it. With in the last couple of years I have seen it referenced.
It is also reported that a talk radio host is audited every year by the state of New York to verify his claims that he earned no income while in that state, which he left a decade or so ago.
Those are the only details I have, thin though they are.
@Animal
““Don’t be like our common enemy and claim racism where none exists.”
Thank you, Japan T for putting it so eloquently.”
Well well, I have been called many things but do not recall “eloquent” as being among them. Thanks.
” I wonder how someone of Japanese descent can be “racist” towards a fellow Japanese. ”
Sadly, it is all to easy. All one must do is to not march in lockstep with the rest of the group to lose one’s status as a member of that group. Look at what is said to and of any hispanic, african American, Jew, asian or homosexual who “strays from the (liberal) plantaion”. Those who purport to be for diversity treat these “race traitors” rather crudely. Group think is not good and for it to have gained such wide acceptence in the US is both sad and frightening.
“If the those Congressmen of Japanese descent had any common sense, they would realize that a Democrat signed Executive Order 6066 and stuck them all in the camps and would have exhorted fellow Japanese-Americans (George Takei included) to have nothing to do with the Democrats EVER.”
I have always wondered the same. Younger Americans may not even know that it was FDR who sent Japanese Ameicans to the camps, but George Takei knows. Same can be wondered about the African American and Jewish communities. History shows that the party these communites have traditionally overwhelming supported to not be acting in their best interest. Perhaps that’s why history is not actually taught any more. Still doesn’t explain George Takei though.
‘I wonder how someone of Japanese descent can be “racist” towards a fellow Japanese.’
Because they’re not a fellow Japanese, just like a Canadian with an English sounding name isn’t a Brit (except for a few who are).
==
“Just so you are aware. I do not hate Obama’s guts because he’s black.”
That has nothing to do with the racism that I objected to. When you say to aim complaints at Asian-American members of Congress, I say there is no call for racism in aiming complaints at members of Congress. Members who have English sounding names and other ancestries (except for Native Americans, or maybe even including them) should all be targeted with the same complaints.
Presidents with Kenyan names and German (inclduing Anglicized German) names and other immigrant languages should be targeted too.