reposted from MapleSandbox
by Lynne Swanson
#FATCA Americans overseas: Do NOT allow US tax pros scare u into entering US tax system. Many have no business entering!
— Keith REDMOND (@kredmond_global) January 19, 2017
Backing up the above tweet, Keith Redmond posted the following on Facebook:
Dear Members: I just had a lengthy, robust call with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas ho have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas need to not succumb to the fear. Excellent conversation and I am glad my views have been validated.
This reflects what I have long believed. Unfortunately, there is still the nightmare of FATCA to deal with. In some countries, anyone born in the US cannot even get bank accounts. We are treated as criminals just for banking where we live.
I asked Keith how his contact explains and justifies this.
Keith replied:
He can’t. He finds the whole situation abhorent…
@JapanT
Obviously I can’t speak to the legal realities of living in Japan, though I’m familiar with milder versions of the same in Europe.
It could be that you are, in fact, completely SOL. US citizens abroad living in “unsympathetic” countries, with no chance of acquiring another citizenship, are in the worst and most vulnerable position. Either the US changes the law (unlikely in my view but who the hell knows) or you figure out how to preserve your banking services in Japan or you head back to the US and presumably spend the rest of your days repaying fines and debts (though if you earn as little as you say, I can’t imagine that you’d owe anything).
Where does it say that the US is sending out half a million passport revocation notices? In any case, revocation (currently) seems to be an extreme measure taken against those who have been identified as owing a significant amount of money, for which collection measures have already been undertaken and failed. Do you fit that profile? Passport revocation may also fail under a legal challenge, one day in the future.
As for the children, as you know, US citizenship does not pass automatically. The US parent must meet certain residence criteria (five years living in the US, with either two or three years past the age of 14 I believe). You doubtless meet these criteria and therefore your children are US citizens. But do the Japanese authorities know this? Certainly the children have a US parent, and obvious markers of American heritage, but they don’t have a US birthplace. So ensure that they are never presented as anything but Japanese citizens only in any dealings with anyone.
My daughter inherited my US citizenship but as her place of birth is a city in Europe she has no US indicia. She has been advised to do nothing and ignore the existence of her second citizenship, unless she should for some perverse reason with to move to the US. Unfortunately I registered her birth with the US consulate and obtained a “baby passport” back in the day – it was over fifteen years ago and I didn’t realize the negative implications – but I doubt this will create problems for her unless she travels to the US on a regular basis and the border database improves dramatically. (They’ve only once noticed the fact that I had a US birthplace on my Canadian passport, which I’ve continued to use since; they’ve never said anything about her status on any of her trips, either with her family or alone with the soccer team. They don’t seem to pay much attention to white people.)
Thanks ND and JapanT for the education on who is “covered”.
As for statelessness, I’m pretty sure that a US citizen — unlike many other nationalities — does have the right to renounce even without having another citizenship. Any US consulate that tells you otherwise — and many will — is misinformed about the law. I researched this a few years ago and am pretty sure that’s the case unless things have changed.
When I was researching this I came upon a blog about statelessness written by some ex-American in Europe, I think he was in Slovak Republic or Slovenia or someplace similar. He did exactly that, renounced and became stateless, and was allowed to remain in Slovakia or wherever and allowed to continue working. He had permanent residence before he renounced, and recommended that one shouldn’t try this unless they have permanent residence.
I was also reading recently about some Americans who claim to have renounced just by mutilating their passports and sending them to the US consulate with a letter stating that they were renouncing, that this was non-negotiable, and that they would not entertain any arguments about it, pay any fee, nor respond to any correspondence from the US. Basically saying it was the expat’s decision to renounce, not the US’s decision whether to LET him renounce.
If every angry expat did the same, the US would have a big problem on their hands.
@Red Cabbage
There has been some in depth discussion about stateliness here in reference to the fellow in Eastern Europe somewhere, but I can’t find it in the wealth of information that is Brock.
If Trump has his way, the act of burning a US flag will revoke your US passport. Much easier to obtain should you not have a US passport in your possession.
@Red Cabbage: When I was researching this I came upon a blog about statelessness written by some ex-American in Europe, I think he was in Slovak Republic or Slovenia or someplace similar. He did exactly that, renounced and became stateless, and was allowed to remain in Slovakia or wherever and allowed to continue working.
Sounds like you’re thinking of Mike Gogulski. Wikipedia has links to his website & a bunch of interviews with him:
https://en.wikipedia.org/wiki/Mike_Gogulski
He had permanent residence before he renounced, and recommended that one shouldn’t try this unless they have permanent residence.
Yep. There have been a few other ex-Americans who also became stateless; Harmon Wilfred has the most complicated case, because he and his wife only had temporary residency in New Zealand when he renounced, and that expired – NZ has tried and failed to get the US to take him back, but they sent his wife back to Canada where she is from and won’t give her a visa to reunite with her husband.
https://en.wikipedia.org/wiki/Harmon_Wilfred
http://www.nzherald.co.nz/business/news/article.cfm?c_id=3&objectid=11640335
“Hell, learning that the IRS has sent just shy of a half a million notifications on pending passport revokations, I may already be an illegal alien in Japan. Who knows. Only ways to find out is to get the letter or getting stopped by the police.”
Or going through immigration control when expecting to take a short vacation abroad with a reentry permit, like Bobby Fischer. (Reentry permits are no longer necessary when expecting to take a short vacation abroad, if you remember to check a particular checkbox in the embarkation card. But if the US told the Japanese government and didn’t tell you that they revoked your passport, you’ll still be arrested and deported.)
“or you head back to the US and presumably spend the rest of your days repaying fines and debts (though if you earn as little as you say, I can’t imagine that you’d owe anything).”
There are fines when you don’t owe any taxes. There are even fines when the US owes you refunds of overpayments (withholding).
“The US parent must meet certain residence criteria (five years living in the US, with either two or three years past the age of 14 I believe). You doubtless meet these criteria and therefore your children are US citizens. But do the Japanese authorities know this?”
Brilliant question. Mr. T could tell the Japanese government that he lived in Canada from age 1 to 30 or whatever, so his kids don’t have scarlet letters.
“I was also reading recently about some Americans who claim to have renounced just by mutilating their passports and sending them to the US consulate with a letter stating that they were renouncing, that this was non-negotiable, and that they would not entertain any arguments about it, pay any fee, nor respond to any correspondence from the US.”
I don’t think that will work. The president said you have to burn a US flag not passport.
Point 7
“Many taxpayers may not be receiving IRS letters about their unpaid taxes. In fact, they may first find out about their passport restrictions when they try to travel to another country or return to the United States. A 2015 Treasury Inspector General for Tax Administration study reported that the IRS had no idea whether U.S. taxpayers living abroad had received the 855,000 notices it sent.”
However, rereading it I see that the notices were sent in 2015, meaning that these could not be notices of passport revocation. I also misremembered the number.
Sadly, the possibility of unknowingly becoming an illegal alien in Japan in the not so distant future remains.
Japan does not give anyone the opportunity to hide their origins. To receive any services from the list of entities I gave above, we must provided a certified copy of our family registery, or another document which we had to provide the certified copy to obtain.
Do Japanese officials know? No, not yet. Once they begin experiencing trouble due to their US tainted clients, they will lock all such people out. Japan treats all members of a group the same. That is why they group every one and free radicals are in general, not tolerated. The same treatment is based upon the lowest common denominator. If one US tainted person causes administrative trouble, the response will be to lock all US tained people out. Personally, I believe it will end up with all gaijin, nonJapanse, being locked out of banking and other services.
I don’t think that I owe that much in taxes. Until recently I thought I owed zero, but then I learned of the excise tax for life insurance but my fear is FBAR. While Norman Diamond states that the FBAR fines are in a different statute than tax penalties, the personal experiences he relates here are filled with instances where the law is of little concern to the IRS. Especially as you can’t even challenge a fine until you’ve paid it. It does not seem outside the realm of probability that the IRS would knowing violate the law and revoke passports based upon FBAR fines secure in the fact that the illegality of their actions will continue until they snag someone capable of paying the fine and the court challenge afterwards. I hope I am wrong.
As for the topic of this thread, the advice to anyone to do nothing. That is a stationery defense in a dynamic situation. Many, many, many entities around the world are really pushing for data on everyone and everything. They are selling it as aiding in epidemiology, consumer safety, drug safety and many other noble pursuits. Regardless of the sincerity of those behind these efforts, there are those just waiting for the chance to use all this data to their advantage and our detriment. It will not be tomorrow, but the day when all the databases upon which our data is currently kept will be linked via a one massive network is not that far off in the future. Depending on our age, we may not see this but our kids or grand kids will. If this is allowed to happen, there will simply be no privacy.
“Especially as you can’t even challenge a fine until you’ve paid it.”
Again FBAR is in Title 31 US Code not Title 26, so the Tax Anti Injunction Act doesn’t apply to FBAR.
However, again because FBAR is in Title 31, US Tax Court has ruled that they have no jurisdiction over FBAR; and the definition that defines US non resident citizens as residents of the District of Columbia for Title 26 doesn’t apply to FBAR so no US District Court has jurisdiction over it either.
“It does not seem outside the realm of probability that the IRS would knowing violate the law and revoke passports based upon FBAR fines secure in the fact that the illegality of their actions will continue until they snag someone capable of paying the fine and the court challenge afterwards.”
When the IRS does that, they’ll surely choose a target who actually is guilty and should lose the court challenge, after which they’ll attack everyone. Actually there already have been cases like that, where US Court of Appeals in several districts have overturned the 5th Amendment, but to the best of my understanding all those people were actual residents of the US.
@ND
Granted but, if the foundations of our laws such as the 4th, 5th, 6th, 8th and other amendments, if the very reason for the existance of the US (no taxation without representation) can be ignored, why should the detail that FBAR fines reside in a different statute be as much as a speed bump?
Sure it’s a speed bump. The IR’s reason for failing to abuse its diaspora on the matter of FBAR is that no court has jurisdiction, not any inclination by the IRS to stop being abusive.
@ND
Hmm, comforting.
Yet, I have little doubt that the IRS is at this moment working on a work around.
@ND
On second thought, I do not think it is a speed bump. FBAR fines have been issued.
My previous message might have been ambiguous. No US court has jurisdiction over civil FBAR files for non-residents of the US. Of course there have been court cases concerning residents.
Hmmm, encouraging.
Thanks!
@Japan T
I know you want to get out ahead of this – dynamic defense and all that – but don’t always jump to conclusions and make things look worse than they are. To the best of our knowledge, we have no evidence that passports have been revoked, or FBAR fines have been assessed to your ordinary non-compliant non-resident, or that the US could even collect FBAR fines from a non-resident with no US assets. FBAR fines have been assessed, but to US residents caught up in bigger cases of tax badness.
Good points yes, but the law is the law and they have made great strides in enforcing their laws against people who live far and away from their shores. Sadly, your arguments on FBAR were also true for all of us and all of our issues even as recently as 8 years ago.
With “experts” and the TAS stating that FBAR fines will be used used in this manner, I believe they eventually will be unless stopped.
@JapanT
So what is your plan?
Mine is pretty clear: a series of fallbacks, starting with staying off the radar and ending with renunciation.
It’s possible that staying off the radar will work forever.
It’s also possible that the Canadian government will turn into a debt collector for the US and that even after renouncing I’ll be cleaned out, every penny taken in fines etc. I don’t think this is very likely, however.
“the law is the law and they have made great strides in enforcing their laws”
Nope. The law is the law but so what? They’ve made great strides in enforcing whatever they want to enforce, whether it happens to coincide with law or violate law.
As I’ve gradually leanred more and more laws that the US violated in their treatment of me, they sure haven’t tried to enforce the laws. Sometimes they explicitly state explanations of why they’re supposed to violate laws, but usually they just resolve to ignore the laws.
By the way, did any law require the US to inform Bobby Fischer when they revoked his passport?
@Nononymous
My plan?
The passport issue is what first put me on to this mess in the first place and looms large. Not surprising as that would be a nonrecoverable situation. I lose it and I lose my family, end of story.
Apart from having my passport revoked or its future renewal turned down, bank lock out is also a huge concern. If worst comes to worst, I can work off the books for cash, hopefully, but the pasport thing is a biggie.
For the most part, I am living as if I have one leg in the grave. I try to spend as much time with my family as I can to the point of misding deadlines at work and not searching for more to replace jobs I have recently lost.
Ever watch any of the amature vidoes of the tsunami we had here a few years back? That’s what it feels like to me. Inland there is a sheer cliff with no way up. Looking out to sea I observe the tsunami coming towards me. Having looked and looked for a way out and not finding any, I am enjoying as much wine and cheese, beer and edamame, good music and what little time I have left with my family before getting swept away by the tsunami.
@ND
““the law is the law and they have made great strides in enforcing their laws”
Nope. The law is the law but so what? They’ve made great strides in enforcing whatever they want to enforce, whether it happens to coincide with law or violate law.
As I’ve gradually leanred more and more laws that the US violated in their treatment of me, they sure haven’t tried to enforce the laws. Sometimes they explicitly state explanations of why they’re supposed to violate laws, but usually they just resolve to ignore the laws.
By the way, did any law require the US to inform Bobby Fischer when they revoked his passport?”
Any yet you cite the law as reason to not worry about losing my passport?
“Any yet you cite the law as reason to not worry about losing my passport?”
Where did I say that?
Where some people said there’s no evidence of the US trying to collect an FBAR fine from a non-resident US citizen, I said a likely reason is that no court has jurisdiction. Even if I’m right, that only puts a speedbump in collection, not in assessment.
Where someone said the law is the law and the IRS enforces the law, I said the IRS doesn’t care about the law.
Where someone whose only passport is from the US runs a big risk of becoming the next Bobby Fischer, the reason isn’t because of the law being the law (and the reason isn’t because of laws being enforced, except by coincidence when they find it convenient).
@ND
You keep saying that FBAR will most likely not be used towards passport revocation and you have give two reasons reasons for this; one FBAR fines are in a different statute and two, that no court has juristiction.
As so much of all this is happening in opposition to the law, then I can see no reason why these legal issues would hold more weight than all the others they have already steamrolled.
My reference about the “law is the law” refers to the standards we are held to, not to the standards the USG is held to, which as you point out, is that no law will stand in their way to get what they want.
Japan T, I posted a reply to you over a year ago. I don’t think it’s changed. I don’t know if FBAR penalties count towards passport revocation. If they do count, you can get screwed by administrative action when no court has jurisdiction. Where other said the IRS hasn’t tried COLLECTING FBAR fines from non-residents I guessed that might be because no court has jurisdiction, but there’s no reason to assume the IRS would refrain from screwing you by administrative action … but I haven’t found anyone who knows if FBAR fines count towards passport revocation or not.
http://isaacbrocksociety.ca/2015/12/03/linking-of-passport-to-taxation-confirms-taxation-based-citizenship-undermining-cookvtait/comment-page-6/
[begin quote]
“the situation you wrote about on the tax court throwing out a FBAR related case, would it prevent the IRS from pulling a passport for FBAR fines?”
I don’t know. If the new law only allows revoking passports for tax related penalties (Title 26) then FBAR penalties wouldn’t count towards passport revocation. If the new law allows revoking passports for anything (e.g. Bobby Fischer playing chess in the wrong country) then it probably doesn’t matter which agency does the revoking. If the new law doesn’t give Tax Court jurisdiction over passport revocations then it’s not going to get jurisdiction either way.
“Or would the person who lost their passport have to go to court in the States before getting it back?”
Catch 22. The person can’t go to the States and therefore can’t ever get their passport back.
[end quote]
‘My reference about the “law is the law” refers to the standards we are held to’
Actually that doesn’t happen either. Well wait, it happens sometimes, when governments or courts find it convenient to use a law that way.
The US has a law forbidding fabrication of a social security number. The US Department of Justice published an article, I think in 2005, about a court ruling upholding that law. Then in 2013 the US Department of Justice persuaded US Court of Appeals for the Federal Circuit to rule that fabrication of a social security number is MANDATORY[*]. When it’s not convenient for the law to be the law, they do not apply such a standard to us.
[* At least when filing a tax return, when the SSA has dragged on 16 years without granting or rejecting an application for SSN and the IRS has consistently rejected applications for ITIN.]