[“American Citizens Abroad (ACA)with 40 years of advocacy on this issue, has led the charge for RBT, proposing a roadmap or outline to Congress showing them how they can get from where the US tax regime is today to where it should be with RBT”.] — From a Forbes article
My reading of the ACA proposal is that it is a “Roadmap to IRS compliance”.
— This post is another opportunity to tell American Citizens Abroad (ACA) what should go into their residence-based taxation proposal. Should you be interested, I am asking for your comments in the form of text that could be included in the ACA proposal.
The discussion with ACA is, in part, whether, to obtain a “departure certificate” (get out of jail card) it makes any sense for a person living permanently outside the U.S., who has:
—no meaningful relationship with the U.S. other than by birth or parentage,
—another citizenship from his/her local country,
—and who does not want to be a U.S. person;
should suffer ANY IRS compliance cost and uncertainty (see the correspondence below).
— First, I suggest that you read the ACA RBT proposal.
— Then read my question followed by a response from Mr. Charles Bruce, on behalf of ACA.
Questions include whether non-meaningful/”accidentals” should be mentioned, or not, in the ACA document as a distinct group. Should persons with no meaningful relationship to U.S. be treated differently than consenting, “real” Americans? Is it reasonable or not that anyone should require a departure certificate? The ACA Roadmap requires all affected to enter into some IRS compliance (and potential harm): Can this be morally justified?
I asked ACA the following question:
“Could you please answer this question on your most recent (Sept 27) RBT proposal? You appear to say that in order to waive the Departure Tax or have a Departure Certificate issued, one must first become IRS compliant. Is this correct? You will agree though that there are likely millions of “Americans” living abroad who have zero meaningful relationship with the United States (e.g., left at age three days, never to return).
Can you please confirm that you wish to impose IRS compliance prior to a Departure Certificate or Departure tax waiver on these people? If the answer is “yes”, do you feel that this is reasonable?”
Mr. Charles Bruce, on behalf of ACA, responded to me today and gave me the ok to post his response:
“First let me simply say that the ACA description and side-by-side comparison, as recently revised, are not intended as a proposal, per se, but rather as a listing of issues that we think Congress will want to address. There are a dozen or so issues that, I believe, Members will need to “zero in on”. My guess is that they will want to do this after seeing detailed revenue estimates.
That having been said, I think this is focusing on Americans who are long-term residents abroad and who, for any number of reasons, have very little connection with the US. For example, they might be an accidental American due to birth in the US but having non-US parents. Or they may have been born in the US and stayed there for several years but later moved abroad and have remained abroad for many years, never traveling back to the US.
Upon enactment of RBT, they would immediately be able to claim treatment under its provisions. They would need to do something to identify themselves and, in effect, claim RBT treatment. They would need to obtain a Departure Certificate and, in doing so, state that they fulfill the requirements. They would typically be “grandfathered” (exempt) as regards the Departure Tax. In subsequent years, they would file an annual certification stating that they continue to meet the requirements.
One of the requirements of obtaining a Departure Certificate is proof that the individual has met his or her federal tax requirements. If the individual is out of compliance, they can “catch up”. Most of them, it appears to me, would qualify for the voluntary disclosure program and would not owe any FBAR penalty, assuming their actions were nonwillful. If they fail to pay taxes, typically these would be due; penalties are commonly waived; interest on taxes owed, as you know, are a statutory requirement and cannot be waived. (One might debate the merits and demerits of the voluntary disclosure program, but I think we should not digress at this point.)
Whether or not individuals, in effect, elect RBT, they are subject to US tax until such time as they put themselves within the RBT regime. RBT ends US taxation for future years. It does not go backwards and make the problem of US taxation go away retroactively. In other words, it does not present an “end run” around the existing voluntary disclosure program.
Should individuals wanting to take advantage of RBT have to be tax compliant or, if they’re not, fix this? Members of Congress will need to decide.
It might be noted that in order to renounce US citizenship, one has to “catch up” if out of compliance. The question is should this be different if instead of renouncing the individual wishes to remain a US citizen? Lastly, a rule permitting US citizens to switch to residency-based taxation and not “catch up” on their past tax payments, would lose – permanently lose – tax revenues for the Treasury, and this might make it less likely that RBT will be enacted, unless the revenue loss can be made up some other way.
I appreciate the question/comment. This issue, together with others, will need to be debated, I suspect…
Charles M. Bruce…”
“Amnesty: If you had U.S. source income etc. and did not report it, that’s your problem; complete amnesty (or at least instructions to IRS not to pursue) for past local country income, investments, etc.”
An amnesty is a pardon. What crime has been committed?
I’ll tell you what crime has been committed: FATCA.
People with a US birthplace are being guilt-tripped and panicked and harrassed by banks into thinking they’re trapped. That is the offence that’s being committed worldwide.
Suggestions of “amnesty” and “departure certificates” (departure from what!) risk reinforcing the learned helplessness (https://www.newyorker.com/science/maria-konnikova/theory-psychology-justified-torture) that in too many cases renders the you-are-an-American trap all too real.
I would encourage anyone who doesn’t identify as American to hang on to who you are. You are in the right, America is in the wrong. Decide on your course of action from that standpoint, and don’t let yourself get swamped into psychological acceptance of American identity against your will.
“–Kill completely the idea of any departure certificate as being costly, impractical, unacceptable to many/most affected, and unnecessary.”
Also pointless. FIs that don’t want people born in America aren’t going to change their mind if an American “Certificate of Loss of Nationality” or an American “Departure Certificate” is waved at them.
There are many good comments on this thread. ACA’s RBT’s proposal and Mr. Bruce’s reply to Dr. Kish are ridiculously unfair (just like US CBT/FATCA/FBAR in general).
In response to Dr. Kish’s questions, as a “non-meaningful” myself, I don’t believe that “non-meaningful/accidental” Americans should be mentioned as a distinct group or treated any differently from “meaningful/real” Americans. US CBT is a human rights abuse for all involved and the ACA proposal requiring US tax compliance cannot be morally justified.
Mr. Bruce’s viewpoint is of course US/IRS-centric. Is is possible to make him see the absurd unfairness of his reply from the viewpoint of a citizen/resident of a country other than the USA?
Consider Elon Musk. A multibillionaire who made his fortune in the USA, he was born in South Africa to a Canadian mother, moved to Canada at age 17 years, spent a couple years at Queen’s University in Kingston, Ontario and then left for the US. He has American, Canadian & South African citizenships.
Would Mr. Bruce think it right and fair that, if Canada & South Africa practised CBT but had similar ACA RBT proposals, Mr. Musk would have to “catch up” on 5 years of Canadian & South African tax returns to get “departure certificates”? How would the US gov. feel about some of his US earned wealth being transferred from the USA to Canada & South Africa?
Mr. A – I’ve mentioned before on here that if the US doesn’t get rid of CBT then other nations should start employing a “reciprocal tax” on their citizens living in the US to get the US government to feel what it’s like to have local money be siphoned to a foreign country. A lot of people on here thought that was too cruel though.
I asked Mr. Bruce:
“Can you please confirm that you wish to impose IRS compliance prior to a Departure Certificate or Departure tax waiver on these [non-meaningful/accidental] people? If the answer is “yes”, do you feel that this is reasonable?”
Contrary to what is written in Mr. Bruce’s September 27 2017 ACA proposal (he confirms that: “One of the requirements of obtaining a Departure Certificate is proof that the individual has met his or her federal tax requirements.”) he now wavers somewhat and says: “Members of Congress will need to decide.”…
In Mr. Bruce’s heart of heart — of course he knows that imposition of ANY IRS compliance on non-meaningfuls/accidentals is a crime that cannot ever be justified — and this goes way beyond being “U.S.-centric”. Of course he knows that his position is, as Mr. A says, “absurd”.
— This statement is inaccurate: “It might be noted that in order to renounce US citizenship, one has to “catch up” if out of compliance.”
subscribing…the link on the right sidebar has never worked for me.
more paper for the bottom of the bird cage.
“That’s why Eritrea was condemned by the united nations for practising citizenship taxation.
Thus, through jurisprudence, that also condemes USA for practising CBT.”
You forget that the US is considered by the rest of the world’s “braindead politicians” as an “exceptional” country not subject to the rules that govern OTHER nations. Therefore it can do whatever it wants, when it wants…how it wants. That is why we are in the position that we are in right now where we have absolutely ZERO support in political circles other than for Sophie In’tVeld who has vociferously proclaimed that foreign countries cowtowing to US FATCA is BULLSHIT, that politicians have NO SPINES to stand up for the sovereignty of their country and allow the US to railroad them into doing what the US wants.
I’m all for every single expat to do an “FUEP” – The “FUCK U EXIT PLAN”
YOU WANT MY MONEY? COME N’ GET IT!
Write your countries Ambassadors /
Admiral Harry Harris as ambassador to Australia / Let him know quote Republican Platform /. We call for its repeal and for a change to residency-based taxation for U.S. citizens overseas.
Tax reform overhaul and these rules will no doubt address tax policy for individuals as well as corporations https://www.forbes.com/sites/kellyphillipserb/2017/10/06/aca-tax-reform-should-tackle-the-worldwide-tax-system#7ad3176c28a0
ANY publicity regarding our fate helps.
The more people informed can investigate it
Yeah I know and am just as angry !
That’s why I don’t comply and never will.
When you know the federal reserve fraud you know who buys the politicians in most countries, not only the US.
FATCA and CBT don’t affect them so they don’t care.
Want my money come try and get it is the right aproach, totally agree !
“Yeah I know and am just as angry !
That’s why I don’t comply and never will.”
Good man. The more of us who are brave enough to say “Enough is enough – Fuck the US…and what they want” the better.
There proposal explicitly excludes (screws) those abroad less than 5 years by forcing them to deal with the status quo until they get to 5 years. Nice of them to make some people sacrificial lambs
@ Steven TRACY @ The_Animal total respect for u guyz from Singapore