Interesting consolidation of tweets discussing a possible move to #TTF for all the different groups of people classified as #Americansabroad https://t.co/M1dwgx1Sge
— U.S. Citizen Abroad (@USCitizenAbroad) May 13, 2018
This post is motivated by the following Brock comment from “JC”. His comment concludes with:
So do we have a feature here on Brock to come up with stories about being proud Americans? So we may give them to Solomon.
Why not? Yes, let’s use this post to create a “Brock Feature” from expected comments. This can be the the “Isaac Brock Society” contribution to U.S. Tax Reform!
I realize that the Isaac Brock Society is not a site that is populated particularly by “Proud Americans” (am I wrong?). But, the idea of compiling a set of comments, about how U.S. tax policies have destroyed the lives of those who have attempted compliance could be valuable. They could be forwarded to all groups (RO, DA, ACA, FAWCO etc.) in this fight.
For once, let’s focus on those who are compliant!
I have a request though. Much of the focus on this and other sites is on people who have NOT complied with U.S. tax laws – usually because they have not bothered to enter the U.S. tax system. I don’t understand why those who have not entered the U.S. tax system have TAX problems. It seems clear that, those who have NOT complied, have NOT had their lives destroyed. They still have their pensions and their marriages. Noncompliant Americans abroad are in no danger of having their passports revoked (because those not in the U.S. tax system cannot have a tax debt). Noncomplaint Americans are in no danger of having their retirement savings stolen. Noncompliant Americans have no fear of crossing the border. But, I digress …
The reality of U.S. tax compliance for Americans abroad
It is those unfortunate people who have complied (with the assistance of the “very best” U.S. tax advisors), who have suffered the most. Think of all those who were ushered into OVDP. Think of those who entered “Streamlined” with their Canadian Controlled Private Corporations. After being assured that the “business earnings” were not subject to U.S. taxation, they are NOW retroactively subject to the transition tax. Think of the “transition tax” (punishment for your past). Think of GILTI (punishment for your future). Only those who have filed U.S. taxes generally and Form 5471 in particular are subject to the great “pension confiscation”. Those who have not complied will still have a happy retirement.
U.S. citizenship is primarily about penalties: Comparing the “penalties” for noncompliance with the “penalties” for compliance
Penalties for noncompliance: For years people have been forced to listen to a constant noise (that’s the problem with the internet isn’t it) warning people about the penalties for noncompliance. These are expressed in the language of either “tax crimes” or “form crimes”. Yes, the penalties for noncompliance are truly frightening! But, they are suffered randomly and sparingly. Let’s compare them to the …
Penalties for compliance: Nobody (don’t understand why) really talks about the “penalties” for compliance. They are real! They are NOT speculative! They are automatically assessed! Think I am kidding? Talk to anybody who is suffering the “transition tax” or somebody who has a real fear of “passport revocation”. Talk to somebody in Australia who has had problems with their Superannuation.
Americans abroad are subject to penalties no matter what they do. What were you thinking when you left the Homeland? You should be punished! And you are punished. Americans abroad are NOT subject to the same tax rules that Homelanders are subject to. They are subject to a different set of punitive rules. You should NOT be permitted to, simply leave the Homeland and expect those left behind, to pay your “fair share”! It is the duty of ALL Americans, wherever they may be, to support the Government of the United States (which as Cook v. Tait teaches – confers benefits to you wherever you may be).
Your experiences please …
Therefore, I think it would of great value to hear from those who have complied with – that Great Bible of American Life – the U.S. Internal Revenue Code (whether you have complied from inception/conception or whether you have recently come into compliance).
Remember that ALL U.S. citizens who were “Born In The USA” are presumptive “Tax Cheats By Birth”! This is because the USA confers citizenship by birth and imposes tax based only on citizenship.
Could you address the following 3 questions in your comment?
1. Why as a “nonresident” of the United States did you decide to enter the U.S. tax system? For example, did your accountant tell you do do it? Were you simply heeding “The Call Of The Condor?” Was your entry into the U.S. tax system associated with another significant life event (illness, divorce, etc.) Do you snap to attention when you hear the U.S. National Anthem?
2. How has U.S. tax compliance caused you specific damage (calling all “transition tax” victims and more)?
3. Will the proposed #TTFI bill (the one from Congressman Holding) solve your problems or not?
If you are not in U.S. tax compliance, you could comment on why you do not intend to enter the U.S. tax system. Were you lucky (probably) or clever (maybe)?
And now, turning it over to JC …
News from Twitter chat with Solomon Yue. He says we may see the TTFI legislation this coming week. One comment to that is ‘we have heard that before.’
It sounds like the treatment for Accidentals will be three years of compliance without FBAR & FATCA penalty and then may elect TTFI status. Comment to that: sounds like streamlined except 3 years instead of 5.
Karen says:
“Essentially, TTFI is saying go thru streamlined and then stop filing. For AA’s and LT expats that want to retain USC, this is a reasonable deal as long as they have no PFICs or CFCs or “foreign” pensions, or ….”
https://twitter.com/FixTheTaxTreaty/status/995328964901122050Point of information about the above: FBAR and FATCA 8938 still exist under TTFI – so still filing! However, I ask as 8938 requires specification of the line on the 1040 return income from specified assets appears, and if no return is required under TTFI then would that end 8938? The devil is in the detail.
Solomon Yue says he will ask the question about PFIC and its exemption. At least someone is listening (Solomon Yue). He has said before about the exemption of foreign pensions, yet it has always been in regards to after TTFI election, and not the 3 years compliance period before one may elect TTFI.
In terms of AA: he has stressed that the TTFI bill is about asking Congress to do something for those who wish to remain American citizens, as the best chance to get buy in from Congress. Then of course once passed he will focus on other changes. So it sounds like perhaps multiple bills: 1) TTFI, 2) remove transition tax and GILTI from US Corps overseas, 3) remove FBAR and FATCA for USP overseas, 4 or more) Dems have a few including one that eliminates Social Security WEP. All this and there is no precedent of passage of a single focused bill helping US Persons overseas.
I asked Solomon for a Preamble on the TTFI speaking about the injustices. He declined such preamble and it will be only to align with TTFC.
Re: PFIC. A thought of today is a new acronym is needed for this. I like the word “curse” today. So Punitive Foreign Investment Curse for U.S. persons living overseas, or PFIC treatment. Innocuous and purposeful sounding names for these things should be changed to more representative names. Else, IMO, we give in to the narrative of the U.S. Compliance-Congressional Industrial Complex. Of course a name including “curse” would never fly in compliance code with DNA predisposed toward compliance. But we may give it a nick name.
Re: Cursed Foreign Corporations. This is what SY says:
Regarding small business owners abroad: we need 3 things 2 be done 4 them: 1) Pass #TTFI 2 connect w/ #TTFC, 2) exempt them from the transition/GILTI tax, 3) allow them 2 elect S Corp pass-through (corporate salaries/distributions r reported as personal foreign-source income).
https://twitter.com/SolomonYue/status/995309965098340352Solomon Yue says that he likes this story about being Proud Americans, and has already used it:
Tamar says:
I’ve said this b4: I’ve raised my kids (Israeli expats) w/spoken English at home & proud of their US origins despite leaving as toddlers. One son refused any Army job that wld require him to renounce! Get rid of #CBT & expats can be proud US ambassadors & trade promoters again.
https://twitter.com/tdbho/status/994952184147120128So do we have a feature here on Brock to come up with stories about being proud Americans? So we may give them to Solomon.
“I sent in a version of my story. Perhaps it too long, or it is not what was wanted because I’m not a ‘proud American’ any longer, and never was a sufficient flag waver in the unquestioning stereotypic sense”
Stories of people who tried to comply are always too long, because it always takes too long to try to comply, and it usually takes too much money (condors’ fees not taxes), and it usually “taxes” our sanity too much.
@badger
I have been lurking around here for several years but rarely comment.
But as I read what has happened to you I can feel the frustration of your experience!
It reminds me of an Aesop fable, The Wolf And The Lamb.
The moral of that story is:
“The tyrant will always find a pretext for his tyranny, and it is useless for the innocent to try by reasoning to get justice, when the oppressor intends to be unjust.”
Some days it feels as if the US IRS is that tyrant, and that Brockers and other overseas Americans are seeking justice from a system determined to be unjust on purpose!
Why else would the embassies close down their IRS assistance centers? Why would they not make it easier to comply? Why else would they do so many other things, throw up so many other barriers, to being compliant with tax law?
@getmikey, thanks for hanging in and continuing to read at IBS over the years. Thanks also for the commiseration.
The ‘why’ questions you and I pose are even in part asked officially by the IRS Taxpayer Advocate. Yet the IRS and the US Treasury continues to demand unreasoning unquestioning obeisance from the whole of the rest of the globe while cutting any ‘services’ and refusing to make any changes that might make those demands easier to obey. They are either obdurately incompetent or actually intend to generate penalties in place of the taxes it cannot assess. They probably don’t care where the revenue comes in, since they have conflated ‘tax’ recovered with penalty revenue in their statements touting the ‘success’ of the OVD programs and FATCA.
The US wasted resources on me (and other expats who came forward ‘noisily’) yet could not even successfully assess me with any US taxes – a fact that was obvious from the beginning. It actually issued me ‘refunds’ due to some tax incentive program. It actually lost money and IRS staff time on me, though I lost far more in professional fees. I would have been better off not complying, or complying only going forward, or quietly backfiling only enough to renounce, and I wish I had done any of those rather than complying.
What did the IRS reap? Zero dollars, and an angry firm determination to stick around and publicize the pitfalls of US extraterritorial compliance and the hazards of retaining US citizenship and a commitment to support resistance in Canada against FATCA and US extraterritorial CBT on my home soil.
That is why I realized soon after my OMG moment that I couldn’t wait for justice and had to give up my birthright in order to survive.
Hope you are free of all this, or at least have found a solution or a work around that allows you to live with it.
“Some days it feels as if the US IRS is that tyrant”
Don’t you mean “Some centuries”?
I used to come here awhile back . Just want any Americans here to be patient, and vote out all the politicians that have betrayed expat Americans.