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.
Not a “proud American story”, but what I sent to my Congressman’s office the other day:
“‘Dear Congressman Posey,
The Repatriation/Transition Tax and what it does to my years of retirement savings within my small Canadian corporation has broken me as an American abroad.
US lawmakers should consider passing laws making it illegal for Americans to make their lives in other countries, because that’s the reality for us. If this can be fixed, please do it as soon as possible. America’s losing too many good people!”
“I don’t understand why those who have not entered the U.S. tax system have any problems. It seems clear that those who have NOT complied have NOT had their lives destroyed. They still have their pensions and their marriages.”
It’s fair enough to ask for stories from only compliant American expats; I’m down with that and there should be some tragic stories by the score. It’s a perfectly understandable request. However, to state that you do not understand how non compliant Americans haven’t also had their lives either destroyed or at least turned upside down is a bizarre claim.
Many on this site, myself included, have written lengthy accounts on the hideous effects of FATCA in spite on non compliance. I’ve seen my elderly parents on fixed income have their accounts blocked by Swiss banks. They were non compliant. I saw my sister’s marriage dissolve when, again, their Swiss account was blocked due to FATCA. I’ve seen friends lose their credit cards, have their accounts cancelled, have their house mortages cancelled and on and on.
Forgive me but please do no pretend that just because a US expat is hiding under his bed, so to speak, that life abroad is somehow a breeze. FATCA AFFECTS ALL OF US, COMPLIANT OR OTHERWISE.
If you want compliant stories then just say so but don’t try to insinuate that non compliant folks are doing just great.
@Eric in Switzerland
You write:
Eric: Of course you are correct and I am not suggesting that “noncompliant Americans” have zero problems. What they do not appear to have are “tax related” problems. I agree that FATCA related problems (bank and financial accounts that you describe) are very serious. They are a different category of problem. This post (as is clear from the title) is about taxation – a possible move to some form of “residence based taxation” – the way that Americans abroad are taxed. The FATCA issue (as important as it is) is a different (but contextually related) problem. It seems to me that Americans in Europe (whether they file U.S. taxes or not) will still have the same type of FATCA problems. Do you agree or disagree?
As you point out there has been a great deal written (and acknowledged) about the problems that FATCA has caused in Europe. There has been comparatively little written about the damage that the U.S. tax system itself does to Americans abroad who do comply.
In the context of “tax reform” (if you agree that this is a possibility) that the destructive effects of tax compliance must be considered.
Let’s agree that being a U.S. citizen or being accused of being a U.S. citizen causes a great deal of pain and damage no matter where you live (even in the USA).
Eric in Switzerland: I believe you’re missing the point. This entire site is all about the damage done to all US persons abroad. The point of this thread in particular is to collect stories specifically about problems faced by compliant taxpayers like myself. This is apparently for the purpose of influencing US lawmakers.
Which story is a myopic, nationalistic, blowhard Congressperson going to pay attention to:
A) I’ve never complied with US law while living abroad, never filed my tax forms, yet you still found a way to punish me.
B) I’ve tried all my life to patriotically follow the letter of the law and file my taxes, yet I’m being punished just for the fact of living abroad.
I think that’s what this thread is about. Want too make it about ALL American expats being persecuted? Easy: go to almost any other thread on this website.
Sorry if this is off topic, but just wondering is there a website or group of people I can join that focuses on the plight of Canadians with unwanted US citizenship as opposed to people who consider themselves American?
USCA – I think you’re right. Any RBT/TTFI fix will ignore FATCA and will have zero impact on the banking problems being faced by US citizens, especially in Europe. On the tax side, those who have tried hardest to comply are those who have been hurt most.
Barbara, thank you for sharing (again) your husband’s story; it is well-written and compelling.
@SadCanadian
You ask:
Yes you are right. You are very much off topic. But, since you ask, I will point you to a site that has been absolutely obsessed with “the plight of Canadians with unwanted US citizenship”.
I will even provide you with link! It has been obsessed with the problem since 2011!
http://www.isaacbrocksociety.ca
Check it out!
SadCanadian: This is definitely the right site for you to find all the information you need about Canadians who no NOT want US citizenship. But this particular thread isn’t the right place. Go to just about any other thread and you will find all kinds of information pertaining to your concerns. Check out the side bar too. You are welcome here!
Well, I’m a little ticked to tell you the truth. I spent yesterday afternoon composing a short, three-sentence statement along the lines of the one JC posted as being particularly useful for Solomon Yue’s purpose. There was nothing in JC’s post that suggested to me that he was soliciting “Proud American” statements ONLY from tax-compliant Americans.
I am NOT a tax-compliant American and will NEVER be one. But, even if it’s only technically speaking, I AM an American. It’s just a fact, and it used to be one that I was more than happy to acknowledge. Similar to Barbara’s husband (whose eloquently angry letter is, incidentally, a masterpiece) “You’d have found no better ambassador for the USA than me. I can’t tell you how many thousands of times I’ve stood up for the USA against the criticisms of my non-American friends . . .” Forty-five years ago when I became a Canadian citizen I did so without renouncing, or intention to renounce, my US citizenship. (How can one repudiate 350 years of history and heritage?) Now, if it didn’t cost a king’s ransom I would more than willingly renounce, and compose a fake genealogy to go along with it!
I had something far more measured and concise composed for JC to send to Solomon Yue but if it’s not welcome I won’t bother posting it. The Senate Finance Committee didn’t listen to “David” back in 2015. I must trust that whoever Solomon is talking to now will have bigger brains and a bigger heart. The only hope, not just for us but for the USA itself, is the adoption of a residence-based taxation system.
@ Sad Canadian If you have a Facebook account, you may ask to join American Expatriates on Facebook. Keith Redmond is one of the good guys. He has lobbied hard for the accidental Americans in Europe who were unaware that they were even considered American citizens.
Just re-read my rather rambling statement (as I said, I’m ticked!) and I need to clarify that the three sentences I wrote yesterday afternoon were more “concise” and “measured” compared with the comment I posted here, NOT as compared to Barbara’s husband’s statement. As I said, THAT is a masterpiece.
Sorry for perhaps not explaining my question clearly. I’m wondering if there is a website or group of people that is just for Canadians stuck with a US citizenship they don’t want. The French seem to have something similar but maybe overly focussed on “accidentals”. The Australians have their own group. This site appears to have a much broader focus than any others I have come across. Nothing against proud Americans or others who may not be so proud but who value their American citizenship. But I was hoping to find a Canadian centric group of people whose focus is primarily the fight to be recognized only as Canadian by both Canadian and US governments. Canadians with unwanted US citizenship should not have to get US tax compliant or pay a huge fee to get rid of a citizenship they don’t want. Not meaning to offend those who consider themselves American and it’s great to be welcome to this broader group representing all those who may be ‘US persons’, but quite frankly the subgroup I refer to kind of gets lost in the overall bigger focus of this site unfortunately.
@ SadCanadian,
I don’t know your situation – eg, if you ever filed US taxes or even have a US social security number. If not, you should think twice before filing US tax. And tax compliance is not a requirement for renunciation. See http://isaacbrocksociety.ca/renunciationrelinquishment-interactions-between-department-of-state-and-the-internal-revenue-service/
Also, particularly if a person is a US citizen without a US birthplace (I’ve no clue if you are or not), it is often best to just stay under the radar; that is not file taxes, but also not renounce because without a US place of birth, the US citizenship is not obvious and therefore not likely to cause problems.
As MuzzledNoMore suggested, look at the Sidebar. There’s links there to information that can help you decide what the best course of action (or non-action) is for you in your particular circumstances.
Re:
Interesting to see persons with unwanted US citizenship considered to be a subgroup here, particularly in juxtaposition to the post directly below this one, which is on the upcoming Ottawa Brock Lunch and mentions an expected attendance of 10 people. As I’m the lunch’s organiser, I’m aware of who’s coming — 7 people who would like to get rid of their US citizenship or already have; 2 spouses who never were US citizens; and 1 person who, as far as I know, is planning to keep US citizenship but I’m not sure.
Thank you Barbara and USCA,
I meant no offense to anyone and I hope you believe that. Again I fully understand the purpose of what you are asking, ie, accounts from the tax compliant expats; and yes of course it carries more weight when an actual tax compliant person appeals to whomever might lend a sympathetic ear in DC.
I was not reacting to the request (of tax compliant accounts) but rather I was annoyed at what I may have wrongly seen as a dismissal of the plight of non compliant expats.
Anyhow, no worries and no harm done. It would be wrong of us to start infighting: compliant or otherwise we must stick together and fight the real bastards in DC.
@Eric in Switzerland
There is absolutely NO dismissal of the plight of people impacted by FATCA around the world. On the contrary, it is understood and your pain is felt.
As somebody (Ronald Reagan quoted this in one of his speeches):
If we don’t hang together, we will hang separately!
Eric in Switzerland: “It would be wrong of us to start infighting: compliant or otherwise we must stick together and fight the real bastards in DC.”
I agree with you with all my heart!
“Which story is a myopic, nationalistic, blowhard Congressperson going to pay attention to:
A) I’ve never complied with US law while living abroad, never filed my tax forms, yet you still found a way to punish me.
B) I’ve tried all my life to patriotically follow the letter of the law and file my taxes, yet I’m being punished just for the fact of living abroad.”
Neither. The effort is admirable but the effort already failed. The IRS’s Taxpayer Advocate reported to Congress in 2011 how the US forced thousands of honest taxpayers to renounce and Congress didn’t give a shit, so who thinks Congress is going to pay attention to ordinary people?
“Forty-five years ago when I became a Canadian citizen I did so without renouncing, or intention to renounce, my US citizenship. (How can one repudiate 350 years of history and heritage?)”
Twelve score and two years ago a bunch of people became US citizens and they did so WITH intention to renounce 710 years (or longer) of history and heritage. We’ve learned from them. It would be nice if they would learn from themselves, but it’s not going to happen.
“But I was hoping to find a Canadian centric group of people whose focus is primarily the fight to be recognized only as Canadian by both Canadian and US governments.”
A bunch of threads here do but, like everything, they wander off topic. You might want to look at the ADCS site, though they don’t care about being recognized as Canadian by the US government, they only try to be recognized as Canadian by the Canadian government — and the Canadian government is fighting them tooth and nail.
Well, this thread has fractured quickly, like so many other discussions here do, into unrelated topics, and is no longer about anything. Maybe start all over again and ONLY post testimony, as originally requested, from us compliant US expat taxpayers who are suffering as a result.
Some moderation of these forums is a bit overdue, since this seems to happen in every thread. If someone says, “This may be off-topic but…” then move that post to the appropriate forum (in this case http://isaacbrocksociety.ca/fatca-and-canada). If someone says, “Why is this thread only about compliant Americans? What about non-compliant Belarusians?” (Not being sarcastic, just being silly), then move that comment to the appropriate other discussion (in this case, almost any other discussion in IBS). When I first came to IBS, I could find the latest information by following the headline topic in various threads. Now it’s become a hodge-podge. There, I’ve just gone off-topic too. But this thread is already disintegrated.
Sorry, but others have commented elsewhere: as these discussions become more a place for rants, IBS becomes less effective.
@pacifica777, you are right that only overseas US citizens that are born overseas and become Americans due to a) naturalisation or b) because of having a US parent, can navigate around the current environment. These people are typically not in the tax filing system and have citizenship rights in their existing country. However many financial institutions overseas are sending out questionnaires asking account holders to confirm they are not US citizens. They can say they are not but if they are found out, their accounts will be frozen immediately and they will be asked to leave in a defined time frame or else. It is not known if their discovery is reported, but it seems likely every bank wants to be on the good side of the Department of Treasury.
@ Silver Surfer,
Thanks for your thoughts on my comment.
I didn’t mean to imply that only persons born outside the US can navigate around this mess, rather that, compared to US born people, it’s pretty easy for them to stay under the radar.
Also, a point re: “These people [persons not born in the US] are typically not in the tax filing system and have citizenship rights in their existing country.”
Citizenship rights in the person’s home country can also exist for a person who is a dual (home country and US), one example being tax collection in Canada, where per the Canada-US Tax Treaty, despite having a mutual collection clause, Canada will not collect on IRS’ behalf if the person was a Canadian citizen at the time the tax debt arose (even if they were also a US citizen at that time and even if they remain so).
@Barbara
In response to your comment which follows and the other two comments which have been removed:
I want to thank you for posting your husband’s story. It was extremely helpful and powerful. I hope that you will make it available to those who are fighting the TTFI battle. I also want to thank you for recognizing the reality that those who have been most hurt are tax compliant Americans. Your comments and other efforts (for example: http://fatca.eu.pn) over the years have been enormously helpful and I thank you for your committment and effort. You have made a major contribution. Or as they say in the world of urban basketball: “You’ve got game!”
It seems to me that comments to a post fall into three broad categories:
1. Offered in the spirit of contributing to the purpose of the post/discussion
2. Irrelevant crap
3. Subversive (meaning that they are for the express and intentional purpose of disrupting and preventing any discussion).
I recognize all three types of comments in this post.
As the author of this post I share your disappointment and frustration. With your comments gone there is absolutely no purpose to the post anymore – just a random discussion (sort of). It takes a lot of time to write these posts and I wish that I had the hour back that I invested in it.
It would have been better if the other comments had been deleted and yours remained.
And the band played on …
I’d like to clarify that Barbara’s comments were removed at her request, not a decision by the site’s moderators. IMO, Barbara’s comment which contained her husband’s story was an outstandingly eloquent testimony and the best comment on the thread.
I’m wondering, Barbara, if you’d reconsider having it posted here. It’s a powerful story for people to read and it’s presence may encourage the thread getting back on track.
Whatever you decide, thanks very much for having posted it. And although it is not visible here now, I presume it has been picked up by or forwarded to Solomon Yue, or you’ve sent it to him, for the presentations he is making to the US govt on behalf of tax reform for US persons outside the US, and it’ll be a great contribution to that.