Greg Swanson has written a three-part series, “Americans abroad: a case study in the dumbing down of American policymakers,” providing a concise synopsis of the situation faced by US persons outside the US as a result of CBT and the history behind it.
Part I and Part II are online at Medium.com now. Part III to follow soon. I’ll post the link when it does.
Greg is the coordinator of PurpleExpat.org, which is focused on the elimination of citizenship-based taxation.
was complying last 10 years, but didn’t have to pay anything to IRS as I didn’t live or get paid in the US. I planned my life around the law that I knew of Now accountant saying I owed 300,000 retroactively on my medical corporation which operates 2 medical clinics in my country of residence, and houses retirement for me and my wife. Have had months of sleepless nights, nightmares, feelings of despair, depression, and even self-harm. No matter how I slice this, I cannot roll over and eat this poison. The congressional lawmakers that wrote TCJA used people like me to make the corporate tax cuts for Apple and Amazon more palatable on paper to pass their law. The transition tax on expats was to offset corporate taxes for trillion-dollar companies !!! I was used as a pawn and no the transition tax was not an “unintended consequence”.
Who else in the world pays retroactive taxes to the government of a foreign country when they have paid all their taxes to the country where their business is located? Why should I be the first one in the world on this experiment on confiscation? After much thought, I guess my only choice is to have no assets in the USA, and never go back to US, as I am a citizen of the country where I live. I am considering renouncing too very soon as that may come in handy should the laws on “assistance in collection” change. I tried to plan and do everything right. I always paid my taxes. heck I even complied with the US when most expats don’t. Never did I think I would be caught so helpless.
@Jack
Your comment reflects the sentiments of many caught in the transition tax nightmare. You are not alone, although most Americans abroad could care less (because they are not impacted by this).
In any case, your post is evidence of the dangers of U.S. tax compliance for Americans abroad. The ones who have not been damaged are those who have not complied (knowingly or unknowingly). Your options are pay the tax to keep the option of further abuse and confiscation open, not pay the tax and vanish or not pay the tax and renounce. If you choose the third option – you might seek professional help for reasons that are too complex to get into here.
You ask:
Obviously only those free people are citizens of the land of the free!
But the better question to ask might:
Who else pays retroactive when they have paid tax all along anyway?
________________________________________________________
How do you like your freedom now?
Boy, Mr. Swanson and I are much of the same mind. Hope many read these two parts and take them to heart. Looking forward to part 3.
Thanks for posting these.
@Jack
As someone also affected by the Transition Tax and GILTI, I’ve been following any developments concerning both very closely. Are you aware of Monte Silver’s lawsuit against Treasury concerning the TT?
Although I largely agree with you, I really don’t think that US lawmakers took American citizens abroad into consideration when making revenue estimates for the TCJA. I don’t know if you are aware or not, but Karen Alpert has done some valuable research concerning the Repatriation/GILTI taxes. She writes,
“JCT did not consider the tax revenue from individual US shareholders when computing the budget impact of TCJA.
sharehttp://fixthetaxtreaty.org/2018/12/10/fixing-the-transition-tax-for-individual-holders/#comment-59422
Additional statistics – the IRS publishes aggregate data for forms 5471 attached to US corporate returns (Form 1120 – so this excludes any 5471s for CFCs owned by individuals or pass-through entities). You can find the data at https://www.irs.gov/statistics/soi-tax-stats-controlled-foreign-corporations. The most recent compilation is from 2014. This shows USD2.7 trillion of deferred income (accumulated E&P not previously taxed) from a total of 90,204 CFCs owned by 14,969 US corporations. While this figure includes some pre-1987 accumulated E&P, after growth from 2014 to 2017, this easily covers the transition tax receipts estimated by JCT. Individually owned CFCs were not considered.
If tax receipts from individual US shareholders weren’t in the original budget effects, what is there to offset?”
@BB
“I really don’t think that US lawmakers took American citizens abroad into consideration when making revenue estimates for the TCJA”
Who cares if they did or not? does it matter what a serial killer’s motives were if he killed my family? that maybe of academic interest, but of no practical importance!
@BB
I have as much faith in Monte Silver’s suit as I do in the Toronto Leafs winning the next Stanley cup, which is next to nothing. I was complying for 10 years with form 5471 but I actually didn’t know about PFIC, capital gains on one’s house, and the exit tax. While worrying about transition, I had to find out about all these other gifts from the gods. Even if Monte were to win, the misery wouldn’t end. I don’t have a crystal ball, but if a Democrat gets elected as president, they are going to make it even tougher as they did in 2010 with FATCA. The leg is gangrenous and seems like best option is amputation. I wish I had renounced in 2017, at least the amputation would have been below ankle, now it will be below the knee. In a couple years, it may have to be below the hip.
These were John Richardson’s thoughts on the first article in Greg Swanson’s excellent new series.
I disagree with John. I think most expats have simply given up because they see that they’re facing a 600 ton gorilla. They don’t see how they have a chance at all of changing this monster. And when you think of it- the war of Independence from England was fought for the exact same reasons. A country which can take taxes from anybody will never stop until they are FORCED to stop, and America is too big and too powerful for that to happen. Speaking out about our sense of injustice and wrong doesn’t seem to have any effect. So I don`t think it is the too few who remain to fight. There is no fight because we have no chance. Every argument is met with distain. Every court case is lost. Every bit of actual LOGIC and regurgitation of the ugly facts and suffering in front of this raptor is completely futile because those in power dont want to hear it, and bend the facts to meet their needs. We state our case and the agony inflicted and hear “Whats the problem? There is no problem. Nobody is hurt by this.” This is the answer we get from JUDGES. I dont think one can blame people who have declared defeat and left the system. Not complying is only possible in Canada. The rest of the world assists America in enforcing their tax laws. If anybody can come up with a new tactic that has any chance of WINNING in this fight, I think more people will return to support the cause. As things stand now., the 600 ton gorilla is undefeatable. No Tea Party will impress and no actual armed rebellion has any chance either. Lets be realistic. I think that the only thing that would make the rest of the world stand up to America and refuse to abide by their laws, is if America loses its importance economically in the world. Trump might make that happen with his economic war on the rest of the world. But that could be devastating for ALL of us.
When I read the article by Swanson I feel sick, because it is so true and so right, and the rest of the world does not react at all to correct this injustice. Isn’t it amazing how abusers never see or admit to inflicting any abuse at all? But to have a justice system which refuses to acknowledge the abuse just goes beyond what anybody can stomach. I am one of those who have renounced and in order to keep my health, I have also removed myself from dealing with this horror day in and day out. I was facing serious health issues while I was involved, and feel quite justified in removing myself from the immense stress. I am an old lady who just wants to live out her life in peace. Having said that, if any NEW ideas with potential come up, i would be back to help as I am sure many others would too.
Polly, not complying is actually very possible in most countries around the world. I’m in the UK, which doesn’t even have (at the moment) any agreement to help the US collect tax.
I am afraid Polly is right, a rebellion is the only thing that worked in the past, but these are different times and apart from the dollar losing its hold over the world I do not see the chance of any change from the premise of US exceptionality, that might is right. You don’t need to field an army if you control the finances.
The individual will now seeks to protect himself in any way possible by not exposing himself to financial risk.
My hopes died when France failed to protect the accidental and what of taking the Canadians taking their fight to appeal, is there enough support to raise the finances needed?
Just my 2 yen,
While I agree with John in the main, there are other factors. I agree that no one wants to hear about this. All save two of the several Americans I know living in Japan have given any consideration to this issue when I raise it with them. They simply do not believe it and think only a fool would. They do not want to learn anything about it. To them, it simply can not be true.
The two who did not immediately mock me when I told them of this eventually stopped responding when I sent them updates.
Response from homelanders is fierce verbal attacts and threats of being “outed” to the IRS ending in typed “chants of “You owe, you pay!”.
So, yes very very few have seriously worked to fight this.
However, I doubt very much that I am on John’s radar. I have givenup much of the little time I have each night to sleep trying to spread the alarm. I have asked everyone I know in States, old friends and family to look into this and write the representatives and Senators. I have made submissions to two, perhaps three legislative committees. Though small in terms of the need, large compared to my means, I have donated cash to the legal challenge in Canada.
Small efforts compared to those undertaken by those doing the fighting in court, but I have given up much of my children’s first years of life studying this and doing the above.
I have, for the most part disengaged from the fight but not for the reasons John gives. My passport expires in a few years. If this is not solved by then, losing my passport due to lack of filing is probable.
Do I give up these last few years with my family knowing the fight will not be won in time or do I build bonds as strong as possible with my kids so that hopefully they grow into good adults? I will not have influence on them once I am taken from them, got to use what time I have while I can be with them.
Have chosen to spend as much time with my family as work allows.
There are other aspects. The fact that many who do know of our plight keep giving advice that suits only one segment of the wide spectrum of US taxation and get rather touchy when their narrow mindedness is called out.
The ”Renounce and Rejoice” crowd, are to me no different than homelanders and Judges etc. who respond to us with, “Well just renounce then!”
Almost every point Mr. Swanson made in the first two parts of his piece I have made numerous times here. Doubt anyone here at Brock does not recall the fire works that always erupt afterwards. There are many involved in this is due that just can not keep their political biases to themselves and insult those whose help we need. Counter productive at best. Bring this up increases the fireworks ten fold. To be blunt, there are many in this fight that I would never willing associate with and who wish to remind me way I would not with almost every comment they make.
Example, recently I thought I might try sending my submissions to the various legislative committees along with my FATCA letter to President Trump directly. For reference, I’d like to direct him to IBS but how far would he have to read before he concludes it is nothing but a bunch of Hate America Firsters suffering from Trump Derangement Syndrome? Not very far, I’m afraid. Not going to get his help sending him here. Counter productive.
So, getting fired upon from my own side while seeing no ground conquered and much lost with just a few years before I am separated from my family and no prospect of the war being over by then, why should I continue in the fight? Much prefer spending time with my kids over reading the counter productive comments here.
Did not mean to go that deep into it nor type so much, but there it is.
@Birdperson
I fear for the future. The UK will now be at the mercy of the US for any kind of post Brexit trade deal. As Larry Summers puts it, the UK after leaving the Eu will have no leverage, who knows what they will agree to, bank collections, confiscations?
@Heidi Yes, which is why I said ‘at the moment’. I’m glad I renounced last year. Who knows what will happen? The UK is at risk of becoming heavily dependent on the USA.
@BP
The next batch of lucky renunciants should be out soon; it’s late as usual.
@Heidi Lucky for some. The fee is more than I earn in a month. I had to take money out of my ISA to pay for it. On the other hand, at least I didn’t pay any of my ISA over to the IRS!
@BP
I was fortunate, I renounced 7 yrs ago for $450, even that seemed high at the time.
@Polly
Canada is one of the few countries where a US-person resident who is not also a Canadian citizen is – in theory – vulnerable to IRS collection measures via cooperation with CRA. (Other countries being Denmark, France, Netherlands, Sweden, and soon Japan). Anywhere else is a better bet for a non-compliant expat without local citizenship.
What Canada is very good for is avoiding FATCA grief, because banks are easily lied to and don’t seem to care much. And even those who honestly report their US person status face none of the limitations on accounts or investment services that are probably the real reason for most of the renunciations these days, plus the registered tax-protected investment schemes (RRSP, TFSA, etc.) are excluded from FATCA reporting under the terms of the IGA.
@Ron Henderson
“Anywhere else is a better bet for a non-compliant expat without local citizenship.”
I am not sure about this. I can picture many little countries crack under pressure from the big bad USA, and give up their citizens who may owe a lot of money to USA, especially if USA gets wind that they are hiding money somewhere. Caribbean countries come to mind as examples. Having said that, I would like to hear from people where they think are very safe countries from the reach of the IRS regarding collection measures.
I only offer a snapshot of the situation today, and make no predictions for the future.
Can’t seem to find a current list of countries that have not signed onto FATCA Those are the safest from US grasp. Russia for one had signed tentatively but is currently and probably will be for a long while in limbo..Iran,Cuba ,most likely,no agreement . All tbree countries with US sanctions. Would venture to say that any country that has gone through a US embargo time and again should be safe.. Mind you,there aren’t many US citzens there nor suggest moving there.
The least safe are US allies. The closer to the US, The closer one is economically and more vulnerable to their pressure. Britain was the first to signup.to FATCA.
@ Robert Ross
I was wondering about China. Says they are part of Fatca, but I doubt they are complying and I highly doubt they would collect for IRS. They stand their ground unlike Britain or Canada.
If one wasn’t born in USA, just open the account with your Canadian passport or other ID.,
Some passports (e.g. UK) only show city of birth, not country. There’s a lot of Springfields out there. Just saying…
@Cam
Maybe,hopefully,,one day , most of the world will be under US sanctions..
If one wasn’t born in the US , like myself,exactly..Was at one time US ,left and shut the door after me.However,have a close relative here ,unfortunately born in the US.
@ Japan T
Admire your fortitude. However, what woud have Trump done for you that he hasn’t done already to the rest of world ..US- haters here ,can’t be true !Ask you this.?
Which feels more painful, a knife in the back from a friend or one from an enemy?
Interestingly ,the idea of sanctions was inadvertentlly started here but there is s connection with sanctions and FATCA, They are opposite sides of the same coin. Those who face up to FATCA face sanctions.
@fedup
“Who cares if they did or not? does it matter what a serial killer’s motives were if he killed my family? that maybe of academic interest, but of no practical importance!”
It was of very practical importance to Democrats Abroad when I told them about Karen’s opinion when they were met by lawmakers who said they need revenue offsets to get rid of the Transition Tax for people like me and Jack.
Heidi makes a good point. It might just be that the U.S. dollar will have to collapse to end the U.S.A.’s worldwide economic, military and psychological hegemony. I see FATCA as a branch on the hideous hegemony tree. Some say the U.S. dollar will never collapse but if, by chance, it did collapse there would certainly be a great deal of turmoil. After the dust settles, would the world then face a new tyrant (like NWO overlords, heaven forbid) or would national sovereingty make a welcomed return?
@ Jack and BB
I didn’t think anything could exceed the irrationality and injustice of FBAR/FATCA but TT/GILTI actually does. Retroactive taxation … so punitive, so complex … beyond the pale. Nobody could have dreamed something like this would come along and frankly I shudder to think there are minds out there capable and uncaring enough to create such things.