Liberty and justice for all United States persons abroad

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Category Archives: Issues regarding US persons abroad

Looking for Stories of People Who Have Renounced

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UPDATE Our Stories
 

It’s Cruel how we Have had to Give up our Right to Return

A Dual who Managed to Relinquish!

I Renounced – for Human Rights, for Privacy Rights, & for Showing Respect for my Husband’s Privacy

I Lost Hope

I did not Leave America, the U.S. Government Left me

I Feel Cheated by my ex-Country who Treats its Citizens in This Way

How I Became Canadian and Ended up Renouncing US Citizenship

Last Generation American

Why won’t the USA Graciously let its People go?

*******

 
I would like to create a section on the Citizenship Taxation website that is devoted to the stories of those who have renounced/relinquised. The primary purpose is to demonstrate a different focus than that of trying to keep it, hoping for change in the political process, etc. Hopefully it would include what it felt like during the period of deciding (the OMG moment + any particular stresses that pointed you in that direction), could include the actual appointment(s) at the Consulate, the aftermath, family reactions, etc. Whatever you feel would be meaningful to communicate…….

Real names are not required. All requests for privacy concerning email, name etc will be strictly respected/followed.

Please email to:

information at citizenshiptaxation at dot ca

Thanks!

Meet the Proposed Commissioner of the IRS – A Welcome Change?

Posted on by Posted in Ethics, Issues regarding US persons abroad 32 Comments

Rettig

Politico announced Trump’s nomination Of Charles P. Rettig, including the following excerpts:

Rettig, who specializes in settling complex tax disputes between his taxpayer clients and authorities like the IRS, known as tax controversies, has for more than three decades represented clients before the IRS, the Justice Department, state tax authorities and other jurisdictions.

Rettig is no stranger to the Washington tax policy community. Many IRS officials would be familiar with him because of tax litigation in which he’s been involved.

Rettig’s nomination would break a nearly two-decade practice of naming commissioners from the general business world, a trend that began after the IRS Restructuring and Reform Act of 1998. Prior to that, commissioners generally had tax backgrounds.

 
Continuing with the conversation from Media & Blogs thread, I see many mentions of the fact that his firm represented some 100 UBS clients (which may be why some of his articles concern the OVDP). I am trying to locate some actual court cases but the site that keeps coming up in references seems to be down. He also clearly, is respected for his work representing clients by his peers:

TaxControversy360

Rettig would also oversee the implementation of tax reform. Rettig has been a friend and mentor to many of us in the tax controversy bar over the years, and we are encouraged by the selection of someone from the private bar to the post.

Given he is a tax litigator, I don’t expect he would support a change to RBT (hope I am wrong about that) but some of his comments certainly suggest he understands what has happened and that our situation is very different from that of U.S. residents with foreign accounts.

Forbes IRS FBAR Streamlined Procedures Revisited, Am I Non-Willful

If, as some believe, the Streamlined Procedures are being used to entice unsuspecting taxpayers into placing their head onto the FBAR chopping block, the government should be held accountable. However, if, as most believe and our experience seems to support, the Streamlined Procedures were designed to provide not quite willful taxpayers an opportunity back into compliance through a simplified and expedited process, the IRS should respect the vast majority of Streamlined submissions (and requests for transitional treatment) and move on.

Forbes IRS FBAR Voluntary Disclosure Program Taxpayer Interviews

It should be anticipated that the IRS will pursue examinations of the amended returns of taxpayers residing in the United States in some manner. It remains uncertain whether the IRS would or could effectively pursue those residing outside the United States in any realistic manner. It should also be acknowledged that there remain viable alternatives to the OVDP, including the voluntary disclosure practice of the IRS set forth in Internal Revenue Manual (IRM) 9.5.11.9 [see Example 6(A)], Section 4.01 of the Criminal Tax Manual for the U.S. Department of Justice, and Section 3, Policy Directives and Memoranda, Tax Division of the U.S. Department of Justice.

Certainly, given the complexities of the Internal Revenue Code, other relevant statutes and life in general, many of the indiscretions associated with an income tax return or FBAR are anything but willful or intentional and definitely not fraudulent or criminal in nature. In these situations, an interview of the taxpayer and/or their return preparer can lead to an extremely quick and reasonable resolution.

Forbes articles

Many, many articles penned by Mr. Rettig are available via SSRN and listed here.

Bubblebustin asked for this post to be based upon this paper. Unfortunately the most we can offer is the link and a few excerpts. Strongly suggest everyone read this particular article- Why the Ongoing Problem with FBAR Compliance? from the Journal of Tax Practice & Procedure, August-September 2016, published by CCH, a part of Wolters Kluwer.

A major point in the article is when government is trusted, is seen as legitimate, compliance tends to be a result. It probably does not help that the IRS emphasizes submissions coming from OVDP and Streamlined will be examined “in an effort to uncover leads for criminal prosecutions.” Mr. Rettig is also aware that eighty percent of non-resident filers will have no U.S. Tax Liability. Though again, that is a reference to income tax and does not cover some of our worst grievances.

Potential government actions should consider the
impact on those six-plus million U.S. people (and their
advisors) sitting in the bleachers domestically or in various
foreign countries trying to determine how best to pursue
some form of voluntary compliance, expatriation or to
possibly just continue sitting in the bleachers … “History
repeats itself because no one was listening the first time.”

 

Taxation of #AmericansAbroad in the 21st Century: “Country of birth” Taxation vs. “Country of Residence” Taxation- Part II

Posted on by Posted in Citizenship Issues, Issues regarding US persons abroad 23 Comments

 

cross-posted from citizenshipsolutions

by John Richardson

Update January 2018: This post has been updated with some new links and discussion.

Part I is here.

*****

We are witnessing what McGill law professor Allison Christians once referred to as the “Story of The Century“. To borrow from Professor Christian’s post:

The US is right now imposing enormous penalties and unleashing general chaos on people living in other countries with US citizenship, both by newly enforcing long-ignored rules and by layering on top of these rules a new and more draconian layer of enforcement. The chaos comes in the form of fear-inducing, devilishly complicated and duplicative paperwork, and penalties, most of all penalties, and it is being piled on to millions of people around the world, many of whom, like Cruz, are very possibly only beginning to understanding that citizenship status is mostly conferred upon rather than chosen by individuals.

Ted Cruz should consider himself very lucky. The Canadian citizenship he claims he didn’t realize he had, doesn’t carry any punishment IN CANADA for his failure to recognize it. Moreover renouncing Canadian citizenship, if he really intends to follow through on that promise, will be relatively simple, cheap, and painless other than any damage (if any) to his US political career. (Interestingly Australian Green Party Senator Larissa Waters was forced to resign because she was born in Canada and still (although she was unaware of it) held Canadian citizenship.

Not so if Mr. Cruz he had lived his life in Canada with his current apparent dual status. US citizens abroad now understand that discovering ties to the US means discovering a world of obligations and consequences flowing from citizenship that one was expected to know and obey. Ignorance of the law being no excuse, the punishments range from the merely ridiculous–many times any tax that would have ever been due–to the infuriating: life savings wiped out and many future tax savings sponsored by your home government, such as in education or health savings plans, treated as offshore trusts and therefore confiscated by the US. Moreover there is no ready escape hatch for the newly discovered and unwanted US citizenship: five years of full tax reporting compliance must be documented, appointments must be made with officials, fees must be remitted, interviews must be conducted, and in some cases exit taxes must be paid. If some in Congress get their way, renunciation could even mean life-time banishment from the US someday soon.

In the grand scheme of things Ted Cruz’s citizenship is a non-story. But for what it illustrates about citizenship-based taxation, it could be the story of the century.

The Debate – Taxation Based On The “immutable Characteristic of Place of Birth”
Continue reading →

National Taxpayer Advocate sees titanic growth in “offshore” penalties, suggests Congress re-arrange deck chairs

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TaxProf Blog informs us that National Taxpayer Advocate Nina Olson’s 2017 Annual Report to Congress has just been released. The latest report contains similar criticisms of diaspora abuse and suggestions for improvement which the IRS & Congress ignored last year and every previous year since 2012 2011. Criticisms of FATCA and mailing delays have been condensed and toned down since last year. Criticisms of passport revocation have been expanded. That stuff is more or less business as usual; see below the fold for details.

However, there’s one new section which makes this worth a separate post: discussion of penalties for not filing international information returns (Vol. 1, p. 314). Ms. Olson managed to get her hands on some interesting data and examples: in particular, she found out that the IRS collected nearly twenty-three times as much in penalties on failure to file Form 3520 in 2016 as in 2013. (I wonder how much of this came from those 48,000 “Streamlined” participants.)

Figure 1: Growth in penalties for failure to file
international information returns since 2013
Form1 Legal basis
for penalty		 Penalty type Net penalty after abatement Growth in
penalty
revenue1
2013 2016
5471 (Cat. 4)
8865 (Cat. 1)		 § 6038 Initial $7,587,151 $20,364,300 168%
Continuation $3,576,416 $35,991,336 906%
5471 (Cats. 1/2/5)
8865 (Cats. 2/3/4)		 § 6679 Initial $30,000 $60,000 100%
Continuation N/A2 $2,671,935 N/A
3520 § 6677 Initial $30,800,327 $702,187,004 2,180%
Continuation N/A2 $6,645,580 N/A
Total penalties
(comparable categories only)3		 $41,993,894 $758,602,640 1,706%

Adapted from Figure 2.7.1, “International Penalties Assessed and Abated in the Aggregate in FYs 2013 and 2016″. Penalties from Form 5472 are excluded. Notes:

1. Form name and penalty growth not in original; any errors in those columns are my own.
2. Original does not list continuation penalties under 26 USC § 6677 or 6679 for year 2013.
3. “Comparable categories” excludes continuation penalties under 26 USC § 6677 or 6679 for year 2016. Total revenue in 2016 including those penalties was $767,920,155.

The actual recommendations in the new section are uninspiring. Ms. Olson doesn’t comment on the growth in penalties, nor inquire as to the reasons behind it. Nor does she suggest reversing the massive hikes in statutory “offshore” penalties over the past two decades, which have left members of the diaspora in fear of bankruptcy for foot-faults on paperwork about local assets (while Homelanders with similarly-situated local assets face penalties proportionate to actual tax, or even no penalties at all because no equivalent paperwork exists for them). She only asks Congress to give the IRS consistent authority to waive penalties for reasonable failures to file — right now, they can waive “continuation” penalties for some forms but not others. All well and good, except they’re barely using the penalty abatement authority they have anyway.

Continue reading →

Investing with One Hand Tied Behind Your Back – an Australian Perspective on United States Tax Rules for Non-Resident Citizens

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Dr. Karen Alpert of the University of Queensland will be presenting this paper at a conference of Melbourne next week:

Investing with One Hand Tied Behind Your Back – an Australian Perspective on United States Tax Rules for Non-Resident Citizens

The paper is based on her posts on investment constraints at the Fix The Tax Treaty Blog, but much more technical (I still found it very readable and useful as a layperson).  It deals with both issues specific to Australia, such as superannuation, and issues affecting all US persons residing outside the US regardless of country.  Karen is the founder of Australia’s FixTheTaxTreaty and a frequent commenter here at Brock.

ACA: TAX REFORM BILL AND AMERICANS ABROAD: WHAT HAPPENED? WHAT’S NEXT?

Posted on by Posted in Issues regarding US persons abroad 77 Comments

cross-posted from Alliance for the Defeat of Citizenship Taxation
 
NB: While ADCT respects ACA’s positions and appreciates their lobbying efforts, this post in no way serves as an endorsement of their submission regarding RBT.

It bears repeating that no group approached Congress during the tax reform process and specifically requested RBT. Many chose to support RO’s effort (TTFI) assuming it more likely to succeed given Congress was clearly intent upon changing corporations to a territorial model.

ACA’s approach to RBT has been described by some as CBT with a carve-out (for those who are already compliant). It does not address the issues of Accidental Americans; becoming compliant for the express purpose of renunciation, etc.
 

TAX REFORM BILL AND AMERICANS ABROAD: WHAT HAPPENED? WHAT’S NEXT?
 

by Charles M Bruce
ACA’s Legal Counsel and Of Counsel to Bonnard Lawson-Lausanne

with contributions from Jonathan Lachowitz, Chairman, ACA, Marylouise Serrato,
Executive Director, ACA, and Jacqueline Bugnion, Former Director, ACA.

On the day President Trump signed the The Tax Cuts and Jobs Act (TCJA) , Mr. Bruce issued this letter (found on the ACA website).

EXCERPTS:

What happened?

Changes in the basic rules for Americans abroad were not made.
There are strong indications that Congress will soon return to the subject of tax law changes to make corrections in what was done and to address issues that were postponed. A couple of days ago Chairman Brady said, “I’m going to recommend that we do have some form of tax reconciliation in future budgets because there are still areas of the tax code I think . . . can be improved, including retirement savings, education, and streamlining,” Brady said. “And we had a number of good ideas from our members we weren’t able to accommodate. Plus, I think we’ll have to continue to modify the international code over time.”

What has not changed?

  • The basic foreign earned income and housing cost amount exclusion (FEIE) has not changed
  • The 3.8% net investment income tax to fund Medicare and The Affordable Care Act, remains in place and continues to apply in a way that, for Americans abroad, exposes them to double taxation because they are not allowed to credit foreign taxes against it.

There are some serious problems.

Continue reading →

UN Human Rights Complaint Quadruples Its Signatures!!!!

Posted on by Posted in Issues regarding US persons abroad 19 Comments

THANK YOU, THANK YOU, THANK YOU to the 101 people (!!!!) who have recently added their names to the Human Rights Complaint that was originally filed with the United Nations in 2014. The number of signatories is now almost quadruple that of the original submission.

In addition, the number of countries represented by the signers has almost doubled, from 10 in 2014 to 19!!

Every year since the Complaint’s filing we have sent a “Support Document” detailing, from online testimonies, the abuses that have been  suffered by ordinary folk around the world because of United States CBT/FATCA and FBAR. It has always been accompanied by a short, one or two-paragraph letter simply reminding the UN that we’re still here and waiting for their response. This year the complete failure of the US government to adopt RBT/TBT for individuals, despite its promises to do so, warrants a larger package and a louder message to be sent to the United Nations.

This year’s “Support Document” is accompanied by the long list of additional signatories as well as the following letter (signed by myself and “Karen”) updating our situation. She and “Calgary” have been instrumental in the success of this current campaign and I thank them both deeply for everything they have done.

I hope that supporters will tweet this out to the media, post it on every website they know, send the link to their government representatives, and just get the word out that this action is in the works and we will NOT be ignored any longer.

For the “update” letter, please continue reading. Continue reading →

Estate Matters for Former US Citizens

Posted on by Posted in Issues regarding US persons abroad 91 Comments

The suggestion, by Badger and Nononymous, for this new thread came from a comment by Elizabeth, which I’ve excerpted here and can be found in its entirety at this link followed by several comments in reply.

Please share your information and experience regarding estate matters for former US citizens both in reply to Elizabeth’s question and/or in a broader sense, and ask your own questions about these matters on this thread.

 Elizabeth wrote:  . . . My father, who was born in the USA and moved to Canada in [the 1980s], passed away recently. A little background… after moving here he was under the impression that he didn’t need to file taxes in the US if he properly filed in Canada . . .  He relinquished his US citizenship in [the 1990s] by taking the citizenship oath in Canada, along with the rest of our family. He never lived as an American after that, never renewed his US passport, never lived there. He did collect Social Security from the years he did work there, but that was it.   His accountants want me to file US taxes for his estate, but I don’t think I need to as he was not a US citizen anymore.

UN Complaint Seeking Additional Signatures: Deadline December 12, 2017!!

Posted on by Posted in Issues regarding US persons abroad 31 Comments

UPDATED!!!     PLEASE tweet this guy! Might I suggest creating #WhatAboutUs?! https://www.taxjustice.net/2017/12/08/human-rights-costs-proposed-u-s-tax-cuts/!

In light of the complete failure of the United States government to provide tax compliance relief for the eight to nine million deemed American citizens living outside US borders, creators of the United Nations Human Rights Complaint against United States CBT, FATCA and FBAR are actively soliciting additional signatures to the document. Signatures are kept confidential and will be disclosed only to the UN Human Rights Council. They will never be seen by the United States government.

Please email calgaryfouroneone@gmail.com with your request to view the document prior to signing it. You will be sent a link and a password. PLEASE NOTE!!! Once you’ve requested the link to the document and the password, your name will NOT be added unless you email “Calgary” AGAIN with your permission AFTER you’ve read the Complaint. 

The Complaint was filed on August 7, 2014 and is still awaiting assessment for acceptance into the complaints process. We are working to find someone with knowledge of the UN bureaucracy who is sympathetic to our cause and can help to draw the UN’s attention to our issues.

Our “domestic avenues” have been exhausted. We must seek justice on the international stage.

Deadline to add your signature is December 12, 2017!!

Support the Paul Amendment to Repeal FATCA!

Posted on by Posted in Featured, Issues regarding US persons abroad 255 Comments

 

repealFATCA

This Is an Urgent Campaign to Repeal FATCA ALERT!

Support the Paul Amendment to Repeal FATCA!
 
 
 

November 29, 2017

This week the Senate version of the tax reform bill will come to the Senate
floor. The Campaign to Repeal FATCA has learned that Senator Rand Paul
(R-Kentucky) plans to offer as a floor amendment his bill S. 869 to repeal
the so-called “Foreign Account Tax Compliance Act (FATCA).

The Campaign to Repeal FATCA is asking everyone immediately to contact your
Senators with this simple message:

“Support the Paul Amendment to Repeal FATCA!”

You can find the contact information for your state’s two Senators
here. Given the partisan divide
in the Senate, it is especially important to contact Republican Senators. If
your state has one from each party, contact the Republican first!

Here is a suggested draft message you can use via the email contact. (NOTE:
If you are contacting a Democratic Senator, please delete the sentence in
red referring to the Platform.):
Continue reading →