FATCA Discussion Thread (Ask your questions) Part Two
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I did. He said that had he renounced his US citizenship five years before he sold his London house, with its profit of some $1,500,000, all would have been nipped in the bud.
Some years ago, the US investment industry lobbied the US government and succeeded in getting the IRS to impose punitive taxation on mutual funds and certain other investments bought outside of the US by US citizens regardless of where they live. So, a dual-citizen living in Canada cannot buy Canadian mutual funds. If they do, the tax is apparently higher than the return, and the tax filing is so complicated and expensive that some cross-border tax experts won’t even take you as a client. I’ve seen it right on accountant’s websites. (I’m referring to PFICs). We have a simple Canadian “tax-free savings account” that is also regarded as a PFIC by the IRS.
Is this a US law to be respected and complied with?
@daniel
Are you talking about Boris?
He could have claimed a backdated relinquishment based on his UK gov position but he was goaded into renewing his US passport by an overzealous US sirport immigration official who would not let him board the plane to the US with his UK passport. He reapplied for a US one, not realising the outcome.
We all rely on correct official information sadly lacking from the US gov.
@DK
I suppose if define “nipping things in the bud” as renouncing, you would be right. As Boris, had I also renounced prior to selling my home in Canada I would have never ended up paying the huge sum of money I did to the IRS. But it’s not really about tax. It’s about US citizens being able to leave the US and thrive as our compatriots both in the US and where we live do, isn’t it? As for knowing about our tax filing obligations, the US fully recognizes that people like me are not aware of their US tax filing obligations by virtue of the fact that they created the Streamlined Program.
Also, if renouncing is the route to nipping things in the bud, then you would agree that the US would rather have taxpayers than citizens.
@Heidi
I actually think it was airline personnel who made him renew his passport – not that makes any difference in the context of this conversation.
I’ve never heard immigration denying someone entry because they weren’t carrying a US passport. I was recently told by immigration it’s because without entering on a US passport, I would only have visitor status.
Boris only has himself to blame. He stated back in 2006 that he was going to renounce his citizenship when they wouldn’t let him enter the States on his British passport and didn’t follow through. If he had he would have avoided the tax bill.
http://www.bna.com/boris-johnson-us-b17179925921/
Said again last year that he was going to do it – has anyone seen his name on the Federal Register yet? I doubt it. So not only did he have to pay his tax bill, now he has the outrageous renunciation fee to pay as well. Poor Boris.
@bb
I had heard both stories, but I am not sure why an airline official would be so officious. Maybe they feared they may have to fly him back for free if he was refused entry?.
@medea
I wouldn’t be surprised if Boris had received some kind of a special relinquishing arrangemet to keep quiet. Why the silence now after he was so outspoken when confronted at that interview?
Well, he’s also said the US passport is hard to give up. I think the interviews caught him when he was all uptight and he said the first thing that came into his head. He was obviously upset about the tax bill, but eventually paid up – either because he calmed down and realised there wasn’t much he could do about it or because his assistants pressured him to do so – so he could then have another go at the embassy for not paying the congestion charge.
@ heidi
I agree. A year ago I wrote:
http://isaacbrocksociety.ca/2015/01/22/boris-johnson-mayoroflondon-acceptance-of-u-s-jurisdiction-means-he-must-now-resign/comment-page-2/#comment-5343460
Bubblebustin says: “I’ve never heard immigration denying someone entry because they weren’t carrying a US passport. I was recently told by immigration it’s because without entering on a US passport, I would only have visitor status.”
The worst time I’ve ever had entering the US was some years ago while entering on my US passport. The guy in the booth was hostile right from the get go. His stated concern was that he suspected I might overstay my allotted time or get a job and work. (Obviously, as a US citizen, I was fully entitled to stay forever and work when and if I pleased.)
I have never had any such trouble when crossing with my Canadian passport. So even a US passport doesn’t guarantee a hassle-free entry. They sometimes treat Canadians badly, but they treat their own citizens even worse. CBT and FATCA is proof enough of that.
@Heidi
Well, most countries require their residents to report at least the income from their overseas accounts. What is unusually about the U.S. is the massive fines and also that info on the foreign account might need to be reported three times in different ways (schedule B, FBAR and 8983).
I doubt that Boris got a sweetheart deal. His U.S. taxes are probably something he doesn’t want to talk about. First, he made a big deal about how he was renouncing years ago when he was forced to get a U.S. passport and then he didn’t follow through, so he comes off as dishonest. Second, it makes him look powerless, which isn’t an image he wants to project.
@publius
Yes, but now it is pretty near impossible for a non resident American to get / keep a bank account in Europe even if they can show that the bank accounts have been reported on fbars. The banks simply do not want to take the risk. Americans are now prisoners in the US, they cannot buy property abroad for vacation or retirement. Those that own property cannot pay their bills related to it, they have to sell up and buy in Florida or the like. We know many in this position. As George said, the days of the expat American are over.
It would be interesting to be on a flight to itthe US with Boris and get a glimpse of the passport he uses.
By ‘ non resident American’, I mean non resident in Europe.
@medea
Just realised that there was a real incentive for Boris to pay up and get his US tax affairs in order. As a dual, if he attests to submitting 5 yrs of tax returns on his 8854, then he is excused the exit tax and being a covered expat when he renounces /relinquishes.
Possibly Boris Johnson is simply having to delay renouncing while his lawyers/accountants work on finding a way for him to avoid covered expatriate status. Which could be interesting.
“As a dual, if he attests to submitting 5 yrs of tax returns on his 8854, then he is excused the exit tax and being a covered expat when he renounces /relinquishes.”
True, if he can show he was not resident. That should give him his out.
But even without the exit tax, Boris Johnson would likely find five years compliance a very costly road to renunciation – especially if the IRS began any investigations following the capital gains tax fiasco. That would mean he would not be eligible for the Streamlined Procedures, so he might be hit with FBAR penalties.
Daniel
the law is a foreign law if you are in canada
do we enforce the saudi law against women driving in canada? no
then why should we as canadian citizens obey an american law in canada?
let the irs mail me a letter if they can find me here in canada and it will end up on the bottom of my bird cage.
Wow, what a bunch of nonsense stated on the Americans Abroad FAQ regarding claiming SS benefits as an NRA. The way it reads, one gets the impression that those rules apply to everyone, which is definitely not the case. Best not to consider such second hand sources when looking for the facts. (Unfortunately, the “official” documentation is very superficial and leaves many questions unanswered, but at least what it does state isn’t obviously wrong or misleading.)
@notamused
Here is the link to the SS non resident alien info.
https://www.ssa.gov/international/AlienTax.html
There is an interactive tool to see if one qualifies and what if any the tax withholding there will be.
Perhaps you can post it on the Americans abroad site? I am not an American, I don’t go there!
@heidi
I’m not an American either and normally don’t go there. After reading the quotation (further up on this thread) I wanted to see if they really state that misinformation without further explanation. Unfortunately they do.
Boris might cut a deal with the U.S. along the lines of being let off penalties and allowed to renounce, in return for no more sarky remarks about the U.S. Embassy refusing to pay Congestion Tax.
Or if the UK votes to remain in the EU, and Osborne continues to look favourite for succeeding Cameron, Boris might decide to become a fully-fledged American and run for President, which as a “natural born citizen” he is qualified to do.
Boris may just show up on the name n shame list, due tomorrow.