Media and Blog Articles Open for Comments – Part 3 of 11 (Year 2016)

2,818 thoughts on “Media and Blog Articles Open for Comments – Part 3 of 11 (Year 2016)”

1. @Calgary411. Taxpayer advocate report Worthy of Brock feature? Every year?

   @Neil Re: Tax payer advocate report.

   I am a bit disappointed that the TBOR was not expanded on to cover TBOR Gaps. Perhaps this was not done as they just got Congress to recognise TBOR.

   I find the TBOR Tax Payor RIght — #10 Right to a Fair and Just Tax System — disingenuous and misleading as while one may think this is in regards to fair and just taxes, the TPA interpretation is to fair and just administration of the tax system, and with assumption that the tax system is fair and just. To remedy the interpretation must be widened to encompass both fair and just tax system and fair and just administration of the tax system.

   Also needed:

   11) Right to simple and easily understood tax regime

   12) Right to reasonable compliance costs. And that cost of compliance must be considered with objective to minimise compliance costs.

2. @Karen, I think so. They even say they were ignored on stuff and so are repeating it.
   @JC, I think the whole thing read that way. Stuff like the burden is high on expats so get rid of one form (which of course they should do) but the assumption is there that the forms are good.

3. Are these the same / related?

   Huffington Post: *Daniel Therrien, Privacy Watchdog: Airline Passenger Vetting Could Amount To Racial Profiling*

   Therrien is concerned travellers may now be targeted for increased scrutiny if they fit the general attributes of a group, such as age, gender, nationality, birthplace, or racial or ethnic origin. (The Canadian Press)

   ABC News, *New TSA identification rules could keep many fliers grounded in 2016*

4. @calgary411,
   The ABC thing has been news for a bit. Certain state drivers licences are going to stop working for air travel. They don’t do enough checked to make sure they know who gets them. Not related to the first article I think.

5. Thanks, Neill.

   The lines and countries involved seem to blur — http://www.forbes.com/sites/robertwood/2015/11/25/passports-required-for-domestic-travel-in-2016-but-irs-can-revoke-passports-for-taxes/ — and *increased scrutiny if they fit the general attributes of a group, such as age, gender, nationality, birthplace, or racial or ethnic origin.

6. ‘Florida Bankers Association and Texas Bankers Association v. U.S. Dept. of Treasury’ – Nonresident Alien Bank Deposit Reporting

   http://www.bna.com/florida-bankers-association-n57982065847/

7. IRS again has info for international taxpayers:

   https://www.irs.gov/Individuals/International-Taxpayers/Tax-Treaties

   I like this tax treaty bit. Translation: You will get your rights from other countries but not the US suckers!

   Treaty benefits generally are available to residents of the United States. They generally are not available to U.S. citizens who do not reside in the United States. However, certain treaty benefits and safeguards, such as the nondiscrimination provisions, are available to U.S. citizens residing in the treaty countries. U.S. citizens residing in a foreign country may also be entitled to benefits under that country’s tax treaties with third countries.

8. Wrong link sorry:

   https://www.irs.gov/Individuals/International-Taxpayers

9. @Tom,
   Very interesting article. Foreign the banks to pay a penalty and face criminal prosecution before allowing a lawsuit is pure gold.

10. @Neil. Tax treaties definitely provide “benefits” if USP tax resident overseas. They allow tax credit for taxes paid in your home country – for income and assets sourced in your home country – against US “like for like” taxes.

    I have tried to refocus on areas where tax treaties guarantee double taxation – tax treaty gaps – and also on how very unfair that it is only on a “like for like” tax basis. For instance, your country has way higher income tax on earnings than the US, yet the excess paid to your country over US rates can not be used as a credit against taxes, or higher tax rate, or same tax by a different name that the US has but not your country of residence. Then there is this taxation – additional to your country of residence – such as on pensions by the US, that your home country will not recognise via a tax credit as the source of the original income is within your home country. They only will allow credit if the source was foreign as in the US but not domestic source.

    Why doesn’t John Richardson and others emphasise the inequities represented?

11. @JC
    I agree. If America is hellhound on keeping its CBT, then they should at the very least reform their WAY of taxing expats who live abroad and are taxed elsewhere. It just makes it so much more evident that they don`t give a rat`s ass.

12. @Neill
    Interesting find. In the U.K.-U.S. treaty, non-discrimination seems to mean merely that the U.K. promises not to tax resident U.S. citizens and companies more than British ones. Given that the U.K. tends to tax wealthy foreigners more lightly to attract capital, I doubt that this provision changes much for individuals. The treaty seems to contain no provisions that would prevent U.K. banks from discriminating against U.S. persons. Unfortunately, the U.K. authorities have been fine with banks dumping U.S. persons, since the banks have argued that it is part of “de-risking” their businesses.

13. @ JC

    On injustices, I was told several years ago by my adviser at the time that one particularly nasty aspect of the PFIC regime was that it invalidated the FTC in the resident country on some PFIC taxes paid to the US. The reasoning was that, depending on the PFIC torture treatment you select, a portion of what is normally dividend or capital gains income is redefined by the US as Sec. 1291 (I think) income. The tax paid to the US on the redefined income then no longer meets the “like for like” test (since the tax paid was on neither dividend nor capital gains). On the redefined income, the individual is subject to more than just blatant double taxation because 1) the redefined income is taxed by the US as ordinary income as opposed to at the more preferential dividend or long-term capital gains rates and 2) the interest element of Sec. 1291 income (which can be very substantial) comes on top of the double taxation. If you use the default method, all capital gains and some dividends (the excess distribution portion) get Sec. 1291 treatment.

14. @Edelweiss,

    Form 8621 has a line for foreign taxes paid. 8621 can generate 4 types of taxes:
    1) Capital loss
    2) Pre-PFIC and current year income tax
    3) PFIC days sec 1291 Tax
    4) PFIC days sec 1291 interest on 3

    Only 3 looks to be offset by foreign tax credit when I look at the form. But when you look at the instructions it says this:

    The excess distribution taxes (the creditable foreign taxes attributable to an excess distribution) are determined by apportioning the total creditable foreign taxes between the part of the distribution that is an excess distribution and the part that is not.

    So that’s saying it can also apply as a tax credit in the normal way to pre-PFIC days via the normal mechanism.
    Now the sec 1291 tax enters form 1040 prior to the tax credit so it can be offset also.
    So it can offset tax types 2-4 and type 1 is not a tax but a loss.
    So the claim it doesn’t offset PFIC taxes doesn’t seem to hold water. Maybe your saying it might be apportioned in such a way as to not completely be used up? For example it might not be consumed by sec 1291 tax. I would think it would enter the general calc then but the form doesn’t say.

15. @Edelweiss,

    I am sorry. I think your going in the reverse direction now I read again. Your taking the credit in your home country.

16. @Edelweiss,
    I might be miss understanding the general situation. If you have a PFIC then it’s primary taxation is going to be done by a country other than the US. So doesn’t that country get first go at the income? Then you take a credit for that tax when you file the US taxes. So I don’t see how you take a credit for PFIC taxes in another country.

17. From the NWT. http://nyti.ms/1TJuLn5

    In declining to turn over evidence to American investigators, Volkswagen has principally cited the German Federal Data Protection Act, an aide said in an email, as well as the German Constitution, the European Convention on Human Rights, decisions of the German Constitutional Court and the European Court of Human Rights, “and (for good measure) provisions of the German Criminal Code.”

    But the German government happily turns over banking information of its citizens to the IRS . Doesn’t anyone in Europe give a shit.

18. @Duke of Devon,
    They all just want more money. FATCA opened up a chance to set global tax rates all across the world (CRS). Governments love this idea. If you can’t run away from them then there isn’t any downward pressure. You can charge what you like.
    Obama is going to want to bankrupt VW.

19. @Duke of Devon,
    I don’t mean to defend the lack of resistance to FATCA in Europe. However there are language barriers, for instance, among the 27 member states. Canada, by contrast, is the largest enclave of accidental Americans, and it is easier there to develop consensus on resistance. The is also a strong lobby of lawyers and tax preparers who benefit from FATCA. Thirdly, it hasn’t yet become widely recognized that normal Europeans will be affected by the twin trends towards the U.S. FATCA and the OECD’s CRS respectively. These two regimes are however not necessarily compatible, and do compete with each other in some ways.

20. State migration and a mention of the ‘leave if you don’t like it’ type statements.

    https://mises.org/blog/census-data-shows-people-are-fleeing-high-tax-states

    Massive number of comments though.

21. Robert Wood says Obama is going to tax me via executive action now:

    http://www.forbes.com/sites/robertwood/2016/01/07/obama-executive-action-tax-hikes-could-be-next/

    Would suggest he could solve the unintended consequences of FATCA but he hasn’t.

22. FATCA Survey Results
    I have not had time to mine for useful nuggets.

    http://www.unr.edu/business/research-and-outreach/accounting-research
    http://www.unr.edu/Documents/business/accounting/FATCASurveyReportFinalDraftDecember2015.pdf

23. @ JC
    That’s a great survey. I already noticed that there was very little response from Mexico which equals or exceeds Canada as an expat destination. Maybe it’s because they tend to keep their bank accounts in the USA … not sure.

24. Significant error made in the unqualified claim quoted in a Toronto Star article which states that those born OUTSIDE the US to only ONE US parent are all automatically US citizens:

    See Toronto Star;
    ‘Legal experts weigh in on Ted Cruz’s Canadian citizenship issues
    Some U.S. politicians are questioning his eligibility but legal experts say Cruz doesn’t need to worry.’

    “Anybody with a filing fee can bring a lawsuit, but it would get thrown out pretty quickly,” said David Martin, an immigration and constitutional law professor at the University of Virginia in Charlottesville. “In a way, that may be better for Trump — there would be no definitive court ruling and he could continue to raise doubts.”

    Martin, and others, add that under U.S. law, children born to at least one American parent abroad are automatically U.S. citizens.
    ….”…
    http://www.thestar.com/news/world/2016/01/08/ted-cruz-can-run-for-us-presidency-despite-canadian-birth-legal-experts.html

    The quoted claim above is not always true. As we know that there are important qualifiers that should have been applied to the ‘expert’ statement that ; “…”…under U.S. law, children born to at least one American parent abroad are automatically U.S. citizens.”….

    In the case of a child born outside the US, transmission of US citizenship with ONLY ONE US citizen parent differed with the law at the time of the child’s birth, and other factors such as how long the US parent resided in the US, after what age, etc.;

    See what the State Dept site currently says:
    …”..Birth Abroad to One Citizen and One Alien Parent in Wedlock

    A child born abroad to one U.S. citizen parent and one alien parent acquires U.S. citizenship at birth under Section 301(g) of the INA provided the U.S. citizen parent was physically present in the United States or one of its outlying possessions for the time period required by the law applicable at the time of the child’s birth. (For birth on or after November 14, 1986, a period of five years physical presence, two after the age of fourteen, is required. For birth between December 24, 1952 and November 13, 1986, a period of ten years, five after the age of fourteen, is required for physical presence in the United States or one of its outlying possessions to transmit U.S. citizenship to the child.) The U.S. citizen parent must be the genetic or the gestational parent and the legal parent of the child under local law at the time and place of the child’s birth to transmit U.S. citizenship….”….
    https://travel.state.gov/content/travel/en/legal-considerations/us-citizenship-laws-policies/citizenship-child-born-abroad.html

25. @Badger

    You will be hard pressed to find a “Homelander Lawyer” who adopts the presumption that those born outside the USA are NOT U.S. citizens. Frankly, I would go further and suggest the correct way to interpret these rules is:

    Those born outside the USA to a U.S. citizen parent who meets the relevant USA residency requirements has the right to U.S. citizenship if U.S. citizenship is desired.

    Of course that Toronto Star article will cause more panic.

Comments are closed.