many expats on this site say compliance industry is fear-mongering, but seems the people here by themselves have obsessively worked themselves into a fear frenzy, much more than by any accountant. it is noted many times on this site US cannot collect against dual citizens in Canada, but then the same posters write they have to keep complying, how scared they are to renounce without filing an 8854, or that not filing is only for those who are poor or have nothing (to fly under the radar). So which is it? you can’t have your cake and eat it too. Because the same people boasting about IRS limited powers, write that they are complying because they still have some property or something there. Well! get rid of it! sell it! and yes your relatives can come visit you abroad, instead of you going there if you are that irrationally scared.
CBT is not just about money and collection, it’s about something that is insanely immoral and tyrannical, so if there is any opportunity for disobedience, that must be followed. Doesn’t it make you feel nasty and dirty to comply with this regime when there is choice?
the more people obey and comply, the worse. if everyone who could en masse stopped complying, it would make a huge dent. if the 1 million expat filing a year went down to 100K, that would speak more than any protest, petition or the like.
@Mike writes
CBT is not just about money and collection, it’s about something that is insanely immoral and tyrannical, so if there is any opportunity for disobedience, that must be followed. Doesn’t it make you feel nasty and dirty to comply with this regime when there is choice?
the more people obey and comply, the worse. if everyone who could en masse stopped complying, it would make a huge dent. if the 1 million expat filing a year went down to 100K, that would speak more than any protest, petition or the like.
Absolutely correct. Regardless of individual reasons for compliance with the immorality of U.S. citizenship-based taxation, every person who complies is making a contribution to sustaining and legitimazing this immoral and evil system. Citizenship-based taxation is likely to continue as long as compliance continues.
@Heidi writes
Sounds like a great Christmas gift for my US citizen kids, who still think I am exaggerating the problems!!
You are not exaggerating the problems when viewed through the lens of what the laws actually are. But, the chances are that your problems are the result of attempted compliance with those laws. The people who have trouble are those who attempt compliance, which is why:
Compliance with the U.S. citizenship-based taxation regime is absolutely the first step toward renunciation! (Interesting isn’t it.)
@Mike
We are all in different situations that is why people here offer the gamut of choices and potential outcomes. I had a large US pension that couldn’t be transferred , I was also compliant as I had worked in the US most of my life and retired back home, it was relatively simple to complete the 8854 and play their game , it meant I didnt have to forfeit 40% of my US pension life savings and qualified me for a % tax treaty in my resident country.
@UScitizenabroad
Problems in Switzerland are not just with attempted compliance, they are with bank access, mortgages, investment accounts, pension funds, Again , its horses for courses, surely that’s why all angles are presented and discussed here.
Its not just those living outside the ‘homeland’ that are shackled, my US kids don’t accept they are now prisoners living in the US. Before FATCA they could buy a vacation property abroad, now no ‘ foreign’ bank will accept their money, they are considered toxic.
@Heidi
I agree with you completely. Clearly for you and others the best course is compliance. But, that doesn’t change the fact that compliance is what props the system up.
In fact, my personal view is this – assuming that that one is interested in the best outcome for oneself:
Compliance makes sense and is the best course of action for people who can comply, not be a covered expatriate and renounce. Renunication will remove one more person or family from the tyranny of U.S. citizenship. Honestly, that’s what they should do and you did the right thing.
I also think that compliance may be the best solution for many accidental Americans. The question is how many years of their lives are they willing to invest in this.
But, the good sense of comliance for a given individual, doesn’t change the fact that compliance is what props the system up. Sad, but true.
@USCA
I am always a little wary of advising someone to ignore compliance, that nothing will happen , that the IRS can’t collect, even though it may be the wisest thing to do. We do not know if the non collection agreements will continue especially in the UK where I am afraid the UK will become dependent on the US for survival after Brexit. But the IRS must be pragmatic and it makes no sense for them to waste resources on trying to collect when they have no idea what is in the kitty. Its those with the most to lose who should be most cautious.
@Heidi – in response to:
I am always a little wary of advising someone to ignore compliance, that nothing will happen , that the IRS can’t collect, even though it may be the wisest thing to do. We do not know if the non collection agreements will continue especially in the UK where I am afraid the UK will become dependent on the US for survival after Brexit. But the IRS must be pragmatic and it makes no sense for them to waste resources on trying to collect when they have no idea what is in the kitty. Its those with the most to lose who should be most cautious.
I agree with you completely. My personal view is that the “nonassistance in collection” provision in certain tax treaties (Canada, France, Denmark, Sweden and Netherlands) is overrated. First, the provision does not prevent the IRS from assessing tax and/or penalties. Secondly, FATCA IGAs are really additions to the tax treaties. So, yes I think this could also change. Interestly, these five countries are countries which have overriden the Revenue Rule which means that these five countries will/do assist the IRS in collection as a general principle (the carve out is for citizens of host country). It may be that residents of countries that do not have the “citizenship-protection provision” will be better off in the long run. After all, they still have the Revenue Rule.
I do think that its important to distinguish between what is IS known and what is NOT known. What IS known that for many people compliance with U.S. tax laws is practically impossible and has the potential to destroy the rest of their lives. What is NOT known is the consequence of noncompliance.
I don’t think you or anybody else should specifically be advising anybody to comply or not comply. I also don’t think that people should get their advice from blogs/Facebook/Twitter, etc.
But, there are certain truths here:
1. As long as compliance continues the system of citizenship-based taxation will be reinforced
2. People’s situations/motives are different and they will do what is in their best interest. This means that it is almost impossible to unite Americans abroad. (Americans abroad will not unite like the residents of Hong Kong.)
It does seem to me though, that for the vast majority of people (what is that statement again?):
All Roads Lead To Renunciation! (and the sooner the better).
@Mike
You accuse me of encouraging compliance, I have NEVER done this. I have many Americans friends for whom it would be disastrous to do so and in fact I have encouraged them to stay off the radar.
Your one sided argument that one solution fits all is completely ridiculous.
Perhaps its my Brexit remark that has got under your skin?
@Heidi
as long as people keep complying, the regime continues. only way to protest is to renounce and not comply.
assistance in collection has never happened against a citizen resident of any country and won’t happen. if it looks like the treaty is changing, then move your assets to another country that IRS has no hold on. if one wants to find reasons and excuses to comply, there are plenty. people need to grow a pair and stand by their rights. It’s like the civil rights movement. if everyone went along and sat in the back of the bus, the injustice would still be continuing today
Mike
I agree, the only way to combat this injustice is to resist en mass, but as I said we all come from different perspectives, for me I was in compliance when I left the US to retire home after 35 yrs working there, when my bank accounts were closed in my resident country, I renounced but filled in the last years 1040 and 8854 to protect my US pension. Without itmy pension would be taxed at 40% as income in the US and again at my top tax rate in Switzerland . It would not have qualified for the US/Swiss tax treaty. I would have loved to tell them where they could shove their 8854 but I didn’t have an alternative.
Not all of us can renounce and rejoice, I have a US citizen friend here born in Persia, if she renounces she cannot travel to the US to visit her family under Trump rules. She stays under the radar, she doesn’t have an alternative.
We all take individual decisions to protect ourselves in any way possible.
Oh dear. It’s comply vs defy, again. I’m for anything that works (as best as possible under the circumstances) for anyone faced with the FATCA/FBAR OMG moment and what comes afterwards. (Meanwhile, deep down deep where I really live, I just wish the USA will someday get a good dose of blowback defiance … it’s long overdue. And it’s more than FATCA. It’s economic sabotage, exploitation and military interventions, too … always in the name of “spreading democracy”. What a crock!) The book is supposed to arrive on Friday so it will be interesting to find out what happens to the character post-OMG. And since the author has faced this in real life I wonder how she has managed.
@EmBee @Mike
I think no matter what one’s situation, it still takes some nerves to stay out of the system, or even more guts to stop filing if one has been in the system. There may be situations where filing may be totally unavoidable like if someone has current income and non-liquidable assets from the US. But when non-compliance is an option at all, rather than working each other up into anxiety, expats should support each other to gather the nerves to do so.
Let’s face it, there are many US residents that are delinquent with the IRS and they already live in the US ! Just came out that US is canceling passports of a walloping 400,000 Americans who owe 52K or more. Now the absolute vast majority of these people live INSIDE the US and the IRS has not been able to collect from them, hence resorting to this tactic. The IRS has lost a lot of its collection budget, and currently has only 1 collection staff per 20,000 US citizens!
In 99.999% of cases, expats’ fears are unfounded and irrational. The IRS always goes after easy prey and that is 99.999999% always inside the US. It is very difficult, expensive and time-consuming for the IRS to go after an expat without US assets, and the evidence bears that out. They would not go after an expat unless very large amounts are involved and even then as soon as they find out the expat cannot be collected from, they stop the efforts to cut their losses. The only international cases they genuinely pursue are those tax cases where other crimes such as large-scale smuggling, money-laundering, or organized tax evasion schemes are involved.
To not comply and not renounce is a form of resistance. One is denied the satisfaction of the US government knowing that you told it to piss off, but on the other hand, you didn’t contribute $2350 to the State Department budget.
many expats are too traumatized by CBT to read cute novels. CBT can lead to not just financial problems but physical health problems. Ask the ones slapped with the transition tax, etc……
@ Ron Henderson @USCitizenAbroad
Dewees and Pomerantz are the examples we know of in Canada. Dewees was not a citizen and was collected against by CRA. To date they have not collected money from Pomerantz, though a 1.4 million permanent judgement was assessed and is sitting against him and his heirs in the USA. No collection but the man has probably paid with years of insomnia, looking over his shoulder, and an untold amount in legal fees.
True, until the treaty changes, US cannot collect in countries where the expat is a citizen, so we are not talking about collection problems. Really, the options to renounce, not renounce, to comply, or not to comply are options people have to treat their anxiety levels, not tax issues. If one has the stamina to withstand a high anxiety level, maybe they should stop complying, as compliance can get incredibly expensive and complicated as illustrated by the transition tax. Some vultures asked for 20k retainers just to “examine”.
True, until the treaty changes, US cannot collect in countries where the expat is a citizen, so we are not talking about collection problems. Really, the options to renounce, not renounce, to comply, or not to comply are options people have to treat their anxiety levels, not tax issues. If one has the stamina to withstand a high anxiety level, maybe they should stop complying, as compliance can get incredibly expensive and complicated as illustrated by the transition tax. Some vultures asked for 20k retainers just to “examine”.
You make a very valid (IMHO) point in saying that the issue is identifying the psychological/emotional needs of the individual. Once you are in the system you have problems that simply cannot be understand by those who are not in the system. Many of the “Arm Chair Quarterbacks” are advising those in the system from the perspective of never having been in the system themselves …
Another point (for some) is that U.S. tax compliance has now gotten so complicated and expensive that many people may not be able to do it even if they want to.
One final thought …
Dewee’s problems were under (Title 26) – the Internal Revenue Code
Pomerantz’s problems were under (Title 31) – the Bank Secrecy Act
The U.S. Canada Tax Treaty IN NO WAY impacts Title 31 issues.
The U.S./Canada tax treaty has overridden the Revenue Rule for all except citizens. Because Dewees was not a Canadian citizen, he was destroyed by the U.S./Canada Tax Treaty (not protected by it). The Treaty required Canada to assist the U.S. in collecting on Dewees (a Canadian resident) because he was NOT a U.S. citizen. Had Dewees lived in the UK I he would still have had the benefit of the Revenue Rule (and I don’t think the British tax authorities would have helped the IRS collect).
In the case of Pomerantz there is no treaty issue at all. His problem (if you see it this way) is a judgment against him in the USA.
It seems to me that it is far better for people to find a way to NOT be a U.S. citizen than to have to worry about this problem forever. The reality is that everybody sees the problem in terms of their individual circumstances:
Yes, the accidentals who are not and have never been in the system see their problems as serious/significant.
But, as you point out, those who are in the U.S. tax system dream about how good it would be to be an accidental.
Look at this way: You must have done something really bad in a past life to have had to endure being a tax compliant American abroad in this life!
I have never filed, so maybe easy for me to say but I think those in system should stop filing also. List the reasons not to if you disagree???
Some condor told me 5 years ago I had to start filing because the treaty could change and they would come after me. My answer was no problem, I’ll just move my assets to another country where IRS has no hold at all, and there are many of those. Any treaty changes would be in draft mode for months. It’s been 5 years and doesn’t look like any treaty changes coming.
Some expats I am sure are so stricken with grief they can’t even think straight anymore to do the right thing. I wonder how many expat have topped themselves over the IRS.
I think those in the system have to step back, and stop thinking or reading anything about it. And look at the issue with a fresh mindset after a break. They should really look at their options of to renounce, not renounce, to comply, or not to comply. Mr. Pomerantz’a case was different and to date there is no example of IRS coming after a Canadian citizen/resident, no US income, for stopping to file.
The one big problem for those in the system is that they are already in contact with accountants and lawyers who will never advise against filing. This doesn’t help them with any emotional support for non-compliance when it could be a viable option. Their anxiety leads them into a vicious down-spiral as they go looking for other 2nd 3rd, and 4th opinions from other compliance “experts”, and they hear the same or worse, thus becoming even more anxious. The vicious cycle of anxiety and compliance continues .
On this site, there are often people who feel a need to post how they made the right choice to comply for this or that reason. If you complied and you are happy with it, I don’t know why post on this board which, as I understand, to have been created as a form of resistance to CBT???…There are tons of compliance boards to post about compliance on…I complied but I am not happy about it and I wish I hadn’t and not going to list the half-logical reasons why I did. …
It takes a lot of courage for someone to become non-compliant. They get no support from the “experts”, and really they don’t need to hear it here also, that some other person had to make the “right” decision to continue complying because they had a little pension in the US, or they had to visit their brother there once a year. If one wants to comply, they can find 100s of reasons, or the “experts” will find them for them. Just remember, the more “experts” or compliant people one talks to, the lower the chance one will make a rational decision whether to continue compliance or not.
“@ Cam,
RE: If you complied and you are happy with it, I don’t know why post on this board which, as I understand, to have been created as a form of resistance to CBT???…”
This site opposes CBT and encourages/facilitates projects to eradicate it or mitigate it and was in fact started to make accurate, non-condor, information available on the internet. But it was also started as a site which provides support for *all* people who are affected by CBT. The feeling since day one at Brock is that compliance is not a one-size-fits-all matter. So,the best course of action for one person is often not the best course for another. So, input from those who file is as welcome as those who don’t file.
@Cam
Perhaps the answer is an emotional support animal? Something small, like a squirrel or a rabbit, that can be easily taken on airplanes. Pot-bellied pigs are great at home but they make a terrible mess in the aisle so not ideal for flying.
@pacifica777
“So,the best course of action for one person is often not the best course for another. So, input from those who file is as welcome as those who don’t file.”
Of course, that goes without saying.
Perhaps my point was missed, which was that not complying, or stopping to comply is not an easy option and takes a lot of courage. To comply or not comply are not 2 equal sides of the coin, or two equally valid options on the menu. As mentioned in a previous post on this thread, most of the decisions made are done to treat one’s anxiety level and not any possible tax issues. Those not complying get no support or validation from tax “experts” or society in general. They may even be called tax evaders and cheats.
So while their input is allowed and may be “welcome”, the stories about compliance doesn’t help those who are really in a bad limbo trying to battle a lot of anxiety and decide on non-compliance. There are 100s of compliance sites out on the net to validate their decision to comply, but almost nothing to validate the option of not to comply. I hope you see my point about the psychology of this issue which is huge.
@Ron
Does your crass comment mean that you believe expat’s anxiety level, as opposed to rationality, is not a big factor in their decision to continue or stop complying?
@ Cam,
RE:
“I hope you see my point about the psychology of this issue which is huge.”
Definitely! I’ve noticed that sometimes 2 people with pretty identical fact sets and good knowledge of the situation, one feels that filing would give them more peace of mind and the other feels that keeping out of the system would give them more peace of mind. I base this, not only on comments, but on in-person and on-phone discussions with affected people, which made it clear that they had done their research and had good knowledge of their options — they just arrive at a different course of action, based on the psychology factor.
@Cam
Indeed I believe that anxiety levels are a factor in people’s decisions, but usually not a good factor, which is why I recommend reducing anxiety. A pet is probably much better for that purpose than a tax lawyer, and much cheaper.
@Ron
I would say an online or real support group of people in the same boat would really help. Perhaps “Compliants Anonymous”…… and I am not joking.
many expats on this site say compliance industry is fear-mongering, but seems the people here by themselves have obsessively worked themselves into a fear frenzy, much more than by any accountant. it is noted many times on this site US cannot collect against dual citizens in Canada, but then the same posters write they have to keep complying, how scared they are to renounce without filing an 8854, or that not filing is only for those who are poor or have nothing (to fly under the radar). So which is it? you can’t have your cake and eat it too. Because the same people boasting about IRS limited powers, write that they are complying because they still have some property or something there. Well! get rid of it! sell it! and yes your relatives can come visit you abroad, instead of you going there if you are that irrationally scared.
CBT is not just about money and collection, it’s about something that is insanely immoral and tyrannical, so if there is any opportunity for disobedience, that must be followed. Doesn’t it make you feel nasty and dirty to comply with this regime when there is choice?
the more people obey and comply, the worse. if everyone who could en masse stopped complying, it would make a huge dent. if the 1 million expat filing a year went down to 100K, that would speak more than any protest, petition or the like.
@Mike writes
Absolutely correct. Regardless of individual reasons for compliance with the immorality of U.S. citizenship-based taxation, every person who complies is making a contribution to sustaining and legitimazing this immoral and evil system. Citizenship-based taxation is likely to continue as long as compliance continues.
@Heidi writes
You are not exaggerating the problems when viewed through the lens of what the laws actually are. But, the chances are that your problems are the result of attempted compliance with those laws. The people who have trouble are those who attempt compliance, which is why:
Compliance with the U.S. citizenship-based taxation regime is absolutely the first step toward renunciation! (Interesting isn’t it.)
@Mike
We are all in different situations that is why people here offer the gamut of choices and potential outcomes. I had a large US pension that couldn’t be transferred , I was also compliant as I had worked in the US most of my life and retired back home, it was relatively simple to complete the 8854 and play their game , it meant I didnt have to forfeit 40% of my US pension life savings and qualified me for a % tax treaty in my resident country.
@UScitizenabroad
Problems in Switzerland are not just with attempted compliance, they are with bank access, mortgages, investment accounts, pension funds, Again , its horses for courses, surely that’s why all angles are presented and discussed here.
Its not just those living outside the ‘homeland’ that are shackled, my US kids don’t accept they are now prisoners living in the US. Before FATCA they could buy a vacation property abroad, now no ‘ foreign’ bank will accept their money, they are considered toxic.
@Heidi
I agree with you completely. Clearly for you and others the best course is compliance. But, that doesn’t change the fact that compliance is what props the system up.
In fact, my personal view is this – assuming that that one is interested in the best outcome for oneself:
Compliance makes sense and is the best course of action for people who can comply, not be a covered expatriate and renounce. Renunication will remove one more person or family from the tyranny of U.S. citizenship. Honestly, that’s what they should do and you did the right thing.
I also think that compliance may be the best solution for many accidental Americans. The question is how many years of their lives are they willing to invest in this.
But, the good sense of comliance for a given individual, doesn’t change the fact that compliance is what props the system up. Sad, but true.
@USCA
I am always a little wary of advising someone to ignore compliance, that nothing will happen , that the IRS can’t collect, even though it may be the wisest thing to do. We do not know if the non collection agreements will continue especially in the UK where I am afraid the UK will become dependent on the US for survival after Brexit. But the IRS must be pragmatic and it makes no sense for them to waste resources on trying to collect when they have no idea what is in the kitty. Its those with the most to lose who should be most cautious.
@Heidi – in response to:
I agree with you completely. My personal view is that the “nonassistance in collection” provision in certain tax treaties (Canada, France, Denmark, Sweden and Netherlands) is overrated. First, the provision does not prevent the IRS from assessing tax and/or penalties. Secondly, FATCA IGAs are really additions to the tax treaties. So, yes I think this could also change. Interestly, these five countries are countries which have overriden the Revenue Rule which means that these five countries will/do assist the IRS in collection as a general principle (the carve out is for citizens of host country). It may be that residents of countries that do not have the “citizenship-protection provision” will be better off in the long run. After all, they still have the Revenue Rule.
I do think that its important to distinguish between what is IS known and what is NOT known. What IS known that for many people compliance with U.S. tax laws is practically impossible and has the potential to destroy the rest of their lives. What is NOT known is the consequence of noncompliance.
I don’t think you or anybody else should specifically be advising anybody to comply or not comply. I also don’t think that people should get their advice from blogs/Facebook/Twitter, etc.
But, there are certain truths here:
1. As long as compliance continues the system of citizenship-based taxation will be reinforced
2. People’s situations/motives are different and they will do what is in their best interest. This means that it is almost impossible to unite Americans abroad. (Americans abroad will not unite like the residents of Hong Kong.)
It does seem to me though, that for the vast majority of people (what is that statement again?):
All Roads Lead To Renunciation! (and the sooner the better).
@Mike
You accuse me of encouraging compliance, I have NEVER done this. I have many Americans friends for whom it would be disastrous to do so and in fact I have encouraged them to stay off the radar.
Your one sided argument that one solution fits all is completely ridiculous.
Perhaps its my Brexit remark that has got under your skin?
@Heidi
as long as people keep complying, the regime continues. only way to protest is to renounce and not comply.
assistance in collection has never happened against a citizen resident of any country and won’t happen. if it looks like the treaty is changing, then move your assets to another country that IRS has no hold on. if one wants to find reasons and excuses to comply, there are plenty. people need to grow a pair and stand by their rights. It’s like the civil rights movement. if everyone went along and sat in the back of the bus, the injustice would still be continuing today
Mike
I agree, the only way to combat this injustice is to resist en mass, but as I said we all come from different perspectives, for me I was in compliance when I left the US to retire home after 35 yrs working there, when my bank accounts were closed in my resident country, I renounced but filled in the last years 1040 and 8854 to protect my US pension. Without itmy pension would be taxed at 40% as income in the US and again at my top tax rate in Switzerland . It would not have qualified for the US/Swiss tax treaty. I would have loved to tell them where they could shove their 8854 but I didn’t have an alternative.
Not all of us can renounce and rejoice, I have a US citizen friend here born in Persia, if she renounces she cannot travel to the US to visit her family under Trump rules. She stays under the radar, she doesn’t have an alternative.
We all take individual decisions to protect ourselves in any way possible.
Oh dear. It’s comply vs defy, again. I’m for anything that works (as best as possible under the circumstances) for anyone faced with the FATCA/FBAR OMG moment and what comes afterwards. (Meanwhile, deep down deep where I really live, I just wish the USA will someday get a good dose of blowback defiance … it’s long overdue. And it’s more than FATCA. It’s economic sabotage, exploitation and military interventions, too … always in the name of “spreading democracy”. What a crock!) The book is supposed to arrive on Friday so it will be interesting to find out what happens to the character post-OMG. And since the author has faced this in real life I wonder how she has managed.
@EmBee @Mike
I think no matter what one’s situation, it still takes some nerves to stay out of the system, or even more guts to stop filing if one has been in the system. There may be situations where filing may be totally unavoidable like if someone has current income and non-liquidable assets from the US. But when non-compliance is an option at all, rather than working each other up into anxiety, expats should support each other to gather the nerves to do so.
Let’s face it, there are many US residents that are delinquent with the IRS and they already live in the US ! Just came out that US is canceling passports of a walloping 400,000 Americans who owe 52K or more. Now the absolute vast majority of these people live INSIDE the US and the IRS has not been able to collect from them, hence resorting to this tactic. The IRS has lost a lot of its collection budget, and currently has only 1 collection staff per 20,000 US citizens!
In 99.999% of cases, expats’ fears are unfounded and irrational. The IRS always goes after easy prey and that is 99.999999% always inside the US. It is very difficult, expensive and time-consuming for the IRS to go after an expat without US assets, and the evidence bears that out. They would not go after an expat unless very large amounts are involved and even then as soon as they find out the expat cannot be collected from, they stop the efforts to cut their losses. The only international cases they genuinely pursue are those tax cases where other crimes such as large-scale smuggling, money-laundering, or organized tax evasion schemes are involved.
To not comply and not renounce is a form of resistance. One is denied the satisfaction of the US government knowing that you told it to piss off, but on the other hand, you didn’t contribute $2350 to the State Department budget.
many expats are too traumatized by CBT to read cute novels. CBT can lead to not just financial problems but physical health problems. Ask the ones slapped with the transition tax, etc……
@ Ron Henderson @USCitizenAbroad
Dewees and Pomerantz are the examples we know of in Canada. Dewees was not a citizen and was collected against by CRA. To date they have not collected money from Pomerantz, though a 1.4 million permanent judgement was assessed and is sitting against him and his heirs in the USA. No collection but the man has probably paid with years of insomnia, looking over his shoulder, and an untold amount in legal fees.
True, until the treaty changes, US cannot collect in countries where the expat is a citizen, so we are not talking about collection problems. Really, the options to renounce, not renounce, to comply, or not to comply are options people have to treat their anxiety levels, not tax issues. If one has the stamina to withstand a high anxiety level, maybe they should stop complying, as compliance can get incredibly expensive and complicated as illustrated by the transition tax. Some vultures asked for 20k retainers just to “examine”.
By the way, all upcoming treaty changes would be posted here: https://www.fin.gc.ca/treaties-conventions/treatystatus_-eng.asp
@Cam you write:
You make a very valid (IMHO) point in saying that the issue is identifying the psychological/emotional needs of the individual. Once you are in the system you have problems that simply cannot be understand by those who are not in the system. Many of the “Arm Chair Quarterbacks” are advising those in the system from the perspective of never having been in the system themselves …
Another point (for some) is that U.S. tax compliance has now gotten so complicated and expensive that many people may not be able to do it even if they want to.
One final thought …
Dewee’s problems were under (Title 26) – the Internal Revenue Code
Pomerantz’s problems were under (Title 31) – the Bank Secrecy Act
The U.S. Canada Tax Treaty IN NO WAY impacts Title 31 issues.
The U.S./Canada tax treaty has overridden the Revenue Rule for all except citizens. Because Dewees was not a Canadian citizen, he was destroyed by the U.S./Canada Tax Treaty (not protected by it). The Treaty required Canada to assist the U.S. in collecting on Dewees (a Canadian resident) because he was NOT a U.S. citizen. Had Dewees lived in the UK I he would still have had the benefit of the Revenue Rule (and I don’t think the British tax authorities would have helped the IRS collect).
In the case of Pomerantz there is no treaty issue at all. His problem (if you see it this way) is a judgment against him in the USA.
It seems to me that it is far better for people to find a way to NOT be a U.S. citizen than to have to worry about this problem forever. The reality is that everybody sees the problem in terms of their individual circumstances:
Yes, the accidentals who are not and have never been in the system see their problems as serious/significant.
But, as you point out, those who are in the U.S. tax system dream about how good it would be to be an accidental.
Look at this way: You must have done something really bad in a past life to have had to endure being a tax compliant American abroad in this life!
I have never filed, so maybe easy for me to say but I think those in system should stop filing also. List the reasons not to if you disagree???
Some condor told me 5 years ago I had to start filing because the treaty could change and they would come after me. My answer was no problem, I’ll just move my assets to another country where IRS has no hold at all, and there are many of those. Any treaty changes would be in draft mode for months. It’s been 5 years and doesn’t look like any treaty changes coming.
Some expats I am sure are so stricken with grief they can’t even think straight anymore to do the right thing. I wonder how many expat have topped themselves over the IRS.
I think those in the system have to step back, and stop thinking or reading anything about it. And look at the issue with a fresh mindset after a break. They should really look at their options of to renounce, not renounce, to comply, or not to comply. Mr. Pomerantz’a case was different and to date there is no example of IRS coming after a Canadian citizen/resident, no US income, for stopping to file.
The one big problem for those in the system is that they are already in contact with accountants and lawyers who will never advise against filing. This doesn’t help them with any emotional support for non-compliance when it could be a viable option. Their anxiety leads them into a vicious down-spiral as they go looking for other 2nd 3rd, and 4th opinions from other compliance “experts”, and they hear the same or worse, thus becoming even more anxious. The vicious cycle of anxiety and compliance continues .
On this site, there are often people who feel a need to post how they made the right choice to comply for this or that reason. If you complied and you are happy with it, I don’t know why post on this board which, as I understand, to have been created as a form of resistance to CBT???…There are tons of compliance boards to post about compliance on…I complied but I am not happy about it and I wish I hadn’t and not going to list the half-logical reasons why I did. …
It takes a lot of courage for someone to become non-compliant. They get no support from the “experts”, and really they don’t need to hear it here also, that some other person had to make the “right” decision to continue complying because they had a little pension in the US, or they had to visit their brother there once a year. If one wants to comply, they can find 100s of reasons, or the “experts” will find them for them. Just remember, the more “experts” or compliant people one talks to, the lower the chance one will make a rational decision whether to continue compliance or not.
“@ Cam,
This site opposes CBT and encourages/facilitates projects to eradicate it or mitigate it and was in fact started to make accurate, non-condor, information available on the internet. But it was also started as a site which provides support for *all* people who are affected by CBT. The feeling since day one at Brock is that compliance is not a one-size-fits-all matter. So,the best course of action for one person is often not the best course for another. So, input from those who file is as welcome as those who don’t file.
@Cam
Perhaps the answer is an emotional support animal? Something small, like a squirrel or a rabbit, that can be easily taken on airplanes. Pot-bellied pigs are great at home but they make a terrible mess in the aisle so not ideal for flying.
@pacifica777
“So,the best course of action for one person is often not the best course for another. So, input from those who file is as welcome as those who don’t file.”
Of course, that goes without saying.
Perhaps my point was missed, which was that not complying, or stopping to comply is not an easy option and takes a lot of courage. To comply or not comply are not 2 equal sides of the coin, or two equally valid options on the menu. As mentioned in a previous post on this thread, most of the decisions made are done to treat one’s anxiety level and not any possible tax issues. Those not complying get no support or validation from tax “experts” or society in general. They may even be called tax evaders and cheats.
So while their input is allowed and may be “welcome”, the stories about compliance doesn’t help those who are really in a bad limbo trying to battle a lot of anxiety and decide on non-compliance. There are 100s of compliance sites out on the net to validate their decision to comply, but almost nothing to validate the option of not to comply. I hope you see my point about the psychology of this issue which is huge.
@Ron
Does your crass comment mean that you believe expat’s anxiety level, as opposed to rationality, is not a big factor in their decision to continue or stop complying?
@ Cam,
RE:
Definitely! I’ve noticed that sometimes 2 people with pretty identical fact sets and good knowledge of the situation, one feels that filing would give them more peace of mind and the other feels that keeping out of the system would give them more peace of mind. I base this, not only on comments, but on in-person and on-phone discussions with affected people, which made it clear that they had done their research and had good knowledge of their options — they just arrive at a different course of action, based on the psychology factor.
@Cam
Indeed I believe that anxiety levels are a factor in people’s decisions, but usually not a good factor, which is why I recommend reducing anxiety. A pet is probably much better for that purpose than a tax lawyer, and much cheaper.
@Ron
I would say an online or real support group of people in the same boat would really help. Perhaps “Compliants Anonymous”…… and I am not joking.
Um, that’s basically what this is. Also Facebook.