30-yr IRS Vet offers his advice about the 2012 27.5% Overseas Voluntary Disclosure program.
[Editor’s note: The Isaac Brock Society does not endorse tax professionals. We endeavour to provide peer-to-peer discussion to help readers (1) to determine better whether they are in a situation that requires professional help; and (2) to gain the necessary knowledge to evaluate the quality of that professional service if they decide that they need it (see OVDI Drudgery for Minnows). The following post is from a 30-yr IRS veteran who is now in private practice at Mopsick Tax Law. We offer it for two reasons: (1) Everyone at the Isaac Brock Society is an adult, able to make decisions for him or herself–thus, our M.O. is not to censor opinions, but to engage in vigorous debate. (2) It may be, given the situation and the risk tolerance of certain individuals, that 30-yr’s advice is appropriate and helpful. Notwithstanding, we will offer critical responses both in the comments and in later posts. Also, we have written a press release, especially for Canadian residents, regarding the 2012 OVD program. Petros]
VOLUNTARY DISCLOSURES
During the past few days in which I have had the privilege of communicating with you, I have learned something quite obvious which is, everyone who is dealing with the FATCA problem has their own unique factual situation. Despite the IRS’s wishes, “one size” does NOT “fit all” and there is no single solution or strategy for everyone.
Notwithstanding anyone’s opinion about the wisdom of the law or the fact that the United States taxes on the basis of citizenship as opposed to residency, what you decide to do is really based on each individual’s tolerance for risk and uncertainty. Some people will be quite comfortable doing nothing. Some people will decide to “become compliant” from this point forward. Some will make a “quiet disclosure” and simply file FBARs and U.S. tax returns for the past two or three years and for some, the formal IRS Voluntary Disclosure program will be the route they choose to take. Based on my experience, while there is still a high degree of uncertainty under the formal program, it remains, in my opinion, the way to go with the least amount of risk.
Here is why: the formal program almost guarantees no criminal investigation but more importantly because very few of you are really at risk for criminal investigation if the source of the unreported money is legal (not from a criminal activity), there is also a commitment on the part of the IRS that there will be no civil fraud investigation which brings the risk of a 75% civil penalty which can go back for many years, even beyond the eight years of the formal VD program.
For those of you who are considering the possibility of entering the program, here is a brief summary of how it works. The applicant, regardless of how many years there are of a failure to file tax returns or FBARs, or failure to pay tax, must file correct delinquent returns and FBARs for the past eight years (starting with 2004). Any years beyond that period are essentially forgiven by the government and not pursued. The disclosure and the returns must be accurate and entirely truthful. The client must provide eight years of bank records and any other documentation the IRS requires to verify the truthfulness of the returns. If there is a corporation or trust or other entity which the applicant controls, that would have to be disclosed as well. The eight years of delinquent returns must be accompanied by a payment of the tax and interest on the eight years of delinquency. In addition there is a 20% penalty computed on the amount of the understated tax. The kicker for many people is there is an additional penalty of 27.5% of the highest aggregate ONE YEAR balance of the applicant’s previously undisclosed bank accounts during the past eight years.
In exchange for the filing of the returns and the payment of penalties, the IRS will not pursue any criminal investigation and, very significantly, it will not seek a 75% civil fraud penalty which could go back for an unlimited number of years. (there is no statute of limitations for fraud). The applicant would essentially be given “a clean bill of health” with the IRS and agree to remain in compliance in the future.
There is also the possibility of future IRS inquiries regarding other independent IRS investigations of any people who may have purposefully counseled the client to evade or avoid US taxes.
That much is certain about the program and my firm has successfully navigated over fifty families through this program since the first VD program was announced in 2009.
Here is the new part and something which I think has a special appeal to Canadians and other “accidental” US citizens. While there is very little discretion on the part of IRS agents to whom these VD cases are assigned, to show any flexibility on the 27.5% penalty, the 2011 program added a new “opt out” procedure which remains in effect under the new program in which the applicant can elect to leave the program and have the chance to argue that there was reasonable cause for their past failure to file, to meet with an independent IRS Appeals Officer, and present an argument as to why no penalty at all should be asserted.
The “opt out” procedure is brand new and practitioners have yet to have any experience with it but it is there. The IRS says opting out will not result in penalties greater than those for which a taxpayer may be at risk for under the program but we simply have no experience to date on how that is working for people and I do know that Washington has not issued any guidelines to date to the hundreds of field offices around the country where these cases would be handled. I predict that this where all the action is going to be for Canadian dual nationals who choose to enter the program simply because of the equity of their situations and the absence of any real wrong doing.
One of you asked if I would be willing to review the facts of people who might be interested in the Program. I would be happy to do so if you want to write to me at my web site or call me at (916) 550-5363.
@Petros,
Thank you for posting this. There is one question for which I would appreciate this veteran’s opinion: There are dual US citizens in many other countries in addition to Canada. In what way, if any, are dual citizens of other countries affected differently than those in Canada. I have heard “educated guesses” that possibly about half of the estiated 6 million US citizens resident outside the US are dual citizens. Thank you.
One thing that I think needs to be discussed is if someone goes forward with this strategy and has to pay “something” does that something qualify as a foreign tax eligible for the under Canadian tax law for the foreign tax credit. As some like Jefferson Tomas have pointed out in some countries local tax authorities were specifically telling people not to file thus in some sense they should help pay to clean this up. Plus I think Canada and other countries would take a greater interest in this issue if the money collected so to speak was coming directly out of their “hide” through the foreign tax credit.
The other thing I’ll point out is a future change in tax law in the US ala moving to a residency based system would in all likelihood effect future years only. I am not sure their are many instances of the US retroactively changing the law back six or eight years(It might need to be even back to whatever the longest statute of limitations was).
Now if you went and won a court fight lets say in the US Tax Court that would be a different story in terms of retroactivity. While I think you could easily find someone with different circumstances under United States vs Cooke the people who have the money to fight in court would probably rather pay for professional help to go through the renounciation process and be done with it unless they had to pay a major tax bill to expatriate.
Additionally I think if people could meet with an appeals officer at a US consulate in Canada and not have to travel to the US it might have more appeal. People are very gun shy at this point and many would just assume stay away from the US for now if not for a long time.
This is pure speculation on my part but because of our shared culture and language and the fact that we share a common border, the sheer volume of Canadian dual nationals results in a very large number of people with no history or motive to pull any of the shenanigans other dual nationals around the world have pulled to avoid US taxes. Simply stated, in most of the Canadian cases I am aware of, it is simply not fair to apply FATCA just because the statute may literally apply. Canadians have a strong “equity argument” simply based on fairness. I strongly recommend Canadians to comment on the proposed FATCA regulations so that the IRS is well aware of the impact of what Congress has done. There is a “deemed compliance” concept in the new Regs published in the Federal Register on December 19, 2011, which I believe could serve as an opening for a special rule for Canadians who are totally innocent.
@Steven
What I have heard in past there were concerns about of people from the US living overseas for a few years then coming back to the US leaving a “nestegg” of undeclared assets behind. I don’t though of any particular case where this has happened. I know in Canada there is something called “Project Jade” being undertaken by the Canada Revenue Agency which is analyse all of the foreign holders of Canadian securities and basically find out who they are and to report their information back to whatever the country of residency of the beneficial owner(or to make sure they aren’t really Canadian resident masquerading as non residents. Back in 2010 they had an issue with a bunch of sham Liechteisinian(I hope I spelled that right) trusts investing in the Canadian securities markets to which they had to get court orders to find out who was behind them(My hunch is they weren’t Canadian but whoever their were the information was in all likelihood turned over to their local tax authority).
So my understanding is if someone from Canadian moved to the United States for whatever reason and maintained financial assets in Canada once their address changed CRA would collect their account information as non residents and send it to the US for example. (My understanding is the US practice is actually much different as the US doesn’t care much really care much about the status of foreigners investing in the US markets as long as they aren’t US “Person.” So going back to FATCA given the existing arrangement of the Canada Revenue Agency it seems like FATCA is going after Canadian “residents” whom CRA considers to have sole “ownership” of whatever nationality or is simply unnecessary duplication. If its duplication its seems like the US should just come out and point to the existing arrangement with Canada as a model for what they would like to see from other countries.
The other comment I’ll make is supposedly Canada and the US have committed to an entry exit tracking system which should solve the issue of whether someone spends 153 days in Canada or the US. I only bring this up because there was case I found remember of a Bermudian(Bermudians have the same non visa immigration status under US law as Canadians) who had a big account at UBS in CH but in reality was living most of time(way more than 153 days) in California. It would seem the US Canada entry exit system should fix this problem in the very near future.
Tim said:
“…I am not sure their are many instances of the US retroactively changing the law back six or eight years”
Isn’t that exactly what they did with the citizenship law? Most of the folks here assumed they had lost their US citizenship according to US laws at the time they became Canadian citizens. Later the US changed their citizenship laws and made them citizens again without even notifying them. If they had been notified of this change, many of them would have renounced.
If you can be vicitimized by a retroactive law why can’t you be helped by one?
There is zero sentiment in Congress for any legislative change on this because no one in Congress is going to stick his/her neck out to help someone WHO MAY BE PERCEIVED as looking for a special deal on his taxes. Your remedy is NOT with Congress. Its too hard to get a law passed, revoked or amended. Your remedy is with the IRS which now has the authority to amend or write regulations which address a particular situation. Meeting with an IRS Appeals Officer or other IRS Compliance type in Canada is a great idea and may be something to pursue with the Office of the Taxpayer Advocate. In MHO this is something which is doable and worth a try.
@ Steven “zero sentiment”. I am now a Canadian. I have zero sentiment left for the American people who elect these people into office. It is only going to get worse as the entire education system has failed us. The kids these days don’t seem to understand anything about rights and democracy and as a result will allow any demagogue come to power. We are rich tax cheats abroad; that’s how the demagogues portray us. My level of disgust with what your country has become cannot be expressed.
One major problem with the OVD programs is that one must voluntarily relinquish constitutional rights and accept the terms of the program. Just Me has shown us that also our houses would be a part of the program, if even we derive $1 rent. Suppose I rent a room in my house, now my house also becomes a part of the basis of the fine. I think it is ridiculous to suggest that any law abiding person join this program. It is a money grab. The only person who should join it is the whale. It is a good deal for the person who has stashed millions in foreign banks to get it out of the reach of the IRS. Now the whale gets to keep 75%, and he still has millions. The law abiding Canadian, in my view, should never ever join a OVD program. It would be suicide. I say, Canadians should get their investments out of the United States and depend on the protections that the Canadian government has promised to them. I say all other Canadians should divest their investments from the US out of solidarity. They should also sell their condos in Florida, and head further south for their vacations.
@Steven J. Mopsick
Thank you for your comments, and POV.
Two points I feel a need to clarify…
You say… “there is an additional penalty of 27.5% of the highest aggregate ONE YEAR balance of the applicant’s previously undisclosed bank accounts during the past eight years.”
Actually it includes more than bank accounts, it also includes assets. That can be a BIG disincentive if you have a retirement house that is now swept up in this penalty net.
The FAQs say…Pay, in lieu of all other penalties that may apply, including FBAR and offshore-related information return penalties, a miscellaneous Title 26 offshore penalty, equal to 27.5% (or in limited cases 12.5% (see FAQ 53) or 5% (see FAQ 52)) of the highest aggregate balance in foreign bank accounts/entities or value of foreign assets during the period covered by the voluntary disclosure;
Regarding Opt Outs. The Opt Out procedures were finally released by the IRS on June 1st, of 2011.
http://www.irs.gov/pub/newsroom/2011_ovdi_opt_out_and_removal_guide_and_memo_june_1_2011.pdf
First question would be…Why did they finally have to come up with some? Was that because what they were netting was not what they were targeting, and only after the fact they are trying to throw some fish back into the sea?
I am surprised to hear you say that “practitioners have yet to have any experience with it but it is there.”
We know of two examples ourselves, and have been posted here at Isaac Brock. One is Moby and the Other is Sally. You can search for them on this site. Of course these folks went through the process without practitioners representing them. Would practitioners be keeping folks inside the process rather than helping them out of it? Or our your clients of a different class?
I have posted my experience inside the OVDP and my attempts at communication with the IRS to find a more reasonable outcome.
http://isaacbrocksociety.com/2012/02/04/letters-to-shulman-or-a-case-study-of-ovdp-communication-attempts-with-the-irs/
You certainly have to go through a hot of hell with a big expense in $ if a practitioner is doing it for you, or a lot of LCUs if you are doing it yourself.
The new found privilege of getting to Opt Out of something that you should not have to go through in the first place to become compliant is what is frustrating to many of us. Why put someone through the entire OVDI hell, and only then give them the option of Opting Out later? Why not have a front end screen, instead of a back end fertilizer factory.
The IRS really knows how to screw up a process and make it so technically and legalistically difficult, that it might actually being pushing people away, and not really adding significantly to compliance rates which supposedly is the objective. Doesn’t the IRS see this? The TAS does!
Those are rhetorical questions, and since you no longer work for them, I really don’t expect that you should have to defend them. I just want you to mull it over and think about it.
@Just Me Good points. I relinquished because of HEART 2008. But the number of people renouncing over FBAR/OVDP 2009-2011 is a flood by comparison. So the IRS has finally found away not to have to process returns from citizens abroad. Force them all to relinquish their citizenship by scaring the hell out of them with an “amnesty” program that promises to confiscate 27.5% of their wealth.
@Petros
Actually, in the 2012 OVDI, you don’t even have to rent your house for it to become part of the highest aggregate penalty base. That was under the 2009 OVDP that they had this provision about income producing assets, where the $1 of rent issue tripped the technical lever. No discretion allowed. .
In the 2011/2012, OVDI they just upped the ante, dropped the income producing part, and asserted that the penalty would be on Value of Foreign asset period, full stop!
@Petros
I think the system in the US is a mess and is getting worse. I think as Roger and Steven have pointed out it will be a hard fight just to keep things like the Foriegn Income Exclusion from being chopped. The real danger is its widely expected that there is going to be a big “backroom” budget deal after the election during the lame duck session in which in my opinion there is a chance that you have some very unfavorable changes to put in place to thngs like FIE with very little public notice to groups like ACA. I don’t know what the future holds I think it better that there are sites like this out there than if there were not. I actually try when I visit blogs in the US that have stories that are even tangentially related I tell them to come here. One thing I find very telling is that of all of the members of Congress who introduce a lot of bills to do a lot of different things much of which never gets enacted no one not even the most conservative republican has introduced anything to change FATCA or do anything to move to a residency based tax system which means for now at least there is no political constituency for any changes. The one announcement by ACA that some members would introduce a bill to create an unlimited Foriegn Income Exclusion turned out to be very premature as no such bill has been introduced despite ACA’s announcement being months ago. I am going to try post a “wishlist” tommorrow of different things we should push for with different degrees of difficulty and odds of sucess.
@Petros
The other comment I’ll make is in the future the issue that has to emphasized is this no longer a question of mere double taxation of foreign employment income. The big issue is the fact it is almost impossible to take part in any foreign countries tax preferred investment programs such as in Canada RRSP, RDSP, RESP TFSA without running straight into the brickwall of US anti avoidence rules such as PFIC and CFC which were intended to prevent very sophisticated tax shelters not someone investing in Canadian mutual fund. It is pretty widely held that now a days in Canada or the US old style defined benefit pensions are a thing of the past and if you want any hope of saving for retirement you have to use programs such as RRSP and TFSA to the max. Yet basically US citizens in Canada are blocked from using many of tools Canadian residents use to save for retirement.
@Just Me
The thing that makes me suspiscious is why they include things such as “foreign” residences(in reality often the person’s primary residence) in the penalty calculation. Constitutionally the US Federal Government has the right to impose an “Income” tax not a “wealth” tax yet it seems as though they are doing just that. Now income has been defined as many things gifts, capital gains, inheritance but I am not sure were “holding” a residence fits into that.
The other thing I am curious to is what the advice you are getting in NZ as to how you can apply any of this as a foreign tax credit on your NZ taxes.
@Mr. Mopsick: Thank you for your comments. Regarding this:
As I understand the “deemed compliance” concept, it applies to FFIs, and exempts them from reporting certain kinds of accounts and structures to the IRS. (I’m looking mainly at Notice 2011-34. I don’t see any mention of “deemed compliance” in IRS rules/proposed rules from that date, so forgive me if I’ve misunderstood and you’re referring to something else). This is limited relief at best. An account-holding institution being “deemed compliant” doesn’t solve the taxpayer’s problem. If the taxpayer has accounts on which he has failed to comply with non-FATCA reporting requirements, “deemed compliant” simply means that FATCA won’t force the institution to let the fatcat out of the fatbag. The taxpayer himself is still noncompliant with the rest of the Internal Revenue Code. Maybe at best he’ll be exempted from filing Form 8938.
Everyone here at Isaac Brock hates FATCA, but in one sense it’s “better” than past tax laws: 6038D(h) at least explicitly gives the IRS the authority to issue regulations giving “appropriate exceptions”. The other information reporting laws about foreign accounts/structures don’t have even this flexibility.
Which is not just a Canadian problem. Every country in the world has tax-advantaged purpose-savings and self-employment structures (e.g. childrens’ educational savings accounts, professional corporations, etc.) intended for use by unsophisticated taxpayers. But as Tim mentioned above, under US law these are PFICs, CFCs, constructive foreign trusts, and other godawful acronyms. The legal presumption and public perception is that anyone using one of those structures must be “pulling shenanigans to avoid taxes” and deserves to be subject to enhanced
interrogationreporting requirements. (Especially those of us who live in evil capitalist “tax haven” countries that are so audacious as to levy lower wage taxes than the US — but still manage to have better socialist health care systems and government housing systems).Hence Forms 5471, 8858, 8865, 8621, 3520, etc. I doubt any significant fraction of homeland tax preparers could tell me off the top of their head what those forms are for, but they’re my annual reality just so I can work for myself and save for retirement. The fact that I’m a “civilian” and I have to know this junk should tell you what Petros said more concisely: the US tax system has enormous problems that are not going to be solved by a few notices in the Federal Register. Which is why, around here a very large number of us conclude that our best remedy is not going off to the IRS to beg for a solution, or lobbying Congress which as you mention is even more hopeless. Our remedy is to file Form 8854, detach ourselves from this insane system, and if the IRS still tries to come after us, stay away from the US entirely and fight it in the courts of our countries of residence.
It is almost impossible to respond to all the many good points which have been raised. I do not judge anyone on this issue and it is obvious to me that the “citizenry” issue is something you all have given a lot of thought to. All I can say is I have a skill and knowlege which some people need right now and there are a lot things I know for sure about what is going on here. One sad thing is a lot of people are about to make some life size big money decisions based on some real bad advice.
That said, if the IRS were to announce that anyone who feels like it started filing correct returns right now it is highly unlikely that they will ever be investigated by the IRS for crimimal purposes. I could be wrongn but a lot of people will come forward in some way because a major element of doubt and uncertainty has been removed from their lives.
Some people only care about the public humiliation of a criminal investigation and charges and will gladly pay the tax, and interest and whatever penalty they can negotiate with the IRS based on reasonable cause. The reality is the IRS simply does not have the people power to bother people criminally.
Read the papers! Who is the government going after? I dont know Moby and Sally’s facts but I do know if they represented themselves they had fools for clients. The simple reality is the IRS likes compliance and when they have a choice to go after someone criminally it is almost never the little guy who just starts to file, show good faith and pay.
Penalties and back taxes are another story. THE VOLUNTARY DISLCOSURE PROGRAM IS NOT FOR EVERYONE. The IRS is not a stupid monolith. One hundred thousand Americans work there. on and off. Personally, I think it is a shame for someone to renounce something as precious as United States citizenship. A lot of people’s grandparents would be spinning in their graves if they ever thought that they risked their lives for nothing to escape the mindless hatred of Europe to come here so that their grand children good start off on a relatively equal playing field.
I would say that if someone feels the need to renounce their US citizenship, good for them!. The point is they dont have to do so if they are afraid of criminal prosecution because of their taxes. Government may not be working very well at this point in history but in this country at least, the federal government is not spending any people time or money trying to investigate or prosecute anyone criminally for tax or related crimes if the source of the money is legal and they just start to become compliant.
Respectfully Submitted,
30-year IRS Vet.
@Steven
I usually avoid feeding the trolls, but I’ll respond to this piece of flamebait.
My views on the role of tax lawyers in this process are well known (http://bit.ly/wteAlS) but I’d like to specifically address some points in this post.
—“I dont know Moby and Sally’s facts but I do know if they represented themselves they had fools for clients”.
So what you’re saying is that if I was represented by a lawyer then I was a smart client, and if I represented myself then I was a foolish client?
I was represented for the initial VDP application into the process by a lawyer. A lawyer with equivalent experience to you and one that specifically advised me to enter the VDP, based on my facts and circumstances (recent immigrant, no knowledge of FBARS, 2 years of non-compliance). So the foolish thing that I did was to engage a tax lawyer who wanted to earn some fees and wanted to cover his own butt by recommending the “low risk option”. I have no doubt in my mind that had I continued being represented by him and followed his advice I would have been down 30% of my life savings. Instead I chose to represent myself, opt-out and argue the case based on own knowledge. Let me be clear: engaging an experienced tax lawyer cost me a great deal of money; representing myself saved me an enormous sum of money.
I have no doubt in my mind that the reason that so few opt-outs have materialized is because people have been following the advice of their lawyers to stay in the VDP and not “risk catastrophic penalties”. Maybe if more people represented themselves then the VDP would have claimed fewer victims.
—“THE VOLUNTARY DISLCOSURE PROGRAM IS NOT FOR EVERYONE”
I find it very interesting that you say this. It is probably easy to say now that a few people like me have fought through the process on their own (unrepresented) and come out with a decent result. If only more lawyers were saying this earlier in the process the damage of the VDP might have been limited. Out of interest I checked your firm’s previous publications at the time people like me had to make irreversible decisions about entering the VDP. I wanted to see whether you were so upfront on advising people that maybe they should possibly stay out of the VDP, at the time they needed to make the decision. Here is what I found (http://bit.ly/yXhjZB; last sentence of document):
“…most taxpayers who elect not to participate in this program are gambling that they will not be caught and risking owing tremendous sums, including their life savings, in potential penalties.”
This was the same fearmongering that I fell for when I entered the VDP and it was being spouted across the legal community. I have no doubt that had I engaged your firm at the time I would have received the the same (bad) advice as the lawyer that I did engage.
—“…it is a shame for someone to renounce something as precious as United States citizenship”.
I’ve lived in the US, and could have had US citizenship if I wanted. I had a GC and I gave it back. Instead I live elsewhere and do not plan to live in the US ever again. I know plenty of Americans who feel the same way. To them a US passport is a dispensable convenience and nothing more. Their US citizenship is far less important to their other citizenship. I imagine that 30 years working for the IRS may not have allowed you much opportunity to live beyond the borders of your country; if you had then you might have an understanding of how little value US citizenship has to a great many people.
I’m sure people in this forum value your opinions, but I just see this comment as armchair quarterbacking based on hindsight, and an attempt to opportunistically troll for business as just about every other lawyer has used the VDP for. One thing I’m intrigued to know is how many of the “over fifty families” (http://bit.ly/whpmLc) that you’ve worked with in 2009/2011 VDPs ended up paying only the accuracy related penalty on unreported tax, and had their FBAR (or in-lieu) penalties waived?
@Tim
NZ taxes have been simple so far, and so the accountant advice there have been no credits available, as have not been paying taxes in NZ on my US earnings..
Now, beginning this past fiscal year, I have had to start paying NZ taxes on my passive US earnings, and so will get credit for taxes paid in the US. There is not an equivalent 1116 form in NZ, so not exactly sure how that will be determined due the many ways US taxes income compared with the simple way NZ taxes. Have a meeting on Tuesday with an accountant to figure it out. I think I will get credit related to my effective rate in the states, but still to be determined.
The complexity is getting a bit much with the two systems, so this past year, we have broken our tax residency in NZ, and have essentially moved back to the States. Will only be in NZ 5 months this NZ fiscal year.
@Steven J. Mopsick: “I would say that if someone feels the need to renounce their US citizenship, good for them!. The point is they dont have to do so if they are afraid of criminal prosecution because of their taxes.”
Perhaps because your entire professional focus is criminal tax activity and compliance, I think you are somewhat missing the point here. People are renouncing US citizenship in record numbers, which must tell you something if you stop to think about it objectively. The reasons are many, but real genuine fear of criminal prosecution over tax is probably one of the less common ones.
If your life is outside the US and you have a quality dual citizenship, US citizenship offers no benefit. It does however offer very real drawbacks. The list is almost endless, but here’s a selection: an ongoing paperwork nightmare for the rest of your life; a likely higher lifetime tax bill (at its very best, merely neutral); inability to participate in any tax advantaged savings schemes in your home country; inability to use mutual funds in your home country; inability to start a company either on your own or with other nationals of your home country; threat of large inflexible civil penalties for minor paperwork errors; requirement to keep up with every tweak congress throws into international tax law; marital strain as non-US spouses are drawn into the reporting web; US estate tax issues that could force a surviving non-US spouse to sell non-US assets acquired with no US inputs to pay a US tax bill; threat of exit taxes on renunciation; inability to open investment accounts, and possibly even bank checking accounts, in your home country.
And of course, add to this list the biggie: whatever insanity congress dreams up in future. The entire direction of travel for congress over expats for the past 20 years or so has been negative. The expat tax regime worsened eight times between 1996 and 2008 alone. People with a free choice in the matter are now choosing not to stick around to see what comes next. Think about what message this sends to prospective immigrants to the US, and to those who might be thinking about gaining US citizenship.
@Moby
“I’m sure people in this forum value your opinions, but I just see this comment as armchair quarterbacking based on hindsight, ….”
Let’s give him the benefit of doubt, at least for today! It is Superbowl Sunday!!!!!! 🙂
@All anyone considered sueing Uncle Sam in a foreign court?
@Steven
“A lot of people’s grandparents would be spinning in their graves if they ever thought that they risked their lives for nothing to escape the mindless hatred of Europe to come here so that their grand children good start off on a relatively equal playing field…….”
Okay, I think I finally realize where you are comning from. I can just picture you sitting in front of the television a few hours from now watching the super bowl, waving a huge foam red white and blue extended index finger with USA no. 1 on it.
It is my personal belief that many people renouncing US citizenship today do so for the same reasons that people left their home countries to come the the US years ago.
On the contrary I think my grandfather, an imigrant to the US and naturalized US citizen once from Europe and now buried in N.Y., would turn in his grave if I DIDN’T renounce! He would be appauld by the policies that the US are putting forth in this day of age.
Please trade in your tainted 30 year old IRS spectacles and your new attorney spectacles for a pair that are neutral, then re-read a few of the posts on this site and I hope you can then truly understand the postition most of us are in!!!!!
It is ABSOLUTELY unacceptable for us expats that we are deprived of our rights from making contributions into foriegn tax deferred funds in the countries we reside, for either reasons of retirement or for any other legitimate reason.
GO Giants!!!!!!!!
@Watcher – that was basically the reply I was going to write, down to the items on your list. 🙂