36 thoughts on “American Citizens Abroad (ACA) recommendations for fundamental tax reform has been posted.”

1. Since we’ve got ACA’s attention, I’ll push my other international tax pet peeve: IRS needs to be delivering more services electronically. Start by sending e-mail notifications to taxpayers. Every single penalty notice I’ve ever got from the IRS due to paying my taxes late (saying “pay this much penalty by this deadline or else”) arrives two to three weeks after the deadline in the letter! And they don’t put date stamps on the envelopes so it’s impossible to tell or prove when they were sent. These letters are being sent from Germany to Hong Kong. Anyone else ever had this problem? I strongly suspect this is systemic.

2. So far the IRS totally avoids sending Emails. I think it is because of supposed privacy and security concerns. That is also why my broker will not accept email orders to buy or sell.

   When I lived in Brazil a Christmas card mailed from the US arrived 9 months after it was mailed. Back then there was a higher rate for international air mail and it had to have either an air mail postage stamp or be marked air mail. This one had enough postage for air mail but used regular stamps and was not market air mail, so it came by boat mail which probably got re-routed several times before it finally arrived.

3. @Eric, postal mail service is almost non-existent in some countries. I remember back in the 1960s the postal workers in Argentina went on strike for higher wages about every two years. Undelivered mail just piled up, so when the strikes ended it was all burned in a massive bonfire. I had a $100 certified check I sent to a person in Argentina stolen from the mail. It was deposited with a forged signature as a 3rd party check in the New York branch of a Brazilian bank. My homeowner’s insurace compensated me for the $100 loss plus the cost of the certified check.

   My daughter worked for a US company in Venezuela for two years. They used a postal address of a courier service in Miami for mail from the US. Reason: local postal system was unreliable. Mail was hand-carried daily by a courier to Caracas who carried back mail destined for the US for mailing in Miami..

   So she used a US mail address for her US tax returns even though a resident of Venezuela.

4. @Roger,

   Do you know if ACA has met with Ron Paul or Rand?

   I know they are busy campaigning now, but I couldn’t imagine them not finding the treatment of America’s expat community an issue of major concern.

   At least half the expats I know have donated money to Ron Paul’s campaign.

5. Honesty I don’t know but I doubt it. ACA, by its nature is non-partisan. Its founder over 30 years ago was the chairman and, I believe, founder of an organization known as Democreats aboroad and one of the others was the chairman of Republicans abroad. Both very close friends of each other and to me as well, but at opposite ends of the political spectrum They have collaborated closely in ACA which tries very hard to serve all US citizens who live overseas.

   I am sure that none of the Republivcan presidential primaries candidates who are all trying very hard to be selected as the Republican candidate in the upcoming November presidential campaign will touch this issue with a 10-ft. pole. It is a subject that does not resonate with 99% of the voters at all, and when the one-time Congressman Bill Alexander, some years back, took up this issue he was roundly defeated for re-election by his opponent who cricifed Bill because the cared more about the issues of Americans who had left the country to live outside of the US, to the expense of standing up for the issues important to “his own” constituents. It is far too toxic an issue for any primaries candidate to even mention if he expects to win the primary election. With all of the darts being exchanged between them right now their total efforts are to win this nomination.

   Obama, when he was running against McCain in the last election came out in one speech by briefly but strongly being in favor of leveing the playing field, so overseas Americans could compete better in the international market. But this just turned out to be rhetoric to win votes from Overseas Americans, Believing he meant it, most of them voted for him.

   Once he was elected he never mentioned it again and, although there have beem many attempts by ACA, AARO and individual overseas members with strong Democratic Party connections to contact his office on this issue, their requests, letters and emails have gone without any acknowledement or responses whatsoever. Once elected, he has expressed no further interest. Instead his IRS director has gone out of his way to hunt down overseas Americans and make them pay through the nose, believing that they are evading hundreds of billion dollars in US taxes they owe.

6. I totally support this iniative by ACA, but I think it is a very longshot in gaining any traction in Washington. How about joining forces with WDC residents on the no representative issue?, it seemed to be gaining some momentum. And also outright challenging some of these things legally?, like unconstitutionality, through ACLU or similar.

7. @Roger Conklin
   I will mention again that the current IRS Commissioner was a George W Bush appointee. However, as I mentioned in my just recently posted post its becoming obvious that a lot of this is coming from Obama and his Treasury Secretary Tim Geithner. Now this may be out of political “fear” more than anything but this is not something just coming out of the IRS senior management and below.

   Take another issue related to US Canada relations the Keystone pipeline(I for one am not necessarily for or against it I just want to show the actual record). First Obama said he had to delay its approval until after the fall election due to unforseen environmental mitigation issues. Fine that tends to be the nature of getting governmental approval anywhere for big complex projects. At the time Obama said the decision had nothing to due with US Government’s opinion of the Canadian Oil Industry or of Canada. Fine. The the Congressional Republicans play a political stunt and add languague to a must pass piece of legislation that required Obama to approve or disapprove the pipeline in 60 days. Obama then disapproves the pipeline saying their was no way legally where he could approve without a full environmental assessment and indicating that Trans Canada can continue to pursue the project through the normal assessment process. Fine The House Republican were playing a political stunt. Obama comes out againt and states the decision had nothing to do with Canada or the Canadian Oil Industry.

   However, after the Republicans announce there intention to try to again force approval of the pipeline Congressional Democrats suddenly all start speaking from the same talking points about how Canadian oil is really bad, how Canada is a “foreign” country just as Saudi Arabia or Nigeria are, that in the future if the pipeline was to again through the approval process “new” “economic” conditions should be added to its approval such as Canada should have to sell the oil to the US at below world market prices which by mandating the US would be effectively abbridging Canada’s rights under the North American Free Trade agreement. These remarks have also been echoed by people like John Podesta who have had and continue to have senior roles in Obama’s campaign. So in my mind Obama can continue to make public statements about the state of US Canada relations but what I find more telling is what his politically allies say(And yes if he wanted Harry Reid to stop blabbering on about the evils of Canadian oil all it would take would be a phone call).

8. @Tim, the current IRS commissioner was indeed appointed by President Bush, was carried over by Obama when he became president. I have never met him, but my impression is that he is a person who wants to do a top notch job in fulfilling the policies of his boss, whoever that boss may be; one of which is to increase tax revenues which he and others believe are there waiting to be picked through vigorous enforcement of existing laws and through the newly-enacted FATCA. There is an excellent collection of articles from around the world on the http://www.aca.ch website. Just click on FATCA in the left hand column.

   FATCA certainly is, in my humble opinion, an extraterritorial overreach in obligating foreign banks around the world to provide very detailed information on all of their accounts held by US persons. But so is citizenship-based taxation which obligates US citizens around the world to file tax returns and pay taxes to the IRS on their income frrom sources within the foreign country in which they reside. Can you imagine what would happen if every one of the 192 other nations enacted legislation requiring US banks to provide similar reports on accounts of US banks held by citizens of those countries and thus transform them into tax agents for all of those countries? If the US has the right to do this why should not other nations have this same right? Brazil and Chile, both enacted requirements that US citizens must have visas to enter as tourists or for business as a reciprocity measure because the US requires visas of their citizens to enter the US. And If I remember correcty their visa fees are identical to the State Deparment visa fees which their citizens must pay. And a few years back, right after 9/11 when the US began fingerprinting citizens arriving from certain countires, Brazil immediately began the fingerprinting of US citizens arriving in Brazil. Brazil did nothing with these fingerprints, but if the US requires that Brazilians be fingerprinted then Brazil required the same of US citizens. I flew to Brazil one time shortly after this fingerprinting requirement was implemeted and it took about 2 hours for all of the passengers on my flight to be fingerprinted and clear immigration on arrival in Sao Paulo.

   I guess the what is so surprising to me is that most of the governments of the world appear to be accepting this asserted right of the US to do what no other nation would ever dream of doing. If even one other nation were to enact legislation like this I would expect the US Congress to immediatelhy enact legislation making it illegal for US banks to reveal any of this information to a foreign government. I suspect that US banks do not have information on the dual nationalities of US citizen account holders and that foreign banks likewise don’t have this informaton on their citizens who are dual US citizens. This is particularly true since more then a few of them are not even aware that they are considered by the US to be US citizens.

9. @Cato

   Thank you! What a lovely diversion from all this tax junque. Though I suspect being an expat in Casablanca is a little more exotic than one in Canada. 🙂

10. @Roger Yes, good point — if these penalty letters arrive 3 weeks late in Hong Kong, I can’t imagine how late they must come if they’re going to deep rural parts of Africa or Latin America. Electronic services delivery might also help American expats living in places with poor mail delivery — if they feel comfortable going to town and doing their taxes in an internet cafe (though that’s a big “if”, of course).

    Regarding the e-mail/security issues: every time my (OFFSHORE TAX-EVADING UNPATRIOTIC ILLEGAL) bank wants to notify me about something important, they send me an e-mail saying “please log in on our secure website”. I go log in, and read whatever notification they have for me. Totally encrypted so no one else can see it. They’re a giant, slow moving, bureaucratic organisation (3x as many employees as the IRS), but they still managed to get this done. https has been around in some form since 1994. There’s no technological barrier to the IRS doing this. But I guess they’d rather keep raking in the penalty interest.

    Reciprocal visa fees are another giant pain point and yet another reason why Americans overseas are at a disadvantage trying to expand from their “home base” into neighbouring markets. Americans here are stuck paying US$100 for single entry mainland China visas, or $200 for multiple-entry. In the mean time, Japan of all places (which not 70 years ago was literally slaughtering Chinese people in the streets) has good enough relations with China to get a visa waiver for Japanese tourists and businesspeople, even without providing reciprocity (mainland Chinese need visas for Japan). Between this, and the insane IRS regulations which consider mainland China a separate country from Hong Kong for purposes of calculating Subpart F Foreign Base Company Services/Sales Income, it’s not surprising the US has a giant trade deficit with China, while high-wage Japan has nearly achieved trade balance with China. It’s another example of the exact same thing you’ve been saying all along about Germany.

11. @Roger. Mail service in Brazil is still NOT 100%. On several occaisions, I just never received letters or parcels.

    If anyone wants to definitely contact me (like the US Gov, banks, or other financial institutions), the most reliable way is through courier service. But the envelope will be opened / inspected / read. There is a 100% guarantee of that.