See: “IRS Newsroom”
I found the following paragraph interesting: “A year ago we actually delayed the opening of tax filing for 6.5 million Americans, from January 14th to February 14th because of late tax law changes. That meant 6.5 million people, including school teachers who wanted to take a deduction for classroom supplies that they paid for themselves, had to wait an extra month to get their refund. In any public policy arena, policymakers should strive to give those implementing a law enough time to do it right.”
So he can be reasonable sometimes and proactively suggest that policymakers ensure that the IRS be nicer to US-based “Minnows” but not to Minnows abroad?
If your purpose in renouncing US citizenship is to avoid taxation, which in reality is probably the prime reason why a US citizen resident in or a dual citizen of another country would renounce, bear in mind the following:
“Barring entry because of “taxpatriation”: The Reed Amendment
In 1996, Congress included a provision in the expatriation law to bar entry to any individual “who officially renounces United States citizenship and who is determined by the Attorney General to have renounced United States citizenship for the purpose of avoiding taxation by the United States.”
Although to date there is no known record of the Reed Amendment every having been enforced, bear in mind that this could change. The law requiring US citizens with foreign bank accounts with a balance at any moment during the year of $10,000 ot more, or with signature authority over uch bank accounts in which they hold no personal financial interest, requires that annual FBAR reports be filed with the US Treasury. This law has been on the books since 1972.
Few US citizens, particularly those resident abroad, were even aware of this law until recently when it was dusted off and is now being enforced by the US with a vengeance. The new FATCA law which requires US persons with assets abroad to file Form 8398. The filing of this form which is required for the first time with tax returns currently being filed for 2011, if they reveal that the US citizen has foreign bank accounts with a value of $10,000 or more, could result in an audit to determine if the taxpayer was negligent in filing FBAR reports in prior years and if it it determined to to be true, the taxpayer could be subject to signifiant penalties.
At any rate, nobody should be surprised if from one day to the next a decision might be made to start enforcing the Reed Amendment.
Should this happen, persons who have renounced US ctizenship could conceivably be required to present substantianting evidence that they did not renounce US citizenship “for the purpose of avoiding taxation by the US” in order to visit the US.
From my perspective the IRS will be able to do what it is planning. I can see that sooner or later – and I believe sooner – they will have a database of all Americans, Dual Citizens and Residente Aliens who have foreign bank accounts and investments. Mr. Shulman is determined to do it and he will succeed. Of course Americans Living Abroad will be lumped together with Americans Living in the USA who have investments in foreign banks. So I am preparing myself to do whatever they want me to do which is becoming close to impossible. Today is saturday and I will be working on this. What we can do? First and foremost join ACA. They have very thoughtfull and clear proposals in our behalf. Second we must fight in all fronts to have representation.
@markpinetree We cannot allow the IRS to do what it is planning. We must resist tyranny. Write your congressmen and senators, write your MP’s in your countries of residence, prepare your arguments (constitutional [US and where you live], civil rights, data protection, sovereignty of your country of residence, fairness, cost of living and local tax structure in your country of residence, international law, whatever).
Do not put blind faith in tax professionals or lawyers, be careful of the information you give them and what they are professionally required or forbidden to disclose to others, and do not give them an unsupervised free hand in making decisions for you: they are consultants– you must decide what is right in your own situation and fight for it.
Write your own position paper and keep it on file with a copy to people you trust so that when the xxxx does hit the fan in your own personal situation you will be prepared in advance.
The US is progressively escalating measures against us that increasingly infringe upon our right to live. We cannot allow Uncle Sam to get by with policies not unlike the British policies that resulted in the Declaration of Independence and the Revolution. If we do not resist with all of our might, hundreds of years of democratic progress will be wiped out and we will find ourselves back in the dark ages.
@ Roger I would venture to say that the laws treats differently those who “relinquish” their citizenship: i.e., they voluntarily lose their citizenship by making a pledge to a foreign power, taking a foreign citizenship, or taking a position in the foreign government or military.
Any law which uses “renunciation” or “renounce” applies only to those who make an oath of renunciation before a consular officer. See: http://isaacbrocksociety.com/2011/12/12/relinquish-dont-renounce-if-you-can/
@Petros
on «how to join this blog» I cliced the icon «contact us» and wrote a small plea . The email sends it to you. Have you received it ?
@petros, You may be right. But many thought that when they became a naturalized ctizen of a foreign country they had lost their US citizenship and all obligations to pay US taxes. And they were right until the Supreme Court ruled that Congress had no constitutional right to deprive US citizens of their citizenship, thus restoring their citizenship retroactively and thus making them again subject to US taxation, with neither their knowledge or consent.;
The Reed Amendment has never yet been enforced, but it hangs like a Damocles sword over the necks of everyone who has renounced US citizenship. Relinquishing it may spare them, at least until Congress becomes aware of this loophole and acts to closes it.
@Petros sorry,it wasn’t «how to join the blog» but rather the «Isaac Brock Forum».
@ Petros This is an important distinction, but what about the CLN? If you commit an act and then inform State that the act was with intention to relinquish, will you still have to appear at a consulate to fill out the forms (some of which mention relinquishment as well as renunciation). I have the impression that a relinquishment will not work if one merely sends in a letter registered mail detailing the case and his/her decision, accompanied by US passport for cancellation.
The form DS-4079 asks questions about property owned in the foreign country, or if one files tax returns in the US. Perhaps one could take the 5th on some of the questions? But that could raise red flags in Washington. Is the Embassy allowed to issue the DS-4083 CLN themselves (see below) or do they have to wait for Washington to do it?
Interestingly enough, the US Embassy in China has a page with links to key documents as to renouncing/relinquishment:
http://guangzhou.usembassy-china.org.cn/service/other-services/renunciation-of-u.s.-citizenship
• DS-4079 Information for Determining Possible Loss of U.S. Citizenship: http://www.state.gov/documents/organization/97025.pdf
(asks questions about property owned in the foreign country, if one files tax returns in the US, etc).
• DS-4080 Oath of Renunciation of the Nationality of the United States http://www.state.gov/documents/organization/81606.pdf
• DS-4081 Statement of Understanding Concerning the Consequences and Ramifications of Renunciation of U.S. Citizenship http://www.state.gov/documents/organization/81607.pdf
• DS-4082 Witnesses’ Attestation Renunciation of Citizenship http://www.state.gov/documents/organization/81608.pdf
• DS-4083 Certificate of Loss of Nationality of the United States http://www.state.gov/documents/organization/81609.pdf
@ Jeff I did go into the consulate, in order to follow their procedure. But State Department procedure is just a procedure and it is not the law. The bigger question is that the tax law requires after 1995 (I think also the Reed Amendment–but I’m not sure) that a person inform the consulate. So that’s what I did to satisfy them. Now it is coming up on a year since I informed them (April 7, 2011), and no CLN. I guess they don’t want to let me go.
A CLN is just a paper that the US government requires. I am not a US citizen as of February 28, 2011, the day I became a Canadian. No threat from the US can withstand the international recognition of my Canadian only citizenship.
If you ever receive a CLN, good idea to file a copy with your local authorities, banks etc. In the meantime, don’t go to the US.
@Jeff hopefully my plane to the Caribbean later in the year will not be shot down as it travels over US airspace. 🙂
Jeff wrote:
The State Dept. in DC issues the CLN.
DS-4079 is full of questions to assess whether the potentially expatriating act was really done with the intent to relinquish citizenship. After the potentially expatriating act, a person’s actions speak louder than words, in the opinion of the State Dept. See: http://isaacbrocksociety.com/2011/12/16/from-the-archive-did-you-relinquish-here-are-some-proofs-that-the-state-department-uses/
@All So anybody want to respond to my original post in this thread about how Shulman can propose that the laws be nice to some Stateside Minnows (eg teachers) and not be more proactive about being nice to Minnows Abroad (whether of the Ostrich-Mermaid variety, or not?).
For me this is a typical manifestation of the discrimination against non US-military citizens abroad. For many years, the absentee voting forms did not offer an option of “US citizen residing permenantly abroad”; then, a few years ago they did, and now this year the “permenatly abroad” question requires answer to another question “intend to return” or “does not intend to return”.
I just filled out some forms recently to check my records in the US to see if anyone was impersonating me in the US due to my extended absence spanning two decades (background check, credit report, etc.) and it is rare if the forms will accept a non-US address. I always have to send multiple requests and be persistant where a US resident with the same level of education as I would obtain a service in 5 minutes.
The last time I called my branch bank, they told me basically to “[(X) off!]”. If I could not come in to the bank to discuss my business, they could not help me. As the bank is a multistate one, I went through the hotline, insisted that I speak to a supervisor in the US (not somebody in India or Philippines or whatever) that could speak off-script with me: finally I got someone at headquarters who understood my situation and helped me. US institutions (private or public) pattern their internal procedures around their largest market segments and make it nearly impossible to treat special cases. I understand that part of this is due to a need for efficiency, but there needs to be a way to deal with exceptions to the perceived rules.
All of this is further evidence supporting our right to remain non-compliant with US tax laws. They get us coming and going and I won’t stand for that!
@jeffersondtomas- As you pointed out, teachers are local voters and they are by no means minnows. The teachers unions are very powerful at both the local and federal level. They tend to be big supporters of the Democartic party and there is no way that the Demoocrats would have allowed them to be ignored. Shullman was acting proactively so that he could KEEP his job.
This all points to the fact that citizens abroad don’t have actual representation in the halls of government. If your organisation doesn’t have the ability to bank roll a big and persistent group of lobbyist your aren’t going to be heard.
I agree with you completely, Roger, that if a law exits it could be enforced at any time. The fact that the Reed law has never been enforced is cold comfort in today’s atmosphere where congressmen (whose one in particular’s wife, according to Wikipedia, has been convicted of felony tax fraud) are trying to eliminate tax legislation that reduces our tax burden to the US. Re form 8938 (foreign financial report) it will be a relief to many that the threshold will be $200,000 for those living as residents abroad.
@bubblebustin- I find no comfort in the fact that the threshold has been raised. The reason is because I see no consititutional justification where the Congress is allowed to set arbitrary limits on our financial freedoms by forcing us to submit to their examination.
They are alienating us from our own money and the existence of FATCA is still a threat to our even being able to have a bank account at all in our countries of residence. The easiest way for the banks to deal with FATCA is still by not having any U.S. clients. Why be exposed to any risk when it isn’t vital to your enterpise?
Our bank accounts are not foreign bank accounts to us, the holders. As long as the accounts are held in the land in which we live their is nothing foreign about them. The U.S. is not our eternal coordinate point of origin.
I am not some dog to be put on a leash.
Roger Conklin – Re entry barred due to taxpatriation
Better barred than apprehended. Those border guards tend to be judge & jury & executioner. Law unto themselves.
I delight in contemplating the flip side – the damage to the U.S. economy brought on by reduction of tourism and shopping.
If I were ever barred, I have the means and shamelessness to publicize the story. Turn myself into a multiplier!
I have a friend of UK origin who already just does not go south. Ever. Who wants to be greeted with an inkpad for the fingers? That’s not happpening to Canadians. Yet.
@usxcanada, Thank you for standing tall. IRS Commissioner Doug Schulman has been tasked by Congress to produce billions of additional dollars in tax revenue from Americans residing abroad and, let the chips fall where they may that is exactly what he is doing. Adolph Hitler and his henchman were unsuccessful in their attempt to get their hands on the fortunes in Swiss banks belonging to the German Jews they sent to the gas chamber, but commissioner Schulman has several feathers in his cap for getting his hands on money hidden from the IRS by US residents in those same Swiss banks.
As an American I regret it, but am afraid he could care less about the loss of tourist business from Canada, because that is not in his job description.
It is my hope that the Canadian government will look them straight in the eye, stand tall and not blink in demanding that the US government, in the strongest terms possible, direct the IRS to get out and stay out of Canada in collecting taxes from law abiding Canadian citizens who are accidental US citizens because they were born in Canada to a US parent, as well as all of those who, under prior law, lost their US citizenship when they became naturalized citizens of Canada.
Does the US fingerprint Canadian citizens entering the US from Canada? Right after 9/11 US Immigration did this with Brazilian citizens. Brazil was quick to retaliate by fingerprinting US citizens arriving in Brazil so it took several hours for US citizens to clear immigration after they deplaned in Rio de Janeiro and Sao Paulo. I traveled once to Brazil when this was in effect and the protests from US citizens was loud. (Fortunately I still had my Brazilian Carteira de Estrangeiro permanent resident card so I was in the Brazilian citizen line and cleared in just a few minutes.) They disposed of these fingerprints almost immediately but it was this reciprocal action by Brazil that resulted in the US decision suspend fingerprinting Brazilians. (Brazil, by the way, has surpassed Canada in becoming the foreign country with the highest number of its citizens arriving in the US as tourists.)
@rogerconklin- so now the U.S. and Canadian border will end up with families that are divided much as North and South Korea have families in the same situation. How ironic that the international relations of the land of the Free could end up looking so much like that of a Communist nation.
Talk about having a lack of self awareness.
Jefferson…
Coming back to your topic…..
“about how Shulman can propose that the laws be nice to some Stateside Minnows (eg teachers) and not be more proactive about being nice to Minnows Abroad (whether of the Ostrich-Mermaid variety, or not?)”
I know it is easy for us to demonize the IRS as a bureaucracy out of touch and displaying incredible hubris. There is the seemingly rigidity in policy and practices in relation to the OVDP/OVDI, and over-the-top in penalty assertions without regard to those offenders in the program.
However, as any of us that have dealt with the Examiners know, they are humans! Given the opportunity, they can display empathy and show reason! Even the Managers and Directors I have had personal conversations with, reminds me that they too can feel the pain that their internal policies unintentionally create for Minnows.
Sometimes they are able to express that up the chain of command, and get attention to what they are seeing and feeling. That can get reflected into a Commissioner’s words. That is how and why an “Opt Out” program was designed after the 2009 OVDP started, even though it took about 18 months to accomplish. Sometimes it takes the TAS to hit them along side their collectively dense heads to point out the friggin’ obvious with a TAO, TAD or a Report to Congress.
So, in many ways this expression by Shulman doesn’t surprise me. The concern for 6.5 Minnow teachers was not just something he pulled out of the thin air. All kinds of factors could be influencing him to mention this now. It probably relates to either internal conversations from his staff that have percolated up, or could even come from some personal experience or conversation he has had. He may have teacher friends that live next door to him, or he has attended a PTA and has his ear bent about how the refund practices are impacting his child’s teacher. So, as a human he is responding in his comments. Or, if you want to take a dark view, he is just cynically using a popular example to make a political point and show the agency as just a victim of Congress’s Statute creation process.
I could even sympathize with his plight in this regard.
Let’s face it. There are some harsh realities that the IRS has to deal with which are not simple to implement. Congress does act without regard to how the stupid changes in Statutes they are being pressured into creating by some lobbyist are going to be implemented! They then act shocked when something doesn’t occur exactly as the paragraph change they slipped into a 1000 pages of the new amendments for a continuing funding resolution they want the President to sign before Tuesday to be sure we have enough borrowing authority to prevent a default on Wednesday!
Is it any wonder that crap policy happens? The process stinks, and it works nothing like that great old fantasy video about how a bill is created.
I’m Just a Bill — Schoolhouse Rock
I think I have seen something similar recently with an IRS announcement about “Innocent Spouse Relief”
http://www.accountingtoday.com/news/IRS-Expands-Innocent-Spouse-Relief-61346-1.html
Was this a sudden concern for innocent spouses that prompted these changes, or was it a long evolutionary process that arose out of some personal experiences that IRS Managers, Directors or even Shulman himself experienced. I don’t know. But I can image that it is so.
The point is that these things impacting Minnows can get heard and adjustments may eventually get made, although not before a lot of damage is done. These “best and the brightest” back in DC are not just “Mad Hatter” ideologues dreaming up things to make Minnows miserable, even though that certainly is the result of the negative unintended consequences which happen when bad policy application is heaped on top of terrible Statutes.
The corrective process is just painfully slow. We must remember, that these bureaucrats live in their own little legal and technical regulation bubble, and they do get locked into a bureaucrat’s perspective, until they run into real life examples of the application of their rules. It could be the neighbor or friend next door who just happens to be a recently returned US Expat, or a school teacher frustrated about a late tax refund, or an innocent spouse of a divorced friend that got hammered and expresses their frustration over cocktails and dinner at their home! That is another way that changes happen.
So, we shall see what comes of all of this for Expat Minnows. According to Tax Notes, it is reported that Shulman and Nina Olson of the TAS have had a “good” conversation over her TAD that he is apparently not going to formally responded to, for technical and legalistic reasons. However, he surely knows the issues now, and Nina says, “It is a rare event when one of these gets up to his level. This is the first time in 11 years.”
So, maybe, hopefully, change for Minnows will come over time. It has been a painful 3 years waiting, I will give you that!
In the meantime, I keep mulling over what we can do to kill the beast that recreates these follies in the first place. How does any person or agency administer 72,536 pages of Tax Code that never ever EVER stops growing?! How many more “Bills” are being fashioned right now, as I write to add to this monstrosity? At some point, it has to collapse under it’s own weight, if we can’t collectively as a Nation find a way to reign it back in!
For those interested:
[TEXT OF THE FATCA COMMENT LETTER SUBMITTED BY
THE INVESTMENT FUNDS INSTITUTE OF CANADA]
November 1, 2010
Mr. John Sweeney
Office of Associate Chief Counsel (International)
CC:PA:LPD:PR(NOT-121556-10), Room 5203
Internal Revenue Service (IRS)
PO Box 7604, Ben Franklin Station
Washington, DC 20044
E-mail: Notice.Comments@irscounsel.treas.gov
Dear Mr. Sweeney:………………
http://bsmlegal.com/PDFs/FATCA_CanadaIFI.pdf
Maybe some of you know but just in case, from the credit union:
COLLABORATING…AND CONNECTING
http://www.cucentral.ca/PAR30JUN11 –
@greenwood
On another thread you were asking if
anyone lived in Montréal region. I live in Montréal
How can I help you?
@Greenwood, do you know if there was any reply from the US Treasury which is dated November 2010 – almost 15 months ago, to this letter and, if so, what it was?
The letter was one of hundreds addressed to the FATCA regulation draft. The draft asked for submissions The response is the 3rd draft published here. These are still not finalised
http://www.irs.gov/newsroom/article/0,,id=254068,00.html