I was sent this account from an anonymous participant at a recent Tax Seminar given by the US embassy in Norway. It was held in the basement fellowship hall of the local American church.
The participant did not want his name used, but did want to publish his account of the event.
I have agreed to provide the vehicle for this on Isaac Brock. This report is provided so others could hear what is being presented to Americans Abroad, at least in this one formal setting in Norway. Not sure that it represents any other countries approach to the problems of U.S. Citizenship taxation. I have been assured that the events written about, happened as described, with characterizations those of the sender.
The participant writes:
Invitations to this tax seminar went out by general media—-word of mouth, Reps abroad, Dems abroad, American women abroad organizations. In a slightly modified form, the invite looked like this:
Invitation:
The U.S. Embassy will host a Tax Seminar at the American Lutheran Congregation on Thursday, January 31, 2013 from 6:30 -8:30 pm.
An IRS Tax Attaché (name withheld) from the Internal Revenue Service Office at the U.S. Embassy in London will be the guest speaker and will present information on tax issues for U.S. citizens overseas. After the presentation, there will be a question and answer session.
If you are interested in attending the Tax Seminar, please contact the U.S. Citizen Services section by e-mail at xxxxxx@state.gov Please bring you passport for identification to the Seminar.
Personal note: This was apparently an invitation for attendance by sign-up only. No unregistered walk-ins allowed.
I replied to that email address, and the confirmation came back with an IRS logo cut and pasted to look official, I guess.
Thank you for your interest in the Tax Seminar. We have added you to our guest list. We look forward to seeing you there.
Seminar:
On the day of the seminar there were ~45 attendees and they filled about half the seats in the assembly hall. Since registration was required by email, the reception was manned by 3 women with the list of the attendees names spread out equally in front of them on four sheets of paper. Two Local (in-country secret service?) agents guarded the exterior and entryway of the church.
The first greeting received at the door was “We need id!” I see now that the invite stated one should bring one’s PASSPORT. One gentlemen had politely told them no, (unsaid if whether he forgot for flatly refused), which was first met with a negative response and tone, but was corrected by the woman in the center who allowed that gentleman in. All attendees were checked off the list.
A pamphlet with some tax basics and an assembly of IRS due dates and telephone help numbers was provided at the door.
Introduction:
The introduction was by the Ambassador, whose senior staff administrator was at his side. He stated that his philosophy was that every person should be able to file their own taxes. He finished the introduction, then stated that this was the last opportunity to ask him questions. (Note: I guess he did not want to be part of the Q & A at the end of the session.)
Audience profile:
The audience primarily consisted of 45+ persons. There were a few people that looked obviously like young corporate-sponsored family types, whose accountants certainly ought to have been doing things correctly during their short stay. However, the majority of the audience were long-term Norway residents who had just learned of the offshore jihad FBAR and FATCA searches via media reports.
None of them mentioned they had received any helpful advice or instruction from US government about what to do. There was no indication that any were using tax accountants. None exhibited strong understanding of the various form(s) requirements. Some of the attendees were:
–A woman who had lived Norway for 40 years and had never known that she ought to have been filing.
–A 65+ man, who spoke bad English, who had obviously found out the consequences of being a U.S. person.
–A U.S. person (male) with good English, who was there not only in his own interest, but also in the interest of the widow of his U.S. father.
– -A man in his 50’s with an East Coast accent, whose local wife was programming FATCA software at the bank.
–The balance were people who had no accountants and had little understanding of the concepts of filing U.S. tax forms with all the complexity of ‘excluding this” and “crediting that” and FBAR’ing your bank accounts. The majority did not seem to understand the basics of filing.
The Presentation:
The presentation was made by a very average woman approximately 50 years old, who had come from the head European office. She presented herself as the IRS Tax Attaché and much of her background was audits and penalties. You would have thought that someone who had experience in actual income tax ‘filing ‘questions would have been a better choice. That is who people wanted to hear from—rather then a message delivered from a “Penalizer”.
The presentation was just horrible.
Obviously she no experience or expertise on how to present a subject in an organized manner to an audience. She began babbling, continued babbling, and finished babbling. She mentioned declarations, exclusions and credits, but gave no form numbers or explanations of how or why. She provided little in the way of the overall filing principles and processes.
She mentioned the FBAR, but gave no explanation about its contents. FATCA Form 8938 wasn’t mentioned by name. She told all kinds of side stories about tax evaders. She talked periodically about the US / Norway tax treaty, which actually was not even part of her area of expertise or policy authority. (IMO, that is the policy business of the Ambassador, and he should have spoke to it).
She threw in lots of little barbs about tax evaders, hah, hah, hah. At one point, she mentioned harshly how audits could be done. “We might actually travel up to this country and perform the audit here”
FBAR questions:
She was questioned as to how many FBAR’s had been filed previously, to which she emphatically responded “millions”, with a facial expression, body language, and delivery as if she knew that this not to be true. Or, to be fair, maybe she was talking about the total number of FBARs filed since the beginning of the 1970 Bank Secrecy Act! There certainly are NOT millions filed yearly.
Some of the things she said during her babble, made me wonder if she had been reading the Brock site. If not, she either was ignorant herself, or she out and out lied about the number of FBAR forms filed.
She stated the penalties for FBAR incorrectly, and had to be prompted to mention that the $10,000 penalty could be per account per year for a non willful failure. The difference between ‘nonwillful’ penalties and ‘willful’ penalties was not discussed. The $100,000 penalty never got mentioned, whereas the 50% penalties were bundled together with the $10,000 penalties.
OVDI was not mentioned. A ”streamlined procedure” for past failures was mentioned but not explained. She said often that people should file if they hadn’t been doing so, and that they should include an extra explanation as to why they had not been filing.
Record Keeping:
She stated that people should maintain their records for 4 years, then burn them. This was followed by her cute story about shoe boxes with year numbers on them. (Shouldn’t that be 7 years?)
Benefits of Citizenship:
At one point, the Tax Attaché started talking about enjoying the benefits of citizenship. At this point, the ’40-yrs-in-Norway’ lady responded “What benefits?”. To that question, she responded correctly “You have the right to enter the United States and work whenever you like” (and no more). That was the sole benefit. This was the answer that made me suspicious that she had been reading IBS. 🙂
The “R” word raised:
At one point, a woman asked “What about the number of renunciations connected to this”? The ambassador’s assistant squirmed around in her chair and answered by saying renunciations would be met with strict enforcement and audits, and that no one should consider renouncing if their intention is to escape tax.
Renunciation consequences:
The Tax Attaché further stated that the act of renunciation could result in serious consequences of not being allowed back into USA and some other negative blah, blah, blah. She then went on to explain some of the filing procedures for renunciations—of filing first a citizen tax form and then filing a final non resident alien tax form for the remainder, etc, etc. She was corrected by the embassy staff assistant and implied that some of the threats mentioned were not totally accurate. She had been squirming uncomfortably in her chair during this part of the discussion. I don’t think she wanted the conversation to go this direction.
U.S. Tax Policy Questions:
There were a number of questions that were related to policy—why the US taxes its citizens? Why did they make these laws? When will they stop taxing citizens overseas, etc.? The Tax Attaché answered them. Neither the Ambassador nor his staff assistant attempted to do their job and to represent the U.S. policy! They let the Tax Attaché babble out the answers for questions which had nothing to do with her authority or expertise.
Visa disagreement:
The Tax Attaché mentioned that after some people renounce, their company wants to send them back to USA to work again. She stated that a U.S. visa is then granted, and then ridiculed the person who would do such a thing in the first place. As she was stating that a visa for those that renounce would be granted, the Ambassador’s assistant visibly upset bounded out of her chair and blurted out a comment implying something like “we won’t allow that to happen here”.
In Conclusion, Mission Accomplished?
The presentation by the Tax Attaché ended without a request for further questions. However, she did say to ask questions after the break, one on one, to the U.S. representatives in attendance.
In my opinion, her presentation consisted of babble and showed no real comprehensive understanding the process of filing taxes overseas and impacts on Americans abroad. The content was of NO useful value to people who already had a reasonable background in these matters. For newbies, they gained little but new twinges of fear.
What she did accomplish, was to weave in enough threats of penalties and examples of evaders to make the point, “you must comply”. Her advice was to file the required forms and attach a nice letter with the filing explaining why it hadn’t been done so previously. This was pleasantly presented and primarily received with courtesy. There was no explanation about what constitutes reasonable cause, what was a ‘low risk’ profile, and how the IRS will review, accept or reject, and what the audit probabilities were. However, we were certainly informed about the penalty potentials for failure to comply!
What happened to the Attendance List?
At the end of the meeting, a woman who had lived 40 yrs in Norway asked what they were going to do with the attendee list. The senior staff consulate woman stated that it would not be kept. However, the emails which were received by the embassy to request attendance, and the confirmation emails sent back out on an IRS letterhead couldn’t be erased, could they? Don’t they live forever on email servers?
A Plea to the Ambassador:
One gentlemen then pleaded the case to the Ambassador, beginning by asking him to write a report to the Executive branch (he visibly stumbled as if he couldn’t stomach saying the president’s name), explaining that none of the people in the room understand how to do their U.S. taxes, as it is so complex.
The Ambassador’s first response was something like, “Well,… NOW they do, don’t they?”
The gentleman further stated that people don’t come to this country to evade taxes (top marginal rate nears 50%). To which, the Ambassador escalated the discussion further—stating that “They just needed to file!” End of story. “They (IRS?) aren’t after normal people. They are after rich people with millions of dollars. “
To which the gentleman responded that “No, they are not just after the rich, they were also looking for normal people. As of Jan 1, 2013, with FATCA, they were looking at all of their accounts (and his) and ordering the Norwegian banks to go out and find US persons. “
The Ambassador did not seem to comprehend what was happening with FATCA at all. His response was to the tune of “What are you hiding?” “If you don’t have much money, they won’t get you. They are not after you if you don’t have a bunch of money. Just file it, Use form 7770, it only takes ten minutes.”
To this, the gentleman (in his 50’s) responded that indeed people his age ought to have some retirement savings (which could be construed as “being rich”), and that the penalties that they were giving out were not just about filing today, but also about failure to file for the last eight years.
The Ambassador had only been in Norway a couple years, so he apparently couldn’t understand anything about the past IRS OVDP processes.
During the ensuing conversation, the Ambassador stated a number of times to “Just file it, what are you hiding?” And, final warning, “You better file them now or the penalties are gonna be a lot worse later!”
Get Professional Help
His last response was “If you have money, then you should have been getting professional help.” (contrary to his intro speech about filing your taxes yourself)”. By this time, the body language of the Ambassador looked like he was going to club the guy with his cane.
Time for cookies and coffee
At this point, other people began cutting in, as the coffee and cookies were ready and many people were anxious to have a private chat with the Ambassador. A number of ‘Stepford-wives’ types told the gentleman that they had just sent their FBAR’s in, and they hadn’t gotten any penalties. (YET!)
The event broke to cookies and coffee.
The gentleman left, and at that time you could notice that the 2 or 3 US ‘agents’ in the room had their eyes open and watching carefully.
Seminar purpose? Scare the bajeebers out of you?
So, as you can see, this event provided no useful instruction about how to do ones U.S. taxes. The majority of questions really related to policy questions, to which the Ambassador did not respond or help with. The Ambassador never elucidated on any U.S. taxation policy matters, a subject the audience had a keen interest in.
The event, however, did succeed in its main objectives, which was to take attendance, to encourage and scare the bajeebers of never-before-filers. Mission accomplished with this audience of older residents who have had no idea that the government of their ‘person hood’ has been preparing to ‘frag’ them with FATCA.
In my opinion, this meeting seemed to show that, under pressure, the Ambassador was chosen to deliver a message, “We are going to get “rich people!” (the definition of which could be adjusted according to current political whim). He was perfect for the job, because of his innate narrow perspectives of what living abroad means.
Bottomline, the US citizens in Norway were to follow the orders of the US government & his boss, period! He was not here to serve the interests or concerns of the US citizens living there. There was absolutely zero recognition of, or consideration for, the innate innocence of the U.S. ‘persons’ present in Norway!
The meeting also showed that the person leading the professional embassy staff was one who believed that the US citizens living in Norway must follow the laws of USA. Renunciations will be processed under her authority, and will not be viewed favorably.
This presentation confirmed for me that the US ambassador solely represents the Executive Branch of the United States. That ought not to be a surprise. His job includes the duty to see that the citizens located in Norway follow U.S. tax laws. He does not represents the interests of the citizens that reside here. It is not his job to report their concerns back to the USA. His executive duties are not like those of a Congressman who works for constituency interests. As an Ambassador, he has one constituent, the US State Department and by extension the President. U.S. Citizens in Norway were not his constituents, and he did not appear interested in advocating for their interests.
However, he does arrange for good cookies and coffee! 🙂
@SchweizAmerican,
re; “………or you are under someone elses’s influence in making the decision.”
And what if renunciants are directly influenced by the words and actions of Geithner, Shulman, Levin, Baucus, Schumer, and all the other US appointees and politicians who apparently have a hate on for those living longterm or permanently ‘abroad’, and the many who were actually born outside the US? If the US can’t even scrape up a paltry 2 million to barely consider our concerns http://www.nytimes.com/2012/07/31/us/politics/presidential-commission-sought-on-us-expatriates.html?_r=0 http://www.govtrack.us/congress/bills/112/hr6263 , then that tells me that enforcement and scapegoating is their only goal. It’s like saying that those who left countries with oppressive policies must never ever acknowledge that was the motivating factor – for fear of official retribution – and a blocked fire exit.
@USCitizenAbroad –
This has been a concern of mine for a while, since US border guards started asking Cdn-resident USCs if they had been filing tax returns, and telling them to start, if they haven’t. One problem for cross-border enforcement at the moment is that it’s hard to rebut a taxpayer’s assertion in a reasonable-cause letter that they had no idea that they were supposed to be filing tax returns. A database of people who have been formally told they should be filing, in one context or another, is one way around the problem.
Like a couple of other commenters, I suspect this is one reason why admission to the Oslo forum was so formal. There’s no reason at all to control admission, require passports and so on, otherwise.
Someday, maybe someday soon, someone with an ignorance-based reasonable cause letter is going to be completely nailed.
@Badger,
If you feel your renunciation was affected by US policy, then you could theoretically make the case (not sure how feasible) that your renunciation was void (there is an administrative procedure for this in the Immigration and Naturalization Act). Of course one would only consider such a procedure after citizenship-based taxation is repealed in which case the US might be compelled to launch an amnesty to attract “global talent” back.
In all honesty, an increased awareness of these issues amongst highly-skilled non-Americans will force many to seriously reconsider whether to bother to immigrate to the US (especially in todays society where people are highly mobile). US attempts to keep foreign METS (Medicine Engineering Technology & Science) students at American universities from leaving the country after graduation will fail spectacularly if the collateral damage of FATBARDT is made for everyone to see.
In Switzerland, awareness about US taxation complications is covered with a lot of frequency in the media and I have come across many educated professionals here (Swiss and non-Swiss) who have openly expressed no interest in applying for the green card lottery or even considering a long-term career move to the US precisely because of the complications of being a US person would entail. As of today, the US Embassy in Bern is the only American Embassy in the world (that I have seen, http://bern.usembassy.gov/service/renunciation5.html) which has a special page (within the embassy website and with a link leading to it in the main homepage under US Citizen Services) exclusively covering all the long list of all details and requirements for renunciations with even a special e-mail address exclusively for this: BernRenunciations@state.gov. I’m surprised the US Embassy in Ottawa and other Consulates in Canada don’t have this (I may be wrong).
What Schumer and so many myopic home landers fail to recognize is that they rhetoric and policy will only discourage the type of high-skilled immigrants the US needs to attract to remain a competitive economy (notice how the US has been going down the ranks as Switzerland is ranked 1st in the WEF rankings). What I find idiotic is how the IRS and Department of Treasury are hounding Switzerland for being a “tax-haven”, yet Switzerland consistently ranks in the top 5 foreign direct investors in the US economy (number 1 in 2010) and Swiss companies in the US pay the most US corporate income tax (in total value) amongst foreign subsidiaries. More details found here: http://www.amcham.ch/publications/downloads/120925_Swiss_Foreign_Direct_Investment_in_the_United_States.pdf
@CHF, I think that as word gets around, fewer of those with skills and the option to go elsewhere, will choose to relocate to the US. The US will lose would-be immigrants, and current citizens to other less punitive countries. Particularly as word spreads of the FBAR and FATCA treatment of pre-existing homeland accounts. FATCA will see the US lose capital – both from those outside the US who will or already have pulled their US investments, and from those foreign non-residents who don’t like the US domestic bank’s portion of FATCA and will ‘hide’ their money elsewhere.
You can see here, that remittances leave the US, and very little returns. http://www.economist.com/node/21553458
With FATCA, those of us abroad will avoid holding any US assets. And those with no US tax obligation – like Canadian-only ‘snowbirds’, and those looking for retirement homes in Arizona and properties in Florida are going to seriously reconsider any relationship with the US which might entangle them in US tax complexities and pitfalls.
http://en.wikipedia.org/wiki/Quisling
The term was coined by the British newspaper The Times in an editorial published on 19 April 1940, entitled “Quislings everywhere” after the Norwegian Vidkun Quisling, who assisted Nazi Germany as it conquered his own country so that he could rule the collaborationist Norwegian government himself.
The ambassador, working for the Nazis in Washington.
April 18/2013 Norway signs IGA: http://www.assetservicingtimes.com/assetservicesnews/article.php?article_id=3826
What should we expect out of a country where the assets and income of any resident can be retrieved from the internet—–on an iphone, in a singles bar. Losers.
The Norwegian IGA has the closest thing to reciprocity that we’ve seen yet.
See http://wealthmanagement.com/high-net-worth/two-more-countries-join-united-states-exchanging-tax-information.
The devil is in the details when it comes to determining what “similar” means.
[Does this deserve its own topic?]
@ttdot,
That probably does deserve separate discussion. Tim pointed out something about this that interesting…
I do think it means that some countries are finally realizing this is a one way street without DATCA (FATCA reciprocity) Maybe the Administration is hoping for a House take over by the Dems in 2016 so then it can push its reciprocity through.
From a KPMG Ireland publication:
“Notably, all IGA’s contain a “favoured nation” clause permitting the country to avail of any more favourable terms included in IGA’s subsequently negotiated by other countries with the US.”
http://www.kpmg.com/ie/en/industry/fs/investment-management/pages/fatca.aspx
Would the “Coordination of Timing” (FATCA reciprocity) clause in the Norway IGA be considered a “favoured nation” clause? If yes, then countries that have signed an IGA (at least Model 1) would not have to “get and exchange” information with the US until the US can reciprocate. Any thoughts?
Let me look at the calendar—let’s see, president budget released at the beginning of the week with page 202. Norway signs agreement at the end of the week.
Whoop, there it is.
That strikes me as funny. Norway won’t do the FATCA unless the USA does a reciprocal FATCA. The USA won’t do a reciprocal FATCA unless Norway does the FATCA. That is one crazy dance where each is looking at the other to take the first step. That almost looks like the FATCA is not going anywhere. 🙂
I asked Allison Christians to look at the article 4 that Wealth Management quotes as “unique”, and she has a more nuanced response about this language. It actually is NOT new, and is in the original Model IGA, but not in the UK or the Mexico one…
Here is her read of the “best and the brightest” Treasury wordsmiths muddied water language in the IGA.
http://taxpol.blogspot.ca/2013/04/thoughts-on-you-first-no-you-first.html
BTW, James Jatras has a great observation after reading Allison’s blog above…
“In short, even the pretense of reciprocity is entirely negated. Under the IGA, the non-US “partner” is told “you must provide the specified information, period”. The US responds, “and we also will provide information, unless we don’t want to”.
This is true and if you start to read tax treaties you will see that the US always has a saving clause which has the same effect as the above citation. Essentially this means that when the going gets tough the tax treaty is a one way street…probably better to try to avoid that alley.
Simply put, the U.S. is the schoolyard bully shaking-down all the other kids for their lunch money. If only those kids would just band together – most bullies are just snivelling cowards beneath their bluster and I don’t believe this one is any different.
I can’t wait to see what happens when trillions of dollars in direct foreign investment begins to flee the U.S. We’ll see who has the upper hand then.
The European nations have a great need to get ahold of tax evaders. With rates as high as they have, the cultures have evasion and avoidance built right in. In the good old days, it was outright obvious in the Scandinavian countries, with loads of cash business throughout so many sectors of merchants and suppliers and private dentists and doctors. In the 80’s it was downright open. Nowadays it happens behind closed doors.
UK Contractors are well known for evasion. I still see contract offers coming out of UK with income-splitting schemes and multi-country schemes.
THese countries know that US is a great Place to put Dirty Money. They know of US’ favorable conditions for non-resident passive taxation. They are just dying to get at it.
These European nations are dripping of codependence upon upon US, just like happens with any abuser. When threatened, they will give up anything just for Another promise. Give, give, give, and hope they get some Crumbs in return. The Crumbs don’t come, but they give anyways, so as not to get the 30% backhand.
http://en.wikipedia.org/wiki/Codependency
http://psychology.wikia.com/wiki/Codependency
Relevant observations, Mark Twain. The US likes all other “lesser” countries to be in a co-dependency state. Fits right in with the analogies to bullying and abusive partner relationships. More and more people in whatever relationships recognize those behaviours as unhealthy. Other countries’ recognition?
I’ve seen that behavior in Sweden for the last 20 yrs. THeir reactions just match up with Everything I had Always thought. While I was hiking today I finally put those 2 concepts together.
It is exhibited with Europe’s military and foreign policy. They gladly delegate it to USA, so as to keep in the cocoon of family and personal issues. Then they have to follow along as puppies, even though they just got their nose rubbed in it.
http://www.iexpats.com/norway-signs-fatca-deal-with-us/?utm_source=rss&utm_medium=rss&utm_campaign=norway-signs-fatca-deal-with-us
Cross posting…
Interesting DATCA development with a Tip of the Hat to @Tim for pointing the article out.
Janet Novak of Forbes, reports….
U.S. Seeks PNC, Wells Fargo, JP Morgan Records To Find Tax Cheats–From Norway
I would really encourage you to read it….
In the latest example of how the world’s wealthy nations have ramped up cooperation against offshore tax evasion, the U.S. Department of Justice is for the first time using “John Doe” summonses to ferret out suspected tax cheats from another country—specifically, the Kingdom of Norway. Since July 19th, the DOJ has quietly filed petitions in nine different federal district courts asking judges to approve summonses for records that could reveal the identities of Norwegian taxpayers with secret U.S. bank accounts and of residents of Norway who should be, but aren’t, paying taxes there.
To which I commented…
These FATCAnatics in Treasury are very clever and determined, I will give them that. If they can not get Congress to go along with their FATCA IGA reciprocity plans by imposing a full blown domestic DATCA on USFIs, then they will just use the U.S. Treasury and the DOJ to do the work for Norway to get what they have promised in IGA Article 6.
This was obviously the quid pro quo for Norway signing the IGAs. In exchange for FATCA compliance and as a reward for signing up, we will do the legal hard yards in America to get your ‘supposed’ tax cheats for you.
One BIG difference being, they will ONLY be looking for Norway Residents, and NOT Norway Citizens living in America. Very different that what America demands of Norway, where the U.S. wants all Citizens reported no matter where in the Universe they live, work or pay taxes.
Now, let’s watch and see if they repeat this model for the other 6 IGA model I signers! You would have thought that they would have done this first for the UK, as a reward for being the first signer of an IGA. Maybe the UK in it haste to join up, did not drive as hard of a bargain as Norway?
Of course if Treasury says, as they always do, that they are in negotiations with 70 countries, then you might as well shut down the DOJ from any other domestic work, as the U.S. being the biggest tax haven of all, they have a lot of summons work ahead of them. The USFIs will be doing nothing but responding to endless John Doe requests. That will make them happy!
Time for the Norwegians to get their money out of USA banks and send it to a stable country. Pretty soon the whole country will look like Detroit.
@Mark Twain, I’ve been trying to legally get a small amount of money out of the US since early June. I’ll have to call the US financian institution again tonight to see what issue they invented this time. The previous issue was that the US financial institution refused, due to US financial secrecy laws, to provide my Swiss bank with the information it sought to prevent money laundering. Thus, my bank was forced to come to the conclusion that it cannot take the necessary measures of combatting money laundering since the US is not cooperating.
I would have likely had the money over a month ago if I had pretended to be a corrupt US politician, or drug lord millionaire, but since I’m an honest minnow, I’ll have to accept the financial loss of doing things legally.
How will the rest of us get our IRA’s out?