Updated on September 19 with an interesting comment by JC to the Robert Wood article:
Which IRS #Offshore Amnesty Program Is Right For You? http://t.co/Iktw9LTdLI – U can't choose all of them, but you could choose none of them
— U.S. Citizen Abroad (@USCitizenAbroad) September 18, 2014
The above tweet references an interesting article by Robert Wood. Many people consider the question of which vacation destination to go to. As any “Homelander” will tell you, all Americans abroad are probably “offshore tax cheats” who simply “don’t pay their fair share”.
Therefore, it’s reasonable that while the whole wide world (less Americans abroad) wonder about their next vacation destination, Americans abroad worry about:
“Which IRS Offshore Amnesty Program Is Right For You?”
It’s 11:00 p.m. – Have you worried about your amnesty program today?
Readers of this post are encouraged to post some comments on Mr. Wood’s blog. I don’t believe that he differentiated between Homeland tax cheats using offshore accounts to evade taxes and Americans abroad who need offshore accounts to pay their bills.
One commenter filled the void left by the failure to acknowledge Americans abroad by writing:
“Amnesty is often used to express “freedom” and the time when prisoners can go free.”
This is the spirit in which many accidental taxpayers living abroad view all of the offered programs. Just drop 10-20 thousand, if your lucky, and buy your way out. Others can’t afford this and are trapped. They have no choice but go underground. (Maybe buy a passport without US place of birth, bank with the BRICS, lie…anything to shed their US-ness. This is called survival. To those deemed American there is nothing they are more ashamed of and try to hide.) In essence the result of all this nonsense is US residents can never leave the US for an extended period unless they are terribly wealthy and have fancy accountants that can merge their two disparate tax obligations. Everyone else can never come back to live on US soil. Those that are forced underground, the less fortunate as usual, can never visit family or friends again, can’t holiday in the US…Hell, they can’t even fly over the US least their plane needs to touch down. The amount of ill will this is causing not only to those living abroad but to their family and friends on US soil is immeasurable. The Democrats just might be handing the election to Rand Paul next go-around. They are still stuck in thinking this is about curbing tax evasion and actually support CBT. I’d wager not one has read the recent Democrats Abroad FATCA survey, from their own party! (https://www.democratsabroad.org/group/switzerland/democrats-abroad-releases-fatca-research-report) If there are 7.5 million with US branding (and that number is low as it does not include those who do not self identify as US folks) and you couple that with their affected family/friends in the US the number expands exponentially. This could become a serious single issue voter block. It would behoove the Democrats to wake up.
Seeking amnesty precludes you are guilty of a criminal offence and are seeking forgiveness. How is a child who left the US after birth to non-US parents and never returned, a child born abroad and never returned, an expired green card holder guilty of anything? If you have completely absurd laws such a citizen based taxation you can not assume sane people intuitively know these absurdities exist. How many living in the US know they are the only country that does this, even know what CBT is? I’d wager not many as it is counterintuitive. Taxes are for services, if you don’t get any what are you paying for? The only argument put forth from the usual commenters with IQs of 3 is the black-op helicopter rescue if you decide to holiday in Tora Bora. They actually believe it is true! Aside from that there is nothing else put forth because there is no possible way to defend CBT.
The next problem is the determination of willfulness. So you have a person whose mandate is to collect money, does not have your best interest at heart, subjectively deciding that you willfully or not understood something that makes no sense to any sane person in the universe. Great…that’s right up there with Russian Roulette!
A second comment referenced in the following tweet includes:
Why neither #OVDP nor #Streamlined will lead to freedom for #Americansabroad – It's all stick and no carrort! http://t.co/AYcXLmyVNr
— U.S. Citizen Abroad (@USCitizenAbroad) September 19, 2014
While pointing out offshore amnesty programs, the article does not mention that once one goes through “amnesty” that one’s relative freedom is determined by where one is tax resident. If in the U.S. then freedom. If resident outside the U.S. then not relatively free which is certainly not a “carrot” to go through these programs.
I reference: “Dear Mr. President, Why I’m Leaving America” where, Marilyn, a tax compliant dual US Canadian citizen tax resident in Canada speaks about her contemplation of giving up U.S. citizenship:
“We are contemplating this “not to avoid paying U.S. taxes but because we strongly object to a system that is blatantly discriminatory and unfair to law-abiding Americans living outside the country. In addition, it has become too expensive, too difficult, and frankly, too frightening, to try to comply with all of the tax filing requirements that now apply to citizens living abroad.”
Any US persons tax resident abroad should visit the Issac Brock Society webpage: http://www.isaacbrocksociety.ca/
I note with great interest the part of Marilyn’s comment that describes the “fear factor involved in U.S. tax compliance! Another idea implied by the comment is this:
Americans abroad will not solve their problems by coming into U.S. tax compliance. By coming into U.S. tax compliance they will enter the absolutely impossible world of “living in U.S. tax compliance”. As the nation of Eritrea has demonstrated it is possible to tax your citizens abroad in a simple manner. Perhaps the U.S. could emulate the kinder and gentler nation of Eritrea which levies a flat 2% tax on its citizens abroad.
Compliance is the financial “kiss of death”.
If Republicans are dead-serious about killing FATCA; then the following needs to occur.
1) Remove FATCA completely – kill the law completely.
2) Financial reparations for those expatriates who were “penalized” by FATCA – in other words – the US will have to put them in the same financial position they were prior to the signing of the HIRE Act.
3) Complete and total amnesty “grandfathered” to 2010 (I’d prefer 2008) – the signing of the HIRE Act.
4) Those who wish to exit the USA entirely (after being disillusioned by the money-grabbing acts of the government) are allowed to do so without penalty.
Only then will it be able to be made right.
As far as the idea that Americans abroad are protected by the US government, one only has think of James Foley and Steven Sotloff, Daniel Pearl and many, many others who were not rescued. In fact, Mr. Foley’s parents were told they would be prosecuted if they went against US policy of not paying ransoms.
How anyone could believe one needs rescuing in first world countries, I’ll never understand.
If you put yourself in a position where those heliocopters DO have to come rescue you? Well, you’re going to get a big fat bill from the U.S. government. Such rescues are not free usually and there are fees! Aside from that silly argument most expats are not in countries where they would need to be “rescued” in the first place and in the second many have second citizenships or are those who don’t even know they are considered American to begin with. Those people would go to their own governments for help in such cases. I’d like to see over the last ten years exactly how many such rescues have been carried out and where? Because out of seven million expats I hardly think there have been many and if there are some I doubt the majority were carried out for expats! People who reside in the U.S. and then go off to danger zones would more than likely be the most frequent users of such services. Not expats at all. Matter of fact being an American in many places is not a plus but rather puts a bigger target on you. Watch the documentary “Terror at the Mall.” The ONE American in that place in Kenya mentions that being an American and trapped in there with her children made her a bigger target. Such is the case in a lot of places. So those mentioning how we won’t be able to be rescued might want to add that the need for such would be less without the “American” place of birth being known.
They might also want to note that FATCA puts people in such places at a far greater risk now. Had those who attacked that mall in Kenya had access to the banking data of locals who had a U.S. birthplace things could have been horrendous for those people. I don’t want to speak for Americans who live in such places as they already know the risks they face everyday. FATCA places them at even greater risk and I am sure they know it.
Any of the amnesty programs will automatically put you in the position of being a delinquent tax filer and you will be treated accordingly. Even with Streamlined, it’s up to you to prove reasonable cause, rather than the IRS determining culpability based upon a preponderance of evidence. No one is going to thank you for coming clean on doing something you should have been doing all along, no matter how unfair that something might be. That’s the law, and the IRS is there to enforce it.
As far as I can tell, the 7.5 million does include people who do not consider themselves to be American. The U.S. government has demographers who figure out what the estimated overseas U.S. citizen population is, including unregistered births. Most foreign censuses have figures for the number of people born in the U.S. and it is a lot less than the State Department figures. Maybe this is why the voting turnout is so poor?
In my daily FATCA roundup, I read one article from Sudan in which the author implied that some Muslims suspect that FATCA is a U.S. plot against Muslims to get all of their information. O.k., lots of countries think FATCA is a plot against them, but this is not a good sign.
I never use my U.S. passport unless I am going to the U.S. because of the terrorism risk, not that I go anywhere dangerous. The U.S. did try to rescue those men, but it obviously didn’t work.
Check out this link to CNN.com
It is an interview with James Foley’s mother. It is shocking. She confirms that that the U.S. government told her that she couldn’t raise ransom money without violating U.S. law. In other words, they told her that she could NOT take steps to save her son. (Obviously the U.S. government had no intention of taking any steps.)
How you feel about this is whether you view James Foley as primarily:
1. The property of the U.S. Government (in which case he belongs to them and the government can do what it pleases, including warning his mother against a rescue operation or ransom); or
2. A free citizen of a country and and a “person” with a family.
The U.S. government views its citizens as property.
What is very clear is that because of hatred for the U.S. (which is growing daily), it is dangerous to be a U.S. citizen. ISIS has made it very clear that they are killing U.S. citizens because of the conduct of the U.S. government. They will target more. They targeted at least one British citizen because of British support for the U.S.
So, not only is the U.S. not willing to help protect its citizens (wherever they may be in the world) but the USG is actually causing their deaths.
You can be sure that the FATCA disclosures will make the kidnapping of U.S. citizens much more frequent.
How do you like your freedom now?
Its not just 7.5 million. It is an additional 13 million green card holders who left America years ago and get taxed too. I wonder- do they get the helicopter – saviour treatment in a pinch too? Or what exactly are they paying for? AH! They pay for the right to go back and work in America with a green card if they so chose, and even if they are retired…. and even if they never intend to go back…… they get the “amnesty” deal too!
These stories make me angry. All of this makes sense when applied to the Mitt Romney’s of the world who tried to avoid US taxes by stashing money outside the US. For THEM amnesty programs made sense.
None of it makes sense when applied to a middle class person living outside the US.
I have never seen any news that Romney didn’t pay all the taxes required. He is rich so he must be guilty of something right? All people who live abroad are rich so they must be guilty of something right?
The drum beat goes on for FATCA and generally harsh taxes and fillings to only apply to the rich.
They need ex-patriates to pay the bills for important government expenses, like hiring all those Border Patrol agents to stop people from moving into the United States, getting jobs, and paying taxes.[/SARCASM]
We have let the government act like our masters instead of the other way around. They did it so gradually that it was not noticable, just like putting a frog in cold water and gradually heating it until it is too late for the frog to jump out and are consumed b y the heat.
It will be almost impossible for us to reverse it. We subsidize farmers because we all eat. During the great depression, which was a deliberate attempt to make most citizens dependent, the government bought the farm products and gave them to dependent families. People were hungry so they accepted the help. From there the water kept getting warmer, so now we have large companies that could stand on their own, taking taxpayer money and distributing it to their shareholders.
The only way a smoker can stop smoking is to just stop and the only way we can stop the dependency creep is to just stop. 66% of all checks and work compensation comes from tax money with 34% paying the bills with their small businesses or jobs.
We cannot pay back the money we borrowed, so our currency will be worthless soon and those who are dependent will probably become the new robbere at gunpoint. Anarchy will be rampant for a generation or even two generations, until a dictator gains control and imposes order form the mess that corp and personal welfare caused.
@Neill I probably shouldn’t have mentioned Romney – you’re right, nothing proven. There are allegations that he took an amnesty program from the IRS and paid penalties for hiding money overseas. Regardless, it’s people who did that the US is allegedly trying to target & there are people who have money hidden overseas to avoid taxes (and FWIW there are Canadians doing the same thing). The problem is that the US with CBT is targeting nonresidents, if they want to find ways to catch US RESIDENTS not paying taxes I have no problem with that, as long as they can do it without infringing on the rights of non-residents.
And yes Harry Reid said he hadn’t paid any tax over a number of years. Nothing every proven because it was likely a lie given that an accountancy firm certified it was false.
The Obama team used these tricks to damage a mad that would have done a damn sight better job than the joker is doing now. I hope your enjoying the fruits of rich hating.
U keep saying… stashing… how are people stashing their money… if it was made in the US… taxes have been paid on it… what is it anyone’s business what they do with it after? If the money is made outside the US… money has been taxed there… I ain’t an american yet I am being treated as one… with a GC without any representation… Immigrants to the US had lives before the US… so we are to be punished for it? We thought once the GC expired… its over… who knew we became tax slaves to the US… who has to pay the US to leave.. like a citizen… which I can’t afford to do. There is no hiding funds… its been taxed already… no matter where u are… its been taxed… US wants to make believe all that was made in the US so they want a piece of it… this is what I say… ohhh…. look at the bird.. its flipping them off…
@US Foreign Person – I agree with you. It is nauseating – paying Obama care supplemental taxes on non US based investments, paying, paying and paying like the US is milking a cow anywhere in the Universe I happen to live and make money – and get nada in return – except that ‘right of return’ to the USA. Actually, I truly believe in American principles and love the US – but I have nothing but disgust for this Administration and the way the US government treats its citizens living outside the USA.
@US Person Foreigner
I think the best way to get policy change for greencard holders is to make university students abroad aware of the situation. Over the next few months, I will be making over 300 students aware of US government policy in this area. If they tell this to ten engineering students down the pub, so be it. If they all decide to go to Australia or Canada or Singapore instead of the U.S., so be it. Taxation without representation leads to tyranny.
I’ve been trying different ways to explain FATCA to people not familiar with the situation and thought about the bank’s approach to the FATCA data witch hunt.
FATCA Data Process
The Bank charges you with criminal offense of ‘US Personhood.’
The bank’s prosecutors send you a form to defend yourself.
If found guilty, the sentence is your data goes to the IRS.
If you don’t defend yourself, you’re automatically convicted in absentia and your sentence is your data goes to the IRS.
The bank acts as judge, jury, and executioner.
I think this pretty sums up the FFIs process to data collection.
Re: Stashing, here’s what I mean. I live in Canada. I pay Canadian tax, and have to include income on my US based investments (yes, I still have some mutual funds in the US that pay distributions every year). AFAIK, the Canadian govt has no easy way of verifying that I’m correctly reporting my foreign income. Now, the total amount that I get from this isn’t large, but if I were wealthy it could be. So, as a Canadian resident I need to file taxes on all income I get anywhere in the world. Yes, I already paid taxes on the original money I invested, but that doesn’t stop me owing taxes on gains/income from investments.
The original tax amnesty & foreign disclosure programs in the US were aimed to stop US Citizens (should only be residents) from putting their money outside the US and not declaring income. As I say, I shouldn’t mention Mitt because it is too politically charged, but there were people like him with substantial investments outside the US who took amnesty programs rather than being charged with tax evasion when the US started getting access to info on foreign accts. If they limited this to residents it would be a reasonable thing to do.
Now you have to recognize a few facts. The government estimated an annual tax loss of $100b a year for overseas accounts. It turns out that when investigated this number was totally made up. Despite decimating the Swiss banking system they have gotten $6b and this involves balance penalties that are 100s of times greater than the tax owed. We also know that the people who paid the most were people with small balances. Do you smell a rat here? It’s all lies.
America has made it’s tax rules so complex that anybody with a foreign account is likely to be non-compliant. They have special punishing tax rates, punishing penalties, interest on all this stuff and special rules for foreign accounts.
Immigrants to the US have foreign accounts. People who leave the US have foreign accounts. People who have relatives abroad can end up with foreign accounts.
The democrat’s plan was to tell you rich people were the bogey man because they hid their money overseas. They told you that if he rich just paid a little more things would be great for you. They made up a bunch of rubbish about how much money they would get. Now the money is not rolling in. It’s a total joke. The costs for everybody went up. You’re still buying it.
There really isn’t much money to be had taxing the rich. They really need to tax you. That’s what FATCA is about. If they can’t get your tax money they will get you with the renunciation fee.
Here’s is how to explain this to Homelanders:
Did you know that YOUR U.S. government claims the right to:
1. Force foreign banks to seek out everybody in the world living outside the U.S. who was born in the U.S.
2. Under threats of penalties and economic sanction, identify all of their income and assets which were earned outside the U.S. and exist outside the U.S.
3. Claim that all the income and assets outside the U.S. must be compliant with U.S. tax laws that apply to Homelanders because that person happened to be born in the U.S.
4. Claim that because they were born in the U.S. that the U.S. can regulate their behavior in terms of: where they can work, who they can marry, countries they may do business with.
5. Because that person, who neither lives in the U.S., nor has income in the U.S., is not compliant with U.S. laws make them pay 50% of the assets to the IRS.
Close by asking the Homelander:
“Do you now understand the answer to the question:
Why does the whole world hate the USA? (It’s not because of the freedom that you don’t have anyway.)
Do you realize that by the time the “Hopey Changey Guy” ends his presidency, the U.S. will be hated with greater intensity and by more countries than it ever has before?
That’s the FATCA of the matter!
There is an 800 lb elephant in the room: the feasibility of enforcement of extra-jurisdictional tax claims on vast scale.
Considering the hundreds of thousands of Canadians with some kind of US-person-hood (as defined by the US), Canada must be the world leader in “illicit unreported offshore accounts held by US persons.”
What is the US Master Plan to collect foreign taxes and penalties from hundreds of thousands of Canadians?
My understanding: it’s difficult if not impossible to collect any foreign tax in Canada because Canadian courts do not enforce foreign tax claims. There is no mechanism of enforcement other than “assistance in collection” by CRA and that requires both a judgement and the exhaustion of all other means. And the Tax Treaty prohibition against assistance in collection from Canadian citizens is not just a policy position. It is treaty law and cannot be changed without active collaboration of Parliament and US Congress.
We need FACTS to counter the fear-mongering and conjecture.
How many Canadians are also so-called “US-persons”? What is their factual % US tax compliance? (based on published stats of foreign tax returns and credits claimed, it seems less than 15%)
Has US ever been successful in collecting tax and penalties from any Canadian citizen in Canada? Any FACTUAL recorded case where a Canadian citizen residing in Canada was forced against their wishes to pay US tax by a Canadian court? What were the cases and how was the foreign tax claim enforced?
Any FACTUAL case of the US intervening in a Canadian estate settlement to seize assets, fighting it out in court, and winning?
Finally: any FACTUAL account of a Canadian visitor to the US being detained on suspicion of taxes owed? (in the countless thousands of blog posts here and elsewhere, I have yet to see a single factual example).
They feel no shame. They couldn’t care less. The english didn’t care either when americans complained of the taxation by England. Nobody in Germany cared either when they moved into the home that used to belong to a rich jew. People raking in the money don`t care if it is a good law or a bad law- main thing is it is a law and they can take the money legally. Only a change in government policies- law- could change that.
You’re right, there’s probably not much they can do, but the US won’t have to do any of those things to benefit from FATCA. They’ll probably be satisfied with the low hanging fruit the millions of threatening computer generated letters will shake out. That includes people who for whatever reason must not be in poor standing with the IRS or the US government itself. That would include people who find it necessary to travel to the US or whose livelihoods depend on it. Many people will have no choice but to comply.
There are indeed a lot of over-the-top claims about that the USA might do to us non-compliant non-filers, and like you I await confirmed news of the first of us to be dragged off in chains to our fate (no news so far). However, some years ago it would have seemed equally improbable that the USA could force foreign financial institutions to share their internal customer records with the IRS, and yet here we are. If it only took the threat of a 30% FFI withholding to get FATCA in place and “voluntarily” agreed to by our own government, what new threat might get CCRA to “voluntarily” start collecting taxes and penalties from noncompliant “US persons” in Canada. After all, they would only be helping a democratic and valued ally enforce the duly approved laws of their land, what could be more noncontroversial?
So while I remain wait-and-see on all these matters, I also am not entirely blase about what the future might hold. We could be surprised on the downside yet again, in time. For now, FATCA has barely gotten started, so we have several years of watching to see what the IRS will do with all this new data. When will the first wave of threatening letters go out, and who will they target?
The Sorrows of Empire