Monthly Archives: April 2015

Michael DeSombre, Worldwide President of Republicans Overseas just submitted Overseas Americans’ Input on Individual Income Tax to the U.S. Senate Finance Committee, especially how FATCA and CBT impact Americans residing abroad negatively.

April 14, 2015

The State Department has estimated that there are 7.6 million Americans living outside of the United States. If Americans overseas comprised a separate state of the Union we would be the 13th largest state by population. Our purpose at Republicans Overseas is to represent those millions of Americans living outside of the United States. It is in this capacity that we write today to highlight two specific issues that significantly harm Americans residing overseas and can be easily remedied. The examples and problems detailed in this submission have been provided by Americans living overseas who have been negatively impacted by the Foreign Account Tax Compliance Act (FATCA) and citizen based taxation (CBT).

Summary

1. Reporting of foreign bank accounts and financial assets as implemented by the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR or FINCEN form 114) violates the constitutional rights of 7.6 million law-abiding Americans overseas and results in the denial of financial services and professional opportunities to the detriment of the individual Americans. The ability of American enterprises to export goods and services is restricted or denied because foreign financial institutions are denying or revoking financial services preventing American enterprises to engage in business outside of the United States. FATCA and FBAR should be repealed.

2. The United States is the only developed country that taxes the global income of its citizens based on citizenship (Citizen based taxation or CBT) when they reside outside of the country. This means that American citizens residing outside of the United States pay taxes both to their country of residence and, additionally, pay further taxes to the IRS. Double taxation treaties do not prevent Americans from being subject to punitive double taxation because many countries tax their residents through mechanisms other than income tax (which are not creditable against U.S. income tax obligations) and America imposes additional taxes (such as capital gains tax and the 3.5% tax for the Affordable Care Act) for which no foreign taxes may be creditable.

3. The United States implementation of CBT results in lower employment for Americans, fails to raise significant revenue and deters successful businesspersons and entrepreneurs from becoming American citizens. It is far more cost effective for any business enterprise (both U.S. and non-U.S.) operating overseas to hire any person other than an American. The extra cost of hiring an American worker hurts not just the employment of U.S. citizens but prevents U.S. enterprises from competing globally and limits any U.S. enterprise’s ability to expand its operations outside of the United States. CBT should be repealed and replaced with RBT.

4. The Senate Finance Committee should investigate the true costs and benefits of FATCA and CBT so that the maintenance or repeal of these provision would be based on accurate information rather than faulty assumptions as to the intentions of Americans residing overseas.

continued on facebook

Looks like Exemption #2 is the Winner.

BDO CANADA, April 15, 2015: Tax Alert – FATCA and Canadian Credit Unions

A Must Read from Shadow Raider’s IssacBrockSociety.ca comment:

I just sent my suggestion for tax reform to the Senate Finance Committee. You can read it here.

We have a Vimeo site, Citizenship Taxation, to post this portion of the submission. I am not sure if it is necessary to be a member of Vimeo to view them; I do know I signed up for free access.

Having sat through the entire filming portion of each of these, I am impressed at how well each excerpt captures the essence of each individual’s point of view/situation. On the day these were filmed, it was very powerful to hear each of these people relate their stories; one person’s was done spontaneously, without any prior preparation. Generally, none used scripts and I was surprised at how incredibly capable they were, at describing their dilemmas in a focused way. Some were as short as 10 minutes and the longest was 30 minutes. Each has been edited to approximately 5 minutes each.
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Help these two women, captured in a nightmare for having the audacity to leave the USA at five years of age and thinking they could live happily ever after in Canada, only to be betrayed by both countries!

Does five years of innocence deserve a life of being hounded by Uncle Sam with threats of fines and imprisonment? Should any US person who lives outside of the USA be threatened like these two five year olds are?

If you don’t think so, please donate at: Alliance for the Defence of Canadian Sovereignty

International Business Times, April 3, 2015: “US State Department Issues Travel Warning For Yemen But Will Not Conduct A Government-Led Evacuation Of Americans”

To those who wish to be rescued (by the US Marine or any other US military) …

Subject: Security Message for U.S. Citizens: Updated Travel Warning for Yemen

TRAVEL WARNING – YEMEN

1. The U.S. Department of State warns U.S. citizens of the high security threat level in Yemen due to terrorist activities and civil unrest. On February 11, 2015 due to the deteriorating security situation in Sanaa, the Department of State suspended embassy operations and U.S. Embassy Sanaa American staff have been relocated out of the country. All consular services, routine and/or emergency, have been suspended until further notice. The Department urges U.S. citizens to defer travel to Yemen and those U.S. citizens currently living in Yemen to depart when you are able to safely do so. This supersedes the Travel Warning for Yemen issued on February 11, 2015.

2. The level of instability and ongoing threats in Yemen remain severe. There are no plans for a U.S. government-coordinated evacuation of U.S. citizens at this time. We encourage all U.S. citizens to shelter in a secure location until they are able to depart safely. U.S. citizens wishing to depart should do so via commercial transportation options when they become available. Keep vital records and travel documents close at hand; U.S. citizens should be prepared to depart at a moment’s notice. The airports are currently closed, but may open unexpectedly; other unforseen opportunities to depart may also suddenly arise.

3. Additionally, some foreign governments may arrange transportation for their nationals and may be willing to offer assistance to others. There is no guarantee that foreign governments will assist U.S. citizens in leaving Yemen. U.S. citizens who choose to seek foreign government assistance in leaving Yemen should only do so if they can safely make their way to the point of embarkation and have received confirmation that there is space available. Even if assured there is space aboard transportation, U.S. citizens should be aware that there is no guarantee that they will be permitted to board the transport, or may have to wait an indefinite period until they can do so. There is also no guarantee of where travelers will go.For U.S. citizen inquiries, you may send an email to YEMENEMERGENCYUSC@state.gov.

4. Terrorist organizations, including Al-Qaida in the Arabian Peninsula (AQAP), continue to be active throughout Yemen. The U.S. government remains extremely concerned about possible attacks on U.S. citizens (whether visiting or residing in Yemen), and U.S. facilities, businesses, and perceived U.S. and Western interests. In addition, piracy in the Red Sea, Gulf of Aden, and Indian Ocean is a security threat to maritime activities in the region. See our International Maritime Piracy Fact Sheet.

5. U.S. citizens remaining in Yemen despite this Travel Warning should limit nonessential travel within the country, make their own contingency emergency plans, enroll their presence in Yemen through the Smart Traveler Enrollment Program (STEP), and provide their current contact information and next-of-kin or emergency contact information. You may inform the Department of State of U.S. citizens located in Yemen by visiting https://tfa.state.gov/ccd, selecting “2015 Yemen Unrest,” and providing as much information as possible. You can also contact us at 1-888-407-4747 (from the U.S. & Canada), +1-202-501-4444 (from overseas), and YemenEmergencyUSC@state.gov if you have additional questions or concerns.

6. For the latest security information, U.S. citizens living and traveling abroad should regularly monitor the State Department’s Bureau of Consular Affairs website where the current Worldwide Caution, Travel Alerts and Travel Warnings, and Country Specific Information for Yemen can be found. Up-to-date information on security can also be obtained by calling 1-888-407-4747 toll free in the United States and Canada or, for callers in other countries, by calling a regular toll line at 1-202-501-4444. These numbers are available 8:00 a.m. to 8:00 p.m. Eastern time, Monday through Friday (except U.S. federal holidays).

Finland 1940

We are now refugees in
Finland.

My little daughter
Returns home in the evening complaining that no child
Will play with her. She is German, and comes
From a nation of gangsters.

When I exchange loud words during a discussion
I am told to be quiet. The people here do not like
Loud words from someone
Who comes from a nation of gangsters.

When I remind my little daughter
That the Germans are a nation of gangsters
She is glad with me that they are not loved
And we laugh together.

Bertolt Brecht, 1940

I have been absent from the FATCA scene recently. I am back in the states and have been busy preparing to start the PCT hike next week trying to forget this madness. However, I had to fill out my FBAR before I left and file for a tax extension since I won’t be back until the first of September. Then I got two letters from my bank, one in NZ and one at our home back here in the States. It was from the “Foreign Revenue Enquiry Team” who are trying to “cure” their list of potential U.S. Persons.

For your information, here were their lead in paragraphs

“We are writing to ensure we have the latest foreign tax residency information for you as required under the Foreign Account Tax Compliance Act (FATCA).

The foreign Account Tax Compliance Tact is a law from the United States of American that recently came into force. The Act requires Foreign Financial Institutions or their governments to enter into an agreement with the US Internal Revenue Service to determine which accounts are held by US citizens and report certain information about their accounts.

Under an inter-government agreement between New Zealand and the US, all New Zealand Financial Institutions are required to comply with the FATCA legislation. As a New Zealand Financial Institution we are required to collect and retain details from our customers to determine whether they are citizens or tax residents of the US.”

……..(details about why they they had identified us)…………….

Important Information…
If we do not hear from you within 90 days, we will be required to send certain information relating to you and your accounts to the New Zealand Inland Revenue Department, as part of the inter-government agreement between NZ and the US. We recommend that you contact your accountant or tax advisor if you are unsure about your foreign tax obligations.”

Anyway, I don’t have much time to devote to this FATCA crap, as still a lot to get done before I leave, but couldn’t help but send this enclosed letter (copy below) along with my compliance. Does no good, but makes me feel better, and thought I would send along a copy for you if you are interested. I don’t have time to post on IBS, but if someone else wants to, they are more than welcome to use it or not. Just remove the names, thanks.

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This is a 15-part series which is designed to provide you with some basic education on:

How the U.S. S. 877A Exit Tax rules work; and
 
How they particularly affect Canadians with a U.S. birthplace, who lived most of their lives in Canada.
 

 
The 15 parts are:
 
Part 1 – April 1, 2015 – “Facts are stubborn things” – The results of the “Exit Tax”
 
Part 2 – April 2, 2015 –“How could this possibly happen? “Exit Taxes” in a system of residence based taxation vs. Exit Taxes in a system of “citizenship (place of birth) taxation”

 
Part 3 – April 3, 2015 – “The “Exit Tax” affects “covered expatriates” – what is a “covered expatriate”?”
 
Part 4 – April 4, 2015 – “You are a “covered expatriate” How the “Exit Tax” is actually calculated”
 
Part 5 – April 5, 2015 – “The “Exit Tax” in action – Five actual scenarios with 5 actual completed U.S. tax returns.”

Part 6 – April 6, 2015 – “Surely, expatriation is NOT worse than death! The two million asset test should be raised to the Estate Tax limitation – approximately five million dollars – It’s Time”
 
Part 7 – April 7, 2015 – Why 2015 is a good year for many #Americansabroad to relinquish US citizenship – It’s the “Exchange Rate”

Part 8 – April 8, 2015 – “The U.S. “Exit Tax vs. Canada’s Departure Tax – Understanding the difference between citizenship taxation and residence taxation”

Part 9 – April 9, 2015 – “Why understanding the U.S. “Exit Tax” teaches us all we need to know about “citizenship taxation”

Part 10 – April 10, 2015 – “The s-877a exit tax and possible treaty relief under the canada us tax treaty”

Part 11 – April 11, 2015 – “S. 2801 of the Internal Revenue Code is NOT a S. 877A “Exit Tax”, but a punishment for the “sins of the father (relinquishment)”

Part 12 – April 12, 2015 – “The two kinds of U.S. citizenship: Citizenship for “immigration and nationality” and citizenship for “taxation” – Are we taxed because we are citizens or are we citizens because we are taxed?”

Part 13 – April 13, 2015 – “I relinquished U.S. citizenship many years ago. Could I still have U.S. tax citizenship?”

Part 14 – April 14, 2015 – “Leaving the U.S. tax system – renounce or relinquish U.S. citizenship, What’s the difference?”

Part 15 – May 22, 2015 – “Interview with GordonTLong.com – “Citizenship taxation”, the S. 877A Exit Tax, PFICs and Americans abroad”

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