Liberty and justice for all United States persons abroad

The Isaac Brock Society

Monthly Archives: October 2016

Reminder: Solving US Citizenship Problems Toronto Sat Nov 5, 2016

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WHEN: Saturday – November 5, 2016 4:00 – 6:00 pm
WHERE: 100 St. Joseph St., Toronto ON M5S 2C4 MAP
ADMISSION:PLEASE REGISTER IN ADVANCE by email to nobledreamer16 at gmail dot com and kindly include your phone number, or phone 416-519-8172 ;
COST is $20 payable in cash at the door
WHO: John Richardson, B.A., LL.B., J.D. (Of the bars of Ontario, New York and Massachusetts), Toronto citizenship lawyer and Co-chair of the Alliance for the Defence of Canadian Sovereignty and the Alliance for the Defeat of Citizenship Taxation. citizenshipsolutions.ca

International Investment recognizes the Isaac Brock Society as global info resource on US Expat issues

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isaacbrock article 2
Screen snip of Helen Burggraf’s article in International Investment (click for full article)

The Isaac Brock Society is a direct response to the Obama administration’s criminalization of innocent expat behaviour. Helen Burggraf has written a great article in International Investment, telling our story.

Ambassador Reaches Out to Swiss Banks

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A Brocker from Switzerland sent me this – the Ambassador there sent a letter in September to the Swiss banks concerning the ongoing problem of closed accounts.

The original (German) from Handelszeitung is here

Perhaps one of our German-speaking Brockers could translate/paraphrase from the comments section.

An explanation (English) regarding the Ambassador’s acts & the situation is here

Excerpts:

The top U.S. representative in Switzerland deplored the fact that Swiss banks closed the accounts of U.S. citizens and turned away new clients. LeVine wrote that she had received numerous letters from fellow Americans complaining that they didn’t have access to basic banking services in Switzerland.

…..Unfortunate Timing

The letter was sent to numerous banks, for instance Migros Bank and at least to one bank that still awaits a fine in connection with the tax dispute in the U.S., according to the «Handelszeitung» report. The timing of the letter thus appears a little unfortunate and will have caused some irritation.

A string of Swiss banks this year still were occupied with closing the tax dispute with the U.S., with fines the normal outcome of the U.S. investigations. The institutes not just had to plead guilty to violating U.S. laws in conjunction with their business with U.S. clients, but also had to promise to remain on a righteous path in the future – at least in respect to the U.S.

…The criticism leveled at Swiss bank by LeVine isn’t just tough to take because of the timing, but also because of what it implies. Some banks were ruthless in closing the dossiers of U.S. citizens, no doubt. But today’s reluctance to have any dealings with U.S. clients has more to do with hard business facts.

Banking for the Rich

Banking in compliance with U.S. regulation is so expensive that business with the normal, moderately wealthy expat doesn’t pay off. And given the unpredictable behavior of the U.S. authorities in tax issues, the risks and costs far outweigh the potential benefit of offering services to the 20,000 U.S. expats.

Swiss banks of course still do business with U.S. clients. About 40 companies have specifically licensed unit for that purpose. But of course: those services are restricted to the very rich, making it worthwhile. Several asset managers are also working on their onshore services in the U.S.

Swiss banking is still interested in U.S. customers. But not exactly in the way U.S. Ambassador LeVine had hoped for.

The letter is here: Letter from Susie

Do Canadian (or Australian etc.) Tax Attorneys Advising Canadian Clients on United States IRS Compliance Typically Comply With The “Professional Code of Conduct” of Their Law Societies?

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[Many readers living outside the U.S. who are not IRS compliant, have sought advice from tax attorneys on whether they should or should not enter into a lifetime of IRS compliance, and what would be the “cost”. Maybe your tax attorney living in Canada etc. is also an Enrolled Agent of the U.S. IRS, possibly affecting the nature of the interaction between attorney and you the client. What were the options suggested and especially disclosures made to you by your attorney? Attorneys must adhere to the professional and ethical standards of their law societies. See discussion below:]

In a recent post I mentioned the situation of a “Caroline” who seeks advice from a Canadian tax attorney (let’s say in B.C.) regarding a question of (IRS) tax compliance with a country foreign to Canada.

How should the Canadian tax attorney advise this frightened Canadian citizen– specifically, regarding the disclosure of relevant options she (or any Canadian) should consider before entering, or not entering, into tax compliance with United States Internal Revenue Service?

What information should (must) the attorney disclose to the Canadian to comply with professional standards and ethical obligations of an attorney?

USCitizenAbroad suggests that the Canadian tax attorney needs to disclose two relevant facts:

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The “Exit Tax”: Dual US/Canada citizen from birth, no Canada citizenship today = no exemption to US “Exit Tax”

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cross posted from citizenshipsolutions.ca

The above tweet references a “guest post” written by Dominic Ferszt of Cape Town South Africa. The post demonstrates how the “dual citizen from birth” exemption to the S. 877A “Exit Tax” relies on the citizenship laws of other nations. In some cases those laws of other nations are arbitrary and unjust. If these laws were U.S. laws, they might violate the equal protection and/or due process guarantees found in the United States constitution. For example, Mr. Ferszt describes how the “dual citizenship exemption” to the “Ext Tax” is dependent on South African “Apartheid Laws”. He describes a situation where a “black” U.S. citizen from birth is denied the benefits of the dual citizen exemption to the Exit Tax, which are available to a “white” dual citizen from birth.
(During the “Apartheid Era” Blacks were not entitled to South African citizenship.)

So, what’s the S. 877A “Exit Tax” dual citizen exemption and how does it work?

The dual citizen exemption, which I have discussed in previous posts, is found in Internal Revenue Code S. 877A(g)(1)(B) and reads:

(B) Exceptions An individual shall not be treated as meeting the requirements of subparagraph (A) or (B) of section 877(a)(2) if—
(i) the individual—
(I) became at birth a citizen of the United States and a citizen of another country and, as of the expatriation date, continues to be a citizen of, and is taxed as a resident of, such other country, and
(II) has been a resident of the United States (as defined in section
7701(b)(1)(A)(ii)) for not more than 10 taxable years during the 15-taxable year period ending with the taxable year during which the expatriation date occurs, or

Entitlement to the “dual citizen exemption” depends entirely on the citizenship laws of other countries …


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Good News from the French Commission

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Very good work being done by those at the Accidental Americans FB group. Fabien Lehagre posted this today.

Good Afternoon –

Please find below the links to the final report (original in French and a rough translation in English) from the French Ministry of Foreign Affairs of the French Commission on US Extraterritorial Overreach which includes FATCA (Foreign Account Tax Compliance Act) and the US practice of Citizenship Based Taxation and the adverse effects on French citizens who are Accidental Americans and French/American nationals which was published today. I have also added the link for the video presentation of the report (in French).

I have also attached a summary both in French and in English of the French Commission’s findings.

FINAL REPORT (FRENCH)

ROUGH ENGLISH TRANSLATION
INTRODUCTION 9

I. EXTRATERRITORIAL: EXTERNAL PERCEPTION OF “NO PROBLEM” THE AMERICAN PERSPECTIVE

A. EXTRATERRITORIALITY, VIEWPOINT QUESTION

B. DESIGN SOME OF THE ROLE OF LAW

C. CONFLICTS OF AGGRAVATED BY BLOCKING CURRENT POLITICAL SYSTEM

II. ISSUES OF CERTAIN EXTRATERRITORIALITY US LAWS

A. THE ECONOMIC AND FINANCIAL ISSUES

B. ISSUES POLITICAL AND DIPLOMATIC: THE DANGER OF COUNTER-PRODUCTIVE, INCLUDING THE AMERICAN PERSPECTIVE

III. ANALYSIS OF LEGAL EXTRATERRITORIAL LAWS OF US

A. GENERAL FOUNDATIONS OF LAWS TO REACH EXTRATERRITORIAL

B. PRACTICE: KEY “INPUTS” US LAWS OF EXTRATERRITORIAL

C. AMERICAN PRACTICES OF ACTION IS BASED ON UNCERTAIN CRITERIA, METHODS OF INTRUSIVE, OR ABUSIVE

IV. A POLITICAL AND LEGAL IN FRANCE AND EUROPE DO NOT POSING LIMITS extraterritoriality AMERICAN LAW

A. NO POLICY “CONVINCING” REPRESSION OF INTERNATIONAL CORRUPTION MAY LIMIT THE INTRUSION EXTRATERRITORIAL AMERICAN

B. RECOGNITION OF THE APPLICATION OF FRENCH FATCA TO ADVERSE SIDE EFFECTS: THE PROBLEM OF “AMERICAN INCIDENTAL»

C. THE EMBARGO AND INTERNATIONAL SANCTIONS APPLIED BUT MAINLY EUROPEAN AND SANCTIONED NATIONWIDE

V. RECOMMENDATIONS OF THE MISSION: WEAPONS EQUAL TO PLAY

A. DEMAND RECIPROCITY AND EQUAL TO ACQUIRE WEAPONS TO FORCE POLICY CO-

B. THE EMBARGO AND ECONOMIC SANCTIONS: STRENGTHENING OF EUROPEAN MEDIA AND CLARIFICATION REQUIRED WITH DIPLOMATIC THE UNITED STATES

C. THE NECESSARY TOOLS TO ACQUIRE THE MEANS TO BE “WEAPONS TO EQUAL”

D. ANOTHER TRACK COOPERATION: INTERNATIONAL NEGOTIATIONS IN PARTICULAR THAT OF THE TRANSATLANTIC PARTNERSHIP, THE OFFER THEY FORWARD OPPORTUNITIES?

CONCLUSION

SUMMARY OF PROPOSALS

CONTRIBUTION OF JACQUES MYARD

WORK OF THE COMMISSION

APPENDIX 1: LIST OF PERSONS INTERVIEWED BY THE MISSION

APPENDIX 2: LETTER UNAI

VIDEO PRESENTATION OF THE REPORT (FRENCH)

See also:

Accidental Americans FB group

SIX different opinions (one the reader might find absurd) on whether “CLN-lacking” “Caroline” relinquished” U.S. (tax) citizenship in 1978 — How should a tax attorney, adhering to an ethical code of professional standard, advise Caroline?

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Read below the sorry situation “Caroline” finds herself in.

The tax attorney Max Reed suggests three options: 1) Obtain a CLN; 2) Do nothing; OR 3) Catch up on U.S. tax returns and renounce (i.e., NOT relinquish) citizenship. How do you suggest a tax attorney should advise Caroline?

Tax attorney Max Reed opines and three attorneys (John Richardson, Virginia La Torre Jeker, Michael Miller), PLUS Shovel AND USCitizenAbroad comment on whether a foreign (U.S.) “tax-citizenship” law that might or might not impact on Canadian Caroline is retroactive.

The case of “Caroline”:

In advisor.ca there is an article by Max Reed with commentaries about whether a foreign U.S. (At present, the U.S. is considered by the United Nations to be a country foreign to Canada) tax-citizenship law should be applied retroactively to a Canadian. Read the entire article and commentary on an issue that has often been discussed on Brock.

Max Reed cites the example of a “Caroline”, a Canadian who relinquished U.S. citizenship in 1978 and has no CLN (Certificate of Loss of Nationality). Her bank sends her a FATCA letter and says that it will report her to the IRS unless she comes up with a CLN.

“In September 2016, she goes to the U.S. State Department to get a CLN to document her loss of U.S. citizenship in 1978 [good idea?]. But what is the exact date of Caroline’s loss of U.S. citizenship for both U.S. tax and immigration purposes?”

Max Reed provides a “common sense” view in the article and also, below, what he feels is a “literal reading” of a 2008 U.S. law:

“The literal approach is based on a strict reading of the law. Since 2008, U.S. tax law has set the date that a person loses U.S. citizenship as the earlier of the date that he applies for a CLN at the Department of State or the date the CLN is issued… Under the literal approach, because Caroline never obtained a CLN, she remains a U.S. citizen until her State Department visit in September 2016. This means she would have had tax obligations to the U.S. government for the previous 38 years – despite losing her citizenship for immigration purposes in 1978…”

Virginia La Torre Jeker comments:

“The collective view of several distinguished US tax professionals is that the current version of the expatriation provisions as spelled out in Internal Revenue Code Sections 877A and 7701(a)(50) as enacted by the HEART Act must have prospective application only… If a later Congress had intended the “surprising result” of retroactivity when passing the 2008 expatriation laws, it would no doubt have spelt this out very clearly….

John Richardson:

“1. What you describe as the “literal” approach is based on reading the exact words of Internal Revenue Coce S. 877A. S. 877A(g)(4)in its opening language addresses those who are “citizens”. Not past citizens. It reads: “A citizen shall be treated as relinquishing his United States citizenship on the earliest of—”

What it means to be a U.S. “citizen” is not defined in the Internal Revenue Code. It is defined only in the Immigration and Nationality Act. Internal Revenue Code S. 877A came into force in June of 2008. Therefore, it seems reasonable to assume that if one was not a U.S. “citizen” under the Immigration and Nationality Act in June of 2008, then S. 877A(g)(4) should not apply to that person. To put it another way: the “literal approach” would/should lead to the conclusion that Caroline, who became a Canadian citizen in 1978, was not a U.S. “citizen” for tax purposes in June 2008.

2. Prior to 2004 there was no provision in the Internal Revenue Code that allowed for one to be a “tax citizen”, if one had relinquished U.S. citizenship under the nationality laws. In other words, if NOT a citizen under the nationality laws then NOT a taxpayer. This means that those who relinquished U.S. citizenship prior to 2004 under the nationality laws, were not subject to taxation under the Internal Revenue Code. The 2004 law (that created the “tax citizen”) specifically stated that the creation of the “tax citizen” under the Internal Revenue Code was prospective only. It seems unlikely that the enactment of S. 877A in 2008 would have changed what was clearly a prospective concept to a retroactive application.

Therefore, whether one takes the “literal approach” or the “common sense” approach, the notion that Caroline, who relinquished U.S. citizenship in 1978, owes U.S. taxes, is hard to justify under the law.”

Michael Miller:

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