[May 18 2017 update: I now include in this LINK the recommendations of Elise Bean, a long-time FATCA supporter and witness at the FATCA hearing.]
On April 26 2017 there was a Hearing at the U.S. House Subcommittee on Government Operations dealing with the harm caused by the U.S. FATCA law imposed on the world.
At the conclusion of the hearing, Chairman Meadows asked the Witnesses for “three recommendations on how to improve the legal framework set up by the Foreign Account Tax Compliance Act” (FATCA).
My personal-only interpretation of this request is that the Chair is saying something like: “If FATCA has to be replaced with something else, can you recommend three compromise laws/approaches that would achieve the “good” aims of FATCA but minimize the harm, and which would receive bipartisan support?”
— I enclose as a link the May 15, 2017 submitted personal recommendations of Jim Bopp, a witness and attorney for the U.S. FATCA/IGA/FBAR lawsuit currently pending in United States Court of Appeals for the Sixth Circuit (I am one of the plaintiffs).
From the Bopp text:
“This letter provides three recommendations on how to improve the legal framework set up by the Foreign Account Tax Compliance Act (“FATCA”).
First, we recommend that any taxation of overseas Americans comply with established United States constitutional principles and international legal norms.
Second, we recommend that the current laws be repealed in their entirety [Bopp goes on to include specifically FATCA, IGAs, FBAR, and citizenship-based taxation] and certain proposals rejected.
Third, we recommend that Congress enact a 1099 requirement on foreign banks, established by treaty, as long as this complies with established United States constitutional principles and international legal norms…”
—- Appended to the end of the Bopp recommendations are my personal thoughts as a separate submission: I support, as does Mr. Bopp, the repeal in entirety of FATCA, FBAR, IGAs, and citizenship-based taxation (the latter to be replaced with territorial/residence-based taxation), do not support any “watered-down” FATCA-replacement legislation whatsoever — which I believe will continue the harm, and offer suggestions on changing U.S. citizenship laws in the very limited context of FATCA harm. In hindsight, I now feel that I should have gone further in my recommendations for citizenship law changes.
—- When I receive the recommendations of strong FATCA supporter Elise Bean, a hearing witness, I will post.
— Ongoing developments: Republicans Overseas has initiated an intensive lobbying campaign with Congress to kill citizenship-based taxation and replace with territorial taxation. There can be no promise of success, but these people are trying. I am not aware of similar efforts on the Democrat side.
“To be frank though, most of us wouldn’t give a rodents behind if there wasn’t tax associated with these little missteps, except maybe in principle.”
You think? Maybe in Canada, where many people might find US citizenship convenient and non-compliance risky. For me, and I would guess for many in Europe, it’s the interference with banking services that’s the big problem, and the most outrageous. But I agree most people, here or there, probably wouldn’t be bothered if they weren’t personally inconvenienced by FATCA – just as I’m not troubled by CRS.
Good that your son is free and clear.
Yes, of course I should have included FATCA in that comment.
‘However, the US does force US citizenship on children born abroad to a USC parent if the parent wants to take the children to the US, and meets the citizenship-transmission requirements, and is not willing to lie.’
Yes, and we need someone to test it.
“Were you born in the US?”
“Yes.”
“Did you renounce?”
“Yes.”
“Was your child born before you renounced?”
“Yes.”
“Did you meet the infection-transmission requirements before your child was born?”
“I don’t know.”
“Your child has to get half of a US passport. If it doesn’t, I will allow half of your child to enter, and I will deny entry to the other half. Here I present to you King Solomon’s sword.”
@iota, re;
“…The problem is, FATCA teaches people by hurting them. Very American. Punish them to teach them not to disobey. …”.
That is what I learned by trying to be compliant. And the US taught me that the only sure way to stop the hurt was by getting rid of my US birthright citizenship as soon as possible. Every day I still had it was another day carrying on with a huge, heavy and looming threat hanging over my head.
@ Norman Diamond
“Here I present to you King Solomon’s sword”
No, too bloody; better to clone the child instead.
“Here I present to you King Solomon’s sword”
‘No, too bloody; better to clone the child instead.’
No, the clone is born after the parent renounced so the clone isn’t infected. The original is still in a flip flopping quantum state that has to be half granted entry and half deported.
@ Norman Diamond
If the Americans can treat, say, a US-born Canadian citizen resident in Canada (fact) as a tax resident of Washington DC (fiction), then we know that the Americans will find a way around that; more fiction to justify their goals…
“Were you born in the US?”
“Yes.”
“Did you renounce?”
“Yes.”
“You’re deported. By the way, you have to pay US taxes as if you were a resident of Washington DC, and you’ll be penalized three times the total value of all bank accounts you ever had.”
“Were you born in the US?”
“No.”
“Were your parent(s) US citizens when you were born?”
“One was.”
“Did your parent live in the US long enough before you were born, to infect you?”
“I don’t know.”
“Did you renounce?”
“No, the State Department wouldn’t let me renounce because they didn’t know if I was a US citizen or not.”
“You’re deported. By the way, you have to pay US taxes as if you were a resident of Washington DC, and you’ll be penalized three times the total value of all bank accounts you ever had. Also since you’re a flip flopped quantum state half US citizen, here use this, King Solomon’s sword.”
@ Norman Diamond
“…you’ll be penalized three times the total value of all bank accounts you ever had.”
What if my wealth was acquired post-renunciation in another country where I am a citizen?
@ Norman Diamond
“Also since you’re a flip flopped quantum state half US citizen, here use this, King Solomon’s sword.”
Now, I can see this happening… LOL.
“…you’ll be penalized three times the total value of all bank accounts you ever had.”
‘What if my wealth was acquired post-renunciation in another country where I am a citizen?’
“You’re covered.”
@badger – “That is what I learned by trying to be compliant. And the US taught me that the only sure way to stop the hurt was by getting rid of my US birthright citizenship as soon as possible. Every day I still had it was another day carrying on with a huge, heavy and looming threat hanging over my head.”
I agree, the only sure remedy is renunciation (if available). Good that you were able to get free.
When I said FATCA teaches people by hurting them, I was thinking specifically of the way it was introduced: without notice to those it proposed to criminalise, and pegged on pre-existing US laws (CBT, FBAR) which had never been systematically enforced and which most expats didn’t know existed.
In civilized countries, new legislation is brought in carefully, with efforts made to alert those affected so that they can comply. The desired end is compliance. There is a recognition that you have to tell people what you want them to do before you start punishing them for not doing it.
With American legislation – FATCA being far from the first – the desired end is entrapment. Allowing the taxpayers a chance to try to comply with the laws they didn’t previously know about, is presented as amnesty, and it comes with additional traps and threats and gotchas. Like ratcatchers, the US counts success by those caught, not by those complying.
Those who’ve been hurt are those who were devoted to America, and mistakenly thought America was devoted to them, and despite the meanness of FATCA, tried to comply – tried to continue as US citizenship.
The rest of us – or at least in my case – are just thoroughly pissed off.
“Like ratcatchers, the US counts success by those caught, not by those complying.”
This is truly an important point to remember and bring up in arguments. It’s the most elegant way to point out what a bully the US government is.
I’d like to know how many people have renounced without becoming tax compliant.
Depends what you mean by compliant. As has been said, there are degrees of compliance. Some may file nothing, paying zero; some may file only the 8854, paying zero; some may quietly backfile five years of returns and six of FBARs, paying zero; some may go streamlined, file everything, and send a cheque; and some may in addition pay over virtually their entire retirement in “exit taxes” and penalties.
Person learns of CBT/FATCA, promptly renounced, ignores IRS. Is the person tax-compliant?
My answer: Yes, assuming they’ve paid tax where they live. (They’re no longer a USC and are not subject to US law.)
From the Oath of Renunciation:
“I hereby absolutely and entirely renounce my United States nationality together with all rights and privileges and all duties and allegiance and fidelity thereunto pertaining.”
@ iota
At the drop of the FATCA hammer many expats went from being hopelessly devoted citizens of America to helplessly demoted second-class citizens of America, desperately seeking to renounce. What an assinine move by Gov. USA.
@ Bubblebustin
Did they or did they not fully comply? It would be wonderful to have detailed, accurate information on the escape routes taken by renunciants but we’ll never know. We don’t even know for sure how many there are.
Yes, we may never know.
Let me rephrase, I wonder what the proportion is of citizens who renounce but don’t feel the need to do any tax filings?
It might be possible to get a rough idea, from the numbers of overseas returns and the numbers renouncing.
All returns filed come from those who file regularly, those who “come into compliance” and keep filing, and those who comply only to renounce. The first two categories (plus new compliers) will be present the following year; renunciants will not.
But the really interesting question, it seems to me, is how many renunciants get chased for US tax on non-US-source income.
The answer appears to be 0 – somebody correct me if I’m wrong.
SKL (Max Reed’s firm) is telling people they can’t renounce without paying US taxes.
“Giving up your US citizenship is one way to rid yourself of a US tax headache. To be allowed to renounce your citizenship, you have to be caught up on five years of US tax returns.”
http://www.skltax.com/services/give-us-citizenship/
I complained to them about it while I was still one of their clients, but they ignored me.
There’s a UK forum for US expats where a condor squats. He is beginning to sound a bit desperate. I speculate that life was good and the living was easy, for several years after FATCA hit, but word is out and people aren’t so easy to terrify into his office.
Despicable.
@ iota
I was trying to guess which forum you are referring to — the one with the condor squatter and I came across this website title — Future Expats Forum – Create an Untethered Life Overseas — and now I’ve had my big chuckle and groan for the day. Untethered? What about that IRS ball and chain? I spotted one interesting title on that website, in the very scant tax section — How Filing my Expat Taxes Changed from a Nightmare to a Dream. Ah there’s something everyone wishes for — dreamy US tax filing. I was thinking she renounced but no, she got dreamy US tax filing by hiring an expert tax return company and we all know how much that costs. OTOH she did get a 25% discount. It was probably for plugging the company on her website which, by the way, I am not plugging because all such websites should feature a big bold TAX HAZARD WARNING graphic on their front page.