US expats given hope of lower tax bills
Republicans edge towards eliminating need to pay levies overseas and at home
published in the Financial Times
by Demetri Sevastopulo and Barney Jopson in Washington
You can read the article by answering a simple question that appears when the page loads. I cannot post the entire article due to copyright restrictions.
Here are some excerpts:
Millions of US citizens working overseas could see their tax bills lowered by an overhaul of the tax system as Republicans edge towards eliminating a requirement for American expatriates to pay taxes both overseas and in the US.
Kevin Brady, the Republican head of the House ways and means committee, which is drafting a tax reform bill, said lawmakers were considering the measure, which has been the focus of lobbying by Republicans Overseas, a group of party donors around the world.
“It is under consideration. They have made the case,” Mr Brady said in response to a question from the Financial Times at a Christian Science Monitor breakfast. “Lawmakers representing that area of the tax code have made that case.”
The US Chamber of Commerce, a business lobby group, has urged policymakers to consider US-only taxation for individuals, too, arguing that taxing foreign income hurts American managers at the overseas affiliates of US exporters.
Mark Mazur, who was the top tax official in Barack Obama’s Treasury department, said he supported the change, arguing that it was necessary to address the “inequity” of an expat paying tax on the same income to both the US and a foreign government.
“If you take two people, one works in London, one in New York, working for the exact same US multinational — if they make the exact same amount of money you might think they should be taxed exactly the same,” said Mr Mazur, who heads the Tax Policy Center.
Solomon Yue and Michael DeSombre are also mentioned in the article.
There are quite a few comments with JC doing Yeoman’s Duty.
Several proposals? Aside from the ACA and RO proposal, what are the others? I will not support or endorse the ACA proposal as it does a different type of damage and their type of proposal would not help long term Americans overseas and Accidental Americans. It is also a proposal that seems more aligned with the US tax compliance industry than the population it’s supposed to help. On Capitol Hill the TTFI proposal is the only one being considered. Is it perfect? No. But after review of both, it’s a better proposal for the American overseas, The Accidental American, and the associated affected populations.
@Keith
Jackie did not ask anyone to support any of the proposals:
I believe her reference to proposals was just to mention there have been different points of view which have been publicly criticized all across the board. And suggesting we come together/support what is offered.
As one smart person pointed out to me, none of the proposals asked for the eradication of CBT. FATCA will still be here as will FBAR. I believe you discussed “half a loaf ” at FB. As you suggested, we just move forward regarding “the rest of the loaf”, perhaps a little more unified than before…..
“FATCA will still be here as will FBAR.”
That might not matter if, for instance, US tax-residence were to be redefined to exclude those not resident in the US, and “foreign account” were to be redefined to mean “foreign account.”
Just a few articles on who must comply and how. Not all are 100% on point but all offer one facet or another.
Who must Comply with US Tax Law
Why are British investors being forced to fill in US tax forms?
By Richard Dyson
5:53PM BST 30 May 2014
#Sweden begins Discriminatory Profiling its Citizens by Country of Birth and by National Origin
by Banc De L Asteroide
“The Nordea banking app for mobile phones has been reported to lock up for users, until they answer questions about their birthplace. The app follows up with a question asking what other passports the user has.”
The slippery slope of Bill C-24: “…disclosure of
information to verify the citizenship status or identity
of any person” to enforce any Canadian law “or law
of another country”
Cabinet will also now be permitted to allow the “disclosure of information to verify the citizenship status or identity of any person” to enforce any Canadian law “or law of another country.”
Foreigners in Israel find themselves ensnared in U.S. tax crackdown janglo.net Several weeks ago, a Jewish foreign resident from Europe went to his branch of First International Bank of Israel and asked to withdraw a large sum of 10 million shekels ($2.7 million).
Citing technical reasons, the bank asked him to return in another day, but when he did so he was in for a surprise: He was asked to sign a declaration that the account and all the money in it had been reported to the tax authorities in his home country and he had paid everything that was due on it.
The man refused and then came the next surprise: The bank refused to let him withdraw his money. He explained that he didn’t speak Hebrew and wanted the declaration to be read and translated by a lawyer. He reminded the bankers that he was a client of long standing and had been told when he opened his account that he would not be asked questions like that. It was all to no avail.
#FATCA #IGA ALL British trusts will be reviewed at expense of client; even w/out ANY US indicia
bit.ly/VM30Si Please RT widely
Non-US Accounts Being Reviewed in UK at the Expense of Non-US Persons
What To Say When (Not If) Your Offshore Bank Asks, ‘Are You Compliant With IRS?’
Forbes by Robert Wood 12/04/2013
Uncle Sam says my Swedish kid is American
“Imagine this: Your kids were born in Sweden, have Swedish citizenship, speak Swedish, and grew up in Sweden. But still, the U.S. government insists they’re Americans — and Uncle Sam wants to collect taxes.
Sound far-fetched? This is the reality for Sarah Gaisler, an American who gave birth to her three sons in Sweden — and many other expats with children born outside the U.S.
Children born abroad to Americans are generally automatically granted U.S. citizenship — along with a major tax burden. That’s because the U.S. taxes on worldwide income, no matter where its citizens earn or live. And all this is creating a headache for expats who say they don’t have a choice in the matter.
“It’s not that citizenship is a right, but it’s actually imposed on your child when they’re born abroad,” said Gaisler, 36, who grew up in Kentucky, married a Swedish man and is now raising her kids in Europe. Her young sons have weak ties to the U.S., but eventually they’ll have to deal with “onerous filing, every single year for the rest of your life.””
Thanks JapanT. None of those cases seem to be about banks requiring proof of IRS compliance though. The Israeli one seems to be a pre-IGA incident, since it’s effectively a waiver of privacy rights. Once the IGAs came in, the privacy rights didn’t exist.
The British one is about W8-BENs, not tax returns. The Woods article is just misinformed. The Swedish one is about FATCA due diligence, and the other Swedish one is about the outrage of CBT.
It’s reassuring if no reports can be found (outside Switzerland) of banks demanding proof of IRS compliance.
@plaxy
“FATCA will still be here as will FBAR.”
This is from the Instructions for Form 8938:
“…..Exception if no income tax return required. If you do not have to file an income tax return for the tax year, you do not have to file Form 8938, even if the value of your specified foreign financial assets is more than the appropriate reporting threshold. ….”
So it is my guess that with TTFI there would be no FATCA filing for the individual who has no US sourced income, but the FBAR obligations probably will not go away that easily.
The FBAR requirement of signatory accounts of employers should go.
@JC
FBAR requirements should only apply to US residents.
I’ve posted this before, but for anyone who doubts that European banks are demanding evidence of compliance with US laws and are freezing accounts until, they do…..
If “foreign account” was redefined to mean “foreign account”, US citizens living outside the US wouldn’t be required to report their normal, non-foreign accounts, nor the non-foreign accounts over which they have signatory authority. Cross-border accounts would be reportable.
That’s what FBAR was supposed to do when it was invented all those years ago, wasn’t it – to report cross-border accounts.
Uncle Tell – if “foreign account” was redefined to mean “foreign account”, only cross-border accounts would be reportable, under both FATCA and FBAR.
I’m not predicting this will happen. I’m just saying that’s one thing that could be easy if they wanted it to be.
“It’s reassuring if no reports can be found (outside Switzerland) of banks demanding proof of IRS compliance.”
These were just what I could find in my now grealy disorganised pile of stuff, hardly proof that such demands have not or are not being made.
The information that these reports say are being required are none the less a big problem.
Mike – I don’t see any reference in the video to Dutch banks requiring proof of IRS compliance.
“These were just what I could find in my now grealy disorganised pile of stuff, hardly proof that such demands have not or are not being made..”
No – if you do come across a case, I’d be interested to hear.
“The information that these reports say are being required are none the less a big problem.”
Of course. But so far no legal challenge has been successful. If banks were demanding proof of compliance, that would be worth bringing to the attention of the EU.
“Mike – I don’t see any reference in the video to Dutch banks requiring proof of IRS compliance.”
They are freezing accounts until the “American” provides their social security number and TIN, so forcing Dutch resident citizens in to the US tax system.
Yes, they’re supposed to obtain a U.S. TIN and report the account to the local tax agency if the customer has US indicia (usually birthplace).
I don’t see anything in the video that says a bank demanded proof of IRS compliance.
The video seems to have been produced by condors trying to scare up clients. At one point it says renunciation is “difficult.” Renunciation isn’t difficult, it’s easy, though expensive.
Mike – having a SSN doesn’t force you to file US tax returns. Even if your bank reports your account balances and interest/dividend income, the income reported to the IRS probably doesn’t add up to the threshold for filing a tax return.
@plaxy
I don’t know about EU but banks from HK, Singapore, Middle East, Most of Asia are asking for compliances or risk freeze or closure of bank accounts. Every citizen of the world is being asked you have any US indicia or not even a Delaware US company as foreigners used to open up accounts using Delaware companies mostly. This is the wide impact of this law. There are questions about second nationalities too in new bank forms courtesy of US govt to enforce its law globally. Many who are thinking about supporting Territorial taxation as proposed by RO should know that FATCA, FBAR and CBT will still impact their lives. I commend Patricia Moon who stated we should give support ” for the rest of the loaf ” instead of TBT as it will not lead to anything. Your local banks overseas will still ask you for compliances to protect themselves from Uncle Sam due to open threats of penalties. Yes they have applied these penalties to other jurisdictions besides Switzerland. The elimination of CBT/FATCA is not going to happen as you will realise too like I did unfortunately. Most banks, brokerages locally are off limits now to US citizens or permanent residents as this damage has been done already. Unless US govt assures the banks world wide that it requires no CBT/FATCA/FBAR anymore and no penalties on them from now on then only this damage can be undone. This is a pipe dream. Anyways try your best and renounce by finding a country that you can get a citizenship of like most Americans did and are still doing to this day.
JapanT if you don’t have another citizenship then I suggest you to start looking for one right away as it is better to renounce like Patricia Moon and iota did then to keep on thinking they will undone all the damages that they have done already by these abusive laws to US expats overseas. I read a case about a recent immigrant from India who had a joint account with his Indian parent in India so the son could his inheritance from his parent after the parent’s death without going through expensive court decisions after the parents death, His CPA in USA asked him to do OVDI to comply with FBAR requirements and that’s when IRS wanted more than half of his account earned by his parent not him. The case was settled in favor of IRS with them getting 10,000 per year penalty of each year of his non filing of his joint account with his parent. Naturally, immigrant and his parent were both upset at this abusive law and his parent took his name out to satisfy IRS. Money made in India by a foreign parent was penalized by IRS due to son’s US taint. Many US spouses of foreigners in Europe gave up US citizenship in 2010-2011 due to their joint accounts with their foreign spouses as penalties were enormous. As I stated earlier there were long lines at US embassy in HK to renounce their US citizenship which was once a prized possession.
The 3000 signatures obtained were very low as compared to 9 million US citizens living overseas. I believe everyone of those 9 million citizens and permanent residents should have signed that form so Congress could have finally understood what their abusive laws are doing to the lives of US citizens overseas. Many families broke up and foreign spouses gave divorces to get rid of arcane US laws being applied to a foreigner’s earned income in their own countries. It affected the lives of all world citizens not just US citizens.
Karen – having a SSN doesn’t force you to file US tax returns. ”
Indeed it doesn’t, and a bank in a Model 1 IGA can’t force a customer to provide their SSN – much less forcing a customer to apply for a SSN. The video is just wrong. A scare story by condors.
What does happen is quite bad enough, and in Model 2 countries may be worse than what happens in Model 1 countries. I’m only familiar with the Model 1 IGA.
@plaxy
“It’s reassuring if no reports can be found (outside Switzerland) of banks demanding proof of IRS compliance”.
What world are you living in? I can assure you many jurisdictions and offshore banks are requiring proofs of IRS compliances. I gave my proofs to my HK bank manager to close the account or risk freeze of all assets. I travel a lot and every bank and jurisdiction is nervous about these compliances and threats of withholding of 30 percent of their dollar transactions. Banks have hired extra staff to look for any US indicia and either reject US owner accounts in case of new accounts or freeze the existing ones and only release them after showing compliance with IRS. As in the case of non US Jewish resident of Europe, GATCA (CRS) was applied which is what OECD came up with after seeing Obama’s law and applying his rules to all citizens of the world.
Keith, Patricia Moon, et.al.
As Benjamin Franklin said “We must all hang together, or assuredly we shall all hang separately.”
If expats can’t unite to support whatever Congress has to offer in the upcoming tax reform bill, then they will never get anything through Congress. Yes, all of the current proposals have flaws. I don’t think any of them fixes FBAR. One is faux-RBT only for those rich enough to buy their way out of CBT. One requires NRAs to pay capital gains tax on US shares at a rate that exceeds the domestic tax rate on capital gains, and suggests re-writing tax treaties to increase withholding on interest/dividends. I have been fairly vocal with my critiques. But both are a foot in the door. Without that foot in the door, further progress will be difficult, if not impossible.
“The video seems to have been produced by condors trying to scare up clients.”
Yes. “We help Americans living in Europe to file US taxes and prevent double taxation.”
Total parasites- they’re not even tax advisors, just an agency. Like a temp agency.
“The British one is about W8-BENs, not tax returns.”
Why is “tax compliance” limited to “tax returns”?
“If expats can’t unite to support whatever Congress has to offer in the upcoming tax reform bill, then they will never get anything through Congress. “
What support, other than moral, have I to give?
The banks are allowed to ask for a W8-BEN, as part of the “curing” procedure. The customer doesn’t have to sign it. The bank can use a form of its own devising.
A W8-BEN doesn’t show IRS compliance. Definitely undesirable though, because like all IRS forms it has to be signed “under penalty of perjury.”