Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 37 Comments

Background …

In a rare instance of “concern” for Americans abroad, Congressman George Holding (Republican North Carolina) may be proposing a bill that could allow some U.S. citizens to live outside the United States and NOT be subject to U.S. tax on their “non-U.S. income”. This would be a “shocker” and a real “Game Changer”. Unsurprisingly this possible initiative has large support including support from ACA, Republicans Overseas, Democrats Abroad, Accidental Americans, etc. Each of these groups (yes each of them) has contributed to and supported this initiative in various ways. Even so, there are partisan fault lines …

There are certain groups/individuals who would NOT support this change (some for ideological reasons and some because they don’t believe the changes would benefit them personally). In any event …

How you can follow the developments …

Interestingly, @SolomonYue of (dare I say) Republicans Overseas, is actively communicating with individuals impacted by this in an ongoing Twitter discussion. “JC” of Isaac Brock fame, (who you all know) is also an active contributor to the Twitter conversation. (You will see other participants) who you will recognize.

In any event, as you all know, the central issue is that U.S. tax policies:

1. Make it impossible for U.S. citizens to move from the United States AND integrate into the tax systems of other countries (if you don’t “quite” understand this, then this post is not for you);

2. Impose very severe punishment on those who (ironically) do attempt compliance with this collection of U.S. tax laws that make life impossible.

As I suggested in the previous post, it seems to me that:

The penalties imposed on Americans abroad who attempt U.S. tax compliance, are far worse than:

The penalties imposed on Americans abroad who do NOT attempt U.S. tax compliance.

The purpose of this post and the anticipated comments is to explain why this is the case!

So, why I am writing this post?

@SolomonYue is apparently having discussion with (I think) Congressman Holding’s Office with a view to effecting positive legislative change (although it’s too early to see exactly what that might mean). In order to contribute to the discussion, it’s important that legislators understand why and how applying U.S. tax rules to “tax residents” of other countries (Canada is another country) is so horrible, wrong, immoral, life destroying, etc.

The previous Brock post was my attempt (at the request of JC), to encourage Brock readers, to provide examples that explain how U.S. tax policy has destroyed the lives of those who have attempted compliance with U.S. tax laws. This was an attempt to solicit responses from those who have actually attempted compliance. It is NOT an attempt to solicit responses from the “silent majority” who have not and will not comply. I repeat, this is an attempt to solicit responses from those who have attempted compliance.

Also, this post is focused on the Income Tax related issues and NOT the FATCA induced banking problems. Please let’s keep some focus here!

It would nice to have contributors from all over the world!!!

What happened to the previous post? Why a “Chapter 2”? Why a second attempt?

Read the previous post and comments to see …

What did come from the post was a comment from Pacifica that suggested:

@USCA,

That comment you made earlier this evening went into incredibly explicit detail (and yet really clearly with those bullet points) about the project you and JC are working on. Thanks for taking the time to do that.

Why not make a new post for the project, using that comment for the post itself, as this thread has really diverged?

Okay. Here is the comment to which Pacifica refers:

This post is in response to comment/request from JC to collect stories about how compliance with the tax rules that apply to overseas Americans (1) create huge difficulties in their lives and (2) make compliance with U.S. tax laws “somewhere between difficult and impossible” and (3) unfairly burden U.S. citizenship for those who ARE filing U.S. taxes and (4) I think that force the renunciation of U.S. citizenship would be appropriate.

I point that one can be a “proud American” and still be forced to renounce U.S. citizenship. In fact, I have met quite a few of them.

The story must be from one who has filed U.S. taxes to the best of his/her ability. What seems clear from the JC information and the “tweets” is that the focus on this discussion is specific examples of how compliance has ruined your life.

I would think that this would include (but not limited to):

– entry into OVDP or Streamlined

– PFIC issues

– inability to find competent tax preparation help

– unjustified penalites

– PFIC confiscations

– CFC problems: Any kind of Subpart F income (including the transition tax and GILTI), problems with the 5471

– punitive U.S. taxation of non-U.S. retirement planning and pensions

– imposition of U.S. capital gains tax in countries that don’t have capital gains tax in general or specifically on the sale of the principal residence

– additional taxation caused by the necessity to use the “married filing separately category” if married to an alien who doesn’t want to be part of the U.S. tax system

– Australian Superannuation

– Punitive taxation of foreign life insurance policies with cash value

– inability to buy into non-U.S. businesses because of U.S. citizenship

– Paying REAL U.S. tax on FAKE U.S. income, generated by the interaction between the U.S. dollar as the functional currency and exchange rate fluctuations

– etc.

It seems to me that stories from those who felt forced to renounce would/could be compelling.

But, please take your cue from the part of the post that quotes JC. I wrote the post primarily on his behalf as his messenger (if you will).

But, again stories from those who have not complied are irrelevant to this thread.

(Incidentally, if you are a U.S. citizen abroad who IS filing U.S. taxes and you do not recognize any of the issues outlined: You are probably not filing your U.S. tax returns correctly!)

Who should respond to this request?

People who have attempted to comply with U.S tax laws while living in other countries WHO ARE/WERE subject to the tax laws of the country where you live. You do NOT have to currently be a U.S. citizen. The fact that U.S. tax compliance from abroad forced you to renounce U.S. citizenship is highly relevant.

Those who commented on the previous thread are invited to repost your “relevant” comments on this thread. Hopefully, this new post will encourage more participation.

Thank you …

____________________________________________________________________________

Footnote -for the purposes of context, here is JC’s original “request” …

News from Twitter chat with Solomon Yue. He says we may see the TTFI legislation this coming week. One comment to that is ‘we have heard that before.’

It sounds like the treatment for Accidentals will be three years of compliance without FBAR & FATCA penalty and then may elect TTFI status. Comment to that: sounds like streamlined except 3 years instead of 5.

Karen says:
“Essentially, TTFI is saying go thru streamlined and then stop filing. For AA’s and LT expats that want to retain USC, this is a reasonable deal as long as they have no PFICs or CFCs or “foreign” pensions, or ….”

Point of information about the above: FBAR and FATCA 8938 still exist under TTFI – so still filing! However, I ask as 8938 requires specification of the line on the 1040 return income from specified assets appears, and if no return is required under TTFI then would that end 8938? The devil is in the detail.

Solomon Yue says he will ask the question about PFIC and its exemption. At least someone is listening (Solomon Yue). He has said before about the exemption of foreign pensions, yet it has always been in regards to after TTFI election, and not the 3 years compliance period before one may elect TTFI.

In terms of AA: he has stressed that the TTFI bill is about asking Congress to do something for those who wish to remain American citizens, as the best chance to get buy in from Congress. Then of course once passed he will focus on other changes. So it sounds like perhaps multiple bills: 1) TTFI, 2) remove transition tax and GILTI from US Corps overseas, 3) remove FBAR and FATCA for USP overseas, 4 or more) Dems have a few including one that eliminates Social Security WEP. All this and there is no precedent of passage of a single focused bill helping US Persons overseas.

I asked Solomon for a Preamble on the TTFI speaking about the injustices. He declined such preamble and it will be only to align with TTFC.

Re: PFIC. A thought of today is a new acronym is needed for this. I like the word “curse” today. So Punitive Foreign Investment Curse for U.S. persons living overseas, or PFIC treatment. Innocuous and purposeful sounding names for these things should be changed to more representative names. Else, IMO, we give in to the narrative of the U.S. Compliance-Congressional Industrial Complex. Of course a name including “curse” would never fly in compliance code with DNA predisposed toward compliance. But we may give it a nick name.

Re: Cursed Foreign Corporations. This is what SY says:

Regarding small business owners abroad: we need 3 things 2 be done 4 them: 1) Pass #TTFI 2 connect w/ #TTFC, 2) exempt them from the transition/GILTI tax, 3) allow them 2 elect S Corp pass-through (corporate salaries/distributions r reported as personal foreign-source income).

Solomon Yue says that he likes this story about being Proud Americans, and has already used it:

Tamar says:
I’ve said this b4: I’ve raised my kids (Israeli expats) w/spoken English at home & proud of their US origins despite leaving as toddlers. One son refused any Army job that wld require him to renounce! Get rid of #CBT & expats can be proud US ambassadors & trade promoters again.

So do we have a feature here on Brock to come up with stories about being proud Americans? So we may give them to Solomon.

37 thoughts on “Chapter 2 – Brock project: Seeking stories from current or former “U.S. Citizens” who are/were destroyed by attempting to comply with U.S. @CitizenshipTax AKA @NonresidentTax”

  1. ‘Wouldn’t it be nice and fitting if he issues a “shot heard around the world” against extraterritorial taxation from another ex-British colony!’

    Shots from another ex-British colony with around 1,000,000 victims of extraterritorial taxation are heard around the world but not listened to except by victims.

  2. @Barbara

    Starting over. Here’s my contribution again: a letter, written in my husband’s name,
    __________________

    Thank you very much for coming back and including ” Dave’s” powerful and well written story. I am so glad you did. It was much needed here.
    It is also similar to stories and just as heartbreaking as the many we have heard before of those who complied and then got in line to renounce.
    Will the US care? I cannot remain optimistic. We are all classified as tax evaders and tax criminals by the USA as well as the government and countries we live in and the “foreign” banks we deal with.

  3. Here’s killing two birds with one stone. My submission to the Ways and Means Committee hearing on May 23rd, and an act of submission by complying to US tax “obligations”:

    May 20, 2018

    Dear Chairman Brady, Subcommittee Chairman Buchanan and Members of the Committee:

    The Tax Cuts and Jobs Act has left my husband and me in an untenable situation.

    I am a Canadian with US citizenship, left the United States as a child and have lived in Canada since 1968. My husband was born in Canada and is a US citizen through his American father. We operate a small Canadian film company and for years have been diligently saving for our retirement within the company. US tax reform threatens those savings and the future of our company through the “Repatriation Tax” and GILTI aimed to encourage large US corporations to move their foreign subsidiaries back to the United States.

    Our company is not a foreign subsidiary and cannot be “repatriated” back to the US. Our company has no presence in the United States, but we do hire service providers in the US who in turn create US jobs. Our ability to directly and indirectly bring jobs to Americans in the US will cease should our Canadian business be forced to fold because of excessive US tax burdens we believe were not meant for us.

    This punitive tax is imposed on us solely because we are US citizens, even though we don’t live in the US and cannot benefit as large US companies can from “repatriating” their subsidiaries there. We can’t even open a bank account in the US because we don’t reside there!

    For years, my husband and I have been filing US taxes and reporting our Canadian corporation to the US government on an annual basis. The understanding was that our corporation would not be subject to US tax, let alone be taxed retroactively and punitively for something that never has or should be applied to us. I have always had a deep appreciation of my US citizenship, but this attempt by the US government to confiscate a major source of income for my old age through a “gotcha” manoeuvre would turn the most patriotic American into a fierce adversary! I am apparently worth more to the United States as a taxpayer than a citizen when tax laws leave Americans in impossible situations that threaten our families and futures. That hurts. Is this how you create jobs through small businesses, by bankrupting American small business owners in other countries resulting in job losses in the United States?

    If the Repatriation Tax and GILTI were not intended to apply to Americans living as residents in countries around the globe, then please fix it before irreparable harm is done to your unofficial ambassadors abroad.

    There is a simple balanced solution to solve this problem: an American living abroad should be exempt from the Repatriation and GILTI Tax regimes for any given year so long as: (1) the American meets the conditions set forth under IRC Section 911, and (2) that person is an individual U.S. Shareholder.

    I strongly request that the Congress act to correct this most painful problem. I thank you for considering my statement.

  4. Does anyone know the deadline for this? I put it in the “Take Action” sidebar, but would like to show the deadline date. Thanks.

  6. @pacifica777

    Are you referring to a deadline for submissions to Solomon Yue (the subject of this post), or for submissions to the Ways and Means Committee regarding the TCJA and small businesses, the subject of the May 23rd hearing? If the former, I’d be happy to ask Solomon. The latter deadline is June 6th:

    https://waysandmeans.house.gov/wp-content/uploads/2018/05/20180523TP-Advisory-2.pdf

    I listened to the May 23rd meeting, and no surprise that issues affecting American Abroad were not discussed. The closest thing was a witness complaining that some homelanders will be double taxed under tax reform.

    https://waysandmeans.house.gov/event/hearing-on-tax-reform-and-small-businesses-growing-our-economy-and-creating-jobs/

    I have requested a hearing through the Committee’s tax counsel and my Congressman aimed specifically at the TT and GILTI as it affects Americans abroad, but it appears to be falling in deaf ears in spite of the fact that the June 15th deadline is quickly approaching. I hope that Monte Silver can get the delay with Treasury he’s been working on.

  7. Nothing as of yet of Solomon Yue talk with the American Chamber of Commerce in Hong Kong on the 25th.

    He has a presentation to Republicans Overseas Hong Kong on May 28th, so maybe we will hear more after that.

    https://us3.campaign-archive.com/?u=6abb65ad85e4871518cc4e6ad&id=227ba632e2

    May 28, 6:30 – 8:00PM
    Dear Friend or Member of RO Hong Kong,

    Final reminder!

    Please join us on Monday, May 28, from 6:30 – 8:00 pm to talk with Solomon Yue, CEO of Republicans Overseas, about Territorial Taxation and the Repatriation Tax. There will be plenty of time for other non-tax discussions, too.

    Mr. Yue will discuss his recent visits to Washington, D.C., the progress being made on Territorial Taxation for Individuals, and the impact this would have on businesses owned by overseas Americans. He has been involved with drafting the TTFI bill and will discuss what can be publicly shared.

  8. I have zero trust in getting this approved. There is a large lobby of CPAs and tax attorneys against us. They pay congressman huge donations to keep these CBT laws intact as it is their bread and butter. It’s better now than ever to simply renounce and rejoice. We simply don’t pay large donations every year. There ya nothing about tax avoidance or evasion in this as people are living overseas. Congress is fully aware but want donations coming from the cpa/attorney lobbies. It’s not a question of patriotism on part of these congrsssman but their bank balances size. This is a huge industry we are all up against.

  9. It would only require an executive order to erase this once and for all. Any Trump lovers here?

  11. @Harrison

    Our accountant in Canada said he would not be unhappy to see CBT go and that accountants can always find work. Anthony Parent at IRS Medic supports a change from CBT. Perhaps they are unusual.

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