101 thoughts on “Coalition Supports RBT – Letter to Ways & Means & Senate Finance Committee”
FATCA seems to have induced a collective guilt complex in many who simply are not guilty of any wrongdoing.
IMO, the appropriate response to FATCA is rage.
@plaxy
After the initial fright
IT IS.
“A US pension is taxable in retirement country”
Not always. It depends on which pension, and which treaty.
“I know of a US phsician who did a 1 yr stint abroad and didn’t file. They received an IRS letter asking why that return wasn’t filed.”
Yes I believe that’s one of the auto-letters churned out by the processing system, and sent by third-class bulk post to a third country, typically in Eastern Europe where the costs are low, to be forwarded on in the general direction of the taxpayer’s last known address.
Did the doc reply?
@plaxy
The treaties are there to enable the resident country to tax.
Treaties are pretty non existent with low or no tax countries like Monaco.
Letter I believe came on his return to the States. Not sure if he replied or the resulting consequences, as it was told to me as a word of warning before I did a Sabbatical.
@plaxy
Not an auto letter from a third country, this was a US letter sent to his US address ,well after his return. This is what we were talking about
‘returning to the US’
Heidi:
“The treaties are there to enable the resident country to tax.”
No, the treaties are agreements between the two countries about who has primary taxing rights, when income is taxable under the law of each country.
USCs, of course, can’t claim most treaty benefits; instead, they’re able to claim USC benefits. Former USCs can claim treaty benefits.
I believe money paid into a Roth pension has already been taxed by the US, so it’s not taxable when drawn. And the UK doesn’t tax it either.
“Letter I believe came on his return to the States. Not sure if he replied or the resulting consequences, as it was told to me as a word of warning before I did a Sabbatical.”
It all seems pretty un-alarming. Presumably it would have been mentioned as part of the warning, if something worse than a letter had
befallen him.
“Not an auto letter from a third country, this was a US letter sent to his US address ,well after his return. This is what we were talking about
‘returning to the US’ ”
But why is it alarming?
@placy
The US claims the right to tax pensions originating in the US unless a treaty is in place for NRA s.
I lost touch with said doc, but just a warning
that the IRS is not so innocuous for those who return to live there. You can’t poo, poo their power on their soil.
“The US claims the right to tax pensions originating in the US unless a treaty is in place for NRA s.”
The source country generally has primary taxing rights unless the recipient is eligible to get the withholding reduced (perhaps to zero) by invoking a treaty provision.
“I lost touch with said doc, but just a warning
that the IRS is not so innocuous for those who return to live there. You can’t poo, poo their power on their soil.”
Wouldn’t dream of it. And I certainly agree with those who regard the IRS as an agency out of control. But I haven’t seen any reports that make me think nonfiling USCs need to avoid returning to the US as if they were criminals.
@plaxy
Just because you haven’t seen any reports doesn’t mean one shouldn’t consider all possibilities when returning to that country of ‘unbounded possibilities’. That’s what I was trying to point out to Fred or any others lurking here.
Heidi: “Just because you haven’t seen any reports doesn’t mean one shouldn’t consider all possibilities when returning to that country of ‘unbounded possibilities’.”
Precisely. I “feel” like a target at the moment and that is enough to keep me away from the place unless things change.
“Just because you haven’t seen any reports doesn’t mean one shouldn’t consider all possibilities”
IMO, it’s a waste of time and spirit, worrying unnecessarily – especially when you’re just worrying that other people might not be worried enough.
But I think you and I have had this argument before. No point going over old ground.
I only made it because Fred is holding on to US citizenship in case he ever wants to return there one day.
If that is the case, then I think it’s wiser to keep filing than to stop again.
My tax preparer who did my final returns told me an unofficial form of streamlined always existed. People left and when they returned to the USA they either started filing again or maybe filed a few back years. Of course all this was pre-Fatca when CBT was either ignored or people never heard of it. It was never an issue. People forget that these are mainly zero owing returns. In some cases even refunds due. The PFIC overkill had not gone into over drive yet. No one filed pensions in the old days (unless they were receiving them) and certainly not as PFIC and some accountants didn’t even know about Fbar. Much of the fear even today is unwarranted unless you are a high net worth person. Best not to file if possible because once you do, you open yourself up to if not anything else queries on your numbers, mistakes with math and eventually a law comes around like the transition tax that becomes a gotca for those that filed.
Yep.
When you file a 1040, you’re asking to be taxed as a US Person. Similar to asking for your corporation to be taxed as a US Corporation.
So similar, that I’ve come to think that’s why the US started taking an interest in the taxation of US citizens abroad around the time of the Reagan tax cuts, when (if I understand correctly) the deferral of tax for foreign earnings of US corporations began to be put in place, and the little note about obligation to file appeared in the passport. It wasn’t important whether people like me filed or didn’t file, but it was important for USP owners / shareholders of US corporations to keep filing their individual 1040s.
The taxation of the USP owners of the corporation became the route to the current deemed repatriation of all those juicy billions. Taxation of undistributed, untaxed foreign earnings. Yummy!
I may be wrong.
‘An unofficial form of streamlined always existed.’
Agree
our accountant wanted us to enter streamlined. We said no and insted filed 4 years of late returns with nothing owing and 1 return on time. Same result. Haven’t heard a word.
An unofficial form of streamlined always existed
Yes. It was called simply making a voluntary disclosure. And was demonstrated by Fact Statement 2011-13.
Pity so many condors pressed so many to continue to enter OVDP and Streamlined. Totally unnecessary. There is/was simply no law requiring OVDP. With horrid effects and results on those who did so.
One could probably get away with having US social security retirement paid to a US account, file there and pay next to nothing in the US. The country one lives in need not know.
As for me, apparently the recent tax cuts will increase the child tax credit. Seems like my tax prep fees will be paid for again next year.
Uh oh, are we digressing again?
😀
“One could probably get away with having US social security retirement paid to a US account, file there and pay next to nothing in the US. The country one lives in need not know.”
And then we’ll all get called tax evaders. Let’s please stick to attacking unfair burdens instead of fair ones.
ND:
“And then we’ll all get called tax evaders. ”
Indeed. That’s why we are treated as potential tax evaders – because of the US birthplace which means we’re US citizens unless proven innocent, and therefore could easily be receiving untaxed or low-taxed US income, and not reporting it to the local tax authority.
That’s why the US can charge us outrageous money for confirming that we’re no longer US citizens and therefore no longer possess that easy ability to commit cross-border tax evasion.
It’s why CBT and jus soli ought to be stopped. Unfortunately, it’s also one of the reasons that’s probably never going to happen.
@ Fred & Plaxy & Norman
One could probably get away with having US social security retirement paid to a US account, file there and pay next to nothing in the US. The country one lives in need not know.”
Only if you are still a US citizen, NRA’s can have their SS payments paid into a US bank account but to invoke any treaty( either 0% , 15% or 30% withhold ) they must attest every 2 yrs on form
SSA 7162 OCRSM that they are tax resident in their resident country, otherwise as NRA’s without a SS tax treaty, they will only receive 50% of their yearly benefits.
I receive a 1042S from SS but I am not sure if any reporting of SS payments is made to resident country tax authority.
Heidi:
That’s the point: when you get the CLN, you lose that easy ability to commit cross-border tax evasion. A very valuable loss, if it’s not your ambition to commit cross-border tax evasion.
The CLN is like a visa granting PR status in NRA-land.
Below are some of the points [Solomon Yue] and others say Holding’s bill is likely to include:
[..]
* Those wishing to opt for the TTFI option must not have any U.S.-sourced income.
That’s why. While you’re a US-born person with no CLN, you can claim USC benefits, including tax breaks on US-source income. Once you get the CLN, you can’t.
@Plaxy
Yes, you and I know, but not everyone knows that Fred is still a US person so I was just pointing out the difference for those who don’t know the process or haven’t been through renunciation yet.
FATCA seems to have induced a collective guilt complex in many who simply are not guilty of any wrongdoing.
IMO, the appropriate response to FATCA is rage.
@plaxy
After the initial fright
IT IS.
“A US pension is taxable in retirement country”
Not always. It depends on which pension, and which treaty.
“I know of a US phsician who did a 1 yr stint abroad and didn’t file. They received an IRS letter asking why that return wasn’t filed.”
Yes I believe that’s one of the auto-letters churned out by the processing system, and sent by third-class bulk post to a third country, typically in Eastern Europe where the costs are low, to be forwarded on in the general direction of the taxpayer’s last known address.
Did the doc reply?
@plaxy
The treaties are there to enable the resident country to tax.
Treaties are pretty non existent with low or no tax countries like Monaco.
Letter I believe came on his return to the States. Not sure if he replied or the resulting consequences, as it was told to me as a word of warning before I did a Sabbatical.
@plaxy
Not an auto letter from a third country, this was a US letter sent to his US address ,well after his return. This is what we were talking about
‘returning to the US’
Heidi:
“The treaties are there to enable the resident country to tax.”
No, the treaties are agreements between the two countries about who has primary taxing rights, when income is taxable under the law of each country.
USCs, of course, can’t claim most treaty benefits; instead, they’re able to claim USC benefits. Former USCs can claim treaty benefits.
I believe money paid into a Roth pension has already been taxed by the US, so it’s not taxable when drawn. And the UK doesn’t tax it either.
“Letter I believe came on his return to the States. Not sure if he replied or the resulting consequences, as it was told to me as a word of warning before I did a Sabbatical.”
It all seems pretty un-alarming. Presumably it would have been mentioned as part of the warning, if something worse than a letter had
befallen him.
“Not an auto letter from a third country, this was a US letter sent to his US address ,well after his return. This is what we were talking about
‘returning to the US’ ”
But why is it alarming?
@placy
The US claims the right to tax pensions originating in the US unless a treaty is in place for NRA s.
I lost touch with said doc, but just a warning
that the IRS is not so innocuous for those who return to live there. You can’t poo, poo their power on their soil.
“The US claims the right to tax pensions originating in the US unless a treaty is in place for NRA s.”
The source country generally has primary taxing rights unless the recipient is eligible to get the withholding reduced (perhaps to zero) by invoking a treaty provision.
“I lost touch with said doc, but just a warning
that the IRS is not so innocuous for those who return to live there. You can’t poo, poo their power on their soil.”
Wouldn’t dream of it. And I certainly agree with those who regard the IRS as an agency out of control. But I haven’t seen any reports that make me think nonfiling USCs need to avoid returning to the US as if they were criminals.
@plaxy
Just because you haven’t seen any reports doesn’t mean one shouldn’t consider all possibilities when returning to that country of ‘unbounded possibilities’. That’s what I was trying to point out to Fred or any others lurking here.
Heidi: “Just because you haven’t seen any reports doesn’t mean one shouldn’t consider all possibilities when returning to that country of ‘unbounded possibilities’.”
Precisely. I “feel” like a target at the moment and that is enough to keep me away from the place unless things change.
“Just because you haven’t seen any reports doesn’t mean one shouldn’t consider all possibilities”
IMO, it’s a waste of time and spirit, worrying unnecessarily – especially when you’re just worrying that other people might not be worried enough.
But I think you and I have had this argument before. No point going over old ground.
I only made it because Fred is holding on to US citizenship in case he ever wants to return there one day.
If that is the case, then I think it’s wiser to keep filing than to stop again.
My tax preparer who did my final returns told me an unofficial form of streamlined always existed. People left and when they returned to the USA they either started filing again or maybe filed a few back years. Of course all this was pre-Fatca when CBT was either ignored or people never heard of it. It was never an issue. People forget that these are mainly zero owing returns. In some cases even refunds due. The PFIC overkill had not gone into over drive yet. No one filed pensions in the old days (unless they were receiving them) and certainly not as PFIC and some accountants didn’t even know about Fbar. Much of the fear even today is unwarranted unless you are a high net worth person. Best not to file if possible because once you do, you open yourself up to if not anything else queries on your numbers, mistakes with math and eventually a law comes around like the transition tax that becomes a gotca for those that filed.
Yep.
When you file a 1040, you’re asking to be taxed as a US Person. Similar to asking for your corporation to be taxed as a US Corporation.
So similar, that I’ve come to think that’s why the US started taking an interest in the taxation of US citizens abroad around the time of the Reagan tax cuts, when (if I understand correctly) the deferral of tax for foreign earnings of US corporations began to be put in place, and the little note about obligation to file appeared in the passport. It wasn’t important whether people like me filed or didn’t file, but it was important for USP owners / shareholders of US corporations to keep filing their individual 1040s.
The taxation of the USP owners of the corporation became the route to the current deemed repatriation of all those juicy billions. Taxation of undistributed, untaxed foreign earnings. Yummy!
I may be wrong.
‘An unofficial form of streamlined always existed.’
Agree
our accountant wanted us to enter streamlined. We said no and insted filed 4 years of late returns with nothing owing and 1 return on time. Same result. Haven’t heard a word.
Yes. It was called simply making a voluntary disclosure. And was demonstrated by Fact Statement 2011-13.
Pity so many condors pressed so many to continue to enter OVDP and Streamlined. Totally unnecessary. There is/was simply no law requiring OVDP. With horrid effects and results on those who did so.
One could probably get away with having US social security retirement paid to a US account, file there and pay next to nothing in the US. The country one lives in need not know.
As for me, apparently the recent tax cuts will increase the child tax credit. Seems like my tax prep fees will be paid for again next year.
Uh oh, are we digressing again?
😀
“One could probably get away with having US social security retirement paid to a US account, file there and pay next to nothing in the US. The country one lives in need not know.”
And then we’ll all get called tax evaders. Let’s please stick to attacking unfair burdens instead of fair ones.
ND:
“And then we’ll all get called tax evaders. ”
Indeed. That’s why we are treated as potential tax evaders – because of the US birthplace which means we’re US citizens unless proven innocent, and therefore could easily be receiving untaxed or low-taxed US income, and not reporting it to the local tax authority.
That’s why the US can charge us outrageous money for confirming that we’re no longer US citizens and therefore no longer possess that easy ability to commit cross-border tax evasion.
It’s why CBT and jus soli ought to be stopped. Unfortunately, it’s also one of the reasons that’s probably never going to happen.
@ Fred & Plaxy & Norman
One could probably get away with having US social security retirement paid to a US account, file there and pay next to nothing in the US. The country one lives in need not know.”
Only if you are still a US citizen, NRA’s can have their SS payments paid into a US bank account but to invoke any treaty( either 0% , 15% or 30% withhold ) they must attest every 2 yrs on form
SSA 7162 OCRSM that they are tax resident in their resident country, otherwise as NRA’s without a SS tax treaty, they will only receive 50% of their yearly benefits.
I receive a 1042S from SS but I am not sure if any reporting of SS payments is made to resident country tax authority.
Heidi:
That’s the point: when you get the CLN, you lose that easy ability to commit cross-border tax evasion. A very valuable loss, if it’s not your ambition to commit cross-border tax evasion.
The CLN is like a visa granting PR status in NRA-land.
That’s why. While you’re a US-born person with no CLN, you can claim USC benefits, including tax breaks on US-source income. Once you get the CLN, you can’t.
@Plaxy
Yes, you and I know, but not everyone knows that Fred is still a US person so I was just pointing out the difference for those who don’t know the process or haven’t been through renunciation yet.