Liberty and justice for all United States persons abroad

The Isaac Brock Society

Author Archives: Petros

Taxpayers abroad can now use SNAP (a.k.a. food stamps) screening tool

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According to CNN (via Business Insider), the US government spent $3 million to inform the public about their eligibility for food stamps.  I once lamented that I didn’t know where in Toronto to sign up for US Federal Welfare, Unemployment Insurance or Food Stamps.  Now at least for Supplemental Nutrition Assistance Program (SNAP), there is a screening tool to see if I am even eligible.  So I thought, “Why not, if the US wants to give me free money?”  So I tried the screening tool.  But I was thwarted by the first drop down menu.  I couldn’t find Ontario.  Crap!

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Form Nation is stuck on stupid: IRS sends Petros a bill

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I published a letter that I sent with my 2009 tax, which was late because of sheer frustration about what to do.  In the letter, I explained that I had relinquished my US citizenship.  Yet the IRS seems to think that I do not qualify for the Foreign Earned Income Exclusion.  If you will recall, they sent me a threatening letter asking for more information, to which I replied about a month ago, possibly with insufficient time for them to take it into account (though I don’t see how they could not have received it before June 12, as it was sent in early May).  The original 2555, filled out by my cheap tax preparer (no longer qualified according to the new rules), did not include the dates of my residence abroad.  Thus, I amended that form and resent it.  This shows the problem of finding a good tax preparer.  If one is cheap, he will make mistakes.  If a tax preparer makes no mistakes, expect to pay over a thousand dollars for a simple return.  In any case, I will appeal this decision within the 60 days.

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Please read this post if your actual expatriation date is before 2004 (Updated)

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UPDATE: Michael J. Miller made a further comment based on a conversation with an IRS employee knowledgeable about expatriation (emphasis mine):

As a follow-up to my prior posts, I spoke today with someone at the IRS who is knowledgeable in the “expatriation” area to discuss the issue of someone who renounced prior to enactment of the American Jobs Creation Act in 2004 but never obtained a CLN.  While the advice I received was not a formal expression of the IRS’s position on this subject, both she and the colleague that she consulted were of the view that it would be crazy for the IRS to treat such an individual as subject to the expatriation rules. I hope that those of you for whom this is a huge issue will take some measure of comfort from this update.

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Instructions for Form 8854 are clearly contradictory

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[Editor’s note:  This post clears up the issue of whether 8854 is required for people receiving backdated CLNs: If your expatriation date is before 2004, the rules are different]

In this post, I want to point out a clear contradiction both in the logic and the wording of the instructions for Form 8854.  This is a follow-up post to the question posed by USX about who must file the 8854. Continue reading →

The “Last in Time Rule” makes tax treaties with the United States essentially worthless

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The Commissioner of the IRS, Congress, the President and the US courts are to thank for the “Last in Time Rule”, which essentially enables the United States to dishonour every tax treaty that it has ever made.  Senior Circuit Judge WILLIAMS wrote this summary of the case (William David JAMIESON and Judith A. Jamieson, Appellants v. COMMISSIONER of INTERNAL REVENUE Service, Appellee):

William David and Judith A. Jamieson are United States citizens who lived in Canada in 2003, earned Canadian income and paid Canadian taxes on that income.   On their U.S. income tax return for that year, they claimed foreign tax credits of $95,132 against their reported U.S. tax liability of $96,429, resulting in a net U.S. liability of $1297.   They did not compute any alternative minimum tax (“AMT”) liability under 26 U.S.C. § 55, noting on their return their position that a tax treaty between the United States and Canada precluded any such liability.   The Commissioner of Internal Revenue rejected this position and, applying 26 U.S.C. § 59(a)(2)’s limit on foreign tax credits for AMT purposes, calculated that the Jamiesons owed $6078 in alternative minimum tax.

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Foreign Financial Institutions could recover some of their costs for implementing FATCA

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The problem with FATCA, according to so many foreign financial institutions (FFIs), is that they bear all the costs and none of the benefits of FATCA.  This is perhaps untrue.  According to the IRS website, informants are entitled to a cut on the proceeds of civil and criminal fines under the Bank Secrecy Act (FBAR):

4.26.7.8  (11-17-2006)
Rewards for Informants

  1. An individual who provides original information that leads to recovery of a criminal fine, civil penalty, or forfeiture that exceeds $50,000 for a violation of the Bank Secrecy Act may be eligible for a reward, 31 USC 5323 and 31 CFR 103.62.
  2. The reward may not exceed the lesser of $150,000 or 25% of the net amount collected. Generally officers and employees of the United States, state, or local governments are not eligible to collect the reward.

Thus, if the FFI provides information ratting out their US citizen clients to the IRS, they should be able to claim a portion of any fines that the IRS is able to collect.

Undoubtedly, the IRS will claim that the information was not “original” but required by FATCA.  Nevertheless, FFIs should pursue the “legal” possibility of getting a piece of the action.

The redirect of isaacbrocksociety.com is successful

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I have completed the transfer of the registrant for isaacbrocksociety.com and immediately used our new host’s free service to forward that domain to isaacbrocksociety.ca.  As soon as this has propagated across the internet, no one will be able to get to the old wordpress site using the dot.com address.  The transfer has been successful in redirecting to the correct page at the dot.ca site.  So there is no need for authors to go through their old posts and change links.  The only thing is that comments do not have the same permalink as before and it may be useful to change links to comments.

I personally have access to the old site (isaacbrocksociety.wordpress.com), if necessary.  But at this point, I have trouble seeing why it would be necessary for anyone to access the old site.

(I’ve just checked, and it is clear that subscribers to the old blog do not need change their subscriptions to the new blog because the redirect takes them directly to the correct page).