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Category Archives: Issues regarding US persons abroad

Trump Logic – Understanding The President’s Rationale For Tariffs

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Davos Day 2 – The Arrival Of President Trump

My last post included Prime Minister Carney’s speech at Davos of January 21, 2025. His speech induced a tremendous amount of interesting commentary which is worthy of a separate post. We have not heard the last of that speech!

Today’s post will focus on President Trump’s speech. The speech was a classic Trumpian speech which included a healthy mix of:

The Good, The Bad and The Ugly

In this post I  focus on one five minute segment of the speech where the President explained:

– his general attitude toward other countries selling their goods into the U.S. market (penetrating “Fortress America”) ; and

– his justification for imposing tariffs (costs) on goods entering “Fortress America”

Generally, this reveals much of what he understands the tariffs/costs of entering “Fortress America” to be.

Spoiler alert: The President seems to mistakenly believe that tariffs are primarily a tax/sanction on the country wishing to export goods into the United States. He doesn’t appear to understand tariffs to be largely a tax paid by the U.S. importer.

That tariffs are paid by U.S. consumers does NOT mean that they are of no cost to the exporting country. On the contrary. As the costs of importing a good increases, the demand for that good will decrease. Hence, trading nations are greatly concerned with the costs one must pay to import a product from outside the United States. In some cases the exporter may lower the cost to the importer by reducing the price. This is why the effect of the additional costs that tariffs represent must be determined on a “product by product” basis.

In summary:

A tariff is a tax paid by the U.S. importer on the cost of the import. In some cases, the exporter may lower the cost to mute the added cost imposed on the importer.

Part A – The President’s stated rationale for tariffs

Here is the where the rationale for his tariffs begins. I suggest you listen for about five minutes (to the 1:05 minute mark) before reading on.

A summary of what President Trump is saying …

Continue reading →

The Green Grocer And The Power Of The Powerless – Mark Carney’s Speech At Davos

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Then …

On May 17 1961, President Kennedy spoke before the Canadian Parliament. His message included:

Geography has made us neighbors. History has made us friends. Economics has made us partners. And necessity has made us allies. Those whom nature hath so joined together, let no man put asunder.

What unites us is far greater than what divides us. The issues and irritants that inevitably affect all neighbors are small deed in comparison with the issues that we face together–above all the somber threat now posed to the whole neighborhood of this continent–in fact, to the whole community of nations. But our alliance is born, not of fear, but of hope. It is an alliance that advances what we are for, as well as opposes what we are against.

Now …

During 2025 the Trump administration has included Canada in his generalized threats and impositions of tariffs. The President has spoken (whether seriously or not) of annexing Canada – an obvious disrespect for Canada’s sovereignty. Prime Minister Carney election was a response to the President’s threats against Canada.

Could it be that the long relationship between Canada and the United States has been “put asunder”?

The Prime Minister’s speech at the World Economic Forum clearly confirms Canada’s objective is to protect, preserve and enhance Canada’s sovereignty.

All persons interested in the future of Canada and supporters of Canada’s sovereignty should watch Mark Carney’s speech which included:

“We are no longer relying on the strength of our values, but on the values of our strength.”

As reported by Sean Boynton of Global News:

Prime Minister Mark Carney gave a forceful speech Tuesday at the World Economic Forum in Davos, Switzerland, on the “new world order” and how middle powers like Canada can benefit by working together.

The speech was delivered against a backdrop of rising geopolitical tensions between great powers like Russia, China and the United States, and as U.S. President Donald Trump threatens allies with tariffs and pushes to acquire Greenland from Denmark, a member of the NATO military alliance.

Read the full transcript of Carney’s speech to World Economic Forum

Below is the full transcript of the English parts of Carney’s remarks.

Continue reading →

A Shocking Appropriation Of The Inherited Wealth Of Two U.S. Citizens Living In New Zealand By Mr. FBAR

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A shocking appropriation of the inherited wealth of two U.S. citizens living in New Zealand

For those who imagine that FBAR penalties are proportionate to the amount of tax owed on the contents of non-reported “foreign” bank accounts, here is your answer!

SEAT members Laura Snyder, Karen Alpert and John Richardson recently published the following article in Tax Notes.

FBAR Penalty: An Unconscionable Appropriation of the Retirement Savings of an Elderly New Zealand Couple

 

The Department of Justice is suing to recover the FBAR penalties. Here is the claim:

https://www.taxnotes.com/research/federal/court-documents/court-petitions-and-briefs/government-seeks-fbar-penalties-new-zealand-couple/7t8ly

As President Reagan was fond of saying:

“Facts are stubborn things!”

 

John Richardson

 

Not All Citizenship Taxation Is The Same! Hint The United States Is Far Worse Than Eritrea

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Introduction – Citizenship Taxation Eritrea Style

My last post discussed the United States Net Investment Income Tax (“NIIT”) AKA the 3.8% Obamacare surtax.

 

Part A – How Does One Compare U.S. citizenship Taxation To Eritrea Citizenship Taxation?

About the United States Net Investment Income Tax

At it’s core the NIIT is a straight 3.8% calculation on taxable net investment income (subject to the usual U.S. aversion to simplicity). It’s important to understand that the NIIT is a separate tax that is calculated separately from the basic income tax. The NIIT is found  in Chapter 2A of the Internal Revenue Code and NOT in Chapter 1. (See the Appendix below.) Any NIIT owing is reported on the Form 1040 along with taxes owing from Chapter 1. U.S. citizens abroad with investment income are required to comply with BOTH:

1. Taxes calculated under Chapter 1 (a detailed calculation with all kinds of deductions, exclusions, forms, taxes and penalties); and

2. Taxes calculated under Chapter 2A (a 3.8% charge on taxable investment income).

The Net Investment Income Tax has had a particularly harsh impact on impact on Americans abroad. Those interested in the details are invited to read a 2023 post by Virginia La Torre Jeker describing how the NIIT impacts Americans abroad. You will find a podcast with Virgina as Appendix B of this post.

The purpose of the NIIT is to pay for health care for resident Americans. Americans abroad do NOT benfeift from this tax.

Significantly, the Net Investment Income Tax is a tax imposed on Americans abroad which is specifically designed to benefit resident Americans and exclude Americans abroad from the benefits.

About Eritrea’s (kinder and more gentle) version of citizenship taxation

Continue reading →

Does The Canada U.S. Tax Treaty Allow A Foreign Tax Credit Against The Net Investment Income Tax?

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Introduction and summary

In brief some of you may have heard that the United States “Net Investment Income Tax” (“NIIT”) found in Chapter 2A of Subtitle A (Income taxes) of the Internal Revenue Code (Chapter 26) cannot be offset by foreign tax credits based on Canadian taxes paid on the same income. Yes, this does subject some Canadians (and others) to double taxation (at a rate of 3.8%) on investment income.

From the perspective of the average individual “investment income” should be understood to be dividends, interest and capital gains including the capital gain on the sale of a principal residence!

(The “NIIT” is more widely referred to as the Obamacare surtax. Obviously Americans abroad cannot benefit from Obamacare.)

Interestingly, the “Net Investment Income Tax” is:

  • a tax in addition to the normal income taxes in the Internal Revenue Code
  • operates in a way that is very similar to Eritrea’s citizenship based tax on foreign income
  • is one more expression of the U.S. hatred of all things foreign (the Internal Revenue Code punishes all things foreign)
  • creates an extra tax (double taxation) on non-U.S. investments (in this way it is similar to the Trump tariffs which is essentially a sales tax on foreign imports)

The question of whether the Canada/U.S. tax treaty obligates the United States to allow a foreign tax credit (minimizing double taxation) is currently being litigated in the Bruyea case.

The purpose of this post is to explain the issue, the litigation and highlight a very important amicus brief written by two U.S. law professors in support of Mr. Bruyea.  To better understand the problem, you are invited to read further. For those interesting only in listening to a podcast about the amicus brief, here you go …

An outline of this post is as follows …

Part 1 – Guaranteed double taxation on certain investment income for U.S. Citizens in Canada!!

Part 2 – The Net Investment Income Tax and the Internal Revenue Code denial of foreign tax credits 

Part 3 – Does the Canada/U.S. tax treaty provide a tax credit when the Internal Revenue Code does not?

Part 4 – Conclusion

Appendix A – How the Internal Revenue Code is structured and why the Internal Revenue Code does not allow for a foreign tax credit to offset the NIIT

Appendix B – A deeper dive

 

Continue reading →

Then And Now: How The U.S. Understanding Of International Law Has Evolved Since 1979

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Prologue

There are many who believe that the capture of the Venezuelan president was a violation of the principle of international law. This was the consensus expressed in the United Nations meeting of January 5, 2026.

Venezuela Live Updates: At U.N. Emergency Meeting, U.S. Allies Criticize Military Action in Caracas

American allies including France objected to the military incursion into a sovereign state and the capture of the Venezuelan president as a violation of international law.

The full text of the New York Times article is here.

Assuming, without deciding, that the United States violated international law, it is  clear that:

The United States does not feel bound by International law.

Circa December 10, 1979

On December 10, 1079 I was awakened by a radio broadcast where I listened to the very impressive voice, passion and arguments being made by U.S. Attorney General Benjamin Civiletti. Mr. Civiletti was explaining to the International Court of Justice the legal significance of a group of Iran students forcibly entering the U.S. Embassy, without the permission of the U.S. Government, taking control of the Embassy and holding the employees hostage. There are some who would call this a hostage taking.

Mr. Civiletti explained to the court that the occupation of the U.S. Embassy and holding the occupants hostage was a violation of specific treaties AND a violation of international law.

What follows is the full text of Mr. Civiletti’s plea to the International Court of Justice.

Click to access Civiletti-12-10-1979.pdf

Listen to this  AI generated podcast based on Mr. Civiletti’s argument to the court. What is remarkable is that in 1979 the United States appears to be supporting the validity of international law and the sovereignty of nations. Those interested should listen to the podcast at least twice.

It appears that the United States of 1979 is not the same as the United States of 2026.

John Richardson

Appendix – Some further reaction …

 

 

Americans Abroad Aren’t Renouncing Because They Want To. They Are Renouncing Because They Have To!

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The January 6, 2026 anniversary and a summary of this post:

 

January 6, 2026  marks the three year anniversary of the State Department promise to U.S. citizens. Specifically, the promise was to lower the fee to issue a CLN from $2350 to $450. It is now three years later and the fee reduction has not been achieved. I am not suggesting that the fee will never be lowered. Maybe the fee will be lowered. The process of lowering the fee is still “in the system”. As of late December 2025, RIN 1400-AF61, titled “Schedule of Fees for Consular Services–Administrative Processing of Request for Certificate of Loss of Nationality (CLN) Fee,” was in the Final Rule stage. This suggests that the fee reduction WILL become a reality. Yet, the failure to have lowered the fee suggests evidence of a continuing animus and indifference toward Americans abroad and certainly strengthens the arguments for renunciation.

On October 2, 2023 the State Department began the rule making process as described in the Federal Register.

The “rulemaking” process generated more than 800 comments . Generally the comments emphasized that the fee to issue a CLN was NOT the dominant problem. Rather the problem was the need for Americans abroad to renounce at all. Comment after comment linked renunciation to the difficulties of complying with US citizenship taxation and FATCA.

The claim that Americans abroad are being forced to renounce because of U.S. citizenship taxation and FATCA raises the question of whether these circumstances violate the constitutional principle in Afroyim v. Rusk. The teaching of Afroyim is that Congress is prohibited from engaging in conduct that results in the “forcible destruction of citizenship”. It is clear that the specific rules of U.S. citizenship taxation do force some (but not all) people to renounce. At the very least, the circumstance of U.S. citizenship, makes it unreasonably difficult for Americans abroad to live freely outside the United States.

Is the difficulty citizenship taxation per se or the specific rules of U.S. citizenship taxation?

Could citizenship taxation be retained but be changed into a method of taxation that is more like “Eritrean citizenship taxation” – only an excise tax or possibly a passport renewal fee? Perhaps the United States could look to “Eritrea” for an acceptable means to tax Americans abroad.

Anecdotal evidence makes clear that some people have delayed renouncing U.S. citizenship in the hopes that the fee for issuing the CLN will be reduced. Would a fee reduction trigger a stampede to renounce?

Those who do NOT wish to read further should (at the very least) read the comments from Americans abroad about why they are renouncing U.S. citizenship.

For those who wish to read further …

The complete post is lengthy, comprehensive and organized into the following parts:

Part I – Introduction and purpose

Part II: “Rulemaking” and the comments it generated

Part III: “Rulemaking” and the comments it generated

Part IV – The $2350 fee is the first of three “Exit Taxes”

Part V – The “comments” to the notice and what those comments suggest

Part VI – U.S. “citizenship taxation”, Afroyim and the “forcible destruction of citizenship”

Part VII – Why does the United States continue to abuse U.S. citizens abroad?

Appendix A – AI generated podcast summarizing the “notice” to reduce the fee for a CLN

Appendix B – Two recent podcasts discussing Afroyim v. Rusk

Continue reading →

2025 – The Erosion Of Trust And The Year Of The International Oh My God (“OMG”) Moment

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Prologue – What sled dogs and the Yukon teach us about the importance of trust

 

Many years ago I visited Whitehorse, Yukon. It is a truly magical place. To visit the Yukon is to feel that you are experiencing another planet.  Amazingly, it’s easily accessible. During that visit I met a man who ran a “Sled Dog Tour” business. The dogs would run together – each dog doing its part. A sled dog racing team operates as a “well oiled” unit. Each dog – whether the lead dog or one of the dogs pulling from the middle – has a very specific and well understood role. Together the dogs worked together to create an outcome.  That outcome far exceeded what any one dog could achieve individually. I asked the man running the business how it was that  the dogs worked so well together. He answered that the effectiveness of the dogs as a unit was the result of one simple thing:

“Trust in each other”

He meant that individually the dogs trusted each other to work toward a common goal and each dog trusted that the other dogs would behave as they were expected to behave.

That’s obvious. But, sometimes the obvious can be difficult to see. If the dogs did not trust each other they could not  operate as an effective unit. Absent trust, each dog would be left to only his own capabilities. With trust great things could be accomplished. (Political systems are organized around the question of what things are better left to individuals and which things are achieved better as a group. For example, should a country have a national health card system?)

What’s true of the effectiveness of “sled dogs” is true of the interaction of countries.

Trust isn’t everything! It’s the only thing!

It’s also true that the Yukon is an incredible place to visit!

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Seasons Greetings And A Celebration of  14 years of the Isaac Brock Society

 

The Isaac Brock Society officially began on December 10, 2011 with a post written by Pretros about the FBAR. Fourteen years letter the FBAR is still an issue for Americans abroad and fourteen years later the Isaac Brock Society continues on. I take this opportunity to thank some (perhaps not all) of the original founders of Brock who had the vision, courage, generosity and skills to create Brock. The site was created following the “OVDI Summer of 2011” and the fear and trauma that caused. The combination of the IRS, the tax compliance industry and the media were combining to deliver the message that a “U.S. birthplace” made one a target for retroactive taxation, forms and penalties. The message was made more powerful because of the alignment of the voices of the IRS, the tax compliance community and the media. The reality was that none of the three understood the situation of Americans abroad. Yet, it took some time for their ignorance to become clear. The Isaac Brock Society was conceived in the message to bring clarity, calm and understanding to the hysteria. The founders of Brock deserve special thanks and acknowledgementt. In that spirit I offer a special shout out to Petros, Calgary411, Pacifica and Deckard.

Those founders of Brock “dug the foundation” on which the Isaac Brock Society was built. Once that foundation was built, the contributors and commenters completed the “house of Brock” and generated the massive commentary. An example is this holiday post from 2019 which captures the essence of the Isaac Brock Society.

Two of the many lessons and observations from that period include:

1. The whole is often greater than the sum of the parts.

When working together individuals, groups and institutions can achieve more than if they work separately. The fear instilled by the IRS, tax compliance industry and media working together (although not a deliberate conspiracy) was far more effective when it came collectively.

2. “Trust isn’t everything. It’s the only thing.”

The 2011 OVDI program, the enforcement of FBAR, the rollout of FATCA and the enforcement of citizenship taxation was a horrible time for Americans abroad. It included a crisis of trust. No longer did Americans abroad trust the United States to be their friend and supporter. Many began to view the United States as a threat to their very existence.

The “OMG” (“Oh My God”) Moment and the erosion of trust …

In 2011 Americans abroad experienced their OMG (“Oh My God”) moment.

For many individual Americans abroad, the enforcement of FBAR, FATCA, citizenship taxation, etc. was the moment that they understood that they could not trust the United States to consider their interests. The United States of America – the country of their birth -became a threat to their lives

In 2025 the rest of the world experienced a collective OMG moment.

The OMG moment included the realization that the United States could not be trusted to maintain its relationship to other countries that had existed for  80 years. The United States reputation as a country that could be trusted came to an end. (Obviously no country is tied to another for eternity. That said the “expectation interest” developed in many relationship dictates that relationships should be ended with notice and concern for the impacts on the other party.)

As Charlie Munger said:

“… reputation and integrity are your most valuable assets and can be lost in a heartbeat.”

For Americans abroad the OMG moment included the terrifying realization that the U.S. government was a threat to the stability of their lives.

For other countries the OMG moment included the terrifying realization that a trusted friend could no longer be trusted.

Trust is a casualty of the OMG moment.

 

Continue reading →

Canada’s “Tax On Death” Impacts More People Than The US “Death Tax”, But Fewer Complain

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https://twitter.com/ExpatriationLaw/status/1991334416849752346

Taxation is destiny

The great tax historian Charles Adams – in his book “Good And Evil” – explained that the rise and fall of civilizations can be understood through the lens of tax policy. On November 26, 2025, the UK Government will deliver, what is anticipated to be, one of the most consequential budgets in the country’s history. This U.K. budget is anticipated to include a Canada style “Departure Tax“.

On November 19, 2025 I attended a “U of T” screening of “Death and Taxes“. “Death and Taxes” is a film about how U.S. tax policy (in this case the U.S. Estate Tax) impacted a person, his family, his life and his country. I highly, highly recommend the film.

Make no mistake: “Taxation Is Destiny!”

Whatever the truth may be (if there is such a thing), Canadians are perceived to be much more highly taxed than similarly situated Americans. Both Canada and the United States have tax systems where the circumstance of death triggers special taxation. Interestingly the U.S. tax is described as an “Estate Tax”. Canada claims to be a country with no “Estate Tax”. Yet, the circumstance of death in Canada, is a taxable event of great significance to the vast majority (if not all) of Canadian residents. Notably, the circumstance of death is a taxable event to only a small percentage of Americans. If an American is below a specific asset threshold, he is NOT subject to the U.S. “Estate Tax”. A higher percentage of Canadians pay taxes that are triggered by their death than the percentage of Americans who pay tax triggered by their death.

Whether justified or not, taxation includes the forced transfer of wealth from the individual to the government. Therefore, it is reasonable to infer that:

In Canada (the country with no “Estate Tax”) death (in most circumstances) is a wealth confiscator through taxation!

In the United States (the country with the “Estate Tax”) death (in most circumstances) is not a wealth confiscator through taxation. In addition, because of the “stepped up basis rule” (which allows assets to be transferred tax free at death), death is actually an overall wealth enhancer! The growth in the value of assets (from aquisition to death) escapes taxation entirely.

Continue reading →

Fidelity U.K. – Cleansing The Firm Of “Suspected” U.S. Citizens And The Problems They Bring

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Cross posted from Citizenship Solutions

The post is about Fidelity. It is also about the regulatory and penalty risk of allowing U.S. citizens (or suspected U.S. citizens) to be clients of non-U.S. financial institutions.To be clear, Fidelity U.K. is the U.K. affiliate of Fidelity in the United States.

Those of a certain age will associate Fidelity with legendary fund manager Peter Lynch author of “One Up On Wall Street“.

Those of any age, will know that:

There is an international trend of financial firms avoiding U.S. citizens. This post is specifically about Fidelity UK (1) refusing to accept U.S. citizens as clients and (2) proactively ridding their client base of those who they know are U.S. citizens or have reason to believe “may be” U.S. citizens!

Think of it: A U.S. based company, founded in Boston, Massachusetts, refusing to do business with U.S. citizens!!

I recently became aware of the following letter sent by Fidelity U.K. to certain undesirables who either are or are suspected of being U.S. citizens. Read it and weep!

Unconfirmed USP Sell To Cash Letter

The letter speaks for itself.

For those interested in the general context and discussion, here is the complete post from which this introduction was excerpted, click here.

Part 5 – Fidelity U.K. – Cleansing The Firm Of “Suspected” U.S. Citizens And The Problems They Bring

Happy Halloween! (It’s the evening of October 31, 2025)

If you want a “scary costume” tonight, just dress up as a U.S. citizen!