Liberty and justice for all United States persons abroad

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Category Archives: Issues regarding US persons abroad

Coming into U.S. tax compliance – To “amnesty” or “not to amnesty” – that is the question

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Updated on September 19 with an interesting comment by JC to the Robert Wood article:

 

The above tweet references an interesting article by Robert Wood. Many people consider the question of which vacation destination to go to. As any “Homelander” will tell you, all Americans abroad are probably  “offshore tax cheats” who simply “don’t pay their fair share”.

Therefore, it’s reasonable that while the whole wide world (less Americans abroad) wonder about their next vacation destination, Americans abroad worry about:

“Which IRS Offshore Amnesty Program Is Right For You?”

It’s 11:00 p.m. – Have you worried about your amnesty program today?

Readers of this post are encouraged to post some comments on Mr. Wood’s blog. I don’t believe that he differentiated between Homeland tax cheats using offshore accounts to evade taxes and Americans abroad who need offshore accounts to pay their bills.

One commenter filled the void left by the failure to acknowledge Americans abroad by writing:

“Amnesty is often used to express “freedom” and the time when prisoners can go free.”

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Democrats Abroad Publishes FATCA Research – “FATCA: Affecting Everyday Americans Every Day”

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Democrats Abroad has published a report of their four month study of how FATCA affects Americans. These reports have been sent to “selected members of Congress and senior officials at the US Treasury and IRS.” DA also indicates discusions with them are ongoing.

The report consists of the following (3) documents:

1. Executive Summary of 2014 FATCA RESEARCH PROJECT – “FATCA: Affecting Everyday Americans Every Day”

2. 2014 FATCA RESEARCH PROJECT – “FATCA: Affecting Everyday Americans Every Day”

3. 2014 FATCA RESEARCH PROJECT – Datapack

Milton Friedman explains why Congressmen and Compliance Condors make tax reform impossible

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The absolute and relative dysfunction of the U.S. tax system:

The absolute immorality of the way it treats U.S. citizens abroad

Who are the beneficiaries of the U.S. tax system and why it is difficult to change – A message from 1976

I came across this by accident. It has been many years since I read Mr. Friedmans’s Free To Choose – but I remember it as one of the best economics books I have ever read.

The book was turned into a Television series. It can be watched here.

Professor Friedman was not well liked by those on the “left” of the political spectrum. Politics aside, I recommend this short video where he explains his views of “why tax reform is impossible”. Or to put it another way:

Who can possibly have a vested interest in retaining a tax system that is so inefficient, archaic and frankly stupid?

It’s Congress and the Compliance Condors Stupid!
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#FATCA: Where citizenships collide – Turning #Americansabroad over to the IRS and Foreign Governments

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I was recently attempting to explain FATCA, FBAR and U.S. taxation practices to a friend. After deciding that I was NOT fabricating a story, she remarked:

“It’s unjust! It’s inhumane! I didn’t choose where I was born!”

(Fortunately she was not born in the U.S.).

The truth is that issues of FATCA, FBAR and citizenship-based taxation are more “citizenship problems” than tax problems.

Incompatible tax systems create problems for people subject to both tax systems.

Incompatible citizenship laws create problems for people who have dual citizenship.

U.S. tax lawyer, Virginia La Torre Jeker has just published a fascinating post where she describes the problems of “incompatibility of citizenship”. Ms. Jeker describes the problems where a country:

1. Does NOT allow dual citizenship; and

2. Makes it a criminal offense to have dual citizenship.
 
I quote from her insightful post:
 

Not only are many desperately struggling to become US tax compliant, many GCC nationals are becoming quite concerned that their government will learn they hold a prohibited “second” nationality. Under FATCA, foreign financial institutions must agree to verification and due diligence procedures – meaning they must be on the look-out for customers, owners or beneficiaries evidencing any “US indicia”. They must identify and report directly to the US Internal Revenue Service or to their own government via an intergovernmental agreement (IGA), information on US account holders. FATCA will help expose GCC nationals who hold US citizenship by a financial institution’s transmission of that information directly to the home country government agency responsible for gathering information under the IGA. America, in its quest to root out tax cheats, has now put many of its own innocent citizens in a very perilous position.

This fear of detection seems particularly acute right now in the Kingdom of Saudi Arabia. In Saudi Arabia, Saudi citizenship can involuntarily be lost if a Saudi citizen obtains a foreign citizenship without the prior permission of the Prime Minister. See Articles 11 and 13 of the Saudi Arabian Citizenship System.

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You keep your friends close and your enemies closer, that’s why I intend to join @Demsabroad (AKA The Stepford Wives)

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The above tweet references a Facebook conversation between on Stephanie Reynaud (one of the many who lost the birth lottery) and Connie Borde (Chair of Democrats Abroad France).

Note the reference to the “Canadian FATCA lawsuit“.

I have included the full text of the conversation below (wanting to capture this in it’s original text). It is absolutely extraordinary for reasons that include the following:

– the absolute desperation and anguish expressed by Ms. Reynaud

– the attempt by Ms. Borde to turn the fear, hopelessness, anger and despair of Americans abroad into a partisan issue

– the implied (if not stated) refusal of Ms. Borde to see this as an issue that affects all Americans regardless of party (or no) affiliation

– the recognition of Ms. Reynaud that all Americans must work together on this issue (as per the thoughts of Victoria)

– the obviousness of the fact that Democrats Abroad is there to further the interests of the Obama administration which (whether by accident or design) but WITH FULL AWARENESS IS DESTROYING THE LIVES OF ALL AMERICANS ABROAD!!!!!!

On several occasions I have documented how Democrats Abroad is nothing but “The Obama Democrats Abroad” (and the best argument there is for not voting for the Democrats) and anybody who believes differently is nothing but one of those “Stepford Wives“.

This post will likely be read by Democrats Abroad. I encourage you to share your thoughts.

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US seeks additional Customs Pre-Clearance locations in the EU

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http://www.usatoday.com/story/todayinthesky/2014/09/12/us-customs-preclearance-coming-to-more-european-airports/15505645/

The United States reportedly is asking five European countries to set up preclearance checkpoints at airports for customs and immigration. The expedited checkpoints for foreign travel are now available only in Canada, the Caribbean, Ireland and United Arab Emirates.

The Guardian newspaper in England reports no formal request has been made yet. But U.S. authorities approached England, France, the Netherlands, Germany and Sweden about setting up the checkpoints, according to the Guardian.

 

Civil Forfeiture: The new #OVDP confiscation program for those in U.S. borders

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Note: Further update September 15, 2014 introducing the idea of “Third Party Confiscation”. Updated September 12, 2014 – Reader comments of “indirect confiscation added” – if you can think of more, please add them to the comments and I will add them to the post. Thanks: NotAmused and Mark Twain.

Direct Confiscation – Let me count the ways

The above tweet references an article which appeared at CBC.ca and was written by Neil MacDonald who is the Senior CBC Correspondent in Washington. The article is about the increasing U.S. use of “civil forfeiture” to confiscate people’s assets. (There have been previous Isaac Brock posts on the use of civil forfeiture here, here and here.)

To put it simply:

Civil forfeiture is a process where the government simply comes in and directly takes your property and money. As the article in the above tweet notes, cash is particularly susceptible to arbitrary confiscation.

But, what about the confiscation of cash according to U.S. law? For example, what about the confiscation of cash pursuant to Title 31? This issue was recently explored as comments to a blog post about the backlog of renunciations in Toronto.

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“The Business of Life”

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UPDATE Robert Wood has posted this today here. This is an excellent opportunity for us to bring this to public attention. Please go over and comment!

Some Brockers who have been around a long time have likely seen this before. However, given the recent events such as greater focus on “Accidental Americans” (Ginny & Gwen as plaintiffs on the ADCS-ADSC lawsuit), and the attempt to get the IRS to relax the rules against the same, (ADCS-ADSC retention of Mr. Jim Butera, Partner, Washington D.C office of Jones Walker LLP, to explore legal options) this letter is especially compelling.

This message is written by a Canadian businessman to his son at the time of his high school graduation. It is a perfect example of what all parents with dual US/CDN children should be aware of and discussing with their kids before they begin to acquire money and assets. It was originally posted here and is re-posted with permission.

*****
The Isaac Brock Society recently featured a discussion about how and when to advise young people about the potential problems of U.S. citizenship and whether they should consider renouncing U.S. citizenship. As parents, teachers, mentors and friends we should pass on to our young people the benefits of our (in varying degrees) knowledge, wisdom and experience. We do this because we want to equip them with the skills they need to make the best life decisions that they can.

The books: “Letters of A Businessman to His Son” and “Letters of A Businessman to His Daughter“, by G. Kingsley Ward, are wonderful examples of this principle. They are chock full of practical advice and thoughts on – the only business that really matters – “The Business of Life”.

I have been inspired by Mr. Ward. Here is the letter (with many factual modifications to protect the young person in question) that I wrote on the occasion of that young person’s High School graduation.

“Letter of a Canadian Businessman to his Dual U.S./Canada Citizen son on the Occasion of his High School Graduation”

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