Category Archives: Issues regarding US persons abroad

http://www.ctj.org/taxjusticedigest/archive/2013/05/senator_rand_pauls_fight_for_o.php

From Citizens for Tax Justice:

Today Senator Paul is still blocking such treaties. Taking his efforts a step further, he has introduced a bill to repeal a major reform that clamps down on offshore tax evasion. That reform is the Foreign Account Tax Compliance Act (FATCA), which was enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. Senator Paul says he opposes it because of “the deleterious effects of FATCA on economic growth and the financial privacy of Americans.”

His arguments are entirely unfounded and the only thing he is accomplishing is to help those illegally hiding their income from the IRS. FATCA basically requires taxpayers to tell the IRS about offshore assets greater than $50,000, and it applies a withholding tax to payments made to any foreign banks that refuse to share information about their American customers with the IRS.

For a country with personal income tax (like the U.S.), that kind of information-sharing is indispensible to tax compliance, as the IRS stated in its most recent report on the “tax gap”:

Overall, compliance is highest where there is third-party information reporting and/or withholding. For example, most wages and salaries are reported by employers to the IRS on Forms W-2 and are subject to withholding. As a result, a net of only 1 percent of wage and salary income was misreported. But amounts subject to little or no information reporting had a 56 percent net misreporting rate in 2006.

So why shouldn’t foreign banks that benefit from the business of U.S. customers report the assets they deposit to U.S. tax enforcement authorities? Without such reporting, people who have the means to shift assets offshore are able to evade U.S. income taxes, while the rest of us are left to make up the difference.

BEIJING, May 18 (Xinhua) — After six years in the United States, and having secured a “green card” for permanent residency, Chinese novelist and former TV starlet Wang Yang has decided to move back to China.

“America is good, but it will not give me what I need,” she says.

Wang will soon start work with a TV drama crew in Beijing on an adaptation of her latest novel “Yang Jia,” or “Marrying Across the Ocean,” depicting a Chinese woman’s love story in America.

While Wang personally wrestled with whether to settle away from China, her protagonist also goes through a similar decision-making process. Crucially, unlike many previous stories with similar topics that venerate foreign cultures when depicting Chinese lives abroad, Wang’s novel has been credited with providing a more truthful, contemporary picture.

It has made a difference by putting experiences across Chinese and U.S. cultures on an equal footing, according to literary critic Mu Gong.

Wang and “Yang Jia” are therefore emblematic of a re-balancing of assumptions on the desirability for Chinese of expatriate life. Foreign residency is starting to lose some of its luster for Chinese, with greater opportunities in their increasingly invigorated home country.

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* Candidate for J.D., Washington and Lee University School of Law, May 2013. I would like to thank my advisor, Professor Michelle Drumbl, for her guidance. I would also like to thank my family and friends for their support and encouragement.

“notamused” has asked if this, which “Johnson” found and commented on could be posted on its own. (Good suggestion, notamused! Thanks, Johnson.) Note, the important comment from SwissPinoy.

FATCA: Toward a Multilateral Automatic Information Reporting Regime

From “SwissPinoy”

@Johnson, the following part of the report is nonsense:

“Thus, renunciation only serves as a way for individuals to avoid U.S. reporting requirements and related penalties after the date of renunciation.”

It incorrectly assumes that everyone who renounces has “annual income of approximately $150,000 or a net worth of at least $2 million”

Comment on original thread from “Just Me“:

Joanna is hardly a FATCAnatic, but it would have been good if she was…

http://www.linkedin.com/in/joannaheiberg
Student at Washington & Lee University School of Law Lexington, Virginia

Do you know the date this was written and what the distribution was? She has a lot of good foot note references?

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By SEN. RAND PAUL Posted 05/16/2013 06:14 PM ET

TradeKing is a privately held discount brokerage firm with headquarters in Fort Lauderdale, Florida, and subsidiary offices in Charlotte, NC.  Its FAQ specifically states that its services are available to all Americans except for non-military personal who live in a particular country or part of the world.

US citizens living abroad
All customers including US citizens must be living in the USA to maintain a TradeKing account. Exceptions may be made for active military personnel stationed abroad.
TradeKing

The act of treating people unequally for living in a particular country or part of the world is listed by the U.S. Equal Employment Opportunity Commission as being national origin discrimination.

National origin discrimination involves treating people (applicants or employees) unfavorably because they are from a particular country or part of the world.
U.S. Equal Employment Opportunity Commission (EEOC)

EEOC states that it is illegal to discriminate against someone (applicant or employee) because of that person’s national origin

Under the laws enforced by EEOC, it is illegal to discriminate against someone (applicant or employee) because of that person’s race, color, religion, sex (including pregnancy), national origin, age (40 or older), disability or genetic information.
Prohibited Policies/Practices

So, Tradeking is illegally discriminating against Americans living abroad.  Yet, when I called the the U.S. Department of Justice Civil Rights Division to inquire further, I got transferred around until I got transferred to an invalid number terminating my inquiry.

In the mean time, Americans living abroad are still being denied financial services inside and outside of America due to their national origin and as a result of US policy.  The image on the left was contributed to the Economic Policy Journal by one of its readers.

…Other people who come forward aren’t even sure they’ve done anything wrong.

Marvin Van Horn and his wife live in New Zealand, where they have a checking account and retirement savings. They weren’t intentionally hiding anything from the IRS. But he heard a story on the radio about offshore tax cheats — and realized that the rules might apply to him.

So he decided to go through the IRS’s voluntary disclosure program. He learned he would have to pay back taxes for six years, which came to about $20,000. That seemed fair, he said. But then there was the penalty: $172,000.

Van Horn says the penalty would have gutted his retirement savings. So he appealed. And after 851 days (he was counting), the penalty was reduced to $20,000.

There’s a spectrum in these cases, attorneys say. There are people who went to great lengths to hide money, people who didn’t know they were hiding money, and a lot of people in between.

One other thing about the 39,000 people have come forward so far: They’re probably a drop in the bucket. Somewhere between five and seven million U.S. citizens live abroad. Fewer than 1 million of them declare offshore accounts, as required by law.

NPR

I love the comments!  As for NPR, there is much room for improvement.  It could expand on this:

Lois Lerner, the senior executive in charge of the IRS tax exemption department and the federal employee at the center of the exploding scandal over the IRS targeting of conservative, evangelical and pro-Israel non-profits, was given $42,531 in bonuses between 2009 and 2011…  Her annual salary in 2009 and 2010 was $172,200, and $177,000 in 2011 and 2012. With the bonuses, Lerner was paid a total of $740,931 for the four-year period.

Washington Examiner

With scandals like that, it is no wonder that the US government needs to heavily fine the politically unrepresented!

A detailed set of guidelines for making monetary contributions to the government has recently been issued to overseas employees of companies and other citizens on business abroad. The guideline for making monetary contributions in support of the military was issued in the form of a National Defence Committee (NDC) order. A detailed set of guidelines stipulating the awards system for monetary contributions is unusual, but not unprecedented. Notably, such guidelines have been issued previously during times of economic crisis.

Based on guidelines issued by the government, those who make contributions of US$1,000 or more will be rewarded with a national decoration. Contributions of US$10,000 or more will guarantee the donor a ‘Letter of Appreciation’ from the President. Those who offer up more than US$100,000 will receive a Medal for Efforts. In addition, they will receive either an extension to their right to work abroad, or a guaranteed re-issue of their right to leave the country for business purposes.

This has resulted in increased pressure for overseas citizens to make monetary contributions, in addition to the usual taxes. According to our sources, there is a rumour spreading about how a businessman offered US$1,000,000 and received an important government position.

Read the full story at New Focus International.

By James M Bennett on 05/15/2013 in fair tax

We FairTax supporters have been contacted by two different gentlemen who are United States citizens who live abroad. One lives in Paris, and the other lives in Tokyo. Both support the FairTax. Why should six million US expatriates support the FairTax? And why does their support matter?

Expatriate Americans are unique in the world. United States citizens are subject to income taxation on their worldwide income even if they have no home in the United States.

This curious rule puts the United States in an exclusive club of countries. As best we know, the only other members are North Korea and the Philippines. One might understand the Philippines, who inherited our tax code when they became independent from us in 1946.

By contrast, a French citizen, or a Japanese citizen, who lives in the United States and who has no home in France or Japan has no income tax obligation to France or Japan. The French and Japanese expat, as well as the US expat, is subject to the full body of law of the host country.

Why then, should a US expat be required to file a federal tax return in addition to the return required by the host country? Is this requirement fair?

To be sure, there are provisions in the Internal Revenue Code to avoid technical double taxation. There is also a so-called “foreign earned income” exclusion of $95,100 (but that amount counts in pushing remaining income into higher tax brackets). However, the US expat gets the worst of both tax worlds.

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It’s been discussed here at Isaac Brock in various comment threads, but last evening as I was listening to the CBC’s Ideas program, it occurred to me again that the US notion of citizenship and national identity is very much in opposition to how a person’s view of who they are, where they are from and where they belong are formed.

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