Category Archives: Issues regarding US persons abroad

…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.

More

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.

Continue reading →

Tax Audits and Threats of Audits Are No Laughing Matter http://t.co/b41XpPqgnk – IRS not the enforcer of the Obama or any administration

— U.S. Citizen Abroad (@USCitizenAbroad) May 14, 2013

This must read article includes:

Continue reading →

The two month extension for Canadian snowbirds is back in the news. No mention of the cons in the article itself but plenty of commenters made note of the Medicare and IRS tax issues that staying an extra two months in the US every year can cause retirees.

What’s more interesting to me about the so-called “Gang of Eights” stab at fixing US immigration issues are the things they are hiding in the bill that will affect border crossings and the intense lobbying of foreign countries trying to get some preferred status for their people tucked away in the fine print of the bill. Everyone wants to go to Amerika.

The article is at the Globe and Mail.

I might be misunderstanding this somehow, but does it imply that Americans living abroad are not entitled to a Foreign Earned Income Exclusion?

Corporations have used numerous and creative means to avoid their tax responsibilities. They have about a year’s worth of profits  stashed untaxed overseas. According to the  Wall Street Journal, about 60% of their cash is offshore. Yet these corporate ‘persons’ enjoy a foreign earned income  exclusion that real U.S. persons don’t get.

Source:

Ayn Rand USA: In 20 Years Corporate Profits Are Up 4X and Their Taxes Have Fallen by 50% — Meanwhile the Workers’ Payroll Tax Has Doubled
AlterNet

On this, Wiki writes:

 Citizens and residents living and working outside the U.S. may be entitled to a foreign earned income exclusion that reduces taxable income.

FATCA Details Slowly Emerging
Gary Rogers, Vice President, Financial Policy, Credit Union Central of Canada

This highlights the need to keep pressure on Canadian government.