Category Archives: Issues regarding US persons abroad

Following 2016 DC Court of Appeals ruling, IRS agrees that #Americansabroad in France were wrongly denied the right to use certain French taxes as Sec. 901 Foreign Tax Credits to offset U.S. taxes https://t.co/0mz6o81REz pic.twitter.com/2YPNF8xZQE

— U.S. Citizen Abroad (@USCitizenAbroad) June 18, 2019

The background to the case referenced in the above tweet is described here. The “bottom line” result was reported on at the New York Times and Bloomberg.

It its simplest terms the controversy was over whether certain French taxes should be interpreted to be income taxes (in which case they could be used as Foreign Tax Credits) or Social Security taxes (in which case the taxes could not be credited against U.S. income taxes). At a minimum, the case assumes that NOT ALL foreign taxes can be used as tax credits to offset U.S income taxes.

(Beyond that, the DC court of appeal decision provides guidance with respect to (1) Who decides how foreign taxes are to be treated under a tax treaty (hint not ONLY the IRS) and (2) what kind of evidence is relevant in determining the question (hint U.S. dictionaries are not to be used).)

There are many people in the world, who think that all of the foreign taxes paid by Americans abroad can be used as credits against U.S. tax owing.

As part of a “conversation” with the “Powers To Be” in DC, I think it’s important to demonstrate that there are many foreign taxes that are simply not “creditable” against U.S. taxes.

Could you please provide examples from your country of residence? What are specific examples of “taxes” paid in your country of residence that are not eligible to be used as “foreign tax credits” under Section 901 of the Internal Revenue Code.

Advocacy to change the U.S. rules of “citizenship-based taxation” is going strong. For example, last week there was a delegation in Washington, DC. Americans Citizens abroad is active and working hard. Republicans Overseas through the efforts of Solomon Yue has been a leader. Democrats Abroad is starting to rise to the occasion.

Legislative change will require a “conversation” with the “powers to be” in DC. It is difficult for those who have not experienced the difficulties of complying with the U.S. tax code (as a “taxpayer abroad”), to understand the problem.

One of the responses frequently heard is:

“What’s the problem”. You can exempt about $100,000 USD per year under the Foreign Earned Income Exclusion.

Although true, as you know, the exclusion applies to “earned income” only. There are many sources of income that are (1) not earned income and (2) are not taxable in your country of residence and (3) are taxable in the USA.

In order to assist those who will be part of “the conversation” in DC, I would like to ask that you provide examples of how/why a U.S. citizen living in another country with income well below the $100,000 Foreign Earned Income Exclusion can end of paying tax to the United States.

I think that a number of focused examples could be very important. These examples could include things like phantom capital gains and U.S. taxation “kicking in” at a lower level of income than in your country of residence. Of course it would be great to be able to document and wide and diverse range of examples.

When if you comment, if you could provide reasonable detail and specify where you live. Also, if you have any knowledge of how a tax treaty might affect U.S. tax (recognising that tax treaties mostly do not assist individuals) it would be helpful.

Thanks in advance!

Further to my post about commenting in general entitled Announcement March 31st, some specific points on repetitious commenting:

Going back and forth on a point doesn’t advance discussions and, after enough rejoinders, other readers tend to tune it out.  Repetitious comments made by a person or persons in a short period of time can be particularly problematic when a person replies, saying basically the same thing again, to every comment made in reply to their initial comment.

Such comments provide only redundant information and redundant thoughts/ideas while making a thread difficult to read efficiently.  Some people suddenly learn of a problem with their real or alleged US citizenship and are in distress and need information f-a-s-t.  As well, exchange of thoughts and ideas is hampered by repetitious and circular discussion.  Please bear this in mind when commenting.

Continue reading →

Karen Alpert (Australia), John Richardson (Canada), Larry Stern (Israel) and Leonard Tuber (Israel) will discuss “territorial vs. citizenship-based taxation, their many advantages and disadvantages, and the myriad of challenges and questions posed by the US’s use of this type of tax system,” Monday 3 June 12:00 BST (11:00 UTC / 07:00 EDT).

You can submit questions at the TaxLinked site.  For more information and/or to submit a question, click here.

A debate/discussion on Citizenship And Worldwide Taxation: Is It Morally Justified Or Unjustified? between John Richardson and Edward Zelinsky will take place Friday May 17, 2019,  14:00 EDT (18:00 UTC), hosted by TaxConnections, live on YouTube.   It will run for an hour-and-a-half.  

CBT is morally unjustified:  John Richardson (Lawyer, Citizenship Solutions, Toronto, Canada)

CBT is morally justified: Edward Zelinsky (Law Professor, Cardozo School of Law, New York, USA)

Click here for full information, to see the questions which have been submitted, to pre-register, and/or to submit questions   (P.S.: Note at the bottom of this page videos of people who we know.)

The United States Imposes A Separate And Much More Punitive Tax On U.S. Citizens Who Are Residents Of Other Countries, John Richardson, TaxConnections.

 TaxConnections and CitizenshipSolutions Posts by John Richardson, Laura Snyder and Edward Zelinski written after this event was announced: Continue reading →

https://youtu.be/3YMTAZBe6cA

Jordan Peterson accuses the government of preying on the weak, those who can easily become addicted to gambling and thus provide revenue for government coffers. In the meantime, gambling exacts an untold price upon the health of society. The government in Canada thus plays the role of organized crime in administering a vice that makes victims of the weak. We see from this that we should not look upon the government as a benevolent entity, but as a threat to our well-being.

Similarly, the IRS and compliance condors prey on the weak.  On Dec 15, 2012, at the FATCA Forum organized by John Richardson, I argued that the Canadian government’s stance, that it would not collect FBAR fines, meant that those of us affected by the threat of the IRS draconian FBAR fines would have to stand up for ourselves–we had to be Clint Eastwoods–and that left the IRS to prey upon the weak and vulnerable residents of Canada who feared what the IRS could do to them if they failed to enter the OVDP/OVDI, i.e., the last, best chance for people to get right with God. When innocent benign actors (the non-Clint Eastwoods) entered the ODVP, the IRS exacted many LCU (“life credit units”) and made their lives hell.

Remember to gamble responsibly. That’s the government’s message. And when it comes to the IRS, you are on your own.

Brock Pub is where you can ask your questions or make somewhat off-topic comments.

US Supreme Court Rules Unanimously Against Excessive Fines

The excessive fines clause doesn’t prevent the federal government from actually threatening to fine you in multiples of your actual financial worth (in the case of FBAR, over 383% of your financial accounts). I’ve not seen FBAR fines applied at the rate of 300% but that doesn’t stop the IRS from threatening it. I called it a bluff. They would scare the crap out of you so that you would enter a voluntary disclosure program where you voluntarily handed over 25+% of your wealth.

A Wisconsin cruise ship passenger faces years in Cayman Islands prison after a gun was found in her luggage

A lot of Americans are apparently unaware that you shouldn’t put guns or ammo in your luggage if you are travelling to other countries.

California gas station clerk fired after ranting against woman speaking Spanish

An American gas station attendant loses her job after being rude to a bilingual woman speaking Spanish and asks her to prove that she was born in the USA. Apparently she is unaware that California used to be part of Mexico. I.e., Spanish speakers were there slightly before Trump supporters.

And a Canadian bonus:
Jody Wilson-Raybould and Jane Philpott kicked out of Liberal Party caucus

King Justin has kicked out JWR from caucas, hoping that Canadians actually believe it is less unethical to lie than it is to expose lies with an undisclosed voice recording.

Republicans Overseas is hosting an event, with House bill co-sponsor Congressman George Holding, Solomon Yue and John Richardson on the Taxation Fairness for Americans Abroad Act bill, London, England, 24 April 2019.

“There is a bill to fix citizenship-based taxation for Americans! Come learn all about it from its sponsor, Representative George Holding!

Representative George Holding (R-NC) will be walking us through his bi-partisan bill that introduces residence-based taxation for all American expatriates, titled Tax Fairness for Americans Abroad Act. This could mean the end of filing income taxes for non-US residents. He will discuss the ins and outs of his legislation, and how together we can get it across the finishline!

Solomon Yue, Global CEO of Republicans Overseas, will be here again to discuss the global grassroots efforts and necessary action items for the expatriate community.

John Richardson, Canadian tax lawyer of Citizenship Solutions, will be joining us again to explain why he endorses this legislative solution from a professional perspective.

. . . . “

Full details and registration at the EventBrite site.