Category Archives: Issues regarding US persons abroad

While this is fairly old it is the first time I have come across it so it wanted to link and post some relevant remarks.

Now, talking about the creation of a good environment to do business, there are a couple of issues that Canada and the United States need to address. Secretary Geithner and I have discussed these issues.

First of all, the requirement for dual U.S.-Canadian citizens living in Canada to file Foreign Bank Account Reports. Most of them didn’t even know that they had to file U.S. tax returns, even though they weren’t earning income in the United States, and there are substantial potential penalties. So this is something that we’re talking about to try to be effective and efficient in what is sought to be accomplished. What is sought to be accomplished, of course, is to avoid tax evasion and the use of tax havens.

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Now that “the Bernank” has announced QE III, a.k.a. Unlimited QE (I prefer “QE Infinity”), Marc Faber says that it will destroy world.  Zero Hedge estimates that the Federal Reserve’s new money base will increase to 4 trillion from 2.8 trillion (=43%) by the end of 2013–that’s because Bernanke is going to add at least 40 billion to the money base every month, with no limit, no specified target.  If you are lucky enough to be in a jurisdiction that doesn’t debase its currency at the same rate, then you better renounce your US citizenship quickly: pretty soon the average home in Vancouver, Calgary or Toronto will be worth two million US dollars, while the Loonie threatens to rise to unforeseeable levels against the Greenback, unless of course Mark Carney debases Canadian currency in this race to the bottom.

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Some rules make more sense than others while some make no sense at all, like rules on voting for Americans living abroad.  The rule for Americans living abroad is that they may only vote where they last lived, or where their parents last lived, or where their parent’s parents last lived, or something odd like that, assuming that they once lived in the States or know where their parents, grand parents or great grand parents lived.  Never mind their possible plans of returning, the place where they may feel attached or the area where they actually have a voting interest.  Americans abroad must vote where they may have no interest in voting, they are told.  Boy, that sure encourages one to vote!

You must vote in the state/county where you last established residence (domicile) in the U.S., and typically, where you developed a real connection.

Under traditional rules and state law, a person living overseas is permitted to register and vote only in the place that constitutes his/her previous residence/domicile. This is the last real home you had in the US and is referred to by election officials as your voting residence address. That defines the state and the jurisdiction.
Overseas Vote Foundation

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I don’t have a lot of details yet but apparently Tom Coburn of Oklahoma(a Republican for those of you who care about that type of thing) is proposing an amendment to make the existing passport revocation provisions of S.3457 even more onerous. Link to the amendment text below:

http://www.gpo.gov/fdsys/pkg/CREC-2012-09-13/html/CREC-2012-09-13-pt1-PgS6346-3.htm

@all
I’ve been away for a couple of weeks backpacking in the Rockies — no wireless, no newspapers, no email, no cell phones — heaven.

Many of you are asking about credit unions. I have written a 2000-wd magazine piece on how credit unions in BC (and nationally) are dealing with FATCA. I can’t share details with you now, but the piece will be published in BC Business magazine on Oct. 1. The magazine is hoping this will spark significant reader comment, and everyone at IBS is welcome to go online and submit a letter to the editor. Here’s what the BCB Editor said in a note I got this morning:

“You can just let them know to look for your story in our October issue, which will be out first week of October. It should be online by Monday, Oct. 8. If they want to send a letter to the editor, they can address it to:

bcb@canadawide.com

and put “letter to the editor” in the subject line.

Thanks — Here’s hoping for a lively discussion!”

So — go for it Brockers. And don’t hesitate to take a shot at the piece if it doesn’t meet your expectations. After 40 years of doing this, I’ve got a very thick hide. My one almost-daily panic is that magazine deadlines are such that the story must be submitted at least two months before publication — and a lot can change on a file like this in a couple of months. I’m praying the whole thing isn’t irrelevant by the time it sees the light of day.

BTW — on our backpacking trip, met a couple from Virginia. They were astounded when we filled them in on FATCA, FBARS, citizenship-based taxation etc. — they knew NOTHING about this issue and were horrified that their government is inflicting this kind of pain on expats.

US Senator Bill Nelson and his Senate colleagues are back up to their old tricks of trying to get a Passport revocation rule instated for back/unpaid taxes. This time they are trying to do it through enacting an amendment to the “Veteran Jobs Corps Act of 2012” which who could be against such a piece of legislation until of course you look at fine print and notice the provisions of the act that have nothing to do with veterans or jobs. The following Senators are Senator Nelson’s partners in crime so to speak on this issue:

Sen Blumenthal, Richard [CT] – 9/10/2012

Sen Franken, Al [MN] – 9/11/2012

Sen Gillibrand, Kirsten E. [NY] – 8/2/2012

Sen Merkley, Jeff [OR] – 9/10/2012

Sen Murray, Patty [WA] – 7/30/2012

Sen Schumer, Charles E. [NY] – 9/10/2012

Sen Stabenow, Debbie [MI] – 9/10/2012

Sen Wyden, Ron [OR] – 8/2/2012

Link to legislation

http://thomas.loc.gov/cgi-bin/bdquery/z?d112:S.3457:

I found this article on the Moodys Tax Weekly:

Life Expectancy, Retirement Planning?

It seems to me that any effective, responsible retirement / estate planning, leaving something behind for our families, can drastically change when taking into account US citizenship-based taxation, excessive penalties (vs actual taxes owed to the US).  If we have been able to do any careful planning with our countries’ savings incentives (such as Canada’s RRSPs, RRIFs, TFSAs, RDSPs), certain mutual fund investments, etc. it all now has a different face.  Some are already there, into retirement, out of the work force and with limited choices to change course.

http://www.rts.ch/info/economie/4265768-l-allemagne-autorise-les-mecanismes-de-sauvetage-de-l-euro.html

Some countries are threatening to leave the Euro because of austerity measures that their people won’t accept.  Others want Germany to prop the Euro up or leave the zone.

What do all of you make of this mess?