Category Archives: Issues regarding US persons abroad

Nov./5/09 – FATCA Hearing pg. 13- Treasury confirms that FATCA is specifically intended to include #Americansabroad https://t.co/xwswNkDF6d pic.twitter.com/7X3gqPa2dY

— Citizenship Lawyer (@ExpatriationLaw) April 15, 2017

The purpose of this post is, as put forth by Tim:

We would like to hear what sections of the testimony (including the non-witness, written testimony) you feel may have some impact on our Charter Challenge. I have tried to make this a little more readable; i.e., the original document is 154 pages, a lot of it in very small print. I have separated where possible, individual letters. It is a lot to take in and I hope this is helpful.All bolding/italics are mine.

NB: Member names that are bolded/italicized still sit on the Ways & Means Committee

GPO PDF file

U.S. Government Printing Office Washington
Foreign Bank Account Reporting and Tax Compliance Hearing
Before the Subcommittee on Select Revenue Measures of the Committee on Ways and Means
U.S. House of Representatives

One Hundred Eleventh Congress First Session
November 5, 2009

Committee on Ways & Means
Charles B. Rangel, New York, Chairman
Fortney Pete Stark, California
Sander M. Levin, Michigan
Jim McDermott, Washington
John Lewis, Georgia
Richard E. Neal, Massachusetts
John S. Tanner, Tennessee
Xavier Becerra, California
Lloyd Doggett, Texas
Earl Pomeroy, North Dakota
Mike Thompson, California
John B. Larson, Connecticut
Earl Blumenauer, Oregon
Ron Kind, Wisconsin
Bill Pascrell, Jr., New Jersey
Shelley Berkley, Nevada
Joseph Crowley, New York
Chris Van Hollen, Maryland
Kendrick B. Meek, Florida
Allyson Y. Schwartz, Pennsylvania
Artur Davis, Alabama
Danny K. Davis, Illinois
Bob Etheridge, North Carolina
Linda T. Sanchez, California
Brian Higgins, New York
John A. Yarmuth, Kentucky
Dave Camp, Michigan
Wally Herger, California
Sam Johnson, Texas
Kevin Brady, Texas
Paul Ryan, Wisconsin
Eric Cantor, Virginia
John Linder, Georgia
Devin Nunes, California
Patrick J. Tiberi, Ohio
Ginny Brown–Waite, Florida
Geoff Davis, Kentucky
David G. Reichert, Washington
Charles W. Boustany, Jr., Louisiana
Dean Heller, Nevada
Peter J. Roskam, Illinois
Janice Mays, Chief Counsel and Staff Director
Jon Traub, Minority Staff Director

Subcommittee on Select Revenue Measures

Richard E. Neal, Massachusetts, Chairman
Mike Thompson, California
John B. Larson, Connecticut
Allyson Y. Schwartz, Pennsylvania
Earl Blumenauer, Oregon
Joseph Crowley, New York
Kendrick B. Meek, Florida
Brian Higgins, New York
John A. Yarmuth, Kentucky
Patrick J. Tiberi, Ohio, Ranking Member
John Linder, Georgia
Dean Heller, Nevada
Peter J. Roskam, Illinois
Geoff Davis, Kentucky

The subcommittee met, pursuant to notice, at 10:05 a.m., in Room B–318, Rayburn House Office Building, the Honorable Richard E. Neal [chairman of the subcommittee] presiding.

FOCUS OF THE HEARING:
The hearing will focus on non-compliance by U.S. taxpayers with foreign bank accounts,rules regarding foreign trusts with U.S. beneficiaries, and certain U.S. dividend equivalent payments to foreign persons to avoid U.S. taxes. The hearing will also focus on recently introduced legislation, HR 3933, the Foreign Account Tax Compliance Act of 2009.

BACKGROUND:
According to the most recent tax year data available (2003), more than $293 billion in U.S. source income was sent to individuals and businesses residing abroad.The United States imposes withholding taxes when U.S. source investment earnings are paid to a foreign person. Those withholding taxes were largely designed to collect tax on income earned in the United States even though the income is earned by a foreign person not subject to the jurisdiction of our laws. Those withholding taxes also play a role in preventing non-compliance by U.S. persons holding investment assets in accounts overseas.

The Internal Revenue Service (IRS) has established the Qualified Intermediary (QI) program that authorizes foreign financial institutions to collect withholding taxes on behalf of the U.S. government. The program was implemented to improve compliance for tax withholding and reporting on U.S. source income that flows offshore through foreign financial institutions. The recent UBS case revealed problems with the QI program that permitted tax evasion by U.S. persons. Further, even with jurisdictions in which the United States has a tax treaty, effective information exchange used by tax enforcement agencies may sometimes be undermined by local laws providing for banking secrecy that conflict with U.S. law.

In March of this year, this Subcommittee held a hearing on bank secrecy and tax evasion at which the Commissioner of the Internal Revenue Service testified (Ways and Means Committee Hearing Print, Serial 111-12, Hearing on Banking Secrecy Practices and Wealthy American Taxpayers). In May, the President released a fiscal 2010 budget proposal including a number of new requirements on taxpayers with foreign bank accounts and foreign financial institutions holding those accounts. Last week, Representative Charles B. Rangel filed HR 3933, the Foreign Account Tax Compliance Act of 2009 containing, among other proposals, many of the proposals from the Administration’s budget, including a mandatory 30 percent withholding on payments to foreign financial institutions unless they disclose information to the IRS on accounts owned by U.S. individuals or close the accounts, and a requirement on individuals and entities to report offshore accounts with values of $50,000 or more on their tax returns (see Joint Committee on Taxation Technical Explanation, JCX-42-09).

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reblogged from Allison Christians’ Tax, Society & Culture with permission

"The Offshore Tax Enforcement Dragnet" – how adversely affects immigrants, #Americansabroad #AccidentalAmericans https://t.co/7rqEzYYpqy

— Patricia Moon (@nobledreamer16) April 1, 2017

Shu Yi Oei (Tulane) has posted an important new paper on U.S. offshore tax enforcement, of interest. Here is the abstract:

Taxpayers who hide assets abroad to evade taxes present a serious enforcement challenge for the United States. In response, the U.S. has developed a family of initiatives that punish and rehabilitate non-compliant taxpayers, raise revenues, and require widespread reporting of offshore financial information. Yet, while these initiatives help catch willful tax cheats, they have also adversely affected immigrants, Americans living abroad, and “accidental Americans.”
This Article critiques the United States’ offshore tax enforcement initiatives, arguing that the U.S. has prioritized two problematic policy commitments in designing enforcement at the expense of competing considerations: First, the U.S. has attempted to equalize enforcement against taxpayers with solely domestic holdings and those with harder-to-detect offshore holdings by imposing harsher reporting requirements and penalties on the latter. But in doing so, it has failed to appropriately distinguish among differently situated taxpayers with offshore holdings. Second, the U.S. has focused on revenue and enforcement, ignoring the significant compliance costs and social harms that its initiatives create.
The confluence of these two policy commitments risks creating high costs for the wrong taxpayers. While offshore tax enforcement may have been designed to catch high¬-net-worth tax cheats, it may instead impose disproportionate burdens on those immigrants and expatriates who have less ability to complain, comply, or “substitute out” of the law’s grasp. This Article argues that the U.S. should redesign its enforcement approach to minimize these risks and suggests reforms to this end.

The paper provides a thorough review of the panoply of offshore enforcement programs and mechanisms and documents the harms of their dragnet approach, especially on the most vulnerable and least likely targets. A significant contribution to the literature.

cross-posted from renounceuscitizenship blog

U.S. citizens outside U.S. – Not what they take from you, it’s what they leave you with – #CBTax #FBAR r destructive https://t.co/LthGIGjI3M pic.twitter.com/f8VkU7BLeT

— Citizenship Taxation (@CitizenshipTax) March 26, 2017

Going back to a general thread from a few weeks ago – on law and morality – this post speaks more to the effects of the law when it is not rooted in morality. On one level, an apologist might claim that “doing one’s duty” and “paying one’s share” is moral and is necessary to maintain funding and order in a society. However, when such a law is applied to those who live outside that society, as we all know from experience, unexpected conflicts, resulting punitive actions and penalties tend to denigrate the quality of life. We are not talking about “quality of life” amounting to physical comforts or financial wealth. By “quality of life, what is referred to is mental stability, emotional trustworthiness and the ability to move through difficulties with a sense of direction and confidence. When these parameters are stifled by confusion/lack of clarity of what is expected, and ridicule and negativity is directed toward those affected, the result is a not an issue of lack of compliance but rather, wrongly imposed requirements that simply make people anxious, immobilized by fear, depression and a general inability to adjust to the situation. How this can be justified when those same people ARE compliant in the society where they live, strikes many as simply being immoral.

*****

The Wisdom of Moe Levine Moe Levine (not that I ever met him) was considered to be one of America’s greatest trial lawyers. Although he died in 1974, his wisdom lives on his book (appropriate called) “Moe Levine on Trial Advocacy“. He (legend has it) was a master at delivering the closing statement in his jury trials. When arguing for a severely injured plaintiff he (according to the commentators of his time) would tell the jury (referring to a badly injured client):

“It’s not what you take from them it’s what you leave them with.”
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Solving US Citizenship Problems Toronto Sat March 25 2-4 pm 100 St. Joseph St. #FATCA #FBAR #CBTax Get the facts! https://t.co/9MwpNgP9Mj pic.twitter.com/SSP2tZMpIt

— Patricia Moon (@nobledreamer16) March 8, 2017

FATCA is in full swing. The fear-mongering of the tax compliance industry continues. A recent suit involving a dual U.S.-CDN citizen is launched and while NOT typical of the average Canadian, major fears arise. Will the IRS extend its program of penalties to the minnow? Will the U.S. Republicans manage to achieve Tax Reform that would include a move to RBT? Will FATCA finally be killed off?

If you are still sitting on the fence wondering what to do and where you stand, now is a good time to make sure you have the facts. Many are still choosing to #RenounceAndRejoice! Should you?

Next meeting is in Vancouver, Tuesday, May 23, 2017

MAJOR Support 4 #RepealFATCA #Americansabroad thnx 2 @RepealFatca @nigeljgreen @GroverNorquist @CFandP @AmerComm https://t.co/BnuZfY0kSM

— Patricia Moon (@nobledreamer16) March 21, 2017

Came across this today: Ways & Means committee members letter

I do not have permission to reproduce in full but here are a few excerpts:

Dear Speaker Ryan, Majority Leader McConnell, Rep. Brady, and Sen. Hatch:
As free-market and taxpayer protection organizations representing millions of Americans,
we urge that repeal of the Foreign Account Tax Compliance Act (FATCA)—a plank in the
2016 Republican Party Platform—be included in any tax reform package sent to the
White House.

Since FATCA’s introduction, Americans living overseas have lost access to their banking
and investment accounts as foreign financial institutions drop clients rightly perceived as
toxic. This has not only impacted the welfare of the estimated nine million Americans
who live and work abroad but hampers small businesses owned and operated by
Americans attempting to compete internationally

FATCA repeal bills will soon be introduced in the House and Senate. We urge the
leadership and committees of jurisdiction to include this vital correction of misguided
enactment of the past administration by including it in any forthcoming tax bill

There is a list of 24 individuals/organizations. I ask any Tweeps to RT like mad to show our appreciation for what they are doing. PERFECT timing for the Rally tomorrow! Perhaps someone could put together an email list for those who do not Tweet.
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