I’ve learned from the American Expatriates group on Facebook that those seeking German citizenship may obtain it before renouncing a citizenship when the cost for renunciation costs more than a month’s gross wages (Note:  Brian Gaber says this is completely false; a lawyer says it is not the law, but an interpretation of the law, so go ahead and try it anyway). This in a list of other Ausnamen (exceptions) from those who must renounce their citizenship before become a German citizen:

wenn der andere Staat unzumutbare Bedingungen für die Entlassung aus der Staatsangehörigkeit stellt, z. B. überhöhte Gebühren (mehr als ein Brutto-Monateinkommen, aber mindestens 1.280 €).

This means that Americans may obtain German citizenship without having to renounce US citizenship in advance, if the $2350 renunciation fee is higher than 1280 € and also higher than a month’s gross wages. It also makes it clear that the reason is that any fee a person’s monthly wage is exorbitant (unzumutbare Bedingungen) .  Immigration Germany (the Ausländeramt) is showing both compassion and flexibility. This is exemplary pragmatism and should be imitated by bureaucrats around the world. It is the opposite of the current State Department approach, which is tyrannical. The current exchange rate 1.11. 1280 €=US $1421.

Attn: Former U.S. Citizens: Are you STILL or have you EVER BEEN a U.S. “Tax Citizen”? http://t.co/IsmbLzUjQL

— Citizenship Lawyer (@ExpatriationLaw) March 4, 2015

My first reaction to the recent letter to IRS Commissioner John Koskinen from the Section of Taxation was excitement, as it seemed a good idea to get the issue of whether 877A is retroactive or not, solved once and for all. For over five years now, many expats have been in agony, knowing they lost their citizenship decades ago and yet many have been told that without a CLN, they might as well accept that they still are US citizens. This is simply intolerable. Now more than ever, we need to understand this as completely as possible.
 
I want to bring to your attention some posts that John Richardson has written over the last several months on this same subject. Trying to make this intelligible to those of us unused to the language of taxation and law is no easy feat. If we are to make reasonable assessments of our situations before choosing a course of action and/or tax adviser, lawyer or accountant, we need to understand what is involved. That is exactly the reason Brock was started; to read, research and share as opposed to simply allow others to take charge.
 
#1 “Attn: Former U.S. Citizens: Are you STILL or have you EVER BEEN a U.S. “Tax Citizen?”
“This post is long and I (John) wish to summarize the purpose and possible (but not certain) conclusion of the post in a few simple sentences.
Here goes:
If you were born in the United States (and became a U.S. citizen at birth) who moved to Canada and:

1. Relinquished U.S. citizenship (likely by becoming a Canadian citizen) prior to June 3, 2004, without informing the U.S. State Department or applying for a Certificate of Loss of Nationality; and

2. Are hearing from the media and some members of the tax compliance community that you are either still a U.S. citizen or are somehow liable for U.S. taxes; then

You should NOT believe that you are still a U.S. citizen and/or are that you are subject to U.S. taxation without getting proper counselling. In other words, you should neither apply for a Certificate of Loss of Nationality nor file U.S. tax returns without a thorough investigation of your situation. You may or may not be a U.S. citizen who is subject to U.S. taxation.

Extreme caution is warranted. Please note that this post is NOT legal advice of any kind whatsoever. You meed to discuss your specific circumstances with a competent adviser of your choice.”
You can read the rest of this post here.

#2 – “The “plain language” of S. 877A – To whom does the U.S. Exit Tax apply?”
“Many Americans abroad are confused by the difference between “relinquishment” and “renunciation”. This post will explain exactly why the date of relinquishment matters. This post will make the argument that the “plain language” of the combined effects of S. 7701(a)(50) and S. 877A(g)(4) compel the conclusion that those with a “Relinquishment Date” prior to June 3, 2004 are NOT subject to the S. 877A Exit Tax.”

#3 – “The United States of America – One country two citizenships – Introducing the “Tax Citizen”
“What could be better than U.S. citizenship? Why not a second U.S. citizenship? The United States Congress rewarded U.S. citizens by giving them all a “Second U.S. Citizenship.” To be specific, on June 3, 2004 all U.S. citizens became U.S. “Tax Citizens.” Interestingly, the U.S. public never asked for “Tax Citizenship.” The status of “Tax Citizen” was simply conferred on them. “Tax Citizens” have no rights. They have only obligations. The obligation is pay taxes.”

#4 – “Renunciation is one form of relinquishment – It’s not the form of relinquishment, but the time of relinquishment”

“There is NO difference between “relinquishment” and “renunciation” (renunciation is just one form of relinquishment). For tax purposes, there is likely a difference between a “relinquishment” prior to June 3, 2004 and a “relinquishment” (including a “renunciation” after June 3, 2004.” Read here.
 
This is an extremely important subject. I do hope you take the time to read these posts and in the spirit of Brock, discuss and share ideas here. We are our own best assets!

ABA Section of Taxation Recommends Those who Relinquished under INA Prior to June 17, 2008 be Treated as Non-Citizens http://t.co/IqGYsexuJt

— Patricia Moon (@nobledreamer16) March 4, 2015

In our view, sections 877A and 7701(a)(50) should not be considered to apply to individuals who had previously ceased to be citizens, for both nationality and federal tax purposes, prior to the date those provisions were enacted. In particular these sections should not apply to individuals who relinquished citizenship on or before June 3 2004, and whose noncitizen status was deliberately grandfathered under the 2004 Act, or to individuals who relinquished their citizenship in accordance with the requirements of former section 7701(n) after June 3, 2004 and prior to June 17, 2008.

The “extra’ here is since 7701(n) was repealed in 2008, the writer also suggests those who relinquished after June 3, 2004 and prior to June 17, 2008, should also be considered non-citizens. IOW, 877A only applies AFTER 2008! NOT RETROACTIVE!
 

The American Jobs Creation Act of 2004 ( the “2004 Act”), however, created a disparity between expatriation for nationality purposes and expatriation for tax purposes. Specifically the 2004 Act enacted new section 7701 (n), which provided for the first time that an individual who ceased to be a citizen in accordance with the INA would continue to be treated as a citzen for federal tax purposes, until a specified notice requirement was satisfied.. Section 7701(n) was effective only for individuals who expatriated after June 3, 2004 so individuals who had relinquished citizenship on or before that date were not affected, even where they had never provided any noticed described in that provision.

Similarly, section 7701(a)(50) generally provides that an individual shall not cease to be treated as a U.S. citizen before the date on which the individual’s citizenship is treated as relinquished under section 877A (g)(4). Pursuant to section 301(g) of the 2008 Act, these provisions are effective for any individual whose expatriation date (defined as the date on which the individual relinquished citizenship) is on or after June 17, 2008.We therefore recommend that Treasury and the Service issue guidance, in any form that they deem appropriate, confirming that individuals who reliquished citizenship under the INA are not subject to sections 877A and 7701(n)(50) and thus continue to be treated as noncitzens of the United States for federal tax purposes following the 2008 Act.

I don’t need to point out how important this development is! This news is HUGE!

For the whole letter to Commissioner Koskinen, please see Here

Taxation #AmericansAbroad: Citizenship taxation vs. Residence taxation: M. Kirsch – B. Schneider May 2/14 Toronto https://t.co/KTe7wnQaNG

— Citizenship Lawyer (@ExpatriationLaw) March 2, 2015

Video also Here

 
“Revisiting the Tax Treatment of Citizens Abroad:Reconciling Principle and Practice” M.Kirsch
 
“THE END OF TAXATION WITHOUT END: A NEW TAX REGIME FOR U.S. EXPATRIATES”
SSRN-id2186076_Schneider
 
Bernard Schneider- April 15, 2013 letter to the Ways and Means Committee
B.Schneider2-Ways&Means
 
With thanks to Embee for the articles
 

UPDATED SAT 28 FEB 2015

 
Everyone should stand up and take notice that WE are having an effect on all things FACTA-oid. First it was only tax geeks and compliance condors. Now the scholars are chiming in. Funny how most simply are oblivious of the fact that the US overreach is the number one indication that the whole thing is simply flawed.

As John Richardson points out in the following repost from The ADCS blog, WE are making a difference. We haven’t been deterred by obnoxious comments from the public, the Canadian Conservative government, nor the compliance condors. One thing they don’t seem to get, is that nothing in life is fixed and immovable. Change is the only thing that one can count on. So while they all sit on the pedestal of “no one can fight this’ and “it’s US law,” let’s enjoy the fact that regardless of how difficult this has been, we have risen to the challenge and are worthy of respect; not just from them, but from ourselves.

Forbes had a nice quote the other day which reflects well upon our situation:

“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”

Mark Twain

@ADCSovereignty #FATCA IGA lawsuit continues to be newsworthy and provides education and leadership to the world https://t.co/0K9zKqTBvt

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 28, 2015

 
The lawsuit launched against Canada’s FATCA IGA will be remembered as part of the history of FATCA. As the Obama administration “boldly goes” to impose it’s will on the world, Canada’s FATCA lawsuit reminds both Homelander academics and International Compliance Condors that there is a world outside the United States.
 
Win, lose or draw, the FATCA lawsuit prosecuted by the Alliance For The Defence of Canadian Sovereignty is:
 
A. Reminding the United States that there is a world outside the United States;

B. Demonstrating that there are people who resent the attempts of the United States to impose its laws on the rest of the world;

C. Illuminating the immorality of (during a time when the U.S. Senate Finance Committee is considering tax reform) U.S. extra-territorial taxation.
 
Extra-territorial taxation is the U.S. practice of attempting to levy taxes on people who (1) do NOT reside in the United States and (2) on income and property not associated with the United States.

What the United States proudly calls “citizenship based taxation” is primarily an attempt to levy taxes on people based on a U.S. place of birth or because their parents had a U.S. place of birth.

We can’t choose where we were born. We can’t choose our parents. Yes, to be be sure:
 

“It’s unjust. It’s inhumane. People don’t choose where they were born.”

So, yes your FATCA lawsuit is making a difference. Yes, your FATCA lawsuit is continuing to make a difference. Yes, by all means do  continue this generous and important initiative!

Continue reading →

Bruce W. Bean,

Michigan State University – College of Law

AND

Abbey Wright Farnsworth,

Independent

February 25, 2015

ILSA Journal of International & Comparative Law, Vol. 21, No. 2, 2015

Abstract:

… two Canadians have filed a claim against the Canadian government asserting that the IGA entered into by the United States and Canada to implement FATCA violates several provisions of the Constitution of Canada,166 including Canada’s Charter of Rights and Freedoms, the Income Tax Act of Canada, and the Canada-U.S. Tax Treaty. The agreement requires Canadian FFIs to hand over information on qualifying accounts to Canadian tax authorities, who will in turn submit the information to the IRS.

… Additionally, there is concern that the agreement disregards the principle of maintaining sovereignty. The claimants and many other Americans living in Canada feel “entrapped in U.S. citizenship” and that their rights are being violated as they are “branded” potential tax evaders.

…The U.S. Government has taken a bold step with FATCA. The legislation is by far the most egregious example of extraterritorial overreach in history and has been harshly criticized by individuals and entities alike.

 **********************

(as most of the world’s countries and *foreign financial institutions*

submissively roll over for the U.S.A.)

Have you received a FATCA letter or been warned of the consequences of being a U.S. person?
 
 

WHO: John Richardson, B.A., L.L.B., J.D. is a citizenship lawyer in Toronto and a member of the Ontario Bar.

WHERE: University of London International Hall Meeting Room,
Landsdowne Terrace, London WC1N 1AS UK
150m walk from Russell Square Tube Station

WHEN: Monday, March 2, 2015. 6:30 – 8:30 pm

ADMISSION: Admission £15. Payable in cash on the door please (to cover costs).

 
Why am I getting letters from my bank all of a sudden?
 
 
FATCA became a reality in the U.K. on July 1, 2014. Financial Institutions must search for any indicia of “U.S. Persons.” Although both the definition of “U.S. person” and whether one meets the definition is not always clear, the process is ongoing. In some cases, there is no particular warning – just a letter indicating that they are suspected to be a “U.S. person”. Often one must prove to the institution sending the letter that one is not a U.S. person.

Continue reading →

http://www.ftseglobalmarkets.com/issues/issue-80-january-february-2015/aeoi-tax-reporting-doesnt-have-to-be-taxing.html

From the back alley of the Compliance Community comes this little tidbit which reinforces concerns about what all those trustworthy banks are going to do with all that shiny US Person customer data once their new FATCA and AEOI (Automatic Exchange of Information to support the OECD’s GATCA) systems get up to cruising speed:

AEOI: Tax reporting doesn’t have to be taxing

From FATCA to AEOI, who knows what the next move will be. And, with confirmation of exact reporting rules around AEOI still up in the air, there is still much uncertainty. The point is that those who continue to paper over the cracks instead of looking for a long term solution run the risk of non-compliance to local and global regulations and reputational damage. On the flip side, financial institutions that adopt flexible technology designed to cater for future unknowns, will avoid any headaches, and have capacity to explore how best to use the new AEOI/FATCA customer data. The silverlining, of course, is that once a firm’s AEOI infrastructure is in place, it provides a goldmine of customer data. Golden nuggets that could then be used for purposes other than keeping the tax authorities happy.

Alberta online bank first in Canada to shun U.S. clients amid tax rules

Some highlights from Barrie McKenna’s new Globe and Mail article:

“The information and documentation required to open and monitor an account within [Canadian Direct Financial] for a U.S citizen or resident outside of Canada is prohibitive to providing the level of service our clients expect and deserve,” explained Kirby Hill, a Canadian Western Bank vice-president and spokesman.

A number of financial institutions in Europe and elsewhere are already balking at doing business with Americans. But Canadian Direct Financial is believed to be a Canadian first.

Canadian Bankers Association spokeswoman Maura Drew-Lytle said she was unaware of any Canadian banks refusing to do business with Americans.

“It’s discrimination based on nationality,” said Kevyn Nightingale, a U.S. tax specialist at accounting firm MNP LLP in Toronto. “FATCA has put financial institutions in a conundrum.” Mr. Nightingale said the steep compliance costs simply aren’t worth the effort for some mid-sized financial institutions.

“I’m amazed this is the first one I’ve seen so far,” he said. “I would expect there would be more.”

Patricia Moon of Toronto, who renounced her U.S. citizenship more than two years ago, said the Alberta bank’s decision not to do business with Americans “demonstrates the harm” caused by Canada’s decision to share data with U.S. tax authorities.

“If all the banks started doing this, where are you going to open an account?” wondered Ms. Moon, a director of the Alliance for the Defence of Canadian Sovereignty, which is suing the Canadian government over its decision to share personal financial information with the U.S.

http://www.theglobeandmail.com/report-on-business/international-business/alberta-online-bank-first-in-canada-to-shun-us-clients-amid-tax-rules/article23186804/