Here is the full legislative text of the Senate Tax Reform bill that just passed the Senate Finance Committee and which now will be likely modified and later voted on by the entire Senate.
It is entitled ‘‘Tax Cuts and Jobs Act’’ which is an amendment to the 1986 IRS code.
SEE LINK See also SECTION SUMMARIES in simpler language.
Anything in this latest version that helps or harms us?
— Two different members of the tax compliance industry are now saying that the House/Senate tax bills are harmful to US persons overseas.
Previously, Max Reed, a Vancouver tax consultant, expressed the opinion that the November House tax bill is bad news for Canadian citizens deemed to be US persons who have small businesses that are incorporated: see Max Reed article:
Now a second Tax Consultant (Kevyn Nightingale) has come up with the same interpretation of the House/Senate tax bill: In part, a one-time transition tax will be imposed on US persons overseas owning small incorporated businesses.
Like Max Reed, Nightingale feels that the harm in the tax reform proposal was “…not designed to catch individuals (I think), and certainly not Americans abroad – they are collateral damage. it’s incredibly unfair.” and suggests “Americans should call their Congressmen and Senators to complain. Ask that individuals – at least those residing abroad – be exempted from this level of unfair taxation and tremendous complexity.”
Here is Nightingale’s opinion:
“Here’s my commentary on the Senate’s version of tax reform dated November 9, 2017.
The United States is doing tax reform – a good idea for many reasons. The driver is the need to bring US corporate tax rates down, to make the country competitive with others. Also, they’re going to make the US corporate system “territorial”, meaning that most income earned by foreign subsidiaries will no longer be taxable.
To make that change politically palatable, they’re also dropping personal taxes.
But the cost of this is big – trillions of dollars. So legislators have to find some way to limit the revenue loss. They do that by increasing some other taxes.
— Accumulated deferred foreign income
One thing they will do is apply an immediate tax (well, sort of immediate – it’s to be paid over 8 years) to the retained earnings of those foreign subsidiaries. And there’s some logic to this as well. Those earnings have been tax-deferred until now. If they fell into the “exempt” system in future years, US multinationals will have effectively gamed the system by keeping them offshore long enough to completely escape tax. Yes, Congress could have developed rules to tax those earnings as they were eventually repatriated, but that would have been arbitrary, complex, and invited even more gaming of the system. And immediate taxation generates revenue. So this solution is reasonable – in principle.
One problem is that if you’re an American individual, and you own shares in a foreign corporation directly, this provision will create an immediate tax in your hands.
You won’t get a foreign tax credit for the corporate tax (like a US domestic corporate parent). You won’t get a special deduction (like a US domestic corporate parent). You just have to pay tax on the retained earnings.
It’s a double whammy if you live abroad
If you live in a country where it’s common to run a small business through a corporation (say, Canada), you already have enough double-tax issues to worry about (Subpart F, filing forms 5471, FINCEN 114, etc.). This new provision will probably lead to double taxation. And even if you can pay out dividends to limit that, it probably will create extra tax in your country. The US tax probably isn’t creditable in your country (in Canada, it isn’t).
Today (11/16/2017) the floor of the House passed the House tax reform bill. The earlier version is here .
Today also the Senate Finance committee passed the Senate tax reform bill. See link
Do not yet have the final versions of either bill but suspect that we are not helped in the bills. Will post here final versions when they become available.
Listen to the C-span clip found by BB in which Residence-based taxation is mentioned by Golding and Brady in the House tax bill debate — none of this however, appears to have been incorporated into the House or Senate bills passed on 11/16/2017
Republicans Overseas (RO) continues to press on, to make changes in the final tax package that will help us. The fight is not yet over, but it continues, right from the beginning, to be an uphill battle — and the odds don’t seem very good right now. RO says: “Again we need to focus on the Senate side since this fight is far from over.”
Personally, it makes no sense to me to blame Solomon and the handful of people at Republicans Overseas for trying to make a change and, so far, failing. Yesterday a friend reminded me that there was this Ismene, who kept telling her sister Antigone that it was pointless to even “try”: “…but you’re bound to fail…No sense in starting a hopeless task…Go then, if you are determined, to your folly, etc. etc.” Antigone responded: “When I have tried and failed, [then] I shall have failed.”
Mr. Obama’s is coming to Toronto to make Canadians better Global Citizens:
According to the Toronto Star, Mr. Obama will speak on “global citizenship” at the Toronto Metro Convention Centre on September 29.
EmBee says this about Mr. Obama, global citizenship, and sovereignty:
“Obama is teaching global citizenship not good citizenship. He’s a globalist through and through and globalists see national sovereignty and individual rights as the antithesis of their ideology and worldwide agenda. The USA purports to have been founded on freedom but look at it now … very sad … very scary.”
The title of this post tells you what Mr. Orwell thinks about global citizenship.
—So… who do you believe? EmBee and George Orwell, or Mr. Obama?
Posted in Ethics, Issues regarding US persons abroad, Law & Morality, Tax Treaties
14 Comments
cross posted from citizenship solutions
Can the common law “revenue rule” be used to stop the enforcement of U.S. “citizenship taxation” on non-U.S. residents?
What the United States calls “citizenship taxation” is actually U.S. taxation of certain citizens and residents of other countries. The U.S. claims the right to impose full U.S. taxation on the “world income” of certain people who do NOT even live in the United States.
Prologue: In August of 2017 it was widely reported that the Canada Revenue Agency had assisted the IRS in enforcing a massive penalty ON A CANADIAN RESIDENT levied under the U.S. Internal Revenue Code. The penalty was imposed on that Canadian resident was for failing to report to the IRS, that he had been carrying on a Canadian business, through a Canadian Controlled Private Corporation. At the time of collection, the penalty was for approximately $133,000 U.S. dollars!
Q. How did this happen? A. He entered the 2009 IRS OVDP (“Offshore Voluntary Disclosure Program”). Those who entered #OVDP were basically “signing up” to pay penalties to the IRS. Those interested in reading about the horrific treatment of another Canadian resident, who tried to “do the right thing” by entering OVDP should read this.
Federal Tax Crimes: Court Sustains $10,000 Per Year § 6038(b) Penalty https://t.co/cx26P98rDV – imposed on U.S. citizen residing in Canada
— Citizenship Lawyer (@ExpatriationLaw) August 12, 2017
For the rest of the story, please see here .
Do the majority still feel that dual citizenship, because of its many benefits, is a very good idea?
Some comments:
“I believe that people should be entitled to carry as many citizenship’s as they can obtain. It makes travel easier and then you are effectively not the ward of one state…If you have at least one more citizenship you are not beholden to any one state…I believe that you should have at least two if the option is available.”
“TOTALLY vote NO on “one-citizenship” rules. Citizenship should not be an issue…”
“No, dual citizenship should not be banned.”
“…What if they have to go back for a bit to look after elderly relatives (the U.K. does not allow people to bring their elderly relatives over). So, I think dual citizenship is fine, as long as people really have a foot in both camps.”
“I believe that multiple citizenship is a natural outgrowth of population movement and that it will be the norm by the end of this century…”
“…Dual or multiple citizenship keeps at least some power in the hands of the people where it belongs.”
“Good discussion. But there is little discussion of citizenship is or what it means…”
“…However, people often want to retain a second citizenship as a backup plan or alternative.”
“Why don’t we just eliminate citizenship? OK, not realistic ”
“Maybe we are being too egocentric here just like the Homelanders?…”
“…It is hard to understand why there is so much misunderstanding and prejudice around dual citizenship…”
“Amazingly not a single comment addressing the “obligations” of citizenship. Clearly since citizenship is regarded as having ONLY “benefits”, the time has come to abolish it in its entirety. It should be thought of as simply a “Club Membership”. You can work your way in and work your way out as desired. If somebody were reading this thread 50 years ago, he/she would be shocked.”
Let’s try this again:
Assume that you, a long-time citizen and resident of France, were born in the U.S. and left U.S. at age four hours after birth, never to return AND you never developed any ties (passport whatever) with U.S. AND never wanted, and do not want, and refuse to accept imposition of U.S. citizenship on your French citizen person — notwithstanding a birth citizenship law of a foreign country (the U.S.).
A lot of people in this post want to define you as an “Accidental American Citizen”, apparently because they feel that this is a useful, easy to digest and understand, term.
But you say: “No way people — I don’t accept U.S. imposition of non-meaningful citizenship that I don’t want and I TELL YOU THAT I AM NOT AN AMERICAN CITIZEN I AM ONLY A CITIZEN OF FRANCE”.
So given the scenario above and your position as a human person, is it accurate or not to say that you are an American citizen?
Does the majority vote that you must defer to a foreign citizenship law that trumps your right to say no way?
"JR" (deported from USA at age 5) explains why he was born into #FATCA "tax slavery" @Sophieintveld says "bullshit" https://t.co/93CA769Lre
— U.S. Citizen Abroad (@USCitizenAbroad) July 12, 2017
Many thanks @Embee for providing the link to the spectacle in her comments here and here. The latter comment included:
Posted in Issues regarding US persons abroad, Law & Morality, Relinquishment, Renunciation, Senate Hearings
21 Comments
Courtesy of Andrew Grossmann · @andygr
28th May 2017 from TwitLonger TwitLonger
This is a transcript from the FATCA Hearing held in Washington D.C on April 26, 2017.
I think it is interesting to actually read the testimonies that we heard that day. Some of the more striking aspects seem even more shocking and the mistakes stick out like sore thumbs……………..All emphases are mine – Patricia Moon
UPDATE – Nov 9, 2018 https://www.canlii.org/en/on/onlst/doc/2017/2017onlsth164/2017onlsth164.html
LAW SOCIETY TRIBUNAL
HEARING DIVISION
Citation: Law Society of Upper Canada v. Lesperance, 2017 ONLSTH 164
Date: August 3, 2017
Tribunal File No.: 17H-025
BETWEEN:
The Law Society of Upper Canada
Applicant
– and –
David Sylvio Lesperance
Respondent
Heard: May 17, 2017, in Toronto, Ontario
Summary:
LESPERANCE – lnterlocutory Suspensions – Based on the evidence: there appeared to have been a misappropriation or mishandling of a substantial amount of a client’s money; the Lawyer was not co-operating with the Society’s investigation; he was no longer in Canada, having left sometime in 2015; the Lawyer had not complied with the Society’s requirement that he disclose his current contact information; and the current location of the Lawyer’s law practice was unknown to the Society – The Lawyer’s licence was suspended on an interlocutory basis.
ON Lawyer remains in Poland as Law Society files notice of motion 4 interlocutory suspension or restriction https://t.co/1m7XIbGikk
— nobledreamer (@nobledreamer16) May 19, 2017
While this particular post is not about a tax-compliance professional per sé, it IS about a person with whom many of us have had interactions and from whom we have been assured we WILL BE CAUGHT in one way or another. Given that, I find it extremely ironic to come across what follows in this post. How many of you who have paid a retainer or left any other type of funds when using a lawyer, ever worry about that person absconding with it?
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