cross posted from ADCSovereignty blog

Introducing Jackie Bugnion …

Jackie Bugnion explains the problems of citizenship taxation for #Americansabroad https://t.co/XHBJ2kDbml

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) September 13, 2015

Jackie Bugnion has published a superb article describing the problems of U.S. citizenship taxation and why the United States must move to residence based taxation. Before, describing her article, for those who don’t know …

On May 7, 2015 I received notification that Jackie Bugnion had submitted her resignation to the Board of ACA “American Citizens Abroad“. I read the notification with a combination of sadness and total appreciation for the incredible efforts that Jackie has made in advocating for the rights of Americans Abroad. Jackie was largely responsible for organizing the “Citizenship Taxation Conference” (featuring the debate between Michael Kirsch and Bernard Schneider) that took place in Toronto on May 2, 2014. Some of you may have had the privilege of meeting her there. It’s unlikely that she could be replaced by any one individual.

In my humble opinion Jackie has done more than any single individual in both:

1. Helping Americans Abroad in day-to-day practical ways; and
2. Leading the broader educational initiative which I believe will lead to the United States transitioning from CBT to RBT.

Jackie’s notification of her retirement included the comment that:

While the task is far from over, I am pleased to know that ACA has managed to get RBT on the table of tax reform.  As you know the Senate Finance Committee has taken a positive stand on this.  The number of public submissions on tax reform to the Senate Finance Committee in April 2015 showed significant input from Americans abroad.  There were 350 submissions to the “international” group compared to 450 for the “personal” group.  When related to the interested populations – 7 million vs 250 million, this demonstrates a major input from overseas. Congress is sensitive to this level of participation.

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Solving US Citizenship Problems –Munich DE Thurs Mar 3 19:00-21:00 Schwanthalerstr. 80 £15 https://t.co/4m8pMyjbM8 pic.twitter.com/cEqyIYA5pG

— U.S. Expat Canada (@USExpatCanada) February 24, 2016

MUNICH DE

Solving US Citizenship Problems

Interactive discussion; updates on FATCA reporting, CBT lawsuit and other issues

WHO: John Richardson B.A., LL.B, J.D. licensed in Ontario, New York & Massachusetts. Member of ACA Tax Advisory Panel. Toronto citizenship lawyer- citizenshipsolutions.ca and Co-chair of the Alliance for the Defence of Canadian Sovereignty and the Alliance for the Defeat of Citizenship Taxation

WHEN: Thurs, March 3, 2016 19:00 – 21:00

WHERE: Eine WeltHaus München, Schwanthalerstraße 80, 80336 München, Germany MAP

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

Information presented is NOT intended or offered as legal or accounting advice specific to your situation.

Solving US Citizenship Problems – London UK Mon Feb 29 18:30–20:30 Russell Sq Tube Stn £15 https://t.co/4m8pMyjbM8 pic.twitter.com/w825LJvAWn

— U.S. Expat Canada (@USExpatCanada) February 24, 2016

LONDON UK
Solving US Citizenship Problems
 
Interactive discussion; updates on FATCA reporting, CBT lawsuit and other issues
 
WHO: John Richardson B.A., LL.B, J.D. licensed in Ontario, New York & Massachusetts. Member of ACA Tax Advisory Panel. Toronto citizenship lawyer- citizenshipsolutions.ca and Co-chair of the Alliance for the Defence of Canadian Sovereignty and the Alliance for the Defeat of Citizenship Taxation

WHEN: Monday, February 29, 2016 18:30 – 20:30

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

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

SWeden pays 73,700 USD per each resident adult US-citizen immigrant to be located with the #FATCA ethnic-identification system. Is Sweden offshore? (I had always thought that Sweden was on the continent of Europe). (Total FATCA implementation costs in Sweden are estimated to be greater than 7.61 billion SEK.)

Would it be at all possible to dispel any myth that residents in USA are sending their money to SWeden to avoid taxation? Has no one in Washington or Stockholm yet realized that SWeden has the highest personal tax rate in the world?

FATCA, the Foreign Account Tax Compliance Act, is an enforcement tool of the requirements of Americans to report their “foreign” bank accounts. Since US has extraterritorial taxation based upon citizenship, these reports are required of all US citizens and all US persons living throughout the world or in Sweden.  “Foreign” and “offshore” are defined as anything that is not in American. Canada is “offshore’ and, Mexico is “offshore”, and the Swedish accounts of a dual citizen living in Sweden are also considered both “offshore” and “foreign” according to the IRS and its captive media. US persons are required to fill out the Foreign Bank Account Report FBAR at the U.S. Financial Crimes Enforcement Network (FinCen). Those that have not filed FBARs are eligible for jail terms, or fines reaching 300% of a persons asset value.  A child is responsible for filing its own FBAR and is not exempted from the penalties.  FBARs are required to be filed electronically at the FinCen website. Additionally, qualified “rich” US persons (those with over $200,000) are required to have also filed IRS form 8938, with an additional penalty structure.

The Swedish government administration stated that the costs of implementation should be considered versus the threatened 30% sanctioned tax which could be applied for non-compliance.

Sweden could not estimate the business effect of FATCA, despite that Swedish law requires that the business impact must be evaluated for legislations. In following discussions, it was estimated that each small financial institute (comprising 95% of the FFI’s) would incur 1 million SEK yearly FATCA administration costs. (Documentation of the costs to larger institutions has not been located.) IRS lists 744 FFI’s to date, yielding a minimum estimated yearly cost of 744 million SEK (excludes the cost of the 5% larger institutions), or 7.44 billion SEK over 10 years. The costs to the Swedish government were estimated to be above 15 million SEK for implementation and 15 million SEK per year thereafter, for a 10 year public cost of 165 million SEK. Total FATCA implementation costs in Sweden are estimated to be greater than 7.61 billion SEK.

As Sweden approaches a cashless society, nearly every resident has a bank account, yet only the 82.9% over 15 yrs old are considered further in this analysis.

With 9,784,445 inhabitants and 17,000 resident U.S. citizens, the Swedish government cost is 777 SEK per capita, 447,700 SEK per resident US-citizen resident and 937 SEK per adult Swedish account, or an astounding 539,984 SEK per adult resident U.S.-person account.

Using the 6-yr average of IRS exchange rates (7.33 SEK/USD), this yields the cost of 73,700 USD to locate each adult resident US-person account.

Would it not have been better for Sweden to just hand over 761 million SEK to USA each year—as a tax for having allowed immigration and emigration with USA?

But, FATCA is about finding rich offshore tax evaders! They are sending their money to Sweden—in order to avoid taxation! Believe it! Believe it! You should be believing all of the FATCA “offshore” media propoganda for Sweden. They are not paying their fair share! We need to get every last PESO out of them!

Who are they actually going to find? The objective is to find all suspected U.S. persons living in Sweden and any suspected Swedes living in USA.

They will find many “real Swedes” have had no control over their Swedish parent’s sexual lust to procreate in America. Thousands of “real Swedes” have studied or worked temporarily in USA, and begat children upon U.S. soil.

They may also find about 51,000 SWedish-citizen schmucks living in The Land of the Free as expats. I suppose that Obama wants to find them, too. There ought to be a few of those pesky buggers with checking accounts back in Du gamla du Fria, due to their devious history of once having lived someplace other than America. They might have inherited something from grandma, have a summer house, or might even be renting out their Swedish family home in their absence. Somehow, these terrible immigrants in America need to be located and punished for their sins.

FATCA looks for “indicia” of these pesky U.S. persons.
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FATCA is the method of identifying suspected U.S. persons, who might be residing outside of USA–working and saving in non-American financial institutions.

As in the analysis of the other countries, one first must ask if we could dispel any myth that there are Americans in America who are sending their money to Australia — in order to avoid taxation.

Australia: The costs in Australia are estimated to be 255 million AUS for implementation, and 22.7 million AUS for each year of maintenance. Over 10 years, this totals 482.68 million AUS. With 77,000 resident US citizens (54% of whom are of dual citizenship) and known population of 24,003,100, the implementation cost is 6,270 AUS per residing U.S. citizen, 11,590 AUS per U.S.-person account, or 20.2 AUS per capita. The most representative developed country has 661 bank accounts per 1000 adults, and Australia has 82.1% population above 15 years old (adults). This yields estimated 41, 700 US-citizen bank customers in Australia, or a FATCA implementation cost of 37.3 AUS per customer.

AS 3668 FFI’s are currently registered, the estimated FATCA cost per FFI is 132,000 AUS per FFI.

The same analysis showed that costs without the IGA 477 million AUS for implementation, and 58.8 million AUS for each year of maintenance. ($1.066 billion AUS total) would have been 44,4 AUS per capita, 81.1 AUS per customer, or 13,800 AUS per resident U.S. citizen, or 25, 600 AUS per U.S.-person account . This is the only published non-IGA country cost estimation identified.

Without an IGA, the estimated FATCA cost per FFI is 291,000 AUS.

If it could have been assumed that one person had only one account, Australia still could only have said to have succeeded to locate only 30,000 of those US citizens (72% effectiveness) in its first FATCA submission to USA.  (updated per commenter) It was determined that each located U.S. citizen bank account averaged 160,000 AUS—hardly those rich 1%’ers.

Australia is paying dearly to identify its minorities for the benefit of an intrusive foreign government.

p.s. Recently, it was pointed out as to where to find foreign-born population in the USA. 84,368 +/-4,780
residents of USA are counted to have been born in Australia as non-US citizen Australians. This quantity is not significant (less than 1%) in the above calculations. Data can be found at

http://factfinder.census.gov/faces/tableservices/jsf/pages/productview.xhtml?pid=ACS_14_1YR_B05006&prodType=table

https://www.census.gov/topics/population/foreign-born/about.html

Note that, indeed, FATCA’s objective is also to locate foreign-born persons residing in USA.  Like US persons living in Australia, Australians living in USA are required to file their FBARs & 8938’s and all of their other tax papers. Many of these persons have inheritances and savings and checking accounts from their former lives and for their current life. Perhaps they have summer houses or inherited family homes or checking accounts for supporting children who are studying in Australia. These persons indeed are due to report their situations to the IRS, yet they are far from “those offshore tax evaders” for which FATCA propoganda is claiming.

482,680,000 / (77,000 + 84,638 ) yields 2986 AUS per the FATCA-indicia objects (US citizens in Australia + Australian-born persons in USA) .

Here is the full Audio for the event. Albright represented Clinton. Her response to the questions was quite cold and standoffish.
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Yesterday, the U.S. Treasury released it’s 2016 Model Tax Treaty.

Treaty-US Model-2016

I suspect that people will interpret this in terms of how it affects their individual situations. This gives a huge clue with respect to information exchange and how the U.S. views “double taxation”, citizenship-based taxation and related issues.

In the past, Brokers have been tremendously resourceful in analyzing complex documents.

I invite you to read the model agreement and comment on whether you see any improvement in how it affects your situation in different countries. Common sense dictates, that the text of the model treaty can be used as an interpretive aid for interpreting the existing treaties.

I am particularly interested in whether you see anything in this which would affect: pensions, PFIC, foreign corporations, etc.

Is this about continuing double taxation or is it about ending double taxation?

Is this Treaty better suited to justifying the exchange of information under FATCA?

When (if) you comment, please make clear which country you live in.

I notice right at the beginning, in Article I it reads:

4. Except to the extent provided in paragraph 5 of this Article, this Convention shall not affect the taxation by a Contracting State of its residents (as determined under Article 4 (Resident)) and its citizens. Notwithstanding the other provisions of this Convention, a former citizen or former long-term resident of a Contracting State may be taxed in accordance with the laws of that Contracting State.

5. The provisions of paragraph 4 of this Article shall not affect:
a) the benefits conferred by a Contracting State under paragraph 3 of Article 7 (Business Profits), paragraph 2 of Article 9 (Associated Enterprises), paragraph 7 of Article 13 (Gains), subparagraph (b) of paragraph 1, paragraphs 2, 3 and 6 of Article 17 (Pensions, Social Security, Annuities, Alimony and Child Support), paragraph 3 of Article 18 (Pension Funds), and Articles 23 (Relief From Double Taxation), 24 (Non-Discrimination) and 25 (Mutual Agreement Procedure); and
b) the benefits conferred by a Contracting State under paragraph 1 of Article 18 (Pension Funds), and Articles 19 (Government Service), 20 (Students and Trainees) and 27 (Members of Diplomatic Missions and Consular Posts), upon individuals who are neither citizens of, nor have been admitted for permanent residence in, that Contracting State.

UPDATE February 13, 2016

This describes the reaction of a non-US Person, listening to the stories of expats at a meeting designed for them to speak freely. It starts just a bit before the speaker describes his background which speaks to the degree of fear he had seen/experienced before he came to Canada, from government oppression.

Dr. Donald Young comments on A FATCA-Related Suicide Part II
 

Obviously I cannot comment on this matter without knowing more facts. I can only say that the situation that many Americans abroad experience due to FACTA and the threats made by the U.S. government will clearly have negative emotional consequences for many and at times severely so. I can attest to this as I have seen and treated it clinically. The possibility of suicidal thinking and behaviour comes as no surprise to me from a psychiatric perspective. The fact of being threatened by the strongest and most aggressive nation in the world is unsettling for even the most psychologically robust individual. Those prone to anxiety, depression, physiological responses to stress and other difficulties ( and this likely involves a quarter of the population at least ) will be all the more vulnerable to the irrational threats and demands of the American government. We are being threatened with economic ruin, branded as criminals and told we will be hunted down. This situation results in a prolonged degree of stress that will have deleterious emotional and often physical stress that will certainly take its toll.The fact that there are often no clear answers as to what to do or how to do it only worsens the emotional upset and results in a form of learned helplessness. We may well have just witnessed a tragic result of what the American government is doing to people who simply want to live in peace and leave their former country behind, assuming they ever even lived in it. And from what I can see there is no solution and no save harbour in sight.

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cross-posted from citizenshipsolutions.ca

 

New instructions to renounce or relinquish US citizenship in Canada – Email: CanadaCLNInquiries@state.gov to start: https://t.co/mWuVjloIa4

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 17, 2016

It appears that the demand to renounce U.S. citizenship continues to grow.

For those who want to book appointments to relinquish or renounce U.S.
citizenship in Canada:

1. These new instructions have recently taken effect.
2. In order to book an appointment you email:
   CanadaCLNInquiries@state.gov
3. You will receive a reply that includes (see below)
4. Note that you are not permitted to have an “attorney” with
   you at the appointment
5. You must also complete the questionnaire which is here:

Questionnaire

(Interestingly, at least for the moment, Canada seems to continue to require Form 4079 an issue that I have discussed here.)

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cross-posted from citizenshipsolutions.ca

If @SenTedCruz had NOT renounced CDN citizenship he could have escaped US S. 877A Exit Tax https://t.co/vHaMojxgzM pic.twitter.com/QuAVA8qfx1

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 16, 2016

Ted Cruz was born in 1971 in Canada. He was therefore born a Canadian citizen. He claims to have been born to a U.S. citizen mother and was therefore a U.S. citizen by birth. (Whether he qualifies as a “
natural born citizen” is a different question.) As a Canadian citizen he had the right (prior to renouncing Canadian citizenship) to live in Canada. Had Mr. Cruz, moved back to Canada, he could have avoided the U.S. S. 877A Exit Tax. Incredible but true. It will be interesting to see whether Mr. Cruz regrets renouncing his Canadian citizenship. As you will see, by renouncing Canadian citizenship, Mr. Cruz surrendered his right to avoid the United States S. 877A Exit Tax.

Here is why …

The S. 877A Exit Tax rules in the Internal Revenue Code, are the most punitive in relation to U.S. citizens living outside the United States (AKA Americans abroad). To put it simply, with respect to Americans abroad, the S. 877A Exit Tax rules:

– operate to confiscate assets that are located in other nations; and

– operate to confiscate assets that were acquired by U.S. citizens after they moved from the United States.

There is not and has never been an “Exit Tax” anywhere else that operates in this way. The application of the S. 877A Exit Tax to assets located in other nations, is both an example of “American Exceptionalism” at its finest and a strong deterrent to exercising the right of expatriation granted in the “Expatriation Act of 1868“.

But, the “Exit Tax” applies ONLY to “Covered Expatriates” and “dual citizens from birth” can avoid being “Covered Expatriates”
…

As has been previously discussed, the Exit Tax applies ONLY to “ covered expatriates“. There are two statutory defenses to becoming a “covered expatriate”. This post is to discuss the “dual citizen from birth” defense to being treated as a “covered expatriate”. I have discovered that this defense is NOT as well known or understood as it should be.

The statute granting the “dual citizen from birth” defense to “Covered Expatriate” status reads as follows:

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