As Deutsche Welle noted, earlier this week the United Nations Population Division released their report on international migrant stocks for 2015, based on a hodgepodge of sometimes-reliable national-level statistics on either the citizenship of local residents (thus undercounting dual citizens) or their birthplace (thus undercounting Americans born in other countries). Most countries’ figures were based on birthplace.

These statistics put the size of the American diaspora at about 2.8 million, an increase of 320 thousand since five years ago. The State Department, whose estimates attempt to capture children of American emigrants as well as naturalised immigrants who returned to their place of birth or moved to other countries, claimed in 2014 that about 7.6 million Americans live outside of the Homeland, whereas in 2006 they stated that the number was 4 million.

Why are all these hundreds of thousands or millions leaving? Well, a recent article from the Homeland (thanks to Tom Alciere for posting it) made a rather audacious claim, probably because the author is confused about the difference between leaving the country and renouncing citizenship.

Tax laws main reason for US citizens’ decision to move abroad …

When it comes to tax rates, the US is no safe haven. It’s 22.7 percent tax rates makes it the eighth (!) highest in the world. Mexico’s tax rate is 9.5 percent. Few countries can compete with the US when it comes to the notion that the last person entitled to your hard earned money is you. The IRS has it down to a science …

Why would anyone in their right mind willingly leave the US? The most common reasons are tax laws.

In reality, aside from Mexico and Ecuador, all of the countries reporting the largest increases in their U.S.-born/U.S. citizen population in the last five years have larger governments relative to the size of their economies and higher tax burdens than the United States. (As it turns out, most of the people moving to Mexico are kids, who don’t have much choice in the matter.)

This has obvious implications for U.S. diaspora tax policy: even if Washington eliminates the Foreign Earned Income Exclusion, they are obligated by treaty to provide foreign tax credits to emigrants who are paying taxes in treaty countries, and most emigrants who actually have income are also likely to have plenty of FTCs. Thus, the only way Washington can get money out of the diaspora is by fining them, by inventing “income” out of thin air, or by deliberately making their tax system incompatible with that of other countries. And that’s exactly what they’ve been doing.

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Thank you, USCitizenAbroad, for once again bringing this subject forward as many, including those like me, who struggle with real black and white clarity on this as we read this subject quoted in articles intended to reel us into *US tax and reporting compliance* for  the child born outside the US to two US parents or just one US parent (biological mother or father and why there is, in this day, the differences for that distinction) with the requisite facts.   We see that it is even an issue of contention between US Republican candidates, Senator Cruz and Donald Trump and follow with interest what will happen in that realm.

(i.e., my legal advice was that my children were US citizens from their first breath and that’s all there is to it and, from posts past from me, I failed to get anyone at the Department of State to state clearly that that deemed acquisition of US citizenship has to be claimed.  Nothing in my being will make me accept this seeming injustice especially as one of my children also has a developmental disability and would not be allowed to renounce that *deemed acquired US citizenship and all of its consequences*.  I maintain my son is Canadian and I want his Canadian government to guarantee that he and others like him have the same rights — *A Canadian is a Canadian is a Canadian*.)

I’m putting your comment into a separate post for better visibility for those who will weigh in, as you say:

Again, I renew my request for comments on this issue.

PART 1:

(From USCitizenAbroad comment at *Media and Blog Articles* refer to full post for detail)

With respect to issue of “derivative citizenship” which started with the comment here:

https://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-3-of-3/comment-page-8/#comment-7076684

My personal view is that people born outside the United States must consider their situations very very carefully. This is an issue that has been “popping up” on this blog for a number of years. One aspect to the question is this:

Can the U.S. deem somebody to be a U.S. citizen or (in the FATCA, FBAR and CBT world) forcibly impose U.S. citizenship on a person born outside the USA?

In July 2015, Eric wrote an interesting post that raised this issue. It’s worth a reread. The comment that I wrote to that post was:

https://isaacbrocksociety.ca/2015/07/10/2nd-circuit-retroactively-extends-jus-sanguinis-citizenship-to-us-emigrant-fathers-out-of-wedlock-kid/comment-page-1/#comment-6285662

Can the U.S. “deem” people “born outside the U.S.” to be U.S. citizens?

@Eric

Fantastic post and fantastic comments. Thank you for this. I see this decision as being more narrow than some of the comments to your post suggest. To cut to the chase, I believe that the significance of this decision depends on whether the U.S. can “deem” people born outside the United States to be U.S. citizens.

With that question in mind …
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BC Doc says…

@JC says

“@Calgary411 I suggest for consideration that blog from Rachel Heller for an IBS feature.

As part of renunciation, one must sign a statement that they have not done it under duress ! I suppose US goverment duress is not to be considered!”

+1 JC. Many of those who renounce or relinquish are doing so with a metaphorical Smith and Wesson revolver held to their temple by the USG.

I will use myself as an example. I am a naturalized Canadian citizen here for over two decades. I have Irish citizenship via my parents and grandparents. Their is no disincentive which has forced me to give it up. My Irish passport sits in a lock box and generally gathers dust save for the odd trip to Europe. I was a US citizen by birth– Boston will always be my home town. Given that I still have family in the US and right of return was my birthright, even though I had no intention of living their again, Citizenship Based Taxation combined with FATCA made retaining my US citizenship untenable. The result? US citizenship destruction, under duress.

Good for Rachel for throwing a wrench in the US citizenship destruction machine.

From Rachel’s Ruminations, January 8, 2016, *THE IRONY OF RENOUNCING UNDER DURESS*

When Americans renounce their citizenship, as I did, we are required to sign a form called “Statement of Understanding Concerning the Consequences and Ramifications of Relinquishment or Renunciation of U.S. Citizenship” (Form DS-4081) that includes the following:

I am exercising my right of renunciation/relinquishment freely and voluntarily without force, compulsion or undue influence placed upon me by any person.

…

Renouncing Under Duress

‘Under duress” means that you were somehow forced or pressured to renounce citizenship, and I agree that no one should be forced. However, many people who have renounced recently, or are planning to renounce, state that they have to do so: they are forced into it by circumstances.

For some, it’s a matter of being unable to find a bank to do business with because the banks don’t want the expense of complying with the new FATCA disclosure rules.

For some, renunciation is necessary because otherwise, according to their adopted country’s IGA with the US, they’ll be double-taxed on sales of property or pension payments.

For some, including me, it’s a matter of the cost of paying an accountant and dealing with a resentful non-US spouse who ends up handing his financial information over to the US government.

You could, then, interpret our reasons for renouncing as being an example of acting “under duress,” except the pressure comes from the US government itself!

With any long, drawn out battle, conflict among comrades is inevitable. Our fight to kill the FATCA IGA in Canada is no exception. We are not soldiers on a battlefied with guns and bombs. Our war is mostly fought with words. But sometimes we use those words against each other. On that note, perhaps the following thoughts might help ease some of the tension many of us have been feeling lately.

1. You know that little voice in your head that keeps you from writing things on Brock that you shouldn’t?  Yeah, well I don’t have one of those.
2. I prefer not to think before writing. I like being as surprised as everyone else when I read what I wrote after pounding madly away at the keyboard.
3. Have you ever read something at Brock and wondered, “Who ties your shoelaces for you?”  See points #1 and #2 to better understand the commenter’s perspective.
4. I can explain it to you, but I cannot understand it for you.
5. I never argue. I just explain why I am right.
6. Do not confuse my personality with my attitude. My personality is who I am. My attitude depends on what or who my comment is directed towards.
7. My people skills are just fine. It is my tolerance for idiotic comments that needs work.
8. Sometimes I sit quietly reading at Brock and wonder why I am not in a mental asylum. Then I read a bit more and think maybe I already am.
9. I hate it when the voices inside my head go silent. I never know what they are plotting for me to write next.
10. Be careful when you follow the Brock masses. Sometimes the ‘m’ is silent.

And the next time you are seeing red over a comment made by a fellow Brocker, take a long, slow, deep, breath.  Then hold it for about 20 minutes!

(This post requested by JC.)

By law, the National Taxpayer Advocate must submit two reports to Congress each year.

National Taxpayer Advocate’s Objectives Report

The first report (Objectives Report), delivered each June, contains the goals and activities planned by the Taxpayer Advocate for the coming year.

National Taxpayer Advocate’s Reports to Congress

The second report (Annual Report), delivered at the end of December, includes: A summary of the 20 most serious problems encountered by taxpayers; recommendations for solving those problems; and other IRS efforts to improve customer service and reduce taxpayer burden.

******************

**********************

Volume I: FY 2016 Objectives Report to Congress

1. PREFACE: National Taxpayer Advocate’s Introductory Remarks
2. REVIEW OF THE 2015 FILING SEASON
3. AREAS OF FOCUS
   1. The IRS Should Provide Victims of Identity Theft with a True Single Point of Contact to Help Them Resolve Their Account Problems and Obtain Their Refunds
   2. The IRS Agrees It Should Issue Refunds to Victims of Return Preparer Fraud, But It Has Been Slow to Develop Necessary Procedures
   3. The IRS’s Administration of the Affordable Care Act Has Gone Well Overall, But Some Glitches Have Arisen
   4. The IRS’s Implementation of FATCA Has in Some Cases Imposed Unnecessary Burdens and Failed to Protect the Rights of Affected Taxpayers
   5. IRS Procedures for Levies on Retirement Plan Assets Create Financial Harm and Undermine Taxpayer Rights
   6. As the IRS Migrates to More Self-Service Tools and Online Services, Low Income and Other Vulnerable Taxpayer Populations May Face Greater Compliance Challenges
   7. Additional Requirements for Appeals Access and Compressed Case Timelines Impair the Fundamental Rights of Taxpayers
   8. The IRS Approves Many Applications for Tax-Exempt Status Almost Automatically, Often Based on Insufficient Information
   9. International Local Taxpayer Advocates Would Provide Valuable Assistance to Taxpayers and Protect Their Rights
   10. TAS Continues to Work with the IRS to Implement the Taxpayer Bill of Rights into IRS Operations
   11. The IRS Must Have a Comprehensive Review Process for Guidance and Other Documents to Protect Taxpayer Rights, Improve Customer Service, and Operate More Efficiently
4. EFFORTS TO IMPROVE TAS ADVOCACY AND SERVICE TO TAXPAYERS
5. TAS RESEARCH INITIATIVES
6. TAS TECHNOLOGY
7. APPENDICES

Volume Two: IRS Responses and National Taxpayer Advocate’s Comments Regarding Most Serious Problems Identified in 2014 Annual Report to Congress

I celebrated New Year’s this year at a residence I rented in Maine, not too far from where I was born. My “pure Canadian” wife and I were joined by our two daughters and their husbands, as well as other family members including my mother who continues to live on Campobello Island where I grew up. The reason for the celebration in Maine was that my older daughter, who now lives in Texas and is married to a Texan, has applied for a green card and could not leave the US. She and her husband had originally intended to come to Nova Scotia and spend Christmas with us, but when her green card did not get issued in time, we had to settle on “Plan B”, which allowed her to spend some time with her grandmother and other family members.

When I opened my Christmas gift from my Texas daughter and her husband, it was a T-shirt with a depiction on the front of a star above a cannon and the words “COME AND TAKE IT”. My son-in-law, who is from Cuero, explained that the shirt was from the neighbouring town of Gonzales. He explained that back in the 1800’s, Mexican authorities had given the people of Gonzales a cannon to help protect themselves from frequent Comanche raids. Over the next few years, the political situation in Mexico deteriorated and several states revolted. The Mexican commander thought it unwise to leave the cannon with the residents of Gonzales and asked them to return the cannon. The residents’ reply was a defiant “COME AND TAKE IT”. The Battle of Gonzales was the first military engagement of the Texas Revolution.

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Picture a Saturday night, it’s extremely cold outside, and some friends have gathered over some hot apple cider, talking about what’s been on all their minds lately……..
 
 
 
 
 
Marco said: Family education in progress…Today I informed my girls (12, 17 & 18) about the U.S. Governmen’s implicit intentions to stop them from living in Germany (their birthplace) and the same implicit intention of the U.S.Government requesting them to move to the U.S., if they would like to remain U.S. and German citizens and would like to remain financially unharmed. In short: I introduced them to Publication 54! One girl would have to file her first U.S. federal tax return next year and the minimum annual compliance costs to remain a U.S. citizen in Germany would be approx. $370 for her (if I wouldn’t do the paperwork). That would be 60% of one of her monthly paychecks. The fee to renounce is currently $2,350, so it would be cheaper for her to renounce after 6 1/2 years filing otherwise useless tax returns and other reports.
 
Credence said:
“When the time comes (my oldest kid with this problem is 9), the $2,350 will be a birthday present. Not that they usually get gifts anywhere NEAR that much, but since this is kind of my fault not theirs…. And now it’s back to work for me–if I can edit another 10 papers or so by the stroke of midnight on the 31st, I’ll have my renunciation fee.”

Marco: “You will *borrow* the child the money and make it a gift after everybody is free from the U.S. tax regime!”

Beverly: “You are allowed to gift 14K per year to each person on your gift list – usually your children – without paying taxes on the gifts, up to 1M (I think) over your lifetime. Don’t worry about the $2350-!!”

Andrew: “Better hope the fee is not raised again by then. In five years it went from $0 to $450 to $2,350. At that rate of growth it will be well over $40,000 by the time your kid reaches 18.”

Marco: “Maybe you could try to explain the German authorities that the U.S. CLN is too expensive for you! Germany would accept this if your current monthly growth income is less then $2,350 while the CLN is charged with more than 1.280€. The German Government believes that the U.S. price tag is an “unreasonable condition for renunciation” – I agree and I also believe it is maybe the only (bad) way to stop citizenship evasion on a larger scale.”

Denise: “My daughter has dual and when she has filed enough tax returns will be renouncing.”

Credence: “So I just sent my request for the documents and the appointment to the embassy!”

Marco:” I don’t think that all dual / U.S. families living abroad can afford such an amount and I don’t believe that they will follow the U.S. Governments wish to move to the U.S. to get away from the burdens either. We would end up with $9,400 in fees if we need to “extract” our U.S. citizenship from our lives in the near future. Since I made the mistake to surrender my girls lives to the U.S. administration by registering them in the first place, I would have to pay and I guess I will frame the receipts and certificates in my living room as a symbol of real freedom once it is done. I already started saving one year ago…”

Credence: “Four kids plus me here who will eventually have to pay that fee. Marco, I feel your pain!” (NB: At today’s rate, the renunciation fees for this family would be $11,785 USD)
 /strong>
everyone stopped for a moment…. mulling all this over in their minds… and then……….
 
Tom Paine: “What about establishing a charity called “Renunciation Fund”? It could be used to assist those who need to escape U.S. tyranny but can’t afford it. Perhaps DA could do a blast to everybody on it’s mailing list: “This year, give the gift of renunciation to somebody who can’t afford to buy their freedom”.

Marina: “Tom Paine I think I will share your suggestion on the DA FB page!” 😉

Marina went over……

I liked this suggestion: “What about establishing a charity called “Renunciation Fund”? It could be used to assist those who need to escape U.S. tyranny but can’t afford it. Perhaps DA could do a blast to everybody on it’s mailing list: “This year, give the gift of renunciation to somebody who can’t afford to buy their freedom”.” This would be a worthy cause and would help the strapped Americans who need to renounce with their children. The way it is now, it’s unaffordable for many. But try explaining that to people who believe we are all the fat cats abroad. Actually it’s the fat cats back home who hide their money abroad, not us!

Joanna: “Tom, that’s a great idea. It’s so ridiculous that the media would love it. If we all contributed a dollar we’d have $8,000,000.00!” Poor kids…….

Marco: “I would call it “Freedom Fund” because the main purpose would NOT be renunciation but freedom, otherwise not available…. but for money...”

Joanna: “Yes!! Very catchy title. Americans and the media love anything with the word “freedom” in it. Freedom fries, etc.

Marco: “And the best: if we find a way to make it tax deductible for the donator in the U.S. and/or others countries, everybody will benefit (except the governments granting the tax deduction, governments supporting FATCA, IGA’s and the deriving burdens for U.S. people)”

Beverly: “Seems to me that at a cost of about $1000 per year for accounting fees to remain compliant, the renunciation fees will pay for themselves in just a couple of years!”

So they all guessed all that had to be done was…..
 

 
And just whoooo might those background singers be?