FOREIGN BANK ACCOUNT REPORTING AND TAX COMPLIANCE HEARING NOVEMBER 5, 2009

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:

This is a copy of the transcript of the one and only hearing on FATCA in the US Congress many years ago. I once had a copy of this years ago and lost it. I feel there is important information in this that will help the ADCS legal challenge against the government of Canada.

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.

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,
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).
Continue reading “FOREIGN BANK ACCOUNT REPORTING AND TAX COMPLIANCE HEARING NOVEMBER 5, 2009”

Form 8621 and Form 5471 are required even if the tax return is NOT!

cross-posted from the citizenshipsolutions blog

IRS

The Internal Revenue Code of the United States requires two things:

1. The calculation of taxes; and

2. The reporting of information.

The Internal Revenue Code of the United States is based on three basic principles:

1. A dislike of all things “foreign”. (If you see the word “foreign” a penalty is sure to follow.)

2. A hatred of all forms of non-U.S. “tax deferral”

3. An attempt to stop the “leakage” of “U.S. taxable assets” from the U.S. tax base. (Examples include the U.S. tax treatment of the “alien spouse”and the U.S. S. 877A “Exit Tax” that may be payable when one makes the decision to renounce U.S. citizenship).

“Forms” AKA “information returns” are for the purpose of forcing disclosure of information relevant to “foreignness”, “deferral” and “leakage”.

The above tweet references an earlier post describing many of the “forms” required to be filed by Americans abroad. The post also describes the significant penalties which can be potentially imposed for failure to file the forms.

For Americans abroad the information reporting requirements are extensive, burdensome and penalty laden. Normally (but not in all cases) the “forms” are filed as part of the tax return (1040 or 1040NR).

NEVER FORGET MR. FBAR – THE NEW SYMBOL OF U.S. CITIZENSHIP – AND THE POTENTIAL FBAR PENALTIES FOR FAILURE TO FILE THE FBAR! THOSE WHO HAVE FAILED TO FILE MR. FBAR SHOULD BE CAUTIOUS ABOUT HOW THEY “FIX THE FBAR PROBLEM“.

(Interestingly, Mr. FBAR has been used as a model for Russia which now has (for lack of a better term) the Russian FBAR.)

Many people do NOT understand that they may be required to file “information returns”, even though they may NOT meet the income thresholds to file a tax return!

Forms that may be required whether a “tax return” is required or not

Form 8621 – This form must be filed if an American living abroad owns more than the U.S. dollar equivalent of $25,000 of non-U.S. mutual funds. In order to discourage American citizens from investing their money in non-U.S. mutual funds, Congress imposes severe penalties for purchasing non-U.S. mutual funds. This includes the situation of a U.S. citizen living in Canada, who buys Canadian funds for retirement planning. Yes, sometimes “truth is stranger than fiction”. From a U.S. perspective, Canadian mutual funds are “Passive Foreign Investment Companies” or PFICs.

Information about Form 8621 is here. I strongly suggest that you read the PFIC regulations which make it clear that IRS Form 8621 is required, whether you have to file a tax return or not!

(d)Time and manner for filing. A United States person required under section 1298(f) and these regulations to file Form 8621 (or successor form) with respect to a PFIC must attach the form to its Federal income tax return (or information return, if applicable) for the taxable year to which the filing obligation relates on or before the due date (including extensions) for the filing of the return, or must separately file the form in accordance with the instructions for the form when the United States person is not required to file a Federal income tax return (or information return, if applicable) for the taxable year. In the case of any failure to report information that is required to be reported pursuant to section 1298(f) and these regulations, the time for assessment of tax will be extended pursuant to section 6501(c)(8).

The requirement to file Form 8621 irrespective of whether one is required to file a tax return is reinforced in the instructions for Form 8621 which remind Americans abroad that:

When and Where To File

Attach Form 8621 to the shareholder’s tax return (or, if applicable, partnership or exempt organization return) and file both by the due date, including extensions, of the return at the Internal Revenue Service Center where the tax return is required to be filed.

If you are not required to file an income tax return or other return for the tax year, file Form 8621 directly with the Internal Revenue Service Center, Ogden, UT 84201-0201.

Who could have known …

There are financial advisors who suggest that Americans abroad should NEVER own mutual funds that are local to them! In the Donald Trump era, one should “Buy American!” and NEVER “Commit personal finance abroad!”*

Form 5471 This form is required in many circumstances where a “U.S. Person” has an interest in a “foreign” (non-U.S.) corporation. The Specific reporting requirements are found in Internal Revenue Code Sections 6038 and 6046. (Pay special attention to the 6038 regulations.) In general, the reporting requirements are for the purpose of identifying “U.S. Persons” who:

– own at least 10 percent of a “non-U.S.” “controlled corporation”; which

– is earning certain kinds (including passive) of income; that

– is not subject to direct taxation by the U.S. Government.

The goal is to attribute the income of the “non-U.S. corporation” directly to the individual U.S. shareholder. This is referred to as the “Subpart F Income Regime” which begins with Internal Revenue Code Section 951.

The reporting requirements exist irrespective of whether one is otherwise required to file a U.S. tax return. (One might be required to file an income tax return (1040 or 1040NR) for the sole purpose of filing Form 5471.)

Are you the owner of a “foreign” corporation? Watch out for the attribution rules (you are deemed to own the shares) and for the possibility of “indirect ownership” (you own something that owns the corporation) …

Just a “heads up”. Watch out for the “attribution rules” in Internal Revenue Code S. 318. You may own more shares of that “foreign corporation” than you think you own!

A form required ONLY if you are otherwise required to file a tax return – Form 8938

Form 8938 is a key component of the FATCA legislation. It is mandated by Internal Revenue Code section 6038D. You are NOT required to file Form 8398 unless you are otherwise required to file a tax return. As of the date of the writing of this post (warning!! warning!! warning!!) the IRS explains that:

If you do not have to file an income tax return for the tax year, you do not need to file Form 8938, even if the value of your specified foreign assets is more than the appropriate reporting threshold.

Reporting early – When a Form may have to be filed before the tax return is due – Form 3520A

Form 3520A is the information return required for a “foreign trust”. Forms 3520 and 3520A appear to be required whether a tax return is otherwise required. Interestingly, Form 3520A is required by March 15 of each year (before the due date of the tax return!).

Form 3520 is a key component of the collection of International Information returns.

Who could have known?

How to avoid the forms …

It’s easy. Americans abroad can avoid the necessity of filing these forms (and potential penalties for failure to file these forms) by simply avoiding all the activities that the forms are required to reveal. Simply avoid committing any “form” (no pun intended) of “personal finance abroad”.

Perhaps that is the true purpose of the “forms”.

When in Rome, live as a homelander! To learn how, simply click here.

John Richardson

JACKIE BUGNION RECEIVES AWARD FOR EXCEPTIONAL SERVICE TO AMERICANS ABROAD

ACA confers Eugene Abrams Citizenship Award for 2017 on Jackie Bugnion

THE EUGENE ABRAMS CITIZENSHIP AWARD 2017 WINNER

Jackie Bugnion

excerpts from the ACA site:

American Citizens Abroad, Inc. (ACA, Inc.) is proud to confer its Eugene Abrams Award for 2017 on Jackie Bugnion.

The Abrams Award, named for Eugene B. Abrams, ACA Executive Director from 1992-1994, honors Americans abroad who have contributed outstanding volunteer service to their community. This year, it is being presented to an American abroad who has been of invaluable service to the overseas American community around the world.

Mrs. Bugnion served on the ACA Board and Executive Committee for 12 years, from 2003 to 2015, and she was the driving force behind the development of Residency-Based Taxation (RBT), writing detailed RBT proposals, visiting lawmakers and giving speeches on several different continents. She was instrumental in creating relationships with key legislators and the tax writing committees on Capitol Hill, and she wrote policy papers which helped establish ACA as the premier thought-leader on issues affecting the community of Americans living and working overseas.
…….ACA and ACAGF owe a great debt of gratitude to Mrs. Bugnion for her years of service to the organization. She always had excellent insight into the problems facing Americans overseas and worked tirelessly to find practical solutions to these problems. Jackie’s dedication and commitment to the cause of Americans overseas and her committed focus to the issues of overseas taxation and compliancy issues helped bring RBT to the forefront of discussions in Washington.

The following are a set of videos, interviews and reports that demonstrate how clearly Jackie understands the problems of Americans abroad and her no-nonsense approach to fixing them.

CFA SOCIETY SWITZERLAND SPONSORS DEBATE – FATCA, THE WORLDWIDE END OF BANK SECRECY? JUNE 25-26, 2012 GENEVA & ZURICH

The CFA Society, Switzerland sponsored debates on June 25 & 26, 2012 in Geneva & Zurich. Of particular interest is listening to the architect of FATCA, J. Richard (Dick) Harvey, Jr. For a fine review of this by Wellington (a Brocker who attended the debate in Zurich) please see callousness of Mr Harvey & the U.S. government .


full debate – 2 hours

 
ACA DIRECTOR JACKIE BUGNION TALKS ABOUT #FATCA WITH JENNIFER CORDINGLEY OF DUKASCOPY TV – NOVEMBER 15, 2012

This short interview with Jennifer Cordingley of Dukascopy is very concise and you won’t find a better one anywhere. This is the one to convince your family and friends-no hysterics or complaining, just, “this is what it is” (and “oh by the way, its terrible“).

There is no direct representation in Congress or in the Administration for Americans residing overseas in Washington D.C., yet U.S. law seriously impacts the lives of Americans overseas through rules related to transmission of citizenship to children born overseas, through specific penalizing measures related to Social Security payments, and, in particular, through its unique citizenship-based taxation whereby the United States continues to impose its tax regime on Americans living outside of the country, even though they pay taxes where they reside. Most recently, in 2010, Congress passed the FATCA legislation (Foreign Account Tax Compliance Act), which makes it very difficult for Americans abroad to maintain bank accounts in the country where they live.

 

5 minutes
 

ACA DIRECTOR JACKIE BUGNION TALKS ABOUT OVERSEAS AMERICAN WEEK ON DUKASCOPY TV – MARCH 6, 2013

Jackie is in the studio with Dukascopy TV journalist Natalie MacDonald to discuss Overseas American Week (OAW). In addition to describing the purpose of OAW, she outlines major issues for expats; tax, banking-(specifically, inability to obtain U.S. accounts while having a foreign address due to the Patriot Act), citizenship and voting. She also delves into the lack of representation due to low percentages of concentration in districts, with the only additional support of the Americans Abroad Caucus headed by Rep. Christine Maloney. The attempt (HR 597) to set up a presidential, bi-partisan committee to address all of these issues is mentioned. As well as the fact that as of the video (March 2013), there has not been a study done concerning overseas issues, in over 35 years. In that time-frame, the issues have become far more complex. She also points out problems with Social Security & WEP and Medicare; as well as the fact that if arrested overseas, Americans do not have the protections of the Vienna Convention; no right to legal counsel, etc, in spite of the fact that the U.S. signed the Convention.
 

8 minutes
 

JACKIE BUGNION SUBMISSION TO INTERNATIONAL TAX REFORM WORKING GROUP (W&M) APRIL 10, 2013

Jackie Bugnion writes the best arguments against citizenship-taxation ever

ACA DIRECTOR JACKIE BUGNION TALKS ABOUT UPDATES ON RESIDENCE-BASED TAXATION (RBT) ON DUKASCOPY TV (JULY 2013)

This interview with Monica Gibson (Dukascoy) focuses on RBT highlights; if adopted, RBT would produce more revenue than the current CBT system; it would reduce costs to the IRS and would be better for US business by increasing competitiveness abroad. The fact that a US employee costs two times the cost of hiring a foreigner hurts the U.S. in this global economy and she asks “who better is there to represent the interests of American than Americans themselves”?
The possibility of tax reform is mentioned due to the Ways and Means request for submissions. ACA’s report as well as a very supportive report from JCT as well as the SFC paper,
INTERNATIONAL COMPETITIVENESS -Senate Finance Committee Staff Tax Reform Options for Discussion
all point to a strong case for RBT.

In this video Jackie speaks passionately about the fact that lives are being destroyed; that “destroyed” is not too strong a word to use. She in fact claims that the situation is “very dramatic.” It is amazing that persons like herself, Nina Olson etc are incredibly clear about this and someone like Mr. Stack claims that such aspects/effects of FATCA are “myths.”
 

7 minutes

 

JACKIE BUGNION SPEAKS ABOUT THE FOREIGN EARNED INCOME EXCLUSION WITH BENJAMIN JONES ON DUKASCOPY TV JAN 9 2014

Here Jackie discusses what the FEIE really is (a “fix” for CBT) and tries to clear up common, stubborn misconceptions (i.e., that Americans abroad get a “tax break”). The FEIE is “low-hanging fruit” and always in jeopardy. Making the case for FEIE is simple; without it, anyone in a low tax country will be severely affected and those in high-tax countries (where 80-90% of Americans abroad live) will simply switch to the FTC. She discusses what happened when the FEIE was repealed due to The Tax Reform Act of 1976. Tens of thousands of Americans in the Middle East, particularly in engineering and the oil fields, received tax bills that were higher than the income they made. Consequently they came home, businesses were lost and the export markets were lost. Though the legislation was repealed retroactively, the damage had been done. This was discussed often by Roger Conklin most effectively in his submission to the Ways & Means Committee .For the first time in nearly 100 years, the trade balance turned negative. The reality is that the low-tax people would leave and enter the unemployment rolls in the U.S. and the U.S. would not receive an extra penny from the high-tax people. Jackie mentions an ACA paper The 911 Mirage .
Another complication has developed due to the Net Investment Income Tax (funds for the Affordable Care Act aka “Obamacare”). Here one has to ask whether this was a deliberate act of Congress to punish Americans abroad. This 3.8% tax on passive income is a Chapter 2 tax (from the Internal Revenue Code) rather than a Chapter 1 tax. Chapter 2 taxes are ineligible for the FTC. This is clearly sheer discrimination that Homelanders do not face. Also, those who are self-employed are required to remit 0.9% of their income for Social Security; may sound minuscule but represents an actual 6% rise in social security taxes. There is a reference made to the new expansion of ACA into the United States as the ACA Global Foundation.
 


12 min

 
ACA’s TAXATION OF AMERICANS ABROAD IN THE 21ST CENTURY:CITIZENSHIP-BASED TAXATION VS RESIDENCE-BASED TAXATION
TORONTO ONTARIO CANADA MAY 2 2014

We were lucky to meet Jackie at ACA’s Taxation of Americans Abroad in the 21st Century:
Citizenship-Based Taxation vs. Residence-Based Taxation
held in Toronto on May 2, 2014. The Isaac Brock Society posted live comments from Brockers present during the meeting. Dr.Stephen J. Kish was academic host for the meeting and John Richardson was the moderator for the debate.
She was delightful to work with and I am glad I had the chance to meet her. A video was made of the actual debate between Prof. Michael S. Kirsch & Dr. Bernard Schneider, “Citizenship-Based Taxation vs. Residence-Based Taxation
video is 2 hours
 
TAX ANALYSTS PUBLISHES “CONCERNS ABOUT THE TAXATION OF AMERICANS RESIDENT ABROAD” by JACKIE BUGNION AUG 24, 2015

“Permission is contingent on properly crediting the article to the author and to Tax Analysts as the original publisher. Using the PDF attached above covers proper attribution.”

“Concerns About the Taxation of Americans Resident Abroad” This article is a “must-read.” You will not find a clearer or better description anywhere.
 
 
RADIO INTERVIEW WITH GOLDSTEIN ON GELT – ALL YOU NEED TO KNOW ABOUT EXPAT TAXES, WITH JACKIE BUGNION SEP 13 2015


14 minutes

JACKIE BUGNION RETIRES FROM ACA – SPRING 2015

John Richardson comments on his reaction to the news that Jackie was retiring:

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:

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

Jackie’s reflection:

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.

 
Last but not least, some quotes from those who have worked with Jackie, all appreciative of her long service to Americans abroad via ACA. Some of us perhaps, have not really been around long enough (i.e., we were just Americans living in our new countries, completely oblivious to all this…….) to truly appreciate all that people such as Andy Sundberg, (boy, was he ever handsome), Roger Conklin (a very kind soul) and now Jackie have done for us. The best thing we can do is learn from their examples; of putting our all into getting this situation reconciled so our kids and grandkids will not have to deal with this………..

Jackie is a real worker. There are projects that require a big effort and a great deal of attention to detail, and Jackie would commit big blocks of time to working on something and making it a success. This was true of the Residency-Based Taxation project and the Canadian conference a few years ago. Things don’t happen by themselves. Jackie made things happen, and I was always amazed and appreciative.

— Charles Bruce, Chairman, American Citizens Abroad Global Foundation

Jackie has a brilliant mind and an incredible command of detail, and I’ve been present in meetings where she blew away legislators with her detailed knowledge of the issues. Her proposals were always incredibly well researched and totally pragmatic. ACA would not be where we are today without Jackie’s expertise.

— Anne Hornung-Soukup, Director, American Citizens Abroad Global Foundation

Jackie selflessly invested in developing the deep subject knowledge needed to propose improvements that now benefit millions of people she will never meet. She embodies the altruism upon which the United States was founded.

— Roland Crim, Director, American Citizens Abroad, Inc.

Jackie:

Your work for “American Citizens Abroad”, as an organization, has been tireless, relentless, purposeful and generous. Your contribution to ACA’s many achievements has been extraordinary. Your influence will continue long after your retirement. But, that’s on the ACA organizational level.

For individual Americans abroad, your contributions have far exceeded your many accomplishments on the ACA level. Your greatest contributions have not been what you have done. Rather your greatest contribution has been who you are as in individual.

As an individual you have represented the finest of American values: a generosity of spirit, a beacon of hope and a consistent and stable compassion.

To put it simply, you have cared. It’s who you are.

On behalf of all American citizens living outside the United States, I thank you.

—-John Richardson, Toronto, Canada

The Little Red #FATCA Book – Review, Identify & Report on U.S. Persons How #FATCA affects the non-US World

reposted from the citizenshipsolutions blog

As many of you know, the long-awaited #FATCA hearing will take place three weeks from today. This is exciting and followed by the news that Congressman Mark Meadows will reintroduce his repeal FATCA legislation. Closely matching is the effort of Nigel Green & Jim Jatras. The recent letter, endorsed by major think tanks, etc is here . We still await the hoped-for tax reform. The fate of those who have not yet chosen whether to become compliant and/or renounce hangs in the balance. Regardless of the outcome(s), our direction will become much clearer in the next little while.

There are so many aspects to #FATCA and how it affects the lives of expats, I suspect it is impossible to be aware of them all. One of the best things we can do, as “ambassadors” is to make sure we are thoroughly conversant with all aspects of it as we discuss it with our family and friends, on online articles and blogs.

j fatca forumJohn Richardson has long been writing about this and has re-organized his “Little Red FATCA Book.” It is likely the most complete account anywhere. I will be reposting it on all the appropriate websites, blogs and Facebook Groups/Pages. Please, share this as widely as possible. Convincing Homelanders, as impossible as it seems, will go farther than perhaps anything else, in garnering support from Congress to rectify this horrid situation. Please, don’t give up, go out and comment everywhere and make sure you know your facts!
********
The “Little Red FATCA Book” is a collection of posts that I created over an 18 month period. I have decided to collect the individual posts and organize them in one place. I have grouped the individual posts into three broad chapters which I will call Chapter A, Chapter B and Chapter C. This is a “work in progress”. Some of the posts are incomplete.

FATCA which is essentially the enforcement mechanism of U.S. “Place of Birth Taxation” is a controversial topic. Feel free to post your thoughts and comments.

John Richardson

MORE AT citizenshipsolutions blog

Shu Yi Oei: The Offshore Tax Enforcement Dragnet via Allison Christians

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

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.

 

Citizenship, identity, mourning loss of identity and moving on …

The following post appeared on the RenounceUScitizenship blog.

The above tweet references an article published on August 25, 2013 at the New York Times. The article is popular and as of now has generated almost 600 comments. It’s a very interesting article because it dispels the myth that all Green Card holders want U.S. citizenship. The article highlights the fact that there are many Green Card holders who choose NOT to become U.S. citizens either because:

– they are indifferent to U.S. citizenship and don’t have a compelling reason to get it;

– they specifically do NOT want U.S. citizenship.

The article focused largely on the connection between citizenship and identity. Interestingly there is no mention of the FBAR fundraiser or other injustices to which immigrants have been subjected. It is full of interesting and instructive comments.

Continue reading “Citizenship, identity, mourning loss of identity and moving on …”

The agony of US citizenship for US citizens living outside the US

cross-posted from renounceuscitizenship blog

The agony of US citizenship for US citizens living outside the US
 

 
U.S. citizens cry out in agony! But, the U.S. government Silence is Deafening .

The cries are getting louder and louder! Inside the U.S. only Taxpayer Advocate seems to be listening. Outside the United States, American Citizens Abroad continues to soldier on. In Canada, the home of (probably) the largest number of U.S. citizens (many of who are also Canadian citizens) the Government of Canada is listening. Finance Minister, Jim Flaherty, has been consistent in his position that FATCA is intrusive and unnecessary and the Canada will not collect FBAR penalties. He has been consistent with the sentiments expressed in his public letter of September 16, 2011. U.S. citizens in Canada are in a far better position than U.S. citizens in other countries. Furthermore, Mr. Flaherty has been responsive to citizen’s concerns, recognizing that Canadians are desperate for help. The evidence is building. to protect themselves from the U.S. government. Take the above poll which is from a previous post describing how renunciations of U.S. citizenship are soaring under Obama. Consider the following wisdom from a U.S. citizen living in France.

Homeland Americans do not love their “Domestic Abroad” and routinely characterize them as “traitorous Benedict Arnold’s.” Now these citizens abroad are in a complete panic now that they are aware of the U.S. tax and reporting requirements. They are facing the same compliance issues as U.S. immigrants and they are now encountering discrimination in their host countries (loss of local banking services, for example, or limited retirement investment opportunities or even being cut out of business deal by non-US partners) as a result of FATCA.

Many of them cannot easily return to the U.S. – if they did they would have to close their businesses or leave their jobs, get divorces from their foreign spouses and, in some cases, leave their minor children behind in the host country. Contrary to popular belief in the homeland, the vast majority of these people are not millionaires and run a real risk of arriving back home in the U.S. with limited assets, if not in a state of outright penury. On the other hand, they can no longer continue to reside in their host countries as U.S. citizens where they risk paying double taxes (U.S. taxes in addition to host country taxes) and must pay the increasing cost of compliance (international tax specialists to file the 1040 and a whole host of other forms demanded of overseas citizens who have built lives abroad and are permanent residents of their host countries). Even Nina Olsen, the IRS Taxpayer Advocate in the U.S., said in her 2011 report:

The complexity of international tax law, combined with the administrative burden placed
on these taxpayers, creates an environment where taxpayers who are trying their best to
comply simply cannot. For some, this means paying more U.S. tax than is legally required,
while others may be subject to steep civil and criminal penalties. For some U.S taxpayers
abroad, the tax requirements are so confusing and the compliance burden so great that they give up their U.S. citizenship.And that sums up quite nicely what is, in fact, happening. Those who are in the know and can afford it are mostly “complaining and complying” while those who cannot are renouncing U.S. citizenship. 2011 was a banner year for renunciations of U.S. citizenship. 2012 will be worse (see this and this excellent analysis over at Overseas Exile.)

http://thefranco-americanflophouse.blogspot.ca/2012/03/diaspora-tax-war-of-2012-stakeholder_27.html

In addition to the current Government of Canada, the Official Opposition of Canada (NDP) is taking the IRS assault on Canadian citizens very seriously. Individual MPs have made an effort to respond and educate. Individual MPs have organized public meetings. Interestingly, the newest NDP MP, Craig Scott is a law professor/human rights lawyer. Furthermore, he attended a public meeting about FATCA. He would be a great addition to the cause. Interestingly there has been very little support from the Liberal Party of Canada. Here is a letter from Bob Rae. Although the Green Party of Canada has only one seat in the House of Commons, their leader Elizabeth May (who was born in the U.S.) has expressed her support for Canadians.

As the FATCA implementation date comes closer and as we find ourselves in tax season, many U.S. citizens (whose only crime is to live outside the United States) are living in a state of desperation and agony. Some samples:

This man gives the word “prescient” real world application:

In closing, some “psychotherapy for U.S. citizens living outside the United States” – the Widsom of Moe Levine:

We are living in interesting times.

Collective psychotherapy – U.S. citizens outside U.S. – Not what they take from you, it’s what they leave you with

cross-posted from renounceuscitizenship blog

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.”

In other words, the inability to live a normal life was worse than the injury itself. Leaving aside the financial costs, Obama/IRS tyranny has had a very serious effect on the lives of many U.S. expats. Few of them will ever forget the day they learned about these problems. One (of many) example is the story of Ambassador Jacobson’s 70 Year old grandmas” in Saskatchewan.

A recent post offered people the chance to describe how recent events have impacted on the lives of U.S. citizens outside the U.S. Check out the comments – there were plenty of them. Yesterday a post appeared on at the Isaac Brock Society called “Your Citizenship Personality“. The comments included a number of descriptions of how the recent Obama/IRS/Levin assault on U.S. citizens living abroad has damaged their lives. I encourage you to read all the comments, but I wanted to share the following two (the second of which is my own) in a separate post:

fullTurtle

March 9, 2012 at 5:15 pm

I’ve been a lurker on this site for over a month. I’ve never “blogged” before today. I am not a writer, nor as eloquent as most you and am woefully ignorant of all this tax and legal stuff. In these 30+ days, I have read every single thread on this site and have visited every link offered. I have read the entire “OVDI Drudgery for Minnows”, all of the personal stories, and have even printed out pages & pages of suggestions and opinions (thank you so much, JustMe!). But I can’t take it anymore… this being silent and feeling so estranged and “criminalized”. The only place I feel connected anymore is while I’m reading postings from all of you. After reading zucchero81′s comments on this thread (“…this whole FATCA issue has been more like going through the 5 stages of grief…”) I feel compelled to peek out of my seemingly safe lurker shadows. You have it right, usxcanada… I am one of those lurkers wondering if/how to transition past pure denial. I have yet to make a real decision (which would require real action) on what the heck to do. My gut reaction is to run fast, run far, hide deep. But the more I read, the more that is sounding impossible to accomplish. I have chosen “fullTurtle” as my alias because doing a “full ostrich” would leave far too much exposed at the surface. Since becoming aware just 6 weeks ago (and purely by accident) of my requirement for filing US taxes… then FATCA and all the rest, my whole life has turned upside down. I can think of little else. I’ve attended a free seminar on the subject of cross-border taxation given by a high-end legal accounting firm in town (can you say ca-CHING?) and have spent the vast majority of my waking hours researching the subject. All I seem to have done is become almost catatonic with dread. I swing wildly between the extremes of near homicidal rage and suicidal depression. Okay, I’m more in the homicidal phase today. To get back to the topic of this thread, I want to renounce my citizenship so bad I can taste it. And thanks renounceuscitizenship; I agree 100% with pretty much everything you’ve posted, and I visit your site regularly too. It would be so worth the $450 USD just to fling my passport & birth certificate down at the US Consolate and tell them exactly where to shove it. When the day comes that I can renounce (my Canadian citizenship application was mailed Feb.6th so it will be 18 mo’s to 2 years), I will write that cheque on a shirt, duly certified by the bank of course, and explain it to them thusly: “Seeing as the US Gov’t is taking the shirt off my back, I thought you might like to keep the shirt.” In ending this tirade, I am so grateful to ALL of you regular posters who have unknowingly kept me from jumping from a tall building (so far). And especially you, Petros, for creating this web site. You have no idea the number of people you are helping give voice. I hope someday to add my story to those of you who have survived this holocaust. Okay whew, if I can do this… the rest of you lurkers out there can do it too!

renounceuscitizenship

March 10, 2012 at 9:36 am

@Fullturtle A warm welcome to the Isaac Brock Society. It’s a great place – with a lot of great people. It’s interesting how the comments often move the intent of a post in a different direction. What struck me about these comments is that one can feel the excruciating pain, the agony, the fear, the uncertainty, the despair, the anger, the rage, the sense of betrayal, and in some cases the unbelievably intense hatred of the U.S. government. I do believe that many people on this board have never experienced the range and intensity of emotions they are feeling today. As noted by Pacifica777: “This horrible gamut of emotions and mood swings seems to be universal, and statistically, I would guess that few of us have ever had to deal with such extreme feelings before, so it’s so unfamiliar that it’s scary. I have never felt such intensity of emotions and such a bizarre range of them, nothing close to it, ever. This US mess just takes over one’s life, feeling like caught in a complex trap, that it will never end. Though it’s not over yet, I have found as time went on, while I still feel an amazing range of emotions, they don’t seem to be so intense and overpowering. For a couple of months, it overtook all of my life — with such an overpowering complex confusing situation, it was hard to focus on anything else. Eight months on, it is still, unfortunately, a big part of my life, but slowly I’ve found more and more of my normal life, and my normal personality, returning. It’s still a big problem but not overwhelming everything else.” Blaze reiterates: “I’m hoping you are just joking in your comment about wanting to jump from a tall building, but I fear you may be serious. Another person has expressed similar disturbing thoughts. Many of us have had sleepless nights, health challenges, strained marriages and personal relationships, expensive accountants and lawyers who are draining retirement savings, difficulties at work, worry about Canadian born children, etc.” JustMe (in his infinite wisdom) has said that it is important to not hate. It will only destroy the person doing the hating. You need to be focused, methodical, purposeful and committed to achieving whatever course of action you decide is best for you. You said that you felt “criminalized”. I understand. If you are not careful, and if you allow yourself to feel “criminalized” long enough, you may actually believe that you have done something wrong. You have done NOTHING wrong (and chances are that you have done a lot right). You are on the receiving end of a vicious assault by an unprincipled vicious debt-ridden thug – The United States of America. I want to add one more thought to this moment of “collective psychotherapy”. There is good news and bad news. First, the good news. You do NOT live in the U.S. You live in Canada. You are in a situation that any sane person would dream to be in. Sure, Canada has its problems. But, lurking beneath all the problems is a basic assumption of fairness, justice and decency. I repeat you live in Canada. In addition to the good things I just mentioned, you have the benefit of the tax treaty. Canada will not collect FBAR penalties. Furthermore, (I don’t have stats on this), but I suspect that a large number of U.S. citizens here are also Canadian citizens (giving them political power). Second, the bad news. As horrible as this situation is (and it is a nightmare for most), you must go on with your life. At least in my case (and I suspect most of you) that life is a life shared with non-U.S. citizens. This is a very important point. The Obama/IRS/Levin assault cannot be understood by anybody unless they are a U.S. citizen living outside the U.S. To be specific, they cannot understand your rage and anger. They cannot understand your feeling of injustice. They cannot understand the intensity of your emotions. They cannot understand your sense of betrayal. They cannot possibly understand these things because they are not experiencing it (and probably will never experience anything like it). So, don’t expect the understanding from them that you really need. My point: You need to be very careful to not allow any of this to damage the valuable relationships in your life – friends, marriage, work, extended family, etc. We are in a situation where we are in a sense forced to protect ourselves from a repressive government. This is has gone on throughout history. Never did I believe, that government would be, (according to Margaret Thatcher) the United States –that “Great Citadel of Freedom and Justice”. But, that’s what is happening. I once met a man who had escaped from another repressive government. He wanted his children to be well educated – commenting that, the only thing that a government couldn’t take from you was your knowledge/education. It’s not the only thing they can’t take. They can’t take your attitude, or your capacity to tell right from wrong. Unless of course you let them (and we wouldn’t let than happen, now would we)! Take the weekend off from your worry. You deserve it. Renounce and rejoice!

So what am I trying to say? 1. There is no way the IRS can understand the effect of their conduct on honest, hard working people, who just happen to live outside the United States. They cannot understand it and never will. 2. Your job is to get through this and have the life you deserve.

More #Americansabroad will pay capital gains tax on sale of principal residence in Canada

 
cross-posted from citizenshipsolutions

More #Americansabroad will pay capital gains tax on sale of principal residence in Canada

The price of Toronto real estate continues its upward trajectory.

This morning I met with yet another (who could have known) Canadian resident who wishes to renounce U.S. citizenship. This person is completely compliant with his U.S. tax obligations. He is renouncing for a very common reason.

The reason for renouncing U.S. citizenship is to:

Protect the tax free capital gain, which results from the sale of his Canadian principal residence in Canada.
Continue reading “More #Americansabroad will pay capital gains tax on sale of principal residence in Canada”

This is Fantastic! Don’t Think We Have Ever Had Support Like this!

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.

@RepealFatca
@nigeljgreen
@GroverNorquist
@CFandP
@AmerComm
@RSI
@MarketInstitute
@ismurray
@Andrew_Langer
@limittaxesorg
@C4Liberty
@Lisabnelson
@Protectaxpayers
@NTU
@GLandrith
@60PlusAssoc
@SovereignInvest
@LimitGovt
@FreedomWorks
@tgiovanetti
@KarenKerrigan

I could not find an address I could confirm for either these individuals or orgs:

Jeffrey Mazzella President Center for Individual Freedom
Chuck Muth President Citizen Outreach
Pamela Villarreal National Center for Policy Analysis

Andrew F. Quinlan President Center for Freedom and Prosperity
Grover Norquist President Americans for Tax Reform
Phil Kerpen President American Commitment @AmerComm
Iain Murray Vice President Competitive Enterprise Institute
Andrew Moylan Executive Director R Street Institute
Charles Sauer President The Market Institute
Jeffrey Mazzella President Center for Individual Freedom
Nigel Green and Jim Jatras Co-Leaders Campaign to Repeal FATCA
Pete Sepp President National Taxpayers Union
David Williams President Taxpayers Protection Alliance
George Landrith President and CEO Frontiers of Freedom
Jim Martin Chairman 60 Plus Association
Wayne T. Brough Chief Economist and VP for Research FreedomWorks
Bob Bauman Chairman Sovereign Society Freedom Alliance
Andrew Langer President Institute for Liberty
Lew Uhler President The National Tax Limitation Committee
Chuck Muth President Citizen Outreach
Norman Singleton President Campaign for Liberty
Lisa B. Nelson CEO Jeffersonian Project
Tom Giovanetti President Institute for Policy Innovation
Rick Manning President Americans for Limited Government
Pamela Villarreal Senior Fellow National Center for Policy Analysis
Karen Kerrigan President and CEO Small Business and Entrepreneurship Council