The Ownership and use of the U.S. Person which includes a Citizen as an Instrument of Foreign Policy – Parts V & VI

 
cross-posted from citizenshipsolutions
 

originally published July 7, 2016
 
The Ownership and use of the U.S. Person Which Includes a Citizen as an Instrument of Foreign Policy
 

by John Richardson

Part V – Why Americans abroad are renouncing U.S. citizenship …

Put it this way:

Ireland recently opened a museum honoring the achievements of Ireland’s diaspora.

The United States continues to control the lives of U.S. citizens living outside the United States. “When in Rome, Live As A Homelander“.

The United States continues to cause other nations to discriminate against U.S. citizens who leave the United States.

The United States continues to use U.S. citizens as instruments of foreign policy.

The United States continues to threaten it’s diaspora (citizens abroad) with penalties and sanctions

It’s no surprise that renunciations of U.S. citizenship are growing! They will continue!
 
Part VI – The injustice of the S. 877A “Exit Tax” as applied to Americans abroad

For many Americans abroad to renounce U.S. citizenship they will be required to pay an Exit Tax. Those who are “covered expatriates” will be required to pay an “Exit Tax” that is based on the value of their non-U.S. assets, their non-U.S. pensions and possibly more. A detailed explanation is NOT the purpose of this post. For information on the S. 877A Exit Tax, I refer you to:

In closing …

Let us not look back in anger, nor forward in fear, but around us in awareness

John Richardson
 
Posts in this Series:

Part I The U.S. “Giveth” and the U.S. “Taketh” – How the U.S. uses “citizenship” as a weapon against individuals

Part II – U.S. Citizens living abroad – “Life in the penalty box”

Part IIII’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations

Part IVThe use of U.S. citizens as instruments of foreign policy

Part VWhy Americans abroad are renouncing U.S.
citizenship

Part VIThe injustice of the S. 877A “Exit Tax” as applied to Americans abroad

The Ownership and use of the U.S. Person which includes a Citizen as an Instrument of Foreign Policy – Part IV

 
cross-posted from citizenshipsolutions

originally published July 7, 2016
 
The Ownership and use of the U.S. Person Which Includes a Citizen as an Instrument of Foreign Policy

Part IV – The use of U.S. citizens as instruments of foreign policy

by John Richardson
 

To leave the USA one needs a passport and when it comes to having a U.S. passport …


 

No passport shall be granted or issued to or verified for any other persons than those owing allegiance, whether citizens or not, to the United States.

“U.S. citizen” vs. “U.S. Person” – What is the difference?

All U.S. citizens are U.S. persons, but not all U.S. persons are U.S. citizens

My impression is that:

– the term “U.S. citizen” is a term that is used to describe one as a person who has rights or membership, benefits and some responsibilities to the United States

– the term “U.S. Person” is a a broader term that “U.S. citizen”. It is defined differently in different pieces of legislation. The class of “U.S. Persons” is broader than the class of “U.S. citizens”. The class of “U.S. Persons” often includes “Green Card holders”, perhaps “U.S.
Nationals”, etc. For example, S. 7701(a)(30) of the Internal Revenue Code defines “U.S. Persons” as “citizens or residents”.

The term “U.S. Person” appears to be used in a context that imposes prohibitions and sanctions directly on the “U.S. Person” and/or is used to imply “U.S. ownership and control” over the person. Often this “ownership or control” is exercised in the context of U.S.
interaction with “foreign nations”. When used in the context of interaction with “foreign nations”, the “U.S. Person” is often used as an instrument of foreign policy.

 


 
There is no one definition of “U.S Person” …

Restrictions on U.S. currency going to Cuba …

When it comes to “Corrupt Foreign Practices”, “U.S. citizens”
are “domestic concerns” …

It has become clear that United States enforces its extra-territorial law by pressuring other governments, organizations and entities (under threats of sanction) to do “U.S. dirty work for the U.S.”.

Some examples include:

– the use of the OECD to enforce the U.S. Corrupt Foreign Practices Act

– the FATCA IGAs to impose U.S. taxation on the citizens and residents of other nations

– as per Juan Zarate in “Treasury’s War” the “blacklisting of foreign banks”

The OECD employs “full-time lawyers” whose mission is to enforce the U.S. Corrupt Foreign Practices Act worldwide!

Bobby, you may be a national hero, but don’t even consider playing chess in Serbia …

Restrictions on “U.S. Persons” under FATCA and the FATCA IGAs …

When it comes to FATCA, the definition of “U.S. Person” is broad …


 

Posts in this Series

Prologue U.S. citizens are “subjects” to U.S. law wherever they may be in the world

Part IThe U.S. “Giveth” and the U.S. “Taketh” – How the U.S. uses “citizenship” as a weapon against individuals

Part II – U.S. Citizens living abroad – “Life in the penalty box”

Part IIII’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations

Part IVThe use of U.S. citizens as instruments of foreign policy

Part VWhy Americans abroad are renouncing U.S.
citizenship

Part VIThe injustice of the S. 877A “Exit Tax” as applied to Americans abroad

The Ownership and use of the U.S. Person which includes a Citizen as an Instrument of Foreign Policy – Part III

 
cross-posted from citizenshipsolutions
originally published July 7, 2016
 

The Ownership and use of the U.S. Person which includes a Citizen as an Instrument of Foreign Policy

 
Part III – I’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations …
 

by John Richardson
 
U.S. citizenship-taxation, enforced by FATCA, does have an impact on the economies of other nations.
There is evidence that this will negatively affect the job and career prospects of Americans abroad. “Citizenship-taxation” is increasingly affecting the way that nations and the citizens of other nations interact with “U.S. citizens”. Because of the “immutable characteristic” of a “U.S place of birth”, many U.S. citizens living outside the United States (assuming they are allowed to have a bank account in a FATCA world) have become undesirable as business partners.

See the following two accounts of discrimination against U.S.
citizens abroad

 


 

Good points that highlight, yet again, the absurdity and detachment of the U.S. political system from 9 million of their citizens now living in an ever globalized and ever more competitive world. The U.S. political class and presidential candidates disinterest in this ever-growing and important group of citizens only speaks to the total stupidity, general ignorance, global unawareness, profound provincialism and confirms a totally dysfunctional and archaic system that is today the United States. A country that attacks and harms its diaspora and through its laws has succeeded in turning its own citizens into international pariahs with international banks, in international business partnerships, in marriage and in the general perception outside of the U.S.

I recently met with three start-ups at a fair in Germany, two from the UK and one from Sweden. In my work as a headhunter they were hiring me to find them some talented people for their growing and successful startups. In all three cases, and each in separate meetings with me, the startups told me that they did not want any Americans or Europeans with U.S. Green cards or passports. They were all wisely warned by their banks and financial advisors not to bring any U.S. Persons into their business. Two of them knew the reasons and the risk that any American presence would bring to the business. The other one learned the hard way. They had an American investor who got them into his FATCA mess, reporting his holdings and his American tax consultant demanding the business’s bank details and the personal details of the owners. They returned his investment, threw him out and agreed never again to get involved with any U.S. persons in their business. This is now widely known and even if FATCA and all of the other reporting requirements for Americans would be eliminated, the damage is already done. The perception out there is to avoid hiring any Americans and also avoiding their investments. They are too much trouble and their government is an intrusive bully that thinks it can control the entire world. That spirit is so foreign to the young brilliant startup minds out there today. The U.S. has become a has-been and definitely not seen as a cool place anymore.

The world has moved on and the U.S. politicians and presidential candidates still haven’t realized that the world has changed since their anachronistic citizenship based tax system dating from the Civil War.
Truly, a nation of idiots.

 


 

As a former U.S. citizen, who renounced just in order to survive, as my four non-U.S. business partners gave me an ultimatum, either get rid of your U.S. citizenship, which was contaminating our totally German business and subjecting our company’s accounts to U.S.
Treasury and IRS scrutiny, or you must sell your shares and leave. This all started upon the advice of our German bank, who said that they wouldn’t deal with our accounts if there was any American/’U.S. Person’
involvement? Not to mention the personal impact on my mortgage, on my bank closing all of my investment accounts and everything else that every reader here knows all too well.

What amazes me most, and also amazes all of my personal and professional friends, all of them non U.S. persons, is how obedient and conforming the organizations supposedly representing the interests of U.S. citizens abroad are. With all that has happened, and especially now, subsequent to the Senate Finance Committee’s “report” on tax reform, paying nothing but contemptuous lip service to the plight of US citizens abroad, it should be more than obvious that U.S. Citizens abroad are of absolutely no relevance for lawmakers and legislators in Washington. Yet, the attitude of all of the organizations supposedly looking out for and fighting for the rights of US citizens abroad has been to follow a very respectful path of presenting the case for change, as if they were dealing with a fair democratic system, that respects equal representation and justice. They look ridiculous, all of them! When I read that Democrats Abroad have been trying to push the “bandage” fix of ‘Same Country Exception’ for more than four years, with no result, I say that this is absolutely pathetic. When I see American Citizens Abroad sending endless delegations to Washington, year after year, and even opening an office there, only to see the interests of overseas Americans relegated to a footnote, with no action proposed n the recent Senate Financial Committee report, I would think that they should be embarrassed and ashamed, as they should be. It has taken the group Republicans Overseas over one year to formulate an intended lawsuit, which has been postponed endless times, with a “promise” to file it next week, I say that they too have not approached this in the right way. Too much damage has been done in the interim.

What astonishes all of my “foreign” friends is how passive, obedient and fearful U.S. people are of their government, especially when confronted with such outright injustice, literal extortion and destruction of their financial wellbeing and that of their families and business partners.
Even the ever law abiding Germans wouldn’t put up with any of this and they would probably, en masse, as one lawyer friend told me, simply refuse to cooperate with any of this Byzantine filing of forms and endless intrusions into their privacy and that of their families and business partners. They would collectively refuse and file class action suits against the authorities behind these injustices worthy of a fascist totalitarian regime. Perhaps the Germans understand better than the Americans what this sort of thing leads to, when a society becomes so beaten down, so subservient, so fearful of authority that it complies with the most horrific and undemocratic “laws” and is unable to unite and simply say NO, collectively. Until Americans fight to recover some form of democracy and fairness, the ravages of FATCA will be but one in a coming litany of similar such abuses. To continue believing that they are dealing with democratic institutions and that reason and fairness will prevail is nothing but a naive attitude that will lead them nowhere, as we can now see with the recent Senate Finance Committee report.

 

Posts in this Series

Prologue U.S. citizens are “subjects” to U.S. law wherever they may be in the world

Part IThe U.S. “Giveth” and the U.S. “Taketh” – How the U.S. uses “citizenship” as a weapon against individuals

Part II – U.S. Citizens living abroad – “Life in the penalty box”

Part IIII’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations

Part IVThe use of U.S. citizens as instruments of foreign policy

Part VWhy Americans abroad are renouncing U.S.
citizenship

Part VIThe injustice of the S. 877A “Exit Tax” as applied to Americans abroad

NO Evidence of Intent to apply the “”Transition Tax” to Small Business Corporations of #AmericansAbroad

 

It appears that we are very likely at a breaking point in this intolerable situation faced by expatriates as regards U.S. application of citizenship-based taxation. Tax reform does not happen often. It is critical that relief for expats occur in the current legislation. Many of us simply will not be around in 30 years for the next shift. It will be completely unacceptable if there is no transition (at the very least) to territorial taxation for individuals. Some people may be forced at this point to renounce if only to put a stop on future tax liability. Some will not choose to become compliant simply because it is expensive, they have no ties to the U.S., no intent to go there, etc.

In addition, there is a very dangerous aspect (the “transition tax”) that appears in both the House and Senate bills; it is arguable that it does NOT apply to small corporations owned by US citizens residing outside the United States. The biggest danger here, is that it may remain unclear. We have seen what has happened in a number of situations when this is the case. Some examples are:

1) People who relinquished citizenship decades ago (and who do not have a CLN) have been told they are still U.S citizens. Not by the State Department, not even by the IRS. And not even by the banks per sé. It is the position of many members of the tax compliance community. This is completely unacceptable and no expat should accept such a conclusion without investigating the citizenship aspects of the situation.

2) Accidentals have been told the same thing; they are Americans and must become tax compliant. Again, not directly by the US government (as in “coming after them) but by members of the tax compliance community. This is also unacceptable and no one should become compliant without a complete examination of whether it is in his/her best interests (or not).

3) People who did NOT belong in the OVDP/OVDI programs were put there by tax professionals with hideous and tragic results. The law says one has to file, nowhere does the law say one had to enter one of those programs. If anybody should have known that, it would be the tax compliance community.

4)The IRS has not given a ruling on whether or not 877A is to be applied retroactively. This is another area where tax compliance professionals have decided it is the law. This is definitely NOT in the best interest of anyone renouncing their citizenship and most definitely should not be applied to anyone who renounced/relinquished before it became law.

5)One of the most egregious and limiting situations involves owning foreign mutual funds. There is nothing to support the practice of treating non-US mutual funds as PFICs. Again, guess who insists on this treatment?

All of the above points are as unacceptable as is a lack of change for Americans abroad in tax reform. We have had enough.
 
THIS HAS TO STOP
 
We, as a community, have to make a conscious decision that what they say does not apply to us, is not in our best interests. The application of U.S. law outside of its borders is highly questionable, and should not override the laws of the countries we are residents of. (The IGAs do not represent approval/acceptance of US policy; they are merely proof of what happens when the US threatens to destroy the economies of other nations). “It’s U.S. law.” This is always the argument used to justify application of these ridiculous actions, often with absurd results. Penalties, FATCA “outing” us, application of the Reed Amendment (or worse, the ExPatriot Act if it ever passes)- all can be quite frightening if applied as the tax community claims. Yet there is nothing to suggest that these things are realities. The only people who have been harmed by these things are the ones who are/or tried to comply.

It is time to resist not only the idea that U.S. law should run our lives but also, that the tax community should determine what courses of action we should take. We need to be consistent in our message on this, on FB, in tweets, blogs etc. No more. No more. No more…………

**********

Shortly before the House of Representatives released the Markup for H.R. 1 a Canadian tax lawyer Max Reed authored an article (also here ) claiming that:

New punitive rules that apply to US citizens who own a business. Currently, most US citizens who own a Canadian corporation that is an active business don’t pay tax on the company’s profits until they take the money out. The House plan changes this. It imposes a new, very complicated, set of rules on US citizens that own the majority of a foreign corporation. The proposal would tax the US citizen owner personally on 50% of the entire income of the Canadian corporation that is above the amount set by an extremely complex formula. At best, this will make the compliance requirements for US citizens that own a business extremely complicated and expensive. At worst, this will cause double tax exposure for US citizens who own a Canadian business on 50% of the profits of that business.
Imposition of a 12% one-time tax on deferred profits. Under the new rules, the US corporate tax system is transitioning to a territorial model. As part of this transition, the new rules impose a one-time 12% tax on income that was deferred in a foreign corporation. Although perhaps unintentional, since US citizens will not benefit from a territorial model, the new rules impose a 12% tax on any cash that has been deferred since 1986. Take a simple example to illustrate the enormity of the problem. A US citizen doctor moved to Canada in 1987. She has been deferring income from personal tax in her medical corporation and investing it. Now, 12% of the total deferred income since 1986 would be subject to a one-time tax in the US. That may be a significant US tax bill.
It is unclear what, if anything, will be enacted. However, US citizens in Canada – particularly those that own a business – should pay close attention as their tax situation could get significantly worse. Renouncing US citizenship may become an increasingly attractive option.

There has been much discussion of whether or not this is going to happen (assuming a tax reform bill containing these measures actually is passed).
A very good argument for why this should NOT apply to #AmericansAbroad is
here.

The following comment appeared today on Brock. It reiterates the position that the “transition tax” cannot be viewed as applying to Americans abroad who own small corporations. We can expect that tax professionals are going to claim it does. Start now to learn why it doesn’t make sense and why no one should listen to the notion they owe a tax to the US based upon this new “tax reform.”
 
USCitizenAbroad
November 14, 2017 at 7:16 pm
 
@ Patricia Moon

With respect to the discussion of whether there is a tax on the retained earnings of Canadian Controlled Private Corporations:

First, pick this discussion of the changes to the territorial tax system for corporations at the 35 minute mark here:

https://www.finance.senate.gov/hearings/continuation-of-the-open-executive-session-to-consider-an-original-bill-entitled-the-tax-cuts-and-jobs-act

There is NO evidence of any intention to apply the “transition tax” to anything other than large corporations and certainly not to small business corporations owned by Americans abroad.

Second, an interesting summary was published by the Toronto law firm Oslers which talks about U.S. tax reform and makes NO reference to a possible tax on the retained earnings of CCPCs.

TaxAuthorities/US Tax Reform for Busy Canadians

Note no mention that this could affect CCPCs owned by Canadians:

” Foreign minimum tax – Current taxation of “Foreign high returns”:

Under this provision, a U.S. parent corporation would be subject to
current U.S. taxation (at the new 20% rate) on 50% of its controlled
foreign corporations’ (CFCs’) “high returns.” Tax would be required
to be paid on these imputed income streams regardless of whether the
corresponding earnings were actually distributed to the U.S. parent.
“Foreign high returns” are the excess of the CFC’s net income over a
baseline return (7% plus the federal short-term rate) on the CFC’s
adjusted tax bases in depreciable tangible property, reduced by
interest expense included in the CFC’s net income. “Foreign high
returns” would be defined to exclude certain types of income (including
“effectively connected income,” income from the disposition of
commodities produced or extracted by the taxpayer, and income subject
to tax at an effective rate of at least 18%). This provision, which
cuts against the theory of a “pure” territorial tax system, was
designed to counterbalance incentives that may otherwise linger for
U.S. companies to locate high return generating assets/activities (like
intangible property) in offshore locations.”

My feeling is that regardless of the language that this was not intended to apply to Americans abroad.

What should be done:

The danger is that the compliance community will make the law by interpreting this to apply beyond its obvious intention. The obvious solution is to NOT use the services of any tax firm who interprets the law as applying to CCPCs. After all, it was the compliance firms who created the notion that Canadian mutual funds are PFICs.

The Ownership and use of the US Person Which Includes a Citizen as an Instrument of Foreign Policy – Part II

 
cross-posted from citizenshipsolutions
originally published July 7, 2016
 

The Ownership and use of the U.S. Person which includes a Citizen as an Instrument of Foreign Policy

 
Part II – U.S. Citizens living abroad – “Life in the penalty box”

by John Richardson

I do NOT want to devote a major part of this post to this issue. The bottom line is this:

U.S. citizens living abroad are subject to ALL provisions of the Internal Revenue Code (and other U.S. laws – see below). The effect of this is to:

– subject them to double taxation on their incomes (the tax preparers and accountants who claim this is NOT true are dead wrong)

– deem all of their non-U.S. assets as “foreign” triggering numerous penalty provisions

– make it very difficult (in some cases impossible) for them to engage in normal financial planning – this is a “Buy American” provision

– make divorce (if they are married to a non-U.S. citizen potentially much more costly) – this a “Marry American” provision

– report the details of virtually all of their “non-U.S. activities” and investments to the IRS under threats of draconian penalties (this is what makes interaction with Americans “toxic” – see below)

In short, Americans abroad are NOT permitted to fully integrate into the societies where they live (and are often citizens). For more details on this see:

The above tweet references a post describing the difficulties. It includes the 10 Commandments imposed on U.S. citizens who attempt to live and outside the United States AND “commit personal finance abroad”.

http://isaacbrocksociety.ca/2015/09/14/how-to-live-outside-the-united-states-in-an-fbar-and-fatca-world/

Here are the ten commandments of “Living Clean” that apply to U.S.
citizens abroad. They are designed to ensure that:

if a U.S. citizen lives outside the United States that he lives according to the principle that:

“When in Rome, live as a Homelander” does, when elsewhere, live as they live elsewhere.

Ten Commandments:

1. Thou shalt NOT have a bank or brokerage account outside the United States. If you do so, it must be reported to U.S. Financial Crimes on an annual basis. Failure to disclose is “Form Crime”. You may be fined an amount that is more than 300% of the value of the account.

2. Thou shalt NOT marry an “alien”. If you do so, you will have difficulty leaving your estate to him or her. Better to return to the Homeland to search for a suitable spouse.

3. Thou shalt ensure that your “alien” spouse agrees to be a U.S.
taxpayer. Failure to do so, will result in your having the punitive filing status of “married filing separately”. This will guarantee greater exposure to the Alternative Minimum Tax, the new 3.8% Obamacare surtax, higher tax brackets and lower thresholds for reporting (including FATCA Form 8938) requirements.

4. Thou shalt NOT believe that the sale of your principal residence is a “tax free capital gain”. In fact, the sale of your principal residence will trigger a 23.8% capital gain which means that your house cannot be used as a retirement investment.

5. Thou shalt NOT buy non-U.S. mutual funds. If you do, you will have your gains confiscated in the form of an “Excess Distribution” Tax. Buy American. Buy U.S. mutual funds.

6. Thou shalt buy ONLY “term insurance”. Any other form of “insurance that has cash value” will be treated as a sacred instrument of tax evasion. Furthermore, if you purchase a “foreign insurance policy” thou shalt pay a special excise tax.

7. Thou shalt NOT buy or participate in an RESP, RDSP, employer pension plan, or any other kind of retirement planning vehicle which will be considered to be a TAXABLE “Foreign Trust” (with all the attendant penalty laden reporting requirements).

8. Thou shalt neither be self-employed NOR carry on business through a non-U.S. (AKA “Foreign”) corporation. If you do, punitive taxes, deemed income, and expensive reporting requirements will descend on you.

9. Thou shalt NOT relinquish U.S. citizenship. In the event that you do, you may be subjected to an “Exit Tax” which applies to your “non-U.S.”
pension, “non-U.S.” assets, and assets that accumulated after you ceased to live in the United States. In addition, there are certain “Form People” who claim that you may be banished from the Homeland forever.

10. Thou shalt file, every year, file the following forms with the IRS:
1040 and all required schedules, FBAR, FATCA, 8938, 8965, 3520, 3520A,
709 (up to a maximum of up to about 45 forms). Understand that this will cost you thousands of dollars.

And this ladies and gentlemen, is why your problem is NOT “coming into U.S. tax compliance”. Your problem is “living as a tax compliant U.S.
citizen abroad”. It really can’t be done (if you want any kind of life).

 
Posts in this Series

Prologue U.S. citizens are “subjects” to U.S. law wherever they may be in the world

Part IThe U.S. “Giveth” and the U.S. “Taketh” – How the U.S. uses “citizenship” as a weapon against individuals

Part II – U.S. Citizens living abroad – “Life in the penalty box”

Part IIII’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations

Part IVThe use of U.S. citizens as instruments of foreign policy

Part VWhy Americans abroad are renouncing U.S.
citizenship

Part VIThe injustice of the S. 877A “Exit Tax” as applied to Americans abroad

The Ownership and use of the US Person Which Includes a Citizen as an Instrument of Foreign Policy – Part I

 
cross-posted from citizenshipsolutions
originally published July 7, 2016
 

The Ownership and use of the U.S. Person which includes a Citizen as an Instrument of Foreign Policy

 
Part I – The U.S. “Giveth” and the U.S. “Taketh” – How the U.S.
uses “citizenship” as a weapon against individuals …


by John Richardson

 
The U.S. Taketh: Draft Resistors in Canada in the 60s and 70s – The use of stripping people of “citizenship” as a mechanism to control the people
 
In my recent post: “Muhammad Ali, draft resistors, loss of US citizenship, the “Rumble In The Jungle” and a trip down memory lane“, I wrote:

During the last few years I have met many former Americans who came to Canada to escape service in the Viet Nam war. Their circumstances vary greatly. This was clearly a tumultuous time and difficult time. Many of them have commented that it has similarities to the circumstances of today. In both the 70s and present day, certain Americans abroad and former Americans abroad, feel uneasy and unsure about their U.S. citizenship. It’s also interesting how in both cases the United States is using “citizenship” as a mechanism to exercise control over individuals who do not live in the United States. In the 70s the United States was punishing people by stripping them of their citizenship. In 2016 the United States is punishing people by imposing citizenship on them. Either way, it’s clear that “citizenship”
(and a U.S. place of birth) is a powerful weapon to be used against people to achieve governmental objectives.

The U.S. Giveth: “Accidental Americans” in Canada and throughout the world – The imposition of “U.S. citizenship” as a way to raise tax revenue
 
There is no one definition of “accidental American”. The group includes primarily those who were born in the United States (often with no memory of having lived there) and have spent all their lives in other nations.
I have previously written about the horrible situation of “accidental Americans” in Stanstead, Quebec. Many Stanstead residents were born in Vermont because it was the closer hospital.
 
The problems of “accidental Americans” worldwide, are well described (on an ongoing basis) by Jude Ryan in his Facebook “Hunger Strike to President Obama”.
 


 
The problems experienced by “Accidental Americans” are that at the present time:

– they (in many cases) did not even know they were considered to be U.S.
citizens

– if they did know they were U.S. citizens they did not know about the uniquely American practice of “taxation-based citizenship

– they are deemed to be U.S. citizens and are therefore subject to U.S.
regulations

– they don’t reside in the United States AND are citizens of other nations

– they are being identified by FATCA and in some cases are having banking problems

– they can’t afford the financial costs of the tax compliance to formally renounce U.S. citizenship

– they can’t afford the $2350 fee to renounce U.S. citizenship

– they live in a state of terror and uncertainty (many don’t believe this or laugh it off)
 
In short, the forced imposition of U.S. citizenship (or at least the CURRENT unavailability of an easy out) is destroying their lives.
 
I highly recommend the following presentation by McGill Law Professor Allison Christians in which she puts the problems of “accidental Americans” in perspective.
 

 

Posts in this Series

Prologue U.S. citizens are “subjects” to U.S. law wherever they may be in the world

Part IThe U.S. “Giveth” and the U.S. “Taketh” – How the U.S. uses “citizenship” as a weapon against individuals

Part II – U.S. Citizens living abroad – “Life in the penalty box”

Part IIII’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations

Part IVThe use of U.S. citizens as instruments of foreign policy

Part VWhy Americans abroad are renouncing U.S.
citizenship

Part VIThe injustice of the S. 877A “Exit Tax” as applied to Americans abroad

The Ownership and use of the US Person Which Includes a Citizen as an Instrument of Foreign Policy

 
cross-posted from citizenshipsolutions
originally published July 7, 2016
 
Prologue – U.S. citizens are “subjects” to U.S. law
wherever they may be in the world

 

by John Richardson
 
Welcome and a bit of an introduction

This post turned out to be longer and cover more topics than I originally intended. The problem with discussing the problems experienced by Americans abroad is that there are many “moving parts”. I have broken SOME of the “moving parts” into, well six parts and a “prologue”.

In addition, as the title suggests, the original intention of the post was to discuss how the U.S. Government uses its citizens as “instruments of foreign policy”. The obvious question is: how can they possibly do this? Doesn’t U.S. law end at U.S. borders? How can the United States impose law on the rest of the world. The answer to that question raises other issues (which are discussed in the other parts of this post).

I guess I need a new title for the post.

I would also like to say that I am hopeful that there will be change.
That said, change is possible ONLY (regardless of intention) if all of the issues are understood individually and how they interact.
 
Posts in this Series

Prologue U.S. citizens are “subjects” to U.S. law wherever they may be in the world

Part IThe U.S. “Giveth” and the U.S. “Taketh” – How the U.S. uses “citizenship” as a weapon against individuals

Part II – U.S. Citizens living abroad – “Life in the penalty box”

Part IIII’m a “Toxic American”, but it’s not my fault – How U.S. regulation makes “U.S. citizens undesirables in other nations

Part IVThe use of U.S. citizens as instruments of foreign policy

Part VWhy Americans abroad are renouncing U.S.
citizenship

Part VIThe injustice of the S. 877A “Exit Tax” as applied to Americans abroad

___________________________________________________________________________________

Prologue – U.S. citizens are “subjects” to U.S. law wherever they may be in the world …

Yes, it’s true. In 1932 (eight years after the Supreme Court decision in Cook v. Tait), Justice Hughes of the U.S. Supreme Court, in the case of Blackmer v. United States ruled that:

While it appears that the petitioner removed his residence to France in the year 1924, it is undisputed that he was, and continued to be, a citizen of the United States. He continued to owe allegiance to the United States. By virtue of the obligations of citizenship, the United States retained its authority over him, and he was bound by its laws made applicable to him in a foreign country. Thus, although resident abroad, the petitioner remained subject to the taxing power of the United States. Cook v. Tait, 265 U.S. 47, 54 , 56 S., 44 S. Ct. 444.
For disobedience to its laws through conduct abroad, he was subject to punishment in the courts of the United States. United States v. Bow-
[284 U.S. 421, 437] man, 260 U.S. 94, 102 , 43 S. Ct. 39. With respect to such an exercise of authority, there is no question of international
law,2 but solely of the purport of the municipal law which establishes the duties of the citizen in relation to his own government. 3 While the legislation of the Congress, unless the contrary intent appears, is construed to apply only within the territorial jurisdiction of the United States, the question of its application, so far as citizens of the United States in foreign countries are concerned, is one of construction, not of legislative power. American Banana Co. v. United Fruit Co., 213 U.S. 347, 357 , 29 S. Ct. 511, 16 Ann. Cas. 1047; United States v. Bowman, supra; Robertson v. Labor Board, 268 U.S. 619, 622 ,
45 S. Ct. 621. Nor can it be doubted that the United States possesses the power inherent in sovereignty to require the return to this country of a citizen, resident elsewhere, whenever the public interest requires it, and to penalize him in case of refusal. Compare Bartue and the Duchess of Suffolk’s Case, 2 Dyer’s Rep. 176b, 73 Eng. Rep. 388; Knowles v. Luce, Moore 109, 72 Eng. Rep. 473.4 What in England was the prerogative of the sov- [284 U.S. 421, 438] ereign in this respect pertains under our constitutional system to the national authority which may be exercised by the Congress by virtue of the legislative power to prescribe the duties of the citizens of the United States. It is also beyond controversy that one of the duties which the citizen owes to his government is to support the administration of justice by attending its courts and giving his testimony whenever he is properly summoned. Blair v. United States, 250 U.S. 273, 281 , 39 S. St. Ct. 468. And the Congress may provide for the performance of this duty and prescribe penalties for disobedience.

It’s that simple. If you are a U.S. citizen, some would argue that you are the property of the U.S.government.

On the other hand (and this will be the subject of another post), the Supreme Court decisions in Cook v. Tait and Blackmer v. The United States were decided in an era where there was no U.S. recognition of dual citizenship. It is reasonable to argue that these decisions have no applicability in the modern world.

There will be those who will say: Come on! Get real! The United States would never rely on these old court decisions. Well, they still do cite Cook v. Tait. Mr. FBAR lay dormant until it was resurrected by the Obama administration as the “FBAR Fundraiser“.

Renouncing for some is excruciating & not because of the emotional ties

 

 

Barbara left the following comment at Brock earlier today. Her story is different in that she lives in a lower-tax based country (easier to owe US tax) where gaining citizenship is very difficult, if not impossible. I think this situation has come up far less often in public discussions and all of us should be aware of all the ways US tax policy is abusive to expats.

Barbara
2017/10/31

Agree with Mike : Renouncing is not only not easy, it’s excruciating. On that annual Greenback Tax expat survey, they often come up with a number like 37% of expats “considering renunciation”. My husband and I are two of those. I’ll bet the majority our fellow would-be renunciants have not taken the plunge, not because they don’t want to bother, but because the obstacles are just too extreme.

Sure, if you’re a lifelong Canadian, it may be administratively simple to renounce. Sure, you have to deal with is the boo-hoo emotional part, and 5000 bucks; I get that. But if you’re one of the tens or hundreds of thousands of Americans living in Saudi or Korea or Nigeria or China or Iceland, or other such places where it is either nearly impossible, or extremely unattractive, to take on local citizenship–even if we choose to or even enjoy living there–then renunciation is one of the most difficult decisions one can face.

We took years to make the decision. It isn’t costing us $2350 plus a few tears. It’s costing us our entire life’s savings to buy a passport of convenience through a property purchase, one which seems safe, but certainly not the best of all potential financial investments. Then we get to wait three years. Then we get the passports, we think. Then we deal with whether or not changing citizenship might affect our permanent residency status where we live. Only then do we face the pleasure of renouncing.

No matter what happens with the current tax reform, we’re determined to go through with it. We’ve lost all faith in the US government. There’s no doubt in my mind that the next administration will be a reaction against this one, and will be all Democrats, out for blood. And there’s no question the economy and national deficit will be in a worse mess than it is now. And us rich squillionaires hiding money abroad will be the first to be roped right back in.

Anyone who claims renouncing is easy, try thinking outside your own borders.

And I too hate all Homeland Americans. I find it hard to talk to them at all anymore. Who gives a damn about talking about Harvey Weinstein? I want to talk about TTFI.

Dual Filer Status- How to Live & Invest in Canada as a US dual filer -Courtenay BC Oct 12

 
 

THURSDAY OCTOBER 12, 2017
3:00 – 5:00 pm P.S.T.
Crown Isle Resort & Golf Community/Copper Room
399 Clubhouse Drive V9N 9G3
Courtenay B.C.
MAP

The life of a dual-filer doesn’t have to be complicated.
Join our seminar and learn about the many strategies that can help you maximize your
after-tax income and remain compliant.

You may be a dual filer if you are a long-term dual citizen of the United States and Canada;
are Canadian born with an American parent; are an American Green Card Holder or live in Canada
with American citizenship.

In this seminar, specialist John Richardson will cover topics such as:

  • Investment restrictions to be aware of
  • Forms you need to file
  • Managing estate planning issues
  • Whether to keep your U.S. citizenship
  • Exit Tax (and its misconceptions)
  • Coming into compliance

 
Lara D Austin
 
 
 
 
 
 
 
 
 
 
 
 
 
Your Host Lara D. Austin BA FMA CIM
Investment & Wealth Advisor
RBC Dominion Securities

 

J
 
 
 
 
 
 
 
 
 
 
 
 

John Richardson B.A., LL.B., J.D.
Citizenship Lawyer
citizenshipsolutions

Citizenship showdown coming: Has Australia ceded control of its sovereignty to foreign countries?

cross-posted from citizenship solutions

Shades of Larissa Waters

Oh My God! Think of it:

My sources in Australia tell me …

This time it’s the –
Deputy Prime Minister
– and the first member of the lower house to be tainted by dual citizenship. This is significant. With the Senate they usually go to the next person on that party’s ticket from the last Senate election. With the House of Reps they have to have a by-election – and Turnbull’s government is hanging on by a single vote. So, if the High Court rules that Barnaby Joyce must vacate his seat, it could topple the government!

And I thought that Politics in Canada was dirty. And we all revel in the daily stench of the toxic partisanship in the USA. But, hey at least these two countries do NOT have constitutional provisions that (as they have been interpreted) allow other countries to interfere in who the elected representatives are! (We let them interfere in covert ways – think “From Russia With Love” ….)

But Australia. This really is unique. Think of it. Once a person is accused of being a dual citizen – AS DEFINED BY THE LAWS OF ANOTHER COUNTRY – then the person is disqualified from serving in the Senate or the Lower House. I had always thought of Australia as a sovereign country. Can it really be true that Australia allows eligibility for service in the Senate or the lower house to be determined by another country’s citizenship laws? Does it matter whether these “foreign laws” confer citizenship by force rather than citizenship by consent?

Think of the possibilities here. There have always been suggestions that “The USA via the CIA” had been (wonderful melody) instrumental in the dismissal of Australian Prime Minister Gough Whitlam. Why go to so much trouble? The way Australia is interpreting its own constitution, all a future U.S. Government would have to do is confer U.S. citizenship on the Prime Minister of Australia and he would be forced to resign. But this would be the intentional “weaponization of citizenship”. (But, the FATCA is that: the USA would NEVER use citizenship as a weapon now, would it?) Australia has already surrendered much of its sovereignty to the United States through a combination of the FATCA IGA and the “savings clause” in the Australia U.S. Tax Treaty.

It’s worse than you think. The problem extends to the ongoing changes in the citizenship laws of other nations

What about the change in one country’s citizenship laws conferring citizenship on an Australian citizen without his/her knowing about it?
For example, Canada has made significant amendments to its citizenship laws in 2009 and 2016. In both cases Canadian citizenship was conferred on people who did NOT have Canadian citizenship. One example is that prior to 1977, a person born abroad to a married couple where the father was NOT Canadian (say Australian) and the mother was Canadian would NOT have become Canadian by descent. In 2009 people in these circumstances were given Canadian citizenship. What if a person affected by this was in the Australian Senate in 2009 when the Canadian law was changed.
Would that person be forced to resign?

Can the citizenship of country A be forcibly imposed on a resident of country B who has NEITHER ACCEPTED NOR ACKNOWLEDGED THAT CITIZENSHIP?


Continue reading “Citizenship showdown coming: Has Australia ceded control of its sovereignty to foreign countries?”