Month: September 2018

Legislation to help American expats imminent, London audience told

reprinted with permission of the author Helen Burggraf
American Expat Financial News Service
Photos by Steven Edginton, Politics UK
steven.edginton@hotmail.com

September 24, 2018
updated 1:02 PM CEST, Sep 27

TTFI_London_2018
 
 
 
 
 
 
 
 
 
 
 
 
 
 
 
Legislation that its proponents say would significantly improve the lot of American expatriates, many of whom have been left reeling by the Trump tax reforms introduced at the end of last year, will be introduced in Congress before the end of the month.

This was the message delivered to a London audience of around 80 mainly expatriate Americans last week by Republican Overseas global chief executive Solomon Yue, (pictured above, far left, and below), and again a few days later to an also mainly expat audience in Paris.

Today Yue is due to bring his message to expats in Frankfurt, with similar events scheduled for Berlin and Rome over the next few days.

Yue’s appearances were his latest on a global whistle-stop tour of key foreign business centers around the world that aims to rally support among – and ideally as well, the active involvement of – American citizens living abroad for legislative changes in the way their country currently taxes them, in the run-up to the midterm elections in November.
Continue reading “Legislation to help American expats imminent, London audience told”

Repatriation Tax/GILTI – Negotiate for an Exemption?


(click on the picture for a clearer image)

A Letter from Monte Silver

Americans against the Repatriation/GILTI taxes – within striking distance of winning and you can help! And what to do with the October 15 filing deadline?

Hi Fellow Americans,

On August 1, 2018, the Treasury issued proposed regulations that interpret the Repatriation tax law – a 250 page very complicated document. I discovered that in issuing the document, Treasury seriously violated numerous Federal laws and procedures. This gives us tremendous leverage in negotiating for an exemption from the Repatriation & GILTI laws. It is not unreasonable to expect that this battle may be won by December 15, 2018. As you many have an October 15, 2018 filing deadline, I attach a relevant portion of an IRS publication stating that you may be able to extend the filing date until December 15, 2018. I suggest that you discuss this with your US CPA specialist to see if this applies to you.

What can you do to help win the battle? Easy! We need impacted Americans abroad and in the US to send in a few short paragraphs (as outlined below) – by October 7! See below for instructions. If you or people you know are impacted by these laws, lets take care of business!

The same text is available at www.americansabroadfortaxfairness.org

We are within reach. Lets do it.

Monte

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Instructions

  1. Do not include any identifying information about you or your business. Do not even say whether you live in the U.S. or abroad.
  2. You need to customize the letter where marked in red!!!
  3. Do not discuss anything but the Repatriation tax, and 962 if relevant for you.
  4. Submitting your comment: You can submit directly at www.regulations.gov/comment?D=IRS-2018-0019-0001. This Federal site does not require you to identify yourself.
  5. If you want to remain 100% anonymous, send the comment to me and I will submit it in an anonymous batch with others. To see other comments, including my own, click “Open Docket Folder” on the above link.

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Template comment

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Subject: Comment on the proposed 965/962 rules

To the US Treasury:

I am a U.S. Person with an interest in a small business. As a result of the Repatriation tax, and now these Proposed Rules, 2018 has, and the foreseeable future will continue to be, a nightmare for me, my business and my family.

I am unable to understand the 250-page document at all. My comment is only limited to two issues:

(i)The 5-hour estimate you state that it will take me to comply with this proposed rule in totally unrealistic, and
(ii)The Repatriation tax and this proposed regulation have and will continue to devastate my small business.

Issue 1: Countless hours I have spent and still have to spend trying to deal with the Repatriation tax.

PUT YOUR OWN EXPERIENCE HERE. In one or two paragraphs, detail all the time you have had to spend on the Repatriation tax. Include everything, from initially reading about the tax and talking to friends, to contacting your US and non-CPA CPA, to doing more research on what the tax is and means to you, how to comply, contacting your Congresspeople to complain and demand action, , to gathering documents and tax information, to joining groups and forums to discuss this matter and learn what to do. If your current CPA is not sufficiently knowledgeable about this tax and you had to speak to other tax professionals and pay then, state that. Put an estimate as to the number of hours you have spent on the Repatriation tax and what you have no idea how many hours it will take for you to understand the comply with the 250 page proposed regulations

Issue 2: How the Repatriation tax has devastated my small business.

PUT YOUR OWN EXPERIENCE HERE. In one or two paragraphs, state things like:

  • how the cost of compliance is so significant that it will threaten the existence of your business. The cost can be
  • (i) money – paying tax professionals, taking money needed for the business out of the business to pay the tax.
  • (ii) Time wasted on this and how that impacts your business. Add that this cost does not include the cost of future compliance for the proposed regulations which you cannot even begin to estimate
  • how you are unable to compete with non-us businesses as they do not have to comply
  • how you do not have the money needed to pay the tax and will need to take out loans, liquidate an asset, or take out pension money at a huge penalty
  • Taking money out of the company to pay this tax is harmful to the growth of your business
  • if you are making the 8-year payment plan or the 962 election, this rule will impact you for years to come
  • you have no idea whether the proposed rules mean that you have to amend returns, which will double the cost of compliance and headache.
  • as a result of the significant impact on business, you or others you know have debated whether to simply refuse to comply and become a tax evader
  • Non-Americans do not want to co-found businesses or have you as an investor, given the headache of Repatriation/GILTI taxes involved.

Based on the above, I respectfully request that Americans with small businesses be exempt from the 965 tax.

Respectfully,

Your Name

Non-partisan discussions set for London on efforts to end U.S. citizen-based tax regime-September 17 & 18, 2018

cross posted from AmericanExpatFinance.com

By Helen Burggraf, Editor – September 08, 2018

A panel discussion that will consider recent and growing efforts to convince U.S. lawmakers to end America’s increasingly-unpopular “citizenship-based” tax regime is set to take place at a venue in the Mayfair district of London, on the 18th of September.

American expats with concerns about the way they are being tax are being invited to the event, which is entitled “What’s next: a light at the end of the tunnel? The possible end of U.S. citizenship-based taxation.”

The discussion will feature Solomon Yue, the Oregon-based global chief executive of the Republicans Overseas, who has been a long-time and visible campaigner on behalf of expatriate Americans, but the event’s organizers say he will be joined in London by tax, legal and citizenship experts from across the political spectrum.

Some tax experts who are determinedly non-political, including at least one non-American, will also participate, the event’s organizers, an un-affiliated group of individuals who include some Republican Overseas members, said.

A question-and-answer period will be held at the end.

Last month Yue participated in three similar such events in Toronto, including one that was filmed and posted on YouTube.

This followed an earlier appearance in May in Hong Kong. Yue is set to follow up the London event in coming weeks with similar programs in Paris, Berlin, Frankfurt and Rome, most of which are being sponsored by the respective local chapters of the American Chamber of Commerce.

Among those scheduled to join Yue at the London event will be John Richardson, a Toronto-based lawyer who specializes in citizenship issues, and who is an American-Canadian dual national himself.

He and Yue are also set to participate in another, more informal event on the subject of America’s expat tax regime, also in London, on the 17th of September, at a venue yet to be decided (but probably near Kings Cross Station). More information about this event will be made available in due course, Richardson said.

When: Tuesday 18 September 2018 – 17:30 to 19:00

Where: Central London location – to be confirmed upon RSVP (nearest tube: Westminster)

Venue: To be provided upon RSVP (nearest tube: Westminster)
Cost: Free to attend

RSVP: drewliquerman@gmail.com by 17:00 Monday 17 September 2018

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UPDATE – Wednesday Sept 12 2018

Due to unforeseen circumstances, Solomon Yue WILL NOT be able to attend the “grassroots” meeting on Monday, September 17 listed below. John Richardson will run this program as scheduled.

In addition the meeting mentioned above, we will have a second, more informal program for expats and their families and friends. This format will be a more intimate question and answer session which will be focused on individuals subject to the CBT regime.

When: Monday 17 September 2018 – 19:00 – 21:00
Where: 40 Bernard St, Bloomsbury, London WC1N 1LE, UK- across from Russell Square Station
Venue: Pret a Manger
Cost: FREE
Registration: REQUIRED nobledreamer16 at gmail dot com by 5 pm (EDT) Saturday 15 September 2018

MAP pret a manger russel square station

The proper care and feeding of the Green Card – An interview with “long term resident” Gary @Clueit

UPDATE 10 SEP 2018

Gary replied to this same post on the Citizenship Taxation Facebook Group. .

Gary Clueit In the example of the Covered Expat inheritance 40% tax on heirs I gave during the interview, I misstated that there was no credit available for any foreign estate tax or IHT paid, giving the UK as an example. Apparently, the amount due to the IRS can be offset by any amount paid to a foreign country. It makes no difference in my case, since my domicile is a country that has no estate or inheritance tax.

Also, only 4 OECD countries (Japan, South Korea, France, UK) have an estate tax equal to or more than the US. Every other country either has none (including 15 OECD countries), or is at a lower rate than the US. Which means, unless you are domiciled in one of the very few high tax countries, your heirs will still lose a significant portion of their inheritance.

It is one thing to pay death taxes where you are living/domiciled. It is an entirely different matter to have to pay anything to somewhere you once lived, left and paid an exit tax on ALL unrealized gains at the time. And zero credit for any increase in wealth since you departed.

Exceptionalism at its best!

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Cross-posted from Citizenshipsolutions

JR 24UG2014 pic

                  INTRODUCTION

The Internal Revenue Code of the United States imposes worldwide income taxation on ALL individuals who are U.S. citizens or who are otherwise defined as “residents” under the Internal Revenue Code. “Residents” includes those who have a visa for “permanent residence” (commonly referred to as a Green Card).

        John Richardson

A visa for “permanent residence” is a visa for immigration purposes. Once an individual receives a visa for “permanent residence” he will be considered to be a “resident” under the Internal Revenue Code. His status as a “resident” for tax purposes continues until he fulfills specific conditions to sever his “tax residency” with the United States. The conditions required to sever “tax residency” with the United States are found in S. 7701 of the Internal Revenue Code. (Basically a Green Card holder can’t simply move from the United States and sever tax residency.)

In the same way that U.S. citizens are subject to taxation on their worldwide income even if they don’t reside in the United States, “permanent residents” will continue to be subject to taxation on their worldwide income until they take specific steps to sever tax residency in the United States. In certain circumstances Green Card holders living outside the United States can avoid filing some of the “forms” that are required of U.S. citizens living abroad.

The steps to sever tax residency are found in S. 7701(b) of the Internal Revenue Code. Those wishing to explore this further are invited to read my earlier posts about Gerd Topsnik: Topsnik 1 and Topsnik 2. Those “permanent residents” who qualify as “long term residents” will be subject to the S. 877A Exit Tax rules if they try to sever tax residency with the United States. It’s probably easier to secure a “permanent residence visa” for immigration purposes, than it is to sever tax residency for income tax purposes.

On September 5, 2018 I had the opportunity to participate in a conversation with Mr. Gary Clueit who has been a permanent resident of the United States for 34 years. The following tweet links to the podcast of the conversation. Anybody considering moving to the United States as a “permanent resident” should listen to this podcast.

Mr. Clueit has previously written on how the S. 877A Exit Tax affects his situation. The following two tweets link to posts which capture his writing.
 
First, from CitizenshipTaxation.ca:

Gary Clueit:

As a long-term GC holder with no way to escape “covered expatriate” status, the article doesn’t really cover all the insidious side-effects. For example, determining the $2M net worth threshold does not cover any assets you might have had before moving to the US, or assets due to bequests from relatives that have never set foot in the US. Even after paying the exit tax on the “deemed sale” of everything you own worldwide, you will have to pay actual capital gains when you do actually sell. And every penny of any bequest or gift you make to someone resident in the US (i.e. a child or grandchild, even if they are not US citizens) is then further taxed at 40% (that they have to pay) with no limit. So, for example, if your net worth is $2.5M on the date of expatriation (i.e. covered expat), you pay the exit tax. Say your wealth increases to $250M AFTER you leave the US – if your heirs live in the US (again, whether citizens or not) and you leave that wealth to them, the entire $250M estate will be taxable to them at 40% regardless of the fact that 99% of your wealth at the time of death was created outside the US.

Even if GC holders decide to stay in the US, they are perpetually screwed. Besides never being allowed to vote (not really an issue since one never desired to be a citizen), though they are still expected to pay taxes on worldwide income. The worst comes at death:
US citizen spouses can transfer or gift an unlimited amount between each other. If you are the spouse of a GC holder the maximum transfer is $149,000 annually.

Upon death, a citizen can leave an unlimited amount to their spouse. If your spouse is a GC holder, the max is just over $5M. If you spouse is a nonresident alien, the maximum is $60,000. Amounts above that are subject to 40% estate tax.

There is also the possibility of being caught up in double estate tax issues when you die.
This is the ultimate in taxation without representation – one of the founding principles behind the creation of the US. Tea parties were held!

Second, from the Isaac Brock Society:

Perils & Pitfalls of Being a Green Card Holder

gary clueit

I am posting this comment of Gary Clueit that appeared on the Robert Wood article couple of days ago. Over the past few months, we have “met” Gary on FB, Twitter etc. Especially the Wednesday Tweet Rally- A group that just keeps on giving!!

by Gary Clueit
continued at the original post here

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For more on Green Cards please see the following three articles by John Richardson:

Green Card Holders; the Tax Treaty TieBreaker rules and taxation of subpart F and PFIC income

Green Card Holders, the Tax Treaty Tie Breaker and REporting Forms 8938, 8621, and 5471

Green Card Holders, the Tax Treaty Tiebreaker and Eligibility or Streamline Offshore