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Archive for John Richardson

Americans Abroad With Local Investments That Are “Foreign To The US” Live Under The Sword Of Damocles

JOHN RICHARDSON

Prologue – The “Take Away” And Summary For Americans Abroad

The general message is contained in the above twitter thread. Americans abroad are likely to have financial involvements with a number of different kinds of “entities” that are “local” to them and “foreign to the United States. Examples may include: pension plans, tax advantaged savings plans, small business corporations and more. The descriptive title of these “entities” is irrelevant to their classification under US tax rules.

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Bittner FBAR Appeal: U.S. Supreme Court Justices Define Three Issues Evidenced By Eleven Key Moments

Bittner FBAR Appeal: Supreme Court Justices Define Three Issues Evidenced By Eleven Key Moments

Introduction

On November 2, 2022 the Supreme Court of the United States heard the appeal in the case of:

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How Will The U.S. Supreme Court Rule On This FBAR Penalty Case?

Supreme Court FBAR Case: ALEXANDRU BITTNER, Petitioner v. UNITED STATES Respondent - No. 21-1195

Here is the audio recording of the November 2, 2022 Bittner FBAR hearing …

https://www.c-span.org/video/?523324-1/bittner-v-united-states-oral-argument

On November 2, 2022 the Supreme Court Of The United States heard the Bittner case. The issue was whether in the context of a non-willful FBAR penalty:

1) The government is restricted to imposing one penalty based on the failure to file one FBAR; or

2) The government is authorized to impose one non-willful penalty for each of the accounts that should have been reported on the single FBAR form.

For example, let’s imagine that a US citizen has ten accounts that are “foreign” and he fails to file an FBAR form. Is the penalty based on the failure to file the form itself (one form means one $10,000 penalty)? Or may the government impose a penalty based on the failure to disclose each of the accounts on the FBAR form (10 times $10,000 = $100,000)?

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How US Tax Treaties And The “Saving Clause” Prevent Countries From Establishing Retirement Programs For US Citizen Residents

How US Tax Treaties And The “Saving Clause” Prevent Countries From Establishing Retirement Programs For US Citizen Residents

Prologue – The Circumstances Of Your Birth Should Not Determine The Outcome Of Your Life …

The above tweet references a “human interest” story where US citizen children are denied benefits in their country of residence that are available to all people who are NOT US citizens.

The description includes:

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Extradition Is One Way That Changes In Another Country’s Tax Laws May Change Your Tax Relationship With The US

JOHN RICHARDSON

Prologue

As long as the US continues to employ citizenship taxation any changes in US tax law will continue to have unintended consequences on Americans abroad. In March of 2022 I outlined how some of the tax changes proposed in the 2023 Biden Green book would impact US citizens who live outside the United States. As important as US tax changes are, Americans abroad must be aware of how changes in the laws of their country of residence may also impact their “tax relationship” with the United States.

The purpose of this post is provide five simple examples. Some of the examples are based on Canada’s tax laws and others are of a more general nature.

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Mr. FBAR’s Civil Penalty – Does 31 USC 5321(a)(5) Authorize The Imposition Of ANY Civil Penalty For Failure To File An FBAR?

Mr. FBAR's Civil Penalty - Does 31 USC 5321(a)(5) Authorize The Imposition Of ANY Civil Penalty For Failure To File An FBAR?

This is Post 6 in a series of posts describing the historical, statutory and regulatory evolution of Mr. FBAR*

These posts are organized on the page “The Little Red FBAR Book“.

Mr. FBAR Visits The Supreme Court Of The United States!

But, maybe the issue is whether a civil FBAR penalty can be imposed at all instead of how much of a penalty can be imposed?

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The Competent Authorities Should Agree That The Canadian TFSA Has The Same Treaty Status As The US Roth IRA

The Competent Authorities Should Agree That The Canadian TFSA Has The Same Treaty Status As The US Roth IRA

2018 Prologue

In 2018 I wrote a post arguing that it is reasonable to conclude that the text of the Canada US Tax Treaty should be interpreted to mean that a Canadian TFSA is – like a US ROTH IRA – a pension within the meaning of the Canada US Tax Treaty. The 2018 post was arguing for equal treatment without the intervention of the respective Canadian and American Competent Authorities.

The Punitive Taxation Of US Citizens Living Outside The United States Continues

I have previously and repeatedly made the point that:

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Airline And Cruise Ship Employees: How Income Earned In International Waters May Lead To Double Taxation For (Only) Americans Abroad

Airline And Cruise Ship Employees: How Income Earned In International Waters May Lead To Double Taxation For (Only) Americans Abroad

Oliver Wagner, CPA and John Richardson – January 16, 2022

Americans abroad and the presumption of double taxation

Prologue: For whom the bell tolls …

Whether a US citizen lives in (and is a tax resident of) Mexico and works on a ship in international waters

Or Whether A US citizen lives in (and is a tax resident of) Holland and is an airline pilot …

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The Beyer “Tax Simplification For Americans Abroad Act” HR6057 – A First Look

The Beyer "Tax Simplification For Americans Abroad Act" HR6057 - A First Look

Updates November 22, 2021:

1. I have also written a post on the SEAT site which compares (in a general way) the Beyer Bill of 2021 to the Holding Bill of (2018). Any attempt to solve this problem through amending the FEIE actually has the effect of strengthening citizenship based taxation.

2. With respect to the 402(b) exclusion:

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German Tax Authorities Reported To Be Imposing Tax On U.S. Military Pay

German Tax Authorities Reported To Be Imposing Tax On U.S. Military Pay

(Reposted By Popular Demand)

Prologue

This post draws heavily from the reporting of John VanDiver who has written a number of articles in Stripes. His most recent article is here:

“You don’t want to be chased and harassed by a government office. It is scary,” said Melissa Howell, the spouse of a U.S. soldier who is being targeted by a tax office in Germany’s Landstuhl area. “I don’t know how they expect people to come up with that money.”

Howell, a German who lives with her American husband and children, said she ran into trouble in June when she went to file her taxes at the local finance office.

She said she was interrogated about her husband and told to fill out a questionnaire that probed information about his employment.

She then received a letter ordering her to hand over her husband’s W-2 and other tax forms.

“I did it because I didn’t know. I found out that

was a mistake,” she said.

After that, she got a phone call from the tax office, saying that their case was getting handed over to a case manager who handles “American-German couples.”

 

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Proposed Pillar 3 For International Tax Reform: Individuals Should Be Tax Residents Of Only One Country At A Time

A Proposed Pillar 3 For International Tax Reform: Individuals Should Be Tax Residents Of Only One Country At A Time

Tax Sovereignty: All countries (including the US) has the right to create its own domestic tax policy. The question is how to solve the problem of US citizenship-based taxation from an international perspective.

The problem: US citizenship-based taxation means that US citizens are tax residents of the United States even when they are tax residents of other countries. Interestingly US tax treaties contain a provision called the “saving clause” which denies US citizens the benefits of a tax treaties. See for example Article XXIX of the Canada US Tax Treaty. Tax treaties generally include a residence tie breaker (usually Article IV) which allocates the tax residency of dual tax residents to one country or another. See for example Article IV of the Canada/US Tax Treaty. The “saving clause” denies residency tie break provisions to US citizens.

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Billionaire Tax Proposal Commentary: Based On Concept Of Fake Income

Billionaire Tax Proposal

This comment is based on the interpretation of the proposal found in this post Proposed And Updated Version Of Billionaire Tax. I don’t have a week to read and digest the 100+ pages of the proposed law but based on the description in the proposal here are my comments:

The US currently has (in effect) separate tax systems for: Employees, small business people, those who live off investment income, Americans abroad, undocumented aliens, certain racial minorities (see the work of Dorothy Brown) and now a new tax system for billionaires is proposed. So, in America of today: Congress asks tell me who you are and we will tell you which tax system applies to you. (How can this be fair?) The proposed tax system for billionaires borrows from some of the most vicious aspects of the tax system for Americans abroad and would apply them to billionaires.

Prospectively – The billionaires tax once is is up and running:

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