Archive for John Richardson

Would A Move To Residency-Based Taxation Solve The FATCA Problem For Americans Abroad Created By The FATCA IGAs?

Would A Move To Residency-Based Taxation Solve The FATCA Problem For Americans Abroad Created By The FATCA IGAs?

Purpose Of This Post – The “Readers Digest” Version

FATCA is administered through the FATCA IGAs (international agreements) and not through the U.S. Internal Revenue Code (domestic law of the United States). the FATCA IGAs do NOT include a provision to change the meaning of “U.S. Person”. Rather the meaning of “U.S. Person” is permanently defined as a “U.S. citizen or resident”. There is no provision in the IGA to change this definition. Therefore, the IGAs are written so that they will ALWAYS apply to U.S. citizens regardless of whether the U.S. continues citizenship taxation.

In effect, implementing FATCA through the IGAs has had the practical impact that:

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Written by | Posted in Citizenship Based Taxation • TaxConnections

To TFSA Or To Not TFSA, Whether Tis Better For A US Citizen Living In Canada To Open A TFSA Or Not

To TFSA Or To Not TFSA, Whether Tis Better For A US Citizen Living In Canada To Open A TFSA Or Not

Introduction And Purpose

As the article referenced in the above tweet makes clear, a very small percentage of Canadians can expect their retirements to be funded by pensions. The message is that individuals have an obligation to themselves and to their families to engage in responsible financial and retirement planning. The tax laws in every country have provisions in their tax codes to facilitate this planning. Almost all of these planning vehicles are based on “before tax” advantaged vehicles (RRSP or Conventional IRA) or “after tax” vehicles (TFSA or ROTH IRA) which allow for tax free growth.

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Written by | Posted in TaxConnections

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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Written by | Posted in Americans Abroad And Taxes • TaxConnections

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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Written by | Posted in FBAR • Reasonable Cause • TaxConnections

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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Written by | Posted in FBAR Filing • TaxConnections

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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Written by | Posted in Citizenship Solutions • TaxConnections

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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Written by | Posted in Biden Tax Law Changes • Extradition

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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Written by | Posted in FBAR • FBAR Filing • TaxConnections

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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Written by | Posted in Competent Authority

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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Written by | Posted in Double Taxation For Airline And Cruise Ship Employees • TaxConnections

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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Written by | Posted in Tax Simplification For Americans Abroad Act • TaxConnections

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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Written by | Posted in German Tax Authorities
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