Archive for FATCA

Your Field Guide To Foreign Account Disclosure Programs – Which Is Your Pick?

There is a lot of buzz going around these days about FBARs, foreign accounts, foreign corporations, IGAs, tax treaties, more & more Swiss banks on the roll-call list, you name it and they cry “FATCA”! Confusion all-around, fear mongers are having a field day, may be rightfully so, fines are high and penalties higher. People are ready to hit the panic button. Or so one would think!

To quote my favorite Buddhist teacher, Thich Nhat Hanh here, “People have a hard time letting go of their suffering. Out of a fear of the unknown, they prefer suffering that is familiar.”

If you are wondering what a Thich Nhat Hanh quote is doing on a tax blog but you have one hand hovering over the panic button, just think about it…without going into many of Buddhism’s wonderful practices let me assure you, do decide to end your suffering, however first- DON’T PANIC! Second, hire yourself a good Enrolled Agent who Read More

Written by | Posted in FATCA • FBAR • OVDP

Part 13 – Understanding “Exit Taxes”

“I relinquished U.S. citizenship many years ago. Could I still have U.S. tax citizenship?”

Attn: Former U.S. Citizens: Are you STILL or have you EVER BEEN a U.S. “Tax Citizen”?

Synopsis:

This is a long post. In fact, it is too long for the average reader. Therefore, I wish to summarize the purpose and possible (but not certain conclusion) of the post in a few simple sentences.

Here goes:

If you were born in the United States (and became a U.S. citizen at birth) who moved to Canada and naturalized as a Canadian Citizen prior to June 3, 2004:

1. Without informing the U.S. State Department or applying for a Certificate of Loss of Nationality; and Read More

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Part 12 – Understanding “Exit Taxes”

“The two kinds of U.S. citizenship: Citizenship for “immigration and nationality” and citizenship for “taxation” – Are we taxed because we are citizens or are we citizens because we are taxed?”

The United States of America – One country two citizenships – Introducing the “Tax Citizen”.  Dual Citizenship – American style – All Americans are both “Citizens” and “Tax Citizens”. One Country – Two Citizenships.

First Citizenship – Citizenship for Nationality Purposes

Americans have always been proud of their U.S. citizenship. Most U.S. citizens regard their U.S. citizenship as the most valuable thing they have. Most Americans will fight for their citizenship. They will die for their citizenship. They Read More

Written by | Posted in Exit Tax • Expatriate • FATCA

Part 11 – Understanding “Exit Taxes”

S. 2801 of the Internal Revenue Code is NOT a S. 877A “Exit Tax”, but a punishment for the “sins of the father”

Updated September 12, 2015 – the IRS has issued “proposed rules”  governing the issue of “The sins of the father”.

The following was a comment on Part 9 of this “Exit Tax” series.

“I know many tax compliant, patriotic Americans who have renounced. Many have done so seeing the $2m threshold approaching, to protect their families and get on with their lives. All with heavy hearts.

You did not mention the additional burden on those who renounce who have US citizen relatives–the tax their Read More

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Part 10 – Understanding “Exit Taxes”

The S. 877A “Exit Tax” and possible treaty relief under the Canada US Tax Treaty

Introduction – The Canada U.S. Tax Treaty Does Not Always Prevent Double Taxation

See: Part 9 – Understanding “Exit Taxes” – For #Americansabroad: US “citizenship taxation” is “death by a thousand cuts”, but the S. 877A Exit Tax is “death by the guillotine”.

When countries independently make major changes in tax law, double taxation can occur.

The following comment from 5thSwiss on the Isaac Brock Society site explains why and how double taxation can be a reality. It also underscores the dangers of a U.S. citizen leaving the United States. Read More

Written by | Posted in Exit Tax • FATCA • FBAR

Part 9 – Understanding “Exit Taxes”

For #Americansabroad: US “citizenship taxation” is “death by a thousand cuts”, but the S. 877A Exit Tax is “death by the guillotine”.

1995 – The origins of the S. 877A Exit Tax –
Video of House Oversight Committee (see video below).

This testimony in this video covers a number of perspectives. It includes a consideration of whether the S. 877A rules are a “human rights violation”. This video should be watched in its entirety. It illustrates the viciousness of the Exit Tax and the attitude of the Clinton administration. There is a suggestion that the purpose of the S. 877A rules was to “keep people from leaving”. If you find any testimony or questions that address the problems of “Americans Abroad”, please leave a comment describing the speaker, time Read More

Written by | Posted in Exit Tax • FATCA

Part 6 – Understanding “Exit Taxes”

Part 6 – “Surely, expatriation is NOT worse than death! The two million asset test should be raised to the Estate Tax limitation – approximately five million dollars – It’s Time”

Introduction

Many Americans abroad have had their lives turned upside down by the combination of FATCA and the enforcement of U.S. “place of birth” taxation. Those who are “long term” residents abroad find themselves caught between a “rock and a hard place”.

On the one hand they can’t afford the costs and complexity of filing U.S. tax returns.

On the other hand, many “middle class” Americans abroad cannot relinquish their U.S. citizenship (freeing themselves from the complexity of U.S. tax laws and the IRS) without Read More

Written by | Posted in Canada • FATCA

Part 2 – Understanding “Exit Taxes”

Part 2 – Understanding “Exit Taxes” in a system of residence based taxation vs. Exit Taxes in a system of “citizenship (place of birth) taxation

Let’s begin with some politics …

In an interesting post Robert Wood writes:

Both Mayor Johnson and Senator Cruz are U.S. citizens. Both Mayor Johnson and Senator Cruz either have or are renouncing the citizenships of the countries where they were born. There will no tax consequences to Senator Cruz for renouncing Canadian citizenship. Mayor Johnson will probably be spared America’s draconian “Exit Tax” (assuming he was born a dual citizen) for renouncing U.S. citizenship. The “Exit Tax” Read More

Written by | Posted in Expatriate • FATCA

Trouble In Paradise

Former Congressman Barney Frank recently remarked that the financial reform law that partially bears his name is in a unique position, because “No program in American history could more clearly combine two elements: great success and absolute unpopularity.” While the jury is still out on the “great success” of Dodd-Frank, there is no doubt that everyone hates it.

Many Democrats, especially progressives like Senators Bernie Sanders and Elizabeth Warren, don’t think the law went far enough towards reigning in the big banks. There is even talk in some quarters about blowing the dust off the Depression-era Glass-Steagall Act, which might effectively break up Wall Street banks the way the government broke up Ma Bell a generation ago. Read More

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‘Justice Delayed Is Justice Denied’?

Wighead English jurist William Gladstone, the author of this famous quote, was obviously not a criminal defense lawyer. In many, if not most, cases, delay is a fundamental element of a successful defense, or even the lynchpin of the entire schmear. Over time, memories fade, evidence is lost (or at least becomes more difficult to find and use in court), witnesses relocate, and prosecutors lose interest in the case. All of these developments weigh in favor of criminal defendants.

To paraphrase Gordon Gekko: Delay is good. Delay is right; delay works. So, there were champagne corks popping all along Wall Street and into the uttermost parts of the earth when the IRS announced that it would delay certain FATCA bank withholding requirements until 2019. However, it remains to be seen whether the delay is a legitimate reprieve or Read More

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The Role of Residency In The Streamlined Procedures

As a U.S. expat, you may have heard about the latest and greatest IRS amnesty program available for delinquent U.S. taxpayers known as the “streamlined procedures.”  What you may not know is that if you continue to spend a significant time in the U.S. each year, your eligibility for the procedures and your ability to obtain penalty-free relief may be in jeopardy.

The key issue here is “residency,” which separates the friendlier “foreign offshore” procedures (available for taxpayers residing outside the U.S.) from the harsher “domestic offshore” procedures (available for taxpayers residing in the U.S.)

For instance, a domestic resident taxpayer that has failed to file a U.S. income tax return in any of the three most recent tax years cannot participate in the domestic offshore Read More

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