Because The US Exports Its Tax Code, Other Countries Should File Amicus Briefs In The Moore MRT Appeal

Why U.S. deemed income events cause problems for U.S. citizens living in other countries and erode the tax based of the countries where they live

All countries in the world have an interest in the Moore MRT appeal and should file Amicus briefs in support of the Moores.

The U.S. citizenship tax AKA extraterritorial tax regime applies to ALL U.S. citizens and residents wherever they live in the world. With its very expansive definition of “tax residency”, the United States claims the tax residents of other countries as U.S. tax residents. Those unlucky dual filers are subject to additional administrative fees, additional taxation and the opportunity cost of the inability to effectively engage in retirement and financial planning.

In the Moore MRT appeal the U.S. Supreme Court will consider whether “income” requires the actual receipt of income or whether “deemed income” meets the 16th Amendment test for income. Does the 16th Amendment require objective tests that must be satisfied before “income” can exist? The answer to this question will have profound implications for both the “U.S. citizen” residents of other countries and (2) the countries where they live. As previously discussed, if income does NOT have to be actually received, this opens the door for the U.S. tax the residents of other countries on income they have never received. Often the taxable event in the U.S. will take place before the taxable event in that other country.

The following post describes some examples where the United States is already deeming income to have been received for U.S. tax purposes before income has been received in the other country.

The following post describes how the U.S. deeming income to have been received for U.S. tax purposes prior to income having been received in the other country may result in (1) double taxation to the individual and (2) erosion of the tax base of the other country.

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State Department Announces Intention To Reduce Fee To Issue Certificates Of Loss Of Nationality From $2350 To $450

Introduction And General Context

On Friday January 6, 2023 the State Department announced its intention to reduce the administrative fee for issuing CLNs (“Certificates Of Loss Of Nationality”) for US citizenship relinquishments from the current $2350 to $450. Notably in 2015 the State Department increased the fee from $450 to $2350.

The precise language found in the Declaration of Assistant Secretary For Consular Affairs Reena Bitter was:

3. Under 31 U.S.C. 9701, 22 U.S.C. § 4219, and Executive Order 10718, the Department has the authority to establish fees to be charged for official services provided by U.S. embassies and consulates. The Department intends to pursue rulemaking to reduce the fee for processing CLN requests from the current amount of $2350 to the previous fee of $450, as set in 75 FR 36522 on June 28, 2010. The Department will consider any necessary changes to this fee, as appropriate, in a future rulemaking.

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The reduction was announced in conjunction with a lawsuit launched by the Association Of Accidental Americans arguing that the $2350 renunciation fee is unconstitutional. The announcement and general context is described in the article at the American Expat Finance News Journal.

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Those wishing to better understand the lawsuit might be interested in a 2020 podcast I did with the lawyer Marc Zell.
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Guide To Renunciation Of U.S. Citizenship Abroad

In this guide, we’ll discuss everything you need to know about the process of renouncing your U.S citizenship, how to book an appointment, waiting times you might expect, forms you need and how to complete them, interview tips and we’ll discuss the most common concerns US citizens have when renouncing your US citizenship. Everything we refuse to charge additional fees for because we believe that you can do it all yourself.

We understand that renouncing US citizenship is a life-altering decision that comes with an enormous amount of stress, doubt, and anxiety. We get many requests each week to help people prepare for their renunciation appointment.

We firmly believe that equipt with the knowledge you’re about to process, you can eliminate the stress and ease your anxiety. In fact, the process is simpler than you might think. At the end of the day, it is your right to decide whether you consider yourself to be a US citizen or not.

Renunciation Process

Section 349(a) of the Immigration and Nationality Act (INA) (8 U.S.C § 1481) governs the right of a U.S.citizent to renounce his or her U. S. citizenship. A person loses his/her U.S. citizen status if he/she voluntarily gives up his/her U. S. citi­zenship with the intent of relinquishing his/her U.S. citizenshi­p, making a formal renunciation before a diplomatic or consular officer of the United States in a foreign state.

In order for you to legally renounce your U.S. citizenship, you must:

1) appear in person before a U.Ss consular or diplomatic officer
2) in a foreign country at a U.S. Embassy or Consulate; and
3) 
sign an oath of renunciation

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Founder Of Russian Bank Pleads Guilty To Tax Fraud

Admits to Concealing More Than $1 Billion in Assets when Renouncing U.S. Citizenship and Agrees to Pay More Than $500 Million Penalty

The founder of a Russian bank pleaded guilty today to filing a materially false tax return.

“In 2013, when the value of Oleg Tinkov’s investment in his bank’s stock rose to over a billion dollars, Tinkov quickly renounced his U.S. citizenship and then lied to the IRS in a ploy to evade ‘exit taxes’ he knew were due,” said Acting Deputy Assistant Attorney General Stuart M. Goldberg of the Justice Department’s Tax Division. “Today, Tinkov has entered a plea to a felony and agreed to pay more than $500 million in taxes, interest and penalties, more than double the amount of money he sought to escape paying to the U.S. Treasury through his fraudulent scheme.”

“Oleg Tinkov brazenly violated United States tax law,” said Acting U.S. Attorney Stephanie M. Hinds for the Northern District of California. “No one who enjoys the immense benefits of United States citizenship, as Tinkov did, may avoid the corresponding obligation to support the country he chose. Tax evaders should take notice of the long reach of U.S. law enforcement.”

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JOHN RICHARDSON

Introduction

On December 5, 2019 TaxConnections published our “Open Letter To Democrats Abroad” in which we argued that “revenue neutrality” should be irrelevant in moving from “citizenship-based taxation” to “residence-based taxation”. That post attracted a large number of comments from Americans abroad expressing the difficulties living under the citzenship-based taxation regime. The bottom line is that the United States is forcing expats to renounce their U.S. citizenship. Yes, its’ true. The comments reminded me of a post that appeared on my site in 2017. Settle in for the ride as you read the “13 Reasons Why …”

Guest post by a perfectly ordinary person who renounced U.S. citizenship for perfectly ordinary reasons

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