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United States Dual Citizens Receive Punitive Tax



Attention Please

We bring your attention to the commentary on the post this week  written by John Richardson of Citizenship Solutions in Toronto, Canada called “The United States Imposes A Separate And Much More Punitive Tax On U.S. Citizens Who Are Residents Of Other Countries”.

We appreciate the commentary to Johns post and ask our readers to add their own stories to educate the public of the impact of these laws have on dual citizens. The real financial impact is causing hardship and stress for many Americans who live and reside in other countries and have done so for years.

You can read the story and commentary at this link.

 

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The Reality of U.S. Citizenship Abroad

My name is John Richardson. I am a dual citizen. I am a lawyer – member of the Bar of Ontario. This means that, any counselling session you have with me will be governed by the rules of “lawyer client” privilege. This means that:

“What’s said in my office, stays in my office.”

I am also a member of the American Citizens Abroad Professional Tax Advisory Council (PTAC). This is an advisory panel focused on assisting American Citizens Abroad in an FBAR and FATCA world.

The U.S. imposes complex rules and life restrictions on its citizens wherever they live. These restrictions are becoming more and more difficult for those U.S. citizens who choose to live outside the United States.

FATCA is the mechanism to enforce those “complex rules and life restrictions” on Americans abroad. As a result, many U.S. citizens abroad are renouncing their U.S. citizenship. Although this is very sad. It is also the reality.

19 thoughts on “United States Dual Citizens Receive Punitive Tax

  1. Avatar Linda says:

    FATCA ruins lives of overseas Americans… can’t get banking services and compliance fees can wipe you out… renounced to keep from ending up on the street… indescribably sad

    • Yes, FATCA ruins the lives of Overseas Americans. But, FATCA also ruins the lives of people who do not even consider themselves to be American. These people are “accidentals” – citizens and residents of other countries – who may have left the USA after having born.

      One might ask: What does this imply about the meaning of U.S. citizenship?

      Anyway, you are fortunate you had the opportunity to renounce. There are many who can’t afford the fees to renounce.

    • It is no longer certain that Green Card holders will take out U.S. citizenship. But, in some cases they are forced to become U.S. citizens in order to move away from the USA and not be forced to pay the Section 877A exit tax. But, if they become U.S. citizens and then move away they are forced to live under the discriminatory rules that affect Americans abroad.

  2. Avatar Graham Astley says:

    Why isn’t it just accepted that the US government doesn’t like it’s citizens leaving the US to live elsewhere and punishes them this way so that others may be dissuaded from doing the same. “The Land of the Free,” sure if you live
    there but not if you leave. Any foreigner moving to the US is crazy
    to take out US citizenship if they don’t have to

    • It is no longer certain that Green Card holders will take out U.S. citizenship. But, in some cases they are forced to become U.S. citizens in order to move away from the USA and not be forced to pay the Section 877A exit tax. But, if they become U.S. citizens and then move away they are forced to live under the discriminatory rules that affect Americans abroad.

  3. Avatar Audrey Pell says:

    Being a dual US citizen and for my part in addition an accidental American is a real nightmare, you can’t leave normally, you are always scared of being chased by the IRS and ruined, Eventhough you don’t have much money, eventhough that money comes from your other parent, the one who has absolutely nothing to do with the USA. Plus, your other country does not protect you at all. I still have my father in the US, the US citizenship is all I have from him, that’s why it’s so difficult for me to renounce, but according to the situation, I really think I have no other choice. Should I live evrything here? could be more advantageous, as I am also French where tax level is one of the highest… but I have never lived in the US, unless when I was a baby, my social life is here, my work too,… it’s inextricable.

    • Audrey – the problem is living under the stress. I think that your description (to some extent) exaggerates the problem. But, I am also sure that there is no shortage of accountants, lawyers, enrolled agents and lower level “form people”, who will play off your fears. As long as you retain U.S. citizenship you will worry about a far off country (that you have nothing to do with) making laws that can ruin your life. By renouncing you are only breaking the U.S. (real or imagined) jurisdiction over you. You are in no way changing the relationship or connection with your family. Renounce and live happily ever after. Because if you don’t renounce you will never be happy.

  4. Avatar Jo says:

    I’m American living in France and my husband is French. He doesn’t even want to attempt to move to the US because he doesn’t want to get ensnared in any of this US taxation mess, and I don’t blame him. It’s bad enough I have to deal with it. The only reason I was able to “easily” get a bank account is because my in-laws have a close relationship with the higher ups at the bank we use, and so they didn’t mind going through all the hoops that come with doing financial business with an American. But before that, I tried to do it on my own with other banks and was given the biggest runaround, all because I’m American (I’m not speculating, they all TOLD me this). It’s insane. I only work part-time so I don’t even make a lot of money. Heck, I’m afraid to really make money because then I feel like I’d just be working to pay taxes. Not worth it.

    • Well, as you know from the perspective of the U.S. Government any bank account used by an American abroad, in his country of actual residence, is presumed to be a “sacred instrument of tax evasion”. Significantly U.S. Treasury has refused to give Americans abroad an FBAR exemption for his/her local accounts. Treasury has also not been willing to grant Americans abroad the “same country exemption” for form 8938. Maybe, it’s fact that you live outside of America that makes you so “suspect”.

  5. Avatar Kirk Callesen says:

    Its just not right to force so many to renounce their American citizenship over such are archaic and just plain unfair tax policies. Just look at how many other countries follow this form of taxation. Maybe two in the entire world? It costs the IRS far more to enforce than it earns back. Its simple math.

    • Yes, Americans abroad who are tax compliant are being forced to renounce U.S. citizenship. The joke of it is that: Those who try the hardest to comply with U.S. laws are the ones who can’t remain U.S. citizens.

  6. Avatar Vann says:

    One account closed cause I’m American and another one blocked. Bank refuses to let me invest on anything. Incredible how we are put in difficulty regarding marriage, buying a house , pention and investments to protect our family. This is going way out of line! It’s not freedom it’s hell.

  7. Avatar Windsor says:

    Every day I log on to check if my bank accounts are still open. Banks are closing accounts of Americans because of FATCA. I want to retire in a different country in Europe, but I’m limited to countries and towns where I can open a bank account because many banks refuse American customers because of FATCA regulations and penalties if they report incorrectly. I even had a US credit card account closed without notice after having the account for 25 years.

    • You are an American. Without significant changes in the law your life will be problematic.

      The U.S. Government is creating problems for Americans abroad. But, the U.S. Government is also creating significant problems for the countries where U.S. citizens reside.

      My prediction: Without significant change, countries will no longer allow U.S. citizens to immigrate to their countries. It’s not worth the trouble of dealing with the regulatory problems they bring. It’s also too dangerous to allow a class of immigrants who have been effectively disabled (by U.S. tax policies) from effective retirement planning.

      The best place for Americans is probably America. It’s a good thing because brick by legislative brick, the USA has built a wall to keep its people in!

  8. Avatar JR says:

    I have no nexus to the US other than my accidental place of birth. I was born on US soil to foreign parents who were studying in the US at the time. I was constructively deported by the US when, aged 5, the US issued deportation papers to my mother. From this moment onwards, and as a result of this decision made by the US, all my ties to the country were permanently severed. I retained no family, cultural or economic ties to the US whatsoever. Fast forward 40 years and, following the implementation of FATCA, the US now seems to be claiming ‘ownership’of me for no other reason that I was born on US soil. How ironic that the country that claims as its founding principles ‘no taxation without representation’ and ‘the unalienable right to expatriate’ should behave in this manner. The founding fathers would not look fondly on FATCA and the extraterritorial and deeply unjust underlying legislation FATCA enables.

    • It’s a myth (history is written by the victors) that the American revolution had anything to do with “taxation without representation”. Frankly it’s a stupid argument. It’s also a myth that the USA is a great believer in expatriation. Professor Lucy Salyer of the University of New Hampshire has just written a fantastic book (Under The Starry Flag) which is largely about the history of the 1868 Expatriation Act. One point that she makes is this: Although the Expatriation Act meant that the USA would treat naturalised U.S. citizens as ONLY U.S. citizens, it was NOT clear that the Expatriation Act was ever intended to provide a right of expatriation for U.S. citizens.

      Shades of the modern day FATCA (give us the information we want and we won’t reciprocate) hypocrisy. Not much as changed. Your situation (if it were not so tragic would be laughable). But, the USA likes to impose worldwide taxation on tax residents of other countries. Anybody will do.

  9. Avatar Karine says:

    I am a French citizen living in London. I was born in the US and resided there until i was 6 years old.
    I never went back to live there. In 40 years, i probably spent about 2 weeks of my life on US soil for holidays and work. I am therefore an ‘Accidental American’.
    Yet, when i decided to start the streamline process to ‘put things right’, encouraged by scaremongering Tax advisors, i was told that i would have to pay $30,000s of taxes minimum, just as a start, because i had had the bad idea of creating my own Limited company, here in London, to work as a consultant.
    The new US tax laws meant for the owners of big corporations like Amazon, when applied to me, meant that all my savings, left on my companies account were taxed the same way as them!
    This is not accounting for the $5,000/year cost of the tax advisors themselves because, of course the whole process is impossible to do on your own.
    This is not mentioning all the complexities that i discovered: having a stock ISA (UK saving type), French Life insurance etc etc, all incompatible with the US tax system. And i had no idea!
    i can empathise will all these comments. My parents were proud, they had worked hard, while in NYC and were delighted that maybe one day i could use this passport again but all it does now, it is coming to haunt me…

    • Karine – you have been victimised by the combined efforts of (1) The “political vandalism” that was the TCJA (which is where the Sec. 965 transition tax came from) (2) the unwillingness of the tax compliance community to make rational arguments that the transition tax should not be applied to Americans abroad (and that the transition tax violates various parts of the tax treaty) and (3) the natural instincts of the tax compliance community (make no mistake they exist only to enforce U.S. tax laws as they perceive them). I am sickened by what you describe. Yet, I know that this is very common. Thank you for your courage in sharing your experience by commenting here. The USA claims to want tax compliance from Accidental Americans. It is very unlikely that with stories like yours that accidental Americans will enter the U.S. tax system. Unfortunately, to enforce the U.S. taxation on Accidental Americans is to equate U.S. citizenship with a new form of slavery. Yup, it’s true.

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