Tag Archive for Expatriation

The IRS Large Business And International Division (LB&I) Announces The Approval Of Six Additional Compliance Campaigns

IRS

To date, LB&I has announced a total of 59 campaigns.

The campaigns described below were identified through LB&I data analysis and suggestions from IRS employees. LB&I’s goal is to improve return selection, identify issues representing a risk of non-compliance, and make the greatest use of limited resources. The new campaigns are:

S Corporations Built in Gains Tax

Practice Area: Pass Through Entities

Lead Executive: Holly Paz, Director of Pass Through Entities

C corporations that convert to S corporations are subjected to the Built-in Gains tax (BIG) if they have a net unrealized built-in gain and sell assets within 5 years after the conversion. This tax is assessed to the S corporation. LB&I has found that S corporations are not always paying this tax when they sell the C corporation assets after the conversion. LB&I has developed comprehensive technical content for this campaign that will aid revenue agents as they examine the issue. The goal of this campaign is to increase awareness and compliance with the law as supported by several court decisions. Treatment streams for this campaign will be issue-based examinations, soft letters, and outreach to practitioners.

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Written by | Posted in IRS Compliance Campaigns • Offshore Disclosures

U.S. Expatriation – Tax Information When Renouncing

Larry Stolberg

Renunciation of U.S. citizenship is an expatriation event requiring the filing of IRS Form 8854 with your tax return for year of expatriation. Renunciation has a fee of US $2,350.

Renunciation is voluntary and requires an appointment for receiving a certificate of loss of nationality.

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Written by | Posted in Expatriate

Part 1 – Life In The “Penalty Box” – U.S. Citizens And Green Card Holders Living Outside The US

On October 18, 2011 the U.S. Ambassador to Canada – Ambassador Jacobson – made a speech on “U.S. Canada Relations” to the Canadian club. The speech took place after the frightening summer of 2011 during which thousands of Canadians:

1 Learned that they might be considered to be U.S. citizens;

2. Learned that they might be required to file U.S. taxes;

3. Made attempts to file those taxes (often through the 2011 “OVDI” program).

Americans abroad throughout the world were living in a “state of fear and confusion” sheer terror. Read More

Written by | Posted in FATCA • FBAR • Internet Tax Summit - 2015 • TaxConnections

The Man (Or Woman) Without A Country

Over the last two years, the number of U.S. expatriations has skyrocketed. For 2013 alone, the number of Americans renouncing their citizenship has increased to 221%. As shocking as this statistic might appear, according to those in the “know,” it is grossly understated. This has inspired many to call the trend, “Ellis Island in reverse.”

What has caused so many to resort to something as extreme as renouncing their U.S. citizenship? None other than the usual suspects, or what I like to refer to as the “dynamic duo” (for all you “Batman” fans): the United States’ system of worldwide taxation, on the one hand and FATCA, on the other. While I could go on endlessly about the harmful effects of global tax reporting and FATCA, the purpose of this blog is to discuss the steps that must be taken in order to expatriate. Read More

Written by | Posted in Expatriate • FATCA • International

USA Expatriation, Experience Matters -Treasury Reg. 1.409A, Internal Revenue Code 877A, 2801 & IRS Forms 8854, W-8CE

Call me naive but the immigration “problem” in the USA is rooted in the fact that the country offers the absolute best Social Security and Medicare systems on the planet. Surely detractors painfully draw out and depending on perspective fabricate flaws. It is remarkable that millions of people, mostly good people in all other regards are so willing to commit the crime of residing in the USA without proper documentation in pursuit of a ‘better life’ for themselves and their progeny.

On the one hand thinking about and planning for multiple generations at a time is what seems to lead to measurable advancements in humanity. But on the other hand one must ask whether being in the USA without proper documentation is worth it at any cost. Evidently the answer is a resounding and problematic yes. That is why expatriating from Read More

Written by | Posted in TaxConnections

Expatriation: Divorcing The Government Has Tax Consequences

As someone who moved around a lot with my parents in my childhood, any kind of displacement conjures up vivid images of huge wooden crates, packers and sad goodbyes. But life is no longer as simple as crates, packers and going-away gifts, many US citizens who had relocated and moved abroad are deciding to renounce their US citizenship. 2013 was a record-breaking year that saw an alarming increase (221%-according to the Treasury Department of US) of Americans renouncing their citizenship. Why such a drastic move? A big reason is the global tax reporting requirement and FATCA.

I read this somewhere, that “expatriation is like divorcing a government”. As heart-wrenching and final as that may sound, it is made even more complex by the tax provisions under Internal Revenue Code (IRC) sections 877 and 877A. So if you decide Read More

Written by | Posted in Expatriate • FATCA • FBAR

Dear Mr. President… Why I Must Expatriate….

This letter was posted by Robert Wood on Forbes’ website. Robert is a US tax lawyer based in San Francisco, California. He received this letter in the course of his practice. I thought it was well worth passing on and have reproduced it in full:

“Dear Mr. President,

I am writing with a heavy heart as I, my husband, and our daughter are all seriously contemplating giving up our U.S. citizenship. We are doing this not to avoid paying U.S. taxes but because we strongly object to a system that is blatantly discriminatory and unfair to law-abiding Americans living outside the country. In addition, it has become too expensive, too difficult, and frankly, too frightening, to try to comply with all of the tax filing Read More

Written by | Posted in Expatriate • FATCA • FBAR • North America

How To Treat Gifts And Bequests From Foreign (Non-US) Persons

If you are a US citizen or resident and you receive gifts or bequests (generally, an inheritance or gift of property by a Will) of money or other property from a foreign (non-US) person or entity, you may need to report these gifts on Form 3520, Annual Return to Report Transactions with Foreign Trusts and Receipt of Certain Foreign Gifts. Form 3520 is an information return, not a tax return. Many people receiving gifts or bequests get very confused. They mistakenly believe that they have to pay tax when they receive a gift or bequest. This is not the case – bona fide gifts or bequests are not subject to income tax in the hands of the recipient. This remains the case regardless of whether the person giving the gift is a US person or a foreign person. It remains the case regardless of the amount of the gift or bequest. Read More

Written by | Posted in Expatriate • Gift Tax • Individual • International

Expatriation – What Happens to the “Principal Residence?”

Certain individuals who give up their US citizenship or their green cards are subject to the so-called ”Exit Tax” imposed under Section 877A of the Internal Revenue Code.

Under the so-called “expatriation” tax rules, harsh tax consequences will result if the individual giving up his US citizenship or “long-term” permanent residency (generally, this is an individual who has held a green card for 8 out of the past 15 years) is a so-called “covered expatriate”. Only “covered expatriates” will suffer the onerous tax consequences.

One is a “covered expatriate” if the individual has either a net worth of US$2 million at the time of expatriation; or, if he has a certain average income tax liability over the past 5 years prior to expatriation. One is also automatically treated as a “covered expatriate” if the Read More

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Help, I Want to Expatriate, But They Won’t Let Me… Part II

This is a two-part blog post with Part I available HERE.

Renouncing US Citizenship if the Individual is a Minor

“Jus soli” (the law of the soil) is a rule of common law followed by the United States, under which the place of a person’s birth determines his citizenship. In addition to common law, this principle is embodied in the 14th Amendment to the US Constitution which states, in part, that: “All persons born in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside.” Citizenship is also determined under various US citizenship and nationality statutes, such as the Immigration and Nationality Act (INA). Read More

Written by | Posted in FATCA • IRS

Expatriation: Deferring Payment Of The Exit Tax

iStock_ Statue Liberty and Flag XSmall

Expatriation And Exit Tax

Many individuals who previously took on United States citizenship as a second nationality or obtained a green card are now regretting this decision.  Some individuals often incorrectly assume they can give up the US citizenship or the green card without adverse US tax consequences.

Under the so-called “expatriation” tax rules, harsh tax consequences will result if the individual giving up his US citizenship or “long-term” green card (generally, held for 8 out of the past 15 years) is a so-called “covered expatriate”.  Only “covered expatriates” will suffer the onerous tax consequences.  One is a “covered expatriate” if the individual has either a net worth of US$2 million at the time of expatriation; or, if he has a certain average income tax liability over the past 5 years prior to expatriation. One is also automatically treated as a “covered expatriate” if the person fails to notify the IRS that he has expatriated and satisfied all of his tax liabilities for the past five years even if he did not meet the aforementioned dollar thresholds.

In these cases, imposition of an “Exit Tax” (among other harsh tax results) will occur when one gives up his US citizenship or “long term” green card. Under the Exit Tax provisions, the individual is subject to tax on the net unrealized gain on all of his world wide assets as if such property were sold for its fair market value on the day before the expatriation date.  Thus, the individual must pay US income tax on gain that he is “deemed” to have earned by operation of the Exit Tax rules, when in fact, the individual has not sold anything and is without any cash in hand with regard to the deemed sale. Naturally, this raises the issue of how the individual will fund payment of the Exit Tax. Read More

Written by | Posted in Expatriate • Individual • North America