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Tag Archive for FATCA

IRS Provides Limited Tax Relief For Certain Individuals Renounced(ing) After March 18, 2010

John Richardson On Renouncing U.S. Citizenship

In what appears to be a response to how FATCA issues affect “accidental Americans” living outside the United States, the IRS has introduced a procedure providing limited tax relief, penalty relief and certainty for accidental Americans who need to renounce U.S. citizenship in a FATCA world. The problem is described in this recent article by Helen Burggraf at American Expat Finance. Note that March 18, 2010 was the date that the HIRE Act (of which FATCA was a revenue offset) was enacted – making it clear that this relief is tied to FATCA and NOT to “citizenship-based taxation” per se.

In a nutshell, it appears (I will read this in more detail again) to say that Individuals who:

1. Have NEVER filed a 1040 U.S. tax return

2. Have relinquished/renounced U.S. citizenship after March 18, 2010

3. File the five tax years in the year prior to relinquishment

4. File a tax return in the year of relinquishment

5. Have a net worth of less than 2 million USD at the time of relinquishment AND at the time of filing

6. Have a total of less than $25,000.00 in U.S. tax liabilities over the five year period

7. Certify that their failure to file was non-willful.

can file, avoid paying the U.S. taxes owed and NOT be a covered expatriate.

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Accidental Americans Get Relief! New Announcement From The IRS

Manasa Nadig

Stop the presses, hold the phones, drop everything you are doing! The Internal Revenue Service announced “Relief Procedures for Certain Former Citizens” on September 6th, 2019. If you are an “Accidental American” and planning on renouncing your U.S. Citizenship, you should be reading this.

Let’s dig back a bit and refresh our memories: The United States Constitution provides through the 14th Amendment that “all persons born or naturalized in the United States” are citizens of the USA. A person born abroad to a U.S. citizen parent or parents acquires U.S. citizenship at birth if the parent or parents meet conditions as specified in § 301 and following sections of the U.S. Immigration and Nationality Act.

Those who have acquired U.S. citizenship in such a manner may not be aware of the obligations and consequences of this status. As you my dear readers already know from my blog, that by law, U.S. citizens regardless of where they live have to report and possibly pay tax on their world-wide income to the Internal Revenue Service.

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U.S. Citizenship And Immigration Services To Close All But Seven Of Its Overseas Offices

Helen Burggraf

The U.S. Citizenship and Immigration Services has announced that it plans to close all but seven of its 23 overseas offices, including those in London, Frankfurt, Rome and Bangkok.

This represents a change from its earlier plan, announced in March, that it would close all 23 of the outposts.

In a statement, the USCIS said the “organizational changes” would “allow more effective allocation of USCIS resources to support, in part, backlog reduction efforts.”

It said the offices it plans to keep open would be those in Beijing and Guangzhou, China; Nairobi, Kenya; New Delhi, India; Guatemala City, Guatamala; Mexico City, Mexico; and San Salvador, El Salvador.

“The first planned closures are the field offices in Monterrey, Mexico, and Seoul, South Korea, at the end of September,” the USCIS statement said.

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UK MP Vows To Continue Speaking Out On Behalf Of Accidental Americans Living In Britain

Helen Burggraf

Preet Kaur Gill, a British Labour Party member of Parliament from the greater Birmingham area,  has said she plans to continue asking questions of the UK government on behalf of U.S.-born British citizens – like at least one of her constituents, who are facing unprecedented “negative financial implications” as a result of the way such individuals are pursued for tax by the U.S. authorities.

Gill’s vow to continue speaking out on behalf of such dual U.S./British citizens comes as resistance is reported to be growing on the part of European governments to continuing to accommodate the American government’s extra-territorial tax enforcement efforts, which is currently done in part through intergovernmental agreements signed in the wake of the 2010 passage of the Foreign Account Tax Compliance Act.

Under FATCA, non-U.S. financial institutions around the world are required to report to the U.S. on those accounts they hold on behalf of American citizens. They do this by reporting the information to the authorities in the country in which the financial institution in question is located – which in turn, under the terms of the IGA, forwards the information to the U.S. Internal Revenue Service.

As reported here last month, a growing number of the more than 100 countries that have signed up to participate in a new, global automatic banking information exchange program modelled on FATCA, and organized over the last few years by the Brussels-based Organization for Economic Cooperation and Development, have begun to question the fact that the U.S. has opted not to participate – and is understood to be giving as its excuse the fact that it has FATCA, and therefore has no need to.

Such countries are said to be frustrated in particular because the U.S. has failed to “reciprocate” with respect to the information it receives from them through their FATCA agreements with the same kind of information on accounts held by their taxpayers in U.S. financial institutions.

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Foreign Financial Institutions To Report U.S. Taxpayers Bank Information: FATCA Intergovernmental Agreements

U.S. Department Treasury

FATCA was enacted in 2010 by Congress to target non-compliance by U.S. taxpayers using foreign accounts. FATCA requires foreign financial institutions (FFIs) to report to the IRS information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.

FFIs are encouraged to either directly register with the IRS to comply with the FATCA regulations (and FFI agreement, if applicable) or comply with the FATCA Intergovernmental Agreements (IGA) treated as in effect in their jurisdictions.

For jurisdiction status on intergovernmental agreements and relayed agreements and date jurisdiction agreements are treated as having an IGA in effect read below:

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The United States Imposes A Separate And Much More Punitive Tax On U.S. Citizens Who Are Residents Of Other Countries

John Richardson - The United States Taxes Citizens Who Reside In Another Country

On February 28, 2019 TaxConnections kindly posted my first post comparing the way that 19th Century Britain and 21st Century America Treated Its Citizens/Subjects. The post received a great deal of interest resulting in more than 120 comments (largely reflecting the frustration of Americans abroad and accidental Americans).

The purpose of that post focused largely on citizenship and the fact that the United States imposes worldwide taxation on U.S. citizens who are tax residents of other countries and do NOT live in the United States. What that post did NOT do was to focus on HOW the Internal Revenue Code applies to U.S. citizens who do NOT live in the United States.

The Bottom Line Is:

The United States is in effect imposing a separate and more punitive tax system on its citizens abroad. Strange but true. The purpose of this post is to explain how that works and to provide specific examples.

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Expatriates Are Very Upset With The United States IRS: 120+ Comments Educate You Why

John Richardson On Expatriate Taxes

We continue to receive commentary on the article written by TaxConnections Member John Richardson of Citizenship Solutions. His blog post on USA Of The 21st Century Is Like Britain In The 19th Century has hit a nerve with many expatriates around the world. The blog post and the 120+ comments that follow explain what is happening to those who happened to be born here but do not live in the United States. There is more to learn that will leave you at the edge of your seats so stay tuned to this post.

Read this post that has 120+ comments and growing by the day and please forward to expatriates you know to add commentary.

https://www.taxconnections.com/taxblog/the-usa-of-the-21st-century-is-like-britain-in-the-19th-century/#.XH3XiKJKiJB

Please add your commentary below to continue to educate others on the consequences of United States FATCA tax laws on your life.

Written By TaxConnections CEO, Kat Jennings

 

WOW! A Big Reaction To The Article Posted Yesterday Called “USA Of The 21st Century Is Like Britain In The 19th Century”

John Richardson About Americans Citizens Abroad

Yesterday, we posted an article called The USA Of The 21st Century Is Like Britain In The 19th Century written by John Richardson of Citizenship Solutions in Canada. John is an internationally recognized expert on the subject of dual citizenship and accidental Americans. The post created a significant amount of reaction and response which I want to bring to your attention today. It is important to understand the impact of U.S. tax laws and how they are affecting Americans who moved long ago to another country, or may have just been born here but do not reside in the United States.

It is a great article and the commentary continues to highlight the issues faced by many. You can read the article and the comments at this link:

https://www.taxconnections.com/taxblog/the-usa-of-the-21st-century-is-like-britain-in-the-19th-century/#.XHkuBqJKiJA

Your comments are welcome to continue enlightening the world.

Kat Jennings, CEO TaxConnections

 

The USA Of The 21st Century Is Like Britain In The 19th Century

John Richardson And FATCA

In 2018 Professor Lucy Salyer of the University of New Hampshire published “Under the Starry Flag” – a book largely about the 1868 Expatriation Act. The book describes a period in American history where Britain treated its “subjects” as having perpetual loyalty to the British Crown. To put it simply: One could NOT emigrate to America and expatriate. No matter what one did, those who were born British Subjects were destined to die British Subjects.

The above tweet links to an interview of Professor Lucy Salyer conducted on February 9, 2019. The interview is about Professor Salyer’s new book “Under the Starry Flag”. It is a fascinating (brilliantly researched) work. The publisher describes the book as:

The riveting story of forty Irish Americans who set off to fight for Irish independence, only to be arrested by Queen Victoria’s authorities and accused of treason: a tale of idealism and justice with profound implications for future conceptions of citizenship and immigration.

In 1867 forty Irish American freedom fighters, outfitted with guns and ammunition, sailed to Ireland to join the effort to end British rule. Yet they never got a chance to fight. British authorities arrested them for treason as soon as they landed, sparking an international conflict that dragged the United States and Britain to the brink of war. Under the Starry Flag recounts this gripping legal saga, a prelude to today’s immigration battles.

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You Are Personally Liable When You Have Signature Authority On Foreign Accounts

Kazim Qasim Foreign Accounts – Changes In Reporting

When most people think of foreign accounts, they think of ex-pat living overseas and utilizing banks for the accumulation of their payments.  However, many taxpayers may also be subject to the federal Foreign Bank and Financial Accounts or FBAR reporting without realizing it. The United States Treasury Department’s Financial Crimes Enforcement Network (FinCEN) 114 form is filed alongside taxpayers’ federal tax return and reports information for those that have a financial interest or signature authority over a foreign financial account.

Financial interest is defined as: directly owning an account; directly owning or indirectly owning more than fifty percent of a corporation’s voting power and/or shares when that corporation owns an account; directly owning or indirectly owning more than fifty percent of a partnership’s profits or capital when that partnership owns an account, or directly owning or indirectly owning more than fifty percent of the voting power, total value or the equity interest or assets, or interest in profits of any entity that owns an account.

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Your FATCA Registration Must Always Be Updated

IRS, FATCA, IRS News, FATCA Registration

Your FATCA registration must always be updated with the current name and email address of your responsible officer and point of contact(s) as soon as there is a change.

When you complete a FATCA registration, you are asked to include the name and contact information of (1) a Responsible Officer (“RO”) and (2) a Point of Contact (“POC”).  Specifically, among other information, you must provide their mailing and email addresses as well as their telephone numbers.  Read more

So You Have Received A Bank Letter Asking You About Your Tax Residence For Common Reporting Standards (CRS) Or Foreign Accounting Tax Compliance Act (FATCA) Part 4

John Richardson - Part IV

Part F – A “U.S. citizen” cannot use a “tax treaty tie breaker” to break U.S. “tax residence”. How then does a “U.S. citizen” cease to be a “U.S. tax resident”?

  1. I am a U.S. citizen. I do not live in the United States. I live in Canada. I am a Canadian citizen. How do I stop being subject to the all of the FBAR and other reporting rules, tax rules (including PFIC),  life restrictionsand inability to effectively invest and plan for retirement imposed by the Internal Revenue Code?
  2. Yourelinquish U.S. citizenship. Please note that a “renunciation” is one form of “relinquishment”. In general, the date of relinquishment of U.S. citizenship is more important than the form of relinquishment of U.S. citizenshipA Certificate of Loss of Nationality (“CLN”) may or may not (depending on the date of relinquishment) be necessary to cease to be subject to U.S. taxation.
  3. In simple terms, where do I get information about the process of renouncing U.S. citizenship?
  4. You can start here.
  5. What are the tax consequences of relinquishing or renouncing U.S. citizenship?
  6. The Internal Revenue Code describes the tax consequences of relinquishing/renouncing U.S. citizenship. See Internal Revenue Code S. 877A (the “Exit Tax” rules).

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