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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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View An Astonishing Achievement By These Tax And Business Professionals For 9 Million Americans Abroad

Kat Jennings - Thank These Gentlemen

This is an important post that we encourage you forward on to any person you know who is an American working and living abroad; or any accidental Americans who are caught up in this tax legislation. Please watch this video where John Richardson interviews Jim Gosart, Olivier Wagner and Solomon Yue about their work on behalf of all Americans Abroad. Although many other significant contributors have helped along the way, these gentlemen have been greatly instrumental in getting tax legislation H.R. 7358 to Congress.

If you have followed any of the initiatives to get this bill in front of Congress, you must know what they have accomplished is astonishing. The goal has always been to make the tax treatment of Americans Abroad fair. The new bill presented in Congress is appropriately called “Tax Fairness For Americans Abroad Act of 2018″ and you should follow it closely.

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US Transition Tax Hearing – Argues Regulatory Flexibility Act Should Apply And/Or De Minimis Rule Be Created

John Richardson - ACA

“The Tax Cuts And Job Act brought in a whole new level. Small locally owned businesses we caught up in an effort to repatriate money from the likes of Google and Amazon. These small business owners were forced to recalculate their earnings dating back to 1986 (just like a large multinational corporation). The tax preparation for this alone could easily be in the tens of thousands of dollars. The retroactive back taxes will likely bankrupt thousands of businesses.”

The Section 965 “Transition Tax” saga continues. Americans abroad may have political differences. They may have philosophical differences. They may live in different countries with different tax treaties. But, opposition to the Section 965 Transition Tax and GILTI appear to have unified all Americans abroad.

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Transition Tax Bad Effect On Small U.S. Business Owners Operating Overseas

John Richardson - Nov 7

U.S. Treasury sought comments about the Sec. 965 transition tax. The deadline for comment was October 9, 2018. You can read the comments here. A particularly noteworthy comment was posted by James Gosart:

To: United States Department of the Treasury

Subject: Proposed Regulations under Section 965 [REG 104226-18]

The transition tax is a killer for small American owned overseas businesses. I am a small business owner of a consulting company in Hong Kong. Around the world, I’m sure there are thousands of small American business owners like me.

I formed the company in 2011 after spending more than 25 years based in China and Asia as an expat employee of a major US corporation. During the 7 years the company has been in operation, I have helped US companies and investors with their China and Asia strategies, ultimately growing their businesses in Asia and contributing to US based employment. My company paid corporate taxes annually in Hong Kong. I have now relocated to the US and I’m in the process of shutting the business down.

The new transition tax is so burdensome and complex that there is no way I would start such a business today.

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Dual Citizen, Canadian Lawyer: Does “Intent” Matter In The Interpretation Of The U.S.Transition Tax?

John Richardson- Transition Tax Intent

An example of the perspective of the “tax compliance” community -Look at what the statute says and not what was intended.

“Probably Congress and the Administration did not contemplate the fallout to these USC taxpayers. They were focusing on a different group of taxpayer. Nevertheless, Section 965 imposes immediate U.S. individual taxation on the “phantom income” (i.e. when no dividends are distributed to the USC shareholder) of the USC shareholder.”

Does the “intent” matter? If the application of the U.S. transition tax to Americans Abroad was an accident and not intentional, then why should it apply to them? Read the “965 Hammer” for USCs residing overseas.

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U.S. Constitutions 16th Amendment Authorized Income Taxes: Transition Tax Is Not An Income Tax

John Richardson - Transition Tax Is Not An Income Tax

Origin Of Internal Revenue Service

The roots of IRS go back to the Civil War when President Lincoln and Congress, in 1862, created the position of commissioner of Internal Revenue and enacted an income tax to pay war expenses. The income tax was repealed 10 years later. Congress revived the income tax in 1894, but the Supreme Court ruled it unconstitutional the following year.

16th Amendment

In 1913, Wyoming ratified the 16th Amendment, providing the three-quarter majority of states necessary to amend the Constitution. The 16th Amendment gave Congress the authority to enact an income tax. That same year, the first Form 1040 appeared after Congress levied a 1 percent tax on net personal incomes above $3,000 with a 6 percent surtax on incomes of more than $500,000.

In 1918, during World War I, the top rate of the income tax rose to 77 percent to help finance the war effort. It dropped sharply in the post-war years, down to 24 percent in 1929, and rose again during the Depression. During World War II, Congress introduced payroll withholding and quarterly tax payments.

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Letter To The Senate Finance Committee On The Effects Of The Transition Tax On Americans Abroad

John Richardson- Transition Tax

Senate Committee on Finance
Attn. Editorial and Document Section
Rm. SD-219
Dirksen Senate Office Bldg.
Washington, DC 20510-6200

Dear Chairman Hatch, Ranking Member Wyden, and all Members of the Committee:

Part A – Introduction

I am based in Toronto, Canada and work with U.S. citizens living outside the United States who are  required to comply with the tax laws of both the United States AND their country of residence. U.S. citizens living in Canada (the majority of who are dual Canada U.S. citizens) are required to comply with the tax laws of both Canada and the United States. Dual citizens in general and “U.S./Canada dual citizens in particular, live in a world where compliance with U.S. tax laws is somewhere “between difficult and impossible”. The difficulty is first because of the potential for double taxation and second because the U.S. Internal Revenue Code imposes far more punitive taxation on U.S. citizens living outside the United States than it does on U.S. citizens living inside the United States.

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Section 965 “Transition Tax”: Individuals Subject To U.S. State Tax Jurisdiction, The Response Of New York State

John Richardson - Transition Tax

U.S. tax laws impact the application of State tax laws. The “Tax Cuts and Jobs Act” has impacted State tax revenues in various ways. Therefore, the Section 965 “Transition Tax” will impact individual state tax revenues.

My previous posts have discussed the “transition/repatriation” tax from the perspective of individuals who (1) have small business corporations outside the United States, who are (2) tax residents of other countries. I have previously noted that the “transition tax” impacts individuals who are “tax residents” of ONLY the United States (actually giving them a “sweet deal”) very differently from how it impacts individuals who are “tax residents” of other countries (basically confiscating their retirement assets. If you are a U.S. citizen why are living outside the USA anyway?). See in particular Part 4 above.

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IRC Section 965 Transition Tax – Part 10

John-Richardson- Investigating the Transition Tax

Individuals Subject to U.S. State Tax Jurisdiction, the Response of New York State

This is the tenth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

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IRC Section 965 Transition Tax – Part 9

John-Richardson- Investigating the Transition Tax

From The “Pax Americana” To The “Tax Americana”

This is the ninth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.

Introduction – The purpose of this post is …

to demonstrate that the “transition tax” is an example (particularly egregious) of the principle that (1) not only does the United States impose “worldwide taxation” on the “tax residents” of other countries, but  (2) it imposes a separate tax regime on certain “tax residents” of other countries that is different and far more punitive than the regime imposed on Homeland Americans. Yes, you read correctly!

It is the “Tax Americana”– a “form” (no pun intended) of an “empire” which is colonizing other countries through taxation.

A recent and most important example of the “Tax Americana” is the “transition tax” : A U.S. resident who has undistributed earnings in a U.S. corporation will NOT be subjected to the “transition tax”. A Canadian resident who has undistributed earnings in a Canadian corporation will be subjected to the “transition tax”!

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IRC Section 965 Transition Tax – Part 8

John-Richardson- Investigating the Transition Tax

This small business thought it was saving to invest in business expansion – Wrong, they were saving to be robbed by America!

This is the eighth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen. Read more

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