Wendy McElroy 2011
Going after the college money earned by children born and raised in Canada (or elsewhere) is just one part of the international enforcement effort. The entire package is called the Foreign Account Tax Compliance Act or FATCA; it was a revenue-raising provision that was slipped into one of Obama’s disastrous stimulus bills. Starting in 2013 — or 2014 if an exemption is granted — every bank in the world will be required to report to the IRS all accounts held by current and former US citizens. If account holders refuse to provide verification of their non-US citizenship, the banks will be required to impose a 30 percent tax of all payments or transfers to the account on behalf of the IRS. Banks that do not comply will “face withholding on U.S.-source interest and dividends, gross proceeds from the disposition of U.S. securities, and pass-through payments.”
Wendy McElroy 2013
Shutting People In
The proposed doubling of might comes in the wake of the Transportation Security Administration‘s (TSA’s) announcement of a dramatic expansion in the screening of airline passengers. Even before a flyer arrives, he will be profiled by the TSA based on his travel record, and personal documents such as employment information, property records, police files, tax data, and car registration.
The number of travelers refused flights – or passports for that matter – is likely to increase. In fact, anyone can currently be refused the right to fly without explanation. And a long list of reasons to be denied a passport already exist. They include: having a felony such as a drug offense or repeat DUI; owing $2,500+ in child support; being in default on specific loans from the United States; or being deemed likely to cause “serious damage to the national security or the foreign policy of the United States.” (The latter reason is elastic, especially since, again, no explanation for denial needs to be given.)
In past years, there have been several attempts to link the granting of passports to tax compliance. The latest one is H. R. 3146, which is now before the House. Sec. 4. is entitled “Revocation or denial of passport and passport card in case of certain unpaid taxes.” It reads, in part, “If the Secretary receives certification by the Commissioner of Internal Revenue that any individual has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport or passport card.” It is only a matter of time before the right to travel is linked directly to a person’s tax status.
Shutting People Out
And then there are those who could be shut out. The Expatriation Prevention by Abolishing Tax-Related Incentives for Offshore Tenancy Act – or the Ex-PATRIOT Act – came back from the dead in the above mentioned border and immigration bill. Again, the measure sought to ban certain expat Americans from legally returning to the US without receiving a waiver, this time from Homeland Security.
Having failed as a standalone bill, the new Ex-PATRIOT Act was introduced as amendment S.A. 1609; it piggybacked on another amendment to the omnibus border and immigration act. Smuggling measures into unrelated legislation is an increasingly popular ploy. For example, the Foreign Account Tax Compliance Act (FATCA), which devastated the ability of Americans to open bank accounts abroad, repeatedly failed as a standalone. It passed only by being tucked into to the 2010 Hiring Incentives to Restore Employment Act or HIRE. [Editor’s Note: Even more reason for you to click here to see how TDV can help you with an offshore account.]
What did S.A. 1609 specify? It would have shut the border to certain expatriates who renounced their citizenship. That act was considered to be tax evasion on its face. Any ex-citizen with a net worth of $2 million or an average income of $148,000 or more over the last five years would have been presumed to be banned from the border. To establish a right to return, the expat would have presumably needed to open up his finances to scrutiny.
S.A. 1609 did not make it into the final Act in the Senate, however. Democrats didn’t want to risk the prospect of the bill being “blue slipped,” as the Republicans had threatened to do. Blue-slipping occurs when the House rejects a bill outright because it is unconstitutional. The bill is then placed into a blue envelope and simply returned to the Senate. The amendment was deemed unconstitutional because it reformed a tax law. In the opinion of many, this violates the Origination Clause by which all spending and appropriations must originate within the House, not within the Senate. Expats were saved by a technicality.
- American Borders Will Be Changing (dollarvigilante.com)
- #FATCA update from Germany from todundsteuer (renounceuscitizenship.wordpress.com)
- New tax law driving expats to renounce U.S. citizenship (mcclatchydc.com)
- 2010 Tax Law Forcing Some Americans to Renounce Citizenship (darkgovernment.com)
- American Borders Will Be Changing (informationliberation.com)