This following comment appeared at the Isaac Brock Society.
Dash, a minor point on US CBT compliance and a comment on dual citizenship:
—USCitizenAbroad suggests that you might be one of the few who are capable of preparing a US return. I don’t believe that this is an accurate statement if, for example, you live overseas, are subject to the Obamacare surtax on investment income and wonder simply whether foreign tax credits can be used to offset this tax:
Last week, as part of doing my weekly IRS compliance homework for overseas US persons, I had a long conversation with the IRS International tax branch on this question in which we read together the final regulations on the surtax issue. IRS confirmed that the definitive answer will not be provided to US persons overseas as it now depends on the interpretation of the US tax treaty with each foreign country. I explained to IRS that I do not have the expertise to interpret the tax treaty and anyway it is only the IRS interpretation that counts (the fellow was sympathetic to my argument). IRS however refuses to interpret the US treaty with Canada and provide me with a straight answer and suggested only that I could take a chance in using foreign tax credits to offset the income– but I would have to somehow defend my position on treaty grounds if IRS challenged me and pay penalties etc if I were incorrect.
I am going to “appeal” to IRS in writing this lack of “guidance”, but my minor point here is only that the US does not make it easy to comply with CBT as the rules are often not even disclosed.
—You suggest that dual citizenship is/can be part of the problem. I agree. A practical issue however as others have mentioned is that terminating toxic US citizenship is difficult or practically impossible because of IRS penalties involved and the Reed Amendment nonsense. My recent submissions to the House W&M committee have mentioned RBT but are much more focused on changing US laws to let us leave the country humanely.
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