Monthly Archives: January 2015

#Americansabroad will be subject to “economic quarantine” in a #FATCA world

The above tweet references a comment at the Isaac Brock Society.

@Nervousinvestor

See Deckard’s comment here:

http://isaacbrocksociety.ca/2015/01/27/are-strata-corporations-the-next-target-of-canadian-banks-fatca-zeal/comment-page-1/#comment-5391660

and Badger’s comment here:

http://isaacbrocksociety.ca/2015/01/27/are-strata-corporations-the-next-target-of-canadian-banks-fatca-zeal/comment-page-1/#comment-5394406

It is quite obvious that “U.S.ness” is a form of contamination that has the potential to first infect and then effect every aspect of human society. In Deckard’s comment he notes the restrictions placed on the Jews during the Third Reich. The restrictions were completely unjustifiable. Notice how they proceeded one “law” at at time. (what could be more legitimate than that – Remember the “Battle Cry of the Condor” – FATCA is “U.S. law”.)

Restrictions on U.S. persons are completely justifiable.

In the case of FATCA, U.S. persons really ARE a threat to the societies where they live. The reason, as has been articulated time and time again is that:

U.S. citizens are being used by the U.S. as tools (via citizenship-based taxation) to extract capital from other countries and transfer that capital to the U.S. There are people who do not understand this. There are people who pretend to not understand this. But, at the end of the day U.S. citizens really are IN ACTUAL FACT a threat to any country where they may reside.

Eventually countries will be forced to protect themselves from what I would call the:

“U.S.ness Forced Extraction of Capital” and the compliance costs associated with having U.S. citizens as residents.

Who could have imagined even 5 years ago that the discussion on this thread was even taking place?Whether a real threat or not, this newly discovered “Condo Terror”, will make condo boards and developers want to avoid U.S. persons. Same for jobs, marriages, businesses, etc.

But, here is the most likely next step.

Special tax laws imposed on U.S. persons. These laws will be for the purpose of neutralizing the extraction of capital by U.S. tax laws. Simple example:

“No person who is taxable as a U.S. person can have a tax free capital gain on a principal residence.”

(the effect would be to produce a Canadian tax which can be used as a credit against a U.S. tax)

So, although U.S. citizens would still be allowed to own property, they will be subject to special tax rules. These rules are designed to protect the local tax base from the theft of capital by the U.S. Perfectly reasonable. Unfair to the U.S. person? Of course, but they can and should renounce.

On a positive side, I predict a whole new universe of financial products.

These will be designed to:

A. Provide products that give U.S. persons the opportunity to plan for retirement; and

B. Segregate U.S. persons from “free people” so that the “free people” cannot be harmed by the “U.S. contamination”

These new investment vehicles will be a welcome development.

Perhaps we will see Condominiums that are specifically for those who carry the disability of U.S. citizenship.

U.S. citizenship is now a disability and this opens up a whole new world of possible financial products for this group of disabled people.

We are witnessing the beginning. What’s important to note here is that by using FATCA and CBT to attack the tax base of other countries, the U.S. has created a situation where retaliation against U.S. persons is rational, necessary and completely justifiable.

If you don’t want to live in the USA you should renounce NOW. You won’t be able to have any kind of life as a U.S. citizen abroad!

The defensive measures taken to protect countries from “U.S. person contamination” will be incremental and significant. But, they will quickly add up to a world where “U.S. persons are subject to “economic quarantine”. I could also see them being barred from certain professions. For example, the legal profession. Do you really want a lawyer who is subject to FBAR on client trust accounts? Real Estate: Do you really want a broker who must report his trust accounts (with your money) to the IRS?

The implications are huge.

No doubt, some will view this prediction as extreme.

Consider this comment to be a “message in a bottle”. Read it again in 10 years.

And finally, (to echo some of the posters here):

If you want to stop this, then you support the people who are fighting on your behalf.

I am thinking of the stopfatca.ca legal challenge.

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Where the IRS will likely look overseas: USCs are Millions Yet U.S. Tax Returns are Just a Few Hundred Thousand

https://twitter.com/USCitizenAbroad/status/560500057724952576

“Only about 46,000 returns were filed by Canadian residents claiming the foreign earned income exclusion, and even more surprising are the mere 7,000 returns from Mexican based U.S. taxpayers. See Table 2 of the report – Individual Foreign-Earned Income and Foreign Tax Credit, 2011

These are the two most populated countries with U.S. citizens.

As the IRS receives information around the world from governments and financial institutions via FATCA, of U.S. citizens and their bank accounts, it will be fairly easy for them to start targeting certain countries and commence tax audits against residents in those countries.”

Tax-Expatriation

The IRS has key tax return filing information in their current records; pre-FATCA flow of financial information.  Various reports indicate there are probably around 6-7 million U.S. citizens residing overseas, although there is no certainty in these numbers.  See, Taxpayer’s Advocate Annual Report of 2012 – that Graph of US taxpayers overseas - TAS 2012 reportdiscussed both the number and type of individuals overseas, and potentially unidentified individuals.

The IRS tracks and keep information on U.S. income tax returns filed by U.S. individual taxpayers overseas.

The information is not only the number of tax returns (head count), but also the amount of income reported.  For instance, TAS reported about 700,000 returns were filed in 2010 by U.S. taxpayers abroad, while estimating about 6.32 million U.S. citizens reside abroad.  See, p. 37 of the Taxpayer’s Advocate Annual Report of 2012

These numbers do not even try to quantify the number of lawful permanent residents (“green card holders”) who…

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IRS UNRELENTING IN PURSUIT OF UNREPORTED OFFSHORE ACCOUNTS

The Tax Wars Blog

Today the IRS released IR-2015-9, “Hiding Money or Income Offshore Among the “Dirty Dozen” List of Tax Scams for the 2015 Filing Season” which provides verbatim:

WASHINGTON — The Internal Revenue Service today said avoiding taxes by hiding money or assets in unreported offshore accounts remains on its annual list of tax scams known as the “Dirty Dozen” for the 2015 filing season.

“The recent string of successful enforcement actions against offshore tax cheats and the financial organizations that help them shows that it’s a bad bet to hide money and income offshore,” said IRS Commissioner John Koskinen. “Taxpayers are best served by coming in voluntarily and getting their taxes and filing requirements in order.”

Since the first Offshore Voluntary Disclosure Program (OVDP) opened in 2009, there have been more than 50,000 disclosures and we have collected more than $7 billion from this initiative alone.  The IRS conducted thousands…

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John Gibson in New York interviews Keith Redmond in Paris and the train wreck known as ‪#‎FATCA‬ ruining American lives

 

 

 

How to navigate Obama’s new tax proposals if you own property in the U.S.

https://twitter.com/USCitizenAbroad/status/559485709615398913
Interesting article highlights the difference between U.S. and Canadian “death taxes” (or lack thereof).

Financial Post

While President Barack Obama’s new tax proposals may never see the light of day, given the Republican majorities in both the House and Senate, they have generated discussion among cross-border tax practitioners. Dual citizens living in Canada or Canadians who own U.S. properties may wonder whether they need to reopen their estate plans in case the proposals, referred to by the White House as an attempt to close the “trust-fund loophole,” ever come into law.

Canada and the U.S. have historically taken quite a different approach to taxation upon death. In Canada, there is a deemed disposition at fair market value of all your capital property (other than your principal residence), as of the date of death and you pay capital-gains tax on any accrued gains on your final tax return.

The U.S., however, has an estate tax that taxes the fair market value of a U.S. person’s estate above…

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How to prevent a midlife crisis from messing up a lifetime of retirement planning

Financial Post

NEW YORK — Say the words ‘Midlife Crisis’, and most people think of cringe-worthy scenes like graying men squiring around much-younger paramours in zippy sports cars.

[np_storybar title=”What to do if you haven’t saved for retirement and can’t keep working” link=”http://business.financialpost.com/2015/01/21/what-to-do-if-you-havent-saved-for-retirement-and-cant-keep-working/”]

Fred Vettese: If you’re a middle- to high-income earner and haven’t saved for retirement, you will face some hard decisions
[/np_storybar]

Matt Welch went in a more wholesome direction: Baseball cards.

Specifically, the 46-year-old editor-in-chief of Reason magazine set out to collect every Topps-brand baseball card ever printed of his beloved Angels. It took roughly five years and $1,000, but this past New Year’s Eve, the final two cards came in the mail.

“Strange things happen to men in their 40s, and this was my midlife crisis,” says Welch, a New York City resident originally from Long Beach, California. “I hadn’t thought about baseball cards in 30 years. But…

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