— The Independents (@IndependentsFBN) April 15, 2014
— U.S. Citizen Abroad (@USCitizenAbroad) April 19, 2014
The above tweet references the following comment at the Isaac Brock Society. It explains why (if the U.S. is really serious about encouraging Americans abroad to enter the U.S. tax system, it will have to offer a serious amnesty program. This commenter is brutally honest and explains the reality of the situation very well. (Note I have added various links to the comment.)
When it’s all said and done, FATCA is likely to result in the rethinking of what citizenship means, how it is acquired, how it can be renounced and more.
Two recent articles on this topic:
2013 has been a year of FATCA talk. FATCA has two components.
A. A public component for banks and governments.
B. A private component for Americans Abroad
The public face of FATCA – Banks and governments
2013 has a been a year of focus on on the public side of FATCA. This has included endless discussion about the compliance costs imposed on banks, the uncertainty of which countries will sign IGAs. (So far very few and even fewer countries of significance have signed IGAs. None of the BRIC countries (Brazil, Russia, India and China) have signed. Interestingly Canada (which is widely considered to be the most significant country has not signed. It’s obvious that 2013 has been a disappointing year (for the U.S. Treasury) on the IGA front. Furthermore, the U.S. has managed to anger each of the four BRIC countries in other ways. For example:
This is a companion to the earlier post I wrote suggesting why Swiss banks should NOT join the OVDP program for Swiss banks. In this post I argue that individuals shouldn’t join OVDP for people. At the moment that means that nobody should join OVDP.
I have written a number of posts about the OVDP program for Swiss banks. The banks should stay away from it. But what does it mean for Americans in Switzerland? The answer is that they are being asked to prove that they are U.S. tax compliant. Remember that proof has nothing to do with proof.
The Swiss banks are taking the lead in asking the question. One American in Switzerland reports receiving the following message from Post Finance:
This is a good discussion. It is non-judgmental. It links the rising renunciations of U.S. citizenship to FATCA. It also describes a large number of Americans who have renounced.
As you may know, Robert Wood is a San Francisco tax lawyer who writes a blog for Forbes. I recommend both his posts and the comments to those posts which add great value to the posts.
On October 23, 2013 Mr. Wood wrote a post titled: “Beware Global IRS Reach” It is a good article with a number of very good comments. That said, here is a comment from Andrew Grossman that really stands out. I intend to build a couple of posts around it. The most interesting aspect is captured in this tweet:
Introductory thought 1:
Based on current tax law, for Americans living abroad, currency fluctuations create U.S. dollar capital gains or losses even on daily transactions as well as on movements of short and long term investments done in local currencies. The exchange rate on the purchase date and the exchange rate on the sale date determine the capital gain for the U.S. Treasury.
Introductory thought 2:
We all know that US tax liability is computed in US dollars. We also know that exchange rates can play in rule in creating profits and losses. It would be interesting for people to comment on their experiences with how changes in exchange rates have created “phantom gains” for them. I think this could be very helpful evidence in working on how to get this whole thing (citizenship-based taxation) reversed. So, if anybody is reading this, please comment on your experiences.
In addition, the issue of exchange rates and a falling US dollar is extremely important on this issue of expatriation? Why?
As the US dollar falls, almost everybody will become a “covered expatriate”. That two million dollars will seem like nothing.
Obviously this is one more reason why you need to get on with the job, painful as it is, of expatriation and freeing yourself from this nightmare!
Since the election of Barack Obama the world has been introduced to two new sports/games.
When it comes to playing games:
Some people make things happen, some watch things happen, some ask “what happened?”
I have been blogging on U.S. citizenship-based taxation since 2011. In February of 2012, I wrote the “Prologue” for this series of posts:
That post included the following poll. The results are shocking!
In January of 2013 I began a series of posts to explore the rationale (if there is one) for “citizenship-based taxation”. I simply cannot understand how the United States of America, a country that once was a leader in human rights, can treat it’s citizens (not to mention Green Card holders) so badly. I assume that Congress has simply not considered this issue.
This series of posts (including the Prologue are):
Cook v. Tait Prologue: Citizenship renunciations soaring under Obama – Renunciation as an Act of Self Defense
Cook v. Tait 2: The presumption of government benefit
Cook v. Tait 6: Taxation of Green Card holders who reside outside the U.S.
In our country the people are sovereign and the Government cannot sever its relationship to the people by taking away their citizenship. Our Constitution governs us and we must never forget that our Constitution limits the Government to those powers specifically granted or those that are necessary and proper to carry out the specifically granted ones.
– Justice Black Afroyim v. Rusk