Category Archives: U.S. Exit tax

Cook v. Tait 44: “Sovereignty”, “Citizenship” and use of “citizenship” to further the interests of the “sovereign” – The evolution from #CookvTait to #FATCA

As citizenship evolves …

I began this post in 2015. It has languished in draft form since that time. It is now November of 2017. As #TaxReform17 comes to an end, I feel motivated to finish it. It is now 2019. Really, it’s probably now or never. This post draws heavily from posts, insights and comments from a number of bloggers and (past) contributors to the Isaac Brock Society. Your comments have helped to shape this discussion. This post will continue my Cook v. Tait Book (a collection of posts written about U.S. citizenship based taxation taxation-based citizenship, which started in 2011. (Much of the Cook v. Tait book appears as a resource at the Isaac Brock Society – a rich source of comments about life in an FBAR and FATCA world.

About citizenship: One way or the other, citizenship matters ..

The purpose of this post is to explore various aspects of the concept of citizenship through the 20th century and the first part of the 21st century. This is an interesting topic in it’s own right. It is particularly important in the context of Cook v. Tait. As the likelihood of a lawsuit against “citizenship-based taxation” increases, the importance of understanding “the evolution of citizenship” increases. I propose to consider this issue under the following “Part”s:

Part A –  Citizenship under international law – An aspect of the Sovereignty of Nations

Part B – Citizenship, international law and citizenship evolution triggered by “war”

Part C – Evolution of citizenship under U.S. “domestic law” – 1967 – Afroyim – The U.S. Supreme Court and the “constitutionalism” of U.S. citizenship

Part D – Notions of Citizenship in the 21st Century

Part E – The forced imposition of U.S. citizenship

Part F – Citizenship as a weapon – The role of “citizenship taxation” in the “weaponization of finance”

Part G – Citizenship-based taxation as a way of controlling the life choices of Americans abroad

Part H – Citizenship-based taxation as a mechanism to export U.S. cultural values to the rest of the world

Part I – Dual citizenship in a world of U.S. extra-territorial laws

Part J – Citizenship-based taxation as a way to export U.S. cultural values to the Muslim world

Part K – Multiple citizenships and public office: Australia’s “Citizenship Seven”

Appendix – Modern thinking and research on the rights and obligations of citizenship

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Poll: Is it common for #Americansabroad to have a higher U.S. income tax bill than a comparably situated Homelander?

Imagine the following two people:

We are comparing “Homelander Ted” to “Expat Benedict Arnold”.

Assume that “Homelander Ted” lives and works in the Homeland and purchases in ONLY U.S. dollars. He would not consider using any other currency.

Assume the Expat Benedict Arnold” (having escaped from the Homeland) lives and works in Canada and purchases in ONLY Canadian dollars. He would NOT consider using any other currency.

Assume that each of “Homelander Ted” and “Expat Benedict Arnold” own a home in their respective countries of residence, have employment income, engage in personal finance which includes retirement planning. “Homelander Ted” commits “personal finance” ONLY in the Homeland. “Expat Benedict Arnold” commits “personal finance abroad”.

Assume that “Homelander Ted” and “Expat Benedict Arnold” have financial situations that are comparable in their respective countries of residence.

To be specific both of them:

1. Have a principal residence in that they have owned for more than two years and that was sold on November 30 of the year. Assume further that there was NO capital gain measured in local currency. Assume that the sale included a discharge of an existing mortgage and that interest was paid on the mortgage up to the November 30 sale. Assume further that they each carry a “casualty” insurance policy on the property.

2. Have employment income and have pensions provided under the terms of their respective employment contracts.

3. Have and use mutual funds as a retirement planning vehicle.

4. Have a 401(k) plan in the USA and an RRSP in Canada.

5. Have spouses and must consider whether to use the “married filing separately” or the “married” filing category. “Expat Benedict Arnold” is married to an “alien”.

6. Give their respective spouses a gift of $500,000 on January 1 of the year.

 

U.S. Tax owing – versus TAX MITIGATION PROVISIONS

Assume further that each of “Homelander Ted” and “Expat Benedict Arnold” each prepare a U.S. tax return. Imagine that the Internal Revenue Code does NOT have (TAX MITIGATION PROVISIONS) either the Foreign Earned Income Exclusion (Internal Revenue Code S. 911) or the Foreign Tax Credits (Internal Revenue Code 901). Imagine further that there is no U.S. Tax Treaty that mitigates tax payable to the USA under these circumstances.

The question is how much tax “Expat Benedict Arnold” would be required to pay the U.S. Government if there were no TAX MITIGATION provisions.

How likely is that without the TAX MITIGATION PROVISIONS that the “Expat Benedict Arnold” would be required to pay HIGHER U.S. taxes than “Homelander Ted”. In other words:

Does the Internal Revenue Code:

First, impose higher taxes on “Expat Benedict Arnold” for the crime of committing “personal finance abroad“?

Second, mitigate those higher taxes through one of the TAX MITIGATION PROVISIONS described above?

Are U.S. Taxes (not including foreign taxes) actually higher for Americans abroad than for Homelanders?

Please consider the questions (without considering tax paid by “Expat Benedict Arnold” to Canada) in the following poll:

How does the U.S. tax bill of an American Abroad compare to the U.S. tax bill of a comparably situated Homelander?
(polls)

 

Relinquished US citizenship in the 1970s? Are you still a U.S. “Tax Slave”?

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

Returning to the purpose of this post:

The question asked by Stephen Kish is how should Caroline be advised. Mr. Reed proposes two interpretations of S. 877A which he calls the “literal approach” and the “common sense” approach. One problem of reading articles written by the tax compliance community is, that by focusing on the theoretical, they minimize the “real life” consequences to the people they advise. So, what are the “real life consequences?” The “literal approach” results in the destruction of your life. The common sense approach means that you still have a life. (Which do you think is the better approach?)

Here is why.

Rather than frame the issue as “the literal approach” vs. the “common sense approach”, the issue should be framed as:

Approach 1 – Your Life Is Over: Under this “literal” interpretation of S. 877A, you poor dumb former American will have to turn your life savings over to the IRS (and pay the adviser to help you do this) because you did not go out and obtain a CLN. It doesn’t matter that a CLN was not required by law. It doesn’t matter that you didn’t know what one was. It doesn’t matter that the U.S. Government was threatening you with the loss of your U.S.citizenship if you became Canadian. It doesn’t matter that in some cases the U.S. was denying entry to the USA to those who had become Canadians. What matters is ONLY that this is what the statute says NOW!!!!!!! So, you better step right up and turn your life savings over to the IRS.

Approach 2 – It’s Your LIfe! Why don’t you keep it!: Let some “common sense” prevail. You were one of the smart ones. Because you relinquished U.S. citizenship – according to the clear laws of the USA in the 1970s – you are not affected by this new law. The only people affected by this new law are the “dumb bunnies” who decided it was a good idea to be a U.S. citizen AND were U.S. citizens when this law took effect on June 16, 2008. I don’t think you should draw attention to yourself. You might want to document the circumstances that led to your becoming a Canadian citizen in 1978. When documenting those circumstances, you probably should make it clear that you were intending to relinquish U.S. citizenship. But, either way you have to sleep. So, you might as well – Sleep well!. There is no good reason to turn your assets over to the IRS and pay your adviser to help you do it.

A fair reading of the legal commentary on this issue appears to be:

One group of lawyers (including the three who commented on this article) do NOT believe that the “literal” (or as Michael Miller says, the “absurd”) approach is correct.

A second group of lawyers thinks that the “literal” approach MIGHT be correct. But, they aren’t really sure. Even though they are not sure, for reasons known only to them, they usher clients into turning their assets over to the IRS. Hmmmm, …

Given the existing commentary and lack of certainty (on the part of those who recognize the “literal approach”), what I can’t understand is:

1. How any adviser could possibly advise a client that the “literal” approach is correct (turn your assets over to the IRS). Yet, we know that a very large number of people are being advised to do just that. (Note that, since June 16, 2008 a CLN is most certainly required lose U.S. tax subjectness. But NOT before.)

2. How any client, given the existence of conflicting views, could possibly allow themselves to be guided into accepting that they should turn their assets over to the IRS. (Actually I know the answer. It’s because there is ONLY one certainty in life. If you turn over all your assets to the IRS, then you will never have tax problems again. But, you won’t have a life either and then you will have a different set of tax problems.)

This reality notwithstanding:

There is/are a large number of people who clearly relinquished U.S. citizenship many years before the current laws, who have allowed themselves to be guided into the “literal appraoch” – turning their assets over to the IRS.

Conclusion: The result that you get will be determined by your choice of adviser. Think about it!

In #FATCA and #FBAR world: “All roads lead to renunciation”, but “Not all roads lead to S. 877A Exit Tax litigation”

USCitizenAbroad says
September 5, 2016 at 2:07 pm

@Watcher

There are at least seven possible reasons why there has not YET been a court challenge – Note that is is relevant only with respect to “covered expatriates”

1. People who are “covered expatriates” based on the net worth test are busy making themselves “non-covered” by reducing their worth and the filing the appropriate paper work (demonstrating that they are not covered);

2. I suspect (but have no direct evidence) that a lot of people are just renouncing (which terminates their U.S. taxability from that point on) and then just not filing. This is more likely if they are “covered expatriates” based on the asset test (> 2million USD). If people are “covered expatriates” because of the asset test, then why would they file the 8854 if the only reason to do so is to prove that they are compliant based on the 5 year tax filing test? Who knows what will happen with them?

3. There is the issue of those who are able to get a CLN based on a “relinquishing act” prior to June 3, 2004. For those who are able to get an actual CLN indicating a “relinquishment date” on the CLN of say (June 3, 1984), and they are covered based on the asset test, why would they file anything? Admittedly there are a few law firms who seem to believe (and are advising – beware) that the S. 877A rules are retroactive. But, there are others who are not sure or believe that they are not. So, why would somebody, who might not be subject to the S. 877 A Exit Tax, assume that they are and file? Why adopt an interpretation that leads to certain destruction rather than take a defensive position that is rational? My point is that in this case the failure to file the Form 8854 doesn’t affect whether they are covered or not.

4. What about those who are clearly “covered expatriates” and are NOT U.S. tax compliant. Well again, they are subject to the S. 877A Exit Tax rules regardless of whether they are U.S. tax compliant or not. Those people are probably (but again this is just speculation on my part) just lying low. Why would they file anything? There are many accidentals who have no Social Security number.

5. As you point out, the U.S. has different tax treaties with different countries. The Canada U.S. Tax Treaty includes in Article XXVI A – Assistance in Collection :

8. No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that

(a) where the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State, and

(b) where the taxpayer is an entity that is a company, estate or trust, the revenue claim relates to a taxable period in which the taxpayer derived its status as such an entity from the laws in force in the requested State.

In other words, some people may simply be saying: Too bad, so sad, not paying any exit tax. You might think I owe it, but Canada will not help you collect it.

6. The dual citizenship from birth exemption: The recent post about the “dual citizenship exemption” and South African apartheid reminds us that there are people (I suspect quite a few) who are exempt from the Exit Tax because of the dual citizenship exemption. In their case all they need to do is show tax compliance for five year …

7. Green Card Holders: We are not just talking about citizens. We are also talking about Green Card Holders. Green Card holders (because of somewhat different rules under the Internal Revenue Code coupled with treaty provisions) have more options available to defend themselves than do citizens. Those in the worst position are those who were born in the United States and have ONLY with U.S. citizenship.

In any case, I suspect that the reasons that we do not know of any treaty challenges are a combination of one or more of these reasons. Why get into into an expensive fight if there is a way to avoid it?

Defending yourself from the Exit Tax by using the Tax Treaties – Defensive position

With respect to a possible treaty challenge:

I am not sure that I would get overly technical about this. It surely was NOT the expectation of treaty slave/partner countries that they were signing a treaty that would allow the USA to confiscate the assets of citizens/residents of the treaty/partner country just because a person says he doesn’t want to be a U.S. citizen. That (in my view) is the primary defense and the rest is just gravy. The United States Court of Appeals (First Circuit) has recently ruled that the expectations of the treaty partner country are relevant in interpreting the treaty.

In any case, it is becoming increasingly clear that people will have NO choice but to renounce and to extricate themselves from this abuse. I emphasize again that a CLN (which is not granted by the IRS) is all that is required to end this nonsense on a prospective basis. Once the CLN is issued, I suppose people can decide as individuals whether they choose to turn their assets over to the IRS or not.

Defending yourself from the Exit Tax by using the Tax Treaties – Offensive position

It seems to me that challenging the Exit Tax based on treaty provisions is a last resort. Perhaps (at least from a Canadian tax treaty perspective), rather than challenging the Exit Tax with the IRS, one might consider using:

Article XXVI – Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case in writing to the competent authority of the Contracting State of which he is a resident or, if he is a resident of neither Contracting State, of which he is a national.

This would be to use the Tax Treaty as a “sword” and not as a “shield”. Actually, this strikes me as a good idea. At least this will ensure that the Government of Canada is aware of this issue. They either will “go to bat” for Canadian citizens or will agree that Canadian citizens can be claimed by the USA and capitulate to the Obama administration. What this approach also does is puts the cost of raising this issue on the Government of Canada which makes it more doable.

In closing …

The idea of the USA going around the world and forcing the citizen/residents of other nations to pay a ransom – percentage of their net worth to the USA – to NOT be a US citizen (especially when those assets have nothing to do with the USA) is absurd and should NOT be done.

The comments of @submergingmkt James Henry appear to assume that the #CookvTait Principle of extra-territorial taxation is correct

My last post featured the comments of Apple CEO Tim Cook about the ongoing debate over whether U.S. companies should be punished for their strict compliance with the absolutely archaic, dysfunctional, overly complex tax laws of the United States of America. It has reached the point where it appears there are two classes of corporations that Homeland politicians and groups like the Tax Justice Network dislike:

Group 1 – U.S. Politicians dislike those U.S. companies who do comply with U.S. laws; and

Group 2 – U.S. Politicians dislike those U.S. companies who do NOT comply with U.S. laws.

These sentiments were recently expressed by James Henry of The Tax Justice Network who makes the point that:

The interview with Mr. Henry is fascinating. Mr. Henry is opposed to “territorial taxation” for Corporations. This suggests that he might be opposed to “residence based taxation” for individuals.

I would appreciate you commenting on what you think of Mr. Henry’s interview. What are the key points that he makes? What (if anything) does he say that is relevant to the RBT vs. CBT debate? Do you get the impression that Mr. Henry believes that U.S. companies are the property of the U.S. government?

By the way …

Here is Tim Cook’s testimony before the Levin Committee in 2013:

Few people believe either the form or the extent of the way USA abuses #Americansabroad

I came across an interesting discussion at Keith Redmond’s American Expatriates Facebook group.

The discussion starts here:

Interesting observation for the week. I have had the opportunity to explain to my fellow Australians the dire situation we face as US expats at the hands of the US government. I get the impression that the people I have told are doubting my facts because they find the unfairness of CBT so frigging unbelievable, the intrusiveness of FATCA so arrogant it couldn’t possibly be true. The shock on their faces is somewhat gratifying. So this is the type of “ambassadors” the US has made of 8.7 million  expats.

I encourage you to read the comments. I agree with this. In my experience the reality of the abusiveness of the U.S. government towards it’s citizens abroad that many people do NOT even believe it’s possible.

Confession: I didn’t think it was possible either.

Renounce and rejoice!

 

 

Thoughts on Exit Taxes in the Modern World by @VictoriaFerauge – Do the S. 877A rules go too far?

The above tweet references a comment that appeared on post written by Victoria Ferauge on her “TheFrancoAmerican-Flophouse.blogspot.com” blog. It is a old post that was written about “Exit Taxes” in general which she refers to as:

An exit tax is a tax that is levied against an individual or a corporation who wishes to transfer residency or citizenship from one country to another.  It is a tax on emigration and/or expatriation.  How does it work and what is its purpose?:

In general, ET [Exit Taxation] aims at levying the potential or latent gains (also called “hidden reserves”) related with the assets that an individual, a company or a PE located in a given country, economically (eg., through allocation to a foreign PE of a trademark or a shareholding), or physically transfer to another tax jurisdiction. A first feature of ET is, thus, related with the fact that it is imposed when no asset disposal takes place, and no revenue is generated.

It is a tax that the United States levies against certain individuals who relinquish U.S. citizenship. I recommend this Victoria’s post as an objective description of what is meant by an Exit Tax. I also found that I had left the following comment on the post:

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More on phantom capital gains and the injustice of U.S. taxation of #Americansabroad

I was alerted to the above comment that appeared on Facebook. Here we have one more casualty of the “Code of Conduct” that governs Americans abroad. You have heard the saying:

“When in Rome, do as the Romans”.

When it comes to Americans abroad, the Code says:

“When an American goes abroad, do as an American in the Homeland.”

The above tweet references an article on how dangerous Foreign Exchange rates can be to the financial health of an American abroad. It’s fascinating how fluctuating exchange rates impact the lives of Americans abroad in so many ways.

By the way, the Canadian dollar is feeling. This means that:

2015 is a very good year to renounce U.S. citizenship. To understand why, read this post.

 

 

 

 

 

Are #Americansabroad “members” of Club USA or “owned” by Club USA?

U.S. citizens abroad are now entering the fifth year of what some have called “the U.S. citizenship nightmare”. Since 2011 thousands of blog posts, comments and tweets have: deliberated, sought comfort, agonized, theorized and suffered persecution at the hands of the U.S. government. This can be understood only by those affected. Homelanders cannot understand how those who moved from American have suffered and continue to suffer.

Americans abroad have (with justification) felt betrayed. At a minimum they have learned that U.S “citizenship” is like no other “citizenship”. Stay in the Homeland and will be fine (maybe). But, if you leave you will be subjected to a slow and painful death by a “thousand cuts”. Each cut inflicted by an incomprehensible law, threat or penalty from the U.S. government, the cross-border professionals or the media.

How could it a country treat its “citizens” this way? I suppose the answer depends on how the U.S. views its citizens. What is the relationship between the U.S. government and its citizens?

What follows are two lengthy comments at the Isaac Brock Society. They are from two unrelated posts.  Each in its own way explores the “nature of U.S. citizenship.

The first comment is directed towards the theoretical nature of U.S. citizenship. U.S. citizens claim they have “rights”. Is that the case? Can something be a “right” if it is granted by a Government? Can something be a “right” if it is limited by the government? This comment suggests that the rights of U.S. citizens are quite limited. They are less of a “right” and more of an “indulgence” from the U.S. Government.

The above tweet references the following comment at the Isaac Brock Society:

@George and @Mettleman

George: Your comment includes:

@Mettlemen, let me rephrase your last comment;

“after the meeting as a canadian citizen resident in canada, i was able to work to come to peace with my self and mine and mine alone decision to preform an act of civil disobience and not comply with an unjust foreign law of a foreign government.”

Interesting thought

In an essay he wrote about the Afroyim case, Professor Peter Spiro suggested that “rights” are contingent on “personhood” and NOT on “nationality”

“… in the wake of the human rights revolution, under which rights are contingent on personhood rather than nationality”

This distinction may have some applicability here.

There are at least two ways of looking at this.

1. Is this “non-compliance” a recognition that a U.S. law cannot apply to someone who is a Canadian citizen residing in Canada?

Under this interpretation, one is saying that he is a free person who is NOT the property of any country but agrees to obey the laws of the country where he is present. He is saying: Sorry but U.S. law ends a the U.S. border. This U.S. law simply cannot apply to me.

Under this scenario he is NOT saying:

“I will NOT comply with an unjust law.”

He is saying the law simply doesn’t apply to me because I am a Canadian citizen living in Canada.

Note that under this scenario, he (while accepting the requirement to obey the laws where he chooses to live) he is really saying:

“My rights come from my status as a being human” – my “personhood”. Because I am “human” I have rights that are NOT dependent on the permission of any Government. I believe in the U.N. Declaration of Human Rights which recognizes that I have rights because I am a human being. I do NOT and am NOT dependent on the United States of America for my rights. U.S. governments will come and go, but “my personhood” is eternal. My tombstone will NOT say that my rights come from my nationality. My tombstone will say that I was a good person “Husband, father, friend ..”.

The Universal Declaration of Human Rights is worth reading:

http://www.un.org/en/documents/udhr/

The Preamble includes:

Whereas the peoples of the United Nations have in the Charter reaffirmed their faith in fundamental human rights, in the dignity and worth of the human person and in the equal rights of men and women and have determined to promote social progress and better standards of life in larger freedom,

(Notice there is no reference to citizenship or nationality.)

Because I am a “person” and NOT “property” I recognize that U.S. law ends at the U.S. border.

2. Is this “non-compliance” based on an acceptance that U.S. law DOES apply to a Canadian citizen residing in Canada, but is a conscious decision to NOT comply with an “unjust law” – making the “non-compliance” an act of “civil disobedience?

In this case the “non-compliance” assumes that the U.S. law does apply to a Canadian citizen residing in Canada. This necessarily assumes an acceptance that he is NOT a free person but U.S. property. (This is the view of the Government of Canada. NEVER FORGET that the Government of Canada believes that, because you were born in the U.S., you are the property of the U.S., and that you have only the rights that the U.S. government allows. That’s what the FATCA IGA is about.)

In contrast to the model where one has rights by virtue of being human, this model assumes (perhaps unconsciously that one’s rights come NOT from being a “Human Being” but rather from citizenship in a country. In other words, as a U.S. citizen, I don’t get my rights because I am a “Human Being” I get my rights because I am a U.S. citizen. (Think of American T.V. – Have you ever heard:

“I’m a U.S. citizen, I have rights.”

Furthermore, since my rights are NOT based on my status as a “Human” but on my status as a “U.S. citizen” I fully gratefully and graciously accept that my rights can be limited by the United States regardless of where I may be and regardless of my status as a “Human”.

Since I recognize that my rights come from my U.S. citizenship, my “non-compliance “really IS an act of “civil disobedience”.

Conclusion

If you believe you are a “person” and that your rights come from your “personhood” there is no civil disobedience.

If you believe that your rights (or limitations) come from your status as a U.S. citizen, then you clearly are committing an act of “civil disobedience”.

So, as the Spiro observation implies, the question that people must ask is:

Am I a person who has rights because of my “personhood” or am I the property of a country where I don’t live and don’t choose to live?

The next tweet references a second comment at the Isaac Brock Society:

The second comment argues in a less theoretical but more practical way that U.S. citizenship is not like a club membership where you are free to leave. Through example, it implies that the relation of a a U.S. citizen to the U.S. Government is more like the relationship between a “master” and “servant”.

The comment, which addresses the question of whether U.S. citizenship is a “membership” or an incident of  “U.S. Government ownership” includes:

@Medea,
re;
“….but refuses to man up and give the citizenship up. If he [Boris] wants to continue to be American – which recently renewing his passport suggests he does – then he’ll have to do as thousands of others do and get his tax affairs in order – even if it bankrupts him as it has others. He’s not the only one who’s been through this and I suspect he could weather the cost much better than most…”…

Forgetting about this example being about Boris specifically.

Extrapolating:

Is the fair price of US citizenship – or any citizenship “…even if it bankrupts… as it has others…”? Should citizenship have a price, or a price so high that it “bankrupts”? Or is it a right conferred on us regardless of our assets and net worth? Rights by definition are something immutable that are not dependent on the ability to pay – or subject to market or other forces.

I and others were FORCED to get a US passport because of the US control of our travel – due to the changes in border crossing rules after 9/11 we had to obtain one – many not until very late in life – if we wanted to see a family member on their deathbed, attend a funeral, care for them in need or emergency. What ‘choice’ is that? Is possible bankruptcy, or going into debt to pay lawyers and accountants and possibly part of the price of our family home outside the US a reasonable price for a birthright?

Is bankruptcy a fair, ethical and just cost that US citizens abroad must all potentially incur in order to “continue to be American”, and to travel to the US if we ever want to see our family again? Or even just to travel to another destination – where most of the travel options go over or through the US in a virtual monopoly? Particularly if we did not choose to be an American, but only inherited it by accident of where our mother happened to be when she gave birth to us? Or, we had a US parent, but were born outside the US?

Is that in the US constitution?

Are FBARs in the US constitution? Is FATCA? Is the punishment of all local non-US mutual funds, savings plans and other legal local banking in the constitution? Is double taxation? How does that accord with the founding values and the ‘rights of man’?

Is American citizenship, or any citizenship a commodity to be bought and sold? Is it a membership fee – as in an exclusive country club where only some can belong – if they can afford to pay whatever is charged?

Does/should US law rule millions outside its boundaries no matter the consequences (and non-US persons and taxpayers and families pay the price too)? Should our US family members be deprived of our assistance and visits because the US is attempting to blackmail them and us by tying the US passport to acceptance and resignation to complex and unfair tax and financial control/oppression over those abroad?

In the current circumstances, there are aprox. 6 million or more living outside the US who it deems to be ‘US taxable persons’. Many are only ordinary people and families, who can neither afford to keep US citizenship, NOR to give it up (an average family of four renouncing would incur almost 10,000. USD just in State Dept. fees, plus the untold thousands in accounting and legal fees, plus whatever interest and penalties the IRS could apply depending on their circumstances – for example, US taxes imposed on their retirement, education and disability savings and their family home). I don’t know about you, but 10,000. is an astronomical amount for my family.

Many are being forced to pay in order to give up the US citizenship because they could not afford to keep it. Especially if they did so using the methods that the IRS and US Treasury demand. A part-time worker or caregiver who makes barely enough to be taxable in either Canada or the US may have almost no income at all and may not even have met the US filing threshold and owe no US taxes. They may have no US economic connection or income, have lived outside the US for more than 50 years, never worked there. Canadian taxpayers, their family and their community and they themselves have paid for their education, healthcare and any other social and economic benefits enjoyed. US hospital fees at birth were paid in full by parents paying directly fee for service, and any other costs came from the taxes paid as US residents at the time incurred. In that scenario, they do not qualify for US social security, or healthcare, and many/most have no intention of ever living in the US. Often, the NON-US/Canadian spouse is the breadwinner. So, the NON-US / Canadian family pays the cost of one or more members retaining their birthright US citizenship – incurred through an accident of fate many decades ago. Should individuals and families outside the US shoulder the compliance burden forever? We are prevented from taking on community work due to the FBAR obligations to report even non-personal co-signatory roles. Prevented from being a co-signatory on RESPs, prevented from being a potential executor or co-signatory on family accounts.

Is that the cost of US citizenship that is just, moral, reasonable and ethical?

I feel that I was the victim of extortion by the US. If I had decided not to burden my Canadian family with the fees to become ‘compliant’ in the manner prescribed by the IRS and US Treasury, and had not renounced, would you advise that I should have ‘manned up’ too? I and my family paid too high a price for ‘compliance’ – a state almost impossible to achieve if done in the manner the US prescribed in 2011, and almost impossible to achieve for anyone with local legal accounts, a home, retirement savings, mutual funds, etc. due to the ways in which we are punished for living, earning, banking and saving outside the US.

Do US residents – those who are merely permanent residents, as well as those who were born with US citizenship have to bear the same burden that those residing outside the US bear? The Taxpayer Advocate says not.

The US is the ONLY country in the world to do this other than Eritrea.

Funny that of all the so-called ‘developed’ nations in the world, only one forces people to entertain bankruptcy in order to maintain a passport or citizenship.

 

 

 

 

My eyes have seen the years – Roger Conklin: “United States has replaced Cuba as the nation with Exit Tax”

With the passing of Roger Conklin, the world has lost a decent man. He was also a relentless advocate for ALL Americans and for the United States as a whole. He influenced many posts on this blog. For many years, Roger was involved with “American CItizens Abroad“. Roger posted numerous comments on online articles. He generously educated others with his numerous emails. He was a true American Patriot who was a keen observer of the “aging of America”. What follows is an email that he composed during the last few years of his life. This email is a “wake up call” and a true gift to those who care about the future of America.

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