Tag Archives: Robert Wood

#Americansabroad are not tax evaders. The U.S. is a tax invader


What follows is a comment ot a rencent Robert Wood post.

This is a “must read”.

UrbanNomad 21 hours ago

I was born in California to foreign parents who were temporarily working in the USA. I left in 1968, aged 1, and haven’t been back except on vacation. I have been fully compliant with my IRS and related obligations since the 1980s.

I have lived in South Africa since 1979, and have spent the past 5 years attempting to naturalise as a South African citizen without success, so I am unable to renounce my US citizenship. I am not in violation of any of the naturalisation requirements; rather the granting of citizenship here is a privilege not a right. Being Africa, I suspect I could make a ‘payment’, but that is not how I operate (and it might put me in violation of the US Foreign Corrupt Practices Act).

I identify fully with Marilyn. Until recently, I had little objection to meeting my US tax obligations. I did think it unfair that the US could assert taxing jurisdiction over me so far away after so long, thereby depriving an African nation of some much needed revenue. However I am more pragmatic than idealistic: the tax rates are similar, and the tax treaty and foreign tax credits meant that the additional burdens (mostly admin & CPA costs) were manageable. This has changed dramatically in the last five years.

Since the IRS’ success against the Swiss banks in 2009 revealed a number homelanders evading tax, they have gone on a global witch hunt. Congress has armed the Treasury Department with some constitutionally dubious legislation which has exponentially increased my tax compliance efforts. I’m spending well over $15K, and up to 100 hours of my time, every year meeting these requirements. The biggest concern I have, given the complexities of the US tax code, is the egregious penalties applicable only to foreigners. Homelanders might be assessed penalties of around 20% of the tax owed, while we are potentially subject to the confiscation of the asset that generated the tax.

The IRS’ PFIC regulations make it almost impossible to hold savings outside the USA. A foreign mutual fund, if held long enough (a wise strategy), can similarly result in taxes approximating the value of your investment in the fund. Having been aware of the PFIC laws for many years, I decided to invest my savings in the USA, but the new AIFMD laws prohibit the sale of mutual funds to non-resident citizens.

I don’t dispute a country’s right to tax its citizens, even if the USA is only one of 2 countries in the world that does so. I am grateful for the Fourteenth Amendment which has granted me the right to hold a US passport and travel freely around the world. However, when you combine these factors with the US tax code and the IRS’ new enforcement abilities, they collectively amount to a violation of some basic rights. I am fortunate that I have savings and assets, and my circumstances may not elicit much sympathy from the homelanders, but the founding fathers intended for all of us to enjoy our rights, not just those on welfare.

To those who might brand me unpatriotic, that has no meaning to me. How patriotic do you feel towards South Africa? If you think that the USA is better off without the likes of Marilyn and me, think again. We don’t fill up your schools and we don’t congest your streets. We don’t crowd your courts with spurious claims nor do we claim medical benefits or welfare. The only thing the USA has ever given me is six passports, and I paid a fee for each of them. Meanwhile, for decades we’ve been swelling the coffers of your treasury with earnings generated in foreign countries. Tax evaders? I think not; the appropriate term is Tax Invaders!

Called-out comment

Robert W. Wood Robert W. Wood, Contributor 21 hours ago

Dear UrbanNomad: Thank you for this thorough personal account. Your costs and perceptions about the changes since 2009 are important for others to note. I have seen some people anxious to expatriate “buy” a passport in a country even where there are not living, if they can’t obtain citizenship in their country of residence. In any case, thanks for your comments. I like your “Tax Invader” term too!

The “inversion” issue is about whether the U.S. can tax income of other countries NOT patriotism!

Through “inversions” U.S. companies are unilaterally rejecting U.S. citizenship based taxation and embracing the world standard of “territorial taxation”

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Time for #Americansabroad forced to renounce citizenship to pursue legal remedies in US courts

This post is motivated in part by Robert Wood’s latest post titled:

Record Numbers Renounce U.S. Citizenship – And Many Aren’t Counted

Of course Mr. Wood’s article is based on “Official Relinquishments”. As explained by FromPatriotToExpatriate in a comment to Mr. Wood’s post:


As always, thank you for keeping this issue “front and center”.

Thank you also for suggesting (this is unquestionably true) that the number of “reported renunciations” is well below the reality. The “reported renunciations” are based on those who are seeking a CLN based on the conditions of S. 349 of the Immigration and Nationality Act. In other words, they go to a U.S. consulate and either:

1. Formally renounce; or
2. Inform the consulate they have previously committed a relinquishing act.

In either case, they are asking the consulate to help them obtain – what is the most sought after document in the world today – that is a certificate of loss of U.S. nationality (CLN). Furthermore, some are paying “big money” to achieve this. There is NO QUESTION that the numbers of those actively seeking the CLN are under-reported.

But, as one commenter has correctly suggested, the number of Americans who are actively seeking the CLN, is very small relative to the people who have simply “unofficially relinquished their U.S. citizenship” by taking the position that:

A. They are no longer U.S. citizens in their minds and hearts.

B. They are willing to never return to the United States.

C. They will simply live life attempting to “hide their U.S.ness”

This is by far the largest number and at the end of the day, this is the greatest tragedy.

The very rich and the very poor can afford to formally relinquish. The “middle class” can’t afford to come into tax compliance or if they are in tax compliance, they can’t afford the “Exit Tax”. The simple truth is that a person who owns a “mortgage free” house in most major cities coupled with any attempt to save for retirement, means they will exceed the two million threshold on paper. In other words, for the middle class to officially “relinquish citizenship” means they will have to turn their retirement assets (which were never earned in the U.S.) over to the IRS.

So, that’s the deal. Barack Obama promised “change we can believe in”. What he delivered was “change we could never imagine”.

Also, Americans abroad have traditionally been good ambassadors for America. Obviously, that is no longer so. In fact many Americans abroad are now very “anti-American”. In a world where the U.S. is widely disliked, where it’s official ambassadors are distrusted and ridiculed, the U.S. needs all the “unofficial ambassadors” it can get. In the past the U.S. has had benefited from its citizens abroad – who have (on the whole) been loyal and patriotic citizens.

Finally, although Homeland Americans don’t care about this, if they paid attention, they would see how the U.S. government has put an “iron curtain” around the U.S.

This is how we treat those who have already left the U.S. This is what will happen to you if you leave the U.S.


Perceptions of U.S. citizenship abroad – How you will be treated if you leave the U.S.

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Robert Wood perspective on #FATCA and countries siging IGAs

Interesting Robert Wood post from Robert Wood about FATCA. Comments include interesting discussion about citizenship-based taxation.

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