Tax Connections

Tax Connections Internet Tax Summit – September 21, 2015

 

 

Supporting Examples:

11:00 a.m. – Investing and Retirement Planning

1. Richardson Kish – Mutual Fund Comparison Canada vs United States – April 15, 2015 – International-1

(For the complete Richardson Kish submission on Citizenship-based taxation to the Senate Finance Committee see here.)

2. PFICS and Taxation of Americans Abroad – 2014

 

3. Slides from the presentation

Tax Connections Living as an American abroad

12:00 noon – Renouncing U.S. citizenship and the Exit Tax

4. See Part 5 – “The Exit Tax in Action” – 5 Actual Scenarios with tax returns” in “How the S. 877A Exit Tax May Apply To Your Canadian Assets

5. Slides from the presentation

Tax Connections Exit Tax

Bonus 1!!

If you are an American Abroad who needs guidance on how to come into U.S. tax compliance see my:

“Coming Into U.S. Tax Compliance Book – How Americans Abroad Can Be Tax Compliant in a FATCA World”

Bonus 2!!

Are  you a “U.S. Person” for tax purposes?

Richardson who is a U.S. person

5 thoughts on “Tax Connections

  1. Charles Buckley

    Thank you for excellent, informative and understandable presentations. I had identified many of the nightmares you spoke of like PFICS and the CFCs back in 2003, and complied, but you’re right: general consciousness and active enforcement of these didn’t start until post 2009.

    I’ve been following your safe investment strategies and getting *miserable* returns.

    The exit tax calculations were a bit of an eye-opener, I must say.

    Every time I look at US treatment of its citizens abroad I seem to discover some new hideous aspect that makes the nightmare more intense.

    I do hope whoever pulls Congressional strings was also watching, connected the dots, still has a soul (or at least the will, persistence and intention to uphold the Constitution).

    Thank you again.

    1. admin Post author

      Charles,

      Thank you and thanks for taking the time to comment.

      You hit the “nail on the head”. The more you learn about this the worse it gets. The more you know about it the harder it becomes to manage your finances and have any semblance of a normal life. I am not surprised that the returns are *miserable* – that’s the price you pay for being a citizen of the land of the free.

      A good part of this is very definitely deliberately punitive.

      John

      1. Charles Buckley

        When Kat Jennings first sent around an email looking for participants for her Internet Tax Summit, I pointed out the same things that you did in your talk, namely that the US Congress had been informed of the extremely negative impact of FATCA and CBT in Congressional hearings held soon after TATCA’s adoption. It goes even further — the US Republican party put into their party platform in the run-up to the 2014 midterm elections the repeal of both FATCA *and* CBT. They won a majority in both houses of Congress,, but so far nothing has been done about fulfilling these campaign promises. Much of 2015 is now behind us.

        I therefore suggested to Kat that this summit would not be complete without participation from those members of Congress who sponsored and pushed through passage of these laws. She replied that this forum was primarily for tax professionals to use to offer their services, though she hoped that legislators would participate as attendees and become educated. As you pointed out, they’ve been educated conceptually for some time, though I found the fact that you explicitly articulated in detail in your presentations the dire consequences of their superficiality on an average Joe caught up in the dragnet to be exactly what the doctor ordered.

        The punitive underpinnings pf these laws to which you refer stem from the sad fact that the easiest way to get anything done in our ‘democratic’ cultures being to overcome an inclination towards inaction on the part of the populace at large by the creation of ‘bogeymen’ myths that motivate them to move. This form of behavior, borne in European states the size of a handful of ridings with hard-to-defend politically-drawn land borders doesn’t translate well to the context of the giant nations of North America and Oceania whose borders are primarily geographic (as in oceans). .

        In such cases, bogeymen must be created artificially out of internal populations who are presumed to be so small or inconsequential as to not be able to fight back. For a while, race, national origin, or any of a number of other criteria served as a basis. Now that there have been year-long tedious legal campaigns to win these minorities protected status, the corporate-controlled media (which RT call the ‘oligarch-controlled media’) now go after alleged rich expats living the high-life on the Riviera or some such nonsense.

        In reality most Americans living abroad pay a lot more to live far less well than their homelander counterparts, but this doesn’t matter — someone needed to create a bogeyman in order to get legislators to act to consolidate their power base, or simply to appear to be adding value so as to insure their reelection. After all, it’s really difficult for US expats to create a legislative power base on which to pursue their concerns. That is, they can’t fight back.

        Any country whose currency has not been artificially propped up as a world reserve currency needs to trade abroad to function. When that becomes necessary for the US, these despised expats will need to be ‘rehabilitated’ as essential to homeland well being — they’re in the best position to represent the US abroad- Large multinationals depend on foreign nationals, but this is not as efficient, and completely incompatible with small business, the true motor for economic development. As you pointed out, US-owned small businesses in foreign jurisdictions are totally eclipsed by current regulations.

        Why sacrifice what generations of these individuals have painfully built up simply to use them as bogeyman in an effete media campaign that ignores economic reality?

        I think the shortest path to get beyond the current unacceptable status quo would be to establish a forum in which the US legislators who passed or condoned this nefarious legislation must appear to publicly and interactively account for what their reasoning was that led them to this legislative mobbing.

        Something like South Africa’s Truth and Reconciliation hearings would serve as a good model for this. That the invited participants exchange immunity from prosecution for open, truthful participation is key. it’s mainly the presumption of purity of motive which is preserved by their silence that blocks a productive way forward at this point.

        Here’s hoping others will join the discussion — I don’t want this to become a binary public conversation.

        1. admin Post author

          A couple of years ago, around the 4th of July, a U.S. tax lawyer inquired about the meaning of U.S. citizenship. The questions he posed were akin to:

          “What is the meaning of U.S. citizenship?” “What is the defining symbol of U.S. citizenship?” “What does it mean to be an American?”

          The answers to these two questions are influenced by the era we are living in ….

          But, here are the answers in 2015:

          The meaning of U.S. citizenship is taxation.

          The defining symbol of U.S. citizenship is FBAR.

          You know you are an American citizen if you live in fear of the U.S. Government.

          _______________________________________________________________________

          Your comment offers many interesting considerations.

          Your analysis is quite reasonable, rational and plausible. On it’s most basic level:

          Sure, if the stupid legislators “go after” those “expat tax cheats” then they can appear to be doing something. So, they “go after” them with these punitive laws that have gradually turned U.S. citizenship (for those living outside the United States) into a “modern day form of slavery”. U.S citizenship-based taxation is a prison, that moronic legislators have built one legislative brick at a time. After having spent considerable time working on this problem, I have concluded that it is NOT possible to live outside the United States as an American citizen AND that (if their circumstances allow) people should renounce as quickly as possible. I am also of the view that this is going to create long term problems for the United States. The simple fact is that U.S. policies are generating feelings of pure hatred toward the United States. That hatred is coming from Americans abroad who feel abused, betrayed, disenfranchised, etc. There will come a time (in the not too distant future) when America will need her citizens abroad. Since America was NOT there for her citizens abroad, her (former) citizens abroad will not be there for America (having long ago moved on).

          Why is this going on? How did we get there? I have some thoughts on this.

          First, continuing your discussion of the “politics in America”:

          There are many aspects to this, but:

          1. You will see that ALL of these so called “expatriate tax provisions” appear as revenue offset measures to broader pieces of legislation. For example, FATCA was the way to pay for the broader spending initiatives in the HIRE Act. One might ask, why would Congress do this? Does Congress even know what it’s doing?

          Congress does NOT know what it’s doing. In other words, Congress does NOT (as a general principle) know what kind of laws it’s making. As Nancy Pelosi said: “We need to pass the law to see what’s in it”.

          The administration is there to administer the laws. Sooner or later they will get around to it. PFIC, FBAR, etc. That said, I am still NOT convinced that anybody in the U.S. government (IRS included) even know of or understand many of these laws.

          This means that:

          A. The tax compliance community is called upon to interpret and enforce these punitive laws; and

          B. In so doing, they strongly influence the interpretation of certain laws. To this day I am not convinced (although I concede I am probably wrong on this one) that non-U.S. mutual funds meet the definition of PFIC laid out in the Internal Revenue Code. But, the tax compliance community, which plays the role of enforcing the law, said:

          “Let non-U.S. mutual funds be PFICs, and it was so.”

          In other words, the tax compliance community (lawyers, CPAs, EAs) are probably the biggest part of the problem.

          To put it simply: The tax professionals CREATE what the laws mean in PRACTICAL application. They have therefore become extensions of the Government.

          2. The United States of America is proof positive that the “right to vote” (which many Americans abroad don’t have anyway) is a necessary but not a sufficient condition for a democracy. The problem with democracy in America is NOT that people don’t have the right to vote, but that there is nobody to vote for.

          The two political parties are essentially private clubs that somehow have managed to gain control of the whole country. The only people able to get any “representation” in the political process are those with the money to pay for it. So, what does this mean? Well, it means that U.S. politics/democracy is NOT an institution that operates for the good of the United States or for its citizens. It operates ONLY for those with the money to pay. So, ask yourself this question:

          How, can Americans abroad be considered in the political equation when homeland Americans are not even considered? It’s not going to happen.

          As you know there have been massive attempts to educate the legislators. They are not interested. But, Americans abroad shouldn’t take it personally. The legislators don’t care about anyone (including Homeland Americans).

          I do like your idea of:

          “Something like South Africa’s Truth and Reconciliation hearings would serve as a good model for this. That the invited participants exchange immunity from prosecution for open, truthful participation is key. it’s mainly the presumption of purity of motive which is preserved by their silence that blocks a productive way forward at this point.”

          I think I will either create (or arrange to have created) a post about your comment. It would be good to generate broader discussion.

          Thanks again.

          1. Charles Buckley

            I could certainly contribute to your reply further, but will refrain. Please let me know when you start a new thread.

            I did have a look at your website, and your videos on YouTube. Your videos made for the TaxConnection Summit are much clearer and more compelling than either of these. If it would be possible to put these up on YouTube, I think it would really help.

            While searching for your videos, I ran across this: http://grandcaystrategies.com/abroad.html. Basically they argue that the number of people who have to file US tax returns, and are therefore subject to FATCA,, is much more limited than most people think. They claim that any election to file tax returns can be legally revoked, and offer a consulting service to that end. They also have a YouTube video, which is a bit detailed and arcane. Do you think their arguments might help your clients and cause?

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