Category Archives: accidental Americans

Tweet #Citizide: The new response of US citizens to #FATCA #FBAR #PFIC


Searching for Uncle #FATCA: Where is he? What does he do? Why is he a danger to America? Can Congressman Meadows and Senator Paul save America?

Outline:

April 7, 2017

Part 1: Prologue – Introducing  Uncle FATCA – Who is he? What does he mean in your life?

Part 2: What is FATCA, what are the FATCA IGAs, what is the Meadows Bill and how do these things interact?

Part 3 – What does it mean to repeal FATCA and how exactly does the Meadow Bill repeal FATCA? A section by section analysis

Part 4: An important reminder – FATCA repeal does not mean IGA repeal

Part 5: The text of FATCA and the text of the Meadows Bill (very dry and technical and not likely to be of interest to the casual reader)

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Part 25: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – What if the 8 month year old Canadian is a “US Person”?

 

More #Americansabroad will pay capital gains tax on sale of principal residence in Canada

The price of Toronto real estate continues its upward trajectory.

This morning I met with yet another (who could have known) Canadian resident who wishes to renounce U.S. citizenship. This person is completely compliant with his U.S. tax obligations. He is renouncing for a very common reason.

The reason for renouncing U.S. citizenship is to:

Protect the tax free capital gain, which results from the sale of his Canadian principal residence in Canada.
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Part 24: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #FATCA and #Americansabroad with life insurance

As the following tweet makes clear, the problems of “Life Insurance Policies” are NOT restricted to Canada:

Sad but true. It’s quite understandable that from a “U.S. Worldview” that a life insurance policy is nothing but a “sacred instrument of tax deferral” (and therefore of tax evasion). U.S. citizens are the most highly regulated people in the world. As such it is no surprise that the possible purchase of life insurance could trigger FATCA scrutiny. (In that “Shining city on the hill” those who purchase life insurance are clearly “up to no good” – “no good at all”!)

Thank of it! A Canadian citizen who resides in Canada is now being asked the most important biographical question of the 21st century:

“Where were you born? Are you or have you ever been an American citizen?”

(Given the dangers of interacting with U.S. citizens, one’s citizenship status should be required information on every match.com profile …)

So, what led up to this post …

Last night (fear of U.S. citizenship takes place 24 hours a day) I received an email from a man in his seventies. In order to provide for his wife (should he die) he was in the process of applying for a life insurance policy. Now (if it matters), I am not entirely clear on what kind of life insurance policy he was seeking (and unfortunately neither was he). (The policy very likely had a “cash value” component.) That said, shouldn’t a normal person be allowed to apply for a life insurance policy without being accused of being – the only “carbon life form” not deserving of human rights – an American?

The question – “Where were you born?” is interesting. Some overpaid lawyer in the company’s legal department obviously thought that a “U.S. place of birth” was proof positive of “USness”. Well, no. It’s proof positive that somebody was born a U.S. citizen. The U.S. has always used “citizenship as a weapon”. In fact, almost all of the law of U.S. citizenship is a study of the U.S. Government forcibly stripping people of their citizenship – AKA the law of relinquishment. But, I digress … Bottom line: it was and continues to be possible for people born in the United States to relinquish U.S. citizenship.

In this case, (say it isn’t so), this poor guy had actually been born in that great Museum to freedom and opposition to “taxation without representation” – the state of Massachusetts. You know, of “Boston Tea Party” fame and assorted other historical shrines to liberty. Well fortunately, the poor guy had overcome his disabilities triggered by birth (being born American) and had (many years ago) voluntarily naturalized as a Canadian citizen with the full intent of relinquishing U.S. citizenship. Of course he did NOT follow up this liberating event by receiving a CLN (who knew they existed at that time). He therefore, proudly “self-certified” the fact of his “non-USness” and presumably will avoid becoming a FATCA victim.

In any case, I thought it might be important to make people aware, that even the simple act of applying for a life insurance policy can now subject people to the FATCA inquisition. I have decided to NOT identify the company in question. But, I promise you that it is a rather large (is there a small one?) Canadian life insurance company. You would know them. And of course:

“To know, know, know them … is to avoid, avoid, avoid them” – as the song goes!

(All Canadian insurance companies presumably operate in the same way.)

Casualty Insurance and the American abroad …

Speaking of insurance in general. Let me remind you Americans living outside the United States that:

1. Although you are allowed to purchase a home or automobile insurance policy from a non-U.S. company that;

2. You are subject to a special excise tax for buying that policy.

You will find this in Section 4371 of the Internal Revenue Code which talks about “Policies issued by FOREIGN insurers” and is in the broader section on “Miscellaneous excise taxes“.

#YouCantMakeThisStuffUp

Spread the word! You can now be FATCAed by attempting to provide for your family by applying for life insurance. Oh and by the wife. Policies with a cash value are likely PFICs! To learn more about the problems of “PFICs and Americans abroad” read here.

John Richardson

Tax residency vs. physical presence: The four questions you must ask before making a country your home

An introduction to “tax residency” …

Most people equate residency with physical presence. They assume that where you are physically presence determines where you live. They further assume that where you live is where you pay your taxes. Conclusion: The country where you live is the country where you must be “tax resident”. Not necessarily!

There is no necessary correlation between where one lives and where one is a “tax resident”. In fact, “residency for tax purposes” may be only minimally related to “residency for immigration (where you live) purposes”. It is possible for people to live in only one country and be a tax resident of multiple countries. The most obvious example is “U.S. citizens residing outside the United States”.

The concept of “tax residency” is fundamental to all systems of taxation. The fundamental question, at the root of all tax systems is:

“what kind of connection to a country is required to assume tax jurisdiction over an “individual”, over “property” or over an “entity”?”

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How to get a US Social Security Number in Canada – A step by step guide

 

Why do some Canadians wish to have a U.S. Social Security number?

Many Canadians are in the process of coming into U.S. tax compliance. One might ask:

Why would a Canadian citizen residing in Canada wish to come into U.S tax compliance?

There are two reasons why Canadian citizen/residents file U.S. tax returns:

1. They have learned that they are U.S. citizens or learned about U.S. “citizenship taxation” (perhaps encouraged by a FATCA letter or their local CPA) and they wish to file U.S. taxes; and/or

2. They have learned that they are U.S. citizens and wish to come into U.S tax compliance to “renounce U.S. citizenship” and avoid “covered expatriate” status (particularly important if they wish to take advantage of the “dual citizenship” exemption to the S. 877A Exit Tax).

Regardless of the motivation, one must do considerable work for the privilege of filing U.S. taxes.

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Around the world in 192 pages: Experiences of #Americansabroad in an #FBAR and #FATCA world

Here it is:

richardsonkishcommentsamericansabroadapril152015internationaltax-2

This is one of seven parts of the Richardson Kish submissions to the Senate Finance Committee in April of 2015. I thank Patricia Moon for her unbelievable effort in putting this document together!

And speaking of Americans abroad in an FBAR and FATCA world, you might like to read:

The message is:

When In Rome, Live As A Homelander

#YouCantMakeThisUp!

John Richardson

 

The “Exit Tax”: Dual US/Canada citizen from birth, no Canada citizenship today = no exemption to US “Exit Tax”

The above tweet references a “guest post” written by Dominic Ferszt of Cape Town South Africa. The post demonstrates how the “dual citizen from birth” exemption to the S. 877A “Exit Tax” relies on the citizenship laws of other nations. In some cases those laws of other nations are arbitrary and unjust. If these laws were U.S. laws, they might violate the equal protection and/or due process guarantees found in the United States constitution. For example, Mr. Ferszt describes how the “dual citizenship exemption” to the “Ext Tax” is dependent on South African “Apartheid Laws”. He describes a situation where a “black” U.S. citizen from birth is denied the benefits of the dual citizen exemption to the Exit Tax, which are available to a “white” dual citizen from birth. (During the “Apartheid Era” Blacks were not entitled to South African citizenship.)

So, what’s the S. 877A “Exit Tax”  dual citizen exemption and how does it work?

The dual citizen exemption, which I have discussed in previous posts,  is found in Internal Revenue Code S. 877A(g)(1)(B) and reads:

(B) Exceptions An individual shall not be treated as meeting the requirements of subparagraph (A) or (B) of section 877(a)(2) if—
(i) the individual—
(I) became at birth a citizen of the United States and a citizen of another country and, as of the expatriation date, continues to be a citizen of, and is taxed as a resident of, such other country, and
(II) has been a resident of the United States (as defined in section 7701(b)(1)(A)(ii)) for not more than 10 taxable years during the 15-taxable year period ending with the taxable year during which the expatriation date occurs, or

Entitlement to the “dual citizen exemption” depends entirely on the citizenship laws of other countries …


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Welcome to Citizenship Solutions – John Richardson

Welcome to Citizenship Solutions – The blog of John Richardson

I am guessing (actually I know for sure) that you arrived here because of some aspect of being a U.S. citizen living outside the United States. Maybe you are a Green Card holder. I also know how you are feeling.

“U.S. citizens” and “Green Card holders” are referred to as “U.S. Persons”. So, if you are a “U.S. Person Abroad”, well, life is pretty tough. in fact living as a “U.S. Person” outside the United States is: hard, expensive, confusing and (quite frankly) unsustainable.

Some of you are NOT in compliance with the intricate and (almost) impossible to understand web of tax and reporting requirements. Non-compliance has its share of problems.

Some of you ARE in compliance (as far as you know) with the intricate (and almost) impossible to understand web of tax and reporting requirements. Compliance also has its share of problems (stress, expense, anxiety).

Whether you are in compliance or not in compliance, you have problems. This is because:

U.S. citizenship is the one citizenship in the world that affects virtually every aspect of your life. in addition to the information on this blog, I help people with the following kinds of specific problems/questions (which include):

1. Are you a U.S. citizen at all? Have you relinquished U.S. citizenship along the way? If you have relinquished U.S. citizenship, are you a “U.S. Person” for FATCA and tax filing purposes?

2. Have you just received a “FATCA Letter” addressed to you as an INDIVIDUAL or to you as an ENTITY (corporation, trust, etc.)? How to respond. What’s a W9? What’s a W-8BEN-E anyway?

3. What about that old Green Card sitting in your drawer? What to do ….

4. Renouncing U.S. citizenship – What’s the “right way”? What’s the “wrong way”? The better question is “what’s the safest way”? What about that “back dated” relinquishment?

5. Green Card expatriation – How to exit the tax system and the U.S. immigration system.

6.  Oh My God!! The moment many of you will never forget. Yes it’s a problem. No it’s not as much of a problem as you think. Make certain that you respond and not react. If all you want to do is file U.S. taxes

7.  U.S. S. 877A “Exit Tax” consulting. If you think you can leave the “Land Of The Free” for free, you better think again. A bit about the the United States expatriation taxes. Those of you with a  non-U.S. pension should take specific note!

8. Retirement and financial planning
(including pensions) as a “U.S. Person” abroad – You will be surprised at the problems you will have living as a U.S. tax compliant American abroad. Think (or maybe you shouldn’t) “PFIC“.

9. Coming into U.S. tax complianceWhat are the various options?  Why one option over another? What about “Streamlined”? 99% of you should NEVER use “OVDP”!!!

10. Non-U.S. AKA “Foreign Corporations” – Yes, these can be a BIG problem. Caution: The U.S. CFC tax rules may attribute income to YOU that you never received!

11. Getting a divorce? Are you a U.S. citizen married to a non-citizen? – Your U.S. citizenship will play a role.

Respond, don’t react! – Do NOT make any decisions without understanding the present and FUTURE consequences of those decisions.

So, how do I know this?

First, I am a person (Toronto based lawyer actually) who was born in the United States and has lived almost all of my life outside the United States. In other words, I have lived and do live these problems.

Second, I have spent the last few years of my life assisting “U.S. Persons abroad” survive the unjust imposition of FATCA, FBAR and “CBT” (AKA U.S. “place of birth taxation”) on Americans abroad. I work with many groups of people including: “accidental Americans“, long term dual citizens who wish to retain U.S. citizenship, long term dual citizens who feel they must renounce U.S. citizenship, Green Card holders (whether they live in the United States or not) and those who have ONLY U.S. citizenship. It’s what I do.

Third,
I have been (and continue to be) actively involved in efforts to oppose FATCA in the courts and in the process of making submissions to the U.S. Treasury. If you want to learn about the Alliance For The Defense of Canadian Sovereignty lawsuit against the Government of Canada, see here.

I work with people all around the world! I have given “live presentations” about the “Problems of U.S. citizenship” all over Canada and Europe. I have given a number of “media interviews” about FATCA and the problems of U.S. citizenship. I have testified as a witness before the Canadian House of Commons Standing Committee on Finance (May 2014). I have written hundreds of articles and blog posts about FATCA, FBAR and U.S. taxation-based citizenship. I have and continue to teach courses both for Americans abroad and for professionals who counsel U.S. citizens abroad.

Anyway, the blog is free. The counselling and assistance require individual consultations. Contact me if you want me to help you solve these problems as they apply to YOUR SITUATION.

John Richardson

P.S. Here is the one of the very first posts that I wrote on for this blog. Some posts are “timeless”. “What you need to consider BEFORE consulting a lawyer or tax professional“.