There are certainly benefits to being a Canadian citizens. Perhaps Canadian citizenship is the most important line of defense against the confiscation that is OVDP.
Introduction – Guest post by a perfectly ordinary person who renounced U.S. citizenship for perfectly ordinary reasons
— CrossBrit (@CrossBriton) August 7, 2017
In a recent submission to Senator Hatch I argued that what the United States thinks of as “citizenship-based taxation”, is actually a system where the United States imposes U.S. taxation on the residents and citizens of other countries. That submission included:
On July 4, 2017, Americans living inside the USA celebrated the “4th of July” holiday – a day that Americans celebrate their independence and freedom.
On that same day, I had meetings with SEVEN American dual citizens, living outside the United States. This “Group of Seven” were in various stages of RENOUNCING their U.S. citizenship. Each of them was also a citizen and tax paying resident of another country. They varied widely in wealth, age, occupation, religion, and political orientation. Some of them have difficulty in affording the $2350 USD “renunciation fee” imposed by the U.S. Government. Some of the SEVEN identify as being American and some did NOT identify as being American. But each of them had one thing in common. They were renouncing their U.S. citizenship in order to gain the freedom that Americans have been taught to believe is their “birth right”.
On August 2, 2017 posts at the Isaac Brock Society and numerous other sources, reported that that there were 1759 expatriates reported in the second quarter report in the Federal Register. The number of people renouncing U.S. citizenship continues to grow.
Now on to the guest post by Jane Doe, which is a very articulate description of the reasons why people living outside the United States feel forced to renounce U.S. citizenship.
The reality of being a “DUAL” Canada U.S. tax filer is that you are a “DUEL” tax filer
“It’s not the taxes they take from you. It’s that the U.S. tax system leaves you with few opportunities for financial planning”.
I was recently asked “what exactly are the issues facing “Canada U.S. dual tax filers?” This is my attempt to condense this topic into a short answer. There are a number of “obvious issues facing U.S. citizens living in Canada.” There are a number of issues that are less obvious. Here goes …
There are (at least) five obvious issues facing “dual Canada U.S. tax filers in Canada”.
At the very least the issues include:
Supporter of CBT, is more like supporter and citizen of U S A !
Who does not know about CBT as applied to residents of other countries.
— JC Double Taxed (@JCDoubleTaxed) July 29, 2017
The uniquely American practice of “imposing direct taxation on the citizen/residents of other nations” (“citizenship-based taxation”) has NO identifiable group of supporters (with the exception of a few academics who have never experienced it and do not understand it).
The Uniquely American practice of imposing direct taxation on the citizen/residents of other nations has large numbers of opponents (every person and/or entity affected by it). In addition to the submissions of Jackie Bugnion, “American Citizens Abroad“, “Democrats Abroad“, Bernard Schneider there is significant opposition found in the submissions of a large number of individuals. It is highly probable that the submissions come from those who are attempting compliance with the U.S. tax system.
The “imposition of direct taxation” on the “citizen/residents of other nations” evolved from “citizenship-based taxation”. “Citizenship-based taxation” was originally conceived as a “punishment” for those who attempted to leave the United States and avoid the Civil War. I repeat, it’s origins are rooted in PUNISHMENT and PENALTY and not as sound tax policy.
In the beginning there was Facebook …
— Citizenship Lawyer (@ExpatriationLaw) May 7, 2017
and from a second Facebook group:
— Citizenship Lawyer (@ExpatriationLaw) May 8, 2017
Introduction: If you were to REPEAL FATCA
A previous post discussing the what exactly is meant by FATCA and the Mark Meadows “Repeal FATCA” bill, described:
FATCA is the collective effect of a number of specific amendments to the Internal Revenue Code which are designed to target both (1) Foreign Financial Institutions and (2) Those “U.S. Persons” who are their customers.
1. There are “Three Faces To FATCA” which include:
– Face 1: Legislation targeting Foreign Financial Institutions (Internal Revenue Code Chapter 4)
– Face 2: The FATCA IGAs (which for practical purposes have replaced Chapter 4)
– Face 3: Legislation targeting individuals (primarily Americans abroad who commit “Personal Finance Abroad – While Living Abroad” – Internal Revenue Code 6038D which mandates Form 8938)
2. The amendments to the Internal Revenue Code that would be necessary to reverse the sections of the Internal Revenue that created FATCA.
Legislative FATCA vs. Regulatory FATCA
The sections of the Internal Revenue Code that comprise “FATCA” are surprisingly few.
FATCA Hearings in Washington, DC – April 26, 2017
April 26, 2017 – Washington, DC – REVIEWING THE UNINTENDED CONSEQUENCES OF THE FOREIGN ACCOUNT TAX COMPLIANCE ACT https://t.co/VmeUIdJlqb
— Citizenship Lawyer (@ExpatriationLaw) April 30, 2017
Beginnings – It all began in July 2016
The purpose of this post is NOT to describe the hearing in detail (that has already been well done), but rather to provide my overall (and perhaps broader) impressions based on actually having attended the hearing.
The April 26, 2017 FATCA hearing in Washington was long in the making. It’s genesis was rooted in a meeting that took place in July of 2016 at the Republican National Convention. The planning and preparation involved the efforts and consistent cooperation (weekly meetings since August) of a number of people in different countries and on different continents. It was a privilege to have been part of this group. A list of the people who worked on making the hearing happen – the “FATCA prep team” – is described here. Those efforts culminated in what some witnessed “in real time” on April 26, and what thousands more will see (thanks to Youtube) in days to come.
The hearing has already been documented IN DETAIL and discussed in various places IN DETAIL, with the best commentary coming from posts at the Isaac Brock Society here and here and various Facebook groups here, here, here and here. (An example of ridiculous commentary is here.) When I say “commentary” I mean NOT ONLY the posts, but the rich and insightful comments. Seriously, this collection of “digital experiences” really is “History In The Making!”
Thinking about FATCA, What is it anyway?
I have written numerous posts about FATCA – “The Little Red FATCA Book” which you will find here. An explanation of how the Meadows “Repeal FATCA” bill would actually work is here. Basically, FATCA is the collective effect of a number of amendments (including the creation of a new Chapter 4 of Subtitle A of the Internal Revenue Code – which has made largely irrelevant by the FATCA IGAs) which are designed to identify, attack and impose sanctions on:
A. FATCA: Non-U.S. banks and other financial institutions
Forcing them to “hunt down” the financial accounts and entities (examples include mutual funds, corporations, trusts and some insurance policies) owned by “U.S. persons”. The goal is to “turn them over” to the IRS.
This imposes enormous compliance costs on non-U.S. banks. The obvious effect is that they will not want U.S. person customers. Would you? Interestingly the focus of the witnesses (Mr. Crawford and Mr. Kuettel) was primarily on the denial of basic access to financial and banking services.
Although important, this is only one half of the equation. What happens when “U.S. persons” learn (the vast majority had no idea) that they are subject to U.S. taxation?
B. FATCA: “U.S. Persons” with non-U.S. financial assets and bank accounts
It is not possible for “U.S. citizens” to BOTH: be U.S. tax compliant and live a productive life outside the United States, when they are also subject to the tax laws of other nations. (Digital nomads are the exception.) The reason is that U.S. citizens living outside the United States are living under a system where:
- They are presumed to live in the United States (which they don’t); and
- Their assets (which are local to them) are presumed to be “foreign” to the United States.
If you don’t understand (or don’t believe) why this is true, you will find an explanation here.
“When In Rome, Live As A Homelander” and do NOT “Commit Personal Finance Abroad!” (It’s UnAmerican)
Although a major effect of FATCA is to subject Americans abroad to a very special set of tax rules (think PFIC, foreign pension, CFC, and a crushing burden of forms that impact ONLY Americans abroad), there was NO witness that even alluded to this as one of the effects of FATCA. (FATCA is the enforcer of the uniquely American policy of “taxation-based citizenship”). There was also no witness that described how a “FATCA letter” can lead to absolute financial ruin for honest taxpayers, who have made a life outside the friendly borders of the United States of America. There was no witness who explained the confiscatory effects of entering one of the IRS “Amnesty – Ministry of Love” programs.
This had had the effect of making it seem as though FATCA (in terms of the effect on Americans abroad) was just a simple “disclosure – Form 8938 issue. Nothing could be further from the truth.
If it were not for “taxation-based citizenship”, FATCA would be no more or less a problem for Americans abroad than it would be for Homelanders (which doesn’t mean it is not a problem). Unfortunately, the hearing did not provide evidence on this point.
(This is NOT a criticism. But, just imagine if there had been witnesses who had been identified as a “U.S. Person” because of FATCA, did NOT know about “taxation-based citizenship” and then were forced into the “Offshore Voluntary Disclosure Program“. Now that would have been a story …!)
It is “taxation-based citizenship” that makes the effects of FATCA so hard on Americans abroad! In 2011, I remember thinking:
The United States can have either FATCA or it can have “taxation-based citizenship” but it CANNOT have both!
April 7, 2017
Senator Rand Paul introduces "Repeal FATCA" bill in the Senate – joining Congressman Meadows Bill in the House https://t.co/InR15hIbJH
— Citizenship Lawyer (@ExpatriationLaw) April 8, 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)
— Citizenship Lawyer (@ExpatriationLaw) March 20, 2016
The above tweet references a fascinating conversation on Reddit.
The conversation begins with:
Hey all, just got back from the Bank of China because I wanted to open an account to hopefully find some easier method of transferring money back home to the States (an entirely different fiasco for another time), but after the bank teller floundering around with his supervisor for a good hour and a half, they finally told me I couldn’t get a card today and would have to try again some other time, which they would call me and let me know. How nice of them.
This is already the second time I’ve tried to go and been turned away. The first time they told me I needed proof that I was actually employed in China (to which apparently my valid residence permit was not enough), and so in true Chinese fashion, I had my school simply write down on a piece of paper that I worked there and then stamp it. Good enough.
Anyway, they told me that today I couldn’t open up an account because their system is “complicated” and there are a number of other people with “similar names to mine” and their system is too slow to process it today. This is of course just a string of nonsense and I don’t see how it’s any form of excuse whatsoever. My buddy opened his account no problem, so I can’t decipher why my situation might be any different. Unless of course it’s because he’s Australian and I’m American, which is the only difference. On the forms you have to fill out, there’s a simple question that says to check if you’re American or not American, and I think this is what may have flagged my account. With everything going on in Beijing and tightening controls on VPNs at the moment, I can’t but help to think this is the reasoning behind the vague excuse. Anyone else experiencing similar problems?
TL;DR: went to Bank of China, couldn’t open an account right now, and I think it’s because I’m American.