Category Archives: accidental Americans

December 31, 2019 and US Born individuals living outside the USA without having a Social Security Number

Introduction – “The Little Red FATCA Book”

More at:

The Two Ugly Faces of FATCA – One for foreign banks and another for US persons

The Obligations of the banks under the IGA

These obligations are described in the FATCA IGA entered into between the United States and the other country. In general the IGA requires non-U.S. banks to “Review, Identify and Report” on U.S. citizens.

The Obligations of the individual taxpayer under IRC 6038D – Form 8938
The mandatory reporting which takes place on Form 8938 is mandated Internal Revenue Code 6038D.

Non-US AKA “Foreign Banks” – The Problem of US Born customers who do NOT have a US Social Security Number are they in danger of their bank accounts being closed?

Those accused of being U.S. citizens who are NOT U.S. citizens have the opportunity to “self-certify” they are NOT U.S. citizens

The Possibility of being “Born In The USA” but NOT being a U.S. citizen

The Possibility of being “Born Outside The USA”, acquiring U.S. citizenship at birth but NOT being a U.S. citizen today

Looks like being “Born In The USA” may not be a great thing!

John Richardson – Follow me on Twitter @ExpatriationLaw

IRS provides limited tax relief for certain individuals renounced(ing) after March 18, 2010

Update – My thoughts “The Morning After” – September 7, 2019:
After having digested this for a day (it was announced the afternoon of September 6/19), I offer the following additional thoughts:

Practical value: I think that this IRS announcement/program has value. It may be that those who have renounced would NOT want to come into compliance (although there are certainly some who would – just to bring closure). But, the IRS announcement makes clear that this procedure is available to those who have not yet renounced/relinquished and wish to do so in the future. The point is that these future relinquishers can:

1. Come into tax compliance and have up to $25,000 USD in tax forgiven; and

2. Come into tax compliance without getting a Social Security number. This has the potential to be enormously helpful to a lot of people (but this is a minority view). It’s a way to make the compliance/renunciation process easier and less expensive (tax forgiveness) than it has been to date.

Of course, this will anger the thousands who have previously come into compliance, paid taxes and gone to the trouble of getting a Social Security number.

IRS Motivation: Much of the discussion in social media has revolved around the question of: “Why would the IRS offer this program at all? What’s in it for the IRS (especially if they are forgiving taxes)? I don’t know and nobody outside Treasury/IRS knows. But, my guess is that this is a political response from US Treasury to the problems that FATCA is causing with foreign banks. Viewed prospectively, this provides a clearer path for accidental Americans (living outside the USA) to renounce U.S. citizenship. Although renunciation (which does have tax consequences) does NOT require tax compliance, most people seem to think that it does. Also, this is a clear response from Treasury/IRS to the problems that foreign banks are having with FATCA compliance. In other words: I do NOT think that this has anything to do with helping accidental Americans. I do think that it to assist foreign banks with the problems they are having with accidental Americans. Note that the relinquishment date – March 18, 2010 – is tied to the date that FATCA was enacted. But, what do I know?

Now on to the post as originally written …

Breaking news – just released today – September 6, 2019

Background:

In what appears to be a response to how FATCA issues affect “accidental Americans” living outside the United States, the IRS has introduced a procedure providing limited tax relief, penalty relief and certainty for accidental Americans who need to renounce U.S. citizenship in a FATCA world. The problem is described in this recent article by Helen Burggraf at American Expat Finance. Note that March 18, 2010 was the date that the HIRE Act (of which FATCA was a revenue offset) was enacted – making it clear that this relief is tied to FATCA and NOT to “citizenship-based taxation” per se.

In a nutshell, it appears (I will read this in more detail again) to say that:

Individuals who:

1. Have NEVER filed a 1040 U.S. tax return
2. Have relinquished/renounced U.S. citizenship after March 18, 2010
3. File the five tax years in the year prior to relinquishment
4. File a tax return in the year of relinquishment
5. Have a net worth of less than 2 million USD at the time of relinquishment AND at the time of filing*
6. Have a total of less than $25,000.00 in U.S. tax liabilities over the five year period
7. Have an average U.S. tax liability of less than approximately 165,000 USD for the five preceding years*
8. Certify that their failure to file was non-willful.

can file, avoid paying the U.S. taxes owed and NOT be a covered expatriate.

*These mirror the general requirements to not be a covered expatriate.

This is of value for a limited (but probably numerically large) group of people. The benefits appear to be:

1. Forgiveness of tax up to $25,000.00
2. The opportunity to exit the U.S. tax system cleanly and avoid covered expatriate status.

This is likely to upset those who previously went to the trouble of coming into compliance to expatriate. Note that the procedures are not available to anybody who has EVER filed a 1040.

I will write more on this later. But, for the moment here is the announcement from the IRS News Room:

09 | 6 | 19
IRS announces new procedures to enable certain expatriated individuals a way to come into compliance with their U.S. tax and filing obligations

IR-2019-151

WASHINGTON – The Internal Revenue Service today announced new procedures that will enable certain individuals who relinquished their U.S. citizenship to come into compliance with their U.S. tax and filing obligations and receive relief for back taxes.

The apply only to individuals who have not filed U.S. tax returns as U.S. citizens or residents, owe a limited amount of back taxes to the United States and have net assets of less than $2 million. Only taxpayers whose past compliance failures were non-willful can take advantage of these new procedures. Many in this group may have lived outside the United States most of their lives and may have not been aware that they had U.S. tax obligations.
Eligible individuals wishing to use these relief procedures are required to file outstanding U.S. tax returns, including all required schedules and information returns, for the five years preceding and their year of expatriation. Provided that the taxpayer’s tax liability does not exceed a total of $25,000 for the six years in question, the taxpayer is relieved from paying U.S. taxes. The purpose of these procedures is to provide relief for certain former citizens. Individuals who qualify for these procedures will not be assessed penalties and interest.
The IRS is offering these procedures without a specific termination date. The IRS will announce a closing date prior to ending the procedures. Individuals who relinquished their U.S. citizenship any time after March 18, 2010, are eligible so long as they satisfy the other criteria of the procedures.

These procedures are only available to individuals. Estates, trusts, corporations, partnerships and other entities may not use these procedures.

The IRS will host an on-line webinar in the near future providing additional information and practical tips for making a submission to the Relief Procedures for Certain Former Citizens.

Relinquishing U.S. citizenship and the tax consequences that follow are serious matters that involve irrevocable decisions. Taxpayers who relinquish citizenship without complying with their U.S. tax obligations are subject to the significant tax consequences of the U.S. expatriation tax regime. Taxpayers interested in these procedures should read all the materials carefully, including the FAQs, and consider consulting legal counsel before making any decisions.

See the following link for more information:

https://www.irs.gov/individuals/international-taxpayers/relief-procedures-for-certain-former-citizens
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Why tax compliant #Americansabroad are under great pressure to renounce US citizenship #citizide

Introduction …
Many individuals (Solomon Yue, Keith Redmond, and MANY others) have been working very hard on tax reform for Americans abroad. Many groups (ACA, AARO, DA, etc.) have also been working. The basic goal is to support Congressman Holding’s bill which would provide some tax relief. This has been a long and difficult process (which will eventually succeed), it is very hard for individual legislators to understand the issues. This motivated me to tweet the following:


A response to this tweet included: “So the only resolution is to renounce citizenship. Correct?”
My thoughts to this response …

Part 15 in series: The Emotional Toll of US Non-Resident Taxation and Banking Policies – “I Just Wanted to Punch, Kick, Scream”

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 11 of this series of posts here.
Laura Snyder discusses the “emotional toll of U.S. non-resident taxation and banking policies
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies. Part 10 of this series (comments of Nando Breiter) was a prologue to Ms. Snyder’s five posts.
Now over to Laura …
Continue reading

Part 14 in series: The Emotional Toll of US Non-Resident Taxation and Banking Policies – “Maybe that’s the Only Way Out”

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 11 of this series of posts here.
Laura Snyder discusses the “emotional toll of U.S. non-resident taxation and banking policies
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies. Part 10 of this series (comments of Nando Breiter) was a prologue to Ms. Snyder’s five posts.
Now over to Laura …
Continue reading

Part 13 in series: The Emotional Toll of US Non-Resident Taxation and Banking Policies – “I Made a Poisoned Gift to My Daughter”

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 12 of this series of posts here.
Laura Snyder discusses the “emotional toll of U.S. non-resident taxation and banking policies
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies. Part 10 of this series (comments of Nando Breiter) was a prologue to Ms. Snyder’s five posts.
Now over to Laura …
Continue reading

Part 12 in series: The Emotional Toll of US Non-Resident Taxation and Banking Policies – “I Love the US but Feel Betrayed”

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 11 of this series of posts here.
Laura Snyder discusses the “emotional toll of U.S. non-resident taxation and banking policies
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies. Part 10 of this series (comments of Nando Breiter) was a prologue to Ms. Snyder’s five posts.
Now over to Laura …
Continue reading

Part 11 in series: The Emotional Toll of US Non-Resident Taxation and Banking Policies – “I Feel Threatened by My Very Identity”

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 10 of this series of posts here.
___________________________________________________________________________________________
Psychological harm and the pain of living as an American abroad – Why this next series of posts is important


I began this “Citizenship Solutions blog” in 2014. The blog included a page (not very visible) called:
“Emotional counselling for those threatened by the FATCA Roundup”
The comments (occasional as they may be) are significant. The comments include a “ping back” to a discussion of great interest which took place at the Isaac Brock Society.
Origins of the psychological torment of those targetted by the extra-territorial application of U.S. tax and banking laws
The campaign of Barack Obama will be remembered by the slogan “Change You Can Believe In”. For Americans abroad the election of Barack Obama was the beginning of a nightmare that they will never forget. Although U.S. citizenship- based taxation had always been the law in theory, it was never applied in practice. This changed with the Obama administation in three ways:
First, a toxic mix of Obama’s IRS, the tax compliance industry and the media worked to create an environment where individuals living outside the United States were led to believe, that the U.S. was enforcing U.S. citizenship-based taxation on Americans abroad. During the summer of 2011 innocent Americans abroad (some who had relinquished U.S. citizenship years earlier),were ushered into the OVDI program.
Second, the rollout of FATCA enlisted banks in the process of searching for U.S. citizens living abroad, who were not filing U.S. taxes.
Third, many Americans experienced their “Oh My God” moment where they learned about U.S. extraterritorial tax policies. For many the “Oh My God” moment permanently changed their perceptions of themeselves. One day they were proud Amercians. The next day they were threatened by the fact that they either were or had been U.S. citizens. Furthermore, they became (or at least believed) that they were a threat to their non-U.S. citizen families.*
The simple truth is that U.S. citizens are terrified of the U.S. Government. The vast majority of Americans abroad were not (and are still not) filing U.S. taxes. Their failure to file was because, they didn’t know that they were required to. Those individuals who were financially responsible and compliant with the tax laws where the live, were most impacted emotionally. They couldn’t belive that they had done something wrong. After all, they had lived their lives “trying to do the right thing”. The realization that they were not compliant with U.S. laws evoked a range of very damaging emotions. They experienced a range of emotions that they had never experienced before.
The emotions experienced were somewhere between “anger” at one extreme and “fear at the other extreme”. The experience of either too much fear or too much anger is a dangerous thing. The best an individual can hope for is to live life somewhere between fear and anger. It’s important to understand how intense and how damaging the psychological impact of the experience of being criminalized by the U.S. Government, has been and continues to be.
Laura Snyder discusses the “emotional toll of U.S. non-resident taxation and banking policies
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies. Part 10 of this series (comments of Nando Breiter) was a prologue to Ms. Snyder’s five posts.
Now, over to Laura …
Continue reading

Part 10 of series: The Psychological Torment Of Americans Who Live Outside The United States

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
You will find Part 1 to Part 9 of this series of posts here.
___________________________________________________________________________________________


I began this “Citizenship Solutions blog” in 2014. The blog included a page (not very visible) called:
“Emotional counselling for those threatened by the FATCA Roundup”
The comments (occasional as they may be) are significant. The comments include a “ping back” to a discussion of great interest which took place at the Isaac Brock Society.
Laura Snyder has written (in addition to her original four posts) a series of five posts describing and exploring “The Emotional Toll of US Non-Resident Taxation and Banking Policies”. This post is a prologue to Ms. Snyder’s five posts.


Before returning to Laura, Nando Breiter will introduce us to “some” of the psychological and emotional aspects of trying to survive as an American abroad in an FBAR and FATCA world.
Continue reading

Part 7 of series: Tax Law to American Abroad – “How Do I Hate Thee, Let Me Count the Ways

Before moving to the post, if you believe that Americans abroad are being treated unjustly by the United States Government: Join me on May 17, 2019 for a discussion of U.S. “citizenship-based taxation” as follows:


You are invited to submit your questions in advance. In fact, PLEASE submit questions. This is an opportunity to engage with Homelanders in general and the U.S. tax compliance community in particular.
Thanks to Professor Zelinsky for his willingness to engage in this discussion. Thanks to Kat Jennings of Tax Connections for hosting this discussion. Thanks to Professor William Byrnes for his willingness to moderate this discussion.
Tax Connections has published a large number of posts that I have written over the years (yes, hard to believe it has been years). As you may know I oppose FATCA, U.S. citizenship-based taxation and the use of FATCA to impose U.S. taxation on tax residents of other countries.
Tax Connections has also published a number of posts written by Professor Zelinsky (who apparently takes a contrary view).
This is post 7 in my series leading up to the May 17 Tax Connections discussion. The first six posts have been for the purpose of demonstrating:
– in posts 1 to 4, Laura Snyder did a wonderful job in explaining how the U.S. tax system impacts the lives of Americans abroad. Her specific focus was on those individuals who identify as being U.S. citizens
– in post 5, I extended the discussion to reinforce that what the U.S. calls “citizenship-based taxation” is actually a system that impacts far more than those who identify as being U.S. citizens. In fact it burdens every individual on the planet who can’t demonstrate that he is a “nonresident” alien (people are renouncing U.S. citizenship because they can save themselves ONLY if they become a “nonresident alien”).
– in Post 6, I added the thoughts of Toronto Tax Professional Peter Megoudis who explained how those who are connected to “U.S. persons” (through family or business arrangements) can be impacted by the U.S. tax system
In this, Post 7, I am extending the discussion to explain that:
1. Not only does the United States impose worldwide taxation on individuals who don’t live in the United States; but
2. The system of worldwide taxation imposed is in reality and separate and far more punitive collection of taxes than is imposed on Homeland Americans.
I have previously written on this topic at Tax Connections:


Think of it! With the exception of the United States, when a person moves away from the country and establishes tax residency in another country, they will no longer be taxed as a resident of the first country.
But in the case of the United States: If a U.S. citizen moves from the United States and establishes tax residency in a new country, (1) he will STILL be taxable as a tax resident of the United States and (2) will be subjected to a separate and more punitive system of taxation! #YouCantMakeThisUp!
Although this truth is rarely understood and is rarely stated (it’s one of America’s “dirty little secrets”) here is an excerpt from a discussion I had with three international tax experts:

In this series of posts I am incorporating the thinking and writing of guest bloggers. In order to guide us in this discussion I welcome Virginia La Torre Jeker, a U.S. tax lawyer based in Dubai. I have previously featured Virginia in my “Unsung Heroes Of Life” Series.
Now on to Virginia La Torre Jeker …


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