Category Archives: Little Red Exit Tax Book

Under the Starry Flag by Lucy Salyer shows how the history of citizenship struggles repeat themselves: The USA of the 21st Century is like Britain in the 19th Century

Leave a reply

Under the Starry Flag – exploring the historical context of the 1867 Expatriation Act

Update: February 8, 2025 (citizenship issues) …

In it’s response to Roger Ver’s application to dismiss the charges against him the U.S. Government has reiterated it’s position that there is no constitutional right to expatriation! If this claim were correct (as a matter of law) it would mean that renunciation would be available ONLY with the permission of the U.S. Government! Does the Government fully understand the implications of the claim that there is no constitutional right to renounce U.S. citizenship?

________________________________________________________________________________

Update: December 8, 2024 (tax issues) …

The recent case of Roger Ver raises constitutional issues (both tax and citizenship) surrounding “expatriation”. I recently participated in a podcast (discussing/introducing these issues) with U.S. tax lawyer Virginia La Torre Jeker here.

Interestingly this appears to have triggered interesting discussion on X.com by U.S. immigration lawyer Parviz Malakouti here. This discussion reminded me of this 2019 post about Professor Lucy Salyer’s book “Under The Starry Flag”. When I revisited the post I noticed that:

1. Professor Salyer appears have deleted her X.com account. I mention this because her old X.com handle @SalyerLucy is now being used by somebody else. Perhaps it is best to NOT delete social media accounts …

2. Some of the links in the original post are no longer working. I have decided to leave the links (even whey they are no longer working) intact.

I predict that Professor Salyer’s book (“Under The Starry Flag“) and research will be discussed as the Ver litigation moves through the courts.

____________________________________________

On to the original 2019 post …

https://twitter.com/SalyerLucy/status/1100508102581985281

In 2018 Professor Lucy Salyer of the University of New Hampshire published “Under the Starry Flag” – a book largely about the 1868 Expatriation Act. The book describes a period in American history where Britain treated its “subjects” as having perpetual loyalty to the British Crown. To put it simply: One could NOT emigrate to America and expatriate. No matter what one did, those who were born British Subjects were destined to die British Subjects.

The above tweet links to an interview of Professor Lucy Salyer conducted on February 9, 2019. The interview is about Professor Salyer’s new book “Under the Starry Flag”. It is a fascinating (brilliantly researched) work. The publisher describes the book as:

The riveting story of forty Irish Americans who set off to fight for Irish independence, only to be arrested by Queen Victoria’s authorities and accused of treason: a tale of idealism and justice with profound implications for future conceptions of citizenship and immigration.

In 1867 forty Irish American freedom fighters, outfitted with guns and ammunition, sailed to Ireland to join the effort to end British rule. Yet they never got a chance to fight. British authorities arrested them for treason as soon as they landed, sparking an international conflict that dragged the United States and Britain to the brink of war. Under the Starry Flag recounts this gripping legal saga, a prelude to today’s immigration battles.

The Fenians, as the freedom fighters were called, claimed American citizenship. British authorities disagreed, insisting that naturalized Irish Americans remained British subjects. Following in the wake of the Civil War, the Fenian crisis dramatized anew the idea of citizenship as an inalienable right, as natural as freedom of speech and religion. The captivating trial of these men illustrated the stakes of extending those rights to arrivals from far-flung lands. The case of the Fenians, Lucy E. Salyer shows, led to landmark treaties and laws acknowledging the right of exit. The U.S. Congress passed the Expatriation Act of 1868, which guarantees the right to renounce one’s citizenship, in the same month it granted citizenship to former American slaves.

The small ruckus created by these impassioned Irish Americans provoked a human rights revolution that is not, even now, fully realized. Placing Reconstruction-era debates over citizenship within a global context, Under the Starry Flag raises important questions about citizenship and immigration.

In the 19th Century Britain regarded its subjects as subjects for life. Many Americans abroad will appreciate how the book applies to their lives in the 21st century. To put it simply: Americans abroad are treated as primarily Americans citizens – even though they are often citizens and residents of other countries. The FATCA IGAs are the most obvious example of this reality. (Shades of the British – History does have a way of repeating itself.) Renunciation is desirable, difficult, expensive (and for those who are in the U.S. tax system – inevitable). For many Americans abroad:

“All Roads Lead To Renunciation.”

Furthermore, dual citizens (for example the accidental Americans in France) are beginning to request that their countries of citizenship/residence intervene and assist their citizens in breaking ties with the United States. History does repeat itself.

Continue reading →

Considering renouncing US citizenship? Thinking #citizide? Abandoning your #GreenCard? @Expatriationlaw webinar explaining the S. 877A Exit Tax

Leave a reply

The general message …


More details – hope to meet you online on December 6, 2018

The "proper care and feeding of the Green Card": Tax Filing Edition – Use of the 911 Foreign Earned Income Exclusion

Leave a reply

Introduction: The Purpose and Limited Scope Of This Post
This post focuses on Green Card holders who are filing the 1040 tax return. The 1040 is the return that is filed by all individuals unless you are a “nonresident aliens”. Non-resident aliens file the 1040-NR. This post does NOT discuss (1) when it could be advantageous for a Green Card holder to file a 1040-NR (using a tax treaty tie breaker provision) and (2) what the (DANGEROUS) consequences of filing a 1040-NR (from both a tax and immigration perspective) could be. For a Green Card holder, there can be both disadvantages and also substantial advantages to using a tax treaty tiebreaker to file a 1040-NR.
This post assumes that the Green Card holder is filing a 1040 and is specifically focused on the following question:
Is it wise for a Green Card holder who is temporarily outside the United States to use the Foreign Earned Income Exclusion found in Section 911 of the Internal Revenue Code (as opposed to the Section 901 Foreign Tax credits) when filing the 1040?
(Most tax practitioners agree, that in general, it is better to use the Sec. 901 foreign tax credits and and not sue the S. 911 Foreign Earned Income Exclusion. Here is a post that explains why this is so. So, why would anybody ever use the FEIE? The answer is that some people live in countries where there is income tax and therefore no foreign tax credit to use against income that is taxable from a U.S. perspective.)
Continue reading →

#Greencard abandonment: The safe disposal of the US "permanent resident" visa without triggering the S. 877A Expatriation Tax

Leave a reply


https://www.taxation.co.uk/Articles/2018/04/24/337897/us-expatriate-tax-conference-pt-2
What follows is a summary of a presentation I made in March of 2018 in London, UK:
Continue reading →

Considering the EB-5 Visa? The IRC S. 877A Expatriation Tax Demonstrates that "Not All US @TaxResidency Is The Same!"

Leave a reply


“Understanding U.S. Tax Residency …
The United States uses a form of “deemed tax residency“.
The Internal Revenue of the United States deems that all “individuals” (wherever they live in the world – including citizens and residents of other countries) except “nonresident aliens” are subject to taxation in the United States on their world wide income. One qualifies as a “nonresident alien” unless one is a:
1. A U.S. citizen
2. A U.S. resident as defined by Internal Revenue Code Sec. 7701(b)
Continue reading →

On what date does an individual (other than a U.S. citizen) begin or end @USTaxResidency

Leave a reply

This is an interesting and important question. This question is always important for determining how the Sec. 877A “Exit Tax” applies to “permanent residents” AKA “Green Card Holders” who with to abandon their permanent residence. There are many other many other reasons why this matters. U.S. tax residency (which is an example of “deemed tax residency“) can be a complicated thing. With the exception of U.S. citizens, U.S. tax residency is usually a function of some form of “physical presence”.
U.S. tax residency can trigger:
– income tax payable
– reporting requirements with respect to non-U.S. assets and more (dual tax residents may be able to use a “tax treaty tie-breaker” to opt out of U.S. tax residency)
Remember that “residence” for purposes of taxation can be different from residence for the purposes of immigration. As the Topsnik case makes clear, it is entirely possible to NOT have the right to have lost the right to live in the United States, but still be subject to taxation as a U.S. resident.
Rather than reinvent the wheel, I am please to reproduce this post from Daniel Gray – a Toronto based CPA. Thanks to Daniel for allowing me to reproduce this post from his blog.


Continue reading →

Tax, culture and how the USA uses #citizenshiptaxation to impose US culture (and penalties) on other countries

Leave a reply

Civilizations and countries define themselves in part by their tax policies
In 1993 Samuel Huntington wrote “The Clash Of Civilizations“. His basic thesis is captured in the following paragraph from Foreign Affairs Magazine.

World politics is entering a new phase, and intellectuals have not hesitated to proliferate visions of what it will be-the end of history, the return of traditional rivalries between nation states, and the decline of the nation state from the conflicting pulls of tribalism and globalism, among others. Each of these visions catches aspects of the emerging reality. Yet they all miss a crucial, indeed a central, aspect of what global politics is likely to be in the coming years.
It is my hypothesis that the fundamental source of conflict in this new world will not be primarily ideological or primarily economic. The great divisions among humankind and the dominating source of conflict will be cultural. Nation states will remain the most powerful actors in world affairs, but the principal conflicts of global politics will occur between nations and groups of different civilizations. The clash of civilizations will dominate global politics. The fault lines between civilizations will be the battle lines of the future.

Tax policy and the possible “clash of civilizations”
To what extent does the insistence of the USA on imposing the Internal Revenue Code (“citizenship-based taxation”) on the citizen/residents of other countries, foreshadow a “clash of civilizations”?


This post was motivated by the article by Virginia La Torre Jeker which is referenced in the above tweet. It is an excellent discussion of how the Internal Revenue Code might (or might not) accommodate the reality of Sharia law. The post raises many questions and alerts practitioners to the challenges of applying the Internal Revenue Code to the lives of people whose culture is largely outside the United States. The post raises many “technical issues”. I expect there will further discussion of this issue on Virginia’s blog.
Taxation does NOT exist in a cultural vacuum. A country’s tax system reflects the counry’s cultural values. As the tax historian Charles Adams has noted, the rise and fall of civilizations can be linked to its tax policies. To impose the Internal Revenue Code on people who live outside the United States is to export U.S. cultural values and impose those values on other nations. The United States claims the right to impose the Internal Revenue Code on U.S. citizens who live outside the United States. The reality is that there are millions of people with no connection to the United States (other than a place of birth). U.S. citizenship is acquired automatically if one has the fortune (or misfortune depending on your point of view) of having been (as Bruce would sing) “Born In The USA!”
FATCA and the tax compliance industry are working hard to identify those who may be U.S. citizens and do NOT live in the United States. What the United States views as a good source of tax revenue should be seen more broadly. Leaving aside basic issues of fairness, to impose U.S. taxation (according to U.S. rules/cultural values) on the residents of other countries, is sure to create problems. As part of tax reform, the United States must stop imposing the Internal Revenue Code on people who are NOT residents of the United States!
The following “Storification” is an attempt to explain the problem from an “outside the USA” perspective …
Continue reading →

Why is the United States imposing an “Exit Tax” on the Canadian pensions of Canadian citizens living in Canada?

Leave a reply

This post is based on (but is NOT identical to) a July 17, 2017 submission in response to Senator Hatch’s request for Feedback on Tax Reform

“Re the impact of the S. 877A “Exit Tax” on those “Americans living abroad” who relinquish U.S. citizenship:

Why is the United States imposing an “Exit Tax” on their “non-U.S. pensions” and “non-U.S. assets”? After all, these were earned or accumulated AFTER the person moved from the United States?”

Part A – Why certain aspects of the Exit should be repealed

In a global world it is common for people to establish residence outside the United States. Many who establish residence abroad either are or become citizens of other nations. Some who become citizens of other nations do NOT wish to be “dual citizens”. As a result, they “expatriate” – meaning they relinquish their U.S. citizenship. By relinquishing their U.S. citizenship they are cutting political ties to the United States. They are signalling that they do NOT wish the  opportunities, benefits and protection from/of the United States.

Yet Internal Revenue Code S. 877A imposes a separate tax on “expatriation”. The “expatriation tax” is discussed in a series of posts found here.

Specific examples of HOW the “Exit Tax Rules” effectively confiscate pensions earned outside the United States are here.

Assuming, “covered expatriate status” and NO “dual-citizen exemption to the Exit Tax“, the S. 877A “Exit Tax” rules operate to:

  1. Virtually “confiscate” non-U.S. pensions that were earned when the individual was NOT a  United States resident; and
  2. Allow for the retention of “U.S. pensions” which were earned while the individual WAS a resident of the United States.

(One would think that the result should be THE EXACT OPPOSITE!”)

Specific request: The S. 877A Exit Tax should be repealed. If the United States is to impose a tax on expatriation, the tax should not extend to “non-U.S. pensions” earned while the individual was NOT a U.S. resident. Furthermore, the tax should NOT extend to “non-U.S. assets” that were accumulated while the individual was NOT a U.S. resident.

But, that’s assuming that the United States should have ANY kind of “Exit Tax!”
Continue reading →

The teaching of Topsnik 2 – 2016: #Greencard expatriation and the S. 877A "Exit Tax"

Leave a reply

What! You want to abandon your Green Card and leave the USA!

Introduction – Introducing Gerd Topsnik – The World According to Facebook

“This case will be seen as the first of an (eventual) series of cases that determine how the definition of “long term resident” applies to Green Card holders. The case makes clear that if one does NOT meet the treaty definition of “resident” in the second country, that one cannot use that treaty to defeat the “long term resident” test. A subsequent case is sure to expand on this issue. Otherwise, the case confirms that the S. 877A Exit Tax rules are “alive and well” and that the “5 year certification” test must be met to avoid “non-covered status”
Topsnik may or may not be a “bad guy”. But even “bad guys” are entitled to have the law properly applied to their facts. It would be very interesting to know how the court would have responded if Topsnik had been paying tax (a nice taxpayer) in Germany as a German resident.”

A nice summary of Topnik 1 and Topsnik 2

This is part of a series of posts on: (1) “tax residency“, (2) the use of “treaty tiebreakers” when an individual is a “tax resident” of more than one jurisdiction and (3) how to use “treaty tiebreakers” to end “tax residency” in an undesirable tax jurisdiction.

This is the second of the two Topsnik posts.

Topsnik 1 focused on the “tax residence” of Green Card Holders. The decision in Topsnik 1 is here:

topsnikdiv.halpern.TC.WPD
Continue reading →