Determing Net Worth For 877A Exit Tax Purposes – IRS Notice 97-19
Leave a reply
Category Archives: Uncategorized
FinCEN Changes FBAR Deadline Again AND AGAIN
Republished with permission. This post was written by Helen Burggraf and originally appeared on October 16, 2020 on the American Expat Financial News Journal website.
Another Update October 19, 2020 – The Filing Deadline Is Now October 31, 2020
BREAKING, continued: (FinCEN) has now posted an explanation for its removal of its surprise Oct.16th announcement that it was changing the final deadline for FBARs to Dec 31. (It was "incorrect")…New deadline is Oct 31 https://t.co/CYrHLe9DtV @ExpatriationLaw pic.twitter.com/LG9ExdeT0r
— Helen Burggraf (@helenburggraf) October 19, 2020
And back to the original post …
BREAKING: The US Financial Crimes Enforcement Network (FinCEN) has quietly removed from its website its surprise announcement, posted just 2 days ago, that the final deadline for FBARs had been moved to Dec. 31, from Oct.15 (yesterday)…https://t.co/CYrHLe9DtV @ExpatriationLaw pic.twitter.com/qKH2HMyZRC
— Helen Burggraf (@helenburggraf) October 16, 2020
The U.S. Financial Crimes Enforcement Network has quietly removed from its website its surprise announcement, posted just two days ago, that the final deadline for Foreign Bank Account Report (FBAR) filings had been moved to Dec. 31, from Oct. 15 (yesterday).
Treasury exempts applicable “tax-favored foreign trusts” from the Form 3520 (and therefore Form 3520A) requirement
Introduction – A small step for forms, one giant leap for “formkind”
It’s true. Many Americans abroad may no longer be required to file Form 3520 and Form 3520A to report their lives abroad! Early indications appear that many Americans will (assuming their retirement vehicle does qualify as a trust) not be required to report on Form 3520. This new initiative from Treasury a positive step in the right direction.
I have long thought that Treasury could solve many of the problems experienced by Americans abroad. Here is a wonderful example of Treasury taking the initiative to clarify the obvious:
Americans abroad do NOT use non-U.S. pension plans and non-U.S. tax-advantaged investing accounts to evade U.S. taxes. Hence, there is NO reason for the Form 3520 reporting requirement. This is an example of the tax compliance industry sitting down with Treasury, explaining a problem and getting a resolution. I suggest (and hope) that the same can be done for PFIC (Form 8621), Small Business Corporations (Form 5471) and other penalty-laden forms.
Yes, this announcement from Treasury in the form of RP 20-17 is a great achievement. Although it certainly doesn’t solve all the problems, it’s:
A small step for forms, one giant leap for “formkind”
The background to this problem – It starts in 1996 (same year as the beginning of the Exit Tax)…
Since 1996 Internal Revenue Code 6048 has required extensive reporting of almost any interaction with a foreign trust. Treasury has required that the reporting take place on Forms 3520 and 3520A. The forms are complex and subject to the draconian penalty regime described in Internal Revenue Code Section 6677. In order for an entity to be a foreign trust, it must be a trust. A “trust” for IRS purposes is defined by the Treasury Regulations as:
Part 33 – US residents bring suit alleging that the Section 965 US Transition Tax is Unconstitutional
A Washington state couple is suing the government arguing a tax on repatriated assets violates the U.S. Constitution. https://t.co/uOKo7AWAO2
— Bloomberg Tax (@tax) September 30, 2019
A lawsuit alleging that the Section 965 transition tax is unconstitutional affords the opportunity to write Part 33 in my series of posts about the U.S. Transition Tax.
Part 22 of this series included a discussion of a paper by Sean P. McElroy which argued that the Section 965 repatriation tax was unconstitutional for the following reasons explained in the abstract:
The 2019 IRS "expatriation" compliance campaign: Getting ahead of the fear mongering
On July 19, 2019 the IRS announced six new compliance initiatives.
Of particular interest to U.S. citizens and permanent residents (Green Card holders) is what is described as:
Expatriation
U.S. citizens and long-term residents (lawful permanent residents in eight out of the last 15 taxable years) who expatriated on or after June 17, 2008, may not have met their filing requirements or tax obligations. The Internal Revenue Service will address noncompliance through a variety of treatment streams, including outreach, soft letters, and examination.
What is expatriation?
Continue reading
Letting go and moving on: So long @JayNoonez and thanks for your efforts over the years
Introduction:
https://twitter.com/millionsofmoth1/status/1152476890260598784
When it comes to Americans abroad, a community is the same as a village.
To quote John who I believe may have been quoting someone else 🙂 "it takes a village". It really does! https://t.co/7n9cB2NfPC
— Monte Silver (@MonteSilver1) July 16, 2019
Which is why it saddens me to read …
This will be my last tweet or like about #FATCA, #CBT citizenship based taxation, or the plight of US citizens who permanently live abroad. In 2010 the US Congress voted to force all foreign banks to identify 'US persons', with the purpose of enforcing tax residents of other …
— Jay Noone (@JayNoonez) July 20, 2019
countries to also pay taxes in the US. But the vast majority of us wouldn't owe anything to the US unless wealthy. The tax forms are complex, don't cover the type of financial products such as pensions or college savings accounts available in some countries.
— Jay Noone (@JayNoonez) July 20, 2019
Lots of banks stopped providing services to US citizens. I also strongly object to the compliance costs forced on small countries such as New Zealand, $10's of millions to try and identify people with a US connection. Those of us who married find our joint bank
— Jay Noone (@JayNoonez) July 20, 2019
accounts may be reported to what our spouses consider to be a foreign government. Rock and a hard place when they say no, nothing to do with me. Why doesn't US join international CRS scheme? Anyway, I've done my best to explain my situation to US relatives multiple times. …
— Jay Noone (@JayNoonez) July 20, 2019
And I've just had my sister visit me. She asked, 'How are things with you and the US government, it's to do with the Magnitsky Act, isn't it?' First reaction, wow she knows this Act?, second reaction, what is the point if even family don't understand #FATCA, #CBT. I'm done.
— Jay Noone (@JayNoonez) July 20, 2019
Please remember that …
The difficult we do today. The impossible takes a little longer. Hang in! https://t.co/KhJInbD6MH
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) July 20, 2019
Thanks to @JayNoonez for his contributions over the years! He should be recognized as an “Unsung Hero Of Life“.
John Richardson – Follow me on Twitter @Expatriationlaw
Part 8 of series: Former ACA Tax Director Jackie Bugnion recalls the 2014 Kirsch Schneider debate on "citizenship-based taxation"
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:
"What Is The Future Of Citizenship-Based Taxation?" Prof. William Byrnes (Texas A&M Law), Prof. Edward Zelinsky (Cardozo Law), John Richardson (Canadian attorney who represents US-Canada dual nationals), Kat Jennings (CEO Tax Connections) https://t.co/LP63MHEFYS
— William Byrnes (@williambyrnes) May 5, 2019
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 the eigth of a series of post I have written as a run up to the May 17, 2019 Tax Connections discussion about U.S. citizenship-based taxation. You can read the previous posts here.
Introducing Jackie Bugnion …
Continue reading
US Treasury interprets Section 962 Election to mean that individual shareholders are entitled to 50% exclusion of #GILTI income when calculating income attributed
On March 4, 2019 as described by Helen Burggraf at American Expat Finance:
My comment included:
Also welcoming the news of the changes in the tax treatment of Americans’ overseas small businesses was John Richardson, a Toronto-based lawyer at CtizenshipSolutions.ca, who specializes in assisting Americans abroad with their tax and citizenship issues. The Treasury, Richardson said, should be congratulated for taking a “purposive” approach “when interpreting how Sec. 951A interacts with Sec. 962” of the relevant regulations.
In layman’s terms, Richardson noted, the new regulation means that “American expats may now deduct 50% of the active business income defined as GILTI, thus reducing the amount of GILTI they would be expected to have to pay tax on.”
However, the new regulations don’t affect the so-called Section 965 “transition tax,” he noted.
“It appears that Treasury heard and understood the problems faced by individual shareholders of CFCs [Controlled Foreign Corporations].
“I suspect that organisations representing S Corps [a type of closely-held corporation, as defined by the U.S. Internal Revenue Service] also made submissions to Treasury and had an influence on this decision.
“All Americans abroad should be encouraged by this. Instead of interpreting the law in the most literal and punitive way, it appears that Treasury has recognized the problems that individuals, whether living inside or outside America, faced.
“The bottom line is that small business owners abroad will now, for the most part, be able to defer U.S. taxation on the active business income of their corporations by using the Sec. 962 election, provided that their corporations are paying sufficient local tax. They will of course have to pay U.S. tax when the income is distributed to them.
“But [even here], the distributions will be subject to local tax which can then be used, via the FTC rules, to offset U.S. tax owing – for active business income.
“In other words, this is excellent news for Americans abroad.”
Full discussion here …
For Sec. 962 and GILTI, Treasury said "Let people be corporations" and on March 4, 2019 US Treasury said that "it was to be". @Expatriationlaw @MonteSilver1 and @FixTheTaxTreaty discuss how Sec. 962 gives #Americansabroad 50% #GILTI deduction https://t.co/P5MpBJRX7X via @YouTube
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 9, 2019
An example of the 50% discount and the Section 962 election here …
Example: @ExpatriationLaw interviews Dr. Karen Alpert of @FixTheTaxTreaty who demonstrates how Sec. 962 election can be used by individuals (including #Americansabroad) to have the same 50% #GILTI discount that is available to corporations. https://t.co/e3kZpulxbH via @YouTube
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 9, 2019
John Richardson – Follow me on Twitter at @ExpatriationLaw
When a US citizen marries a non-citizen – AKA The #FBAR Marriage: Filing status, joint ownership of assets, income, gift and estate tax issues
Thanks to @VlJeker for participating in this video series. Again, the most important question of our age is: "Is it the U.S. citizen or is it the non-citizen that is the source of the problem in the #FBARMarriage?" Your thoughts? https://t.co/SiPJAY4alz
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) February 7, 2019
Marriage is complicated. Marriage between U.S. citizens is complicated. But, a marriage between a U.S. citizen and a non-citizen is (for tax compliant Americans) is the most complex marriage of all.
WordPress Resources at SiteGround
WordPress is an award-winning web software, used by millions of webmasters worldwide for building their website or blog. SiteGround is proud to host this particular WordPress installation and provide users with multiple resources to facilitate the management of their WP websites:
Expert WordPress Hosting
SiteGround provides superior WordPress hosting focused on speed, security and customer service. We take care of WordPress sites security with unique server-level customizations, WP auto-updates, and daily backups. We make them faster by regularly upgrading our hardware, offering free CDN with Railgun and developing our SuperCacher that speeds sites up to 100 times! And last but not least, we provide real WordPress help 24/7! Learn more about SiteGround WordPress hosting
WordPress tutorial and knowledgebase articles
WordPress is considered an easy to work with software. Yet, if you are a beginner you might need some help, or you might be looking for tweaks that do not come naturally even to more advanced users. SiteGround WordPress tutorial includes installation and theme change instructions, management of WordPress plugins, manual upgrade and backup creation, and more. If you are looking for a more rare setup or modification, you may visit SiteGround Knowledgebase.
Free WordPress themes
SiteGround experts not only develop various solutions for WordPress sites, but also create unique designs that you could download for free. SiteGround WordPress themes are easy to customize for the particular use of the webmaster.