Tag Archives: renounce US citizenship

Recent economic upheaval creates expatriation opportunities for “US Persons” living abroad

This post was motivated by a thread on Reddit …

At the end of this post, I have included the Reddit thread. (Note that I am trying to develop a “RenounceUSCitizenship” thread on Reddit – you will find it here.)

As you know the US Section 877A Expatriation Tax applies to U.S. citizens and “Long Term Residents”. A “Long Term Resident” is an individual who has had a Green Card (as defined by the rules in Internal Revenue Code Section 7701(b)(6) for at least eight of the fifteen years prior to expatriation). This has become a serious problem for Green Card holders who simply move from the United States and and don’t take formal steps to sever their U.S. tax residency. (They must either file the I-407 or use a tax treaty tie breaker election to expatriate. Otherwise they may be in a situation where they have no right to live in the United States (having lost the immigration status) but are taxable on their worldwide income (still being tax citizens).

That said, whether you are a U.S. citizen wishing to renounce U.S. citizenship or a Long Term Resident wishing to sever U.S. tax residency, you do NOT want to be a “covered expatriate“. Generally, (unless one is subject to two exceptions – dual citizen from birth or expatriation between 18 and 181/2 – that are beyond the scope of this post), one is treated as a “covered expatriate” if one meets any one of these three tests:

1. Net worth of 2 million USD or more (which this post will focus on)

2. Average U.S. tax liability of more than approximately $165,000 USD over the five years prior to expatriation

3. Failure to certify U.S. tax compliance for the five years prior to expatriation.

The COVID-19 Panic – Falling asset values – more favourable exchange rates -2 million USD net worth test

The last couple of weeks have changed and continue to change our world. We are experiencing human misery on an unprecedented and global scale. This includes physical illness, fear of illness and social distancing. I live in a large city and I am beginning to see less variety in the food available. Self-employed people are seeing disruptions to their revenue streams, etc. I don’t want to keep listing examples. But it is very bad. On the economic front, we are seeing unprecedented and incalculable damage to the world economy. This includes (but is not limited to) falling asset values – how is your stock portfolio doing? We see currencies that are weakening relative to the U.S. dollar. (This means that a higher Canadian or Australian dollar net worth would equal 2 million USD.) As I write this post I just received a message, from someone advising me that the shares in a certain cruise ship stock, have fallen from $136 to $22. (My advice would be: Don’t spend money on the cruise. Instead buy the shares in the company.)

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#Citizide? Letting Go And Moving On – Online Renunciation Discussion

The situation for many Americans abroad has reached the boiling point. On Saturday November 9, 2019 I will be hosting an online discussion about renunciation generally and HOW TO DECIDE WHETHER IT MAKES SENSE FOR YOU SPECIFICALLY. The time will be 7:00 a.m. EST (Toronto time). This means that it should work for people in most parts of the world. Although, general in nature, I will attempt to answer as many individual questions as time permits. I recognize that this is a very difficult issue for people – spanning the emotional, financial, identity, etc. That said, the U.S. Government is forcing Americans abroad to consider renunciation as a defensive measure to protect themselves and their families.
See the announcement on Twitter below.
If you are not on Twitter feel free to email me at: expatriationlaw at outlook dot com for registration.
The discussion will last approximately one hour.
John Richardson – Follow me on Twitter at @Expatriationlaw


If you are not on Twitter feel free to email me at: expatriationlaw at outlook dot com for registration.

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 …

How can the IRS enforce US tax debts in foreign countries? Does renunciation of citizenship matter?

For years people have asked the question: Can the United States enforce U.S. tax debts in foreign countries? If this is possible, how would this work. I sometimes answer questions on Quora. My answer to this question (comments invited) is here:
Read John Richardson's answer to Can the IRS confiscate non US-based assets for taxes owed after someone renounces their citizenship? on Quora

Considering renouncing US citizenship? Meet a person who I suggested NOT commit #citizide


For most U.S. citizens attempting to live outside the United States (in compliance with U.S. laws), their days as U.S. citizens are coming to an end. Those who have ignored the fiscal demands required of Americans abroad (meaning they have not entered the U.S. tax system) will be able to retain U.S. citizenship for the foreseeable future. But, for those who do file U.S. taxes and attempt to comply with the outrageous demands of the United States (FBAR, forms, PFIC, Transition Tax, GILTI, Subpart F and more), they experience life like this:
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Considering renouncing US citizenship? Thinking #citizide? @Expatriationlaw moderates a "Retain or Renounce" conversation among a lawyer, a financial planner and an accountant

As 2018 comes to a close, the “Retain or Renounce” discussion intensifies. American Citizens Abroad (ACA) writes that …


The @citizide twitter account frames the question as follows …

In an #FBAR and #FATCA world #Americansabroad ask: “To retain or renounce US citizenship, whether tis better to live free ..” – #citizide explore this question

The hashtag #citizide has been established in the twittersphere …
The “Retain or Renounce” question is discussed by a wide range or professional advisers …

U.S. citizens living outside the United States are considering whether to: "Retain or renounce?" This is a decision that…

Posted by Citizenship Solutions on Monday, January 15, 2018

To hear the snippets of the discussion continue on …
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Considering renouncing US citizenship? @Expatriationlaw information sessions Fall 2018

FATCA, U.S. citizenship-based taxation (which includes much more than taxation) and restrictions on financial and retirement planning are causing many Americans abroad to renounce their U.S. citizenship.
The US Government is well aware of the problem that FATCA (coupled with US “citizenship-based taxation) has caused for Americans abroad.
The proof comes from the following two tweets:
1. 2014 – Don Beyer (currently a Member of Congress) was the US Ambassador to Switzerland from 2009 – 2014. In this interview he acknowledges some of the problems of FATCA (incredibly acknowledging that FATCA has led to divorces.


2. September 24, 2018 – A comment by a Foreign Service Officer in Frankfurt acknowledging the problems the United States has caused for its citizens living living abroad. He also acknowledges  that people are renouncing their valued U.S. citizenship. I have linked directly to his comment. But, I suggest that you take the time to watch the whole video. You will see “heart breaking” stories of people who feel that they can no longer remain U.S. citizens. (Thanks to Solomon Yue for his tireless efforts in advocating for tax changes to “Save U.S. Citizenship” for Americans abroad!)


The United States would rather have FATCA than have Americans living abroad.
FATCA is a tool to enforce (what the United States refers to as) “citizenship-based taxation”. In practice (as patriotic as it sounds), “citizenship-based taxation” is actually the U.S. policy of:
Imposing “worldwide taxation” on people who are “tax residents” of other countries and who do not live in the United States.
 
I will be conducting information sessions (some formal presentations and some informal discussions) during the next few weeks as follows:
Bangalore, India – October 22
Brisbane, Australia – October 25 (with Karen Alpert) – 19:00 – 21:00
Auckland, New Zealand – October 31
Sydney, Australia – November 1 – 19:00 – 21:00 The address is 58A Macleay Street – Entrance near Baroda Street – Potts Point NSW 2011 – There is a train you can get to Kings Cross Station.
Dubai, UAE – November 4
Limassol, Cyprus – November 7
Who: John Richardson, B.A., LL.B., JD (Toronto based lawyer)
When: 19:00 – 21:00
Cost: Free, but preregistration is required for all sessions except the October 25 session in Brisbane (where you can just appear)
Registration: Please send an email to: citizenshipsessions at citizenshipsolutions.ca
This post will be updated as further information becomes available. Feel free to check back!
Topics discussed:
Although there will be variation from location to location, the topics covered are likely to include:
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Considering renouncing US citizenship? @Expatriationlaw interviews Immigration Attorney @JoeGrasmick


This is the first of a video series I am developing on “Renouncing US Citizenship”. My goal is to to try to provide a number of perspectives to aid you in your deliberations.
Also from Joe:

False Form 8854 used as part of "willful" #FBAR prosecution

The primary story is of a U.S. professor who pleaded guilty to an FBAR violation and was subjected to a 100 million FBAR penalty.  Notably the “tax loss” was 10 million dollars and the FBAR penalty was 100 million dollars. It appears that Mr. FBAR is becoming an important tool in the arsenal used by the United States Treasury.
The more interesting (for the purposes of expatriation) was the role that a “false Form 8854 “Expatriation Statement”) may have played in the guilty plea.
The story has been reported at the following two sources:


and on Jack Townsend’s blog


What is most  interesting is the description from the Department of Justice site which includes:

Horsky directed the activities in his Horsky Holdings and other accounts maintained at the Zurich-based bank, despite the fact that it was readily apparent, in communications with employees of the bank, that Horsky was a resident of the United States.  Bank representatives routinely sent emails to Horsky recognizing that he was residing in the United States.  Beginning in at least 2011, Horsky caused another individual to have signature authority over his Zurich-based bank accounts, and this individual assumed the responsibility of providing instructions as to the management of the accounts at Horsky’s direction.  This arrangement was intended to conceal Horsky’s interest in and control over these accounts from the IRS. 
In 2013, the individual who had nominal control over Horsky’s accounts at the Zurich-based bank conspired with Horsky to relinquish the individual’s U.S. citizenship, in part to ensure that Horsky’s control of the offshore accounts would not be reported to the IRS.  In 2014, this individual filed with the IRS a false Form 8854 (Initial Annual Expatriation Statement) that failed to disclose his net worth on the date of expatriation, failed to disclose his ownership of foreign assets, and falsely certified under penalties of perjury that he was in compliance with his tax obligations for the five preceding tax years.
Horsky also willfully filed false 2008 through 2014 individual income tax returns which failed to disclose his income from, and beneficial interest in and control over, his Zurich-based bank accounts.  Horsky agreed that for purposes of sentencing, his criminal conduct resulted in a tax loss of at least $10 million.  In addition, Horsky failed to file Reports of Foreign Bank and Financial Accounts (FBARs) up and through 2011, and also filed false FBARs for 2012 and 2013.

The point is that the false Form 8854 (used primarily to provide information about whether one is a “covered expatriate” and to calculate the Exit Tax) was used as evidence of part of a conspiracy to evade taxes. This is an interesting use of the Form 8854,  which is primarily an “information return”.
Obviously this a “general interest” post with extremely unusual circumstances. But, it is an example of how associations with others, in the  “Wide and Wonderful World of U.S. Tax Forms” can become a problem.
This is also a reminder the “information returns” DO matter!