Tag Archives: transition tax

Part 23 – It's time for #Americansabroad to support the fight against the @USTransitionTax and #GILTI

Part 1 – Understanding the “Transition Tax” issue and what it means for Americans Abroad
As reported at Tax Connections:


Part 2 – The “Transition Tax” Battle continues …

It has become clear that a lawsuit will be necessary to stop the application of the "Transition Tax" and GILTI to the…

Posted by Citizenship Solutions on Tuesday, November 13, 2018

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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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Part 20 – The failure of Treasury to comply with the requirements of the "Regulatory Flexibility Act" make the Sec. 965 @USTranstitionTax subject to judicial review


If you don’t want to reach this post, then just watch the above video.
If you do want to read the post …
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Part 19 – Comments from those with @TaxResidency in other countries about the effects of @USTransitionTax & #GILTI

Designed for Google and Amazon and applied to individual Americans abroad …


ADCS Press Release on the Transition Tax and GILTI: The Alliance For The Defence Of Canadian Sovereignty issued a press release on the impact of the “transition tax and GILTI” on people with tax residency in other countries. Although issued in November of 2017, it attracted a number of comments. These comments provide insight into how U.S. citizenship-based taxation damages people in other countries.
Comments made in November 2017 (before the world heard about the transition tax)
The comments (from November of 2017 which is well before the Section 965 transition tax was understood) are here.
Comments in September/October 2018
As described in this post, U.S. Treasury has been seeking comments about the Sec. 965 transition tax. The deadline for comments is October 9, 2018. You can read the comments here.
Comments that are particularly noteworthy are:
From American Citizens Abroad – on behalf of all Americans abroad


From James Gosart an individual

To: United States Department of the Treasury
Subject: Re: Proposed Regulations under Section 965 [REG 104226-18]
The transition tax is a killer for small American owned overseas businesses.
I am a small business owner of a consulting company in Hong Kong. Around the world, I’m sure there are thousands of small American business owners like me.
I formed the company in 2011 after spending more than 25 years based in China and Asia as an expat employee of a major US corporation. During the 7 years the company has been in operation, I have helped US companies and investors with their China and Asia strategies, ultimately growing their businesses in Asia and contributing to US based employment. My company paid corporate taxes annually in Hong Kong. I have now relocated to the US and I’m in the process of shutting the business down.
The new transition tax is so burdensome and complex that there is no way I would start such a business today. Nor would I recommend it to anyone else. For the US to decide to retroactively tax retained earnings of small US owned overseas businesses is so draconian and unprecedented that it will seriously impact the survival of countless numbers of such businesses. Even if a US owned overseas business is capable of making this payment, and many will not be able to, how can any business survive when faced with a 17.5% tax that their non-US owned competitors do not have? In addition, many thousands of Americans who use lawful local corporate entities as retirement savings vehicles will see their lifelong retirement savings decimated.
The Commerce Department has long estimated that for every $1 billion of business done by American business abroad 5,000 domestic US jobs are supported. Based on my own anecdotal experience I agree with that. No doubt the transition tax will cause thousands of American owned small businesses to close, or fail to start in the first place, will cause the loss of many thousands of US based American jobs, and will damage the lives of countless numbers of Americans living abroad.
I do not believe the transition tax for small business can be made fair or workable. It must simply be dropped altogether.

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And on the Home front …


The FATCA Canada lawsuit continues: The Alliance For The Defence Of Canadian Sovereignty announces the filing of its Memorandum of Fact and Law. The trial is expected to be heard in January of 2019.
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More on the U.S. “Transition Tax”
This is Part 19 of my series of posts discussing the Section 965 U.S. Transition Tax. This has been reposted with permission from Americansabroadfortaxfairness.org.

Part 18 – CAMPAIGN TO TREASURY/IRS: EXEMPT AMERICAN SMALL BUSINESSES IN THE U.S. & WORLDWIDE FROM THE @USTransitionTax & GILTI TAXES

This is Part 18 of my series of posts discussing the Section 965 U.S. Transition Tax. This has been reposted with permission from Americansabroadfortaxfairness.org.
Time out from our regular programming with this special message – A Call To Action – from Attorney Monte Silver:
Hi Fellow Americans:
On August 1, 2018, the Treasury/IRS issued proposed regulations that interpret the Repatriation tax law – a 250 page very complicated document. I discovered that in issuing the document, Treasury, the IRS and other Federal agencies seriously violated numerous Federal laws and procedures. This gives us tremendous leverage in negotiating for an exemption from the Repatriation & GILTI laws.
It is not unreasonable to expect that this battle may be won by December 15, 2018. What you can do to help win the battle? Easy! Treasury needs to hear your voice in a few short paragraphs (as outlined below) – by October 7, 2018.
We are within reach! Lets do it.
Monte
p.s. – as you may have an October 15, 2018 filing deadline, there is a way for you to extend the filing date until December 15, 2017. See IRS Publication 54, page 4 (can be seen at silvercolaw.com/blog). I suggest that you discuss this with your U.S. tax person.
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Part 15 – The Canadian Media Notices the @USTransitionTax: The @LizT1 series of post

The first fourteen posts in my “transition tax” series were:
Part 1: Responding to The Section 965 “transition tax”: “Resistance is futile” but “Compliance is impossible”
Part 2: Responding to The Section 965 “transition tax”: Is “resistance futile”? The possible use of the Canada U.S. tax treaty to defeat the “transition tax”
Part 3: Responding to the Sec. 965 “transition tax”: They hate you for (and want) your pensions!
Part 4: Responding to the Sec. 965 “transition tax”: Comparing the treatment of “Homeland Americans” to the treatment of “nonresidents”
Part 5: Responding to the Sec. 965 “transition tax”: Shades of #OVDP! April 15/18 is your last, best chance to comply!
Part 6: Responding to the Sec. 965 “transition tax”: A “reprieve” until June 15, 2018
Part 7: Responding to the Sec. 965 “transition tax”: Why the transition tax creates a fictional tax event that allows the U.S. to collect tax where it never could have before
Part 8: Responding to the Sec. 965 “transition tax”: This small business thought it was saving to invest in business expansion – Wrong, they were saving to be robbed by America!
Part 9: Responding to the Sec. 965 “transition tax”: From the “Pax Americana” to the “Tax Americana”
Part 10: Responding to the Sec. 965 “transition tax”: Individuals subject to U.S. state tax jurisdiction, the response of New York State – It’s about “reasonable cause”!
Part 11: Responding to the Sec. 965 “transition tax”: Letter to the Senate Finance discussing the effects of the transition tax on Americans abroad
Part 12 – Bulletin – June 4, 2018: It appears that the first payment for the @USTransitionTax will be delayed for some
Part 13 – Calculating the Transition Tax: Just Like Dental Work – Painful in More Ways Than One
Part 14 – Calculating the Transition Tax: The 962 Election – getting credit for the tax the corporation has paid
The Canadian Media Takes Notice …
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As Sir John Templeton said: The best time to invest is when you have the money – The 7 Habits Of Highly Effective #Americansabroad

The late Sir John Templeton pioneered the concept of “international” investing. Of course, by the standards of today, this would be considered “offshore investing”. He also pioneered the concept of “renouncing U.S. citizenship“. It is clear that Sir John’s renunciation of U.S. citizenship was the best investment decision he ever made. Like many Americans who are forced to renounce U.S. citizenship to create business opportunities, Sir John likely renounced to save his mutual fund business.
Sir John was fond of saying:
“The best time to invest is when you have money.”
Of course, that is a more difficult concept for Americans abroad. (The problem is particularly acute in Australia where it is believed that the Australian Superannuation may be subject to U.S. taxation.) Time after time, in country after country, I speak with people who avoid investing because they are Americans abroad. This is a great mistake.
It’s important for Americans abroad to heed the teaching of Sir John Templeton. They must (1) learn to invest when they have the money and (2) discipline themselves to acquire the money to invest!
One of my most consistently read posts is “The biggest cost of being a “dual Canada/U.S. tax filer” is the “lost opportunity” available to pure Canadians“.


I have been meaning to write a “follow up” post for a long time. Perhaps, the message was too simple. Perhaps it is only worth a tweet. Perhaps it’s dangerous to expand such a simple thought into multiple paragraphs, but here goes …
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Part 12 – Bulletin – June 4, 2018: It appears that the first payment for the @USTransitionTax will be delayed for some


To get to the point:
On June 4, 2018 U.S. Treasury issued the following bulletin which included questions and answers about the Sec. 965 U.S. Transition Tax.
It included Q. 16 …
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Bye Bye Storify, Hello Wakelet – My "Stories" will live in this post and be moved to https://wakelet.com/@Expatriationlaw

Today is May 15, 2018. Tomorrow Storify closes forever (unless it provides a last minute_ reprieve.
Therefore, I am creating this post to “store” copies of my 6 Storify Stories.
They are being saved here in pdf format. I have also moved them over to my Wakelet account where I will continue posts of this type.
‘Will you walk into my parlour?’ – #Americansabroad and IRS “amnesty” offers in the 2009 #OVDP
Australian Greens Senator @LarissaWaters resigns because of her CANADIAN place of birth. Too bad she was born in Canada
Can the common law “revenue rule” be used to stop the enforcement of U.S. “citizenship taxation” on non-U.S. residents?
My tax professional told me my “non-U.S. mutual fund is a #PFIC! What is a #PFIC and what do I do?
Tax, culture and how the USA uses #citizenshiptaxation to impose US culture (and penalties) on other countries
The “Pax Americana” to the “Tax Americana”: How the USA is imposing a separate, punitive tax regime on “nonresidents”

Canada U.S. Tax Treaty – Article XXVIA: How the 5th Protocol Enhances protection for Canadian citizens


Introduction – The Purpose of this post
This is an addition to “The Little Red Tax Treaty Book“.
I was recently asked the following question:
I heard that the Canada U.S. Tax Treaty means that the Canada Revenue Agency will not help the United States collect a U.S. tax debt on a Canadian citizen, provided that the person was a Canadian citizen at the time the U.S. tax debt arose. But, what if the person was NOT a Canadian citizen when the U.S. tax debt arose? Will the Canada Revenue Agency help the United States collect U.S. tax debt?
My answer to the question:
On September 21, 2007 Canada and the United States signed the 5th Protocol to the Canada U.S. tax treaty (first entered into in 1980). As a result of the 5th protocol, Paragraph 8 (a) of Article XXVIA now reads:
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