FATCA Wisdom – Short Quotes

It’s about American Exceptionalism:
Almost all countries stop taxing people when they move to another country. But, the United States taxes people more punitively when they move to another country. It’s the Hotel California.

Much of the wisdom in the world is found on bumper stickers and in short quotations

This Citizenship Solutions blog contains hundreds of posts detailing the hardships that the United States intentionally inflicts on U.S. citizens abroad. Their only crime is that they have emigrated from the United States and attempted to live lives (without interference) in new countries. Each post is a long letter and this blog is therefore a collection of long letters.

But, who has time for long letters? This post is a short letter. It lists a collection of things that I have learned in my years of advocacy against FATCA (which is the enforcement tool for “citizenship-based taxation”). This collection (inspired by Helen Burggraf) is really the equivalent of a “short letter”.

If you would like to add a quote or a thought to this page, feel free to contact me using the “Form” (no penalty associated with this “Form”) below.
_______________________________________________________________________________

The above tweet references a post from Helen Burggraf who is the editor of American Expat Finance. I have been privileged to have been interviewed by her on a number of occasions. The following excerpt from one of her recent posts is the result of those interviews.

New tax quotes describing the lives of Americans abroad in an FBAR and FATCA world

The introduction of the Foreign Account Tax Compliance Act in 2010 has resulted in the creation of a new genre of tax quotations, which Toronto-based lawyer and tax expert John Richardson has been perfecting – as anyone who has heard him speak at a tax industry event recently will know. Below are some of Richardson’s best-known quotes.

“The motto for Americans abroad should be: Report early, report often, report everything – and keep a record of what you report.”

“We’re in a situation in which the IRS is the judge, the jury and the executioner.”

“The beauty, genius and timeless wisdom found in the Internal Revenue Code include the principle that the Internal Revenue Code, in its majestic equality, punishes both Homelanders and Americans abroad for having financial assets and accounts outside of the United States.”

“Americans abroad are always the most highly taxed people in their country of residence – making them the most highly taxed people in the world.”

“The United States imposes a separate and more punitive tax system on those Americans living outside the United States than it does on Homeland Americans.”

“The IRS treats marriage between a U.S. citizen and a non-U.S. citizen as a form of tax evasion.”

“To the IRS, a non-U.S. pension is nothing but a sacred instrument of tax evasion.”

“There are two kinds of Americans abroad with problems: First, those who do not file U.S. tax returns. Second, those who do file U.S. tax returns.”

“All roads lead to renunciation.”

“If you see the word foreign in the Internal Revenue Code, the word “penalty” (usually starting at US$10,000) is sure to follow.”

“It’s not that Congress doesn’t care about Americans abroad. It’s that they don’t care that they don’t care.”

“When the United States move to ‘territorial taxation’ for corporations [in the 2017 Tax Cuts and Jobs Act], what it actually did was to expand internationally the territory over which the United States claims tax jurisdiction.”

“The single most important skill for American citizens in the 21st century is the ability to complete and file a U.S. tax return without having to resort to professional help.”

“A supporter of citizenship-based taxation is someone who has merely given some thought to the idea of citizenship-based taxation. An opponent of citizenship-based taxation is someone who actually understands citizenship-based taxation.”

“People are not renouncing because they want to cease being U.S. citizens. They are renouncing because they feel they must cease being U.S. citizens in order to survive.”

“Life is really too short to live it as a U.S. citizen abroad.”

“It takes a lot of time to be a U.S. citizen.”

“To be a U.S. citizen is to be a member of the world’s premier: Tax, Form and Penalty Club.”

“For U.S. citizens, life is just a series of forms: It’s just that some have higher penalties (and compliance costs) than others.”

“In the life of a U.S. Citizen: There are Forms, Crimes and “Form Crimes”

“Some people age gracefully. For Americans abroad the ageing process is nothing but the acquisition of tax and penalty liabilities.”

“Americans abroad may live longer. But,they are happier to die.”

“U.S. citizens: They’re not like you.”

“The Lions in Africa were “Born Free”. U.S. Citizens abroad yearn to live “Form Free”.

“If not handled properly, the Green Card is Kryptonite.”

“When it comes to U.S. taxation of Americans abroad: It’s not what you don’t know, it’s what you don’t know and couldn’t even imagine to be true.”

“Americans abroad who don’t file U.S. taxes don’t have a tax problem. They have a compliance problem. But, when they start filing U.S. taxes they will have a tax problem too.”

“For many U.S. citizens: It’s not the circumstances of their own birth that determine the outcome of their life. It’s the circumstances of their parent’s birth that determine the outcome of their life.

The 10 Commandments that all Americans abroad must obey in an FBAR and FATCA world

Read John Richardson's answer to Why are people getting rid of their US citizenship? on Quora

The 10 Commandments for Americans abroad from here (you will find lots here):

Genesis: The “Bible of the Homelander is based on two basic principles:
Principle 1: The “Bible of the Homelander” hates anything that is foreign. In fact, if the word “Foreign” appears in the “Bible”, the word “penalty” (generally starting at $10,000) is sure to follow.

Principle 2: The “Bible” is designed to punish all forms of “tax deferral” that are not “Homelander Permitted (think IRA) Tax Deferral”.
Now, from these two great principles, we will develop the “Ten Commandments” of living a clean American life outside the United States.

“Living Clean” – The Life of a U.S. citizen abroad

Here are the ten commandments of “Living Clean” that apply to U.S. citizens abroad. They are designed to ensure that:
if a U.S. citizen lives outside the United States that he lives according to the principle that:

“When in Rome, live as a Homelander” does, when elsewhere, live as they live elsewhere.”
Ten Commandments:

1. Thou shalt NOT have a bank or brokerage account outside the United States. If you do so, it must be reported to U.S. Financial Crimes on an annual basis. Failure to disclose is “Form Crime”. You may be fined an amount that is more than 300% of the value of the account.

2. Thou shalt NOT marry an “alien”. If you do so, you will have difficulty leaving your estate to him or her. Better to return to the Homeland to search for a suitable spouse.

3. Thou shalt ensure that your “alien” spouse agrees to be a U.S. taxpayer. Failure to do so, will result in your having the punitive filing status of “married filing separately”. This will guarantee greater exposure to the Alternative Minimum Tax, the new 3.8% Obamacare surtax, higher tax brackets and lower thresholds for reporting (including FATCA Form 8938) requirements.

4. Thou shalt NOT believe that the sale of your principal residence is a “tax free capital gain”. In fact, the sale of your principal residence will trigger a 23.8% capital gain which means that your house cannot be used as a retirement investment.

5. Thou shalt NOT buy non-U.S. mutual funds. If you do, you will have your gains confiscated in the form of an “Excess Distribution” Tax. Buy American. Buy U.S. mutual funds.

6. Thou shalt buy ONLY “term insurance”. Any other form of “insurance that has cash value” will be treated as a sacred instrument of tax evasion. Furthermore, if you purchase a “foreign insurance policy” thou shalt pay a special excise tax.

7. Thou shalt NOT buy or participate in an RESP, RDSP, employer pension plan, or any other kind of retirement planning vehicle which will be considered to be a TAXABLE “Foreign Trust” (with all the attendant penalty laden reporting requirements).

8. Thou shalt neither be self-employed NOR carry on business through a non-U.S. (AKA “Foreign”) corporation. If you do, punitive taxes, deemed income, and expensive reporting requirements will descend on you.

9. Thou shalt NOT relinquish U.S. citizenship. In the event that you do, you may be subjected to an “Exit Tax” which applies to your “non-U.S.” pension, “non-U.S.” assets, and assets that accumulated after you ceased to live in the United States. In addition, there are certain “Form People” who claim that you may be banished from the Homeland forever.

10. Thou shalt file, every year, file the following forms with the IRS: 1040 and all required schedules, FBAR, FATCA, 8938, 8965, 3520, 3520A, 709 (up to a maximum of up to about 45 forms). Understand that this will cost you thousands of dollars.

And this ladies and gentlemen, is why your problem is NOT “coming into U.S. tax compliance”. Your problem is “living as a tax compliant U.S. citizen abroad”. It really can’t be done (if you want any kind of life).

_________________________________________________________________________________

If you would like to add a quote or a thought to this page, feel free to contact me using the “Form” (no penalty associated with this “Form”) below.

Here are some suggestions that have already come in.

John Richardson – Follow me on Twitter @ExpatriationLaw