"The Unknown Ambassadors: A Saga Of Citizenship" by Phyllis Michaux – A great read documenting the history of discrimination against #Americansabraod prior to the #FATCA era … (also provides an interesting blueprint for effective advocacy) pic.twitter.com/4cOYOn3KRl
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) January 19, 2024
Phyllis Michaux’s achievements from the 20th century offer lessons for the many individuals and groups who are advocating to achieve justice for Americans abroad in the 21st century.
“The Unknown Ambassadors” provides an account of Ms. Michaux’s recognizing discrimination against Americans abroad as a matter of fact, identifying the laws responsible for that discrimination, identifying the appropriate U.S. government agencies to lobby for change and finally executing that change. Advocates for Americans abroad in the 21st century should read this book. A testament to her achievements is that the “Phyllis Michaux Papers” are found in the “Georgetown University Archival Resources”.
— U.S. Transition Tax – Subpart F and #GILTI (@USTransitionTax) June 26, 2023
Much of the argument before the Supreme Court in the Moore case focused NOT on whether there was income (it was accepted that the foreign corporation had realized income). Rather the discussion was focused on “due process issues”. Specifically the issues of (1) the retroactive nature of the income and (2) the fairness of attributing the income of the foreign corporation to the U.S. shareholder.
In Part 42 and Part 49 have written about the relevance of retroactivity.
Because “due process” issues were raised in the hearing, some commentators have begun discussing the “due process” issues which are part of the Moore appeal.
What follows are links to some examples of the discussion.
Outline, table of contents and purpose of this post.
Because U.S. citizenship taxation impacts different groups in different ways, it is hard to garner a significant mass of people to committed to the mission of ending citizenship taxation. There are five different groups who are impacted by citizenship taxation. Yet they would seem very different if you were to meet them in heaven.
Part A – “The Five People You Meet In Heaven” – the notion of interconnectedness Part B – Barack Obama and the revival of citizenship taxation – how did his administration “slice and dice” Americans abroad? Part C – Different kinds of Americans abroad with different attitudes toward the taxation of Americans abroad Part D – Fault Lines Among Americans Abroad – The discussion in Keith Redmond’s American Expatriates Facebook group Part E – The Five Types Of Americans Abroad Obama Would Meet In Heaven Part F – Conclusion
I will be in London on Wednesday January 17, 2024. Since I am already there, I am happy to connect with London residents who wish to discuss all things related to surviving as a U.S. citizen living outside the USA. The session is:
When: Wednesday January 17, 2024 – 18:00 – 20:00
Where: Pret A Manger 18:00 – The Sutton Arms – first floor wine room – 6 Carthusian Street, London – EC1M 6EB
Registration for the London session: Please send me an email to: email@example.com
Just tell me me your name and indicate that you wish to attend.
Read on to learn what these events/discussions are about.
Podcast – audio of the actual Dec. 5, 2023 argument before the U.S. Supreme Court (in real time) in the Moore v. U.S. @USTransitionTax case. Regrettably individuals generally (including the Moores and #Americansabroad specifically) were NOT discussed. https://t.co/l6JJScjB55
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) December 6, 2023
SEAT members Dr. Karen Alpert, Dr. Laura Snyder and John Richardson discuss their predictions on how the Supreme Court will grapple with the difficult decisions in Moore. The SEAT/AARO amicus brief is here.
Twas the Night before Moore Poem
Twas the night before Moore, when all through the court
Not a justice was stirring, not even a clerk.
The issues were hung in the briefs with care,
In hopes that the justices soon would be there.
The tax profs were nestled all snug in their beds,
While visions of fake-income danced in their heads.
And Kathleen in ‘kerchief, and Charles in cap,
Had just settled their brains for a retroactive tax.
Interested in Moore (pun intended) about the § 965 transition tax?
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) November 14, 2023
Renunciation of U.S. Citizenship – From the perspective of a U.S. journalist
.@AnaTeresaSola Please contact me if you are open to discussing your article about cit renunciation. It seems to be based on: 1. Retirees abroad with US income sources 2. Bad info about how tax treaties help US citizens. – Perhaps write a Part 2? https://t.co/l0wg4YAR95
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) November 13, 2023
It’s hard to have a discussion about why Americans abroad are renouncing U.S. citizenship. There are many different perspectives about renunciation. There is very little “shared reality”. Tax academics (who have the resources to know better), “pensioned intellectuals”, politicians and most journalists see this from a “U.S. resident perspective”. They don’t understand the reality of the lives of Americans abroad. But, Americans abroad are NOT a monolith. The ONLY thing they have in common is that they live outside the United States. Their circumstances vary widely. There is little “shared reality” among Americans abroad of what the issues are. AT the risk of oversimplification, I have attempted to divide “Americans abroad” into four categories (as defined below). The categorization will explain why different groups of “Americans abroad” experience the U.S. extra-territorial tax regime differently.
Hint:Americans abroad aren’t renouncing U.S. citizenship because they want to. They are renouncing U.S. citizenship because they feel they have to.
Politicians, tax academics, “pensioned intellectuals” and many journalists deal in the world of opinions. The opinions they hold are often “myths”. They are not “facts”. They are entitled to their opinions (as misguided and ignorant as they may be). They are NOT entitled to their “facts”.
This post is to describe the facts about how the extra-territorial application of the Internal Revenue Code and the Bank Secrecy Act pressure many Americans abroad to renounce U.S. citizenship. Interestingly a large percentage of those renouncing owe ZERO taxes to the U.S. government. They renounce anyway!
First, a bit of background to the problem – what is the problem and who is affected?
They do NOT meet the test of being “nonresident aliens” under the Internal Revenue Code
The people most affected by the U.S. extraterritorial tax system are not a monolithic group. Some left the United States recently, some left years or decades ago. Some left as adults (some young, some middle-aged, and some retirees), while others left as children (with their families), and some have never lived in the United States (they are U.S. citizens by virtue of the U.S. citizenship of at least one parent). Some intend to live in the United States (again) in the near or distant future, while others do not intend to ever live in the United States (again). Some identify as Americans while others do not. Many are also citizens of the country where they live (dual citizens) while others hold triple or even quadruple citizenships. In referring to this group, there is no one term that sufficiently reflects its full diversity. What unites them is that they do not meet the test of “nonresident alien” under the Internal Revenue Code. Depending upon the context, this series of papers will use terms such as “persons,” “individuals,” “affected individuals,” and “overseas Americans.” The latter term has a drawback, however: it emphasizes connections to the United States while minimizing the important connections that such persons have to the countries and communities where they live.
That said, what divides Americans abroad may be greater than what unites Americans abroad!
This post is a continuation of of my first post about Joe Grasmick’s “Free Trade Professionals” conference that took place in September of 2023 in Mexico City. The first post described the conference and why “citizenship matters”. The morning after the conference ended I boarded a plane for a long flight. I was still thinking about citizenship and immigration.
Usually I don’t watch movies on flights. This time (who knows why) I went through the movie selection and saw two movies where “citizenship/immigration status” played a huge role (whether directly or indirectly) on the lives of individuals. (I didn’t realize this until I watched both movies.) The new 2022 movie “Elvis” and the 1942 old movie “Casablanca” were on the menu. I watched both. Some thoughts on each …
“Elvis” the movie:
A great movie. Sure, it’s about the life and times of Elvis Presley. But, the story of Elvis also includes the role of his manager’s status as an illegal alien in the United States. A partial description includes:
Afterwards, Elvis headlines at the largest showroom in Las Vegas, the International Hotel, and resumes concert tours. Parker’s control of Elvis’ life tightens as he refuses Elvis’ request for a world tour. Motivated by gambling debts, Parker manipulates Elvis into signing a contract for a five-year Las Vegas casino residency. Elvis’ problematic behavior and prescription drug addiction overtake him, and a despondent Priscilla divorces him on his 38th birthday, taking their daughter Lisa Marie with her. After discovering that Parker cannot leave the country because he is a stateless illegal immigrant, Elvis attempts to fire him. Parker subsequently informs Vernon that the family owes him an $8.5 million debt accumulated over the years and convinces Elvis of their symbiotic relationship; though the pair rarely see each other afterward, Parker continues as his manager
How might the life of Elvis Presley been different if Colonel Tom Parker had either been a U.S. citizen or had a Green Card? Would Elvis’s career have unfolded differently? For that matter would he have died at such a young age? Clearly he would have toured outside the United States.
But, enough on Elvis. The more interesting story of the role of citizenship and immigration (and how they relate to Americans abroad) is found in the 1942 classic movie “Casablanca”.
. “Casablanca” the movie:
Casablanca is a true classic. Classics (whether books, movies or art) are interpreted in different ways, by different people at different stages in their lives. As the flight took off, I was still thinking about immigration and how everybody is an immigrant or alien somewhere. How certain people (because of their lack of citizenship are subject to a form of “citizenship apartheid“. Because my mind was in the world of immigration and because I had clearly been a “foreigner” in Mexico City, I saw Casablanca in a completely different light. As described by Wikipedia
“Casablanca is a 1942 American romantic drama film directed by Michael Curtiz, and starring Humphrey Bogart, Ingrid Bergman, and Paul Henreid. Filmed and set during World War II, it focuses on an American expatriate (Bogart) who must choose between his love for a woman (Bergman) and helping her husband (Henreid), a Czechoslovak resistance leader, escape from the Vichy-controlled city of Casablanca to continue his fight against the Germans. The screenplay is based on Everybody Comes to Rick’s, an unproduced stage play by Murray Burnett and Joan Alison. The supporting cast features Claude Rains, Conrad Veidt, Sydney Greenstreet, Peter Lorre, and Dooley Wilson.”
Although Casablance may be in part a “romantic drama film” it is certainly a story about oppression, refugees, human mobility, citizenship, chance, injustice and human survival. Coming off the immigration conference, I interpreted the movie largely through the lens of circumstance, citizenship, fortune driven by the accident of birth and how little is required to disrupt the life any person. As the movie makes clear from the outset, people came to Casablanca because they were fearing and trying to escape from tyranny and were generally trying to get to “the Americas” (the safe haven of the time).
This is the trailer.
It’s a great movie. It’s great entertainment for people of all ages. But, seen through the perspective of citizenship and immigration it exhibits many parallels to the lives of Americans abroad.
What follows are some clips that exhibit analogies to common scenarios.
Some meaningful clips from the movie Casablanca ..
A: Rick experiences an “Oh My God Moment”: On random events – sometimes bad things happen to good people…
B: About U.S. Citizenship and taxation – “It’s based on the circumstances of birth”
C: About the forced imposition of citizenship – Reminds me of the Accidental Americans – “I have never accepted tha privilege. I am now on French soil.”…
D: About the importance of the visa, passport and mobility documentation – It’s all relative … One way or the other, “citizenship matters”. Apparently Rick is always free (from an immigration and citizenship perspective) to return to the USA
E: “To renounce of not to renounce, that is the question”: On the meaning of the decision (including the renunciation decision) – If you don’t get on that plane (renounce), you’ll regret it …
F: Here’s looking at you kid – The U.S. extra-territorial tax regime (although a big problem is a “first world problem”)
G: I finally understood the origins of the title of the Wood Allan movie “Play It Again Sam” …
Mexico City – September 2023 – A reminder that citizenship matters
Last month I attended an Immigration Conference in Mexico City. It was organized by Buffalo immigration lawyer Joe Grasmick and focussed on the USMCA, CUSMA (formerly called the NAFTA Free Trade Immigration Visa- TN Visa). The conference highlighted the opportunities available to citizens of Canada, Mexico and the USA to live in any one of these three countries performing certain professional services for which they are qualified.
In a nutshell the “Free Trade Immigration” visa is an opportunity for:
1. Citizens of the United States, Canada and/or Mexico who have the status of being certain kinds of professionals (who they are and their professional qualfications); to accept
2. Certain kinds of employment (what will they actually be doing).
The devil is certainly in the details. Immigration under the “Free Trade Professional” category has its own nuances. It is certainly more difficult than it appears (and is described).
The conference was a “sobering” reminder that “citizenship matters”!
Congratulations to lawyers Stuart Horwich & James Lieber for their work and success in achieving this result for Americans abroad.
U.S. citizens considering retiring abroad on their U.S. pensions, investment income and Social Security should explore the special benefits of becoming a resident of France (and I don't mean just the wine) … https://t.co/JvLMXlCK9Tpic.twitter.com/XECemSynPH
— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) February 6, 2023
Because of the specific provisions of the France/U.S. tax treaty, U.S. citizens who are resident in France are eligible to use French income tax paid as a tax credit against the 3.8% Obamacare surtax. Depending on the terms of the tax treaty in their country of residence, it is possible that U.S. citizens residing in other countries may be able to use taxes in their country of residence as a tax credit against the 3.8% Obamacare surtax.
As described below, I expect that to be able to use foreign taxes paid as a credit against the 3.8% Net Investment Income Tax, the “Double Taxation” article in the relevant tax treaty must include a specific provision for “U.S. citizens residing in the country of residence”. (Canada comes to mind. But, I will have to some more research …)
Note that it is very possible that this decision will be appealed. The US government will be unhappy with this decision.
For more detail and analysis, keep reading. This post in organized into the following parts:
Part A – Introduction – Background Part B – Before moving to another country, pay special attention to the tax treaty between the US and that country! Part C – MATTHEW AND KATHERINE KAESS CHRISTENSEN V. UNITED STATES – Why does the US/France tax treaty work for them? Part D – Not all tax treaties are the same! What kind of tax treaty provision create the eligibility to use foreign tax credits to offset the Obamacare surtax? Part E – It’s great that I am entitled to a foreign tax credit. But, how is the tax credit to be calculated? Part F – The Question: I live in country X. May I use foreign tax credits to offset the Obamacare surtax? Part G – Dang! Can I get a refund? It appears that refunds ARE available to those who improperly were charged the Obamacare surtax! Appendix – ARTICLE 24 Of the 1994 France/US Tax Treaty with the later protocols taken into account