Tag Archives: citizenship taxation

It’s 11:00 pm – Do You Know What The @TheDemocrats Are Up To?

On May 14 – 16 the Democratic Party had its Global Annual Meeting. It’s interesting to see the resolutions proposed. (Those not dealt with will considered at a later meeting.)

Americans abroad who understand that the single most important issue facing them is US citizenship-based taxation, should be aware of resolution 18. Shockingly this resolution was proposed by FOUR MEMBERS OF DEMOCRATS ABROAD and includes (but is not limited to):

1. A strong endorsement of US citizenship-based taxation and the proposed US Wealth Tax

2. Some proposals to make US citizenship-based taxation, FATCA and FBAR work a little better

Notice in this excerpt they completely acknowledge that at best, their proposal is designed to create “de facto” residence-based taxation for some Americans abroad. To put it very simply:

Clearly (at least) some members of Democrats Abroad:

1. Do NOT want pure residence-based taxation; and

2. Are playing the same game of proposing some “carve outs” for some people, some of the time, under some circumstances.

(The retention of citizenship-based taxation allows them to keep changing the rules.)

It’s shocking that this proposal is coming from members of Democrats Abroad!

Here it is in all of its glory …

All 25 DPCA Resolutions submitted to the 2021 Global Meeting_Adopted, Withdrawn, or Deferred

Comments from Americans abroad about the effects of #FATCA and @CitizenshipTax

Those contributing to conversations on Social media about FATCA and US citizenship-based taxation would find the following to be of great value.

Those who are trying to provide education on this topic should use this book.

Those who are trying to learn about this topic should use this book.

Submission_SFC

Also, see the following video accounts here:

http://www.vimeo.com/citizenshiptaxation

John Richardson – Follow me on Twitter @Expatriationlaw

Citizenship Matters With @RonanMaCrea Part 2: The Nature Of Citizenship In A Global World

Introduction

This is a continuation of my discussion with Ronan McCrea on “citizenship matters”. My first discussion with Ronan McCrea focused on issues surrounding “citizenship by descent”. This second podcast focuses on the nature of citizenship.

The questions included:

What does citizenship mean?

What are the rights of citizenship?

What are the obligations of citizenship?

What are the different ways of acquiring citizenship?

What obligations to citizens living abroad have to their fellow citizens living at home?

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Questions to Democrat candidates about a change from @citizenshiptax to RBT should NOT assume revenue neutrality!

Appreciate these interviews from Democrats Abroad. But, they need to STOP making the question about residence-based taxation conditional on revenue neutrality!
See starting at the 9 minute mark … Separate questions about FATCA and citizenship-based taxation …
This is the @Demsabroad interview with Senator Sanders that includes two distinct questions: 1. About FATCA and 2. About residence-based taxation.
Many people have reported (based on this interview) that Senator Sanders supports residence-based taxation on a “revenue neutral” basis. This is NOT what he said. His answer did NOT include the “revenue neutral” condition. The question asked by the DA representative phrased the question in terms of revenue neutrality. (Arguably, the Senator’s answer was based on an assumption of revenue neutrality – but, I don’t think so.
My impression is that Senator Sanders did NOT condition his support on revenue neutrality. Democrats should stop building the “revenue neutrality” condition into the question. It is obscuring the meaning of the answers.
Finally, Mayor Pete when asked the question ABSOLUTELY made it clear that his support for residence-based taxation WAS based on revenue neutrality. Again, it is possible that he was NOT answering the question more generally.
I applaud Democrats Abroad for this interview series and for asking these questions of all candidates. That said, I do NOT think the question should be based on a move to residence-based taxation being revenue neutral.

Presumptions, tax residency and presumptions of tax residency: Nonresident alien status in a FATCA world

Introduction – All The World Is A Multiple Choice Test
Q.1 – A tax resident of the United States is taxable on his worldwide income. According to the Internal Revenue Code of the United States, which one of the following is NOT a tax resident of the United States of America?
(A) A Congresswoman “Born In The USA”, head of her household, who does not and has never had a U.S. Passport
(B) An unmarried Green Card Holder who has never filed an FBAR who lives in El Paso Texas
(C) A fifty year old U.S. citizen who is divorced has never set foot in the United States, doesn’t have a U.S. Social Security Number and lives in and pays full taxes in Germany
(D) A citizen of only Canada who lives four months a year in Florida with his U.S. citizen wife, in a house he owns where he parks a car he owns with Florida license plates
(E) A citizen of Grenada who lives full time in the USA with an E1 visa operating a fast food franchise
For help in finding the answer see …
https://www.law.cornell.edu/uscode/text/26/1
https://www.law.cornell.edu/uscode/text/26/2
Q. 2 – A tax resident of Canada is taxable on his worldwide income. According to the Income Tax Act Of Canada, which one of the following is a tax resident of Canada?
(A) A Canadian citizen who lives in the United States but has no business, family, social or residential ties to Canada
(B) An individual with a house and family living in Toronto who works and lives in the banking industry in the Middle East
(C) A Massachusetts resident with a summer home in Ontario, Canada in which he visits 180 days every year
(D) An individual who is a legal permanent resident of Canada but actually lives in Hong Kong
(E) A rich Canadian who buys permanent residency in Portugal and uses a tax treaty tie breaker provision to deem himself to be a tax resident of Portugal
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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.


Which is why it saddens me to read …


Please remember that …


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

Determining Tax Residency In the United States: Citizenship and other forms of deemed tax residence

Introduction


The advent of the OECD Common Reporting Standard (“CRS”) has illuminated the issue of “tax residency” and the desire of people to become “tax residents of  more “tax favourable” jurisdictions. It has become critically important for people to understand what is meant by “tax residency”. It is important that people understand how “tax residency” is determined and the questions that must be asked in determining “tax residency”. “Tax residency” is NOT necessarily determined by physical presence.
What is meant by tax residence? Different rules for different countries
All countries have rules for determining who is a “tax resident” of their country. Some countries have rules that “deem” people to be tax residents. Other countries have rules that base “tax residency” on  “facts and circumstances”. Canada is a country that bases “tax residency” on either “deemed” tax residency OR tax residency based on “factual circumstances”.
What if a person qualifies as “tax resident” of two countries?
When an individual (who is NOT a U.S. citizen) is a “tax resident” of two countries, it is common to consider any tax treaty between those two countries. Often the tax treaty will contain a “treaty tie breaker” provision which will allocate “tax residence” to one of the two countries. (Note that the “savings clause” which is found in standard U.S. tax treaties prevents U.S. citizens from having most tax treaty benefits. Note “treaty tie breaker” provisions are available to Green Card Holders.)
In summary: for the purposes of the “CRS”, tax residence is determined by BOTH a country’s domestic laws AND tax treaty provisions that assign “tax residence” to one country.
Even though the United States has chosen to NOT participate in the OECD “Common Reporting Standard” (CRS), and is NOT a “reportable jurisdiction, the OECD reminds us of the rules for determining “U.S. tax residency”.


Deemed tax residency in the United States …


The IRS discussion of “U.S. Tax Residency” includes:
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Determining Tax Residency in Canada: Deemed resident vs. factual resident

Let’s begin with the law as stated in the Income Tax Act of Canada …

Taxation in Canada is governed by the Income Tax Act of Canada. Sections 1 and 2 of the Act read in part as follows:

Short Title

1 This Act may be cited as the Income Tax Act.

PART I Income Tax

DIVISION A Liability for Tax

2 (1) An income tax shall be paid, as required by this Act, on the taxable income for each taxation year of every person resident in Canada at any time in the year.

(This does NOT say that ONLY those “resident in Canada” are required to pay Canadian tax. In fact there are circumstances under which nonresidents of Canada are also required to pay different kinds of Canadian tax.)

Searching for the meaning of “resident in Canada” …

Tax Residency” is becoming an increasingly important topic. Every country has its own rules for determining who is and who is not a “tax resident” of that country. The advent of the OCED CRS (“Common Reporting Standard”) has made the determination of “tax residence” increasingly important.

At the risk of oversimplification, a determination of “tax residency” can be based on a “deeming provision” or decided by a determination “based on the facts”. Some countries base “tax residency” on both “deeming provisions” and a “facts and circumstances” test.

Tax Residency in Canada – “Deemed residence” or “ordinary residence based on the facts” …

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Physical presence as a necessary condition for being a US "resident" under the Internal Revenue Code

Introduction

Every country in the world with the exceptions of Eritrea and the United States claim tax jurisdiction based on “residence”. Although the tests for “residence” may differ, “residence based taxation” means that it is possible to sever your tax connection to a country by severing residence.

The nations of Eritrea and the United States impose taxation based on citizenship. U.S. citizens (primarily those “Born In The USA”) can NEVER sever their tax connection to the United States as long as they remain citizens. When it comes to U.S. citizenship-based taxation it is possible to NEVER have lived in the United States and still be subject to taxation!

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Part 13: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Colonizing other nations by imposing US taxation on the world

Introduction – FATCA is really about extending the U.S. tax base into other nations …
In other words, FATCA is more about the “creation of taxable income” than it is about the “taxation of existing income”. This point was also made in my “Tax Haven or Tax Heaven Series“.
 


What follows is a comment that I tried to leave on the following blog post:
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