Tag Archives: FATCA

Fascinating discussion with @Scaramucci: They want the #expat vote, but don’t want to understand the #FATCA life! #Citizide continues

Fascining discussion. In this election season the politicans are agressively courting the vote of Amerians abroad. Yet, they seem unwilling to take the time to understand the problems of Americans abroad and how FATCA has destroyed many life – resulting in many renunications of US citizenship.

Proposal by @JoeBiden to increase the GILTI tax has particularly vicious implications for #Americansabroad

Introduction

Taxation is what America is about and America is about taxation.

Perhaps it’s better to say that:

Politics is about taxation and taxation is about politics.

Once Upon A Time In America

The primary legislative achievement of President Trump’s first term was the 2017 TCJA. It’s important to note that the TCJA had it’s genesis in the work of Michigan Congressman Dave Camp and was the result of a long term project of reworking the US tax system. It is absolutely incorrect to suggest that the TCJA was developed by the Trump Administration. It should not be referred to as “Trump Tax Reform”. That said, because of the “politics” involved in enacting the TCJA, the Trump Administration and Republican Controlled Ways and Means Committee, did impact the legislation at the margins. (Rate of repatriation tax, etc.)

Like all tax legislation the TJCA had clear winners and clear losers.

The TCJA Winner(s)

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About #FATCA and @Citizenshiptax: Here is the @DemsAbroad Interview with @AmyKlobuchar on January 22, 2020

Amy Klobuchar speaks to Democrats Abroad!

Join our global town hall with presidential candidate Amy Klobuchar! We’ve invited every Democratic Presidential candidate to join a call with us to discuss the issues that matter most to Americans abroad and give you the chance to get to know our candidates.

Posted by Democrats Abroad on Wednesday, January 22, 2020

This is an interesting interview with an interesting candidate. But, it is very clear that Senator Klocbuchar (1) believes in FATCA and (2) has no interest in abolishing citizenship-based taxation. You can pick this up at the 27 minute mark.

It’s interesting that the two candidates endorsed by the New York Times (Elizabeth Warren and Amy Klobuchar) are hostile (more so than most other Democrats) to the interests of Americans abroad.

Here is an interesting Facebook discussion about this interview, which includes the following comment:

DA Q and Sen K A on RBT: DA: Most Americans living abroad think that the time has come for residency based taxation, the principle guiding all other country’s tax systems and a fix for numerous unjust burdens on Americans living and working abroad. Now there are bipartisan, revenue neutral proposals to implement our Beatie that include robust provisions to protect the laws from abuse by tax evaders. All we need is a moment of leadership to get this done. Will you be that leader?

Sen K: Well, I have not taken a position to change that at this time. I’m always open to looking at things. And if I could just step back on our taxes in general. There just has not been the opportunity to step back and look at our tax code to see what works for regular people. Because when you think about it, when President Obama was in, we did some things, but we were in a deep recession and it was hard to make the changes that need to be made. Then President [00:03:30.0] Trump comes at it and they pass his tax bill, which really. Oh, wait. It was weighted toward people at the top and has added over a trillion dollars in debt. And when you look at his time period, while he gloats about what things, what’s happening in our country, we’ve had a 30 percent over the last decade, even before him slow down in startups. We call it the startup slump because of consolidations and other things. And we just don’t have a good tax enforcement, as I already mentioned. And then there’s just a bunch of things I think that we need to change. When it comes to our tax code, including closing some loopholes and doing something about the Buffett Rule and bringing in reversing some of the corporate tax cuts he made, I was in the group that wanted to bring the corporate tax rate down, but not to the level near the level that he brought it to. Every pointing went down was one hundred billion. And I would actually take a big chunk of that money and put it into infrastructure. Another chunk to start working on the deficit, which is brought to record levels. And I just think there’s much more we have to do to keep our economy strong for the long term.

The interview speaks for itself. It’s as though the Democrats think that the only purpose of life is to avoid taxes.

It’s pretty clear that a vote for the Democrats is a vote against Americans Abroad. (I am not, by this statement, taking any position on the Republicans.

IRS Relief Procedures For Former Citizens Update – Relief For Former Green Card Holders Coming!

Introduction

On December 17, 2019 Gary Carter published a post on Tax Connections, which outlined the “Options Available For U.S. Taxpayers With Undisclosed Foreign Financial Assets“. It contained an excellent overview and analysis which included a discussion of the IRS definition of “non-willfulness” under the Streamlined Program. In commenting on the definiton of “non-willful” he noted that:

The IRS definition of non-willful covers a lot of territory. Negligence, for example, includes “any failure to make a reasonable attempt to comply with the provisions of the Code” (IRC Sec. 6662(c)) or “to exercise ordinary and reasonable care in the preparation of a tax return” (Reg. Sec. 1.6662-3(b)(1)). Further, “negligence is a lack of due care in failing to do what a reasonable and ordinarily prudent person would have done under the particular circumstances.” (Kelly, Paul J., (1970) TC Memo 1970-250). The court also stated that a person may be guilty of negligence even though he is not guilty of bad faith. So the fact that you ignored the FBAR filing requirements for many years, and failed to report your foreign income, might be negligent behavior, but it’s probably not willful. That means you likely qualify for one of the new streamlined procedures. On the other hand, if you loaded piles of cash into a suitcase and lugged it over to Switzerland to conceal it from the IRS, you don’t qualify, because that is willful conduct. If you believe your behavior may have been willful under these guidelines, consult with an attorney before submitting returns through one of the streamlined procedures. We work with attorneys who are experts in this field and we would be happy to provide a referral, free of charge or obligation.

Notably, the definition of “non-willfulness” for the Streamlined Program is the same as the definition for the new “IRS Relief For Former Citizens Program”.

Part A – IRS Relief For Former Citizens Who Relinquished U.S. Citizenship After March 18, 2010 (the date FATCA became law)

The program was announced on September 6, 2019.

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Recently Released Survey Report Dispels Myth of the Wealthy American Abroad and Demonstrates Why Middle Class Americans Abroad Are Forced To Renounce US Citizenship

This blog post features the research of Laura Snyder. It is (I believe) the single and most comprehensive study of (1) the U.S. legislation that is understood to apply to Americans abroad and (2) the disastrous impact this legislation has on them. To put it simply, Congress is forcing Americans Abroad to renounce their U.S. citizenship.

The bottom line is that for Amerians Abroad:

“All Roads Lead To Renunciation!”

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And now over to Laura Snyder with thanks.
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Part 2: Because banks and people are not the same: @RepMaloney #FATCA amendments require foreign banks but NOT individuals to report custodial accounts

Introduction:


FATCA imposes obligations on both foreign banks (report on individuals to the IRS – Internal Revenue Code Section 1471) and obligations on individual Americans abroad (report foreign assets to the IRS – Internal Revenue Code 6038D).
Depository vs. Custodial Accounts
In general a “Depository” accounts is a basic day-to-day bank account (checking, savings, etc.)
In general a “Custodial” account is a brokerage or other account that holds assets for management.
The Maloney bill addresses these obligations (with respect to the reporting of “Custodial” accounts) differently.
The Maloney bill and foreign banks – Section 1471 Amendments – custodial accounts are reportable
Representative Maloney’s H.R. 4362 – “Overseas Americans Financial Access Act” – includes relief provisions for both foreign banks AND for individual Americans abroad.
My previous post discussed how the Maloney bill impacts the reporting requirements of foreign banks. Notably the Maloney bill relaxes the reporting requirements for foreign banks ONLY with respect to depository accounts.
The Maloney bill and individuals – Section 6038D Amendments – custodial accounts not reportable
It appears that the Maloney bill would relax the Form 8938 reporting requirements for individuals with respect to BOTH depository and custodial accounts. Although not a model of clarity, it means that (as a general principle) Americans abroad would not be required to report their local (foreign to the USA) accounts (depository or custodial) to the IRS. This is a variant of what has been called FATCA SCE (“Same Country Exemption”).
Bottom Line: Foreign banks and Americans abroad do NOT get the same treatment under the Maloney bill. Is this an oversight? Is it careless drafting? Is it deliberate?
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Technical analysis (of interest to few people) follows:
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December 31, 2019 and US Born individuals living outside the USA without having a Social Security Number

Introduction – “The Little Red FATCA Book”

More at:

The Two Ugly Faces of FATCA – One for foreign banks and another for US persons

The Obligations of the banks under the IGA

These obligations are described in the FATCA IGA entered into between the United States and the other country. In general the IGA requires non-U.S. banks to “Review, Identify and Report” on U.S. citizens.

The Obligations of the individual taxpayer under IRC 6038D – Form 8938
The mandatory reporting which takes place on Form 8938 is mandated Internal Revenue Code 6038D.

Non-US AKA “Foreign Banks” – The Problem of US Born customers who do NOT have a US Social Security Number are they in danger of their bank accounts being closed?

Those accused of being U.S. citizens who are NOT U.S. citizens have the opportunity to “self-certify” they are NOT U.S. citizens

The Possibility of being “Born In The USA” but NOT being a U.S. citizen

The Possibility of being “Born Outside The USA”, acquiring U.S. citizenship at birth but NOT being a U.S. citizen today

Looks like being “Born In The USA” may not be a great thing!

John Richardson – Follow me on Twitter @ExpatriationLaw

Part 1: #FATCA is: Maloney "Overseas Americans Financial Access Act" is the wrong answer to the right question

Introduction and purpose …


On March 18, 2010, President Obama signed FATCA (“Foreign Account Tax Compliance Act”) into law. FATCA was:
– a revenue offset provision to the HIRE Act
– a series of conforming amendments to the Internal Revenue Code that:
(a) imposed requirements on Foreign Banks (Internal Revenue Code Sections 1471 – 1474); and
(b) imposed reporting requirements on individuals (Internal Revenue Code 6038D). Those reporting requirements are expressed in Form 8938.
On September 17, 2019 Representative Maloney introduced H.R. 4362 – “Overseas Americans Financial Access Act” – which introduced changes to BOTH the FATCA requirements imposed on Foreign Banks and requirements imposed on Individuals.
This post discusses ONLY the aspect to the Maloney bill that “relaxes” the requirements on Foreign Banks. I have writen a separate post discussing how the Maloney bill would impact individuals.
(Those interested in learning more about FATCA may be interested in my “Little Red FATCA Book)“.
The Maloney Bill is NOT The Same As SCE Previously Drafted!
The Good News:
The Maloney bill appears to apply to ALL Americans abroad – without regard to whether they are compliant with their U.S. tax filing requirements. (A previous version of SCE applied ONLY to Americans abroad who were compliant with their U.S. tax filing requirements.) Interestingly, the Bill (like Internal Revenue Code 911) would NOT apply to “permanent residents (Green Card Holders) in exactly the same way.
The Bad News:
The bill as drafted gives the banks the option to either continue to report on the depository accounts of Americans abroad or not. This is an option available to the bank. I (along with many others) suggest that banks will NOT be willing to engage with individuals with respect to whether they meet the requirements of the Maloney bill. The exact language of the bill includes:

(i) IN GENERAL.—Unless the foreign financial institution elects to not have this subparagraph apply, such term shall not include any depository account maintained by such financial institution if each holder of such account is—

The Maloney bill is too narrow in application
The bill as drafted applies ONLY to “depository accounts”. This means that the bill applies only to day-to-day bank accounts. It specifically does NOT apply to “custodial accounts”. This means that it excludes investment accounts, brokerage accounts, etc.
Verdict: The Maloney bill is clearly far too narrow. There is no reason why the Maloney proposal should not extend to ALL accounts (depository, custodial or any other kind of account) held by an American living outside the United States.
The technical analysis (which will NOT be of interest to the average reader) follows. It consists of Part A to Part D.
Thoughts and Suggestion
The Maloney bill is symbolic. It is not a serious attempt to alleviate the problems of Americans abroad. Representative Maloney should – as a Democrat – support Representative Holding’s “Tax Fairness For Americans Abroad Act of 2018”.
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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