On April 26, 2022 Creative Planning (Formerly Thun Financial) ran a webinar on PFICs. What follows is a link to the webinar.
PFIC – April 2022
https://attendee.gotowebinar.com/recording/6339022506851871235
On April 26, 2022 Creative Planning (Formerly Thun Financial) ran a webinar on PFICs. What follows is a link to the webinar.
PFIC – April 2022
https://attendee.gotowebinar.com/recording/6339022506851871235
Introduction
Life is full of rude awakenings. More and more people are experiencing their OMG moment …
The Twin Horrors Of FATCA And Taxation Based Citizenship as described by @Amy_From_Sydney https://t.co/SHxNUp37WR via @YouTube
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) February 20, 2022
This is Part 2 of the series. In Part 1, I identified that it is essential that individuals (and governments) unite to bring an end to the US tradition of “citizenship taxation”. “Citizenship taxation” – what a phrase. The words are not descriptive of anything. It clearly has something to do with some form of taxation. The inclusion of the word “citizenship” makes it sound almost patriotic. But maybe, not. Maybe it’s just part of what means to be a citizen. Since only the United States has citizenship taxation, perhaps taxation is what it means to be a US citizen. If so, then perhaps US citizenship should be called “taxation based citizenship”. The concept of citizenship means different things in different countries. Is this a statement that the essence and the meaning of US citizenship is taxation and only taxation?
Citizenship Taxation – Theory vs. Reality
A supporter of citizenship taxation is someone who THINKS about “citizenship taxation”. An opponent of citizenship taxation is anybody who has tried to LIVE under citizenship taxation.
https://www.citizenshiptaxation.ca
I guarantee you that there is not a single supporter of US citizenship taxation who actually understands it!
Toward An Understanding: Citizenship Taxation And The Seven Deadly Sins
Introduction – The First Of A Series Of Short Posts
My name is John Richardson. I am a Toronto, Canada based lawyer. I am also a founding member of “SEAT” (“Stop Extraterritorial American Taxation”). I am an advocate for reforming the US laws which apply to US citizens who live outside the United States as permanent residents of other countries. The problems experienced by Americans abroad are at the “boiling point” and something must be done. This post is motivated by the following twitter thread which reveals the pain, desperation, anger and divisiveness experienced by Americans abroad:
FOR IMMEDIATE RELEASE – Taxation Task Force submission to @WaysMeansCmte Oversight Subcommittee in advance of hearing with the @YourVoiceAtIRS on Challenges facing taxpayers https://t.co/RY7M37kfCB #Taxation #IRS
— Rebecca Abroad (@AbroadRebecca) February 7, 2022
This is the first of a series of short posts in which I will share my thoughts and suggestions for how to proceed. I welcome your comments both here and on twitter where I am @Expatriationlaw.
Blind Partisanship Is Not Productive
I want to state at the outset that I am an independent and am not a member of any political party. I have been and continue to be supportive of independent candidates in Canada (and anywhere else). I state this because during this series of posts, I will express sentiments that are critical of political parties. When I criticize the Democrats it’s not because I am a Republican. It’s because the Democrats are deserving of criticism (or vice-versa). Healthy democracies are dependent on accurate observations and objective analysis. Excessive partisanship is simply an excuse for reasoned analysis.
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) February 19, 2022
The Difficulty Of Living As A US Citizen Outside The United States
First, if you are a “retiree living abroad” where all of your income is US sourced this post is NOT for you. You are filing the same US tax return while “retiring abroad” that you would if you were living in the USA. You are probably filing tax returns ONLY in the USA. Therefore, the US citizenship tax regime does not impact you in the same way. This post is for those who live permanently outside the United States and your income sources, assets and retirement planning are associated with the tax systems of other countries (foreign to the United States).
Second, As permanent residents of other countries, US citizens are treated as BOTH tax residents of the United States and tax residents of the countries where they live. In other words, they are subject to the full force of two (often incompatible) tax systems. Think of it. US citizens living outside the United States are subject to the tax systems of two countries at the same time. Leaving aside the anxiety this induces, the time that it takes to comply, the heightened threats of penalties and the outrageous costs of compliance (think tax accountants and lawyers), this puts Americans abroad in a position where:
1. They are subjected to a tax system that is more punitive than the tax system imposed on US residents
2. They are often subject to double taxation (the foreign tax credit rules and the Foreign Earned Income Exclusion do not prevent many forms of double taxation)
3. The US tax rules prevent them from engaging in the normal financial planning and retirement opportunities (Canadian TFSA and UK ISAs are not tax free for US citizens)
4. In many countries, because and only because of their US citizenship they are prevented from maintaining the normal financial accounts they need to live in a normal way (this is the direct result of the 2010 Obama FATCA law)
The cumulative weight of these problems is that US citizens living outside the United States are being constructively forced to renounce their US citizenship in order to survive. But, it gets worse. Since June 16, 2008 certain Americans abroad who renounce US citizenship (“covered expatriates“) are forced to pay a special expatriation tax on their non-US assets to achieve this goal. (You can find a video of my discussing US citizenship renunciation here.)
Americans abroad are NOT renouncing because they don’t want to be Americans. They are renouncing because the US tax and regulatory regime is forcing them out of their US citizenship!
It’s The System Not The Parties
Regardless of which political party is in power, tax laws will continue to change.
As long as the United States employs citizenship-based taxation, changes in US tax laws will continue to have dramatic (sometimes intended and sometimes unintended) effects on Americans abroad. These negative effects and outcomes will continue regardless of which political party is in power.
For example:
Another example of the evil of @citizenshiptax imposed on #Americansabroad. The 3.8% NIIT cannot be offset by foreign tax credits which guarantees the double tax of #expats. Shouldn’t @AbroadRebecca be complaining? @Taxresidency cannot be based on citizenship period. https://t.co/4dbIPy38KT
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) February 13, 2022
The 2017 TCJA became law under the Republicans. The effects on Americans abroad were horrible. (Examples include: Transition Tax, GILTI, those using the “Married Filing Separately” category were required to file with zero income)
The 2010 FATCA law was enacted under the Democrats. The effects on Americans abroad were horrible. (Examples include: Form 8938, FATCA bank account closures, etc.)
Therefore, it is a mistake to bicker over which political party has done more or less damage to Americans abroad. As long as citizenship-based taxation continues and tax laws continue to evolve, whatever political party is in power will – by changing tax laws – continue to damage the lives and finances of Americans abroad.
Individual American Abroad Must Unite To Get This System Of Law Changed
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) February 19, 2022
Conclusion for today: The problem is the system! It’s not the political parties.
You have the right to vote. The question is not which party to vote for. The question is how can you most effectively use your vote to end US citizenship-based taxation and encourage FATCA repeal.
To be continued …
John Richardson – Follow me on Twitter @Expatriationlaw
The words “exit tax” should not be included in any discussion of RBT that includes existing #Americansabroad and what non-US assets they have. People should not have to buy their freedom.
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) May 23, 2021
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.
Also, see the following video accounts here:
http://www.vimeo.com/citizenshiptaxation
John Richardson – Follow me on Twitter @Expatriationlaw
Prologue
The United States imposes a separate and more punitive tax system on US dual citizens who live in their country of second citizenship https://t.co/OLCYn7G211
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) March 12, 2019
Do you recognise yourself?
You are unable to properly plan for your retirement. Many of you with retirement assets are having them confiscated (at this very moment) courtesy of the Sec. 965 transition tax. You are subjected to reporting requirements that presume you are a criminal. Yet your only crime was having been born in America (something you didn’t even choose) and attempting to live as a U.S. tax compliant American outside the United States. Your comments to my recent article at Tax Connections reflect and register your conviction that you should not be subjected to the extra-territorial application of the Internal Revenue Code – when you don’t live in the United States.
The Internal Revenue Code: You can’t leave home without it!
As 2018 comes to a close, the “Retain or Renounce” discussion intensifies. American Citizens Abroad (ACA) writes that …
Excellent! @ACAVoice makes case for USA to stop imposing worldwide taxation on people with @taxresidency in other countries and do not live in the USA – #Americansabroad are on life support https://t.co/hJUuo0CBlF pic.twitter.com/rBimCprWky
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) November 2, 2018
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 …
To hear the snippets of the discussion continue on …
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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“.
Why #Americansabroad renounce U.S. citizenship: The biggest cost of being a "dual Canada/U.S. tax filer" is the "lost opportunity" available to pure Canadians https://t.co/SZjNRSUEin via @ExpatriationLaw
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) August 6, 2018
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 …
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”
Q. What do #MeghanMarkle and the @USTransitionTax have in common? A. They are two news items of 2018 that will draw attention to U.S. policy of imposing "worldwide taxation" on people who have @taxresidency in other countries and do not live in the USA. https://t.co/G8Q7l3KSdQ pic.twitter.com/Co7OmQiXn7
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) April 16, 2018
This is the ninth in my series of posts about the Sec. 965 Transition Tax and whether/how it applies to the small business corporations owned by taxpaying residents of other countries (who may also have U.S. citizenship). These small business corporations are in no way “foreign”. They are certainly “local” to the resident of another country who just happens to have the misfortune of being a U.S. citizen.
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Introduction – The war against corporations and the shareholders of those corporations
Corporations as entities that are separate from their shareholder/owners
As every law students knows, a corporation is a legal entity that is separate from its owner. As a legal entity that is separate from its owner, a corporation is capable of holding assets, carrying on a business and investing in a way that results in separation of the shareholder(s) from the business itself. It is a mistake to infer that the corporation’s status as a separate legal entity means that the corporation’s income will not be taxed to its shareholders.
Corporations as legal instruments of tax deferral
When corporate tax rates are lower than individual tax rates, there is incentive for individuals to earn and invest through corporations rather than to earn and invest as individuals. In other words, in certain circumstances, corporations can be used to pay less taxes.
Corporations as instruments of tax evasion
In many jurisdictions is it possible to create a Corporation and NOT disclose the identities of the beneficial owners. Because of this circumstance:
1. Corporations (as was made clear in the “Panama Papers Story”) can be used to hide income and assets for either legitimate or illegitimate reasons; and
2. Corporations can be used to avoid the attribution of income earned by the corporation to the shareholders.
Corporations and the rise of @TaxHavenUSA
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