The Devil is in the Details When it Comes to the U.S. Exit Tax

reposted from isaac brock society
 

A very   interesting discussionabout the Exit Tax has been taking place at Brock this week. In particular, the comment below from USCitizenAbroad highlights some of the major differences between the U.S. Exit Tax and the more benign Departure Tax that occurs in Canada and Australia. It cannot be overstated how punitive and destructive the U.S. Exit Tax is and anyone contemplating renouncing, should be certain to be familiar with all aspects of it; do a preliminary set of returns and an accurate accounting of all assets including pensions. While anyone can renounce at a Consulate before filing tax and information returns, anyone who is close to being “covered” should get counselling before taking such a step.

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USCitizenAbroad says says:

@Watcher makes the point that:

As you see, then, the devil is very much in the detail. These latter two things have no analog in the Canadian exit tax. So… the US is not the only country to have an exit tax, but the exit tax it does have is one of the worst. And very likely the actual worst.

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Is U.S. Treasury Secretary Nominee A Real Tax Cheat?

Hmmm. Donald Trump’s nominee for Treasury Secretary failed to disclose $100 million in assets and “forgot” to mention his corporation in the Cayman Islands.

Don’t worry. Steven Mnuchin assured U.S. Senate it was all “a simple mistake made amid a mountain of bureaucracy.” His “oversight..was unintentionsal.”

Mr. Mnuchin says

Filling out these forms is quite complicated.

He insisted he does pay all his taxes. I wonder if he shares the view of Trump that a billionaire not paying taxes “makes (him) smart.”

I suspect Mr. Mnuchin doesn’t like FATCA very much–if he even knows what it is. He does want to make things simpler.

“I would support changing the tax laws to make sure they are simpler and more effective.”

So dare we hope he would actually bring forward the Republican resolutions to repeal FATCA and move to residence-based taxation?

Accidental Americans (And Others): Do Nothing!

Backing up the above tweet, Keith Redmond posted the following on Facebook:

Dear Members: I just had a lengthy, robust call with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas ho have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas need to not succumb to the fear. Excellent conversation and I am glad my views have been validated.

This reflects what I have long believed. Unfortunately, there is still the nightmare of FATCA to deal with. In some countries, anyone born in the US cannot even get bank accounts. We are treated as criminals just for banking where we live.

I asked Keith how his contact explains and justifies this.

Keith replied:

He can’t. He finds the whole situation abhorent…

Accidental American “I Live Hell. I Had to Give up my dual Nationality. (i.e., Renounce my U.S Citizenship)”

original article in French HERE

reposted from Anmerican Expatriates Facebook Group

ACCIDENTAL AMERICAN’: I LIVE HELL. I HAD TO GIVE UP MY DUAL NATIONALITY (I.E. RENOUNCE MY US CITIZENSHIP)

Keith Redmond says:

Thank you Fabien Lehagre or making sure this injustice stays in the press! The homeland US press refused to report on it. I know Caroline and her story is one of millions where the US government is ruining the lives of people outside the US.

English translation below.

carolinec Caroline, 37, was born in the U.S. of French parents and lived there for two years. Franco-American, her dual nationality was unfavorable to her when she discovered that she had to pay taxes there. The U.S. is one of the only countries in the world to base the taxpayer’s status on nationality and not on place of residence. Stuck in a legal imbroglio, it tries desperately to regularize its situation.

Caroline says:

I was born in 1979 in Los Angeles. My parents were French, but they were expatriates in the United States for professional reasons.

All my life, I had dual French-American nationality. Even though I only lived for the first two years of my life on the other side of the Atlantic, I always found it amusing to have this double status. I was the only one of my siblings to have this peculiarity.

I remember returning to the United States when I was seven, then in 2008 with my husband. Always with my French passport since I never redone my American identity papers.

A legacy blocked because of “my clue of americanity”

Since July 2014, France and Switzerland have undertaken to disclose the tax data of their US residents. For the moment, this device is not reciprocal. As a lawyer, I had heard about the Fatca (Foreign Account Tax Compliance Act), a law to combat tax evasion, but I never thought I would be directly involved.

I have always paid my taxes in France, and since I have never really lived on American soil, why should I have had to pay taxes in the United States? I was wrong. In reality, the United States is one of the only countries in the world to base the taxpayer’s status on nationality and not on place of residence.

I understood it in September 2014, a few months after the death of my father. The succession had to be settled. I thought there would be no worry, but I received a letter from my father’s bank, BNP-Paribas, to point out that I had a “clue of americanity” because of my place Of birth. So I was concerned about the famous Fatca law.
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Seeking Canadian Witness for Canadian FATCA IGA Lawsuit Who Has Renounced and Paid U.S. “Exit Tax”

Are you a Canadian citizen and resident and have you renounced U.S. citizenship and have paid or are subject to the U.S. Exit Tax (IRS 877A)? [No, I do not mean the $2350 fee.]

If so, we ask you to consider being a Witness in our Canadian FATCA IGA lawsuit.

You might have renounced U.S, citizenship but own a now valuable house in Toronto/Vancouver/London etc. and have (because interest rates are now very low) a very valuable pension — and had to pay a U.S. exit tax.

Information on the exit tax and examples of the exit tax can be found at the citizenshipsolutions.ca site.

We are specifically seeking as a possible Witness in our Canadian FATCA IGA lawsuit a person who:

Has renounced and has paid an exit tax (the ideal witness);

– Has renounced and will be subject to exit tax;

– Is intending to renounce and know that they will have to pay exit tax; and

– Cannot afford to renounce because they have no way of paying the exit tax

Again, the person likely affected will be one who happens to own a now valuable home in Vancouver etc. that has appreciated markedly over the years and a company pension for which the cashed out value of the entire pension (NOT the monthly distribution) is sizable. Typically, only the pension company can accurately calculate the value of your pension.

The U.S. demands in the exit tax a percentage of your Canadian-made assets as punishment for renouncing.

If interested, email me at: Stephen.Kish.Chair@adcs-adsc.ca

Your name and situation will be made public in a submission to the Federal Court of Canada.

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