Disproportionate Effort to Chase a Few

Estimated world population as of Oct. 31, 2011    7 billion

Estimated population of the U.S. for 2012             313,281,000

Estimated number of U.S. citizens living abroad  6 million

Estimated costs to administer FATCA and chase those 6 million- billions of dollars forever. Net benefit to be derived at the best is most likely zero but is more than likely to be negative because the taxes collected are not likely to ever exceed the cost of FATCA compliance.  Of course we will never know because the U.S. very conveniently refuses to establish any criteria for costs calculation.

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174 thoughts on “Disproportionate Effort to Chase a Few

  1. You could add a third line –

    Est US Citizens Living Abroad – 5,000,000 to 6,000,000

    So…you’re asking 100% of the world to track down 0.08% of world population of US Citizens Abroad – it looks even more crazy.

  2. @john- actually it is even worse at 0.00897 of the world’s non-U.S. population. If you factor in the resident U.S. population then the number is .000857. Even U.S. resident citizens will unknowingly have to pay, most likely via capital outflows, for this in some way but their politicians are not telling them this truth.

  3. Unless the FFIs say hey this is going to be expensive and ask the US to come up with $100 million for each major FFI to cover the costs.

    Remember Emily McMahon suggested giving the FFIs a cut of the revenues the US collects. I think she said 25% for the FFI and 75% for the US. The FFI still comes out on the losing end with that kind of deal. It’s going to cost them $10 for every $1 they collect.

    FATCA is badly conceived and can’t possibly work unless the world’s banks are complete idiots with deep pockets who are willing to allow themselves to be robbed by the US government.

  4. Oh and how would a major (likely public) bank justify spending $100M to it’s shareholders for something that will have no benefit to them? Could shareholders sue the bank for wasting their money?

  5. If someone has at least 1 share in a bank, why don’t they go to the next AGM and complain to the officers why $ millions are being wasted on FATCA and why should the shareholders help out the US Government.

  6. I posted this at the sad excuse of a lawyer’s blog at http://ataxingmatter.blogs.com/tax/2012/03/still-havent-filed-your-fbar-dont-wait-til-you-get-hit-with-forfeiture-like-this-alaska-plastic-surg.html#comment-6a00d8341cf2a753ef0163039a535b970d

    I assume that when Russia, China, Pakistan, Eritrea, Lebanon, Zimbabwe, Korea (North and South) and India, among other nations, pass laws that all US-based financial institutions must inquire into their customers’ birthplaces and if such birthplace is any of these nations and the person does not produce a certificate of renunciation, the American banks will be required to send these bank records to these nations, you will still be speaking of “scofflaws” who are denying their responsibilities and enjoying “the best of both worlds.” Do you have ANY IDEA what the rest of the world makes of these American actions and laws? Really?
    The large majority of those of us unfortunate to have been born in the USA and now living outside the USA would be dancing in the streets if the US subscribed to section 15 of the Declaration of Human Rights and allowed us to change her citizenship!

  7. @usx – I don’t believe there are 6 million, especially if you consider only the people who were born in the US, not naturalised. After all, for people who were born abroad, but naturalised, saying that they have zero US connections is very easy. For someone who was “lucky” enough to have been born in the US, it’s much more difficult due to place or birth on your passport.

    The biggest slap on the face is that I was reading over census data this morning. Illegal aliens are counted in the US census, but not us!! And yet they demand taxes from people like when I have already been sucked dry. Commmoon!

    The US could have made this extremely easy: only profile people with 1 million+ in their accounts. It sure would have saved the banks and everyone else a lot of time and expense.

  8. @geeez- Of course the easiest thing would have been to adopt a system of territorial taxation but the U.S. legislature never takes the straightest route between two points.

  9. @Petros, it had something to do with monkeys having the capabilities to become lawyers 🙂

  10. I said that 99% of us living abroad owed no taxes. And her ignorance showed that if you put enough monkeys together eventually one of them would become a US law professor.

    [the old “with enough monkeys using typewriters one would eventually type out the Encyclopedia Britannica”]!

  11. I can´t understand… American Abroad don´t deposit money and make investment in “foreign” banks, They do it in their local banks where they are residing, working and earning money, They are not like Americans Living in the USA who deposit and hide money in foreign banks. These two Americans could not be lumped together. Besides Americans Abroad have income exclusion and tax credit for the income tax they pay in their country of residence. So what is the IRS going after?…The possible diferença in the taxes between the country of residence and the USA? All this effort for this? I would call it, to be very nice, harassment. A better word would be persecution…of Americans who chose to live abroad.

  12. “So what is the IRS going after?”

    They don’t like that you pay taxes to your country of residence. Knowing they can’t legally get you to pay the tax to them, they come up with $10,000 penalties simply for non-reporting your local bank account. Even the Mafia has more compassion than this.

  13. @ markpinetree
    Add to harassment and persecution the word rendition because that is what might happen to an unwitting and innocent extraterritorial U.S. citizen or “person” attempting to merely visit the USA. I was thinking this morning, oh no, we sent all of my husband’s FBARs by regular mail and all we have as proof of them is the penciled copies we keep for our own records. With FBARs and 1040s we never get an acknowledgement that they have been received.

  14. So you guys are mad because under these regulations you can no longer hide your income’s that fall above the limit? Did you think you could evade taxes forever?

  15. I understand that the income above the excluded income will have Tax Credit for the tax it pays in the country of residence. Am I wrong? If it is Self Employed Income, depending on the country you reside, you will pay Self Employment Tax in both countries. No, we did not think that we could “evade” taxes forever. What we did think is that like all citizens of other countries we should pay taxes in the country where we are living and working. I lived in the USA for 30 years and I never sent a Tax Return to my country of origin. Such is the case with all others who come from other countries to work in the USA.
    And then why “evade” if some of our income is excluded and what is not get a tax credit for the taxes we pay in our country or residenc?. Evade for what? The problem is the harassment the amount of forms and forms and forms… and then like it was said above the penalties for our mistakes that are much higher than the penalties for Americans living in the USA. I am not the one saying this. The IRS Tax Payer Advocate has said that in her report 2011. Do you know what I think? We are five million plus. Potentially we could make a differece in a general election. All we need is to organiza ourselves.

  16. How abou this as a concept – renounce your place of birth
    and replace it with the capitol of the country you hold another passport. If the US insists on FATCA, give us dual citizens a way out.

  17. @topthrillsteve
    nobody here is evading taxes, Canadian taxes are substantially higher than US taxes, also we have consumption taxes for which we do not receive credit for.

    We do not get any services from taxes paid to the US, DOS services are priced to cover the cost of providing those services.

  18. Or they could stop acting like North Korea and give out CLNs to all those who legally renounced their US citizenship over the last 60 years by taking on the citizenship of their country of residence. Is it too much to ask that they be logical? We’re not coming back … deal with it.

  19. @topthrillsteve
    Why don’t you read some more of the posts on this site and then maybe you’ll understand that we are already paying taxes where we are living!! Add to that the fact that many of us are even paying more than if we were living in the US.

  20. @topthrillsteve- I don’t know where you get the ideal that we were evading paying taxes. Wherever we live we do pay the taxes that are required by the land of our residence. It we don’t live in America or have any income from assets that are held in America then we owe nothing to America.
    When America taxes its non resident citizens on incomes that are earned in the currency of another country then America is the tax criminal and the free loader.

  21. @topthrillsteve: Some of us are mad because we were told clearly, firmly and directly by US Consulate we were “permanently and irrevocably” terminating our US citizenship by becoming citizens of another country thirty, forty, fifty or even sixty years ago. Now that we are in or near retirement, USA suddenly wants to reclaim us and our money, including our retirement savings, education savings for our children who were born and raised outside of US and disability savings for our disabled children.

    For the record, my income has never exceeded the FEIE. I just don’t want to pay taxes or even report to a country where I haven’t lived or been a citizen for more than four decades.

  22. @topthrillsteve: P.S. For most of us, all of our money has been earned, saved, invested and taxed in the countries where we live, work, vote, volunteer, contribute own homes, and raise families. Often the taxes we pay far exceed the rate we would pay if we lived in US. We gladly do this knowing the quality of life in our adopted counties is also far superior to that in US.

  23. It’s funny how topthrillsteve showed up out of nowhere when we were just talking about Ms. Beale. The logic used seems similar to hers … hmmm.

  24. I have been reading around this site now for a couple of hours. US Citizenship is the most sought after citizenship around the World, and from reading it’s obvious that most of you were either born here or received Permanent Residency (Green Card,) and enjoyed the advantage that, it bestows then for whatever reason (financial/emotional/weather) chose to leave, you knew that the IRS claims global jurisdiction over your earnings as a US Citizen/Resident.

    All I’m seeing is whining about the IRS closing in on foreign financial accounts. I even read the renouncing US citizenship posts which if you ask me is cutting off your nose to spite your face because unless you’re hiding huge sums of money it seems awfully odd to end your ties to a government that does the most to protect it’s citizen’s globally.

  25. Sorry I didn’t know that would change my display name on here, and I’m not Ms. Beale whoever that was? I just found this site today.

  26. Steve, most of the people here who are renouncing US citizenship already did it once before … decades ago. But the US government doesn’t seem to want to get the message and is trying to reclaim former citizens, that’s why they are once again formally relinquishing or renouncing. That’s not whining, it’s a legitimate complaint.

  27. @whoaIt’sSteve- I can assure you that when I left the U.S. that it there was no love lost. I left the U.S. because there was no “advantage” in having U.S. citizenship and I still can see no advantage in holding it.
    U.S. citizenship will become of questionable value as knowledge about FATCA, FBAR’s and IRS right of eternal taxation begins to spread around the world.
    And no, I had no idea that the IRS would claim such a ridiculous and aberrant power. America can’t countenance the possibility that it may actually be wrong. America has incurrs absolutely no losses when its citizens move abroad. Their move actually puts the country in a better position because the government no longer has to incurr any expenses in the form of services. Their absence also reduces the government’s exposure to citizen risk. The whole rational for citizen based taxation is flawed.
    By making it impossible for its citizens to move abroad America is actually violating a principle of Captialism, which is the free flow of goods and services. Labour is a service and the way to combat unemployment/under employment is for labour to be able to move. One of the reasons why unemployment in America has remained stubbronly high during this last recession is because home ownership, has prevented the free movement of labour within the country. People who leave the confines of America and look for work are to be admired and not punished with archaic ideas of ownership.

  28. Most of the people renouncing are not doing it due to taxes because they don’t owe any. But the FATCA regulations have made Americans pariahs in the financial world. There are countries where you can’t even open a basic bank account or will have your existing account closed as soon as they discover you might be an an American. The Treasury is fully aware of this and doesn’t care.

  29. WhoaIt’sSteve
    You are missing the boat. Perhaps because as a proud American you – like I was – can´t believe that the USA would do harm to its own citizens. I understand. You are not an American Living Abroad, I guess. Just to correct the record: no, I was not told when I became an USA citizen by choice that I would have to pay USA Taxes regardless of where I lived.No other country demands this from its citizens. And I am sure the Green Carders were not told that either when they were accepted. I am still thanful to the USA for accept me as citizen and I have no hesitation to say that this country was good to me.
    But now my life has become a nighmare after at an old age I returned to my country of origin and enormous demands are being placed on me to comply with endless paper work, not to mention the threats. The USA is indeed being quite unfair to its citizens living abroad. You are making a confusion between Americans Living in the USA who have hided foreign accounts and Americans Living Abroad who have nothing to hide. If you don´t believe me please check the report from the IRS Tax Advisor when talking about our plight. As far as I know she is quite American. And take a look at http://www.aca.ch. Then we will talk,

  30. @omghess…

    The United States doesn’t consider your citizenship renounced based upon a citizenship ceremony conducted by a foreign government, I’ve done only several minutes to an hour of research on that in the past.

    That being said if one wants to renounce their citizenship that is entirely their right to do it. The whining I’m seeing is that people are upset that they are using institutions which are domiciled outside the United States but these organizations actively trade in and do business with or have divisions in the US which means they are subject to US law. I’m seeing whining that the US is changing the law regarding anyone who may be or have been a US citizens regarding account balances. (Whether or not that is justified depends on the situation, do I think foreign national’s PII should be exposed to the US of course not, but any and every American citizen’s should.)

    Getting upset at this seems to me to be pointing to someone who is trying to hide from the jurisdiction of the IRS. If I’m seeing it wrong maybe you could correct my errors? I completely understand the allure and opportunity of living and working abroad but that also comes with responsibilities as a US citizen/resident, you have to follow the rules.

  31. @whoait’ssteve- the old laws very clearly spelled out that taking on the citizenship of another country did indeed result in your automatic loss of U.S. citizenship. For the U.S. to change the law and then to retroactively reinstate the citizenship of people who had voluntarily relinquished that same citizenship is a misscarriage of justice.
    As for the U.S.’s attempt to apply its laws on an extraterrtitorial basis, that is nothing nothing more than arrogance. When you live in another jurisdiction then you are subject purely to the laws of that jurisdiction. For another country to say otherwise is a violation of the sovereignty of the country of residence. I should not have to live like an American if I don’t live in America. I know for a fact that America takes the same stance with regards to anyone who may be the citizen of another country while resident within its borders. Afterall don’t Saudi women who are living in America have the right to drive?

  32. Steve: at least in my situation, I’m afraid that the same will happen to me that is happening to Americans in Europe. Banks are shutting their accounts instead of dealing with US laws.

    Other thing – I left America because I didn’t like it there. I saw a situation that I knew would get worse, and it HAS. Now I’ve been overseas for 6 years, and the same bloody hand is showing up in my life again. Many of us don’t want to be Americans in the first place. I sure as heck don’t. I’m bitter too because I have the pay $450 to be free of the US. I didn’t even ask to be a US Citizen in the first place. WTF is that!

  33. Steve, the problem with the US citizenship laws is that they are a moving target and apparently retroactive. I wouldn’t be surprised if the law changes again soon. We have also done extensive research into US laws on this site. Most of us are Canadians and had not thought about the US tax system especially since we moved here as small children.

    Prior to 1986 you were considered to have lost your citizenship when you took the oath of another country and took their citizenship. In fact the US was very clear about that even sending people letters which have been posted on this site. Unfortunately, they didn’t seem to mail Certificates of Loss of Nationality to most of them. Getting a CLN out of the State Department takes a year and comes with all kinds of potential complications.

    The US did not inform these former citizens that they were being reclaimed when the law changed in 1986. They have lived their lives as non-Americans. When you don’t live in the US you don’t keep up with their changing laws.

    If it was easy to renounce US citizenship you would not hear any whining. People would just go and do it. The problem is that the IRS wants to fine people $10,000 per year per account just for not letting them know that you have a foreign account (which to us is not foreign it’s local). There is one person on this site who paid a $25,000 penalty for not reporting his bank accounts in the country where he lives.

  34. @WhoaIt’sSteve

    You obviously have not read enough. The DOS still accepts that if you performed ‘an expatriating act (i.e.citizenship in another country), voluntarily and with intent to relinquish’ your US citizenship, then you did in fact ‘relinquish’ that citizenship. They will even back date the Certificate of Loss of Nationality. The US has two different departments (DOS and IRS) with two different Loss of Nationality Laws. And the IRS law only came into being in 1990. Many of us who became Canadian prior to sometime in 1973, actually swore a renunciatory oath along with our oath of allegiance to Canada. Now you tell me how can one department say you are no longer a U.S. citizen and another department say ‘oh, yes you are’, we are restoring your citizenship for tax purposes. Makes no sense to anyone who is in the least bit fair – minded and thinks logically.

    I think you need more reading time. But perhaps that won’t help.

  35. Steve, I can see how someone who has not read the entire site might think we’re a bunch of tax evaders but I can assure you it’s not the case for most of us. The Canadian Finance Minister has stated this in news articles published in the US.

    There may be 2 or 3 out of the hundreds that post and read this site who might actually fall into the category of tax evader willingly or otherwise.

    We don’t expect to solve this on our own. The Canadian government is actively working to find a solution to our problem and I think eventually there will have to be an agreement that allows most Canadians to renounce again once and for all without losing everything they own.

    Yes we do alot of whining here but it’s a support group, that’s what happens in support groups. If we were tax evaders we would not post here. The security on this site is pretty loose, if the IRS wanted to know who we are it wouldn’t take much.

  36. Please block WhoaIt’sSteve’s IP address. We can get uninformed opinion from “Lawyer” Beale if we want it.

  37. “I think eventually there will have to be an agreement that allows most Canadians to renounce again once and for all without losing everything they own.”

    PLEASE GOD YES! IMAGINE THE PARTIES ACROSS CANADA!!!

  38. Joe, I think Steve is actually trying to learn this complex topic. We don’t know what his background is. He may actually have useful input so let’s give him a chance.

  39. OMG is right. It is a mega-complex issue. Steve himself pointed out he just started reading our site this afternoon.

    On this issue, the US media only seems to write about in-land American residents with offshore accounts and mega-wealthy bi-national crooks. With the exception of I think 3 — count ’em 3 — newspaper articles, we know the US media never mentions the situation of US citizens, former citizens and dual citizens who actually reside outside the US. It’s no wonder most Americans think we’re tax cheats!

    I wish more Americans would read the Brock site and get a fuller view of what these tax policies are doing to honest law-abiding people, many of whom, including me, didn’t even know they are US citizens and/or have for decades believed that, according to US law, they are not.

    So, welcome, Steve. You might want to check out the posts under “Participants’ Stories” at the bottom of the page … Americans and former Americans living outside the US actually live pretty mundane lives and are being hurt through no fault of their own.

  40. Joe wrote to Ms. Beale:

    I said that 99% of us living abroad owed no taxes. And her ignorance showed that if you put enough monkeys together eventually one of them would become a US law professor.

    [the old “with enough monkeys using typewriters one would eventually type out the Encyclopedia Britannica”]!

    Your comment was pretty mild and not very provocative, if you ask me. Seems she is opinionated, bigoted and thin-skinned to boot.

  41. She called us Canadians blackmailers and scofflaws before Joe made that comment. I chose not to post on her site realizing she did not care about the truth. Joe on the other hand decided to retaliate and speak his mind as he seems to have a habit of doing : -)

    Funny how she only responds to him but not to all the nice folks who posted their stories to her on this site. She ignores the nice people but continues on with Joe … must be an American thing!

  42. Joe wrote

    Please block WhoaIt’sSteve’s IP address. We can get uninformed opinion from “Lawyer” Beale if we want it.

    Why? This guy’s really part of the whole picture. An ignorant American who says that we are just “whining”. Didn’t James Fallows, journalist for the Atlantic, also say we were in danger of seeming like whiners to Americans? He was right! (See http://www.theatlantic.com/international/archive/2012/01/the-fatca-menace/250763/ ). Surprise, Surprise!

    Whining about FBAR when the penalty is 300% of your bank accounts? Whining about having the IRS scare the hell out of millions of people who have legitimate and legal accounts. Yeah right. We’re whining, all the way to the consulate to tell Secretary Hillary: “Take this citizenship a shove it!”

    If we seem like whiners to the majority of Americans, then they really have become a nation of idiots, and we are absolutely justified to want to cut our ties with them.

    @WhoaIt’sSteve, by all means keep commenting! As long as you keep up this kind of commenting, you make my job easy.

  43. @all

    As Nelson Mandela said:

    “Education is the most powerful weapon which you can use to change the world.”

    Let’s embrace the opportunity to educate Steve.

    It will be tough as described here:

    But, this is also an opportunity for Steve to educate us. Perhaps he could start by explaining why he thinks U.S. citizenship is so valuable.

  44. @Joe: It’s already happening at the border. Three Canadian women were strip searched by female border guards. http://www.theglobeandmail.com/news/national/canadian-women-say-they-were-sexually-molested-by-female-us-border-guards/article

    This Supreme Court decision won’t help their lawsuit. The rationale of this decision is beyond me. The justices seem to think someone who doesn’t have a license plate is out to blow up a government building and someone who speeds is preparing to fly a plane into a high rise. Hmm, I wonder if any of the judges have ever exceeded the speed limit or gone through a red light.

    What must they think of someone who relinquished US citizenship to become a citizen of another country? Forget it, I don’t want to know!

    You are wise not to visit US. My only reason for going there is to see my elderly mother. After her death, I will never again cross the border.

  45. Ok so I have been reading up and I have some questions, and am prepared to accept that maybe you’re not all whiney or whining as I thought.

    First how is it that these banks in foreign country’s are allowed to except your patronage based upon your national origin? Aren’t these country’s supposed to be the ones more socially liberal than the US? I mean they have ombudsman to deal with gender identity but banks are allowed to turn you away due to your national origin, that makes little sense to me?

    I’m still reading about the reporting requirements, I think reporting your financial accounts shouldn’t be that difficult, but I’m still researching that.

    @tiger
    From the research I did although honestly it was less than an hour’s worth of searching around it did say “potentially” which seems to me to say that it’s up the Dept. of State whether or not they count that as actually an event that would cause you to lose your citizenship, it was a year or two ago so I’d have to dig around again to look, you’re probably way more knowledgeable than I am, but it seems to me as if State was saying we’re not in the business of taking away American citizenship so although this is a potential situation we’re not going to act on it.
    @petros
    Good article very informative, however is reporting your supermarket club card actually required or CYA?
    @renounce…
    I didn’t make American citizenship valuable, it just is. There’s a reason the line’s are as long as they are to get in. Don’t get me wrong I love this country but I can admit that sometimes we make mistakes or act stupid.

  46. @WhoaIt’sSteve, I’m very pleased that you’ve been reading and have come back. I know you’re engaging in a dialogue with some of the others, and I will leave it to them to answer your specific questions. I did want to comment on one thing, though, where you mentioned that you thought that reporting on the financial accounts shouldn’t be that difficult. There are many who cannot take on something like all of those IRS forms themselves – my elderly mother (who has been in Canada since 1966, and Canadian since 1975) has only had her retirement income for many many years. She was quoted at $8,000+ to get her income taxes and financial reports in compliance. And that’s $8,000 for about as basic as it gets, out of a retired persons limited funds. (I won’t even go into what might happen to her last remaining retirement funds if any penalties were assessed.)

  47. @WhoaIt’sSteve

    I would agree US Green Card status is well sought after but the actual rate of naturalization has been going down for many years. Perhaps its because newer immigrants to the US don’t feel the same type of national connection that previous groups did or what I am not sure. On a per capital basis though Australia and Canada are probably more chosen than the US given their relatively low levels of existing population.

  48. @whoait’ssteve- you are correct when you observe that there are laws in other countries which would seem to make it obligatory for banks to serve all legal residents and citizens without respect to national origin. The other unfortunate truth is that under FATCA if these banks want to be FATCA compliant, they have an extraterritorial obligation to divulge the names of all U.S. person’s who are account holders.
    If they refuse to divulge the name of the “U.S. person” account holder then the IRS will withhold 30% of all U.S. source financial assets. If the money doesn’t come out of the account holder’s account then the IRS will take it out of the bank’s own account. If they are a compliant Foreign Financial Institution then the IRS will tell them to close the account of the “recalcitrant” account holder. As you can see FATCA will leave all foreign financial instittutions stuck between a rock and a hard place. On the one hand they can be squeezed by their country’s constitutional privacy laws and on the other they can be rendered bankrupt by the IRS. That more or less is the situation as it stands. Others on this site I am sure will be able to add more info to this.
    As you can see if you are a foreign financial institution the easiest and less problematical answer is to just let go of all of your account holders who have any U.S. connections. In the case of green card holders this can mean letting go of people who are born citizens of the country where the bank is located. Now how is that for justice? To be made a stranger in your own land because some foreign government claims to have a right over your finances. Of course this works against you also if you move to the States and keep any bank accounts open in your homeland. The Swiss in the U.S. are finding this out.

  49. @WhoaIt’sSteve,
    Glad you are continuing to read.

    Re the expatriating act of taking out citizenship in another country causing ‘relinquishment’ of U.S.citizenship. There was an amendment to the INA in 1986. Prior to that date, as long as the act was voluntary and with intent to relinquish, and the preponderance of evidence did not deny that intent – then it was a given – you lost your US citizenship. By preponderance of evidence, they meant things like you did not vote, you did not file taxes, you did not apply for a U.S. passport etc. The 1986 amendment to the Immigration and Nationality Act is quite clear about this. In 1990 (approximately), the DOS sent out a directive to all its consulates and embassies that they were to assume that if someone became a citizen of another country, that person DID NOT intend to relinquish. It would be up to the individual to prove to DOS that they really did intend to relinquish. This is where some of the confusion comes in because many people only know about the attitude post 1990. So the burden of proof changed from DOS to the individual to prove intent to relinquish.

    There are many people on this site who became Canadians in the 60s,70s and early 80s. Many of us were told our ‘relinquishment’ was irrevocable. Some of us (myself included) even had to recite and sign an oath that stated: “I renounce all allegiance to any former state or sovereign”. There are some on the site, who received a CLN without even applying for it. So there was no consistency within the State Department. Was it a case that some consulates were more effecient than others; some with time on their hands; or perhaps some that were just too busy to get all the work done. Who knows, but you can see the confusion.
    There are others on this site, who might not have performed the expatriating act until the late 80s or even the 90s who ‘intended to relinquish’ and perhaps had always assumed they had in fact relinquished. Because of the change of attitude (1990) some Canadian papers published articles about that time that stated that if you had formerly ‘relinquished’ your US citizenship, and perhaps really did not INTENT to relinquish, you MIGHT be able to get it back. I actually have a friend from University that did just that in the early 1990’s. I saw the forms she needed to fill out and realized that I would have definitely had to have lied on those forms to get back my US citizenship.
    It is interesting they used the words – ‘you might be able to get back your U.S. citizenship’. You can only get something back, if it was taken away. So perhaps you can see the anguish of many of us on this site. I am a widowed, senior citizen with five grandchildren. For 40 years I have believed myself to be only a Canadian. A Canadian who happened to be born in the U.S. Now the US government wants to not only reclaim me, they also want to claim my 3 grown sons, born in Canada, who have nver had nor plan to have anything really to do with the U.S.

  50. @WhoaIt’sSteve With regard to your comments about the State Department: The State Department doesn’t take away citizenship, but determines whether a potentially relinquishing act has taken place with the intent to relinquish. This should be verifiable fact of the matter. Please read the following post: http://isaacbrocksociety.com/2011/12/12/relinquish-dont-renounce-if-you-can/

    As for supermarket cards, etc., the pedantic answer would be that they included if they add to the aggregate value of a one’s foreign financial accounts: aggregate value is a US government accounting fraud.

  51. @whoaIt’sSteve

    Welcome to the Debate. The issues that people have been discussing here are multiple and complex, and don’t fall into easy one line talking points. You have stirred things up, and that is good. Thanks for hanging around for the discussion. It’s ballsy, and welcome.

    By now, you are getting the idea of that US Citizenship taxing is unique in the world. All the problems being discussed here stem from that major trunk, and everything else just branches from it. Most Americans don’t recognize or even understand that this is unusual, or why it has come to be the way it is. It arises from American Exceptionalism, and a hubristic view of it’s place in the world and the dominion it can assert on all others.

    But, like everything, when you get past the conventional wisdom dogma of why America decides that by the accident of birth place, or by the granting of a Green Card, it can tax you forever, from a practical stand point you might consider the negative consequences that arise from these practices. Read this link below, and discover “The Cronklin Report” that was described there. There are plenty of negative consequences, like a gigantic Trade Deficit that has it’s root in US Tax Policy. Bet you never considered that. It is ok, neither did I, but Roger lived it and felt it, and testified to Congress about it.

    http://isaacbrocksociety.com/2012/01/12/u-s-citizenship-based-taxation-harms-u-s-economy/

    or this… 50 years of killing off our competitive position in the world.

    http://isaacbrocksociety.com/2012/02/12/after-five-decades-of-abuse-enough-is-enough/

    You also might just consider what would happen if other countries asserted on their citizens that which the US has solely taken to its self, the right to tax its citizens no matter where they live. Do a little thought experiment here of what would happen if others copied this model…

    http://isaacbrocksociety.com/2012/02/16/what-is-the-systemic-risk-to-the-worlds-

    That might broaden your understanding a little bit and help you know what this web site is all about.

    It is NOT about evading taxes.

    Finally, you might ask yourself, how did this all come to be? Why does America do what it does? What practices lead to this? It is unnatural situation, as even in America, the individual States practice a Territorial tax system just like the rest of the world. Why is the US such an outlier? What is the history?

    http://isaacbrocksociety.com/2012/02/27/who-is-a-us-citizen/

    That should keep you busy for a while, if you are truly interested in the subject, and not just stirring for stirring sake.

    Happy reading
    cheers Mate.

    .

  52. Whoait’sSteve:

    I’m glad you joined this discussion, and I’m glad you’re hanging in there and perhaps learning something along the way.

    I want to take a different approach to this to see if you — and 300 million other homeland Americans — can perhaps understand what all the fuss is about.

    Obviously I don’t know you, but I’ll assume you were born in the US. Let’s go back a generation and assume that while you were born in the US, your father was born in Russia, emigrated to the US as a small child, and married your American-born mother. Totally unknown to you, Russia considers you a Russian citizen because your father is — even though you’ve never left the country. And what’s more, Russia thinks you should have been filing Russian income tax returns all these years; and it wants an annual report on all your bank accounts. And if you don’t do it, it’s going to assess penalties on you that might take away half of your life savings. And because you are now in your 50s (another assumption) your life savings actually represent a nice chunk of money — money that you are relying on to keep you fed, clothed and housed in retirement.

    Now let’s further complicate this. Russia is broke and needs money, and it wants to track down all its expatriate citizens wherever they are so it can hit them up for cash. So Russia passes legislation that requires your American bank to tell the Russian IRS all about you, and your money, so it can track you down. And if the American bank doesn’t want to play ball because, well, it will cost the bank a small fortune to ferret out all the account holders who might be Russian — Russia will withhold 30% of all the money the bank gets from its Russian dealings. And, suppose you decide that what’s in your bank account is none of Russia’s business and you tell your bank to stick it where the sun don’t shine when it asks you to prove that you’re not Russian. Russia then tells your bank to close down your bank accounts because you have been deemed “recalcitrant.” And you bank does it, because it can’t afford to have 30% of its Russian transfers withheld.

    There you are — a loyal American who just happens to also be Russian, and now you can’t even open a bank account in your homeland because Russia has branded you a tax cheat.

    Does that help? Because that’s exactly what the US is doing now to every bank in the world, and to every person who has the supreme misfortune to have US connections — either long-expired citizenship or as a former green card holder. They say they are chasing tax cheats, but for every genuine tax cheat there are likely 1000 people like you (or the “you” I just invented).

    Ask yourself — would that scenario I just outlined make a good story on CNN? Do you think there’d be any expressions of outrage from your Congressmen at the prospect of half your life savings being converted to rubles and shipped away? Do you think America would let that happen?

    The vast majority of the people posting on this blog are people just like the fictitious “you” that I painted. They are people whose connections to the US are extremely tenuous, and they are people who thought they had relinquished that US citizenship — willingly and enthusiastically — as much as 40 or 50 years ago. In my wife’s case it was 38 years ago.

    Do you still really think we’re just a bunch of whiners?

  53. In a sense it is good that Steve is here with us. He represents what Americans who never lived outside the USA thinks about us. They have no clue.

  54. @WhoaIt’sSteve What you do not seem to understand is that extraterritorial tax and reporting laws go against fundamental American principles of democracy, the 4th,5th,6th, 8th,13th,14th amendments, and the notion of proportional representation (we are not counted in the Census, thus the House of Representatives has no authority over us). We represent such a small proportion of population in our home states (if we even have one and are even allowed to vote) that congresspeople don’t bother listening to us. Yet our numbers compare to the populations of states like Arizona or Colorado.

    The additional taxes required of the US by people living in higher cost of living areas abroad where the local tax burden is lower can put these people out on the street. The FEIE and AMT do not take into account the exchange rate situation which pushes people into higher tax brackets than before. I think that the AMT can even force people in high-tax countries like Denmark and Sweden to pay additional taxes to the US: money many families cannot do without. Housing exclusions are only allowed for those residents of city centers, not those who live in the suburbs where rents may be almost as high. A few years ago there was a change to the revenue code putting income above the 90kUSD FFIE in the 90k tax bracket: before this change any income over the FFIE was taxed progressively, starting at the lowest rate after the standard deductions were taken.

    Congress doesn’t listen to us. Some of us here at IBS have tried to contact or call our congresspeople and been ignored or told to buzz off because we live abroad. Even members of our own Americans Abroad Caucus have voted to eliminate the FEIE. Congress is looking to US persons abroad to balance their budget following a huge economic bubble that arose out of greediness, mismanagement, and ignorance of basic macroeconomics. Many of us abroad did not take advantage of the bubble, never had McMansions, never were even allowed to invest in US markets because US and foreign financial institutions have not allowed middle class Americans abroad to maintain brokerage accounts! Thus, we cannot be expected to bail the US out.

    The credit reporting agencies often will not provide credit reports to us. Even basic banking services in the US like checking or savings accounts have been refused to many of us. And now, because of FATCA, we are increasingly being denied banking where we live: even if we have the nationality of the country in which we live.

    The effect of this is like the Nuerenberg laws. The Nazis did the same sort of crap to the Jews. First they removed them from economic life and marginalized them, deported or forced many to emigrate for a heavy fee, and then they annihilated those that were still around. After the US makes it impossible for us to function and make a living where we live, what next? How far will these traitors in the IRS and Congress go? Given the way the US is run like a police state these days I don’t know what will hold them back.

    FATCA and FBAR reporting are general warrants and violate the 4th and 5th amendments, not to mention the excessive fines for noncompliance (unconstitutional under the 8th). They also compel people to commit CRIMES in their countries of residence by disclosing information that family members and business associates or employers do not want disclosed. They violate the sovereignty of the countries where we live. If another country tried to do what the US is doing the US would invade them or nuke them.

    Although some people on IBS try to become compliant, I believe that US tax policy is unconstitutional and those abroad should not pay a dime unless they have income or property in the US, and then only on that property or income. For me, there are two valid options: renounce citizenship and tell the IRS to go to hell, or retain citizenship and tell the IRS to go to hell (but don’t cross the US border ever again). Congress and the administration are traitors against the Constitution.

    The majority of people living in the US do not know what we are going through and that we already pay taxes where we live. We have a right to equal economic opportunity with our neighbors in our countries of residence.

    The US shoots itself in the foot with its policy. It does not encourage Americans abroad to improve the US trade situation. FATCA will cost billions to the global financial sector, will cause another financial crisis and will discourage investment in the US. Ultimately, Congress and the President are making life worse for US homeland residents. You should not stand for this either.

    Spread the word among homelanders : tell your congresspeople to quit scr**ing Americans abroad because to continue to do so will only mean the eventual downfall of the US, which I believe none of us at IBS really want.

  55. @justme
    I read the post and the pdf how does Conklin’s data coalesce with the actuality that the US is a tech exporter, and has transformed in to a service based economy? Manufacturing and a well rounded economy is important for any country. The days of cheap Chinese labor will soon be behind us, the only remaining territory of exploitable human capital is Africa and that can’t last long either, the days of dirt cheap goods are numbered. But also there are fascinating developments in technology with 3d printers that will obsolete manufacturing within the next few decades anyway.

    @justme & @arrow
    Well the obvious solution is to end jus sanguinis, or end any recognition of multiple citizenship’s. I can see the point some of the renounce/relinquish people here, to me giving up my American citizenship would be like cutting off my arm, it’s just that as I have visited other country’s I never felt comfortable like here in the US or that I wanted to do anything there beyond visit. I can understand others have found new home’s other places, and that is fine for them, in fact I think that’s great for them that they have found a place that they call home.

    The rest is getting pretty political. It’s not that I don’t think the IRS should be cut down to size too, but it’s that your viewpoints are what would be considered very liberal here I’m sure you guys know and realize this, after all you’re the smart one’s that decided to leave. American exceptionalism which may or may not hold sway over someone college educated who is living abroad, is very much still in the minds of many American’s who haven’t left, and trying to persuade them that you shouldn’t be taxed because you left I think is going to be difficult to sell to many. The Constitutional arguments I feel fall in to the same arguments the “income tax is voluntary” group use, or at least they sound similar, and we know how that works out for those guys.

  56. Steve said: “or end any recognition of multiple citizenship’s”

    Steve, I think that’s where this is headed. Once again we will likely return to the pre 1986 US citizenship policy.

    If the US wants to continue on with citizenship based taxation (which is in conflict with the system used by the rest of the world) they have to allow average Joes to cut their ties to America.

    I understand the argument that most very wealthy Americans would not have made their money if not for the US system. That kind of money is almost impossible to make anywhere else. They can afford expensive lawyers and accountants to deal with the complex US tax code. We can’t.

    The rich folks would also benefit from remaining US citizens, to us it’s just a huge inconvenience. A Canadian citizenship is just as good as a US one (at least we think so). In fact we think it’s better because we have universal healthcare.

    It’s good to believe you live in the best country in the world. We believe Canada is the greatest country in the world for various reasons … low taxes is not one of them.

    By not filtering out millions of ordinary folks like us from the wealthy, the US will find it much harder to pursue the real tax cheats who are hiding millions all over the world. This is a problem that needs to be solved not just for our sake but for the sake of the US government which needs to collect from the real tax evaders.

    Since 99% of us owe no taxes, we are just clogging up the system.

  57. It is difficult to explain my distress being in a third world country trying to comply with the Treasure Department and the IRS. Apparently things should be easy. I jave an income exclusion (Form 2555) and I have Tax Credit (Form 1116). I am not a CPA and I don´t know who to fill these forms. They are a nighmare. Then now I have the FBARS. On my investments the banks here do not tell how much I pay of taxes. They just say that they withdrew the taxes automatically without saying how much, I then at my age have to go to banks to ask, spending there close to two hours in each and sometimes having to come back. Sometimes I am inclined not to report something just because the time and effort it will take to fill all the forms even though I will end up not paying taxes in the USA. Nighmare. Then there are inconsistencies: Americans living in France don´t pay US taxes on their pensions they have from working there. I do. Or, self employed in the country I am have to pay SS Self Employment Tax in the two countries. Can you imagine how much this will add to? I now have to hire a CPA in NYC. $150.00 for half an hour in the phone. Total cost 1000+ because i am unable to fill al those forms and the penalties are stiff if I make a mistake, much worse than for Americans living in the USA. I could go on and on. This year since January 1 I have spent more than one hour a day thinking about this. And wakening up at night, scared. This is not fair.

  58. So are you guys more upset that FATCA will see that the banks are talking to government’s and with that you fear some sort of privacy violation or are you more angry that banks which choose to be outside the international system are refusing your patronage?

    @omg
    Canada is awesome, love visiting, trying to finalize plans for a trip to BC soon, and heading up to Canada’s Wonderland this summer!

  59. Steve, what I wish that all Americans would understand is that we pay taxes where we live. Around 60% – 80% goes into local coffers, through a series of payroll taxes, deductions, consumption taxes, and sales taxes. For me to listen to US politicians say that I say I pay no tax is completely absurd.

    Now with the FATCA, it is a game changer. Instead of just hearing the bald-face lie that we pay no taxes, they threaten our financial viability in other countries. How can someone live without a bank account to pay their bills?

    I have a wife and a little boy to support. If my bank brings up this “citizenship issue”, my first order of business will be to renounce. ** I don’t care ** if I’m stateless for a year or two before my citizenship is granted. See what kind of brilliant laws come out of Washington?

  60. “I have a wife and a little boy to support. If my bank brings up this “citizenship issue”, my first order of business will be to renounce. ** I don’t care ** if I’m stateless for a year or two before my citizenship is granted. See what kind of brilliant laws come out of Washington?”

    It is so sad to see that this shit is screwing up well meaning citizens all over the world.

  61. Steve, I’m definitely more angry that banks would refuse me because of where I was born. I didn’t pop out of my mother and say “Wait a minute… you better have me someplace else!”

    Here for example, many things are paid for with bar coded “boletos” that you pay at banks. US Banks don’t even have such a thing. US banks aren’t even too keen on wiring money overseas anymore because of the Patriot Act. You get the 3rd degree if you want to wire money from many banks. Capital One WILL NOT even do an international transfer. So using a US bank account in most foreign countries for day-to-day issues is impossible.

    Also, I don’t like being discriminated against or treated differently due to where I was born. The US (and the consular officers) said that this is the bank’s fault. However, if the US wouldn’t have come up with this, then it would be a non-issue.

    All this stuff will probably work out for the greater good of the US. I hope so because something positive HAS to come out of this after the grief it has caused so many people.

  62. Steve, I can’t speak for other countries but in Canada we would prefer our banks forward information directly to the Canadian government. I personally don’t consider it a privacy violation because I’ve got nothing to hide from my own government. Also, I’m pretty confident that Canada will not forward information on dual citizens to the US if those citizens are residents of Canada.

    Canada is the only country that already had an agreement in place long before FATCA to automatically forward Canadian bank information on US residents to the US government. If you are a US resident trying to evade taxes, the last country you would put your money in is Canada.

    What the Canadian government does not want to do is forward any information to the US on Canadian citizens resident in Canada who may also be considered US citizens. We are on a territorial tax system and consider what the US is doing to be a threat to our sovereignty. It’s a way to erode our tax base and this is what is causing the friction between our two governments.

  63. I should add that in Canada we have very few banks compared to the US and our banks are heavily regulated by the government.

    This puts the Canadian banks in a very difficult position. The US is trying to extort them into breaking Canadian laws and the Canadian government will penalize them for breaking those laws.

  64. @omg and steve: Actually, I don’t want information forwarded to any government about my assets, savings and investments. No Canadian citizens or residents are required to report this information to CRA. Income on those funds is, of course, reported and taxed in Canada-as it should be.

    FATCA singles out people based on where they were born or where their parents were born and demands information about them based on that criteria. If we refuse to provide information about our place of birth or provide consent for information to be released to a foreign government, that foreign government (USA) requires our banks to close our accounts or face severe financial penalties. That is a violation of Charter of Rights, Canada’s Bank Act and Privacy Act.

    As OMG stated, it is also intrusion into sovereign nations around the world to make, implement and maintain their own laws.

  65. @geez/kumar
    I can only say that if you find advantage in not being an American that’s what you’re going to have to do.

    @omg…
    So shouldn’t that be up to the banks then whether or not to comply and then whether or not to serve or utilize US markets to profit? There is a very real problem of evading and cheating taxes and that problem still has to be deal with.

  66. @Steve
    Thank you for continuing to read our posts.
    FATCA may have been initiated with the best of intentions by your government. I would hope that any government (Canada’s also) would do what it could to prevent its’ residents from hiding money off shore. It does seem that this happens frequently in the US.
    Most of the individuals posting here are resident in countries with considerably higher taxes than the US. Certainly in Canada in addition to higher income tax rates, we also have a VAT tax on goods purchased.
    The end does not justify the means. The US wanted to catch its’ ‘tax evaders’. They pass a new law called FATCA. This new law invades the privacy and charter rights of the peoples of many different nations. How can this be considered a ‘good’ thing?

  67. @blaze
    I’m not sure I agree that its an intrusion on sovereignty, financial institutions have a choice of whether or not to trade in or use US markets. While I admit it would be rather difficult for an institution to survive without any US (and by relation EU) interaction I think it could possibly be achievable, maybe the solution is to look for an institution that is more interested in its clients and profiting with them?

  68. @WhoaIt’sSteve

    To be fair the goal of this site is as much to lobby the Canadian government to impose a law prohibiting compliance with the US FATCA legislation by Canadian financial institutions within Canadian sovereign territory as much as anything. Whatever the negatives consequences caused to Canadian insitutions operating in the US under the US sovereign right to control its own territory so be it. I don’t many people here have much belief that the US will change its policies anytime. I personally don’t think the US or the American people have the guts to get into a big fight with Canada on this issue but if they do I welcome it.

  69. Steve, I guess ultimately if the banks think it’s worth breaking Canadian laws to comply so they can utilize US markets it’s up to them. I know I wouldn’t want to be the head of a Canadian bank right now. Those guys probably don’t get much sleep these days either.

    But in Canada an issue like this can cause a political party to lose power (there are an estimated 1 million dual citizens plus their non-US family members). In Canada politicians control the banks … it’s a hard concept for Americans to understand.

    Every political party in Canada is behind the the dual citizens and think what’s happening to us is extremely unfair. A large majority of dual citizens had legally renounced US citizenship decades ago which is what creates the complication and unfairness.

    The issue of tax evasion is a very real one and should absolutely be dealt with but with 1 million average dual citizens in the crossfire it’s become way more complex than it should be. When you consider the non-US family members of the duals we could be talking about 3 million or more people. That’s almost 10% of our population.

    The fact that Washington has not negotiated a settlement with the Canadian government speaks to the dsyfunction there. I know the Canadian government has been trying for almost 2 years to resolve this.

  70. @whoait’ssteve- I am afraid that what you have gotten out of this is the notion that we believe the income tax to be unconstitutional, then you haven’t really understood the argument at all. Rather what you have done is to commit the classical American error of lumping us into a familiar American anti tax narrative.
    We all pay taxes to the countries in which we reside, make our living and create our wealth. There is nothing that we do which involves America at all. Contrast this to U.S. based companies like Apple, Google, G.E., Exxon etc who make billions of dollars IN the U.S. then ship those profits overseas where they rest free of U.S. tax.
    Here is an argument against expat taxation that maybe you can understand. The Reupublican party is a staunch advocate of the principle which says that, a dollar should only be taxed once. This is why they argue so vociferously against the taxation of dividends and inheritance. They truthfully state that company dividends are paid out of after tax dollars and therefor the shareholders who receive those dividends should not have to again pay taxes. Well the arugment for expats not being subject to U.S. taxation is the same thing. We have already been taxed in our country of residence and we should not be taxed again by the U.S. If you look at the taxation treaties that the U.S. has signed with many countries you will see that the explicitly stated goals of those treaties is to eliminate double taxation.
    The problem with all of those treaties is that the U.S. sneaks in a clause called the “reserve” clause which actually allows the U.S. to do the very thing that it has agreed not to do, which is to tax the same dollar twice. Now up until the financila crisis of 2008 the U.S. has operated on a default policy which has never seen them enforce this reserve clause. In other words the U.S. has been practising territorial based taxation. Now since politicians will never admit their mistakes and would always rather blame their problems on the sins of others: they have decided to place the blame for the government’s deficit on non-compliance and tax evasion. This has led them to dust off FBAR and tax filing laws that up until now have lain dormant.
    Naturally this has come as a shock not only to the U.S. citizens who have never been aware of these laws but also to the governments of the countries in which we live. If we as residents of these foreign countries are forced to convert our local currencies into dollars in order to send tax money to the U.S. then that is going to hurt our local economies. Now the U.S. is demanding money form us even though it has not provided not one dime in services. If this was pushed to the extremen,in the end the cheapest way for the U.S. to finance itself would be to send all of its people abroad to live and earn a living and have those citizens send taxes back home. In other words citizenship based taxation has now made the U.S. into the world’s biggest free loader.
    To make things even worse for expats not only does the U.S. want to tax them but it also reserves the right to tell them how they can invest their money. And it taxes them unfairly on employer pension contributions and other investment matters. U.S. taxation also puts all expats in the currency game and forces them to rely on expensive tax attorneys because U.S. tax law is incomprehensible.
    FBAR laws should only be applied to people with U.S. residencies and not to those who live outside of the U.S. It only makes sense that if you live somewhere that you would have a bank account there too. I have been outside of the U.S. for almost 27 years and have never had a U.S. bank account. All of my financial accounts are known to my government of residence and I see no reason why they are the concern of the IRS. Even if there were to be 10M dollars in them.
    The whole notion that the Foreign Income Exclusion is a tax drain is a lie, because the money was never earned in the U.S.

  71. Steve, there is a very easy way the US could have limited the collateral damage associated with the FATCA such as saying “If US person was born in the US, but has additional citizenship of resident country, and has lived continuously in resident country or other country for period of 5+ years, then this person is excluded.”

    But I guess that’s too easy.

  72. @Tim
    My understanding is that many Canadian’s think Harper is an American shill, some solely because he is of the Conservative Party, or from Alberta which makes no sense to me and smacks of the East/West divide.

    Anyway, I understand the lobbying aspect, is it having much influence over Parliament? Are the banks also lobbying? Is there an effort besides the background noise of being “distinctly Canadian” to distance the sector from the US, or is it business as usual?

  73. @recalcitrant
    Then it seems the real issue is the administrative and paper work hassle from getting rid of your American citizenship should be the biggest problem you all face? You claim that you don’t want anything to do with the US. And, as the current and most likely future procedure is going to be citizenship based taxation and an ever increasing enforcement net it looks like there is only one option if you don’t wish to file 1040’s and declarations?

  74. @steve: It’s important you also understand it is not only individual accounts that must be reported under FATCA, but joint accounts held with spouses who have no connection to US and education savings plans and disability savings plans for Canadian born children. In addition, any account which a “US person” has signing authority for, i.e. through an employer or charitable organizations should be reported..

    So, this is straining relations with spouses, employers and even places where some of us volunteer. I’m glad I’m retired. I know past employers would never have consented to IRS being able to have access to my departmental budget information just because I had the misfortune to be born in US.

  75. Steve said: “Then it seems the real issue is the administrative and paper work hassle from getting rid of your American citizenship should be the biggest problem you all face?”

    Exactly. This is the problem we want the Canadian government to solve on a government to government level. Let long time Canadian citizens who are compliant with their Canadian taxes get rid of US citizenship without too much hassle. After that they can do whatever they want with our banks. I believe that would also make the Canadian banks extremely happy.

    If the US would work this situation out with Canada, they could use it as a blueprint to get all other countries on board with FATCA. If you can’t do a deal with Canada, there’s something wrong.

  76. @WhoaIt’sSteve

    I have two questions for you. Not sure you would want to answer them but I am curious about your thoughts on them.
    My first question is this: Would you consider it fair for a country to tax a 45 year old citizen of another country because that 45 year old happened to have an American born mother. Now keep in mind, the 45 year old has never exercised one ‘right ot US citizenship’ in those 45 years. Everything he has earned has been earned in his country of birth. This is the country where he chooses to work, vote, pay taxes. His only connection to the US is that his mother just happened to be born there.

    My second question is this: The American born mother in the above example, now in her late 60s, has lived, worked, raised her family in the ‘other’ country. When she became a citizen of her new country, she formally ‘renounced’ her US citizenship. She has never exercised any rights under her US citizenship since that renunciatory oath. Her only connection to the US is she has siblings living there. All of them patriotic Americans. They respect her decision from many years ago to become a citizen of another country. Do you believe she shoud be paying taxes to the U.S. government?
    If your answer to either of the above questions is “YES”, then so be it. We will ‘agree to disagree’.

  77. @whoati’ssteve- the change from the banks reporting to their local governments instead of directly to the IRS is a slight improvement that protects our privacy but it still isn’t enough. The raising of the reporting threshold is also an improvement but it isn’t enough. FATCA is still a violation of local privacy laws, national sovereignty, personal freedoms and a major choke point to capital flows.
    Unfortunately though we live in a world where the U.S. considers that IT alone can rule the world. American Exceptionalism is just a thinly veiled version of racial superiority and we all know how badly things ended up the last time that argument was used.
    By enforcing FATCA on the world the U.S. is doing the very thing that it says should never be done, which is to use access to a resource for political purposes. Basically FATCA is a violation of free trade but no one in the U.S. cares.
    The other dangerous aspect to this whole mess, and one which should really worry all Americans, is that fact that the IRS is increasingly being used as a tool to violate U.S. constitutional rights. The IRS is becoming the mode of choice for prosecuting people because appeals against tax enforcement are harder to make. When it comes to tax matters there is a presumption that the government has an overriding interest in collecting taxes that is more important than the protection of individual rights.

  78. WhoaIt’sSteve:

    Great moniker, by the way.

    You said: “I’m not sure I agree that its an intrusion on sovereignty, financial institutions have a choice of whether or not to trade in or use US markets.”
    Many of us have already transferred our banks accounts to credit unions, hoping that they will have a little more concern for the welfare of their clients based on the fact that they do not have any operations in the US. They still have to deal with FATCA, unfortunately. But all of Canada’s major banks have significant (and in some cases growing) operations in the US, and the US will use that as a big club to make them comply with US law, even if it means breaking Canadian law. That is a BIG intrusion on sovereignty, and it’s something that if it were done in reverse — e.g. the Canadian government was forcing a US bank to comply with Canadian law and in the process break US law — the Marines would be on their way north.

    You also said: “While I admit it would be rather difficult for an institution to survive without any US (and by relation EU) interaction I think it could possibly be achievable, maybe the solution is to look for an institution that is more interested in its clients and profiting with them?”

    Think this one through. As others have pointed out, this is the US against the entire world. If those other institutions shunned all things American (trust me, that is being kicked around quite a bit these days) it would precipitate a global depression overnight, and the US would go down for the count. The US is not an island, and it doesn’t have anything like the financial clout it did even a decade ago. This would be very bad news for the US, and that has been pointed out by quite a few. This is a classic example of a nation shooting itself in the foot. I’ve already purged my investments of all things American because frankly, I think your legislators are too stupid to grasp what they are doing, and they won;’t see it until it bites them in the but.

    I suspect most of us here (except those who want to retain their US citizenship) would be happy if the US would just — as Moses said a few years ago — “let our people go.” For many of us, the US has decided to retroactively restore a US citizenship status that we don’t want, and it has done so without our knowledge and without our consent., and for the basest of all reasons; so it can pick our pockets.That is a human right violation.

  79. @kumar
    If a citizenship has turned “toxic” to you, why do you still keep it?

    @omg…
    But this isn’t an issue between the government’s this is solely a citizen issue. If the Canadian government considers you a citizen with the rights and responsibilities associated with that just as the US Government does, giving priority to either one would invade the others sovereignty so to speak. Asking the Canadian government to do your bidding when it seems that people are having no problem’s making consular appointments and filing the paperwork seems political and divisive to me, if you have no use or time for the US why not just end it? I’m getting the sense that some people genuinely did not know about the IRS filing requirements, I only knew about it because I minored in finance. Probably a one time amnesty should be at hand with a grace period to get current.

    I have started to feel empathy for you all which I did not have yesterday, so I will indeed keep researching.

  80. @whoait’ssteve- of course it is an intrusion on national sovereignty. FATCA requires the reporting of banking information that even under most local laws cannot be divulged without a warrant being granted. I can tell you with certainty that FATCA even violates my provinces privacy laws with regards to the dissemination of banking information.

  81. Steve said: “Probably a one time amnesty should be at hand with a grace period to get current. ”

    If the IRS was as logical as you Steve, this message board wouldn’t exist.

    We would have no problem going through the paperwork to renounce and hire a tax accountant to get caught up on US tax filing requirements even though it might cost us a few thousand dollars.

    The thing holding us back is not that there will be taxes owed (if there are we’ll pay them) but the massive penalties in the tens of thousands of dollars for simply not letting the IRS know you have a Canadian bank account. The account you need to conduct your day to day business of living could cost you your life savings because the IRS treats all of us the same as deliberate criminals and money launderers.

  82. @Tiger
    No, I think someone who has US citizenship solely on jus sanguinis who has never even been to the US should not fall under the requirements to file, the mother who genuinely thought she had ended her relationship with the US should also be relieved of the requirement. However if at anytime she did any action that could be construed as a citizen action then I think amnesty and a grace period to get current are in order. Followed by a reinstatement of the filing requirements.

    @recalcitrant…
    You won’t get an argument from me the IRS uses a cannon to kill a fly. But also I’m of the opinion that we are too interconnected and put our own prosperity in the hands of foreigners who just by reading around you can see many times hold anti-American sentiment.

    @Arrow
    Haha thanks (-:

    I do understand but at the same time no one is requiring BMO, TD, or RBC etc. to invest in the US market, they do it because they see a chance to profit. Now along with that chance to profit comes with it this regulation. What though is more important to the banks, the good conscience of not breaking the privacy or the $$$$.

    The next part is a whole other discussion of the interconnected world and financial markets and how yes through some weird turn of events all capital could leave the US creating a global depression never ever seen before. But then you get in to myriad issues of which this is not the correct forum to discuss. I think the simplest observance right now is that the CIA does not look kindly on those who wish to decouple the US from the global financial market. *Yikes!*

  83. @Steve: Others have covered the sovereignty issue well, so I won’t add anything.

    @Others: I’m not sure where to post this, but this thread seems to be the most followed right now (Thanks Whoa!) so I will do it here. I received a call about half-hour ago from Don Davies, NDP MP for Vancover-Kingsway and Official Opposition Critic for Citizenship and Immigration Canada.

    Unfortunately, I was on another call when Mr. Davies phoned, so I didn’t actually have the opportunity to speak with him directly. However, I was impressed that Mr.Davies would call me directly when his riding is 3000 miles from me and my own Conservative MP hasn’t even acknowledged my letter.

    Mr. Davies was calling regarding the letter I sent to him with a copy of my correspondence to the Prime Minister in late January. Mr. Davies apologized for the “long time” to reply, but he said “It is an issue we continue to press the government on. I think I’m fully aware of the unfairness of the issue facing Canadians that may have had at one time US citizenship and we’re going to continue to press for full justice for you.” He also said NDP “agrees wholeheartedly” with my letter.

    Our efforts are working. Some people in Ottawa are responding. Let’s keep it up!

  84. @Steve
    Thank you for responding to my two questions. If only more Americans could see the injustice of ‘citizenship’ based taxation when it effects people who certainly do not believe themselves to be citizens.

    @Blaze
    Thanks for posting that. Very impressive of Mr. Davies. I never thought of writing to him.

  85. Just sent this to

    Don.Davies@parl.gc.ca

    RE: Greetings from Toronto-Danforth!

    Hi, I am one of those “Born in the USA” Canadian citizens who would love to see the USA and Canada enforce the section of the Universal Declaration of Human Rights that states:
    Article 15.

    (1) Everyone has the right to a nationality.
    (2) No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality.

    I have no contact with the USA, no assets in the USA, no income from the USA, and just want to be a Canadian citizen. I have lived in Canada for 37 years and been a Canadian citizen for 17 years.

    Please help!

    xxx xxx

  86. @whoait’ssteve- Only the U.S. government attempts to impose its laws on its citizens even if they don’t live in the country. My wife and I lived in the States for five years and in that time she was never felt it necessary to see if her life was in accord with her Canadian citizenship.
    The U.S. has never in a real way acknowledged dual citizenship. Rather the U.S. has only ever conformed with the letter of the Supreme Court decision, which said that the government could not strip someone of U.S. citizenship just because they performed a certain act. Since then though the U.S. has never given any real force to dual citizenship. As far as the U.S. has always been concerned you have to live like an American no matter where you are and without any regard to whateve other citizenship you may hold.
    Holding U.S. citizenship is more like wearing a brand.

  87. WhoaSteve –

    If US citizenship is such a great thing to have, then why does the United States …

    (1) Charge $450 for disposal? We are not even allowed to give the thing away. As someone memorably put it, being stuck with that unwanted “status” is more of a pain than a junk refrigerator.

    (2) Attach a ball-and-chain to people who just desire to be free? When you get right down to it, ditching US citizenship may be the most American thing a liberty-loving extraterritorial could do. Leave us to pursue happiness – and to not be pursued by a failing state!

    (3) Set up kafkaesque Catch-22’s that make it horrendously difficult to cut loose? Like having to pay thousands of dollars to become tax-compliant on incomprehensible forms, when owing no tax, in order to be allowed to expatriate.

    (4) Ration consular and embassy appointments – recent report of six month wait in Ottawa – in a manner that mimics the barriers to exit thrown up by the likes of the Soviet Union and Nazi Germany?

    (5) Foot-drag for months and years on giving final closure to those who manage to obtain that so-sought-after appointment for relinquishment or renunciation? (We in Canada have not one single confirmed report of issuance of a current Certificate of Loss of Nationality.) Limbo is one version of indefinite detention.

    (6) Produce a public record on skyrocketing severance that is nothing but a blatant farce of useless data?

  88. @Steve. The US Consulate states that parents/guardians/trustees cannot renounce the ‘US citizenship’ of their developmentally delayed family member even with a court order — in my family’s case for a son who was born in Canada, raised in Canada, never registered with the US, never lived in the US, never received any benefit from the US (only and many from Canada).

    I would be interested in your opinion (as an ordinary American). This is a long post, but very important to a segment of the ‘US person’ population you are discussing …

    As I submitted to TAS Office of Systemic Advocacy, February 26, 2012:

    Parents/guardians/trustees of developmentally delayed dependent adult children cannot renounce US citizenship on their family member’s behalf. That dependent adult does not have the capacity to understand either the benefits of US citizenship or consequences of its renunciation.

    Parents/guardians/trustees make all day-to-day decisions, some of life or death, for their family member’s well-being. They need to live in the same country as their family, without the prohibitive stress and monetary cost of yearly US tax and reporting compliance.

    Most countries have better rights for developmentally disabled persons, better health care benefits, better tax-assisted savings plans for retirement. They are discriminated against by the persons looking after their well-being not being able to renounce their US citizenship on their behalf to end unnecessary administrative costs (by their government funding) for US tax returns with $0.00 owing and possible prohibitive penalties resulting regarding FBARs.

    Because of additional health problems most of these developmentally delayed persons have, it makes no sense for them to live in the US where they would not have the health care insurance or benefits they have in their family’s country.

    Who will administer the responsibilities of their US citizenship when the US parent is either incapacitated or deceased? To have an executor carry on this pointless yearly exercise is a further expense charged to their government disability benefits.

    This is discrimination on the basis of citizenship, i.e. our dependent children have additional compliance requirements, additional expense of administration, all for $0.00 owing to the US, because they are considered US citizens in addition to the citizenship of their birthplace.

    These dependent individuals are denied health care assistance from the US in the country where they live. It appears they are denied access to benefit of legal tax laws provided by their country to save for retirement in their resident country.

    Let those of us who look out for our developmentally delayed dependent family member’s well-being EVERY DAY be allowed to renounce that US citizenship on their behalf and continue in the important things like ensuring the quality of life for our sons, our daughters.

    This is from the ‘Americans with Disability Act’ which doesn’t address a lot of the discrimination for Registered Disability Savings Plans (RDSPs), etc. for Canadians with developmental disabilities (and the like).

    But I did glean the following portion, which talks about discrimination ‘economically’. (My comments are in CAPITALS.)

    The US Congress finds that:

    (1) physical or mental disabilities in no way diminish a person’s right to fully participate in all aspects of society, yet many people with physical or mental disabilities have been precluded from doing so because of discrimination; others who have a record of a disability or are regarded as having a disability also have been subjected to discrimination;

    (2) historically, society has tended to isolate and segregate individuals with disabilities, and, despite some improvements, such forms of discrimination against individuals with disabilities continue to be a serious and pervasive social problem;

    (3) discrimination against individuals with disabilities persists in such critical areas as employment, housing, public accommodations, education, transportation, communication, recreation, institutionalization, health services, voting, and access to public services;
    THESE INDIVIDUALS HAVE EMPLOYMENT, HOUSING, PUBLIC ACCOMMODATION, EDUCATION, TRANSPORTATION, COMMUNICATION, RECREATION, HEALTH SERVICES!!!!!, VOTING, ACCESS TO PUBLIC SERVICES IN CANADA — THAT IT WOULD BE DIFFICULT TO PROVIDE FOR THEM IN THE US (WITHOUT THEIR FAMILIES WHO ARE ALSO LIVING IN CANADA).

    (4) unlike individuals who have experienced discrimination on the basis of race, color, sex, national origin, religion, or age, individuals who have experienced discrimination on the basis of disability have often had no legal recourse to redress such discrimination;

    (5) individuals with disabilities continually encounter various forms of discrimination, including outright intentional exclusion, the discriminatory effects of architectural, transportation, and communication barriers, overprotective rules and policies, failure to make modifications to existing facilities and practices, exclusionary qualification standards and criteria, segregation, and relegation to lesser services, programs, activities, benefits, jobs, or other opportunities;

    (6) census data, national polls, and other studies have documented that people with disabilities, as a group, occupy an inferior status in our society, and are severely disadvantaged socially, vocationally, economically, and educationally;
    THESE INDIVIDUALS ARE DISCRIMINATED AGAINST ECONOMICALLY; I.E. THEIR CANADIAN BENEFITS ARE DIMINISHED IF THEIR PARENTS / GUARDIANS / TRUSTEES ARE NOT ALLOWED TO MAKE A DECISION FOR THEIR BEST INTERESTS TO RENOUNCE THEIR US CITIZENSHIP, WHICH THEN BECOMES A SEVERE ECONOMIC HARDSHIP FOR THEM LIVING IN CANADA OR ANOTHER COUNTRY. IF THEY HAVE IN THEIR NAME A CANADIAN REGISTERED DISABILITY SAVINGS ACCOUNT OR A TAX-FREE SAVINGS ACCOUNT, IT DOES NOT GIVE THEM THE SAME VALUE FOR THOSE LEGAL TAX-SAVINGS PLANS AS A CANADIAN WITH A DEVELOPMENTAL OR OTHER DISABILITY COMPARED TO THE SAME CANADIAN WITHOUT AN ADDITIONAL US CITIZENSHIP AND ITS RESPONSIBILITIES.

    (7) the Nation’s proper goals regarding individuals with disabilities are to assure equality of opportunity, full participation, independent living, and economic self-sufficiency for such individuals; and
    THESE INDIVIDUALS CANNOT HAVE ECONOMIC SELF-SUFFICIENCY — IT IS INCOMPATIBLE WITH AN EXTRANEOUS (TO THEIR CANADIAN OR OTHER COUNTRY CITIZENSHIP) US CITIZENSHIP.

    (8) the continuing existence of unfair and unnecessary discrimination and prejudice denies people with disabilities the opportunity to compete on an equal basis and to pursue those opportunities for which our free society is justifiably famous, and costs the United States billions of dollars in unnecessary expenses resulting from dependency and nonproductivity.
    THIS IS, FURTHER, UNFAIR AND UNNECESSARY DISCRIMINATION BY NOT LETTING THE PARENTS / GUARDIANS / TRUSTEES OF DEVELOPMENTALLY OR OTHERWISE DISABLED CANADIANS RENOUNCE US CITIZENSHIP ON THEIR BEHALF, WHICH DENIES THESE INDIVIDUALS THE OPPORTUNITY TO COMPETE ON AN EQUAL BASIS (IN THE COUNTRY WHERE THEY RESIDE AND HOLD CITIZENSHIP), THEREBY CREATING MORE DEPENDENCY AND MORE RESULTING EXPENSES. THE COST OF ADMINISTRATION OF THEIR EXTRANEOUS US CITIZENSHIP IN CANADA (OR ANY OTHER COUNTRY) CREATES LITTLE, OR IN MOST CASES $0.00, FOR THE US. IT DOES GIVE MONEY TO CROSS-BORDER ACCOUNTANTS AND US TAX LAWYERS IN CANADA (OR ANY OTHER COUNTRY) — NOTHING FOR ANY SERVICES IN THE US.

    WHAT ARE THE OPPORTUNITIES FOR THESE INDIVIDUALS FOR WHICH THE US IS JUSTIFIABLY FAMOUS THAT IS BETTER THAN WHAT CANADA, IN THIS CASE, PROVIDES?

  89. @Chester12
    Yeah you got us numbered fat, stupid, and armed to the teeth. I’ve detected a thin veneer over the anti-Americanism here. It’s fine if you don’t want to be an American due to political reasons you have every right to do so.

  90. You’re handling the anti-Americanism really well Steve. I’m surprised you haven’t gone on an expletive laden rant … you have a lot of patience.

    Canadians are not usually this nasty … we’re just burnt out from this intrusion into our lives. I hope it ends soon.

  91. @usxcanada
    I believe the US Government thinks US citizenship is a one way street. All the actions the government takes are to benefit the country and people who live within it’s borders. I’m seeing that the government pays no attention to those that choose to live and work outside the borders permanently. The situation is what it is, I don’t have an opinion positive or negative about it, I think people gotta be themselves, and if your life takes you away from the country that’s your life.

    I dismay at the thought that the government makes it extremely arduous to release those who don’t want to be American’s. I cannot understand the mindset, but I empathize with their struggle.

    I’m coming to the conclusion that the US has you over a barrel if you choose to make your life as an American abroad, the manner in which our government conducts itself seems to discourage people from choosing to live away permanently, and that to be honest sucks.

  92. @omg…
    Hahah I have a thick skin, I can deal lol like I said a minute ago this situation sucks, and I can’t imagine having it hang over my head. On the lighter side if you’re one for conspiracy theories you won’t have many more years to worry the Amero is supposed to be right around the corner with the NAU, hahah

  93. @whoait’ssteve- please don’t do what Americans usually do when cornered and dismiss our arguments by saying that they come from a “hatred of America”. Such a move is only a resort to the traditional U.S. attitude that America is only hated because it is secretly envied. Once this pattern of thought sinks in then all discussion is at an end and American belief in their own rightousness gets even stronger.
    Up until this IRS thing started we were all comfortable with the U.S. and none of us were secretly utilizing our U.S. citizenship for personal gain. What we are legitimatly upset about is the opportunism that the U.S. is making use of. What we object to is being labelled as crooks and being told that choices that were made long ago have now been unilaterally negated. I can assure you that if there were a segment of the U.S. population that was being subjected to a similar witch hunt by their home country that the U.S. would be doing the same thing.

  94. @recalcitrant…
    I’m not one to dismiss your argument, you can hate or love America, you can hate or love American citizenship. I as an American wouldn’t trade it for anything in the world, I don’t feel righteous, I know it’s not for everyone and some people have differing values to mine.

    I don’t think any less of you for choosing to not live in this country, and I empathize with your struggle with the IRS, although I have tiny reservations that a few are really trying hard to hide their assets and from contributing their fair share. I can also understand that this is probably a miniscule minority.

  95. @Steve: In terms of any anti-Americanism you may have detected here, it stems from the way we are being treated. Most countries see their citizens living around the world as a fabulous opportunity to have informal ambassadors representing their country.

    The US sees their citizens around the world as a potential cash cow to solve its economic woes. It tries to force law-abiding, honest responsible people to capitulate by calling them “tax cheats” or “tax evaders” or “traitors.” As a result, former and current US citizens living independent lives outside the US are now among the most anti-American people anywhere. How sad.

    Because of how I now feel, I personally will never again cross the border after my elderly mother’s death. Instead, I will happily spend my money in Canada or in another welcoming country. Many are already taking that approach. How does that help the American economy?

    I’m glad you’ve hung in and tried to educate yourself about this and perhaps develop a different perspective. I hope you will reply to Calgary’s posting.

  96. @Blaze
    I’m not sure I detect anti-Americanism in the way you’re thinking. From my understanding a lot of people’s reasons for leaving the US in the first place comes from their more liberal leaning politics, of which the US is not at all famous for. So to me that’s underlying most of what I see coming from expatriates, and I just take that at face value and understand that politically most expatriates fall in to that section of the spectrum. Stereotypical anti-Americanism shows more a lack of knowledge on the part of the person saying it, you can’t make any generalizations about a country of 313,000,000 people.

    @calgary…
    I don’t have expertise in law (although I bought an LSAT prep book lol someday maybe.) Also as I am unfamiliar with the Canadian social system, and only slightly familiar with OASDI, and the only interaction I’ve had with ADA was a handrail in the bathroom, I cannot really formulate an opinion. I guess I’d say that a guardian who has power of attorney should be able to make the decision for someone that is completely incapable but I think that also probably opens the door to abuse, so I think State would have to be extremely cautious about accepting that kind of declaration.

  97. Steve said: “From my understanding a lot of people’s reasons for leaving the US in the first place comes from their more liberal leaning politics, of which the US is not at all famous for.”

    I think you nailed that one Steve. My husband’s mother wanted him and his brother to become Canadians and lose their US citizenship before they turned 18. This was in 1980 around the time that Reagan came to power. Remember him, he talked big and scared the hell out of everybody. She was afraid that the US would draft her two boys but they never ended up having a draft.

    She had a much older son who went to Vietnam. She also was in the Second World War. She was a dancer entertaining American troops with the comedians Wayne and Shuster.

    She was originally from Canada and left the US after her divorce since all of her family was still here.

  98. @WhoaIt’sSteve…

    Regarding your: “I have started to feel empathy for you all which I did not have yesterday, so I will indeed keep researching.”

    Good for you Steve, and I have empathy for my liberal and Conservative friends in America who don’t understand the fuss either.

    Chester12 doesn’t speak for me. I understand that Americans living in Kansas, going about middle “real American” life have no basis for understanding these issues. Frankly the cost of a gallon of gas is more important and close to home. The lack of good paying jobs is more of a concern,and the idea that some concept of citizenship tax would have any impact on export job creation would not resonant. They wouldn’t see the direct line correlation, as you don’t either. You probably think our trade deficit with China is just foreign exchange related.

    Anyway, i don’t think you are a waste of time, and in fact, I appreciate and respect your opinions. I think they don’t have a wide enough perspective yet, but that comes with years and from additional exposure. My hat is off to you for continuing the dialog here. I know you love your citizenship, but traveling overseas is not the same as living overseas, and maybe if you did, perspectives would begin to broaden.

    That said, I am not one of those contemplating giving up my citizenship yet. I am trying to comply with the extra requirements that consume a lot of my LCUs that you in the Homeland don’t have to bother with. I am also trying to help Homelanders understand how misguided the US policies are and the negative consequences that can result. However, no one was listening to Nouriel Roubini prior to the Financial melt down, and there is little comfort that he was right after the fact. It is only in hindsight do Americans begin to understand things, and then only if they turn off the TV and read a few books.

    Yes, there is some anti-American feelings being generated by all of this, and if you would Google FATCA and look around here, you would pretty much see that the Financial Institutions of the World have been in total opposition to these unilateral actions of the US. “Draconian and obnoxious” descriptors have been used by some pretty conservative bankers to describe them.

    However, reality being what it is, there does seem to be a “Complain by Comply” mentality beginning to settle in, now that the US is imposing the same regulations on it’s domestic banks as are being applied on the foreign institutions so that they can engage in a reciprocity exchange of tax data to help undermine FATCA opposition.

    You might read this post too..

    http://isaacbrocksociety.com/2012/03/17/dualing-editorials-datca-vs-fatca/

    It is a brave new world being created, and you are one of the few Americans engaging with those that see it and concerned about it.. The man in the street in Kansas City has no idea.

    http://isaacbrocksociety.com/2012/03/27/a-global-fatca-in-the-future/

    This is not a partisan issue, and it is not just Liberals that are concerned about it as you said. You would think it would be a Conservative issue, but only some Libertarians understand it. I am pretty sure Ron Paul does, as does the Catco institute.

    Carl Levin, who is hardly a conservative, is the one Senator who has been leading the charge against offshore evasion. He has single handedly done more harm than any one person with his unilateral extraterritorial FATCA laws slipped into the Hire Act in the dead of night. It is sending us down the road of a Global FATCA, or GATCA.

    It was his dogged determination to get those tax evading Homelander cheats that launched this offshore jihad, and as with every legislation with its thousands of pages of amendments, it is only much later that the collateral damage is tabulated. The FATCA drone strike is not as precise as he would believe

    Maybe you think that these movement towards a GATCA are a good idea, and maybe you don’t, but you have stumbled upon one site that is actively discussing it and opposed to it. You won’t find the subject being debated anywhere in the MSM back in the Homeland.

    You said….“Probably a one time amnesty should be at hand with a grace period to get current. ”

    Would to god that the IRS operated like the Canadian IRS when it comes to amnesties. Few minnow US immigrants or Expats who wished to hold onto their US citizenship would have much complaint, if the IRS followed the CRA example towards off shore reporting and tax compliance. However, that isn’t what the US does.

    http://www.cra-arc.gc.ca/gncy/nvstgtns/vdp-eng.html

    Now compare that to what the US does with threats of criminal prosecution and 27% penalties of all overseas assets, and you will begin to understand some the complaints.

    Anyway, Mate, when you launched your first comments about “evaders and whiners”, I am sure you did not think you would be so engaged.

    Keep an open mind, and we will try to keep a civil discourse. I enjoy reading your perspectives, as wrong as I think some of them are…but over time they can change. That is unless you are locked into the world of “certainty” that often accompanies partisan political dogma, American Exceptionalism or religion.

    Glad you got that minor in Finance. I guess I should have gone to school to learn about the FBAR and citizenship taxation. When I tell my Kiwi and Australian friends they are gobsmacked (technical term) that American would tax and penalize its citizens the way it does. Similarly American Homelanders are amazed that some would not want a greencard or US citizenship anymore. It just doesn’t compute. 🙂

    cheers

  99. Thanks for your reply, Steve. For my Canadian-born son and those like him and parents/guardians/trustees who have legal authority to make decisions in their best interests, I see what is happening as nothing more than blatant discrimination and that’s where any ‘abuse’ comes in. We ‘US persons’ in whatever country are second-class citizens by virtue of our extraneous US citizenship.

    Fortunately, the country we live in has better health and disability benefits and protection for its disabled. I am sure the US Department of State is not going to afford my son a better life in the USA.

    Unfortunately, my “accidental American” son is the loser, economically, health-wise, family-wise, stress-wise, along with those entrusted with his care. The Albertan and Canadian taxpayer also loses as the US is requiring this country’s taxpayer dollars to go for the administration of US tax and financial information reporting, stolen from provincial dollars allocated for that disabled person’s living and medical expense. This will bring zero tax dollars to the US — only the absurd penalties that could be incurred and the dollars to competent Canadian professionals for administration of US tax and financial information reporting.

    These families need no further stress or expense in their lives. I am using my retirement savings for resolution, which I am not confident I can get. There are many, many with a disabled person in their family who are not fortunate enough to have that to draw on.

    If there is no resolution, I too am prepared not to again cross the US border with my “illegal son” for travel or to visit US family members. My son is protected in Canada but, illogically, could be arrested on US soil for not holding a US passport, not reporting his ‘big $$’ legal Canadian Registered Disability Savings Plan (RDSP) and Tax-Free Savings Account (TFSA) by FBAR or the new IRS Form 8938 or for sending the US a yearly tax return for $0.00 owed.

    I just feel that when I know something is wrong, it is my responsibility to act on it the best way I can. It is not just my family’s story — it is the story of many in whatever country. I am thankful every day that my path brought me to Canada. I could have never dreamed that this is what my retirement years would be and the trouble I’ve brought to my children, born Canadians. It is not the legacy I wish to leave for them.

    Common sense could go a long way in circumventing any abuse — that being taxation based on citizenship rather than residence as for the rest of the world.

  100. @ omg who wrote: “Canada is the only country that already had an agreement in place long before FATCA to automatically forward Canadian bank information on US residents to the US government. If you are a US resident trying to evade taxes, the last country you would put your money in is Canada.”

    That is exactly the point I get so hung up on although I don’t think the banks provide our bank account numbers and balances to the Canadian gov’t, just the amount of interest earned in a year. (Although maybe if there was a criminal investigation they would provide everything, I don’t know.) Nevertheless it was always my belief that if the IRS wanted T4 and T5 information they merely had to request it because of the reciprocal tax treaty. That’s why FUBAR is so outrageous because it isn’t searching out taxable interest income for a year, it is basically asking people to give up the keys to their accounts. (Please note, I am not familiar with any investments other than GICs because we have never had any of those things.)

    Anyway we don’t know who reads those bank numbers and dollar values at the Treasury Dept. and we don’t know who else they share the information with (IRS for certain though). I think FUBAR filers are all at risk of identity theft. Seems to me that unscrupulous TD employees would have almost everything they needed to empty our accounts — bank name, account number, rough balance, holder’s name, DOB, SS number, address and even a signature to copy. (They might have to search out SI number and mother’s maiden name but for those cleverer than I it would be possible to do that.) Also, we might all be at risk of future, beyond FACTA, US tax laws whereby the IRS might order a Canadian bank to actually freeze access to or even seize banking accounts. Yes I know it hasn’t happened yet and the Canadian gov’t says it will protect us but there is nothing put down in serious legislative writing yet — it’s only words from politicians. Paranoia strikes deep … Into your life it will creep … I just don’t trust anybody very much.

    On a lighter note, I mentioned somewhere, that we have never received any acknowledgement from the Treasury Dept. that my husband’s FUBAR had safely reached them. I lied. One year they wrote back to say my husband had not filled in his date of birth. I wrote a one page letter back to them pointing out that my husband’s DOB was the same as it had been recorded every year before on his forms. It was something he couldn’t change (even if he did want to shave a decade off).

  101. @em- I believe that the Tax Treaty requires the sharing of financial information about U.S. residents who have Canadian bank accounts. Even today when you read about FATCA compliance that still seems to be the understanding that many non U.S. financial institutions have.
    It hasn’t quite yet sunken in that the U.S. considers any financial account that is held by a U.S. person with a financial institution that is outside of the U.S. to be a foreign account.
    It is the inability for U.S. persons to have domestic accounts, without having to divulge them to the IRS, that is probably one of the biggest insults to us as individuals. So bascially we are being punished everyday for living outside of the country. None of which makes any sense whatsoever. The simple and fair answer to this problem would be for the IRS to exclude from FBAR and 8938 reporting all accounts that are held in your country of residence. Of course then the next logical step would be for the U.S. to adopt territorial taxation since the financial reporting rules and citizen taxation are all a part of the whole.
    But there is no way that the U.S. would ever be willing to acknowledge that it is not the only sovereign nation around.
    Let’s not forget just how unfair all of this law is people who move to America and never do become Americans. No longer can they have financial accounts the land of their birth unless they are willing to subject these accounts to IRS rules. Even if they move back to their native land they will still be treated as U.S. citizens by their local financial institutions. Having any association with America is now a less appealing status.
    If you are a young person the biggest hinderance to your life is now U.S. citizenship. Not only can such citizenship hinder your job prospects in the land your birth and in other countries but it will cost you untold thousands of dollars in fees for accounting/lawyers. The cheapest thing that you could do would be to get rid of your U.S. citizenship. The payback over a lifetime is huge. By jettising your U.S. citizenship you would get rid of untold and unknown legislative risks in the present and the future.

  102. @Blaze, Congress may be visualizing Americans living abroad as a huge cash cow, but that is not the way the US citizenship based tax laws are written. The way they are written it really does not matter to the US to whom you are paying income taxes, just as long as you are paying them to somebody. In reality the are punishment for living in a country whose tax laws do not mirror those of the US and have tax rates at least as high as US tax rates. If you live in a country like Canada where the tax laws are similar, then your foreign tax credits will likely totally satisfy you US tax obligation and you will owe nothing to the IRS. But you have to go to great expense to prove to the IRS that you don’t owe anything to the US. You have to maintain intricate records and fill out complex forms, and be able to produce receipts that you have paid enough in Canadian taxes so that you don’t owe the IRS anything.

    What defies any logical explanation is why it should be a matter of concern that you pay taxes to the foreign country where you live. That should be a matter of concern to the tax authorities of that country, but not to the US.

    Tell me how this can possibly serve any useful purpose other than to justify a massive and costly government bureauracy. It is truly a “make work” program. And it also creates jobs for accountants whose fees have to compensate them for correctly undertanding these very complex tax laws. They produce nothing really worthwhile.

    But if you are a US citizen and have the audacity to live in a country whose tax laws are very different than those of the US, then is when you really experence in the flash the wrath of the US, as if doing this was somehow almost a capital crime. Not only do you have to go through keeping detailed records, filing complex forms that you cannot possibly do wtihout expensive professional assistance, but also you end up owing a pile of money to the US as punishment for living in a country which generates its tax revenue, not through income taxes, but through VAT, Sales and all kinds of consumption taxes that likely do not have any US equvalents. The act of living and working in such a country is somehow regarded is such a treasonous act that you must pay income tax to the US as punishment. Not ony that you must pay the US in US dollars. If you happen to live in a country with foreign exchange controls you have another problem. You may have to obtain the dollars to pay the IRS by “buying” them on the black market and secretly smuggling them out of that country. In doing so, you risk getting caught, having everything you own confiscated and being sentenced to prison for the rest of your life.

    According to the Tax Advocate’s most recent annual report to Congress, 91% of the tax returns filed from outside of the US showed a zero balance due to the IRS. The remaining 9% were filed by US citizens mostly living in countries with very different tax laws. These are the few that produce the bulk of the blood money for the IRS. And those who live in these countries would be expecially hard hit if the Foreign Earned Income Exclusion were to be eliminated. The exclusion, currently at $92,000 represents $19 627 in additional tax cost for a single person currently able to exclude this amount. What would happen? The people hardest hit would have to chose between moving to the US or renouncing their citizenship. It is nothing more than dreaming in techniciolor that this exclusion elimination would produce any significant additional revenue. It might even result in a drop in revenue. The Joint Tax commission does not take into consideration the behavioral change that would result, because they have no way of guessing what it would be. So they just assume there would be no change.

  103. @rogerconklin- I agree completely. It is none of the U.S. government’s concern about what your tax situation is like in your country of residence because the U.S. has no vested interest in the situation. It is all just a pretext for imposing their taxing regime on an extra territorial basis.

  104. What we’re experiencing are the negative side effects of being connected to a country that has the most super rich people who maintain residences and businesses in multiple countries.

    It’s hard to separate average people from really rich ones through the tax system when you don’t have real legal jurisdiction. That’s why even now the US government sites warn you about the hazards of dual citizenship. Why they went and reclaimed so many former citizens when they knew this is upsetting.

  105. @omghesstillanamerican- the logical answer is to adopt a territorial system of taxation. The present system is obviously unworkable if you have to adopt punitive measures in order to enforce it.

  106. Steve – let me ask you something. You said “Some of you are hiding assets and don’t want to pay your fair share.”

    If someone paid taxes where they live, let’s say 30%, and they save this money in the bank, what does the US Government have do with this? And how do they deserve a “share” since taxes have already been paid?

    This is the argument of many of us. We are ALREADY taxed where we live. If we receive ZERO benefits and services from the US, then why should we have to pay there too? We’ve already paid.

  107. And one more thing: US Citizens in US Territory should be ashamed of themselves for letting Obama charge $450 for someone to renounce. That’s the 21st century equivalent to a slave buying their freedom! Whatever happened to the American attitude of “good riddance!”??

  108. @recalcitrantexpat Absolutely on point! “The present system is obviously unworkable if you have to adopt punitive measures in order to enforce it.”

    BTW @WhoaIt’sSteve

    Continuing your education, you should read the National Tax Advocates recent report to Congress on Foreign tax issues and bad practices by the IRS. There are some at the IRS that understand the problems, but unfortunately there have been no hearings or discussions on these matters in Congress. Certainly nothing in US media.

    Under areas of Focus, read item K. IRS’s Inconsistency and Failure to Follow Its Published Guidance Damaged
    Its Credibility With Practitioners Involved in the Offshore Voluntary Disclosure Program

    Read about the TAS directive to the IRS where this problem stems from.

    http://www.irs.gov/pub/irs-utl/recommendations_tad2011-1.pdf

    Read about the Most Serious problems that the TAS has identified…

    Introduction to International Issues: Compliance Challenges Increase International Taxpayers’ Need for IRS Services and May Undermine the Effectiveness of IRS Enforcement Initiatives in the International Arena

    http://www.irs.gov/pub/irs-utl/2011_arc_internationalmsps.pdf

    Finally, not to overburden you with educational material, but since you have taken finance classes, this should be a piece of cake for you…

    Familiarize yourself with American Citizens Abroad, a non partisan group trying to represent Expat issues with Congress.

    This on FATCA…
    http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=466&Itemid=2

    This a proposal for a Territorial Tax system and abolition of the Citizenship taxation model.

    http://www.aca.ch/residencebased.pdf

    Happy reading….

  109. @recalcitrantexpat, I think at it’s core the US government is afraid of tax competition which is what the territorial tax system introduces to the equation.

    They need to find ways to broaden their tax base at home. There are too many deductions that other countries don’t offer to their citizens that US residents enjoy. US politicians need to bite the bullet and change the system now while it’s in upheaval and less Americans will notice what’s really happening.

    You can’t spend more than you take in forever. They need to broaden the tax base, become more competitive with business taxes, find ways to export more, and reduce the government bureaucracy.

  110. @omghesstillamamerican, you are so correct. The only way any nation pays for its imports is to export. That’s the only real way to get your money back, but what Capitol Hill totally fails to understand is that it takes feet on the ground in order for exports to be sold. Foreigners do not come on bended knee begging to buy what you make. Exports have to be sold and that takes blood sweat and tears. Hanging a millsone around their necks in the form of double taxation to keep Americans from going abroad to sell American products is absolutely insane. And the US currently has a $740 billion trade defiicit to show how “successful” this supression of the sale of US products really is. It is not higher labor costs that kill US exports, but restraining salesmen from selling them by double taxation so they will stay home.

    The average hourly wage (2010 numbers) in the US is $33.74. In Germany it is $43.76, Switzerland $53.20, Canada $35.67. Germany’s current 12-month trade surplus is $224 billion. China’s is $153 billion. If it wasn’t for China’s $300 billion trade surplus with the US it would have a world trade deficit of $154 billion.

  111. @omghesstillanamerican- the U.S. is already engaged in competitive taxation and it is losing the battle to other countries that practise territorial taxation. Let’s not give the U.S. another illusionary boogeyman to use in their refusal to what is right.
    You are correct when you say that the U.S. tax system with regards to its residents must change. When over half of your resident households pay no income tax while still taking services, then you have a problem. I still say that the best way for the U.S. to go is to institute a VAT but it probably won’t happen since the Americans associate such a tax with the Liberal European nations. VAT’s are beautiful in their simplicity of administration and notable for the fact that they are hard to avoid.
    But probably one of the America’s other biggest problem is a military that is spread around the world. Fighting two unfunded wars hasn’t helped at all and the tax cuts for the rich have only made things worse.
    An American single payer health system would also enhance the competitiveness of U.S. businesses since it would rid them of a very expensive employee expense that does not burden the foreign companies that they compete with. When it comes to cost savings ability, ObamaCare isn’t even in the same league as that of a country that has a singel payer system. But unfortunately Americans don’t seem to get that fact even though their present system costs them over 2X as much to deliver health care.

  112. Oh crapola, my memory failed me about that letter I sent to the Treasury Dept. when they informed us one year that my husband’s DOB was not filled in on the FBAR. I just found the darn thing and it was so dripping in sarcasm that I’m sure there has been a neon-lit red flag on my husband’s file ever since. It began …

    My MOST sincere and humble apologies for neglecting to inform the MOST exalted and almighty Department of the Treasury of the MOST omnipotent and esteemed nation in the universe (namely, the United States of America) of this MOST important piece of information regarding my husband (namely, his date of birth).

    And after that it got worse for 5 more paragraphs. Honestly, what came over me? I guess back then the form was a mere annoyance whereas today it is terrorizing. What I did was the equivalent of poking your finger in a policeman’s belly.

  113. … and mine!! The things that we say in our head sometimes get on paper. And, you even mailed it. Good for you, Em!!

  114. @omg…
    I wasn’t born until well in to the Reagan Era like 2nd term time, so I can only go from what I’ve learned in history (-: hehe

    @Just Me
    Well it takes understanding to empathize, and I’m beginning to understand.

    Here in Ohio we are dealing with some of the issues of a post-industrial era United States, and our state is handling it pretty well. With a below average unemployment rate, and growing economy Ohio is heading in the right direction. Manufacturing is only a facet of what the United States needs to do to maintain it’s strength. The trade deficit is an issue but thinking that correcting that with manufacturing will make everything ok, is thinking too simplistically, it won’t go away as long as there are nations with slave labor wages. We need to make more things domestically, but that should not be the sole focus or even a major part of any economic program…this is getting way off topic Sorry lol.

    I have changed my mind that anyone complaining about citizen taxation is trying to evade, I think it’s just complex and being human we don’t like complexity. I can be wrong, I’ve been known to be very wrong but I’m always open to be corrected by someone smarter than I am.

    I just perused TD F 90-22.1 and it seems straightforward enough, yes complex but so are most government forms, a 1040 is also pretty straightforward. My father is an accountant so I may be a little more knowledgeable than most, I mean I still pay an accountant about $300 to do my taxes for me.

    @calgary411
    That sucks that you wouldn’t be able to visit or bring your children to the US, but I think you just have to do what’s in the best interest of your family.

    @Ben Franklin
    Not sure I see the correlation? The Colonist’s did not choose to place themselves in a situation where they were taxed but not represented. Anyone with American citizenship is free to enter and take up residency thereby allowing them to register to vote.

  115. @geeez
    Isn’t that why tax treaty’s are signed to alleviate double taxation? In the process giving you credit towards your bill in the US because you’re paying a bill in a foreign land?

    I know it sounds jingoistic but you know as well as I do that the US doesn’t see itself as just another nation. I understand how this comes across, but this is the US Government you’re talking about and they have you over a barrel for now it would be like an ant trying to push a semi-truck, the best solution I can see is that you extricate yourself from the bad situation.

    I don’t have an opinion about the fee, I think it’s probably along the lines that one is utilizing consular services and that takes time and money, Passport’s are not issued for free either.

  116. @WhoaIt’sSteve

    ‘Anyone with American citizenship is free to enter and take up residency thereby allowing them to register to vote’. Perhaps the Brits believed that any of the colonists could always go back to England if they did not like what was happening in the colonies.

    For many of us, Steve, who have been gone from the country of their birth for years and years (in my case 51 of my 69 years), it is safe to assume they have made a life in their new country. Speaking for myself, I know that after my Canadian born husband died 19 years ago, I thought briefly (about 10 minutes) that perhaps I should move back to the States where my mother and siblings stilled lived. But then I quickly realized how silly that would be. I had grown children, grandchildren and many friends here in Canada. This is where I had spent all of my adult life, where a daughter was buried and a husband was buried. Now the US is trying to reclaim me or at the very least lay a claim on some of my late husband’s hard earned dollars. Do I resent it. You bet. At my age, too many sleepless nights is not good for one’s health.

  117. @tiger
    I agree, that’s probably the issue I think is the most serious and worth looking at of all those being brought up here. If someone wants to abandon the United States then it should be easy and simple. I can understand though why it would be a little tough as it is irrevocable.

    Are former US citizen’s who renounce or relinquish permitted to apply for Permanent Residency after?

  118. @WhoaIt’sSteve

    Most(More like all) tax treaties between countries other than the US actually prohibit citizenship based taxation. The US though has always demanded theirs be negotiated to allow it(The US Senate refuses ratify any treaty without the so called “savings clause”)..

  119. @whoait’ssteve- not exactly true. The Colonists or their forbears did intentionally put themselves in a situation where they knew that they would be taxed but not represented. Remember that the Colonists voluntarily came to North America and they knew the political and economic arrangement that existed between the New and Old World.
    When it comes to the ease of the 1040 you have to be in the situation of an expat who is trying to reconcile the 1040 with the income reporting laws of his/her country of residence. What you fail to understand is that the 1040 is just the surface of U.S. tax law. Underneath that 1040 lays a whole bunch of other rules that you have to understand if you are to fill in the 1040. The IRS Tax Advocate points out in her report that every explanation of the tax code leads an expat to countless other tax rules that are on other pages. This is a real problem and therefore usually means that an expat has to go and get help from a highly paid tax professional in the way of an accountant or lawyer.
    There is also the problem of the fact that the IRS forbids its non-resident citizens to make investments that are perfectly legal in their country of residence. Then their are other investiments that you can make but you have to make sure that you use the proper form to tell the IRS that you hold those investments.
    The whole point is that there is no way to reconcile the tax codes of the U.S. with the tax code of your country of residence. It is this inability to reconcile the U.S. tax code with that of other countries which leads to an income reporting gap that the IRS can exploit for purposes of extracting additonal tax or for levying penalties and collecting tax. Take an investment like mutual funds. If you live in America you can freely invest in any mutual fund that is issued by a U.S. financial institution. However if you live outside of America you are not free to invest in mutual funds unless you inform the IRS about it.
    Any mutual fund that is issued non-America institution is known by the IRS as a, Passive Foreign Investment Corporation(PFIC). THe investment is still a mutual fund and as a matter of fact it is probably going to be invested in the same companies that the U.S. mutual fund is invested in. The legality of the investment all rests on the nationality of the institution that manages the fund. Bacially what it all comes down to is that an expat U.S. citizen has to each year prove to the IRS that he/she is NOT committing a crime The Tax Payer Advocate in her report also points out this deficency in the IRS rules- that a taxpayer has to prove his/her innocence as opposed to the IRS having to prove guilt. The FBAR forms are a part of this having to prove one’s innocence.
    What it comes down to is that a U.S. citizen can leave America in a formal sense but he/she cannot leave America in a real sense. As a person who has rights that exist without the government’s having to grant them or as the U.S. Constitution calls them-inalienable rights, I resent being placed on probation by the IRS until the day that I die. I also have a right to have financial accounts in the land of my residence and the right to make any investment that is allowed under the laws of my country of residence. I should not be placed in the position where the rights that I have under the Constitution of my land of residence are abridged by the U.S. government. The other real travesty is that a person who is a native of his/her own country cannot return from the U.S. and be placed in the same legal situation that he/she enjoyed before leaving to live in America.

  120. @tiger
    Also if I’m remembering correctly colonist’s could not take up residency in England, and even if they could voting was limited to landowners. The correlation between someone choosing now to permanently move outside the country abandoning any residency they had for purposes of registering for elections and the colonist’s is not valid.

  121. @recalcitrant…
    I was just Googling that. How likely is one to be accepted for the naturalization process that has before given up US citizenship?

  122. @whoait’ssteve- As I understand it one’s previous citizenship does not give you an advantage. Once you give up your U.S. citizenship you are on the same level as any other immigrant who wishes to gain entry into the U.S. You have to go through the exact same process. There are no shortcuts allowed for previous citizens.

  123. @recalcitrantexpat

    I learn alot from your posts. I have never filed a 1040 (having left the States as a University Student) but it does sound like the US tax requirements of the expat community are much more onerous than for US persons, resident in the US. I know that they don’t recognize Canada’s RRSPs and if you have one you must file something called a ‘private letter’, I assume through a tax attorney, in order to get permission to not pay tax on the RRSP. I am probably a bit confused on all of that, but I do think a Canadian who also has to file US returns, and has registered funds in Canada, has a much more complicated process to go through.

  124. @recalcitrant…
    Ok that’s interesting the only thing I found said you could never re-apply for naturalization. I trust you all with your knowledge, at least we don’t hold a grudge against ex-citizen’s.

    You know overall I think the IRS sucks, but I did read the advocate report and it seems to me that it is overly complex, the whole tax code needs an overhaul. While I think citizenship based taxation isn’t a bad idea, I also think it should be as straightforward as filing a domestic return is.

  125. @WhoaIt’sSteve,

    I am curious – why do you think citizenship based taxation isn’t a bad idea? If all countries of the world had citizenship based taxation (instead of only US and Eritrea), wouldn’t that spell disaster for the world economy. I am sure there are millions of immigrants in the US, who would face poverty if they suddenly had to also remit tax money back to the country they were born in or perhaps a country, their parent was born in.

  126. @tiger
    To me it’s just a better idea. Citizenship grants privilege and also has responsibility, the more successful a country’s citizen’s are the more they will earn and the more revenue there will be to collect.

    I think if every country in the world turned to citizenship based taxation we would see the end to recognition of dual and triple citizenship by public demand, probably an increase of citizenship by jus soli rather than the awkward jus sanguinis, which to me makes sense, why have citizenship in a country in which you may possibly never have been to or will ever want to go to?

    I’m not sure it would ruin world commerce, nations compete with each other as it is now, wouldn’t they compete with each other in a situation in which taxation was based upon your homeland?

  127. @whoait’ssteve- Citizenship based taxation would destroy world commerce because it would destroy the mobility of people. Right now a good deal of the new wealth that the world has created is the unacknowledged result of individual citizens being free to take their talents to other nations where their knoweledge can be more effectively used. If a potential immigrant with an engineering degree were to be faced with the prospect of having to pay taxes in two countries then this would serve as a strong disincentive to going to a country that offered more opportunity. Also citizenship based taxation would present an impediment to the flow of capital if taxes on investment gains would have to be paid to your country of citizenship in addition to the country where the gains are generated. Citizenship based taxation would make it impossible for capital and human ingenuity to meet each and therefore be most efficiently employed. The proof for this can currently be seen with the behaviour of international countries. Double taxation is bad for captial accumulation.
    Citizenship based taxation is morally wrong because it allows the country of a person’s citizenship to actually tax the wealth that is generated by the person’s country of residence in a totally different currency. Citizenship based taxation is nothing more than a free ride for the country of citizenship. I have no doubt whatsoever that the U.S. would vigorously object to having citizens of other countries, who are resident in the U.S., converting their U.S. dollars into another currency and sending that money away to pay a tax obligations to a country that did not generate the wealth.

  128. @whoaitssteve

    You sound to me to be a reasonable enough guy, who confronted with a subject you didn’t know much about before, (even though you instinctively had a bias) has been willing to dig in an learn about it. That is pretty mature of you, and appreciate your openness to new learning.

    So much about our Tax system and its complexity and adverse effects on Expats arises out of our Politics and the Money game that caters to special interests. I just posted the link to a “This American Life” podcast, I would really recommend you listen to….

    http://isaacbrocksociety.com/2012/04/03/take-the-money-and-run-for-office/

    It is a little off subject, but to me it explains a lot why we have what we have, and why it will be very hard for Expats to exert any influence to change things.

    Even I, who only recently learned that I had to fill out FBARS, and a Form 1116, foreign tax credit with an instruction booklet that no one could fathom and now an FATCA form 8938, didn’t fully realize how complex our system had become until I saw this…

    http://isaacbrocksociety.com/2012/02/12/what-is-the-real-size-of-the-u-s-federal-tax-code/

    Then when you read stories of tax returns 17,000 pages long for Berkshire Hathaway and 57,000 pages for GE, you know a lot of the complexity in the tax code leads to this. I am sure both Warren Buffet and Jeffrey Immelt would complain about the complexity too, but yet it is their lobbying that creates the loopholes and exceptions which requires filings like this that basically let them push the limits while engaging in audit lottery. They rightfully conclude that the IRS will not have the resources or time to challenge every credit and deduction that is claimed in the filings. That is why GE has a Tax department with the best attorneys money can buy which is a profit center.

    That is how GE pays no taxes on $14 Billion in profits last year. And guess what? Since they are a super person, they can keep their profits offshore and are not taxed until they expatriate them, but I, a mere mortal as an Expat, can not. I have to declare my income and pay the taxes now. See what lobbying dollars buys you? An exception that Expats without lobbying dollars can not participate in.

    http://www.weeklystandard.com/blogs/ge-filed-57000-page-tax-return-paid-no-taxes-14-billion-profits_609137.html

    Maybe if everyone, including CEOs and you, had to do their own taxes without software or CPA help, there would be a revolt against what we have created. Expats are up in arms, partially, because they more closely feel the effects of the complexity and see the absurdity of the practices. With all the extra forms they have to file, and all the “non willful” “guilty until you prove your innocence” forms with serious penalties for foot faults, it does get up your nose at what Congress has created with it’s Statutes. Also, we see the hypocrisy of one rule for Corporations and one for Humans when it comes to foreign (offshore) earnings.

    When you think about it, the IRS, in many ways has almost has an impossible task enforcing the will of Congress. It seems to change the code almost daily in response to some special interest. As a lobbyist gets some Congressman to insert this provision into the code or deletes another unfavorable provision, they have to try to keep up churning out the new (or modifying) rules, regs, publications and forms that accompany the change. You could almost feel sorry for them until you experience how they go about enforcing the will of Congress in such a bungling way that the TAS had to criticize them publicly and issue a TAD, which they ignored by the way.

    http://federaltaxcrimes.blogspot.co.nz/2012/01/tax-notes-discusses-dispute-between.html

    and here

    http://federaltaxcrimes.blogspot.co.nz/2012/01/national-taxpayer-advocate-report.html

    These are all subjects that you wouldn’t have learned about even in your Finance class, or on NBC nightly news. 🙂

    The problem with the Tax code and all the problems it creates (including IRS enforcement practices) is that it really is not a revenue document and or a tax document, but a political document. So politicians look at a net figure they want to get to, gross it up, and then create ‘exceptions’ for all the interest groups so they can all claim victory. The members of the Committee get their re-election contributions, and everyone except the little guy is happy. If you were to wipe the slate clean and start with a 2 page flat/fair tax code today, given our political system and the money that drives it, it would only be a matter of time before it is back to the monstrosity it is today.

    Time for a Constitutional Amendment to somehow restrict the growth. But that would strip lobbyists of their power, and Congressman of their money, so that is a hard row to hoe.

    So it goes.

  129. @whoait’ssteve- I have read material to the contrary. Also when I was at the Consulate I was told that I could regain my citizenship but that I would have to go through the naturalization process in order to do so.

  130. @whoait’ssteve- here’s a thought. If Congressional spending power cannot be authroized for purposes of directly funding services for citizens- eg. education, medical care, roads etc.- who live outside U.S. jurisdiction then how is it the taxing power isn’t also similarly restricted?
    Part of the pact that a citizen has with his government is that taxes are remitted in exchange for services both now and in the future. The U.S. citizen who is not resident in the U.S. has entered into a pact with the government of his/her country of residence and has abandoned the arrangement that previously existed with the U.S. government.

  131. @tiger- thank you tiger for your kind words. I have learned much from you and the many others who participate on this blog. We owe a great deal of debt to our shared knowledge and the comfort that we derieve form sharing each other’s burdens.
    My only regret in all of this are the horrible circumstances that have brought us to this place. This is all costing us a lot of LCU’s with no gain.

  132. @recalcitrantexpat… Well, the LCUs may have no $ gain, but frankly for me, it has helped my mental sanity to have a place for civil exchange. Also, I too have learned a lot. You never know what future benefit could arise from that knowledge. It has been a good schooling for me at least.

  133. @WhoaIt’sSteve and recalcitrantexpat

    I was told at the consulate, that it was virtually impossible to regain citizenship again; he didn’t explain further and I didn’t ask. Later, I became worried (a bit) about what would happen if my son (dual) got a job in the States and my husband died. He could sponsor me for a green card. I was afraid I wouldn’t be able to afford living in the US. Though he has changed his mind and also decided to renounce.

    Steve, I am curious. I only left the US because I met my husband and we married. I don’t see that as something “against” the US. Having lived half of my life in each country (more or less), I don’t understand, being gone for 30 years, why I have any financial obligations to the US. I was a stay-at-home Mom and have always been involved in volunteer work. IOW, I never earned much money at all. The issue with FUBAR is that my husband’s account numbers, balances, etc. are none of the IRS’ business. But we had to report them since my name is on them. There’s just no way I can accept that as fair, reasonable, or neccessary.

    There is also the very real issue that the majority of us (as well as many, many others), had no idea we had a tax filing requirement and had never even heard of an FBAR. There has been no effort whatsoever, by the IRS, to see that this information was communicated and spread. Most of us first heard of this linked to people who had come forward and were losing their retirements. First there is terror, endless anxiety and eventually, anger. I don’t hate the US, after all, it is my “home.” But I cannot fathom the need for this kind of “punishment” just due to marrying a Canadian. I am not sure what you are getting here is really “anti-Americanism” as much as really strong anger. But I could not take the risk of losing our retirement, we could never recover at our age. So I felt there was no choice to renounce and I was not happy about it.

    BTW, also a buckeye.

    PS-I admire your guts to stick it out here and appreciate your efforts to learn what is going on…..Thanks!

  134. @WhoaIt’sSteve

    You might want to think Citizenship tax to its logical conclusion, if you think it is a good idea. What if all Countries in the world asserted that right? What if it wasn’t just the sole providence of the US? What would the world look like? Would we have to have a world court of citizenship arbitration when two or three countries claimed the same person as citizens of their country as a revenue source? Who would decide? Would there be a fight between countries for the taxing rights to a person?

    What if that happened in the States. What if you move from Ohio to California, but Ohio considers you an Ohio Citizen for taxation purposes just based upon the lottery of your birth. Now, even though you are living in California, you have to send taxes back to Ohio? Does that make any sense at all? Of course it doesn’t, and that is why if my Australian wife moves from Australia to New Zealand, Australia release her tax filing requirements. She comes Tax resident in New Zealand and pays taxes there. If she moves back to Australia, the reverse happens. Very logical and simply administered, and Australia spends no time trying to chase her around the world to collect taxes when she is no long tax resident there. And, I might add, they do not threaten her and force her to reveal her NZ bank account details, nor do they add tax filing complexity and penalties on top of her NZ life either.

    The Citizenship thought experiment has already been done for you to contemplate.

    http://isaacbrocksociety.com/2012/02/16/what-is-the-systemic-risk-to-the-worlds-economy/

  135. @geees, tax treaties sometime help non-us citizens who do not reside in the US to avoid double taxation, but rarely do they avoid double taxation for Americans abroad. Their prime function in the case of US citizens is to confirm the recognition by the foreign country that the US has the right to tax its citizens who reside in that foreign country. It confirms the right of the US to impose double taxation on US citizens (and green card holders) who live in that particular country.

  136. @rogerconklin- you are correct. The U.S. does not enter into these treaties in order to protect its citizens but purely to make sure that it’s own interests are protected. What a way to lie to your own people. It shows a lot of nerve and lack of morals, that the U.S. is wiling to have the lie put on paper.

  137. The fact that the US government collects taxes from money earned in foreign jurisdictions also creates a conflict of interest.

    If they were on a territorial tax system it would benefit workers in the United States because the government would have to become competitive to attract companies to manufacture in the US. This would create more jobs.

    As it stands, the government doesn’t care if you ship jobs overseas because they’re going to see tax dollars from that too. They pay lip service to US residents when they bad mouth companies shipping jobs overseas but the government is also betraying them through the tax code.

  138. If they want to bring manufacturing back to the US now would be a great time because shipping rates are so high and not likely to go down anytime soon.

    But companies are not going to switch manufacturing to the US when they have the world’s highest tax rate and the threat of never being able to disconnect from the US once attached to them.

    If they switched to a territorial tax system and greatly reduced the corporate tax rate they might even be able to attract foreign companies into relocating to the US if their customer base is primarily there.

  139. Mr. Conklin you wouldn’t happen to be affiliated with Mr. Norquist’s group would you? Your commentary sounds awfully familiar.

  140. @WhoaIt’sSteve:

    I think you’ve got the politics of this issue too neatly pigeonholed. The NDP, which is well to the left of any mainstream US party, has made a point of taking up the cause of the US/Canadian duals caught up in this thing.

    see http://denisesavoie.ca/ndp-position-on-the-us-foreign-account-tax-compliance-act-fatca

    Nina Olsen reported that US tax system is more or less impossible to comply with from outside the country, and I have certainly found this to be the case:

    the system puts people with shallow-end finances – who may have very simple Canadian taxes, over and done with in an evening or two – into deep-end tax reporting, regardless of the size of their actual incomes.

    All the tax-sheltered accounts that the financial advice columnists keep recommending – the TFSAs and RESPs and all the rest of it – are arcane foreign trusts from the IRS’s point of view, and come attached to either seriously expensive accounting fees – depressingly disproportionate to the size of the actual account – or high-stakes home accounting, with the threat of penalties terrifyingly disproportionate to the size of the actual account.

    More or less any fund a Canadian is likely to invest in is likely to qualify, from the IRS’s point of view, as a “passive foreign investment company,” or PFIC.

    Scotiabank put it bluntly in a recent newsletter:

    “All Canadian mutual funds … are now considered by the IRS to be PFICs for U.S. tax purposes. The tax treatment of PFICs under U.S. tax rules is complex. Recent changes to these rules impose harsher U.S. taxes, penalties, and interest on U.S. Persons who hold PFICs.”
    http://www.scotiabank.com/ca/common/pdf/about_scotia/PFIC_FAQ_-_English_Version_%28Final_12_28_11%29.pdf

    “A U.S. taxpayer who owns shares in a PFIC (directly or indirectly) is taxed under one of the most Byzantine regimes in the tax code,” a Wood Porter newsletter warns, cautioning accountants that the work involved “may appear to be daunting.”

    http://www.woodporter.com/Publications/Articles/pdf/What_to_do_if_Your_Foreign_Account_is_a_PFIC.pdf

    A dual citizen who wants to start a company, incorporate herself, or own more than 10% of a business (however small) is faced with Form 5471, which the IRS itself estimates takes 38 hours to complete – though tax experts say it could take far longer. Failure to file it comes attached to a $10,000 fine – per year the form should have been filed. 5471 is an informational return, not connected with actual taxes.
    http://www.rpifs.com/cfc3-f5471.htm

    “Form 5471 is so difficult to prepare that professional American tax preparers abroad speak of it as an administrative horror,” American Citizens Abroad laments, “and the IRS staff is not permitted to answer questions related to the forms.”

    http://www.aca.ch/joomla/images/pdfs/tradelet.pdf

    Preparing Form 5471 in the first place assumes that the company concerned doesn’t object to an enormously detailed data set on its finances being sent to the IRS every year. Some do, ACA points out:

    “ACA has received reports from Americans who were instrumental in establishing a business plan for a new venture overseas, but were subsequently shut out from the final investment project by financial advisors who counseled the foreigners not to have any American partners.”
    http://www.aca.ch/fatcabad.pdf

    (The U.S. Office of Management and Budget estimated that one year in the 1990s, 7,432,000 human hours had in fact been spent on Form 5471.)
    http://clinton4.nara.gov/library/omb/OMBINVT.html

    (My own view is that a needlessly complex tax system is necessarily regressive – the more complexity, the more loopholes for the wealthy to find.)

    If it helps you think about the problem, switch countries. Suppose your mother was Australian, but you’d lived all your life in the U.S. The Australians consider you a dual citizen (you had no choice in the matter, but it was never a problem in your life). Suddenly, because of a financial crisis in Australia, the Australians become very insistent on your filing Australian tax returns. Really complicated, expensive returns that eat large amounts of your time. Also, the Australians say they can levy enormous fines, higher than your net worth, for not having filed returns in the past. It’s ambiguous whether these would ever actually be applied (the US government has said their tax treaty with Australia doesn’t require them to help collect them in the United States) but the discussion is alarming.

    As an adult, you have no plans to live in Australia, and no connection there except for an elderly aunt in Wollomoloo. Do you really find it all that hard to imagine going through the paperwork to renounce your Australian citizenship?

  141. @WhoaIt’sSteve, No,I am not affiliated with Mr. Norquist’s group nor do I know anything about nor or am I even aware of this group.

  142. @ All:

    America’s founders: a bunch of whiners?

    Did the British colonists relocate to America in pursuit of economic, religious or political freedom? Yes or no?

    Did the British Government run out of money due to its wars of imperial expansion? Yes or no?

    Did British Parliament promulgate a series of laws to restrict the colonists’ ability to trade with countries outside the empire? Yes or no?

    Did British Parliament promulgate a series of laws to tax the colonists in America? Yes or no?

    Did the colonists have representation in British Parliament? Yes or no?

    Did the colonists believe they were being treated fairly? Yes or no?

    Did the colonists choose to suffer in silence with British laws or declare their independence?

    Were America’s founders a bunch of whiners? Yes or no?

  143. @A broken man on a Halifax pier

    Excellent commentary laying out clearly some of the detailed complexity of the Citizenship taxation system for Americans. I have been lucky, as I did not have PFICs, but when I saw Phil Hodgen’s write up on the correct way to do this my eyes glazed over at the complexity. I now praise my wife’s wisdom / reluctance to invest in some of the Mutual funds that the NZ bank was selling when we first moved here. Sometimes you get lucky!

    Thanks again for that write up. The next time one of my friends doesn’t get it, your comment will be the first on the list as a reference…

    BTW. It goes along well with this video posted elsewhere on Isaac Brock. This is created as a “buyer beware” warning to new Immigrants to be sure they know what they are getting in for, but I am sure most Americans don’t know this either…
    You could have added some more forms (like 1116) to the video, but it made the point well enough, and at 9 minutes it maybe beyond the attention span of most.

    Many of us have cherished our US citizenship, just like @WhoaIt’sSteve, but after the last 3 years of the offshore jihad we have come to realize there are some real costs attached that have previously been pretty much unadvertised.

    Now, every chance I get, I issue the warning to those Kiwis and Aussies I know who think they want to immigrate to America. Know what you are buying into before you make that decision.

  144. What ever happened to WhoaIt’sSteve? Did he give up, or go away to study up?

    Hey, WhoaIt’sSteve… come back and engage a bit. Don’t be a one night stand! You were fun, and seemed to be open to understanding the issues. I am inviting you to listen to Petros’ recent interview with Pete-the-Planner which you might have missed.

    http://isaacbrocksociety.com/2012/04/22/the-peter-dunn-x2-interview-uploaded/

    or go here…

    http://petetheplanner.com/2012/04/17/a-minor-pr-disaster-for-pete-the-planner/

    You need to continue your outside the classroom education. 🙂

    Cheers mate

  145. @Just Me
    I, also, noticed WhoaIt’sSteve’s time on ISB was very short-lived. I figured he was perhaps home sick for a day or two, or even a college student playing on his computer for a couple of days and that he has gone ‘the way of the dodo bird’.

  146. Pingback: Nationalistic Narcissism and U.S. citizenship – Being a U.S. citizen is like having a narcissist for a parent « Renounce U.S. Citizenship – Be Free

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