No one can serve two tax masters

Badger made the following comment which is well worth pulling out of our busy comment stream:

  1. The ‘lords’ and ‘masters’ grant or deny us travel passes, and grant or deny us the ability to change our status – via US citizenship.

    Basically, we haven’t left serfdom, peonage and indentured servitude behind us – the ‘lord/s’ of the manor (Congress) give or deny us the right to travel via the US – while at the same time forcing us to use only the US passport to enter the US. We can be separated from seeing our families there. The lords reserve the right to enact restrictions on what we do with our bodies, the labour of those bodies, and the goods(assets) we produce with that labour – outside the US – forever. The status does not end with our death – the same goods and assets we report all our lives – are then reported on again – via our estates. We are to keep abreast of, and follow closely, the lord and master’s laws – from remote locations abroad – even those who – born in a non-English speaking country, or with print or intellectual disabilities, or limited education and means, may not have the ability to do that.

    The IRS manual – written in technical language that most people are illiterate in – dictates how we will be governed remotely from abroad, and we must be ready at all times to respond if they rule – even retroactively – on any matter. Any significant dispute requires an expensive intermediary – and can be lengthy – and so justice would be unaffordable to most. For example: an RRSP without the proper form filed at the proper time – requires a special ruling letter – at a cost of about 2000.

    The lords and masters reserve the right to enumerate and seize the assets we have produced with our own labour – or in the case of joint, spousal, children’s or non-personal accounts – through us, gain knowledge about, and fine or seize the assets and fruits of the labour of other non-US individuals outside the US. (Under FATCA – if a US ‘person’ is associated with a non-personal account actually belonging to a non-US citizen – what happens in a withholding?). The lords and masters reserve the right to count and potentially seize the same asset over and over again – the same account – like an RRSP is scrutinized repeatedly – though it hasn’t changed and cannot be accessed. The same RRSP – could potentially be held for 45 plus years before being eligible to access – reported and scrutinized, and subject to penalties – more than 45 times via FBARs and FATCA – over a lifetime. More in the case of TFSAs or other savings with additional reporting obligations.

    If we make an error on the FBARs or FATCA or myriad of other asset reporting – no matter how small, or do not report, the penalties – which the IRS acknowledges can greatly exceed the value of the legal accounts – can lead us into ‘debt bondage’ whereupon we may need to sell or mortgage our homes, or seek extra work to pay off the penalties as they assess them.
    As the same entirely legal, post-tax asset can be subjected to multiple draconian penalties – to undertake to pay them off would take a lifetime.

    The ‘lords’ and ‘masters’ enact laws that control our bodies, labour, actions and product – from ‘abroad’ without our consent. We can only invest the fruits of our legal labour as they direct.

    Our children and grandchildren are born into the same servitude without their consent, and we cannot protect them by renouncing for them. There is nothing we can do to save them from the same indenture.

    We can buy our way out (manumission): by complying for 5 years – and by asking abjectly for permission – and a fee – be allowed to be set free.

    Or, if we don’t comply for 5 years, have too many assets, or don’t get their consent to change our status – they will impose an ‘exit tax’ – and thereby pay off what they assess our labour and goods to be worth – in lieu of the rest of the lifetime of potential production that we take with us. In spite of that labour and goods being produced entirely in another country.

    If we are subject to the exit tax, we are also ‘shamed’ publicly – and names entered onto an official list. The scarlet letter.

    I look forward to a kind of emancipation day with all my heart. I do not enjoy security of my person and labour anymore. As in Canada: “Everyone has the right to life, liberty and security of the person and the right not to be deprived thereof except in accordance with the principles of fundamental justice.” Security of the person in section 7 consists of rights to privacy of the body and its health[3] and of the right protecting the “psychological integrity” of an individual. That is, the right protects against significant government-inflicted harm (stress) to the mental state of the individual. (Blencoe v. B.C. (Human Rights Commission), 2000).

    I do not enjoy peace of mind anymore. And as a low wage earner – dependent on another for my upkeep – now my non-US spouse is also indentured. I tried to do the drudgery – but find it too complex – and endure anxiety attacks, intrusive thoughts, and depression – that make it hard to cope.
    And so our savings are going into complying – so that I can be free.

    My family endured the Great Depression, and survived slavery. Who knew that bringing us to live in another country would lead us into FATCA and the current state of things for US ‘persons’ abroad – subject to arbitrary and punitive remote control
    of our person and labour.

  2. @Badger – that’s a very heartfelt and detailed portrait of the 21st century bondage we’re facing as long as we remain associated with the U.S. The founding fathers must be spinning in their graves – so much hypocrisy to go around.

    I honestly see no hope whatsoever for America – it is now in a slow, empire’s-end death-spiral, well on its way to becoming the world’s biggest, most corrupt failed-state in human history. That is what American exceptionalism will mean in this decade.

    In a way, we are lucky to be going through this now, a few years before things really start to fall apart. We have the advantage of foresight – of literally being able to predict the dystopian future that is a certainty. Our homeland brothers and sisters will be ever so envious that we got out when we still could, just like the handful of Jews, East Germans and Soviet bloc refugees that came before us. For most Americans, however, it’s Eyes Wide Shut – for them it will be far too little, too late.

  3. @Badger
    Your post, as Deckard said, is so heartfelt. I ask myself, probably for the 1000th time since all of this started, how did this all happen? When did it start? And why? It has played havoc with my health, and my heart. Certainly has wrecked havoc on any kind thoughts I may have still held toward my country of birth. It is just so unbelieveably sad. Not a day goes by that I am not thinking of this. It is difficult to find joy in my life because of it.

    I do find myself again and again going back to 9/11. I could most definitely be wrong about this; but, I believe that was the ‘beginning of the end’ so to speak. I think both America and Americans were changed forever by that day. That is why I believe the terrorists won. America now feels that injustice is ‘allowable’ if it protects the homeland.

  4. Thanks so much, badger, Deckard and tiger, All. Not much more to express on why we no longer respect, trust, have faith in the land of our birth — for ourselves / for our children (including the one I am not given the right to renounce on his behalf).

    It was so heartening to see that Mr. Mopsick posted:

    APRIL 18, 2012 AT 11:57 AM
    @all: You are very welcome!. The more I see of the injustice of citizen-based taxation, the more I realize this law cannot be allowed to stand!!
    30 Year IRS Vet

  5. I appreciate the fellow feeling, Deckard and tiger, calgary411 and All. Some days it just gets to be overwhelming, and the nights are almost worse. Thank you for the venue and the support.

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17 thoughts on “No one can serve two tax masters

  1. Once again everyone, thank you for keeping up the good fight! Safety and strength in numbers will only help our cause.

  2. @badger- well said. I have come to liken the effects of FBAR, FATCA and citizenship based taxation to the old Jim Crow laws of the South. Under Jim Crow the Black U.S. citizens were separated out from the majority White population of their country and told what fountain they could drink from, which entrance they must take to a public building, and how far up the economic system they could go etc. Of course any violation of the Jim Crow laws meant harsh punishment. Under the present revitalized Jim Crow laws the IRS is the one who metes out the punishment for any violations. Like with Jim Crow it is all based on determining a person’s origin and is a burden that we pass on to our progeny.
    In a previous post that I wrote some time ago I compared it to South Africa’s old Pass Laws, under which dictated the conditions the native Black population had to adhere to in order to be allowed outside of their designated homeland area.
    Never did I think that by simply moving across the border could I have committed a crime. I didn’t rob a bank, become a serial killer or abuse a dependent and yet I find myself joining their ranks.

  3. @Bager and Petros, I can certainly vouch for the “retroactive” enforcement of US tax laws on Overseas Americans. On October 4, 1976 when President Ford signed the Tax Reform Act of 1976 it was retrractive to January 1, 1976. The instant he inked that Act my combined Brazilian plus US income tax was increased to 81% more that any other non-American person of any nationality residident in Brazil with my exact same income and family status. Very clearly those who maintain that tax laws cannot be retroactive are totally mistaken. That law changed my life forever. Because I could not survive I closed down a business selling US exports in Brazil and came home to start a new career, which fortunately for me I was able to do. From afar I observed how a French company with no prior presence in Brazil moved in to hire my former employees and expand the market I had opened so that 8 years later it accouted for over $1 billion in French exports to Brazil, while the US portion of that specfic market dropped to near zero.

    That legislation wracked such havoc on US citizens living and working abroad, that Congress repented and delayed its effective date by one year to January 1, 1977. But that did not happen until after the due date for 1976 tax returns and well after most of those affected had already throuwn in the towel returned home and many export markets were abandoned to foreign competitors.. Do you think any of them would be willing to go back abroad again? No, having been destroyed once they were not about to take that kind of risk ever again.

    Actually that 1976 Act never went into effect, because Congress subsequently enacted additional legislaton which replaced these provisions of the Tax Reform of Act of 1976. But what replaced it was even worse. It totally eliminagted the Foreign Earned Income Exclusion. But that law did not last long either before the FEIE was reinstated. It has been one disaster after another ever since the US Congress legislatted and President Kennedy signed into to law in 1962 the extraterritorial taxaton by the US of its citizens living abroad.

    Since then it has gone from bad to worse.

    The solution to this problem lies in the replacement of citizenship based taxation with residence based taxation, but how to get Congress to do this is a question without an answer so far,

  4. @all, thank you for reading my comments – this site is my comfort and my guide. I can’t forge on otherwise.
    I learn so much here – @rogerconklin, the history you provide shows me that I have been living blind to the forces behind the current impasse.

    I want to urge you all to read and share this GAO report http://www.gao.gov/products/GAO-12-403
    “Reporting Foreign Accounts to IRS
    Extent of Duplication Not Currently Known, but Requirements Can Be Clarified”
    GAO-12-403, Feb 28, 2012
    – and to send it to all the people you can think of – because it makes very clear that the US masters already know that FATCA will only exponentially add to the burden we already have – and are prepared to let it happen – letting us bear all the cost.

  5. @ Badger
    Thank you for putting that all into words for me … for all of us. I had another sleepless night last night … there have been many in the past month. I found out just a month ago about the horror of having a green card (long thought to be expired, null and void) in my possession. Now there doesn’t seem to be a safe way to dispose of it and we slip deeper into the mire of red tape, form prison and monstrous penalties. (Not thinking of myself as a “US person” I did not file FBARS on my individual accounts — and I won’t — ever!) Anyway at 3:00 AM I got up and started sifting through 15 years of our Canadian and US tax returns, tabulating on a spreadsheet as much information as I could find. It took me 3 hours. The interesting thing was that over those 15 years we only owed the IRS $222 and paid every penny of it. I still can’t believe that the US gov’t thinks it has the right to seize virtually half of my retirement savings (all acquired in Canada) over an honest misunderstanding of their absolutely incomprehensible tax code. They won’t get it either, as long as our Canadian gov’t doesn’t throw us all under the bus. (I think all it would take is the US offering Harper a 1% cut in the collection of FBAR penalties.) Please, US gov’t, release me … let me go! Please, Canadian gov’t, don’t betray me!

  6. The Treasury Department has modified due diligence procedures around pre-existing accounts to permit FFIs to rely on electronic searches for accounts ranging from $50,000 to $1 million. For accounts with a balance of more than $1 million, FFIs will have to do paper searches that would be limited to documentation, current account files, and certain correspondence. FFIs would also be required to question any relationship managers associated with these accounts to confirm that they don’t have any knowledge that the client is a U.S. person. Searches are not required for accounts of less than $50,000 or for certain insurance contracts or entity accounts of less than $250,000. In many cases, including most instances of new account onboarding, banks would be able to rely on know your customer (KYC) and anti-money laundering (AML) rules they already have in place.
    http://www.deloitte.com/view/en_US/us/Services/tax/06ad46bb0c765310VgnVCM1000001a56f00aRCRD.htm

  7. @Em, thanks. Unbeknownst then, I’ve been in your good company! I’m sure we’re not the only ones. You will be okay. Hang in there.

  8. If we are ever to get out of this FATCA/FUBAR pickle then I would like to warn everyone to not look for help from the USA because therein lies only the problem, not the solution. No, it is we the “overseas” oppressed who will have to badger and bolster our own governments to show some spine and reject the lunacy of FATCA/FUBAR.

    I watched the movie “They Live” years ago and today I found a great summary (with pictures) which reveals the deeper meaning beneath the surface of what appears to be just another mundane, Sci-fi, Class B flick. It illustrates allegorically what we are up against, not just in the USA, but in all the TV zombified nations around the world.

    http://vigilantcitizen.com/moviesandtv/they-live-the-weird-movie-with-a-powerful-message/

  9. @Em, We must all stand strong..it is hard, I am like you up at 3 am..nervous, angry and so sick of it all.. Last nite I was up at 2 am.. isn’t it fun !! We are all going to have health problems. This has got to be the worst time of my life..I would love to have my life back..

  10. A reminder from Walt Disney’s “Johnny Tremain” of what happened when the British government tried to force the American colonists to serve two Tax Masters.

    The colonists were quite okay with paying taxes to their “resident” government institutions, but paying to the crown thousands of miles across the ocean was a bit more than they could bear.

    Too bad Uncle Sam has a case of amnesia when it comes to his own history. Needless to say, the Brits at least learned something from 1776 and have since adopted residence-based taxation.

  11. @Ben: The Brits are wise. As historians say, “If we don’t learn from history, we are bound to repeat it.”

    Congress and IRS seem to be determined not to learn from their own history–which was drilled into us as kids. Consequently, they are facing a world wide revolt.

  12. Only an embarrassing amount of renunciations might wake them up. And I emphasize the word might.

  13. @Ben Franklin – yep. I’ve been reading the comments over at the Huff post article and I am sinking into depression. A lot of “good riddance” and not much sympathy or even willingness to discuss the issue rationally.

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