# America’s immigrants and emigrants



## underation (Oct 25, 2018)

“Recent Changes Affecting U.S. Investor Immigrants, Citizens and Green Card Holders”
https://www.forbes.com/sites/andyjs...citizens-and-green-card-holders/#1c68d165e810

Suggesting that “The same reasons that are motivating investors to immigrate to the US, are also motivating others to leave [i.e., renounce US citizenship]”

FATCA is number 4 on his list. CRS is number 5.


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## Bevdeforges (Nov 16, 2007)

FATCA is number 4 on the list of reasons why investors are immigrating TO the US.

The CRS is a common hazard across most Western countries. (Also, as you may note, cited as a reason why investors are immigrating TO the US, not away from.)

And as far as inheritance taxes are concerned, even if they drop the threshold to only $5 million or so, they're far lighter in the US than in most European countries.

Not really sure what point you're trying to make here.

Oh, and BTW, it really annoys me when supposedly "reputable" publications can't be bothered to proofread their material. The word for people disassociating themselves from their country is EXPATRIATE. I'm not sure "expatriot" is really a word - but you need not have ever been a "patriot" nor even particularly "patriotic" to expatriate yourself. (Hm, I guess we all have a little of the grammar Nazi in us. <g>)


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## underation (Oct 25, 2018)

Bevdeforges said:


> FATCA is number 4 on the list of reasons why investors are immigrating TO the US.


Yes - the writer is suggesting that the factors which encourage investors to immigrate are the same factors which encourage some citizens to renounce.



> Not really sure what point you're trying to make here.


And I’m baffled as to what is the problem. I posted the link because I found it interesting and thought it might be of interest to others.


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## Nononymous (Jul 12, 2011)

> The U.S. is enforcing the Foreign Account Tax Compliance Act (FATCA) thus requiring other countries to report on the bank accounts of all U.S. citizens in their jurisdictions. This is forcing U.S. citizens living abroad, many of whom have lived quietly abroad for decades without paying U.S. taxes and coming to the attention of the I.R.S., to file U.S. tax returns to avoid paying stiff penalties for failing to do so. Just to make sure all are caught, U.S. citizens are now also required to disclose all foreign bank accounts they have abroad where the amount on deposit is $ 10,000 U.S. or more through so-called FBAR filings in their U.S. tax returns. In short, foreign tax filings and tax payments are up!



How many inaccurate assumptions can we find in this paragraph? I count quite a few.

- There is no evidence that "enforcement" of CBT has increased post-FATCA.

- FATCA reporting does not directly compel compliance.

- Supposedly 94 percent of US returns filed from abroad have no tax owing, so the vast majority of non-compliant US persons abroad would owe nothing anyway, and are not avoiding paying US taxes.

- FBAR long predates FATCA.

- With very few exceptions, penalties assessed would not be enforceable - no means of collections.

- Are foreign filings in fact up by any significant amount? If so, provide evidence.

I could go on, but I won't.


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## underation (Oct 25, 2018)

You don’t find it interesting, the suggestion that FATCA has been a significant factor in the US economic growth during the Trump administration?

I’ve seen the idea mentioned before, but not for some time.

Of course, it may or may not be correct.

As for “enforcement” and “compliance” — that’s a misconception in my view. US citizens living outside the US and not filing US tax returns aren’t doing anything wrong. The way to commit tax evasion is by living _in_ America and manipulating the hopelessly incoherent US tax system into sending you a very tiny tax bill (or a very large refund) instead of a tax bill. 

Expats who don’t file and wouldn’t owe US tax if they did, are not in the game, any more than US residents who don’t file because they don’t make enough money to owe tax. The “international tax gap” is a figment of TIGTA’s imagination.


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## Nononymous (Jul 12, 2011)

It is indeed interesting that FATCA and CRS without reciprocity has turned the US into the world's foremost tax haven. Ironic even.


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## underation (Oct 25, 2018)

It was what led to FATCA, after all — Swiss banks were poaching US tax-haven money. Bradley Birkenstock broke Swiss law that was protecting the banks and their customers - including their US-resident accountholders - and the US Treasury successfully put the squeeze on not just UBS but also on many other Swiss banks. And the US customers’ money, presumably, came back home to Nebraska, Delaware etc.

FATCA was never about trying to force expat US citizens to hand over US tax on their non-US income and capital assets. It was always about making it easier, safer, and more profitable for US citizens (and others, of course) to invest their money in America rather than elsewhere.

IMO.


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## underation (Oct 25, 2018)

Bradley Birkenfeld, not Birkenstock.


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## underation (Oct 25, 2018)

underation said:


> It was what led to FATCA, after all — Swiss banks were poaching US tax-haven money. Bradley Birkenstock broke Swiss law that was protecting the banks and their customers - including their US-resident accountholders - and the US Treasury successfully put the squeeze on not just UBS but also on many other Swiss banks. And the US customers’ money, presumably, came back home to Nebraska, Delaware etc.
> 
> FATCA was never about trying to force expat US citizens to hand over US tax on their non-US income and capital assets. It was always about making it easier, safer, and more profitable for US citizens (and others, of course) to invest their money in America rather than elsewhere.
> 
> IMO.


I have learned since I started looking into this CBT-FATCA business that in tax-treaty language, when a US-resident US citizen or entity invests in a country other the US (e.g. Switzerland), they’re exporting capital from the US. And that bilateral double tax treaties arise from the need to decide which country will be entitled to capture the tax revenue generated by the capital that has been exported. 

Investopedia explains (https://www.investopedia.com/terms/t/taxtreaty.asp)



> When an individual or business invests in a foreign country, the issue of which country should tax the investor’s earnings arises. Both countries – the source country and the residence country – may enter into a tax treaty to agree on which country should tax the investment income so as to prevent the same income from getting taxed twice. The source country is the country that hosts the inward investment, and is also known as the capital-importing country. The residence country, or capital-exporting country, is the investor’s country of residence.


The US FATCA legislation required US residents to report such investments to the IRS, and required non-US banks to report US-tax-resident accountholders to the US (the investor’s residence country - the country which has lost the right to tax the exported capital).

Of course the accounts of most expat US citizens in high-tax countries don’t fit this purpose at all, as in most cases they’re not moving money from the US to the residence country; but FATCA puts pressure on US expats to do the opposite: invest in the US rather than the residence country.

Which, I suppose, is why the EU would like the US to dump FATCA and sign up to CRS, which is reciprocal.


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## Marikelv (Aug 21, 2019)

The easiest way to escape FATCA and FBAR filings problems and to avoid U.S. worldwide taxation, is to abandon U.S. citizenship and green cards.


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## underation (Oct 25, 2018)

Marikelv said:


> The easiest way to escape FATCA and FBAR filings problems and to avoid U.S. worldwide taxation, is to abandon U.S. citizenship and green cards.


The easiest way to avoid US taxation is to invest only in the residence country and pay tax only in the residence country.

Renouncing US citizenship lets you self-certify truthfully that you’re not tax-resident in the US.


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## Nononymous (Jul 12, 2011)

Marikelv said:


> The easiest way to escape FATCA and FBAR filings problems and to avoid U.S. worldwide taxation, is to abandon U.S. citizenship and green cards.


US tax and FBAR problems can be solved by renouncing, or by ignoring all filing requirements (i.e. non-compliance). There may be risks to non-compliance for those with US citizenship only, or US assets/income, however.

FATCA problems (either the reporting itself or restrictions on the type of accounts one is allowed to open) can be solved by by renouncing, or by not disclosing US citizenship to financial institutions. The latter may not be possible in some countries for those with a US birthplace and/or US citizenship only.


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## Nononymous (Jul 12, 2011)

From the FB group, an example of the long-term risks of non-compliance for someone with only US citizenship. Admittedly this person left the US without dealing with a tax debt, so not the same situation as your regular accidental or long-departed expat.


> Ok here it is........Guy left US many yrs before. He had been young and carefree and had run a small business. He had a good year and didn't have the money to pay the taxes so just file his state returns (CA) he did this for a few years and just let the notices build up) Then he decided to leave and eventually ended up in Vietnam. He had been there about 5 yrs and had been very slowly starting a small design firm. He in the past few years got his VN business setup with all the right documentation and visas. The business was just starting to make money and he had just signed a 1yr lease. He needed to renew his VN residency card which required 6 months on. his US passport. Realizing he was needing that renewed also he headed to US Consulate in HCMC. He filled out all the forms and handed then his passport. He got a message to return to what he thought was to pick up his new passport. The staff at consulate advised him that his passport had been cancelled due to an outstanding matter with the IRS. He was given a number of the IRS which he contacted them and was told the balance was 91k. This doesn't include any FBAR etc penalties yet....His passport was cut by the staff and handed back to him. He asked the staff at the consulate about it and they had no idea and hadn't come across this before. With less than a week to get his VN permit filled and or leave which he cant now with no passport he appealed to consulate who said they would give him emergency one to return to US only.


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## underation (Oct 25, 2018)

Nononymous said:


> From the FB group, an example of the long-term risks of non-compliance for someone with only US citizenship. Admittedly this person left the US without dealing with a tax debt, so not the same situation as your regular accidental or long-departed expat.


An example of the risks of tax evasion.


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## Bevdeforges (Nov 16, 2007)

underation said:


> An example of the risks of tax evasion.


There is a new law stating that they can seize your passport (or refuse to issue a new one or a renewal) if you have an outstanding tax debt of at least $50,000. Bingo! Filing with the state without filing Federal is a dead giveaway - and yes, they do check state returns against Federal. 

If the guy hadn't filed at all, he'd be in a much better situation.


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## underation (Oct 25, 2018)

Bevdeforges said:


> There is a new law stating that they can seize your passport (or refuse to issue a new one or a renewal) if you have an outstanding tax debt of at least $50,000. Bingo! Filing with the state without filing Federal is a dead giveaway - and yes, they do check state returns against Federal.
> 
> If the guy hadn't filed at all, he'd be in a much better situation.


Yes. Doesn’t sound like he thought things out very well.


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## Nononymous (Jul 12, 2011)

An example of the risks of abject stupidity, if one wants to be uncharitable about it.


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## underation (Oct 25, 2018)

Nononymous said:


> An example of the risks of abject stupidity, if one wants to be uncharitable about it.


I do.

The tale as told draws a picture of an incompetent and dishonest businessman who runs up a tax bill, doesn’t pay, moves abroad, gets caught. Whether it’s true or invented, it’s not remotely relevant to the very real problems caused for some US expats by being treated under US law as always US tax-resident. So why does it turn up on a facebook page about those problems?

Maybe to drum up a little more anxiety about passport revocation.

In reality, law-abiding expats would seem to be the very last people who have any reason to be worried about passport revocation, given that those without US assets/income don’t owe US tax and those who do have US assets/income can’t very well evade the resulting US tax even if they tried.


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## Nononymous (Jul 12, 2011)

The comment was made in the context of a broader discussion about consequences of non-compliance, as an example of passport revocation that recently took place. It was rather quickly pointed out that there's a difference between never having been in the US tax system, and leaving behind a debt with the IRS to grow steadily over the course of two decades.


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