# Requests from foreign banks to ID US customers for FATCA



## USExpat111

Hi everyone,

I am a dual US/UK national in the UK who recently received a letter from HSBC First Direct to either confirm I am American by sending them a W9 form or to show I'm not American by submitting ID forms like other government issued ID which needs to be certified by a 3rd party (they gave a list of acceptable certifiers, like including postmasters and pharmacists who can certify this, odd or what!!). Have many other Americans overseas especially in the UK else received these requests from their local banks?? When I asked the bank for guidance on which forms to send, they refused to give any guidance on their own request for forms and how I should comply and say I should seek advice from a tax advisor!!

Doing a quick search online, I see that there is currently a lawsuit going on in Canada with a couple people suing the Canadian government for making such requests of them on some infringement of rights basis? Apparently in Canada, one can send their Canadian passport instead even if they are US nationals technically as well, and this way their banks won't start submitting their details to the IRS? I'm wondering if anyone knows the situation in the UK, whether I should actually just send in my UK passport details instead? I worry that once the bank confirms I have US citizenship, this will not only authorise them to contact the UK tax authorities to start disclosing my tax affairs to the IRS, but also that the bank might refuse to renew my mortgage next time around or even not allow me to open any further accounts/products with them. I've been doing my tax returns in both the UK and US for many years so am up to date, but honestly am not sure whether the US ones are always correctly done since the rules are so complex now, especially with how to report foreign accounts. Honest, I would love to give up my US passport except I still have family in the US, but I suppose that's another topic altogether. 

Any advice on these requests by UK banks to identify their US customers?? I feel it is a huge invasion of privacy and so heavy handed of the US government to start forcing foreign banks to identify their US customers to the IRS. At the same time, it is extremely annoying and frustrating that UK banks are actually submitting to the US requests without any fight and essentially becoming another arm of the IRS, without any concern for citizen rights at all. I don't see this happening in reverse with US banks having to identify all their foreign nationals and reporting them to their local tax authorities. It seems like a dangerous precedent as well, as there's no telling what banks are going to do or what info is going to be disclosed to the IRS and how that info will be used once you confirm you have US nationality.


----------



## BBCWatcher

The U.K. government has posted advice to account holders here. I'll quote the relevant section:

_*Responding to questions from account providers*

It is important that you respond if you are contacted by your account provider requesting information in relation to an account that you hold (for example, you may be asked for a self-certification of your tax residency status). If you do not respond, the account provider may conclude that you are tax resident in another country based on information it already holds and forward your financial information to HMRC anyway. It may also refuse to open new accounts for you.

You should always ensure that enquiries are genuine and not an attempt to fraudulently obtain your personal information (often referred to as a ‘phishing’ scam) - if you are not sure, check. You can find some advice on how to spot fraudulent activities by following these links –

Phishing | Action Fraud
https://www.bba.org.uk/landingpage/know-fraud/

There is some standard information that account providers already have to ask for under current rules, for example, those aimed at preventing money laundering. Each account provider may choose to design its own form to collect this information or in some cases use an industry standard form, or it may simply be requested as part of an account opening process.

It’s important to note that your account provider will not be able to provide tax advice to you (for example, on your tax residence status) and it is your responsibility to provide accurate information in response to requests for self-certification. If your tax affairs are complicated you may wish to ask a tax adviser to help you.

*Is there anything else I need to know?*

For most people this is all you need to know...._

I'd add a couple points:

1. As that guide mentions, the U.K. government exchanges financial data of this sort in substantially similar fashion with 51 countries. One of those 51 is the United States. (The U.S. was not the first among those 51.)

2. If you're thinking about lying, consider that carefully. Lying to your bank, especially in this matter, may be a criminal offence under domestic U.K. legislation. The U.K. implementing legislation for FATCA is "The International Tax Compliance (United States of America) Regulations 2014," though other, generalized U.K. domestic law may apply to your situation.

3. HSBC First Direct is a bank. U.S. compliance is not particularly complicated if you only have an ordinary bank account and a mortgage. (It might get complicated if you have certain investments such as non-U.S. mutual funds and non-U.S. trusts.) You don't have to report mortgages at all if you're the borrower and as long as no debt has been forgiven, though you may wish to take the mortgage interest deduction on your U.S. tax return. For your ordinary bank account, you have potentially two reporting forms to file annually: FinCEN Form 114 and/or IRS Form 8938. You file FinCEN Form 114 if the total value of your non-U.S. financial accounts (including those you have signature authority over) at any point in time in the year was $10,000 or more. You have a few more weeks before the 2014 report is due as I write this. You file IRS Form 8938 only if two things are true: you are required to file a U.S. tax return and you meet the much higher threshold for filing that particular form. Most people don't meet the filing threshold for Form 8938, but you should simply check if you do/did each year. If you missed filing 2013 (or prior years') FinCEN Form 114 you can presently file back years without any reported penalties as long as you have a reasonable, truthful excuse ("I didn't know" is popular) and as long as the U.S. Treasury hasn't contacted you first about your late filing. You also report the gross interest income from your ordinary bank account using IRS Form 1040 Schedule B, and you can take the Foreign Tax Credit (IRS Form 1116) for non-U.S. income tax paid on that interest income. If you're not already using tax preparation software then I'd recommend it, even a free option such as TaxAct.com or TaxSlayer.com.


----------



## USExpat111

Who's talking about lying? I'm just wondering if one has dual US/foreign nationality, whether it's necessary to claim the US nationality or whether like Canada it might be possible to just claim Canadian citizenship if you are dual US/Canadian? Also, any idea what the bank will end up doing with the info in the future if you are an American? Will they cancel your accounts or deny you a remortgage as I understand some banks are doing?


----------



## Bevdeforges

You only have to google "FATCA" to find all sorts of reactions, over-reactions and a wide variety of opinions on the subject.

The key thing is that you, as a US citizen, are supposed to be reporting your foreign bank accounts to the US Treasury Dept. every year (by June 30th) electronically from the FinCEN site. It is basically just a listing of your accounts, along with the high balance (in US$) for the year you are reporting. If you're already doing that, then what HSBC is asking for is really no more than what you already divulge in your own name anyhow.

HSBC is likely to be a bit more insistent than some other banks, given that they have recently paid some pretty big fines in the US for breaking US banking law. And if they don't do their "due diligence" to find all their US citizen customers, they are liable to have more trouble with the US Treasury, IRS and banking authorities.

The W9 is a fairly common form - used by the banks to obtain the "tax identification number" (usually the US social security number) of all US customers. (And from now on, probably something they'll require their customers to provide when first opening a new account.) Oddly enough, I have seen advice posted on AARO (website of one of the big US expat groups) saying that if you don't want to disclose your US social security number, you could substitute your US passport number (it has the same number of digits). The same source said that it's also possible to leave the SS# space blank. Not sure how that will work out longer term, but it's up to you.

Basically, what they are going to use this for is to provide information to the IRS (through the national banking authority) on balances and income earned (interest, dividends, etc.) for US citizens linked to their US SS #. If you're already reporting this as required as part of your US tax filings, it's no big deal. If you haven't been filing or haven't been reporting your foreign bank income or information, then you have a decision to make.
Cheers,
Bev


----------



## BBCWatcher

USExpat111 said:


> Who's talking about lying?


I was, as a hypothetical. Hence I included the word "if."

What question(s) is(are) your bank asking, verbatim? If (there's that word again) your bank is asking "Are you a U.S. citizen?" or some close variation thereof, there is only one truthful answer to that question.


----------



## USExpat111

Thanks, Bev. I've just been upset with the bank as well as they will provide absolutely no guidance on their own request for these forms when I ring them for answers. You would think that if a global bank is going to ask their customer for something so sensitive like personal ID confirmations with SSNs so as to potentially be able to send your details to the IRS, they would have trained people to be knowledgable enough to answer customer questions rather than just throwing up their hands and saying they have no responsibility or guidance and they're just following regulations. 

BBC Watcher, I take your point as well, but from what I understand from the Canadian example, if a dual Canadian citizen only submitted their Canadian ID documentation then they might be within their rights since the whole issue of being forced to comply with FATCA requests by the local bank seems to be being challenged by some expats in Canada. Seems especially ridiculous for persons who are only US citizens by birth or parentage but never or rarely set foot in the US.

Thanks for pointing me in the direction of AARO too, Bev. It looks like this group asks for annual subscriptions. I assume you think it is worth it as you sound like a member?


----------



## Bevdeforges

I was a member of AARO for a number of years. Was even on the board for a while. It's a good organization and they make quite a bit of useful information available to their members. Another group in somewhat the same vein is the ACA (American Citizens Abroad) which works together with AARO on an annual lobbying visit to Washington DC to discuss various expat issues with Congress. https://americansabroad.org/

AARO seems to offer more nitty gritty "how to do your taxes" kinds of advice. The ACA is perhaps a bit more political and into issue papers and the like. https://americansabroad.org/ Depends on what sort of information you are looking for.
Cheers,
Bev


----------



## USExpat111

Thx, Bev, I forgot about ACA, will look into them as well!


----------



## BBCWatcher

USExpat111 said:


> BBC Watcher, I take your point as well....


Did you?

You don't live in Canada, and you didn't receive an inquiry from a Canadian bank. So why would anything happening or not happening in Canada be relevant to your circumstances? I could replace Canada with Bangladesh, and it'd be the same.

The U.K. has financial data sharing agreements with 51 countries and counting, and it has associated domestic law. You're not being asked anything by the U.S. government on this occasion. You're being asked one or more questions by your U.K. bank under U.K. law. So before you decide to do anything except answer their question(s) truthfully, how about you take a closer look at the governing law?

As the U.K. government's helpful guide explains, your bank cannot provide tax advice or assistance. If their question(s) are confusing or unclear in some respect (are they?) then you'll need to seek advice elsewhere. This forum is one option. You're certainly free to post your bank's verbatim question(s), although I'd recommend removing personally identifiable information.


----------



## maz57

A few comments:

1. Although there is a lawsuit presently working its way through the Canadian courts Canadian citizens living in Canada who are also "US persons" are in much they same situation as you find yourself in the UK. The Canadian banks are also presently hunting down US citizens amongst their customers so they can relay their account details to the CRA which will, in turn, pass that info on to the IRS. The lawsuit is attempting to stop the violations of Charter and privacy rights resulting from the Canadian government's signing of the IGA with US Treasury. It is possible there will be an injunction preventing the CRA from transmitting data until the lawsuit is settled, a process which may take years. Presently the only Canadians who are safe are the ones without a US birthplace.

2. Assuming you are up to date on your US filings the information HSBC may pass on to to the UK revenue agency (sorry, I can't remember the acronym) for transmission to the IRS won't be anything the IRS doesn't already know. The greater worry is that HSBC may use that knowledge to eliminate you as a customer once they have discovered your "US personhood". Presenting a non-US passport is of no use if it shows a US birthplace. This process has already started in Canada as some institutions are now refusing customers with any US connection.

3. In view of the fact HSBC has refused to give you any guidance on exactly how you should respond, it seems to me they are inviting you to be a bit creative. Some sort of ID which establishes that you are a UK citizen resident and paying taxes in the UK but doesn't show a US birthplace should do the trick. (Hopefully you are on good terms with your postmaster!) As long as you don't actually lie you should be OK. On the other hand, if they already have information documenting your US citizenship, there is really no escaping that fact. Have you tried "update my personal profile" on HSBC's website to see what they have on file for you?

4. Some try to put a pretty face on it but the fact of the matter is that the US is trying to tax people who are the resident taxpayers of other countries, i.e. expand its tax base beyond its borders. It is wrong, shameful, and needs to be resisted at every opportunity by all means possible. The US won't reciprocate on this because it would be pointless; other countries generally don't try to tax their non-resident citizens. Besides, the US doesn't reciprocate on much of anything, anyway. As Bev likes to say, "you are preaching to the choir, here."

5. The fact that you still have family in the US doesn't prevent you from renouncing US citizenship if you never intend to live there again. Once you are solely a UK citizen you will be able to travel to the US on your UK passport just like any other UK citizen. There is a bit of fear-mongering going around on that subject but its all hypothetical. Depending on how the UK banks ultimately react to this FATCA fiasco its possible you may not have a choice in the end.


----------



## BBCWatcher

maz57 said:


> Assuming you are up to date on your US filings the information HSBC may pass on to to the UK revenue agency (sorry, I can't remember the acronym)....


HMRC.



> The greater worry is that HSBC may use that knowledge to eliminate you as a customer once they have discovered your "US personhood". Presenting a non-US passport is of no use if it shows a US birthplace. This process has already started in Canada as some institutions are now refusing customers with any US connection.


Canada is not the United Kingdom. The U.K. doesn't have a "charter," for example.

Several posts back I looked for credible reports of HSBC First Direct closing the accounts of U.S. citizens who are resident in the U.K. and who responded truthfully to HSBC's inquiries. I can find no such reports of account closures. _As mentioned_, HSBC already has 51 countries' worth of reporting to HMRC under domestic U.K. law (acts of Parliament, in Westminster). Even HSBC is not in the habit of closing accounts for ~51 countries' worth of citizens who are U.K. resident.

If you can find a credible report otherwise, please post a link.

The only reference to account closures I could find is in the U.K. government's advice that I linked upthread. The U.K. government indicates that banks are likely to close accounts when the account holder does not respond or does not respond truthfully to their inquiries.

I don't think this is actually complicated. To summarize, a U.K. bank is asking its U.K. resident customer a specific question (or questions) as required under U.K. law. The customer has three choices: (1) Ignore the inquiry (and, according to the U.K. government, risk account closure); (2) tell the truth (and, according to the best available evidence, keep the account, possibly with foreign tax and financial reporting consequences that already exist); (2) lie (and consequently possibly commit a felony under U.K. law and/or risk account closure). Take your pick.



> Once you are solely a UK citizen you will be able to travel to the US on your UK passport just like any other UK citizen.


Yes, for now, and with absolutely no legal right of entry into the United States. Only U.S. citizens (and U.S. nationals) are legally guaranteed admission into the United States, and only documented U.S. citizens/nationals can make that legal right operable. (Like anyone else they might be arrested upon arrival if there's an outstanding warrant, but they are guaranteed entry.)


----------



## Bevdeforges

OK, before we get too far afield on this, let's consider the original question posed here. 

Publicity about FATCA and all the FATCA related stuff is much, much greater in Canada (due, I suppose to the proximity) than just about anywhere else in the world outside the US. Unless you are particularly tuned in to the US expat community media sources, it's entirely likely that hearing about this "you must give us your US SS number" comes as something of an unpleasant surprise - and indeed some expats who have drifted off the grid altogether may be concerned that it is some sort of a scam.

Also HSBC has been somewhat pro-active in pruning "problem" customers from their rolls. It must have been five years ago now that I got notification from HSBC that they were going to close all savings accounts (at least in my branch) held by "overseas residents." Since I also had a current account (in the UK, this is), they were supposed to just roll the balance of my savings account into my checking balance. Don't know what happened, but two years later, I still had two accounts in the branch just like always.

Ultimately, I shifted both accounts to my French bank anyhow. And still have yet hear anything from my French bank about needing to fill out a W9 or any of that nonsense. I've always reported my foreign accounts, so it really doesn't matter one way or another to me. These days, bank accounts don't generate enough interest to make a difference, certainly not on my US tax returns - and besides, the one "taxable" account has French taxes deducted at the source anyhow. And at least according to one tax attorney at the AARO, it's perfectly valid to refuse to disclose your US SS#, even on a W9 form. (After all, the W9 does NOT go to the IRS - it is supposed to be held by the bank or other institution that requested it. In these days of identity theft, apparently it is considered a valid concern.)

Yes, it's a pain in the patoot. And yes, to many of us, it appears to be "wrong" or "immoral" or whatever other adjective you want to use to describe the situation. There are, however, ways to cope, up to and including renunciation, if you feel strongly enough about it. The US expat groups have their own ideas, and those are worth looking into (as well as being a whole bunch less expensive than renunciation at the moment). And there is always partial- or non-compliance, where it is up to you to assess the likelihood of getting caught, given the IRS statistics on audits.
Cheers,
Bev


----------



## USExpat111

Thanks, Maz57. The fact that FATCA is being challenged in Canada is why I was asking about the UK situation, in case anyone knew if it was also being challenged in the UK or anywhere else in Europe or if there were any similar loopholes. I should think someone could/should take the issue to the European Court of Human Rights, it's just completely overreaching on the part of the US government as far as I'm concerned. I don't know why BBC Watcher seems to think it is such a black and white issue beyond challenge.

Saying that, I don't think I have options to be creative as my UK passport shows my US birthplace. The HSBC people couldn't or wouldn't promise nothing would happen to my future as their customer if I confirmed I was American. On the other hand, in the paperwork they do threaten to close your accounts if you don't respond! I really am going to have to consider the renunciation option at some point as the reporting/filing requirements are just driving me mad every year and taking up too much time. I'd like to perhaps start my own business one day too, and the thought of having to file under that situation as a US national scares the heck out of me. Having family still in the US is the main barrier too however as another complicating factor is I don't know what the implications are say if a US family member dies and leaves you property/assets and you're now longer American?


----------



## Bevdeforges

I wouldn't get too concerned (just yet, anyhow) about the possibility of opening your own company in the UK. How much you need to report is tied to just exactly how you have the company set up (i.e. some form that the US recognizes as a "corporation"). And, as with all things in the realm of taxation, the rules could change within the next few years.

They also need to be very careful in taking the FATCA issue to court anywhere in the world. Many of the "gripes" about FATCA and the US system of taxation are based on "it's too much work" or "the forms are too confusing" whereas the purported purpose of the legislation is to fight against global tax evasion. The anti-tax evasion and anti-money laundering movement is getting stronger all around the world, although different countries have different ways of handling it.

Purely personal opinion here, but I think the folks looking to get out from under the worst effects of FATCA need to focus on the duplication of control and usurpation of authority - i.e. that their accounts are already subject to control and review by their country of residence. Anyone living in a country without banking oversight or with no national level income tax, or living in a known tax and banking haven won't be covered by that argument. 
Cheers,
Bev


----------



## BBCWatcher

What question(s) did HSBC First Direct ask you, USExpat111? It's really hard to provide advice on how to answer a question when we still don't know the exact question.

A ECHR case? Well, good luck to the individual or group that wants to try that...50-odd countries and years/decades after U.K. law started requiring such reporting to HMRC (and Inland Revenue before that).


----------



## BBCWatcher

OK, I found out what HSBC First Direct is telling its customers. That's because First Direct has published a rather helpful Q&A guide here.

The most interesting and relevant Q&A is probably this one, quoted in its entirety:

_*What will first direct do if I do not provide the information required under FATCA?*

*first direct* is committed to being fully compliant with FATCA.

*first direct* may not open new accounts or offer additional products and services to customers who choose not to comply with *first direct*'s requests for documentation to establish a customer's status under FATCA.

*first direct* may exit the relationship with customers who decide not to provide the necessary information and documentation within the regulatory timeframe.

*first direct* may also need to report information about customers who do not provide the required documentation to us._

Not confusing.


----------



## USExpat111

Yes, I agree, Bev, another reason I'm so annoyed is that the foreign banks are submitting to an authority from another country (the US) seemingly without any question or regard for their customer's rights. Where's the UK Data Protection Act when you need it??

BBC Watcher, HSBC didn't ask me questions per se, they've just sent letter asking me to send back forms depending on my situation- W9 if US or the other W9 form plus other certified documents to show non-US ID if you're not US. I am guessing they've sent me these as I ask them every year for interest income statements for the US tax year, and I tell them I'd like them because I'm American and need statements for my US tax returns. I do the same with other UK banks too, but HSBC is the only one asking me forms for FATCA.

I like the idea of using the US passport ID rather than giving out the SSN, thanks Bev. It's either own business or self-employment I'm thinking of, but the thought of having to file yet more US tax forms and spending much more time than I already do trying to figure them out gives me a headache and puts me off from going in that direction just yet.


----------



## BBCWatcher

USExpat111 said:


> ....HSBC didn't ask me questions per se, they've just sent letter asking me....


_*What does the letter say?*_ Just grab the letter and quote from it, directly.

Passport numbers? Bad idea, in my view. I always wonder why so many purportedly honest people go out of their way to act as if they're guilty. Doesn't anybody else remember the important lesson Richard Nixon taught us?


----------



## USExpat111

Yes, BBC Watcher, I've already pointed out that HSBC is also threatening to close accounts/relationships of persons who don't respond to their requests. Talk about heavy-handed and over-reaching US authority, this is what I'm also griping about. I wish some group in the UK or Europe would contest FATCA and hope someone does eventually, but the UK is definitely the US's poodle when it comes to things like this...


----------



## USExpat111

The letter is too long to quote, I've given the gist of it already, BBC. If tax attorneys and AARO are saying it is acceptable to use passport numbers instead of SSN, why do you suggest it's not? I don't know if you've ever experienced ID fraud or people stealing your home address or other personal details, but I've experienced the latter and I'd really rather not give out my SSN if possible.


----------



## BBCWatcher

Wesley Snipes had tax attorneys. 

AARO does not recommend providing false information. AARO recommends providing your SSN if you have one. (Where did they recommend otherwise? I can't find it.)

Refusing to provide a particular piece of information is quite different than lying, in case you weren't aware.


----------



## maz57

USExpat111 said:


> Yes, BBC Watcher, I've already pointed out that HSBC is also threatening to close accounts/relationships of persons who don't respond to their requests. Talk about heavy-handed and over-reaching US authority, this is what I'm also griping about. I wish some group in the UK or Europe would contest FATCA and hope someone does eventually, but the UK is definitely the US's poodle when it comes to things like this...


That's what I'm griping about, too. Because of FATCA it has now become almost impossible to live in your own country without US interference if you happen to have a US birthplace. This is a clear-cut violation of the UN Master Nationality Rule. (In cases where a person possesses dual nationality, that person has the right to live in one of those countries solely as a citizen of that country without interference from the other country.) Curiously, this was one of several issues during the War of 1812 and the US and UK positions were reversed at that time; the Brits were stopping US merchant ships, grabbing American sailors they deemed to have a British connection, and forcing them to serve in the Royal Navy. My how times change!

There is a summary trial scheduled in early August in Vancouver, BC for the Canadian lawsuit. This will be one of many issues the court will consider. Stay tuned; a successful challenge in Canada will definitely be noticed elsewhere. The Canadian government is apparently from the same litter.

By the way, although a few Canadian banks now flat out refuse US customers, most are responding to FATCA by doing an extremely unenthusiastic search for US persons amongst their customers. In Canada you can still open a bank account with nothing more than a provincial drivers license and a SIN number, neither of which display place of birth. Perhaps you should consider changing banks and be very careful what information you share with the new bank?


----------



## BBCWatcher

With due respect, Maz57, this is _crackpot_ stuff, truly.

First of all the Master Nationality Rule dates to 1930, before the United Nations existed. It's Article 4 of The Hague Convention on Certain Questions Relating to the Conflict of Nationality Law. League of Nations-era stuff. Here's Article 4 in its entirety:

_A State may not afford diplomatic protection to one of its national against a State whose nationality such person also possesses._

Good luck to you if you think that article has anything to do with RBT or CBT.

But even if you somehow get past that, the United States never signed that treaty and is, thus, not bound by it. Interestingly Canada did sign the treaty but then a few years later denounced it (as expressly permitted in Article 28, not that that permission would necessarily be required), so that particular treaty has no force of law in Canada either! (To pick another example, Japan signed the treaty but with Article 4 and other reservations, so Article 4 has no force of law in Japan either.)

Wherever you got that junk, I'd recommend you run away as fast as possible. Clearly your source has no idea what they're talking about. They're just throwing around names of treaties hoping you won't even bother to check basic facts about them.


----------



## USExpat111

BBC, you are obviously a stickler for the rules and authority, not sure if that's something related to living in Singapore ;-). I was only going by what Bev said given she said she was previously a member of AARO and even served on the board. Obviously, I can't verify who she really is or who anyone else here is including yourself. However, I should think providing one's US passport number rather than SSN certainly wouldn't be giving false info, especially if one noted on the form it was a Passport ID. It shouldn't be much harder for the US to trace/verify someone based on their US passport number than their SSN. If a bank has a problem with that, I'm guessing they would write back and ask one to supply SSN instead. 

There's clearly a lot of unhappiness with the intrusiveness of FATCA by overseas Americans worldwide, and many of us don't wish to give in to the demands of any authority without question if we don't feel comfortable with the demands and its consequences. Unfortunately, we expats are all so scattered about that few foreign banks or foreign politicians care about the protests or rights of a negligible percentage of their customers/citizens who might be American compared to the substantial penalties they might incur from the US if they don't comply with FATCA. It's an abuse of US power as far as I'm concerned, and I certainly will be rooting for those brave Canadian ladies who are challenging the power and authority of FATCA. Most honest people have no problem following the rules if they're reasonable, but clearly a significant number of overseas Americans feel FATCA is certainly not. Unless one is a cop or a soldier, one shouldn't always just accept authority as benign and all-righteous, give into their rules/demands unequivocally, and presume those who question authority's rules/demands as suspect.


----------



## Bevdeforges

I got it from someone else, but this is the link to the comment about using a passport number: https://www.aaro.org/taxation (It's not the first article on the page, roll down to the section on FATCA). I happen to know the guy who made the recommendation and I have great respect for him. 

But I think you may have the wrong end of the stick on this issue. The thing about the banks asking for a W9 has nothing to do with their customers or their customers' filing obligations to the US. This is about the banks saving their own butts. 

HSBC has already paid out some enormous fines for various violations of US banking and/or taxation law - with respect to their operations in the US (over which US law can and does apply). What they're being pressured with here is that if they do not submit the requested information to their national bank authority and use a certain level of "due diligence" to find their US customers whose accounts and balances are to be reported, then their banking operations in the US will be suspended. (And/or they'll be hit with more huge fines - which don't seem to bother them all that much on other issues.)

So, banks with no international presence don't have anything to bother with. (Probably explains why my bank here has yet to ask for anything from me.) And if you read up on the W9 forms, you'll see that the form itself is absolutely NOT to be sent into the IRS. That's a form for the bank to have, in order to comply with FATCA and to be able to show the IRS if and when the auditors turn up. But it's the bank that will suffer if the IRS decides that what information they've been submitting is inadequate or that the bank hasn't done the "due diligence" thing.

Draw your own conclusions, but your legal obligation is to file your FinCEN (i.e. list of foreign accounts) and to file your US taxes. If you don't give them a W9 or that W8BEN form, the banks can choose to close your account. It's a business decision on their part. If you give them a W9 but without your SS number, then they will report your information against your name only. The IRS is free to follow up on that information or not, as they consider appropriate and if they decide to audit your tax returns, then it becomes your problem to defend what you did (or didn't) file on your tax returns.
Cheers,
Bev


----------



## USExpat111

Hi Bev, no I perfectly understand that the banks are just trying to cover themselves so they can avoid stiff penalties from the US. Doesn't make it any less intrusive or unreasonable from my point of view. I've done my Fincens and other returns already, just the W9 request is outstanding now so if the IRS audits me, hopefully all should be in order. I'm planning to turn in the W9, just considering your suggestion of using passport ID (or partial SSN) instead. Somewhere down the line, maybe I will close my accounts with the bank- and give up the US passport too.


----------



## Bevdeforges

And that's your choice. 

I've considered the renunciation option and decided it's not something I want to do, for a number of reasons. But for other folks it may make perfect sense.

The banks have to deal with the legislation as they see fit. And those of us condemned to eternal filing of annual tax reports, we deal with it as we see fit and what allows us to sleep at night.
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> I happen to know the guy who made the recommendation and I have great respect for him.


Let's give full credit where credit is due. An attorney named John Fredenberger, in a meeting held in Paris, apparently recommended providing false information (according to the report) to one's bank. In France, not the United Kingdom. (The United Kingdom has different laws, obviously.) AARO does not recommend this, Bev, unless you can find something I haven't found. I provided a link to AARO's recommendation.

Yes, _of course_ if you're asked for a SSN or TIN, and if you answer with a passport number -- or your supermarket loyalty card number for that matter -- that's providing false information. It's lying if it's intentional. What are we, children?



> Draw your own conclusions, but your legal obligation....


No, that's not complete. FATCA is the inspiration (only) for domestic law in most cooperating countries including the only other country that matters to the original poster: the United Kingdom. French law does not apply, even if (big if) John Fredenberger was correct (and his advice was correctly reported). Canadian law does not apply, and Sudanese law does not apply either. All legal citations must be under United Kingdom law to understand USExpat111's domestic legal responsibilities. If lying to your bank is a criminal offence under U.K. law, then that's important information.

Withholding information is quite different than lying. The former is a protected right in many countries. The latter can land you in prison. I am certainly suggesting before anyone do anything potentially illegal they understand the ramifications.



> If you don't give them a W9 or that W8BEN form, the banks can choose to close your account.


Correct, as cited upthread for this specific bank.



> If you give them a W9 but without your SS number, then they will report your information against your name only.


And perhaps close your account. Which is also different than lying or providing false information.


----------



## maz57

BBCWatcher said:


> With due respect, Maz57, this is _crackpot_ stuff, truly.
> 
> First of all the Master Nationality Rule dates to 1930, before the United Nations existed. It's Article 4 of The Hague Convention on Certain Questions Relating to the Conflict of Nationality Law. League of Nations-era stuff. Here's Article 4 in its entirety:
> 
> _A State may not afford diplomatic protection to one of its national against a State whose nationality such person also possesses._
> 
> Good luck to you if you think that article has anything to do with RBT or CBT.
> 
> But even if you somehow get past that, the United States never signed that treaty and is, thus, not bound by it. Interestingly Canada did sign the treaty but then a few years later denounced it (as expressly permitted in Article 28, not that that permission would necessarily be required), so that particular treaty has no force of law in Canada either! (To pick another example, Japan signed the treaty but with Article 4 and other reservations, so Article 4 has no force of law in Japan either.)
> 
> Wherever you got that junk, I'd recommend you run away as fast as possible. Clearly your source has no idea what they're talking about. They're just throwing around names of treaties hoping you won't even bother to check basic facts about them.


I'll be interested to hear what the Canadian courts have to say about whether a Canadian citizen has the right to live in Canada without interference from a foreign government. It may be 20th century League of Nations stuff but most countries still regard it as the international norm.

The US typically ignores the international rules (not to mention signed agreements) if it decides it is in their national interest to do so. That's how we now find ourselves being assaulted by FATCA in our own countries. Let's just say we have distinctly different viewpoints on this subject.


----------



## BBCWatcher

maz57 said:


> Let's just say we have distinctly different viewpoints on this subject.


You're not claiming you believe this particular bunk ("UN Master Nationality Rule"), are you? Whoever is peddling this tax nonsense has crossed well into legal crackpot territory, and I'm not understating it. What next? Does Hammurabi's Code mean that U.S. CBT is illegal (in Mesopotamia)? How about the Korean Armistice Agreement of 1953? Or maybe Apple's One Year Limited Warranty? Good grief!

If you do believe that the "UN Master Nationality Rule" -- which isn't even "UN" -- has any legal relevance whatsoever to U.S. CBT then yes, we really do have different views at least on this occasion. One of those views is reality-based.


----------



## Bevdeforges

Nowhere does John F. say to submit false information. The W9 is a form that is submitted only to the bank (or other financial institution) - it is NOT for submission to the IRS or any other government agency. And yes, handing over your social security number to a "third party" is a risky proposition any where in the world these days, due to the threat of identity theft.

If you do not give your US social security number to your bank, it is up to them what to do next. But the US citizen has not done anything illegal or immoral. The whole question of what to submit on the W9 is between the citizen and their foreign bank.

And incidentally, there are options to submit alternative identification numbers on a number of US forms and applications these days. (Just having come through such a process myself.) Was surprised to find this, but yes, in some cases it is possible and certainly legal. But the W9 isn't a form that goes to the government anyhow. If the IRS decides that the bank (or the country) is submitting inadequate information, they will push back through channels and it will again be up to the banks how and what they choose to do.
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> Nowhere does John F. say to submit false information.


If he recommended answering a request for a SSN or ITIN with a passport number, he recommended, in plain English, lying. He's not here to represent himself, and I don't put much stock in a second hand report of his remarks (without even a direct quotation attempted), so I presume he didn't recommend that.

By the way, he used to be on AARO's board of directors, but very recently (2014 or 2015) that ceased to be true. AARO no longer lists him. Do you know what happened?



> And yes, handing over your social security number to a "third party" is a risky proposition any where in the world these days, due to the threat of identity theft.


You don't trust your bank with a Social Security number, but you do trust your bank to hold (as simply another record in their database) thousands, millions, or billions of your dollars (or euro, or pounds)?

Really? Seriously?

But OK, if that's what you think, withholding information is very different than lying. Though the bank might still decide to your close your account, as is their right.



> If the IRS decides that the bank (or the country) is submitting inadequate information, they will push back through channels and it will again be up to the banks how and what they choose to do.


True. One possible option: close the customer's account.


----------



## Nononymous

Rather late to the party here, but a contribution nevertheless.

I can sympathize with the OP, of course but I can't really see why he/she is getting quite so worked up about this. 

If you are already compliant with US tax filing requirements, sending returns to the IRS and FinCEN (aka FBAR) forms every year, how could it possibly matter that your UK bank also does FATCA reporting? It's no more paperwork for you, once you provide the W9. Possible denial of banking services is a concern, but it doesn't appear to be an issue yet for anyone who cooperates. All in all, I don't see what the problem is for someone already compliant. You are on the radar - you file US taxes - and this changes nothing.

Where FATCA reporting is a concern is for people such as myself - a US citizen (with a US birthplace) living in Canada, non-compliant by choice. Right now I'm off the radar. Bank reporting would put me on the radar, and I don't want that to happen. In Canada I have a couple of ways to avoid FATCA and preserve my anonymity. I can move my daily banking to a smaller credit union that's exempt from reporting under the terms of the Canada-US IGA. All the common retirement savings accounts are also exempt under the IGA. 

So far the banks here aren't doing anything yet to check on existing customers, to the best of my knowledge. I had a small amount of bother with an investment firm wanting a W9 from me (they somehow caught wind of my US citizenship) but I argued that since all my accounts were of the non-reportable type, they had no need for that information. The broker then directly asked me if I was a US citizen, by e-mail, and I directly lied in response. And that was the end of it, for now.


----------



## Bevdeforges

BBCWatcher said:


> By the way, he used to be on AARO's board of directors, but very recently (2014 or 2015) that ceased to be true. AARO no longer lists him. Do you know what happened?


I strongly suspect he simply retired. He was on the board back when I was - in the late 1990's. You get tired of these volunteer functions after a while and he was at it longer than most.



> You don't trust your bank with a Social Security number, but you do trust your bank to hold (as simply another record in their database) thousands, millions, or billions of your dollars (or euro, or pounds)?
> 
> Really? Seriously?


Didn't say that was MY POV - just that some folks really are concerned about possible identity theft, especially those who have been through it once or more. As I hear it, "common wisdom" back in the US is not to give your SSN to any organization that doesn't absolutely require it - basically anyone other than the SS Administration or the IRS itself. (And even the card itself says it is not to be used for identification purposes.) 



> True. One possible option: close the customer's account.


Which is precisely what I was saying: this is between you and your bank. The IRS is not directly involved.
Cheers,
Bev


----------



## maz57

Bevdeforges said:


> Didn't say that was MY POV - just that some folks really are concerned about possible identity theft, especially those who have been through it once or more. As I hear it, "common wisdom" back in the US is not to give your SSN to any organization that doesn't absolutely require it - basically anyone other than the SS Administration or the IRS itself. (And even the card itself says it is not to be used for identification purposes.)
> 
> Bev


The possibility of identity theft is not merely hypothetical. A few years back an unknown person somehow got hold of my credit card information and wreaked havoc before the card company contacted me about the abnormal activity. Fortunately for me, the card company absorbed the loses but I was still considerably inconvenienced while the whole business got sorted out and a new card was issued.

That situation taught me to be very picky as to what personal information I reveal to whom. One response I have found to be very useful when dealing with overly intrusive forms is to simply enter "N/A" in boxes where they are going overboard with the information requests. N/A can mean either "not applicable" or "not available". That is not lying. If I believe too much information is being requested, that is my call to make. Most of the time, the form is accepted and that is the end of it. If not, they'll let me know.

FATCA will be a whole new level of personal information flying around in cyberspace. The IRS is notorious for its inability to safeguard people's information and therefore cannot be trusted. In fact, if they spent more time tracking down fraudulent returns/refund checks inside the US, they would wind up saving more revenue than they are going to collect from hunting down US persons around the world.


----------



## maz57

BBCWatcher said:


> You're not claiming you believe this particular bunk ("UN Master Nationality Rule"), are you? Whoever is peddling this tax nonsense has crossed well into legal crackpot territory, and I'm not understating it. What next? Does Hammurabi's Code mean that U.S. CBT is illegal (in Mesopotamia)? How about the Korean Armistice Agreement of 1953? Or maybe Apple's One Year Limited Warranty? Good grief!
> 
> If you do believe that the "UN Master Nationality Rule" -- which isn't even "UN" -- has any legal relevance whatsoever to U.S. CBT then yes, we really do have different views at least on this occasion. One of those views is reality-based.


The argument is simple enough: US CBT is perfectly legal in the US. It has no legal force in Canada because it is US law, not Canadian law. There is already a substantial treaty in place between the two governments to deal with situations such as, for instance, a person who flees from one country to the other to evade tax obligations incurred while a resident of the first country, citizen or not. Singling out some Canadians because of their place of birth or national origin is a clear violation of Canadian law, specifically (but not only) the Charter of Rights and Freedoms. There is a process by which Charter Rights can be limited or overridden in some cases; the government did not utilize that process when it signed the IGA.

The lawyer who agreed to take on the two plaintiffs in the Canadian case is anything but a crackpot. In fact he rarely loses because he doesn't take on a case unless he believes there is a very good chance of a favorable ruling. The Canadian government signed the IGA and passed the implementing legislation against the advice of their own legal experts who opined it would most likely not pass legal scrutiny for a multitude of reasons. Whether the Master Nationality Rule forms part of his arguments I couldn't say, but I'll bet it at least gets a passing mention during the proceedings.

I'm not a lawyer so I wouldn't to be familiar with all the legal subtleties involved in this case. What I do know is that this seems to be the current pattern: the sitting Canadian government (some of whom arguably ARE crackpots) dreams up some pet legislation, passes it against the advice of their own legal experts, winds up getting sued, spends vast amounts of taxpayer dollars defending it, and eventually loses the case rendering the legislation invalid. The current government has suffered a series of stunning loses in the courts recently. I'm hoping this FATCA case will be yet another.


----------



## BBCWatcher

Bevdeforges said:


> Which is precisely what I was saying: this is between you and your bank. The IRS is not directly involved.


The dialog is between you and your bank, but an additional set of laws governs: the laws of the country where you live. _Very_ important point.


----------



## BBCWatcher

maz57 said:


> Singling out some Canadians because of their place of birth or national origin is a clear violation of Canadian law, specifically (but not only) the Charter of Rights and Freedoms.


"Clear"? Not according to what I can find. A variety of Canadian legal experts are, it's fair to say, skeptical there's a violation. Most of those who think there might be also think the Canadian side of the IGA is easily repairable to address their concerns.

Note that Canada's own tax system already violates Charter Section 15(1). (Hint #1: Elder tax credits. Hint #2: Section 1.) And the IGA concerns U.S. _indicia_, not citizenship or national origin as such.

Somebody could try a Section 7 or 8 argument, I suppose. Good luck.



maz57 said:


> Whether the Master Nationality Rule forms part of his arguments I couldn't say....


Unless he's an idiot he's not going to cite an already irrelevant treaty that Canada denounced.

The Canadian Charter of Rights and Freedoms has nothing to do with that treaty.


----------



## maz57

BBCWatcher said:


> "Clear"? Not according to what I can find. A variety of Canadian legal experts are, it's fair to say, skeptical there's a violation. Most of those who think there might be also think the Canadian side of the IGA is easily repairable to address their concerns.
> 
> .


The plaintiffs think there's a violation, and so, presumably does their lead counsel, otherwise he wouldn't have taken on the case. The dissenting opinions of other experts on the subject are irrelevant unless they are arguing in court for the defense. The same goes for my opinion and your opinion. That's why we have a legal system to settle such questions.

I'll be very interested to hear what the court decides and regardless of the outcome it probably won't be the end of the legal wrangling. If there is a favorable (to my mind, anyway) ruling there is the possibility of an injunction preventing the CRA from transmitting information until the matter is finally settled, a process which could take years.


----------



## jbr439

BBCWatcher said:


> "Clear"? Not according to what I can find. A variety of Canadian legal experts are, it's fair to say, skeptical there's a violation. Most of those who think there might be also think the Canadian side of the IGA is easily repairable to address their concerns.
> ...


Constitutional expert Peter Hogg believes the IGA contravenes Section 15 of the Charter. This guy is no lightweight - google him.
For his argument re the IGA, see: http://www.greenparty.ca/sites/greenparty.ca/files/attachments/peter_hogg_fatca.pdf

Which legal experts are skeptical there's a violation?


----------



## maz57

Let's just say that people generally tend to find what they ARE looking for and tend to not find what they ARE NOT looking for. That's just the way we humans work.


----------



## Bevdeforges

Actually, this is precisely why governments have court systems in the first place: to raise the questions and allow them to be debated, presented and then ruled on.

Let's let the justice system in Canada work and see what the ruling is. If you have strong feelings about the case and its merits, place a large wager with your local bookmaker. (But don't forget to declare any winnings on your US tax return if you file one!)
Cheers,
Bev


----------



## maz57

Bevdeforges said:


> Actually, this is precisely why governments have court systems in the first place: to raise the questions and allow them to be debated, presented and then ruled on.
> 
> Let's let the justice system in Canada work and see what the ruling is. If you have strong feelings about the case and its merits, place a large wager with your local bookmaker. (But don't forget to declare any winnings on your US tax return if you file one!)
> Cheers,
> Bev


I agree. This will be the first real debate on this issue because the sitting (majority) government, stifled debate in the House before quickly passing the IGA implementation legislation. Their explanation? "Congress has spoken".

The money I could bet on the outcome I will instead donate to the plaintiffs fund because the lawsuit is largely crowdfunded. Do you think that would qualify as a "charitable donation" on a US tax return? (LOL) That's one US "tax" I'm happy to pay.


----------



## BBCWatcher

You can use your favorite search engine to find analyses of Hogg's arguments. He has many Canadian legal expert-critics who think he's made a poor argument on this occasion.

Keep in mind there are at least two hurdles plaintiffs will have to clear here. One is the court case itself. The other is the fact that the Canadian government will be powerfully motivated to find any possible way to repair the Canadian side of the IGA if there's an adverse court ruling. A repair could well be easy, and there's even the possibility a repair would be _worse_ than the status quo.

There's a _very_ tall set of hills for plaintiffs to climb here.


----------



## jbr439

The simplest 'repair' would be to have the IGA not apply to the Canadian accounts of Canadian residents. This would also be consistent with the notion that local client base financial institutions are deemed compliant. In other words, the US has demonstrated that it's not interested in the Canadian accounts of Canadian residents who have their accounts in financial institutions with a local client base; so it's not much of a stretch to extend that to all Canadian accounts of Canadian residents regardless of type of Canadian financial institution.


----------



## Nononymous

The simplest repair is to move your accounts to a credit union, or lie to your bank and investment advisor.


----------



## HillbillyCanuck

Nononymous said:


> The simplest repair is to move your accounts to a credit union, or lie to your bank and investment advisor.


Finding a financial institution that doesn't ask about "US personhood" is easier said than done. It seems like most institutions including credit unions are now asking about US citizenship or about place of birth. I probably checked around two dozen and only managed to find one very small credit union which didn't ask.


----------



## Nononymous

HillbillyCanuck said:


> Finding a financial institution that doesn't ask about "US personhood" is easier said than done. It seems like most institutions including credit unions are now asking about US citizenship or about place of birth. I probably checked around two dozen and only managed to find one very small credit union which didn't ask.


Daily banking is going to get easier as awareness of FATCA grows, I think. I didn't have to look that hard to find some options in the western half of the country. In BC, Vancity definitely makes FATCA-proofing a "feature" - they advertize it. First Calgary plus others in Alberta are clean. I'd also seen an online credit union based in Winnipeg that took out-of-province accounts. When I first looked over a year ago FATCA was barely mentioned; now that word is out I'm finding more credit unions with local client base status. 

That's only an issue if you want to be honest with your bank. It's not clear yet what a regular bank will do for compliance on basic accounts. It may just be a box on the application form, you lie and check "not a US citizen" and they will never follow up (or care). If you're comfortable not telling the truth, it could well end there.

With other financial institutions, the greater the sums involved, the more carefully they're likely to check. I had a long back-and-forth with the investment advisor we use, told him my citizenship status was none of his business for RRSPs since they're FATCA-exempt anyway, and refused to give an SSN or fill out a W9; they backed down but then asked about US citizenship directly so I simply lied and said I didn't have it (wink wink nod nod). No further trouble from them.


----------



## HillbillyCanuck

Nononymous said:


> Daily banking is going to get easier as awareness of FATCA grows, I think. I didn't have to look that hard to find some options in the western half of the country. In BC, Vancity definitely makes FATCA-proofing a "feature" - they advertize it. First Calgary plus others in Alberta are clean. I'd also seen an online credit union based in Winnipeg that took out-of-province accounts. When I first looked over a year ago FATCA was barely mentioned; now that word is out I'm finding more credit unions with local client base status.


I tried Vancity. They only accept in-province accounts. Same with First Calgary. I live in Ontario so I can't open an account with them. I have accounts with several Manitoba credit unions but if I were to try to open a new account with them now, I'd have to answer a "US personhood" question. Implicity Financial in Winnipeg Manitoba didn't ask any "US personhood" questions when I opened an account with them a few months ago.


----------



## USExpat111

I spoke to my bank again, and they said even if I closed my accounts, they would send my details for FATCA reporting this year anyway! The worrying thing is, they didn't know what would happen to my details once they were passed on..


----------



## Bevdeforges

While I would never advise anyone to lie on the FATCA issue, there is also the matter of just how much follow-up the IRS is going to be able to do on information they get from overseas. There are any number of very good reasons why you may have a foreign bank account well into 6 figures and still have no income tax reporting obligation. 

Such is the case for a friend of mine, whose taxes I do every year. And because she's over 65, she doesn't even have to file. But we still report her foreign bank account. It's what she's living off, and the interest paid on the account simply doesn't amount to enough for her to break the filing threshold.

They aren't going to investigate your individual situation unless something comes up that seems to indicate that you're "hiding" something or may have a sizeable tax obligation. 
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> There are any number of very good reasons why you may have a foreign bank account well into 6 figures and still have no income tax reporting obligation.


True, that's possible, but such an individual would have a FinCEN Form 114 filing obligation (as you allude to), and the U.S. Treasury Department knows how to send form letters if they wish.

Caution: Canada now has _domestic_ law requiring additional financial reporting to its CRA. Lying to your Canadian bank (and thus to the CRA) could very well be a thoroughly, completely Canadian crime in Canada, prosecutable in Canada under Canadian law. It's at least something to check before you lie if you're considering lying, preferably with a competent Canadian attorney.


----------



## USExpat111

I have quite a lot in this UK account, but it doesn't receive any interest because it is used to offset my mortgage so I don't receive the interest. I'm not sure the US has any products like that. I still report the accounts, but they do make me look much wealthier than I actually am. 

Do Americans over 65 not have to file? I didn't know that, something to look forward to if I decide to keep my US citizenship (though I'm still a ways from 65)!


----------



## Bevdeforges

USExpat111 said:


> I have quite a lot in this UK account, but it doesn't receive any interest because it is used to offset my mortgage so I don't receive the interest. I'm not sure the US has any products like that. I still report the accounts, but they do make me look much wealthier than I actually am.
> 
> Do Americans over 65 not have to file? I didn't know that, something to look forward to if I decide to keep my US citizenship (though I'm still a ways from 65)!


You report the account on FinCEN and that's it. They normally don't go looking to match up accounts to interest reported - precisely because there are plenty of foreign accounts that pay no interest (or these days, such paltry interest that it isn't worth fussing about).

At age 65, the filing threshold jumps by quite a bit (well, relatively speaking). Under 65 and single, the threshold is $10,150, whereas over 65 the threshold is $11,700. Depending on your sources of income at that age, that can be significant enough to eliminate your filing obligation.

In the example I cited, my friend's "big" bank account only generates about $2000 to $4000 in income (thanks to the current crummy interest rates), and otherwise she's drawing down her savings accounts to live on. Yes, we report the big bank account on FinCEN, but her other income doesn't breach the filing threshold (and yes, she happens to be resident in a country where her US Social Security is NOT subject to taxation by the US). 
Cheers,
Bev


----------



## jbr439

BBCWatcher said:


> ...
> Caution: Canada now has _domestic_ law requiring additional financial reporting to its CRA. Lying to your Canadian bank (and thus to the CRA) could very well be a thoroughly, completely Canadian crime in Canada, prosecutable in Canada under Canadian law. It's at least something to check before you lie if you're considering lying, preferably with a competent Canadian attorney.


Given how Canada seems to deal with genuine tax cheats, I'd expect that if such a person were caught, they would be given a proper scolding and told never to do that again.


----------



## Bevdeforges

jbr439 said:


> Given how Canada seems to deal with genuine tax cheats, I'd expect that if such a person were caught, they would be given a proper scolding and told never to do that again.


I've always liked Canada and the Canadians. 
Cheers,
Bev


----------



## Nononymous

jbr439 said:


> Given how Canada seems to deal with genuine tax cheats, I'd expect that if such a person were caught, they would be given a proper scolding and told never to do that again.


No maple syrup or watching hockey for a month, or similar punishment.

I did some searching on the legal ramifications of telling a deliberate untruth (in Canada, to a Canadian bank) and found every little. According to what I saw on other forums the IGA and enabling legislation are very, very vague - lots of banks "may" do this, "may" do that. Which doesn't mean that you wouldn't spend the rest of your life in solitary if caught, of course.

Now if one of the major banks had 30 percent withholding imposed on all US transactions for FATCA non-compliance because a single customer lied about their US personhood on a savings account application and the bank didn't catch it before the IRS did, I assume that person would be sued by the bank. And have their account closed.


----------



## BBCWatcher

USExpat111 said:


> I have quite a lot in this UK account, but it doesn't receive any interest because it is used to offset my mortgage so I don't receive the interest.


I didn't follow that.

If the account pays interest it pays interest. Whether that interest goes toward buying a ham sandwich or paying a home loan doesn't matter (for IRS purposes).


----------



## USExpat111

It's called an offset mortgage. Maybe they don't have them in Singapore either. The whole point is that your savings offset your mortgage, and what interest you would have received also goes towards your mortgage payments. So say if you have 40k saved and a 100k mortgage, you would only have to pay interest on 60k. It's a tax efficient product as one also doesn't have to pay the 20% tax on interest income the UK levies since you don't receive any interest. If the IRS asked this bank how much interest I received, they would say none.


----------



## BBCWatcher

OK, but it doesn't actually matter (much) what the bank says and what HMRC thinks about what the bank says. What matters are what the facts are and the IRS's interpretation of those facts.

As it happens, the IRS generally considers debt and interest forgiveness, of any kind, to be income, dollar for dollar. So the IRS and HMRC probably have different interpretations here, and what works as a U.K. tax-advantaged approach probably doesn't translate into a U.S. tax advantage. If I'm correct then you'd have to calculate the interest in the way the IRS wants. However, note that mortgage interest is generally U.S. tax deductible, so it's also in your interest (no pun intended) to get the math right here. In other words, the U.S. also offers a tax advantage, but it does so differently than the way HMRC does.

Regardless, the important point is that you cannot rely on HMRC's views in order to understand the IRS's views, or vice versa for that matter. Each tax agency will have its own, separate views. "HMRC doesn't tax it" carries absolutely no weight. You have to look at the IRS's rules, instructions, and the U.S. tax code on its own. (If there's a tax treaty that says otherwise, OK, but I doubt the U.S.-U.K. tax treaty is going to have any relevance here, especially with the savings clause. But you can certainly check that.)


----------



## USExpat111

I don't think it would be up to the IRS to define what is interest if the bank says it is not. If the bank says you don't receive interest, then the IRS should have to accept this. The HMRC interpretation should also carry weight.


----------



## BBCWatcher

USExpat111 said:


> I don't think it would be up to the IRS to define what is interest if the bank says it is not.


Oh yes it would be!

Let's consider another hypothetical. Suppose you have a bank account in Botswana, and you're a resident of the U.K. This bank in Botswana claims it doesn't pay interest, but they do send you a gold bar every month and deduct half the market value of that gold bar from your account.

Now it comes time to report your income to HMRC. (Forget the IRS for a moment.) You claim to HMRC that you have no income from this bank in Botswana, even though you're paying half market rate for gold. How well do you think your argument will work with HMRC?

Of course it won't work at all. It's patently absurd. If you don't report the income the way HMRC wants it reported, you're liable for statutory and regulatory penalties. HMRC is most probably going to view your reportable and taxable income on that account as equal to that discount you received on the gold you're receiving every month.

And of course the same is true for the IRS. The IRS (and Congress) decide what is and is not reportable and taxable income, and how it's taxed. What your British bank says, and what some foreign tax agency thinks, has absolutely zero merit. The only things that matter are the facts and the IRS/Congress's rules, regulations, and tax code.

Sorry, your argument doesn't make sense and doesn't work. It's nice and all that British banks structure their arrangements to take advantage of British tax loopholes, but none of that has any relevance on the U.S. side. Sovereigns are sovereign.


----------



## Bevdeforges

Unfortunately, it doesn't work that way. What your bank says doesn't really matter (especially HSBC these days, since they seem to be in the US authority's gunsight for a variety of misdeeds).

However, if you were/are eligible to itemize your deductions, your mortgage interest would be fully deductible and to the extent that the mortgage interest exceeds the interest you're earning on the account, would have little to no effect on your ultimate tax obligation. Actually, if you were to declare the interest paid on your account and it would fall under the standard deduction amount you're entitled to take, it wouldn't be taxed, either.

Up to you whether to go through the process of declaring the interest and then applying either the standard deduction or the itemized deductions to see how much is "left over" to be taxed. Chances are the IRS will let it fly even if you don't declare the interest and then deduct the mortgage interest separately - or you can declare it to "prove" to them that you're not hiding anything and don't owe them anything. They've got far bigger fish to fry.
Cheers,
Bev


----------



## USExpat111

Well as I said, the account pays no interest so there's no interest to declare. The UK isn't Botswana, and the product is well-established and recognised as legit by all the financial authorities including HMRC here. The accounts are listed in my US filings, so I'm not hiding them. If they did receive interest, it would be minimal and covered by the mortgage payments as that's how the product works in any case. As you say Bev, hopefully the IRS have bigger fish to fry. However, as you all seem to like to give me a headache with worst case scenarios, this gives me more incentive just to close everything and lose citizenship. I really don't wish to deal with anal IRS rules/interpretations/requirements and having to be paranoid about every cent accountable anymore. It's all just too much for one person to handle!!


----------



## BBCWatcher

USExpat111 said:


> Well as I said, the account pays no interest so there's no interest to declare.


From the IRS's point of view, if I'm correct (probably), yes, it does. Mortgage interest relief is also taxable income.



> The UK isn't Botswana....


From the IRS's point of view, yes, it really is.



> ....and the product is well-established and recognised as legit by all the financial authorities including HMRC here.


Yes, it's perfectly legitimate _under U.K. tax regulations_, regulations that have absolutely nothing whatsoever to do with the U.S. tax code.



> The accounts are listed in my US filings, so I'm not hiding them.


You're not hiding the accounts, but you're thinking of improperly hiding the (imputed) income. I don't recommend that. I recommend determining what the IRS demands, in their instructions (and regulations and tax code) and complying with that. Nothing more, nothing less.



> If they did receive interest, it would be minimal and covered by the mortgage payments as that's how the product works in any case.


Yes, as I pointed out! There's a mortgage interest deduction available in U.S. tax reporting. That's how you do it when filing a U.S. tax return. You don't do it the U.K. way. I recommend you do it correctly. As it happens -- though it shouldn't matter -- doing things correctly is (probably) at least as U.S. financially attractive as doing things the wrong way. So, Good Lord, what's the bloody point doing things the wrong way?


----------



## Bevdeforges

BBC, lighten up a bit. This all depends on the amounts involved, and there are actually banks and accounts out there that don't inform their customers of all the various innies and outies of their accounts (especially in places that withhold the local taxes at the source anyhow).

I don't see where you're getting any "mortgage interest relief" - they're simply taking the interest theoretically due the "savings" account against the mortgage payment directly. While, in a perfect world, yes, the OP would report the interest paid to the account as income, and then deduct the mortgage interest paid as either part of the standard deduction or as an itemized deduction, it's really and seriously unlikely the IRS is going to dig into this particular arrangement unless our OP has undeclared accounts stashed somewhere in Belize or the Caymans and is in a pretty high income bracket to start with.

The accounts have all been reported - and if the IRS has questions, they can consult with Treasury and then contact the OP. (Which is probably not going to happen.)

The main thing is to disclose. And then let the IRS decide if anything "looks funny" or needs further explanation. The likelihood that our OP actually owes anything on the imputed interest is pretty slim.
Cheers,
Bev


----------



## USExpat111

Thank you, Bev!! Though I still have a headache and will still consider closing or at least reducing balances in all these accounts now to simplify my tax life. It shouldn't be this much worry and headache to be a US citizen abroad. I don't understand why the US tax authorities aren't more relaxed or reasonable like Canada or other countries. Life is too short to be wasting months of each year trying to understand complex tax rules and attempting to fill out endless complex tax forms...


----------



## ForeignBody

USExpat111 said:


> Well as I said, the account pays no interest so there's no interest to declare. The UK isn't Botswana, and the product is well-established and recognised as legit by all the financial authorities including HMRC here. The accounts are listed in my US filings, so I'm not hiding them. If they did receive interest, it would be minimal and covered by the mortgage payments as that's how the product works in any case. As you say Bev, hopefully the IRS have bigger fish to fry. However, as you all seem to like to give me a headache with worst case scenarios, this gives me more incentive just to close everything and lose citizenship. I really don't wish to deal with anal IRS rules/interpretations/requirements and having to be paranoid about every cent accountable anymore. It's all just too much for one person to handle!!


Cash ISAs are "recognized as legit by all..." but, although the interest is tax free in the UK, it is taxed by the USA. The tax rules for different products are different in different countries. Nothing strange about that!

The offset mortgage that you are (I think) referring to sets your savings capital against your mortgage debt so that the sum you are paying interest on is reduced. eg if you have a mortgage of $100k and savings of $20k you simply pay mortgage interest on $80k. Personally I would treat it for what it is: one account with a debit balance of $80k.


----------



## StewartPatton

USExpat111 said:


> Who's talking about lying? I'm just wondering if one has dual US/foreign nationality, whether it's necessary to claim the US nationality or whether like Canada it might be possible to just claim Canadian citizenship if you are dual US/Canadian? Also, any idea what the bank will end up doing with the info in the future if you are an American? Will they cancel your accounts or deny you a remortgage as I understand some banks are doing?


The forms the bank give you require you to declare whether you are a U.S. person or not a U.S. person. So, if you are a U.S. citizen, you can't simply claim that you are a foreign citizen or whatever.


----------



## maz57

When confronted with crappy forms with crappy questions, I've had good luck just writing in N/A. Nothing like poking a stick in the spokes of a Fatca wheel. 

These local banks don't really care about any of this stuff. Fatca is not their law and not their problem. They are just going through the motions set up by their resident IT geek.


----------



## StewartPatton

maz57 said:


> When confronted with crappy forms with crappy questions, I've had good luck just writing in N/A.


This is one of those strategies that works great all the way up until the day it doesn't. Anyway, I wish you continued good luck.


----------



## maz57

Well in my case, I'm no longer a US citizen so I'm home free. Now I proudly answer NO to the dreaded question.


----------



## StewartPatton

maz57 said:


> Well in my case, I'm no longer a US citizen so I'm home free. Now I proudly answer NO to the dreaded question.


Ah, OK. I got you confused with that Nononomouse guy I think . . .


----------



## maz57

Not surprising, he and I are of like mind. (Except for some reason he wants to hang on to his US citizenship.) Me, I'm not one to hang around where I'm distrusted and punished, which is clearly US government policy regarding expats.


----------



## Nononymous

maz57 said:


> Not surprising, he and I are of like mind. (Except for some reason he wants to hang on to his US citizenship.) Me, I'm not one to hang around where I'm distrusted and punished, which is clearly US government policy regarding expats.


I just feel peculiarly stubborn about not cooperating, given what I perceive to be minimal risk as long as I and my assets remain in Canada. If they hadn't jacked the fee I might have changed my mind and renounced, particularly now that I've heard stories of people not bothering with all the expatriation tax stuff and never hearing a peep out of the IRS.

My one and only FATCA fight, with the investment folks, actually turned out pretty well. They backed down and admitted that they didn't need to be collecting citizenship information for RRSPs, which are exempt from FATCA under the IGA. (Only after this did I untruthfully answer a citizenship question, in an e-mail to the investment advisor.) Regular banking I can move to a credit union when the need arises.


----------



## BBCWatcher

maz57 said:


> Me, I'm not one to hang around where I'm distrusted and punished, which is clearly US government policy regarding expats.


Maz57, no, a thousand times no. U.S. government tax policy applies to all its citizens (and residents). To the extent you're "distrusted and punished," it's because you are/were a _citizen_, not because of your place of residence. That's the whole bloody point of (mild) citizenship-based taxation (CBT). [And that's OK -- I believe in adults making decisions about their citizenships, no problem with that. If you didn't like the obligations that come with U.S. citizenship, it's perfectly OK with me that you terminated that citizenship -- and I'd defend your right (and others' rights) to do so.]

And, in fact, to the extent that tax code is not neutral with respect to residence, it's _favorable_.(*) The Foreign Earned Income Exclusion is the preeminent example. It's probably America's most generous tax break within its CBT, and overseas Americans are the only ones who enjoy it.

Good grief, this isn't hard to understand. I sometimes think some Americans overseas -- some former and some current -- have completely forgotten (or never knew) what tax and financial reporting is like for _everyone_ (or practically everyone). That's why I'm generally in favor of simplifying tax and financial reporting for _everybody_, because it's complicated for practically everybody, including citizens living overseas.

(*) Though Congressional Republicans are working to change this fact.


----------



## maz57

Nononymous said:


> I just feel peculiarly stubborn about not cooperating, given what I perceive to be minimal risk as long as I and my assets remain in Canada. If they hadn't jacked the fee I might have changed my mind and renounced, particularly now that I've heard stories of people not bothering with all the expatriation tax stuff and never hearing a peep out of the IRS.


Yeah, I hear you...I wouldn't want to pay $2350 to get rid of something I didn't want either! I was lucky and got the free relinquishment deal. I skipped all the expat tax crap and haven't heard a peep. (But I did have a track record of owing no taxes and having fairly modest assets.)


----------



## jbr439

BBCWatcher said:


> Maz57, no, a thousand times no. U.S. government tax policy applies to all its citizens (and residents). To the extent you're "distrusted and punished," it's because you are/were a _citizen_, not because of your place of residence. That's the whole bloody point of (mild) citizenship-based taxation (CBT).
> ...


"The law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread." - Anatole France.

Please make that argument when US residents find that their local mutual funds and ETFs are toxic, or that their 529 plans require them to fill out paperwork equivalent to forms 3520 and 3520A, or ...


----------



## maz57

BBCWatcher said:


> Maz57, no, a thousand times no. U.S. government tax policy applies to all its citizens (and residents). To the extent you're "distrusted and punished," it's because you are/were a _citizen_, not because of your place of residence. That's the whole bloody point of (mild) citizenship-based taxation (CBT). [And that's OK -- I believe in adults making decisions about their citizenships, no problem with that. If you didn't like the obligations that come with U.S. citizenship, it's perfectly OK with me that you terminated that citizenship -- and I'd defend your right (and others' rights) to do so.]
> 
> And, in fact, to the extent that tax code is not neutral with respect to residence, it's _favorable_.(*) The Foreign Earned Income Exclusion is the preeminent example. It's probably America's most generous tax break within its CBT, and overseas Americans are the only ones who enjoy it.
> 
> Good grief, this isn't hard to understand. I sometimes think some Americans overseas -- some former and some current -- have completely forgotten (or never knew) what tax and financial reporting is like for _everyone_ (or practically everyone). That's why I'm generally in favor of simplifying tax and financial reporting for _everybody_, because it's complicated for practically everybody, including citizens living overseas.
> 
> (*) Though Congressional Republicans are working to change this fact.


1. Can you stop with the "mild" CBT? Its CBT, full stop. No one else has it except for Eritrea (which doesn't count) so there is no country which has "severe" CBT to compare with. Stop trying to pretty it up. There's nothing pretty about it. Without CBT there would be no need for Fatca and no need for the US to threaten other countries and non-US banks with ruinous fines. The US and its "CBT is my story and I'm sticking to it" is getting tiresome. In fact the entire US government is tiresome.

2. The FEIE applies to "earned" income, something retired people don't have. I suppose its great if you qualify. I wouldn't know.

3. I don't have any "foreign" accounts. They are all in the town and province where I live, yet the US government requires ridiculous reporting year after year for these common benign Canadian financial accounts. Sounds like distrust to me. This making believe like you are a US resident when in fact you are not just doesn't work because of the clash of other country tax codes.

4. I certainly felt like a target when I found out about this mess. All the IRS (and media) talked about was punishment and more punishment. How about all those people they screwed in OVDI? The US government and the IRS should be ashamed of themselves. Good grief...$10,000 for not filling out a form? How stupid can you get? I responded in the only logical way; I headed for the exit ASAP.

5. Simplifying the tax code (and not just the US tax code) is the only thing we can agree on here.


----------



## BBCWatcher

Every U.S. citizen has the same obligations, Maz57. If you've got a bank account in Paris, it doesn't matter whether you're a resident of Tokyo or Topeka -- it's the same damn thing. Citizens are citizens. Of course different citizens behave differently -- some of them open pizzerias in Topeka! -- but the U.S. tax code does not discriminate -- or, more precisely, it discriminates in financial favor of U.S. citizens living overseas.(*)

You and others are arguing (were arguing) that the U.S. tax code should _increase_ that level of discrimination among its citizens, that it should treat non-residents even more differently (favorably) than resident citizens, to an unlimited extent. Fair enough, *get in line*. It's not a particularly creative idea. Practically every American wants Congress to reduce their taxes. (There are a few exceptions, e.g. Warren Buffet and Bill Gates.)

(*) It occurs to me the Earned Income Tax Credit (EITC) is an exception, and for what it's worth I disagree with that exception. In my view, in a CBT, the EITC should apply to all citizens and residents. However, it would be reasonable if the EITC were not available to citizens who choose the Foreign Earned Income Exclusion, just like the Additional Child Tax Credit.


----------



## diharv

I'm glad the US tax code discriminates in favor of US citizens living overseas . If my tax and accounting bills over the last five years cost me more than $23000.00 , I can only imagine what my poor 90 year old aunt in Idaho had to pay !


----------



## maz57

BBCWatcher said:


> You and others are arguing (were arguing) that the U.S. tax code should _increase_ that level of discrimination among its citizens, that it should treat non-residents even more differently (favorably) than resident citizens, to an unlimited extent. Fair enough, *get in line*. It's not a particularly creative idea. Practically every American wants Congress to reduce their taxes. (There are a few exceptions, e.g. Warren Buffet and Bill Gates.)


I'm not going to to get in line because I'm already standing in a 7 billion or so crowd. Its the US government that needs to get in line. The rest of the world (save our favorite little African dictatorship) agrees that it is wrong to use citizenship as an excuse to try to tax people who don't live in a country or consume the services of a country. Not only wrong, but impossible to enforce. 

Non-resident US citizens should be treated exactly like what they actually are; non-residents. After leaving the US they now live and pay taxes somewhere else...the US needs to get over it. Pretending otherwise is how they got to the current sorry state of affairs. Piling complication on top of complication only makes it worse. If Congress' stated objective were to try to get the maximum number of people around the world to hate the US, FATCA would be the perfect strategy. How is that going to end well?


----------



## BBCWatcher

Hungary is in Africa? 

I don't generally do politics, Maz57, sorry. I prefer to deal in facts.


----------



## Bevdeforges

Actually, the taxation system in the US isn't CBT, it's BOTH, CBT and RBT. From what I've picked up online, the CBT part started during the Civil War to prevent rich folks from expatriating with their money. And oddly enough, that's well before federal income tax was even implemented - so this sacred "tradition" was never meant to apply to personal income tax anyhow. So yeah, I think it's fair to say that CBT is designed to penalize (if not actually "punish") expats and expat wannabees in this day and age.

Add to that, the laws have been changed to favor the corporations (like that's a big newsflash), who for years have not had to pay tax on their "foreign earnings" (earned or not) as long as they don't repatriate the funds. There would be no problem if that same principle were applied to personal income taxes as well. While there's talk about changing that for the corporations, I'm not holding my breath on any action on that score in my lifetime.

The IRS has always used "shock and awe" as their primary enforcement technique - threatening huge fines for technical violations of obscure rules - but in practice, your likelihood of being audited is pretty small, and even miniscule if you are resident overseas, particularly if you have a "modest" financial situation.

There's really not much point in arguing over the nits and lice here. Each taxpayer has to decide on how to best address his or her own situation without giving in to the media-based hysteria. 
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> From what I've picked up online, the CBT part started during the Civil War to prevent rich folks from expatriating with their money. And oddly enough, that's well before federal income tax was even implemented - so this sacred "tradition" was never meant to apply to personal income tax anyhow.


No, that's not what I see in the historical record.

The United States introduced an income tax during the Civil War. The first income tax legislation was the Revenue Act of 1861. Very quickly, with the Revenue Act of 1862, CBT was added, and there were rate and threshold adjustments to raise some more revenue, though still exclusively from higher income Americans. (The income tax applied only to income above $600, a very large sum back in the 1860s, and the top marginal rate was 5%, applicable to income above $10,000.) It's thus fair to say that the very first income tax "loophole" that Congress closed was RBT (in favor of CBT), way, way back in 1862. Note that Congress adopted a _strict_ CBT back then. There was no Foreign Earned Income Exclusion, for example (see below). Citizens were strictly treated the same everywhere with no financial favor (or penalty) granted to citizens residing overseas. I don't think there was even a Foreign Tax Credit back then. There were just two marginal rates in the 1862 strict CBT code: 3% (above $600 up to $10,000) and 5% (above $10,000). (There weren't any filing statuses either, in large part because women weren't anywhere near full legal and economic participants in society.)

The U.S. suspended its income tax after the Civil War, in 1872, about 5 years before the Reconstruction Era ended. The income tax was reintroduced in 1894 and was very similar to the 1862 version (including CBT), but the Supreme Court found it unconstitutional (as constructed) in 1895 -- and not for CBT reasons, by the way. The Supreme Court has never had a problem with CBT and, in fact, explicitly ruled in another case -- Tait v. Cook, 1924 -- that CBT is perfectly fine. Democratic (small d -- it was multi-partisan) political forces pushed hard to counteract that Rockefeller/Carnegie-friendly 1895 Supreme Court ruling, and thus the 16th Amendment to the U.S. Constitution (1913) firmly and permanently established the legality of the income tax, rapidly reintroduced after the amendment was passed -- and just in time for World War I, fortunately. The U.S. income tax has been continuously operating, with CBT, for over 100 years. Except for its very first year (1861), CBT has always been part of the U.S. income tax code.

The Foreign Earned Income Exclusion was introduced in 1926 in the (what else?) Revenue Act of 1926, and that was when the U.S. transitioned from a strict CBT to a mild CBT. Except for a brief period in the 1970s, the FEIE has persisted in some fashion. (Today's FEIE is more generous than its historical average.) Income tax withholding was introduced in 1943 during World War II. (Payroll tax withholding started several years before that, with the introduction of Social Security.)

Interestingly the U.S. had a federal wealth tax many decades before the income tax. As far back as 1791 there was a narrowly applied wealth tax, on slaves. Then, in 1812 (during the War of 1812), a temporary, broader wealth tax was introduced on gold, silver, jewelry, and watches to raise revenue to fight that war. Federal wealth taxes ended in 1817. I'm not sure if those wealth taxes were RBT or CBT. The estate tax dates back as far as 1797, but it was much more firmly and permanently established in 1916 (again a World War I revenue raising innovation).

FinCEN Form 114 ("FBAR"), and its predecessor equivalent forms, were introduced in 1970 with the Bank Secrecy Act, always applicable to U.S. citizens and residents universally. So we've been required to report foreign financial accounts for 45 years or so and counting.


----------



## Nononymous

Here's a simple test. Keeping it all first-world so that it's an apples-to-apples comparison.

If you were currently living relatively comfortably in some relatively civilized country where you'd grown up, let's say the UK or Germany, with no particular desire to leave, and you had a second citizenship due to place of birth or parental nationality, would you rather that citizenship be US or Canadian? Which one is less trouble?

I recently found a story over on a Canadian money forum. Some poor retired guy in Victoria, born in the US to serving military, returned to Canada at three weeks of age. Lived and worked his whole life in Canada. Assumed he didn't have US citizenship because of his father's status. Went to move some money into a mutual fund with his bank (HSBC). They asked for his place of birth. Foolishly, he answered honestly. Now he's been FATCA'd and will either spend his days wondering when he's going to receive a letter from the IRS, or will need to invest all kinds of time in becoming tax compliant for a country he otherwise has nothing to do with. (Even better - hello PFIC, that mutual fund wasn't an RRSP.)

Seems a bit silly, doesn't it?


----------



## USExpat111

Boris Johnson, the current Mayor of London, was born in the US but has spent all or most of his life in the UK. Apparently, the IRS recently chased him for the capital gains on the sale of his main home, which is tax free in the UK. He seems to have been hopping mad about it from media stories. He paid the tax in the end, but also has just given up his US citizenship. Ostensibly, he says he gave it up because he wants to to focus on his UK links and and position as a UK politician. But, we all know why he really gave up his US citizenship, don't we?


----------



## jbr439

USExpat111 said:


> Boris Johnson, the current Mayor of London, was born in the US but has spent all or most of his life in the UK. Apparently, the IRS recently chased him for the capital gains on the sale of his main home, which is tax free in the UK. He seems to have been hopping mad about it from media stories. He paid the tax in the end, but also has just given up his US citizenship. Ostensibly, he says he gave it up because he wants to to focus on his UK links and and position as a UK politician. But, we all know why he really gave up his US citizenship, don't we?


I don't think we actually know if he paid the tax, and how much of it he negotiated to pay, if he did pay. I think all we know is that the matter has been resolved. For all we know the command came down from on high to been lenient on BJ as he could one day be the PM of the US' most reliable ally (*).

(*) other people might use a different phrase involving a particular breed of dog to describe the UK's relationship with the US.


----------



## BBCWatcher

Do you have any reliable evidence that Boris Johnson has renounced his U.S. citizenship? He's been claiming he'd do so for something like 20 years.

U.S. citizenship has been and perhaps still is extremely financially rewarding to Boris Johnson. Color me skeptical he actually pulls the trigger.

We know the IRS considers the matter settled. I would not bet heavily that the IRS failed to collect the tax owed.


----------



## jbr439

BBCWatcher said:


> Do you have any reliable evidence that Boris Johnson has renounced his U.S. citizenship? He's been claiming he'd do so for something like 20 years.
> 
> U.S. citizenship has been and perhaps still is extremely financially rewarding to Boris Johnson. Color me skeptical he actually pulls the trigger.
> 
> We know the IRS considers the matter settled. I would not bet heavily that the IRS failed to collect the tax owed.


If BJ paid the full amount, why wouldn't he publicly state so? Saying only that the matter has been resolved creates more questions than it answers. Not to mention that he's lost all the venom he once had when discussing the situation.

Also, I don't understand how US citizenship has been financially rewarding to him. Can you elaborate?


----------



## maz57

Nononymous said:


> (Even better - hello PFIC, that mutual fund wasn't an RRSP.)


Oh my God, he bought a Canadian mutual fund! Time for some serious form filing to prove that this highly suspicious activity is not some slick tax evasion scheme. Plus a dollop of PFIC punitive taxation to atone for this evil deed. (And don't forget the FBAR, please.) Sounds like the distrust and punishment I mentioned previously. 

Meanwhile a homelander buys a mutual fund and has to report.....well, nothing, unless and until he sells it for more than he paid for it. Yup, all US citizens are treated exactly the same under the US tax code.


----------



## BBCWatcher

jbr439 said:


> If BJ paid the full amount, why wouldn't he publicly state so?


Trying to create the appearance of ambiguity is _exactly_ what Johnson would do.



> Also, I don't understand how US citizenship has been financially rewarding to him. Can you elaborate?


Johnson has very significant U.S. source income, and his U.S. citizenship was/is vital to obtaining much of it. Renunciation would very seriously risk his continued generation of such income. He might actually have more U.S. source income than non. (For some strange reason a few Americans find him entertaining.) You think his public salary in the U.K. buys his choice whiskey? Ha. 

To paraphrase James Carville, "It's the net income and wealth, stupid." Way too many people think taxes are everything or even a major factor. Heck no.


----------



## Nononymous

For the love of god, please call him BoJo not BJ...


----------



## jbr439

BBCWatcher said:


> ...
> Johnson has very significant U.S. source income, and his U.S. citizenship was/is vital to obtaining much of it.
> ...


And that's the part I don't understand. BJ wouldn't be the first or the last foreigner to have significant U.S. source income. AFAICT, his US citizenship gets him nothing w.r.t. this.



> ...
> To paraphrase James Carville, "It's the net income and wealth, stupid." Way too many people think taxes are everything or even a major factor. Heck no.


I imagine that if he renounced or does renounce in the future, the fact that he's going to make a run for the party leadership and thus being the PM would be a major factor - a la Ted Cruz.


----------



## BBCWatcher

jbr439 said:


> And that's the part I don't understand. BJ wouldn't be the first or the last foreigner to have significant U.S. source income. AFAICT, his US citizenship gets him nothing w.r.t. this.


Hint #1: How does Boris Johnson obtain much/most of his U.S. source income?

Hint #2: Where does Boris go?

Hint #3: Do you think Hillary Clinton is likely to meet _anywhere_ with an American who renounced his citizenship?

Membership has its privileges.


----------



## jbr439

BBCWatcher said:


> Hint #1: How does Boris Johnson obtain much/most of his U.S. source income?
> 
> Hint #2: Where does Boris go?
> 
> Hint #3: Do you think Hillary Clinton is likely to meet _anywhere_ with an American who renounced his citizenship?
> 
> Membership has its privileges.


#1 Not being a US citizen would not prevent this.

#2 He goes where lots of other Brit only citizens go.

#3 I don't know. He would not be an ordinary renunciant - he's a potential PM of the UK. At any rate, would not meeting H Clinton really make any practical difference?


----------



## BBCWatcher

jbr439 said:


> #1 Not being a US citizen would not prevent this.


Oh yes it would. American corporations expect their highly paid speakers to show up before they're highly paid.



> #2 He goes where lots of other Brit only citizens go.


You want to bet on that?  _Renunciants_, particularly famous ones, are...well, let's just say the clubhouse won't roll out the red carpet for him.



> #3 I don't know. He would not be an ordinary renunciant - he's a potential PM of the UK. At any rate, would not meeting H Clinton really make any practical difference?


To Boris's income, absa freakin lutely.


----------



## Stevesolar

BBCWatcher said:


> Hint #1: How does Boris Johnson obtain much/most of his U.S. source income?


Hi,
The more observant amongst us would have noticed the last line of text in your link above - which reads as follows:-

DUE TO BORIS' POSITION AS MAYOR OF LONDON, HE IS NOT CURRENTLY AVAILABLE FOR SPEAKING ENGAGEMENTS.

So probably not a rich source of income given his current role.
Cheers
Steve


----------



## USExpat111

According to press from February, he has settled with IRS and is or has renounced.

Savvy London Mayor Boris Johnson Paid IRS, Is Now Renouncing U.S. Citizenship - Forbes

Why London Mayor Boris Johnson Is Renouncing His American Citizenship (the IRS) - The Atlantic


----------



## USExpat111

I'm not sure BJ earns very much if any income from the US. It seems the majority of his income is from his job as major and writing for the Telegraph. Perhaps he earns some in his freelance work, but I don't hear of him going to the US much for paid speaking engagements.

Boris Johnson earned £1.3m in three years | Politics | The Guardian


----------



## BBCWatcher

Yes, that's correct. Boris is not currently available for speaking engagements...in the United Kingdom.  (Those pesky ethics rules. )

Due to the fact Boris Johnson has been "threatening" to renounce his U.S. citizenship for some 20 years, nobody should believe he has actually done so unless and until his name appears in the U.S. Federal Register. Even then it should be triple checked. 

On edit: Here's Boris Johnson insisting he has renounced his U.S. citizenship...9 years ago. (And in his own words.) Clearly he got right on that task, didn't he?


----------



## BBCWatcher

I did a little more research and discovered something interesting about America's introduction of CBT. As I mentioned, the U.S. Congress introduced citizenship-based income taxation (CBT) in 1862 as part of the Revenue Act of 1862 (July 1, 1862). It's a massive piece of legislation for its time. Among other things it imposes a license fee on jugglers, would you believe. Section 90 is the section that introduced CBT.

I thought it was neutral with respect to U.S. citizens residing overseas, but it wasn't. That 1862 income tax applied to "the annual gains, profits, or income, rents, and dividends accruing upon any property, securities, and stocks owned in the United States by any citizen of the United States residing abroad...there shall be levied, collected, and paid a duty of five per centum." Or, in other words, the 1862 income tax was, for U.S. citizens residing overseas, a flat 5% income tax on all U.S. source income, from dollar one.

Anyway, it's quite correct that the 1862 tax code made sure that all U.S. citizens -- the property-owning ones, anyway (and usually the wealthy) -- were required to pay an income tax no matter where they lived. But overseas Americans were treated very differently. They owed income tax on U.S. source income at the highest rate (5%) with a threshold of zero. U.S. residents, on the other hand, owed income tax on worldwide income but only after $600 of income, and then at a 3% marginal rate until $10,000. Note that non-U.S. citizens did not owe any income tax on U.S. source income at that time, so U.S. citizens overseas really did have a uniquely citizenship-based tax requirement.

Once the CBT _principle_ got established way, way back in 1862 it has endured as a fixture of the income tax (whenever there's been an income tax). But all the various rates, income sources, and thresholds have been modified and continue to be modified.


----------



## maz57

BBCWatcher said:


> Due to the fact Boris Johnson has been "threatening" to renounce his U.S. citizenship for some 20 years, nobody should believe he has actually done so unless and until his name appears in the U.S. Federal Register. Even then it should be triple checked.


If Boris' name appears on the "list" he renounced. The converse, however, is not true. Just because he does not appear on the list that doesn't mean that he has not renounced. 

Some ex citizens appear on the very next list after their renunciation is official. (The list is published quarterly.) For others, there is a very long delay but they eventually make it. And for still others, their names never appear on the list. There is no known reason for the haphazard reporting of those who have lost US citizenship other than the usual inefficiencies and oversights which apply to any government bureaucracy. Is there also political interference? Who knows?

In view of the fact that the list is also referred to as the "name and shame" list one could imagine that publicizing the renunciation of someone as well known as Boris Johnson might well have the opposite effect and draw more attention to the fact that there is serious downside attached to being a US citizen outside of the United States. For that reason they might "neglect" to name Boris. The stated purpose of the list is the US government's last hail Mary attempt to punish it's expats.

There is no doubt that the Boris Johnson case has done much to raise awareness of just how crazy the US rules are. The US government in general and the IRS in particular have been looking pretty stupid throughout this whole affair.


----------



## Bevdeforges

BBCWatcher said:


> Once the CBT _principle_ got established way, way back in 1862 it has endured as a fixture of the income tax (whenever there's been an income tax). But all the various rates, income sources, and thresholds have been modified and continue to be modified.


Hey, back in 1862, slavery was still legal. (Emancipation Proclamation wasn't issued until the following year.) I don't see too many folks anxious to continue that "tradition" just because it dates back such a long time.

BTW, the Wikipedia article on International taxation include a very interesting section on Citizenship based taxation: https://en.wikipedia.org/wiki/International_taxation#Citizenship
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> Hey, back in 1862, slavery was still legal.


You're trying to draw an analogy between slavery (as practiced in the Antebellum American South) and the (perfectly escapable, if desired) 2015 U.S. tax code?

Wow. I wish you luck.

On edit: Stephen Schwarzman attempted to draw an analogy between closing the carried interest loophole (a tax avoidance strategy that many hedge fund managers use) and Hitler's invasion of Poland. Let's just say that analogy didn't go over well.


----------



## Bevdeforges

The current income tax code didn't come into being until something like 1913. And it only came in at all thanks to Prohibition - since the Federal Government had been getting its revenue from the excise tax on alcohol and needed something to substitute if they were going to do away with the manufacture and sale of alcohol (which didn't happen until 1919). 

Anyhow, they got rid of Prohibition (and slavery). No reason they can't do the same for CBT - though given the current political mess they have over there, I'm not holding my breath.
Cheers,
Bev


----------



## maz57

Bevdeforges said:


> Anyhow, they got rid of Prohibition (and slavery). No reason they can't do the same for CBT - though given the current political mess they have over there, I'm not holding my breath.


Doing away with CBT would not make that much of a dent in the revenue stream. As BBC likes to point out, only 6% of expats even owe any US tax. So US CBT has far more to do with control and punishment than actual revenue collected. That amounts to a form of slavery, only the shackles are financial. 

One way to replace that lost revenue would be to end the prohibition on marijuana and start taxing it at the federal level instead. Voila!, a brand new revenue stream. (Not to mention all the money they would save by eliminating the cost of enforcement, courts, jails, etc.) Regardless, people will continue to smoke their weed and vast profits will be made. The only question is will it be criminal enterprises or legal private businesses and governments. 

If they are going to do this they had better do it quickly, before the states grab all the revenue just like they did with sales taxes. Look at that; two unenforceable federal policies axed in one fell swoop and replaced with something that will actually bring in some serious cash!

As far as fixing the CBT/FATCA situation for expats, all that really needs to be done is to create a humane way of exiting the US tax system (a departure tax) short of renouncing citizenship. But all this is just a pipe dream, and I don't even smoke pot!


----------



## Nononymous

There are lots of things that could be done with minimal revenue loss, but of course won't be.

- switch from CBT to RBT like the rest of the world

- raise threshold for FATCA reporting to something in the millions (de facto tolerance of non-compliance by the non-rich who likely never owe anything)

- painless exit procedure: renunciation for $100 plus signed statement that you owe no US taxes (not so different from today, where you can renounce and basically ignore the exit tax routine with no consequence if you don't have US assets)


----------



## Bevdeforges

Or even easier on the FATCA question: exempt reporting of any and all investments and assets in the country in which the TP is resident and already subject to local taxation. 
Cheers,
Bev


----------



## maz57

Yes, there are a hundred different sensible ways to fix this problem, none of which will be adopted in the foreseeable future.


----------



## Bevdeforges

maz57 said:


> Yes, there are a hundred different sensible ways to fix this problem, none of which will be adopted in the foreseeable future.


Afraid that's the real problem here. 
Cheers,
Bev


----------



## BBCWatcher

maz57 said:


> Doing away with CBT would not make that much of a dent in the revenue stream.


Yes it would. Go read the best research on that subject. Gosh, if the Republican Party is worried about some U.S. expatriates getting refundable Child Tax Credits in order to scrape up revenue to pay for Trade Adjustment Assistance, clearly these revenues are meaningful and substantial.

The are (at least) first and second order effects. The second order effects -- rich Americans literally, immediately hopping on their Gulfstreams to head for American Monacos -- are big.

At least you've suggested how to raise taxes on some other cohort (marijuana consumers inside the United States) to try to replace lost revenue, though whether that math works is a separate question.

Get in line, and go make your best political arguments why people like me (and other members of the Six Percent Club) should be able to enjoy all the privileges of U.S. citizenship while also wiping out our tax burdens. Good luck to you, and thanks for the support.


----------



## Bevdeforges

IIRC, maz57 has already relieved himself of the US citizenship burden, so is discussing the issue solely out of interest and/or curiosity.

But what troubles me is this persistent belief that "most" of the US citizenship living overseas are "rich" potential tax avoiders. Sure, they exist - and every country has them. (In France, the rich and famous move to Switzerland or Belgium - Depardieu is still hanging around despite his Russian nationality, but I'm betting he "resides" in his Belgian residence for tax purposes.) 

Most expats (especially the ones who have never lived in the US or those of us long, long gone) have little or no tax liability even if we have to juggle considerable paperwork to prove it. People like me will start having a tax liability from overseas when we start taking social security benefits and/or our IRA/401K withdrawals, but that is very easily handled with withholding at the source. (Also potentially giving folks a reason to deal with the paperwork if they expect a refund for overwithholding.)

It might also be interesting to see just how much of the taxes the IRS collects from overseas taxpayers relates to US source income vs. other source income. The "loss" from a switch to RBT might not be nearly as big as many folks think.
Cheers,
Bev


----------



## AmerInSyd

In fact, in the context of CBT, requiring expats to use their full un-excluded income to calculate refundable tax credits doesn't strike me as particularly unjust.

What does strike me as unjust as that for many long-term middle-class expats, the CBT falls heavily and disproportionately on types of income that don't fit into the very blunt double taxation relief instruments of the FEIE and FTC - things like fellowships, unemployment benefits, pensions, retirement savings, college savings, homes sales, currency fluctuations, etc. Despite often living in much higher tax jurisdictions than the US, we are in effect being taxed on the incompatibilities between the US tax code and the tax codes of the countries in which we live. 

What I find particularly offensive is that when we point this out, we are told, well, fixing this mess will cost money, so it's your problem to come up with an alternative revenue stream. Which of course is impossible, since Congress will never pay for tax cuts for "wealthy foreigners" by raising taxes on their actual constituents (my Congressman won't even accept an email from me since I don't live in his district.)

I'm also curious as to what "benefits of citizenship" long-term expats are supposedly enjoying, other than the right to someday return to live in the US if they so choose.


----------



## BBCWatcher

Bevdeforges said:


> But what troubles me is this persistent belief that "most" of the US citizenship living overseas are "rich" potential tax avoiders.


Who said that?



> Most expats (especially the ones who have never lived in the US or those of us long, long gone) have little or no tax liability even if we have to juggle considerable paperwork to prove it.


I don't know about the "especially" part, but that's correct: about 94% if one tax expert's estimates are accurate.



> People like me will start having a tax liability from overseas when we start taking social security benefits and/or our IRA/401K withdrawals, but that is very easily handled with withholding at the source. (Also potentially giving folks a reason to deal with the paperwork if they expect a refund for overwithholding.)


_All_ people with U.S. source income can have a U.S. tax liability, not only people like you (citizens). I haven't seen anybody, even the most zealous anti-CBT campaigners, argue against U.S. taxation of U.S. source income. (Or have I just not been reading enough crackpot Web sites? )



> It might also be interesting to see just how much of the taxes the IRS collects from overseas taxpayers relates to US source income vs. other source income. The "loss" from a switch to RBT might not be nearly as big as many folks think.


OK, let's try again.

That's not necessarily the biggest issue. A major issue is that if the United States were to zero out all income tax (on non-U.S. source income) for all its overseas citizens then there'd _naturally_ be a stampede of well-to-do Americans "moving" abroad, many to St. Kitts. ("Moving" because they'll still "vacation" in the Hamptons, on the Vineyard, and on Rodeo Drive, as examples -- up to whatever tax rule limits apply.) There's just no serious question about this. Abolition of all CBT would be a tax cut of massive individual proportions almost exclusively to the benefit of the wealthiest Americans.

And thank you all very much for fighting on my (and others') behalf. But, with all due respect, I think you're politically insane on this point.


----------



## BBCWatcher

AmerInSyd said:


> What does strike me as unjust as that for many long-term middle-class expats, the CBT falls heavily and disproportionately on types of income that don't fit into the very blunt double taxation relief instruments of the FEIE and FTC - things like fellowships, unemployment benefits, pensions, retirement savings, college savings, homes sales, currency fluctuations, etc.


Ah, now you _might_ be onto something, AmerInSyd. You're making a very different argument.



> What I find particularly offensive is that when we point this out, we are told, well, fixing this mess will cost money, so it's your problem to come up with an alternative revenue stream.


Well yes, it is, sorry. Tax relief for poor and/or middle income individuals, resident anywhere, costs money. There's nothing offensive about that. Everybody wants their taxes cut -- everybody. So who's going to pay for government?

There are some possible answers. We've had one proposal in this thread to raise taxes on marijuana users in the United States. I suppose that's a start. Here's another idea: how about if the U.S. limits how much "bankable" Foreign Tax Credits can be spent down to offset future/past U.S. income tax, much like capital losses are limited? That'd raise some revenue, and my idea would skew to hit the highest income Americans. How about closing the hedge fund manager/carried interest loophole? How about tripling the IRS's budget to go collect taxes owed but unpaid, mostly from the wealthiest Americans? How about tightening up the estate tax so that no dead people (above wealth thresholds) can escape it, even with the best lawyers and accountants? How about a carbon (and other greenhouse gas) tax with refundable tax credit rebates to the poor and middle class? How about a financial transactions tax?


----------



## Bevdeforges

BBCWatcher said:


> Who said that?


Almost any article you read in the US press lately about the taxation of overseas expats makes some allusion to "most" overseas residents being relatively wealthy, or to the tax evasion side of living overseas. (The latest one I saw was a particularly condescending article in the Wall St. Journal.)



> I don't know about the "especially" part, but that's correct: about 94% if one tax expert's estimates are accurate.


The "especially" part relates to the whole "accidental Americans" phenomenon. It seems rather ludicrous to expect annual tax forms from those who have never lived in the US and who have no US sources of income.



> _All_ people with U.S. source income can have a U.S. tax liability, not only people like you (citizens). I haven't seen anybody, even the most zealous anti-CBT campaigners, argue against U.S. taxation of U.S. source income. (Or have I just not been reading enough crackpot Web sites? )


Exactly my point. Even the "fanatics" (as you seem to see them) concede that the US has every right to tax US source income - as they do with foreigners anyhow (at the 30% rate on many things). I actually think no one here is contesting that. It's how RBT works. If you have income from France, yes, France expects you to pay their tax on it, even if you live elsewhere. Fair enough.



> That's not necessarily the biggest issue. A major issue is that if the United States were to zero out all income tax (on non-U.S. source income) for all its overseas citizens then there'd _naturally_ be a stampede of well-to-do Americans "moving" abroad, many to St. Kitts. ("Moving" because they'll still "vacation" in the Hamptons, on the Vineyard, and on Rodeo Drive, as examples -- up to whatever tax rule limits apply.) There's just no serious question about this. Abolition of all CBT would be a tax cut of massive individual proportions almost exclusively to the benefit of the wealthiest Americans.


Are you so sure about this "stampede" of wealthy Americans to the various tax havens? That's probably as bad a calumny of the rich as the nonsense about "most" overseas residents being "well to do."

Those that want to avoid taxes have already gone and that's why the OECD is looking to eliminate the tax havens. Sure, a few high profile types make the move, but I really doubt you'd find any mass exodus. As long as US source income was still taxed (as it should be) most of the zillionaires out there wouldn't easily give up their US profits. As the bank robber said, "it's where the money is."
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> It seems rather ludicrous to expect annual tax forms from those who have never lived in the US and who have no US sources of income.


At least no less ludicrous than a military draft, and 40-odd countries do that.

But OK, just terminate that burdensome, "accidental" citizenship. It's still free of charge to do so at age 18.



> Are you so sure about this "stampede" of wealthy Americans to the various tax havens?


As sure as the sun rises, and every reputable tax expert (including the one who calculated the 94% figure) thinks so.



> Those that want to avoid taxes have already gone....


Nope. Anybody/everybody who (a) values the privileges of U.S. citizenship, and/or (b) doesn't want to pay the Expatriation Tax hasn't. That's most wealthy Americans. The only ones that would rationally stay are those that value substantial physical presence in the United States and/or must be physically present in the United States in order to contribute materially to further high income/wealth (e.g. professional sports stars playing for teams in the U.S.) That's not most wealthy Americans, especially when St. Kitts ("America's New Monaco") beckons. The U.S. has no capital controls, so wealthy flight is absolutely no problem -- and there are many tax free places to park wealth and continue receiving interest, dividends, and capital gains.



> ....and that's why the OECD is looking to eliminate the tax havens.


Which will never happen in any relevant way for these purposes as long as each country gets to set its own tax rates and rules.



> Sure, a few high profile types make the move, but I really doubt you'd find any mass exodus.


You're really too funny, Bev.  But who are we kidding? I'm not fooled or a fool, at least not on this occasion.


----------



## Bevdeforges

Perhaps you're better acquainted with the rich and famous than I am - but in my book, "every reputable tax expert" is something of an oxymoron. Never known experts in any field to agree on much of anything. And if we're still taxing US source income, they'd have to not only move overseas, but uproot their profitable investments in the US, too.

Hey, the rich and their experts-for-hire have speculated for decades that lowering their taxes will "trickle down" to the benefit the economy big time and we see in the state of Kansas how that theory works out. 
Cheers,
Bev


----------



## maz57

Every other government in the world has figured out how to collect the revenue needed to run their government without taxing their expat citizens. Is the US government really so dumb it can't figure this out as well? If so, they need only study the tax systems of a few other countries to get some ideas.

All of these RBT countries have their own share of wealthy citizens who live and pay taxes even though they could easily move to a low or no tax jurisdiction. They don't. If this assertion were really true, no RBT country would have wealthy citizens and their populations would be uniformly poor. When people decide where to live (if they decide at all) there are many more considerations far more important than taxes.

I have no problem with the taxing US source income regardless of where the recipient lives. Makes perfect sense. The choice is simple; if you don't want to pay US tax, don't have US source income.


----------



## maz57

As far as OECD progress in eliminating tax havens goes, a major impediment is the US and its outlier CBT. That and its utter refusal to provide any meaningful reciprocity in financial reporting despite those hollow promises in all of the FATCA IGAs.


----------



## Nononymous

BBCWatcher said:


> Nope. Anybody/everybody who (a) values the privileges of U.S. citizenship, and/or (b) doesn't want to pay the Expatriation Tax hasn't. That's most wealthy Americans. The only ones that would rationally stay are those that value substantial physical presence in the United States and/or must be physically present in the United States in order to contribute materially to further high income/wealth (e.g. professional sports stars playing for teams in the U.S.) That's not most wealthy Americans, especially when St. Kitts ("America's New Monaco") beckons. The U.S. has no capital controls, so wealthy flight is absolutely no problem -- and there are many tax free places to park wealth and continue receiving interest, dividends, and capital gains.


Wouldn't these tax havens already be full to bursting with all the millionaires who've fled Canada, Europe, and all the rest of the non-CBT countries around the world?


----------



## BBCWatcher

Nononymous said:


> Wouldn't these tax havens already be full to bursting with all the millionaires who've fled Canada, Europe, and all the rest of the non-CBT countries around the world?


"Full," no. There's no practical residential (and wealth holding) supply limit here. But there are many, many wealthy people who have avoided Canada's and Europe's tax systems. What do you think Monaco's attraction is, its casino? 

Come on. You're all pulling my leg, of course. This planet isn't flat.


----------



## BBCWatcher

maz57 said:


> Every other government in the world has figured out how to collect the revenue needed to run their government without taxing their expat citizens.


Yes, of course. Who said otherwise? (Though note those countries generally have higher national debts and higher unemployment than the U.S.) Unfortunately the way they generally do that is through higher rates of consumption and payroll taxes. Those taxes disproportionately fall on the working poor and middle class.

But I appreciate all your support for cutting or even zeroing out wealthy Americans' taxes (and thus raising taxes further on the poor and middle class), I really do. Thank you.


----------



## Nononymous

At the end of the day this is just a fun if somewhat obsessive parlour game, as nothing will change while I still walk this earth.

Personally I don't really care whether wealthy Americans living abroad pay more or less tax. Nor do I care about the state of the US treasury. 

What I care about is Canadians (and others) being told they need to either pay to get rid of [1] or pay to keep [2] a citizenship they don't need, don't want, and did nothing to acquire. 

That's why I'm cranky, and why I'm non-compliant by choice.

[1] Paying the cost of renunciation and compliance to exit.

[2] At minimum the cost of compliance, plus potentially paying US tax on things that are tax-free for your fellow-citizens who are not also US citizens - tax-protected investment vehicles, real estate gains, scholarship funding, whatever.


----------



## BBCWatcher

Nononymous said:


> What I care about is Canadians (and others) being told they need to either pay to get rid of [1] or pay to keep [2] a citizenship they don't need, don't want, and did nothing to acquire.


They don't have to pay anything (absent a weird Justin Bieber-like scenario) as long as they act to terminate U.S. citizenship while under age 18 1/2.

If you'd like my support to double that free renunciation time window from 6 months to 12 months, you have it.


----------



## Nononymous

BBCWatcher said:


> They don't have to pay anything (absent a weird Justin Bieber-like scenario) as long as they act to terminate U.S. citizenship while under age 18 1/2.
> 
> If you'd like my support to double that free renunciation time window from 6 months to 12 months, you have it.


Why not double the age to 37, or again to 74, while we're at it?

Not every 18 year old is informed of this option.


----------



## Pacifica

BBCWatcher said:


> They don't have to pay anything (absent a weird Justin Bieber-like scenario) as long as they act to terminate U.S. citizenship while under age 18 1/2.
> 
> If you'd like my support to double that free renunciation time window from 6 months to 12 months, you have it.


If the person is under 18-1/2 on the date of expatriation and has been a US resident for not more than 10 years, that is one way a person can be exempt from exit tax. 8854, Part IV, (A), (5).

I’m not aware they get an exemption from the $2350 renunciation fee as well. Could you provide a link re that. Thanks.


----------



## BBCWatcher

After some more research, I (apparently) stand corrected. I recall there used to be a fee waiver for renunciation before age 18 1/2 (or I thought there was), but if it existed it's not there now, not that I can find.

If anyone wants my support for a fee waiver for renunciants younger than age 19, you have it -- though bear in mind that'd naturally result in a further increase in the fee among those 19 or older.

During that research I stumbled into something else I wasn't aware of: _relinquishment_ of U.S. citizenship in and of itself doesn't terminate U.S. tax liability. You have to file IRS Form 8854 to exit the U.S. tax system if you relinquish U.S. citizenship through any method other than formal renunciation. (And you're _obliged_ to file IRS Form 8854 if you renounce, but your exit from the tax system in that case is made official on the date you renounce.) Unless and until the IRS is formally notified of your non-renunciation relinquishment, you're not legally a U.S. citizen but are legally a U.S. tax citizen, indefinitely. Congress put this particular provision into effect in 2004 (with the American Jobs Creation Act, amended somewhat with 2008's HEART Act, if you want the legislative history).

Interesting!


----------



## BBCWatcher

Nononymous said:


> Not every 18 year old is informed of this option.


True, and thus I have no objection whatsoever if you -- and/or anybody else -- inform(s) young American adults of their legal option. As long as that information is truthful and apolitical.(*)

Relatedly, many young American males are also unaware that they must register with U.S. Selective Service else they forfeit certain privileges for life such as many government jobs and student aid. Likewise, I have no objection whatsoever if you and/or anybody else inform(s) young American males of the loss of benefits associated with failing to register with Selective Service.

As yet another example, many 18 year olds are unaware that there are certainly no more judicial concessions granted if they were to commit criminal acts -- that they surely will be treated as adults within the criminal justice system. Again, I have no objection whatsoever if individuals and organizations wish to educate young adults (and in this case older minors) about these legal perils.

(*) I also have no objection if you and/or anybody else want(s) to pay their $2350 renunciation fees. Organizations that believe strongly in this issue might wish to do so. After all, such organizations predominantly represent wealthy Americans (and ex-Americans) who can afford it.  Yes, I'm half joking, but only half. With a reminder that I would favor a fee waiver for renunciants under the age of 19.


----------



## maz57

BBCWatcher said:


> During that research I stumbled into something else I wasn't aware of: _relinquishment_ of U.S. citizenship in and of itself doesn't terminate U.S. tax liability. You have to file IRS Form 8854 to exit the U.S. tax system if you relinquish U.S. citizenship through any method other than formal renunciation. (And you're _obliged_ to file IRS Form 8854 if you renounce, but your exit from the tax system in that case is made official on the date you renounce.) Unless and until the IRS is formally notified of your non-renunciation relinquishment, you're not legally a U.S. citizen but are legally a U.S. tax citizen, indefinitely.


Have you actually read a Form 8854? The stupid US government actually purports to levy an "exit" tax on assets which were never in the US in the first place! They are out of their minds! Additionally, the form asks for a complete list of all one's assets in the net worth calculation (FBAR on steroids?) right down to the used car and golf clubs. Any body who fills out that form is giving the IRS a complete shopping list so they can pick your carcass clean if they so desire. No one in their right mind would fill out such a form, at least according to the instructions. You are no longer a US citizen; its none of their damn business.

Obliged to file it, my ass. Once you have that CLN in hand they can go pound sand. Many don't bother with 8854. Others file it with NO US ASSETS scrawled in red crayon across the first page. Nothing more.

The so-called "obligation" to file 8854 has nothing to do with the exact means by which US citizenship is lost. According to the US rules everyone must file 8854 to officially exit the US tax system. Many skip it because once you have that CLN in hand, that equals no FATCA reporting, no tax returns, no endless form filing, and no tax. In spite of all the usual threats of punishment, fines, and jail time, once one is no longer a US citizen, has no US assets, and lives somewhere else, there is not much the IRS can do about it. Not filing 8854 makes one a "covered expatriate". So what? It beats being a US taxpayer for the rest of your life.

I haven't come across a single report of someone being hassled after filing an "abbreviated" Form 8854 or not filing one at all.


----------



## Nononymous

BBCWatcher said:


> True, and thus I have no objection whatsoever if you -- and/or anybody else -- inform(s) young American adults of their legal option. As long as that information is truthful and apolitical.(*)
> 
> (*) I also have no objection if you and/or anybody else want(s) to pay their $2350 renunciation fees. Organizations that believe strongly in this issue might wish to do so. After all, such organizations predominantly represent wealthy Americans (and ex-Americans) who can afford it.  Yes, I'm half joking, but only half. With a reminder that I would favor a fee waiver for renunciants under the age of 19.


I think such an organization would find it far more cost-effective to offer Canadian citizens who had the misfortune to be born in the US a decent quality forged Canadian birth certificate with which they could easily FATCA-proof their Canadian bank accounts. More bang for the buck than subsidizing renunciation.


----------



## BBCWatcher

maz57 said:


> The stupid US government actually purports to levy an "exit" tax on assets which were never in the US in the first place!


Have you read Canada's tax forms? Golly, they purport to levy taxes on assets that were never in Canada in the first place!

....It's an exit from the tax system, not exit of any assets, Maz57. I've never seen a dollar, euro, yen, rupee, bar of gold, or mansion that has legs, much less ones that can walk on their own. 

You sometimes make me laugh out loud, and on this occasion you succeeded. 

So "stupid" it's only the world's largest economy, has more of the wealthiest individuals on the planet than any other country (by far), has a lower national debt than Canada's (for example), has all the world's top ranking universities, thoroughly dominates global culture and the Internet (thank you, Hollywood and Silicon Valley), has no particular demographic problems with aging (unlike most of the rest of the developed world), has less unemployment than Canada (for example), and is one of the very, very few countries in all of recorded history that directly elected a member of a racial minority as its head of state. Oh, and their professional hockey teams have been clobbering Canada's without exception since 1993 in the league Canada founded, and they make damn good bagels (especially in Manhattan). And, as it happens, their highest income citizens always owe some tax. Yeah, they're _really_ stupid, those Yanks. 

Seriously, I think Canada is a perfectly lovely country and can set its own membership rules for its citizens as it sees fit provided two conditions broadly hold: one, those decisions are made democratically (through Canada's democratically elected representatives), and two, Canadian adults who are unhappy with the arrangement can terminate their citizenships (and their rights and privileges) under reasonable terms (including a fee set to no more than actual termination costs and a settling up of obligations/debts incurred to that point in time). And may the best country (or countries) thrive among the 200-odd countries around the world. The United States is doing quite well, thank you very much.


----------



## Bevdeforges

Actually, it's not a competition. And a country's tax system isn't necessarily the main "reason" why the economy is in the current state it's in (for better or for worse). Economics is a whole lot more complicated than that.

And this issue involves a whole lot more than just the US citizens through a technicality born overseas. Used to be that kids born with double nationality had to choose at age 18 which one of their nationalities they wanted to retain. That's beginning to sound like a whole lot better idea than it used to. Or even a time limit on the taxation period for overseas residents - 5 years, 10 years (and maybe they'd be justified for a change in asking for how many days you'd spent in the US every year on the form 2555).

US taxation has always been a combination of interpretation of the laws and regulations and the old "what you can get away with" in the face of the IRS attempt to publicize big name cases and scare the populace into compliance. The fact remains that they simply don't have the resources to pursue every low to middle income case involving overseas residents with a minimal US tax burden. It's the fatcats and high rollers they're after, not the little old Italian granny with an interest paying account who gets no statement of interest paid (or even of the balance in the account) because the Italian government takes their taxes out up front and is done with the matter. 

Non-compliance, partial compliance or full compliance. Whatever you can live with and what lets you sleep at night. At least until there is some action in this area (which is unlikely to come within MY lifetime).
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> Actually, it's not a competition.


I agree, but Maz57 invited a comparison. 

And may I add, congratulations to the NHL's Chicago Blackhawks.


----------



## ForeignBody

BBCWatcher said:


> Have you read Canada's tax forms? Golly, they purport to levy taxes on assets that were never in Canada in the first place!
> 
> ....It's an exit from the tax system, not exit of any assets, Maz57. I've never seen a dollar, euro, yen, rupee, bar of gold, or mansion that has legs, much less ones that can walk on their own.
> 
> You sometimes make me laugh out loud, and on this occasion you succeeded.
> 
> So "stupid" it's only the world's largest economy, has more of the wealthiest individuals on the planet than any other country (by far), has a lower national debt than Canada's (for example), has all the world's top ranking universities, thoroughly dominates global culture and the Internet (thank you, Hollywood and Silicon Valley), has no particular demographic problems with aging (unlike most of the rest of the developed world), has less unemployment than Canada (for example), and is one of the very, very few countries in all of recorded history that directly elected a member of a racial minority as its head of state. Oh, and their professional hockey teams have been clobbering Canada's without exception since 1993 in the league Canada founded, and they make damn good bagels (especially in Manhattan). And, as it happens, their highest income citizens always owe some tax. Yeah, they're _really_ stupid, those Yanks.
> 
> Seriously, I think Canada is a perfectly lovely country and can set its own membership rules for its citizens as it sees fit provided two conditions broadly hold: one, those decisions are made democratically (through Canada's democratically elected representatives), and two, Canadian adults who are unhappy with the arrangement can terminate their citizenships (and their rights and privileges) under reasonable terms (including a fee set to no more than actual termination costs and a settling up of obligations/debts incurred to that point in time). And may the best country (or countries) thrive among the 200-odd countries around the world. The United States is doing quite well, thank you very much.


Wow, now you have me laughing! I am used to parochial Americans, who rarely travel out of state, to stay stuff like this, but for someone who appears to have travelled and been exposed to other cultures I am shocked.

"ALL the world's top ranking universities".. so you've never heard of Oxford or Cambridge and plenty of other British and French universities??

"Thoroughly dominates global culture".. and that's a positive?

Have you read international research about medical outcomes in the USA? By far the highest costs with the worst outcomes among the top 30 countries.

And what about education? Very poor outcomes compared with most modern countries.

Oh, and who invented/created the internet?

I love America - that's why I'm here. But please cut out the nonsense comparisons and stick to taxation, which is what this forum is about and to which you contribute so helpfully.


----------



## maz57

BBCWatcher said:


> Have you read Canada's tax forms? Golly, they purport to levy taxes on assets that were never in Canada in the first place!



With one important difference which you conveniently forgot to mention. You must be a Canadian resident. Not a Canadian resident? No tax. Perfectly normal stuff. 

Canada's tax system is in alignment with the rest of the world. The US is the outlier.

By the way, I don't think Yanks are stupid; its their government that has a problem.


----------



## Nononymous

Bevdeforges said:


> Non-compliance, partial compliance or full compliance. Whatever you can live with and what lets you sleep at night. At least until there is some action in this area (which is unlikely to come within MY lifetime).


Worth remembering from time to time that I had an American friend living and working here for a few years who satisfied his US tax filing requirement by writing "0" on a 1040, stapling it to a copy of his Canadian tax return, and sending it off in an envelope. Never heard a whisper of protest.


----------



## Bevdeforges

Honestly, I wouldn't give them a copy of the "foreign" return. They wouldn't understand it anyhow.
Cheers,
Bev


----------



## Nononymous

Bevdeforges said:


> Honestly, I wouldn't give them a copy of the "foreign" return. They wouldn't understand it anyhow.
> Cheers,
> Bev


Oh it was not a good idea at all, except as a declaration of "I have nothing to hide" - my point was more that some days it sounds like you can get away with sending them just about anything.


----------



## BBCWatcher

ForeignBody said:


> Oh, and who invented/created the internet?


The Internet? ARPA, the U.S. Advanced Research Projects Agency, part of the U.S. Department of Defense, in turn part of the U.S. government. You know, that "stupid" government.  Vinton Cerf and Bob Kahn were the primary individuals at ARPA deserving of credit, though Welsh engineer Donald Davies at the U.K. National Physical Laboratory also deserves some credit. (NPL didn't invent or create the Internet, but Davies made an important technical contribution to ARPA's work and to ARPANET, the network that directly grew to form what's now called the Internet.)

The World Wide Web, one of the Internet's most popular applications/protocols? Tim Berners-Lee at CERN in Switzerland in 1989. However, he created a static Web site. Every visitor saw the same page at CERN unless and until somebody changed the Web content. Paul Kunz (with credit also to Terry Hung and Louise Addis) at the ("stupid" U.S. government-funded/CBT-supported) Stanford Linear Accelerator Center in California took his idea and then created the world's first Web site outside Europe (and probably the second in the world) in 1991. However, Stanford's was the first _interactive_ Web _application_, with dynamic content -- a simple search application, as it happens. The rest is, of course, history.

HTML, the Web's markup language, borrowed (ahem) heavily from IBM's GML which debuted in 1969 and is credited to Charles Goldfarb, Edward Mosher, and Raymond Lorie. GML begat SGML, an ISO standard from 1986. HTML came very directly from SGML. So TB-L had some help, but that's not a criticism.

TB-L ran his first Web site on the NeXT computer from a company headed by a certain American named...Steve Jobs. That computer ran an operating system known as UNIX, created by AT&T (with major contributions from UC Berkley). The NeXT computer sported processors by Motorola, dynamic random access memory invented by IBM, and Ethernet invented at Xerox PARC. All U.S. government funded.



> But please cut out the nonsense comparisons....


Maz57 invited the comparisons, and they are not by any means all (or even mostly) favorable. I certainly do not think either the Canadian or American government is "stupid" (his word).


----------



## BBCWatcher

ForeignBody said:


> "ALL the world's top ranking universities".. so you've never heard of Oxford or Cambridge and plenty of other British and French universities??


Partly fair point. Oxford, Cambridge, and (occasionally) University College (London) appear in the Top 10, such as Times Higher Education's and QS World's rankings. They don't rank at the top, and no other country has any institutions in the top 10.



> "Thoroughly dominates global culture".. and that's a positive?


For the United States, yes, of course. That cultural dominance generates significant wealth and income for Americans.



> Have you read international research about medical outcomes in the USA?


And I said nothing about that, nor did I suggest the United States is superior in every respect. But on many, many objective measures, the United States is doing quite well.

There's no need for Canadians, Finns, or Italians (as examples) to criticize the United States for being "stupid" (it's not) or vice versa.

In Finland, for example, if you violate a traffic regulation the amount of your fine will be set according to your income. The higher your income, the higher your fine. High income people hate this. They're wrong, and Finland's government is not "stupid." There's nothing "stupid" about CBT as a principle. Let each country democratically decide it's own revenue raising approaches, subject to the principles I outlined before.


----------



## HillbillyCanuck

BBCWatcher said:


> So "stupid" it's only the world's largest economy, has more of the wealthiest individuals on the planet than any other country (by far), has a lower national debt than Canada's (for example),


Really? The US has a national debt of $18.3 trillion US dollars. That's $57,142 per person. Canada's national debt is $808.3 billion US dollars or $22,655 per person. Source: World Debt Clock :: National Debt Clocks From Around The World


----------



## BBCWatcher

That's one way to look at it, but the more correct way for these (and many other) purposes is to look at debt as a percentage of GDP. (_Ethiopia_ has a lower per capita debt than either Canada or the U.S., but so what?)


----------



## HillbillyCanuck

BBCWatcher said:


> That's one way to look at it, but the more correct way for these (and many other) purposes is to look at debt as a percentage of GDP. (_Ethiopia_ has a lower per capita debt than either Canada or the U.S., but so what?)


From the same source:

US debt as a percentage of GDP: 105.13%

Canadian debt as a percentage of GDP: 44.32%

An excerpt from the first episode of HBO's The Newsroom is perhaps relevant here:
"https://www.youtube.com/watch?v=wTjMqda19wk"


----------



## BBCWatcher

HillbillyCanuck said:


> From the same source:


Which source?

....You may not be familiar with these statistics. Look at federal governments, and look at debt held by the public.

I'll wait.


----------



## BBCWatcher

OK, I'll give you a little more help.  FYPUGDA188S is the U.S. statistical series for gross federal debt held by the public as a percentage of GDP. (The St. Louis Federal Reserve publishes this series, for example.) In 1Q2015 that figure was just under 73.4%. Canada has different accounting standards, but you can get _fairly_ comparable statistics on gross federal debt held by the public as a percentage of GDP if you look around.

Other statistical measures are _perhaps_ defensible, but the specific one I describe is fairly widely agreed to be the "best" for these sorts of comparisons. (The IMF feels that way, for example.) And you started this dialog (badly) with debt per capita, not me. 

We haven't even mentioned GDP growth rates yet. I'll just note that. 

I really don't care, by the way. For some reason there are some very, very sensitive Canadians in this forum.  As I've already said (and will repeat), I think Canada is a perfectly lovely country. I'm not wild about Justin Bieber, but there's more to Canada than Bieber.


----------



## Bevdeforges

And there are those of us who have somewhat the same feelings toward the US: it's a "perfectly lovely country" except perhaps for certain individuals and a few idiotic policies that make those of us living overseas cringe whenever they are mentioned.
Cheers,
Bev


----------



## BBCWatcher

Yes! But this idea that the United States is on the brink of armageddon because it has (mild) CBT is crackpot, earth-is-flat stuff. It's one of many perfectly viable approaches to tax policy and (more generally) a sovereign's relationship with its citizens. _Obviously_. I see the United States has done pretty well for itself over the past century, a century of an unbroken (and usually more strict) CBT income tax regime.

Heck, even the United States has given up on the idea that Cuba will fundamentally alter its course after over half a century of U.S. economic sanctions. The U.S. is now in the process of normalizing relations with Cuba. I think anti-CBT zealots could at least acknowledge the reality that after a century of CBT the United States isn't actually doomed and isn't actually going to fundamentally change course.  (And Canadians had Cuba figured out half a century ago, to their credit. )

Anyway, whether you're for or against CBT -- and there are arguments on both sides -- there's also _reality_. That's the world I try to inhabit.


----------



## Bevdeforges

I don't believe anyone here is seriously suggesting that Armageddon is in the offing due to CBT. But on the other side, I don't think you can attribute various "successes" in the economic realm (which some of us see more as hegemony) to the CBT element of the income tax system. There are many other elements at play here. While I agree that it is unlikely that the US tax system is unlikely to change much in the coming years, that's not to say that there aren't some major advantages (and savings) that could be realized if the system became more RBT aligned.
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> I don't believe anyone here is seriously suggesting that Armageddon is in the offing due to CBT. But on the other side, I don't think you can attribute various "successes" in the economic realm (which some of us see more as hegemony) to the CBT element of the income tax system.


The latter is at least as plausible as the former, I point out, and indeed many people made and make the former argument. I make neither argument.



> While I agree that it is unlikely that the US tax system is unlikely to change much in the coming years, that's not to say that there aren't some major advantages (and savings) that could be realized if the system became more RBT aligned.


We agree here. Yes, with RBT 100% of the highest income Americans "residing" (definitionally) in comparatively low tax jurisdictions -- both currently resident overseas and those many more enticed overseas -- would enjoy _tremendous_ advantages and savings. The higher their incomes, the bigger their advantages and savings. That they surely would, yes indeed.


----------



## Bevdeforges

BBCWatcher said:


> We agree here. Yes, with RBT 100% of the highest income Americans "residing" (definitionally) in comparatively low tax jurisdictions -- both currently resident overseas and those many more enticed overseas -- would enjoy _tremendous_ advantages and savings. The higher their incomes, the bigger their advantages and savings. That they surely would, yes indeed.


I'm not talking about advantages to the taxpayers. I'm talking about advantages and savings for the Gummint. Reduced costs of enforcement and audit. Reduced staffing requirements based on fewer returns coming in - especially those with 0 tax liability. They've already called back the overseas IRS office staff, which has to be a savings at some level, if only in overseas perks paid. (Though with less overseas tax assistance available, I imagine there will be some drop in compliance as well as in the ability to follow up on those who choose not to comply.)

It's not free of charge to administer all that foreign bank reporting coming in, thanks to FATCA, and then there is the job of deciding what to do if the information coming in from the banks doesn't quite match what's on the tax return. Which discrepancies need to be followed up on, and which don't?

It would be really interesting to have the GAO whip up a cost-benefit analysis of some of the various alternatives to the current CBT system.
Cheers,
Bev


----------



## jbr439

Bevdeforges said:


> I'm not talking about advantages to the taxpayers. I'm talking about advantages and savings for the Gummint. Reduced costs of enforcement and audit. Reduced staffing requirements based on fewer returns coming in - especially those with 0 tax liability. They've already called back the overseas IRS office staff, which has to be a savings at some level, if only in overseas perks paid. (Though with less overseas tax assistance available, I imagine there will be some drop in compliance as well as in the ability to follow up on those who choose not to comply.)
> 
> It's not free of charge to administer all that foreign bank reporting coming in, thanks to FATCA, and then there is the job of deciding what to do if the information coming in from the banks doesn't quite match what's on the tax return. Which discrepancies need to be followed up on, and which don't?
> 
> It would be really interesting to have the GAO whip up a cost-benefit analysis of some of the various alternatives to the current CBT system.
> Cheers,
> Bev


What about that annual $1000 per kid "baby bonus" payment that USCs with kids can get? Shouldn't that be included in the savings category?


----------



## Bevdeforges

jbr439 said:


> What about that annual $1000 per kid "baby bonus" payment that USCs with kids can get? Shouldn't that be included in the savings category?


Not having kids, I didn't think of that! Yes, now I wonder how many overseas taxpayers claim that these days? 
Cheers,
Bev


----------



## HillbillyCanuck

BBCWatcher said:


> Which source?
> I'll wait.


Canada Debt Clock :: National Debt of Canada

US Debt Clock :: National Debt of United States

Some excerpts from the source's website:

Over 90% of our data is directly obtained from official government agencies and central banks. When this has not been possible we have used data from the CIA, The World Bank or Eurostat. This raw data is then processed through our algorithms which use, amongst other variables, the average 10 year interest rate paid on the debt to accurately calculate the current debt amount at the time you are viewing the debt clock. We believe our calculations are correct working from the data that we have collected.

This is the gross government debt, this means the amount of money (the repayment value) owed by government today calculated according to the SDDS 2014 and The Maastricht Treaty guidelines. In keeping with the aforementioned guidelines we do not subtract from the debt any financial assets the government may own. Please also note the debt figures do not take into account any government future payments e.g. pensions payable next year. Or business and private borrowing e.g. you buying a car with a loan, buying a house with a mortgage or a business buying a machine with a bank loan.


----------



## BBCWatcher

Bevdeforges said:


> I'm talking about advantages and savings for the Gummint.


All dwarfed by the loss of revenue. There are no net savings to the government (and to the American public it serves), only net costs. Quite big ones.



jbr439 said:


> What about that annual $1000 per kid "baby bonus" payment that USCs with kids can get? Shouldn't that be included in the savings category?


Yes, but only the net revenue matters. The Additional Child Tax Credit, a refundable tax credit, starts to phase out at no less than $110,000 of modified AGI (Married Filing Jointly). A household must have earned income to qualify and at least some of that income must not be excludable via the Foreign Earned Income Exclusion.

There are zero truly high income (or even upper middle income) Americans legally receiving that refundable tax credit due to the income phase outs. Those income phase outs also apply to overseas Americans, and since they are MAGI phase outs overseas Americans don't get to "double count" their FEIEs.

CBT generates significant direct net revenue for the U.S. Treasury, and its existence deters even greater revenue losses due to Monaco-style tax avoidance behaviors. This is just indisputable fact. I know RBT advocates don't like to talk about how to make up for both the direct and indirect revenue losses if their policy preferences are enacted, but, sorry, that's just inescapable reality. The primary purpose of a tax system is to raise revenue for government, period, and a CBT regime certainly does that.

As one clue how big the revenues are, in 2003 Republicans seriously considered reducing or eliminating the Foreign Earned Income Exclusion. At that time Congress estimated that eliminating the FEIE would have raised an additional $34 billion over 10 years. Adjusted for inflation (only, not including the increase in the population of overseas Americans), that tax break alone is worth, for comparison, about 3 Amtraks (America's national passenger rail system) for example. (Yes, America could have a lovely TGV-style high speed rail system within a decade or so if the FEIE were eliminated -- that'd be approximately the math.) Or almost 2 U.S. National Park Services. Just that single tax break! I just want to give you all a dose of reality that we're talking about very real revenues here, both direct and indirect. Many billions in direct revenues and (easily) tens of billions in revenue loss prevention.

So if you want to make the political argument that a cohort (a club that would grow! a lot!) of the very highest income Americans ought to have their U.S. taxes zeroed out -- and that's just how this works, this is very real -- and want to present a way to replace those billions in lost revenue and pay for tens of billions in tax avoidance per year -- go right ahead, and good luck to you. Also bear in mind that if you want to make these political arguments then everything is on the table, including a discussion about whether what is probably America's most generous tax break, the Foreign Earned Income Exclusion, ought to continue to exist at all -- revisiting 2003's debate. "Be careful what you wish for."

I'm sorry, the reality is that Congress simply does not believe that one of America's most pressing tax policy problems is that the very highest income Americans (whether overseas or not) are paying too much, and Congress certainly is not interested in creating new tax revenue losses that would, as one consequence, dramatically boost real estate in St. Kitts and Nevis. In fact, Congress (and other governments' democratically elected bodies) are starting to focus more seriously on rising income and wealth inequalities that have reached or in many cases surpassed Gilded Age levels. A switch from CBT to RBT is _entirely_ inconsistent with today's new policy concerns.


----------



## jbr439

BBCWatcher said:


> All dwarfed by the loss of revenue. There are no net savings to the government (and to the American public it serves), only net costs. Quite big ones.
> ...


Are there published figures that can be used to validate this assertion?


----------



## BBCWatcher

jbr439 said:


> Are there published figures that can be used to validate this assertion?


The Congressional Budget Office (CBO) and Joint Committee on Taxation (JCT) would assess the costs of any proposed tax policy changes. As far as I know they haven't formally estimated an RBT basically because they aren't routinely asked to estimate "crazy" revenue-reducing ideas. (Just as nobody in Congress bothers to ask the Department of the Agriculture whether a drought _will_ reduce agricultural output. Some things are pretty obvious and not particularly controversial.) Those who advocate the "crazy" idea don't want the truth revealed (revenue loss, probably large), and the "sane" members of Congress (most of them) don't want to waste the CBO's time on crazy estimates for policy changes that aren't even under consideration.

But you can get some clues at the margins. As I mentioned, CBO (I assume) estimated the additional revenue that would be raised if the FEIE were eliminated, and back in 2003 that figure was $34 billion over 10 years. (A no less crazy idea than RBT, by the way. Certainly less crazy considering Congress actually considered that idea, fairly recently.) The only other recent estimate I can find slightly related to CBT v. RBT is that CBO apparently estimated the revenue impact of FATCA in 2010. FATCA was/is a change in financial reporting requirements (for both financial institutions and some individuals) without any change in tax rates, rules, or thresholds. FATCA alone was projected to raise a net $8.7 billion in revenue to the Treasury over 10 years. (Of course that additional revenue will be collected from both residents and non-residents.)

J. Richard Harvey, Jr., a professor at Villanova University who has estimated the tax incidence of the U.S. CBT regime on overseas Americans (at about 6% -- compared to about 54% income tax incidence among U.S. residents according to the Tax Policy Center), says this (in a policy paper he wrote in 2013): "In summary, after considering behavioral considerations, adoption of a residence-based tax system without a departure tax could be a major tax revenue loser." He then looked at whether it would be possible to craft a revenue-neutral RBT even with a hefty departure tax ("be careful what you wish for"), and here's what he says: "I will defer to JCT as to whether a revenue-neutral proposal could be crafted over the typical ten-year budget period, but my suspicion is it could be. The reason is that such a proposal would likely include large one-time transition revenue sources (e.g., voluntary disclosure initiative and Departure Tax). However, over the long-term, tax revenue is likely to decrease from the adoption of a residence-based tax system."

So no matter how you slice it, Harvey says RBT is a revenue loser unless you pretend that the world ends within 10 years and (mainly) you introduce a new, broad, and hefty Departure Tax. _How much_ revenue loss depends on the details (like thresholds and rates for departure taxes), but I don't think anybody seriously believes that RBT would be free or even close to that....

....Except "earth is flat" Citizens Abroad that claims that somehow, miraculously, _their_ RBT formulation would actually increase tax revenues. Harvey analyzed CA's RBT proposal, and suffice it to say he's skeptical. Here's what he says: "However, one suspects many members of Congress will not support the CA Proposal once they better understand its details. Specifically, the proposal could lose revenue and allow wealthy U.S. citizens to avoid substantial future U.S. taxes by virtue of either moving their permanent residence overseas, or by already residing overseas."

As far as I know Citizens Abroad's RBT proposal went nowhere fast, and Congress didn't even score their proposal.

I don't assume Harvey is infallible or the only U.S. tax expert (or even the best one), but at least I find his 6% tax incidence estimate to be believable and plausible.


----------



## Bevdeforges

They propose elimination of the FEIE (section 911 of the tax code, oddly enough) every 5 or 10 years. And the estimates of all the additional revenue that will bring in are simply incredible (in the "not credible" sense of the word). 

You may find your figures on the amounts of revenue coming in from overseas taxpayers to be indisputable facts, but I doubt anyone else does. Anyhow, you may want to take a look at the IRS Tax Stats website: Tax Statistics

Lots of numbers to play with here! It appears that overseas individual income tax collections in 2014 amount to 0.26% of total income tax collections. I really wonder if overseas enforcement efforts consume a mere quarter of a percent of the IRS budget. And if you divide the total income tax collections from overseas by the number of returns filed, you get something like $28 average proceeds per return. Someone out there is paying a whopping load of income taxes to make up the difference for my past 25 years of $0 returns. And, I wonder how much it costs the IRS to process a return.

Unfortunately, as with so much back in the Old Country these days, it's all based on the "perception" of the issue. The Republicans have their knickers in a twist over voter i.d. too - yet actual cases of voter fraud are still somewhere in single or double digits over the last decade. So they legislate a "solution" to a problem that doesn't exist - with all the expense to the taxpayer to protect them from nothing.
Cheers,
Bev


----------



## BBCWatcher

> Anyhow, you may want to take a look at the IRS Tax Stats website: Tax Statistics


Yes, let's!

The IRS reports that in tax year 2011 filers excluded $28 billion in foreign earned income from U.S. taxation, after accounting for deductions. That doesn't include the adjunct Foreign Housing Exclusion. That's not a _trivial_ revenue base, is it? I'd say there's a couple or three billion per year in additional revenue raised if the FHE/FEIE were abolished, even accounting for the FTC. What does your calculator tell you?



> It appears that overseas individual income tax collections in 2014 amount to 0.26% of total income tax collections.


Yes, that's the _direct_ number, and that's equal to about $4.73 billion. That's 3 times Amtrak's federal funding _request_ for reference. That number does not include perfectly predictable tax avoidance behaviors if the statutory rates were zeroed (RBT), nor does it include additional net revenue reasonably collectible if the IRS were properly funded. It does include the current tax preferences (such as the FEIE) available to overseas Americans.

To address your hypothesis, no, the IRS is not spending ~40% of its total budget on overseas Americans. (We can dream.)



> Someone out there is paying a whopping load of income taxes to make up the difference for my past 25 years of $0 returns.


I don't know about "whopping load" _relative to income_, but in absolute terms I pay a substantial amount of U.S. income tax on non-U.S. source income. As I said, I appreciate all the support from forum members arguing to reduce my U.S. tax on non-U.S. source income to zero.



> And, I wonder how much it costs the IRS to process a return.


As a rough estimate, the IRS processes about 240 million tax returns. The total IRS budget is about $12 billion, so the average cost per return, fully burdened, is about $50. If you take out pre-filing taxpayer assistance and education (which is mostly fixed cost), enforcement, and "business services modernization" then what I'd call the corrected fully burdened average cost per return is about $22.30. That figure still includes all the mostly fixed costs for real estate, IT, support staff, etc. The marginal cost per return is comparatively tiny, particularly for individual returns.

I think your voter ID analogy is a bad one. Tax revenues exist and are important, and tax avoidance behavior is real and often predictable, as it is in this case.


----------



## Bevdeforges

Figures don't lie, but liars sure can figure. 

I crank numbers for a living, so I know how folks can skew the data to show just about anything you want to show. I suppose you could also calculate how many of those 147million returns from "overseas" would simply suck it up and make that one-time payment of $2350 to be done with it all, too.



> That number does not include perfectly predictable tax avoidance behaviors if the statutory rates were zeroed (RBT), nor does it include additional net revenue reasonably collectible if the IRS were properly funded.


Though to be fair, it also doesn't include potential "additional net revenue reasonably collectible if the IRS were properly funded" from evasive taxpayers within the US. The US tax system is still heavily reliant on voluntary compliance. Always has been.
Cheers,
Bev


----------



## BBCWatcher

Bevdeforges said:


> Figures don't lie, but liars sure can figure.


Bev, you're being disrespectful, with all due respect. I'm making an earnest effort to determine the truth as best as possible. As I've said and I'll say again, I genuinely appreciate all this energy and enthusiasm to reduce my U.S. tax bill, truly. But I'm wise enough to keep my own self-interest separate from what's reality, including political, statistical, and financial reality. And tax revenues support civil society, quite simply.



> I suppose you could also calculate how many of those 147million returns from "overseas" would simply suck it up and make that one-time payment of $2350 to be done with it all, too.


Where are you seeing a statistic of 147 million returns from overseas? That would be equal to about 61% of U.S. tax returns.

Well, the Foreign Earned Income Exclusion was suspended for a period of time in the late 1970s, and renunciation of U.S. citizenship was either free or cost less than $2350. I've seen no evidence of even a spike in renunciations in the late 1970s. Have you?



> Though to be fair, it also doesn't include potential "additional net revenue reasonably collectible if the IRS were properly funded" from evasive taxpayers within the US.


Are we agreeing that IRS funding should be increased, substantially?


----------



## Bevdeforges

Sorry, that was 147 million returns in total for 2014. But going back to the site, I find all sorts of other goodies I'll have to play with when I get a bit more time. Sorry, gotta run, but more fun and games later!
Cheers,
Bev


----------



## BBCWatcher

Note that there are various definitions of "returns," so you have to be a little careful about that because whatever definition you (or the IRS) chooses will influence the total number. Is IRS Form 1040-ES, for example, a "return"? I'd say yes, but what are you trying to count?


----------



## Nononymous

Of minor interest to Canadian readers:

I just received some forms from the people who handle my investments (affiliated with one of the major banks). Their updated personal information has yes/no indicators for Canadian citizenship (with SIN) and US citizenship (with SSN). Of note: they only ask to identify US citizens, not US persons for tax purposes; no questions about place of birth. Just an internal record for the bank, then, to flag potential FATCA candidates.

Thanks to a less-than-truthful answer to the broker a few months ago, my pre-filled forms only said yes to Canadian citizenship, not US citizenship. I must have failed to notice that when I signed them...


----------



## BBCWatcher

A U.S. place of birth is not quite equal to U.S. citizenship. Foreign diplomats' children born in the United States are not U.S. citizens from birth, in particular.

That also likely harms plaintiffs' Canadian Charter-based lawsuit, by the way. U.S. tax personhood is not actually the same thing as national origin, and citizenship is different than national origin again. (And obviously citizenship-based discrimination is legal in Canada and elsewhere. Else Canada would have to allow non-citizens working rights, for example.)


----------



## Nononymous

BBCWatcher said:


> A U.S. place of birth is not quite equal to U.S. citizenship. Foreign diplomats' children born in the United States are not U.S. citizens from birth, in particular.
> 
> That also likely harms plaintiffs' Canadian Charter-based lawsuit, by the way. U.S. tax personhood is not actually the same thing as national origin, and citizenship is different than national origin again. (And obviously citizenship-based discrimination is legal in Canada and elsewhere. Else Canada would have to allow non-citizens working rights, for example.)


We shall see. 

Incidentally, it would be of service to someone on another forum if one could find an instance of US citizenship not being granted to children born in the US if one of their parents was serving in the military, on some official assignment. The law is pretty vague, from what I could find. Citizenship is not granted to "representatives of the sovereign" - commonly taken to mean diplomats, but could well be broader. The few things I could find actually describe the reverse situation - diplomats in the US getting citizenship for their children because the US doesn't record this status on the birth certificate.


----------



## BBCWatcher

Nononymous said:


> Incidentally, it would be of service to someone on another forum if one could find an instance of US citizenship not being granted to children born in the US if one of their parents was serving in the military, on some official assignment. The law is pretty vague, from what I could find. Citizenship is not granted to "representatives of the sovereign" - commonly taken to mean diplomats, but could well be broader.


The Fourteenth Amendment uses the words "subject to the jurisdiction thereof," and I would have to assume that one jurisdictional parent is entirely sufficient for that constitutional right to apply. (Maybe there's some jurisprudence on that point?)

Otherwise, if the ambassador has an affair with a "local," their child born in the United States would not be born a U.S. citizen? No, I don't think that's how it works or could work. (Do they flip a coin? )


----------



## Nononymous

BBCWatcher said:


> The Fourteenth Amendment uses the words "subject to the jurisdiction thereof," and I would have to assume that one jurisdictional parent is entirely sufficient for that constitutional right to apply. (Maybe there's some jurisprudence on that point?)


Sorry, that requires mild parsing. In other words, if the Canadian father is a military officer on assignment in US, his child born in the US is not US citizen? (Or do you mean that because the Canadian mother isn't also in the military, the child is a US citizen?)

A quick Google search found next to nothing, but I didn't look very hard. The individual in question - not me, honestly - needs only to convince their bank of this, not a citizenship judge.



> Otherwise, if the ambassador has an affair with a "local," their child born in the United States would not be born a U.S. citizen? No, I don't think that's how it works or could work. (Do they flip a coin? )


Not what I meant. It appears that children born in wedlock to two foreign diplomat parents with diplomatic passports were obtaining US citizenship to which they were not entitled. If I remember correctly, hospitals don't check for diplomatic passports and/or there's no provision to make such an indication on the birth certificate, which means nothing prevents that child from later applying for a US passport.


----------



## Bevdeforges

It's more than just what's in the Constitution. For anyone interested, there is an interesting article in Wikipedia under Birthright citizenship in the United States. https://en.wikipedia.org/wiki/Birthright_citizenship_in_the_United_States
Cheers,
Bev


----------



## Nononymous

The Wikipedia article doesn't say anything specifically about diplomatic/military children, but it does contain this little gem:



> Another problem arises where a Canadian child, born to Canadian parents in a US border hospital, is treated as a dual citizen and added to the United States tax base on this basis despite having never lived, worked nor studied in that nation. While Canadian income tax is only payable by those who reside or earn income in Canada, the US Internal Revenue Service taxes its citizens worldwide.


----------



## BBCWatcher

Nononymous said:


> Sorry, that requires mild parsing. In other words, if the Canadian father is a military officer on assignment in US, his child born in the US is not US citizen? (Or do you mean that because the Canadian mother isn't also in the military, the child is a US citizen?)


I simply mean that if one parent is "jurisdictional" then that has to be enough for 14th Amendment purposes. I would have to think.

I would also have to think that a random Canadian bank's officer would naturally assume, by default, that birth within United States territory equals U.S. citizenship. Any argument to the contrary is already challenging default assumptions.



> Not what I meant. It appears that children born in wedlock to two foreign diplomat parents with diplomatic passports were obtaining US citizenship to which they were not entitled. If I remember correctly, hospitals don't check for diplomatic passports and/or there's no provision to make such an indication on the birth certificate, which means nothing prevents that child from later applying for a US passport.


Correct. But let's keep the operational, practical limitations separate from constitutional rights. Understandably, exceptions to the 14th Amendment (among children born in U.S. territory) are so rare that hospitals, municipalities, and states don't ask, "Do you two perfectly lovely parents both have diplomatic status?" And nobody -- well, OK, maybe a few lunatics  -- is particularly bothered by that operational reality.

Within the universe of fraudulent U.S. citizenship claims, this particular fraud pattern wouldn't even rank.


----------



## Nononymous

BBCWatcher said:


> I simply mean that if one parent is "jurisdictional" then that has to be enough for 14th Amendment purposes. I would have to think.
> 
> I would also have to think that a random Canadian bank's officer would naturally assume, by default, that birth within United States territory equals U.S. citizenship. Any argument to the contrary is already challenging default assumptions.


Sorry for the repeated clarification: one parent in military = no US citizenship?

I'm not really finding fault with the bank employee's interpretation, just trying to save someone a bit of grief. His being able to convince the bank may be a chore, or may be easy - no idea. 



> Within the universe of fraudulent U.S. citizenship claims, this particular fraud pattern wouldn't even rank.


Oh I'm not complaining. I found it interesting that the only information I could dig up on this subject was going in the wrong direction, as it were - obtaining citizenship under false pretenses, as opposed to proving you don't have it.


----------



## BBCWatcher

Nononymous said:


> Sorry for the repeated clarification: one parent in military = no US citizenship?


I think I've been abundantly clear, but I'll try again: one parent, either parent, any parent who is "jurisdictional" + U.S. birthplace = 14th Amendment citizenship rights apply, I would have to assume.

Leave all that aside, though. Most people think that U.S. birthplace = U.S. citizenship, period. Exceptions (both parents foreign diplomats) aren't even contemplated much less known. So somebody arguing that U.S. birthplace <> U.S. citizenship are already challenging common presumptions around the world.

So I'd vote for "chore," by default. Ultimately, likely unsuccessful because both the default understanding and the facts lead to U.S. personhood.

Nononymous, _avoiding_ U.S. citizenship is already "weird," statistically speaking. There are nearly one million individuals choosing to naturalize as U.S. citizens every year and about 3,000 U.S. citizens and green card holders choosing to terminate their U.S. personhoods each year. Heck, there are at least 10 million residents of the United States who do not have the legal right to live in the United States. "Two of these numbers are not like the other." U.S. citizenship -- and even non-citizenship residence!(*) -- are in high demand, quite simply, and it's not actually surprising that some foreign diplomats want their children to be U.S. citizens. Children aren't routinely born into the 25% marginal tax bracket.  And most countries aren't as prosperous as the United States (or Canada, for that matter).

So.... A child with only a passport from Tanzania, or a child with passports from both the United States and Tanzania? (I'm picking a random country example.) Why would the latter be at all surprising? The parental desire is perfectly _un_surprising. There are some highly valued citizenships in the world, and U.S. citizenship is one of them.

(*) Southern Europe is also experiencing this phenomenon right now as migrants embark on extremely perilous voyages across the Mediterranean, mostly landing in Italy. Italy has ~12% general unemployment and one of the highest tax rates in the world. "So what?" It's safe and relatively prosperous, and that's plenty good enough.


----------



## Nononymous

BBCWatcher said:


> I think I've been abundantly clear, but I'll try again: one parent, either parent, any parent who is "jurisdictional" + U.S. birthplace = 14th Amendment citizenship rights apply, I would have to assume.


The confusion lies in your use of "jurisdictional" - I don't know what you actually mean by that.

Are you suggesting that although the father was a Canadian military officer serving in the US on assignment, the child obtains US citizenship because the Canadian mother was not there in an official capacity?

Conversely, a child born to a foreign couple where one parent works as a diplomat does not obtain US citizenship because the non-working parent also has a diplomatic passport?

This seems like a rather thin distinction. 

I won't take up the rest of the argument - I'm not questioning some people's desire to acquire US citizenship. In this gentleman's very specific case, however, "avoiding" US citizenship is a sensible course of action, as it will save him a world of paperwork, and possibly money. Yes, the bank will take some convincing, because it challenges common assumptions.


----------



## BBCWatcher

Nononymous said:


> Are you suggesting that although the father was a Canadian military officer serving in the US on assignment, the child obtains US citizenship because the Canadian mother was not there in an official capacity?


Not quite. The mother in that hypothetical is clearly subject to U.S. jurisdiction, so you never get past the mother to decide whether or not the father is subject to U.S. jurisdiction. (He might be.)

The Fourteenth Amendment does not say "in a foreign official capacity." It says what it says.



> Conversely, a child born to a foreign couple where one parent works as a diplomat does not obtain US citizenship because the non-working parent also has a diplomatic passport?


Yes, that's a widely accepted interpretation of the Fourteenth Amendment (as a legal matter).



> This seems like a rather thin distinction.


And so constitutional rights (and other laws) often are. There are many, many aspects of life -- and physics, chemistry, etc. -- that are "fine" but still important distinctions.

Consider Pennzoil v. Texaco, for example. Pennzoil ended up getting $3 billion from Texaco because Texaco violated a _handshake_ agreement between Pennzoil and Getty Oil. It was probably the most expensive handshake in history (for Texaco), but the courts fully recognized that fine distinction.


----------



## Nononymous

I find that peculiar in light of women's general historical non-personhood - that the wife's diplomatic passport might be the decider, rather than the husband's status. However, as I said, this gentleman isn't persuading a citizenship judge, he's only persuading his bank not to tick the FATCA box. I wish him the best of luck, because he's a poster-child for accidental unwanted citizenship, retired after living and working all but the first three weeks of his life in Canada, with all kinds of potentially ugly non-RRSP investments that could involve heaps of paperwork and possibly tax payments.


----------



## BBCWatcher

Nononymous said:


> I find that peculiar in light of women's general historical non-personhood - that the wife's diplomatic passport might be the decider, rather than the husband's status.


I don't.

The Fourteenth Amendment does not refer to gender. Here's what it says: "All persons born or naturalized in the United States, and subject to the jurisdiction thereof, are citizens of the United States and of the State wherein they reside."

It's up to the U.S. Supreme Court to interpret what "subject to the jurisdiction thereof" means. They can also change their minds. In Plessy v. Ferguson, the Supreme Court made a particular decision about what the Fourteenth Amendment meant. They changed their minds. 

I have to assume that whether the mother or the father is the ambassador (and whether the mother or the father is the "local") would not make any difference whatsoever to a modern Supreme Court's decision if the child of a jurisdictionally "mixed" household is born in the United States. There may or may not be case law on that point.


----------

