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Friday, October 12, 2012

Best Links for the Citizenship-based Taxation/Renunciation FUBAR

I just replied very tardily to a very good question left in response to this post, How I Really Feel About Citizenship-based Taxation.  The person wanted to know what exactly were the tax implications of renouncing U.S. citizenship.  The honest answer is that I am aware that there are important tax implications to doing this but I don't really know the particulars - it all depends on each individual's situation.  I did provide a link however to a source of information that I trust and it struck to me as I was typing that this would be a good time to give a few links that I rely on to keep up to date on this topic and FATCA as well.  This list is not exhaustive and I'm sure there are other sites of interest out there but these are the ones I feel very comfortable recommending to you.

You will notice that not one of these sources is a U.S. government website and I find that terrifying.   Clear as mud, they are and what I cannot understand after I have read until my eyes are bleeding, I do not trust.   Perhaps that means I'm the village idiot but since I 'm hearing similar comments from people a lot smarter than I am, I'm inclined to think that there is indeed a "failure to communicate" here.

Hopefully you will find this very modest list useful/helpful.  And please feel free to add more links to the list in the Comments section.


These are places to get the facts (or the best interpretation).  These are either first-hand experiences or advice from professionals.  Not a substitute for real personalized legal advice but good for getting a minimum amount of information before you make the call.

Renunciation of U.S. Citizenship:  A Web Guide:  This is where I started many months ago and it remains, I think, a point of departure for anyone delving into this topic for the first time.  It was written by two people who went through the process and it's very clear.  Read it carefully and thoroughly as there are gems hidden in places like the FAQ.  It has a section on the tax implications of renouncing and I suggest that you read that and then go to Phil Hodgen's blog.

Phil Hodgen’s Blog:  The author is an international tax lawyer.  The site is, well, rather dense and there are lots of comments and questions.  Hodgen does a great job answering queries but I would suggest that you just start reading as it is quite likely that your particular question about citizenship-based taxation, renouncing U.S. citizenship, FBARs and the like has already been answered.  This is a good one to subscribe to (Jello-O Shots) as Mr. Hodgen is quite witty, a good writer, and his advice is pertinent and clear.  He is in the process of writing an ebook about renunciation and has a newsletter with draft chapters.  I have looked in vain for the link to sign up for it - if anyone has it, please let me know so I can add it here.

Steven J. Mopsick:  Another lawyer but he was at one time with the U.S. Internal Revenue Service (IRS).  Again, this is a fellow who is clear and able to write for a general audience.  He frequently links to articles he has written that are available for free on the Net.  I read them and feel myself progressing from idiot to moron on many subjects and I thank him for the enlightenment.

Note to U.S. Government:  For ideas on how to correct this communication problem you have with Americans Abroad, you have only to READ the comments on the above blogs to see where people are having problems understanding what it is you want.   People are desperate for information and confusion reigns.


Isaac Brock Society:  Lots of great information on this site and I was originally going to put it under "Blogs" but I honestly think that the real power behind this site is the community and all the people who are willing to share their experiences, post links and organize responses to on-line articles.  It is really remarkable.  Please be aware, however, that the discussion is a free for all - free speech on steroids and folks can say whatever they like and, believe me, they do.  I enjoy it but it is not to everyone's taste.  For another community that is quite good....

Maple Sandbox:  Very similar to Isaac Brock and you'll see many of the same names but they have community standards for what is and isn't acceptable to post on the site.  The Rules are here.

I like both and I have contributed in the past (and hope to do so again in the future health permitting) to the Isaac Brock Society.  They are both good places for people to talk about how they feel about what's going on and I think that's important because...

Note to U.S. Government:  These sites represent the tsunami of fear and anger just reaching America's shores.   No matter that the numbers are few and that the water is only up to your ankles - I think their impact is far greater than you might realize.  I recently posted this on the Sandbox:

But what I see as THE change that IBS and sites like this one have contributed to is the breaking of certain taboos – things we didn’t talk about before because, well, it just wasn’t done. Give up U.S. citizenship? Until very recently it was a rare U.S. citizen abroad willing to even contemplate it in public. It was the big “no no” – the sort of thing that if you even hinted at it at a party some people would fall silent and others would shoot back at you, “Americans never EVER give up their citizenship!” This of course was totally untrue but it was a myth that most of us believed in because we had little or no information to contradict it.
And now we have all these people coming out and saying, “yeah, I gave up my citizenship years ago” or “I’m thinking about it” and giving their personal cost/benefit analysis of the situation. And, guess what? The sky isn’t falling in and the discussions just keep getting franker and more open every day. It is quite the phenomenon.
I think the impact of all this is greater than many realize. A U.S passport had an almost magic aura to it once upon a time. It was perceived as being incredibly valuable and something to hold onto preciously. That’s changing every day in every way as U.S. citizenship is being toppled from its lofty pedestal and becoming just another nice citizenship to have if one is willing to accept some of the downsides (that pesky taxation business).
This may have been inevitable as U.S. relative power declines in the world but I think frank discussions and the willingness of so many to simply renounce is accelerating the slide. It is “rightsizing” with a vengeance. And this makes homelanders very uncomfortable because as much as they like to say sometimes, “don’t let the door hit you on the way out,” the reality is that something they have, are proud of, want to keep, and care deeply about is becoming less valuable. And to the extent that citizenship (and that pretty blue passport) represents membership in a political community, a democratic experiment that began over 200 years ago, the lowering of its perceived value says a lot about the attractiveness of America and its ability to wield soft power in the 21st century.

Only one here and it's one I follow religiously.

@FATCA_Fallout:  Best round-up of all the articles on the Net about FATCA, citizenship-based taxation, renunciations and so on by Just Me.  He is a frequent poster at Isaac Brock and participates in so many discussions on many sites that one has to wonder when he gets any sleep.  For his tireless efforts someone should give this man a medal.  I for one am deeply grateful to him for all he's done to bring this issue to the media's attention.  One person can make a difference especially when that person has the persistence of a pit bull. :-)

Any others, messieurs-dames?


Anonymous said...

Awesome! I love your entire comment following the communities section. IBS is having a big, positive impact. I think you hit the nail on the head regarding IBS' bigger impact in breaking down stigma of renunciation and making it something to talk about, consider, and do. And also that you get to the underlying issue of why defensive homelanders are reacting so defensively about renunciations--it's challenging their beliefs about the US--and demonstrating the seismic shift of the US' waning soft power in the World.

Ironically, the US' softpower would remain stronger if the US federal government treated American expats better by ending citizenship-based taxation, the myriad burdensome filing requirements, and the cloud of draconian penalties and threats made toward US expats abroads. And even the US domestic economy would be stronger by encouraging America's sales force, the expats, to go abroad while also reducing unemployment domestically. But Congress doesn't get it at all. And as it stands now, the US government is only brewing resentment amongst Americans abroad, which has the opposite effect as we are a vocal group abroad. And I think that we, as expats, affect America more than Congress can even imagine.

Rosy said...

Hi again, I'm going to the US Embassy tomorrow to try and get some information on both the FATCAT-FUBAR situation and how it compares to renunciation and the other evenetual tax paperwork involved. (Hey Guys, Remember the Paperwork Reduction Act ??). IF I can get any info, that is. I don't feel one should make a renunciation appointment unless all the (tax) papers are filled out first, because it seems appointments are long to come by. And some of FATCAT starts to go into effect on next January 1st (Happy New Year Everybody !) So I plan to come back and report here, step-by-step, if that helps anyone. Cheers!

Victoria FERAUGE said...

@anonymous, I got some insight recently into that defensiveness. I came across a comment from a homelander on another site. He said that we deserved what we are getting after "having abandoned us." Wow. A lot of emotion around that comment. I was talking to another homelander who asked just how much I would be willing to pay to keep my US citizenship and was terribly hurt and very angry when I replied (as honestly as I could) about 200 dollars a year given that I receive no services from the US and already pay plenty of taxes in my host country. I really think we need to start having these kinds of conversations with the homeland. US citizenship is clearly not worth what it was perceived to be worth in times past. Just look at the naturalization numbers in the US that have been declining. I agree with you that the impact of people renouncing and the anger of those (like me) who are still hanging on is not in the best interests of the US. Like it or not when our friends, families and colleagues here in our host countries want to hear the voice of America they look to us. What they are hearing now is much less positive than what they would have heard just a few years ago.

@Rosy, That would be WONDERFUL! Yes, please do and I'm sure many would benefit from your passing along the info. Good luck to you and I hope it goes well. All the best.

Rosy said...

FBAR/POSSIBLE RENUNCIATION FIRST HALF-STEP: Hi, I'm back and as promised, here's my account of what happened at the embassy this morning. Sorry, it's long but it may serve others. I'll take it in order:
RENUNCIAITON PROCEDURE: Yuo can only get an appointment with a Consul using the online appointment calendar. Now the website has no reference to renunciation procedures, not even if you type it or anything similar in the search bar. Guess they don't waznt to give that type of info too easily. Anyhow, the online calendar has 4 reasons to check, and none refer to renunciation, so you have to use "others". Now, if you need filing info to bring to your appointment, it's simply unavailable. You have to go the appointment with the only document you can fill out beforehand, and probably have to go back again. At the embassy, I could obtain no info about it at all. So I proceeded to the IRS:
2) IRS and FUBAR: Despite the info on "walk-in tax assitance" you cannot see anyone. You have to use the phone in the main hall, with no table to write info on. The intrerview takes place that way, wihtin possible earshot of others. Anyhow, I must say that I got a really nice person whose name I shall not cite, because I don't want her/him to get in to trouble for having been so understanding. Is it a ploy? Don't think so. I explained my own complicate circumstances. I asked about the Overseas Compliance thing and The Person as I will call him/her first said she/he didn't know about it, then suddenly told me not to even try, as it's really for millionaires, mostly US residents, who have cheated a lot and may be subject to criminal prosecution. That possibility immediately cancelled forever out of my mind, I confessed but succinctly, given the lack of privacy and The Person's hurry to get to a meeting, and The Person said I could turn in fewer FBARs and only one 1040. I'm aware I'm already saying too much here. Anyhow, the term "lunacy" for FATCAT was used, and The Person is well aware of the banking problems associated with it here for us. The Person even cited the remarkable action of AARO. Since The Person had to get to a meeting (so don't trust the times given on the website) I couldn't ask about - horror of horrors - possible fines or renunciation procedures. But my guess was that they have so much paperwork that the thing might be negotiable upon interview. I mean, they don't really want to deal with 6 FUBARs for evey damned account you and your dog may have here, and other years' worth of 1040s. My advice for now MAYBE, but I may change my mind during the night - better to go for it while somebody understanding is there. The more who do it, the more they have to process, and the more lenient they may be just to get it all out of the way. Remember, it's the big fish they want. And I did mention that most of us are not big business people but training others to do business with the States. True or less so, that's an argument they'll listen to. Ther renunciation, if it happens, could also be a bit easier to obtain, since you'd already be ok with the IRS. If anybody wants to communicate personally about this, write to me at, but only if the mails remain private, are immediately erased, never forwarded and never published anywhere. Thanks for reading !

Just me - FATCA_FALLOUT said...

Thank you for the acknowledgement, but sometimes that persistence does get you a tired jaw from hanging on too long. Sometimes I think I should just drop the bone, and move on to another delicious subject, like tweeting about Huff Posts "Disturbing Details About Britney Spears about to Be Revealed" It would get more followers! :)

Anonymous said...

@ Rosy
Dear Rosy, I wish the best for you as I know, from personal experience, how difficult and heart breaking the renunciation decision is.

I would like to comment however because I feel the need to caution you and others.

I personally believe it is complete folly to link anything to do with your renunciation visits, to the tax situation. You should not mention taxes,ask for assistance, consult with their advisors at the embassy when you are there for renunciation, whether first or second visit. Get your tax information from qualified sources and if possible tax professionals, not from "nice people" at the IRS arm sitting in the embassy.

Secondly, it is a known tactic for tax inspectors, insurance inspectors, detectives and the like to put on a "good guy" act to induce you into feeling comfortable and disclosing perhaps things that are not in your interest. Again seek qualified advice and don't think "this doesn't apply to you" because even if you are not rich the 10,000$ penalties are there and waiting.

Rosy said...

Yes, I'm fully aware of the pitfalls, and will, of course, seek professional advice - if I can find where to go for it for a reasonable price. The other problem is that this FATCAT business is making a lot of people rich. The Internet is full of software companies asking "Are you FATCA ready?", not to mention the tax accountants and lawyers licking their chops over this thing. It really made be that the people at the Embassy are in negotiating mode, given the mess they also have to deal with. The whole business is unworkable - but unfortunately, aside from the petitions, there doesn't seem to be any drvie to get the thing up to the Supreme Court. We are truly without representation. Thanks for the advice. I'm taking it very seriously.

Anonymous said...

Thank you for the expat links!

The FATCA storm is brewing for Americans abroad, many of whom unfortunately have no idea its coming.

Once again, thank you for the links.

Tim said...

Is/Was Dave Reichert of Washington State your member of Congress? It looks like you wrote a big letter to Geithner and Schulman on FATCA. I am curious why he of all people would do so? Did you bombard him with letters?

Victoria FERAUGE said...

@Rosy, Thanks so much for the report. I thought the business about the "walk-in tax assistance" was unbelievable. You really have to use the PHONE? What is going on with that?

@Just Me/Marvin, Credit where credit is due, mon ami. You do great work and I am really grateful for your efforts.

@anonymous, You are very welcome. Yep I'm still amazed at how many Americans abroad have no idea what's coming.

@Tim, thanks for the link. No he's the rep from Issaquah (mine is McDermott the rep for Seattle). Interesting that he is getting involved. Wonder if he has Microsofties or other IT workers in his district. I tried to write him and thank him for his interest but, like some US politicians, he doesn't take any mail from outside his district. So no way to contact him unless it's by snail mail.

Victoria FERAUGE said...

@Time, I'm an idiot. Instead of trying to reach Reichert why don't I wrote a quick note to McDermott pointing out Reichert's good work and asking him to support the effort? I'm going to do that RIGHT NOW.