21.1K
Downloads
295
Episodes
Discussion about current events, culture, independent candidates, business, education, travel, death and taxes, global mobility, citizenship and residence by investment options, Americans abroad, FATCA, CRS, U.S. citizenship renunciation, Green Card abandonment, citizenship taxation, PFIC, GILTI, foreign trusts, I-407 and more ...
Episodes
Wednesday Apr 19, 2023
Wednesday Apr 19, 2023
April 17, 2023 - Participants include:
Virginia La Torre Jeker - @VLJeker
John Richardson - @Expatriationlaw
Prologue - Some Penalties are "assessable" and some are not
An excerpt from the 2023 Taxpayer Advocate Report included a discussion of "assessable" penalties which included:
"These “assessable” penalties are generally those that are due and payable upon notice and demand. Unlike penalties subject to deficiency procedures, assessable penalties carry no rights to a 30-day letter, agreement form, or notice requirements prior to assessment. Internal Revenue Manual 20.1. 9.1."
Not all penalties are the same! Notably this excerpt makes a distinction between "assessable" penalties and penalties "subject to deficiency" procedures.
Generally, "assessable" penalties are payable because they are assessed and cannot be challenged without first paying the penalty and then using the judicial process to seek a refund.
Penalties "subject to deficiency procedures" can be challenged in tax court before they are paid. Although no taxpayer likes ANY penalty clearly penalties that are NOT "assessable" afford the taxpayer with more options for response.
Chapter 61 - Form 5471, Form 5472, Form 8938, Form 926 Form Penalties
These are significant penalties for taxpayers generally and especially for U.S. citizens living outside the United States. On April 3, 2023 in the Fahry case, the Tax Court ruled that Form 5471 penalties were NOT "assessable" penalties and that therefore the IRS had no jurisdiction to treat them as "assessable". (Practically speaking, this means that the U.S. would be required to embark on a separate legal proceeding to collect those penalties. This would also give the taxpayer the opportunity to defend against the penalty.)
The Taxpayer Advocate Blog of April 17, 2023
On April 17, 2023 the Taxpayer Advocate in a blog post discussing the Farhy case noted that ...
Since 2020, I have repeatedly recommended a legislative change under which Congress would make foreign information return penalties and assessable penalties subject to deficiency procedures for the benefit of both the IRS and taxpayers. This change would provide taxpayers with a more efficient, less costly, and more equitable regime governing the initial imposition of these penalties, as well as the mechanisms by which they can be challenged by taxpayers.
Continuing the Taxpayer Advocate notes that ...
This blog specifically addresses information reporting penalties in Chapter 61, Subchapter A, Part III, Subpart A (hereafter referred to as Chapter 61 for brevity’s sake).
Taxpayers who receive foreign gifts or control certain foreign corporations and partnerships and fail to file required information returns are subject to penalties under IRC §§ 6038 and 6039 (which are in Chapter 61 of the IRC). IRC § 6038 is one of several code sections that require similar filings and provide for similar penalties for taxpayers with various types of foreign corporations, partnerships, assets, and accounts. These Chapter 61 penalties are peculiar in that each section specifically imposes the penalties but provides no authority to assess and collect the penalties. I raised this concern in my 2020 Annual Report to Congress and recommended that the IRS take steps to protect the government fisc and also taxpayer rights by maximizing taxpayers’ access to administrative and judicial review.
______________________________________________
The Great Question Post Fahry is how to determine whether an penalty is an "assessable" penalty or a penalty "subject to deficiency procedures"
In this podcast, Virginia La Torre Jeker and John Richardson discuss:
1. How to determine whether a penalty is "assessable" or "subject to deficiency procedures"
2. That 5471 and 8938 penalties (affecting Americans abroad) are NOT "assessable" penalties
3. Why many 3520 penalties are "assessable" penalties
4. How taxpayers can take advantage of the Tax Court decision in Fahry which ruled that Form 5471 penalties are NOT assessable (there is a window of opportunity)
5. The absolute importance of reading and considering the language in the Internal Revenue Code!
Although this podcast is a bit technical, it is of great practical utility.
Friday Apr 14, 2023
Friday Apr 14, 2023
April 14, 2023 - Participants include:
David (Coach Coutts) - @RealCoachCoutts
John Richardson - @Expatriationlaw
_____________________________________________
"Drama" (defined in this podcast) as an "interference in our emotional equilibrium is a part of life. People have different relationships to "drama". Sometimes as the "victim", sometimes as the "persecutor" and sometimes as the "rescuer". All people play different roles in different aspects of their lives.
In this podcast, Coach Coutts discusses how to (1) recognize drama (2) recognize which of the three personality types you are exhibiting in this drama scenario and (3) the importance of "responding" to drama rather than "reacting" to drams.
Friday Apr 07, 2023
Friday Apr 07, 2023
April 7, 2023 - participants include:
David Coutts - @RealCoachCoutts
John Richardson - @Expatriationlaw
____________________________________________
Continuing the discussion with David Coutts ...
Personal training from the perspective of the trainer:
You can't have both "gratitude" and "anxiety" together. Let the "gratitude" push the anxiety away!
The Bottom Line is:
"Leave The Fitness To US!"
Thursday Apr 06, 2023
Thursday Apr 06, 2023
April 6, 2023 - Participants include:
Julie Lepore - Total FIRPTA
John Richardson - @Expatriationlaw
Julie is available at Total FIRPTA .
If you are an owner of U.S. real estate and you are selling your real estate located in the USA you need to understand the 15% withholding tax imposed by FIRPTA!
A basic description from the IRS includes:
Withholding of Tax on Dispositions of United States Real Property Interests
"The disposition of a U.S. real property interest by a foreign person (the transferor) is subject to the Foreign Investment in Real Property Tax Act of 1980 (FIRPTA) income tax withholding. FIRPTA authorized the United States to tax foreign persons on dispositions of U.S. real property interests.
A disposition means “disposition” for any purpose of the Internal Revenue Code. This includes but is not limited to a sale or exchange, liquidation, redemption, gift, transfers, etc. Persons purchasing U.S. real property interests (transferees) from foreign persons, certain purchasers' agents, and settlement officers are required to withhold 15% (10% for dispositions before February 17, 2016) of the amount realized on the disposition (special rules for foreign corporations).
In most cases, the buyer (transferee) is the withholding agent. The transferee must find out if the transferor is a foreign person. If the transferor is a foreign person and the transferee fails to withhold, the transferee may be held liable for the tax. For cases in which a U.S. business entity such as a corporation or partnership disposes of a U.S. real property interest, the business entity itself is the withholding agent."
https://www.irs.gov/individuals/international-taxpayers/firpta-withholding
See also IRS Publication 515.
Podcast Outline - The Top 10 Topics:
1. IRC Source rules - Sales of Real Property Sourced to USA
https://www.law.cornell.edu/uscode/text/26/861
"(5) Disposition of United States real property interest
Gains, profits, and income from the disposition of a United States real property interest (as defined in section 897(c))."
2. How Real Property Is Defined Under The US Internal Revenue Code
https://www.law.cornell.edu/uscode/text/26/897#c
(1) United States real property interest
(A)In general
Except as provided in subparagraph (B) or subsection (k), the term “United States real property interest” means—
(i)an interest in real property (including an interest in a mine, well, or other natural deposit) located in the United States or the Virgin Islands, and
3. How A Nonresident alien is taxed by the USA - 871
https://www.law.cornell.edu/uscode/text/26/871
b)Income connected with United States business—graduated rate of tax
(1)Imposition of tax
A nonresident alien individual engaged in trade or business within the United States during the taxable year shall be taxable as provided in section 1 or 55 on his taxable income which is effectively connected with the conduct of a trade or business within the United States.
(2)Determination of taxable income
In determining taxable income for purposes of paragraph (1), gross income includes only gross income which is effectively connected with the conduct of a trade or business within the United States.
4. Q. How does the USA enforce the payment of the tax in 871(b)?
A. FIRPTA - IRC 1445
https://www.law.cornell.edu/uscode/text/26/1445
"(a)General rule
Except as otherwise provided in this section, in the case of any disposition of a United States real property interest (as defined in section 897(c)) by a foreign person, the transferee shall be required to deduct and withhold a tax equal to 15 percent of the amount realized on the disposition."
5. What FIRPTA is - IRC 1445
https://www.law.cornell.edu/uscode/text/26/1445
"(a)General rule
Except as otherwise provided in this section, in the case of any disposition of a United States real property interest (as defined in section 897(c)) by a foreign person, the transferee shall be required to deduct and withhold a tax equal to 15 percent of the amount realized on the disposition."
6. To whom does it apply? - Definition of "foreign person"
"(3)Foreign personThe term “foreign person” means any person other than—
(A)
a United States person, and
(B)
except as otherwise provided by the Secretary, an entity with respect to which section 897 does not apply by reason of subsection (l) thereof."
The definition of "United States Person" in IRC 7701(a)(30) is
"(30)United States personThe term “United States person” means—
A)
a citizen or resident of the United States,"
7. How practically does FIRPTA apply to Canadians (and others who are neither citizens nor residents of the United States) who own real estate in the USA generally and Florida specifically?
8. Assuming FIRPTA withholding what steps must be taken to get any applicable refund - 1040NR, etc. How do they get a tax id number, etc?
9. Canadians are also taxed on the U.S. capital gain? How do they get credit for the capital gains tax paid in the USA?
10. Are nonresident aliens subject to the 3.8% Obamacare tax?
Wednesday Mar 29, 2023
Wednesday Mar 29, 2023
July 2020 - Participants Include:
John Richardson - @Expatriationlaw
Jimmy Sexton - @JimmySextonLLM
Good discussion with Jimmy Sexton - interesting and unique expatriation issues ...
Friday Mar 24, 2023
Friday Mar 24, 2023
March 24, 2023 - Participants include:
Virginia La Torre Jeker - @VlJeker
John Richardson - @Expatriationlaw
________________________________________________
Taxes are a huge source of anxiety for Americans abroad. One concern is always:
How long does the IRS have to audit me after I have filed?
On March 23, 2023 Virginia La Torre Jeker published a post discussing this very issue.
https://us-tax.org/2023/03/23/tax-statutes-of-limitation-run-fast-irs-is-right-behind-you/
This podcast is a nice summary of the post.
The bottom line is that:
The failure to file various "foreign information returns" will extend the "statute of limitations" - the time that the IRS as to instigate an audit.
Interesting the 2024 Biden Green Book contains provisions to tighten the noose even further!
Friday Mar 24, 2023
Friday Mar 24, 2023
Friday March 24, 2023 - Participants include:
Jeff Steiner - @JeffSteiner
John Richardson - @Expatriationlaw
___________________________________________
Democrats abroad has members who are entitled to vote within the party and have the potential to impact party policy.
Democrats Abroad France has an election - voting is April 1, 2023 - which will determine who some of those voting members are. Jeff Steiner is a candidate. You can vote for him on April 1, 2023.
In this podcast I meet Jeff and discuss some of the reasons why he believes that Residence-based taxation and FATCA repeal are a priority for Americans abroad.
You can learn more about Jeff at:
Tuesday Mar 21, 2023
Tuesday Mar 21, 2023
March 21, 2023 - Participants include:
Virginia La Torre Jeker - @VLJeker
John Richardson - @Expatriationlaw
__________________________________________________________
The United States is determined to get its tax revenue. The U.S. Internal Revenue Code has provisions that:
Prohibit People From Leaving The Country For Tax Related Reasons
Examples include:
- Passport confiscation laws for citizens
- A requirement of a tax certificate for non-citizens ("Sailing Permit")
Take Control Over People's Money If They Are Neither Citizens Nor Residents
Examples include:
- withholding taxes generally
- FIRPTA
- Estate taxes on US Situs assets ($60,000 USD threshold).
Make it difficult for U.S. citizens to access their money in the United States if they are living outside the United States
Example includes:
- various filing requirements that apply to Americans abroad that do NOT apply to resident Americans
_____________________________________________________
In today's podcast Virginia La Torre Jeker and John Richardson discuss the "sailing permit" AKA the mechanism designed to prohibit non-citizens from leaving the United States. Read more here:
Friday Mar 17, 2023
Friday Mar 17, 2023
March 17, 2023 - Participants include:
Anthony Parent - @IRS_Medic
Keith Redmond - @Keith__Redmond
John Richardson - @Expatriationlaw
___________________________________________
For those renouncing U.S. citizenship a perceived "loss of identity" is a factor.
But, those renouncing U.S. citizenship need NOT lose their identity as Americans.
They simply become:
"Retired American Citizens" - They remain Americans but they lose all the obligations!!
Those who cannot imagine themselves as retired should listen to the Dodge Stratus podcast:
"You aren't losing a sports car! You are gaining two doors!!"
For those who renounce:
"You are not losing your identity as an American. You are simply gaining your freedom from the regulatory regime!!"
For those who missed the Dodge Stratus podcast:
Thursday Mar 16, 2023
Thursday Mar 16, 2023
March 16, 2023 - Participants include:
Virginia La Torre Jeker - @VLJeker
John Richardson - @Expatriationlaw
On March 16, 2023 Virginia La Torre Jeker published a post titled:
The Perfect Storm - U.S. Tax, Community Property and The Mobile International Couple
"Once upon a time:
Two UK nationals who were married were exiled from Uganda, moved to Belgium (a community property jurisdiction). The husband had substantial U.S. stock registered in his name. He died and an estate tax was owed to the IRS."
This case combines elements of:
- how the U.S. estate tax applies to U.S. situs assets owned by individuals who are neither U.S. citizens nor domiciled in the U.S.
- the difference between ownership of assets in a community property jurisdiction (Belgium) and a separate property jurisdiction (U.K.)
- how "conflict of law rules" will determine which jurisdiction's law applies to determine property ownership.
The couple did NOT "Live Happily Ever After!