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."
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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
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
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
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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
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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
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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!
Tuesday Mar 14, 2023
Tuesday Mar 14, 2023
Congressman Higgins Asks United States Trade Representative to Request Consultations Related to Canada’s Underused Housing Tax
Mar 7, 2023
Press Release
Congressman Says Tax 1% Property Tax Violates Standing Trade Agreements
Congressman Brian Higgins (NY-26) is asking United States Trade Representative Katherine Tai to open formal consultations with the Government of Canada to explore if the Underused Housing Tax is inconsistent with the United States-Mexico-Canada Agreement (USMCA).
In a letter to Ambassador Tai, Rep. Higgins writes, “The United States and Canada have a longstanding, cooperative, and mutually beneficial relationship. Western New York and Southern Ontario exemplify this unique bond. The UHT’s impact on Americans who own property in Canada, however, threatens our binational community and appears to be inconsistent with the USMCA.”
One of the principles of the USMCA is the requirement that all parties not discriminate against each other or provide preferential treatment solely to domestic companies or citizens, including with respect to internal taxation. Canada’s Underused Housing Tax does not apply equally to Canadian and U.S. citizens and therefore may violate these principles. The USMCA stipulates parties can request consultations with another party when trade agreement disputes arise.
Canada recently imposed a 1% tax on “vacant or underused housing” owned by non-resident, non-Canadians. The intent was to target foreign investment speculation negatively impacting affordable housing in Canada, but it is impacting good-faith, longtime cottage owners who have maintained and enjoyed living among their Canadian neighbors for years.
Higgins began sounding the alarm about the Underused Housing Tax since it was first proposed in the Government of Canada’s Budget 2021. Most recently, Higgins asked the U.S. Secretary of State to object to the Underused Housing Tax in conversations with the Government of Canada.
Outreach from frustrated U.S. residents has increased in recent weeks as the April 30th tax form deadline approaches in Canada. Congressman Brian Higgins has heard from hundreds of U.S. residents negatively impacted by the Underused Housing Tax, including over 320 property owners who completed an online survey.
Congressman Higgins is a member of the House of Representatives Ways and Means Subcommittee on Trade and serves as Co-Chair of the Northern Border Caucus and the Canada – U.S. Interparliamentary Group. His Western New York district, which includes the Cities of Niagara Falls and Buffalo, borders southern Ontario.
Saturday Mar 11, 2023
Saturday Mar 11, 2023
March 4, 2023 - Participants Include:
Amy Purcell - @Amy_From_Sydney
John Richardson - @Expatriationlaw
This fourth podcast with @Amy_From_Sydney continues with our three discussions from 2022. If you missed either of the first two discussions with her, you can find them here:
First - February 6, 2022:
A fascinating discussion with Amy - born to a US citizen mother in Australia - who has lived in Sydney Australia her whole life. She has visited the United States but has never had any economic connection to the United States. In other words, she is an "Accidental American".
In March of 2021 she received a FATCA inquiry from her Australian bank. In this podcast she describes her "OMG Moment". She generously describes her emotions, her response (getting a Social Security Number) and filing taxes through the streamlined process.
Second - February 22, 2022:
Amy From Sydney Take 2: To Vote Or Not To Vote - That Is The Question, Whether Tis Better To
A fascinating discussion with Amy - born to a US citizen mother in Australia - who has lived in Sydney Australia her whole life. She has visited the United States but has never had any economic connection to the United States. In other words, she is an "Accidental American".
In her first podcast Amy told her story of becoming acquainted with the "Twin Horrors Of FATCA and Taxation Based Citizenship". In this, her second podcast, we continue the discussion with an emphasis on the importance of Americans abroad:
- becoming vocal about the injustices of FATCA and US extraterritorial taxation
- using the right to vote strategically and as an opportunity
- contributing to the struggle by doing what they can!
After all, the United States is actually imposing direct taxation on income earned in Australia by an Australian resident. It's no wonder that Amy describes this as hard to believe and "spacey".
Third - May 24, 2022 - The American Expat Finance News Journal
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Fourth - March 4, 2023
In this 2023 update, Amy provides updates which include:
- the continuing difficulty of advocacy for Americans abroad
- the responsibility of all Americans abroad to participate in the opposition to U.S. extra-territorial overreach
- the continuing conflict between the "Get Out The Vote" initiatives and the interests of @USVotersAbroad
- the importance of fund raising
- why it's important for every country to have at least one "Amy From Sydney"!
- How to become the next "Amy From Sydney!"