PREP Podcaster - ”Success Favours The PREPared Mind”

Redefining US Citizenship Tax: Taxation Based On Circumstances Of Birth Instead Of Circumstances Of Life (applied to people who don’t live in the USA)

February 1, 2023 - Participants include:

Anthony Parent - @IRS_Medic

Keith Redmond - @Keith__Redomond

John Richardson - @Expatriationlaw

This short podcast is based on the following two recent posts:

Toward A Definition Of Citizenship Taxation

Bottom line: The only contextual meaning that citizenship tax can have is the US imposing tax on people who do NOT live in the United States on income earned outside the United States.

Should tax residency Be Based On The “Circumstances Of Your Birth” Or The “Circumstances Of Your Life”?

Bottom line: The reality is that "citizenship taxation" is really taxation based on "circumstances of birth" rather than "circumstances of life".

Combining the lessons of these two posts, we can reasonably conclude that US "citizenship taxation" means that:

Because of the circumstances of birth, the United States claims the right to impose taxation on income earned by people who don't live in the U.S., on income not earned in the U.S.

 

 

FBAR Penalties - US v. Molyneux - The Next Opportunity To Argue The Excessive Fines Clause

January 30, 2023 - Participants include:

Virginia La Torre Jeker - @VLJeker

John Richardson - @Expatriationlaw

 

In December of 2022 the Department Of Justice sued Ms. Molynuex to recover FBAR penalties.

Significantly:

- it appears the penalties were assessed in relation to an account that she had "signing authority" over but no beneficial interest (it wasn't her account)

- the penalties assessed were more than 400% of the maximum value of the accounts

This may be a good case to accept Justice Gorsuch's invitation from the Toth case to argue that that "civil FBAR penalties" are indeed limited by the "Excessive Fines Clause" of the eighth amendment of the constitution.

 

 

 

@MiAzhikwan - The Importance Of Truth - The Second Lesson

January 23, 2023 - Participants include:

Janine Seymour - @MiAzhikwan

 

John Richardson - @Expatriationlaw

 

The Role Of "Truth" In Enabling Forgiveness and Love.  - The Third Lesson

MiAzhikwan is a lawyer, LL.M., independent candidate and a member of the Bear Clan near Kenora, Ontario in Treaty Three Territory.

 

This is my fourth podcast with MiAzhikwan.

The first was during her run as an independent candidate in the May 2022 Ontario election:

https://independentcandidates.substack.com/p/meet-janine-seymour-aka-miazhikwan#details

The second was on September 5, 2022 and explored the teaching of forgiveness:

https://independentcandidates.substack.com/p/miazhikwan-choosing-forgiveness-the#details

The third was on September 27, 2022 and explored the teaching and meaning of love:

https://independentcandidates.substack.com/p/miazhikwan-the-importance-of-love#details

 

This fourth podcast was recorded on January 23, 2023 and explores the importance of role of truth:

https://independentcandidates.substack.com/p/miazhikwan-the-importance-of-truth#details

 

 

 

H.R. 25 - ”The Fair Tax” - Will Be Voted On In The House - Taxation Is Too Important To Be Left To The Political Parties

January 24, 2023 - Participants Include:

 

Jim Bennet - Fair Tax - @FairTaxOfficial

 

John Richardson - @Expatriationlaw

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On January 10, 2023 the "Fair Tax" - H.R. 25 was introduced into the House. The has provided a long overdue opportunity to rethink what taxation is for, how it should work and how it should be enforced. It's important that individuals do NOT rely on their Republican or Democrat representatives to explain the "Fair Tax". Taxation is too important to be left to the political parties.

Tax reform is about serving the interests of the American people and NOT the American political parties.

Taxation is NOT and should never be a partisan issue!

Some background ...

 

On March 27, 2022 I hosted Jim Bennet of "Fair Tax" and learned about the "Fair Tax Proposal".  On April 13, 2022, Jim Bennet returned as a guest and was joined by Steve Hayes and Joe Howard. The April 13, 2022 podcast can be heard here. On June 4, 2022 I hosted Steve Hayes 

Mr. Hayes and Mr. Bennet are the primary movers and creators of H.R. 25 "The Fair Tax Act of 2021" which can be viewed here.

So, what is the "Fair Tax" movement?

At the risk of oversimplification, H.R. 25 proposes to replace Subtitle A (Income Tax), Subtitle B (Estate and Gift Tax) and Subtitle C (Employment Tax) of Title 26 (The Internal Revenue Code)  with one comprehensive consumption tax.

If enacted the "Fair Tax" would create a U.S. tax system that:

-  was a territorial (tax imposed on activity in the US only) based on a consumption tax (tax imposed on consumption and not income)

- allowed certain low income people to apply for tax abatements

- made the U.S. a more attractive location for foreign investment and business activities

- ended the tax filing requirement for individual taxpayers (and therefore ended the "Regulatory Oppression" experienced by individuals in general and Americans abroad in particular)

- ending the relevance of "tax residency" because taxation would be based on spending only

- solved the problems of citizenship tax as experienced by US emigrants and accidental Americans

The adoption of the "Fair Tax" would result in a major change in US society. As the great tax historian Charles W. Adams taught:

As goes taxation, so goes civilization!

I strongly suggest that Americans abroad support the "Fair Tax" movement!

 

 

US Supreme Court Denies Toth FBAR Cert Petition Refusing To Decide Whether Penalties Violate ”Excessive Fines Clause” Of 8th Amendment

January 24, 2023 - Participants Include:

Virginia La Torre Jecker - @VLJeker

John Richardson - @Expatriationlaw

On January 23, 2023 the Supreme Court of the United States denied Ms. Toth's petition to hear her case. The court was invited to hear arguments on whether the assessment of a two million FBAR penalty on a four million dollar bank account balance violated the "Excessive Fines Clause" found in  the Eighth Amendment.

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Eighth Amendment  Cruel and Unusual Punishment

• Excessive bail shall not be required, nor excessive fines imposed, nor cruel and unusual punishments inflicted.

   

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Justice Gorsuch wrote a dissent in which he described the facts and issues. The dissent which is found here, included:

 

"In the 1930s, Monica Toth’s father fled his home in Germany to escape the swell of violent antisemitism. Eventually, he found his way to South America, where he made a new life with his young family and went on to enjoy a successful business career in Buenos Aires. But perhaps owing to his early formative experiences, Ms. Toth’s father always kept a reserve of funds in a Swiss bank account. Shortly before his death, he gave Ms. Toth several million dollars, also in a Swiss bank account. He encouraged his daughter to keep the money there—just in case.

Ms. Toth, now in her eighties and an American citizen, followed her father’s advice. For several years, however, she failed to report her foreign bank account to the federal government as the law requires. 31 U. S. C. §5314. Ms. Toth insists this was an innocent mistake. She says she did not know of the reporting obligation. And when she learned of it, she says, she completed the necessary disclosures. The Internal Revenue Service saw things differently.

Pursuant to §5321, the agency charged Ms. Toth with willfully violating §5314’s reporting requirement and assessed a civil penalty of $2.1 million—half of the balance of Ms. Toth’s account—plus another $1 million in late fees and interest.

Initially, Ms. Toth sought to represent herself in proceedings challenging the IRS’s assessment, but that did not go well. Later, Ms. Toth engaged counsel who argued that the IRS’s assessment violated the Excessive Fines Clause of the Eighth Amendment. But the First Circuit rejected this line of defense. It held that the Constitution’s protection against excessive fines did not apply to Ms. Toth’s case because the IRS’s assessment against her was “not tied to any criminal sanction” and served a “remedial” purpose. 33 F. 4th 1, 16, 17–19 (2022).

This decision is difficult to reconcile with our precedents. We have recognized that the Excessive Fines Clause “traces its venerable lineage” to Magna Carta and the English Bill of Rights. Timbs v. Indiana, 586 U. S. ___, ___–___ (2019) (slip op., at 4–5). We have held that “[p]rotection against excessive punitive economic sanctions” is “‘fundamental’” and “‘deeply rooted in this Nation’s history and tradition.’” Id., at ___ (slip op., at 7). And all that would mean little if
the government could evade constitutional scrutiny under the Clause’s terms by the simple expedient of fixing a “civil” label on the fines it imposes and declining to pursue any related “criminal” case. Far from permitting that kind of maneuver, this Court has warned the Constitution guards against it. See Austin v. United States, 509 U. S. 602, 610 (1993) (“[T]he question is not, as the United States would have it, whether [a monetary penalty] is civil or criminal, but rather whether it is punishment.”); see also Giaccio v. Pennsylvania, 382 U. S. 399, 402 (1966); Sessions v. Dimaya, 584 U. S. ___, ___ (2018) (GORSUCH, J., concurring in part and concurring in judgment) (slip op., at 10).

Nor is a statutory penalty beneath constitutional notice because it serves a “remedial” purpose. Really, the notion of “nonpunitive penalties” is “a contradiction in terms.” United States v. Bajakajian, 524 U. S. 321, 346 (1998) (Kennedy, J., dissenting). Just take this case. The government did not calculate Ms. Toth’s penalty with reference to any losses or expenses it had incurred. The government imposed its penalty to punish her and, in that way, deter others. Even supposing, however, that Ms. Toth’s penalty bore  both punitive and compensatory purposes, it would still merit constitutional review. Under our cases a fine that serves even “in part to punish” is subject to analysis under the Excessive Fines Clause. Austin, 509 U. S., at 610 (emphasis added). Ms. Toth and her amici identify still more reasons to worry about the First Circuit’s decision. They say it clashes with the approach many other courts have taken in similar cases. Pet. for Cert. 18–25 (collecting cases). They observe that it incentivizes governments to impose exorbitant civil penalties as a means of raising revenue. Id., at 25–30. And they contend that it is difficult to square with the original understanding of the Eighth Amendment. Brief for Professor Beth A. Colgan as Amicus Curiae on Pet. for Cert. 4–13. For all these reasons, taking up this case would have been well worth our time. As things stand, one can only hope that other lower courts will not repeat its mistakes."

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Four Attitudes Of Americans Abroad Toward US Citizen Tax: Ending, Ignoring, Escaping Or Improving

January 20, 2023 - Participants Include:

 

Keith Redmond - @Keith__Remond

John Richardson - @ExpatriationLaw

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This informal discussion was the result of two separate (but contextually related) discussions on social media discussing US citizenship taxation.

First - Keith Redmond's American Expatriates Facebook group. The discussion thread is here:

https://www.facebook.com/groups/AmericanExpatriates/posts/2370830776416314/

Note this thread is discussed until approximately the 30:35 mark.

Second - Discussion on Twitter 

https://twitter.com/RonSteenblik/status/1614669507590496259

Note this thread is discussed from approximately the 30:35 mark until the end.

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Interestingly both discussions illuminated the fact that those subject to the US extra-territorial tax regime are clearly impacted in different ways. These differences make it very difficult to unite Americans abroad in a common goal of ending US citizenship taxation.

Generally, those subject the US extra-territorial tax regime fall into one of the following four groups. Each group is characterized by a dominant goal (although there is some overlap):

Ending Citizenship Taxation - This group which is symbolized by SEAT is focussed on ending US citizenship taxation. This means that citizenship is never relevant for the purposes of taxation.

Ignoring Citizenship Taxation - It is clear that there are any individuals who approach the problem of citizenship taxation by simply ignoring it. It is clear that many people who are subject to the citizenship tax regime are simply not "in the US tax system". Typically these are people who have no economic centre of gravity in the United States and have no plans of living in the United States.

Escaping Citizenship Taxation - Members of this group are concerned with solving their specific problem. For example, they would want the Taxation of capital gains on principal residence, PFIC, CFC or Foreign Trust rules changed. Once that issue is solved they believe their problems are solved.

Improving Citizenship Taxation - These individuals are NOT concerned with ending citizenship taxation as a general principle. They are concerned with reforming citizenship taxation in a way that reduces the kinds of non-US source income that is taxable by the United States. But, US citizens abroad would remain US tax residents. An example fo this would be the "Beyer Bill".

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Why should the US entertain a transition from citizenship taxation to residence taxation when Americans abroad are NOT united in the goal of ending citizenship tax?

To put it simply:

Americans abroad have divided and conquered each other!

 

 

 

 

 

Why Tax Reform For Americans Abroad Is Reminiscent Of The Movie Groundhog Day

January 18, 2023 - Participants Include:

Virginia La Torre Jeker - @VLJeker

John Richardson - @Expatriationlaw

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In the move "Groundhog Day" Bill Murray awakens every day to a day that was the same as the previous day.

The 2022 Taxpayer Advocate Report to Congress was released in early 2023. It contains a section about the problems facing Americans abroad.

As noted by Virginia La Torre Jeker, the same problems are identified as continuing from year to year with no change!

Everybody agrees that there is a problem. Yet there has been little (or no) progress to relieve the problems (other than encouraging people to renounce US citizenship).

 

Dr. Don Young Discusses: Jordan Peterson And The Ontario College Of Psychologists of Ontario

January 7, 2023 - Participants include:

Dr. Donald Young - Toronto Psychologist

John  Richardson - @Expatriationlaw

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As has recently been widely reported in the press, the College of Psychologists of Ontario (CPO) has disciplined a member, Dr Jordan Peterson, for public comments he has made in regard to a variety of topics. Dr. Peterson is a Professor Emeritus at the University of Toronto Psychology Department and was previously at Harvard. He has authored three books and hundreds of academic articles. He has over 1.8 million subscribers to his YouTube channel and over 6.5 million views. Of note, none of his comments were made in the context of his clinical work as a psychologist. The implications of the CPO's actions have frightening implications for all professionals in Ontario who work under the auspices of their regulatory bodies.

 

The basis of the complaint and Dr. Peterson's response is detailed in the following two newspaper articles.

https://nationalpost.com/news/canada/read-jordan-petersons-tweets-that-prompted-complaints-to-psychologists-college

 

 

https://calgaryherald.com/news/provincial/read-the-court-filing-by-jordan-peterson-against-the-college-of-psychologists-of-ontario/wcm/beef4b34-0906-4361-a14a-574ba11ddbd0

 

Today we are joined by Dr. Donald Young, a clinical psychologist with 40 years of experience, who will discuss how health professionals are regulated in Ontario, some specifics about the CPO and Dr Peterson's legal response to the allegations.

 

Notice 2023-11: A Significant Escalation of FATCA Enforcement On Foreign Banks and Americans Abroad

January 6, 2023 - Participants Include:

Keith Redmond @Keith__Redmond

John Richardson - @Expatriationlaw

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On December 30, 2022 US Treasury issued Notice 2023-11. The purpose of the Notice included a provision that allowed foreign banks to avoid a designation of "significant non-compliance" with the FATCA IGAs. This "temporary stay of execution" is available ONLY in return for heightened FATCA enforcement on both US citizens and the banks.

I have written the following two posts on this topic:

https://citizenshipsolutions.ca/2023/01/04/part-1-notice-2023-11-the-carrot-the-stick-and-heightened-fatca-enforcement-on-overseas-americans/

https://citizenshipsolutions.ca/2023/01/04/part-2-notice-2023-11-non-us-banks-may-be-forced-to-sever-ties-with-us-citizen-clients-because-of-fatca/

 

Joining me today is Keith Redmond where we discuss:

- what Notice 2023-11 really means

- What Americans abroad need to understand

- What options may be available for Americans abroad

"All Roads Lead To Renunciation!"

 

There Are Two Kinds Of People Who Need A Second Citizenship: The Rich And The Poor

December 30, 2022 - Participants Include:

 

Hon. Philippe A. May - @EC_Holdings

John Richardson - @Expatriationlaw

In my final podcast of 2022 I had the opportunity to explore the issues of second citizenships and residents with Mr. Philippe A. May of EC Holdings which is a second citizenship advisory in Singapore.

We discussed the "Who", "What", "Where" and "When" of both second citizenship and residency programs. Mr. May shared his expertise and thoughts and the opportunities in general with a special emphasis on the South American countries of Uruguay and Paraguay. The opportunities in South America will come as a surprise to some.