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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
Monday May 29, 2023
Monday May 29, 2023
May 27, 2023 - Participants Include:
Virginia La Torre Jeker - @VLJeker
John Richardson - @Expatriationlaw
The decision may be accessed is here.
Last week a Belgian tribunal charged with investigating and determining violations of the GDPR "General Data Protection Regulation" ruled on a complaint brought two an "Accidental American" in Belgium and the Association of Belgium Accidental Americans.
The tribunal ruled that to send information to the IRS under the FATCA IGA did indeed violate the GDPR. The decision can (and certainly will) be appealed. The decision is long (77 pages), complicated and identified a number of different reasons why the FATCA IGAs conflicted with the GDPR. This is hardly surprising given the the whole purpose of the FATCA (expressed in the FATCA IGAs) is is to deprive US citizens of any and all rights with respect to their banking information.
The Belgium decision has now created a situation where as long as there are U.S. "reportable accounts" in Belgium the transference of FATCA data to the IRS will result in either:
- a violation of the FATCA IGAs (and therefore U.S. law); or
- a violation of the GDPR (and therefore Belgium law).
It would seem that the only way to avoid violating the law would be if there were NO FATCA data to report. This can be achieved by and only by either
- terminating the banking accounts of all U.S. citizens in Belgium; or
- relying on the provision in the IGA that does not require the reporting of "Depository" (not custodial) accounts with a balance of less than $50,000. (See page 8 of the U.S. Belgium FATCA IGA.)
"A. Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting Belgian Financial Institution elects otherwise, either with respect to all New Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Belgium provide for such an election, the following New Individual Accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts: 1. A Depository Account unless the account balance exceeds $50,000 at the end of any calendar year or other appropriate reporting period."
https://home.treasury.gov/system/files/131/FATCA-Agreement-Belgium-4-23-2014.pdf
In any case, the real issue is whether Belgium is to be run by the United States (as a territory or vassal state) or whether Belgium is a "sovereign country".
It will be interesting to see how this develops.
Thursday May 04, 2023
Thursday May 04, 2023
Appeal - May 3, 2023 - District Court Of Appeals
As many of you know the Association of Accidental Americans sued the U.S. State Department over the issue of limiting renunciation appointments during the Covid19 pandemic.
This is a recording of the appeal heard on May 3, 2023.
Friday Apr 28, 2023
Friday Apr 28, 2023
April 28, 2023 - Participants Include:
Personal Trainer David Coutts - @RealCoachCoutts
John Richardson - @Expatriationlaw
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Note: Check back for the link to the Video version!
Thursday Apr 20, 2023
Thursday Apr 20, 2023
April 17, 2023 - Participants include:
Janine Seymour - @MiAzhikwan
John Richardson - @Expatriationlaw
It’s almost a half century since a Charter of Rights became part of Canada’s constitution. Has the Charter fulfilled its promise?
Many opinions are reflected as replies to Justin Trudeau’s “Happy Birthday Charter Tweet”.
https://twitter.com/JustinTrudeau/status/1648033598023299074
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!