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In traveling to dozens of countries using my passport from the Commonwealth of Dominica, I've discovered that many of them, especially in Asia, use a customs and immigration procedure for visitors called "visa on arrival."
What standard of proof does the IRS have to demonstrate in order impose the most severe civil or criminal penalties possible for failing to acknowledge a foreign account? The answer: less than you might think.
Over the last two years, I've written extensively about a U.S. law enacted in 2010. It's called the "Foreign Account Tax Compliance Act," or FATCA.
Ten years ago, the Sovereign Society published what became the most controversial article I've ever written. Entitled "The Enemy of My Enemy is My Friend," it predicted that the then-upcoming invasion of Iraq would have the unforeseen consequence of accelerating the rise of Islamic fundamentalism in the Mideast.
There's been a flurry of activity this week from the Department of Involuntary Servitude, otherwise known as the IRS. On June 26, the IRS released what it calls "New Filing Compliance Procedures for Non-Resident U.S. Taxpayers." The effective date for the new procedures is Sept. 1, 2012.
The numbers of U.S. citizens and long-term residents "expatriating"—i.e., giving up U.S. citizenship or long-term permanent residence status—is skyrocketing. Official statistics from the IRS state that in 2011, almost 1,800 people gave up their U.S. citizenship or handed in their "Green Card" to U.S. authorities.
You have to credit the folks at the IRS for their ironic sense of humor. On June 20, 2012, the IRS clarified offshore reporting rules for 2011 with respect to Form 8938, “Statement of Specified Foreign Financial Assets." While the clarifications are both significant and welcomed, it would have been nice if the IRS hadn't waited two months after the filing deadline for Form 8938 (April 17, 2012). (The form, if required, was due with a U.S. taxpayer's 2011 tax return).
The IRS seems to be putting the infamous FATCA statute into effect two years early. It's already withholding 30% of all U.S. income generated from U.S. securities accounts owned by non-resident aliens (NRA). That's only supposed to begin happening in two years.
Can the U.S. government force you to sign a document that strips you of your nationality? Longstanding legal precedent says U.S. citizens end U.S. citizenship only "with the intention of relinquishing United States nationality." However, several cases have emerged where the U.S. Customs and Border Protection (C&BP) agency has coerced native-born U.S. citizens into signing away their birthright.
Brazilian-born Facebook co-founder Eduardo Saverin relinquished his U.S. citizenship late last year. As an expatriate, Saverin must pay an "exit tax" on the value of any unrealized gains in his worldwide estate, less a $636,000 exclusion for 2011. I'm not privy to billionaire Saverin's financial affairs, but I have no reason to doubt his statement that he will pay "hundreds of millions" of dollars in exit tax to the U.S. government. Some of this tax is on the pre-initial public offering (pre-IPO) value of his Facebook shares.
Austerity measures in France, Greece, and Spain demanded by these countries' creditors have spurred unemployment, cuts in pension costs, and above all, politically motivated attacks on wealth.
As a former U.S. citizen who has given up U.S. citizenship, I've visited dozens of countries using my Commonwealth of Dominica passport.
While you have an absolute right to give up your U.S. citizenship, you must make your intention to expatriate crystal-clear.
Sometimes people ask what I fear most. My answer isn't really what they expect.
If you're a U.S. citizen or long-term permanent resident ("green card" holder), you have a unique responsibility: you must pay tax on your worldwide income, even if you live outside the United States. Not to mention capital gains tax, gift tax, and estate tax.
One of the strongest enforcement mechanisms any government has over its citizens is to restrict their ability to travel internationally.
A U.S. law with the Orwellian name of the "Bank Secrecy Act" requires U.S. citizens and permanent residents to report interests in, or authority over all foreign accounts with an aggregate value of $10,000 or more...
Every country has a path to naturalization through its constitution and law of nationality. In most countries, eligibility for citizenship and a passport requires a period of extended legal and physical residence of one year to 10 years or more...
Chris Martenson at Chrismartenson.com recently commissioned me to write an article on expatriation to be posted on his Web site.
If you have a British grandparent and are also a citizen of a Commonwealth country (definition here), you can apply to live and work in the United Kingdom. My friend Suzanne, a Canadian citizen, recently did it and passed the latest rules on to me from the U.K. Home Office:
Earlier this week, I participated in to a teleconference sponsored by the Society of Trust and Estate Practitioners and the International Law section of the American Bar Association. The conference addressed the expanded offshore asset disclosure requirements brought into effect by the Foreign Account Tax Compliance Act (FATCA). (For background on FATCAÂ see here, here, and here.)
Occasionally, the U.S. Congress discovers to its great surprise that the agency it created to collect revenues for the federal government, the Internal Revenue Service, engages in systematic abuse of taxpayers. In one such moment in 1979, Congress created the Office of the Taxpayer Ombudsman as a taxpayer advocate within the IRS. This office eventually became the Taxpayer Advocate Service (TAS). by authority of first so-called "Taxpayer Bill of Rights" in 1988.
![Form 8938: Another Nail in the Coffin of Offshore Financial Privacy [Part II]](https://www.nestmann.com/wp-content/uploads/2021/03/articlesbankfinancialsecrecy-full-700x280.jpg)
In my last blog entry , I discussed the newest U.S. government escalation in the War Against Financial Privacy: Form 8938, the “Statement of Specified Foreign Financial Assets.â€
![Form 8938: Another Nail in the Coffin of Offshore Financial Privacy [Part I]](https://www.nestmann.com/wp-content/uploads/2021/03/articlesbank-secrecy-full-700x280.jpg)
Are you a U.S. citizen or U.S. resident alien who held assets outside the USA at any time during 2011? If so, you need to know about a rapidly approaching deadline for filing Form 8938, "Statement of Specified Foreign Financial Assets." Non-resident aliens may need to file this return as well in certain circumstances. See the instructions for Form 8938 for details.
The United States is one of the very few countries, and the only major country, that taxes its citizens, no matter where they live. If you haven't lived in the United States in decades, you must pay tax on your worldwide income as if you never left. Even "accidental" U.S. citizens born overseas with at least one U.S. parent, who never set foot in the United States, must file U.S. tax returns. Beneficiaries of a deceased U.S. citizen living abroad must prepare a U.S. estate tax return and possibly pay estate tax, even if they're non-U.S. citizens who have never lived in the United States.
Only minimal protection exists under federal bankruptcy laws for life insurance and annuity contracts, but laws in some states exempt certain annuities and life insurance policies from creditor claims. It's also difficult for a creditor to sustain a fraudulent conveyance argument if you purchase a life insurance contract or (especially) an annuity. This is because you take back value (the promise of future payments) in exchange for your investment.
The blogosphere has been humming the last couple of weeks with condemnation of the 2012 National Defense Authorization Act. This bill, which funds U.S. military forces for the coming year, has a neat little provision tucked away in Sec. 1031. It permits anyone the government claims is “a member of, or part of, al-Qaida or an associated force†to be held in military custody “without trial until the end of the hostilities authorized by the Authorization for Use of Military Force.†Including, according to numerous blog posts, U.S. citizens residing in the United States.
The United States is one of only two countries, and the only major country, that taxes its citizens, no matter where they live. If you haven’t lived in the United States in decades, you must pay tax on your worldwide income as if you never left. Even “accidental†U.S. citizens born overseas with at least one U.S. parent, who never set foot in the United States, must file U.S. tax returns. These laws affect every one of the more than 6 million U.S. citizens living abroad.
![Form 8938: Not a Prelude to a Wealth Tax…This Time [Part II]](https://www.nestmann.com/wp-content/uploads/2021/03/articleswealthtax-full-700x280.jpg)
In my last blog entry, I described the latest salvo against offshore financial privacy from the IRS: the requirement to file a tell-all form annually with your tax return detailing “foreign financial assets†with an aggregate value exceeding $50,000.