Taxes

Uncle Sam Wants You So Badly That the Feeling May No Longer Be Reciprocal

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Feeling patriotic today, punk?

Within this Reuters scare story about Americans seceding from their own country ("US taxes cost some expatriates their citizenship"!), there is a long chunk that alludes to some of the stuff I wrote about yesterday re: the IRS making life hell for those millions of citizens who do things like live abroad and marry furriners:

The United States is one of the few countries to tax their citizens on income earned while they're living abroad. And just as Americans stateside must file tax returns each April — this year, the deadline is Tuesday — an estimated 6.3 million U.S. citizens living abroad brace for what they describe as an even tougher process of reporting their income and foreign accounts to the IRS. For them, the deadline is June.

The National Taxpayer Advocate's Office, part of the IRS, released a report in December that details the difficulties of filing taxes from overseas. It cites heavy paperwork, a lack of online filing options and a dearth of local and foreign-language resources.

For those wishing to legally escape the filing requirements, the only way is to formally renounce their U.S. citizenship. Last year, IRS records show that at least 1,788 people did, and that's likely an underestimate. The IRS publishes in the Federal Register the names of those who give up their citizenship, and some who renounced say they haven't seen their name on the list yet. […]

The decision by the IRS to publish the names is referred to by lawyers as "name and shame." That's because those who renounce are seen as willing to give up their citizenship primarily for financial reasons.

Whatever, maple-eater!

Who are these shameful tax-evading billionaires? People like Peter Dunn, "a dual U.S.-Canadian citizen who has lived outside the United States since 1986," who renounced last year "because he felt American citizenship had become more of a liability than a privilege":

As an American, Dunn had to file tax returns and report all of his bank accounts — even joint accounts and his Canadian retirement fund. If he didn't, he would be breaking U.S. law and could face penalties of up to $100,000 or 50 percent of his undeclared accounts, whichever is larger. Dunn says he was tired of tracking IRS policy changes, and he had no intention of returning to the United States. Renouncing his citizenship, as he puts it, was "a no-brainer."

"If it was just me then it would be one thing," says Dunn, a part-time investor who worried that having to share information with the IRS would deter future business partners — and upset his wife, who is Canadian. "Disclosing joint accounts I hold with my wife and anyone I ever want to do business with — that's just too much. My wife's account is none of their business."

Dunn, who blogs about expatriation, takes issue with being characterized as a tax evader. He says the taxes he pays in Canada are higher than what he would pay in the United States, and he says he had always complied with the IRS before renouncing. But, Dunn says, the IRS approach to enforcing compliance is misguided. "It's making life difficult for a lot of people," he says. "It's driving us away."

Some day. SOME DAY! We're gonna get taxed in Atlanta!

And not only does this mean that foreign banks are dropping Americans "like hot potatoes," according to one source in the story, but there's a War on Women angle as well:

"American women married to non-Americans are only just now finding out that they have to disclose years and years of income and accounts," says Lucy Stensland Laederich, a leader of the women's club who lives in Bordeaux, France. […]

"When they decide to come clean and report everything," she says, "they have to go ask their husbands for all of their bank information, retirement funds, and investment accounts, everything."

Some of their husbands, Laederich says, refuse to hand over information to the IRS. That leaves the women in difficult predicaments.

"Your options are to ignore the IRS and stick your head in the sand; take your name off of all the accounts and live in a completely cash economy; divorce; or renounce U.S. citizenship," Laederich says. "We've seen all of these things happen."

Link via Amy Alkon.

NEXT: Dick Lugar, The Tea Party, and (Here's Hoping!) The Future of American Politics

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  1. Shouldn’t that properly be Reciprocated? Or is that one of those words where either is fine?

  2. The IRS publishes in the Federal Register the names of those who give up their citizenship

    John H. Galt this country is retarded.

    1. Hell, I’ll probably buy a copy with my name in it.

  3. Of course, one of the great virtues of this country has been attracting the best and brightest from the rest of the world. The atomic bomb, for instance, was created and designed in large part by immigrants. Ditto our earliest rockets.

    1. Actually, ProLib, much of Goddard’s work predated Von Braun, though it was the Germans who really pushed the technology.

      1. More important is that Nazis were able to find work after World War II.

        1. Especially those in the Gehlen organization.

        2. “After the war we were snatching up kraut scientists like hotcakes!”

          1. Ah, I forgot – Hugh doesn’t watch Archer

      2. Oops, my comment way below somehow got misplaced:

        Not at all suggesting that Americans weren’t involved–obviously, plenty of home-grown talent, too. That was true with the bomb, as well–Oppenheimer and Feynman were natives, for instance.

        1. Hopefully, you aren’t in charge of actually targeting the rockets.

          1. I’ve been having weird issues since the registration slate of changes. Seems like things jump around, etc.

  4. If I was – oh, a member small E. European legislature – I would try to pass a law giving Americans a haven, with easier tax and bank laws. It would be a good way to draw money to my country.

    1. It’s a good idea. Probably better would be some relatively isolated nation, without the scary neighbors one has in Europe, to do so. Like New Zealand.

      1. In general, being a neighbor of the French, English, Russians or the Germans was not good for your life expectancy.

        Nor, at certain times, was it healthy to be neighbors with the Turks, Spanish or Swedes.

      2. Not at all suggesting that Americans weren’t involved–obviously, plenty of home-grown talent, too. That was true with the bomb, as well–Oppenheimer and Feynman were natives, for instance.

  5. The United States Tax Code versus the Commerce Clause. Who would win?

  6. This is biting me too, as a Canadian with a son born in the US. Now that we’ve started saving for his education, we have to declare that to the IRS. Fairly straightforward, so far.

    I toyed with the idea of renouncing his citizenship at birth, knowing that this would be an issue, but decided against it. If he ends up going to live in the States then this becomes moot, and he can always renounce later (or maybe the IRS will become more sane on this issue in the future).

    I work with a number of Americans living north of the border and it’s been quite a nightmare for some of them.

  7. Open Question:

    Senate passed, and House discussing bill with a nasty amendment: Having a sizeable tax levy/lien can result in not being able to get a passport or getting current one revoked. If this goes through the whole process and becomes law, anybody know about when the IRS would hook up with immigration services and start enforcement?

    1. It won’t pass the House. If it does, I will be speeding up my EU passport process, that’s for sure.

  8. I know Welch is being tongue-in-cheek with the whole War on Women thing, but really, wouldn’t American men married to non-American women have the exact same issue? (Trick question! They do! I see it every day.)

    I’m glad to see this is getting more attention, but the coverage tends to be… spotty at best. For example, sure, Americans living abroad have an automatic two month extension of time to file their return, but that isn’t an extension of time to pay any outstanding liability.

    1. Yeah, totally on the War on Men aspect. I think the (sexist) assumption is that it’s harder for wimmenfolk to ask their domineering husbands, or something.

  9. America: Love or Leave It, but you leave you still have to pay for all the “services” you aren’t using but taxes are voluntary and if you don’t want to pay them you can just leave.

    Circular logic that has become a downward spiral.

    1. Circular logic that has become a downward spiral.

      Circular logic is a downward spiral because it’s circular.

  10. Has there ever been an anti-income-tax court case with the obvious “Hey Uncle Sam, you don’t have jurisdiction outside your borders” argument?

    1. Can’t speak directly for tax law, but in general US Courts and prosecutors like to think that Lex Americana governs the entire planet. (cf: The on-line gambling cases, Mark Emery, etc.)

  11. but in general The President, Congress, US Courts and prosecutors like to think that Lex Americana governs the entire planet

    ftfy.

  12. I’m looking to renounce asap.

  13. Renouncing U.S. citizenship is one of the Federal reasons that bars possession of a firearm. That’ll fix ’em.

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