HuffPost: American Expatriates Renounce Citizenship Over Tax

From The Huffington Post, 18th April 2012



Blue Horseshoe

That won’t work. In US law there is a presumption that anyone renouncing citizenship is doing so for tax avoidance purposes. As a result, even those who renounce their American citizenship have to file American tax returns for 10 years thereafter. If they don’t, they can be barred from entering the country.

That’s a joke

Two Broke Girls sitcom episode last night was about filing US tax returns.
They were working out their tax form in the queue to file it coming up to midnight.
Seems(from watching a sit-com) that the process is relatively straight-forward unless your tax affairs are quite involved.

Not a great episode of a so-so sitcom. laugh free zone.

there are a lot of possible deductions; you’re supposed to be able to e-file for free but the companies make you think you need them (H&R Block/Intuit etc). I paid for it as I’m no longer there, anyway I filed on Monday and the IRS website tells me my refund should be in my account on 1st May, pretty impressive IMHO

the Sit Com had a hipster tax advisor recommending they claim everything from condoms to cannabis as a deductible expense.

This is not the case - the law changed about 2 years ago, you no longer are required to file taxes for 10 years but are required to pay an exit tax on worldwide assets as if you sold them on the day you left. Also no restrictions on travel. The only part of this article that may be correct is that people give up there citizenship the rest is crap - why bother writting an articel if the most fundamental facts are so out of date

And very soon if a new law passes and you have not paid your taxes, the IRS will seize your passport… … rt/255940/

How is that enforced? If you’re no longer a US citizen and not resident in the US and they won’t ban you from traveling, what leverage do they have?

If it is juicy enough I’m sure the dudes in black clothing with Magnum boots and private jets that land in Shannon will swoop by.

If you don’t pay you cannot renounce and are liable as a citizen and subject to all the relevant laws.

The exit tax is actually seen as positive for some who have significant offshore funds and who ar ehappy to pay the exit tax to avoid more serious issues were those funds detected. Not a whole lot of people who fall into those categories but a few. The new foreign bank reporting structures are providing for allot of consulting opportunites these days, it is likely the number of people renouncing citizenship will peak over the next few years, from what I understand anyone dodging tax for 10 years or more offshore could lose 100% of that money plus more, it’s not as simple as declare and pay at the current rates, the penalties are massive.

Lot’s of Irish got citizenship, then left the US to return to Irelad or go elsewhere and forgot about their tax returns, lot’s of fruit out there for the IRS if they really go digging.

That’s a little weird to me. You can renounce and they won’t recognise that you’ve done it and will still consider you subject to US law. But surely there’s very little they can do about if for any US expat who has another nationality and no intention of visiting the US.

Judging from this site, this only applies to fairly wealthy individuals:

That’s what I’d have thought. If you renounce your citizenship (or simply stop paying taxes) and intend never to set foot in the US again, what are they realistically going to do about it? It might be worth extraditing Bill Gates or Warren Buffett for unpaid taxes, but are they really going to do anything about your average person?

Now you don’t want to end up on that list of “undesirables” do you! Pay up!

I think you only have to pay tax if it is over 90,000 USD/year income. So maybe not a huge concern for many, just hassle to do the tax filing.

The real question here is when will Ireland bring in something similar…

Tax the Irish expats, and that deficit goes away! Tax people not to be Irish too… Someone in the Revenue/DOF or other who is worried about the value of their civil service pension ten years down the line would find an idea of multiplying the tax base, many times over, very appealing and reassuring.

I have often thought that the Irish Government might try and do this someday as a way of reducing the deficit. Presumably most of the Irish expats would just renounce their citizenship and become a citizen of whatever country they are living in (assuming this was an option of course).

I cannot see too many Irish expats being all that keen to pony up tax to pay unsecured bondholders in Anglo and to keep 300,000 civil servants in the comfort they have become accustomed to! As an Irish expat myself out of Ireland 8 years, I know what I would be doing!

US citizens get to vote, wherever they are. The Irish don’t.

That’s because US chickens get to pay egg tax…

I think you might be overestimating the income of Irish expats if you think taxing them will cure our defecit. Appropriating their entire wealth might solve the defecit for a year or two if it could be done practically but then what do we do after that?

But apart from that, Irish double tax treaties are all based on the concept of residency based on days spent in Ireland and irish expats who are avoiding tax are generally protected under one of these treaties. The US includes US citizenship in the definition of US tax resident in its treaties.