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John Richardson - Counsellor for US persons abroad Profile picture
@ExpatriationLaw
Jan 18, 2023 • 9 tweets • 5 min read • Read on X
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Post from @1040abroad (includes) attempts to define who is an ”Accidental American” (not defined in US law). US Treasury has made consistent attempts to help them without defining them. How should “Accidental American” be defined? taxconnections.com/taxblog/being-… via @TaxConnections
The first recognition of the problem of "Accidental Americans" is found in the 2015 Obama budget proposal discussed here ... See the screen shots for what was proposed. citizenshipsolutions.ca/2015/02/08/the… ImageImage
The second recognition of the problems of "Accidental Americans" appeared to result in the 2019 "IRS Relief Procedures For Former Citizens" as discussed here ... citizenshipsolutions.ca/2019/12/18/irs… ImageImage
The third recognition of the problems of "Accidental Americans" comes in the March 2022 Biden Green Book which is designed to allow certain individuals to expatriate easily. citizenshipsolutions.ca/2022/03/29/bid… ImageImage
The fourth recognition of the problems of (and caused by) "Accidental Americans" came in Dec. 30/22 - Notice 2023 - 11. The effect of the Notice was that FFIs would NOT be required to close the bank accounts of certain Accidentals who do not have SSNs. taxconnections.com/taxblog/the-ca… Image
The fifth recognition of the problems of (and caused by) Accidental Americans was the Jan. 6/23 announcement by the State Dept that it intended to reduce fee for a CLN from $2350 to the 2012 level of $450. A clear intention to make renunciation easier. citizenshipsolutions.ca/2023/01/10/sta… Image
It can be inferred that US wishes to remove "Accidental Americans" from US tax base. The preceding five steps are attempts to encourage the easy/painless renunciation of US citizenship in accordance with US law and improve US tax compliance in a @CitizenshipTax and #FATCA world.
The term "Accidental American" is neither a definition nor concept in US tax or nationality law. It will be interesting how US defines the groups of people targeted by various programs/initiatives. For example, the 2019 "Relief Procedures For Former Citizens" is narrowly defined.
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More from @ExpatriationLaw

John Richardson - Counsellor for US persons abroad Profile picture
Dec 11
Labor Rally Taking Place Now On Capital Hill To Support A Vote On The Social Security Fairness Act (WEP provision) youtube.com/live/gT5uZYesX… x.com/IRS_MEDIC/stat…
Interesting and motivating ... Frequent references to the fact that the fight to repeal WEP and GPO has been going in since 1983 (40 years). Adovacy is difficult! Image
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Read 11 tweets
John Richardson - Counsellor for US persons abroad Profile picture
Nov 29
Principle 7 - understanding what the #endingdoubletaxation of #Americansabroad means:

It's critical to understand how US @citizenshiptax makes it harder and more expensive for U.S. companies to hire U.S. citizen employee/managers/executives. Nobody understands this better than Jim Gosart - @jgoshksk ...
@CitizenshipTax Wisdom of @jgoshksk -
@CitizenshipTax More wisdom from @jgoshksk -
Read 4 tweets
John Richardson - Counsellor for US persons abroad Profile picture
Nov 16
Principle 6 - understanding what the #endingdoubletaxation of #Americansabroad means:

The biggest obstacle to change to the US @citizenshiptax extra-territorial tax regime is NOT Congress or Treasury

The biggest obstacle to change is (amazingly) #Americansabroad as a group.

Because, @citizenshiptax affects different people very differently, it is hard to (1) define the problem (people understand it in how it affects them) and (2) willingness to actively campaign for change.

All #Americansabroad must come together to demand the severance of citizenship from @taxresidency.
Let's consider different groups and imagine how
@citizenshiptax affects members of those groups. Those with their financial center of gravity in the US might object to the compliance/filing requirements. But are not likely to experience the destructive affects of having a financial center of gravity outside the USA.

Least impacted: 1. Those who retired in the USA and moved abroad 2. Wealthy Americans who move abroad 3. Employed expats who are temporarily abroad.

Most impacted: 4. Emigrants living permanently abroad 5. Accidental Americans who file U.S. taxes

Could go either way: 6. Digital nomads (often use FEIE to avoid paying tax anywhere).
The key point is that because @citizenshiptax impacts people in different ways it is hard to get universal support for severing citizenship from @taxresidency.

Most people want their specific problem solved but are NOT supporters of completely ending the extra-territorial tax regime.

But, it's "All For One and One For All!"

Carveouts will NOT work!
Read 5 tweets
John Richardson - Counsellor for US persons abroad Profile picture
Nov 15
Principle 5 - understanding what the #endingdoubletaxation of #Americansabroad means:

Starting in "Principle 1" I explained that the problem of the #doubletaxation of #Americansabroad exists in relation to non-US income sources received by individuals who do NOT live in the USA (AKA #Americansabroad.

Key point: If @USCitizenAbroad does NOT have non-US income sources and assets, the US @citizenshiptax will be experienced mostly as filing a US tax return while living outside the USA. From that perspective it's easy to see why non-resident US citizens with US income sources and assets are not hugely impacted by US #citizenshiptaxation.
Let's be a bit more precise. Imagine you have a @USCitizenAbroad with an investment portfolio of US stocks, US Social Security or a US pension. Even if taxed by the non-US country, the US generally has first right of taxation (it's US source income). US will NOT impose punitive taxation bc it's US source income. (The other country will generally provde a credit for US tax paid.
Now let's consider a @USCitizenAbroad with a non-US investment portfolio (possibly including non-US mutual funds), non-US pension, small business corp located outside the USA the situation is the opposite of having all US based assets. The non-US country has first right of taxation. The US will then impose very punitive taxation, reporting and penalties because it is "foreign income and assets". #PFIC, #GILTI, #Form5471, #Form8938, #Form8621, etc. - denial of foreign tax credits ...

Clearly US @citizenshiptax allows those WITH US asset
Read 9 tweets
John Richardson - Counsellor for US persons abroad Profile picture
Nov 15
Principle 4 - understanding what the #endingdoubletaxation of #Americansabroad means:

Let's summarize "some" of the costs of the US @citizenshiptax regime to BOTH @USCitizenaboad and the countries where they live.

First, Costs of US @CitizenshipTax to #Americansabroad

- #Americansabroad are in effect subject to a separate and more punitive tax regime than Homeland Americans. On this point see:

citizenshipsolutions.ca/2019/03/12/the…
Second, the lost opportunity of not being able to participate in retirement and financial planning programs created by their country of actual residence:

citizenshipsolutions.ca/2017/08/04/the…

Third, the horrible fees to tax preparers to prepare (often incorrectly) US tax returns. It is obvious that compliance costs should be considered a separate tax on UScitizenship.
Fourth, the inability to have access to normal banking, brokerage and investment accounts. US Treasury denies this is happening. But, I have people all over the world #renounceuscitizenship in order to free them from this US @citizenshiptax imposed disability.

Fifth, who in their right mind would engage in business opportunities with a U.S. citizen partner. Would you want to have your banking info reported to the IRS
Read 7 tweets
John Richardson - Counsellor for US persons abroad Profile picture
Nov 15
Principle 3 - understanding what the #endingdoubletaxation of #Americansabroad means:

Because @doubletaxation of #Americansabroad is caused by US @citizenshiptax it is clear that ending the #doubletaxation of @USCitizenAbroad can be ended by ending #CBT - AKA separation citizenship from @taxresidency. This is the ONLY solution that solves the problems of all people, all the time and under all circumstances.

That said, other solutions have also been proposed.

These other solutions which RETAIN US #citizenshiptaxation and solve the problems of some but all include ...

-
Proposals that RETAIN US @citizenshiptax but provide relieving provisions for some of the effects of #CBT for some people but not for others. Examples include:

- the 2018 Holding Bill and the later Beyer bills which mostly exclude most non-US source income from US taxation but are aimed at limited forms of income and leave ALL reporting requirements in place (Form 5471, Form 8938, Form 3520, Form 3520A, Form 8621, FinCEN 114, etc.)

Note that although these might enddouble taxaion they are limitedin scope.
It's important to note that #endingdoubletaxation of #Americansabroad ...

- by severing US citizenship from @taxresidency ends all the compliance costs of being a @USCitizenAbroad

- by RETAINING US @citizenshiptax, but creating a "carve out" for foreign income means that the compliance cost, reporting obligations and opportunity cost (restrictions on investing/financial planning) likely continue.
Read 5 tweets

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