Offshore Without a Land Address

[exMaggieDrum]

We used a mail accumulation and forwarding service in Seattle when we went offshore. It was not legal to use a a physical address in a few instances. Washington, and I suspect many other states, will not accept a mail forwarding address even if it doesn't look like one since the mail is sent to the physical address of the service.

This isn't directly related to your issue, but it became a big deal for us, is that the Federal boat documentation department requires you to respond to renewal notices within a small window of time or else you have to go through a costly reinstatement process. Other things such as IRS audit notices require quick reaction times (just an example - never happened to us until we came back).

[belizesailor]

Originally Posted by exMaggieDrum

...
...
This isn't directly related to your issue, but it became a big deal for us, is that the Federal boat documentation department requires you to respond to renewal notices within a small window of time or else you have to go through a costly reinstatement process. Other things such as IRS audit notices require quick reaction times (just an example - never happened to us until we came back).

These issues point out why it is handy to have mail, at least important items, scanned and emailed to you.

[belizesailor]

Originally Posted by crazyoldboatguy

Greetings,

...

We may have to talk to our tax guy about this but we are curious as to how folks establish some type of "residency" for state tax purposes. We can easily get a post office box and will have a land based agent to handle our affairs during those times we may be unreachable. Just wondering what it takes so that the Tax Man doesn't come after us.

The best way/place to establish residency for legal/tax purposes will vary depending upon the specifics of your situation and the State you choose. So, as you are doing, discuss this is issue with tax and legal council. All we here can do is say what worked for us, which may or may not work for you. It does at least give you a sample of solutions.

In my case my Accountant established my tax domocile in Florida.

[Canibul]

Originally Posted by belizesailor

s.

For example, my boat has Belizean registration, I have legal residency in Guatemala, income from multiple States and countries...my Tax Domocile for IRS purposes is Florida.

Sounds like we're heading toward a similar set of circumstances. We're considering the ramifications of dropping the USCG documentation and registering the boat in the TCI, although we remain US citizens.

Has having a Belizean registration been a good thing?

[dannc]

There was an article in the Wall Street Journal in the last couple of weeks that I scanned that is applicable to this discussion.

The article was about US citizens getting trapped by Federal law that in the past had not really been enforced but is now. The article mentioned financial institutions limiting overseas access or accounts because of Federal law. I really did not pay that much attention to this part of the article though. What caught my eye was that some US citizens are having to renounce their citizen ship due to possible tax law violations.

The law in this is unreal but here it goes.

If a US citizen has ANY money in an overseas account, this money must be reported to the IRS. You must report even if you do not owe one cent in taxes. The penalty of NOT reporting money held over seas can be as much as 50% of the maximum amount of money that was held in that account. I think there was a one year period on the maximum amount of money in the account.

So if you bought a bought overseas, transferred $100,000 to buy that boat to an overseas account and did not report that amount to the IRS, the IRS can go after you for $50,000 even though you did not own US taxes.

The law was written to go after people hiding money overseas and it has trapped innocent people. Their only/easiest way out was to renounce their US citizen ship. The example in the WSJ was of a US citizen married to a Canadian. She renounced her US citizenship because she was in violation of US law and was afraid she would loose a big chunk of her money since she did not report the money she did not know she had to report. She owes no US taxes.

Later,
Dan

[Canibul]

Sadly, US Citizenship is not what it once was. We don't wave the flag around much, and never display it on the boat.

[dwedeking2]

Many of the ex-pats, where I now live in Mexico, use South Dakota. Because they are land based the easy car registration requirements (just mail in the renewals once it's set up, no smog/safety checks) is the primary reason. There is even a company ( Americas-Mailbox Home - mail forwarding - Americas-Mailbox ) which has a whole system set up for establishing residency and all the related services to do this. I've never used them, just got the link from a expat forum I follow.

I established residency in Nevada (by living there) before leaving the country. I have a mail forwarding service that has an online component. They hold my mail until I go online and tell them where to send it (an option you can set or you can do a periodic forward, like once a month or something). Once I log in I can tell them which mail to forward, which to hold and even have them discard something. There is a scanning service so they will scan the mail, but I've never used that.

With so much online, really filing taxes is about my only reason for having an address.

[belizesailor]

Originally Posted by Canibul

Sounds like we're heading toward a similar set of circumstances. We're considering the ramifications of dropping the USCG documentation and registering the boat in the TCI, although we remain US citizens.

Has having a Belizean registration been a good thing?

Belizean registration is a PITA to get on a foreign vessel and of no real use outside of Belize. I have it because I used to live there and used my boat commercially in Belize. My boat is also USCG documented which is much more useful for crossing international borders because it is so widely recognized. Although techinically the Belizean registration should be recognized, and surprisingly looks quite official, even nearby Guatemalan authorities prefer the USCG registraton.

If you plan to leave TCI waters often you might consider keeping the USCG documentation...no big deal to maintain.

This is another aspect of cruising for the OP to consider.

[Fortytwo]

Virtual Post Mail – Online Postal Mailbox. Anytime, Anywhere.

I have been happy with their service. They respond quickly to emails. I currently need to have a California address.

[belizesailor]

Originally Posted by dannc

There was an article in the Wall Street Journal in the last couple of weeks that I scanned that is applicable to this discussion.

The article was about US citizens getting trapped by Federal law that in the past had not really been enforced but is now. The article mentioned financial institutions limiting overseas access or accounts because of Federal law. I really did not pay that much attention to this part of the article though. What caught my eye was that some US citizens are having to renounce their citizen ship due to possible tax law violations.
...

The requirement to report foreign assets has been around for a long time, but recent FATCA legislation beefed it up.

The renouncing citizenship bit sounds a little far fetched though, I doubt it would avoid prosecution for past tax violations.

Lesson: Don't mess with the IRS.

Another aspect of FATCA regulations that is effecting Expats is the increased reporting requirements on their foreign bank accounts. To avoid the hassle, some banks in Panama have closed Expat accounts.

[belizesailor]

Originally Posted by colemj

As others have stated, many of these mailing services act as real addresses.

In addition to keeping a credit card, also don't forget about car insurance. We learned from friends (who learned the hard way) that dropping car insurance for several years automatically puts you in the high risk pool category upon returning. We keep a relatively inexpensive non-drivers policy that covers us should we rent a car, but more importantly keeps us "visible" as having years worth of coverage.

Mark

Can you post a link for the car insurance?

[Hudson Force]

We, also, keep a non-owners liability policy for our occasional rental cars and we use the collison coverage opportunity that is availble with our credit card. It might take some searching to find the non-owners liability coverage. We found that this is not a typically written policy. Since the insurance rates are so high if paid through the car rental company, we found that our separate policy was an economical advantage if we rented 12 or more days of the year.

[dannc]

Originally Posted by belizesailor

The requirement to report foreign assets has been around for a long time, but recent FATCA legislation beefed it up.

The renouncing citizenship bit sounds a little far fetched though, I doubt it would avoid prosecution for past tax violations.

Lesson: Don't mess with the IRS.

Another aspect of FATCA regulations that is effecting Expats is the increased reporting requirements on their foreign bank accounts. To avoid the hassle, some banks in Panama have closed Expat accounts.

The WSJ is a pretty reliable source and they said that the number of renounced citizenships has increased because of the regulations. It does avoid prosecution because the people are no longer US citizens.

Later,
Dan

[Canibul]

Originally Posted by Hudson Force

We, also, keep a non-owners liability policy for our occasional rental cars and we use the collison coverage opportunity that is availble with our credit card. It might take some searching to find the non-owners liability coverage. We found that this is not a typically written policy. Since the insurance rates are so high if paid through the car rental company, we found that our separate policy was an economical advantage if we rented 12 or more days of the year.

we'd be real intested in who you used for these policies. I tried quite a bit to find a personal liability policy that covered us while in the US, and about a half dozen tries produced the same info over and over:

I can get a Personal Liability Policy in the country where I reside. Period. IF I lived in the US I could get one that would cover me everywhere, but as a TCI resident, I can get one here that only covers me in the TCI. Local insurance company told me there's no way they can keep up with liability laws all over the world.

We pay a fortune in rental car insurance. forty, fifty days a year.

[leftbrainstuff]

Nation states don't cope well with people that don't reside in a fixed locale. Thankfully in the US it's easy to get a UPS post box that mimics a physical address.

There are also online services that can scan your mail and email it to you.

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