Warning for U.S. Citizens

[Dockhead]

Originally Posted by redneckrob

. . . Once again, I can completely see how I could make a tax mistake, in fact I have multiple times over my life. I find it inconceivable that I could go multiple years with the IRS trying to reach me at the addresses I provided when its trivial to set up a scan and email mail forwarding service. . . .

What you find inconceivable, is in fact daily life for millions of long term expats without access to mail forwarding from the states. It might seem "trivial" to you, but for this or that reason, hardly anyone (including myself) who is not getting mail from the U.S. uses these services. All idiots in your view, or scofflaws, in case they get caught out, deserving whatever they get.


There is no point in continued attempts to paint a true picture of expat life. I've laid out the facts. You're welcome to your unempathetic misconceptions.

[flightlead404]

Originally Posted by Dockhead

This sounds pretty wild, but apparently really true:


https://www.iexpats.com/irs-set-to-c...ith-tax-debts/


You can get stuck with a cancelled passport (!) if you have an outstanding tax bill. Seems like a basic human rights violation, but there you are. Be careful!!

Its one of the reasons I recommend people have passports in more than one country. I have two myself, and hope to get a 3rd non-OECD passport in the future.

Personally I regret becoming a naturalized US citizen in a misplaced fit of patriotic fervor after 9/11, there was nothing wrong with my green card

[valhalla360]

Originally Posted by Dockhead

What you find inconceivable, is in fact daily life for millions of long term expats without access to mail forwarding from the states.

Yes, it is inconceivable because it's so easy to set up electronic mail forwarding from the states.

I have expat friends who use it, including using the address with the IRS.

[garyfdl]

Originally Posted by redneckrob

Stating that it is easier and less costly to audit smaller tax payers is simply a statement of obvious fact. How does that support an assertion that the IRS targets small tax payers over larger ones?

LOL if it's an 'obvious fact' why did you question it and continue to do so?

As to supporting the 'assertion'? Try reading the article; Better yet, do your own research and Google it.

Btw, your 'nom de guerre' may not be as far off as you think... IMHO

[Dockhead]

Originally Posted by redneckrob

Again, then what do we do? Allow those folks to remain noncompliant indefinitely while holding everyone living into the U.S. strictly to the rules? And denigrate anyone who points out that this is both poor policy and unfair? Or do we figure out the one way that we can get their attention and implement that? If passports isn't the best way, what is your suggestion of a method that holds every American equally accountable under the law?

What we do? Well, now finally an interesting question. Certainly I agree with the goal of "holding every American equally accountable under the law."



Some suggestions:


1. Stop taxing people based on citizenship. Reform the tax system so that we tax based on residence only, like the entire world does except North Korea and one or two other countries. To be clear: Sweden, Denmark, the UK, Germany, Japan, France, Mexico, Canada, etc. etc. etc. etc. etc., even Russia -- do not tax their citizens based on citizenship like we do.



There have been numerous legislative initiatives on this but nothing has gone through so far. OK, failing that, plan B:


2. Reach out and educate, attempt to bring people into compliance in a patient and understanding way.


And with all credit to the IRS, that is actually what they are doing. So many U.S. expats are out of compliance with filing requirements, apparently an absolutely majority, that the IRS has had in place a generous amnesty scheme call the Streamlined Procedure. This has been in place since 2012 and has been such a success that it has been continued even up until the present day. Basically this procedure says that as long as you were not missing your filings wilfully, you can file 3 years of 1040's and they won't penalize you, nor will they even ask for unfiled years before that. Available only to long term expatriates.



This is excellent, and has been a great success, bringing millions of expats into compliance over the years. Truly win-win, at least, if you have taken tax reform off the table. But WHY we need expats who don't owe any tax to be filing complex tax returns every year, is a deeper question. Very few expats pay any taxes at all, because anyway the first $108 700 of earned income is exempt from income tax, and most American expats anyway live in jurisdictions with higher tax than Americans pay and are allowed to offset their foreign taxes against U.S. tax obligations. Compliance among expats who actually pay taxes (like me) is very high -- the people we are talking about is your average expat who does NOT pay any U.S. taxes.



So in the vast majority of cases, U.S. expats who don't file 1040's don't owe any tax anyway, so the moral outrage over this delinquency is completely misplaced. It's just needless bureaucracy to make them file, and then whack them when they don't.


Should passports be cancelled for tax delinquencies? I am not morally outraged by this, but in my opinion this is too much. I do understand why the IRS would ask for this -- there are a certain number of real hard core scofflaws with big unpaid tax bills (I know one) who avoid enforcement by staying out of the country. Yanking their passports is a cheap way to get their attention and get them back home where they can be prosecuted, compared to very expensive processes to reach people overseas.



But the United Nations Universal Declaration of Human Rights, Article 13, Clause 2, says: "Everyone has the right to leave any country, including his own, and to return to his country". This document has no legal force, but I think this clause is a reasonable formulation of a real human right or what at least should be a fundamental human right. In my opinion, this right is more important and more sacred, than the goal of making it cheaper for the IRS to get at a small number of hard core scofflaws.


Paying taxes is the price of living in civilization. I am all in favor of everyone paying his fair share. Certainly I pay my own fair share. But enforcement of the obligations to do so should be reasonable, measured, and kind.

[Dockhead]

Originally Posted by valhalla360

Yes, it is inconceivable because it's so easy to set up electronic mail forwarding from the states.

I have expat friends who use it, including using the address with the IRS.

1040 wants your HOME ADDRESS, and allows the use of a PO box ONLY if the post office doesn't deliver to your home. 1040 doesn't say "mailing address", it says "HOME ADDRESS".



If you indicate a U.S. address on your 1040, you are creating a presumption that you are domiciled in the U.S. and are not eligible for the FEIE. This can cause you big problems. My tax advisors told me categorically not to ever use a U.S. address on my 1040 (during the 90's I was living in a country where physical mail services had completely broken down for a time, and I wanted to have my mail sent to my father's address, but alas no).



This is no provision in the tax filings for a mailing address separate from your home address. There is no provision for receiving correspondence electronically.


If you use a mail forwarding address on your 1040, then if it's even legal to indicate that as your "Home Address" in your 1040, then it should be at least in the same country as your real home address. You see it's not so simple as you imagine.



You seriously underestimate what a challenge it is for some people to get physical mail from the IRS. You live your lifestyle; the way other people live may be totally different from your experience.

[redneckrob]

Originally Posted by garyfdl

LOL if it's an 'obvious fact' why did you question it and continue to do so?

As to supporting the 'assertion'? Try reading the article; Better yet, do your own research and Google it.

Btw, your 'nom de guerre' may not be as far off as you think... IMHO

Since you didn't provide a link I was responding to your quote, which simply stated the obvious that it was easier to do audits for small accounts, not that the IRS based their audits on what was easier to do. If you have a quote or a link or something to show that the IRS actually only does do audits on easy to audit accounts I would sincerely be interested in seeing it; you'll note I never disputed that I simply asked for some support of that assertion which has heretofore not been forthcoming.

BTW, the whole "I make an unsupported claim, if you as me to substantiate it I tell you to go google it" thing is tiresome at best, don't you think? Do you appreciate that when others pull it on you?

[Pelagic]

Originally Posted by Dockhead

What we do? Well, now finally an interesting question. Certainly I agree with the goal of "holding every American equally accountable under the law."


Some suggestions:

1. Stop taxing people based on citizenship. Reform the tax system so that we tax based on residence only, like the entire world does except North Korea and one or two other countries. To be clear: Sweden, Denmark, the UK, Germany, Japan, France, Mexico, Canada, etc. etc. etc. etc. etc., even Russia -- do not tax their citizens based on citizenship like we do..

Exactly DH.

USA's global tax sweep has forced a growing number of extremely affluent, patriotic Americans to give up their US citizenship, because of their complicated national and multinational Corporate holdings...
... and the overreach of the IRS.

The irony of that is that the US then looses an extremely productive citizen, who now visits the US as a tourist.

https://www.axios.com/wealthy-people...6839f209d.html

https://www.prnewswire.com/news-rele...301222817.html

[Jammer]

Originally Posted by Dockhead

It is very easy to make a mistake.

I am dismayed to see everyone piling on Dockhead here.


It is indeed all too easy to make a mistake or oversight, and the IRS is all too happy to impose large penalties without any regard to the presence of malicious intent, circumstances, history of compliance, etc etc etc. It is one of many areas of law and regulation where there is aggressive enforcement against any violations that come to the attention of the state.

[garyfdl]

Originally Posted by redneckrob

Since you didn't provide a link I was responding to your quote, which simply stated the obvious that it was easier to do audits for small accounts, not that the IRS based their audits on what was easier to do. If you have a quote or a link or something to show that the IRS actually only does do audits on easy to audit accounts I would sincerely be interested in seeing it; you'll note I never disputed that I simply asked for some support of that assertion which has heretofore not been forthcoming.

BTW, the whole "I make an unsupported claim, if you as me to substantiate it I tell you to go google it" thing is tiresome at best, don't you think? Do you appreciate that when others pull it on you?

OOPS! Mea culpa. Here's the link.

https://www.foxbusiness.com/money/ir...xpayers-easier

I used to get "Google it!" a lot - to the extent that I will (often) do so before I ask for supporting information to someone's claim.

[Anders]

Originally Posted by flightlead404

Its one of the reasons I recommend people have passports in more than one country. I have two myself, and hope to get a 3rd non-OECD passport in the future.

Personally I regret becoming a naturalized US citizen in a misplaced fit of patriotic fervor after 9/11, there was nothing wrong with my green card

As a green card holder you would still have to file a tax return even if you lived outside US.

[garyfdl]

Originally Posted by flightlead404

Its one of the reasons I recommend people have passports in more than one country. I have two myself, and hope to get a 3rd non-OECD passport in the future.

Read this and thought: "can you legally do this?"

So... I Googled it. ( redneckrob) Aaaand you can!

BUT

From what I gather it is very expensive! From $100,000 USD to over a MILLION USD! And, it could require you to own property and /or investments in the country you get the passport from, presumably subjecting one to their tax laws.

And then... "U.S. nationals, including dual nationals, must use a U.S. passport to enter and leave the United States." ~ Travel.State.gov

Probably easier just to pay "your fair share".

[redneckrob]

Originally Posted by garyfdl

OOPS! Mea culpa. Here's the link.

https://www.foxbusiness.com/money/ir...xpayers-easier

I used to get "Google it!" a lot - to the extent that I will (often) do so before I ask for supporting information to someone's claim.

Thank you!

[Wotname]

Amazing thread, gobsmacking really, especially about USA expats having to file tax documentation yearly even if they don't need to pay US tax.

And U.S. nationals, including dual nationals, must use a U.S. passport to enter and leave the United States - WTF.

Land of the free, I hear it everywhere but I'm not seeing it in action - what eyeopening arrangements!

[garyfdl]

Originally Posted by Wotname

Land of the free, I hear it everywhere but I'm not seeing it in action

If you knew anything about our history, particularly as it relates to colonial period under British rule, and our Constitution, then maybe you'd understand.