
Why expat Americans are giving up their passports - nkurz
http://www.bbc.com/news/35383435
======
timthelion
I am an American living in Prague and will be among those to give up their
citizenship. The new FBAR requirements and the recently pushed through changes
that require foreign banks to report are really a huge burden. It is a
significant legal risk to be an American overseas. The fines are insane for
failiure to report, even if you owe no taxes! You can easilly land yourself
with a $20 000 - $80 000 fine for having a hundred bucks in the bank and no
income. Indeed, it's not just double taxation, it's tripple taxation, because
I have to have a special bank acount that is for Americans, and the fees for
the "American expat" bank account are much higher than the ones for a normal
bank account.

But I think that it is wrong to present this as a taxation issue. I would be
fine with paying a percentage of my income in taxes. There are some benefits
to being a US citizen, like that the army will rescue you if there is a civil
war ;). But the fear uncertainty and doubt that surrounds these new
regulations makes it nerve racking to be a citizen. Every expat I know here
has nightmares about an audit comming and having all of their assets seized.
And it has happened to some of them too! And that legal risk is no longer a
form of taxation, because taxes are percentual (the more you earn the more you
pay), but when you end up having to pay a fine that is higher than your net
worth, that's just robbery.

We used to be a free nation, but thanks to austerity the 'r' had to be
removed.

~~~
mike_hearn
_> There are some benefits to being a US citizen, like that the army will
rescue you if there is a civil war_

This is a common myth. If you don't intend to return to the USA there are no
benefits to US citizenship, only downsides. The US may or may not rescue you
if there's a civil war (see the fate of people in Yemen), but if they do, they
will charge you for it at military rates you almost certainly cannot afford:

[https://travel.state.gov/content/passports/en/emergencies/cr...](https://travel.state.gov/content/passports/en/emergencies/crisis-
support.html)

See "Will the US government pay for my travel? What will it cost?" which says,
essentially, that no, it won't. This is unlike other countries which DO
evacuate citizens for free and DO NOT charge taxes on non-residents.

~~~
knodi123
> but if they do, they will charge you for it at military rates you almost
> certainly cannot afford:

But the link you posted said "We charge you the equivalent of a full coach
commercial fare on a comparable mode of transportation at the time that
commercial travel ceases to be a viable option."

Where'd you get the "military rates" part?

~~~
terinjokes
When was the last time you bought a full fare couch ticket? People are usually
buying "double deep discount" tickets. Most of the time you can buy first or
business fares for cheaper.

------
dalke
American citizens have to pay $2,350 to renounce citizenship? What kind of
paperwork costs that much? (Or, why not just add more paperwork and charge
$100K?)

[http://www.greenbacktaxservices.com/blog/renouncing-us-
citiz...](http://www.greenbacktaxservices.com/blog/renouncing-us-citizenship-
will-cost-422/)

> 1\. Consular officers must confirm that the potential renunciant fully
> understands the consequences of renunciation, including losing the right to
> reside in the United States without documentation as an alien.

> 2\. Consular officers must verify that the renunciant is a US citizen and
> they must conduct a minimum of two intensive interviews with the potential
> renunciant.

> 3\. Consular officers must review at least three consular systems before
> administering the oath of renunciation.

> 4\. The final approval of the loss of nationality must be done within the
> Directorate of Overseas Citizens Services in Washington, D.C. After that,
> the case is returned to the Consular officer overseas for final delivery of
> the Certificate of Loss of Nationality to the renunciant.

"Intense"? [http://hodgen.com/renunciation-interviews-
intense/](http://hodgen.com/renunciation-interviews-intense/) gives a report
from an interviewee:

> Also, despite what the State Department says, I did not have “two intensive
> interviews”, unless two interviews at a window open to view of all waiting
> in the Passport Section at the London Embassy count. These were to make
> sure, first, that everything was correct on the (many) forms I had sent in,
> and, second, that I understood the seriousness of the step I was taking and
> finally to swear/affirm my renunciation. I thought it was all rather less
> intensive than it should have been, considering the seriousness with which I
> had approached it.

The official estimate, reported at [https://www.rt.com/usa/183972-fee-
renounce-us-citizenship/](https://www.rt.com/usa/183972-fee-renounce-us-
citizenship/) , is that:

> the State Department notice gives an estimate of a consular officer’s time
> at $135 an hour working for 20 hours.

and confirms:

> “The questions are minimal and I didn’t spend more than 15 minutes at the
> window either time. It’s not intensive. They ask you: ‘Are you aware of the
> ramifications of your actions?’ And ‘Are you doing this of your own accord?”
> she said.

Finally from [http://worthly.com/news/cost-renouncing-u-s-
citizenship/](http://worthly.com/news/cost-renouncing-u-s-citizenship/) I
learn:

> Prior to 2010 it was free to renounce U.S. citizenship, but in July of that
> year a $450 was established.

~~~
jacquesm
That sounds about as hard as cancelling comcast.

~~~
charlieflowers
If comcast could charge $2350 to cancel, they would.

~~~
wickedlogic
And really, at that price have you thought about upgrading to triple play?

------
anothermouse
I am British, and am married to an american. My wife moved to the UK and has
never worked since. I had no idea about her obligation to file anything. She's
been here for over a decade.

Like a lot of people we use a joint bank account. My salary, and anything else
goes in there.

A couple of years ago I sold my flat in central London, and had 400K (600K
USD) in there at various points. I have no idea how to bring my wife into
compliance, as if I do, she will be expected to hand over 25% of the maximum
balance of this account for every year it was undeclared to a maximum of 5
years. I.E. 125% of the maximum balance!

She remains unaware, and I don't file for her. We'd risk losing our house
(brought with the proceeds of the previous sale), if I attempt to fix this. I
live in absolute dread of the IRS, and what they may do to our happy family.

~~~
ssmoot
I don't know if this applies to you, but state-side the sale of an asset
wouldn't be counted as income.

According to this: [http://time.com/money/2803550/income-taxes-on-home-
sale/](http://time.com/money/2803550/income-taxes-on-home-sale/)

If you lived in your previous home for at least 2 years, then you'd take it's
original sale price plus closing/brokerage/etc costs as your "basis". Then
take your later sale price subtracting those same costs. You get a $250,000
credit on profits.

So to me (a complete layman who's maybe not very good at taxes), that means if
I buy a house for $200,000 plus 5% closing costs, my original expenses were
$210,000. I later sell it for $450,000 minus 5% closing costs. That's
$427,500. I've made $217,500 for holding onto the asset for two years. I
should probably play the lottery. ;-)

Because I'm under the $250,000 single filing credit ($500,000 for joint filing
couples, but I'm not sure how that'd work in your case since you're not a US
citizen), I don't owe anything.

Say I did really well and made $400,000 in pure profit though (selling my
$210,000 in the neighborhood of $600,000+).

You still get the credit so your taxable profit is $150,000 (assuming the
joint filing credit wouldn't apply). That's taxed as capital gains. Not
income. Which is a regressive tax. The highest rate is 20%. That'd be a
$30,000 tax bill.

This all assumes you even put her on the title for the old property. If you
didn't, then the sale doesn't mean anything necessarily. That she had access
to the money through a joint banking account after the sale might complicate
things?

In general I've found the IRS to be very helpful. They're not interested in
prosecution (IME). They just want their due. And they're pretty flexible in
making that happen.

Once upon a time I owed $15,000 in taxes from previous contract work, and
hadn't filed in a few years because I was scared of the consequences. That's
about the worst move. By not filing I racked up something like $1,000 in non-
filing penalties each year as well as paying 10% interest on the amount owed.

When I finally did get my act together and contact them they waived further
penalties, suspended the interest on the amount owed and set me up with a $300
a month payment plan.

There are a lot of horror stories out there. And bad things do happen to good
people. But I'd like to imagine that most cases work out more like mine.

If I were in your position, I'd make it a priority to talk to a tax attorney,
being sure they don't have a reporting obligation. It probably won't cost more
than a few hundred dollars just to get some advice. Then I'd get a second
opinion. Once I had some confidence I had a grip on the situation and how it
was likely to play out, I'd talk to the IRS on my own, get on a payment plan
if necessary, and put it behind me.

I'm not sure it applies in your situation, but stateside, simply avoiding
filing properly is about the worst thing you can do. It doesn't just go away
on it's own. That only makes it worse (interest and penalties).

But you know, I'm just some random guy on the internet. Figure out if tax
attorneys have a reporting obligation and talk to one maybe? Good luck!

~~~
anothermouse
The problem is not that I made a profit in selling my house, it is that my
wife had money in a bank account at all.

As she didn't file, she didn't know that you need to file an FBAR annually for
each foreign account _. And the penalties for not doing so are those mentioned
above 25% of the balance a year for 5 years.

_ and there are plenty who do file who don't know to file an fbar too.

------
cbennett
Upset about this issue and want to make a positive difference rather than
debating technicalities or simply waiting for the other shoe to drop?

It may be no surprise that FATCA and FBAR present several consitutitional
issues. Chief among them are the following:

-As the IRS can unilaterally sign unauthorized pseudo-treaties with foreign governments, the Senate’s role in ratifying treaties is bypassed

-Fourth amendment: Private financial data is collected indiscriminately

-Eighth Amendment prohibiting cruel and unusual punishment, as well as excessive fines, may be leveraged when compliance is not perfect, and without Rule of Law provisions to ensure any protection for the accused. (My recapitulation of points in [1] )

Thankfully, several large scale legal challenges on exactly these grounds are
now underway- by Sen Rand Paul and 6 other expats [2] , and perhaps even more
promisingly, by super lawyer Jim Bopp (who took down Mc-Cain Feingold [3]).

You can also donate a small amount to support the latter case:
[https://fatcalegalaction.com/contribute/](https://fatcalegalaction.com/contribute/)
Thanks for reading, lets not give up hope, and remain fired up to the
correctness of this cause because, in the words of Bopp - “The U.S.
Constitution protects every citizen’s liberty and freedom, while FATCA
undermines both,”

We deserve better!

Signed, An American living in Paris

[1]
[http://www.thenewamerican.com/usnews/constitution/item/18253...](http://www.thenewamerican.com/usnews/constitution/item/18253-critics-
mount-constitutional-attack-on-dreaded-fatca-tax-regime)

[2]
[http://www.taxanalysts.com/www/features.nsf/Features/9D07FB4...](http://www.taxanalysts.com/www/features.nsf/Features/9D07FB48795BBF9285257EC1006BB907?OpenDocument)

[3]
[http://www.washingtontimes.com/news/2014/may/5/superlawyer-j...](http://www.washingtontimes.com/news/2014/may/5/superlawyer-
jim-bopp-takes-on-mccain-backed-tax-ac/?page=all)

~~~
___ab___
1\. The IRS isn't signing binding international agreements, they're agreeing
to cooperate with foreign governments in the reporting of financial assets,
which is well within their legal privilege.

2\. The fourth amendment doesn't apply to data you're legally compelled to
surrender to the government. By your logic, every form 1040 that's ever been
filed is a fourth amendment violation.

3\. The eighth amendment has almost never been used in a constitutional case
involving excessive fines. When it has, the court has primarily used it to
prevent pseudo-fines that aren't really called fines in order to skirt the
eighth amendment.

Sure, FATCA might be annoying, but a legal challenge has almost nothing going
for it. Don't get your hopes up.

------
letitleak
"The US Treasury worked tirelessly to address many of these problems, and most
have been resolved. If there are still problems with the law, then I believe
Congress should hold hearings to see how it can be improved."

I bet they are wondering how to stay motivated on this one. Well a minor
update to the legal system should fix the problem:

Welcome to Congress, we have now designated you a "US Congress Person" for
filing purposes.

Being or having been a Members of Congress will require you to file all forms
that could be requested of any "US Person".

In cases like FATCA you will also be required to disclose all accounts in your
country of residence to meet our test of equivalence for "US Persons" abroad.
Banks in the US will now be required to follow all procedures for FATCA for
the special case of "US Congress Persons" or face 30% penalties. If Banks are
unable to establish whether account holders are "US Congress Persons" they
shall pay 30% penalties on all US sourced income.

The penalties for failure to file any form as a "US Congress Person" shall be
no less than the highest established for other "US Persons".

Being convicted of some crimes and failures to file may limit your time in
office but does not change your status and obligations as a "US Congress
Person". If (Ex-)Congresspeople would like to renounce their citizenship they
will automatically face the maximum 10 years of continued filing with the IRS
as provided by the current regulations. "US Congress Person" like "US Person"
can not be renounced separately.

Children of US Congress Persons shall inherit all filing birthrights of being
a "US Congress Person".

(edit- fix mis-attribution of renunciation/IRS filing issue to FATCA)

------
youngbullind
This affects my girlfriend. She has a dual passport but only lived in the US
to the age of six months. We are are British but live in Spain which already
makes for complex tax arrangements, and this on top of things is just crazy.
How the hell does the US think it has the right to tax people who haven't
lived there for over 30 years?

~~~
chrisseaton
Does your girlfriend have access to services as a US citizen? Such as
embassies, entrance to the US without a visa, or evacuation in case of war?
Who should pay for those services if your girlfriend doesn't want to?

~~~
leoedin
You say this like other countries don't also offer those services. Almost
every western country does, and none of them tax their citizens abroad.

The UK embeds the cost of consular protection and embassy services into the
renewal cost of a passport - approximately £15 in 2010, probably more now.
It's an insurance payment that most people will never use, so it doesn't need
to cost very much per person.

Citizens of a number of countries can enter the US without a visa. They don't
also have to fill out tax returns in the US.

~~~
vinay427
>Almost every western country does, and none of them tax their citizens
abroad.

This is certainly not limited to western countries, to underscore your point.
Even India evacuated its citizens from Yemen, while the US did not. [1]

On that note, India also organized the largest-ever civilian airlift to
evacuate tens of thousands of citizens from Kuwait during the Iraq invasion
(1990). [2]

[1]: [http://america.aljazeera.com/articles/2015/4/7/us-
among-26-c...](http://america.aljazeera.com/articles/2015/4/7/us-
among-26-countries-asking-india-to-help-citizens-escape-yemen.html)

[2]:
[https://en.wikipedia.org/wiki/1990_airlift_of_Indians_from_K...](https://en.wikipedia.org/wiki/1990_airlift_of_Indians_from_Kuwait)

------
rbehrends
For what it's worth, at least part of the problem should be fixed when the
EU's Payment Accounts Directive [1] comes into effect [2]. It prohibits both
discrimination on the basis of nationality (as long as the customer is legally
resident) in article 15 and enshrines the right to a basic bank account in
article 16.

This does not solve the other problems with FATCA, but it should eliminate at
least one practical and very real annoyance for Americans living in the EU.

[1] [http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A3...](http://eur-lex.europa.eu/legal-
content/EN/TXT/?uri=CELEX%3A32014L0092)

[2] Technically, the directive is to be transposed by September 18, 2016 at
the latest, but some member states may be dragging their feet.

~~~
mike_hearn
It just represents total capitulation by the EU - all banks will be legally
required to have a relationship with the IRS and do their bidding, as turning
away US persons will not be possible any more. As that's extremely expensive,
in turn, those costs will get passed on to all the non-Americans. So everyone
else ends up paying through higher bank charges for the costs of IRS
compliance.

~~~
rbehrends
It's not being done for the benefits of US citizens, that's just a side
effect. The goal of the Payment Accounts Directive is to ensure that every EU
resident has access to banking services.

------
josh_fyi
For most tax forms, the IRS says "you have to fill out this form so as to pay
the correct taxes."

For FATCA, the IRS says "FATCA targets tax non-compliance by U.S. taxpayers
with foreign accounts." [https://www.irs.gov/Businesses/Corporations/Foreign-
Account-...](https://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-
Compliance-Act-FATCA)

In other words, FATCA treats all Americans overseas as a priori criminals --
the form is being filled out to "target non-compliance."

~~~
Ensorceled
This is exactly how the IRS treats all non-resident US tax payers. My ex, a
joint Canadian/US citizen, had a problem with her taxes one year. The CRA
(Canadian Revenue Agency) sent a letter that basically said "You appear to
have made a mistake on your taxes, we think you owe an extra $XXXX. Check with
your accountant, sorry for the bother if this isn't correct." the letter from
the IRS basically said "You have defrauded the US Government of $YYYY. You
will be arrested if you return to the US. You will be extradited if your
country of residence supports extradition for Fraud. Fraud of this amount can
result in <list of horrible penalties>"

Her accountant cleared it up in a few days, apparently someone at the IRS had
made a mistake about Canadian Tax Law and reported the problem to the CRA
which didn't verify it. It was a scary couple of weeks until we got the letter
from the IRS which said the taxes were fine but included a warning about not
letting this happen again.

I'd have renounced just for that bullshit.

~~~
Relys
Whatever happened to innocent until proven guilty? People make simple mistakes
all the time. With something as bloated and obtuse as the US tax code the
margin of error for honest mistakes is drastically increased. Criminal action
should be classified as preemptive malicious intent. Glad to hear things
worked out to you. Props to the CRA for it's professional conduct.

~~~
Ensorceled
Also, many parts of the tax act have grey areas where even the CRA/IRS is
unsure. You can call the CRA/IRS several times and get different opinions on a
situation depending upon which agent you talk to.

------
madaxe_again
So, I know a us born billionaire who rescinded his citizenship last year to
avoid fatca.

He has successfully evaded both the US and UK tax authorities to the tune of
half a billion or so, he tells me.

The guy gives crazy amounts to philanthropic causes instead. He doesn't want
his hard earned wealth pissed away by clueless bureaucrats.

So. Anyone who tells you fatca has been a success is full of it. It penalises
"normal" people, and the evaders keep on evading. Uruguay is where they've all
now got citizenship.

~~~
youngtaff
>He doesn't want his hard earned wealth pissed away by clueless bureaucrats.

Yeh, but guess he likes driving on roads and making use of many of the other
public services taxes pay for

~~~
madaxe_again
Actually, doesn't own a car, and spends most of his time in third world
nations doing said philanthropy - but I'm not here to talk about his relative
merits, just that fatca is ineffectual.

~~~
StevePerkins
To recap:

[1] Random person on Hacker News personally "knows" a billionaire.

[2] Billionaire renounced U.S. citizenship without having to realize any
significant capitals gains.

[3] Billionaire doesn't own a car. He just spends his time touring Africa,
solving AIDS or malaria like Bono or Bill Gates.

[4] Billionaire has a secret lair, from which he dresses up in a costume and
fights crime by night.

I could be making some of these up. I started to have serious doubts right at
[1], and completely got off the train by [2].

------
DyslexicAtheist
I just noticed that this year if you open a bank account in most EU places
they all ask you if you are a US citizen or have a green-card for the US to
tick a box on the account opening forms.

I'd really hate it if my own country would force all the banks in the world to
report back to the "mothership" and hence track my every move around the world
for what? The IRS? Sure there are also other implications such as total
control over the movements of a citizen. Can see why people renounce their
citizenship. This isn't freedom any more.

~~~
aledalgrande
Switzerland has renounced any business with US citizens after changes in US
law.

------
smazero
The use of the term "expat" rather than "immigrant" is interesting. I read a
piece in the guardian the other day which framed that distinction in terms of
white vs non-white ([http://www.theguardian.com/global-development-
professionals-...](http://www.theguardian.com/global-development-
professionals-network/2015/mar/13/white-people-expats-immigrants-migration)),
but it's obviously a bit more complicated than that. I don't think the two
terms are synonyms, but they are _very_ close, and once you try to pick apart
the differences, I think the distinction does start to unravel.

Thought experiment: think about how the article would have felt had it been
titled: "Why American immigrants are giving up their passports". I think it
would have felt different, and I wonder whether an American reader might have
felt slightly insulted by that change.

I'd be interested to know whether other languages/cultures draw that same
subtle distinction between "immigrants" and "expats", or whether it's just
some vestigial remnant of the UK's colonial past.

~~~
greggman
2 thoughts .

Immigrant: person who's moved to a new country indefinitely

Expat: person who's moved to a different country temporarily

Also a 2nd definition from my personal experience

Expat: a person sent temporarily to another country by their company. Usually
they are in $300k+ a year job and their company pays their relocation expenses
and their rent.

As someone who has lived abroad for 8 years of my own choice, in other words I
don't fit that 2nd definition of "expat", it was an eye opener how the 1%
lives because there are entire industries set up to cater to them. Before I
lived abroad I never saw that but living abroad all the English magazines
target those type 2 expats and are full of ads for services far far beyond
anything I could possibly afford. Example: ads for apartments starting at $6k
a month to $20k a month plus. So, suddenly I was acutely aware of just how big
a different there is.

~~~
dalke
That definition isn't really true.

The term for anyone working outside of their home country is 'migrant worker'.
Some migrant workers are called expats. These tend to be rich, at least on a
global scale.

Many foreigners come to the US as seasonal farm workers. Almost no one refers
to them as, say, "Mexican expats", even though by your definition that's
exactly what they are.

While on the other hand, Madonna is one of many Americans who are called
"expat" but live overseas and have no plans (or at least no definite plans) to
return. There's a long list at
[https://en.wikipedia.org/wiki/Category:American_expatriates_...](https://en.wikipedia.org/wiki/Category:American_expatriates_in_the_United_Kingdom)
if you want to see more.

------
singold
I work at a non-US bank and we can't have US citizens as clients because of
fatca.

We would like to have them as clients but AFAICT fatca compliance would cost
us a non trivial amount of money for the few (but relatively wealthy)
potential clients

------
arto
For those looking to renounce their U.S. citizenship, Mike Gogulski has
chronicled and documented the whole paperwork-heavy process on his blog:

[http://www.nostate.com/about/](http://www.nostate.com/about/)

In his case, after submitting the paperwork and burning his passport on
YouTube, he chose to not get another citizenship, which means he's now
stateless.

~~~
jacquesm
Being stateless is not a good thing. It might seem that because you're member
of none you are superior to all but having citizenship is not just a tax
burden, it also allows you to partake in a lot of activities (such as travel,
commerce and so on).

Getting bank accounts and other goodies when you're stateless is rather
troublesome.

~~~
arto
> Being stateless is not a good thing.

That's wholly a matter of individual preference. I know Mike Gogulski
personally and I can attest to him being quite happy having made the choices
he did, and no longer being part of what he perceives as an evil empire. The
tax question never factored into his decision, it was moral questions that
preoccupied him.

~~~
jacquesm
I applaud the mans morals but I foresee some practical complications in such
trivalities as child-birth, hospitalization, estate planning (and eventual
execution) and so on. None of those may apply to him and he's apparently
thought this through very well but the wheels of government have a very
annoying habit of grinding on with or without your consent and by placing
yourself purposefully outside of the system you might find one day that this
can backfire. I sincerely hope he has a back-up plan if he ever needs to be
part of some formally recognized entity again, it's easier to lose a
citizenship than it is to gain one.

~~~
VLM
For all practical purposes having Nicaraguan citizenship does nothing for the
guy who empties the wastebaskets at work. From what little high school spanish
I can remember, he seems fairly happy and unconcerned about all these supposed
problems you list. He might be the first stateless person in your area, but I
assure you he's unlikely to be the first non-american citizen in your area to
have a child or visit the hospital or whatever else.

~~~
jacquesm
That he's unconcerned does not mean the problems of undocumented citizens
aren't real. It likely means that he's simply not going to make too much of a
point of it because it is not in his power to make a change.

------
pmontra
Every form I see about financial matters here in Italy has a checkbox that I
must tick to state I'm not a US person. No financial institution wants to deal
with them because of FACTA. An unintended consequence for sure and I hope
they'll fix it. Still it's telling about the general attitude of lawmakers all
around the world.

~~~
josh_fyi
Right. Imagine if every financial form had 200 extra checkboxes -- dictated by
the Mongolian Treasury, the Namibian Treasury, etc.

But that's not the case. Only the US imposes financial regulations on _every_
bank in the world.

~~~
RyanZAG
Well other countries could try, but banks wouldn't really care because of
limited exposure and inability for most countries to collect.

------
Fizzadar
One reason I'll never seek a Green Card or any kind of permanent residency.
Such a shame for such an awesome country; I'd love to spend some years living
in the US.

------
mark_l_watson
This story hits close to home. My wife and I had wanted to buy a home in
Central America (I really enjoy that area of the world) and live there about
2/3 of the time, but also maintaining a modest residence in Arizona.

We gave up that dream when FACTA became a law. The US government is basically
making it as nasty as possible for citizens to live abroad.

Why is the government doing this? I think it is simple economics. Americans
spending their social security checks, and savings, in other countries
slightly weakens our economy.

We also love living in Arizona, so life is good, but the FACTA laws are nasty
shit.

------
henridf
Another scenario:

US Citizen living and working abroad buys a house for X in local currency.
Later sells same house for the same amount X in local currency. That local
currency has appreciated by 20% against USD in the timeframe. And the IRS
computes capital gains in USD, not in local currency.

Net result: the seller owes IRS "capital gains" taxes on 20% of the value of a
house that was bought and sold for the same price.

------
MikeNomad
Doesn't the "I" in "I.R.S." stand for "Internal?"

------
karlcoelho1
Scared to turning my permanent residency into citizenship now.

~~~
Ovid
Sorry to break it to you, but if you're a non-US citizen but a permanent
resident in the US, you're a "US person":
[https://www.law.cornell.edu/cfr/text/22/120.15](https://www.law.cornell.edu/cfr/text/22/120.15)

This means that you're completely subject to US tax law, even if you leave the
US. Congratulations! You're now subject to FATCA!

~~~
jacquesm
Except of course that if and when he leaves he ceases to be that US person
because he's no longer a permanent resident.

~~~
i_don_t_know
You're a permanent resident until you formally renounce permanent residency at
a US embassy or consulate. Some may permit mailing in your green card, others
require you to appear in person. However, the process is or was free when I
went through it.

I think there are other ways of losing permanent residence, but the only
guaranteed ways are when you renounce or when the US takes it from you. Either
way, you better have written proof.

If you're a long-term permanent resident (8 years or more), then you're
subject to the same expatriation tax rules as US citizens. The IRS agents that
I spoke to were all friendly and helpful, but unfortunately none of them knew
the expatriation rules. It wasn't as bad as it may sound, but it wasn't fun
either.

You also have to file a preliminary tax return before you actually leave the
country (informally called the sailing permit).

Anyway, just leaving the US isn't good enough when you're a permanent resident
and until you're through the process you're on the hook. And don't forget to
meet FACTA requirements for the year in which you gave up PR...

~~~
true_religion
I wonder.

You can lose your PR status simply by:

> Fail to file income tax returns while living outside of the United States
> for any period. [1]

But they do require you report your loss of PR status to the IRS.

So I wonder if failing to file thus losing your status would count as good
enough to the IRS.

[1] [https://www.uscis.gov/green-card/after-green-card-
granted/ma...](https://www.uscis.gov/green-card/after-green-card-
granted/maintaining-permanent-residence)

~~~
i_don_t_know
I don't know. My impression is that you don't officially lose your status
until some US government official or agency confirms it. Presumably, you may
not have intended to give up PR. Maybe you had a stroke or you were unable to
meet the requirements through no fault of your own. But I'm speculating. I
don't know.

As for the IRS, the rules are in the instructions to form 8854[1]:

> Date of termination of long-term residency.

> If you were a U.S. long-term resident (LTR), you terminated your lawful
> permanent residency on the earliest of the following dates.

> 1\. The date you voluntarily abandoned your lawful permanent resident status
> by filing Department of Homeland Security Form I-407 with a U.S. consular or
> immigration officer.

> 2\. The date you became subject to a final administrative order for your
> removal from the United States under the Immigration and Nationality Act and
> you actually left the United States as a result of that order.

> 3\. If you were a dual resident of the United States and a country with
> which the United States has an income tax treaty, the date you commenced to
> be treated as a resident of that country and you determined that, for
> purposes of the treaty, you are a resident of the treaty country and gave
> notice to the Secretary of such treatment. See Regulations section
> 301.7701(b)-7 for information on other filing requirements if you are such
> an individual.

[1] [https://www.irs.gov/pub/irs-pdf/i8854.pdf](https://www.irs.gov/pub/irs-
pdf/i8854.pdf)

EDIT: These are the rules for long-term permanent residents (8 years or more).
I don't know what the rules are for other permanent residents, if there even
are any. But you're probably better off if you clearly state your intent and
file I-407.

------
peteretep
America is one of the few countries that could get away with this, as being
American has such a premium. It'd be nice to see them use their clout to force
through legislation that stopped companies from playing silly beggars with
their offshore profits if they wanted access to US markets.

~~~
jacquesm
What premium is that over say being the holder of passport from the UK, NL,
DE, FR, ES, IT, CH, SE, DK, NO, FI, BE or any one of a host of other countries
that don't have such crazy tax rules?

~~~
mbesto
The US economy and quality of life commands that premium.

Note - My fiancee is British and I've lived for 4 years overseas in the EU (UK
3 years, DE for 1). As the tax code as an American begins to squeeze more and
more, I've become more reluctant to "pay" that premium, but there are indeed
aspects of American life and opportunity that don't currently exist in the EU.

~~~
maxerize
I constantly have to remind myself that people who browse HN learn strongly
libertarian and are mostly well-off white males. Otherwise, saying that the US
quality of life exceeds that of the UK, Germany or Switzerland is just
blatantly false.

~~~
magicGLASSman
saying "blatantly false" does not make something factual. Please provide and
argument with evidence instead of blanket racist remarks.

~~~
maxerize
For an example, this site doesn't have very comprehensive indicators but it's
a good start:

[https://www.ifitweremyhome.com/compare/DE/US](https://www.ifitweremyhome.com/compare/DE/US)

------
toni
Doesn't US have bilateral tax treaties with (at least) Western European
counties? And shouldn't such a treaty strive to protect American citizens from
paying double taxes?

~~~
masklinn
The problem isn't citizenship-based taxation, it's an odd concept but it's
been there for a very long time, there's a relatively high standard deduction
and IIRC your local income tax is also deductible. Expats have dealt with that
for more than a century.

As the article points out, the problem is FATCA which doesn't come close to
fixing the issue it's supposed to fix (income tax evasion) and completely
breaks expats under the standard deduction limit.

~~~
toni
Let's say I am an American citizen living in France. Why US government doesn't
close a tax treaty with French and demand 20% of the total amount I pay for
all the taxes annually in France?

~~~
masklinn
Because that makes no sense? Why would the french state give part of its
(perfectly normal and standard) income tax back to the US for no reason?

~~~
gutnor
It makes sense if it is bilateral ( US giving money to France for French
people working there ) and common enough that both countries don't want to
deal with the hassle.

The real problem is that the US is the odd one here. Every other country save
1 or 2 tax people income based on residence . So there is a legal clash that
probably prevent any kind of sane and simple bilateral agreement like the one
most of the first world countries have between themselves.

------
VLM
I'm surprised 10% of the comments are on the topic of Grenada-style evacuation
from warzones. The total number of evacuee's vs total number of expatiates
over the last couple decades must be a truly microscopic percentage.

I have a long term goal of moving to Canada; better health care system, I love
winter sports and weather, etc. I personally know people in Belgium and Sweden
and Ireland. Evac sounds very unlikely, and if there were a military invasion,
it would probably be the USA doing it, so I'm anticipating coordination would
be complicated to the point of uselessness (First cross the front lines of the
battle without getting killed to enter the USA sector, then evac? Seriously?).

------
rbcgerard
In addition to excessive paperwork, potentially higher taxes, loss of privacy,
inability to obtain financial services (bank accounts, mortgages), Americans
living abroad also deal with punitive treatment of pensions earned while
abroad if they have also earned u.s. pensions and poor political
representation...

I'd also suggest those of you living abroad to check out
[https://www.americansabroad.org/](https://www.americansabroad.org/) a
political advocacy group (i have no affiliation)

------
tokenadult
From the article, "In 2010, just 1,006 gave up being US citizens, but since
then the numbers have risen every year."

Let's think quantitatively to see if there is really a net trend here. In the
most recently reported year, there were approximately 680,000 new United
States citizens through naturalization.[1] So barely more than 1,000 United
States citizens renouncing citizenship is swamped by several hundred thousand
new citizens each year. I am an American citizen who has spent two three-year
stays working and living abroad during my adult life. I've read about this
taxation issue for decades, and filed United States tax forms from my place of
foreign residence, but I've never seen a good reason to renounce my United
States citizenship, nor has anyone else in my family.

The most common complaint about United States policies around citizenship that
I see here on Hacker News is the complaint that it should be much easier to
come to the United States to work on an employment-based visa. (It's more
difficult than many participants on Hacker News desire, but settling in the
United States with an employment-based visa is sufficiently easy that I know
people just in my own social circle here in the Midwest who have settled here
from Britain, the Netherlands, Norway, Japan, Taiwan, China, India, Pakistan,
Ghana, Nigeria, South Africa, Ecuador, Argentina, Korea, and a variety of
other countries. Many people would like even more employment-based visas to be
available, but they are already available by the tens of thousands.

[1] [https://www.uscis.gov/archive/archive-news/naturalization-
fa...](https://www.uscis.gov/archive/archive-news/naturalization-fact-sheet)

------
whazzis
Part of the problem is how difficult it is to understand what your obligations
are, even if you intend to comply. And then there are things that are just
plain unfair. Let's say that you live in Canada and you bought your house for
$500,000 Cdn. Five years later you sell it for the same $500,000. Except
during that time, due to exchange rate fluctuation, the house increased in
value relative to the US dollar, going from, for example, $400K to $600K US.
(Entirely possible, given how much change there has been in the two currencies
over the last few years.) The US considers you to have made $200K US in
speculation and expects you to pay taxes to the US on that gain. Even though
there was no gain -- you live in Canada and bought and sold the house in
Canadian dollars. Capital gains exemptions don't apply here--they consider
this to be currency speculation. Mindboggling. And easy to get yourself in
trouble over without realizing.

------
personlurking
> "The United States is one of only two countries in the world that has
> citizenship-based taxation (the other is Eritrea)."

I very recently read that Brazil does this too - that no matter where you
currently live or work, as a Brazilian citizen, you have to pay taxes on it to
Brazil (someone correct me if I'm wrong)

~~~
marcosdumay
You have to pay taxes on any income you earn on Brazil, even if you don't live
here.

You don't have to pay taxes on income taxed afar, even if you live here, and
on any income not earned here if you live afar.

------
NTDF9
So is America still the land of the free?

It looks more like a prison: \- Follow rules (that you are supposed to somehow
know) \- Forced to take on debts to survive \- Hope you don't get penalized or
\- God forbid you need healthcare

It's a great country for people with money and resources. The common man is
just screwed.

------
letitleak
I wasn't familiar with Charles Rangel until I read this article..

For anyone who suspects the US is engaged in a "Buy American" (or else)
campaign to sell domestic evasion/financial services, the man who apparently
wants to be identified as behind FATCA seems to be the poster child of evasion
the patriotic way:

[https://en.wikipedia.org/wiki/Charles_Rangel#Unreported_asse...](https://en.wikipedia.org/wiki/Charles_Rangel#Unreported_assets_and_income)

The World’s Favorite New Tax Haven Is the United States (bloomberg.com)
[https://news.ycombinator.com/item?id=10978847](https://news.ycombinator.com/item?id=10978847)

------
2a0c40
Relevant: [http://isaacbrocksociety.ca/2011/12/14/about-the-isaac-
brock...](http://isaacbrocksociety.ca/2011/12/14/about-the-isaac-brock-
society/)

------
garfieldnate
I live in Japan, and when I went to open a bank account there was a lot of
paperwork, including this funny form that said they would notify the American
government of my address and how much money I had. I felt pretty violated by
it- as if the NSA stuff wasn't enough, they now track me outside of the US. I
don't make enough money to be taxed, but I don't like being tracked, either.

------
farslan
Does this also affect H1B holder that are temporary living outside the US?

~~~
c4n4rd
If you work for a USA company, yes - it does.

------
gyardley
For all the people from HN dreaming of American immigration, be aware that 'US
citizens' in this article (any anything else pertaining to taxation) should
generally be read as 'US citizens and permanent residents'.

Also be aware that while renouncing permanent residency is much simpler (and
you'll be sure to lose it if you're out of the country long enough), you may
be exposed to significant tax liabilities for doing so - especially if you're
holding illiquid startup stock.

------
sakabaro
Isn't that fully a political issue? Current administration want to be tuff on
foreign accounts, but some GOP candidates seem to reverse the law.

Ref:
[http://www.repealfatca.com/index.asp?idmenu=4&idsubmenu=159&...](http://www.repealfatca.com/index.asp?idmenu=4&idsubmenu=159&title=lets-
get-republican-presidential-candidates-uon-the-recordu-for-fatca-repeal)

------
X86BSD
I've had questions about this for some time.

1) When you drop US citizenship and become "stateless", what happens? Are you
deported from the US since you are no longer a citizen? To where?

2) Are you unable to get health insurance? A job, with no SSN?

This has fascinated me for years but I have never seen anyone write about the
real world practical impacts of what happens if you become stateless.

Any links to that information?

------
emiliobumachar
"...foreign banks to identify US citizens among their customers to US tax
authorities. The penalty for failing to do so can be as high as 30% of all a
bank's dealings with the USA."

So, could any new, small bank start accepting americans as costumers but
completely refuse to deal with the USA, not even a tiny transfer, or charge a
50% fee for each transaction?

Would that be legal?

~~~
thisone
From what I understood of the law when I was wondering about my banks, yes.

Though I have no idea how small and local the bank would be to not have to
think about it.

------
TazeTSchnitzel
> [Double taxation] has been the case in the US since the Civil War in the
> 19th Century

That's a fascinating detail to me, as it explains why the US, and pretty much
only the US, has double taxation. I'm guessing they instituted it so Union
citizens still had to pay tax even when living in the Confederacy?

------
0x2015
This makes America looking really dam pathetic and makes me less proud to be
an American.

------
maxlamb
I don't understand, isn't it easier to get around this by keeping your foreign
bank account balance low (less than 10k) and transferring money on a regular
basis to your US bank accounts to make sure it stays under 10k?

~~~
dalke
If you live overseas then you probably want to do thing like save up for
retirement, or a house. While you can have a US bank account, it means taking
a loss to change the money first to then from dollars.

You also have to be very careful with your direct deposit. If it goes into
your local account (because it's expensive and more complicated to wire the
money to a US account) and make $5K/month then you have to be absolutely sure
that your local bank account doesn't have $5K in it. And be sure to watch the
exchange rates!

If you sell a house, you can't put the profits into a local account but must
figure out some way to have everything sent to the US. Which may not be easy.

In some countries, like Sweden where I live, the government can fill out your
taxes for you, because they know how much you make - except for foreign
accounts. If you have, say, $100K in a US account, drawing interest, then you
have to declare it appropriately.

So no, it's not easier for the millions of Americans who live overseas to keep
the bulk of their money in a US bank account.

~~~
geomark
I will also add that many (most?) US banks will not provide banking services
for you if they know you live overseas. You have to maintain a US address.
Even then, if they discover that despite having a US mailing address you
actually reside overseas they will close your account. It's happening more
frequently these days.

~~~
dalke
Wow, you're right! I looked into that just now. I figured USAA, which provides
banking service to military and ex-military, and therefore likely has many
members who live overseas, would be more likely to provide banking services to
overseas Americans.

[https://communities.usaa.com/t5/Other/INVESTMENT-ACCOUNTS-
WI...](https://communities.usaa.com/t5/Other/INVESTMENT-ACCOUNTS-WITH-
OVERSEAS-ADDRESS/td-p/30680) suggests that even banking with them may be
problematical, at least if you have no US address.

------
known
Reasons for giving up your US citizenship aren't officially listed, but one of
the main reasons cited is Fatca - a 2012 law designed to target overseas
accounts held by wealthy Americans.

------
known
US dollar is a giant Pyramid scheme.
[http://www.zerohedge.com/print/502779](http://www.zerohedge.com/print/502779)

------
peter303
Its a tiny percentage too, less than 1 in 2000 living abroad. A higher
fraction dies abroad every year.

------
IIAOPSW
I don't even have to click to know what this is about. God damn government
wants to tax me despite being overseas.

Don't get me wrong here. I love my country but hot damn do I hate our
government. HK or UK or Canadian passport would probably be nearly as good but
without any of the bullshit.

~~~
josh_fyi
No, this is NOT primarily about taxes. It is about expensive reporting
requirements -- the sort of paperwork usually done by billionaires and big
corporations must be filled out by every American, even those with low-
incomes.

~~~
cylinder
Yes, taxes are still an issue! Look at how the Mayor of London just had to pay
capital gains taxes to the US because he was born there. He sold his primary
residence, which is cap gains tax exempt in the UK, and the profit exceeded
the threshold in the US, so he had to fork over money to the IRS. It's a
complete joke and scam.

~~~
dalke
("NOT primarily about taxes" != "taxes are not an issue". My biggest complaint
is precisely the expensive reporting requirements.)

~~~
cylinder
Forms can be filled out. Look at Australia. If I want my retirement fund to be
self-managed, I basically cannot because of inconsistencies in the tax treaty.
And, what if I choose to live and work in Hong Kong or Singapore or the Cayman
Islands? Why should the US have rights to tax my income above $100k if those
states are tax-free? Did the US pay for my education? No. Not even my
healthcare! The socialist states don't even do this.

~~~
dalke
The majority of people that I've read about who are complaining about the
situation are not complaining about having to pay taxes, because they don't
have to pay taxes. I don't have to pay taxes to the US because I don't make
enough in Sweden.

But I do have to spent the time and money to have someone to fill out the
forms.

I also have to worry that my bank might decide to cut me off, because they
_also_ have to "fill out forms", that is they also have "expensive reporting
requirements". Even if you paid no taxes and had no problems with the tax
treaty, you still might not be able to get a bank account in Singapore.

Yes, there are a lot of people who also don't like the taxes. It's an
important point. But not the primary point, which is the expensive reporting
requirements for both American citizens and banks which do business in the US
and which have American citizens as clients.

------
DCPOS_Anthony
That's an amazing story. I never knew those details.

------
tsukikage
So, is it time to throw some tea in the harbour now?

------
pvaldes
I wonder how bitcoin could fit in this scenery.

------
serge2k
Is it because of incredibly dumb tax laws?

 _reads article_

yup.

Fatca is a pretty gross law.

------
crdoconnor
>Her voice cracks and her eyes well up. She is in the process of relinquishing
her American nationality. Soon she'll visit the US embassy formally to
renounce her citizenship, she says, under duress.

>"I'm very proud of being an American. It's what I am when I look in the
mirror.

>"If it weren't for Fatca [the Foreign Account Tax Compliance Act] and the
decision by the bank, I'd never be doing this. Never ever. It's just breaking
me in half."

Caterwauling by the 1%.

~~~
lokedhs
It can be a huge hassle for normal US citizens living outside the US. Most
banks won't deal with them because of the risks involved. As a US citizen
abroad, just getting a regular bank account can be next to impossible.

I live in Singapore and when I was signing up for a stock trading account I
asked what would have happened if I had to answer yes in the box that asked if
I was liable to pay income tax in the US. The answer was plain: "you wouldn't
be allowed to have an account with us".

~~~
crdoconnor
I lived in Singapore for 3 years and managed without a stock trading account.

It's one of the easiest places to open a bank account, actually.

~~~
zrail
This is a recent development. How long ago were you in Singapore?

------
sk3l
If you live abroad & give up your citizenship, I think you should sign a
waiver clause giving US government release of liability for any security,
diplomatic services, basically anything you'd ever ask for. The US is off the
hook for your safety and comfort, forever. Perhaps this is already part of the
process, not sure.

IMO, depending on where you are living abroad, that might give one misgivings
about turning in ones passport.

Just my 2 satoshis.

~~~
kalleboo
Isn't that exactly what giving up your passport does? And as long as you've
acquired a new one from a developed country, you're probably better off anyway
for safety and comfort (e.g. other countries may cover your medical care)

