Dual citizen: Become compliant, stay non-compliant, renounce? - Page 2

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Dual citizen: Become compliant, stay non-compliant, renounce? - Page 2


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  #11 (permalink)  
Old 8th July 2019, 05:45 PM
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Originally Posted by Nononymous View Post
(Technically this means that one is still a US person for tax purposes, but so what?)
It appears to me that it just means the IRS doesn’t know you’re no longer tax-resident in the US.

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Old 8th July 2019, 05:55 PM
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Originally Posted by underation View Post
It appears to me that it just means the IRS doesn’t know you’re no longer tax-resident in the US.
It means that the IRS never knew of your existence until it received your name from the State Department after you renounced. What the IRS then does with this information is a mystery. Presumably nothing. But it also means that you never formally exited the US tax system that you were never actually in, which is a bit of a zen koan isn't it?

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Old 8th July 2019, 06:01 PM
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Originally Posted by Nononymous View Post
It means that the IRS never knew of your existence until it received your name from the State Department after you renounced. What the IRS then does with this information is a mystery. Presumably nothing. But it also means that you never formally exited the US tax system that you were never actually in, which is a bit of a zen koan isn't it?


(and a second one to make it post: )

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Old 8th July 2019, 10:30 PM
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Originally Posted by Nononymous View Post
... they ignore the tax compliance business. (Technically this means that one is still a US person for tax purposes, but so what?)
Absolutely no argument with your point here, but the pedant in me demands that I add a small footnote. :-)

It used to be the case that you remained (technically) a US taxable person even after renouncing or ditching the green card, until you had filed an initial IRS form 8854. Introduced by the TCJA in 2004, and clearly a pretty dodgy state of affairs, not just for individuals but also legally and constitutionally for the US. HEART swept this away in 2008; although that introduced a spiteful Soviet-style exit tax, along with a presumption of guilt if not up-to-date with annual tax filings, it did at least reconnect the date of termination of all future US tax entanglement with the date of renunciation or green card ditching.

If you have a high tolerance for pain, you can see all of this going on in the instructions for form 8854.

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Old 8th July 2019, 11:00 PM
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...a presumption of guilt if not up-to-date with annual tax filings...”
A presumption of guilt if the form isn’t filed.

If the form is filed, and compliance confirmed, there’s no presumption of guilt. Not having filed US tax returns is not treated as evidence of non-compliance.

I filed the Expatriation form precisely in order to put it on record that I had been compliant with US tax obligations.

Done and dusted.

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Old 9th July 2019, 04:15 AM
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Wow thank you everyone for these extensive replies! I'm a bit overwhelmed with the amount of information and will have to process it first. I'm glad I was able to spark a bit of a discussion on the general pros and cons associated with the different strategies.

For now, it's great to know that there is no immediate rush to do anything. As far as I'm aware none of my Aussie banks know of me being a US citizen. I do however sometimes receive mail from the US embassy (I think?) about events, voting, etc.

My father is a dual citizen himself, and is currently also working on getting his US tax situation in order. Is there any risk of me being put on the IRS's radar by anything he might file?


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Originally Posted by Moulard View Post
I think that I am the resident Aussie on the list. Like you, I am a Seppo who moved here as a child - although some 30 years before you. But fundamentally I have been through your exact same thought processes fears and concerns.

Feel free to PM me.
Moulard, I was hoping you would show up in this thread It's great to be able to reach out to someone who has experienced much the same. Thank you.

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Old 9th July 2019, 04:18 AM
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Oh, maybe to clarify, as it has been mentioned in some comments: I do have a US passport, as well as an SSN.

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Old 9th July 2019, 05:12 AM
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Keep on not doing what you're not doing, I'd say. In other words, do nothing for the foreseeable future. Take your time.

If your Australian banks have never asked about US citizenship, they probably don't know. I personally would keep it that way, by simply saying "no" if the question ever comes up.

The e-mails you receive from the US embassy are consular niceties, and do not mean that the IRS knows of your existence. No worries there.

I don't think there's any way your father's attempt at compliance could create problems for you, as you are too old to be a dependent, and he can't attempt to claim the child tax credit. He would have no reason to identify you to the US government. There might possibly be some issues in the future if you were to inherit US assets (stocks or real estate, not cash) but that's a whole different discussion.

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Old 9th July 2019, 09:53 AM
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Quote:
. As far as I'm aware none of my Aussie banks know of me being a US citizen.
Australia has enabling legislation for both FATCA and CRS, both of which require banks to report to the ATO the accounts for foreign tax residents. I am more familiar with FATCA than CRS, but fundamentally if you open a new account you will be asked about tax residency. Under FATCA, existing accounts are grandfathered in. According to the IGA once a pre-existing account hits $50k they are meant to ask about tax residency.

Yes, Oz has four main banks, but one must remember that under the IGA "local banks" are exempt from FATCA Reporting. Annex II of the IGA defines what a local bank is, but without checking the balance sheets, I would suspect it is a fine reason to bank with a local credit union or building society. Of course they may still have to be CRS compliant. But long and the short, some of the questionnaires I have seen are very vague allowing plausible deniability if you accidentally ticked NO.

Quote:
My father is a dual citizen himself, and is currently also working on getting his US tax situation in order. Is there any risk of me being put on the IRS's radar by anything he might file?
Possibly, but I would suggest that the only risk would occur if he claims you as a dependent on his return, in which case he would have to provide your name and SSN. The reality is that there would be many reasons, including dependence, why you would not have filed. So its not going to raise alarm bells.

The dual citizenship of your father raises an interesting question. Where you born here or in the US? If in Australia, then any concerns around the exit tax associated with expatriation are a moot point. Unfortunately if you were born outside Australia, then I *believe* that technically you were not an Australian until your birth was registered. Which technically may mean that you were not an Australian citizen at birth. But I am not that familiar with case law related to the definition of Australian citizenship.

The s.42 constitutional kerfuffle has highlighted that some countries like Greece and Australia do not recognize citizenship until registration. In the case of Greece once registration occurs citizenship is retroactively applied from birth. I simply cannot comment if under Australian law that is also the case, but I do not think it is. But it might be worthy of investigation.

Quote:
Moulard, I was hoping you would show up in this thread It's great to be able to reach out to someone who has experienced much the same. Thank you.
Glad to help and offer my thoughts on the topic. Much to the annoyance of my family my private vice is to read through case law, rulings, audit statistics and the like while watching the Boxing Day Test.


Last edited by Moulard; 9th July 2019 at 10:07 AM.
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Old 9th July 2019, 03:13 PM
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Quote:
Originally Posted by Nononymous View Post
Non-compliance is not "incorrect" per IRS law. It's simply choosing to ignore IRS law.

In your professional experience, have you ever encountered a non-compliant US person with no US assets or income - i.e. someone completely out of the US tax and financial systems - who has been proactively contacted by the IRS on the basis of FATCA reporting, passport renewal or any other type of information somehow supplied to or obtained by the US government?

As things currently stand, I think the future risks from attempted compliance grea exceed the future risks of continued non-compliance, for a dual citizen with no US ties.

You would have to owe the IRS more than 50K in overdue taxes to worry about your passport being revoked, and they would send you a letter in advance warning you that they have sent your details to the state department, so one would have a heads up if they were going to run into passport issues. Most expats don't owe US taxes, so this would be a rare occurrence.

They have not released details on folks getting caught in FATCA compliance checks, so an exact number here is impossible to guess. So while I think that is currently a small risk, I have seen a big increase in the IRS sending out notices in the past year or so (for items they never sent notices on before), so I don't think this nonchalance will last long. You are much better off coming forward voluntarily while the waters are calm versus getting caught later on.

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