Dual citizen: Become compliant, stay non-compliant, renounce? - Page 3

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  #21 (permalink)  
Old 9th July 2019, 03:39 PM
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Originally Posted by DavidMcKeegan View Post
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.
By definition, a non-compliant person is not filing, so the only way they could be overdue for anything is if the IRS created a substitute return and determined that taxes were owing, on the basis of who knows what information. Have you ever heard of this happening to a person outside the US who is fully non-compliant and has no US assets or income?

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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.
Again, FATCA compliance checks against US residents who are already filing is one thing; FATCA compliance checks against non-residents who are not in the US tax system is quite another. Have you seen any evidence of the latter?

What sort of notices has the IRS suddenly begun sending out with greater frequency?

My broader point is, for a dual citizen with no US financial entanglements, there is currently no meaningful way to be "caught" because there is no means of inflicting and enforcing punishment. For that to change the US would have negotiate new collection assistance agreements with a great many countries. Presumably someone at the IRS understands that there's no ROI in going after non-resident duals, because they've said next to nothing on this issue since the creation of the streamlined program around the time FATCA was implemented in 2014. (We won't count the transition tax and GILTI mess, that was Congress.)

Anyway, you have your view, I have mine, but I find it useful to ask these questions of someone who is actually dealing with compliant taxpayers and the IRS, because you may see things that we don't learn about through scanning various fora. So thanks for your patience and responses.
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  #22 (permalink)  
Old 10th July 2019, 03:44 PM
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Originally Posted by Nononymous View Post
By definition, a non-compliant person is not filing, so the only way they could be overdue for anything is if the IRS created a substitute return and determined that taxes were owing, on the basis of who knows what information. Have you ever heard of this happening to a person outside the US who is fully non-compliant and has no US assets or income?



Again, FATCA compliance checks against US residents who are already filing is one thing; FATCA compliance checks against non-residents who are not in the US tax system is quite another. Have you seen any evidence of the latter?

What sort of notices has the IRS suddenly begun sending out with greater frequency?

My broader point is, for a dual citizen with no US financial entanglements, there is currently no meaningful way to be "caught" because there is no means of inflicting and enforcing punishment. For that to change the US would have negotiate new collection assistance agreements with a great many countries. Presumably someone at the IRS understands that there's no ROI in going after non-resident duals, because they've said next to nothing on this issue since the creation of the streamlined program around the time FATCA was implemented in 2014. (We won't count the transition tax and GILTI mess, that was Congress.)

Anyway, you have your view, I have mine, but I find it useful to ask these questions of someone who is actually dealing with compliant taxpayers and the IRS, because you may see things that we don't learn about through scanning various fora. So thanks for your patience and responses.
If someone has never filed anything in the USA and has no US income, it would be near impossible for the IRS to have them in the system. So the risk of "getting caught" is slim (although with FATCA that risk becomes a little more so each year). I have not heard of someone who has never filed anything getting caught in a compliance check. That being said, just because someone does not get caught doing something against the law does not change the law or the obligation to file behind it. I personally sleep better knowing that everything is done properly and that I am not hiding anything.

Recently we have seen a crack down on late filing penalties and notices for missing items like 3520A forms and 5472 forms. I imagine they will continue to crack down on these more complex forms and there is no telling what they will scrutinize in the future.

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Old 10th July 2019, 04:23 PM
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Originally Posted by DavidMcKeegan View Post
If someone has never filed anything in the USA and has no US income, it would be near impossible for the IRS to have them in the system. So the risk of "getting caught" is slim (although with FATCA that risk becomes a little more so each year).
I filed while I lived in the US, then I left and didn’t file again. Like millions of others. Not “hiding”, not doing anything wrong or illegal.


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I personally sleep better knowing that everything is done properly and that I am not hiding anything.
US expats who pay the tax due on their income to the country that has the taxing rights, and don’t file US tax returns, aren’t hiding anything.

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  #24 (permalink)  
Old 10th July 2019, 04:36 PM
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Originally Posted by DavidMcKeegan View Post
If someone has never filed anything in the USA and has no US income, it would be near impossible for the IRS to have them in the system. So the risk of "getting caught" is slim (although with FATCA that risk becomes a little more so each year). I have not heard of someone who has never filed anything getting caught in a compliance check.
Thank you for your honesty. Not everyone in your line of work is so forthcoming.

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Recently we have seen a crack down on late filing penalties and notices for missing items like 3520A forms and 5472 forms.
We can thank the compliance industry for encouraging Canadians to "play it safe" and file 3520 forms for ordinary RRSP/RESP/TFSA accounts that really should not be considered trusts; chickens now coming home to roost with the late filing penalties. See current thread over at Isaac Brock for more info. Another fine example of blind obedience leading the unwary astray.


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  #25 (permalink)  
Old 10th July 2019, 05:00 PM
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I filed while I lived in the US, then I left and didnít file again. Like millions of others. Not ďhidingĒ, not doing anything wrong or illegal.




US expats who pay the tax due on their income to the country that has the taxing rights, and donít file US tax returns, arenít hiding anything.
I can't change your opinion or force you to file your tax returns, but your understanding of the rules is incorrect. If you are a US citizen and make over the income threshold each year, you are legally required to file a tax return. The US taxes based on citizenship and not residency and while I am not saying the rules are fair or typical, they are indeed laws and you are providing guidance to people based on your opinion and not fact.

https://www.irs.gov/help/ita/do-i-ne...e-a-tax-return

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Old 10th July 2019, 05:12 PM
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Quote:
Originally Posted by DavidMcKeegan View Post
I can't change your opinion or force you to file your tax returns, but your understanding of the rules is incorrect. If you are a US citizen and make over the income threshold each year, you are legally required to file a tax return. The US taxes based on citizenship and not residency and while I am not saying the rules are fair or typical, they are indeed laws and you are providing guidance to people based on your opinion and not fact.

https://www.irs.gov/help/ita/do-i-ne...e-a-tax-return
Several of us here have tried to make that point with the guy. At a certain point, you may just be wasting your breath. (Er, whatever one wastes online in a forum like this one.)

But thanks for your candor. Like you say, no one can force someone to change their opinion or to file their returns - but it's important for each taxpayer to understand and accept the risks they may or may not be facing based on whatever decision they take.

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Old 10th July 2019, 06:30 PM
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I can't change your opinion or force you to file your tax returns, but your understanding of the rules is incorrect. If you are a US citizen and make over the income threshold each year, you are legally required to file a tax return.
That’s the point. I’ve never had US-taxable income over the threshold.

Consequently - no need to file.

I agree that we’ll just have to agree to disagree.

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The US taxes based on citizenship and not residency
Taxation rights, however, are based on the US-UK treaty.


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and while I am not saying the rules are fair or typical, they are indeed laws
Yes, they’re law in the US. Here, they’re merely a citizenship obligation.

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and you are providing guidance to people based on your opinion and not fact.
That’s ok. Lots of US expats did their best to provide guidance to me, to the effect that the IRS would be “coming after me” and fining me $10,000 per year per account for all the decades I never filed US tax returns or filed an FBAR It didn’t seem likely to me, so I looked into it and eventually understood the situation.

The IRS, however, has never caused me the slightest concern. They sent me a refund on my last part-year of US filing, and then, many years later, I returned the compliment by filing Form 8833 to let them know I had renounced. A happy ending.

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  #28 (permalink)  
Old 10th July 2019, 06:35 PM
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I actually quite like this approach. No idea if the US government considers it correct or not, but since the IRS doesn't appear to care about non-compliant US citizens with no US income or assets, the outcome is still the same.

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Old 14th August 2019, 07:28 PM
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I can't advise which option to take, but I think it's probably good to make a decision soon. It gets much more complicated when you've been working outside of the US for longer and your net worth is higher.

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Old 15th August 2019, 04:00 PM
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I can't advise which option to take, but I think it's probably good to make a decision soon. It gets much more complicated when you've been working outside of the US for longer and your net worth is higher.
It becomes more complicated to come into US tax compliance later in life with higher net worth. However, the passage of time does not make it any more complicated to not come into US tax compliance!

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