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Financial Planning / Tax Strategies
|Subject: IRS to put up new Iron Curtain?||Date: 4/18/2012 5:09 PM|
|Author: fleg9bo||Number: 116079 of 125005|
The Republican House of Representatives may soon follow the Democratic Senate and give the IRS the power to confiscate your passport on mere suspicion of owing taxes. There's no place like home, comrade.
...the "bipartisan transportation bill" that just passed the Senate... Contained within the suspiciously titled "Moving Ahead for Progress in the 21st Century Act," or "MAP 21," is a provision that gives the Internal Revenue Service the power to keep U.S. citizens from leaving the country if it finds that they owe $50,000 or more in unpaid taxes — no court ruling necessary.
the Foreign Account Tax Compliance Act, passed in 2010 with the aim of reducing offshore tax evasion.... asks foreign financial institutions such as banks, hedge funds, and private equity funds to provide the IRS with information on U.S. clients.
"I hear about banking problems again and again and again," says Phil Hodgen, an attorney who has been helping Americans expatriate since 2008. The new reporting rules, he says, pose "a huge administrative burden. It's made Americans too expensive to keep."
Francisca N. Mordi, vice president and senior tax counsel at the American Bankers Association, says she has received a number of calls from Americans in Europe complaining about banks closing their accounts. "They're going to drop Americans like hot potatoes," Mordi says. "The foreign banks are upset enough about the regulations that they're saying they just won't keep American customers, and it's giving (Americans living abroad) a lot of sleepless nights."
Genette Eysselinck renounced [her US citizenship] early this year. Her husband, a European Union civil servant, saw no good reason to share his account information with the IRS, she says. And after considering all her options, Eysselinck decided that renouncing was the best path [as opposed to divorcing her husband].
She spent her final months as an American collecting paperwork and filing tax returns from the past five years, even though she says she owed nothing. Her last act as a citizen was to swear before an American flag that she renounced all ties with the United States. She called the process "gut wrenching."
"I grew up in a military family where patriotic feeling was very strong" Eysselinck says. "I'm amazed at how terrible I felt renouncing. But it was the only way to get them off my back. It's very distressing and time consuming to keep up with all the paperwork. But if it's this bad when I'm 64, how bad will it be when I'm 74?"
If you want to live abroad but can't open a bank account because the banks don't want to deal with the IRS reporting hassles, you might as well turn in your passport even if you don't owe anything.
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