The perils of overseas tax disclosure: An immigrant's story

Another slam-dunk by the IRS: This time the victim is a UK man that became a US citizen and has bank accounts in the UK. FBAR fines 27.5% of the account's maximum balance - when converted to USD. $28,000.00 in fines!

Reuters article here
JC

Like many, I did read this with great interest as I have many American friends directly concerns with this. I am very proud of Scott to come out on this and take the bull by the horns.

On a side note, without any interest to stir the shit, I am also shocked to see our great Jrspet member being banned. This guy must have done something very wrong outside of the public of the forum to have been ban as I can't see how a great outstanding member could have crossed the line while he has been anything but very helpful ever since he joined!

You will be truly missed for this next month. I can't wait to see you back with your EF encyclopedia.

What! Jrspet? No, I can't believe it. Always being helpful and providing lots of useful info.

If you performed a expatriating (relinquishing) act, per the US law, you could have already 'lost' your US citizenship. Keep in mind this original law was at a time when dual or multiple nationalities was not the norm, and the US and many countries basically discouraged having more than one nationality or loyalty. The list of expatriating acts has been modified over time, so it is important to look at what was in force at the time of the potential act, see INA, section 349. For example--serving in the armed forces of another state, accepting employment with a foreign government, conviction of an act of treason, naturalisation in a foreign state, etc....

http://travel.state.gov/law/citizens...nship_778.html

As it stands today. Note the importance of demonstrating "intent to relinquish".

On my application for Swiss citizenship is the following question (in German):
"Do you intend to give up your United States citizenship?"
My response: Yes"

Assuming all goes well with my Swiss citizenship application and I receive it, I will then make an appointment at the US Embassy in Bern to inform them of a "fait accompli" that I took out Swiss citizenship with the intention to relinquish US citizenship, citing this statement on my Swiss citizenship application.

Exactly, Curt. If you can get a video of the ceremony too for extra proof, if you can maybe ask if you could read a statement stating your intent as well, you'll really be on to a winner.

Curious though, is American citizenship the only one mentioned or do the Swiss send out a form with separate nationalities on them depending on who you are at the moment?

Your taxes and tax reporting in order for the last five years?
JC

This is simply not true. Kantonalbanks (and others) are also effected because they trade in US stocks and other US-based instruments. It doesn't take opening an office within the borders of the US to 'qualify'. This is why all Swiss banks directly involved in commerce with US-based/US-regulated instruments are bending over for FATCA and either dumping or compelling their US customers to do the same. They want to stay in the game, and that's the price.

Not relevant when informing the state department of the relinquishment.

Relevant, however, for IRS requirements (but this doesn't impact the relinquishment itself).

True, whereas renunciation or relinquishment does not mean you are free from IRS responsibilities. Upon receipt of your CLN the next step is to file Form 8854. Here you must confirm that you have completed your tax responsibilities for the previous five years... Do I read an echo here
JC

True, but you are not obligated to complete Form 8854. Failure to do so results in being automatically labelled a "covered expatriate". In essence this means that your are subject to the exit tax regime, regardless of your net worth or past average income tax liability.

If you never intend to visit the US again, may not be much of an issue.

Of course it is not required to complete your tax filing with an 8854.

Lets think about it, which option offers a bit more peace of mind? Especially when one may have family in the states. No passing through en-route either

In the end, the person making the move has to live up to their decision.
JC

Does renouncing your citizenship entail any extra "revenge" checks if you go to US on holiday or business, or would you be treated like any other Swiss citizen (assuming you aquired Swiss citizenship)?

As long as your ducks are in order ... all obligations are closed in such a way that the US is satisfied and your passport/visa is properly dated... there is no reason the US should detain a former US citizen upon entry to the US.

As for visa, if a former US citizen requires a visa... and that person has family in the states, he/she may possibly qualify for a long term family-visa (I read somewhere up to 10 year).
JC

So long as your tax obligations have been met there should be no problems. Carry a copy of your CLN with you so if the border guards query why you're not using a US passport if you were born in the States you can show them you've given up your US citizenship. Otherwise you are now a foreigner when applying for any US visas, even a green card, so make sure you apply for any that you need for business/pleasure visits.

I think I posed this question before, but maybe someone here has an answer.

My main hurdle in giving up the passport is that my wife is not ready to take that step, and I don't blame her one bit.

If our marriage didn't work out for whatever reason, and if she would like to go back to the US with kids, where does that leave me? Would I be able to apply for a permit to live there while my child/children are minors?

Or what if my mother in law gets sick and we need to go take care of her long term? Can I get a green card through my wife? Or would I just go back and forth on a tourist visa?

Incidentally, I'm both furious and heartbroken at being put into a position where I even have to consider all this....

Understand your dilemma. Not easy.

Basically, you are a foreigner (and a terrorist till you pass immigration ). And, as previously mentioned, with family in the states a longer visa is possible. I know that once you give up US citizenship that future re-naturalization is not possible... but I am not sure on the green card.
JC

Brilliant stinky bait. I assume you're posting from Walchwil, TX?

I have yet to see that in any official document.

Tom