Source: https://isaacbrocksociety.ca/author/quant18/
Timestamp: 2020-04-03 10:24:01
Document Index: 545431739

Matched Legal Cases: ['§ 6039', '§ 1481', '§ 1481', '§ 871', '§ 871', '§ 871', '§ 6039']

1,100 names in late-as-usual IRS list of certain ex-citizens
Posted on May 7, 2018 by Eric Posted in Issues regarding US persons abroad	78 Comments
The Quarterly Publication of Individuals Who Have Chosen to Expatriate for Q1 2018 has just been placed on public inspection for printing in Tuesday’s Federal Register, eight days later than required by 26 USC § 6039G(d). This is the seventh quarter in a row in which the IRS has been late with the list.
This quarter’s IRS expat honour roll has the names of 1,100 people who gave up US citizenship, by my count. (Andrew Mitchel counted 1,099. My initial count was 1,102, because I accidentally counted two very long names as four entries.) Meanwhile, the number of records in the “renounced US citizenship” category of the FBI’s National Instant Criminal Background Check System (NICS) increased by precisely 1,100 during the first three months of the year, from 42,693 to 43,793. (The FBI added another 341 records in April, bringing the total to 44,134.)
The IRS list is known to be incomplete. It’s supposed to be much larger than the NICS list, not exactly the same size, let alone smaller. Per regulations, NICS only contains people who terminated their US citizenship by swearing an oath of renunciation at a US embassy or consulate. In contrast, the IRS’ list is supposed to have the names of all people who obtained Certificates of Loss of Nationality from the State Department, either by swearing an oath of renunciation or by reporting any other relinquishing act specified in 8 USC § 1481(a). The preamble of the IRS list even misleadingly implies that it includes some of the tens of thousands of people who give up their green cards every year.
Demonstrating the point, this quarter’s IRS list still failed to include some public figures who gave up US citizenship more than a year ago, including Japanese legislator Kimi Onoda and Ghanaian Deputy Minister of Finance Charles Adu Boahen. However, Homelanders and their chieftains don’t care about that. They’re dissatisfied with NICS instead, so there’s some provisions in the new spending bill imposing penalties on heads of upstream agencies, including the State Department, if they fail to certify semi-annually that they’re providing NICS with all the records they should be. More about that below.
Federal Register Justice Department NICS State Department
1,376 published expatriates in Q3 2017 Federal Register list of people giving up US citizenship
Posted on November 1, 2017 by Eric Posted in Issues regarding US persons abroad	93 Comments
The Quarterly Publication of Individuals Who Have Chosen to Expatriate for Q3 2017 has just been placed on public inspection for publication in Thursday’s Federal Register, three days later than required by law. By my count, this list contains the names of 1,376 people who renounced or otherwise relinquished US citizenship under any paragraph of 8 USC § 1481(a), as compared to 1,004 people who renounced US citizenship (under 1481(a)(5) only) added to the FBI’s National Instant Criminal Background Check System (NICS) in July, August, and September.
Following Q3 & Q4 2016, this is only the second time since 2011 that we’ve had two quarters in a row of Federal Register numbers being significantly higher than NICS numbers, the way they should be every quarter. Even then, the Federal Register list is far from complete: contrary to some media reports, it’s basically impossible that the list includes people who give up their green cards, and no one has ever identified a single green card abandoner in the list, despite the message at the top claiming that “long-term residents, as defined in section 877(e)(2), are treated as if they were citizens of the United States who lost citizenship”.
The people named in this list probably completed the State Department’s painfully slow and expensive formalities to apply for a Certificate of Loss of Nationality around mid-year at the latest, but that’s just a guess. I can confirm that one name in this quarter’s list belongs to a man known to have relinquished in April 2016 or earlier. For the US government, that’s positively speedy — last quarter’s list had relinquishers from 2013 and 2014.
As always, after the jump you can find discussion of recent media reports about relinquishers, as well as a table of past NICS and Federal Register statistics.
U.S. source-of-interest rules, part one: how the U.S. does residence-based taxation (very badly, with lots of traps)
Posted on May 22, 2017 by Eric Posted in Issues regarding US persons abroad	19 Comments
The firm which designed the CN Tower couldn’t get correct U.S. tax advice. What do you think your chances are on a ground-floor budget? (Photo: Local Hero/Wikimedia Commons)
On Twitter, Andrew Grossman mentioned Housden v. Commissioner, 63 T.C.M. 2063 (1992). Mr. Housden, a partner of famous Canadian architecture firm WZMH, got a loan from the Royal Bank of Canada. He later moved to the U.S. to operate a WZMH subsidiary, and made some payments on the loan from 1980 until 1983 — meaning that RBC earned interest income “from sources within the United States” within the meaning of 26 USC § 871(a)(1).
The U.S. Tax Court ruled that when an individual resident of the United States has borrowed money from a non-U.S. bank, the individual is supposed to be the withholding agent for the 30% tax on interest income earned by the bank under § 871(a). So Housden had to pay that 30% out of his own pocket and try on his own to get it back from RBC. The only relief for Housden was that he didn’t get hit with penalties for underpayment or failure to file required forms, since two famous nests of compliance condors — first Deloitte, later the now-defunct Laventhol & Horwath — failed to warn him about his withholding obligations until he was already being audited.
Brockers with local mortgages or credit cards are probably about to panic upon reading this. Fortunately, the IRS suggested in 1992 regulations that an individual interest payor should probably only be considered a “resident of the United States” if the individual meets the substantial presence test (SPT), regardless of citizenship. As Phil Hodgen pointed out two years ago, the IRS confirmed this view in (non-precedential) Chief Counsel Advice in 2012. So if you have lived in another country for your entire adult life, IRS lawyers do not seem to think they can reasonably interpret § 871 or its regulations to grab 30% of all your mortgage payments.
In other words, this is a tiny island of residence-based sanity in the citizenship-based “Internal” Revenue Code — well, almost. Nothing involving the U.S. tax system can ever be as simple as it sounds.
Deloitte Mortgage Royal Bank of Canada
FATCA reciprocity watch: it doesn’t matter whether the Form 5472 filing requirement for single-foreign-member LLCs survives Trump’s regulatory review
Posted on May 5, 2017 by Eric Posted in Issues regarding US persons abroad	20 Comments
As TaxProf Blog and others noted at the time, a few weeks Trump signed Executive Order 13789, setting a deadline of 20 June for Treasury Secretary Mnuchin and his people to:
… review all significant tax regulations issued by the Department of the Treasury on or after January 1, 2016, and, in consultation with the Administrator of the Office of Information and Regulatory Affairs, Office of Management and Budget, identify in an interim report to the President all such regulations that:
Unfortunately for beleaguered U.S. Persons abroad, that time frame does not include the original FATCA regulations released in 2014, and the scope does not include past refusals to use clear statutory authority to issue new regulations to excuse us from incomprehensible “offshore” information forms with obscene fines.
For foreigners investing in the U.S. it’s better news: the Trump/Mnuchin review might repeal the Form 5472 filing requirement for single-foreign-member LLCs (proposed on 10 May 2016, 81 FR 28784; finalised on 13 December 2016, 81 FR 89849). That requirement was widely seen as a tiny, halting step towards imposing genuine FATCA reciprocity on inbound investors who were trying to remain anonymous. But even if it doesn’t get repealed, it’s no big deal: the Obama administration left plenty of loopholes to make sure that foreigners can keep hiding their identities from both the U.S. government and their own governments.
FATCA reciprocity FINCen Trust
99.999% of this country’s citizens didn’t renounce during Q1, proving that it’s nearly perfect
Posted on April 30, 2017 by Eric Posted in Renunciation	10 Comments
By which of course I’m referring to Vietnam, where media reports state that 1,077 people renounced Vietnamese citizenship during the first quarter of 2017, while by counting notices in the official gazette I came up with a somewhat higher figure of 1,382. Since Vietnam’s population is roughly 92.7 million, I guess we can say, using FATCA-natics’ logic, that 92,698,618 people chose not to renounce their citizenship and so Vietnam is 99.999% perfect, right?
Sarcasm aside, Vietnamese nationality law and bureaucracy have several praiseworthy aspects. First, there are a few provisions which try to prevent “accidental citizenship”, meaning that some of the diaspora can avoid going through renunciation procedures in the first place (though as one case from the United Kingdom demonstrates, these provisions haven’t always worked very well). They even issue certificates of non-citizenship to people who never had Vietnamese nationality but need to convince other disbelieving governments or private institutions of that fact.
For those who do need to renounce, Vietnam does things relatively efficiently. The Vietnamese embassy in DC says that they accept renunciation forms by mail. The law requires them to respond to an application for renunciation within 60 working days. And the Vietnamese government managed to issue a press release about their Q1 renunciation statistics less than four weeks after the end of the quarter.
In contrast, the U.S. State Department’s unilateral demand for in-person renunciation appointments, and strict rationing of those appointments, makes the waiting list ten months long in some places. You might wait more than a year after that to get your Certificate of Loss of Nationality. They certainly don’t issue certificates of non-citizenship. And while 26 USC § 6039G(d) requires the U.S. government to publish a list of renunciants within 30 days after the end of each quarter, there was nothing relevant in Friday’s Federal Register and nothing scheduled for Monday’s either.