American Citizens Living Offshore

There are serious tax consequences to consider

I've taken the following from the excellent Sovereign Society A letter. It is free to subscribe and contains excellent information.

... The fact is that the Uncle Sam taxes every American citizen on their worldwide income, no matter where they live or for how long. Virtually every other country in the world, except for Eritrea and the Philippines, taxes their residents...but not citizens residing abroad.

Lots of people, including me, think this is unfair.

Nonetheless, "facts are facts," and those of us who are U.S. citizens must deal with the realities of how our country taxes us, domestically and offshore.

Over the years, I've met many individuals who have committed some serious tax mistakes because they just didn't know any better. Quite a few haven't lived in the U.S. for decades and simply had no idea that they still needed to pay U.S. taxes. They didn't understand that they needed to file a U.S. tax return, every single year, on their foreign earned income. And I've advised quite a few that they needed to report their foreign bank accounts and their interests in foreign corporations annually as well.

If you ignore (or simply don't know about) these reporting requirements, you could face serious repercussions. If you add up the maximum criminal penalties for non-compliance with these mandatory reporting rules, you could face years in prison, and millions of dollars in fines. For instance, the penalty for a U.S. citizen to not report a foreign bank account, for just one year, is a five-year prison term and a US$250,000 fine.

.... If you're in this situation, you can become compliant with U.S. tax and reporting obligations by hiring a U.S. tax attorney who could prepare and file the necessary forms and tax returns. The cost of doing so could be tens of thousands of dollars (but well worth it, if you consider the alternative). It's also quite possible that if you did take this step, before any investigation was initiated, there would be no criminal penalties imposed. But if you fail to become compliant, the next time you travel to the United States, you could be pulled out of the line going through Customs and whisked off to an IRS office for interrogation and eventual arrest.

... there are many advantages to going offshore - among them asset protection, financial privacy, and access to lucrative, global investments that are off the radar of your U.S. broker or money manager. But only rarely are there tax advantages for a U.S. person offshore. And if you do choose to go offshore as a U.S. citizen, there are numerous tax and reporting obligations that you must adhere to.

Moral of this cautionary tale: it's dangerous to assume you're in full tax compliance. Always consult with a U.S. tax attorney just to be safe.

MARK NESTMANN

(the above are excerpts, not his full letter)

Consider yourself warned.

Citizens of just a few third world countries, and of the USA, have to worry about taxes even if they do not live in their country of birth.

These banana republics own their cow, and they want the milk sent home even if it is eating grass in another pasture.

If you are one of their cows they also want to brand you, herd you, and call you up for self-sacrifice if they so desire.

Some give up their US citizenship to escape, but the re-branding process is not easy. You have to go to a US embassy to do so, putting yourself in their hands while they check your records. If they decide you are leaving to avoid future taxes, they will require you pay taxes even after you are no longer a citizen - they want to keep milking you.

They may demand a severance package - pay taxes now on all your assets (not just earnings) before you leave. Consider this an early inheritance tax.

Just as there is great benefit to speculating when young and building wealth over time; so there is a benefit to escaping before you gain enough wealth to cause you to be of interest to the IRS.

You may earn your money - but slaves can't own money - it belongs to their masters. If you ignore this and are wealthy enough; they may knock you on the head, toss you on a plane, and drag you off to debtor's prison in the US just to make an example of you.

This stuff does change frequently - usually for the worse. Check with competent advisers for current rules, regulations, laws, and requirements.

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