Last year around 1800 Americans, living abroad, denounced their US citizenship. The U.S. is one of the only countries in the world that requires its citizens living abroad to file tax returns. Those people live and work legally in foreign countries and already pay taxes to their adopted countries. Renouncing ones citizenship is the only way to escape the wrath of the IRS.
The actions of the IRS go well beyond the law that was passed in order to expose accounts, used as tax havens by wealthier Americans, specifically those holding Swiss bank accounts.
On the heels of comments last week from U.S. Ambassador to Canada
David Jacobson, the U.S. Internal Revenue Service quietly posted on its
website an update to the information for citizens living abroad.
The fact sheet, which the website lists as last updated on Wednesday,
largely confirms what Mr. Jacobson said was expected to come from the
IRS, stating that no penalties will be imposed on late returns where no
tax is due and failure to file required bank account information will
also be forgiven for “reasonable cause.”
Mr. Jacobson said the clarifications were expected in response to “a
lot of angst” among dual citizens who did not know they had an
obligation to file returns in the United States when they were not
living there. Read More Here
Canada has a tax treaty with the United States to avoid double taxation
and with foreign tax credits, many of those who file returns will not
end up owing taxes south of the border. Since this tax treaty exists, that is intended to avoid
double taxing, one has to ask, why the filing of a return is required at
all. This seems to be another case of government waste and keeping
people employed in the IRS. The US should stop this nonsense and go
after real tax evaders, instead of forcing U.S. citizens to give up their citizenship.