Job Discussion Forums

[Marcoregano]

The article below appeared in HK's South China Morning Post last week. It seems to imply that even individuals (not just companies) need to disclose bank account details to the IRS. Is this true? Have YOU given the IRS your private bank account details? Sounds like Orwell's 1984.


US expats give up passports over tax fears

May 25, 2009
The US government's decision to crack down on its citizens who fail to report their foreign bank accounts has been widely condemned as being discriminatory and anti-competitive by many expatriate Americans, and some have given up their US passports as a result.

The disclosure requirement, which is not new but has not been strictly enforced until now, applies to personal and company bank accounts with a total combined value of at least US$10,000 at anytime last year, including those over which the US taxpayer has control but no financial interest.

This means a local company with an American chief financial officer who can sign cheques will have to reveal its bank account details to the US government. The bank details must be filed with the US Department of the Treasury by June 30 or the taxpayer may be liable to a maximum fine of US$500,000 and up to five years behind bars.

"The US Congress and the president are trying to collect tax wherever they can," said Alan Seigrist, vice-chairman of the Hong Kong chapter of Republicans Abroad. "Overseas Americans and businesses are an easy target as these taxes won't affect the domestic voter base.

"This is a very cynical grab for cash. It will result in the effective destruction of competitiveness of American companies doing business overseas. They will never collect the money they think they will, and American influence abroad will be whittled away."

The US Internal Revenue Service recently told members of Congress that about US$300 billion was not being collected from cash businesses in the US, and overseas Americans who were not paying taxes on their investments and other income.

Representatives of both Republicans Abroad and Democrats Abroad plan to raise the issue with House Speaker Nancy Pelosi when she visits Hong Kong this week.

Glenn Berkey, chairman of the local chapter of Democrats Abroad, said: "Needless to say, Democrats Abroad is not real happy with any idea that might make a company reluctant to hire an American for any job. Another danger is that it will make law-abiding Americans less likely to volunteer to serve as anything that would give them signing rights - say, treasurer of AmCham, head of their child's school's parent-teacher association or a person responsible for office petty cash - because of the added burden it places on them when they file their returns."

Evan Blanco, who chairs AmCham's tax committee, said the tough stance by the US government was unlikely to persuade Americans with something to hide to come clean but would probably catch many law-abiding taxpayers who might be unaware of the disclosure requirement. Even a tax adviser Mr Blanco spoke to was unaware that Mandatory Provident Fund accounts should be disclosed under the requirement.

The aim of the policy was to identify those taxpayers using undisclosed foreign bank accounts to avoid paying taxes, a US consulate spokesman said.

But under US tax law, a taxpayer who surrenders his US passport can still be taxed on any unrealised gain if his net assets, including property, were worth more than US$2 million, said Berin Chan Ding-bong, a partner at PricewaterhouseCoopers International Assignment Services (Hong Kong).

The decline in asset values because of the global crisis and recent slide in stock prices had convinced a number of Americans to give up their US passports, Mr Chan said.

[dragon777]

This is a very interesting development. Which is in know doubt, true. What the US does(in tax law) is usually copied by other countries(notably western). I am in no doubt that we are heading towards a 'world type' or 'kind' of government. If one wants to enjoy the fruits of both cultures or life one must eventually pay for better or worse.

[Khrystene]

Well these are mostly people who cheat the system and are the ones to thank for global financial crises. Therefore, little or no sympathy from me, sadly.

[dragon777]

Krystene, what do you mean cheating the sytem? Are you saying we are already part of a world government and that we must pay tribute(tax) for being part of it? Or, that all Esl teachers are cheaters for not paying tax in their home countries? Thus, trying to escape the responsabilities of their own countries? Please, enlighten.

[naturegirl321]

Just a nice tidbit. If you teach private classes and make over 400usd a YEAR, then you owe 15.3% on taxes, Dosen't matter where you live in the world, and the foreign income exlusion doesn't apply, because you're self employed.

[Chancellor]

So, how does one give up one's passport in this context without giving up one's citizenship?

[spiral78]

Uhhh...you don't. You give up both at the same time, by definition.

Just for the sake of the argument, I'm planning to give up my US citizenship when my parents are gone. They're quite elderly now, and are really my last ties to the country. There would be (for me) quite a few advantages to giving up the US passport/citizenship, and I just haven't the slightest desire to maintain any further ties there...and I've felt consistently the same for more than 10 years.

I hope my parents will be around a few more years, of course!

And I'm not avoiding taxes - I faithfully file the paperwork every year. But I'm just not interested in remaining a citizen of a country where I've zero wish to ever live again...and I have other options that are far more meaningful to me personally.

[Marcoregano]

Coming back to the OP, what I find most objectionable - and worrying - is giving the US authorities access to your private bank account. If the UK govt did that ... I just can't imagine they would try such a thing, it would be political suicide. It's an invasion of privacy. You declare your earnings on the tax return - there's no need for them to see how you like to spend your money! Absolutely outrageous.

So, spiral78, have you given them your bank account details?

BTW, my partner is in a very similar position - she has no desire to continue her US citizenship when her parents move on up. In fact, she regards the US as a real ball-and-chain given these draconian/Orwellian financial measures.

[Kyle737]

Wait I'm confused. I'm a US citizen (also Canadian) but I haven't lived there since I was three and it's never occurred to me to pay taxes to a country I've never worked in. I do have a US passport though. What kind of trouble could I get in?

[johnslat]

Dear Kyle737,
If you're a US citizen, you have to file every year, whether you owe taxes or not. I filed all nineteen years I was in Saudi Arabia although I never had to pay any taxes.
Hope you never get audited, but if you never live/work there, you'll be OK.
Regards,
John

[naturegirl321]

Another thing, I came across while learning that you have to pay taxes on private classes. It's ILLEGAL to give up American citizenship just to get out of taxes.

Go figure

By the time I retire Soc Sec will be non existent, or a joke. Either way, I haven't paid my 40 quarters, so I won't be eligible.

About giving up US cit. I went to the embassy and asked about it. And they said it was a long, hard drawn out process

I'm sure in Peru, the US govt woulnd't hesitate to give bribes to find out your bank account info.

Kyle737, since you are AMerican, joy of joys, you have to file taxes. Better get an accountant, or else file yourself and claim the foreign exclusion for taxes.

[naturegirl321]

[Kyle737]

Well what the hell? What happened to "vote with your feat" and "if you don't like it don't live here"? I've had many opportunities to go there but I never have for a reason: the US is the last country I would live in.

I'm going to start looking up info on extradition treaties because I'm not going to pay to kill Iraqis and I'll kill myself before I let a fundamentalist religious nutjob (or a KKK congressman) touch a single dime of my money.

[Prof.Gringo]

I will never surrender or give up my American citizenship. It's my country even if I choose to live somewhere else.

For anybody that thinks giving up their US citizenship is a good idea, you better think twice. History shows things can change very fast. You never know when you might need to get out of a sticky situation. Remember that the Embassy is only open for citizens, even expats.

[sweeney66]

As far as I know, it's not necessary to file in the US if you've earned less than $7,000 as a single.