One of the greatest traps for the unwarry is how Section 877(a)(2)(C) can cause even the most economically modest person to become a “covered expatriate” with the adverse tax and reporting requirements that follow.

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One of the greatest traps for the unwary is how Section 877(a)(2)(C) can cause even the most economically modest person to become a “covered expatriate” with the adverse tax and reporting requirements that follow.

All individuals should have a clear understanding about how this specific code section can affect their personal taxes and the future taxes of any future gifts or bequests/inheritances to U.S. beneficiaries.  All U.S. citizen or U.S. resident children, grandchildren and friends and family of the “expatriate” who fall into this “Section 877(a)(2)(C) trap”  will likely be subject to the 40% tax on “covered gifts” or “covered bequests.”  This can come as a real surprise years after the “renouncing” citizenship or “abandoning” lawful permanent residence status.

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Should IRS use Department of Homeland Security to Track Taxpayers Overseas Re: Civil (not Criminal) Tax Matters? The IRS works with Department of Homeland Security with TECs Database to Track Movement of Taxpayers

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The Department of Homeland Security (DHS) uses the TECS  database, which was originally managed and created by the Treasury Department as the  Treasury Enforcement Communications System.  This database allows the U.S. federal government to track the movement of people, funds and various transactions.  It is now being used by the IRS to feed taxpayer data to the TECS as described in the IRS Internal Revenue Manual –

http://www.irs.gov/irm/part9/irm_09-004-002.html

9.4.2.4.1      (08-09-2004) Treasury Enforcement and Communication System

  1. The Treasury Enforcement and Communication System (TECS) is used extensively by the law enforcement community. This subsection discusses the information available on TECS. Items discussed include:
    • description and purpose of TECS
    • responsibilities for TECS
    • information available from TEC

9.4.2.4.1.1   (03-15-2007) Description and Purpose of Treasury Enforcement and Communication System

  1. Treasury Enforcement and Communication System (TECS) is a computerized information system designed to identify individuals  and businesses suspected of, or involved in, violation of Federal law. Treasury Enforcement and Communication System is also  a communications system permitting message transmittal between Treasury law enforcement offices and other Federal, national,  state, and local law enforcement agencies. The TECS provides access to the FBI’s National Crime Information Center (NCIC)   and the National Law Enforcement Telecommunication Systems (NLETS) with the capability of communicating directly with state    and local enforcement agencies. The NLETS provides direct access to state motor vehicle departments.

9.4.2.4.1.2    (08-09-2004) Responsibilities for the Treasury Enforcement and Communication System

  1. The responsibility for TECS lies both in Headquarters (HQ) and the field offices. The following subsections provide a brief   description of these responsibilities.

9.4.2.4.1.2.1    (03-09-2012) Associate Director, Warrants and Forfeitures

  1. The Associate Director, Warrants and Forfeitures will be responsible for ensuring that all TECS entries meet authorized disclosure  criteria.
  2. All fugitive entries will be made through HQ and all non-fugitive entries will be made through or authorized by the Associate Director, Warrants and Forfeitures.
  3. Headquarters is also responsible for conducting and coordinating periodic training for TECS operators, as well as providing  operating instructions, including the TECS Operating Manual, at all locations, and additional instructions as needed.

9.4.2.4.1.2.2   (03-09-2012) Resident Agent in Charge, Scheme Development Center

  1. Each Resident Agent in Charge (RAC), Scheme Development Center (SDC), will be responsible for:
    1. designating TECS users and coordinating their training
    2. performing queries for field offices upon request, and reporting the results upon receipt of a TECS reply (either a HIT or    a No Record) by telephone, transmission of the TECS hard-copy reply to the field office, or by attachment of the hard-copy   reply to the primary investigation (PI) being evaluated

9.4.2.4.1.2.3  (08-09-2004) Special Agent in Charge

  1. The Special Agent in Charge (SAC) in each field office will be responsible for:
    1. designating a TECS Systems Control Officer (SCO) to assist other users and compliance functions in obtaining authorized data
    2. designating TECS users and coordinating their training
    3. disseminating written instructions to field office personnel regarding TECS query requests within the general guidelines as     stated in this section
    4. providing HQ with a mailing list for their field office of direct distribution recipients of wanted circulars

9.4.2.4.2     (08-09-2004) Information Available From Treasury Enforcement and Communication System

  1. All information retrieved from TECS must be stamped OFFICIAL USE ONLY.
  2. The US Customs Financial Intelligence Branch (FIB) Financial Information Database provides information via TECS as follows:
    1. Form 4789, Currency Transaction Reports (CTR)
    2. Reports of Foreign Bank and Financial Accounts (FBAR), Treasury Form 90-22.1
    3. Form 8362, Currency Transaction Reports by Casinos (CTRC)
    4. Suspicious Activity Reports (SARs), Form TDF 90-22.47

    See Also –

http://www.dhs.gov/xlibrary/assets/privacy/privacy-pia-cbp-tecs-sar-update.pdf

Why should the names of former U.S. citizens be published – especially if they have lived all of their lives in the U.S.?

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Why should the names of former U.S. citizens be published – especially if they have lived all of their lives outside the U.S.?  The law provides for publication (Section 6039G) and apparently there is no method by which they can be suppressed.  Should Congress change this law?

 

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Federal Benefits and Obligations – US Department of State – Will you lose your social security benefits? Will you lose access to medicare?

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One very important consideration for all who are considering renouncing U.S. citizenship are the loss of U.S. federal government benefits.  Will you lose your social security benefits?  Will you lose access to medicare?

Federal Benefits and Obligations

Federal Benefits and Federal Agency Programs and Services for U.S. Citizens Abroad

http://travel.state.gov/content/passports/english/abroad/legal-matters/benefits.html

 

 

 

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Overseas Americans: Time to Say ‘Bye’ to Uncle Sam? – Wall Street Journal… What are the most important questions you must ask prior to renouncing U.S. citizenship or formally abandoning your lawful permanent residency?

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Overseas Americans: Time to Say ‘Bye’ to Uncle Sam? – Wall Street Journal…

online.wsj.com/…/SB100014241278873234551045790147721…‎

by Laura Saunders Aug 17, 2013 – The U.S. tax code does allow taxpayers living overseas an exemption It includes people born on U.S. soil as well as people born to U.S. citizens living abroad. In 2010, Congress passed the Foreign Account Tax Compliance Act, Important Fatca provisions have been postponed until July 1, 2014, but

What are the most important questions you must ask prior to renouncing U.S. citizenship or formally abandoning your lawful permanent residency?

 

 

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IRS Updated Website Re: U.S. Citizens and Resident Aliens Abroad

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U.S. Citizens and Resident Aliens Abroad

If you are a U.S. citizen or resident alien, the rules for filing income, estate, and gift tax returns and paying estimated tax are generally the same whether you are in the United States or abroad. Your worldwide income is subject to U.S. income tax, regardless of where you reside.

When to File

If you are a U.S. citizen or resident alien residing overseas, or are in the military on duty outside the U.S., on the regular due date of your return, you are allowed an automatic 2-month extension to file your return and pay any amount due without requesting an extension. For a calendar year return, the automatic 2-month extension is to June 15.

If you are unable to file your return by the automatic 2-month extension date, you can request an additional extension to October 15 by filing Form 4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return, before the automatic 2-month extension date. However, any tax due payments made after June 15 will be subject to both interest charges and failure to pay penalties.

 

http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad

 

 

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Taxpayer Advocate Report on Burdens of Benign Taxpayers who Make Mistakes

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2014 Taxpayer Advocate Report – Re: Expanded Reporting Obligations and IRS Form 8938 (FATCA – specified foreign financial assets)