fwiw, i live chatted w / fxcm.com support who said funding an account with them, from a Japanese bank, denominated in yen, taking any profits in yen to the same bank would allow me to file in Japan. I specifically asked if the IRS would ever bother me, and they said no. I realize this is one anonymous person at the fxcm help desk, but I asked because I noticed a lot of Japanese people seem to use them. Obviously these Japanese citizens are using a Japanese bank and paying taxes in Japan, not the US. I am not yet 100% convinced, but I don't see why I couldn't do the same.
I understand that the process comes with a huge pile of red tape and bureaucratic headaches, but it might still be worth it. Those that are financially independent and think their US citizenship is worth so much should make a 25 (or 50, if you want to account for your children's taxes) year Excel spreadsheet and look at the numbers themselves. They might be in for a surprise. Somebody will have to pay the bill for all the money spent. They'll go after those with money and chances are it will take more than one generation (i.e. our children will still be paying off the mess created by this generation). I am not an American citizen, but I am keeping an open mind if my children really require a G8 passport (I wouldn't be surprised if France/UK/Germany etc. will change their laws to something closer to the US's in order to tax passport holders who are not residents) -- so they can store their wealth offshore while having the flexibility to freely choose a jurisdiction around the globe to live in.
This is not the case if one's past income and net worth are low enough: "Expatriation after June 3, 2004 The American Jobs Creation Act (AJCA) of 2004 amends Section 877 of the Internal Revenue Code (IRC), which provides for an alternative tax regime for certain, expatriated individuals. Amended IRC 877 eliminates the tax avoidance criteria for imposition of the expatriation tax on certain types of income for 10 years following expatriation, and creates objective criteria to impose the tax on individuals with an average income tax liability of $127,000 for tax year 2005 (or higher amount for later years) for the 5 prior years or a net worth of $2,000,000 on the date of expatriation. In addition, it requires individuals to certify to the IRS that they have satisfied all federal tax requirements for the 5 years prior to expatriation and requires annual information reporting for each taxable year during which an individual is subject to the rules of IRC 877. Further, expatriated individuals will be subject to U.S. tax on their worldwide income for any of the 10 years following expatriation in which they are present in the U.S. for more than 30 days, or 60 days in the case of individuals working in the U.S. for an unrelated employer. Finally, even if they do not meet the monetary thresholds for imposition of the IRC 877 expatriation tax, the new law provides that individuals will continue to be treated as U.S. citizens or long-term residents for U.S. tax purposes until they have notified the Secretary of the Department of State or of Homeland Security of expatriation or termination of residency. The implementation date of this provision is retroactive and applies to expatriations occurring after June 3, 2004. The expatriation is not effective until the notification and tax satisfaction certifications are filed with the IRS and the Department of State or of Homeland Security." http://www.irs.gov/businesses/small/international/article/0,,id=97245,00.html
Please excuse this ignorant question, I get the feeling everyone already knows this but me, but I have to ask it, this thread is a very interesting read: If you move to Hong Kong say, renounce your citizenship, but then refuse to pay taxes for those 10 years after, say right when you get to Hong Kong you never file anything in the US ever, how do they do anything about it or enforce it?
http://www.bloomberg.com/apps/news?pid=20603037&sid=a8rRMJDegPA0 They are probably dead on. Also see UK tax increases for high income earners. People with above average wealth will look for an "exit strategy".
Tax evasion/fraud is a serious crime in the US, punishable by law with imprisonment lasting up to several years. The US has extradition treaties with most countries, the common denominator for these treaties is usually punishment by prison > 1 year. The key for extradition here is the tax evasion has to be punishable in BOTH jurisdictions. In general, I wouldn't try breaking US tax law and thinking you can easily get away with it. After all the IRS is probably one of the - if not the - most hardcore tax enforcement agency around. If I was a US citizen I'd bite into the sour apple, play by the rules, get professional assistance to deal with all the paperwork and get rid of my citizenship.
I'm in my 50's and the people that I know who are really screwed have experienced bad marriages/divorces or problems with the IRS. One buddy just finally gave up and told the IRS to take whatever they wanted, and from what I can see they took everything and he even borrowed money from wife's retirement acc't to pay them off. They ragged him literally for years back in the early 1990's. He recently had a brain aneurysm & I wonder if that wasn't due in part to the huge stress he suffered with the IRS. He ran his biz out of his own building in a very upscale area of Socal, lived in a big house in the same city, raced open ocean boats (even had one of his boats on the cover of a racing magazine), etc. When the IRS was done with him, he was whipped. I don't mess with the IRS.
Talk to a tax lawyer/CPA on this. My brother is an oil drilling engineer that works in Africa & is out of the US most of the time. I don't know the details, but as I understand it, there is a minimum # of days that you need to be out of the US to avoid paying US Federal Income taxes. If you dont have enough days as of April, you may be able to file an extension to meet the minimum # of days. Eric
here is the details..good luck with that- http://www.irs.gov/businesses/small/international/article/0,,id=96960,00.html
The US has law enforcement all over the world. Where I live (Costa Rica) people are rather famous for pulling crap like that. Here they have en entire "tax task force" from the IRS here...soemthing like 60-70 people going thorugh files and records and looking for high risk people and tax evaders. If they want you...they WILL get you. Always, always, file. As stated above, it isnt worth the risk. If you have ever gone though a major stress inducing event in your life (being sued, life threatened, audited, gravely ill child, Divorce, banckruptcy etc) you understand that these things take a real toll on your physical and mental health. While going through that...you will literally pay any amount to just make it go away and get back to normal. better not to create the situation in the first place.