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March 10, 2012 - Phil Hodgen

Why American citizens abroad will turn in their passports

This comment was left on on a different topic. I have made it a separate blog post because it is important. This person’s experience is common. He is describing the “new normal” for Americans abroad. Lightly edited (I broke it into smaller paragraphs) here is @jeffDTom’s comment.

I know the following rant might not belong in this thread, but I felt like writing you this stuff so you and your friends who read and participate on your site know my situation which is not unlike that of many other US persons abroad who are not lucky enough to be stationed abroad by a US company who compensates them for double taxation and greases the gears of bureaucracy for them.  You are not my lawyer, I am not a lawyer, I am not giving legal advice, just lay opinion, get your own lawyer, make up your own mind at your own risk etc.

I personally was denied banking services in the US soon after I established myself in Europe.  I was unable to maintain a brokerage account and lost thousands in gains that I was not allowed to realize.  The brokerage, Donaldson, Lufkin, Jeanrette closed my account without prior notice (the letter arrived weeks later).  My banking relations for simple things like credit cards and checking account in the US (needed to pay student loans and other occasional purchases in the US) have been strained to say the least.  

European banks told me to buzz off when I tried to open brokerage accounts. When I call my local branch bank in the US they tell me I have to come in physically to do anything (so I have to call the headquarters of the bank and scream every time even though they have copies of my US passport, SSN, drivers license).   I have been denied the economic freedoms accorded others who were not born in the freaking USA.  I remember that at least two ex-girlfriends were able to open and maintain US savings accounts (modest, a few thousand just to keep money in the US during studies or for vacations in the US) with no SSN and no trouble.  Now, despite my US nationality, the banks tell me to go to H every time I try to do anything.  I have been refused much-needed jobs due to my birthplace and despite my European nationality.  

My home state will not renew my drivers license anymore unless I show up in person (which is impossible because I am now unemployed and on the verge of bankruptcy).  My Congressmen are oblivious, myopic, US-centered, and do not understand my problems.  Obtaining a US credit report is a like something out of Kafka–past and current addresses are mangled by the computer systems that cannot store foreign addressees properly so according to them I have a foreign street address in a US state.  I have had accounts closed without prior notice and almost gotten arrested for using a credit card that I did not know had been cancelled.  

I have not been counted in the US census since living abroad.  I am lucky to be able to vote because I re-registered 20 years ago when I left and have kept in touch with the county election office (they have been wonderful, always pretty good service despite their limited resources and manual processing).   The US treats its citizens abroad like xxxx (replace with your choice of cussword) and attempts to tax them too.  

My home country told me years ago after I was naturalized that I must not declare income and assets earned and taxed there to the US, but now they seem to be backing down on their position in view of FATCA which is so much a general warrant against the 4th that I want to vomit.  Even my mandatory pension plan in Europe seems to be taxed to the point of negative returns due to US policy.  I deserve the same rights and the same tax bill as a neighbor living in the same town with the same income and deductions.  This has been denied me, even though I am an upstanding citizen in the country where I now live, have a clean record, pay taxes, and even served on a jury without complaining.

Sometimes I would like to renounce.  But that would draw attention to me, I am even afraid of an extraordinary rendition at the Embassy/Consulate due to some political ties an estranged family member has.  Furthermore, I am loathe to renounce as I don’t hate Americans or America (although I think many Americans are oblivious): I just want the US government to behave itself and stop screwing its citizens in the way the Brits did to us prior to the Revolution.  Renouncing would be like giving up the fight which I feel I must seek to win as a good patriot must.

I remember when the exit tax laws changed in mid-2008. I processed probably one of the first renunciations under the new exit tax laws, just a few weeks after the new law came into effect. (It was a glorious, sunny day in Berne. The guards in front of the Embassy are a trifle scary.) I remember the polite derision from my tax lawyer friends — no one will renounce their citizenship, they said. U.S. citizenship is prized. The new tax law makes it too expensive to cancel citizenship, even if you are crazy enough to want to do it.

Heh.

@jeffDTom is an active participant at the Isaac Brock Society website, where Americans abroad discuss IRS problems and mistreatment they receive at the hands of their own government.

Expatriation