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Vor

Active Member
Figured I would make this thread to discuss what the implications of this scenario I'm about to layout are in theory and in actual practice. As most of you on this forum will be aware Americans are taxed on Citizenship as opposed to residency and along with that comes FATCA. There is estimated to be 9 million americans overseas yet fewer than 2 million even filed a tax return like they are suppose to. We can assume then FBAR compliance numbers are the same since who wouldn't file taxes but would report FBAR data to FinCen? Not many doesn't make sense. So this being said the vast majoirty are not compliant. Here is a blog post talking about this.


The bulk of these people are likely just not aware however there is for sure another contingent who are well aware and choose not to. If one kept large amounts of money offshore held via gold, physical property titled to others, crypto, etc and then these US persons kept the foreign bank accounts below the FATCA trigger that they use for daily spending how would the IRS track them down? With 7 million not filing pretty clear they aren't and most these people have their money in retirement accounts, bank accounts, etc all on the books not off the books like im referring to here.
 

Martin Everson

Offshore Retiree
Staff member
Mentor Group Gold
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The bulk of these people are likely just not aware however there is for sure another contingent who are well aware and choose not to. If one kept large amounts of money offshore held via gold, physical property titled to others, crypto, etc and then these US persons kept the foreign bank accounts below the FATCA trigger that they use for daily spending how would the IRS track them down?

I can imagine those Americans living abroad have a second passport which they use on a daily basis. I would file and pay whatever the US wants from you or renounce the US citizenship. If US wanted to track you down I am sure they could. For example if you ever wanted to apply for US passport as an American they could theoretically check if you ever filed a tax return.

I still remember even Prime Minister Boris Johnson who is American and British not being aware he must pay US taxes...lol. In end he did pay. And if he was not aware then average person stands no chance :confused:.

 

Vor

Active Member
I can imagine those Americans living abroad have a second passport which they use on a daily basis. I would file and pay whatever the US wants from you or renounce the US citizenship. If US wanted to track you down I am sure they could. For example if you ever wanted to apply for US passport as an American they could theoretically check if you ever filed a tax return.

I still remember even Prime Minister Boris Johnson who is American and British not being aware he must pay US taxes...lol. In end he did pay. And if he was not aware then average person stands no chance :confused:.

very correct id assume to disappear off the radar like this you would need a second passport as oppossed to just the american one. Assumingly you could have assets in gold, crypto, physical cash, and straw ownership on real estate and companies and fly totally under the radar then. Could they hunt you down, probably but would they? probably not. Only so many resources cant hunt down the 7M non filers so unless your the richest one your probably never gonna hear a thing.

Agreed though peace of mind simplicity only option for an American is renunciation.
 

Golden Fleece

Entrepreneur
very correct id assume to disappear off the radar like this you would need a second passport as oppossed to just the american one. Assumingly you could have assets in gold, crypto, physical cash, and straw ownership on real estate and companies and fly totally under the radar then. Could they hunt you down, probably but would they? probably not. Only so many resources cant hunt down the 7M non filers so unless your the richest one your probably never gonna hear a thing.

Agreed though peace of mind simplicity only option for an American is renunciation.
First, the vast majority of those seven million non-filing taxpayers are just "accidental Americans." They were not born in the U.S. and do not have a U.S. passport. Most of them have never even visited the U.S. after their birth. The IRS has no legal jurisdiction over them and no way to collect. The USG cannot even restrict their U.S. passport use, because they do not have one.

Read about the misery of all the Canadian "accidental Americans" and what happened to them after FATCA. If the U.S. has even an ounce of leverage (e.g., because you cross a border into the U.S.), it can make your life an utter misery.

Even a decade or more ago, people living offshore had horror stories of going to a U.S. embassy to replace a lost passport and getting interrogated over their source of income and why they had not filed tax returns. People living offshore (who thought about it in advance) had to claim that they had no job and that they lived with a local girlfriend who supported them.

It is now a completely different world today. At the very least, you would need a second passport and then never return to the U.S. again. Even then, you are taking a big risk with your freedom and your assets.

Why take the risk? If you own a company or real estate, you can legally get your effective tax rate down to the 10% to 15% range. Even lower, if you own a service company and base it in Puerto Rico.
 
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wellington

Entrepreneur
Figured I would make this thread to discuss what the implications of this scenario I'm about to layout are in theory and in actual practice. As most of you on this forum will be aware Americans are taxed on Citizenship as opposed to residency and along with that comes FATCA. There is estimated to be 9 million americans overseas yet fewer than 2 million even filed a tax return like they are suppose to. We can assume then FBAR compliance numbers are the same since who wouldn't file taxes but would report FBAR data to FinCen? Not many doesn't make sense. So this being said the vast majoirty are not compliant. Here is a blog post talking about this.


The bulk of these people are likely just not aware however there is for sure another contingent who are well aware and choose not to. If one kept large amounts of money offshore held via gold, physical property titled to others, crypto, etc and then these US persons kept the foreign bank accounts below the FATCA trigger that they use for daily spending how would the IRS track them down? With 7 million not filing pretty clear they aren't and most these people have their money in retirement accounts, bank accounts, etc all on the books not off the books like im referring to here.
Know an American that made bank in crypto a few years ago, put it all through his wifes name (non American), didn't pay tax, bought a house, set up a marina in vietnam.

That's how a lot of them do it, if they have a local partner, just sweep it through to her/his account and hope there isn't reporting elsewhere.
 

Vor

Active Member
Know an American that made bank in crypto a few years ago, put it all through his wifes name (non American), didn't pay tax, bought a house, set up a marina in vietnam.

That's how a lot of them do it, if they have a local partner, just sweep it through to her/his account and hope there isn't reporting elsewhere.
I know this is super common also using the partner who isn't a US citizen to hold assets/money in their name and accounts.

First, the vast majority of those seven million non-filing taxpayers are just "accidental Americans." They were not born in the U.S. and do not have a U.S. passport. Most of them have never even visited the U.S. after their birth. The IRS has no legal jurisdiction over them and no way to collect. The USG cannot even restrict their U.S. passport use, because they do not have one.

Read about the misery of all the Canadian "accidental Americans" and what happened to them after FATCA. If the U.S. has even an ounce of leverage (e.g., because you cross a border into the U.S.), it can make your life an utter misery.

Even a decade or more ago, people living offshore had horror stories of going to a U.S. embassy to replace a lost passport and getting interrogated over their source of income and why they had not filed tax returns. People living offshore (who thought about it in advance) had to claim that they had no job and that they lived with a local girlfriend who supported them.

It is now a completely different world today. At the very least, you would need a second passport and then never return to the U.S. again. Even then, you are taking a big risk with your freedom and your assets.

Why take the risk? If you own a company or real estate, you can legally get your effective tax rate down to the 10% to 15% range. Even lower, if you own a service company and base it in Puerto Rico.
Correct the vast majority of that 7M are accidental americans as I am aware, however there is for sure a decently large contingent of actual US Expats who are just not compliant also. What the ratio is of that to accidentals who knows even if its 10:1 you still have a large number of non-compliant US expats that are simply flying under the radar.

I do not know why one would even attempt this without a second passport in case of the US using the FAST act for passport revocation over their unpaid taxes. The reality of the US is though it takes them years many of the times to even begin chasing down domestic US residents who have not filed their taxes in 3 years, 5 years, 10 years, etc. So I highly doubt that in practice you would have much of any problem if you stayed out of the USA, kept assets outside traditional banking system and your only ones in it are under other non US persons names.

As to why someone would risk this? Well not every US person wants to live in Puerto Rico for act 20 & 22, Not every US person wants to pay 10%-15% when there are places you can pay less, and lastly not every US person would want to deal with the compliance costs/headache of reporting everything properly. I personally know of US persons who in 15+ years now have not filed a US return and are abroad and they are not accidentals but Americans with passports, SSNs, and US taxes on record when they were in America.

I'll just renounce since I do not want all the stress of worrying if X years later they would find me and having to deal with all that, but its very clear talking with other US expats that the law here in theory is very different than the law here in practice. Their is tons of US citizens simply not filing and without assets in the USA the IRS has a headache to chase them all down on top of getting foreign courts to actually enforce collection of say FBAR fines.

The US has a fairly easy time collecting unpaid taxes abroad through assistance agreements but from what I've heard they do in fact have trouble collecting FBAR penalty assessments in many jurisdictions since courts do not always recognize it as part of tax collection agreements since its in fact not a tax but a penalty. Interesting tid bit :)
 
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GPT

Active Member
Know an American that made bank in crypto a few years ago, put it all through his wifes name (non American), didn't pay tax, bought a house, set up a marina in vietnam.

That's how a lot of them do it, if they have a local partner, just sweep it through to her/his account and hope there isn't reporting elsewhere.
Isn’t there a reporting requirement when you are married to an USA passport holder?

Ok I do understand that if the marriage is not know / registered in the USA this is very challenging to enforce.
 
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Vor

Active Member
Yes, under FATCA. Tax reporting can become a real nightmare for both spouses. One of the reasons that people renounce their U.S. citizenship. So, what Wellington discussed is illegal under U.S. law.
Yep since then you need to report even the non-american spouses income lol but fuck the IRS as @GPT mentioned without it being registered in America it will be hard to actually discover the spouse.

If your smart never get legally married even just stash your shit in your non american girlfriend/boyfriends name and then their is no way for them to tie it to you legally. Unless they plan to come find your Belizan girlfriend whose bank card you've been swiping. Rest in deposit boxes, crypto, physical real estate with straw owner. It will take IRS-CI to attempt to discover all your crap then..
 

Golden Fleece

Entrepreneur
If your smart never get legally married even just stash your shit in your non american girlfriend/boyfriends name and then their is no way for them to tie it to you legally.
It is not worth the risk of your offshore girlfriend disappearing with your offshore cash just to illegally hide your money from the IRS. Expats do not like to use trusts because they lose control of their assets. So, why would those same expats risk placing control of those same assets in someone else's name, when the risk is far greater?
 
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Vor

Active Member
It is not worth the risk of your offshore girlfriend disappearing with your offshore cash just to illegally hide your money from the IRS. Expats do not like to use trusts because they lose control of their assets. So, why would those same expats risk placing control of those same assets in someone else's name, when the risk is far greater?
use discretion, an expat in this scenario could keep the bulk of their money in crypto(cold storage) and gold in deposit boxes with no reporting. The money in partners name can be small for daily living $20,000. If you lose $20K oh well lesson learned you got burned but before giving someone a cent you should know the risks associated with them holding it. Some people would cheat you out of $10 and others wouldn't cheat you out of $100K.

Partners just good for keeping you off the radar with traditional banking. If offshore checking accounts in your name of course bank will share info with FATCA.
 

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