USA topic -- Major taxation change for American business owners abroad

[Jingthing]

Just a heads up.

I doubt every American owner of a business abroad knows about this.

I don't really understand it and I don't have to as I don't own a business.

But for those it might impact -- here you go (and so sorry) --

 

Quote

 

U.S. expats with businesses hit hard by new tax law; Some consider giving up citizenship

...

The two taxes U.S. expatriates who own businesses abroad are most concerned about: a one-time repatriation levy of as much as 17.5 percent on old foreign profits and an annual levy called Gilti — or global intangible low-tax income — on foreign profits going forward.

 

 

https://cuencahighlife.com/u-s-expats-with-businesses-hit-hard-by-new-tax-law-some-consider-giving-up-citizenship/

 

Edited October 5, 2018 by Jingthing

[fablo]

Love the name of the source, Joe Light of Cuencahighlife.....you can't make this stuff up!

 

 

Edited October 6, 2018 by fablo

[Jingthing]

3 hours ago, fablo said:

Love the name of the source, Joe Light of Cuencahighlife.....you can't make this stuff up!

 

 

The source for that information from Cuenca is actually BLOOMBERG.

Duh!

Is that all you got?
 

Quote

 

U.S. Expats Face Hammering From New Tax Rules

https://www.bloomberg.com/news/articles/2018-07-31/living-abroad-isn-t-so-idyllic-for-u-s-expats-facing-new-taxes

 

This does sound like significant (bad) news for some U.S. nationals owning businesses abroad. I shared it for them. It would be interesting to hear from some of them here that think they may (or may not) be impacted by this and what it means to them.

Cheers.

Edited October 6, 2018 by Jingthing

[fablo]

1 hour ago, Jingthing said:

The source for that information from Cuenca is actually BLOOMBERG.

Duh!

Is that all you got?
 

This does sound like significant (bad) news for some U.S. nationals owning businesses abroad. I shared it for them. It would be interesting to hear from some of them here that think they may (or may not) be impacted by this and what it means to them.

Cheers.

Your original post points to cuencalife.com, not bloomberg.  Let's stick to the facts.

[Jingthing]

43 minutes ago, fablo said:

Your original post points to cuencalife.com, not bloomberg.  Let's stick to the facts.

An article that you clearly didn't bother looking at. It's source was BLOOMBERG.

You're just playing an irrelevant game. This thread was added for actual expat business owners that might want to comment on what this real news means to them, if anything.

[AhFarangJa]

intangibleadjective 

UK  /ɪnˈtæn.dʒə.b^əl/ US  /ɪnˈtæn.dʒə.b^əl/    impossible to touch, to describe exactly, or to give an exact value:

It seems to me that Governments are going further and further from reality to wrench the very last penny from its citizens.

Thanks for the link Jingthing.

[suzannegoh]

Most of those small businesses owned by Americans abroad such as in the example in the article (which turns less than $100k/yr profit) probably were either not reporting their income to the IRS or were paying out that income to themselves as a salary so that it would be exempt from taxation the grounds that it's Foreign Earned Income rather than business income.  It seems the ones that get bit would be ones who instead of taking the their profits out of the business were rolling over the profits into bank accounts in the business's name AND were telling the IRS about it.

[Jingthing]

Most of those small businesses owned by Americans abroad such as in the example in the article (which turns less than $100k/yr profit) probably were either not reporting their income to the IRS or were paying out that income to themselves as a salary so that it would be exempt from taxation the grounds that it's Foreign Earned Income rather than business income.  It seems the ones that get bit would be ones who instead of taking the their profits out of the business were rolling over the profits into bank accounts in the business's name AND were telling the IRS about it.

That's interesting.
But as you know with FBAR and FATCA bank account reporting requirements if they weren't reporting the accounts themselves that could mean even bigger trouble just about that.

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app

[suzannegoh]

44 minutes ago, Jingthing said:

That's interesting.
But as you know with FBAR and FATCA bank account reporting requirements if they weren't reporting the accounts themselves that could mean even bigger trouble just about that.

Sent from my Lenovo A7020a48 using Thailand Forum - Thaivisa mobile app
 

Yes, they could run afoul of that if profits were being rolled over into bank account and not reported.  I’ve seen articles elsewhere saying that up to a million American small business owners would be affected but I haven’t seen a good explanation of the scenarios under which that would happen.  The example of very small businesses, such as in the Bloomberg article, doesn’t seem like a very compelling example because people running business of that size are probably drawing out most of the profits each year in the form of salary.  You probably know quite a few Americans in Thailand running small business – bars, restaurants, or whatever.  How many of them do you suppose are reporting to the IRS that they have business profits and are paying self-employment tax?

[Jingthing]

Personally, as I don't own a business here, I know almost nothing about what expat businesses do or don't do. But I am aware of the unusual situation for Americans abroad in regards to IRS obligations. So if you're saying, it doesn't matter because they're already ignoring U.S. laws, well, as you say, it's really hard to know how many people are really impacted. 

[suzannegoh]

32 minutes ago, Jingthing said:

Personally, as I don't own a business here, I know almost nothing about what expat businesses do or don't do. But I am aware of the unusual situation for Americans abroad in regards to IRS obligations. So if you're saying, it doesn't matter because they're already ignoring U.S. laws, well, as you say, it's really hard to know how many people are really impacted. 

I’m sure that there must be some who play it exactly by the book but the ones that I’m personally aware of put the business in the name of a Thai wife or a Thai partner and try to make such that there is no paper trail connecting them to the business.  However I do know of one case where a guy’s business became a little too successful and someone tipped off the IRS that he was evading taxes and the IRS wasn't sympathetic to his explanation that his Thai wife was rolling in money bu that he had no income.

 

Edited October 7, 2018 by suzannegoh

[how241]

More US tax laws.  Certainly not needed.  A total reform of the US tax code is what's needed.

[Jingthing]

1 hour ago, how241 said:

More US tax laws.  Certainly not needed.  A total reform of the US tax code is what's needed.

Meanwhile, back in the real world, American expats still need to deal with the current laws (new and old) even if it means intentionally dodging them. A member here seems to be suggested that most expat businesses were doing that already. I don't know how she can know that. 

[MyFriend You]

8 hours ago, suzannegoh said:

I’m sure that there must be some who play it exactly by the book but the ones that I’m personally aware of put the business in the name of a Thai wife or a Thai partner and try to make such that there is no paper trail connecting them to the business.  However I do know of one case where a guy’s business became a little too successful and someone tipped off the IRS that he was evading taxes and the IRS wasn't sympathetic to his explanation that his Thai wife was rolling in money bu that he had no income.

 

I personally witnessed an American escorted out of a Bar in PPenh for Income Tax evasion by US Marshalls, he had a couple of construction companies in Thailand and Cambodia.  His downfall (according to the barroom banter) was he took a construction job for the US Embassy in PPenh, and a background check was made - he never came back to Cambodia to my knowledge.  ????  I was sitting in a sidewalk bar in Saigon a couple months ago and an American guy stated that he couldn't wait until he had been overseas for ten years so he wouldn't have to pay US taxes anymore............ I said "If you think that is true, your crazy"  You have to file for Taxes irregardless if you have an income or not...........i fact you may qualify for Earned Income"..........but he was adamant that he wouldn't have to file taxes anymore.  Good Luck to him............but one way or some day Uncle Sam will get his due.

[Jingthing]

A bit off topic but actually Americans are NOT always required to file, expats or not. There is an income threshold where if you if you fall under it you are not required to file and indeed the IRS doesn't WANT you to file (wasted work for them). But if that income includes certain types of income you would want to file anyway, such as asset sales where the gross amount is over the cost basis. But of course there is no such thing as filing obligations ending after 10 years abroad. It's funny to me that anyone actually believes that. 

 

[suzannegoh]

5 hours ago, Jingthing said:

A bit off topic but actually Americans are NOT always required to file, expats or not. There is an income threshold where if you if you fall under it you are not required to file and indeed the IRS doesn't WANT you to file (wasted work for them). But if that income includes certain types of income you would want to file anyway, such as asset sales where the gross amount is over the cost basis. But of course there is no such thing as filing obligations ending after 10 years abroad. It's funny to me that anyone actually believes that. 

 

However there is at least one good reason to file even if you don’t have to.  Generally, in the absence of fraud, the IRS can only go 3 years back to challenge your returns.  But the clock starts ticking on the day that you file not at the end of the tax year, so if you never file the clock never starts ticking, making it possible for the IRS to go back 10 years or more if they want to.

[suzannegoh]

7 hours ago, TunnelRat69 said:

I personally witnessed an American escorted out of a Bar in PPenh for Income Tax evasion by US Marshalls, he had a couple of construction companies in Thailand and Cambodia.  His downfall (according to the barroom banter) was he took a construction job for the US Embassy in PPenh, and a background check was made - he never came back to Cambodia to my knowledge.  ????  I was sitting in a sidewalk bar in Saigon a couple months ago and an American guy stated that he couldn't wait until he had been overseas for ten years so he wouldn't have to pay US taxes anymore............ I said "If you think that is true, your crazy"  You have to file for Taxes irregardless if you have an income or not...........i fact you may qualify for Earned Income"..........but he was adamant that he wouldn't have to file taxes anymore.  Good Luck to him............but one way or some day Uncle Sam will get his due.

I don’t run a business but I got a letter from the IRS once before where they recomputed a prior year’s tax bill and told me that I could either pay additional tax plus a penalty or give them a written explanation and documentation showing why they are wrong.  Luckily that worked, otherwise the choice would have been either to pay or go to tax court.

Re that guy you met that said that once he was out of the US for 10 years he wouldn’t need to pay US income taxes anymore, there are a surprising large number of American expats in Thailand who know zero about US tax law or believe complete nonsense about it.  I think that a lot of it is because conspiracy theories and alternative media are so popular among low-rent farang.  After all, if you “know” that the Federal Income Tax is unconstitutional, why would anyone worry about going to jail if they don’t pay?
 

[suzannegoh]

13 hours ago, Jingthing said:

Meanwhile, back in the real world, American expats still need to deal with the current laws (new and old) even if it means intentionally dodging them. A member here seems to be suggested that most expat businesses were doing that already. I don't know how she can know that. 

I don’t know that most in Thailand are, just that most (maybe all) run by people that I know are.  It’s  not only because the US Tax code is burdensome, it’s because they are small timers and Thai law makes it such that the most practical way for a small timer to own a business here is to have their Thai spouse “own” the business. 

But either way, the example in the article that you shared doesn’t make very much sense because it says that that guy’s business never made more than $100K per year (in other words, he's a small timer).  It’s easy to legally shelter $100K/yr from US taxes.  The article also says that he found out about the changes on a facebook group for expats.  So apparently not a very tax savvy small timers.  This might be a real issue for some people but the article isn’t worth much because it didn’t dig into how large of a business is likely to be affected by the change and what options small business owners might have other than panicking.

Edited October 7, 2018 by suzannegoh

[radiochaser]

1 hour ago, suzannegoh said:

I don’t run a business but I got a letter from the IRS once before where they recomputed a prior year’s tax bill and told me that I could either pay additional tax plus a penalty or give them a written explanation and documentation showing why they are wrong.  Luckily that worked, otherwise the choice would have been either to pay or go to tax court.

Re that guy you met that said that once he was out of the US for 10 years he wouldn’t need to pay US income taxes anymore, there are a surprising large number of American expats in Thailand who know zero about US tax law or believe complete nonsense about it.  I think that a lot of it is because conspiracy theories and alternative media are so popular among low-rent farang.  After all, if you “know” that the Federal Income Tax is unconstitutional, why would anyone worry about going to jail if they don’t pay?
 

I met a man in California with whom I got into a conversation about Federal Taxes.  He was adamant that U.S. citizens did not need to pay them, even took my mailing address and sent, at his expense, a package of paperwork that cost him six or seven dollars.  This was in 1990.  Not much but about $13.00 today. 

I was interested so began reading the one inch thick stack of paperwork.  Until I found the sentence that basically read, you don't have to pay federal income taxes unless you were born on federal government property.  I laughed and tossed all the paperwork into the trash.  

I and all my siblings were born on U.S.  military bases. 

 

[radiochaser]

Another thing about U.S. Federal taxes.  You can call the IRS and ask them about a tax related issue and then follow their advise.  

If the IRS tax employee gives you wrong or bad tax advise, that is your problem.  Dig deep enough into the IRS website and you will eventually find the information, that the IRS is not responsible for giving you bad or wrong tax advise. 

You, the tax payer, are the one responsible for knowing what the correct tax laws are!

[Time Traveller]

For those complaining, remember it was Obama and the democrats that introduced both the strict FBAR and FATCA requirements for Americans. Think about that before you keep voting in the same stupid political parties.

9 million Expat American votes would definitely swing an election.

Edited October 8, 2018 by Time Traveller

[MyFriend You]

16 hours ago, suzannegoh said:

I don’t run a business but I got a letter from the IRS once before where they recomputed a prior year’s tax bill and told me that I could either pay additional tax plus a penalty or give them a written explanation and documentation showing why they are wrong.  Luckily that worked, otherwise the choice would have been either to pay or go to tax court.

Re that guy you met that said that once he was out of the US for 10 years he wouldn’t need to pay US income taxes anymore, there are a surprising large number of American expats in Thailand who know zero about US tax law or believe complete nonsense about it.  I think that a lot of it is because conspiracy theories and alternative media are so popular among low-rent farang.  After all, if you “know” that the Federal Income Tax is unconstitutional, why would anyone worry about going to jail if they don’t pay?
 

I just sent them a check for little over $15K for a miscalculation on my part for 2016 taxes, with a note that I plan to resubmit - I learned years ago, usually when they say you owe, it is a sure thing you do, in my case I completely forgot an annuity for $100K I bought 10 years ago matured - the money was banked automatically and I forgot about it, no 1099R was sent to me so I didn;t include it as income.  Now if it was a deduction I claimed and they say its not allowed???  Then its Game On!!......I win every time.  When I was in the Army, they would send me to H&R Block Courses every year - and I would serve as an Income Tax Advisor - I am pretty good at 'cheating legally' talking advantage of a lot of little known deductions.  I am a quarter Choctaw I Indian, and am now filing for the past six years tax on my Social Security..........as a Native American I shouldn't be taxed for Social Security.  I dot live on a reservation, buy I have a mailbox on one.

Edited October 8, 2018 by TunnelRat69

[spidermike007]

This is just another example of the Trump administration's hatred and distaste for the common man. If you are not rich enough to take advantage of the loopholes, then you are targeted. Let us give the largest corporations, at a time of record profits, billions in savings, and let us tax the crap out of the ordinary hard working Joe. It is just how Trump rolls. He never met a lobbyists he could say no to. Too bad the average Joe does not have a lobbyist.

[Time Traveller]

1 hour ago, spidermike007 said:

This is just another example of the Trump administration's hatred and distaste for the common man. If you are not rich enough to take advantage of the loopholes, then you are targeted. Let us give the largest corporations, at a time of record profits, billions in savings, and let us tax the crap out of the ordinary hard working Joe. It is just how Trump rolls. He never met a lobbyists he could say no to. Too bad the average Joe does not have a lobbyist.

 

Did you read my post?.....because you are sooooooooo far off being anywhere close to the truth it's just sad.

Say what you want about Trump, but he definitely didn't create FATCA or FBAR bills....and he sure doesn't take money from lobbyists. Unlike the previous democrat adminstration.

BTW, here's a tip since you didn't seem to learn from the recent Supreme Court judge appointment. Just because you say something, doesn't make it true.

 

Edited October 8, 2018 by Time Traveller

[Scott]

A post containing unconfirmed information and no source has been reported and removed.  

[Jingthing]

The topic here actually isn't about FBAR or FATCA which have been amply covered many times in the past.

 

The topic here actually isn't intended as a invitation to a political debate. Go to the world news forum for that kind of stuff and knock yourself out.

 

The topic here is about much more RECENT changes. Refer to the article in the O.P. for more details --

Quote

The two taxes U.S. expatriates who own businesses abroad are most concerned about: a one-time repatriation levy of as much as 17.5 percent on old foreign profits and an annual levy called Gilti — or global intangible low-tax income — on foreign profits going forward.

 

Edited October 8, 2018 by Jingthing

[Scott]

Off-topic post removed.  

[spidermike007]

8 hours ago, Time Traveller said:

 

Did you read my post?.....because you are sooooooooo far off being anywhere close to the truth it's just sad.

Say what you want about Trump, but he definitely didn't create FATCA or FBAR bills....and he sure doesn't take money from lobbyists. Unlike the previous democrat adminstration.

BTW, here's a tip since you didn't seem to learn from the recent Supreme Court judge appointment. Just because you say something, doesn't make it true.

 

 

What you say could not possibly be further than the truth. Trump has sought to repopulate the swamp with even more lobbyists than Obama. As Rudy has said, truth is not truth.

 

Trump promised to “drain the swamp,” an oath that came with plans to curb lobbying and end a “culture of corruption.” The campaign stump speech line had a populist appeal, but one person’s swamp dweller is another’s job creator. Some of the 16 lobbyists spanning nine different industries interviewed by Reuters acknowledged that many people view them as part of the problem in Washington, not the solution, and that their growing influence may be seen by those as a negative. 

 

Spending so far this year on lobbyists is on pace to exceed spending in 2016, according to the OpenSecrets website, with $2.43 billion spent over the first nine months compared to $2.38 billion at the same point in 2016. After taking office in January, Trump quickly made it easier to get into the White House. He reversed President Barack Obama’s restrictions that sought to keep lobbyists at bay by physically barring many of them from the White House - a rule that critics said did nothing more than move meetings with lobbyists to coffee shops across the street. And Trump has stopped the public disclosure of White House visitors’ logs, so now lobbyists come and go with less concern that their presence at the White House will be scrutinized. 

 

https://www.reuters.com/article/us-trump-effect-lobbying/open-sesame-lobbyists-cheer-warmer-welcome-in-trump-white-house-idUSKBN1D714U

 

 

Edited October 9, 2018 by spidermike007