Nestmann Group, Ltd.

by Mark Nestmann: Yes,
You ARE a Criminal…You Just Don’t Know It Yet

Over the last
few years, IÂ’ve helped dozens of U.S. citizens and permanent
residents (“green card” holders) give up their U.S. nationality
or residence status. This is called Expatriation.

ItÂ’s a
big decision – one that has implications far beyond possibly
paying an “exit tax” upon your permanent departure.

Some of the
considerations you need to review include:

  • Will you
    be able to return to the United States to visit relatives, receive
    medical treatment, etc.?
  • Does the
    passport youÂ’re using in place of a U.S. passport provide
    sufficient visa-free travel options for the countries you wish
    to visit regularly?
  • Do you have
    a non-U.S. home where you can not only live comfortably, but also
    become integrated with the local community?
  • Do you have
    U.S. assets or sources of income that would actually be subject
    to higher tax if you expatriate?
  • How will
    your U.S. pension and social security income be taxed after expatriation?

For those of
you not familiar with the concept of “expatriation,” perhaps
IÂ’m getting ahead of myself. Why might you wish to take the
admittedly radical step?

One reason
is taxation. The United States is one of two countries, and is the
only major country, that imposes significant income, capital gains,
gift, and estate taxes on its non-resident citizens and permanent

In virtually
all other countries, individuals end their liability to pay income
tax after a sustained period of non-residence, generally one year
or longer. But to legally and permanently U.S. tax liability on
their worldwide income, U.S. citizens must also give up their U.S.
citizenship and passport.

“Big Media”
emphasizes the tax aspect of expatriation when it trains its focus
on high-profile expatriates like Eduardo Savarin or Tina Turner.
But the truth is that the vast majority of individuals who give
up U.S. citizenship or permanent residence pay at least some tax
in their adopted country.

IÂ’ve discovered
the motivations for our expatriation clients to take this step are
more nuanced than mere tax avoidance. Several non-tax factors make
it increasingly difficult for U.S. citizens or permanent residents
to live outside the United States.

A case in point
is the overwhelming compliance burden U.S. taxpayers living overseas
face. The information reporting regime they face is complex, overlapping,
and constantly evolving. Even minor violations are subject to draconian
penalties. Take for instance, the ubiquitous Treasury Form TD F
90-22.1, the “foreign bank account reporting form.” Fail
to file this form and you could be imprisoned for five years and
fined $500,000. True, sanctions typically are much less severe,
but many other mandatory disclosure forms exist, all of them easy
to miss, and all with significant penalties for non-compliance.

more, U.S. laws force foreign banks and other financial institutions
to enforce U.S. tax and reporting rules with respect to their U.S.
clients. If the banks fail to do so, they face a 30% withholding
tax, starting in 2014, on many types of U.S. source income, and
possibly on other capital transfers. In many cases, itÂ’s easier
for foreign banks to “fire” U.S. clients than deal with
this risk.

The upshot
is that many Americans, especially those already living outside
the United States, have decided that their U.S. citizenship or permanent
residence is more trouble than itÂ’s worth.

the decision to turn in your U.S. passport or green card is a big
one. It requires that you acquire a second passport, if you donÂ’t
already have one. It also requires that you live permanently outside
the United States, if you donÂ’t already do so.

If you think
youÂ’re a possible candidate for expatriation, The Nestmann
Group, Ltd. can assist you in every step of the process. We can
help you acquire a suitable citizenship and passport, choose a country
in which to acquire permanent residence, and assist with every phase
of your expatriation. Contact us today for more information at [email protected].

27, 2013

Nestmann [send him mail]
is a journalist with more than 20 years of investigative experience
and is a charter member of The
Sovereign Society
’s Council of Experts. He has authored over
a dozen books and many additional reports on wealth preservation,
privacy and offshore investing. Mark serves as president of his
own international consulting firm, The
Nestmann Group, Ltd.
The Nestmann Group provides international
wealth preservation services for high-net worth individuals. Mark
is an Associate Member of the American Bar Association (member of
subcommittee on Foreign Activities of U.S. Taxpayers, Committee
on Taxation) and member of the Society of Professional Journalists.
In 2005, he was awarded a Masters of Laws (LL.M) degree in international
tax law at the Vienna (Austria) University of Economics and Business

© 2013 Mark

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