Re: Re: PS: About Taxation
Keith R said:
I'm not a tax lawyer (are you a lawyer, as your moniker implies?), but it seems to me that this is not entirely true. What about a US citizen resident in the DR, but paid salary by a US-based MNC that already withholds US taxes and social security from the citizen's salary?
Surely, you jest. Few lawyers are my friends, despite the name. No, I am not a member of that august body of the legal profession.
If you work more than 330 days of the year outside the US, then regardless of how your salary may be deducted for tax liability (pay as you go, for instance), the liability wil be calculated on a basis net of the exclusion and net of the local DR taxes paid. (I am sure you understand this, but am simply repeating it for clarity.)
If your salary is in pesos, it will be exchanged at the current rate for tax liability calculations. If it is in dollars, well, no sweat. Still, when it comes to making the declaration, the $80K will apply.
Keith R said:
Couldn't the IRS seek to garnish part of that citizen's salary to recover tax it claims to be owed?
Oh, yes, the IRS will smell it out like a shark scents blood from five kilometers.
Keith R said:
What about a US citizen residing in the DR but who still possesses, on US territory, property, bank accounts, trust funds or other assets that the IRS can seize or freeze in pursuit of tax it argues is owed?
Yes, indeed, they will seize it with a court injunction until your taxes are settled. If you do not respond within the alloted time, they will simply sell the property up to the amount necessary to pay the taxes. If insufficient, the interest rate clock will continue ticking on the remainder.
It is unwise to dicker with the IRS, particularly if you have property in the US. But, if you are working for an MNC, I am sure that they have a contract with local tax consultants, who will merrily handle the tax maze on your behalf.
It is the individual who does not have that expert support who may be in for a hassle. I am sure, however, there is sufficient talent in the DR to handle US tax declarations for one and all in this category. KPMG might do them for a fee, though I am not sure how much they charge. There are 80,000 Americans estimated to be living year-round in the DR, so the market is significant, wouldn't you think?
PS: Neither do I work for the IRS. I am a mere mortal like the rest when it comes to paying US taxes as an expat - which is why I first posted regarding this peculiar situation that I find very unfair.
PPS: Annnnd, I am not a tax consultant, I am a tax payer and the above has been my experience as an inveterate expat.