It All Depends On Who You Ask
At last week’s Offshore Summit in Panama, one theme that came up in many of the presentations was professional competence. The context was everything from immigration professionals for establishing foreign residency and obtaining a second citizenship to tax professionals to help U.S. persons take advantage of the Foreign Earned Income Exclusion and attorneys to set up structures offshore.
The conclusion in every case was that the key to success with whatever offshore agenda you’re pursuing is to find someone with experience.
While at the conference, I received a frantic e-mail from a reader who had attended our Retire Overseas event in Scottsdale earlier this year. This reader and her husband, after attending the Scottsdale conference, had decided to retire to Ireland. They arrived in the country a month ago with all their documentation and entered as tourists, as Americans can. They settled into a little cottage and proceeded to contact local attorneys for help establishing legal residency. The first responded to say she was too busy. The second told the couple that they could not get residency in Ireland…that it’s just not possible. The third attorney said he’d need to do some research to find out if it might be possible. The couple was on the verge of panic. They’d sold their house in the States and moved to Ireland with the intention of never moving back.
I responded to their e-mail to say, forget the attorneys. Go to the local immigration office, I told them, for the county where you’ve living and register with the garda (the Irish police, who, in Ireland, also handle immigration). They called their local garda station on Friday, were given an appointment for Saturday, and were assured they’d leave after that meeting with the necessary stamps in their passports.
It's All About Incompetence...
Why did they get such conflicting and non-helpful information from the attorneys? My guess is that the attorneys had no experience with immigration. They didn’t know how to do what they were being asked to do so they said it couldn’t be done.
I had a similar situation with a bank this morning. Some part of my online access for my account with this bank didn’t work when I tried to log in. The first bank employee I got on the phone told me the problem was that I shouldn’t have been allowed the kind of account I have. (Note that I’ve had this account for more than four years.) I hung up from that non-helpful soul and called back. This time I got someone with broader banking experience who was able to help me resolve the issue.
At the conference last week, a couple of the attendees told us that their tax preparers had told them not to try to take the Foreign Earned Income Exclusion when living and working overseas, that it’s illegal and they would end up in jail if they tried to claim it. Talk about gross incompetence by a tax professional.
For the record, the Foreign Earned Income Exclusion is not illegal. It’s part of the tax code. If you qualify for the exclusion, take it.
Most tax preparers focus their practice, and most U.S. tax preparers have never had a client take the Foreign Earned Income Exclusion. They have no experience with it…just like the attorneys in Ireland the reader contacted for help establishing residency.
I’d always done my own taxes until that point, but, the year after Kathleen and I moved to Ireland and were eligible for the Foreign Earned Income Exclusion, I decided to use the CPA Kathleen had had prepare her tax returns back in Baltimore. I had to send the return back to the guy three times for corrections related to how he figured the Foreign Earned Income Exclusion. In the end, I finished the return myself. Then the guy sent me a bill for three times what Kathleen had paid in the past. I paid his bill, but he lost a client. The next year, I prepared our taxes myself, as I have done every year since.
Not everyone has the ability to prepare his own tax return, though. So you need to find a tax preparer with experience with your kind of tax situation. We gave specific recommendations for how to go about this at the conference last week.
Lief Simon