Wednesday, November 19, 2014

I was (very) wrong… twice!

Loyal readers, I owe you a deep apology. It has been brought to my attention that I was wrong. Very wrong. Twice.

Well, I can’t say that I feel too bad. After all, you should not be taking advice from a blog that calls itself an accident. Still, we have standards to uphold.

This week and next week, I beg your forgiveness by presenting you with a complete analysis of where I was wrong.

Wrong #1

My first wrong came to me as a tremendous shock. As my loyal readers know, I regularly claim to be the internet’s foremost non-expert on financial matters. However, it turns out that I am actually the internet’s authoritative source for U.S. tax issues for ex-pats living in Israel.

I know this because my definition of a PFIC was shamelessly copied by Dan Dobry )דן דוברי( in an article he wrote about taxation issues for Israelis with U.S. citizenship.

Here is my authoritative definition of a PFIC from Getting Eaten by PFIC.

A PFIC is a semi-mythological creature that roams the earth outside of the United States of America. It seeks out American taxpayers wherever they may be living, watches carefully to see if they invest their money outside of the United States, and then eats them. It does this by levying the highest possible tax calculation on the earnings from these investments.

It tends to eat them slowly, so that at first they may not feel all that much pain. After time, they experience extreme agony.

Here is Mr. Dobry’s definition of a PFIC along with an actual Hebrew-to-English internet translation:

ה - PFIC זו חיה מטולוגית, שמטיילת ברחבי העולם מחוץ לגבולות ארה"ב. היא מחפשת את אזרחי ארה"ב איפה שהם לא גרים ומביטה על ההשקעות שלהם. אם הם משקיעים מחוץ לגבולות ארה"ב היא "אוכלת" אותם.....
היא עושה זאת באמצעות הטלת מיסים גבוהים במיוחד על ההכנסות מהשקעות אילו.
אך היא "אוכלת" אותם לאט – בהתחלה היא מעניקה את התחושה שזה לא כואב במיוחד אך עם הזמן זה הופך להיות כואב באופן קיצוני

The PFIC is an animal mythical, travel around the world outside the United States. She is looking for U.S. citizens wherever they live, and not looking at their investments. If they invest outside the United States is "eating" them… It does so by imposing very high taxes on investment income while. But she “eats” them slowly – at first it gives the impression that it was not particularly painful but over time it becomes extremely painful.

I know that Mr. Dobry is a financial expert because he is the CEO )יו"ר( of Global Investment Solutions Ltd (“איגוד המתכננים הפיננסים”). Here are his exact words from his biography:

Dan Is dedicated to finding for the Israeli Financial Institution's solutions and accumulated Knowledge.

Imitation is the highest form of flattery, and I am deeply flattered to be the internet’s authoritative source on PFICs. However, I must apologize to the internet (and to Mr. Dobry) for being somewhat misleading in Getting Eaten by a PFIC.

You see, the PFIC is not actually a mythological creature, and it does not actually roam the earth. It cannot actually eat you. It is just tax regulation which I personified as hyperbole in an attempt to provide entertainment value to my readers. Or, you could say: סתם.

Unfortunately, Mr. Dobry seems to have taken this literally. Or maybe, this is not unfortunate at all. It has provided us with a bit of accidental entertainment by juxtaposing an utterly snarky definition of a PFIC in an otherwise entirely serious article.

I am certain that he is serious because he offers practical advice for his readers to overcome U.S. taxation issues. Specifically, they should consult with an expert. He doesn’t provide a full list of who these “experts” could be. He mentions himself and then his list appears to get cut off. I suppose if he continued, I would have been on the list, but I guess we will never know.

In any case, now that I am an expert, I really should shamelessly copy-and-paste something from another expert. I found this in Mr. Dobry’s article, and it seems appropriate. I will use an internet translation engine to make sure I don’t miss anything:

כל האמור בכתבה זו אינו מהווה תחליף לייעוץ משפטי או מקצועי ובכל מקרה מומלץ לקיים התייעצות עם בעלי מקצוע מיומנים בתחום זה.

All of this article is not a substitute for legal or professional advice in any case it is recommended to hold consultations with skilled professionals in this field.

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