What follows here is a wallow. Not an activity for the faint of heart, but a full-fledged wallow in the vagaries of two modern-day bureaucracies and the cost of living with less than a persnickety attention to detail. If you venture in, I recommend you bring with you one or more of the following: a) a cultivated appreciation of the absurd and the ability to cackle; b) an ability to use a glass of something with maximum power to intoxicate; c) a mastery of Schadenfreude and no shame about the need to feel lucky and superior.
Here's my latest little windmill assault-in-progress. And a view of my mental decay as of Sunday, June 23, 2007.
Even though I have left Japan and now live in the United States, I determined it would be wise to hold fast to my option of being able to return to Japan, should President Bush be assassinated and Cheney become President. For that reason, I wanted to hang on to my permanent visa（永住権), the Japanese equivalent of a Green Card. When I left Japan almost a year and a half ago, I did not turn in my alien registration card（外国人登録証明書）because that, I assumed, would have meant the end of my permanent resident status. And so my troubles with the tax office began...
The problem is, I am being taxed in both Japan and the United States. I was given to understand that that would not happen, but that information, it turns out, represents conditions in a perfect world, and not the one I currently inhabit. I have repeatedly appealed to the Japanese authorities to recognize that I am now resident in the United States, and, according to the terms of the U.S./Japan Tax Treaty, I should be exempt from double taxation. The rub is there seems to be a Catch 22 that prevents me from exercising that exemption. (Or not. I may simply be being assessed taxes on my Japanese social security.) Plus this Frankenstein monster of a solution to the tragedy that too many old people in Japan fail to die, called kaigohoken (介護保険).
Kaigohoken is a tax on old people for being old. It is assessed on all residents of Japan, Japanese and foreign, who are over the age of 65. It is labeled an insurance, but it is a tax. It is meant to pay for services old people (as a class) tap into in the health program, and that justifies the special tax levied just on old people and not on the rest of the population. Problem is, by not labeling it a tax, but an insurance, they make it impossible for foreigners to declare it as a deduction, but it is most assuredly a tax. Not voluntary. Not a service accessible by those not physically present in Japan, but a tax on being old. Taxation, without the participation of the taxpayer, on people who cannot vote, for services they cannot possibly use. The kind of thing my people once fought a revolution over.
If I pay all Japanese taxes, including this tax on being old, I will be considered a resident of Japan by the various Japanese governments, national and regional, and I can stay as long as I like in the United States. The only limitation is that my re-entry visa runs out July 4, 2008. And that's not necessarily a problem, I don't think, because if I return to Japan at some point before then and renew it, I am good for the duration of that new visa – (three years, unless the rules have changed since I got the last one). I can continue to come and go at will, with my Japanese Green Card in tact.
Also, if I pay those Japanese taxes, I may be able to claim them as deductions on my IRS taxes. My tax accountant takes the approach that with the IRS one makes a case for a deduction and hopes they are persuaded. We'll call that UNKNOWN #1.
As of March 29, 2007, I was ¥86,640 in arrears on my kaigohoken, and as of June 1, 2007 I was ¥114,900 in arrears on my city and prefectural taxes. A mere pittance to folks in the "have" class, but a good chunk of change (about $2000 and increasing daily) to those of us living on a retirement income of no more than $12,000 a year from the same Japanese government now slapping me upside the face with these taxes.
UNKNOWN #2 is whether the city and prefectural taxes are one-time taxes, on 2006 income. Japanese tax authorities levy taxes. They do not explain them. Are they taxes on my social security income? Will those amounts be constant? If ever the sky opens and the gods of Japanese tax agencies I've been petitioning for an answer respond, and if I get an affirmative answer to that last question, I can then assess the cost, by adding it to my kaigohoken amounts, of maintaining my permanent residence in Japan (Miura). I know the kaigohoken tax amount is constant. I do not know where to ask about how the city and prefectural tax was assessed beyond contacting again (for the n'th time) the Miura City Hall, as well as the Tokyo Social Insurance Agency in Tokyo (Social Insurance Agency, Japanese Government, 3-5-24 Takaido-nishi, Suginami-ku, Tokyo, Japan / 東京都杉並区高井戸西３−５−２４ 社会保険事務所 )
If I surrender my permanent visa, these problems go away. I then need only to find out how to do that. Which brings me to UNKNOWN #3: How do I surrender my alien registration card? There is an information service at the immigration office. They accept inquiries only in Japanese, but that is a hurdle I can jump, and we are currently inquiring a) if my assumption is correct, that I cannot both maintain my residence in Japan without paying Japanese taxes, and b) what the procedure is for surrendering my alien registration card, and c) whether that, in fact, invalidates my permanent visa. I am loathe to ride that merry-go-round once more, because in the past the immigration office told me to contact the tax office about taxes and the tax office told me to contact the immigration office about immigration concerns. I wish now I had taken off all my clothes in both offices and painted my body red until the person came out who could speak to the intersection of immigration (emigration) and tax concerns. I know he/she is in there somewhere.
UNKNOWN #4 is the question of whether the Japanese taxes already assessed can be voided and UNKNOWN #5, if I do not pay them, will my social security payments be garnished? The Miura City Hall tells me that since I did not surrender my alien registration card upon leaving Japan, I am liable. The taxes were appropriately levied and are overdue. I did not surrender my alien registration card, for reasons explained above, but also out of habit. For the past eighteen years I have been leaving Japan without doing so, and I left thinking I would return within a year. What loose ends there might be, I thought I could handle on my next visit. I didn't anticipate being away so long.
My major failing was in not collecting information on what taxes would be assessed after departure, how much they would be, what the connection is between maintaining the permanent visa and paying taxes, and how the Japan/U.S. tax treaty works.
I did not know, for example, that the Japanese tax office required a Form 6166 directly from the IRS attesting to my residence in the U.S. And that I got such a form by submitting a Form 8802. And I did not know that the IRS would turn down such a request if filed for a year any part of which I was resident outside the United States, effectively assuring double taxation.
I was working under two assumptions – that Japanese, unlike Americans, did not pay national taxes when living abroad and that foreigners not physically present in Japan on January 1 would not be assessed local taxes. As far as I can tell, those assumptions were correct. Missing, however, was the information that, from the Japanese government’s perspective, “physical absence" is tied to receipt of Form 6166 from the IRS – and, as I have explained, that Form is not issued until one has been resident in the United States for one entire tax year. According to statute, although I regularly watch the sun go down over the Pacific, I am in Japan.
UNKNOWN #6 is whether I have that information right. I do not know where to get this kind of information. I have petitioned the IRS for it, but they do not respond for months at a time, and then, in my experience, with unsatisfactory answers. The Japanese tax office simply plays by the rules and says the rules say they must have that Form 6166. I will keep trying, but I have to assume this is a lost cause.
Not only does Miura City Hall continue to bill me for kaigohoken; it informs me there is no way to pay directly to them. It must be paid only into a local Miura bank – not even a Yokohama bank will do. In a recent telephone call, I asked (couching my question in multiple hypotheticals) if I were to pay where I would send the money. They said I would need to find a friend who can hand carry the money to a Miura bank. Or, of course, I could open a Miura bank account and do this through a bank transfer.
I have beaten myself up for not doing my homework. But at some point myself stood up to this bullying, and protested that I did, in fact, do the homework. The real problem is multiple bureaucracies and inadequate piecing together of multiple bits of information from sometimes conflicting sources of information. An exacerbating factor is that there are precious few people in my position, so "general knowledge," which normally passes efficiently through the grapevine, was not there to be tapped into.
So, if you are do happen to fall into this pothole after me, let me suggest the following. Tentatively.
Rule #1: Know before you leave whether you intend to return.
If you do…
1. Prepare financially to pay double taxes for a period of one to two years, and quite possibly for as long as you hold on to your Japanese residence permit. Ignore the information you hear that the Japan/U.S. Tax treaty prevents double taxation. Claim Japanese taxes as a deduction when you file your U.S. taxes, and hope it works.
2. Arrange a method of paying your Japanese taxes. In the case of national taxes (on any Japanese income, including social security income), if you keep your Japanese bank account open, you can pay by direct transfer. If you live outside the Tokyo (or, presumably, other large) urban area, be ready to hear there is no way to pay taxes except through a local bank, and make arrangements accordingly, in advance.
3. Seek out information from a competent Japanese tax consultant on how the Japanese tax system works in retirement, what amounts will be assessed and on what basis. Don't be penny-wise and pound-foolish as I was, thinking you can do this on your own. The money you spend will save hours of your time thereafter. (If you do find such a person, please make his/her name available broadly.) Don't depend on the tax offices themselves, in other words. Recognize that one tax authority will not necessarily have information on another tax authority’s policies, and that city taxes, kaigohoken, and koseinenkin are all run by separate administrations.
If you don’t…
4. Contact the immigration office before you leave and verify the procedure for turning in your alien registration card. Expect to lose your permanent visa.
5. When leaving the country, submit your alien registration card. The authorities will likely cancel your re-entry visa.
And whether you do or not...
6. Find the person responsible for kaigohoken and murder him in his bed. Time travel, if you can, and murder him in his cradle.
One last piece of advice.
Don’t beat yourself up for trying to have your cake and eat it too. In the great ebb and flow of life, one should never do any less.
So much for Rule #1.
There's a Rule #2, which is an alternate, not a complement, to Rule #1:
Be rich. Pay what they ask and forget about it.