In the 21st Century, the most interesting thing about a person is where he is a tax resident: "So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer" https://t.co/w3LtUfyt3H via @expatriationlaw
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) December 28, 2019
We have all had our OMG Moment. Now that the FATCA rollout has begun, there will be many more “OMG Moments”. This past weekend, I heard about a particularly egregious, frightening and unfair situation (yes, some are worse than others). In response to this, John Richardson suggested that I post the following:
If you are newly in your OMG Moment, we hope this will help.You are among friends here. Thanks John!
Have you just been told that you are required to file U.S. tax returns?
I am hearing more and more reports of people having their OMG (“Oh My God”) Moment where they are hearing for the first time that they may be required to file U.S. tax returns.
You are experiencing one of the most terrifying, confusing and disorienting moments that you will ever have in your life. The range of emotions you are feeling are so difficult to manage that you are having difficulty responding.
Some simple advice.
1. You are NOT in a position to make any quick “commitments” which are NOT REASONED decisions but are REACTIONS to a frightening and confusing situation.
2. Only “U.S. persons” are required to file U.S. tax returns. You may NOT be one. Your first step is to take steps to determine your citizenship status.
A. Being born in the U.S. is NOT conclusive proof of U.S. citizenship. You may have relinquished it along the way.
B.There is NO presumption whatsoever that somebody born outside the U.S. is a U.S. citizen.
3. Since you have not been in the U.S. tax system you do NOT have a tax problem. Therefore you do NOT begin by calling an accountant/tax preparer/tax lawyer. (Once you are in the U.S. tax system you will be rewarded with “tax problems”. At the moment you have a “possible compliance” problem (if it determined that you are a U.S. person).
Accountants, tax preparers, your bank and the vast majority of lawyers are NOT qualified to advise you on the starting question:
“Are you in fact a U.S. person?”
4. The advice “What To Do Before Contacting A Lawyer” is important and applies to to contacting accountants as well.
5. You are NOT alone. Estimates are that there are at least one million Canadian citizens affected by this injustice and unfairness. Remember that you are NOT alone.
6. You have done NOTHING WRONG. The U.S. has never made any effort to educate Canadians of U.S. origin that their laws levy taxes on the basis of citizenship and those born in the U.S. begin life as U.S. citizens.
You did NOT choose where you were born.
Being born in the U.S. means that you started life as a U.S. citizen. You may have relinquished U.S. citizenship.
7. Information sessions are available to you that you can attend anonymously at a very small fee.
26 thoughts on “OMG! IRS Wants Me!”
RT @MapleSandbox: OMG! IRS Wants Me!: http://t.co/pFmPyQVrO8 by @expatriationlaw
There is a typo in the link ‘what to do before contacting a lawyer’
Excellent post. However someone needs to tell the FFIs about Point 3 (that banks are not qualified to assess whether or not you are in fact a US person). Also Point 2 is rather important and not at all consistently interpreted by the media or probably by CRA and the banks. Particularly assuming the latter have any idea where your parent(s) was/were born, if they were born in the US and you weren’t. I’m not even sure State Department consular officials are consistently clear on that point (i.e., if you were born outside the US of one or two US parents, are you automatically a US citizen or are you only eligible to get a passport and exercise US citizenship and tax responsibilities IF YOU SO CHOOSE AS AN ADULT). This may or may not become an issue in some cases as FATCA gets implemented, depending on what indicia the FFIs have or on how much personal knowledge a small-town FFI clerk might have about your parentage, if you still live in the town where you were born. And obviously it is critical that FFIs give you an opportunity to demonstrate that you might have lost your US citizenship along the way, if you were born in the US, BEFORE forwarding your account information to CRA or other countries’ tax authorities for further forwarding to IRS. In Canada the enabling legislation says the FFI “may” explore that with you, AFAIK it doesn’t say they “must.” It should have said that, but it didn’t.
OMG! IRS Wants Me! | Maple Sandbox http://t.co/0NfEkl2Kth – Advice from @Expatriationlaw to use when you learn about #FATCA #FBAR #PFIC
RT @ExpatriationLaw: OMG! IRS Wants Me! | Maple Sandbox http://t.co/0NfEkl2Kth – Advice from @Expatriationlaw to use when you learn about #…
An addition to what Schubert just wrote as he is spot on with Point 3.
Let me state I do not like nor think others should provide links on forums like this to FFIs. Why? It can make matters WORSE!
Anyways, a FFI in the EU states the following on its account opening section.
“________ regulations require us to keep a record of where you are resident for tax purposes. If you are unsure, please seek independent tax advice.”
Lastly We are seeing in the EU that statements made concerning nationality and residency are “the best of my belief” and not “under penalties of perjury.”
There will be another OMG moment IF they know FOR SURE they are a U.S. person and make the decision to file. I have just recently called FIVE Accountants , some that I have heard of from friends, others using the list on the American Citizens Abroad website . The fee I have been quoted to file three years of tax returns and six years of FBAR forms In the NEW June 2014 Streamline Program is between $1500 to $5000 . Trying to find an Accountant that doesn’t try to scare me half to death when I’m talking to them on the phone has been a challenge! I think I would pay more money if they tried to “calm me” and not try to “scare me”.
Since 1974 I have filed my Canadian taxes . I buy a Canadian tax program for $50 , years ago I did them manually, and file for the whole family. We have always had SIMPLE Canadian tax returns. Now to become compliant in this new 2014 streamline program , it is going to cost me a minimum of $1500! The $1500 fee is because I said I could submit the FBAR forms, but I will still need to pay them a consulting fee because I have no idea what type of accounts I’m holding. Are my CANADIAN accounts: GIC , RRSP, LIRA, Open RRSP mutual fund – Securities or Other!!
I have zero income to report up to 2013, but Last year my Canadian husband of 37 years passed away so I am now receiving a Spousal Pension from the Canadian company where he worked for 35 years. Because of the money we saved In our Canadian RRSP’s , and money I invested in a Canadian GIC that I received from a
SMALL life insurance policy he left me , there is another form that needs to be filed. OMG!!
One accountant said he had 30 plus returns on his desk right now to be filed.
There is a part of me that I wish all the millions around the world that the U.S. say should file because of U.S. Citizen Base Taxation would file their ZERO tax returns , and everyone would mail their three years of returns and six years of FBAR on the same day!
Or they could make the decision to not file. What really has changed? Simple.
@Ferfet: I’m sorry you are going through all of this. I know you are having a tough time dealing with the loss of your husband and your own challenges.
As Duke said, one option is to do nothing. But, I know you have thought this through for a long time and may be making the decision you think will give you the most peace of mind.
I’m glad to see you posting here, but I’m sorry it is under such terrible circumstances.
I’d like to raise the question of when a person should not let someone else know about the CBT and FATCA nightmare. I recently had a conversation with a woman with whom I have had a slight acquaintance for more than 20 years. During the conversation I learned that this person was born in the U.S. about 90 years ago, but moved to Canada when she was a teenager. Because of her age, health and lack of financial resources, I didn’t want to bring up the U.S. citizenship problem.
Do others agree that there are circumstances where a person is better off not being burdened with such unpleasant information?
@Hazy, I’m with you. I, also, know someone who is not aware – was born in the US, lived there a couple of months and returned to Canada with (Canadian) parents. The person is having a difficult time and the decision was made by the family not to discuss it as it’s felt that it might tip the person over the edge. If the person finds out through the media, that’s one thing, but I’m not going to be the one to purposely perhaps endanger someone’s precarious health & mental state. I keep the person’s family up to date, so that if it comes out they can help manage the situation.
@Hazy: I agree. There was a woman in her 90s in my condo building. She is a retired opera singer, which I found fascinating.
Whenever she introduced herself to people, her first words were “Hello dear. I’m Rose. I’m an American citizen.”
No one could understand why she thought that was the major thing she wanted people to know.
In many conversations I had with her, she brought up the American citizenship issue. I could never bring myself to say, “Rose, do you know…?”
A couple of months ago, several of us noticed she had a lot of confusion and later learned she had Alzheimer’s. She is now in a retirement home. I am convinced I did the right thing not to tell her.
She has an accountant and lawyer, so I don’t know if they ever told her or if she is compliant.
Hazy: Of course. This lady is 90. You barely know her. Why on earth would you or anyone else trouble her?
Actually, I came to know her quite well over the last year. In each conversation, she raised the point about being an American ciizen.
I was simply responding to Hazy’s question about whether there are times when we are best not to raise this issue with people. This was one of those situations.
Tell the politicians that USA does not need to worry about loss of tax base from persons in Canada renouncing. For each Canadian citizen who renounces USA citizenship, simply mint one U.S. resident alien card and auction it off. Millions of persons all over the world would jump at the chance to be a resident alien in USA (and there is a big overlap between those and the ones who would be delighted to receive lawful permanent residence in Canada) . Then USA bureaucrats collect all the fees (renewing the work permit until the bureaucrats are good and ready to issue the resident alien card, the longer they take the more money they make) to USCIS on top of the auction price and income taxes.
I was recently informed by the John Hancock Insurance Company that I need to fill out a W-9 form regarding my US citizenship. I am trying to relinquish a $1000 policy that was purchased when I was a child. I feel that to do this would open up a huge can of worms on such a small gain. They are also requiring that I fill our this form to satisfy the IRS even though I might not relinquish the policy.I have been a Canadian Citizen since 2005 and have live here for over 50 years. Help! I do not know what to do.
D. H. You could fill in the W9 as asked. The IRS won’t bother you. They have bigger fish , living in the US, to go after.
Alternatively, tell John Hanccck that you are no longer a U.S. person and offer to complete a W8-Ben . This is the equivalent IRS form for non-Americans. If J.H. demands a CLN tell them that when you relinquished by becoming Canadian telling the state dep’t and obtaining a CLN was in no way required.
Duke’s advice is good. I personally would take the second option he suggested. I would be interested to know if they will accept that.
Is John Hancock in the U.S. or is it in Canada?
I’d like to apply for a Nexus Pass, or perhaps a British Columbia enhanced Driver’s License, so I can visit Washington state in the fast line-up.
I’ve been in Canada since the age of 5, since 1979. Never done my US taxes. And I don’t want to start now. Any idea if I can apply for a Nexus pass?
Or would they forward my information to the IRS?
I don’t go that often, so I’ll do the long line-up if I have to.
You can apply for Nexus. When I got a Nexus card in 2004, the Nexus Officer insisted I was still a U.S. citizen. I insisted I wasn’t.
In the end, she said because I applied as a Canadian, they would issue Nexus to me as a Canadian. So, be prepared to take a strong stand on the fact that you are a Canadian–and only a Canadian. (Are you a Canadian citizen?)
I don’t believe the Nexus people forward information to IRS.
As you mentioned, an enhanced driver’s license is also an option for land crossings. This does not give your place of birth, but the border guard can (and often will) ask. I don’t think this option would give you access to the fast lane.
Please let us know what you decide and how it works for you.
Lynne I think you may want to talk to Schubert 1975
“Canadian citizens still protected from IRS tax collection and penalties, in Canada
I appreciate that some people feel they have to be able to cross the US border, either for family or business reasons. However, I strongly suggest anyone who is concerned about the costs, both financial and moral, of complying with IRS extortion, seriously consider the option of refusing to comply with IRS demands and not crossing the border again. Yes this may have a down-side for you, but what is the trade-off in terms of costs to you, your family, and your retirement if you comply with the IRS?”
If you are a US citizen and do not file taxes you have committed a felony. For non resident the earning limit is not much and you have to do FBAR. Failing to file income taxes has no limit on statue of limitations for FBAR statue of limitation is 7 year I think. Check with Petras.
US Border Security can access a host of information from Canadian law enforcement. Any police report is available. Canadian Border Security has same right about American visitor. Watch the TV program Border Security there are ones about Canadian and USA. I assume that US agent can easily access your citizenship and tax record. They can force you to answer any question regarding income and how much you have in the bank. With Canadian FATCA IGA they may just ignore small fry or people not on FATCA list, but do you really want to take the risk? Lying to A US Border is perjury and they can obtain a credit report. You credit card limit is based on income and they can tell who you bank with.
Go to Nexus will just create a closer examination and Obama pushed FATCA. This is not 2004.
Also voting in USA election may get you on FATCA list.
Lynne Can you please repost list of Credit Union not compliant.
I was told recently by Nexus that if you are living in Canada as a dual Canadian-US citizen (I assume that the opinion of the U.S. is that you are a U.S. citizen), your Nexus card will be “tied” to your US (not Canadian) citizenship — because that’s just the way it’s done. Your Canadian citizenship or any other citizenship is then “irrelevant” for Nexus, although you do have to provide your Canadian passport for Nexus. I believe Lynne’s situation is that she is not a U.S. citizen and therefore she could only apply as a Canadian. You will have to figure out how you will respond to this possible question at the Nexus interview: “I see that you were born in the U.S. Are you a U.S. citizen and do you have a U.S. passport?” Will Nexus talk to IRS? Who knows?
@Stephen and Wayner: As far back as 2004, the Nexus Officer was not accepting my position that I was not a US citizen. She insisted I was an American citizen. I insisted I wasn’t. It was the first time since 1973 that I was aware the Americans had changed their position from what I was told by the US Consulate in 1973 (that I was “permanently and irrevocably” relinquishing US citizenship.)
She did not mention taxes or the IRS. But that was a long time ago and five years before FATCA was passed by Congress.
I see a lot of people at Issac Brock talking about voting in US election.
You may want to open a thread there
Registering to vote in US election may be harmful
“Financial institutions should not accept as reasonable any explanation which is unlikely or ambiguous in light of an account holder’s actions. For example, if a financial institution knows that the individual voted in an U.S. election or travelled from Canada to a country (other than the U.S.) under a U.S. passport after the date the account holder claims to have relinquished U.S. citizenship, the financial institution does not have to accept the explanation.”
Some FI may be searching US voter list. When you vote for US election in Canada does USA know you are living in Canada.
As aside I should point out over a year ago any Canadian party in power will implement FATCA. Now I telling people do not register to vote in USA election. It will really bad for your friends if the Republican loses control of congress. Remember that other than a handful of New England Republican senator the Republican did not support the Hire act. I think future President Hillary Clinton is pushing even more on a continental common market. Her Supreme Court Justice will be no friend of ours.
@George III I am not currently following or posting at Brock.