Monthly Archives: December 2016

New Year’s Wish

As 2016 draws to a close, there are people from all walks of life, throughout the world, who share one attribute, along with one New Year’s wish. These are the ‘US persons’ – those individuals who USA says are inexorably connected to the USA, most commonly due to birth on American soil. Their collective New Year’s wish – to be free of the inequities associated with being deemed a ‘US person’.

During an interview regarding his book, ONE MIND, How Our Individual Mind is Part of a Greater Consciousness and Why it Matters, Dr Larry Dossey says: “Our problems are enormous: global climate change, environmental degradation, pollution, overpopulation, water scarcity, hunger and food insecurity, endless wars, religious strife, degradation and acidification of our oceans, on and on. Nearly all these problems are caused by individuals who represent a particular culture, race, tribe, country, or religion, who are competing with other individuals of different views. We cannot see beyond our individual self, our tribe, our religion, our culture. All of these problems are compounded by greed and selfishness…. It is going to be difficult or impossible to confront these problems intelligently without dealing with our fragmentation and sense of separateness. We need a profound shift in our sense of how we are related to one another. I believe this shift is possible by re-imagining how we connect with others through our consciousness. The “us-against-them” competitive model is not going to see us through. A shift to a One-Mind perspective may be our best alternative — a sense of unity that is experienced at our deepest emotional levels.”

The human rights grievances associated with being a ‘US person’, although justified, may seem trivial compared to the plethora of issues threatening the survival of humanity and our planet. Nonetheless, they are  representative of a lack of ‘One Mind’. When governments and financial institutions, consisting mostly of individuals who are lucky enough not to be classified as ‘US persons’, support, enable or enforce ‘US person’ laws (i.e. CBT, FBAR, FATCA currently, but who knows what else in future) in the misguided belief that harm inflicted on a minority is justified to ‘protect’ the majority, or worse deny there is any harm being done at all, we all lose. And when as individuals or groups we silence, label, deny, invalidate, discriminate against, or marginalize others, even in our comparatively small spheres of influence, we all lose.

“Just as a parent chooses to protect his or her own children, we sense, through the One Mind, that we must protect our relations with whom we share consciousness, which includes all of life on earth. The new ethic makes it possible to expand and revise the Golden Rule. We no longer say, “Do unto others as you would have them do unto you.” Now we say, “Be compassionate to others because in some sense they are you.” ”

Happy New Year.

December 22 2016 Update on Canadian FATCA IGA lawsuit — Moving closer to the Charter-Constitutional trial

This is a new update with some timelines from the Canadian Federal Court showing what has to be done before we know the Charter-Constitutional trial date (taking place next year). In part, there will be motions and responses related to differences of opinions as to what documents and information have to be provided prior to trial:

Order dated 22-DEC-2016 rendered by Roger Lafrenière, Esq., Prothonotary Matter considered with personal appearance

The Court’s decision is with regard to Case Management Conference [recently held by the parties to move the litigation forward]

Result:

Court Orders:

1. D [The Defendants — Attorney General and Revenue Minister] are granted leave to s/f [serve/file] their motion in writing for production of documents and particulars.

2. P [The Plaintiffs — Kazia, Ginny, and Gwen] shall s/f their responding motion record within 28 days from the date of service of the D motion referred to in paragraph 1 above

3. P are granted leave to bring their motion for summary trial [the Charter-Constitutional trial]. P are dispensed from s/f a motion record at this stage and shall instead s/f a notice of motion and contemporaneously serve their affidavit evidence [e.g. testimonies from our Witnesses and Expert Witnesses].

4. The timeline for the D to file a response to the P motion for summary trial is suspended until further order

5. Any further affs, docs, or particulars, and anything else req’d by any order resulting from the D’s motion referred to in para 1 above shall be produced by the Ps to the Ds within 30 days of such order

6. The parties shall make best efforts to schedule the Ds examinations for discovery of the Ps within 45 days of satisfaction of the requirements, if any, described in para 5 above

7. The parties shall requisition a CMC [Case Management Conference] as soon as possible following completion of the steps set out in para 5 and 6 above in order to, among other things: A) fix a timetable for completion of the steps leading to the hearing of the P motion for summary trial; and B) schedule the hearing of the P motion for summary trial.

Filed on 22-DEC-2016 copies sent to parties”

Sorry again for the slow pace.

Stephen Kish

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Be careful what you “fix for”! A Holiday Gift: What to do about the unfiled #FBAR

cross posted from Be careful what you “fix for”! A Holiday Gift: What to do about the unfiled #FBAR

UPDATED WEDNESDAY JANUARY 4, 2017

Part 6 – Getting help with “fixing your compliance problem”:
“The smaller the step taken, the bigger the result”

 
Some tax professionals:

– believe that compliance problems should presumptively be solved ONLY through prescribed IRS procedures including: “Streamlined (domestic or offshore)”,”OVDP”
“Delinquent information returns” and; “Delinquent FBAR submission procedures”; AND THEREFORE

– rightly or wrongly (and it depends on the facts) find it difficult to deal with the Title 31 FBAR problem without considering one or more Title 26 tax problems.

In many cases they will frame the issue as:

Should you use OVDP (the answer is almost always NO) or should you use Streamlined (the answer is usually maybe). But, to use either OVDP or Streamlined is to NOT solve the Title 31 FBAR problem without compounding the number of problems (by introducing Title 26 tax issues). Are you eligible to use the “Delinquent FBAR submission procedures?”

The threshold consideration is whether all income associated with the “foreign accounts”, that should have been reported on the tax returns was properly reported.

OVDP and Streamlined ALWAYS assume more than one problem …

Since OVDP and Streamlined deny the possibility of solving the Title 31 FBAR problem on its own, some advisers escalate one simple Title 31 FBAR problem into several problems.

OVDP, Streamlined the “Delinquent FBAR Filing Procedures” are NOT not found in either the Internal Revenue Code (Title 26) or the Bank Secrecy At (Title 31). Therefore, they are NOT the law and are NOT legally required. They may or may not be advisable courses of action.
(This is where your adviser can assist you in making a rational decision.)

Obeying the law (“doing the right thing”) requires two things.

Thou shalt:

1. File FBARs (Title 31)

2. File your tax returns (Title 26)

What could be wrong with fixing “compliance problems” by “obeying the law”?

Isn’t to “obey the law”, to “do the right thing”?

There are people who fix their “compliance problems” by simply “filing their tax returns and/or amended tax returns” without using OVDP or Streamlined. In do doing, they are simply “obeying the law”. You will find many “internet warnings” against filing tax returns outside of the OVDP or Streamlined (“quiet disclosures“). Are these warnings justified?

Is it really “the wrong thing” to try to “do the right thing”
(obey the law)?

The answer depends on the facts. I will address the question of “quiet disclosures” in a separate post.

“The total weight of problems is equal to the square of the number of problems!”

You will compound your problems by allowing your problems to escalate.
That’s how the two people described above, who started with one simple problem, found themselves in the messes they are in today.

Conclusion: consider whether you can deal with minor/unintentional FBAR violations as a “stand alone single problem”.
There may be no need to escalate that one single problem into a multi-dimensional full blown tax problem!

Remember: In most cases, “the smaller the step taken, the bigger the result for you!”

John Richardson
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Tax residency vs. physical presence: The four questions you must ask before making a country your home

cross posted from citizenshipsolutions

An introduction to “tax residency” …

Most people equate residency with physical presence. They assume that where you are physically presence determines where you live. They further assume that where you live is where you pay your taxes. Conclusion: The country where you live is the country where you must be “tax resident”. Not necessarily!

There is no necessary correlation between where one lives and where one is a “tax resident”. In fact, “residency for tax purposes” may be only minimally related to “residency for immigration (where you live) purposes”. It is possible for people to live in only one country and be a tax resident of multiple countries. The most obvious example is “U.S. citizens residing outside the United States”.

The concept of “tax residency” is fundamental to all systems of taxation. The fundamental question, at the root of all tax systems is:

“what kind of connection to a country is required to assume tax jurisdiction over an “individual”, over “property” or over an “entity”?”

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Wives & Girlfriends as Sacred Vows OR How Your Marital Vows Could Deprive the Treasury Department Its Due

 
Given the trend of governments requiring their citizens and residents to report nearly everything (even Russia has now begun to require duals to register their 2nd citizenship), it’s amazing no one has come forth with a requirement to file a SpouseBar. Think of the normal approach the U.S. takes to anything foreign. “Alien.” Most countries have more benign terms in use for their non-citizen residents. “Permanent resident.” “Landed immigrant.” “Alien”- as if there were no similarities between an American and a human being that just happens to be from another country. “Foreigners” – being seen as some form of animal, wild, untamable, unworthy of freely mixing with the Homelanders but somehow, needing to be contained. And what are the three aspects the US always takes toward something foreign?

  • First, the US hates anything FOREIGN.
  • Second, the US hates anything regarding DEFERRAL.(Remember, “if you see the word foreign, the word penalty, is sure to follow”
  • Third, the US hates LEAKAGE (for anything to get outside the US tax system)

After all, without a reporting requirement, that door undoubtedly opens far and wide to tax evasion. And certainly, the richer a couple is, the greater the risk of not meeting that noble goal of “paying ones fair share.”

Keeping this in mind, President-Elect Trump has finalized the main appointments that will make up his cabinet. We looked at how many FBAR marriages there are currently (and still examining earlier unions). After all, some of these people are among the richest in the world. While there is a disturbing amount of physical abuse (allegedly in some cases) committed on the part of the males, so far we have found two couples that include an “alien spouse.” First of course, is President-Elect Donald J Trump. And then, of course, just as we had TurboTaxTimmy, our new Treasury Secretary may have some tax issues he is not taking care of.

Most expats have come across the issues of the gift and estate taxes, if for no other reason when trying to figure out what the value of an asset is (gift tax) vs how it is to be taxed (estate tax). Then there is the issue of an expat trying to get under the 2 million asset-test by gifting.

Just to remind, the relevant issue here is:

  • an annual exclusion amount per donee per year There is no limit on the number of people that can be gifted to. There is no gift tax involved and no need to report
  • US citizens and domiciliaries can also “gift split,” allowing married donors to exclude up to twice the annual exclusion amount per donee per year. Gift splitting is not permitted if either spouse is a non-US domiciliary, and of course, there is IRS Form 709 . After all, we’re still talking about Form Crime
  • An unlimited amount can be gifted to a spouse who is a US citizen
  • There is an annual exclusion for gifts to non-US citizen spouses

So how will these rules affect our incoming members of the executive branch?
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