Category Archives: FBAR

Synopsis: Solving U.S. Citizenship Problem with John Richardson (London, Ontario)

Canadian Information and Resources, Citizenship, FATCA, FBAR, General Info, IRS, Relinquishment and Renunciation

Finally, I’m posting a synopsis of Solving the Problem of US Citizenship information session presented by John Richardson of citizenshipsolutions.ca that was held in London, Ontario on February 8, 2014.
I apologize for the delay. Other FATCA projects have consumed my life.
You can read the synopsis in the link, but here are a few highlights:
CITIZENSHIP:
John first gave an overview of US citizenship laws, tax laws, renunciation and relinquishment and many changes that have taken place over decades.
People have many differing circumstances and each one is unique. Because of the complexities, John stressed:

 “The bottom line is you have to check the law at the time the act took place.”

 For people born in Canada to one or more parent born in the U.S., John suggested they should not automatically assume they are US citizens or US persons. There are many different rules around that. In addition John questions whether the US can apply their laws on people born outside of U.S.  So, he recommended people explore that before making an assumption they must be a US citizen.
He said:

“I would never, never, never under any circumstances advise someone to simply swallow hook line and sinker, well my father was American, therefore I am American for a number of reasons.:

A Supreme Court decision from the 1960s dealt with the forcible destruction of US citizenship. John confirmed many in the room felt they were being forced to relinquish US citizenship.
John believes:

The forcible destruction of US citizenship is going to become THE argument on this issue.
 

John explained renunciation is one form of relinquishment, along with other expatriating acts like becoming a citizen of another country with the intent of relinquishing US citizenship, working for a foreign government and other actions.
For numerous reasons, John recommended people who are renouncing or relinquishing by other means should get a Certificate of Loss of Nationality (CLN) through US Department of State by renouncing or reporting relinquishing at a US Consulate.
John reported there are various reasons to

“Deal with this sooner, rather than later.”

For many different reasons, John thinks:

“U.S. citizenship is probably the most dangerous, toxic citizenship in the world today.”

Lynne advised people who became naturalized Canadian citizens may be able to get information from their Canadian citizenship file by applying through Access to Information at (http://www.cic.gc.ca/english/department/atip/form-imm5563.asp)
PERSONAL EFFECTS:

John recognized the toll these issues are taking on people.  He stressed:

“Your life, your health, your family is so, so much important than any of this stuff. If you focus on this in a way that jeopardizes the things that make life worthwhile, you’re going to let these people win–absolutely destroy your life.”

TAXES:

John said there are two types of US persons:
1. Those Who Are Compliant
2.  Those Who Are Not Compliant

No matter what, you’re going to have a problem.  “When we talk about U.S. taxes, we’re talking about much more than taxes. It’s a whole information reporting regime, which is a huge problem.”

He covered many of the issues relating to taxation, but said the most important message was:

“One thing you should absolutely not do is enter the Offshore Voluntary Disclosure Program” (OVDP).

CANADA REVENUE AGENCY, CANADIAN COURTS:

John explained that under the Canada-US Tax Treaty, CRA will not collect penalties for the IRS for Canadian citizens or residents. CRA also will not collect taxes for the IRS on a US citizen who also was a Canadian citizen at the time the tax liability arose.
Plus, under the Revenue Rule, Canadian courts will not issue a judgement for the IRS.
FATCA:
John thinks FATCA is a “gross abuse of power” by the United States.

“FATCA allows them to redefine any time they want what the information is and any person who is affected.”

 Lynne noted the proposed legislation to allow FATCA to be implemented will prevail over other federal laws, including banking, privacy and human rights laws.  Some individuals have contacted a constitutional lawyer about this and more information will be posted at Maple Sandbox (maplesandbox.ca and Isaac Brock Society (isaacbrocksociety.ca)
UPDATE: Money was raised and constitutional lawyer Joseph Arvay was retained on March 10 by Dr. Stephen Kish and Lynne Swanson to provide a legal opinion on a possible challenge to the FATCA IGA enabling legislation under the constitution and Charter of Rights and Freedoms.
 

US Senate Finance Committee Submission–Richardson, Yates and Kish

Citizenship, FATCA, FBAR, IRS, Relinquishment and Renunciation

Here’s an excellent submission (Request for Tax Rule Changes) to the U.S. Senate Finance Committee.
This was written by Toronto lawyer John Richardson, University of Toronto professor Dr. Stephen Kish and (this is huge!) U.S. attorney Willard Yates.  Mr. Yates’ involvement is significant because he retired from Office of Associate Chief Counsel (International) (ACCI), Internal Revenue Service after 31 years of service.
The 32 page comprehensive submission deals with everything from problems of citizenship based taxation to the financial and psychological costs of renouncing US citizenship. Despite the complexity of issues covered, it is quite easy to understand for most of us who have been around this issue for a while (although newbies may very well find it overwhelming and frightening).
The report is also posted at citizenshipsolutions.ca, John Richardson’s Canadian website designed to counsel US citizens abroad who find themselves having to live in a FATCA and FBAR world.

Citizenship Based Taxation: Unique or Outrageous

Citizenship, FBAR, IRS, , ,

If all countries adopted American citizenship and tax laws, US President Barack Obama, Senator Ted Cruz and Secretary of State would finally agree on one thing. Citizenship-Based Taxation and FATCA are “Outrageous.”
Citizenship-Based Taxation: Unique or Outrageous was published in Tax-News today. This is an international tax publication based in the UK. The article by Lynne Swanson (aka Blaze) was originally published as a Letter to the Editor in Tax News International two weeks ago, but is only available to subscribers there. Continue reading Citizenship Based Taxation: Unique or Outrageous →

Beanie Babies, Hyatt Heiress and IRS

FBAR, IRS,

Beanie Babies are now “US persons.”  Uncle Sam is mad at Beanie Babies.  Good old Sam has grabbed $53.6 million in FBAR penalties for $885,000 in taxes owed.
In IRS vs. Beanie Babies, Beanie Babies creator Ty Warner agreed to pay $53.6 million in restitution for his Swiss bank account of $94 million.
I do not support offshore tax evasion, but does this seem extreme to anyone else?  Maybe it’s just a drop in the bucket when your net worth is $2.6 billion, but Ty could still face prison time.
Here’s what the U.S. Attorney said:

“Regardless of wealth, everyone must pay taxes on all of their income, not just the amount they choose to report. Such conduct invites federal prosecution.”

On the other hand, Hyatt Hotel heiress Penny Pritzker Understated Income by $80 million in income to IRS due to an “inadvertent clerical error.”  Penny’s punishment?  She was appointed Secretary of Commerce.
Here’s what a White House senior adviser said:

“I think she’ll be extremely effective in leading trade missions around the world and helping U.S. companies develop those contacts that will lead to contracts back here in America.”

Hmmm.

ACA: IRS Systematically Targeted Overseas Americans

FBAR, IRS, Taxes, , , ,

Here’s a report from Geneva Lunch published today: IRS Targeted American Citizens Overseas:  IRS Systematically Targeted Overseas Americans

American Citizens Abroad (ACA) has provided evidence “of the arbitrary and questionable IRS (US tax office) management of the Overseas Voluntary Disclosure Programs” (OVDP) to members of three US Congressional committees working together to investigate IRS abuses, ACA said Tuesday 4 June.
The Geneva-based international group says that the 2009 OVDP in particular was “extremely prejudicial to Americans living overseas who sought to become compliant with their taxes due to errors or omissions under the OVDP. Believing they could come back into the system by simply filing the appropriate paperwork and paying any outstanding tax burden, these individuals were later told they would be hit with a standard penalty of 20% of the highest value of their bank accounts over a five-year period.”

Jackie Bugnion calls it entrapment to hit people with ruinous penalties.

“There is no question that the IRS targeted Americans living overseas,” says ACA Director Jackie Bugnion. “By luring them into the OVDP in a form of entrapment then hitting them with ruinous penalties based on the overseas assets, instead of using the discretion which was within IRS purview for benign actors, the IRS treated ordinary, hard-working Americans like criminals. Most of the unreported accounts were pension funds and basic financial accounts used for living expenses and were not being used to hide assets.”

So, does anyone think this will get the same kind of media and Congressional attention that Tea Party is currently getting?
 

Will FATCA Cause Some of the Headlines We Read in 2015?

FATCA, FBAR, , ,

The final regulations for FATCA were released yesterday by the US Department of Treasury, and the IRS. If you’re interested, you can read all 544 abstruse pages at the links below.
As far as I can tell there is nothing unexpected in there and no good news. The United States still expects all foreign banks to comply with their law, even when it violates that country’s law. The US still expects our banks to pay huge sums to implement a foreign law, to administer a foreign law, and to betray law-abiding Canadian citizens.
I haven’t found any response or updated information from our Canadian government. The release of the final regulations led me to think about the potential impact of FATCA on Canada if our government does not protect its citizens.
https://www.federalregister.gov/articles/2013/01/28/2013-01025/information-reporting-by-foreign-financial-institutions-and-withholding-on-certain-payments-to
Or  http://maplesandbox.ca/fatca-final-regulations-are-out/
Could the following be some of the headlines we might see in early 2015?

Bankruptcies on the rise across Canada.
The Office of the Superintendent of Bankruptcy Canada has just released updated information. Bankruptcies in 2014 reached an all-time high of 117,258.  In 2011, only 81,636 bankruptcies were recorded. Continue reading Will FATCA Cause Some of the Headlines We Read in 2015? →

Spreading the Fear

FATCA, FBAR, IRS, , ,

Maybe we’ll get a lot more people joining our cause. If this article I ran across is any indication, some of these consultants must be scaring the pants off of the US mainlanders. “Failing to file the right documents could have dire consequences.” I’m not sure if it’s the writer of the article or if it’s the tax attorney who set out to scare them, but I bet it’s working. Continue reading Spreading the Fear →

The Economic Impact of FATCA and FBAR Terrorization

Citizenship, FATCA, FBAR, IRS, Taxes, , ,

Why aren’t our governments more concerned about what the US is doing? Ignoring, for the moment, the legality, or lack thereof, why don’t the governments of our countries recognize that the terrorization of their citizens by the US has a far greater effect than just the immediate financial impact on an individual? Continue reading The Economic Impact of FATCA and FBAR Terrorization →

Canada, Australia and Switzerland–Who Will Hold Out?

FATCA, FBAR, IRS,

Here are some interesting pieces from the news and from personal perspectives.
First is a CTV interview with Queen’s University law professor, Art Cockfield, who has spoken out before against FATCA.   He makes the point that the Canadian government needs to be doing more “sabre rattling” over FATCA.
He also makes a point I don’t think I have heard before that he thinks FATCA is illegal under NAFTA (North American Free Trade Agreement.).  So, we already know FATCA violates Canada’s banking, privacy and human rights laws and Charter of Rights and Freedoms.  Now a law professor says it also is illegal under NAFTA.  Why are we still having this conversation?  Why doesn’t the Canadian government Just Say No?
Cockfield stresses, like others, that IRS is not going to find much revenue going after Americans in Canada and points to our 70 year effective tax treaty.  Our friends is Switzerland will not like the comment he makes about Americans living in a tax haven like Switzerland.
Thanks Saddened for sending me the link to the CTV interview with Professor Cockfield.
Investment Europe is reporting FATCA Rules Could Cause Banks To Cut Back On External Asset Managers.  Asset management is the main focus of the article.  But, there is an interesting comment at the very end about the situation in Switzerland.

FATCA is already law in the US but negotiations are under way to enshrine it in national law of countries around the world. Jaeger was hopeful that some ‘carve-outs’, or exemptions, could be negotiated for pension funds and custodial banks in Switzerland. However, he thought the possibility of getting a foreign law accepted in a Swiss referendum was ‘unlikely’

I think getting a foreign law accepted in a referendum in any country would be unlikely.  However, is a referendum planned for Switzerland?
iExpats is reporting Australia Is Ready to Join FATCA Tax Alliance.  This seems to be a model similar to the Europe Five.  However, the Europe Five model is dependent on “reciprocity,” which is still far from a done deal because US Bankers Are Fighting The IRS on “reciprocity.”
On a personal level, Victoria tells How I Really Feel About Citizenship Based Taxation. Actually, I suspect Victoria is being quite tactful and holding back from how she “really” feels.
And, here is an Israeli-American Couple’s Letter To IRS TAS.  It continues to boggle my mind how people whose lives have been turned upside down continue to be so reserved and polite in their comments.