Tag Archives: FBAR

Solving US Citizenship Problems- Vancouver May 23, Geneva June 7, Dublin June 8, & London UK June 16 2017

Vancouver BC – Tuesday, May 23, 2017 Details below

Geneva CH Wednesday, June 7, 2017- Details TBA

Dublin IE – Thursday, June 8, 2017 – Details TBA

London UK – Friday, June 16, 2017 Details TBA

Have you received a FATCA letter or been warned of the consequences of being a U.S. person?

New this year in the U.S. assault on people and countries outside its borders, is the “second wave” of reporting – the “entity” reporting. This is nothing less than every financial entity – any corporation, non-profit corporation, your Canadian controlled-private corporation (CCPC), any fund with shareholders-is fair game for an associated financial lender, bank etc to ask:

“Who are your clients, shareholders? Are they, or have they ever been, U.S. citizens?”

If so, they need to fill out a US tax form. (W8-no withholding for non-US taxpayers or W9-for withholding on US taxpayers) to be kept on file with the bank.

My financial advisor indicated he now realized I had not exagerrated the extent of this U.S. interference in Canada. He now has to ask each and every new client, regardless of what they are buying,

“Are you, or have you ever been, a U.S. citizen?”

Utterly outrageous.

Why am I getting letters from my bank all of a sudden?

The “FATCA Hunt” – the hunt for U.S. persons (whatever that is) began on July 1, 2014 which was “Canada Day”. Although both the definition of “U.S. person” and whether one meets the definition is not always clear, the search has begun. The level of FATCA awareness has begun. Some organizations are actively warning people that “U.S. Personness” matters. The purpose of the warning is presumably to encourage people to ”come clean” and deal with their U.S. tax situations. In some cases, there is no particular warning – just a letter indicating that they are suspected to be a “U.S. person”. Often one must prove to the institution sending the letter that one is not a U.S. person.

What individuals are U.S. taxpayers? Who is a U.S. citizen?

There are individuals that the U.S. government would define as “U.S. citizens” who:

do NOT agree that they are U.S. citizens because they have performed a “relinquishing act” under applicable U.S. laws;
do NOT even know that they may be U.S. citizens because they have never lived in the United States
are citizens and residents of countries that do NOT allow multiple citizenships
To put it another way: one’s status as a U.S. citizen is NOT always clear.

I have never heard of these requirements! What determines the income that must be reported to the IRS? What “Information Returns” are required to be reported to the IRS?

FBAR (Now called FinCen 114)
FATCA 8938 – Report of Specified Foreign Assets
5471 – Information return for Foreign Corporation
3520 – Information return for a “Foreign Trust”
3520A – related to the 3520
8621 – for mutual funds
8965 – for exemption regarding ACA (“Obamacare”)
I am only a snowbird! Why does this affect me?

Substantial Presence Test
Form 8840 Closer Connection Exception Statement for Aliens
Caution: Streamlined Programs & 35 day rule – Catch 22

What are the ways I can become compliant?

Offshore Voluntary Disclosure Program – AKA “OVDP – Not appropriate for the vast majority of people
Streamlined Compliance – A pre-packaged way to “clean up” past compliance problems
Obeying the law – filing amended tax returns outside the “IRS Created” programs
Delinquent FBAR Submission Procedures

What costs are involved in renouncing U.S. citizenship?

The costs of a total of 6 years (5 years prior the year of renuncation plus the year of renunciation) of tax compliance and information returns
The cost of any back taxes and penalties
A $2350 administrative fee
Possibility of having to pay an “Exit Tax” (which can be the biggest problem)

VANCOUVER BC
WHEN: Tuesday, May 23, 2017 1:00 – 3:00 pm
WHERE: 1010 Richards Street, Vancouver B C V6B 3E4 (Downtown) MAP
Richards & Nelson, Gallery Condo Building, Amenity Room, Entrance at REAR of BLDG on lane.
Metered parking on street or lot at Richards & Smithe. Canada Line – Yaletown stop.
Expo & Millenium lines – Granville Station.
ADMISSION:PLEASE REGISTER IN ADVANCE by email to john at citizenshipsolutions dot ca
COST: $20 payable in cash at the door

Information presented is NOT intended or offered as legal or accounting advice specific to your situation.

Dual Citizens of Sweden, France, Netherlands, Denmark & Canada take note! Your Country WILL NOT Collect for the U.S.

cross-posted from citizenshiptaxation.ca

Last week in my email was a link to an article by Michael J DeBlis (unable to determine whether it was the father or the son). It runs in my memory that prior to the launch of the Tax Connections website, the younger Michael had started a blog that was specifically about expatriate issues and many of us joined and took part. He seemed particularly sympathetic and supportive of our plight and one who I would never have labelled a “condor.” And this post is in no way meant to be demeaning.

Imagine my surprise to read this:

Consider the following example. Pierre is a dual citizen of the U.S. and Canada who presently resides in Montreal. He has fastidiously filed U.S. and Canadian tax returns for the last ten years. Following an audit of his 2012 U.S. tax return, the IRS determined that there was a $ 20,000 deficiency and mailed him a notice of deficiency. Pierre timely filed a protest but Appeals found in favor of the IRS. Having failed to file a petition with the tax court, that deficiency soon became a $ 20,000 assessment.

The IRS now seeks to collect on its claim by imposing a tax lien on real estate owned by Pierre in Canada. Essentially, what the U.S. government is attempting to do is cajole collection officials from the Canadian Revenue Agency (Agence du revenue du Canada) to do its dirty work for it: namely, to collect Pierre’s unpaid U.S. taxes by enforcing an IRS tax lien on property located within Canada.

As incredible as this might sound, reliance upon a foreign taxing authority for assistance in collecting a tax judgment against a citizen of the requesting country is entirely permissible under the terms of the U.S.-Canadian Treaty. Of course, such a request must be accompanied by documents firmly establishing that the taxes have been finally determined.[ix]

Therefore, the Canadian Revenue Agency would have no choice but to enforce the lien and to collect the unpaid taxes. But what if Pierre filed a motion in a Canadian court to have the tax lien imposed by the Canadian Revenue Agency, at the behest of the IRS, set aside? Not surprisingly, the court would refuse Pierre’s request on the grounds that the imposition of the tax lien was proper under the terms of the treaty.

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US Citizenship & Young Adults: Navigating The Special Rules Imposed Upon US Citizens

“Life planning, career planning and the reality of U.S. citizenship for Americans abroad”
“Everything I wish I had known, but couldn’t even have imagined to ask!”

During the winter, John Richardson presented a number of seminars for those concerned with the obvious problems of U.S. citizenship (including the “threshold question” of whether you really are a U.S. citizen).

Seminar topics have invariably included the problems of: FBAR, FATCA, investing, retirement planning, mutual funds, U.S. tax compliance, renunciation, etc.The official “FATCA Launch” of July 1, 2014 will surely make the existing problems worse.

U.S. citizens living outside the United States are subject to a regime of rules that diminish their “life opportunities”. These rules are such that U.S. citizens abroad live at a disadvantage relative to the citizens of any other nation. Those attending previous seminars have been primarily “middle aged” people, who have attempted to plan for their retirement, only to find that their retirement plans are threatened, because of their birth in the United States.

A shared sentiment has been:

“If only, I had known about these rules earlier … This is information that my children and other young adults need to hear! What does all this mean for my children?”

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Banks must notify customers before sending information to CRA and the IRS

Just after the Canada US FATCA IGA was signed, CRA put out a list of frequently asked questions.

Among the list is item 14 which caught the attention of some: (emphasis mine)

14. Does my Canadian financial institution have to notify me if information on my accounts is being reported to the CRA?

Canadian financial institutions must be open about their policies and procedures for complying with the Agreement and must be prepared to make this information available to anyone who asks about them. Although there will be no obligation for financial institutions to automatically notify their account holders about reporting to the CRA under the Agreement, financial institutions must, upon request, allow account holders to have access to the personal information that has been reported. 

In his testimony before the Senate Finance Committee on April 30th, Kevin Shoom mentioned that there was a change to the implementing legislation to take away the voluntary nature of informing customers that their accounts have been flagged as reportable. He cited ITA subsection 265(5), which is written in the usual almost incomprehensible language of the Income tax Act.

(5) For the purposes of paragraphs (2)(a) and (b), subparagraph (2)(c)(ii), paragraph (3)(a) andb)(ii), subparagraph B(3) of section II of Annex I to the agreement is to be read as follows 3. if any of the U.S. indicia listed in subparagraph B(1) of this section are discovered in the electronic search,or if there is a change in circumstances that results in one or more U.S. indicia being associated with the account,then the Reporting Canadian Financial Institution must  seek to obtain or review the information described in the portion of subparagraph B(4) of this section that is relevant in the circumstances and must treat the account as a U.S. Reportable Account unless one of the exceptions in subparagraph B(4) applies with respect to that account.

 I have asked Kevin to ask CRA to change their frequently asked questions to revise item 14 and he agreed to do so.Until the Charter Challenge nullifies the IGA, there’s going to be mistakes made by FIs. At least now, with this change, they will be required to contact customers before passing private information through the CRA to the IRS.

Have you just learned that the United States considers you a US person? (Updated February 6, 2014)

February 6, 2014 Update: Yesterday, Finance Canada announced an IGA with the United States that may change some of the information presented here.  We will update as more information becomes available and we better understand what it may mean.

Perhaps you’ve just read one of the sensationalist IRS-propaganda articles in the media that says every person born on US soil is a US citizen and must file income tax reports to the US, and are at risk for huge penalties. Perhaps you heard about this situation through another person who has a US connection. Either way, you’re probably confused about what this means and what you need to do about it.  Continue reading