All posts by IRSCompliantForever

May 2 2014 ACA-Sponsored Toronto Forum/Debate on Citizenship-Based Taxation vs. Residence-Based Taxation

The American Citizens Abroad Global Foundation has just launched its educational program with a forum/debate on the merits of Citizenship-based taxation vs. Residence-based taxation.
This is a full day event, sponsored and organized by the ACA, that will be held at the University of Toronto on May 2.
To my knowledge, this is the first public debate — worldwide — devoted to this important topic.
The speakers will include academic tax specialists Bernard Schneider and Michael Kirsh, who have different approaches to the taxation of US citizens abroad, with the program moderated by Toronto lawyer John Richardson.
Dr. Stephen Kish, who co-authored with Mr. Richardson a submission to the U.S. Senate Finance Committee (see below), will be the academic host.
Bernard Schneider:

The End of Taxation Without End: A New Tax Regime for U.S. Expatriates, Virginia Tax Review, Vol. 32, No. 1, 2012,

Michael Kirsch:

Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, October 23, 2013, Florida Tax Review, (Forthcoming), Notre Dame Legal Studies Paper No. 1457,


John Richardson, Willard Yates, Stephen Kish, Request for Tax Rules Changes for U.S. Citizens Overseas: Submission to the Senate Finance Committee, January 2014,

For registration and information see:

What If Angry Peoples World-Wide Began Challenging the Constitutional Legality of FATCA in Court?

On March 10 2014 a small group of Canadians (with supporters in other countries) took a gamble and donated money they could not afford to try to bring down FATCA using a legal challenge approach.

What if similar groups in other countries took their governments to court over this?

One Brocker, upset that the Swiss referendum did not obtain enough signatures, already told us that:

“[The Swiss Federal] Constitution undisputably mandates guarantees of nondiscrimination and liberty of economic opportunity, as well as the right to a family and the protection of privacy, among many other things. Here at IBS, we all know that FATCA violates such guarantees, as expressed in the UDHR, as well as many constitutions around the world”.

Here is a list of countries with constitutions. How many of these constitutions guarantee fundamental rights that are violated by FATCA?:
Are there any Brockers/Sandboxers or their sympathizers in these countries who could lead anti-FATCA constitutional challenges?
See today’s new post on the Republicans Overseas website asking that this happens:

“Canadians Ask “US Persons” World-Wide To Challenge Legality of FATCA
In only six days Canadians Dr. Stephen Kish and Lynne Swanson received sufficient donations from Canadians and those in other countries to retain a constitutional expert attorney. The attorney will examine the constitutionality of the proposed IGA (Intergovernmental Agreement) between the United States and Canada to implement FATCA.
They and other Canadians believe strongly that the IGA will violate Canada’s Charter of Rights and Freedoms.
Kish and Swanson ask concerned peoples in all countries affected by FATCA (i.e., ALL countries worldwide) to begin similar efforts to bring down the FATCA beast.
See the press release for the Canadian Charter Challenge Fund:

Abolish FATCA Petition From Republicans Overseas Now Online

If you are opposed to FATCA consider signing this abolish-FATCA petition from Republicans Overseas which will be submitted to U.S. Congress.  
You have to be a U.S. citizen, Green Card holder, or a FORMER U.S. Citizen.  Your name and address has to be provided, but if you choose, only your initials and country will be published. If you worry about disclosure for any reason consider carefully whether you want to sign this petition.
You can fill out online at:
This petition is associated with a resolution by the Republican National Committee to abolish FATCA and is aimed at providing pressure on each Senator and Congressperson to vote to repeal FATCA.  In future, the same approach will be used to kill U.S. citizenship-based taxation. See:
You might or might not like the Republican Party, but I am a single issue U.S. citizen and voter and will sign off also on the same anti-FATCA petition that the Democratic party provides, should this happen. You do not have to be a Republican to sign and you can submit from any country, including the U.S. (you can be a homelander).
The Petition begins with:

Honorable Senators and Representatives of the United States Congress,
I am writing in support of abolishing the Foreign Account Tax Compliance Act (FATCA). FATCA has negatively impacted 7.6 million U.S. citizens living abroad.
First, it violates U.S. Citizens’ right to privacy by requiring foreign banks to disclose U.S. citizens’ account names, taxpayer identification numbers, addresses, and their account balances, deposits, and withdrawals to the IRS…

The Petition ends with:

…The IRS Taxpayer Advocate Service (TAS) 2013 Annual Report to Congress admits that FATCA’s most serious problems are its reporting requirements and violating taxpayer rights. TAS Report #23 on page 43 is titled The Foreign Account Tax Compliance Act Has the Potential to be Burdensome, Overly Broad, and Detrimental to Taxpayer Rights.
I agree. I believe that FATCA is morally reprehensible and detrimental to overseas Americans’ basic human rights. America, as a shining city upon the hill, must not impose this horrible choice between citizenship and livelihood on its own citizens. Thank you.

Can Cross-Border Tax Professionals Prepare U.S. Tax Filing Return For Impoverished Canadian Brad Smith For Only $300?

Recently, Mr. Brian Mahany on a TaxConnections Worldwide Tax Blog discussed costs of filing U.S. tax returns for duals living abroad and took issue with some statements on tax preparation fees made by Allison Christians in a CBC article.
Here is the CBC “Myth,” according to Mr. Mahany, followed by the Mahany “Fact”:

CBC “MYTH”: The annual cost of filing U.S. taxes can be “astronomical,” tax expert Allison Christians notes. Accounting firms estimate the cost of filing personal U.S. taxes can be anywhere from $500 to several thousand dollars.”
Mahany “FACT”: “I suppose if I were Bill Gates or Warren Buffet, the cost to prepare my tax return might be in the thousands. There are many very qualified CPA firms and expat tax services that prepare returns for dual nationals, including FBAR filings, for about $300. [We don’t prepare returns but can certainly send you to folks who do.]”
I was also intrigued with Mr. Mahany’s statement that the U.S. has special rules on “trusts” such as RESP, RRSPs, and TFSAs, implying that these should be easy to deal with.
Several commenters took issue with Mahany, with one saying:

“Please, show me a competent accountant that will do a US tax return for $300 when RESPs. TFSAs, and Canadian mutual funds (outside of a RRSP) are involved. There is no such animal.”

I decided to pursue this question and asked Mr. Brad Smith, who might or might not be a composite character, to follow up with Mahany on this inexpensive $300 tax service. Brad is a 27 year old single Canadian resident and Canadian citizen living in Toronto who just discovered that he is a U.S citizen. Mr. Smith insists on entering into IRS tax compliance in order to pay, as he says, his “fair share”. He is unwilling to file returns on his own and refuses to renounce his new-found U.S. citizenship.
I selected Brad as he has a very simple tax situation: very low self-employment income ($19,000 annual), a single share of a Canadian mutual company (value $100), and $200 in a Canadian tax free savings account (TFSA).
—Brad corresponds with Mr. Mahany:
On the Tax blog, Brad asked Brian Mahany:

“Hi Brain [sic],
I just found out that I am a US person. You say that you can find a qualified CPA firm that will prepare my tax return for only $300 (including FBARS). This sounds pretty good to me.
What is the name of this CPA firm?
Thank you for your help. I will sleep a lot better tonight knowing that I can become IRS compliant at low cost.”

Mr. Mahany then sent Brad a private email disclosing the names of two tax professional companies that will be called below “Yellow Jacket” and “Boll Weevil.”
Brad then responded in a comment on the blog with lots of thanks, but Mr. Mahany removed from the response the personal details of Brad’s income and savings (TFSA, mutual fund) mentioned above. Brad’s response of thanks to Mr. Mahany:

‘Wow! Many thanks for getting back to me so quickly with the names of two companies, I will call both CPA companies on Monday and get quotes for preparing my tax return. You mentioned that the price depends on the situation, but my tax situation is simple [PERSONAL DETAILS DELETED BY TAX BLOG ADMINISTRATOR].
I will let everyone know on this post what I am quoted by the two companies. I really thought that the cost would be so much higher and thank you for helping me out.
I don’t ever want to be accused of being a tax cheat. I left the U.S. when I was two years old and have never returned but I am happy to pay my fair share.”

—Brad discovers the true filing costs of IRS compliance:
Mr. Smith phoned both tax companies and obtained quotes over the phone. Yellow Jacket also has some costs listed on-line. You can imagine Brad’s disappointment when he discovered that costs for yearly U.S. citizenship compliance, given Brad’s very simple financial situation, were much higher than Mahany’s $300 estimate.
The costs from the two companies were similar and are shown below:
Yearly compliance cost                Yellow Jacket                      Boll Weevil
Basic cost IRS 1040                     $357                                     app. $400
TFSA (2 trust forms)                     $357                                     app. $400
Mutual fund (PFIC form)               $149                                     app. $250
FBAR                                             $67                                       app. $100
TOTAL                                         $930/year                             app. $1150/year
Mr. Smith also insisted on entering into one of the IRS “disclosure” programs. Both firms suggested that a “Quiet” IRS disclosure approach might be the way to go, but the cost was the same for “Quiet” and “Streamline” disclosures.

[Note, IRS helpfully advises: “Those taxpayers making “quiet” disclosures should be aware of the risk of being examined and potentially criminally prosecuted for all applicable years.”]

The costs for the disclosure were:
Yellow Jacket: basic return three years ($915), FBAR 6 years ($402), TFSA ($357 X 3 = $1071), Mutual Fund ($149 x 3 = $447) for a total of $2835 U.S.
Boll Weevil: basic return three years ($1200), FBAR 6 years ($600), TFSA ($1200), Mutual Fund ($750) for a total of $3750 U.S.
The costs of five years IRS compliance to exit the IRS system as an expatriate will be higher but this is not relevant for Brad.
—What are Brad’s options given the cost of IRS tax filings?
This is not a random sampling of tax firms but it does prove that using the companies Mr. Mahany has selected, and a Canadian-U.S dual who all must admit has a simple (impoverished) tax situation, US tax returns for people like Brad cannot be done cheaply.
What is striking is the high penalty (confiscation of savings) that must be paid by Brad for owning the tiniest of two harmless Canadian (i.e. “foreign”) retirement vehicles for which, in Brad’s case, the cost of compliance is actually more than the value of the TFSA and mutual fund FOR EVERY YEAR OF COMPLIANCE.

[But could any of us ever be comfortable in suggesting to Brad that he should give away his small retirement savings just because IRS deems it to be toxic—or in helping Brad become IRS compliant?]

Brad wants to be IRS compliant, but with his meager income knows that he will never be able to afford these costs, yet he refuses to part with his toxic Canadian mutual fund and TFSA because these were given to him by his family to help him in his retirement.
Brad is also unwilling to take a stab at filling out the IRS forms himself because he does not want to make a mistake. Even if Mr. Smith wanted to renounce U.S. citizenship (he tells me that he will never renounce) and exit the IRS system legally, he would never be able to afford the costs of five years IRS compliance.
Given Brad’s financial situation, IRS compliance costs, and his wishes, what are Mr. Smith’s options?

Come to the Saturday February 1 Information Session in Kingston Ontario

This meeting will be held February 1 from 1:00 pm to 3:00 pm in the Kingston and Frontenac Library Central Branch in the Delahaye Room @ 130 Johnson St. Kingston.
The Kingston session will be identical to that of the January 25 Toronto meeting and is organized by a small group of Canadians who don’t like the treatment of U.S.-Canadians by U.S. Congress.
The speaker, Toronto attorney John Richardson, will outline concerns of Canadians impacted by the US tax laws and help you identify and understand your options. John has a website at Continue reading Come to the Saturday February 1 Information Session in Kingston Ontario

Come to the Saturday January 25 Information Session in Downtown Toronto

This meeting will be held January 25 at 12:00 noon at 100 St. Joseph St. M5S 1J4 (Near Museum subway)

Go also to the post on Brock for other comments on this and on later information sessions in other cities:

The meeting is organized by a small group of Canadians who are concerned with the treatment of U.S.-Canadians by U.S. Congress and the IRS.
The meeting is also a response to OutragedCanadian’s post that information is needed to help US people in Canada make decisions about their lives and financial security.
The speaker, Toronto lawyer John Richardson, will outline concerns of Canadians impacted by the US extra-territorial tax laws and help you identify and understand your options.

January 13, 2014: Gwen Interviewed By CBC On Consequences of U.S. FATCA Law to Her Family

Listen to today’s CBC radio interview on Metro Morning in which Matt Galloway interviews Gwen.  The interview is about six minutes long:
Gwen’s relationship with the U.S. consists of living the first five years of her life, without her consent, in the U.S.
Some phrases were mentioned by both Gwen and the interviewer:

“Throw them under the bus” and “branded property of the U.S.”

The words used by Mr. Galloway are sympathetic:

“How did you end up entangled with this? A lot of people would believe that …you have no real ties to the U.S. There’s no real reason why you should be paying taxes to the U.S.”

What does Gwen want?

I want that government [Canada] to protect my rights under the Charter.

How does she feel about the complicit banks?

“For one thing, I think I should walk out of the bank(s).”

Gwen mentioned that we can turn to MapleSandbox and IsaacBrockSociety for support.
Gwen explains several reasons why she might not renounce:

[This would be] tantamount to me agreeing that yes I am a U.S. person. I AM A CANADIAN!
“I would have to be compliant”

Great interview! But can somebody please explain to me why a person like Gwen who obviously has no ties to the U.S. would ever need to pay the costs to become IRS compliant prior to “renouncing”? What is the logic to this?

January 13, 2014: Calgary 411 Interviewed By CBC On Consequences of U.S. FATCA Law to Her Family

This Jan 13 2014 interview, entitled “U.S. FATCA tax law catches unsuspecting Canadians in its crosshairs” is at:
Some excerpts from this important interview given by a brave and outraged Canadian mother:

“A Calgary woman’s developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future.
“He’s entrapped,” said [Calgary 411], the 70-year-old mother. “There’s no way out. He is entrapped into U.S. citizenship.”
Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for [my family].”

“Tax law expert Allison Christians calls the …case “ridiculous” and a “classic example of why the law is unjust.”

“For [Calgary411], the financial burden has already been costly. She spent thousands of dollars seeking legal advice on how to renounce her son’s U.S. citizenship. Under the law, a parent, guardian and trustee cannot renounce on someone’s behalf.
‘I wanted my son to have something when I was gone from this Earth.’
She refuses to file U.S. taxes for her son, fearful that it would chip away at the funds she’s stashed in a Registered Disability Savings Plan (RDSP) and a Tax Free Savings Account (TFSA).
“I see no common sense in it,” she says. “Put me in jail. I don’t care. But I’m not going to do that.”

2013 Taxpayer's Advocate Report to U.S. Congress Cites Maple Sandbox and Murray Rankin NDP Letter on FATCA

Read the “Serious Problems” portion of the just released 2013 U.S. Taxpayer’s Advocate Report to Congress:
Then go and read the “FATCA” section:
But note especially footnote 38 on page 243, which references a Maple Sandbox quote of Canada’s NDP National Revenue critic Murray Rankin complaining about FATCA.
The report mentions that FATCA, “in addition to objections based on resource burdens …has given rise to discussions of sovereignty issues, as well as concerns regarding economic repercussions. For example, Murray Rankin, the Canadian equivalent of a “Shadow Minister” for National Revenue, recently reiterated his party’s concerns regarding FATCA”:
“New Democrats are concerned with the prospect of a foreign nation unilaterally imposing obligations on Canadian banks to disclose personal information. The Canadian government has a responsibility to protect Canada’s tax base, and while we understand the United States’ desire to protect their own tax base, this should not come at the cost of the rights of individuals residing in our country. Cracking down on tax cheats should occur through international cooperation rather than unilateral action” (38; referenced as

The report does not contain all that we would like, but it shows first that Maple Sandbox is read widely and seriously considered (Congratulations to Blaze and Outraged!) and secondly that Sandboxers and Brockers persistently pestering a political party in Canada (the NDP) can cause a change that finds its way to a US report to Congress.

This Canadian text, now in a U.S. report to Congress, also needs to find its way back to Canada and to Minister Flaherty.
January 10 2014 afternoon update: Earlier today (see comment below) Schubert emailed Mr. Mulcair, the Leader of the NDP, and mentioned that Mr. Rankin’s letter had just “earned a supportive footnote in the latest report to the US Congress by the US Taxpayer Advocate Service.” This afternoon he received an e-mail of thanks from Mr. Mulcair for alerting him to this information. Nice to receive a same day personal reply from the leader of a party–and we all agree that the last few days have been pretty good.

Torontonian visited Canadian Conservative Party MP Today and Promised How US People in Canada Will Vote in Next Canadian Election if Minister Flaherty is FATCA-Complicit

The point of this post, originally posted on Brock, is that Canadians must make it absolutely clear to their representatives who are members of the Conservative Party that they will NEVER vote Conservative again if this party signs off on any IGA that will implement FATCA. This is a summary of my meeting today with my Conservative MP representative:

I had a nice chat this afternoon [Jan 5, 2014] with my Canadian Conservative MP rep, Mr. Bernard Trottier. I introduced myself as the fellow who previously sent him a letter on FATCA and thanked him for actually responding and in a meaningful way.
He had no update on the state of the IGA negotiations between Minister Flaherty and the US, but will speak to him on this in about a week.
In a few minutes I summarized some of the consequences of FATCA for Canadians and mentioned again the IGA negotiations. His response was “But [as this is a “negotiation”] what does Canada get out of this?” and I responded appropriately.
Then I discussed votes: I explained that I voted for Mr. Trottier in the last election (this is true) and that should Minister Flaherty negotiate any IGA with the US, I will not vote for Mr. Trottier or the Conservative party again. Further, I emphasized that I am part of a network of one million (I used the term “unfortunate”) US persons in Canada, all just like me, and that my recommendation to my network will be the same. I noted too that this election is likely to be more difficult for the Tories to obtain a majority.
The discussion ended with Mr. Trottier saying that this evening he will be speaking to some US persons living in Canada, with one person considering taking out Canadian citizenship, and I provided advice on whether this was a good idea.
I left copies with Mr. Trottier and his secretary of Brison’s questions in Parliament to Flaherty, the (long) letter to the Canadian Bankers Association, some correspondence between me and a Canadian bank that uses a green logo, and a written statement in large bold print promising that I and my network will not vote Conservative should Flaherty negotiate any agreement that imposes FATCA on Canadians.
No idea whether the above will be helpful, but I was blunt enough (but polite) that my MP, who I felt was was very sympathetic throughout, understood the simple message.