It’s difficult to make a man understand something when his salary depends on him not understanding it.
Upton Sinclair in I, Candidate for Governor: And How I Got Licked (1935), ISBN 0-520-08198-6; repr. University of California Press, 1994, p. 109.
No, he wasn’t really talking about the IRS. But he could have been. If you screw up filing a piece of paper and the IRS has the power to fine you $10,000, it is exceedingly difficult for everyone in the IRS — from the Commissioner on down — to understand why this is a bad idea.
If you are an Accidental American who has lived most of your life in Canada and you don’t file a piece of paper with the U.S. government, it is exceedingly difficult for the Commissioner to understand why claiming 25% of your RRSP is a bad idea.
Reader comments (27)
-
Great quote, Phil.
I am an economic fugitive because I only learned about FBAR a year ago. But then, I wonder. If I had known about it, I probably still would have refused to file. It is a violation of fundamental right, and even if I am no longer an American, I still understand my rights better than those who salaries depend on violating them.
-
Here is a list of dual US / UK citizens that FATCA will undoubtly hack off:
Zoe Warnamaker – British actress
Sienna Miller – British American actress
Wilnelia Merced Cruz (wife of Sir Bruce Forsyth)
Terry Gilliam – British Screenwriter
Bill Browder – British Hedgefund CEO)
Dame Marjorie Scardino – CEO Pearson plc
Michael Goldfarb – BBC Journalist
Larry Adler – British musician
Amy Lamé – British actress
Caprice Bourret – British model
David Soul – ex Starsky and Hutch actorAll these people have left the US to make a life abroad. When immigrants arrive in the US, the general thinking is you can leave your old country behind because in theory the US is a better place to live – of course it depends on which country you’re comparing the US against.
So why can’t these Americans be allowed to leave the US like other nationalities and be accountable to one taxman (and not have the IRS in their hair).
Are we heading for a situation where countries will block IRS access to bank account information for their own citizens? The IRS will then have to decide whether to up the ante and start legal action or arresting these evil “tax evasionists” at US airports?
Do Americans abroad need to live in the shadows and if they don’t have an American accent do not discuss their place of birth for fear of the IRS – it’s crazy.
It’s a simple fact – the majority of Americans abroad do not feel it’s appropiate for them to have to file tax returns to the IRS.
-
At least one of these folk has already acted. From
http://en.wikipedia.org/wiki/Terry_Gilliam
“In January 2006 he renounced his American citizenship. …in an earlier interview with The Onion AV Club, he also indicated that it was related to concerns about future tax liability for his wife and children. As a result of renouncing his citizenship, Gilliam is only permitted to spend 30 days per year in the United States, fewer than ordinary British citizens.”
-
Thanks for the update on Terry Gilliam.
The tentacles of FATCA will go too far someday and get bitten off. We have all read on this blog about Canada, but one thing is clear, once it hits the mainstream press in a country, the “Uncle Sam wants your money” argument isn’t received very well.
I have often said in this blog, Congress would be better off enacting VAT and higher petrol tax legislation, than persuing this FATCA fallicy of $300B of very hard and expensive revenue to collect – we’ll hacking off important people in other countries at the same time.
When the next major investment/factory/or other project goes to another country (like FATCA free Canada- can be used for the free trade provisions of NAFTA) the Americans will have only themselves to blame. Gain a few billion, hack off important people and lose many many times that figure in investment. Here’s a good slogan – “investment in America and risk losing 30% in withholding tax” sounds like a good deal to me. Or “invest in FATCA-free Canada, no withholding tax risk” The Canadians will be laughing all the way to the FATCA-free bank.
-
Oh….one other thought. FATCA will not catch everyone. I remember talking to a South African guy who wanted to take money out of the country, but of course the RSA had exchange controls.
It become common practise to buy diamonds in the RSA before leaving the country. If someone is leaving the US, and wants to avoid FATCA, a trip down the jewelers may solve your problem. Ah…people will say what about airport security, easier to drive across the Canadian border for instance.
What is the IRS going to do if someone clears out their bank account in the US, buys something small and valuable, and arranges to get it out of the country. What is the US turning into – these are the tactics that are used in some two bit third world country.
-
I love what you’re writing Don. Keep it up. Carrying that much wealth, actually anything over $10,000 without filing a report is a felony and can lead to total confiscation. But mark my words, people are going to do it because they have no choice.
-
Poser…..the $10,000 refers to currency or negotiable instruments. Diamonds are not negotiable instruments.
Please see below -
Currency Reporting
For Travelers
It is legal to transport any amount of currency or other monetary instruments into or out of the United States. However, if you transport, attempt to transport, or cause to be transported (including by mail or other means) currency or other monetary instruments in an aggregate amount exceeding $10,000 (or its foreign equivalent) at one time from the United States to any foreign place, or into the United States from any foreign place, you must file a report with U.S. Customs. This report is called the Report of International Transportation of Currency or Monetary Instruments, Customs Form 4790. Furthermore, if you receive in the United States, currency or other monetary instruments in an aggregate amount exceeding $10,000 (or its foreign equivalent) at one time which has been transported, mailed, or shipped to you from any foreign place, you must file a CF-4790. These forms can be obtained at all U.S. ports of entry and departure.
Monetary instruments include:
* U.S. or foreign coins and currency;
* Traveler checks in any form;
* Negotiable instruments (including checks, promissory notes, and money orders) that are either in bearer form, endorsed without restriction, made out to a fictitious payee, or otherwise in such form that title thereto passes upon delivery;
* Incomplete instruments (including checks, promissory notes, and money orders) signed, but with they payee’s name omitted; and
* Securities or stock in bearer form or otherwise in such form that title thereto passes upon delivery. However, the term “monetary instruments” does not include:
o Checks or money orders made payable to the order of a named person which have not been endorsed or which bear restrictive endorsements;
o Warehouse receipts; or
o Bills of lading.Reporting is required under the Currency and Foreign Transaction Reporting Act (PL 97-258, 31 U.S.C. 5311, et seq.), as amended. Failure to comply can result in civil and criminal penalties and may lead to forfeiture of your monetary instrument(s).
U.S. Customs Service
1300 Pennsylvania Avenue, N.W.
Washington, D.C. 20229http://www.tsa.gov/travelers/airtravel/assistant/editorial_1848.shtm
Someone would have to check this out further, but on the face of it exporting diamonds doesn’t seem to be covered in this case. What does Customs do if a woman is wearing a $30,000+ rock on her finger?
Is it illegal to export diamonds – I know it seems to easy but it’s a way to possible get around the $10,000. Of course customs could always ask where you got the money to buy the diamonds, with risk of confiscation, but a receipt should help. Question: is it illegal NOT to declare to customs that you sold your house, decided to buy $400,000 in diamonds, and leave the country? Of course you’d have to deal with customs at the other end as well.
-
FYI – recent open letter from a Canadian Member of Parliment (published in various BC newspapers.
Editor:
Open letter to Hon. Jim Flaherty, Minister of Finance, on Sept. 27 –
Dear Minister Flaherty,
I want to thank you for your stand in support of dual U.S./Canadian citizens against the Internal Revenue Service’s cross-border tax enforcement initiatives.
After all, Canadians who live and work in Canada, invest and save in Canadian financial institutions, have no “offshore” accounts and are not evading taxes.
I am encouraged by your understanding of the impact not only on our financial institutions of the proposed U.S. FATCA (Foreign Account Tax Compliance Act) legislation, but also the impact on the futures of so many Canadians whose savings are threatened by IRS penalties.
In your current talks with the Americans I urge you to push the U.S. to redefine their reporting criteria to distinguish between those U.S. citizens who deliberately engage in illegal activity to evade U.S. taxation and Canadians who annually report their income and financial accounts to the CRA.
I urge you to make clear to U.S. authorities that it is unacceptable for Canadian citizens to be under threat of heavy fines and/or legal action for not disclosing their Canadian bank accounts or for failing to file U.S. tax returns. I also urge you to take measures to protect the sovereignty of Canadian businesses and institutions.
On behalf of those one million Canadian citizens affected, it is my hope that, in the spirit of co-operation, an agreement will be reached with the U.S. government to ensure that Canadians are not made to feel like criminals by the newly introduced enforcement policies intended to fund a U.S. stimulus package.
I look forward to hearing from you in the near future on this issue.
Please rest assured that you have my full co-operation in this regard.
Alex Atamanenko,, MP,B.C. Southern Interior -
Don: thanks for pointing that out.
Strictly speaking you would have to deal with customs entering just about any country, because you would be importing goods for resale.
I guess you could carry large amounts of gold or silver, since the Fed chair recently said that gold is not money.
-
Thank you for that. From the bottom of my heart.
An ex-American who proudly sang O Canada on Canadian Thanksgiving Sunday.
-
Poser…if you show up at UK customs and tell them you are taking up residence (as long as you have an EU passport) you’re allowed a one-time exemption to bring in your possessions.
In other words, you can bring in as much as you like the one time.
-
Smart on their part.
-
Bad day today. Apparently my wife’s Canadian/American cousin is caught in the IRS snare and is now spending money on tax lawyers etc. My father-in-law doesn’t think I’m crazy any more, now that his niece is in the same snare. Apparently her son is to marry a US citizen and wants to claim US citizenship based on his mum’s dual nationality. So she fell under the radar–scary thing to be noticed. Now the IRS says, why the heck haven’t you been filing for taxes lo these many years that you’ve been hiding in Canada to avoid taxes? My wife’s cousin the tax evader. My blood boils. My hatred of the IRS grows deeper.
I picked up a couple Americans at Pearson, Toronto’s airport. As I was driving my renunciation came up as part of the conversation. I said, “I don’t have a problem with you folks if you come up here to my country friendly-like.” But my feelings are becoming more tense.
-
If the IRS starts to enforce the withholding tax, when is a country going to enact a tit-for-tat withholding tax aimed squarely at US banks?
I think in the end countries will block the information flow for their own citizens. The IRS will be starved of information ultimately.
Governments will allow their own courts to decide and then say to the US government – sorry it’s not our fault ours courts don’t agree and I don’t have the votes to change the law in parliament. What do you expect me to do override the will of the people for the convenience of the US government?
-
Canada could start by ending exports of oil to the US. That would get some attention if the price of gas suddenly spiked by several dollars per gallon.
-
I’m sure the Chinese would be eager customers, they’re buying up commodities all around the world as we speak.
-
Indeed, Sinopec made a offer for one of my investments (Daylight Energy) just this weekend.
-
Do you have the link to that letter? thnx
-
“Look is this an embarrassment for him? Yes. He said so himself. But it was an innocent mistake. It is a mistake that is commonly made for people who are working internationally or for international institutions. It has been corrected. He paid the penalties.”
This is what our President said about Treasury secretary. Amazing how it equally applies to expats, immigrants and visa workers ! Although later group is dealt with harsher penalties !
-
I wonder if Tim Geitner was in violation of FBAR and what penalties that he paid.
-
See links to some of MP’s comments here.
He’s published usually in BC newspapers:
http://expatsinca.wordpress.com/2011/10/06/alex-atamanenko-mp-for-bc-southern-interior-weighs-in/
-
How about good ole Charlie Rangel. He headed the committee that writes the tax code. He also had undisclosed income from rental properties in Central America I think in the Dominican Republic. I would guess he had accounts there to collect rents and administer the properties. I think he filed amended returns but to my knowledge no FBAR or other penalties. This is another sign of the corruption and unfairness of our government. Hell, a bunch of Obama’s people had tax issues. Why do they get a break and the common folks get the shaft. We are a broken nation.
http://online.wsj.com/article/SB10001424052970203946904574300013592601036.html
-
“Good ole Charlie Rangel” also authored the stupid-on-stilts “exit tax”. Even within a decidedly venal congress, Rangel stands head and shoulders above the rest when it comes to hypocrisy and corruption.
-
Thanks for that… Appreciate it.
-
Probably shipped back the dollars in banana crates!
FBARs and filing yearly is a lot of busy work that earns the US Gov’t nothing.
-
So are tax returns from the vast majority of Americans living in Canada, as the tax rate has been historically higher here in Canada, and the tax treaty is intended to help avoid double taxation.
-
Ireland Presidential Candidate and well known Eurovision singer, promises to give up US-citizenship to promote her election.
See – http://en.wikipedia.org/wiki/Dana_Rosemary_Scallon
Is it the election or has she decided to say goodbye to the IRS??
She’s London-born, and grew up in Northern Ireland.
Another example how the US’ tax policy is driving people away. Tax a few bucks in the short-term, lose people and talent longer-term.