http://www.cbc.ca/news/world/story/2011/08/08/nb-american-tax-evasion-rules-258.html
This is yet another general information story by the mainstream media about the fate of ordinary people caught up in the IRS Commissioner’s Career GloryQuest cunningly sold using sentences containing the word “fair”.
Generic articles like this aren’t going to make a difference. We need real people willing to stand up and speak truth about their experience at the hands of the IRS. The only way things will change is when the real world sees the tragedies.
Is anyone out there willing to be visible and public about what happened to them in the amnesties? Contact me. It will go on YouTube.
The IRS wins by hiding the execrable things it does. We need some sunlight. I can’t disclose client information. We need a taxpayer to stand up and show the trivial tax liability coupled with a six figure penalty for FBAR violations.
Call me if you’re up for this.
Thanks to reader L for the story link. I won’t break her anonymity by saying she lives in a city that hosts a stampede every year. And no, it isn’t Omak, WA (I have actually been to the Omak Stampede).
Unrelated: I’m watching surfers right now. With the occasional pod of dolphins swimming by.
Phil Hodgen
Philip D. W. Hodgen is the principal attorney of HodgenLaw PC, an international tax law firm based in Pasadena, California. He earned his undergraduate degree from Claremont McKenna College and his law degree from the School of Law at the University of California, Los Angeles. He then went on to earn a Master of Laws degree with a specialty in taxation from the University of San Diego School of Law. Admitted to the California bar in 1982, Phil spent nine years in law firms and with a large U.S. bank before starting his own firm in 1991.
Phil is a past chair of the International Tax Committee of the State Bar of California's Tax Section and was a member of the Executive Committee of the State Bar of California's Tax Section for 2004-2007. Phil frequently speaks on a variety of international tax, trust and estate topics to attorneys, accountants, and real estate professionals.
You cannot do a tax-free rollover of your RRSP into an IRA. An Individual Retirement Account in the United States is the equivalent of the Registered Retirement Savings Plan in Canada. One idea people have is that if they are going to live in the United States permanently they would like to roll over their…
There’s a deal in place, says the Wall Street Journal. No details yet, so let’s see if/how much the Swiss have bent on secrecy. At least all of my UBS clients are in the pipeline already. 🙂
For your reading pleasure, here is Notice 2009-62. If you have signature power over a foreign financial account but the money isn’t yours, then you have an extension of time to deal with the “Come to Jesus!” clean-up and file all of your paperwork with the IRS. If this applies to your particular situation, it…
According to Reuters, UBS has settled with the IRS. Names will be named. (How many? Yours? We shall see.) Beans will be spilled. Fingers will be pointed. Bureaucratic chests will be puffed outward. Meanwhile, back on earth. . . . (I have been accused of being obtuse in the past. By my wife. Let me…
Jack Townsend has — as usual — a thoughtful analysis of the implications of the UBS settlement in which UBS will cough up a few thousand names of U.S. taxpayers. (Exact details of the settlement haven’t been publicized yet.) It seems clear to me (and to Mr. Townsend) that the settlement depends on the Swiss…
Here’s a lightly adapted version of the letter we use. If you want to launch your own voluntary disclosure for your offshore account, here’s what to do: Go to the IRS website and find the address and phone number for the IRS Criminal Investigations office for where you live. Call them and get their fax…
11 Comments
Now that the extended date for the amnesty has passed and I did become aware until this week of the requirement to either file a 1040 as a dual citizen living outside of the US or the FBAR requirement – what options are available now – file and be financially raped?
Is anybody else wondering what to do now the amnesty has ended?
I think this needs to happen. This is outrageous. I was born to American parents and have never lived or worked in the United States. Now I fall under the same category as US citizens willfully hiding their money to avoid taxes.
I have just heard about the OVDI and barely have time to make an informed decision. Now after living my whole life as a law abiding Canadian citizen I risk losing more than I am currently worth due to these Draconian penalties. I have made some successful investments, that were taxed heavily here in Canada. Even if I do participate in the OVDI I will be crippled.
If I go down I will go kicking and screaming and the press will certainly hear about this. But at this point I’m not really willing to draw attention to myself until I decide on a course of action.
Thank you for addressing the topic.
There needs to be a class action lawsuit against the US Government for mental cruelty, amongst other things. If they wanted expats to file, it would be the US’ responsibility to let them know! Not wait for thirty years and then say, oh yeah, you owe me.
I came to Canada from the US in 1970. I became a landed immigrant and was awarded Citizenship in 1976. I worked for Canadian givernments (Federal and Provincial). At that time it was automatic that I would lose my US Citizenship, especially if you included voting in “foreign” elections. This changed in the 1980’s whereupon you were not deemed to have lost your US Citizenship unless you did one of seven things with the express declared intent to revoke your citizenship.
My parents suddenly both became ill and incompetent in 2006. In order to be their power of attorney in New York, I was told that I had to re-affirm my citizenship and that is where the distress begins.
I had no idea that I had been remiss in filing an income tax return but have now done so for five years running. My Dad has passed away and I no longer need to be a US Citizen to be mom’s guardian, conservator, etc.
I went in to the consulate to renounce my Citizenship recently and was dissuaded enough by the Consular Officer NOT to relinquish my Citizenship until I had really thought about it. I had stated that tax was not my concern as I was well under the radar with income and net worth being low compared to the folks that have bailing from the US WITH MASSIVE AMOUNTS OF ASSETS.
I really just want to simplify ! I retire next year and my home, pension, health care, family, children and grandchildren are all Canadian as am I! I have no interest in ever being a permanent resident in the US where my opension woulod be $7.21 per month. I just want to look after Mom and if I survive her, handle a very modest estate if it even exists by then.
The US is telling me that they won’t let me go without a challange and it all relates to taxation. Did you know that only the USA and Eritriea tax their citizens on income made abroad as residents outside the US?
Well, heck this is unfair and kinda gets you into the paranoid state of mind with information that “your name will be published in a gazette” and their may be other recriminations such as a long lengthly IRS audit.
I’m hoping for a class action suit whereby this question is defined and the rules made clear. I mean is there not a law in canada which roughly articulates the fact that if you’re in Canada as a citizen, immigrant, or refugee, you cannot be extradited back to the US for an offense that does not exist in Canada?
I mean this is a Sword of Damacles that is suddenly being raised by a very confused population to the south of the 49th. who are capable of any judicial travesty in the name of getting re-elected in a completely bi-polar system of governmance.
As it stands now: forget a wining lottery ticket, non taxed inheritance, death taxes, capital gains, severance packages etc. I ask how can this be after over 40 years and now that the US has fallen way short of world expectations insofar as fiscal responsibility is concerned ? The “fat cats” have already left for the Virgin Islands and elsewhere. Why do I get punished for being a productive citizen in Canada with 35 years in the civil service and having raised a good family and supported my community wherever I have lived in BC and Alberta?
They need to make it quite clear, as it was done during the general DRAFT pardons in the 1970’s, that: Provide your income tax information for the last 5 years and determine a base line for contribution and allow one to renounce their US citizenship and be done with it. None of these travel restriction threats, or extradition threats,fees and lengthly waits for your application to renounce to be “accepted” (costs $450.00 by the way!), threats of being published in a right wing sponsored gazette or looked upon as a potential terrorist for having the radical notion of living somewhere else on the globe.
Truth be known, if it were not for my Mother still being alive, I would not want to travel to the US ever again. There is more to look for, learn, and enjoy in my retirement from sea to sea to sea to the 49th. parallel. I am a proud Canadian being fettered by something that exists nowhere else that I am aware of . . . and that is the fact that the USA feels that they own my soul, check book, and retirement peace of mind.
You want a you tube “rant” – I’ll volunteer. I’ve always been an average guy with the notion of fairplay, justice, civil conscience, Judao (sp?) / Christian ethics (more Buddhist of late as I contemplate the next steps beyond life), accepting of responsibility for my folks in their dire straits – and so my story is average and “small potatoes” – but it is peace for collective aging souls for all of us dual Citizens that I seek. Those who came to Canada and will continue to reside in Canada and wishto be buried in our home and native land. I have stood on guard for Canada in my career and I would hope that some thoughts of fair justice would stand on guard for me in return.
I honestly don’t understand the point of your comment. Do you advocate the US government banning foreign accounts? What about the right of the people to own such accounts which is protected by the Ninth Amendment?
I have posted your comment as a new blog post. Also, send me a text message to +1-626-999-4000 so we can talk.
/Phil
The axe hasn’t fallen yet, but if it does after Aug. 31 you might have yourself a youtube video…
I’m 25 yrs old, earn less than $15k/yr as a writer, and just learned
I might be several years of income in debt to the US govt 🙁 My
fiance is trying to help me straighten this out (I can’t even think
about the problem without crying).
I’m a dual citizen who grew up and went to school in Canada and moved
to the US a couple years ago. When I was in my late teens, my parents
put $80k US in a Canadian bank account in my name to pay for my
education. Now I want to do an MFA degree, but I’m afraid to touch the
remaining money. I want to marry my fiance but we’re afraid that if we
do the IRS will take his savings too. My life is on hold, and I’m
scared.
My fiance was hoping I’d qualify for OVDI FAQ #17, but he says I
didn’t report my interest correctly in 2008, made some other mistake
in 2009, and before 2007 I thought of myself as a Canadian and didn’t
even file 1040s.
Here’s the catch: my fiance checked all my past taxes and discovered
that even including the interest correctly in 2008, I’ve always made
less than the standard deduction, and wouldn’t have owed any
additional taxes even if I had reported the Canadian account’s
interest correctly. He thinks I therefore, depending on the
interpretation of “tax liability” (is it pre or post deductions?),
might still qualify for OVDI FAQ 17.
Does this mean I have no “unreported tax liability” and can send in
my 6 delinquent FBARS and be done with it? Or does the fact that I
messed up my 1040’s (albeit in a way that doesn’t change how much
taxes I owe) mean that I would get in huge trouble? Should I file the
6 FBARs, or just stay quiet and hope for the best?
I think that the IRS should publish a list of ALL people who participated in the amnesty, showing :
1> How much tax they paid during 2003~2008
2> How much tax they didn’t pay that they should have (because of interests from a foreign account, for example)
3> How much penalty they had to pay.
Of course, without showing any names.
The consequence of not making this public is that people will completely distrust the IRS’s meaning of fair. One possible result is that people will start moving all their savings into legal foreign accounts (with FBARs and everything). Then, the next move of the government can only be to make foreign accounts completely illegal. Period.
Phil: Thanks for the question. Given that non-wilful violation is punished with fewer lashes it is ill-advised for me to come out of the closet. That is the fear that the IRS has inculcated in people. So that means that those one million Canadians will have their privacy rights violated one at time, for few people have considered that they have 4th amendment rights as Americans not disclose their papers without probable cause and a warrant; and they have Canadian rights too, enshrined in law by PIPEDA, which the banks would have to violate in spirit and letter in order to divulge our account information to a foreign government.
That CBC article carries the water of the IRS just like about every mainstream article that I’ve seen in Canada. I’ve asked reporters to interview me anonymously, and so far no bites.
Decode: where did you get that statistic that only 38,000 returns were received from residents of Canada. That is amazing.
Phil,
Writing from Canada, regarding the CBC story…
There is much angst being whipped up among the large community of former US nationals who are now Canadian citizens permanently residing in Canada. Some of these are my colleagues and friends.
It is a serious situation. US epats rightly feel under siege. However, the sheer quantity of Canadian citizens of US nationality, combined with their historically low compliance rate on extra-jurisdictional tax claims, is exceptionally challenging – especially in consideration of how integrated they are as citizens of an advanced human rights state (where the Canadian Charter of Rights and Freedoms can trump the persecution and/or deportation of the most egregious criminals).
The last published statistics of offshore US tax returns filed from Canada was 2006: about 38,000 returns filed. Estimated population of US nationals in Canada in 2006: 600,000. Now its likely >1,000,000.
In consideration of these numbers, there has been little discussion of how to actually enforce hundreds of thousands of extra-jurisdictional revenue claims on domiciled and law-abiding Canadian citizens of US origin, many of whom have no US assets, income or ties.
The Canadian Revenue Agency cannot do it. Under the mutual assistance clause of the Canada-US tax treaty, no assistance will be provided for a revenue claim in a taxable period where the taxpayer is a citizen of the requested assisting state. Canada will not collect US revenue from its own citizens unless the revenue claim originates from a period preceding their citizenship.
To also discuss: how will Canadian banks comply with FATCA, when they have no record of customers’ nationality, and asking a client their nationality (or discriminating based upon same) is forbidden by the Charter of Rights and Freedoms and Canadian Human Rights legislation.
As Neil Young said; I’m wondering…
Comments are closed.
Tax laws change over time, and the information in this post above may be less accurate today than it was at the time of the last revision. This post is not tax advice for your specific situation. Please contact an international tax professional to get personalized advice for your situation.
Now that the extended date for the amnesty has passed and I did become aware until this week of the requirement to either file a 1040 as a dual citizen living outside of the US or the FBAR requirement – what options are available now – file and be financially raped?
Is anybody else wondering what to do now the amnesty has ended?
I think this needs to happen. This is outrageous. I was born to American parents and have never lived or worked in the United States. Now I fall under the same category as US citizens willfully hiding their money to avoid taxes.
I have just heard about the OVDI and barely have time to make an informed decision. Now after living my whole life as a law abiding Canadian citizen I risk losing more than I am currently worth due to these Draconian penalties. I have made some successful investments, that were taxed heavily here in Canada. Even if I do participate in the OVDI I will be crippled.
If I go down I will go kicking and screaming and the press will certainly hear about this. But at this point I’m not really willing to draw attention to myself until I decide on a course of action.
Thank you for addressing the topic.
There needs to be a class action lawsuit against the US Government for mental cruelty, amongst other things. If they wanted expats to file, it would be the US’ responsibility to let them know! Not wait for thirty years and then say, oh yeah, you owe me.
I came to Canada from the US in 1970. I became a landed immigrant and was awarded Citizenship in 1976. I worked for Canadian givernments (Federal and Provincial). At that time it was automatic that I would lose my US Citizenship, especially if you included voting in “foreign” elections. This changed in the 1980’s whereupon you were not deemed to have lost your US Citizenship unless you did one of seven things with the express declared intent to revoke your citizenship.
My parents suddenly both became ill and incompetent in 2006. In order to be their power of attorney in New York, I was told that I had to re-affirm my citizenship and that is where the distress begins.
I had no idea that I had been remiss in filing an income tax return but have now done so for five years running. My Dad has passed away and I no longer need to be a US Citizen to be mom’s guardian, conservator, etc.
I went in to the consulate to renounce my Citizenship recently and was dissuaded enough by the Consular Officer NOT to relinquish my Citizenship until I had really thought about it. I had stated that tax was not my concern as I was well under the radar with income and net worth being low compared to the folks that have bailing from the US WITH MASSIVE AMOUNTS OF ASSETS.
I really just want to simplify ! I retire next year and my home, pension, health care, family, children and grandchildren are all Canadian as am I! I have no interest in ever being a permanent resident in the US where my opension woulod be $7.21 per month. I just want to look after Mom and if I survive her, handle a very modest estate if it even exists by then.
The US is telling me that they won’t let me go without a challange and it all relates to taxation. Did you know that only the USA and Eritriea tax their citizens on income made abroad as residents outside the US?
Well, heck this is unfair and kinda gets you into the paranoid state of mind with information that “your name will be published in a gazette” and their may be other recriminations such as a long lengthly IRS audit.
I’m hoping for a class action suit whereby this question is defined and the rules made clear. I mean is there not a law in canada which roughly articulates the fact that if you’re in Canada as a citizen, immigrant, or refugee, you cannot be extradited back to the US for an offense that does not exist in Canada?
I mean this is a Sword of Damacles that is suddenly being raised by a very confused population to the south of the 49th. who are capable of any judicial travesty in the name of getting re-elected in a completely bi-polar system of governmance.
As it stands now: forget a wining lottery ticket, non taxed inheritance, death taxes, capital gains, severance packages etc. I ask how can this be after over 40 years and now that the US has fallen way short of world expectations insofar as fiscal responsibility is concerned ? The “fat cats” have already left for the Virgin Islands and elsewhere. Why do I get punished for being a productive citizen in Canada with 35 years in the civil service and having raised a good family and supported my community wherever I have lived in BC and Alberta?
They need to make it quite clear, as it was done during the general DRAFT pardons in the 1970’s, that: Provide your income tax information for the last 5 years and determine a base line for contribution and allow one to renounce their US citizenship and be done with it. None of these travel restriction threats, or extradition threats,fees and lengthly waits for your application to renounce to be “accepted” (costs $450.00 by the way!), threats of being published in a right wing sponsored gazette or looked upon as a potential terrorist for having the radical notion of living somewhere else on the globe.
Truth be known, if it were not for my Mother still being alive, I would not want to travel to the US ever again. There is more to look for, learn, and enjoy in my retirement from sea to sea to sea to the 49th. parallel. I am a proud Canadian being fettered by something that exists nowhere else that I am aware of . . . and that is the fact that the USA feels that they own my soul, check book, and retirement peace of mind.
You want a you tube “rant” – I’ll volunteer. I’ve always been an average guy with the notion of fairplay, justice, civil conscience, Judao (sp?) / Christian ethics (more Buddhist of late as I contemplate the next steps beyond life), accepting of responsibility for my folks in their dire straits – and so my story is average and “small potatoes” – but it is peace for collective aging souls for all of us dual Citizens that I seek. Those who came to Canada and will continue to reside in Canada and wishto be buried in our home and native land. I have stood on guard for Canada in my career and I would hope that some thoughts of fair justice would stand on guard for me in return.
I honestly don’t understand the point of your comment. Do you advocate the US government banning foreign accounts? What about the right of the people to own such accounts which is protected by the Ninth Amendment?
I have posted your comment as a new blog post. Also, send me a text message to +1-626-999-4000 so we can talk.
/Phil
The axe hasn’t fallen yet, but if it does after Aug. 31 you might have yourself a youtube video…
I’m 25 yrs old, earn less than $15k/yr as a writer, and just learned
I might be several years of income in debt to the US govt 🙁 My
fiance is trying to help me straighten this out (I can’t even think
about the problem without crying).
I’m a dual citizen who grew up and went to school in Canada and moved
to the US a couple years ago. When I was in my late teens, my parents
put $80k US in a Canadian bank account in my name to pay for my
education. Now I want to do an MFA degree, but I’m afraid to touch the
remaining money. I want to marry my fiance but we’re afraid that if we
do the IRS will take his savings too. My life is on hold, and I’m
scared.
My fiance was hoping I’d qualify for OVDI FAQ #17, but he says I
didn’t report my interest correctly in 2008, made some other mistake
in 2009, and before 2007 I thought of myself as a Canadian and didn’t
even file 1040s.
Here’s the catch: my fiance checked all my past taxes and discovered
that even including the interest correctly in 2008, I’ve always made
less than the standard deduction, and wouldn’t have owed any
additional taxes even if I had reported the Canadian account’s
interest correctly. He thinks I therefore, depending on the
interpretation of “tax liability” (is it pre or post deductions?),
might still qualify for OVDI FAQ 17.
Does this mean I have no “unreported tax liability” and can send in
my 6 delinquent FBARS and be done with it? Or does the fact that I
messed up my 1040’s (albeit in a way that doesn’t change how much
taxes I owe) mean that I would get in huge trouble? Should I file the
6 FBARs, or just stay quiet and hope for the best?
I think that the IRS should publish a list of ALL people who participated in the amnesty, showing :
1> How much tax they paid during 2003~2008
2> How much tax they didn’t pay that they should have (because of interests from a foreign account, for example)
3> How much penalty they had to pay.
Of course, without showing any names.
The consequence of not making this public is that people will completely distrust the IRS’s meaning of fair. One possible result is that people will start moving all their savings into legal foreign accounts (with FBARs and everything). Then, the next move of the government can only be to make foreign accounts completely illegal. Period.
Phil: Thanks for the question. Given that non-wilful violation is punished with fewer lashes it is ill-advised for me to come out of the closet. That is the fear that the IRS has inculcated in people. So that means that those one million Canadians will have their privacy rights violated one at time, for few people have considered that they have 4th amendment rights as Americans not disclose their papers without probable cause and a warrant; and they have Canadian rights too, enshrined in law by PIPEDA, which the banks would have to violate in spirit and letter in order to divulge our account information to a foreign government.
That CBC article carries the water of the IRS just like about every mainstream article that I’ve seen in Canada. I’ve asked reporters to interview me anonymously, and so far no bites.
Decode: where did you get that statistic that only 38,000 returns were received from residents of Canada. That is amazing.
Phil,
Writing from Canada, regarding the CBC story…
There is much angst being whipped up among the large community of former US nationals who are now Canadian citizens permanently residing in Canada. Some of these are my colleagues and friends.
It is a serious situation. US epats rightly feel under siege. However, the sheer quantity of Canadian citizens of US nationality, combined with their historically low compliance rate on extra-jurisdictional tax claims, is exceptionally challenging – especially in consideration of how integrated they are as citizens of an advanced human rights state (where the Canadian Charter of Rights and Freedoms can trump the persecution and/or deportation of the most egregious criminals).
The last published statistics of offshore US tax returns filed from Canada was 2006: about 38,000 returns filed. Estimated population of US nationals in Canada in 2006: 600,000. Now its likely >1,000,000.
In consideration of these numbers, there has been little discussion of how to actually enforce hundreds of thousands of extra-jurisdictional revenue claims on domiciled and law-abiding Canadian citizens of US origin, many of whom have no US assets, income or ties.
The Canadian Revenue Agency cannot do it. Under the mutual assistance clause of the Canada-US tax treaty, no assistance will be provided for a revenue claim in a taxable period where the taxpayer is a citizen of the requested assisting state. Canada will not collect US revenue from its own citizens unless the revenue claim originates from a period preceding their citizenship.
To also discuss: how will Canadian banks comply with FATCA, when they have no record of customers’ nationality, and asking a client their nationality (or discriminating based upon same) is forbidden by the Charter of Rights and Freedoms and Canadian Human Rights legislation.
As Neil Young said; I’m wondering…