The Isaac Brock Society consists of individuals who are concerned about the treatment by the United States government of US persons who live in Canada and abroad.
If clicking on a link brings you to the wrong page in the comment thread, click here to arrive on the current page of the thread: http://isaacbrocksociety.ca/2011/12/14/about-the-isaac-brock-society/
The United States is one of two countries in the world that taxes its people no matter where in the world they may reside. The other is Eritrea, which the USA has condemened for terrorism and for its diaspora tax. The majority of US persons who live abroad are not aware of their filing requirements. But recently, the US government has decided to crack down on those who are not in compliance.
But what is more, the US government has begun, since about 2004, to apply with great pressure a long-neglected requirement of 35-year old law called the Bank Secrecy Act. That requirement is FBAR, the foreign bank account report, which the United States government expects annually from those who have accounts outside of the United States which exceed $10,000 in aggregate. The fines for failure to file this form are extortionate, and virtually no US person who lives abroad even knew about FBAR, while most of them, over a certain age, own bank accounts with retirement savings exceeding that amount. The threats of fines and imprisonment has frightened many people who as a result have consulted expensive accountants and tax lawyers to get this mess sorted out, only to face high accounting or legal fees on top of potential fines and back taxes. In 2009 and 2011, the IRS offered voluntary disclosure programs (OVDI). Some who entered into the 2009 OVDI, because of fear of the penatlies, were shocked when the IRS assessed them fines in the tens of thousands, essentially treating them as tax evaders instead of a law abiding citizens in their countries of residence.
For many US expats, renunciation now seems like a really good idea. Why not? Many haven’t lived in the US for years and now they have few ties there except perhaps some family members. So they want to renounce their citizenship only to find that the laws regarding expatriation are confusing and that the exit tax requirements are at best complicated and invasive, and at worst, extortionate and utterly in violation of their right to expatriate.
The media coverage of this issue has been uneven. There have a been a few balanced stories, but most of the time, the media has merely publicized the purposes of the US government; this is especially true of US media sources. The Canadian media has generally done a much better job of grabbing the attention of the world about the abuses of the US government. That being said, even the Canadian media sometimes falls into the IRS trap of projecting fear in order to force compliance. Overall, we regret when the media offers only condemnation and fear without telling the story from the side of the victims or informing them of their rights and alternatives.
US persons abroad also face US border guards who are starting to put pressure on all those who have a US place of birth to travel only on a US passport, even if the person has not been a US person for decades–an arbitrary change of policy making those who relinquished citizenship into would-be loyal taxpayers to a profligate government that has to borrow 40 cents on every dollar its spends.
The Isaac Brock Society is here to fight. Sir Isaac Brock prepared Canadians for war with the United States and gave his life in repelling a US invasion in 1812. So we also want to fight for US persons who are frightened by the IRS, the border guards, the compliance condors, and the media. We are here to provide one another with resources and strategies, comfort and advice.
But not only so, we are here to warn other Canadians about the illegal incursion of the US federal government into the lives of the US expat community. Pretty soon, with the new FATCA legislation, this arrogant attitude of the United States will affect every man, woman and child on the planet who wants to open or maintain a bank account or to invest in a retirement fund. Now, according to FATCA, you will have to tell the United States whether you are a US person when you open up a bank account in, e.g., Australia or Thailand. This makes every country in the world a protectorate of the United States, for, if they comply with FATCA, they are ceding their very sovereignty to a nation which has not invaded or conquered the rest of the world, but only uses its waning hegemony over the financial sphere to coerce other nations.
So whether you are a US person living in exile, a Canadian or a citizen of any other country, we ask you to join us in this struggle for freedom and justice.
@OMG – wait a second. You were NOT Canadian from birth but became one in 2002? If you have done nothing to maintain US citizenship such as using an American passport since then, you should be able to claim a relinquishment if you so choose based on becoming a Canadian. See the side bar on the right “Links by Subject” there is a thread devoted to relinquishments prior to 2004. Good luck
OMG You said “I had thought that by becoming a Canadian citizen I relinquished my American status.”
it is quite likely that this is correct. It depends on your age when you became Canadian and your intent. If you were 18 or older and your intent was to relinquish, then your relinquishment is probably valid. v
If you were younger than 18 then it’s a grey area at best and a minefield at worst.
Since you do not have a US birthplace, there is no rush to do anything and quite likely no need to do anything. Most important, don’t do anything to claim US citizenship until you have a better understanding of the issues. Also remember that there plenty of accountants and maybe even some lawyers who will give you poor advice. Be choosy.
@OMG, the main thing is not to rush into hasty decisions. Yes, it’s a shock – a major one – but you need to take a step back and start researching your options before making any decision. As others have said, there’s a good chance from the sound of it that you have relinquished your US citizenship. Depending on the date that happened and your age at the time, start here:
http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/
Take it slowly and don’t worry that anyone is going to come after you because they’re not. Even if you have a birth certificate for an American birth abroad, you probably have no Social Security Number so are not in their system. If you have done nothing like get a US passport they have no way of finding you, even if they wanted to – which at the moment they don’t because you don’t exist as far as any taxation goes.
So take a deep breath and start researching. Dig out your Canadian citizenship document and check the date then take it from there. We’ll support you with advice and info where we can. You’re not alone in this so don’t think you are.
We may all be overlooking the most important clause of the 14th amendment, all persons born or naturalized in the United States,AND SUBJECT TO THE JURISDICTION THERE OF, are citizens of the US.
US jurisdiction stops at the border, so those who live in Canada and have no property in and no income from the US cannot be subject to their jurisdiction, thus should not be deemed US citizens.
@chuck, nice idea but FATCA is only the latest law that proves otherwise. With citizenship based taxation the US government has no physical boundaries to their jurisdiction.
If citizenship was left at the border, not just in the States, but everywhere then either people would have to live in their country of birth and never move for the rest of their lives or most of the world population would become stateless because they’d lose their citizenship when they leave their homeland and won’t have another one to use. The chaos to employment, travel, the global economy, etc, would be unbelievable.
There is alot out there about the war of 1812. Issac Brock made the mistake of trying to be a soldier. 200 years later it is the war of 2014 (war of 1812 did not end until 1814 when the Brits burned Washington and America discovered its national anthem).
See this http://www.eighteentwelve.ca/?q=eng/Topic/16
2014 but could drag out to 2024. In facebook you can correct this.
My American husband and I relocated from the US to Canada in August of this year. I happily abandoned my Greencard at the border. My husband has just acquired Canadian Permanent Residency and we have two young dual citizen children, born, unfortunately, in the US. The reality of CBT, FATCA, and FBAR has begun to hit us full force. What are the implications for us in purchasing a home in Ontario? We will need to acquire a mortgage on approximately 50% of a modest $250 000 home. Should we keep his name off the mortgage? This will be difficult as he is our primary breadwinner…My understanding is that even after the mortgage is paid, he will not be able to transfer his share of our home to me taxfree upon his death. If I am not required to file taxes, how will the IRS get their hands on this money. Feeling so lost and persecuted by this bully country that I so desperately wish to leave behind…
@Disgusted
You will be ok if your husband becomes a Canadian citizen and renounces his USC before you sell that house. If he is not willing to do that, it could be a problem.
If the children are young and will end up primarily as Canadians, they may wish to renounce; need to re-check this but as duals I think they have a very short window (6 months only) right after the 18th birthday to renounce.
Try not to worry. Identify specific problems and then read up all you can find. And ask lots of questions. Chances are, someone here has the same issue and can pass in what they know.
@Tricia Moon & Disgusted, there’s no “short window” for renunciation. It can be done at any time once they reach the age of 18. At that age they could also apply for Canadian citizenship with the intent to lose their American one which would – at the moment – save them the $2,350 fee that renouncing carries with it. Note that if they gain Canadian citizenship before then relinquishing wouldn’t be possible for them. The Americans wouldn’t consider such an act by a minor as being an expatriating act, it would have to be done at age 18 or over.
Can’t help much on the money side, but as well as others here who’ll have advice I suggest your husband goes to http://www.irs.gov and then searches for Americans Abroad. That’ll call up the IRS info sheet which gives you a good starting point for sorting all this mess out.
@Medea
Sounds as though Disgusted’s children are duals at birth.
@Disgusted
You may have to formally log out of your green card. Others know more about how to do that. Should not be overlooked though.
Or did Disgusted formally log out at the border by completing Form I-407 and now should have a copy of that important document in possession?
More information at…
http://hodgen.com/expatriation-and-the-expiring-green-card/
and
http://blogs.angloinfo.com/us-tax/2014/10/12/tax-court-affirms-informal-relinquishment-of-green-card-not-enough/
I agree that it appears the children were born dual in the U.S. to one American and one Canadian parent, so relinquishment would not be an option unless government employment, etc. qualifiers.
Disgusted Slow down. It isn’t all that difficult. Firstly, decide if your husband wishes to remain a US citizen. He can still have a RRSP but needs to avoid TFSA and Canadian mutual funds. He can buy US stocks and etfs. He of course would need to continue filing US taxes but that’s no biggie.
It seems a bit early to think about transferring his half of the house tax free upon his death. However, if you need to worry about it now, there is a 5.25 million estate tax exemption
Once a year, review your situation. At some stage he may want to renounce. If so he will want his net worth to be below 2 million.
The problems for you and your husband are manageable . No where as complex as for those who haven’t filed anything for years and years because they didn’t know they were supposed to.
@Bubblebustin, oops missed that.
To the poor Saskatchewan couple who had the misfortune of delivering their baby girl in Hawaii and now owe almost $1 000 000 USD in medical bills for Maternal/Fetal and Neonatal ICU care…their infant daughter now belongs to the select group of “accidental americans” who can look forward to a lifetime of persecution from the US government. Interestingly, while the issue of the medical bills has swept the news in both nations over the past few days, not one has examined the effects of this second catastrophic outcome. I doubt this poor couple is even aware of the consequences for the future of this young child.
Now am free of US citizenship, wee!!!!!! cost only $450…..am a senior but would participate in any demonstration/protest etc …. very impressed on article about 3rd birthday. please email me , not twitter or facebook
Carol,
Big congratulations on your freedom from US citizenship. Have you now received your Certificate of Loss of Nationality for your renunciation at the *bargain* price of $US 450? Good for you!
Have you seen an article about this site’s third birthday somewhere? I know one is being worked on and I have forwarded your comment to that person. It should be quite the story.
@ calgary411
The birthday post appeared for a few minutes last night and then disappeared. I expect it will reappear on the 12th. At least Carol Farkas confirmed that I wasn’t just imagining it. 😉
I can confirm that the birthday post was not an hallucination, but maybe suffered from premature send.
Thanks, bubblebustin and EmBee.
I wasn’t up so late last night to have seen it, but I have heard that is exactly what it was — a premature “Publish”.
Waiting in anticipation to read some of Isaac Brock’s three years’ worth of history, from Petros stepping up to start by providing and maintaining this site — to where we are today.
Hello,
I recently read a reference to the FBAR on an expat tax forum while looking for information helping us to decide whether to open a Roth IRA for my husband, currently a resident alien. After doing some research, I not only realized that we had been required to file the FBAR the last two years but also that we could be assessed serious penalties for not doing so. I’ve since done a lot of research and am trying to find information on whether quiet compliance is too risky for us, as the streamlined OVDP penalty seems unreasonably harsh for our situation.
Our facts are pretty straightforward. Husband granted green card in July of 2012 and moved to the US, did not get a job until June of 2013. For 2012 tax year, I filed married filing separately; he did not file as he had no income while a resident alien. For 2013 tax year, I filed married filing jointly using TurboTax. I answered YES to foreign accounts question, but NO to over $10,000 question. I don’t remember any reference to FBAR in TurboTax questions.
However, I’ve since discovered that the amount in his account was about $18,000. I did not think he had this much and didn’t realize the seriousness of not making sure. None of this would be a problem if I hadn’t failed to report the interest income on this account on our 2013 tax form. As a novice to tax filing, it didn’t even occur to me that I would have to come up with numbers not listed on the different 1099s, w2s, and other forms I had gathered. The interest earned on this account was approximately $500, such that we would owe less than $100 in additional taxes for the 2013 tax year.
I would like to just file the 2012 and 2013 FBARs late with an explanation as to why we did not know we were required to file, and then file an amended 2013 return and pay the taxes owed and interest, as this would obviously cost less than the OVDP penalty. I believe under the streamlined program, we would owe 5% of $18000, so about $900. Plus the back taxes. However, we certainly couldn’t afford a $10000 late filing fee or costs of a lawyer. We also don’t want to risk my husband’s green card status. We do plan to move back to his home in the next 3 years to start a family.
Is quiet compliance too risky???
welcome to IBS. Firstly, OVDI is meant for serious criminals and tax evaders. It was never meant for people like you. Don’t even think about it.
Secondly, you have a choice between amending past returns or complying as best you can in the future. (2014 tax year on). They are both very good options. Pick the one you are more comfortable with. FBARS are filed electronically. I think there is a drop down menu for a late fbar that includes “i didn’t know” as a reason for late filing. Your situation is not uncommon and not a cause for a large penalty. Quiet compliance is certainly not too risky. Try not to worry.
@Portland PLC
Hi. I don’t think you have to worry about too many people entering OVDP now that the IRS is no longer lying about it as the only way to come into compliance. For people with large, easily discoverable tax liabilities who’ve never filed a US tax return, what do you suggest they do?
@Bubblebustin. Your question is too general to answer. If they live outside the US, they could follow Boris’s example.