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.
I’d like to subscribe to your newsletter. I clicked on “subscriber,” but nothing showed up in my email.
What do I do now?
Hello and Welcome, Maureen.
The Isaac Brock Society is a blog, rather than a newsletter. Perhaps there are no new posts since you entered yourself as a subscriber of the blog. I believe you can also follow each particular post as new comments are added to those. For a look back at all of the posts since this site’s inception, there is an index of all the posts in the Archive, http://isaacbrocksociety.ca/blog-archive/, accessible from the home page of the site.
You can follow the RSS feeds of posts/comments (look for a link in the footer – various RSS apps are around, I like feedly. Alternatively, blogtrottr can send you an email whenever a given RSS feed is updated).
If you don’t want to mess with RSS, then when you post a comment, tick the box “Notify me of new posts by email”.
US wants NAFTA to require open cloud computing, meaning US agencies may be able to access Canadian financial records. Please consider this in your analyses. Very dangerous.
Very good point @Laurentius. Others here http://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-4-of-4/comment-page-39/#comment-7948351 and I have tried to warn people about that threat http://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-4-of-4/comment-page-39/#comment-7948407 . If you come across more, you can post them on that same thread, or the country specific one for Canada ex. http://isaacbrocksociety.ca/fatca-and-canada/comment-page-8/#comment-7944794 .
We don’t have a NAFTA + FATCA thread yet, but perhaps admins might consider making one?
Hello! I am a frequent reader here and have a request to anyone that might be able to help. My father, who was born in the USA and moved to Canada in 1988, passed away recently. A little background… after moving here he was under the impression that he didn’t need to file taxes in the US if he properly filed in Canada. Of course, we know that is not the case, but it was an honest mistake (as it is with many in similar situations). He relinquished his US citizenship in 1998 by taking the citizenship oath in Canada, along with the rest of our family. He never lived as an American after that, never renewed his US passport, never lived there. He did collect Social Security from the years he did work there, but that was it. His accountants want me to file US taxes for his estate, but I don’t think I need to as he was not a US citizen anymore. They suggested I get a lawyer to give a professional opinion letter on the matter… or for me to apply for a backdated CLN for him (which I don’t even know if I can do). Can anyone suggest a lawyer or give me any advise? I feel confident that his was not a US citizen. I am the executor of his will and the entire estate will be going to charity, but I don’t want to get in trouble for not doing something I should. But I don’t want to file if I don’t need to. Any help would be appreciated.
@Elizabeth, welcome to IBS. I suggest you start here:
The general opinion seems to be that no, there is no need to file since he relinquished before 2004.
As for getting a CLN for someone who’s deceased … The emphasis would be on you to prove he had “intended” at the time he took Canadian citizenship to give up his US one. It may be possible, first contact the US embassy in Canada and ask them whether they’d consider such an application. You’d need to fille in this form which helps the staff decide whether or not someone did intend to give up their citizenship or not.
If the embassy is reluctant to consider it you could contact the State Department in Washington and ask them since they have the final say.
Also try and check back on what the US and Canadian laws were regarding dual nationality at the time. They may also help your case.
Your Father can be regarded as performing a relinquishing act back in 1998 when he became Canadian. He did nothing American after that date and you can argue that it was his stated intention to relinquish US citizenship and he had no need to obtain a CLN at that time.
You accountants are just covering their backsides. The fact that he is leaving his estate to charity makes the whole US filing exercise pointless anyway, if not expensive.
Applying for a CLN (if poss) will cost the estate $2350, I am sure your Father would rather that be in the hands of a charity than the US State Dept. Filing now would be admitting that he was a US citizen, which he wasn’t.
@Medea Fleecesteale and @Heidi
Thank you both so much for responding so quickly. I love this site for the community and the information it has. I have read the link about relinquishing before 2004. I read it a couple of years ago for myself when I first heard about all of this. It set my mind at ease for my personal situation. I 100% believe it applies to my father as well.
I’d rather not contact the US at all if I can get away with it, as I don’t believe I have to. And as you mentioned, the accountants are trying to cover their butts and so am I. It is scary to think I could be held accountable for this decision not to file. But… he himself never filed so I assume he believed he didn’t have to. If anyone knows of a lawyer that might give a letter of opinion, that would be perfect. If not, I may just have to go out on a limb and just not do it from what I have read.
Thank you both again.
Elizabeth – have you contacted John Richardson? http://www.citizenshipsolutions.ca/contact/
What Medea and Heidi said. Assuming you are a Canadian citizen living in Canada, you are the Canadian executor of a Canadian estate. No need to get the US government involved; its none of their business. (Besides, unless your father was quite wealthy, there would be no US estate tax owing anyway…the current exemption is about 5.3 million before the tax kicks in.) As executor, the only way you could possibly have any trouble with the IRS is if you choose to tell them. Don’t do it and they won’t have a clue.
As far as the IRS is concerned your father dropped off the edge of the earth when he moved to Canada in 1988 and quit filing US returns. Don’t worry about the US Social Security connection. Because government retirement benefits are taxable only in the country of actual residence under the US/Canada tax treaty, the IRS has no record of any SS benefits paid to your father. (No withholding = no record.)
From the day your father became a Canadian, he believed he was no longer a US citizen and lived his life accordingly. For God’s sake don’t undo all that by filing a US estate tax return. And for sure don’t waste $2350 trying to get him a CLN. (I’m not even sure its possible for a deceased person, anyway.) Presumably, if he had wanted one he would have gotten it himself. He didn’t think it was necessary and neither should you. (And don’t forget that State Dept. notifies the IRS whenever a CLN is issued.)
If the accountant isn’t OK with that, get another accountant. Forget the lawyers, they’ll only make things more complicated and expensive. If you are confident he was solely a Canadian citizen (and you are), settle his wholly Canadian estate with the CRA and move on with your life.
Elizabeth.. I agree .Your Dad was not American when he died and you should not have to file US estate taxes . We know what the law was. Dual citizenship was permitted but not encouraged. Obtaining Canadian citizenship,with intent to lose US citizenship was an expatriating act. The facts support his intent.
I doubt it is even possible to get a CLN for a decedent.
John Richerdson sounds to me like a reasonable resource. I would tell the accountant that you have no intention of filing US taxes.
p.S. you might get more (if not better) ideas on the relinquishment thread.
If I could ask a small favour, it would be grand if you could keep us informed of your progress with the estate, particularly what sort of questions are asked by lawyers, accountants and other nefarious types. The whole business of estates and executors and deceased US persons is a bit of a grey area – we’ve had some inconclusive discussion on the subject over the past year. I’d be particularly interested to know the means by which the US personhood of deceased or beneficiary could become known to anyone other than immediate family.
In your case, I think the advice received is valid: assume that US citizenship was relinquished and proceed as if your father was Canadian only. No need to obtain a CLN or god forbid to file any form of US tax return. If the accountants get sticky, fire them.
@Elizabeth, he definitely comes under the before 2004 opinion regarding any need to file. As maz said the IRS lost track of him years ago so they’re not going to be doing anything regarding his estate – they don’t even know about it! Do what needs to be done for a Canadian estate and then get on with your life and forget about the US. If the accountants are unhappy tough luck. Find one who’s prepared to file as a Canadian and tell the others thank you, but no thanks.
You could try explaining to your accountants that obtaining a CLN pre the 2004 American jobs and creation act was NOT required. It was accepted that the intention was to relinquish if after taking another citizenship, the relinquisher no longer acted in any way as an American. No passport, no voting, no filing.
There was no need of a notice event to inform the State Dept.
Show them the argument
If they are reluctant to accept, find another accountant.
Elizabeth – The accountants seem to behaving improperly, in trying to get you to file US taxes on your father’s estate simply because he was born in the US. Are they just hoping to bump up their fee?
I agree with Medea Fleecestealer and others who have suggested getting rid of them. I suggest you could write to the new accountants, making clear your father’s change of citizenship (i.e., that your father was not a US citizen because he relinquished his US citizenship when he became a Canadian, citing the relevant section of US renunciation law at the time your father relinquished). Make sure a copy of your letter is filed with the papers you file as executioner, and keep a copy for your own personal records. That should put your father’s status permanently on record, make sure the new accountants don’t develop any IRS-related anxiety, and forestall any attempts by the fired accountants to make trouble for you.
Just a suggestion – I’m not a lawyer, and not a Canadian.
“the papers you file as executioner,”
Related to my earlier point, why would any accountants, new or existing, need to know anything about a US birthplace or previous (but relinquished) US citizenship?
Except, I suppose, if there are US assets in the estate. That might give them a clue. Finish coffee before posting…
Good luck @Elizabeth. Agree with the opinions above that accountants covering butts. They also would charge much much more for all the additional complex paperwork required.
Also, do NOT raise any issue of past US connection or status with his or your financial institution in the course of settling the estate. They will also try to cover their posteriors, and tangle things and delay them much further. You don’t want them to consider the estate account as somehow belonging to a USP for the purposes of FATCA either.
And IF any banks involved with the estate should inquire, it would be much much better to use the reasonable explanation offered above re the presumption that your knowledge of his intent, and your father’s behaviour after taking Canadian citizenship demonstrates that he relinquished. He did not need a CLN at the time, and that is why he does not have a CLN.
I suppose if pressed it might be possible to swear out an affidavit as to your knowledge – confined to whatever it might be – of the above (father’s intent to relinquish, lack of any further actions on your father’s part to indicate any continued USness…)? I am not a lawyer, so that is not legal advice. Could possibly ask John Richardson as to the possible utility of that – but only if necessary?
Admins, would it be useful to have a dedicated thread for the issue Elizabeth raised? I am certain that there are USPs in Canada as well as non-USPs who are or will be grappling with this type of estate issue, even if all the assets are inside Canada and belong to Canadians. Now that there has been more publicity about some of the crossborder US extraterritorial tax issue, there may be more accountants here in Canada trying to push people into the same position. In circumstances where the assets are modest, the accountants alone could eat up significant amounts just in preparation fees, doing 3520/3520A, etc. etc.
Re: “Related to my earlier point, why would any accountants, new or existing, need to know anything about a US birthplace or previous (but relinquished) US citizenship?”
Death certificate in Ontario gives place of birth. The accountant would probably require a copy of that for verification of the date of death and for stuff like submitting it with the deceased’s final tax forms to CRA.
I second that. It’s really the one issue that still concerns me. Though only in an abstract way because if trouble happens with my estate, I won’t be in a position to care.