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.
@Pacifica
This is another situation where we really need an Etsy shop selling forged CLNs for $100 worth of Bitcoin.
@ Badger and Nonymous,
That’s a good idea. I will make a new thread for estate matters of former US citizens.
@ All,
I just created the new post. From here on, please reply to Elizabeth’s question, as well as sharing any other information/experiences on estate matters, and asking questions about it, at Estate Matters for Former US Citizens.
Thank you for starting a new thread. I will type out my experience so far in the comment there.
@Nononymous Yes, I will certainly keep everyone updated on my experience.
A New Year’s Wish. May the ADCS lawsuit proceed with all due haste
Merry Christmas, God bless us , every one.
Ditto, DoD. 🙂
Same from me.
I am Australian. My wife is a dual citizen (US-Australia). She has lived in Australia for 42 years and has no intention of ever returning to the US.She filed returns until she retired in 2011 and has not filed since. However she has continued to file FBAR. She is deeply incensed by what she calls US Financial Terrorism, particularly as it applies to Australian Sujperannuation. Filing wouldvery likely bankrupt us and she would like to know what ithe maximum penalty the US Government is able to apply in the even that she doesn’t comply. Can anyone help.
John P.
Hi John
Don’t worry. Many many USCs around the world never file. A lot of us never knew about US citizenship-based taxation until FATCA came along.
There’s an Australia thread here:
http://isaacbrocksociety.ca/fatca-and-australia/
If you repost your question there, it will be more likely to be noticed by someone from Australia who can tell you the specifics. In the meantime, don’t worry. The IRS can’t do much if your wife doesn’t have any US assets or income. 🙂
JohnP. She should just walk awy from any filing including fbars. The maximum penalty is zero because there is nothing they can do.. Stay well away from streamlined or any other so called amnesty programs. OVDI was meant fot criminals. Streamlined is meant for those who want to get back into the system.
A question not a comment.
I am an American citizen, living abroad for over 40 years considering renouncing of my citizenship and am confused by the Exit Tax definitions.
They sort people either as covered expatriate or not. They use the wording about your net worth at the time of expatriation. I expatriated in the 1970’s, but does that mean that my net worth at that time or does this mean my net worth at the time I will give up my passport?
It will make a significant difference as to whether or not I will have to pay the Exit Tax .
Can anyone help with a clarification?
Slack Allice from Dallas, it means your net worth the day before you officially give up your US citizenship by renouncing said citizenship at an embassy/consulate.
@SlackAlice
Welcome to Brock!
The Exit Tax is figured on the gains at the time you renounce (the deemed disposition on the day before you renounce) not the time you left the U.S.
Hope you will seek advice before going forward….lots here to read beforehand.
You might wish to post on the Renunciation thread so more will see your question.
@Slack Alice
Did you expatriate in 1970 by taking up another citizenship, by which you intended to relinquish your US one? The rules were different then, there was no exit tax assessment.
Did you retain a US passport after you expatriated? If so you will still be considered a US citizen and would now have to renounce at a consulate.
@Alice
I think there may be confusion about the word expatriate. Do you mean it to be that you left the US or you gave up citizenship?
The word seems to be used interchangably!
The exit tax is assessed the day before you renounce (expatriate) that is if you later send in an 8854. If your net worth is over $2,000,000 you will have pay 15% of any UNREALISED gain over 650,000 . Some may be a covered expat and have to pay 0 if their UNREALISED gains are less than 650000.
Slack Alice – renouncing is easy. It costs $2350. Email the local US embassy or consulate and ask for an appointment; they’ll send you instructions as to the forms and documentation required.
Once you’ve kept the appointment, handed over the cash, and sworn the oath, you’re done. You’re no longer a US citizen and you can show your receipt to your bank as proof. Eventually, after a few weeks usually you’ll get the CLN. Job done.
Would the Isaac Brock Society have a branch or a comparable lobby organization in Australia? If so, could you supply particulars. Thank you.
@ Martin,
The Australia-based FixTheTaxTreaty.org is really good. And as well as the tax treaty, it covers others US tax and citizenship issues.
I renounced 5 years ago; my wife just renounced. She has to file with the IRS one last time. Has the tax procedure changed over the past 5 years? Or is it the same: 1040, 1040NR, 8854? Did I miss a form? Thanks for any assistance with this. Cheers
Better to ask on the Tax Questions thread.
The process hasn’t changed. 1040NR is the official return. 1040 is an attachment. The 1040 has changed considerably. One could argue Why bother?
I certainly never bothered. All my assets are in the UK and none of the IRS’s business.
Hi, this group was a favorite of mines for years. Very nice and accurate information about the perils of US citizenship and harm it causes to many of us expats all over the world. This law was designed to be harmful to US citizens living outside the US even though the author admitted regretfully himself on an interview he never intended to hunt down the dual nationals or us citizens resident in other countries. Even offshore advisors to this day are advising not to get US citizenship or green card to the who want a US passport for themselves and their children. Same is true for EU nationals as offshore tax advisors are advising the rich not to get EU citizenship by investment programs or Golden visas as there is a great chance for them to tax by citizenship alone in years down the lane. All over the world I am seeing US like laws being started to apply like for instance only 180 days per three years. I read on some website that Indian law was changed from 180 days per year to 60 days now to be tax resident and reporting. If you look at CRS form it is directly from FATCA laws. FATCA is setting off unprecedented changes and I personally think that is why EU is supporting US laws. EU is cracking down on tax havens and targeting tax free countries by sanctioning them and passing all sorts of regulations to make them bow down to it by OECD. Anyways, if you are living in a country where you are a resident you should be paying taxes to that alone not pay taxes to US govt or report them by expensive tax forms. I personally have no taxes but banks refuses me, investment firms refuses to serve on my US passport alone and I am a resident/national of the country I am living in. So many Saudis/Gulf natives also gave up their US citizenship in recent years which they had acquired by having birth in US alone. That is totally unfair law but something that EU citizens would soon be having issues with living in other countries.
I had a somewhat similar situation several years ago. At that time, I had an accountant who was well versed in Canada-US tax relations. He was able to write an “explanatory” letter to the IRS (explanation: I was unaware of the FBAR obligation). I then provided the FBAR information retroactively (through the accountant’s services). It was a nuisance but not difficult to complete. However, and I hate to advocate expensive services, if you are nervous about what your tax obligations are, it may be a good idea to go to someone who knows what he/she is doing in terms of US tax laws (but again: it will probably come with a hefty price tag). Good luck.
Sounds like your accountant put you through Streamlined, the amnesty program the IRS came up with after putting too many people like you through the mill in other more punitive amnesty programs when they found the necessity come into compliance.
It’s much simpler now. On the online submission, there is a drop down menu of choices to tick for late filing of fbars. Did not know I had to file is one of several choices. The new form has room for an explanation. If you live outside the US or if the accounts are small that will be the end of it,
. No need for an accountant