Petros responds to Barrie McKenna’s new article. He asks Mr. McKenna to change his narrative from, “US taxpayer needing to come clean” to “Profligate government in United States bullies Canadian residents”.
Dear Mr. McKenna:
Thank-you for this article. But I think that as a member of the Fourth Estate, you are nevertheless negligent in your duty to warn Canada of the danger of this invasion by the United States. For one thing, as your reader, Arrow, has said, you continue to approach this problem from the standpoint of a dilemma in the hands of the simple Canadian taxpayer who needs to come clean. These people, your own fellow Canadians or US residents in Canada, who work next to you side by side, are not dirty people, but law-abiding taxpayers who are productive members of our beautiful country.
We are the victims of the United States government’s bullying. Instead of seeing us as needing to come clean, why not approach this from the angle that the IRS has become a rogue criminal agency that is making victims of innocent people? Why indeed, do you continue to view us as having a problem to solve rather than as poor people who are getting our heads bashed in by this abusive government? And don’t you see that as Washington continues down this reckless path, she forces her citizens abroad to decide between retaining their toxic US citizenship and keeping some of their hard earned money that was dearly taxed in Canada, typically exceeding by far what people in the United States pay.
For the US government, in enforcing the FBAR law against Canadian residents, is saying that we could be fined up to 50% of our financial savings (per annum!)–and you almost make the 5% penalty to seem like a good deal! But as I said to you before, how is this fair? How is it fair that we even pay 1 or 2% to this profligate nation that borrows 43 cents for every $1 it spends? Why, as Canadian residents, should we pay anything at all? If we should, could you please tell me where the nearest US unemployment or welfare office is here in the Toronto area, where I can please sign up for food stamps? Oh, that doesn’t exist? Really?
Please, I beg you to change your narrative. This is not a problem for the little guy US citizen resident in Canada to solve but a very big issue that requires our government in Canada to stand up to the bully in the United States and say, “Here is the line! Do not cross this line!”
Peter W. Dunn, http://isaacbrocksociety.com
[youtube=http://www.youtube.com/watch?v=lRmmHPE8EvA]
Well said Petros… I had spoken once to Beth Webel from P.W.C. and she really tried to frighten me into complying. I was scared and upset for days. I find this article very disturbing and unfair of our press to post. I am really tired of all the reinforced fear being put out there. If they say “come clean” one more time like I am a criminal, I think I will lose it.
Very eloquent, Peter. Bravo.
Peter…i wish i could write like you!
@Mach7 The first tip I have is get angry and the spit out all the four letter words to get them out of your system. Then you sit down to write …
Doing nothing about your IRS obligations is a viable option, as long as you know the risks. I’ve made that quite clear. What I’ve tried to do is offer a little of the very expensive CA advice — for free. Take it or leave it.
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It’s amazing how all of these MSM articles have the exact same wording. As I said on several other comments, I believe that the ** IRS is funding these infomercials, hoping to grab some free donations from Canadians **. I’ll bet we can articles with the exact same wording in places with large concentrations of expats. I’ve already found several of the “exactly same worded” articles in Israel and Hong Kong. Where else?
Good luck IRS on getting the “real” whale tax dodgers. I know Obama needs the money. Where I live, falsely accusing someone of being thief/cheat without substianted proof can land someone in jail. I bet that’s the same in most countries! So I think arrow’s comments on suing the G&M are a good idea. I’m sure that if he goes at it alone, it would be quite difficult, but if all the American citizens in Canada took collective action, it would be much easier.
I find this site much like a car accident in that I can’t seem to look away….one question i have for Petros (and anyone else) is what do you expect the Canadian government or the media or anyone else for that matter to do about the situation of the US taxing its citizens on the basis of citizenship?
I would be personally offended as a Canadian if a foreign government tried to stick its nose in our domestic affairs including our tax system. That is essentially what you’re asking the Canadian government to do. Your beef is with the US government and its taxation methods.
The issue of taxation by citizenship is not a new concept in the US. If you live outside of the US you have 3 choices: i) expatriate, ii) comply or iii) don’t comply.
No amount of outrage or complaining will change those options. I understand (better than most) the difficulty and cost of complying with the US tax system as a foreign resident but if you want to be in compliance with the US tax law that’s your only choice. If you don’t want to comply then you shouldn’t really have an issue with the tax rules.
Many people who were born to Canadian citizens and were born in Canada but one whose parents was a US citizen for example who didn’t know US law before they were 18 and half according to the US have to file six years of back tax returns and wait up to two years for an appointment to renounce and pay a $475 fee and conceivable have to pay an “exit tax” and enter some program like OVDI. Why shouldn’t the Canadian government not get involved.
In my view none of those people should be going through OVDI. If you’re subject to an exit tax it means that your net worth is $2 million+ – get professional advice. But I believe (off the top of my head) that the exit tax would not apply to someone who is born in Canada and considered a US citizen under those rules.
I believe it would be the duty of the US parent to understand the citizenship rules and act accordingly. I spoke to a number of individuals who were born in Canada to one or both US citizen parents whose parents dutifully documented them as citizens and they have a passport and an SSN. A very basic amount of research would have informed them of the US tax filing requirement. And of course the US citizen parent should have known for their own situation.
Again this is another country’s rules and it’s not the business of the Canadian government to get involved. As a taxpayer I don’t want our scarce resources allocated to that type of government activity.
@Tim & @brndawg
The fee has gone up and is now $475????
In some places I see that consular registration is the only way and other sources say that “just having a US parents suffices”
So I don’t know the “official” rule. If the parents never register, they are not US ctizens, or are they?
@Brndawg, from everything I read, they say $600,000, but like I said, there are usually 2 sides to everything floating around about the issue. I’m going to assume it’s 600k and rennounce before I get there. It’s much safer.
The exit tax would not apply if the person gave up citizenship before 18 and half by actually going to a consulate and renouncing. How many people are really in a position 18 and half to understand these ramifactions(Its quite obvious that it was intended no one never would ever fall into this group short of those born into extremely wealthy parents . How many people grew up in one person households where the US national parent left or died before the child became 18. Do Canadian schools teach the importance of filing US income taxes I think not. What about children who were adopted but one of whose biological parents was a US National. Plus all of these laws have changed many times over the years so they can be huge differences depending on whether someone was born in 1972 or 1979 for example. Many people who believe they renounced in good faith 30 or 40 years ago are having problems getting CLN’s. Plus why should a Canadian citizens need a CLN to do business at a Canadian financial institution(I’ll get to this in a minute)
I guess the comment I would make about OVDI is most tax practioners are telling people in the circumstances listed above that they HAVE to enter it. At the very least the Canadian government should be challenging this opinion. I would argue there are real issues with renounciation process. I find it hard to see how someone of low income could really sucessfully carry it out.
Then you have FATCA. FATCA is a direct extraterrioriorial application of US law to all sorts of Canadian insititutions and fundamentally conflicts with Canadian laws such as Access to Basic Banking Services and PIPEDA.
Then in terms of the Canadian government getting involved well they already have gotten involved. Every time I go to US pro FATCA pro FBAR blog I make sure to link all of the official documents, party postion papers, videos etc put out by MP’s and the government. I even once mentioned that if the the likes of Carl Levin and their supporters truely believe in rightousness of policies such as FBAR and FATCA they should immediately come out and denounce publically the comments made by the likes of Denise Savoie, Paul Dewar, Megan Leslie, John Williamson, Shelly Glover, and Flaherty himself as you pointed out into the intrusion of “US” internal matters. Furthermore the likes of Carl Levin should be immediately calling for Canada’s expulsion from the Organization for Economic Cooperation and Development and the G20 for being a “non cooperative” “harmful” jurisdiction for tax compliance as is OECD “speak”. As the video shows below the Canadian government has made it an official position that it will not enforce FBAR which was a legitimately enacted law the soveriegn nation of the US(In the future I am going to make sure this video is shown to as many US pro FBAR, FATCA supporters on the web as I can find).
Not going to get into a detailed exit tax expalanation here but if your net worth is not $2 million then the exit tax won’t apply. Additionally, there are circumstances where your net worth can be more than $2 million and the exit tax won’t apply. The $600,000 figure is the amount of capital gains that are not subject to the exit tax – eg. your net worth > $2mm but your actual capital gains are not in excess of $600K then would pay no exit tax. However, I’m going from memory here and not looking to the IRC for confirmation.
My view is that OVDI is not for you if you had no criminal intent in your US non-filing. People need to understand the previous and thus far current assessing practices of the IRS with respect to non-filers of tax returns and FBARs. Any practitioner that states you HAVE to enter OVDI is not doing their clients any favours. Nobody HAS to enter OVDI.
The OVDI program was originally started as a result of the UBS snafu in 2009 – that is for US taxpayers who had filed tax returns and LIED on their returns that they did not have foreign bank accounts. In 2009 when I discussed the program with the IRS I was told that the program was not for Canadian resident non-filers and NOT to file returns under the program. In 2011 they were vague and wishy washy about the application to Canadian resident non-filers but CID specifically stated that “if there was no criminal intent we are not interested in criminal prosecution.” Some people wanted the 100% certainty of no criminal intent (and 50% penalty) and entered into OVDI.
However, when the 5% penalty was instituted I think the OVDI program became a lot more palatable to taxpayers and practitioners alike. But does it really make sense for someone who was born in the US and moved back to Canada as a baby or young child? Or a person born in Canada to one or both US parents? Or someone who moved to Canada in 1970 at age 22 and never filed a US tax return thereafter and is now retired?
Each person needs to make their own decision about their specific circumstances. Fear mongering by the media or government or Expat US citizens or even tax practitioners isn’t helpful to anyone.
Brndawg wrote: “Fear mongering by the media or government or Expat US citizens or even tax practitioners isn’t helpful to anyone.”
Among Expat US citizens, who do you find is fearmongering?
@Brndawg — it would make so much sense to have the IRS just give us our instructions in easy-to-read, easy-to-understand terms, in plain English right up front in all instructions.
If the IRS can tell you, a practitioner:
“In 2009 when I discussed the program with the IRS I was told that the program was not for Canadian resident non-filers and NOT to file returns under the program.”
why can the IRS not make that statement to all Canadian US persons in their many instructions to us.
Just saying, there are many, many who cannot afford to hire PROPER US tax accountants and US tax lawyers — and the IRS gives us next to nothing for assistance here in Canada, and likely even less than that in many parts of the world. This whole thing is impossible for many, and they ain’t coming out of hiding (well maybe until FATCA comes to town and it affects their day-to-day banking) because they just bloody well can’t figure out the whole mess — they’re too busy working, putting food on their tables for their families, trying to cope and get by the best they can, etc., etc.
It is the IRS and the incomprehensible instructions they give us, changing horses (rules) in the middle of the stream, etc. — the fearmongers.
it’s a major snafu – no question. ain’t no easy answers and i doubt any will be forthcoming…..regardless of what any level of gov’t (or subset of gov’t) says….