I was looking at usxcanada’s site and came across this:
In more than 4 out of 5 of 3233 responses (as of 14 Jan 2012) to a Globe and Mail online poll, individual U.S. citizens in Canada indicate either uncertainty or an intention to do nothing in the belief that they can remain undiscovered by U.S. authorities. — G&M Poll
- I applied for the limited-time amnesty 9% /279 votes
- I am still working out a plan with a financial professional 10% /329 votes
- I am not sure what my options are 26% /827 votes
- Nothing, how will they find me? 56% /1798 votes
It is hard to believe this is as of last Saturday. There doesn’t seem to be an easy way to get this message across. I shudder to think that the worst is yet to come. Any thoughts about this?
I’m not surprised at the results. Considering that the high degree of uncertainty that is associated with attempting to comply doing nothing seems to be just as attractive of an alternative. After all the IRS has done nothing to really give people any assurance that there is any reward for attempting to come into compliance.
They have offered no true amnesty and they have attached severe penalties to any return that is less than perfect. It is all there in the Taxpayer’s Advocates rebuke to the IRS for their heavy handed dealings with the situation and the maze of indecipherable forms that people have to submit. The average person can’t be expected to have the high level understanding of the tax code that is necessary if you want to have a chance of a reasonable outcome. Nor can most of us afford the high priced attorneys or CPA’s who are charging exorbriant prices to fill out the forms.
In many ways it is ironic that the IRS has set up a situation where they will actually get less tax revenue per tax payer because they insist on everyone filing a return. If they wanted to maximize their return on work they would confine their efforts to the true tax evaders and leave the average honest person alone. How foolish is it that my two University children have to find a tax professional to fill out these stupid forms when they should be spending their money on paying for their education? Why should they face the prospect of crippling penalties for not jotting every I correctly. The U.S. tax system is one that only a sadist could love.
The reaction is actually a normal one. It is the reaction of despondency. I know because I feel it myself. This whole thing has taken the joy out of life for me and has angered me to no end.
although U.S. citizenship and lawful permanent resident status are valued and valuable, and provide a sound basis for U.S. taxation of worldwide income, compliance enforcement by IRS
may be extremely difficult with respect to individuals whose connection to this country was or will be minimal. In some limited cases, efficiency and equity may argue for some modification of the rules leading to such noncompliance. pg. 15
Consideration should also be given to modifying the basis for U.S. taxation of individuals.
As discussed in Part IV, supra, the current definition of individuals subject to U.S. taxation may be
subject to manipulation by tax-motivated expatriates, on the one hand, and may, on the other hand, include some individuals who for reasons of administrative efficiency and fundamental fairness should be excluded. pf. 47
Both passages come from the following presentation by Treasury to Congress: INCOME TAX COMPLIANCE BY U.S. CITIZENS AND U.S. LAWFUL PERMANENT RESIDENTS RESIDING OUTSIDE THE UNITED STATES AND RELATED ISSUES (1998).
http://www.treasury.gov/press-center/press-releases/Documents/tax598.pdf
I received the link to this publication from an email that was sent to me by Calgary411. The original source of the link came from a conversation on the Issac Brock forum.
In the end Congress refuses to deal with expat non compliance by acknowledging that the current system actually promotes non compliance by refusing to exclude certain groups who are not tax cheats or to acknowledge that it is not profitable to go after “everyone”. Instead they prefer to ustilize DRACONIAN measures that only serve to drive people underground or to renunciate their citizenship.
Wow, that’s fascinating. But it seems to confirm some of my private conversations with people. I’ve yet to meet one person who will go for any “amnesty” (unless it was a real one). The rest seem to think it’s a bluff on the part of the US gov. “What could they do to me? they say. People with duals citizenship, no assets in the U.S. and a very limited connection to people there seem to think that the threat is an empty one. My answer to this is, well, they could do a number of things to make your life really unpleasant:
1. No more traveling to the U.S. to visit family and friends.
2. No more traveling to the U.S. on BUSINESS. This is a big one. If a person worked for a French company how could he/she explain that he/she couldn’t travel to the U.S. for a meeting?
3. Denial of Green Cards for spouses or family.
4. Denial of banking services in the host country. Try living on cash in Europe. Ok, duals can attempt to hide their U.S. citizenship but imagine the wrath of the bank if they find out you lied and they got in trouble.
5. For those of us who are not duals, could hiding from the home government put our long-term residency permits at risk? If we get in trouble and the US gov makes a stink, could we be deported? Of course we could. We can argue all we like about how it’s not fair that our home government does this but from the perspective of the host countries, this kind of behaviour makes us “undesirables” and certainly not good candidates for citizenship if we seek it.
For all of those reasons I personally will not lie to, or try to hide from, my home or host government. The risks are too high.
I think that the high percentage of;
Nothing, how will they find me? 56% /1798 votes
Is directly related to two things.
1. They just don’t believe you and will not take the time to research the information….example in point;
I have a friend who owns a condo in Florida, they spend 8 months out of the year down south. When i told him about his US Tax obligations due to the ‘presence test’ he actually got angry at me and told me that I was ‘paranoid’ and to stop believing everything that I read….(i didn’t engage, but actually laughed).
2.I have NUMEROUS co-workers who just couldn’t be bothered….more than you can imagine..mostly with green cards etc.
Victoria lists several excellent points. I am guessing that Canadians have yet to have banking services closed to them? I do most of my banking in Germany, and I have been informed that the only types of accounts that US citizens may continue to have open at several major banks are limited to current and savings accounts. Everything else is not allowed.
I have also been affected professionally by being a US citizen since my company will not allow me to act as a signer on any accounts (and these accounts are just used to purchase office supplies…) since they would then have to be reported to the IRS. Someone in the UK on the old Expat Forum said something about not being allowed into her company’s pension scheme as well. So, I imagine that there could be very dire consequences not only from your bank but also from your employer if you hide your citizenship status.
@Don
Since we are all “on vacation” according to the US Gov, we are being punished. The tax issue is of little importance for me. BUT being restricted on opening accounts because of my passport was the straw that broke my back. And as an American, don’t you dare open a business abroad and create economic activity because the IRS forms are 1.000x worse. It has always been this way, pre-FACTA. I’ve already told my wife on several occaisons, “I plan to create xxx”, but I won’t do it until I renounce. I’m hoping that I can go to renounce in Feb or March. I just want to be done with that place.
I think for all of us, it’s going to come down to needing a CLN. I think that it is going to become as important as your passport. You’ll need to show it to banks, employers, or anyone who can potentially lose as a result of your birthplace. This sounds like something from the book 1984 or a science fiction novel, but it’s the truth, and happening right now.
“For all of those reasons I personally will not lie to, or try to hide from, my home or host government. The risks are too high.”
Me either. This is what I told the consulate as well. So I will renounce. The only way I’ll keep US Citizenship is if they pay for me to live overseas because there is no way I’m going to PAY to live overseas and under US repression.
Regarding the 56%:
Haha, I wish I could see the look on their faces when [Canadian and other] banks start updating their customer profiles and asking the following:
1) Were you born in, or have you ever lived, worked, or paid taxes in America?
2) Were your parents at anytime US nationals?
Politicians think that as long as you have a passport to “the American dream” you deserve to be treated as an American, and live under their rule.
Let them hunker down and hide! They will also get slaughtered like sheep.
Don, I’ve been looking for a job for a few months now. On my CV I list my status as a U.S. national and as a holder of a 10-year French residency permit. Do you think that my US citizenship could be one reason I am not getting many callbacks? (Many fewer than in years past)
@DonPomodoro It just occurred to me after reading your first comment that I could never have signing authority at the company I work for. I do payroll for them and recently started working in that department, and not being able to sign cheques would definitely hold me back professionally.
@geeeez I’m definitely starting to agree with you. After being forced to fill out a form to cash out my IRA and suffer a 10% penalty, as well as pay a $75 termination fee and $40 annual fee, all because of the “Patriot” Act, I don’t see any other option other than renouncing. The US doesn’t want me to invest money in their banks, but they still want to be able to snoop on my money outside their borders How f’d up is that?! It feels as if they are tightening a noose around my neck at this point.
Had a heart to heart talk with my mom yesterday about this. She was understandably a bit upset that I would think of renouncing since she left her own country to be in the “land of the free,” but in the end she is understanding and supportive, telling me to weigh all my options before I make the final decision.
@Victoria
Probably…I think it will only get worse in the next 18 months as more and more people become aware of FATCA. I have also heard that many businessmen are loathe to have “US persons” as business partners, since if the “US person” has more than a 10% stake in a company then the whole company is treated as a US company or something outrageous. Scroll down to the “10% U.S. ownership rule” on this page at ACA:
http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=457&Itemid=95
This is really the main reason that I am renouncing though. I hate the reporting requirements and the double taxation, but I can’t stand being told time and time again at the bank or at my place of work “No, I’m sorry, but because you were born in the US you can’t do that. Oh but you’re an EU citizen? I’m afraid that that doesn’t matter…”. I’ve had enough.
@Don, my situation is identical.
@zucchero81
Technically, you can still have the authority. But why would you company want to expose their accounts to the IRS? You really have to wonder what on earth were the politicians were thinking when they extended this legislation to professional accounts at companies with no US-connections as well? It beggars belief. I even remember reading someone who said that they had to report their signing authority at a voluntary orginisation and even at their kids’ school where they were part of the parents’ association and volunteered to work as the treasurer.
What is problematic I think is that this seems to be the least recognised consequence of FATCA. Reporting your bank accounts is annoying and intrusive, but literally having your bank account closed,being refused as a business partner or having your professional career held back because of where you are born is unacceptable. Maybe we should try and get the media to report on these issues, since I have yet to see them mentioned anywhere outside of very detailed analyses by companies or on the ACA website/a couple of blogs like American Thinker. I’ve never seen an article in the mainstream media that has mentioned these issues.
@zucchero, I don’t think your family should be upset. Renouncing doesn’t change where you were born. I see it as a minor technicality I have to do to be able to live freely overseas.
My parents know I don’t want to spend a bunch of money and travel a long distance to the consulate AND pay a $450 fee, but the US overreach is forcing my hand.
I still think that ‘Nothing, how will they find me?’ is a viable strategy for accidental Americans with no paper trail connecting them to the United States – birth abroad, citizenship abroad, never lived in the US, never applied for a US passport, etc.
I like “some individuals who for reasons of administrative efficiency and fundamental fairness should be excluded” – a sensible insight that should have been acted on.
@Don, I think that the denial of banking services would be a good one to get the media on. It’s a basic service that everyone understands and hearing that it really brings home for the average person back in the States just what FATCA means for a regular person going about his or her business. We need to stress more how this will promote discrimination against Americans. THAT I think would anger them more than anything else. A real challenge to their “amour propre.” 🙂
@Don and @Victoria
There has been several mentions of this issue in the MSM. I guess someone unaffected by this (the tyipcal us-citizen-resident) doesn’t care much about it.
This effort by the IRS to enforce US tax laws against law-abiding Canadian citizens who also have US citizenship is likely to do much more economic harm to the US than any positive financial benefits that result from these efforts in generating revenue for the US Treasury.
Those dual US citizens born in Canada, those born in the US to a Canadian parent, and those who became naturalized citizens back when doing this automatically terminated US citizenship and were never aware that the Supreme Court decision declaring such deprivation of citizenship was unconstitutional, thereby rectroactively restoring their US citizenship with neither their knowledge or assent, especially have plenty of reason to be very not only upset but furious and filled with a desire for revenge.
They may never be able to see their US relatives again unless they meet on the Canadian side of the border.
Canada is one of the top sources of tourist revenue in the US . If these victims of these inconsierate and indefensable actions of the US Congress and succeeding administrations have even one brain in their heads they will never cross the US border again. They risk financial obliteration if they do. And this from the nation that claims to be the champion of Human Rights in the world.
This could also result in a massive boycott of the US by Canadian tourists who are not US citizens, because it is Yankee Imperialism at its worst. Would you blame Canada for supporting this kind of a boycott? Congress has really opened Pandora’s box with FATCA, which hopefully will turn into the straw that breaks the camels back. Let us all work diligently and unceasingly to make this the catalyst for repealing citizenship taxation and replacing with the residence-based taxation system of every other nation on the face of the earth.
And it all started with the Tax Act of 1962, signed by President Jhn Kennedy, which subjected US citizens abroad to US income tax. Numerous laws passed by the US Congress and signed by subsequent presidents, have only served to make this worse.That 1962 law is the “root of all evil” that has to be destroyed.
@Roger
There is definately a strong preference already among many in Canada to take their winter vacations in the Mexico and the Carribean(you also have Cuba mixed in there which Americans can’t visit but Canadians can, another failed policy by the US) compared to Americans who in many cases stay within their own country i.e. Florida and Arizona. This continues to occur even with fairly frequent stories of high crime at many resorts Canadians travel to in Mexico for example. I also notice in this regard you never hear about a big time Canadian politician taking a vacation in Florida its always in Mexico or the Carribean like the current Canadian Minister of Defense who just got married at a Mexican seaside chapel. Canadian companies are also fairly active investors in places like Bermuda, The Bahamas, and the rest of the English Carribean.
The following was an article Maclean’s magazine citing the dangers to Canadian tourists in Mexico. What is really interesting is all comments at the end by people saying how the US is “much” more dangerous than Mexico(something I don’t believe is at all justitified by facts but thats people’s perception).
http://www2.macleans.ca/2011/03/06/beaches-buffets-bullets/
Thanks for that historical reminder for those of us that are just discovering how this nonsense all started!
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@Tim, my wife was nagging me the other day about a vacation, so this got me thinking:
I’m too scared of Mexico, and I live in Brazil. Try Panama or Colombia. I’ve been hearing that Panama is very cheap nowadays and I doubt the crime rate is even a small fraction of what it is in Mexico. Be careful though, you might like it so much you don’t want to return to cold Canada.