Our new friend, 30-year IRS veteran, Steven Mopsick, has been a really good sport. He’s defended the orcs of Mordor, his former colleagues at the IRS fearlessly, and he’s taken our abuse like a trooper. He’s asked me if I wanted to put up his new post on FATCA, and I said to myself, why the heck not? Meanwhile, go have a look at his blog, especially this little piece, called FATCA Red Herring, which starts with this whopper, “For all the groaning about FATCA, there is one ‘red herring’ which should be given the lie right away, and that is the silly notion that FATCA is an attempt to force the application of U.S. law on foreign financial institutions.” Well, if nearly 400 pages of orcish regulation isn’t an attempt to force U.S. law on FFIs then I don’t know –but wait, these regs still hadn’t come out when Steven wrote that post–so you’re off the hook, Steve–I am being unfair.
Again, caveat emptor! The Isaac Brock Society maintains a non-endorsement policy of tax-professionals (see here). Also, please read not just the post, but the full comment stream.
New Rules For Foreign (Non-American) Banks with American Clients
by 30-year IRS veteran
With the publication on February 8, 2012 of the FATCA bank withholding regulations, it is clear that the FATCA train has left the station. The 400 pages of new Regulations would apply to almost every non-American bank in the world if they wish to continue to do business with American clients and financial institutions.
How FATCA works in a nutshell. The impact of the new law is two-fold. Americans with assets outside the United States starting with their 2011 tax returns, now have to disclose to the IRS, all of their foreign financial assets exceeding a specified dollar threshold, including their non-American bank accounts.
For non-American banks with American clients, they must agree to become a “withholding agent” of the United States government through the IRS, agree to an IRS review of their internal procedures, file an annual tax information return with the IRS disclosing the names and ID numbers of all their American clients, and if the American client refuses to cooperate with the bank, close the account immediately.
As part of a worldwide effort to stop Americans from using offshore banks and other financial institutions to cheat on their taxes, it was also announced on February 8, that five European countries including Spain, are working toward sharing certain data bases so that the European countries can benefit from FATCA and catch their own people who are cheating on their taxes, as well as European bankers and advisers who have been counseling American investors about how to evade taxes by using European banks and other entities. What is significant about the European announcement is the FATCA concept that participating European banks in those five countries will soon be able to give their information on American account holders TO THEIR GOVERNMENTS instead of directly to the IRS. Banks in those countries may soon be relieved of the requirement of entering into a separate agreement with the IRS. Their governments will turn over their records on their Americans and their banks will not have to deal with the IRS. We believe this creates a huge advantage for banks in those countries and we predict a scramble in other western countries to become part of that elite group of countries which are working hard to implement FATCA.
DETAILS ON THE NEW REGULATIONS AS THEY APPLY TOFOREIGN BANKS AND WHAT IS COMING UP NEXT.
The Regulations published on February 8, 2012, reflect the IRS response to the many comments the IRS has received from banks all over the world over the past several months. Most banks today have been very busy making changes to their IT systems to identify their American customers and comply with the new FATCA rules.
The IRS announced a formal comment period on the proposed Regulations which closes on April 30 of this year. Banks with concerns about the implementation of FATCA should participate in this process by submitting comments. Following the comment period, there will be a public forum on May 15 in Washington, D.C., at which time banking institutions will have another opportunity to talk directly with the IRS and raise any concerns they may have on how the processes are supposed to work.
Some foreign bank compliance officers with whom I have spoken have confirmed they are busy revamping their systems to get ready for the new rules which will be summarized below. Foreign banks which are inactive, waiting for further direction from domestic ministries or fiscal agencies are losing precious time and are doing so at their extreme peril. Moreover, even if the deadline to apply to be a withholding agent for the IRS is postponed again, those foreign banks who are late getting in their paperwork are going to cost their shareholders and owners money because of lost business, direct liability for the taxes they should have withheld, and attorney and accounting fees to straighten the mess out with the IRS once the bank fully complies.
Here is what each foreign bank must do if it wishes to continue doing business in the United States’ financial arena
A participating bank must agree to become a withholding agent of the IRS and
(1) Report certain information on an annual basis to the IRS with respect to each U.S. account and other accounts controlled by Americans and to comply with requests for additional information with respect to any U.S. account.
(2) The information that must be reported with respect to each U.S. account includes: (i) the name, address, and taxpayer identifying number (TIN) of each account holder who is a specified U.S. person (or, in the case of an account holder that is a U.S. owned foreign entity, the name, address, and TIN of each specified U.S. person that is a substantial U.S. owner of such entity); (ii) the account number; (iii) the account balance or value; and (iv) the gross receipts and gross withdrawals or payments from the account .
(3) The bank must obtain a signed waiver of its American clients’ privacy rights, if any, in that foreign country.
(4) If the American depositor refuses to cooperate, the bank must close the account.
All banks which decline to participate in the program will be at risk for a 30% withholding tax on certain defined transfers of US source income to them. This includes pass through payments of US source income to, or from other foreign banks who the IRS determines are non-Participating Foreign Financial Institutions.
ONE OF THE MOST IMPORTANT POINTS IN THIS PAPER IS THE FACT THAT FATCA APPLIES TO TRANSFERS OF US SOURCE INCOME BETWEEN FOREIGN BANKS; IF JUST ONE OF THE BANKS IS NOT PARTICIPATING, THE WITHHOLDING REQUIREMENTS APPLY.
In today’s world, a banker cannot do his job properly if he does not ask whether or not FATCA applies to every single transfer of funds involving US Source Income to or from a bank which is not a U.S. bank.
I have extensive information on the implementation dates, the rules for identifying Americans from amongst other depositors, streamlined rules for affiliates and branches of banks, the circumstances of how a bank might qualify as a “deemed compliant” bank which permits certain relief from some of the administrative burdens, key definitions, record keeping requirements, how the Anti-Money Laundering and Know Your Customer rules operate within this arena, the treatment of certain life insurance policies, and the potential liability of the banks themselves for the payment of withholding taxes which were not correctly reported.
The newly-published rules also announced a relaxation of the threshold for rules which are specifically targeted toward Private Banking and personally against Private Bankers.
Banks all over the world have realized that compliance with FATCA is simply the cost of doing business in today’s computerized, modern financial environment. Please feel free to share my summary of the new regulations contained herein as you deem appropriate. Additionally, I am available for consultation, which can be arranged by contacting my office.
@Tim: Thanks for the info about the human rights lawyer. I will try to contact him.
@somerfugl: Thanks for agreeing to contact the lawyer Tim provided the link to. I would be willing to work with you in consulting him if you are interested.
@Blaze: Thanks for your offer. I’d also be interested in working with you about consulting the lawyer.
@Steve, I really appreciate your posts here. If you have any contacts from the PR department of the IRS (I know, Congress approves, the IRS is something different), please ask them to swing by. While there may be very few people that actually post, this site receives HEAPS/TONS of hits every day. This means that these issues have affected a lot of people, and these people are looking for answers and discussion. None of us want misinformation to be spread, but I hate to say it, many “professionals” provide contradictory information!
Personally, I think the US should start a source-based taxation scheme for everything. They do that here, and guess what? It only makes my life easier. Also, I know that you didn’t create the law, but the US could have easily said “people overseas for more than 1,2,5-10 years continously are exempt in the FATCA but they didn’t. That’s the point of contention for so many people here, including myself. We are long-term residents of countries closely allied to the US and political risk is a thing of the past. I was eligible for a Brazilian passport some years back but never worried about it because I didn’t need to. The FATCA is a game changer for me.
As far as renouncing goes, maybe you wouldn’t do it, but everyone’s situation is different. Even the interpretations of this FATCA is going to be different in every country on the planet. Watch… you’ll see. (This means that in Brazil, every neighborhood is going to have a different interpretation!!). Add more government rules, add more problem interpretations.
@calgary411 and petros: You have my private contact information. Can you pass it on to somerfugl so we can connect privately via phone or e-mail. Thanks.
@Steven Mopsick: I appreciate your advice and your comments and am reading and thinking carefully about what you post. The problem is that it is difficult to “sit tight,” even for people with no real or current U.S. connections — financial, family, or otherwise — given the high temperature of the rhetoric that we’re hearing from the American government. It’s strong stuff, and for outsiders, it’s scary. Both my mother and mother-in-law — good, law-abiding women in their late 70s who are 100% Canadian (except that my mother married an American) — are panicking and advising me, basically, to go underground. That’s ridiculous, of course, but given the seriousness of the threats that the U.S. is making, people who don’t want to be American, who are not making any claims on America, and who want only to live normal lives as law-abiding and tax-compliant citizens of the country in which they live (and, which, in many cases, is the only country that they believe they’re citizens of) are suddenly feeling threatened and vulnerable. It’s not entirely surprising, though perhaps regrettable, that under those circumstances the rhetoric is getting heated on this side as well.
@Blaze: Thank you for your eloquent post at 6:22. I know that I’m not doing much more here than restating what you’ve said, but, intentionally or not, this legislation attacks not just its targets and not just innocent Americans — who at least can appeal to American law for protection, cold comfort though that might be at this point — but also people who are not (or who are no longer or who never believed themselves to be) American. I think that that’s an important point that cannot be made too strongly.
Stephen:
I’m glad you are posting here, and I appreciate the wealth of technical knowledge you bring to the table, I think we are all learning a lot — although some of what we are learning doesn’t reflect very well on the U.S.
I’m hoping you are still reading this thread because I suspect you may be the only American who I could “talk” to who would perhaps see the issue from this side of the border, and who obviously understands the US tax system. I’ve posted here before with a little detail about my own circumstances, but now I’m going to lay a lot more out because of one of your recent statements:
“My message is very simple. If you have an ongoing controversy with the IRS or it would be reasonable to assume that one is on the way, then hire a recommended, qualified, tax attorney. Make that a CANADIAN TAX ATTORNEY.”
That advice, should I follow it, would cost me and my family tens of thousands of dollars just for the legal/accounting advice — never mind what the IRS might decide to do to us all if we were stupid enough to put ourselves on their radar screen.
And who are “We” and what are our circumstances?
Here’s how many members of my family could be affected by this:
My wife: she emigrated to Canada (with me) in 1969 and became a Canadian citizen in 1974. At that time taking out citizenship in another country meant automatic revocation of US citizenship, and we were so advised by a US consular official in Calgary. She took an oath of allegiance to the Queen and Canada knowing full-well that her US citizenship was now nullified. The US government, as a result of an action before the U.S. Supreme Court, changed that provision, but not until 12 years later. The US position now is that my wife’s revoked citizenship is magically reinstated, but without her knowledge and without her consent. That is unconscionable. Since 1969, she has been a Canadian resident (citizen since 1974) and has had no dealings whatsoever with the US, other than as a tourist from time to time. She has claimed no benefits from the US, has done no work in the US, and has not lived in the US since 1969.
My mother: she is now 94, suffers severe dementia, and is bedridden in a Victoria nursing home. She and her husband emigrated to the US from Canada in 1959 with green cards. They left the US after about 15 years (in which they duly paid all taxes), and returned to England. My now-widowed mother subsequently returned to Canada 25 years ago and has been a Canadian citizen for 20 years. All that she and her husband “earned” in the last 35 years came from a business he started in the UK, and was sold when he died. It now sits in bank accounts earning interest which helps pay for her considerable medical/care costs. But the US calls her a “US person” and now wants to make her retroactively file annual tax returns, FBARs, would likely impose steep penalties because she’s got a lot of money in the bank — and will no doubt seek a piece of her estate when she passes away.
My sister: She is retired at 71 and lives in Victoria on a small pension. She and her late husband were in the US, with green cards, for about 10 years before they too came back to Canada. Her three adult children — all Canadian citizens born in Canada — were all in the US with green cards (and I’m sure are oblivious to all this). Two of those adult children live in Victoria, the third resides in the United Kingdom. All are on the IRS hit list.
And then me: I was 13 when my family moved to the US from Canada (my father was an engineer on the Avro Arrow project) and had a green card issued to me as a minor. I left the US in 1969 with my wife, and have been here living and working ever since. I too became a Canadian citizen in 1974. Within a month of my arrival back in Canada, I had taken half a dozen actions which, according to the US Immigration and Naturalization Act, would each result in the immediate revocation of the green card. Now the US wants to take the position that I (along with my mother, my sister, and her three children) all still have those green cards and are still “US persons.”
All of us are law-abiding, taxpaying citizens of Canada (and the UK), and in my wife’s case have been so for more than 40 years. The government of the United States now wants to make all of us criminals, and extract tribute. We have not filed annual income tax returns with the US — why would we? We don’t live there. We had no idea (my wife in particular) that the US government could change her citizenship status for tax purposes without her consent and without her knowledge.
Perhaps you can see from this that our issue is less with what the IRS wants to do to track US citizens and extract tribute from them wherever they are, and more to do with a country that a) refuses to let its people go, and b) changes the rules around citizenship and applies them retroactively. Don’t get me wrong, I too am appalled and outraged by what the US wants to do to US expats who actually want to retain their status as Americans (although I bet those numbers are diminishing rapidly).
As the current reigning patriarch in my family, I’m the lead person on this problem. To further complicate it, I am running my mother’s financial affairs on a power of attorney and now have to decide what to do when she gets umpteen requests from the banks she (I) deal with about her status. I can tell you that if she possessed her full mental capacities and knew what the US wanted to do to her, she’d declare her own personal war on Washington and invoke a scorched earth policy with every penny she possesses. Unfortunately, I’m going to have to deal with it.
As you have no doubt seen on this blog, there are tens of thousands of people like me — some with far more serious situations than mine — and I don’t mean to sound like I’m particularly put upon. We all are. And it seems the best advice we get from professionals like you is to hire a professional like you and pay them scads of money to get rid of an ugly problem, south of the border. Anyone remember that movie “The Magnificent Seven?” We need Yul Brynner.
OK — end of rant (for now anyway).
@Steven –
I’m looking forward to your replies to @Wondering and @Arrow.
@Arrow and @ Wondering and everyone else who is following this thread: Please don’t kill the messenger. There is no silver bullet here. There is no single piece of advice anyone can give on a public blog which is going to magically answer these terribly difficult questions. Nor am I urging you to hire me either because I have no solution here. Arrow says you are all “on the IRS hit list” but I do not understand that to mean you are actually under audit. My understanding is you have done a lot of reading on this and you have personally concluded, as I do, that the law literally fits your factual situations. I am going to assume that none of you are actually under audit and that there is no reason to believe, apart from your understanding about the statute, that an IRS agent is going to appear at your door asking to see your books and records.
So, assuming I am correct in that you are simply anticipating what could happen based on your reading of the statute and Regulations, I can only say a few things: (1) the IRS has the authority and power to issue guidance which sets out some clear examples showing that under certain circumstances, U.S. Persons living abroad and holding non-U.S. bank accounts are deemed to be in compliance with FATCA and all of its related reported requirements; (2) to date the IRS has not yet done so; and (3) IN MY EXPERIENCE, the IRS has the collective good judgment to apply the law in a reasonable way, (4) it would not seem reasonable to me for the IRS to go after Arrow’s 94 year old mother, or anyone else in his family or Wondering’s example of a 60 year old who has an equally tenuous connection to the USA.
I honestly do not know what it going to happen when, or if Canadian banks start asking their customers where they were born but I am sure that if they do, and if they discover who the U.S. Persons are amongst their depositors and turn that information over to the IRS (or the Canadian government for turning over to the IRS) then it would be most unreasonable, if not plain crazy, for the IRS to spend one dime of its meager enforcement budget making life miserable for the people I believe you are describing here.
30 Year IRS Vet
Steven
No — there’s no audit underway with any of my family members. At the moment, the IRS doesn’t who we are or where we are, and I’m not going to do anything just yet to let them know. My wife (the only former citizen among us) is considering applying for a CLN, which should be granted since she’s been a Canadian citizen since 1974 and has done nothing to indicate any desire to retain US citizen ship.
That, of course, will put her on the IRS radar as soon as they get their copy of the CLN. So it’s a tough call — get the CLN or stay under the radar. Either way, I suspect crossing the border will start to get dangerous in about a year’s time if not sooner. She’s already told family in the US not to expect her for any family event, and in fact we did not attend a funeral a couple of weeks ago that we otherwise would have. Other than family, she’s not concerned. She’s so spittin’ mad at the US now that her blood pressure skyrockets every time I try to talk to her about it.
Steven, you are getting all the broadsides from a bunch of US expats who are enraged by all this. It ain’t personal, and you’re a good sport for hanging in there and offering us your knowledge and counsel. But if there isn’t a dramatic change of course on this issue, the US risks turning about 7 million mostly supportive ex pats into 7 million sworn enemies. Talk about shooting yourself in the foot.
@steven: “(3) IN MY EXPERIENCE, the IRS has the collective good judgment to apply the law in a reasonable way, (4) it would not seem reasonable to me for the IRS to go after…”
Now we’re getting to the heart of it. There’s a law, but the IRS might not apply it because to do so could be unreasonable. Or they might. And it’s their call.
From http://en.wikipedia.org/wiki/Selective_enforcement
“Historically, selective enforcement is recognized as a sign of tyranny, and an abuse of power, because it violates rule of law, allowing men to apply justice only when they choose. Aside from this being inherently unjust, it almost inevitably must lead to favoritism and extortion, with those empowered to choose being able to help their friends, take bribes, and threaten those from they desire favors.”
@Arrow: thanks for the kind words. As I have said before, I believe the IRS will publish a common sense Notice directed at Accidental Americans but I do not expect that very soon. Believe it or not, the IRS is grossly understaffed where it counts and the people in charge are doing the best they can putting out fires every single day. I was there. I worked there. I saw it happening.
@Watcher: with all due respect, what you are seeing with regard to the FATCA/Canadian issues doesn’t even come close to what is commonly called Selective Enforcement/Selective Prosecution.
When you say,
“Now we’re getting to the heart of it. There’s a law, but the IRS might not apply it because to do so could be unreasonable. Or they might. And it’s their call,” I respectfully beg to differ. This is the kind of thinking that just advances the misconception that the IRS and the Federal government is just one monolithic, unthinking blob. That is not the case. There are PEOPLE in management positions in the government and for the most part they are not stupid. “Not being stupid” means you don’t abuse the power you have been tentatively given to enforce the laws. I have no comment on the specific cases mentioned on this blog where someone has written about a real live case or controversy. No comment because I have no idea whether in those cases the taxpayer got bad advice or the taxpayer acted on his own counsel which showed really bad judgment or an ignorance of the process.
Show me one, real live case where the IRS sought to collect FBAR penalties from a 94 year old lady in a Canadian nursing home with little or no connection to the United States. In fact I would represent that family pro bono and take it all the way to the Commissioner of Internal Revenue if I had to in order to vindicate the taxpayer.
Respectfully submitted,
30 Year IRS Vet
@steven: “Show me one, real live case where the IRS sought to collect FBAR penalties from a 94 year old lady in a Canadian nursing home…”
There almost certainly isn’t one. And that is exactly my point. The statute *as written* allows the IRS to hound this hypothetical 94 year old, but they haven’t. They have *selectively* chosen not to. Perhaps out of human decency. Perhaps out of fear of being perceived as overbearing. Or perhaps because of simple lack of manpower.
So what about an 84 year old? 74 year old? 24 year old? Someone with just a bit more cash? It’s a complete continuum, and because enforcement is at the discretion of the IRS, just because they haven’t hit your point on the spectrum yet, doesn’t mean that they won’t in future. The PEOPLE at the IRS — and I’m sure many of them are fine folk — are nevertheless bound by the LAWS, REGULATIONS, and GUIDANCE from upper level managers.
I think you’re missing the big picture here. Nobody wants to live under any level of threat from this, no matter how remote it might be that threat becomes reality, because the IRS has already demonstrated that it is willing to leave the law unenforced until it suits them to enforce it. And that is another example of selective enforcement. There was simply no FBAR enforcement at all for about the first 30-odd years of the FBAR existence. But now all of a sudden there is. Lots of it.
Citizenship based taxation law as written is plain nuts, and this fact has finally been thrown into sharp relief by the nonsense that is FATCA. For many US citizens living outside the US, their US citizenship is no more use to them than a (ruptured) appendix.
@Steven Mospick
Thanks again for thoughtful comments!
When this issue surfaced, many of the US born Canadian citizens feared that somehow the US would seize their Canadian assets, send agents to their homes, or extradite them.
What is emerging is that it’s likely impossible for the US to ultimately collect any personal tax or penalty IN CANADA from Canadian citizens domiciled here, when they have no US-based assets, employment or presence. Especially if their only US tie is a distant place of birth and their Canadian income is legitimate and reported to Canada Revenue.
What these folks do remain afraid of is:
1) Having their Canadian banking and investment accounts screwed up because they were born in the US. Especially retirees who rely on their savings and investments for income.
2) Being harassed at the US border, or persecuted within the physical jurisdiction of the US because their Canadian passport has US place of birth. This has lead to an Iron Curtain mentality – many US-born Canadians now consider US travel inadvisable.
@ Steven Offshore Voluntary Disclosure 2009-2012 shows that the IRS is quite happy to take the money of a 94 year old grandmother. I just heard of another Canada resident in the 2011 program that was assessed several thousand. So as long as you are willing to walk into the OVD programs and say, Here’s a blank cheque, it doesn’t matter if you are a minnow or a grandma, the IRS will be happy to take your money.
This is why the IRS cannot be trusted with our bank information, as I have said. If FATCA accounts information is given to the IRS, they WILL systematically hand out 50% FBAR fines to every single account. We have no reason to think that they would do otherwise, and every reason to think that they will. I am not fearmongering here. I am just basing this on their warnings. They have said that they will fine undisclosed accounts with the FATCA information and indeed, that is the reason they want it.
@Watcher: Citizenship based on taxation is a whole other story, battle, intellectual or academic excercise. I know it can be argued both ways. I have said on these pages that I have no opinion on the topic. What I do care about is misinformation and irrational fear that is sometimes whipped up by people who may have another agenda. I think there is a greater liklihood of a meteor striking Toronto than there is of the IRS going after Accidental Americans with little or no connection to the USA, and no evidence whatsoever of engaging in the kind of financial shenanigans which gave rise to FBARs and FATCA in the first place. Do you have anything printed or published from a responsible person in the US Government which would fit the definition of a threat?
30 Year IRS Vet
@steven: “I think there is a greater liklihood of a meteor striking Toronto than there is of the IRS going after…”
But again you miss the big picture. What is the likelihood of being refused banking in your home country because of your dual citizenship? Of being shunned by potential business partners? Prevented from taking on certain jobs or roles at your place of business? Facing a US estate tax bill that means your surviving spouse has to sell the family home? Failing to spot some future tweak that congress makes to tax law and then becoming embroiled in a future FBAR-like “compliance” initiative?
You’re focusing on one small element, because that’s your profession. Outside the confines of your work sphere though, *normal* people leading *ordinary* lives in countries that are not the US are finding those lives curtailed by US laws. They’re finding it unacceptable, and are voting with their feet.
@steven: “Do you have anything printed or published from a responsible person in the US Government which would fit the definition of a threat?”
I’d say Nina Olson’s recent criticism of the OVDI as a “bait and switch” is a pretty good indication that the IRS behaviour is duplicitous and unreliable.
“I think there is a greater liklihood of a meteor striking Toronto than there is of the IRS going after Accidental Americans with little or no connection to the USA, and no evidence whatsoever of engaging in the kind of financial shenanigans which gave rise to FBARs and FATCA in the first place.”
Steven:
With all due respect, you are not seeing the forest for the trees. Watcher has described it accurately and has zeroed in on the main issue. It’s fine for you to say the IRS would never pursue my 94-year-old mother — or anyone else with marginal US connections — the fact is that Congress has given them the authority to do so. If the law says it’s OK, it’s only a matter of time and inclination before the agency authorized to enforce that law decides to do so; and in whatever arbitrary way it chooses. As Watcher says, that fits the definition of tyranny.
Why should anyone — 94 year old or 24 year old — have to live with that sword of Damocles hanging over their heads? It is grossly unfair, and despite the comments you made on your blog, it is blatantly extra-territorial. Many members of my family, including me, are at the mercy of an agency in a foreign country that may, or may not, decide to come after us in some fashion — or failing that, make the US a very dangerous place to visit. Or more likely, as Watcher has also pointed out, make our lives miserable by forcing our bankers to extract information from us that our own law forbids them to do.
How you can’t see that as extra-territorial is beyond me.
And as far as taxation based on citizenship is concerned, the US needs to explain why it wants to be out of step with the entire rest of the world. It also needs to explain how taxation based on citizenship is in any way fair or reasonable. And it needs to explain why it makes it so difficult for Americans to leave the country, given that the right to expatriate is enshrined in US law.
Watcher wrote: “I’d say Nina Olson’s recent criticism of the OVDI as a “bait and switch” is a pretty good indication that the IRS behaviour is duplicitous and unreliable.”
Touché. This is exactly the point I made above.
@steve
“Citizenship based on taxation is a whole other story, battle, intellectual or academic exercise. I know it can be argued both ways. I have said on these pages that I have no opinion on the topic……….”
Did I just read that correctly?
A 30 year IRS vet is stating that he has NO OPINION on citizenship based taxation????????
What were you doing for 30 years, that you have no opinion on the fundamental principle of the US tax system?
It can’t be that only US citizens abroad are interested in educating themselves enough to be able to say that they are either:
a) for it
b) against
c) or they really just don’t care
I just can’t believe that a person would have no opinion on the matter. If they just said “well, I’m living in the US and citizenship based taxation doesn’t affect me either way so I really couldn’t care less” that would be a statement that I could respect, I would find it quite disappointing but I could respect it.
So Steve my advice to you is please get a relaxing beverage of your preference, sit down in a comfy chair reflect on some of the posts on this blog, then choose one of the 3 logical possibilities that I previously mentioned and let us know about it, because 99.99% of the people reading this blog DO HAVE an opinion.
Here is my argument which includes an incredible analysis from Jeff D. Tom:
http://isaacbrocksociety.com/2011/12/13/is-the-taxation-of-us-persons-abroad-constitutional/
The fact that I do not have an opinion on taxation based on citizenship does not mean I don’t care or that your concerns are not important. I do know that the chances of changing that rule are slim to none. I also know that many of you are basing your opinions on misinformation and I will continue to speak out about that. For example, you just don’t get a bill from the IRS for estate taxes. There first has to be a legal notice of an audit. Then there is the audit itself, a chance to argue with the IRS, receipt of a notice which allows you to go the United States Tax Court before any money is paid and then appeal if you are not happy with the Tax Court result. That may sound like a lot to do but it does show that we are a country of laws and not a tyranny.
Also, let’s assume the Canadian banks do decide to turn over your names to the IRS. It is one thing to be in a government data base; it is quite another for a human being to push a button causing that data base to spit out a menacing letter dragging you into to a fight with the US government. In my practice I find that many people are engaged in battles with the IRS in part, because they have ignored their mail from the IRS. If the IRS does something stupid we fight back. But that fight has to be fought according to a set of rules, almost every one of which has at one time been the subject of challenge and litigation, yet another example why we are a country subject to the rule of law. Let’s cool the rhetoric and see what is possible to accomplish and petition the government for a redress of our grievances instead of talking about martydom, burning bridges, and muddying the waters.
30 Year IRS Vet
Steven J. Mopsick wrote: “Let’s cool the rhetoric and see what is possible to accomplish and petition the government for a redress of our grievances instead of talking about martydom, burning bridges, and muddying the waters.”
Who is talking about martyrdom? Not me. Hell no! We are saying that the line must be drawn here. This far, no farther.
@steven I should mention that the IRS has treated expats shabbily in the “amnesty” program. They have promised to be harsher on those they catch through FATCA. I’m just taking the IRS (1) by what they have done; and (2) by what they promise to do. This is hardly misleading people–it is only just talking about what the IRS plans to do with the FATCA information.
Also, I am not fearmongering, at least not to Canadians; I believe that the best days of extorting money Expats is done. That’s why the Isaac Brock Society is here: to explain to expats that they have rights and protections and that they don’t have to let the IRS bully them.
Granted the IRS does not have a great reputation with the taxpayers but so far they do not appear to have prosecuted Canadian Grandmas or expat Canadians. The majority of the prosecution appears to be of individuals who have intentionally hid and do have some real bad facts.
I am one of those immigrants affected by these sudden enforcements and looking to see if we could collectively do something to petition the govt to see if we can get some form or redressal.
Since Stephen has worked with the IRS and is a 30 year veteran
would it make sense that we write a petition how the OVDI, FBAR and FATCA is affecting the immigrants and expats and have him (if he is in agreement) take it to the Govt/IRS