IRS cracking down on U.S. expat taxpayers: Steep penalties for Americans who don’t comply with U.S. tax laws (Updated: CBC has corrected the article)
We should call for an apology from reporters from our own government funded media who fail to point out the specific protections that the Canadian government has offered: (1) Never to collect taxes for the United States from a Canadian citizen. (2) Never to collect an FBAR fine from anyone ever. Why does Jon Hembrey of CBC News fail to point out these protections in his article? Instead, this is what we get:
There are also steep fines for failing to file FBARs — up $10,000 US for non-willful violations and the greater of either $100,000 US or 50 per cent of the account balance for willfully failing to file.
The same December release from the IRS said FBAR penalties would be waived if they were the result of a “reasonable cause.”
Bewick said many people have expressed anger at the rules governing U.S. citizens living abroad, some going so far as to suggest they would renounce their citizenship to avoid the reporting requirements.
Renouncing American citizenship, however, requires a person to file five years of income tax returns, Bewick said.
“People just think it’s unfair — it’s completely unfair — and it probably is unfair. But unfortunately the law is the law and it’s just better to get compliant than try to fight off the IRS,” he said.
The issues of FBAR, FATCA and US extra-territorial taxation, have been around for a while, but Hembrey seems like a newbie, who has learned about the problem yesterday, and he relies mainly on United States government sources and Bewick, a cross border accountant.
UPDATE: The Isaac Brock Society (as reflected in the comment stream) has apparently been instrumental in getting the CBC to make certain corrections to this article. It now has the following note at the bottom:
Corrections and Clarifications
- CBC News added information to this story noting that the Canadian government says the CRA will not collect penalties imposed on Canadian citizens by the IRS under FBAR. The story was also updated to reflect the fact that the U.S. government requires Americans to file annual Reports of Foreign Bank and Financial Account (FBARs) if the aggregate value of all their foreign financial accounts exceeded $10,000 at any time during the calendar year. March 7, 2012 | 12:30 p.m. ET
Good job everyone!
@usxcanada; I don’t know enough about how media actually works – except for my perceptions that they often don’t follow up, don’t do in depth analysis anymore – with a few outstanding exceptions, probably won’t write about the CBA telling members not to talk to the public about FATCA, or bury it in some out of the way section, etc.
Lots of those affected still don’t know. Too many. Some may be in denial. Some are waiting to see how it all shakes out.
The story isn’t sound bite friendly – too many technical details to keep straight and write about – even when I try to explain it to others – and keep it straight myself. And even with a personal face and story – it is ‘fantastical’ and surreal – because it doesn’t make any sense – there is no logic to it, so the listener thinks the fault is in the telling – not with the truth of the tale.
I even sometimes catch myself thinking that I’ve been dreaming it all – and others here have also described it that way – like a nightmare. Everything looks the same as it was – except that we never dreamed that this could be real – that we could be subjected to this – and that almost no-one that I actually know understands, or is doing anything substantial to help – even among family. It is all so ‘fabulous’ – so like Kafka’s The Trial.
This might seem very naive – although I tend to be more of a pessimist and somewhat cynical by nature, but though I know that governments and politics are often dirty, and only a tiny bit of what they do is ever in public view – I am not used to seeing a group of people cut so blatantly out of the herd like this – which is what Shulman is doing. There is one speech of his where he basically says that he doesn’t have any firm stats on the size of the ‘tax gap’ he keeps citing as justification for his OVDI program. Then he says that it doesn’t matter how large or small it is, or how much it costs to try and close it – that even if there isn’t much of a gap to close – that somehow it really is about the integrity of the tax system domestically. Here is a quote: ……….”Second is the international tax gap. So how big is it? $10 billion? $100 billion? It’s hard to say as I haven’t seen any solid research to arrive at conclusive numbers….But in some ways, whatever the size of the international tax gap, our commitment to this issue would be unchanged. That is because our international compliance efforts are much more about protecting the $2.7 trillion base of revenue that we collect today rather than just the incremental enforcement revenue that we collect from these efforts. Nevertheless, we are committed to aggressively pursuing the international tax gap – whatever amount it may ultimately be”….Remarks of Commissioner Douglas Shulman before the 21st Annual George Washington University International Tax Conference IR-2008-137, Dec. 8, 2008http://www.irs.gov/newsroom/article/0,,id=201003,00.html
And I believe that Obama knows, and that he is silent by choice – can’t make an omelet without breaking some eggs? The Dems obviously think that they don’t need the vote from ‘abroad’ this time around. The Republicans will use us if they can, but it’s not really germane to them one way or the other – a website and petitions re FATCA – just a cheap token gesture.
All I know for sure at this point is that I am not going to shut-up about it. It won’t rest on only a single strategy or a single action.
@Calgary411- it was lovely to meet you yesterday and to be able to talk freely and openly, and not be looked at askance because I sound crazy. We’re not crazy and we have to keep fighting and talking and getting the message out there. There are many people, I’ve discovered, who are just finding out about this, so I think our ranks will grow. All the oil&gas people are going to eventually discover that they won’t be able to hide.
@Brock – I’m with you. I’m going to keep fighting. Sometimes, yes, it feels like tilting at windmills, but I’m going to keep writing letters and sending them and if I have to send two times or three, I will. For me, I have zero faith in the US gov’t taking any positive steps no matter who is in power, they are just in their positions because of their ties to big business & big money, no matter what party or who they are. While Canadian politicians aren’t always better, I think on the whole I have more hope with our govt. I will keep on keeping on….
@outragec, Glad to hear that people have been able to connect face to face. And glad about that fighting spirit… I figure that part of what I’m doing is also keeping up my spirits and how I feel about myself – if I don’t do something – however symbolic it sometimes seems, I will get low. And it has been very educational….
”This above all: to thine ownself be true,
And it must follow, as the night the day,
Thou canst not then be false to any man.”
sorry, no attribution;
“to thine ownself be true..”
Shakespeare
Hamlet Act 1, scene 3, 78–82
@Everyone: We may all be angry with our country of birth right now, but one thing is becoming increasingly obvious. Lessons U.S. drummed into us as kids are serving us well.
Help each other. Become Friends with Strangers. Share. Stand Up for Your Rights. Don’t Let Anyone Take Away Your Freedoms. Fight for What is Just and Fair.
Be Patriotic and Love Your Country (in our case, that country is where we live our lives–not where we were born!). Never Give Up.
Tim & Brock the Badger – Thanks for your thoughts and questions on the media coverage of our story. Look back at the August-September part of the file and consider news outlets that have just fallen silent. The lack of coverage cannot be attributed to payoff. The causes are more structural and deeper rooted. I’m meditating on a posting, so won’t say more for now. At the moment other duties call.
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usxcanada;
will await your post with interest – always interested in the contributions here – and different ways of looking at the situation.