Help! I would like a second opinion on what this page on the HR Block Canada site is really saying. It appears to me that they are either directly saying (or at least implying) that U.S. citizens in Canada MUST enter the Voluntary Disclosure Initiative. To me this sounds as though they are saying that people must enter the OVDI program that was reactivated in January 2012. VDI is certainly different from a general requirement to file U.S. tax returns. The page URL is here (it states a 2012 publication date):
http://www.hrblock.ca/canada-irs.asp
What follows is an excerpt from the page. (You may want to read it all.) Am I misreading this? Am I misinterpreting this? How would a U.S. citizen in Canada interpret this? Help! At the very least I think this is highly misleading. I have highlighted certain parts. Your thoughts?
For US Citizens Living in Canada
Any US citizen who lives in Canada (regardless of when he or she moved here and regardless of how long he or she has stayed) needs to file a US tax return with the Internal Revenue Agency (IRS) under the Voluntary Disclosure Initiative (VDI).
Contact us today to find out how we can help.
Key Points Relating to the VDI for Canadian Residents
- The IRS program formerly known as the Offshore Voluntary Disclosure Initiative (OVDI) is now closed. The final application deadline was August 31, 2011. This was not an amnesty program and as such venalities and interest were still imposed by the Internal Revenue Service where applicable. Therefore, the sooner a taxpayer files, the easier it will be to mitigate any penalties and the smaller any interest assessment for balances owed will be.
- The need for US citizens living in Canada to file under the VDI does not negate their obligation to file Foreign Bank and Financial Accounts (FBAR) forms and tax returns with the IRS. See below for more information.
- While there is generally a three year time limit to receive funds in return, there is no time limit when you owe taxes to the Internal Revenue Service. Furthermore, the statute of limitation does not start running until the tax return has been filed. Filing an incorrect or incomplete tax return will also prevent the statute clock from beginning to run.
Reblogged this on Renounce U.S. Citizenship – Be Free.
This seems to be the least-risk alternative for professionals: tell the taxpayer to put his/her neck in the guillotine and trust the executioner.
If things go badly, it isn’t the tax pro who bleeds.
I am aghast at how many advisors roll over and play dead for the IRS. Think of the lawyers who do criminal defense. They will have a defendant plead not guilty and bang heads in front of a jury to get a lower sentence. Why do tax professionals not take the same approach?
That publicity page is dumb and dumber. And to think, I was contemplating H&R Block to do my last returns for me. I guess I’m on my own.
I’ve said this a couple of times, but it bears repeating here: 1) there are Canadian lawyers and accountants who are much more predatory and dangerous than the IRS and 2) sooner or later there will be a class-action suit in Canada launched by people who were stampeded into OVDI, didn’t belong in OVDI, and lost their shirts.
Let’s look at this again:
“Any US citizen who lives in Canada (regardless of when he or she moved here and regardless of how long he or she has stayed) needs to file a US tax return with the Internal Revenue Agency (IRS) under the Voluntary Disclosure Initiative (VDI).”
This is dangerous nonsense, emphasis on dangerous.
@Bebe: That’s a good analogy. It’s along the lines of: “Charged with a crime? You *must* plead guilty. Contact us to enter your guilty plea.”
Getting a second opinion from a US tax lawyer before following this questionable advice is in order.
Following H&R Block’s direction before waiting for more details from the IRS (whenever that might be!) could mean disaster.
@All,
Not ALL tax professionals are or would be giving the same bad advice being touted by H&R Block!! I believe they will say WAIT.
And, their further exploitation: Come to H&R Block sooner rather than later…
The US taxpayer living in Canada may be surprised by actually receiving money back from a refundable credit for the past three years- ex. Making Work Pay Credit, Refundable American Opportunity Credit, Additional Child Tax Credit.
Refunds can only be received for three open tax years; returns can be amended to receive the credits if there is a more advantageous way to file. Foreign tax credits can be created 10 years back and brought forward to offset tax balances for open years if the person has always excluded earned income and now needs foreign tax credits.
The tax offices are extremely busy with the influx of new clients and have more time and capacity now to prepare all delinquent filings- during tax season there will likely be a wait.
So, I’m a bit confused. When did “must” or “have to do” become synonymous with “voluntary”?
words fail me.
I took a screenshot in case they change it later:
http://twitpic.com/8vg96w
I would say that either H&R Block doesn’t know what they are talking about (most likely) or they are drumming up business unethically. I don’t think anyone here (or anywhere) should take this as reputable advice. . My only concern would be that there are people out there who don’t know any better, who might take their advice.
I lived in Canada for 11 years, and did all my return myself except for one year — it was because I had to change file as single from as married. I thought it was a bit too complicated so I went to H&R Block. I paid the service, and they made me happy for good refund. — then 6 months later, I was audited by CRA — the very first time (the only time). I ended up to pay much more back to CRA (tax due and interest).
Since then, I have never used professional again.
@CanuckDoc: I think it is both of what you have said–H & R doesn’t know what they are talking about AND they are drumming up business unethically. Unfortunately, there are way too many people who are going to fall into the trap.
Did they bother to mention the fact CRA will not collect penalties for IRS from Canadian citizens or residents for failure to file FBARs and CRA will collect no tax liability for IRS for a from Canadian citizens, even if that person is also a US citizen.
It’s appalling and an absolute outrage. Is it even legal? I suppose because it’s on their own website it doesn’t qualify as false advertising…
Clause 1 of the Canadian Code of Advertising, “a) Advertisements must not contain inaccurate, deceptive or otherwise misleading claims, statements, illustrations or representations, either direct or implied, with regard to any identified or identifiable product(s) or service(s).
(b) Advertisements must not omit relevant information in a manner that, in the result, is deceptive.”
Clause 11: “Advertisements must not exploit superstitions or play upon fears to mislead the consumer.”
Proceed wtih extreme caution. Some preparers can exacerbate an already tenuous situation.
That page seems to have disappeared.
LOL. Boy we’re good!
We can change news stories on the fly … make H&R pages disappear.
Given that HR Block proposes you services in Canada, they must therefore have a Canada Corporation, or at least a registered branch office, and hence they should be subject to an obligation to preserve Canadian civil rights protections as to their interactions with Canada residents. Even if they have added an option to their computer system for “Canada Resident”: Do not let them propose you a situation that strips you of your retirement funds, or that denies you your fundamental constitutional right to pay taxes as your immediate neighbors do. If you have earned your money in Canada through legal means, you owe nothing to the US. Think of yourself, your family and your neighbors before you fill out IRS and/or HR Block forms. Do not waste money on expensive lawyers. Think for yourself. Do your research on your local, provincial and national legal environment. Speak with your local MP`s and local administrative officials. Stand your ground. Double taxation is not acceptable and shall not stand.
@OMG and KalC — now that’s a story for the media! I’ve sent the link to CBC (Ian Johnson) and to Calgary Herald. Vulnerable people need to be warned of the bad advice and exploitation.
After seeing that H&R Block nonsense I felt the urge to call the President of the firm that does my business and personal accounting to let her know she should steer Canadians who expatriated pre 1986 away from the IRS. She agreed.
She has accounting booths in malls all across Ontario and she told me that when people approach them about doing US taxes she tries to discourage them. She said she doesn’t need that kind of headache!
And, BELATED THANKS, to ‘renouncecitizenship’ for cross-posting at Isaac Brock.
Oh and my accountant’s description of the IRS … they operate like the mafia.
@OMG
Good for your accountant. Would she advise potential US tax clients not to file, refer them elsewhere, have them check out Isaac Brock site where they can start to educate themselves properly on what is required and what Canada says they will not do in this regard vs what someone like H&R Block puts out there, both for taxes and FBARs (not to mention 8938’s)?
I think there are not a whole lot of accountants who would want to take on this US tax mess and even less that have the “proper credentials” from IRS.
@calgary411
She does do US tax returns but only for people who actually have worked down there so they have US source income. Some high rollers do need to file both US and Canadian returns so she will file in both countries for them.
If average Joe Canadian walks in and says I’m originally from the US should I file a return I think she would only do it if they actually have income from the US. If there’s no US income the cost alone would be prohibitive so I don’t think people are beating down her door. I don’t think she would refer them to someone else, just tell them it’s not something they should do unless they’re looking for trouble.
I don’t want to post her information because I do not want to get her into trouble but she knows a con job when she sees one.