As reported on April 9th, Democrats Abroad Canada held its annual general meeting on March 25th in Toronto. The minutes provided a very brief mention about DA’s FBAR/FATCA task force. Today, a new communiqué was released detailing the task force’s recent and upcoming activities. We are now heading into lobbying season, it appears, with both DA and ACA poised to make their annual pilgrimages to D.C. to plead our case – particularly interesting in an election year.
Here’s the new message:
FBAR/FATCA Task Force Update
Dear Democrats Abroad member,
Democrats Abroad’s FBAR/FATCA Task Force has been working consistently to develop an effective strategy to alleviate the burdens placed by new and newly-enforced tax legislation on US citizens abroad. The specific legislation we are focusing on is FATCA and the FBAR.
The Foreign Accounts Tax Compliance Act (FATCA) requires U.S. taxpayers with specified foreign financial assets that exceed certain thresholds to report those assets to the IRS. In addition, FATCA will require foreign financial institutions to report directly to the IRS information about financial accounts held by U.S. taxpayers, or held by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
The Report of Foreign Bank and Financial Accounts (FBAR) must be submitted if you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account. FBAR legislation has been in place since the 1970’s but only recently has the IRS begun to enforce this ruling. The threshold is currently set at $10,000 and the penalties for not filing can be considerable.
We are fortunate in having well-placed contacts in strategic government positions, and have made some headway in our efforts. In point form; here is the latest update on our activities:
* We have been in regular contact with senior staff at both the IRS and the Treasury Department, who have been receptive to our concerns.
* We have developed a strong and sympathetic working relationship with members of the Senate Finance Committee responsible for the FATCA legislation.
* We have shared with our contacts at the IRS, Treasury and Senate individual stories illustrating the stress and challenges placed on ordinary overseas Americans. These stories appear to have made a significant impact.
* Our former DA International Secretary, Amanda Klekowski von Koppenfels, a scholar in the field of politics and demographics, has compiled a detailed stratification of Americans abroad, which clearly refutes any imputation of tax evasion as a general motive for living overseas. The statistical breakdown has been of great interest to the Senate Finance Committee, and may figure prominently as supporting material to our upcoming requests and submissions.
* We helped facilitate a letter from Carol Maloney, Chair of the Americans Abroad Caucus, to Treasury Secretary Geithner requesting congressional hearings. Secretary Geithner himself has acknowledged there are concerns with FATCA and we have recently learned that Treasury will host later this month a meeting of groups representing overseas Americans, including Democrats Abroad.
* We are reaching out to senators who have been major promoters of FATCA to bring to their notice that the anti-tax laundering legislation they introduced will have disastrous, unintended consequence for millions of law-abiding overseas Americans, as well as serious implications on foreign investment in the US.
* We are requesting inclusion in an IRS hearing on FATCA in Washington, DC on May 15.
* We are arranging a meeting with Taxpayer Advocate Nina Olsen Olson, whose 2011 report to Congress is highly critical of IRS handling of overseas tax filers.
* We are preparing resolutions to present to the DPCA Resolutions Committee at the May global meeting in Mexico. If passed, Democrats Abroad will then submit those resolutions to be considered for inclusion in the Democratic Party 2012 Platform.
We remind our members once again that Democrats Abroad and its FBAR/FATCA Task Force cannot and does not offer tax advice. All those facing problems or having specific questions are urged to seek professional tax and/or legal counsel.
Respectfully submitted to the DA Membership,
Your DPCA FBAR/FATCA Task Force,
Joe Green (Canada) Chair (firstname.lastname@example.org)
Stanley Grossman (UK), Maureen Harwood (Canada), Carmelan Polce (Australia), Maya Samara (Switzerland) and Joe Smallhoover (France)
@Blaze,OK since you have the costume, you will have to lead the march!! It has now been decided.. I bet you look great in that costume.. Ha!
This is a great letter…
Especially the stuff below.
BTW Alterna has confirmed I have no USA SOURCE INCOME.
“I sent an e-mail to Randy Bachman, but I didn’t hear back.”
Oh nuts, Randy would have been perfect to come aboard the expat express. His wife, Denise, is indeed an American woman. I wonder how that mixed nationality couple copes? I suppose they can afford the high priced tax attorneys. I’m glad you reposted those lyrics — found them before (loved ‘em BTW) and then couldn’t track them down again.
@Em: I didn’t know Randy Bachman’s wife is an American Woman. I wonder how she feels about the song. I hope she wasn’t the inspiration!
Calgary411 gave me a way to contact Randy through CBC Radio, where Randy has a show. I don’t know if he actually saw it.
I pointed out to Randy he could be affected because of his Green Card.
@blaze, I love it – the costume and the song.
Speaking of Brock and his uniform – Brock University has a replica of his coat.
http://www.stcatharinesstandard.ca/2012/01/17/city-and-brock-partner-on-large-1812-exhibit “Brock University has several significant artifacts in its collection, including a lock of Sir Isaac Brock’s hair, documents from that era and a replica of a coat worn by Brock when he died.”
Then there is Brock day:
“Therefore, Her Majesty, by and with the advice and consent of the Legislative Assembly of the Province of Ontario, enacts as follows:
Major-General Sir Isaac Brock Day
1. October 13 in each year is proclaimed as Major-General Sir Isaac Brock Day.
2. This Act comes into force on the day it receives Royal Assent.
3. The short title of this Act is the Major-General Sir Isaac Brock Day Act, 2012.”
Speaking of candidates for the expat express or US taxable ‘persons’ from Canada – (and FBARs and FATCA. Obama has Canadian-in-laws
through his sister’s husband. Obama came up to S.Ontario to visit – (so he saw firsthand just how chockfull of suspicious hidden banking activity it is!). http://www.cbc.ca/news/canada/story/2008/06/18/f-ng.html
His brother-in-law now works in the US – which would mean that his once ordinary daily Canadian bank accounts – post-tax, and duly reported to the CRA, have now magically transmogrified themselves into those mysterious and criminally suspect entities: “foreign” accounts – once he crossed the border and became transformed into a US person-taxpayer. I find myself wondering whether he complained about the incomprehensibility of FBAR reporting, and now FATCA – since, like all of us, it is unlikely that he had ever heard of, or experienced one. I can only hope that he nags Obama about it once he has to file his first ones.
@Blaze, thanks! I actually saw Denise perform in the day. Living in Canada, you’d have to be living under a rock to not now know about having to pay US tax. Surprising how many people go into ostrich mode, or are we confusing tax defiance with that?
Not Ostrich mode, Turtle mode, and we are much better off for this!
@Joe, no matter what you call it, it’s still a form of tax rebellion, whether it’s fear or defiance that’s the motivator.
FWIW I did not know that I had to file US tax returns. I live in a rural part of Ontario, there has been not one word about any of this (taxes, FBAR, FATCA) in local papers. I do spend considerable time on the web, and that’s how I tripped across one of the Globe articles that sucked me into the vortex. Local lawyers and some accountants I have spoken with had no idea. I sincerely believe most US persons in Canada simply do not know.
Sorry, I should have said “living under a rock if they haven’t heard about by now”. I was referring to Denise McCann, married to Randy Bachman. Pretty slim chance that they wouldn’t know about the requirement by now. Bad news travels fast especially to those who are somewhat in the limelight. I didn’t know about US tax obligations until last summer either…
No worries. I wasn’t living under a rock before but I sure feel like I am now.
@CanPat I actually feel like a creature that was used to living under a rock and is now exposed to excessive solar radiation 🙁
@ bubblebustin & Blaze
According to Denise McCann’s bio she became a Canadian citizen in 1989 but we all know now that without renunciation of her US citizenship she is probably still vulnerable to IRS tyranny too and if Randy Bachman does indeed have a green card well that makes the two of them doubly vulnerable. I suppose if you can afford good tax attorneys it doesn’t bother you too much though. Anyway I adore both of them for their musical talent and song smithery and would love them to come out with some kind of support for those of us wallowing in the IRS morass.
The great majority of Americans Abroad did and do not know about these incredible demands. So are dual citizens and greencarders.
@thatisme, one wonders how many know about it going in. I have a friend who moved to the US and is planning to move back to Canada and had no idea about the filing requirement until I told her. I would like to see some of the documentation applicants see prior to obtaining US citizenship. I know it’s been in mouseprint on the last page of the US passport for about 10 years now. Maybe I’ll do some research…
Re: warning anyone leaving the US and not knowing what they face with reporting once outside it,
(or those immigrating to the US, with pre-existing accounts ‘abroad’).
Have a look at this GAO report “Reporting Foreign Accounts to IRS: Extent of Duplication Not Currently Known, but Requirements Can Be Clarified”
GAO-12-403, Feb 28, 2012
http://www.gao.gov/products/GAO-12-403 : re duplicative reporting on FBARs and FATCA – very very interesting reading – they again admit that there are no good numbers on that so-called tax gap of ‘unreported income’
“IRS does not have an estimate of the revenue loss due to offshore non-compliance, and estimates by others are unreliable. However, some international tax policy experts believe that the losses are in the billions of dollars annually.” No citation of those ‘international tax policy experts’ , or source/method of the estimates……………”
“A variety of tax commentators, taxpayer representatives, and individuals stated that these duplicative reporting requirements have created confusion. They report being unclear about what and how information should be reported on both forms. Neither form provides filers any explanation as to why duplicative reporting is necessary, where the duplication occurs, or how the information being requested is the same or different.
Without data on Form 8938 filers, the benefits and costs of taking actions to reduce duplicative reporting cannot be determined.”………………..
“IRS does not have an estimate of the revenue loss due to offshore non-compliance, and estimates by others are unreliable. However, some international tax policy experts believe that the losses are in the billions of dollars annually.”…………..
“This increases the compliance burden and adds complexity that can create confusion, potentially resulting in inaccurate or unnecessary reporting. Currently, the instructions and guidance for both forms lack any explanation of why and where duplication exists. Actions to reduce duplicate reporting requirements while maintaining the usefulness of the data for tax administration and law enforcement purposes would benefit filers. However, since the Form 8938 is a new requirement beginning after 2011, data are not yet available to determine the number of filers subject to these duplicative reporting requirements. Without these data, it is not known whether the benefits of reduced duplication would exceed the costs. When filing data become available, Treasury’s Office of Tax Policy, IRS, and FinCEN would have the information needed to assess whether cost-effective steps could be taken, including allowing filers who would normally have to submit both forms to substitute the information reported on one to meet the requirements of the other”…………….
As we already know, they implement based on non-existent statistics – justifying their actions using imaginary numbers, citing nameless ‘experts’, knowing ahead of time that there will be problems with reporting and complying – borne totally by those they ‘enforce’ it on, and admitting they have no idea how many will be affected. We’ll bear the costs of compliance – through LCUs, or paying someone – or incurring penalties.
They are willing to go ahead and impose it on individuals – with substantial knowledge that as designed : “This increases the compliance burden and adds complexity that can create confusion, potentially resulting in inaccurate or unnecessary reporting.” WITH THE HUGE FINES and NO STATUTE of LIMITATIONS.
What an unjust and arbitrary basis for a law.
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It seems I am moving to a big conflict> Democrat and Living and working abroad.
@markpinetree I think I know what you mean. I was really disappointed in Democrats Abroad back when I was talking with them and had some hope that they would step up, grow a pair, take the issue to management. Didn’t happen then. Some movement now. Have become sadly cynical since.