Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 108 Comments

Phil’s blog post is a “must read” (The Isaac Brock Society is mentioned). Full of all kinds of great ideas – including teaching how people how to get at “Private Letter Ruling”.  Also, some interesting “non legal advice” thoughts on the FBAR problem. You will find the actual paper that was submitted to the IRS here.  The paper was supported by the New York Society of CPAs.

Phil, thanks again for your help and support!

108 thoughts on “Phil Hodgen meets with IRS to solve RRSP problems – Thank you Phil!”

  1. My hunch is that the US is working on a deal with Canada, one that would allow the US to save face and stop the renunciations. I think the delay in issuing CLNs for Canada may be in the hope that they can get some who have already renounced to change their minds before the CLN is handed out.

  2. @truenorth- they would have to offering some serious coin as compensation, a public apology and an exemption from any future filing requirements to get even a fraction of us to change our minds.
    There is no way that I want to play the battered spouse role.

  4. My sense is the only chance for citizenship-based taxation to be repealed is if the number of expatriations reaches a level of political embarrassment.

    I agree the delay tactics are meant to frustrate renunciants with hopes people might change their minds.

    As for a special deal in the offing for Canadian Americans, I wouldn’t hold my breath.

  5. @Truenorth

    Once you have renounced that’s it. The CLN is not a necessary condition for the renunciation of citizenship.

    I don’t think the U.S. cares about renunciations. As far as I can tell, the U.S. government and the homelanders can’t imagine people renouncing unless they are tax cheats. Furthermore, they are simply not capable of understanding anything else.

    It’s as though the U.S. is living in some kind of time warp – a time when the U.S. had a moral authority that they sorely lack now.

    I think that there may be a deal for the banks, but not for the people. The reality is that U.S. citizens who are Canadian residents are a long term danger to the sovereignty of Canada. So, the Canadian government should really be cutting some kind of deal to get U.S. citizens out of Canada (a cost free mass renunciation or something like that).

    In 1783, the end of the American Revolution forced a mass exodus of Loyalists. This is the second mass exodus from the U.S. Petros is one of the more prominent examples.

  8. @True North, I don’t know what to think about that possibility. What would Canada be asked to give up? To agree to a form of FATCA? Will it meant giving in to the super improved FBAR successor – the super evil FATCA? The existing tax treaty has proved to be of only limited use as protection – witness the decades long problems with RRSPs. Will duals be protected, and all others sacrificed?

    If both countries have known about the problems with RRSPs for so long, and have known that TFSAs, RESPs, RDSPs, and the newly touted PRPPs, etc., along with the axe of FBARs, and all the other forms (like 3520s, and others I probably still don’t know about) all with fines over 10,000. – and they have existed for so long as traps for us ; what will be gained, and what will be lost in any deal? I find it incredible that all the Canadian lawyers and government officials who read and signed off on those tax treaties did not see how they could and would lead to the scale of grief and ruin we are now facing. They had to have at least some idea of how many duals by birth and by inheritance lived in Canada. Or maybe they just thought the US wouldn’t actually go insane and start ruining the lives of so many actually permanently inside Canada on the current scale of magnitude.

    Will any deal only help those born with dual citizenship? Or those who were duals ‘during the period when the liabilities and penalties arose’? It sounded from Phil Hodgen’s very helpful posts, that changing even the problems some of those US officials acknowledged re RRSPs was not going to be quick or sufficient due to the layers upon layers of liabilities – although a potentially positive step in the right direction. If the US will threaten and punish those outside the US as they have – without remorse or just cause, then I don’t believe they will offer much. They want money however they can get it – if not in direct taxes, then penalties ‘in lieu of’ – and they’ve certainly worked very very hard to make certain that it would take a lot of help from expensive professionals, and a miracle to walk unscathed between all the mines they’ve set up for us. I can’t believe that is not deliberate. I believe that we are just cash cows for them – no matter how small we are – and I believe that they chose to pursue those they thought would have the least recourse or voice, and to make it hard to comply, because compliance wouldn’t bring in enough money.

    Canada cannot afford to give in. If so many lose so much, and our savings go to either professional fees, or to the IRS, we’ll be relying on whatever Canadian government safety net remains. Canada will pay double – once because our savings will be lost to Canada’s economy, and again, because we’ll have nothing left for living on – and it is not just individuals here and there – we all have families who depend on our savings too. If FATCA is implemented, that drain on Canada’s economy – through the claims on us and our children will be permanent. Basically, FATCA is really about the US trying to get around existing tax treaties by another door, to try and get at our assets via another route.

  9. That’s why I predict that countries will no longer accept U.S. citizens as immigrants.

    The Government of Canada must hang tough. The world cannot afford to go along with FATCA.

  10. @All, I just read that Globe story, and after reading Phil Hodgen’s post about the RRSPs, I think Canada would be insane to make any FATCA deal. If they couldn’t work out a way over decades, to make RRSPs exempted from US taxation and penalties for those of us INSIDE CANADA, then we haven’t a hope in hell of surviving FATCA. There isn’t a shred of logic or ethics in treating RRSPs the way they have – unless it is just to grab anything the US can. And the newly proposed PRPPs are going to be treated as trusts – just like every other modest Canadian registered savings option – so are poisoned for millions of us.

  11. @badger, your well thought-out analysis makes a lot of sense. Thanks for laying it out so clearly.

  12. I’ll say the one plus are things are starting to come to a head sooner rather than latter.

  13. Key comments:

    The framework that the U.S. has developed with certain European countries appears to demonstrate an interest in greater joint government collaboration to address [Canadian] concerns,” Finance Department spokesman Jack Aubry said.

    Finance officials are now working with U.S. officials to “minimize the red-tape burden, minimize conflicts with privacy and other laws, and improve collaboration between governments,” Mr. Aubry added.

    The U.S. Foreign Account Tax Compliance Act, or FATCA, has provoked a storm of protest in Canada, home to roughly one million Americans.

  14. The day the Government of Canada capitulates to the U.S. on FATCA is the day we must be prepared to hit the streets in mass protest. I mean it – this game will then move to a whole new level and we, as leaders in this movement, must assume that duty. We must NEVER allow our government and our banking system to kowtow to the U.S. in the pathetic way the big five in Europe have. F**k “realpolitik” and the supposed importance of the U.S. dollar as a reference currency – no one in the world needs that overprinted trash anymore and it will be worthless soon enough anyway. We DO have a choice, goddamit, and we better make sure no one ever forgets it.

    There will be a firestorm in Parliament when this begins to go down and we must do everything we can as citizens of this country to keep our government from caving in. When the day comes, the Conservatives will conclude that they are safe behind their precious majority. Our job will be to prove them wrong. We still have the best Charter of Rights and Freedoms in the world and it will soon be put to the test again in a contest whose outcome may determine our very survival as a sovereign nation. We must not fail.

  15. omg –

    If there’s one thing I’ve learned about the US it’s that they love to take sharp turns.

    But if you look at the history, the details over the longer haul, the sharp turns all seem to spiral in the same direction! So, that’s a kiddie going ever dizzier. I see no reason to expect significant reversal in this demonstrated long-term trend. This latest news of “negotiations” can only amount to the US perhaps trying to save some face and to befuddle the masses who really have not caught on yet.

    I lay my wager on a one-time clean-up opportunity for extraterritorials who already have clear severance from the United States, in particular a second citizenship, plus institution of even more hurdles for current US residents who might attempt to exit the the land of the fee and the home of the slaves.

  17. I don’t wish to put too fine a point this, however, I’m afraid my post yesterday has caused some confusion. Therefore to clarify: a) the official interpretation of Canada and the US on the treaty protocol is found in the Diplomatic Notes. The Technical Interpretation is, as I said yesterday, US Treasury’s interpretation of the Treaty, the Protocol, and the Diplomatic Notes. b) The appreciation in an RRSP IS tax deferred for US purposes until it is withdrawn provided the 8891 is filed on a timely basis. Article XVIII(7) is the support for this. I had meant to make this distinction in my post yesterday but in my haste neglected to clarify.

    What is most important for US citizens who have RRSPs, however, is not the tax-free appreciation but the deduction for contributions made to RRSPs. Article XVIII(13), (14), and the accompanying Diplomatic Notes and Technical Interpretation make it clear that you can deduct RRSP contributions only if the RRSP is part of a group plan.

    I apologize for the confusion

  20. @usxcanada

    I agree with your second point – the U.S. will make it harder to leave/renounce. Canada on behalf of its citizens (who were born in the U.S.) needs to negotiate not only a compliance opportunity, but an opportunity to use that compliance opportunity to renounce easily and inexpensively.

  22. Pingback: Some thoughts for immigrants caught in the IRS Jihad – This is for you! | The Isaac Brock Society

  23. A link re RRSPs and other related retirement savings vehicles – a recommendation to the IRS to treat them fairly – NY State CPA group notes that they see many clients who do not understand that the way the US treats these plans is onerous and underscores that the clients cannot access the plans prematurely, and are not using them to evade US taxes.
    ‘Accountants Urge IRS To Simplify Foreign Pension Reporting
    by Leroy Baker, Tax-News.com, New York
    23 May 2012’
    http://www.tax-news.com/news/Accounts_Urge_IRS_To_Simplify_Foreign_Pension_Reporting____55596.html

    “The New York State Society of Certified Public Accountants (NYSSCPA) is calling on the US Internal Revenue Service (IRS) to provide a simplified method of electing deferral of US taxation on Canadian pension plans, and is requesting additional guidance on the taxation of foreign retirement and pension plans due to consumer confusion over the filing procedures required by such programs.

    As noted in a comment letter sent to the IRS on May 3, the NYSSCPA says that the IRS must consider mechanisms and policies for addressing potential inequities associated with foreign retirement plans.”……..

    ….” The NYSSCPA also wants the IRS to address how to more equitably treat retirement savings plans from countries that do not have tax treaties similar to the US – Canada agreement”……………

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