What the new IRS rules mean for U.S. citizens living in Canada natpo.st/KK2Oao – Not much so far – what is a “low compliance risk”?
— U.S. Citizen Abroad (@USCitizenAbroad) June 30, 2012
“For taxpayers in the grey zone — the small business owner, the high income earner, the wealthy grandmother with assets in a holding company — the news release may be less comforting,” said Christine Perry, a cross border tax specialist with Keel Cottrelle LLP.
“Until we get some indication of who is a compliance risk and who isn’t I think there will be a continued reluctance to come forward.”
U.S. taxman finally eases pressure on American citizens in Canada vancouversun.com/business/taxma… – Only for those who are “low compliance risk”
— U.S. Citizen Abroad (@USCitizenAbroad) July 1, 2012
The IRS was, in my view, slow to the point of negligence in determining some kind of relief for people who were put in a terrible situation through no wilful wrongdoing. And the agency still needs to clarify the details.
Brockers who are inclined to comment take note.
@Confederate, you should read 30 Year IRS Vet’s article on good governement on his blog:
http://www.mopsicktaxlaw.blogspot.com/2012/04/fbar-penalty-administration-good.html
It may interest a few of you to know how some private contractors for the US government may be able to infiltrate political activist groups to have these groups appear to have associations with terrorist groups.
“In early September, U.S. Day of Rage, which supported the Sept. 17 call to occupy Wall Street, received Twitter messages that falsely accused it of being affiliated with terrorist groups. The messages came from a privately owned security and intelligence contractor, Provide Security, managed by Thomas Ryan, who works for U.S. military and government agencies, and Dr. Kevin Schatzle, a former FBI, Secret Service and New York City Police Department counterterrorism agent who is on the advisory board of a private intelligence firm that sells technology to profile and interrogate terrorism suspects.”
Repost:
http://isaacbrocksociety.ca/2012/04/03/a-behind-the-scenes-look-at-how-a-government-might-work-at-connecting-an-activist-group-with-a-terrorist-one-by-chris-hedges/
@30yearsIRSvet: Your warning to ConfederateH: ‘I do know that the pages of the Isaac Brock Society are favorite fun-time reading for many, many people at the IRS so I am not so sure its a great idea to give them any untoward ideas about you’.
Who’s watching those who watch us?
*@Bubblebustin: Excellent question. There are many ways in which IRS investigtions get started. Almost all of them (outside of the realm of the computer rankings which are coughed up based on what a taxpayer puts down on his return,) are from sources the IRS can get legally and easily, such as pleadings in state, local and federal court cases, news stories, tips, and within the last couple of decades, from the Internet.
The IRS also has what is called Lead Development Centers (as in “looking for good leads for possible investigations”) where specially trained groups of workers consult with each other and simply work the enormous body of materials and information which is available in today’s modern world.
It would almost be impossible under today’s Internal Revenue Service, for someone to start an audit because he didn’t like someone, thought that some point of view needed to be punished, or based on political views, religious or racial prejudice.
I haven’t reviewed these sections of the Internal Revenue Manual personally, but based on my knowledge of the IRS, I am sure there are criteria and check lists which need to be met before a decision is made to audit someone. One of the biggest challenges for the IRS is to put decision makers in the right places who have the maturity of judgment, intelligence and common sense to open cases which pose some reasonable liklihood that the Internal Revenue laws are being violated and that an investigation is likely to be fruitful when compared to the amount of people hours it will take to get results.
Having said all that about how IRS cases get started, “who’s watching those who watch us?” The answer is, the courts, the free press, Nina Olson, Congress, organizations like the Isaac Brock Society, American Citizens Abroad, Democrats Abroad, and a whole world of other taxpayer advocate groups, professional societies, and YOU! You can hold the IRS by its nose, while Petros kicks them in the pants! You are already doing it! And you know you do not have to be afraid.
There is a formula here in all this. You have to think ahead, even before you speak to the government because you want to keep the playing field as level as possible. That’s why you don’t insult the people who work there or put a sign on your back that says, “Kick Me: I do all my business in cash, and I avoid keeping records!!”
You also have to trust in the idea that people of good will in a free society can be convinced to act in a certain way, soley on the basis of the wisdom of words they are hearing from another human being who has something to say. I may be wrong but for all its faults, at least with my dealings with the government, I am seeing that happen over and over.
Happy Fourth of July!
@Bubblebustin
At least from the perspective of someone I have talked to who has experience working with CRA in Canada though they tend to have certain areas they target a lot simply because there is a long history of abuse in them. Home Renovators working without license and tax registration are always going to be a biggie. Restaurants especially “nightclub” type establishments where there is lots of alcohol being served and cash being exchanged are also always going to rank high on CRA’s watch list. My sense is in the US you would tend to have quite similar circumstances. Look at the story of the Studio 54 nightclub in NYC.
http://en.wikipedia.org/wiki/Studio_54
Quote from wikipedia
In December 1978 Rubell was quoted in the New York newspapers as saying the Studio 54 had made $7 million in its first year and that “only the Mafia made more money.” Shortly thereafter the nightclub was raided and Rubell and Schrager were arrested for skimming $2.5 million.
As 30 Year Vet would probably put it saying “only the Mafia made more money” is a pretty good way of putting a kick me sign on your back.
You might want to take a look at the following post at Calvin on Fund Tax
http://www.calvinonfundtax.com/2012/07/03/uk-hmrc-insights-into-fatca-developments/
A couple of comments. As an OECD member Canada will clearly be attending the meetings in Paris and for one would very much like to be a fly on the wall at those meetings. I am wondering who will be attending on behalf of the Canadian government(I don’t it will be Flaherty but it could be Ted Menzies or Gail Shea. I also wonder what the term “minor legislation” means in the context of UK law. The only way FATCA can be implemented on an intergovernmental basis with just “minor legislation” is if the US caves completely which everyone says they won’t including the author of the linked blog post.
Cornwalliscal said:
Canada border guys don’t bother about which passport a dual citizen uses.
Half true, and very misleading.
I have direct knowledge of a case of a US person who was using US passport only. “Canada border guys” routinely over a period of years expected to also see a proof of the Canadian citizenship with the US passport. In one instance where that specific Canadian document was left at home a “Canada border guy” became remarkably nasty. Something like: “You could be detained. Don’t do this again.”
@usxcanada — No surprise in this at all. A Canadian border guard wants to see something that proves you are a legal resident of Canada — not a tourist — and a US passport doesn’t cut it. I guess if you lied and said you were a tourist, you might get through — but that’s a very very dangerous thing to do (not to mention illegal) and I sure wouldn’t recommend it.
When I first emigrated to Canada, I had a UK passport. My Canadian landed immigrant papers were stapled to that passport. Until I became a Canadian citizen with a Canadian passport, that’s what I needed to get back in the country.
@Tim… Well, thanks for that downer! 🙂
bubblebustin says:
I think that I can assume that most of us here at Brock are committed to finding a political solution to our problems.
That is not what I see. I see a broad spectrum of front runners and bleeding edgers and early adopters and savvy risk assessers and pioneers with arrows in the back — whose common denominator is sauve qui peut. And a weird compliance spectrum that stretches all the way from monalisa1776 to Dan. Good gallimaufry! Inevitably a few system reformers toil doggedly for a “political solution,” and good luck to them and ACA. (At the current rate of renunciation, when will ANCA emerge in parallel?) But mostly a mutual aid society composed of individuals who are trying to concoct a solution for themselves, and to find some cameraderie and info in the meantime. With many of those individuals rationally tending in the direction of becoming non-alienated former US persons. The only politics to that direction is voting with ten toes. Let a thousand extraterritorials bloom. Even weeds can have magnificent flowers. An extraterritorial is a US person planted where it is not wanted, at least where it is not wanted by one particular failing state.
*@Arrow, there certainly must also be many Canadian citizens residents of countries around the world that do not maintain a residence in Canada who return to Canada for family and tourist visits.
*Does anybody remember “the good old days” when the only thing you had to do when you crossed the US-Canadian border going either way did not not requre showing any documents whatsoever? All you had to do was answer the question “where were you born?”
I remember when I lived in Chicago in the 1950s and worked with a gentleman who had been born in Chicago to Lithuanian parents before WW II. They moved back there when he was still a baby and then, after WW II came back to Chicago to live and work. He spoke English with a heavy foreign accent. He had relatives in Canada who he visited from time to time and, because of his accent, he frequently had problems convincing the boarder guards he was American when he responded to their question with “I Vas born in Chicago.” So he carried a copy of his US birth certificate with him when he visited Canada.
But he was the exception. Persons born in either country were generally just waived through without hardly slowing down.
But those days are now only memories.
@JustMe
I do have to say that Malcolm White is down fairly low on the totem pool although I think that is reflective of the position the UK government has taken on the issue which is that of it being a technical “problem.” I am actually having a hard time finding who is even Mr. White’s counterpart in CRA there doesn’t appear to be one(It would appear that Kevin Shoom at the Department of Finance is the closest thing t0 Mr. White counterpart and I doubt most Canadian know who Kevin Shoom is.)
Picture of Malcolm White below:
http://www.taxjournal.com/tj/content/malcolm-white
More on this from Advisor.ca / Tax News:
http://www.advisor.ca/tax/tax-news/americans-in-canada-get-tax-reprieve-83636
@30yearIRSvet
I am not afraid (ok, maybe a teensy bit afraid). The IRS has already done the worse they can do to us, at least within ethical guidelines.
If you claim that Isaac Brock Society is a favourite reading to many IRS agents, how can you suggest on this thread that ConfederateH would be in any more danger of US government reprisals than Janeb, who you suggested has little or nothing to worry about from the IRS? ‘ it is one thing to be in a government data base as horrible as that thought is to so many, but it is quite another for a human being inside the government to start pushing buttons on the computer to seek you out and make your life miserable.’
http://isaacbrocksociety.ca/2012/07/01/steven-j-mopsick-comments-on-irs-new-filling-procedure-for-americans-abroad-too-little-but-not-too-late/#comments
Either the IRS/ government is reading Brock, or they aren’t. I’m prepared for either. I’m also prepared for someone from the IRS to infiltrate Brock, and from my post about the US government trying to make activist groups look like they have associations with terrorist ones, I’m prepared for that too. What is your opinion of the likelihood of that happening, esp with you as a major contributor?
@uxscanada, I would argue with you just to hear you wax so poetically! My apology for making a poor assumption.
*
*@Bubblebustin: I am not sure I understand what you mean about how it would be possible “for someone from the IRS to infiltrate Brock”? Is there a secret part of Brock that we don’t know about? Are people meeting at Petros’s house in the basement past midnight exchanging secret handshakes and making plans about how to deal with the next smart mouthed border guard who gets his kicks from humiliating and pushing around sixty year olds from Windsor who drive across to Detroit every Sunday to visit Mom who is in her nineties in a nursing home ?
A public web site on the world wide web is about as transparent as you can get, especially where there isn’t even a filter to block even the most hair-brained hysterical screeds, where the press of a button that says “post comment” on their computers can make a public record which lasts for eternity showing how brilliant and insightful a commentator can be?
I do not know all of Jane B’s facts but I don’t see her foaming at the mouth about IRS corrupt Gestapo extortionists from the Commissioner on down to the mail clerks. I think Jane B just wants to be left alone without any trouble from the big bad IRS. I could have missed it but has Jane B published on the Internet, her Super Secrets on How to Confound the IRS by avoiding banks, using barter instead of currency, and boasting about the gold and silver bars she must keep in her basement because no bank or financial institution can be trusted? Once the revised FATCA regs come out, I am going to launch a campain for world wide justice and lobby for a FATCA rule that says foreign banks only have to report their American customers if their safety deposit boxes exceed five feet by five feet because everyone knows you need that much room to hide gold bars and anyone with a safety deposit box which is less than five by five surely must fit the “low level of risk tolerance” threshold because any gold stash that fits in a box less than five by five couldn’t be worth that much.
People come on! Let’s not let the fantasy world of James Bond and M-TV shape the way we see the world.
@Bubblebustin
As hard as it might feel I would not get paranoid about all that is going on. I find the possibility of people “infiltrating” IBS to be quite remote. “Real” law enforcement agencies have a lot more important things to do than to cruising the millions of internet sites out there all day long.
What I think is going on behind the scenes is the IRS had a huge degree of success back in 2009 with the original OVDP program. They then thought they could replicate the “easy” success of the first program in 2011 and now in 2012. They didn’t realize is that the type of people who came forward in 2009 aren’t around anymore or have moved on to better and badder things. Instead they are now stuck with a huge mass of people who really were never intended for these programs but like any large organization there is a large degree of inertia in continuing to “hope” there is some large mass of people still out there like the original 2009 OVDP participants that they can still reel in. I do think it will become more and more apparent that the type of people who came forward in 2009 OVDP have moved on to better and badder things and that the IRS is going to have to move to a completely different strategy(possibly under new management in the fall).
@Bubblebustin
I do know people in both IRS General Counsel’s Office and the Joint Committee on Taxation read the site. I wouldn’t get to concerned about either both of which play much more policy roles than direct compliance
I would suspect … and am delighted … that the US govt is reading Brock! I want our voices heard!
@ 30 yr IRS Vet: this is way too weird. How did you know that I had a safety deposit box? In my 5 cubic ft box I store 864,000 1 oz bars of gold for a value of $1600 = 1.38 billion dollars. But of course when I bought these bars was about a decade ago, when gold was $300 per oz, and my gain has been 533% or 1.12 billion of unreported income–though unrealized, all in the form of undeclared bullion in a safety deposit box at my local TD bank. Of course, the storage cost has been $1000 per year. So we can deduct that from the income. Unfortunately for the IRS, I don’t have to declare my safety deposit box because it is not a foreign account, and there is no place to put it in the FBAR form. Furthermore, the world’s expert on money, The Bernanke, has said that gold is not money.
As for our secret nocturnal rituals, I was very seriously wondering if you had consulted a medium. How could you have found out about them? Or should I be paying attention to that unmanned drone hovering over my house?
@bubblebustin’: I learned something important from a four year old on Canada Day. She told me monsters eat Cheerios, peanut butter, ice cream (favourite is mint chocolate chip) and people (even kids!).
The secret to not getting eaten is to make sure the monster has enough of those rations that he doesn’t need to eat any people.
So before she goes to bed each night, this clever youngster makes sure there are Cheerios for breakfast and peanut butter and ice cream available for Monster night snacks.
She absolutely knows the monster feeds himself because when she gets up in the morning, there is a knife with traces of peanut butter, a dirty ice cream dish and an empty cereal bowl. So, she feels safe in her bed because she’s feeding the monster food which tastes much better than she would.
We can all take a lesson from her. The IRS Monster can easily find far more tasty treats to devour than Janeb or most of us here. While IRS is gobbling those munchies, we should all try to sleep better–and not let the IRS Monster eat us alive.
I wonder what the size of the “small complementary” but subject to availability safe deposit box TD Bank is now advertising as part of its new basic checking account.
http://www.tdcanadatrust.com/products-services/banking/edb-index.jsp?cm_mmc=edb-_-accts-_-switch-_-en
I think a few of you may have missed my point I attempted to make by posting the Truthdig article by Chris Hedges. I could give a proverbial rat’s as* about IRS surveillance.
bubblebustin –
Thanks so much for taking that riposte in the good humor with which it was composed. I anticipated that you would. Even through the unidimensional medium of on-screen text, and from behind the masques and bandanas and balaclavas of a plethora of monikers, personalities still emerge. I can find something to like about practically all Brockers so far. Why practically? One counterexample of utterly dull and useless jumps to mind: Not sorry to lose you.