You may remember Ambassador Jacobson’s “70 year old Grandma” speech on October 18, 2011:
“When I read all of this I was concerned. So last week I called the Commissioner of the United States Internal Revenue Service to see what we could do. I explained the problem to him.
The result is that both he and I are sympathetic to the concerns. We are going to work together to see if we can’t find a way to accommodate grandma — and others — here in Canada. But we have to figure out a way to do it without letting the person who is trying to evade taxes in the Cayman Islands off the hook.
My message on this one is to sit tight. We are not unreasonable. We are not unsympathetic. We are not irresponsible.”
Tonight, November 2, Ambassador Jacobson provides responsible education about the U.S. electoral system on the Agenda.
Update – November 3:
1. According to the Agenda you should be able to see the interview online.
2. The comments on this post are directed to the continuing disappointment and betrayal that U.S. citizens abroad feel at the hands of the US government. Specifically how Ambassador Jacobson promised relief and clarity. Relief in the sense that US citizens abroad should NOT be subjected to massive penalties for “footfaults”. Clarity in the sense that direction would be provided in terms of how to come into compliance. I wrote a number of posts last year on the topic of how US citizens abroad cam come into compliance with US tax laws. It has since become clear that the IRS is not offering any reasonable way to come into compliance. Furthermore, the silence of the IRS and failure to address this issue suggests that the IRS would rather operate through threats of penalties. The September 1, 2012 guidelines are useful to such a small percentage of people that they are meaningless. US citizens abroad now fall into one of two groups. They either renounce US citizenship or they do the full ostrich. On a personal level I have simply come to terms with the fact that the Government of the United States as represented by the IRS is:
Unreasonable, unsympathetic and irresponsible.
The worst thing is the realization that many of the things we believed about the United States – “land of the free and home of the brave” – are just simply wrong. Margaret Thatcher used to refer to the United States as “That great citadel of freedom and justice“. Right, this is a country that levies huge penalties on US citizens abroad who invest in Canadian mutual funds.
Lioness, comments on the penalties she has received from the IRS. I note that she was using a US based CPA firm. The more I learn about the experiences of people using US based professionals, the more I think you should consider using professionals in your country of residence. See the following comment thread from here to here on this topic.
Finally, don’t forget about one of Ambassador Jacobson’s 70 year old Grandmas.
And, thanks to Calgary411 for your great comments on this post.
There are times in life when bad things happen to good people!
In Ambassador Jacobson’s address, (‘U.S.-Canada Relations: Issues and Opportunities’ delivered in Ottawa, October 18, 2011) he states that:….”an issue that has been around for about 100 years, since the United States imposed an income tax in 1913. From the beginning, my country has taxed the incomes of American
Citizens no matter where they live, no matter where they earn their
livings.
This is different from the way Canada — and some other countries — do it.”….
Another disingenuous misrepresentation – he knows full well, (and no doubt would have had a researcher/speech writer to help him) that ONLY ERITREA and the US do that (see http://hodgen.com/does-the-united-states-stand-alone/ ).
Moreover, the Bank Secrecy Act, and the way it is being applied by the IRS, and the changes that came in 2003, and in 2008, and with his friend Obama’s HIRE Act, have NOT existed or been applied for 100 years to those abroad.
The misleading, disingenuous, misrepresentations of the situation by the Ambassador are disgusting.
When he says that “To my knowledge we have never gone after a grandma in those circumstances”, he has to know that signifies nothing, nada. Firstly the IRS has refused to break down or release any analysis of what they’ve been up to. Secondly, Ambassador Jacobson’s awareness isn’t at issue, and proves nothing. Speeches like this are very carefully written, so the choice of phrasing and content are extremely significant.
ACA has requested Freedom of Information re “how many of the reported 33,000 taxpayers who came
forward under the OVDP have overseas addresses and how much of the US$
4.4 billion collected under the program comes from FBAR fines instead of
back taxes.” http://www.prweb.com/releases/2012/3/prweb9264773.htm
To date, the IRS has not provided that information. So for Jacobson to minimize the dangers of the layers of IRS penalty regimes on our post-tax legal local accounts by referring to the penalties as “theoretical”, and basing that on his “knowledge” of the issue is a deliberate misdirection.
Anne Hornung-Soukup, Finance Director of ACA and the other
co-signatory of the letter, said, “Our letter to Commissioner Shulman of
the IRS makes it clear that ACA is in full agreement with efforts to
find and hold accountable tax evaders. However we also know firsthand
from our members how devastating the indiscriminate use of penalties
under the OVDP has been for many American citizens living outside of the
United States. Most of them are not tax cheats; they were sincerely
and completely unaware of the Foreign Bank Account Report (FBAR) filing
requirement, since it was not enforced until just a few years ago.”
Hornung-Soukup, also said: “Many of the U.S. citizens living abroad
who entered the OVDP in fact owed no taxes to the United States, since
they had paid full taxes in their country of residence. Yet because of
not filing their FBAR forms, they faced IRS imposed fines and penalties
amounting in some cases to their entire lifetime savings.” from Geneva, Switzerland (PRWEB) March 09, 2012
We’re now in November, and soon will be the one year anniversary of the December factsheet of 2011. And, Shulman will leave office having been successful in stonewalling both the Taxpayer Advocate, and American Citizens Abroad.
So, Ambassador Jacobson, what kind of explanation do you have for us now? Have you ascertained from the IRS Commissioner exactly how many Canadian grandmothers have been hit with FBAR and other reporting penalties? Or are you complicit in keeping that information buried – along with Shulman – who will leave office without having to be held to account – by you, Obama and his boss Geithner?
A follow-up to my follow-up (cross-posted):
In response to my emails, I had a conversation with Sylvia D. Johnson (JohnsonSD@state.gov ) at the Canadian Embassy in Ottawa this afternoon. I was pleased with her reaching out to me, the first in all of my attempts. One of the things I was assured was that all Consulates, yesterday, were directed to require one appointment only, if all is in order, including the Vancouver Consulate.
It was good to have a one-on-one conversation with someone from this office who was actually listening. She seemed amazed regarding things people are going through and said they have anecdotal evidence from some others who have contacted their office. She assured me that the US Ambassador takes all of this very seriously. I told her this may be something new as hers is the first reply I’ve gotten from any correspondence to the US Ambassador to Canada.
She knows that I will be renouncing my citizenship in Calgary November 14th. I hope I haven’t compromised my own renunciation case. My main points were my, as well as others’, administrative costs (and usually $0.00 or very little tax owed) experienced for coming into compliance. Filing from without the US is very different than filing inside the US because of the added complexity and costs of so many forms. I emphasized this was a life-changing time for many US Persons abroad and outlined the stresses put on ordinary, law-abiding, tax-paying people for what we feel are overly punitive threats.
I wanted to make a case for the many I think who know nothing about all of this yet — that it is, to me, immoral for people to bankrupt themselves, spend retirement savings or simply try to ignore perceived threats from the US because they don’t have the resources to come into compliance themselves, with their only choice to try to hide in fear, thinking they are somehow criminals (while many of the real “tax evaders” have likely gone down a different path, laughing at the IRS wasting their time on us because they never thought it necessary to do a cost:benefit analysis of US extra-territorial FATCA solutions).
I stated that I and other US Persons in Canada (and other countries) are second-class Canadians by virtue of of US citizenship — not being able to benefit from the same tax-saving accounts the Canadian (and likely other) government has set up and encourages Canadians to responsibly save with — these are not “foreign” accounts to us; being afraid to cross the border without repercussion, which denies us from visiting families and friends in the US or even being ordinary tourists.
I told her it would be my decision to stay on this side of the border as I wouldn’t be able to confidently travel with my son — yes, I told her that whole personal story too. It was quite a long conversation and Sylvia was very accommodating in her time to listen to me.
So, I’ve given another anecdotal story to the US Embassy in Ottawa. Will it make a difference — maybe. I think more need to correspond there.
You are very brave @Calgary411. What you did means that the Ambassador cannot pretend he doesn’t know that the Canadian grandmothers and their families are still under serious and undeserved threat by the US. I hope his conscience hurts him. Especially now that we’ve got the official notice of the Canada US negotiations re FATCA http://www.fin.gc.ca/treaties-conventions/notices/unitedstates-etatsunis-eng.asp “Negotiation of an Information Exchange Agreement with the United States” November 8, 2012, which I find very depressing – that Canada even entertains the idea of helping with ‘an agreement to improve cross-border tax compliance’, which if successful will only benefit the US, and threaten >1 million inside Canada.
*I salute you Calgary 411. I will be sending my story to Ambassador Jacobson, Dept. of finance, Obama, and Harper.
*@Calgary, Great Job!! Thank you for all you do to help our situation..You are the best!!
*just arrived home to find another letter from the IRS – I usually receive them on Fridays.
The letter stated: “Thank you for filing your foreign trust return (3520). The review for this tax period is complete. No penalty will be assessed.”
What a happy day for me that I am now cleared from the 2008, $10,000 tax penalty for late filing!! The letter is dated Oct. 26, 2012. I filed my first cause letter on June 19, 2012 for all three tax years. I am hopeful that they will also clear the 2010, $57,000 late filing penalty. After all, they shouldn’t be coming after Grannies who are set to retire!! Or anybody for that matter!!
Looks like we have to fight for what we believe in! I’m thankful this site is here to openly discuss these horrendous issues.
@Lioness
Great news. With any luck at all this time next week you will get good news re the $57,000 penalty.
Agreed – IBS is a great site. It has taught me so much in the past 11 months and gave me the courage to attend my first meeting to apply for a back-dated CLN.
That gives some hope–to be able to file papers and pray that no penalties will be assessed.
Congratulations, lioness! Serendipity, your receiving this today. I’m so happy for you!
Thanks for posting your good news — information that can give others in your situation a boost of hope for their own similar situations.
It is actually, I think, a fast turn-around. (Are some ice jams starting to break?) Hopefully, you will receive a similar letter soon for the $57,000 penalty.
Thanks again for your contributions here. You are a lioness, a fighting Granny.
*Thank you Calgary411!
*I am optimistic that Lioness’s $57,000 penalty will be abated because for her to be hit like that for am innocent mistake or omission is cruel and unusual punishment, and thus, a breach of the 8th Amendment of the Constitution. Even if the IRS presses on, she has a strong case for reasonable cause.
True, she may have to shell out for some legal fees but I am hopeful that this will be cleared up without huge cost and fairly quickly. Fingers crossed!! I agree it’s outrageous though.
*Mona Lisa – I agree that it is cruel and unusual punishment. and how many people are fortunate enough to be able to afford an accountant and tax lawyer?? I will be retiring next year and certainly did not plan on paying the IRS anything in my retirement plans! I refuse to pay the $57K penalty and will fight for my rights – I did not do anything worng. I wonder how many people actually pay or have paid these ridiculous fees out of fear.
Iamquincy– I appreciated you sending the link to a copy of the AICP letter of Aug. 28, 2012 to The Honorable Douglas H. Shulman RE: Need for IRS Resolution to Systemic IRS Incorrect Letters on Form 3520. As u know, my penalties were related to Form 3520.
Regardless of all this IRS mess, I have applied for my Canadian Citizenship- another long wait of 21 months.
@lioness Congratulations that one part of your struggle is over. Mine drags on. What was your reasonable cause argument that they accepted?
*Lioness, the situation is explained here:
Note the bold text. The US government sees that it was able to collect $5.5 billion through high fines and such from only about 38,000 Americans (abroad). This is considered to be a major success. With 5.5 million Americans abroad not being in the tax system, the US government is seeing dollar signs, big time. Never mind “cruel and unusual punishment”. The US government is eyeing k-ching without representation. It’s gonna make some money.
*@swisspinoy, I don’t know if we know for sure that the additional funds raised from the 38,000 taxpayers was collected 100% from persons living abroad, do we?
I suspect that some of the additional $5.5 billion likely was collected from US citizens resident in the US who had been hiding assets abroad and not reporting the income the generated to the IRS. Theseoriginally were considered to have been the principal targets of this crackdown. Or at least they had not been filing FBAR reports even though they may have been reporting and paying US taxes on this income, and had to pay penalties even though it may have not affected the taxes due. The requirement to file FBAR reports was well hidden from most taxpapers, both at home and abroad. For years there was no mention whatsoever of this obligation in IRS published information and instructions.
Correct me if I am wrong but it seems to me that there is a lot that the IRS is not revealing, nor does it have any intentions of revealing, on this subject. Requests for a breakdown of how much of this additional revenue was taxes and how much was penalties.I know that Andy Sundberg, who passed away in August, had been attempting to obtain this information for over a year before he died.
The sources of this revenue, whether domestic taxpayers or US persons abroad, remains undisclosed, as far as I am aware.
@lioness,
It will be in my being-worked on :
that I think it important to fast-track Canadian citizenship for US residents in Canada.
@lioness, the ‘average’ processing time was listed at 21 months, up from 19 months, but it may move faster. Just spoke with a friend who is almost done, and it only took about 13 months. As I posted to @Em, if you’re 55 or over you don’t have to do the test, which takes one step out of the process – and may make the overall time shorter? “The Citizenship Act provides for exceptions in some of the requirements
for citizenship. For example, people aged 55 or older do not have to meet
the language and knowledge requirements, and do not have to write the citizenship
test.” http://www.cic.gc.ca/english/information/faq/citizenship/index.asp#guide
*Lisa – I’m still not sure (or convinced) that they accepted my “reasonable cause” letter for the 2008 file, as this was not indicated on the Oct. 26, 2012 letter that I received from them yesterday. I sent the first reasonable cause letters in June, 2012 for all 3 years (which, by the way were all filed in JUNE, 2011 including Forms 3520.) In September, 2012, I received late filing penalties for years 2008 and 2010. The IRS letters informed me that the penalties were assessed for Failure to File Form 3520 for the tax year. I sent two more reasonable cause letters on October 9, 2012. We advised them that as provided in the instructions for Form 3520, “No penalties will be imposed if the taxpayer can demonstrate the failure to comply was due to reasonable cause and not willful neglect.” I did provide a reasonable cause explanation stating that I was unaware that I was to file. This whole mess/issue MAY have been caused by the IRS having systemic Incorrect Letters regarding Form 3520. The AICPA (American Institute of CPAs) sent the IRS a letter on August 28, 2012. I dont know how to scan and add to this site, but it came from a note from Iamquincy on this site.
Badger – I applied for my canadian citizenship in July, 2012 and received a confirmation
letter in September, 2012 that they received my application. I assume it is a 21 month waiting time because that is what is on their website. I can only hope that it is sooner – thanks for the info. And yes, I am over 55 and knew about the non-testing – Senior benefits!
Calgary 411 – thanks for including the fast tracking info for US residents living in Canada
*Roger Conklin, unfortunately, we’ll never know the truth. Maybe India will help us to get a better understanding of the situation? America is preparing for a fishing expedition in India:
Google Trends show that FBAR is searched the most in India.
http://www.google.com/trends/explore#q=fbar
Since parents in India tend to grant their children signature authority over their accounts, those living in America have to report their parent’s accounts on FBARs even though they may know nothing about them.
With heavy FBAR penalties, one can only assume that the US government anticipates that it has found a major jackpot. k-ching! I suspect that IBS is going to become very popular in India in the near future.
@Roger & bubblebustin
I was in a bunch of records today and had a look at my old passports. There is no mention of tax for 1982 & 1987 but in 1997 it says:
“Internal Revenue Service: All US citizens working and residing overseas are required to file and report on their worldwide income.See IRS publication 54 for an explanation of filing requirements and benefits.”
It’s odd that Roger’s from 1998 does not have any mention of this. Wouldn’t one expect that all passports would have the same info for year of issue and beyond?
I had once surfed across an older site where indian immigrants were sharing FBAR misery.
@Mark Twain,
Yep, not only them but also the many Chinese as well. All my Indian friends routinely send money back home for their families, often to old bank accounts they never closed. It’s outrageous that the US claims they must file FBAR for that. Just sickening.
*@Mark Twain, it is obbvious that the FBAR legislation was never enacted with any mechanism to accomodate the use of the common practice in some other countries and cultures where joint bank accounts are commonly used to transfer inheritences to survivors when one of the persons whose name is on the account dies. What may be a perfectly legal ipractice in that country is severely penalized by the FBAR obligatory reporting.. This is just one more reason why the extraterritoral tax policies in “US person” taxation of citizens and green card holders is so destructive of certain persons and is absolutely wrong.
@nobledreamer: huh, odd. I’d guess the passports were issued in different offices, and maybe one office used up all their old blanks and got restocked with the new ones with the warning, while the other office lagged behind for a while because fewer people in that area wanted passports? For what it’s worth, my 1997 passport (which I applied for through the SF passport agency) does have the Pub. 54 warning too.
Congress’s assumptions when designing international tax law for individuals:
1. All new immigrants immediately sell all their assets and transfer all their money to the US.
2. No immigrants return to their countries of origin permanently after coming to the US.
3. There are no Americans living permanently abroad, they are only working there temporarily.
4. US citizenship is the essence of righteousness. Anyone who renounces it is either insane or a criminal.
5. Anyone that has a foreign bank account must be a tax evader.
6. All countries are tax havens, except the US.
7. Any tax laws we come up with can easily be implemented. The IRS will explain them to everyone.
8. Everyone knows the law. Any violation of the law is a serious crime and must be punished with the highest severity that is physically possible.
9. The US has jurisdiction over the universe and beyond.
10. The US government is perfect and it never does anything wrong.