Jack has posted this blog post which should be of special interest to Canadians.
Hale Sheppard has a new article that should be of interest to Canadians. The article is introduced on his firm’s Blog, IRS Introduces Two Unique Remedies for U.S. Persons with Unreported Canadian Retirement Plans and Accounts, here. The article can be linked to in that blog entry or can be linked here. The summary of the article is:
Life isn’t fair. Neither is the IRS’s most recent settlement initiative designed to entice taxpayers to proactively resolve their international tax non-compliance, such as failing to report foreign income, foreign accounts, foreign entities, etc. In both instances, some people win and some people lose, often with little or no regard to what is equitable. Among those basking in the benefits of favored status lately are certain Canadians, residing either in the United States or the homeland, who have neglected their tax-related obligations with Uncle Sam. Indeed, thanks to recent modifications to the offshore voluntary disclosure program (“OVDP”) and the introduction of a special “streamline procedure” for select expatriates, many Canadians are able to resolve their tax transgressions on terms vastly superior to those applicable to the masses. This is particularly true for persons with specific types of Canadian retirement plans. The article, published in the most recent edition of the International Tax Journal, analyzes the unique options available to Canadians.
You have got to admire Mr. Sheppard’s precision. This article needs to be read in the context of what I understand the main purpose to be: that is explaining how Canadians who have moved to the U.S. or U.S. citizens living in Canada can solve their tax (primarily their RRSP) problems. After explaining how the problem arose, he then details how the September 1/12 “Streamlined Procedure” and OVDP/12 can be used to come into compliance. Mr. Sheppard analyzes these options very well – but he doesn’t describe any other compliance options (which I find typical of almost all U.S. based lawyers).
That said, another fine analysis from the “FBAR Scholar”.
I was most interested in his description of the history of reporting Canadian RRSP’s. Despite numerous attempts, people just didn’t do it, so they went back to come up with another form. Over all it has slightly simplified the reporting (no longer needs 3520 with all it’s complexity). There are many clearly better ways they should have done it, and it is not simplified enough, and no good for other countries equivalent accounts. But it just goes to show that an overwhelming number of people just simply not complying did make them change the rules. They could have tried to collect large fines from all those non filers of 3520’s, but they didn’t, because they probably realized they really didn’t have much chance of success.
So what will happen when large numbers of FFI’s can’t/won’t comply with FATCA(which is bound to happen)? Will they actually start the 30% with holding, which seeme to me to possibly unmanageably complicated, or will they have to go back and delay and or rewrite the rules.