The following conversation that took place at Jack Townsend’s blog. Jack Townsend is of the opinion that Canadians can’t simply choose not to obey the IRS. I am of the opinion that the IRS is a criminal organization that is violating the rights of Canadians and it is only good and proper to disobey what are clearly unjust laws. Jack’s view is that Canadians who choose to disobey US tax laws are not going to get any sympathy from him. What he says about jury nullification is particularly interesting in light of my argument that the US tax laws applied in Canada are a violation of the right to trial by jury in the district in which the alleged crime was committed. It is sad to see the law professor with such little sympathy for the our situation, as it is so very much like the causes of US revolution against British rule.
That an RRSP is even considered some kind of delinquent account at all is offensive to Canadians. The IRS could take a much more lenient stand towards RRSPs since they are equivalent to IRAs except in a “foreign” country. Foreign only from the point of view of the IRS, but domestic as far as Canadians are concerned. What’s “foreign” to us is the IRS, which is the External Internal Revenue Service.
I understand what you are saying, but many countries have deferred compensation plans that are like IRAs. Those plans are not treaty qualified and thus are subject to current income taxation and FBAR reporting.
Thus, since I see a lot of these, I have to ask the question why Canadian RRSPs should get better treatment where the taxpayers have not done what is necessary to get the better treatment? Canadian taxpayers may not think it fair from their perspective, but Canadians subject to the U.S. tax regimes overall get better treatment that U.S. taxpayers in other countries. So what is fair?
I think what the Canadian / U.S. persons are really complaining about is the U.S. tax regime. That is a complaint they are entitled to make and, if they feel strongly enough, withdraw from citizenship. What I think is inappropriate is for them just to ignore their known U.S. tax obligations simply because they think the tax system is unfair. If that were a reason not to pay tax, almost everyone could find something that is unfair in the system (tax protestors do it all the time).
Jack, I understand your ultimate paragraph, although I have to admit, I think the complexity required in for Expats to comply is daunting and the number of necessary forms is overwhelming. In situations where the income should be tax-deferred but for the failure to fill in a form, the IRS could/should be more accommodating. For years, the IRS ignored expats, barely providing any education or outreach and many preparers were unaware of the multiple forms (for another example, see UK ISA’s, which are often considered trusts under US law. The number of people who failed to file 3520′s is quite large). The service has gone from almost zero enforcement to making expats their number one priority.
I am of the opinion that the IRS is a law unto itself. It does not have the welfare of the people in mind. The reason why RRSPs programs are set up in the first place is so that Canadian people can look after their own retirement, and that their retirements might be invested in solid vehicles which can lead to the prosperity of Canada. It is an unacceptable situation that angers me and gets my blood boiling, that the IRS thinks that it has the right to reach into and steal Canadian RRSPs.These accounts are supposed to be protected by treaty but instead the IRS has decided that their own rules are more important than a treaty with Canada. This is an example of bad faith–and it is an example of how the IRS has no concern for bigger issues, such as Canada-US relations.
But you are right–my anger is with citizenship based taxation. The American system of “citizenship” (as defined by their own laws, not the laws we have made here in Canada) based taxation is a travesty of justice. It is unjust tax by its very nature, since the proceeds of the tax go to benefit not our community here in Canada, but your profligate and immoral society south of our border. You won’t balance your own budget, you borrow over 40 cents on every dollar you spend, and your country is creating disorder and instability everywhere in the world.
I was just in Niagara on the Lake. It was settled by Loyalists who fled the United States. Unwittingly, I’ve been thrust into a new Loyalist movement. I think it was wrong for the United States to destroy Niagara on the Lake in the War of 1812. And I think it is an unmitigated evil that the United States has decided to go after the Canadian tax base in the enforcement of laws passed in Washington DC, where we have no representation.
You were the richest nation in the world. Do you think that it is morally justified to steal from our Canadian tax base? How can you justify that?
US tax laws applied outside the borders of the United States and imposed on other nations are in violation of international law. Take for example the Master Nationality Rule. Canada has no need to have any concern with your so-called citizens here in Canada, if they are Canadian citizens. It’s none of your business. The lawsuit by the Alliance for the Defense of Canadian Sovereignty is exposing the United States as a violator of Canadian sovereignty and rights violater, because the US has no respect for the human rights codes of other countries in the implementation of its own extra-territorial laws.
The US provides no services or protection to Canadians within the borders of Canada. It says so in a US passport. Since the constiutional justification of citizenship based taxation is “protection” then it is completely wrong to apply citizenship based taxation to citizens of Canada living in Canada. There is no justification for the tax.
Jack, there is an age old rule that says that a law which is unjust is no law. Perhaps you heard it. Or said otherwise, “One has a moral responsibility to disobey unjust laws.’” Did you not learn that in law school?
I don’t believe it’s okay to bash Jack, by saying, “Did you not learn that in law school.”
Most professionals know of the inequities of the US tax code. But doing nothing is not the same as doing something, no matter how you attempt to comply. For e.g., you might just choose to give up your US citizenship, or try, at least to file the right forms, no matter how late they are, whether or not they are in any sort of disclosure programs. Hint, hint buddy.
@Milan, Since you are CPA, perhaps you are not well-versed in law theory. I approach the matter not as a lawyer but as an historian and theologian. Theology has much to say about law, and the morality thereof. I am critical of the IRS implementation of unjust laws in ways that would destroy the lives of my fellow Canadian citizens and I regularly recommend civil disobedience.
If laws are not just, then civil disobedience is morally acceptable. We are living in an age when politicians are so corrupt that they pass laws which result in implementations that destroy basic fundamental human rights.
Since I’ve never gone to law school, I actually wonder if Jack did learn that disobedience to unjust laws is justifiable. But it seems to me that forcing unjust laws on clients instead of helping them to realize their basic and fundamental rights is not providing a service.
For your information, I have expatriated. I have also chosen civil disobedience with regard to certain Form crimes. And there you have it. Form crimes are actually an assault to the civil liberties of the citizen–including the right to privacy (4th Amendment), the right not to incriminate oneself (5th Amendment), the excessive fines clause (8th Amendment). To disobey them is proper, and the only proper means by which I can refuse to waive my Constitutional rights. I have to protect my family from the financial crimes of the USA. The assault against my family by Congress and the IRS, I was forced to give up my Right of Return, and now the US may penalize me via the Reed Amendment for having expatriated for tax reasons (if it so choses). So your “hint” is quite besides the point. My fundamental rights as a native born American have been destroyed by acts of Congress, because I have to pay for my continued citizenship via accounting fees and time wasted filling out forms, and by the destruction of my liberty to live my life as a free person in my country of choice (Canada)–RRSPs are just one significant issue–What about TFSAs, RESP, PFICs, RDSP, capital gains on primary residence, etc.?
Finally, withdrawing from citizenship, as you and Jack have suggested, is not always a good solution. Some of the people I speak with only wish to see their loved ones in the USA, but they cannot come into tax compliance, as it would mean for them financial ruin. This means that the USA, with the threat of the Reed Amendment, of the Ex Patriot Act (proposed) and the tax enforcement at the border, is effectively using family as hostage to collect unjust taxation. And the USA has condemned Eritrea for its extortionate tax collection techniques. I just see too much hypocrisy in my former nation, which is now bankrupt morally and financially.
I understand the concept of civil disobedience, but that does not mean that we are entitled to only obey laws of our liking and disobey the rest. All of society would be in shambles if that were the case -’- we may not like tax laws, hence we don’t report or pay, we may not like laws that say we cannot have nuclear weapons, hence we stock up on nuclear weapons, and so on. That is pure anarchy.
Specifically, in a tax context, in your imagination, every tax protestor in the world would be honorable to disobey the law. Yet, tax protestors routinely suffer society’s civil and criminal consequences of disobeying the law. All you are saying is that you and others with similar views are just tax protestors. I do not see any honor in that.
If you don’t like the system the U.S. has, then do what you did — expatriate and surrender your U.S. citizenship and then go somewhere else that has laws that you are willing to honor. (Although, I guess your theory is that, you can pick and choose which laws of Canada you will obey, as well; maybe at some point the citizens of Canada through their government representatives may have something to say about that).
And, to close the loop, I do know about civil disobedience. Depending on context, conduct which you call civil disobedience can be honorable or not honorable. I think you know where I stand on someone making the unilateral choice not to report and pay U.S. tax. The U.S. tax systems gives U.S. taxpayers plenty of opportunity to vet their complaints to Congress (the proper focus) or even in the Courts where in a civil or criminal case the jury could be asked to exercise its power of jury nullification to bless such civil disobedience. My experience with juries is that no jury — let me repeat, no jury — of U.S. citizens would find the sympathy required to exercise its inherent power of jury nullification.
So, if you are looking for sympathy or support for such notions, you won’t find it from me. There are any number of other blogs where you can get the echo feedback chamber you seek, but I hope the bulk of my readers do not sympathize with these notions.