“TaxConnections” asks “Shall I Stay or Shall I Go?”
Besides first determining if you are indeed a U.S. citizen, some further self-analysis is necessary. Anyone, and I mean anyone, should comprehend what is in store for “Americans Abroad” reading this and listening to John Richardson’s interview with CHQR News Talk 77, Dave Taylor, in Calgary, AB:
When it comes to FATCA, there are four kinds of *Americans Abroad*
…there are really four kinds of U.S. Taxable Persons abroad. Each one of them has his own set of problems.
…
They can be grouped as follows:
File U.S. tax returns? U.S. tax compliant? What is their problem?
Yes Yes Inability to live normal life*
Yes No Subject to penalties for mistakes**
No Yes Don’t have any income***
No No OMG moment is coming****
Dave Taylor got it and summarized:
It’s unbelievable that the US Government is going after people who in many cases, for decades, have not considered themselves to be Americans, American citizens, but indeed Canadian citizens, for money they don’t owe. It’s unbelievable the US Government has the audacity to think it has a claim on the assets of those people. It’s incomprehensible THAT THE HARPER GOVERNMENT IS PLAYING RIGHT ALONG. So we will watch this story because I think it’s a gross violation of rights and miscarriage of justice.
This analysis / summary of the absurdity and injustice for *US Persons Abroad* should be understandable to anyone who reads it or listens to the interview.
Whether *anyone* would include US Congresspersons whose job should be to understand and make reasonable effective change in legislation is debatable. Why is that?
@Ann, one important mention……
While a CLN is NOT required under US Law to lose citizenship by relinquishment nor is it required under the laws of other countries to document loss of said foreign US Nationality, it IS likely required if you want to enter the USA for any reason which may be a holiday to Disneyland!!
For those that have an honest to goodness relinquishment who do not want to get a CLN and are satisfied with likely never entering the USA, then they can live their lives.
@ George,
Re: “You will need copies of your naturalisation file.”
DoS requires proof that the naturalisation occurred and the date on which it occurred, but one proves that with the citizenship certificate already in one’s possession (or if lost, which one can apply for a replacement of).
So, I can’t see what would be in one’s naturalisation file that would be of use (or that one would want to share with the US govt) – except if one naturalised when the citizenship oath here contained an oath of renunciation, in which case it could be worth it to get the file to give them a copy of the signed citizenship oath. Apart from that, I can’t think of anything.
But the way things are going, it seems to be a good idea to cover all bases, so I’m wondering what are you referring to that could be of use in one’s naturalisation file.
George. I’m glad you agree that Anne#1 relinquished her US citizenship years ago.
I do not agree that a CLN is all that necessary. There have been plenty of posts here and at Maple Sandbox of people travelling to the US on a Canadian passport and a US place of birth. If questioned ( which is infrequent) the answer “I lost my US citizenship when I became Canadian and CLNs were unheard of at that time ” is enough.
Similarly, if opening a new financial account, the answer to a citizenship question would be Canadian/ not a US person. There should be no discussion of birth place. If there were, the same reasoning applies- I relinquished when I became Canadian and CLNs were unheard of at that time.
@Ann#1: You raise a very interesting point (signatory on employer law firm’s trust accounts) that I am quite amazed has not seen greater play. I know the issue has been referred to before, but I see no sign that any Law Society has taken an interest.
The issue of course is filing FBAR reports for accounts over which a USC is signatory. In your case, I am surmising you are an employee, and not a partner. You are rightly concerned about your employer’s information being sent to the USG over your objections should your relinquishment be disputed or not accepted. Given that we may have something like 1 in 33 or 34 Canadians being a potential dual citizen (and, according to the US at least, having an onus to PROVE they are not) and given the large number of law firms that are bigger than 33 lawyers, it is a near statistical certainty that almost every one of the mid to large size firms in Canada has at least one partner who is either a US citizen or is considered by the US to be one. Partners are almost always signatories at the bank of the trust accounts and other accounts (even if multiple signatures are needed). Of course few of the affected law firms would have any reason to know who any of these people are: employers, including law firms, aren’t in the habit of asking questions about birth place. Should the bank learn that partner “X” is born in the US from its handling of his or her personal accounts, the bank would potentially be including in its reporting package to the CRA/IRS EACH AND EVERY account over which X has signing authority, including the law firm trust accounts, without any notice to the law firm. That is a truly stupefying result given that confidential client information is contained in those accounts that no lawyer is permitted to disclose except in the narrowest of circumstances. This might be an issue for Mr. Arvay to put in his files for future use.
@Anne Franke
Tony Geoventu, Executive Director of the Condominium Home Owners Assn of BC wrote this article in the Times Colonist back in May of last year at my urging:
“U.S. citizens who live in Canada also have personal obligations of reporting to the Internal Revenue Service in the U.S., even though they are residents of Canada. It is important to understand that the sale of a principal residence in Canada is not tax exempt for U.S. citizens.
There’s more. If you have a U.S. citizen on your strata council who is also an authorized signing officer on your trust funds, that person is also required to report on their U.S. tax return whether they have any foreign bank or investment accounts.”
– See more at: http://www.timescolonist.com/condo-smarts-tale-of-two-tax-men-and-strata-corporations-1.178211#sthash.eHkJ7Huv.dpuf
I’ve also written to a large property management company in Vancouver and the Vancouver Real Estate Board hoping they would notify realtors (having been one myself) to advise any clients they know to be US persons to seek tax advice before buying or selling real estate. Had I been aware, I have never have found myself paying the US tax on the sale of my principal residence in Canada. Nothing much came of my efforts it seems though.