Psychologists describe 5 stages of grief based on the Kubler-Ross model introduced by Swiss psychiatrist Elisabeth Kübler-Ross in her 1969 book, ‘On Death and Dying’. Although originally ascribed to the emotional stages experienced due to death of a loved one, the model can also be useful to understand the responses to any subjective trauma that a person may go through, for example a relationship breakup, a job loss, or a ‘OMG! I am a US taxpayer’ moment.
The key here is ‘subjective trauma’. Many ‘US persons’ know what it is like to have people roll their eyes, yawn, or wonder why we are so worked up, just because we discover we are subject to FATCA (what’s the big deal? You ARE an American!), or because we discover we are US taxpayers (if you don’t like it why don’t you renounce?). Typically, we do not get the sympathy one would get if we had a serious illness, or lost our job, or divorced our spouse.
Non-US persons for the most part, just do not ‘get’ the ‘US person’ curse, because to be FATCA’d and CBT’d is not within the realm of normal human experiences. We are unique and special in the world that way – thanks to USA’s exceptional treatment of those it deems ‘US persons’. Nevertheless it IS traumatic for those of us who have lived most or all our lives in countries other than the USA, and who have never had a clue we were US taxpayers on our non-US income, to be FATCA’d and CBT’d.
The following are the 5 stages of grief as outlined in the Kubler-Ross model. Keep in mind that these stages are not necessarily linear. One day you may feel like you are angry beyond belief, and the next day you may feel that it just is what it is. Hopefully, at some point, most of your days will fall into the latter category.
Denial.
The first reaction to hearing one has a terminal illness, or their house burned down, or they are subject to the tax laws of a foreign country, is denial. This just CANNOT be for real. It makes no sense. This has got to be wrong. How could I have lived all these years and NOT known I was a US taxpayer? There must be exceptions for people like me who don’t live in the USA. They surely cannot be referring to ME.
Anger.
Once the initial shock wears off, anger follows. We want to blame someone or something. We may be angry at the doctor who gives us a bad diagnosis, at the driver who caused the accident, or at ourselves for not doing something to prevent whatever bad thing happened. We are angry at the Canadian government for not standing up for us, at our spouse who thinks we are over reacting, at our neighbour who doesn’t want to listen to our rants, at ourselves for not figuring out years ago that we were US taxpayers, or at the American government for acting like it owns us.
Bargaining.
This is the stage where we play games with ourselves, and with others, desperately trying to ‘work it out’ or ‘fix things’, so that we can go back to the way things were before. The person whose romantic relationship is at an end may promise to change their behaviour – anything to not have the relationship end. The dying patient may promise God he/she will be a better person or take better care of himself/herself – anything to not have to die. The newly aware US taxpayer searches for a way to work out their non-compliance: streamlined program? 5 years tax compliance catch-up? – just please don’t penalize me for my ignorance.
Depression.
Reality is setting in now. There is no easy way out. We are not going to bring our loved one back. Our job is gone forever. The relationship is definitely over. No matter which route we take to solving our ‘US taxpayer status’ we are going to pay – whether that be in taxes, compliance fees, penalties, loss of privacy, loss of US citizenship, or by being forced into hiding. It sucks no matter how you look at it, and this just makes us sad. 🙁
Acceptance.
Psychologists and grief counsellors say you are lucky if you get to this point. Many people get stuck in anger or depression for years or even a lifetime – the widower who becomes a recluse when his wife passes away, the mother who mourns a lifetime for the child she lost, the aspiring athlete who never made it to the big leagues and seems forever lost in his former glory years, the ‘hidden’ US person who cannot shake the mental chains of his unwanted ‘US taxpayer status’ even if he has logistically found a way to deal with it. The luckier people at some point accept the reality of what has happened and find a place to put it so that it does not interfere in their daily lives anymore. The widower finds peacefulness alone, or maybe finds new love. The mom, whose child is gone, remembers the happy times she spent with him/her and stops dwelling on what was lost. The US person, finds a way to deal with his/her own particular situation – stays hidden, or becomes tax compliant, or renounces – and moves on with his/her life.
@ wondering: That is more or less what I learned, too. And soon, I will have to make my “no way” stance known. Can they literally take me to court? Naturally I will not enter US soil or airspace.
@Duchesse: “If a law is unjust, a man is not only right to disobey it, he is obligated to do so.” (Thomas Jefferson)
The Americans cannot take you to court in Canada. They cannot seize your assets or income in Canada. CRA will not collect taxes for IRS on Canadian citizens and will not collect penalties for IRS on Canadian citizens or residents (So far).
@Duchesse
There are a lot of people hiding in Canada because Canada says it won`t collect. Many of these are completely hidden, never paid any taxes because they never knew, and until now, are “unknown” to the IRS. This is what FATCA is supposed to address. I know some people who have renounced their citizenship without paying any taxes and just go on to live their daily lives – whether that is smart or not only the future will tell. There are a lot of countries which WILL collect for the IRS so people don`t have that option. In some places, accounts have been frozen. I believe Germany and Great Britain have laws against tax evasion too and so they will help America with such “criminals”. ( choke )
Sounds to me like you are already exposed? And you just don`t want to pay the PFIC penalties because this would be ruinous for your retirement? Sad enough. So basically you are saying to the IRS: “I`ll pay my taxes but not all of what you think I should pay.”? It sounds to me like you are seeking a deal?
You might want to get a lawyer for that. Hopefully you can find one with integrity.
If however what you mean is that you just want to bow out – then you should know that your tax obligation will continue (no statute of limitations) and the late fee is 20% or something along those lines. Draconian. But of course one could ignore those too if one wants- only what would the future bring? Nobody can really tell you that here. You might need to consider renouncing in the process, among the other things you are contemplating. Also: check out the lawsuit going on right now on the top of this page – the ADCS lawsuit aimed at stopping FATCA altogether and crippling the american citizenship-based taxation system.
Actually, I haven’t yet heard of somebody saying to America “These taxes are too high and I wont pay them. So I`ll pay less if you don`t mind.” Thats kinda ballsy. Ask a lawyer who is well-versed in these kind of things.
@Duchesse, the State Dept. and Treasury have been on the receiving end of some very snotty letters when I renounced and filed the exit tax form (no other tax returns or reporting forms filed). I have heard not a peep from anyone in the few years since. For what it’s worth. I have crossed the border once since, but will not be doing so going forward as I can not shut up about this situation.
@ Duchesse
I am oriented as you describe. For me it’s not a hardship to never go to the USA. I haven’t visited there in nearly 20 years anyway. Keep your anxiety at bay by camping out at Brock. At least you know we know what the situation is and now we’ve moved from trying to educate politicians, the media and the masses to an action plan — the lawsuit. You are not alone.
@ Dutchesse
You have no obligation to accept any particular mail delivered via Canada Post …
RE: REFUSING OR RETURNING UNOPENED MAIL VIA CANADA POST
https://www.canadapost.ca/cpo/mc/business/support/helpcentre/receiving/delivery_items.jsf
“Can I refuse to accept a letter or a parcel that is delivered to me?
You are expecting a letter or a parcel to be delivered but you no longer want it.
Answer
We are required to deliver all items in the mail stream, but you can refuse an item upon delivery. Simply inform the delivery person that you do not wish to accept the item and it will be returned to sender.
If you have already received the item, you can still return it provided that the item has not been opened and no labels have been removed. Bring the item to any Post Office and state that you want the item returned to sender.
As for the IRS “taking you to court” in a foreign country where you are protected by Tax Treaty from assistance in collection … they are too understaffed and underfunded to answer their own telephone helplines …
The Mom: You are lucky. I would not actually be in compliance when filing that exit return. To be so (which would involve selling my portion of our portfolios of mutual funds, then taking the Revenue Canada capital gains hit) would devastate our savings. So I assume you had little exposure re your financial holdings.
EmBee: How do you cope with sleeplessness and depression, loss of appetite, etc? Activism is important. Right now I am struggling with being their target.
@ Wondering: Never considered refusal of the letters, thanks.
Duchesse, compliance is an interesting term, and what it means depends on who uses it. I am 100% Canadian compliant, always have been. Am I compliant, in Canada, with the laws of foreign countries? Who knows? That’s not my problem. Am I compliant with what my Canadian bank requires of me? You bet. I have a purdy CLN, after all, that says the US no longer considers me a US citizen.
I continue to stick around and be vocal because:
1. I hate bullies.
2. I hate bullies trying to push their laws beyond their own borders.
3. I hate that the Canadian government threw Canadians under the bus to help the banks that CHOOSE to do business in the US.
@ Duchesse
I don’t always cope — it’s an up and down thing for me. At least I’ve gained back some of the weight I lost 3 years ago. I don’t know if I’m a target but I’m on their radar if they bother to look. However my situation is not as dire (yet) as yours appears to be. Everyone has uncertainty in their life (even if they don’t recognize it) so I have had to add “What will the U.S. do next?” to my list.
@Duchesse
You are definitely not alone in being non-compliant. Having the government of the USA attacking us and the government of Canada failing to protect us (and in fact actively offering us up on a sacrificial altar) does have the potential to overwhelm oneself with despair.
Gain strength from quotes like Thomas Jefferson’s noted above by Blaze and MLK noted by Wondering.
MLK said: “One has a moral responsibility to disobey unjust laws.”
Someone once said about FATCA: “When injustice becomes law, resistance becomes duty.”
I was born in the US and came to Canada as an infant. I have never lived, studied or worked in the US. I don’t even have a social security number (and will never get one). The idea that I should be filing US tax returns and paying the US tax (and filing FBARS) strikes me as ridiculous, absurd, insane, infuriating. I did struggle for months about the right course of action but deep down could never truly accept the idea of coming forward in any attempt at compliance. It is just so wrong. So I am not compliant.
I can’t stand it when we are repeatedly being told about our tax filing “obligations”, which to me is a euphemism for theft, extraterritorial confiscation, financial rape.
Try not to despair. Support the ADCS legal action if you can. Spread the word about it to all “US Persons” that you may know.
Hopefully this old adage will also soon apply to our situation: “This too shall pass.”
@ The Mom: I am so envious of your CLN! And am in complete agreement with 1-3.
@EmBee: Was shocked to draw fire immediately and freaking me out, but at least it has clarified my stance.
Mr. A: How’s this for irony: I emigrated at 22, after university graduation, because I was not willing to pay taxes of which 60 cents of every dollar would directly support the war in Viet Nam. Heartsick at the lies told about the “victories” and body counts. Forty-five years later “my” government still wants my money for, among other things, its military interventions.
@ Polly: I have filed my US taxes for decades, honestly and promptly. No one- not my accountant nor my investment company not the IRS- ever warned me the garden-variety mutual funds we hold were about to be punitively taxed. Suddenly, our major retirement funds are subject to these taxes. So I could liquidate the mutual funds and go segregated, triggering a big capital gains event with CRS and markedly limiting my investment options.
I thought to put the mutual funds solely in my husband’s name but I am told the IRS views this as evasion. Has anyone done this?
@Duchesse: I also came to Canada as a spiritual draft dodger. I never looked back.
This attack on our lives as law abiding citizens of Canada is horrific, but it is what the United States of Arrogance does. However, I am even angrier with Canada for betraying us with the IGA than I am at the U.S.
I hope it helps to know you are not alone.
All, your comments have been like oxygen; so grateful. I was fine with complying when the US/CDN tax treaty reduced my US tax liability to zero. Now when they want to dissolve my old age security (and I did not work in US long enough to get Social Security) I am re-infused with the fire of protest I had in my 20s, leaving the US as a war protest.
Why did I not give up my citizenship, given I was so political? Dad’s four years in WWII, South Pacific. “I sacrificed so you could be free, please keep your citizenship”. He must be rolling in his grave.
@Duchesse, there is obviously a lot of grey here. I can’t get overly specific but I was advised to gift a substantial percentage of my mutual funds to my spouse. It was possible because the amounts involved were low enough to not require a gift transfer form.
The IRS are going to be literally inundated when they start receiving their FATCA data; with present understaffing, they will almost certainly go for the biggest bang for their buck. A portfolio of even a half million dollars would cost them more than what they could raise in revenue from an international audit. You’re also less vulnerable if you have no assets located within the U.S. for them to grab. Court cases cost serious money.
In hindsight, I believe that I fell for the compliance industry’s scare tactics. Nevertheless, I was in a mess because I hadn’t reported my UK investment income on my returns, so could have been deemed guilty of tax evasion, especially with unfixed FBARs. I amended several years in what was essentially the streamlined process before it officially came out.
I am relieved that I did things by the book for my peace of mind, especially because I decided to renounce in the end; however, an attorney later on told me in confidence that expats were getting away with just filing in a ‘simple’ fashion via software without being harassed with nasty audits. The main thing for them in terms of avoiding legal risk was that they declared all their accounts and income.
Perhaps the IRS has ‘wizened up’ to the 8621 PFIC filing though and is now suspicious if these forms are not included. But I would still be surprised because I don’t believe that Publication 54 for expats even mentions PFIC taxation and form 8621, thus why I still think one could argue reasonable cause for failure to include it (as long as the dividends and gains were declared).
It seems to be a racket.
Duchesse, I am not “Compliant” at all, and have zero desire to play Amerika’s asinine games. They can burn in hell for all I care! I cautiously accept that the Canadian gov’t will not collect for those bastards, but I’d be wary of your financial institution doing something like that, especially those 3 of the big 5 that have huge retail banking operations in the USA (BMO, Royal and TD). They’d be easy prey for intimidation by the IRS to withhold your accounts, so suggest you move to a credit union after liquidating your mutual funds, but not keeping any serious investments via a brokerage (they all seem to use Credential). So yes, this might mean only having a savings account for a while (can still be RRSP eligible, so no penalty there), but this should buy you some insurance to the degree that you’re no longer low hanging fruit. Who knows, maybe they’ll be the ones capitulating before you have to face “their” music.
Disclaimer: I am no expert on this subject…I’m just telling you how I’m approaching this. If this is civil disobedience, I’ll wear that with pride, but I don’t think it is.
Another reason I decided to ‘clean everything up’ was because I still need to get over there regularly to visit family. I also was concerned that the IRS might seize any future inheritance from my parents if I hadn’t resolved my tax problems. If I had no reason to ever go back to visit or any assets there, then I probably wouldn’t have felt such an urgent need to pay all that tax (over $10,000!!!) plus close to $30,000 in accounting fees and financial planning costs .
Another industry that’s growing is naturally ’boutiques’ for U.S.-tax-compliant portfolios for U.S. Persons here in the U.K. With hindsight, I wouldn’t have gone anywhere near mutual funds had I done things over, but had been oblivious to all the horrible tax rules. I almost wish that I had just stuck to simple savings accounts instead of investing. It just seems to add so much potential complexities.
Even now that I’ve renounced, I’m still going to find it more difficult than before to open up investment accounts because I will always have U.S. Indica. I also worry that the U.S. may subsequently try to re-include former citizens as U.S. Persons for tax purposes once again to deter the spiralling renunciations. So even with my CLN, I cannot enjoy complete certainty with my retirement planning. All I can do is my best.
Duchesse
If you were to stop filing anything starting today, nothing will happen . You might get a letter or two. Big deal. Ask yourself “what exactly am I afraid of?” and “what exactly can they do?”
Are you afraid of being non compliant with a foreign government’s extra territorial tax grab? As you have no US connection all they could do about it is sweet fanny adams.
There are other options. You could simply ignore the admonition to treat mutual funds as PFICs report income and capital gains as they are reported on your T3s and T5s. Who is going to know the difference except you? Your accountant? You would have to d.i.y. If you have a TFSA, treat it like a RRSP- don’t report anything until you get a T3 or T5
You could put every thing in your spouses name- I personally know someone who did exactly that. He gave her everything except his RRSP but including his half of the house. That would make your non-compliance wilful- all the more reason not to tell them a thing. I don’t like this option- better to simply stop filing.With respect to PierreD, it is none of your banks business whether or not you are compliant. Good luck. P.S. You don’t need a lawyer.
@Duchesse: I had no idea until I stumbled across Welcome to Resisterville (published almost 10 years ago) that slightly more young women than young men immigrated to Canada from the U.S. during Vietnam era. For decades, I thought I was an anomaly.
http://www.canada.com/vancouversun/news/observer/story.html?id=df918abb-1f78-469a-9a02-97f1844ef46a
You will find many Brockers came to Canada during that time–draft dodgers, veterans, young men not drafted and “slightly more young women.”
We stood up to the U.S. government decades ago, We can and are doing it again. Civil disobedience is one way. Legal action is another.
“Where have all the young men (and women) gone? Long time passing…”
We need them all in this fight. Only this time, we are also fighting Canada.
@Portland_PFC, I agree that it would probably have been safer to never have filed. Once you file, you’re in their system. I believe the more immediate risks are the compliance vultures and especially the banks possibly cooperating under duress, threatening to freeze accounts, etc.
I sometimes wonder if the IRS privately feels that its hands are tied under this awful legislation and that it’s the accountants and tax lawyers who are the ‘wolves in sheeps’ clothing’…
@Blaze, perhaps all the more why the U.S. is viewing many former citizens in Canada as ‘apostates’.
@’MonaLisa: I’ve had a theory about all of this from when I first learned about it. I think part of the reason Canada was not able to get a better deal is because it is literally pay back time. There are Vietnam and other vets working at IRS and US Treasury.
CBT has been about punishment since the Civil War. It still is.
IRS did not care about us forty years ago. We were young and did not have any money.
Now we are in or near the early stages or retirement with savings we need for retirement. Those savings are the highest they will ever because we are beginning to just draw on them for the purpose for which we saved–to support ourselves in retirement.
Of course I know we are not the only targets and Canada is only one country impacted by FATCA. But still….
P.S. I had to look up apostate. Good one. Here is what I learned.
It’s not a faith issue, but defect, desert and rebel certainly describe it. It also should inspire us to do it again.
@ Portland: I’m more or less following your path. I filed as always have reporting simply income and capital gains and they came back- with speed-and asked for a Schedule D form. l ‘m sending that and see if they persist. If so, I will go to the “stop filing” route, and transfer assets to spouse as a precaution against further CDN bank intervention. The reality is my retirement savings are stuffed with PFICs and liquidating would result in huge costs. (I can see why those who need to go back to US chose that.) Your stance resonates with me- as does Hitch’s.
@Blaze: Do you remember that some Canadians thought draft resisters should be deported?
And that when amnesty was announced a good number of Americans were furious that those “criminals” could return to the US without prosecution. I wonder if there will be an amnesty for us, and I don’t mean the “amnesty” for new filers, which I perceive as a Trojan Horse. (Hi, welcome in, now let us plunder your savings.)