reposted from MapleSandbox
by Lynne Swanson
#FATCA Americans overseas: Do NOT allow US tax pros scare u into entering US tax system. Many have no business entering!
— Keith REDMOND (@kredmond_global) January 19, 2017
Backing up the above tweet, Keith Redmond posted the following on Facebook:
Dear Members: I just had a lengthy, robust call with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas ho have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas need to not succumb to the fear. Excellent conversation and I am glad my views have been validated.
This reflects what I have long believed. Unfortunately, there is still the nightmare of FATCA to deal with. In some countries, anyone born in the US cannot even get bank accounts. We are treated as criminals just for banking where we live.
I asked Keith how his contact explains and justifies this.
Keith replied:
He can’t. He finds the whole situation abhorent…
@Japan T
So I don’t get another US passport. Big deal. So a US debt collection agency buys my FBAR fines for pennies on the dollar. Who cares? (It won’t be a tax debt because they would have no clue what my income is.) Pretty sure my employer won’t be concerned if some jackass sends them a letter, unless my job required US travel, maybe. (It doesn’t.) Given the current tax treaty prohibition against collections, I doubt that a Canadian court is going to order that I cut someone a cheque.
Let’s keep this realistic. If the law changes, I’ll change my approach. Panic just scares people into compliance when they are far safer staying out of the system.
It’s not panic, it’s preparation.
Remember, a very few years ago and these problems just plain didn’t exist. Once people started finding out about them, it was too late for many.
Much more concerned about what my bank would do in such a case and will do as things are.
Had to change trains.
Not panic. I’m up for the fight, am fighting. The unprepared do not last long gainst the well prepared. Our foe is very well prepared, funded and equipped. We must be as prepared as possible.
The first to find out about this were totally unprepared (how could they have been otherwise?), panicked and suffer greatly. Let’s learn from them and prepare for future actions.
The IRS and the US are the law unto themselves with the demonstrated power to bully every nation on Earth to give them what they want. That truth coupled with the fact that Canadian citizens had to raise huge sums of money to attempt to force their government to follow the law should dissuade anyone from thinking that anything can not happen.
The impossible has already happened, so why this faith that the impossible will not continue to happen? How many laws have to be broken before we lose faith in the law to protect us?
@PM
What’s the legal precedent for the FATCA IGAs? If there isn’t one, then clearly precedent is not required.
@JapanT, “What’s the legal precedent for the FATCA IGAs? If there isn’t one, then clearly precedent is not required.”
I have been looking around (Bopp lawsuit docs) and the legal strength is that they are considered an Executive Memoranda as in they carry the strength of the Office of President.
Ergo, it is simples for Trump to order Treasury to not defend the Bopp Lawsuit and to disavow the Memoranda that created the beast.
I have been watching what the new Administration has been doing in week one to see how they are unpicking the Obama legacy and frankly they are not concerned what the media thinks and are well equiped to throw the Obama legacy under the bus.
I had been hesitant that Trump would blink on this issue because of bad Press but frankly he does not care about or what they think!!!
I think when he gets around to us the Press will be simply too shell shocked to care any more.
@Japan T
I don’t agree at all that the “strongest”defence we have has already been breached. That would have been the easiest deflection. So they got through the first brick. There are others behind it that are not so easily dislodged.
I did not mean to say there were precedents for FATCA IGA. According to the judgement of the court in ADCS-ADSC’s first round, the IGA’s are sourced from the Treaty; the court would not even consider any aspect of the IGA as being of “dubious origin.” What I meant was, there are precedents for the Canadian courts to prevent collection of debts owed to the US:
https://scc-csc.lexum.com/scc-csc/scc-csc/en/item/7322/index.do
United States of America v. Harden
Supreme Court of Canada
United States of America v. Harden, [1963] S.C.R. 366
Date: 1963-10-02
http://uniset.ca/other/cs6/68OR2d379.html
VAN DEMARK ET AL. AND TORONTO-DOMINION BANK
68 O.R. (2d) 379; 1989 Ont. Rep. LEXIS 206
April 19, 1989
“There is no dispute between [**7] the bank and Kenneth Van deMark and the dispute, if any, is between the bank and the Internal Revenue Service of the United States.
The effect of what has occurred is that a Canadian citizen has placed assets in a branch in Canada of a Canadian chartered bank. The bank also does business in the United States and is being threatened by a United States authority.
One must sympathize with the position of the bank but that position is the result of its election to carry on business in more than one country and that cannot influence the application of Canadian law.”
*******
In addition to this, we do have protection in the Treaty. Nothing is iron-clad or “forever.” But the world moves slowly and changes take time. Even in the worst possible scenario, that all these protections disappeared, things will have shifted elsewhere, people will have time to make decisions, etc. IOW, it’s great to try to prepare but no one knows what the future brings.
@PM
“I don’t agree at all that the “strongest”defence we have has already been breached. That would have been the easiest deflection. So they got through the first brick. There are others behind it that are not so easily dislodged.”
The primary responsibility/duty of a legitimate gov. is to protect its citizens. The very existance of the lawsuit is proof that this stongest defense has been breached. If the C. gov. lived up to its duty, then its citizens would not have to raise the money and take time away from pursuits of their choosing to defend themselves. Additionally, hasn’t the CRA sent data to the US? That wall has been breached. If it had not, then all of us could be spending the time and money spent trying to protect ourselves against the US on other things.
Think of it as a river dyke. If the river breaches it, then the individual home owners are the ones that have to expend their funds and time sandbagging their homes against the flood waters.
“In addition to this, we do have protection in the Treaty. Nothing is iron-clad or “forever.” But the world moves slowly and changes take time. Even in the worst possible scenario, that all these protections disappeared, things will have shifted elsewhere, people will have time to make decisions, etc. IOW, it’s great to try to prepare but no one knows what the future brings.”
The FBAR fines came out of nowhere and were applied retroactively. I see no way that I nor anyone else living abroad could have prepared for that. The only way to prepare for much of our current situations would be to have a time machine and go back in time and renounce and bringing a CLN with us before marrying a nonUSC or having our parents do so before having children. We now know what the US and Canada are capable of and should not trust that the US is done with its bullying and Canada with capitulating. We should not be complacent and trust all that has already failed us to protect us the next time around.
Why did Canada sign the IGA? Because your banks ran to the Canadian gov. in fear of the 30% fine. Do you really believe that these same banks won’t drop you like a hot potato if they learn of an IRS tax lien against you? They will close the accounts of anyone of whom they learn of an IRS lien against out of the same fear that caused them to persuade your gov. to sign the IGA. Then what?
In this scenario, you bank didn’t collect the supposed taxes owed to the US but you are locked out of the banking system of your own country until you can provide proof that you have paid your taxes to the US. Then what?
Those who prepare sandbags as the river reaches flood stage before the dyke is breeched are much more likely to be able to protect themselves. If you wait until the waves crest the wall or break through it to prepare it will be too late.
@JT
Of course it is supposed to be the primary duty for a govt to protect its citizens. History is full of situations where that didn’t happen. That does not mean there are times when they do as well as times where they do nothing. The government is bigger than one finance minister or the CRA. The reality is at this point in time, no one here has heard anything from the IRS after two rounds of FATCA reporting. Banks are not generally closing accounts in Canada. There have been no cases that have made their way up from the US to our courts. So we really don’t know if those things will happen nor what the response will be. But to assume there is absolutely nothing except all the terrible things that can happen is an awful place to be. Particularly when 99% of the time, none of the stuff we worry about happens anyway.
Everybody does what they need to do. What I did might not work for you and what you do won’t work for someone else and so on. I don’t think anybody can really say they know there is only one way…
What you call being prepared strikes me as trying to anticipate every possibility which is impossible and does tend to make people perpetually anxious. You yourself said that FBAR came out of nowhere…I don’t understand how any of us could have anticipated that.
I dumped my citizenship and believe it really is the only way to make it stop. What makes sense to me is that instead of trying to protect oneself/stay in the system, work toward finding a way to be able to extract oneself from it. But again, to each his own….
@PM
“Of course it is supposed to be the primary duty for a govt to protect its citizens.”
No it IS their primary duty. History shows us that thie duty is often unfullfiled but it remains the primary duty. Failure to live up to one’s duty does remove one’s responsibility to do so.
“You yourself said that FBAR came out of nowhere…I don’t understand how any of us could have anticipated that.”
True, but we had no reason to know different then, now we do. We can not anticipate every situation but by trying to anticipate and prepare for as many as we can we can create more options for when things do go bad, much like home owners insurance or a first aid kit. Do you have air crash insurance? We do because we could not get a loan for our home unless we bought it. We live in the flight path of Narita airport. Would not think of getting this if we did live in a flight path. Do you have flood insurance? We do because we live in a historic flood plain. Once every 70 years or so the Edo river floods our area, so we have flood insurance. We do not have tornado insurance because they are exceeding rare where we live. If a plane or flood destroys our home, we are covered but are out of luck if a twister hits us. Not fully covered but much better than no coverage.
We have fire insurance because fires ae a very common cause of losing one’s home anywhere but of even greater concern when your home is less than a meter away from your neighbors’ homes.
Same with our various situations. Those who do not insure their homes are at greater risk of losing everything than those who do. Those who do insure are not completely safe as no one can be but have limited their exposure to risk more than those who have no insurance.
For example, I have asked my wife to keep enough money to cover a couple month’s living expenses with her parents should we have our accounts closed.
I pay my bills by cash instead of via electronic allotment, as is the norm here, in case my accounts are closed. That way I will have a route to pay my bills, provided I can get paid in cash.
Doing nothing to prepare means that you have no options when something bad does happen. Preparing provides for the possiblity of options where they otherwise would not exist. If someone lost their home and you found out that they we uninsured, you would probably think them very foolish, no? And yet, more than a few here advocate doing nothing, to go uninsured.
@Japan T
I don’t know if you really are that much more exposed than we are, but you seem to believe it so prepare as you see fit. If you really think the US government is both that malevolent and that competent, get yourself a new passport, pronto.
For typical dual US-Canadian citizen in Canada, in my view, FATCA currently has zero to near-zero impact. I don’t think I’m being naive, that’s an informed assessment.
Early on I considered the renounce-and-comply option but I decided that the cost (the consular fee, the hassle and the potential that I actually would owe money) was not justified by the very low level of risk, when I can so easily stay off the radar.
When my investment firm asked about US citizenship, I could have safely told the truth because all my accounts are RRSPs and non-reportable under the IGA. I lied for three reasons: on principle, as an act of civil disobedience; I didn’t want it on record in case I eventually came have reportable accounts; they wouldn’t give me a straight answer as to whether or not that information would be reported to CRA – i.e. who makes the decision to respect my privacy, the bank or the Canadian government.
Right now the US knows very little about me – my SSN is associated with a passport renewal a few years ago from a European address, and with a handful of tax returns filed a quarter-century ago from a US address, with only US income. (No actual connection to Canada save for passport applications many decades ago, which may not have required the SSN.) I feel zero concern that they will learn anything useful about me anytime soon.
But I’m not completely blind to the possibility that things could get worse. In the unlikely event that the IRS were to (1) discover my existence in Canada, then (2) determine that I owed it money for something, which would be difficult with no information about my income, and (3) have begun to exert pressure on the American subsidiaries of Canadian banks (which seem to be an entirely different corporate entities, not merely branches) to freeze accounts or otherwise act nasty, I’m sure that I would have long since moved my money to a local credit union, because there would have been plenty of warning.
In the future, yes, it’s technically possible that the Canadian government could completely sell us down the river by turning over tax data so the US can calculate what we all owe, and assist with collections of taxes due and fines and penalties. Would they really do that to 2 to 3 percent of their own population? I doubt it. (Different story perhaps in other countries, when you’re one of a handful of expats without dual citizenship.) If you want to the push the argument to its extreme, the US could easily invade and make us all taxpayers at gunpoint. Technically possible? Yes. Likely? No.
I’m really not sure how much to fear the US at this point in time. On the one hand, recent events have shown that great chaos can be unleashed at the stroke of a pen. On the other hand, one can’t be too afraid of a country so dumb as to have elected an illiterate toad for its leader.
@Japan T
“Remember, a very few years ago and these problems just plain didn’t exist. Once people started finding out about them, it was too late for many. ”
No it wasn’t. Some folks entered OVDI in a panic or spent loads of money on compliance, but that was their choice, possibly driven by bad advice and a lack of information. Others decided to to take a wait-and-see approach, given that they correctly perceived the current risk to be very low. (US citizens losing access to banking services in a select few countries is a different issue, and in any case I’m not sure they had or have any alternative course of action, beyond renouncing if possible.)
“The FBAR fines came out of nowhere and were applied retroactively. I see no way that I nor anyone else living abroad could have prepared for that.”
But they haven’t been applied. To the best of our knowledge, certainly in Canada, non-residents coming into compliance are not being hit with FBAR fines. Nor do we have any record of non-compliant individuals being identified by FATCA even hearing from the IRS, let alone being hit with FBAR fines. Not to say it won’t happen one day, but it hasn’t happened yet.
Clarification to post above:
“For typical dual US-Canadian citizen in Canada, in my view, FATCA currently has zero to near-zero impact.”
The exception would be a dual citizen with significant funds outside of RRSPs and other vehicles exempt from reporting under the IGA. In that case, if the financial institution was aware of their US personhood, that information could be reported to the US.
Whether the US can then do anything useful with the information is another story. Certainly under current conditions they cannot collect any money from a US person who is also a Canadian citizen (unless the debt was incurred prior to taking Canadian citizenship).
Add the usual caveat that if you have US assets, property, income, business interests, work travel requirements, future inheritance, family ties, etc. then you have a more complex problem on your hands. All bets are off. I speak more of the true “accidental” with no ties south of the border.
Someone has a question for Trump http://www.trinidadexpress.com/20170125/news/kamla-writes-trump-on-fatca
@JT
Sorry that I don’t remember this 100% but I never think of you as an Accidental. If you are, I apologize. But this post and it’s info is based upon
1) one is an Accidental
2) based upon information from an IRS Ci person
3) observations over the past 5 years
Are we on the same page?
Amazing how the US liberal fake news media is reporting the “muslim ban”. Apparently many are saying discrimination on country of origin is unconstitutional. The ACLU is apparently posting lawyers at airports now.
Where are all these people, like the ACLU, for us since FATCA is the very essence of country of origin discrimination? SAD!
@clarence
Go away. Not relevant to FATCA or CBT.
@Nononymous: it’s completely relevant. The FATCA cause is a human rights cause as discussed many times on this forum. It’s worth asking why the UN, ACLU, EU never speaks up for us like they do for other groups.
and nobody has the right to criticize Trump for “discrimination” as they’ve all been loudly silent on FATCA discrimination for all these years.
As an accidental American who has been following the do nothing strategy for a few years, I have now been told in no uncertain terms by US border guards that next time I enter the US, I had better use a US passport. My US birthplace is listed on my passport and now even if I have it removed, I’m now in the border computer system. Living in Canada, it’s not realistic to never go into the USA again.
Looking at the US passport application form, my SSN (which I have) is required. I’m worried that I’d better have my tax stuff at least in progress before applying for a US passport. Or can I apply for a passport and otherwise “do nothing”?
@Les
My approach would be to apply for the passport and continue doing nothing. No evidence I’m aware of that the IRS either receives or does anything with that SSN.
I had such a lecture once but have used my Canadian passport half a dozen times since without grief. I now keep a US in my pocket just in case but I did that application from a temporary address in another country – which might be something you could do if the chance for a long holiday came along.
@Les Major
I’m of the understanding that even if you could get your birthplace removed from your Canadian passport, the US won’t allow you to enter with a passport that doesn’t state birthplace. Especially now that it looks like Canada’s special status may now be in jeopardy:
http://www.ctvnews.ca/canada/u-s-official-says-entry-ban-applies-to-canadian-dual-citizens-from-7-countries-1.3261361
Yes, by all accounts the no-birthplace passport causes more problems than it solves.
Perhaps one solution would be for the Canadian government to issue passports with fictional Canadian birthplaces for any US-born citizens who request it!
@Les Major
Do you also have the option of entering the US with the enhanced drivers license, which does not indicate place of birth? Depends on which province you live in, I believe. I don’t know much about it.
“Perhaps one solution would be for the Canadian government to issue passports with fictional Canadian birthplaces for any US-born citizens who request it!”
How about for anyone including people born in any of Trump’s hit list countries too?
I use my Canadian passport (with US birthplace) to enter the US by car fairly often. I have gotten “the lecture” a few times and always nod politely and carry on. Some agents are dickheads and others don’t seem to care. There is no telling which kind you will encounter on any given trip. They apparently don’t remember past admonitions from one trip to the next. I have no idea what, if anything, they enter into their computers. In my mind I am fully prepared to be refused entry because there is no way I will ever have or use a US passport again. Obtaining and using a US passport would be admitting I am a US citizen which I am not. So far I have not been refused. Things could be totally different if traveling by air which I haven’t done for a very long tome.
A year or so ago one young dickhead started with the grief and asked why I wasn’t using a US passport. I told him I didn’t have one because I was no longer a US citizen. He asked me if I had appeared before a Consulate to swear the oath of renunciation. I told him no, I opted to relinquish my US citizenship at the time I became a Canadian. He told me I was still a US citizen then because renouncing at a Consulate was the only way I could lose US citizenship. I told him that was wrong, renouncing was not the only way to lose US citizenship, and suggested if he didn’t believe me, he could look it up for himself. (Disagreeing with the goons is definitely not recommended, but he was really annoying me at that point. I figured being refused entry was better than allowing him to claim me as an American.) He eventually relented and allowed me to enter on my Canadian passport, in effect conceding that I was solely a Canadian. I have had no trouble at all since.
If you are willing to admit you are a US citizen, you can apply for a passport. Technically US State Dept. is supposed to notify the IRS but as Nononymous already pointed out there is no evidence the IRS does anything with that info or even receives it at all. There is no love lost between State and the IRS. I think you can apply for a US passport and “do nothing” with little risk. Or continue to be a Canadian and use your Canadian passport, also with little risk. Don’t let the bastards intimidate you. If you want to be a Canadian then be a Canadian. If you want to be a dual, then by all means, apply for a US passport. Your choice and either way you can ignore the tax stuff.
Hey Bubblebustin, I like that idea. Only they shouldn’t be referred to as “fictional Canadian birthplaces”. It would be better to refer to them as “alternative facts”!