Here is the full legislative text of the Senate Tax Reform bill that just passed the Senate Finance Committee and which now will be likely modified and later voted on by the entire Senate.
It is entitled ‘‘Tax Cuts and Jobs Act’’ which is an amendment to the 1986 IRS code.
SEE LINK See also SECTION SUMMARIES in simpler language.
Anything in this latest version that helps or harms us?
Karen – as I’ve said before, I think that any proposal would have to allow an opt-out, so that those who have done their planning on the basis of CBT would be able to continue to rely on CBT treaty benefits.
Hopefully Ms Bean will not be part of interpreting the legislation or drafting the regulations.
JC: “Hopefully Ms Bean will not be part of interpreting the legislation or drafting the regulations.”
Eh?
I don’t follow that. What has Ms Bean got to do with it?
This just from Republicans Overseas:
“…We plan to take your concerns of 14% tax charge for small business abroad to the Congress by launching another petition drive next week. We will deliver those petitions to the White House and Congress the week of December 11. Our goal is to remove the 14% language at the conference.”
@plaxy Ms Bean was defender of FATCA at the Congressional Hearing on FATCA. For her, the regulations do not go far enough and she wishes the same on U.S. banks. She might be now retired. Yet I am sure there are others like her in Treasury.
JC – If you’re referring to my comment about opt-outs, let me clarify: I wasn’t referring to USCs who might be worse off if the US moved to fully reciprocal automatic reporting of US bank accounts held by accountholders tax-resident in other jurisdictions.
If there are changes to US taxation rules affecting all US citizens living outside the US, some will win and some will lose. Those who lose can be expected to protest, and some may mount legal challenges. Making the changes optional avoids those problems.
According to the internet, she is now working on corporate taxation policy and teaching law.
The IRS talks about section 965. I haven’t read it.
https://www.irs.gov/pub/irs-drop/n-18-07.pdf
Thanks, Norman. Lots of detail. Fortunately, I don’t think there’s really anything new there that will affect small CFCs with individual shareholders (unless you own a series of related CFCs).
I don’t know who to turn to? I’m a Canadian citizen born in the states. I own a small resort that is a Canadian corporation. I have been saving all I can for some renovations and future retirement. These funds are in the corporate account. I’am I screwed? The accountant I use to have in the states won’t do our US return. Any advise?
Yes. Don’t file US tax returns. Ever.
I agree with Nononymous. Also don’t tell your bank where you were born.
If you feel you must file, only tell them what they already know.
The former use of an account in the US makes me worry that the person might have filed US returns in the past. We’d better add suggestions that the person had better never go to the US, never invest in the US, and maybe never invest in another country that might have a collection agreement with the US (unless the person is also a citizen of that other country).
Non-compliance breaks the law.
Compliance brings punishment.
Wade —
Nononymous, Portland, and Norman Diamond say it all in their comments above.
In summary it appears that
– not filing is OK (something I may have missed, since I started filing again; maybe a decision I’ll come to regret; that said I follow Portland’s advice).
– if you file, always feed your tax preparer sanitized data (keeping in mind Portland’s advice!!!). Never just hand over all your documents to a professional — they won’t know what to do except embark on a homeric compliance voyage.
– preexisting bank accounts in a bank that does not know your place of birth are SAFE unless you decide to “turn yourself in”
– even if you do tell your bank you are a USP and even if they send that info off to Washington via Ottawa chances are nothing will happen
– the only people in trouble are those who attempt compliance. The degree of trouble and cost is proportional to the effort put into complying.
I have already been filing in the US because my Canadian account said I had to years ago. Back around 2014 US accountant said they needed all my personal bank records in Canada by law. Just personal accounts. I think they said company accounts were not needed?
@wade
My husband and I are in the same boat with a small corporation in Canada. I believe that it was not the intention of Congress to include corporations like ours in their “repatriation” tax (due to the fact that we are sometimes considered as an after-thought after much damage has been done) but a literal interpretation of the law implies it does. I’ve been working with my Congressman’s office (Posey) on this. I have written a letter outlining the situation that he’s supposed to take to the Ways and Means Committee sometime soon.
According to our accountant, there are a lot of people losing sleep over this – people with more power and influence than we have. The situation is very fluid on how to respond right now. Hopefully we can get this fixed, and soon.
Your corporation should have been reported annually on form 5471. Did your accountants miss that?
Wade, what is your financial exposure to the US? Assets, income, anything? Much need for regular business travel?
If the exposure is minimal, you can just stop filing. You might get a letter, might not, but that’s about all the IRS can do. It has no ability to collect in Canada.
Your Canadian accountant did you a tremendous, expensive disservice. You should never have begun filing. That was very poor advice.
If you aren’t comfortable with complete non-compliance then file only personal returns with no mention of your business. If the accountant refuses, fire them and do it yourself.
If Wade hasn’t been filing a 5471, the IRS may not even know about his business.
@Wade
Note that non-compliance won’t have any impact on your ability to enter the US, unless there is an actual criminal proceeding against you for tax evasion, which will never be the case.
You can of course renounce your US citizenship if that helps you sleep nights. Sometimes worth the investment. Full tax compliance is not required for that either.
@ Wade,
Since we’re discussing a personal matter here, I removed what appears to be your last name from your “blog name” in your comments, so your name just appears as Wade. If you’d like me to put it back, though, I can.
—Pacifica, moderator
Does anyone remember that RO was attempting to get clarification on the transition tax debacle? Or was it someone else? Just wondering if anything has happened on this front. Has there been any confirmation that (hopefully) this does NOT apply to small business entities which will never be moved from their country of origin to the USA. If there have been no answers so far, then more pressure needs to be applied and SOON. The condors are circling …
Anyway, as BB writes above, we know that Rep. Posey has or is about to pose some probing transition tax questions to W&M. Good luck to him and thanks BB for hound-dogging the good congressman.
@EmBee
You’re welcome. I believe that RO was trying to arrange some meetings re the TT. Haven’t heard anything though.
The silence is deafening, isn’t it. You’d think that there at least would be some pretty irate Canadians demanding some action from Minister Morneau’s office, and perhaps there are. I called and left a message with his deputy director the other day (the one who’d written me twice). Crickets.
Who do these people work for, the US government?