The specific problem in the U.S. tax reform bills related to U.S. person-owned incorporated businesses in Canada, Australia, France, UK, etc. appears to have been identified.
However, apart from the general solution of changing the bills’language to end U.S.-imposed worldwide taxation on individuals, WHAT IS THE ONE SENTENCE CHANGE IN WORDING OF THE TAX BILLS LANGUAGE THAT WOULD FIX THE PROBLEM IDENTIFIED IN THIS POST?
This one sentence change could be sent to the drafters and supporters-antisupporters of the bills.
IF YOU ARE INTERESTED, YOU CAN FORWARD OUR PRESS RELEASE WITH YOUR COMMENTS TO POLITICIANS AND OTHER ORGANIZATIONS IN U.S., CANADA, AND ELSEWHERE.
Tricia has some thoughts that you might include (in a comment below).
— In this press release we ask United States Congress to fix a problem in the present House/Senate tax bills that targets certain Canadian citizen/residents who own an incorporated business — and more broadly — to “stop imposing worldwide taxation on any Canadian resident”.
The press release is being sent in part to members of U.S. Congress and also to Canadian politicians who should be in the business of defending Canadian citizens from harm caused by a foreign state.
The focus of the press release is intentionally on “Canadians”. The word “American” is not mentioned. Our use in the text of the now-offensive term “U.S. person” (defined by the U.S. Internal Revenue Service) does not imply that U.S. person law applies to any Canadian resident or that any of these so-designated (by the U.S.) Canadians have ever consented to be U.S. persons.
Here is the link to the press release.
The text:
November 24, 2017
For Immediate ReleaseU.S. CONGRESS: DO NOT CONFISCATE OUR SMALL CANADIAN BUSINESSES AS PART OF YOUR TAX REFORM
Dear Congressperson,
On November 16, 2017 Rep George Holding, of the House Ways and Means Committee, in an exchange with Chairman Brady, urged that as part of tax reform that: The United States join the rest of the world by adopting “residence-based taxation”. This would END the U.S. current practice of imposing worldwide taxation on certain residents of other countries.
As U.S. law currently stands, many Canadian citizen/residents (who are deemed by the U.S. to be “U.S. Persons”) find themselves subject to U.S. taxation (ON THEIR CANADIAN INCOMES and CANADIAN ASSETS), even though they live in Canada and pay taxes to Canada.
The application of U.S. tax law into Canada – a principle enforced by FATCA – has profoundly negative consequences, some of which are intended and some of which are unintended.
This is a request that the wording of the United States “Tax Cuts and Job” bill be revised so as not to harm, even more, small Canadian businesses possibly included, we believe inadvertently, by your proposed tax reform legislation.
As your tax Senate and House tax reform bills are presently worded, Sec. 14103, for example in the Senate bill, might be interpreted to confiscate a significant percentage of the retained earnings of certain small “Canadian Controlled Private Corporations”. This is evidently part of broader legislation to implement “territorial taxation”, in order to enhance the competitiveness of publicly traded U.S. multinational corporations.
We believe that this section is intended to apply ONLY to the foreign subsidiaries of U.S. domestic corporations. However, a strict reading of the language of the bill suggests that this “transition tax” MIGHT also be paid by those who are deemed by your country to be “U.S. persons” living overseas who happen (as is common in Canada) to own an incorporated small business. The “minnows” swept up by your bill will then include small businesses such as a one-person incorporated medical doctor’s clinic, should the owner be designated by U.S. law to be a “U.S. person”.
We do not believe that this was your intention and ask that you fix the language of the bills accordingly. Surely you would agree that “territorial taxation” for U.S. multinational corporations does NOT mean that the United States should extend its taxable “territory” to Canadians who happen to own small Canadian Controlled Private Corporations!
As part of U.S. tax reform, we conclude by asking that the United States stop imposing worldwide taxation on any Canadian resident AND clarify that the “Tax Cuts and Jobs” Bill does NOT apply to Canadian residents who are shareholders of Canadian Controlled Private Corporations.
John Richardson
Carol Tapanila
Patricia Moon
Stephen KishOn behalf of the
Alliance for the Defence of Canadian Sovereignty (www.adcs-adsc.ca) Information@adcs-adsc.ca;
and
Alliance for the Defeat of Citizenship Taxation (www.citizenshiptaxation.ca)
Contact Mr. John Richardson at johnrichardson@citizenshipsolutions.ca
Alliance for the Defence of Canadian Sovereignty/Alliance for the Defeat of Citizenship Taxation 283 College Street, P.O. Box 67678 Toronto, Ontario, CANADA M5T 3M1
Well done and timely!
I applaud the fact that this is not about americans but random people residing outside of america which are “deemed” owned by the usa for reasons only under their control. When will the rest of the world wake up to it?
Thank you.
Hear hear!
Good luck, Canadians.
Bravo!
Guess we just have to hope that the reaction is not – “good, extra revenue we hadn’t considered. After all, if these people want to keep the benefits of US citizenship, and obviously they do or they would have renounced, they can pay their fair share like everyone else”.
Personally, I can see benefits if they try and enforce this as it stands. Something has to wake the governments of the world to what the USA is doing here with FATCA and CBT. Ruining numerous small local businesses in Canada for money for the IRS should get the ball rolling.
Big accounting firm suggests some countries might retaliate.
“Some of these changes could impose significant additional burdens on both US and foreign taxpayers and could encourage other countries to enact similar or retaliatory legislation. Companies should endeavor to understand the proposals as the bill could quickly become the template for tax reform in Congress. Taxpayers should also consider participating in the legislative process by commenting on specific proposals that might affect their businesses.”
https://www.pwc.com/us/en/tax-services/publications/insights/ways-and-means-chairman-releases-tax-reform-discussion-draft.html
Well done, ADCT/ADCS!! Great work!!
Republicans Overseas wants to do away with the tax altogether and would like us to help.
“…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.”
AND, TTFI is not dead. RO posted on Facebook today:
“…We are still waiting for JCT’s TTFI score with 2 Heller’s amendments ready to go.”
“Big accounting firm suggests some countries might retaliate.”
I live in hope of the Chinese government declaring the US population in its entirety to be “Chinese persons” for the purposes of taxation, and imposing a massive fine on any and all US banks operating in China unless US domestic banks starts handing over everyone’s account details.
Will the Canadian government be so willing to throw their Canadian corporations under the bus, as they did Canadian citizens under the FATCA IGA? When exactly is a Canadian a Canadian, Mr Morneau, Ms Lebouthillier?
This could get interesting.
“Will the Canadian government be so willing to throw their Canadian corporations under the bus”
Exactly.
Will this finally open the eyes of governments around the world to what they have done by turning over a section of their own tax base to the IRS?
@Mike
Use the “FATCA entity search” to force the Canadian Government to reveal who has Canadian Controlled Private Corporations.
Confiscate the retained earnings.
@USCA
That’s scary. Confiscation may not be so easy though if the shareholders are Canadian and have no US assets. The IRS could probably content itself for quite some time just trying to collect from owners who file 5471’s, that’s if they’re going to try to collect from non-residents at all. Do you really think they would?
I suspect the majority of us would probably tell them to pound sand anyway. Then what? Passport revocations? You see where this is going.
Laws or treaties would need to change before confiscation would be possible, no?
Your message of noncompliance comes through loud and clear. It’s fairly obvious that that those who have not complied to date will not comply.
The problem is for the people who have been compliant and filed 5471s. “Confiscation” is not restricted to the U.S. Government somehow entering the country and putting a lien on bank accounts or whatever else you can imagine.
A very real form of “confiscation” is the result of relying on advice from the “trusted tax professional”. Remember that CBT is not enforced by the IRS. It is enforced by the tax community. If the “tax professionals” say:
“Turn your retained earnings over“, many will comply.
Yes, I would call that a form of “confiscation” – it’s just the tax compliance community doing it’s job.
Those who are not in compliance have little to worry about.
Those who are in compliance must be careful and:
“Ignore the call of the Condor!”
Yes, I wanted to make a distinction between “voluntary confiscation” – compliance, however ill-advised – and “involuntary confiscation” – the IRS actually taking your money against your will, with the assistance of the Canadian government.
Why would the Canadian government care if the US taxed our corporations? As long as Canada gets its full share of tax revenue who cares where additional taxes go. Likewise, they don’t care about Canadian citizens paying taxes to the IRS.
@Marie
The Canadian Government would care because this is Canadian capital that leaves Canada is therefore no longer available for the Government of Canada to tax. If you have been following the discussion of the taxation of Canadian Controlled Private Corporations in Canada AKA “The Morneau Chronicles”, you will see that the Government of Canada is very interested in taxing this pool of capital.
John Richardson, Carol Tapanila, Patricia Moon, Stephen KISH.
Guys…thank you for staying in the game.
Bisquit: ‘I live in hope of the Chinese government declaring the US population in its entirety to be “Chinese persons” for the purposes of taxation…’
Meiguo has been an integral part of China for tax purposes since time immemorial! American tax splittists hurt the feelings of the Chinese People!
@.Marie
Oh I think the government does care about the US taxing individual Canadians. It doesn’t want capital to leave. And the tax treaty reflects this, because it states that Canada will not assist the IRS with collection against Canadian citizens.
I am asking everyone here who visits Brock from anywhere in the world for help with my “silent Canadian media” project. I have beed stirring up conversations on Ham radio especially on short wave 80 meter and 160 meter worldwide bands at night. If anyone on here knows anyone who is a ham radio operator, and either they or you can talk on these bands, I want to start an “on air” group that can talk openly about the whole “fatca” lie and how our governments lied and turned their backs on us by committing treason. It is perfectly legal for anyone to talk on the air on short wave as long as a licensed radio operator is with you. I have had incredible response from American citizens who have heard of this from me and they can’t believe their country would do this to people born on their soil, furthermore, they cannot believe their government would “bully” another nation in this way and make them pay for US laws to be enforced in their countries against their own citizens period. I have been active on the air recently on 3.847mhz if you have a short wave radio receiver, you can listen in. I would love to have other like minded people to talk about this. My station has 2000 watts of power(legal limit) that travels around the world. It would not take long to get this message out as the media has been told to shut up and keep quiet. Thank you and let me know through our administrator.
“Will the Canadian government be so willing to throw their Canadian corporations under the bus”
Yes, because they’re small companies and don’t give big campaign donations.
Corporations are people too. If they want tax breaks (whether being not double-taxed or not single-taxed, since politicians can’t see the difference), they have to do the same as rich people do and give big campaign donations.
Thanks John, Carol, Patricia and Stephen for putting this press release together. Nathan Cullen is currently the NDP Deputy Critic for Finance and since he opposed FATCA in the last parliament I decided to e-mail him and cc’d the others. Hope it helps a little.