The Isaac Brock Society

* Candidate for J.D., Washington and Lee University School of Law, May 2013. I would like to thank my advisor, Professor Michelle Drumbl, for her guidance. I would also like to thank my family and friends for their support and encouragement.

“notamused” has asked if this, which “Johnson” found and commented on could be posted on its own. (Good suggestion, notamused! Thanks, Johnson.) Note, the important comment from SwissPinoy.

FATCA: Toward a Multilateral Automatic Information Reporting Regime

From “SwissPinoy”

@Johnson, the following part of the report is nonsense:

“Thus, renunciation only serves as a way for individuals to avoid U.S. reporting requirements and related penalties after the date of renunciation.”

It incorrectly assumes that everyone who renounces has “annual income of approximately $150,000 or a net worth of at least $2 million”

Comment on original thread from “Just Me“:

Joanna is hardly a FATCAnatic, but it would have been good if she was…

http://www.linkedin.com/in/joannaheiberg

Student at Washington & Lee University School of Law Lexington, Virginia

Do you know the date this was written and what the distribution was? She has a lot of good foot note references?

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This has just been posted on the Moodys Tax Advisors blog.

IRS says hundreds of thousands of US citizens are not reporting Canadian trusts

This week the IRS released statistics on the number of returns it received in 2010 from US citizens with foreign trusts. The results are startling (you may find the report by clicking here). In all of Canada only 324 returns were filed that report ownership in a non-US trust, which likely means hundreds of thousands of US citizens residing in Canada had not filed the appropriate returns.  This is important for two reasons: first, the penalties for not filing are draconian (but waivable); and second, last week the US Government Accountability Office (GAO) issued a report that encouraged IRS to pursue those taxpayers who file late returns using a technique known as “quiet disclosure.”

Background

The US State Department knows of more than 687,000 US citizens residing in Canada but most experts agree that the actual number is several times that number.  Many common Canadian retirement and savings vehicles are considered foreign trusts under US law. These vehicles include registered education savings plans (RESPs), tax free savings accounts (TFSAs), registered disability savings plans (RDSPs) and the like. Of course, typical Canadian trusts used for income splitting and succession are also considered foreign trusts and carry the same reporting obligations. Any US citizen who owns, contributes to, or receives a distribution from any of these trusts must report that interest on the appropriate form at the appropriate time or face severe penalties.

Penalties for Failure to File

Contributions to or distributions from any of these trusts triggers the obligation to file US tax form 3520 on or before the due date of the US income tax return (form 1040). The failure to file penalty for the form 3520 is a minimum of $10,000. In addition, an ownership interest in any of these vehicles triggers the obligation to file the US form 3520-A on or before March 15. The failure to file this form triggers a minimum $10,000 penalty. Both of these penalties can be waived if the taxpayer has “reasonable cause” for not having filed.

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Shadow Raider has brought this to our attention and asked that it be posted:

The Ways and Means and Senate Finance Committees have just launched the website TaxReform.gov and are asking for the general public to submit comments on tax reform again. This time,  they even said they want “horror stories”, and many Americans abroad and immigrants have such stories to tell.

The form on the website asks for a US address, but, as Shadow Raider points out, “I suppose you could use your voting address (or perhaps try to input a foreign address using one of the obsolete postal abbreviations at the end of the list)”.

CARP: Canadian Snowbirds Might Be Able to Extend Their Stay

Toronto Sun: Canadian snowbirds might get to extend their stay south of the border

WASHINGTON – HIDDEN in a sweeping new American immigration reform bill is one small provision aimed at Canadians — making it easier for grey-haired snowbirds to spend more time in the sun.

The short section — buried in 844 pages of legislation — would boost the consecutive amount of time Canadian retirees can spend south of the border from six months to eight.

Canadian Snowbirds might be able to extend their stay

Canadian retirees may soon be able to stay in the United States for an extra two months, up to a total of eight months per year. The US legislation called Jobs Originated through Launching Travel (JOLT) Act, known to many Canadian snowbirds as the “Canadian Retiree Visa” is currently under review by the US Senate. In addition to the extended stay in the US, legislation would expand access to visa services, improve out-dated visa processing systems, speed up visa processing, and expedite entry for priority visitors as well as establish a visa video conferencing pilot program, if the legislation is passed.

The eligibility requirements for the Canadian Retiree Visa are the following:

Have Canadian citizenship;
Be 55 years of age or older;
Maintain a residence in Canada;
Own a residence in the U.S. or have a rental agreement for the duration of stay;
Will not engage in employment while in the United States; and
Will not seek assistance or benefit.

The Act is part of the United States’ efforts to boost their economy via tourism, and it is attempting to capitalize on the increasing number of Canadian visitors and the business they bring when travelling.

According to Statistics Canada, Canadian residents took 20 million overnight trips to the U.S in 2010, an 11.1% jump from the previous year, and spent $18.2 billion. It is no surprise that the US sees this as an opportunity, but at what costs to Canada and Canadian residents is unknown yet.

While many are happy about this news, Canadians should keep in mind that this Act may affect them, especially with respect to provincial health plans and residency issues for income tax purposes. CARP will seek more information from provincial and federal government, but at the moment it is uncertain whether Canadians will be able to keep their provincial health coverage if they are out of the country for the additional time provided by the JOLT Act. CARP will continue to monitor and report on the JOLT Act and its potential effects on Canadians travellers.

2013 US JOLT Legislation Section – by – Section

As, rightly, suggested by badger for a dedicated post at Isaac Brock:

Jack Townsend’s OPTING OUT, Part 3

and latest comment,

anon5percent

Jack – Good news! I am an OVDI participant who asked to opt out into the Streamlined Program. I have been accepted into the Streamlined Program as a low risk for non-compliance. I have been issued Letter 5062 (acceptance into Streamlined Program) along with a 4549 (tax adjustments – no tax penalties, just interest) and my agent told me today that a Letter 3800 (FBAR Warning) will soon follow.

There is major news associated with this result. It is news that OVDI participants and many tax attorneys will want to know. The news is that the Streamlined Program policy is changing again. It is very much to the favor of OVDI participants. It seems that they are being given the chance to enter the Streamlined Program on the basis of the same years as new Streamlined Program participants. I am a prime example of that. I was a filer who amended returns in OVDI. I thought amending returns made me ineligible for the Streamlined Program. It no longer does. Even Letter 5062 says, “We’ve processed the returns or amended returns you submitted.”

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US Department of Justice News Release, April 30, 2013

Also, Globe and Mail: Justice Dept. targets U.S. accounts at CIBC’s Caribbean wing

It looks like US folks were opening a Wells Fargo account that would then be directed to one of CIBC’s offshore affiliates.

Could be very reasonable reasons for doing this. Perhaps not. All will be mixed in the same pot.

The Justice Department announced that late yesterday a federal court in San Francisco entered an order authorizing the Internal Revenue Service (IRS) to serve a John Doe summons seeking information about U.S. taxpayers who may hold offshore accounts at Canadian Imperial Bank of Commerce FirstCaribbean International Bank (FCIB). The order was signed by Senior District Judge Thelton E. Henderson. The IRS summons seeks records of FCIB’s United States correspondent account at Wells Fargo N.A., which will allow the IRS to identify U.S. taxpayers who hold or held interests in financial accounts at FCIB and other financial institutions that used FCIB’s Wells Fargo correspondent account.
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Senator Paul stirs business ire over blocking of U.S. tax treaties

I had this in a comment to the FATCA thread but think more will see it as a post:

WASHINGTON, April 28 (Reuters) – Senator Rand Paul is coming under pressure from some multi-national businesses to drop his opposition to tax treaties between the United States and other nations.

Citing privacy concerns about Americans’ tax data, Paul, a Republican and libertarian, has single-handedly blocked Senate action on treaties with Hungary, Switzerland and Luxembourg that have been signed by authorities on both sides, but have been awaiting Senate review since 2011.

Read More at Reuters

Canadians, the ones paying attention including US Persons in Canada worried about compromise of all financial information of their and those related to them being turned over to the US:

Bank fraud, computer security top survey of Canadians’ privacy concerns

The poll suggests two-thirds of Canadians are concerned about the protection of their privacy — with a quarter of respondents saying they are “extremely concerned.”

“There is a growing sense amongst Canadians that their ability to protect their personal information is diminishing,” the report says.

Many Canadians feel a growing sense of helplessness when it comes to protecting their privacy. Seven of every 10 people think their personal information has less protection today than it did a decade ago, the report suggests.

…
The survey also suggests most Canadians are concerned about bank fraud, credit-card fraud, computer security and identity theft.

Despite these concerns, the poll found most Canadians remain largely unaware of their privacy rights. Some 63 per cent rated their knowledge of privacy laws either low or in the neutral range. That said, Canadians’ knowledge of their privacy rights is higher now than in previous years, the survey suggests.

Canada Privacy Breaches: More Than A Million Canadians May Have Had Data Compromised

Prompted by a question from NDP MP Charlie Angus, the government was forced to acknowledge this week that at the very least, there were 1,072,999 instances where a Canadian’s private information held by various departments and agencies was lost, stolen or accessed by an unauthorized third party.

In a stack of documents tabled in the House of Commons Monday, the government admitted it has recorded more than 3,134 data and privacy breaches between 2002 and 2012 across all departments — although many departments only counted data breaches within the last two to five years. Of the total breaches, only 399 were reported to Privacy Commissioner Jennifer Stoddart.
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The Conservative government said Tuesday that it takes the privacy of Canadians seriously.

G-20 Pushes for Measures to End Tax Evasion — NYT’s David Jolly

NY Times journalist, David Jolly (as well as NYT’s Brian Knowlton on related stories) — ahead of the pack on reporting the FATCA, DATCA, GATCA scenario. Can’t other journalists see it?

The Group of 20 countries called on Friday for a coordinated effort to stop international tax evasion, urging governments to systematically share bank data.

Finance ministers and central bankers of the G-20, meeting in Washington, said in a communiqué that automatic exchange of tax-relevant bank information should be adopted as the global standard.
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Under an automatic exchange, governments would routinely transfer all foreign taxpayers’ data to their home governments, making it far more difficult to hide assets from the tax collector.

The impetus for the new approach is an American law, the Foreign Account Tax Compliance Act, called Fatca, requiring Americans with overseas accounts and non-American financial firms to meet tough financial disclosure requirements. In practice, Fatca conflicts with privacy laws in many countries, so Washington has been working out bilateral deals in which overseas financial institutions share that data first with their own governments for transmission to the Internal Revenue Service in Washington.

The Bitcoin: Bubble or Bank — CBC The Current, April 11, 2013

If the Bitcoin becomes sometime in the near future the new “virtual?” currency as some think, will FATCA keep up?  Will any of us keep up?  Or, will it fail?  I’m trying to understand it all.