US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
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NB: This discussion is a continuation of an older discussion that became to large for our software to handle well. See US expat tax and FBAR: Discussion thread (Ask your questions) Part One.
I think ITINs are only for filing taxes with the IRS and not for social security benefits.
Gotta love it! I received a ‘tax package’ from RBC today. Included was this gem… “Royal Trust will be issuing U.S. -based tax reporting slips to U.S. non-exempt and U.S. suspect recipients…..
RBC is firmly in bed with the IRS but screwing their suspectclients.
I wonder what triggers this “tax package”. Does every RBC client receive one, or just the one’s with US indicia?
It is on the last page of a 36 page information booklet that accompanies the tax slips from RBC. I received the same thing about a week ago and sent a picture of it to Stephen. I continue to fly under the radar at RBC and report only as a Canadian tax payer.
Marie: it goes to all their investment clients. Most of it deals with reporting to CRA such as cost base, currency exchange and so on. This is the first example of a Canadian FI sending tax slips directly to the IRS that I’m aware of. This is in addition to the reporting to CRA of the account balances under the IGA.
They say that generally suspect Americans are those who have signed a W9
Duke, where do you see that RBC is reporting directly to the IRS?
My question too. The notice I received from RBC Dominion is that my account info was sent because I signed a W-9. Signing a W-9 would remove any suspicion that one is a USP, I would think.
Duke, did they really use the word “suspect?”
That is priceless.
And is more fodder…..
I should have mentioned that I was informed that my account info was sent to the CRA. No mention that it was reported directly to the IRS.
To clarify, if that’s possible. George- they use the term “US suspect recipients” and “effectively most account holders who have provided a Form W-9”
No name and BB. Not positive but it only makes sense. They send you a 1099-Div, a 1099-INT, a 1099-B, a 1099-OID, or a 1099-MISC.
These are US information slips equivalent to our T3s and T5s. It is reasonable to assume copies are sent south. However I’m not certain.
I tried to read the general instructions for issuers of 1099 slips. They were incomprehensible but at the end FFIs were told to send the info to Austin, Tex. This could be S.O.P for all FFIs . I don’t know.
Thanks to all who commented regarding my SSN questions, but I still have not found the answer I am looking for. Perhaps if I explain further, someone might have some useful info.
What I am trying to figure out is whether or not a particular person I know is in fact a US person or not. The person is Canadian born and raised, but lived in USA from about 1953 to 1963 as the spouse of a permanent resident. She did not work in the USA while living there and seems to think she never had a green card but was allowed to live in the USA through her spousal connection. Would it have even been possible for her to have lived there for that period without being a legal permanent resident?
Flash forward 40+ years, and this person (no longer married) is now collecting spousal SS benefits while living in Canada. The person has a SSN as reflected on her SS benefit statements but is not sure WHEN she got this number and suspects it may have been at the time she applied for SS around 15 years ago. However from what I can tell, the only people who get SSN’s are people who were or are US taxpayers with some exceptions that are not readily documented anywhere on the net that I can find.
So, my thoughts on this are that SSN’s may also be given out for situations where the person has no SSN, but needs one to collect SS (ITN is for taxation purposes only as WhatAmI pointed out and I have clarified that the person’s SSN is in the format of a valid SSN (i.e. does not start with 9 as ITN’s apparently do).
So what do you all think? Is this person a US person, or a non-US person who happens to have a SSN only to collect spousal SS benefits?
If on the other hand, SSN are NEVER given to someone who is neither a citizen nor a legal resident alien, then it would seem that this person is indeed a US person.
Argghh…am reminded of that Rick Mercer video of the family who cannot figure out whether or not they are American?
@Duke of Devon
The letter I received should clarify things. Here are the relevant bits:
“Both account holders are documented for QI and FATCA as a US person with W-9’s on file for the two accounts listed on the email.
We reported the following for these clients under QI & FATCA requirements:
Under QI requirements:
The IRS requires RBC entities, such as Qualified Intermediary, to report all US and foreign income earned by US Resident. This includes all US source income and all other income earned in the account, regardless of country of issue (including Canada). US citizens who do not reside in the US only have their US source income reported on various 1099 forms.
If your client is a US person, he or she will receive one or more 1099 form(s). Note: When a US Person has provided a completed W-9 and supplied their TIN, then there will be no US backup withholding tax deducted from their US source income and, after 2016, will no longer receive a 1099 as they will be reported to CRA for FATCA purposes.
Under FATCA requirements,
The following information is what is is reported to CRA for specifies US Persons:
– Name, address, and US TIN
– Account number
– Account balance/value as of the end of the calendar year. If closed, balance immediately before closure.
– Income paid into the account for the current year
– For 2016 onwards (to first be reported in 2017), gross proceeds from the sale or redemption of property paid or credited to the account during the year For those with US Controlling Persons & US Owners; name, address and TIN (if any)”…
Google ‘ can a non US citizen have a Social Security No.’ They can be issued to non citizens given permission by homeland security to work am
Ned or live in the US. Homeland security didn’t exist 40 years ago.
Your friend is no longer a US person for all intents and purposes,.S/he is a non US person who happens to have a SSN.
S/he does not have to report social security benefits on any return other than her Canadian one. Social security payments are only reported in the country of residence.
AnonForAReason,
You may find your answer here (32 page pamphlet): https://www.socialsecurity.gov/pubs/EN-05-10137.pdf – Social Security, Your Payments While You Are Outside The United States.
You also may be able to figure out how to talk to a real person from outside the US (and without a social security number): https://www.socialsecurity.gov/foreign/phones.html. That is likely the best source for other than a guess to answer your questions. Good luck with that.
Thanks BB I didn’t understand a single word. You have to be there.
Question to “US suspect” RBC account holders: if you have any non-US list mutual funds or ETFs outside of a RRSP, did RBC send you the US tax-related forms (can’t recall what it’s called) that make it possible to get better tax treatment for these PFICs? Just curious.
2015 IRS security breach now up to 700,000 accounts. Imagine the extra work load to repair that damage and another reason for CRA to withhold the data.
http://usat.ly/210cXq5
Very interesting memo from ABA American Bar Association commenting on the current OVD, SFOP and SDOP, as well as calling for more clarity as to how to distinguish “willfulness” vs. non, in the ‘narrative’ the IRS is demanding:
http://www.americanbar.org/content/dam/aba/administrative/taxation/policy/101415comments.pdf
The IRS continues to show that it doesn’t respect the Taxpayer Bill of Rights
for example – #1 Right to be Informed
“The Right to Be Informed;
Taxpayers have the right to know what they need to do to comply with tax laws. They are entitled to clear explanations of the law……..”
or
#10
“The Right to a Fair and Just Tax System;
Taxpayers have the right to expect the tax system to consider facts and circumstances that might affect their underlying liabilities, ability to pay, or ability to provide information timely….”…..
See recent comments by Horton, Acting Deputy Commissioner (international), IRS Large Business and International Division, which are particularly relevant to those ‘taxpayers abroad’ that the IRS is demanding compliance from.
David Horton, acting deputy commissioner (international), IRS Large Business and International Division, spoke at the annual Florida International Tax Conference in Miami on January 8, and in his answers to questions put by ABA lawyers, refuses to help define or distinguish what ‘willfulness’ means:
“……. according to Horton. “Non-willful is non-willful,” he said.
The American Bar Association Section of Taxation wants a definition of willfulness. “The absence of any meaningful guidance on the definition of willfulness significantly complicates the task of preparing and submitting an explanation of the ‘specific reasons’ for a taxpayer’s prior compliance shortfalls and results in taxpayers and their advisors preparing more detailed explanations than might otherwise be necessary,” the lawyers griped in their report 2015 TNT 199-19: IRS Tax Correspondence to the IRS.
Ain’t gonna happen. “We’re not going to define willfulness for you,” said Horton. Panoff noted that willfulness under the tax code is different than willfulness under Title 31, the federal criminal law…”……
http://derrenjoseph.blogspot.ca/2016/01/notes-from-florida-international-tax.html
and IRS Commissioner Koskinen;
“…….. on December 17, while presenting at the George Washington University Law conference on international taxation. IRS Commissioner John Koskinen said, “At some point, we will have assumed that people have had enough notice that they should have become voluntarily compliant,” “At that point—after some period of time and you’re not compliant—it will be assumed that logically you are purposely not compliant”.
And that comment ass/umes without cause, that the entire globe speaks English, knows US citizenship and tax laws intimately, can afford assistance with the incomprehensible US tax system and translation of local documents into English in order to file, etc.
Koskinen shows that he and the IRS’s default position is the assumption of purposeful non-compliance.
How fair and just could such a system ever be? Why would anyone outside the US with other options choose to ‘voluntarily’ comply and be part of such a system for a lifetime if they had the choice to renounce and sever connections with the US?
The US Treasury and IRS continues to be stuck on stupid.
@Badger
There are a lot of useful suggestions in those many comments from the American Bar Assn for non-resident USP’s that would hopefully reduce the amount of compliance fees when assisting taxpayers through the Streamlined process. Some are:
– Waiving PFIC calculations when the amount of tax generated is presumed to be negligent
– Allowing a taxpayer to make a Streamlined submission without a SSN
– No longer denying “snowbirds” (those who meet the substantial presence test) and “accidental” Americans to enter Streamlined.
– Allow Streamlined participants to pay a “proxy” tax when compliance costs threaten to “dwarf” the actual tax and penalties owed.
I wonder how many lawyers never see anyone again after telling them how much they’ll have to pay in compliance fees just to owe no tax. There’s no money in that.
BB The ABA are compliance condors. Their bias is exemplified by the statement- “The IRS voluntary disclosure programs have been remarkably successful “
Seems the usual “we want to immigrate” surge happened once the results of Super Tuesday came out, Canada being the obvious place to head for.
http://www.bbc.com/news/world-us-canada-35706377
Wonder how many realise that while they may leave, they’ll still be subject to US taxation. My guess? Not one single one. Wonder even more what they’ll say when they find out.
…and if you told them, they’d say FATCA was something the Republicans thought up.
I swear if we had a dime from each Homelander who states they will move to Canada if So and So gets elected, our legal bill would have been fully paid ages ago. I agree none of them appreciate FATCA repercussions or even Canadian immigration laws. Guess they’d better sneak over before the Trump Wall that he now isn’t building at our costs is/is not going up.
We hear this crap every four years and I am sick of it. Blowhards and whiners when they don’t get their way. Why don’t they work within their own party systems to make changes?
The ones that did come here years ago in the anti Vietnam years and especially the ones trapped by conscription at least made some sense to me.
But our immigration laws have changed and you can’t just walk into Canada because your candidate didn’t win. Get over yourselves! Talk to some actual refugees to learn about the oppressive government systems they have escaped.
I couldn’t agree more, Ginny! Is Canada some kind of a shelter for battered US voters? Next time someone says that, I’m going to ask them if they even voted. I bet most of them didn’t!