US expat tax and FBAR: Discussion thread (Ask your questions) Part Two
Please ask your questions here about US Expat tax and FBAR.
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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.
Jet.. Let’s be clear here. I am neither a lawyer or accountant. …just an interested spectator who has a keen interest. With the caveat.’as far as I know’…. You do not attach any original documents. You do not attach anything. Most tax returns are e-filed and they take almost everyone’s word for it. The computers ask for more info in a few cases. A tiny number are audited.
The computers match peoples’ ‘word’ with info they get from employers, banks etc. Since you are offshore, they won’t have anything to match with.
If you are a minnow, they will not have time or interest to bother you.
3 yrs. has been recommended for those who have no taxes owing and nothing to hide. File more if you must.
Bizarre results…some have been sent a cheque as a result of the stimulus act. A cheque they neither expected or wanted. Men in jail have been sent millions in refunds for non-existent dependents–identity theft was rampant…Anything can happen.
Bear in mind that the tax code is so complex that it isn’t possible to get it right without spending a boodle. You cannot be faulted for making your best effort.
http://www.forbes.com/sites/kellyphillipserb/2013/10/01/with-shutdown-taxes-still-due-but-you-cant-ask-irs-for-help/
10/01/2013 @ 1:10AM
‘With Shutdown, Taxes Still Due But You Can’t Ask IRS For Help’
by Kelly Erb
“if you’re on extension, your 2012 federal income tax return is still due on October 15, 2013. And yes, the IRS will cash your check on time.”
“But the door doesn’t swing both ways. If you are due a refund, it will likely be delayed (the extent of the delay is largely dependent on the length of the shutdown).”
“Walk-in assistance centers for taxpayers will be closed. Similarly, the IRS will not pick up the phones: all telephone hotlines would be closed….”….
..”…Forty-five employees will stay on with the Taxpayer Advocate Service; those are personnel considered necessary for the protection of statute expirations, bankruptcy, liens and seizure cases. Specifically, Nina Olson (the National Taxpayer Advocate) will go to work, as will her executive and staff assistants and her senior advisor. Additional directors and deputies needed to provide oversight will also report during the shutdown….”……..
http://www.ctvnews.ca/politics/what-the-u-s-government-shutdown-might-mean-for-canada-1.1478038
…………..” Do business in the U.S.?”
“Canadians who earn income in the U.S. will still have to file U.S. tax returns, but the Internal Revenue Service says it will suspend all audits for now. As well, IRS taxpayer services and toll-free help lines are shut down.
The Bureau of Labor Statistics has ceased almost all operations, leaving the stock market without some of the benchmark economic indicators that drive the market. The September jobs report, due Friday, could still be released on time. The Treasury Department’s daily report on government finances will be released normally.
Mail delivery should continue as usual, because the U.S. Postal Service receives no federal aid for its daily operations.”
Just posting these links as an FYI if anyone wondering and needs to know.
http://www.accountingweb.com/article/shutdown-wont-halt-october-15-filing-extension-deadline/222487
…”Shutdown Won’t Halt October 15 Filing Extension Deadline
Posted by Terri Eyden on Oct 1 2013 0 143 printer friendly
By Jason Bramwell
Despite the federal government shutdown that went into effect at midnight Eastern time October 1, the deadline for many of the more than twelve million taxpayers who requested an automatic six-month extension from the IRS to file their 2012 tax returns and make payments will remain October 15….”
I posted this on another thread, but don’t want it to get lost:
Very interesting comment from the IRS Taxpayer Advocate:
http://www.lexisnexis.com/legalnewsroom/tax-law/b/newsheadlines/archive/2013/09/25/aba-meeting-taxpayer-advocate-urges-u-s-taxpayers-to-use-caution-on-offshore-voluntary-disclosure.aspx
09-25-2013 | 05:33 AM
Author: TaxAnalysts®
“ABA Meeting: Taxpayer Advocate Urges U.S. Taxpayers to Use Caution on Offshore Voluntary Disclosure
National Taxpayer Advocate Nina Olson said September 20 that taxpayers who are thinking about opting in or out of the IRS’s offshore voluntary disclosure program (OVDP) should talk with an attorney-adviser at the Taxpayer Advocate Service to learn the pros and cons of participating in the program.
Olson spoke from the audience during an Individual and Family Taxation session on reporting foreign-source income at the American Bar Association Section of Taxation meeting in San Francisco. The panel was discussing the possible dangers for taxpayers who decide to opt out of OVDP.”
Thanks Badger!
@Badger, Nina is bit behind. Remember Brock’s press release on 2012 OVDP? (which the media completely ignored). But Nina’s point that one shoudl talk to an attorney/adviser is wrong. They will most likely try to get you in the program and make you pay them tens of thousands.
@Petros, it was hard to know exactly what to make of the statement without further context. Does it only refer to those who would have been opting in only to opt out – because of the IRS herding of people into OVD programs vs. quiet backfiling or foward compliance? Is it of help to people stuck in the queue from the 2009-2011 OVDs who are wondering what to do next? At least it is interesting that Nina is willing to make that statement in a room of practitioners. Perhaps she also meant that the legal representatives of those considering opt-in, or opt-out should consider contacting the TAS. It was unlikely that any minnows or expats would be there in that audience to hear her statement. Just as we are not able to pay for access to other venues where she has spoken. Wish that her statements could be made where ordinary expats could hear and ask questions for themselves. Although perhaps they wouldn’t if it flagged that they were not ‘compliant’.
@bubblebustin, hope it is of some use and import. Does seem interesting that she made that statement, and that Tax Analysts reported it. For what it is worth.
@petros
I read it to say that she thinks those who are in OVDI should contact an attorney at TAS before opting out. I plan to make contact with TAS again if we ever hear from the IRS.
@badger
We are stuck in a queue, but have been told by TAS that there’s nothing they can do until we get a response from the IRS.
@bubblebustin
22 months is ludicrously long. Does the IRS at least periodically tell you that you’re still in the queue (and thus haven’t been totally forgotten about)?
Speaking of the IRS, I missed that Lois Lerner and several others have resigned from the IRS: http://www.forbes.com/sites/taxanalysts/2013/09/26/we-need-a-tax-professional-to-run-the-irs/
@bubblebustin,
That callous treatment, utter lack of service and absence of even rudimentary fairness gives us a big heaping taste of what FATCA will bring even closer to our homes. The US requires that we sacrifice up all other parts of our life as an offering – laying days, months and now multiple years of our life and wellbeing at the feet of the sacred altar of US exceptionality and the US domestic debt. And don’t forget to surrender every child’s RESP, every disabled dependent’s RDSP, and every family TFSA as well as your own retirement savings and proceeds from selling the Canadian family home. A destitute Canadian citizen is apparently a US compliant citizen.
They’ll take your life and health while waiting to take your savings.
@tdott, badger
Nothing, zilch, nada from the IRS. Just a letter from Treasury many months back refunding our PLR fee and informing us that the issues surrounding our RRSP’s would be dealt with in OVDI. As I mentioned before, I envision our banker’s box in the corner of a room with everyone making wide circles around it. In the spirit of Halloween, let’s throw a few cobwebs in there too.
I might actually be happy if more years went by if a statute of limitations would apply, but not in our case as we are first time filers. I don’t want to renounce either until we are through OVDI in case we have a bone of contention and end up being ‘covered’, as we at this point can only certify 2 years of tax compliance (accumulated since entering OVDI). Maybe 3 more years will pass allowing us to renounce outside of the years tied up in OVDI. With the US government grinding to a halt, it’s looking more and more within the realm of possibilities.
Yes, it’s evident that mistakes will be made with FATCA. Mistakes that could take years, if ever, to correct. I shudder to think about it. Thank you for reminding me how incensed I should be about it, Badger. I’m afraid I’m starting to feel numb, like it’s happening to someone else. Watching the US government right now is like watching a train wreck in slow motion. Sad yet fascinating. Is it time for popcorn yet?
@bubblebustin,
Sorry to remind you – being numb is a respite sometimes. When can we resume ‘normal’ life?
@petros and @bubblebustin;
Have a look at the chart of compliance options on the TAS page.
http://www.taxpayeradvocate.irs.gov/Individuals/Resources-for-International-Taxpayers . Nothing about quiet backfiling or filing going forward of course. But, why no mention of the Streamlined by name? Nothing re the Dec 2012 Factsheet either. No cautions re OVDs. How does that accord with the reported comments and her criticisms about how the programs have been conducted – at least from 2009 to now? And, the chart only mentions the OVDP as a possible remedy for those who did not know to report their RRSPs (specific to US residents?). I find this disturbing – See chart under “Q. I recently learned about my U.S. tax obligations. How can I get current?
A. For information on common situations and potential solutions, see Options Available to Help Taxpayers with Offshore Interests, which discusses the following scenarios in more detail.” links to the IRS
“You have an interest in a Canadian RRSP or RRIF and you either (i) didn’t make an election on Form 8891 to defer paying tax on the investment income earned by the fund until you receive distributions or (ii) didn’t file annual information returns on Form 8891. Consider asking the IRS to accept you into the Offshore Voluntary Disclosure Program (OVDP). ”
Also see that there is an FAQ re the rising numbers of US citizens and greencard holders renouncing – though nothing about the questionable numbers and Federal Register gaps. See: “Q. I’ve heard that some taxpayers give up their American citizenship or status as long-term residents (i.e., taxpayers who have held a green card during at least 8 of the last 15 years) for federal tax purposes. Is that true? What do I need to know about that?
A. Yes, renunciations (or as the IRS refers to them, expatriations) increased more than sixfold between 2008 and 2012. The IRS is required to publish a list of individuals who have chosen to give up their citizenship or resident status. You need to know that your tax liability could be affected by your expatriation, and notification requirements apply to you. Different rules apply according to the date you expatriated.”
@badger
It is odd – Streamlined is mentioned, but not by name.
Even the Streamlined web page, which is linked to, doesn’t use the word “Streamlined”.
Seems like a recipe for confusion.
@badger
TAS sure makes it clear what the options are, but unless you meet the narrow qualifications for what was once known as the Streamlined procedure, you’re looking at nothing more than the extremely expensive, stressful and lengthy option of OVDI. To build into OVDI the opt-out option creates an outcome different from OVDI’s but can only be accessed through OVDI. If I was facing which choice to make coming forward right now, all would seem to be fraught with danger. Depressing, really.
Can’t quite figure out why they would drop the Streamlined name.
At almost 22 month in, I’m sure I don’t make great advertising for the OVD program.
@bubblebustin,
I wonder if the term ‘Streamlined’ drew too much attention in negative contrast to the only other alternative they will acknowledge as acceptable – the OVD? Even ‘Streamlined’ is only a relative term if one is opting out apparently. Do they want to pretend that it is all part of a tax evading ‘offshore’ foreign account continuum so they can still trumpet the ‘success’ of the ”Offshore’ ‘Voluntary’ programs – and conflate all the Canadian resident ZERO filers and similar expats elsewhere with the numbers who actually benefited from the OVD – i.e. big homeland resident whales with Cayman accounts?
There can be no question of trusting the US. Everything they do is suspect.
Anyone want to give a shot at helping this commenter?
http://isaacbrocksociety.ca/2011/12/14/about-the-isaac-brock-society/comment-page-5/#comment-562603
His comment is lost on that thread.
For those sending documents to the US and looking for proof of delivery and proof of timely filing:
Ask about this. I was recently told that Canada Post no longer recommends using registered mail to the US for this purpose, because of a new US treatment of that mail – mingling the registered mail in with other mail (?), which apparently makes it unreliable. I saw a memo to that effect though I don’t see anything similar on the Canada Post website. So, in order to ensure timely delivery AND get proof that the IRS will recognize, it costs an incredible amount for each time a form must be sent – because they are now recommending Priority Post Courier instead. The US will only recognize proof of timely filed mailing from certain types of couriers and certain types of methods http://www.irs.gov/uac/Private-Delivery-Services-%28PDS%29 http://blogs.angloinfo.com/us-tax/2013/03/18/living-overseas-how-to-properly-mail-or-send-tax-returns-to-the-irs/
Thus, the US adds another layer of extortionate and disproportionate costs to ensure ‘compliance’ for those who must have reliable and provable timely delivery to the IRS and Treasury for all those tax returns, FBARs, 3520 and 3520-A etc. being filed from Canada and the rest of the globe to prove that we owe the US ZERO!
Even if we sent these documents a month ahead of time, we can’t prove it, so we have to pay for a method that provides proof for our own protection. If they get lost in the US postal system, we’re SOL.
One accountant said that for those in Canada living near the common border it might be worth actually driving across into the US just in order to mail the forms on the US side.
How much more absurd is that? And of course, to do that would require a US passport, which would compromise a potential renunciation or relinquishment. And how to explain mailing from within the US – while filing as a nonresident?
Another oppressive and insane cost to maintain our ‘birthRIGHT’.
The US doesn’t really want compliance. They keep inventing ever higher and random hurdles to add to those that already plague us.
Robert Stack – the list of reasons for those living outside the US to renounce or relinquish are getting longer and longer – and the main cause is the US itself. That is fact – NO MYTH.
When is the mandatory microchip implant coming? And when will all US persons born and living abroad have to pass mandatory US tax and financial reporting exams just like the licensing ones for US tax preparers?
Those who can’t pass the tax exams set for citizens and persons abroad will be recycled into pellets.
@badger
As we already know, the biggest threat to US citizens abroad is the US GOVERNMENT!
@Badger, those pellets have a name … Soylent Green!
So right bubblebustin! We need a t-shirt to that effect.
WhatAmI, glad to others remember Soylent Green.
: )
Americans in Canada. I am not American anymore but that does not matter. I kind have a sympathy for their plight.
Me and Yoga Girl have inflicted this website.
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