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.
Unfortunately form nation is so screwed up that there might not be a ‘correct’ way to do it. Ask 25 accountants to do a US tax return and you will get 25 different results. Bonne Chance!
For anyone else in this situation (i.e. renounce then do taxes)
“If you or a spouse or dependent are not eligible to have a Social Security Number and do not already have an ITIN (Individual Tax Identification Number), submit an application for an ITIN along with the required tax returns and information returns. We are an authorized IRS ITIN Acceptance Agent and can help with this process”.
http://sandpointcpa.com/wp-content/themes/williamsparsons/downloads/streamlined-expat-filing.html
It’s not taken from the IRS website but fingers crossed it’s true.
“If you are not eligible to have a Social Security Number and do not already have an ITIN, submit an application for an ITIN along with the required tax returns, information returns, and other documents filed under these streamlined procedures”.
This was taken from IRS website http://www.irs.gov/Individuals/International-Taxpayers/U-S-Taxpayers-Residing-Outside-the-United-States
I really couldn’t create a more complicated tax system. Talk about a huge headache. All I want to do is travel to US with ease but after all of this, I may never want to go there again.
Stressed,
That is indeed the conclusion many of us have come to, even those of us who have family in the U.S. It is indeed a sorry situation.
You may or may not have read that we are seriously fighting all of this and would welcome your support at: http://www.adcs-adsc.ca/
On the topic of timing: is there any consensus on what a person who has renounced (*) should do if a CLN is not received prior to having to have to file the final year return? Should they just file 8854 and the dual status return as if the renunciation had been approved?
I ask because it seems that CLNs are taking an increasingly long amount of time to be issued.
I focused on renunciation because that is the straightforward case – 99.99% (100%?) likely to be approved. Documentation of a prior relinquishment is dicier as there can be a question as to whether it will be approved.
@tdott,
I agree with that. My mother renounced but I had her go ahead and file, assuming the CLN would come eventually. It actually came before the 8854 etc was due, but as you say it’s taking longer now.
tdott, there is no approval for renunciations. Approval can only be had for relinquishments. If you renounced in front of State, you renounced, end of story. You should have a receipt from fee payment as proof until the CLN arrives. Even if the CLN never arrives, you still have renounced.
@tdott, I agree with The Mom. Renunications don’t need any approval so it’s a done deal once you sign the Oath of Renunciation. Go ahead and file as if you already have your CLN because you’re no longer a US citizen from the date of your visit to the embassy/consulate.
Question re the JUne 2014 Australian – USA Intergovernmental Agreement (IGA), FIN 114 reporting and Australian Self Managed Superfunds ( SMSF)
I
The recent IGA has a clause under exemptions for FATCA filing:
Funds that Qualify as Exempt Beneficial Owners. The following Entities are treated as Non-Reporting Australian Financial Institutions and as exempt beneficial owners for purposes of sections 1471 and 1472 of the U.S. Internal Revenue Code.
Australian Retirement Funds. Any plan, scheme, fund, trust, or other arrangement operated principally to administer or provide pension, retirement, superannuation, or death benefits that is a superannuation entity or public sector superannuation scheme (including an exempt public sector superannuation scheme) as defined in the Superannuation Industry (Supervision) Act 1993, or a constitutionally protected fund as defined in the Income Tax Assessment Act 1997. (http://treasury.gov.au/Policy-Topics/Taxation/Tax-Treaties/HTML/~/media/Treasury/Policy%20Topics/Taxation/Australian%20Tax%20Treaties/Intergovernmental%20Agreement/PDF/Australia-US%20FATCA%20IGA.ashx)
Does anyone know if an individual when filing FIN114 FBARS needs to file the information of accounts in persona lSMSF . This latest IGA would seem to say, No. Anyone know if this is so?
@Medea and The Mom, technically you can have a renunciation denied. If the consular officer notices you are under duress, mentally disturbed etc specifically stating they are not intending to give up all rights etc, and/or for any reason not renouncing voluntarily, there is a strong likelihood the CLN won’t be approved. FAM mentions cases where people insisted demanded to take the oath, the consular officer accepts it and then DOS denies it.
Ditto what @Somewhere just said.
If a Consular Officer simply thinks you are signing under duress or you might not be competent, they can submit a letter with an adverse recommendation.
A Consular Officer could interview an older person who because of the stress in getting to the Consulate, going through the security and then “twenty questions” might make an error with a statement causing the Consular Officer to wonder if dementia is a possibility.
@somewhere, George
But what happens when an elderly person renounces and has a receipt for paying the 2350 dollar fee, but the DOS then denies the renunciation? Does the person get their money back? 🙄
@Uncletell…
http://www.state.gov/documents/organization/115645.pdf
7 FAM 1262.4 Documentation of Renunciation
(CT:CON-394; 02-09-2012)
a. Under Federal regulations at 22 CFR 22.1, an administrative processing
fee applies to documenting renunciation of U.S. nationality. The fee
should not be collected during the initial interview but only after the
individual has decided to proceed with the renunciation and has arrived to
take the oath of renunciation. The fee should be collected before
conducting the ceremony and administering the oath. If a renunciation is
undertaken but not approved by the Department, the fee is not
refundable.
@Brockers, in regards to renouncing or for those that want a CLN for relinquishment.
I have thought for a long time now that a person going in needs to keep everything short, sweet, and to not be too chatty!!!
Keep it very business like realizing that anything you say can and will be used against you.
Remember, these people think you are “nuts” for giving up something so “precious.”
@George, some places may still think that way, but I didn’t get that impression when I did my renunciation in Bern last year. There was no attitude about it, one way or the other, just professionalism in getting the job done. Just another task to be done that day with nothing special about it. What their thoughts are in private I can’t say of course, but there was nothing in their public face that gave that impression. I was dealt with as simply another US citizen who needed their help.
I agree that it’s best to keep things as short as possible though. Just stick to the facts and get it over with as quickly as you can.
In the “What Not To Say” category…
When I was in the waiting room for my relinquishment interview, there was a woman at the glass window counter telling the clerk all about FATCA, and how her financial adviser told her she’d have to move her account to another FI unless she renounced her US citizenship, and other hardships and costs about filing US taxes, etc.. Can you imagine? I wish we knew if her renunciation was successful.
Thanks for the responses to my question. However, it unfortunately seems that there’s no consensus (or even idea) on how to proceed with the final year return without a CLN in hand. Is that right?
@George
Short & sweet is the best approach even crossing borders, banks, etc… just answer what is asked… don’t add more to it cause u think have to explain yourself… just answer what they ask… smile… wait politely… for the next question… no one needs to know your life story… it will be used against u… no matter how innocent u think it sounds…
@tdott
Personally, I’d file “as if” even without a CLN. Think about the mess it would create if you didn’t and then tried to correct everything after receiving it.
Again on the topic of the final year return: Phil Hodgen recently seemed to say that under some circumstances, one can be considered a NRA for the entire year, not just part of it (*):
This is the first I’ve heard of that – I’d always thought that you had to file dual-status returns. Does anyone want to chime in on this?
(*) See: http://hodgen.com/your-expatriation-tax-return-when-u-s-income-is-zero/
So, the IRS and US Treasury wants every scrap of information automatically reported from FFIs on everyone around the globe who might even remotely potentially have had some asset that US tax might possibly potentially be assessed on – which they would have to work to formally assess, and then collect extraterritorially, YET, they have not been able or willing to do this INSIDE the US?
http://www.canadianbusiness.com/business-news/fed-report-says-irs-halts-efforts-to-collect-unpaid-taxes-too-soon-billions-may-be-at-stake/
..”The IRS failed to take all required steps for collecting unpaid taxes from people it can’t locate in over half the cases that investigators studied, according to a federal report released Monday.
The study does not estimate how much money that costs the government overall. But it says that in 2012, the IRS declared $6.7 billion in unpaid taxes to be uncollectable — involving nearly 483,000 tax returns — because it couldn’t find the taxpayer.
In tracking down those with overdue bills, IRS workers are supposed to take up to 10 actions like tracing postal, motor vehicle, court and other records. But in a study of 250 cases involving self-employed people and small businesses, investigators said that 57 per cent of the time, they found no evidence that agency workers had completed all required research before declaring the money uncollectable.
In addition, 7 per cent of the cases lacked a required, public warning that the government was putting a lien on a taxpayer’s property, according to the report.
The report was written by the Treasury Inspector General for Tax Administration, which audits the IRS.”………..
See TIGTA report http://www.treasury.gov/tigta/auditreports/2014reports/201430052fr.pdf , and more commentary;
http://www.accountingweb.com/article/tigta-finds-flaw-irs-collection-efforts-unpaid-taxes/223960
Badger. Precisely. Yet people on IBS are worried that the IRS is going to court in Canada to collect unknown amounts from unknown individuals.
I am feeling incredibly annoyed right now with everything. My accountant told me I need to call SSN who told me I would qualify for one because I was born in the US. I really don’t understand why I would need an SSN – I will never work in the US and I certainly won’t collect anything from then. I renounced in March 2014 and I made that quite clear to her.
Please tell me how I can qualify for an ITIN because I cannot travel to Toronto yet again and wait around for this number. I need to put this behind me.
@ Duke of Devon, Badger
There’s an 800 lb elephant in the room: what’s the proposed mechanism for enforcement of HUNDREDS OF THOUSANDS of new extra-jurisdictional US tax claims in Canada?
Due to its close proximity to the US and the hundreds of thousands of Canadian with some kind of US tie, Canada is the world leader in so-called “illicit unreported accounts held offshore by US persons.” So what’s the MASTER PLAN plan for now collecting foreign tax claims from these untold hundreds of thousands of recalcitrant Canadian citizens residing in Canada? Especially if they have no US presence, assets or income?
It is difficult if not impossible to collect any foreign tax in Canada because Canadian courts do not enforce foreign tax claims. There is no mechanism of enforcement other than “assistance in collection” by CRA. And the Tax Treaty prohibition against assistance in collection from Canadian citizens is treaty law and cannot be changed without collaboration of both Parliament and US Congress.
Has the US government ever been successful in collecting tax and penalties from a Canadian citizen in Canada? Any factual cases where a Canadian citizen residing in Canada was forced to pay US tax (or any other foreign state’s tax) by a Canadian court judgement? What were the cases, and how was the foreign tax claim enforced? Any actual cases – not conjecture or assumption?
The answer to your question is that as far as anybody here knows, no Canadian living in Canada was ever forced by a Canadian court to pay a US tax bill. The IRS would be nuts to try.