FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See FATCA Discussion Thread (Ask your questions) for earlier discussion.
My apologies if we have moved this thread far away from the discussion of FATCA itself, but maybe through this discussion SEAT and I can help someone who is just having their OMG moment due to hearing about FATCA. The tax professional aspect and the duplicitous actions of the IRS to herd everyone into OVD programs are intimately connected to FATCA.
@Bubblebustin
thnx.
Had not seen that!
@Petit
It could be that section, since it’s the one that deals with exemptions. The quoted words don’t match the IGA in that the IGA reads more like 100%, but either way, it sounds good to me.
I’m amazed that this exemption provision isn’t getting more coverage. I read an article that mentioned other exemptions (less than $50K balance, etc) but not this one. I wrote to the author Friday night but haven’t heard back yet.
http://www.nortonrosefulbright.com/knowledge/publications/112584/canada-and-the-united-states-reach-an-intergovernmental-agreement-on-foreign-account-tax-compliance-act
Wouldn’t it be great if _almost_ every FI in Canada punted all US person clients not resident in Canada? No, that’s not as mean as it sounds. Most such people are surely resident in the US. They could find a Canadian FI that caters to non-residents of Canada if they need one. Since we at IBS firmly believe in RBT, those people living the the US are surely already compliant with the IRS in every way. FATCA reporting would be no big deal to them, because they are already reporting the exact same info on their FBARs and 8393 forms.
Of course, if the US switched to RBT life on Planet Earth would be as it should be.
@Not that Lisa…
Thanks. Yes, probably should get this thread back to FATCA, but as we have seen, you NEVER know where questions might arrive, and hard to be pedantic about ‘wrong threads” and NOT answer, eh? 🙂 Your story has been a good source of learning for all!
Maybe you can copy these comments or link them to the OVD drudgery thread? SEAT’s lessons could be valuable for some who might look directly at that thread.
Ah, you did it already. Thanks!
@not that Lisa
It would seem that the only options the IRS has left on the table are OVDP opt-in then opt-out (revolving door) and the narrow Streamlined Procedure. “Go forward” is to be treated with suspicion. The IRS has not yet found a fair way of coming forward for those benign actors who have the most to lose, as a high FBAR will put you in the hot seat for further investigation.
@ Just Me ….
no, I saw your questions and I appreciate your request but please understand my situation.
I am still a public figure / TV personality (sport) and have avoided so far public embarrassment of myself and more importantly of my wife. I am more than happy to answer specific questions with regards to certain experiences I had but I would not like to publish my story any further than I already have here.
I hope your understand that.
This is enlightning: Pravda understands the plight of US citizens.
http://english.pravda.ru/business/finance/12-02-2014/126819-americans_denounce_citizenship-0/
New info for the OECD police: Abba admits ‘we only wore outrageous outfits to avoid tax’
New book reveals band’s style was influenced by Swedish laws that allowed cost of outfits to be deducted against tax
http://www.theguardian.com/music/2014/feb/16/abba-outfits-tax-deduction-bjorn-ulvaeus?CMP=twt_gu
@Seat…
Totally understand. Would not ask you to be any more public than just the “SEAT” alias you have chosen. I started very anonymously sharing my story just to educate others as to what was happening in these programs. Over my wife’s strenuous objections, I did allow my name to become public in a few media stories, as frankly I had gotten over the embarrassment, even if she had NOT. I am easy to find, but still just refer to myself as Just Me.
Yours is an excellent outcome, and I really appreciate the insights it provides for others navigating these treacherous waters. I have chalked the cost of compliance up to my continuing education fund, and now am CCW, or Comply, Complain and WARN! 🙂 Emphasis on WARN!
If you can save one person from the minnow conveyor processing plant, it is worth the effort. Just paying it forward, I guess. I have no compliance products or endorsements to sell, other than do your own drudgery (due diligence).
Cheers and thanks for you contribution.
@WhatAmI
Just punting out residents of the US would not qualify for non-reporting status, if I understand correctly. The institution also has to be operating only in Canada, which would exclude our big banks and even some big credit unions like Desjardins.
Hence my hope for IBS to have a “Which institutions have non-reporting status” thread or list.
We also need a clarification from CRA as to how they will treat over-reporting institutions that decide to do “due diligence” on all their clients. (There is a scene in the Will & Grace tv series where a rich businessman having been told that he had to do due diligence, answers “What the hell is doodoo diligence?”
@Seat @Liberated @Just Me @Not That Lisa
Very insightful comments. I offer the following three points:
1. Don’t enter OVDP period. It’s a good deal only if there is a “material risk” of criminal prosecution.
2. Don’t use U.S. based lawyers. They seem to use OVDP or Streamlined as the default solution.
3. Understand also that your problem is NOT a tax problem. It’s a problem of “non-compliance” which is NOT the same as tax.
The compliance industry is far more dangerous to you than the IRS.
http://michaelpower.ca/2014/02/fatca-charter-challenge
‘FATCA: Charter Challenge?’
“…I have not seen the actual text of the agreement but there has been no suggestion in the press that the deal is limited to U.S. residents. If one agrees with Peter Hogg’s assessment (see FACTA Revisited), this may pose an inconsistency with the Charter of Rights and Freedoms. This begs the next question. Will someone challenge this agreement using a Charter argument? If yes, FATCA may remain in the public eye a little bit longer….”
@USCitizenAbroad
I would take issue with your implied knock against Streamlined. If the goal is to get compliant (perhaps in order to renounce “cleanly”), then IMO Streamlined is a decent way to do it if you qualify. It has the advantage over QD of being the official way for expats to get compliant, and thus AFAICT has a reduced risk of penalties. In fact, the only negative I can see (and this is a minor negative) is that you have to answer the questionnaire. Other than that, it’s similar to doing a QD, but with the benefit of it being sanctioned by the powers-that-be. Note that both Kevyn Nightengale and Phil Hodgen say they do 5 years of returns in Streamlined for their expatriating clients, so the 3 years requirement is a floor not a ceiling.
My 2 cents.
Republicans Overseas: They are taking a hard line against FATCA and openly advocating bringing an end to CBT.
https://www.facebook.com/republicansoverseas
Democrats Abroad: They still need a lot of convincing. Their position is to soften the blow to Americans living abroad, but provide zero indication of bringing an end to CBT.
https://www.democratsabroad.org/group/fbarfatca/fbarfatca-task-force-page-updated
@all –
Thank you very much for your valuable advise. We have been so stressed, angry and terrified that my “US person” fiancee and I have even thought of breaking ties with the US (we live there) once this mess is settled. I will tell him about the going forward approach, since I don’t think just closing that account will take care of this issue… we will make an appointment with one of Jack Townsend’s recommended lawyers, but we are very very wary now, and will probably just use them to get a 3rd “professional” opinion to help us decide. We want to comply and do what’s best. I’ve spent hours reading all the materials, blogs, etc you have provided, but I am still lost inside the intricacy of all the laws, regulations, penalties, and it’s hard to feel confident yet. The lawyer we consulted wants QD and he’ll do it for an initial fee of $1200, but we know we could end up losing everything after irs and lawyers collect their $$$. We haven’t signed a thing or filled any forms yet. It’s unbelievable how $45,000 offshore can wreck a life 🙁
libertad. You’re wasting your money. The $1200 is his initial fee. comply going forward.
@tdott. Agree with your comments re: Streamlined vs. QD. An analogy: QD is leaving your package of back filings on the front steps of the IRS; Streamlined is knocking on the door and handing the package to someone. Both work but Streamlined is “official”.
@ libertad …..
….we will make an appointment with one of Jack Townsend’s recommended lawyers…….
please remember these names stand for OVDI/P lawyers – you have no business being in the OVDP / opt-out conveyor belt.
You are a Minnow – listen to the advice given to you here and do your penalty analysis or worst case scenario. If you have specific questions down the line ask people here at IBS – we are here to serve.
If you go the OVDP/opt-out route you will for sure have a compliance bill > $10K for such a small and simple case like yours.
Take your time until you feel more comfortable with the intricacy of all the laws, regulations, penalties etc… There is no rush, file Form 4868 that is an extension to file your 1040s etc…… you still have plenty of time to make a smart decision.
@libertad….
btw. follow this thread below as well , folks have made many valuable comments here for people and cases like yours :
http://isaacbrocksociety.ca/2012/01/28/the-ovdi-drudgery-for-minnows/#comments
libertad. You are like a grain of sand on a large beach. You will not be noticed.
@ Libertard. Pay attention to @Seat. He is giving you EXCELLENT advice.
Do you want to spend 851 days on the minnow oil extraction process of the OVDP? That is what those attorneys have in mind for you!
One note. For your first FBAR is due June 30th. That is NOT part of the income tax filing… But you still have time for that smart decision.
READ, READ, READ before dialing for dollar extraction!!
@Libertad..
One final note. I don’t know all your facts, but the situation that most closely aligns with yours is IJ, a Chinese immigrant in America that came here from Canada and left accounts back there. He made the mistake of getting into the OVDP, and then with a little spine toughing from some of us, he Opted Out, and came away with ONLY a warning letter. It was a long road and scary experience, but he made it without PAYING BIG FEES TO ATTORNEYS!
This is NOT to say you should enter the OVDP and Opt Out. I am NOT recommending that. This is just to show, that in a normal audit process outside the OVDP, (which the Opt out is) the most likely outcome for you, given benign facts, is probably just a warning letter. Focus on that, and not the worst case penalties designed to strike fear in your heart. They WORK, don’t they?
You might want to read his case here. It is also referenced in the Drudgery thread.
Also, Moby was another immigrant success in extracting himself from the processing belt, and he left America vowing Never to return either…
Finally, I can not speak for this immigrant case, but it represents someone sharing their OVDI experience. He used an attorney. IJ and Moby did NOT. I have not absorbed all the details closely, but wanted to provide it as another source of self education for you. I am NOT suggesting that you follow his route, as all facts related to any non compliance are individual. Again, this is just an educational source for you to absorb.
And boy do I commiserate with your statement about being lost…
I too was there once, but you know, repetition of reading has a way of clearing the muddled waters over time, and you have time, so DON’T GIVE UP.
If you feel you must consult with an attorney, (I don’t think you need to yet) then limit the amount of money you are going to spend, and if they ask for a retainer, hang up! But just remember, for money spent, you are going to get advice that might actually add to your confusion. There are as many opinions out there as there are attorneys.
The first advice I got to enter, in retrospect was wrong, but given the knowledge or IRS processes at the time, I understand why it was given, so not angry about it. I should have studied up more like you are doing. It cost me a lot of LCUs and $$, but it could have been worse had I followed the advice by other attorneys to take my lumps and pay the OVDP penalty. For that decision, I went my own way.
Hope some of this helps you. Hang in there. This too will pass, and fade away into a distant memory…
@libertad, another reason why the ‘Go Forward’ approach can be appealing is because as of sometime last year, the filing of FBARs MUST be done electronically only. i.e. online. For that reason, while you can electronically file past years FBARs, it is not possible to add reasonable cause letters anymore, which makes this approach a little more risky than complying forward and not correct the past.
Lawyers will tell you anyway that the ‘crime’ has been committed at the time you did not file. You can still file them at the time you’re audited if that ever happens and provide reasonable cause at that time.