Media and Blog Articles Open for Comments – Part 4 of 11 (Year 2017)

1,720 thoughts on “Media and Blog Articles Open for Comments – Part 4 of 11 (Year 2017)”

1. @JC, I wondered too, until I read USCitzenAbroad’s explanation. Plenty of information filing penalties and pitfalls abound for those living outside the US, so they had an alternate stick to beat the taxpayer with. Everything we do in the course of living normal ordinary law abiding lives in Canada and elsewhere outside the US comes with a special arcane filing requirement or three, and special deadlines and labyrinthine complexity and of course the very very special layers of confiscatory penalty regimes – which can generate far more revenue for the IRS than the US tax assessed ever could (often minimal or zero).

   This is why for those who can do so, renouncing/relinquishing is the only real lasting remedy.

   The conduct of the IRS to date shows us the depth of its contempt for any fairness, and its utter disregard for the TBOR ex. http://pdfs.taxnotes.com/2017/2017-48694_TNTDocs_NTA-Statement-on-TIGTA-Structuring-Report.pdf . They have no shame, and will do whatever they can to raise revenues, whether by hook or by crook http://taxprof.typepad.com/taxprof_blog/2017/04/tigta91-of-taxpayers-whose-bank-account-assets-were-seized-by-irs-had-acquired-their-funds-legally.html

2. He was not a Canadian citizen, I believe. So CRA would be required to help collect a tax debt on behalf of the IRS (though possibly not an FBAR fine). Moral of the story: always safer to have citizenship in the country where you live.

   Interesting that it was “only” holding back a refund and not emptying bank accounts, based on what i read.

3. Helping collect the debt with the power of the state by withholding a refund. Sounds stronger than “helping.” Wouldn’t these be completely separate? And what if one wanted to use the refund to pay the U.S. debt?

4. “Currently living in Canada”. We don’t even know if he was residing in Canada during any of the assessment periods, do we?

5. The scary part about all of this is once a US taxpayer (resident or non-resident) is thrown into the system, they are in the position to have the book thrown at them equally and within the fullest extent of the law – which the IRS seems eager to do.

   This guy would have probably been ok had Streamlined been around then. I wonder if he could benefit from involving the NTA?

6. @Bubblebustin

   At some point I think I read that he had tried to involve the Taxpayer Advocate. This is one of the worst stories that I have yet heard. The message that seems to be driven home time after time is this:

   The risks of coming into compliance may be greater than the risk of not.

   What I have never been able to understand is why the IRS will not give the same benefits (Streamlined, etc.) to the people who acted quickly in 2009 to enter the OVDP (as it then was).

   This is exactly the type of situation that explains why the message from the tax compliance people (“just come into compliance”) is so upsetting.

   Clearly the best thing is to renounce.

7. @Bubblebustin
   The complaint document from Karen’s federal tax crimes link post gives some factual background on this taxpayer. According to that he moved to Canada in 1971 and has maintained a residence in Canada continuously since 1971. He also married a Canadian citizen in 1975 and they raised their family in Canada. He was filing Canadian taxes and had engaged a Canadian tax professional for his Canadian filings. The Canadian corporation was formed at the advise of his Canadian tax professional, common practice in Canada.

   @USCitizenAbroad and I agree, this is clearly one of the worst stories I have ever read. It’s a clear case of bad advise from tax professionals and ignorance of the US filing requirements. and many people never heard about fbars or form 5471 before Fatca. He had a Canadian spouse, better planning could have been done.

   It’s also clear the IRS wanted something out of him. The way I understood it is that the form 5471 penalties were not considered in the first assessment under the OVDP, it was purely Fbar. After he opted out they sent the 5471 penalties. maybe as you said that the treaty could be used to collect those penalties but not the fbar.

8. This is sickening. My husband and I entered OVDI, reporting a corporation – which we opted out of into Streamlined. Had he been a few years later he probably would have gotten through Streamlined relatively unscathed.

   He might have even done much better just waiting a year or two,

   IRS to refund certain OVDP penalties:

   http://timesofindia.indiatimes.com/nri/other-news/IRS-to-refund-certain-2009-OVDP-penalties/articleshow/13410879.cms

9. And what did Canada gain from this? Nothing. It does not foster ‘respect’ for the US tax system, and erodes any respect for the CRA who assisted a foreign nation to collect extraterritorially on penalties against a Canadian resident compliant taxpayer – merely for failure to file forms for a foreign country, with no tax owing to the US, and the whole thing based only on a non-economic relationship – birthplace. All his ties were far stronger, longstanding, and well established with Canada.

   How is this good policy for Canada? The costs and losses and stressed weren’t borne only by the plaintiff, but by his Canadian-only spouse/family whose wellbeing was also on the line.

10. Re Dewees, couldn’t help wondering about the contrast between the size of the IRS assessment of penalty for mere form-crime in his case, vs. this;

    “….Canada’s Cameco Corp, the world’s second-largest uranium producer, said on Thursday it had settled a U.S. tax dispute for a fraction of the original claim, which may bode well for the company’s multi-billion-dollar battle with the Canada Revenue Agency.

    Cameco will pay the U.S. Internal Revenue Service $122,000 for its 2009 through 2012 taxation years, compared with the $122-million the IRS claimed Cameco underpaid.”

    https://www.theglobeandmail.com/report-on-business/industry-news/energy-and-resources/cameco-settles-us-tax-dispute-narrows-loss/article35815432/

11. This certainly is one of the worst things we’ve read here. I don’t care if he was a Canadian citizen or not. Something like this should never happen to anyone, much less receive the legal approval and support of any court. I’ve noted it for the next communication with the United Nations should it prove necessary.

12. Best thing this Dewees chap could have done was get himself Canadian citizenship back in the 1970s. Dead easy. But hindsight is 20-20.

    His treatment by the US is awful. But then that’s not really a big surprise at this point.

13. An unanswered question in the Dewees case:

    5. On October 28, 2010, a $252,480 penalty assessment was made against Dewees. Dewees alleges that the penalty assessment was “relating to FBAR non-compliance.” The Government states that it was assessed “under the terms of the OVDP.” If the Government’s statement is correct, the penalty assessment was the MOP assessment in lieu of all penalties other than the income tax penalty; in Dewees case, the MOP penalty would have been in lieu of the FBAR penalty and the Form 5471 penalty. [JAT comment: a question I have is how the MOP could have moved to assessment without the taxpayer having signed a closing agreement inside the OVDP penalty structure, but I could not find the answer to that question.]

    http://federaltaxcrimes.blogspot.co.uk/2017/08/court-sustains-10000-per-year-6038b.html

    Was a closing agreement signed? If not, or if signed under duress, might that be relevant for the plaintiffs’ case challenging the Canadian government’s co-operation with the US Treasury in the matter of the FATCA IGA? Additional evidence of potential harm to Canadians from the imposition of FATCA, if the IRS can be shown to have by-passed US regulations in order to impose the charge on Dewees. As I understand it, the Canadian treaty Mutual Assistance in Collection Article restricts Canadian assistance to cases in which a final [U.S.] legal assessment has been made against the Canadian being collected from. If DeWees did not sign a closing agreement the CRA surely ought not to have co-operated in the collection of the penalty.

14. But perhaps what Townsend means is that the penalty of $252,480 should not have been assessed unless a closing agreement had been signed, yet if a closing agreement had been signed Dewees would not have been able to withdraw from the OVDP.

    A comment suggests that the penalty of $120,000 + interest (the penalty Canada assisted in collecting), which was presented as a Form 5471 penalty of $10,000 per year, was actually a proxy for the FBAR penalty of $10,000 + interest which the CRA couldn’t have helped collect.

    Dewees may have thought he could safely withdraw from the OVDP (instead of staying in it and transferring to Streamlined) because he was resident in Canada and he thought (perhaps correctly) that the reduced penalty of $185k-odd (reduced “because the IRS had double-counted some accounts”) was mostly FBAR penalties, which Canada doesn’t collect. And he might have been correct. But the IRS retaliated by issuing the $120,000 penalty and calling it a 5471 penalty so that it could be collected under the treaty.

    Pretty diabolical. And contradicts what Canada states at http://www.cic.gc.ca/english/newcomers/about-pr.asp

    As a permanent resident, you have the right to:

    * get most social benefits that Canadian citizens receive, including health care coverage,
    * live, work or study anywhere in Canada,
    * apply for Canadian citizenship,
    * protection under Canadian law and the Canadian Charter of Rights and Freedoms.

    You must pay taxes and respect all Canadian laws at the federal, provincial and municipal levels.

15. We can only speculate at this point as to what Dewees knew or didn’t know or thought might happen or not happen.

    My sympathy is somewhat tempered by the fact that he lived in Canada from the 70s onward without taking out citizenship. It’s not difficult to obtain, and if you’re going to spend your whole life somewhere, would you not want the right to vote, and to not be deported if you did something stupid?

    But that is all water under the bridge at this point.

16. Whether the CRA actions constitute a Charter violation is, of course, a matter of interpretation. I’m sure there are differing legal opinions on that question.

17. “My sympathy is somewhat tempered by the fact that he lived in Canada from the 70s onward without taking out citizenship. It’s not difficult to obtain, and if you’re going to spend your whole life somewhere, would you not want the right to vote, and to not be deported if you did something stupid?”

    Many people used to not bother acquiring a second citizenship. Not just Americans. Things have changed, and not just because of FATCA.

    A US expat who didn’t know they were supposed to be filing US tax forms, might well have had no reason to ever even think about being at any risk of tax penalties, let alone deportation.

    By the time the person finds out, it’s way too late for citizenship to offer any protection.

18. And then, just as he’s been told by a “U.S. tax specialist” that his best course of action is to enter the OVDP, (which is about to close so he’d better hurry, says the condor) – suddenly, his son commits suicide.

    https://drive.google.com/file/d/0B0SLTNWD-Z3YVVF3OE9maWxkbEU/view

    It’s hardly surprising if he wasn’t thinking straight. This does seem like a complete nightmare.

19. The individual circumstances are sad, and OVDI decision and other bad advice very unfortunate. Citizenship offers rights and protections well beyond the sphere of taxation, however. It would have been well worth his while to obtain it. But ultimately this is a separate issue from his treatment by the IRS, except that his not having it made him vulnerable to collection.

20. More on Dewees:

    http://isaacbrocksociety.ca/2017/08/15/dewees-2-why-did-he-participate-in-the-2009-ovdp-horror-show/

21. From @Brian Dear

    On Aug 24, I’ll be participating in a telephone town hall with Ways & Means Chairman Kevin Brady (R) Texas. You can bet a bottle of 1989 Margaux that FATCA is going to be brought up. Please leave comments on suggestions on what to say/ask/do. If I get to speak, I need to be on-message, to the point and accurate. Any “coaching” from the group would be appreciated.

    https://www.facebook.com/groups/citizenshiptaxation/permalink/1482434238512986/

22. Will we have any Brockers in attendance for Rand Paul in Rome 18 16 August? It would be nice to have a report from an attendee.

    https://twitter.com/SolomonYue/status/882607645525291008

23. Rand Paul in Rome: 16 August (not 18th) – within 24 hours.

24. Quote from Trump’s press conference today regarding the broken process of infrastructure development:

    “No longer will we accept a broken system that benefits consultants and lobbyists at the expense of hardworking Americans. I will tell you that the consultants are rich people. They go around making it very difficult. They lobby congress, they lobby state government, city governments to make it very difficult so that you have to hire consultants and that you have to take years and pay them a fortune, so we’re streamlining the process, and we won’t be having so much of that anymore.”

    If only he would make the same pronouncement about the tax code, especially as it applies to taxing Americans overseas.

25. @Nonymous, re;
    “My sympathy is somewhat tempered by the fact that he lived in Canada from the 70s onward without taking out citizenship. It’s not difficult to obtain, and if you’re going to spend your whole life somewhere, would you not want the right to vote, and to not be deported if you did something stupid?”

    Actually, both Canada and the US made it impossible or difficult for a long time to obtain the other citizenship without having one status stripped from one involuntarily. Many have close family on both sides of the border. Staying a PR would have allowed for a person to be able to return to the US if necessary in a family emergency and not be stripped of US status involuntarily.

    Canada did not allow dual status until changes to the Citizenship Act 1976 came in to force Feb 1977.
    “Citizenship law was reformed by the Citizenship Act, 1976,[14] which came into force on 15 February 1977. Canada removed restrictions on dual citizenship, and many of the provisions to acquire or lose Canadian citizenship that existed under the 1947 Act were repealed……”
    https://en.wikipedia.org/wiki/History_of_Canadian_nationality_law

    And then of course at that time the US was still actively discouraging or outright banning dual status, until in 1980 ( see Vance v. Terrazas).

    Even now the US discourages of dual status though it can no longer so easily strip one of US citizenship, and cannot take it involuntarily simply because one has naturalized elsewhere.

    It is not so simple to choose, or to predict what the future may bring when family is divided between countries. And some families have one pure Canadian spouse who does not want to live in the US, and one US spouse who does not want to give up the ability to return to the US – even short term, if necessary.

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