Liberty and justice for all United States persons abroad

The Isaac Brock Society

Tag Archives: RRSP

Brock project: How has awareness of @citizenshiptax AKA @nonresidenttax changed your attitude toward investing and retirement planning?

Posted on by Posted in Issues regarding US persons abroad 21 Comments

Direct effects of U.S. tax compliance on residents of Canada or other countries

The most recent “Brock project” posts (here, here and here) have focused on the directs effect of the U.S. tax system on Americans abroad who have attempted compliance and on issues related to the “transition tax”. Those posts have focused on the punitive taxation, the compliance costs, etc.

Indirect effects of being subject to U.S. taxation as a nonresident

The purpose of this post is explore the “indirect effects” of being subject to the U.S. tax system. How has it changed your attitude toward basic financial and retirement planning? Over the years I have talked with a large number of people who simply say things like:

– I can’t have a TFSA

– I can’t have mutual funds

– I can’t have a life insurance policy

– I would have incorporated but I am afraid to

– I worry about having to report my spouse’s bank accounts to the IRS

– I am no longer the financially responsible person I was

– I see no point in attempting financial planning

– Because I have a Canadian Controlled Private Corporation for which I am filing Form 5471, I have to keep a separate set of books for my company

– I have been declined business opportunities or certain kinds of employment because I made the mistake of admitting I was a “U.S. Person”

– etc.

Your comments and thoughts on the indirect effects of being subject to U.S. taxation would be appreciated. Comments from those who have attempted compliance and those who have not attempted compliance are encouraged.

Thanking you in advance!

IRS claims that only 20,000 people are affected by U.S. Form 8891 for Canadian RRSPs

Posted on by Posted in Issues regarding US persons abroad 10 Comments

Since it’s that wonderful time of the year again, I’m reading the Federal Register a little more closely than usual. Not that this is a chore, mind you: the official notices coming out of Washington, D.C. are quite entertaining. Some of them are even true! Last week, for example, the State Department finally got around to cancelling regulations that were 37 years out of date — they were promulgated under a law that got repealed during the Carter administration. That was worth at least a chuckle.

But today, the funny men at the IRS have gone one-up on those State Department bores, and submitted this side-splitting, thigh-slapping article:

Revenue Procedure 2002-23 provides guidance for the application by U.S. citizens and residents of the U.S.—Canada Income Tax Treaty, as amended by the 1995 protocol, in order to defer U.S. Income taxes on income accrued in certain Canadian retirement plans.

Current Actions: There are no changes being made to the revenue procedure at this time.
Type of Review: Extension of a currently approved collection.
Affected Public: Individuals or households.
Estimated Number of Respondents: 20,000.

And I’m not the first one to notice this comedy gold, either.

Continue reading →

IRS makes useless paperwork less onerous for U.S. Persons in one country

Posted on by Posted in Issues regarding US persons abroad 31 Comments

Phil Hodgen has some good news for the Canadians in the audience:

Up to now the way to fix an unreported RRSP problem was by incurring brain damage, spending lots of money, or suffering through terminal uncertainty and fear. Or all of the above … Guess what. Things have changed for the better. I’m serious. We confirmed today in a phone call with Chief Counsel’s office that amended tax returns will be allowed with Form 8891 attached.

In other words, a seemingly pointless waste of paper the IRS issued to one taxpayer early this year may have unforeseen historical significance: it is quite possibly the last “late RRSP election” Private Letter Ruling that will ever be made.

While this is certainly good news for many people, I find myself rather underwhelmed. Treasury has enormous power under existing laws to issue regulations exempting pretty much any class of persons it wants from pointless international paperwork that is otherwise demanded by law. Canada introduced its Registered Retirement Savings Plans in 1957. It only took fifty-six years for the IRS to ensure there are reasonable procedures for dealing with late filings on this one type of financial product. (Got RDSP or RESP problems? Too bad for you!) And that was in the best case scenario: a country right next door with English as one of its official languages, the most common type of account in that country, and over a million migrants going in either direction who were hit by the whole mess.

You do the math: 190-odd other countries & territories, each with their own unique kinds of purpose savings accounts, most speaking languages other than English, and fewer than a million affected filers in each to lobby for change. How long will it be before U.S. Persons finally have the freedom to move to any country on Earth without incurring unreasonable paperwork requirements, and the folks in the District of Columbia can start figuring out what to do with all those non-filers who moved to Mars in the intervening centuries?

Jack Townsend: “Article for Canadians with Unreported Canadian Retirement Plans and Accounts”

Posted on by Posted in Issues regarding US persons abroad 2 Comments

Jack has posted this blog post which should be of special interest to Canadians.

Hale Sheppard has a new article that should be of interest to Canadians.  The article is introduced on  his firm’s Blog,  IRS Introduces Two Unique Remedies for U.S. Persons with Unreported Canadian Retirement Plans and Accounts, here.  The article can be linked to in that blog entry or can be linked here.  The summary of the article is:

Life isn’t fair.  Neither is the IRS’s most recent settlement initiative designed to entice taxpayers to proactively resolve their international tax non-compliance, such as failing to report foreign income, foreign accounts, foreign entities, etc.  In both instances, some people win and some people lose, often with little or no regard to what is equitable.  Among those basking in the benefits of favored status lately are certain Canadians, residing either in the United States or the homeland, who have neglected their tax-related obligations with Uncle Sam. Continue reading →

U.S. citizens abroad are disabled from retirement planning, I think – Contribute to the knowledge

Posted on by Posted in Issues regarding US persons abroad 8 Comments

 

 

Subject to applying for an extension, your U.S. tax return was due this past Friday June 15. During tax season, the discussion of the problems of citizenship-based taxation have become louder and louder. After many discussions with U.S. citizens abroad, I have concluded that:

There is not a single investment vehicle outside the United States that will not plant the seeds of future U.S. tax problems. These problems if not attended to early (translation they must be eradicated) will eventually grow so big that: Continue reading →

When Bygones aren't Bygones

Posted on by Posted in Issues regarding US persons abroad 26 Comments

Some of you are familiar with attorney Hale Sheppard who has written extensively on FBAR issues.  Renounceuscitizenship has provided links to his past writing at Looking for Mr. FBAR – In Search of FBAR fullfilment and Consciousness, which is an excellent post that provides history and back ground for the FBAR.  In his post, he refers to Hale Sheppard as the FBAR Scholar for his 2006 work EVOLUTION OF THE FBAR: WHERE WE WERE, WHERE WE ARE, AND WHY IT MATTERS   If you are still somewhat hazy on this history, and especially if you are going through the OVDI, this is required reading.

I bring this up as an introduction to Hale, as I recently came across some of his writing from 2008 about the Canadian RRSP. Continue reading →

OVDI Switcheroo: Canadian RRSP back in the penalty base

Posted on by Posted in Issues regarding US persons abroad 54 Comments

News Flash:  The United States government is so desperate for cash that the IRS has put the RRSP back into the penalty base for the Offshore Voluntary Disclosure Initiative.  You can read about here and at the Serbinski Forum (see comments by Tacova and tsanaha).

Imagine that.  The United States is now raiding the retirement accounts of Canadians.  Way to take the high ground Mr. Shulman.  Way!

Continue reading →