@ Cam,
Several people who have participated at Brock have started groups with a particular focus. One example is Karen’s Fix the Tax Treaty website for Australians. Brock is by design a big tent. You might consider starting a website, blog or Facebook group with a particular focus on non-compliance.
@Ron Henderson
except for when one has to read about compliance stories based on frivolous “reasons” that could have been otherwise managed if someone really wanted to stop complying. Those offer the opposite of support to someone grappling with immense anxiety to drop off the radar.
We need something more dogmatic like AA, with features like closed groups, coaching, sponsors etc.
“We need something more dogmatic like AA, with features like closed groups, coaching, sponsors etc.”
As I suggested, consider starting such a group. Brock has a broad focus, but we publicise and link to other groups that deal with the issues we cover.
Estate: my recently deceased father-in-law (a Canadian citizen, not a snowbird) had to file estate taxes with the IRS as per whatever regulation regarding US investments (done with an accountant who has assisted us with US-Canadian tax issues in the past): no taxes owed to IRS. Three months later: a nasty IRS letter indicating that the estate did in fact owe taxes and that if the estate did not pay such taxes, seizure of property, bank accounts, etc. would quickly ensue. We now have a tax lawyer involved (who has not been able to speak to any IRS representative to date to pursue our case). Any ideas why a Canadian citizen would have to pay US taxes on an estate that is clearly below the threshold for US taxation? What is going on? And, if the IRS does not provide sufficient reason to pay the estate taxes, what would happen if the estate simply does not pay the IRS? Thanks from dazed, taxed and confused.
Greg. It all depends. Size of the estate; amount of US investments; location of US investments and so on
The nasty letter could well have been generated by a computer algorithm.
Don’t panic. Don’t pay. They can’t collect in Canada. The first mistake probably was filing in the first place. A good general rule is don’t tell them anything they don’t already know.
@Greg
Are there any US assets to seize – property, bank accounts, investments? If no, into the bin with the letter, there’s nothing the IRS can do to Canadian citizens in Canada. If yes, well, that’s potentially a problem.
I don’t know the details but I suspect that there are different treatments for investments held by non-resident aliens (such as your late father-in-law) as compared to citizens and residents. This may also apply to their estates, if the investments are liquidated. Just a guess on my part.
Another reason for Canadians to not own (and especially to not die with) US investments, at least not owned directly. If the assets are situated in the US, dealing with the IRS is likely unavoidable. There are really not enough facts here to offer any useful advice.
Greg. Assuming your father in law had US situs assets, (Otherwise, why file anything), The calculation is as follows. Value of property exempt from U.S. estate tax (2018) = [(U.S. situs assets / worldwide assets)]*US$11.2 million. Therefore, a Canadian resident will not have estate tax payable on U.S. assets if the value of her entire estate, including her worldwide assets, doesn’t exceed US$11.2 million (in 2018). Furthermore, under the Canada-U.S. Tax Treaty, the estate tax exemption for a Canadian can potentially be doubled when property is left to a surviving spouse.
Better to avoid the hell completely than to go through it.
Maybe you should change your name to Captain Obvious.
My point, admittedly not obvious in a short quip, is that for all his excellent work, JR rarely distinguishes between the compliant and the non-compliant, and this to me is a serious weakness, though perhaps understandable given that he’s a practicing lawyer. When he describes all the horrid limitations on Canadian investments by US persons, for example, he doesn’t add the essential qualifier: it’s only a problem for someone who files, and most Canadian duals really ought not to file. Of course everyone here knows that, but perhaps not someone whose only just had their OMG moment, and who finds one of his articles.
My point, admittedly not obvious in a short quip, is that for all his excellent work, JR rarely distinguishes between the compliant and the non-compliant, and this to me is a serious weakness, though perhaps understandable given that he’s a practicing lawyer. When he describes all the horrid limitations on Canadian investments by US persons, for example, he doesn’t add the essential qualifier: it’s only a problem for someone who files, and most Canadian duals really ought not to file. Of course everyone here knows that, but perhaps not someone whose only just had their OMG moment, and who finds one of his articles.
@RH
John doesn’t need to explicitly promote non-compliance – it permeates much of what he writes as a warning in doing so by describing the affects of complying. Again read “Impact of FATCA on individuals” and the increasing difficulties many people who have chosen to comply continue to face. If I could turn back the clock and again faced the choice of whether or not to comply, his words serve as more than a subtle warning against doing so.
@RH
John doesn’t need to explicitly promote non-compliance – it permeates much of what he writes as a warning in doing so by describing the affects of complying. Again read “Impact of FATCA on individuals” and the increasing difficulties many people who have chosen to comply continue to face. If I could turn back the clock and again faced the choice of whether or not to comply, his words serve as more than a subtle warning against doing so.
@ BB
“If I could turn back the clock and again faced the choice of whether or not to comply, his words serve as more than a subtle warning against doing so.”
Most of the people who are in compliance, if the clock turned back, would still choose to be in compliance. they are the kind of people that are impressed by title and rank, and tend take the word of someone with a CPA or JD title over regular people who may say don’t do it.
Hello All, I have a question??? Has anyone who has renounced or relinquished there US Citizenship had to get a Federal Tax Number because of a sale of property in US. Well this is what I am dealing with, Sisters and I have a small parcel of land we have sold, so of course Tax man wants us to pay taxes of course. But now that I don’t have a SSN number it means I have to get a Itin # which I do not want to do. I am afraid that this will open up a can of worms.. I did all my taxes when I relinquished 6 years ago. But now got myself in this situation. Anyone have any suggestions?? I feel like my back is against the wall..
@ Ecstatic Canadian,
Your SSN remains with you for life. A few years ago, I received some unexpected income from the US. This was after I relinquished (and obtained CLN). I used my US SSN number and marked my citizenship status as non-resident alien on the forms.
Also, in my case — I was the beneficiary of an IRA — I arranged that the US Financial institution would send IRS the exact amount of tax owed (the Treaty rate) before releasing the money to me. I didn’t have to file a 1040, as, being a non-resident alien with no other US income, there was nothing to file. Only peep I heard from IRS was I got some form (an S-2 or something) showing I’d paid $X in income tax. I confirmed with a (competent and trustworthy) cross-border accountant that “That’s it, you’re done.” If you can arrange that with this sale, that would be really good.
Good thing the IRS basically ignores US citizens abroad; the lack of equal concern and respect is irrelevant to the nine-tenths majority who aren’t sending them paperwork every year.
@RH
Ok you’ve made your required disclaimer and again in the process gave one-tenth of Americans abroad another kick in the teeth by saying we are not relevant. To you take joy in taunting people?
What IS relevant is intelligent and helpful discussion in response to this important and thoughtful post that adds fuel to the growing fire that may one day extinguish CBT.
You’ve made your point, so kindly move out of the way of those who don’t find non-compliance as a panacea in treating the scourge of CBT.
The interests of the 90 percent are not the same as the interests of the 10 percent. Brock seems to be very concerned with the compliant tenth, of late. Which is fine, it can evolve into a support and advocacy group for those who feel compelled to file US tax returns. Doing so does not however represent very effectively the needs and concerns of the vast majority of dual citizens Canada, whose best approach to FATCA and CBT is, quite clearly, to continue ignoring it.
[Ron Henderson] While what you state is seemingly factual, this may change tomorrow, or in the near future. Am totally against FATCA for all the reasons discussed in this site and as an IT Consultant, am very concerned for the future. Since the US put a crowbar into financial institutions around the World, and they yielded, under threat of industry wide sanctions of 30% withholding of all us sourced funds (Rather that just those attributed specifically to US Persons,……) the US now has a foothold with technological resources to conduct more warrant-less searches (4th Amendment of the US) of not just US Citizens, but those in the target country. This is already happening as people show up at the US Border, CBP computers there can address recent credit card transactions of non citizens, green card holders and of course US Citizens for daring to leave the homeland!
This is WHY the CANADIAN CHARTER challenge to FATCA is ESSENTIAL, and those challenges happening around the World in other countries that have signed up and chopped some of their own citizens rights away with legislation that counter’s that countries protections of it’s own citizens! The 90/10 argument may hold for now, this encroachment of rights is how it starts as it did with FATCA and the Canadian Government “Expunged Provisions” of MY RIGHTS UNDER THE CHARTER OF RIGHTS AND FREEDOMS!
The human tendency of those in power is to want more and more information & control. The 90/10 position is easily changed with technological resources already in place and governments willing to write away our rights under their respective constitutions!
Thanks for the info about my father-in-law’s estate. Story had a happy but bizarre ending: finally contacted a woman at the IRS office in Delaware (through Skype!) who laughed about the situation, told us that my father-in-law was compliant with all IRS laws, and, even if he weren’t, there’s no way the IRS could do much about it any way. Now happily in possession of an official IRS letter stating the above (not the ludicrous parts of course). One final question: have the IRS procedures changes in the past few years for the final filing of a renunciant? My recollection is as follows:
1. 1040
2. 1040NR
3. 8854 (i.e., statement of complete assets)
Thanks for all your assistance. Cheers Greg
@greg
Hilarious. Proof again that IRS threats are best ignored.
As far as I know, there has been no change in the IRS exit procedure for someone who’s renounced and previously been compliant. There is a new “super-amnesty” offered for renunciants who have never been in the US tax system, though I expect most folks in that situation would be wise to simply renounce without any filing.
After having been through my OMG-moment a few months ago, and having understood quite well the full impact of being a so-called Accidental American, I have decided I need to renounce to get my life back. I am well aware of the strong voices both here and there advising against filing anything (never have before), and that is likely an advice I will follow. Still, it’s nice to know my options regarding compliance post-renunciation, should the urge materialize for some unknown reason. I know about the Relief Procedures. I may not be able to stay below the 2M net worth threshold. If so, is the Streamlined procedures (with all 5+1 years) still an option, AFTER no longer being a US citizen (I do have an SSN)? I can’t really find anything that says otherwise.
Simply back filing 1 or more returns is always an option regardless of any “procedures” that are on offer at any given time. I filed 3 zero balance owing returns when I was in a big panic after my OMG moment years ago. The only thing I ever heard back from the IRS was the $300 cheque they sent me for an obscure Bush-era tax credit. Later, after my panic subsided and I came to my senses, I realized I’d made a big mistake and stopped filing. I’ve heard nothing from them since.
However, I’ll add my voice to the others advising against entering the US system if you haven’t already done so. No good can possibly come from sending them a complete shopping list of all your assets, particularly considering you are pushing that 2M threshold. (Plus at your level of net worth there’s always the possibility of actually owing some tax.) Just let sleeping dogs lie…. My $0.02.
@ Cam,
Several people who have participated at Brock have started groups with a particular focus. One example is Karen’s Fix the Tax Treaty website for Australians. Brock is by design a big tent. You might consider starting a website, blog or Facebook group with a particular focus on non-compliance.
@Ron Henderson
except for when one has to read about compliance stories based on frivolous “reasons” that could have been otherwise managed if someone really wanted to stop complying. Those offer the opposite of support to someone grappling with immense anxiety to drop off the radar.
We need something more dogmatic like AA, with features like closed groups, coaching, sponsors etc.
@ Cam,
You’re starting to repeat yourself. You’re welcome to comment, but repetitious comments may be removed. http://isaacbrocksociety.ca/2019/06/05/a-comment-on-repetitious-commenting/
Re:
As I suggested, consider starting such a group. Brock has a broad focus, but we publicise and link to other groups that deal with the issues we cover.
Estate: my recently deceased father-in-law (a Canadian citizen, not a snowbird) had to file estate taxes with the IRS as per whatever regulation regarding US investments (done with an accountant who has assisted us with US-Canadian tax issues in the past): no taxes owed to IRS. Three months later: a nasty IRS letter indicating that the estate did in fact owe taxes and that if the estate did not pay such taxes, seizure of property, bank accounts, etc. would quickly ensue. We now have a tax lawyer involved (who has not been able to speak to any IRS representative to date to pursue our case). Any ideas why a Canadian citizen would have to pay US taxes on an estate that is clearly below the threshold for US taxation? What is going on? And, if the IRS does not provide sufficient reason to pay the estate taxes, what would happen if the estate simply does not pay the IRS? Thanks from dazed, taxed and confused.
Greg. It all depends. Size of the estate; amount of US investments; location of US investments and so on
The nasty letter could well have been generated by a computer algorithm.
Don’t panic. Don’t pay. They can’t collect in Canada. The first mistake probably was filing in the first place. A good general rule is don’t tell them anything they don’t already know.
@Greg
Are there any US assets to seize – property, bank accounts, investments? If no, into the bin with the letter, there’s nothing the IRS can do to Canadian citizens in Canada. If yes, well, that’s potentially a problem.
I don’t know the details but I suspect that there are different treatments for investments held by non-resident aliens (such as your late father-in-law) as compared to citizens and residents. This may also apply to their estates, if the investments are liquidated. Just a guess on my part.
Another reason for Canadians to not own (and especially to not die with) US investments, at least not owned directly. If the assets are situated in the US, dealing with the IRS is likely unavoidable. There are really not enough facts here to offer any useful advice.
Greg. Assuming your father in law had US situs assets, (Otherwise, why file anything), The calculation is as follows. Value of property exempt from U.S. estate tax (2018) = [(U.S. situs assets / worldwide assets)]*US$11.2 million. Therefore, a Canadian resident will not have estate tax payable on U.S. assets if the value of her entire estate, including her worldwide assets, doesn’t exceed US$11.2 million (in 2018). Furthermore, under the Canada-U.S. Tax Treaty, the estate tax exemption for a Canadian can potentially be doubled when property is left to a surviving spouse.
From Max Reed at SKL tax.https://www.advisor.ca/columnists_/max-reed/4-structures-to-protect-canadians-from-the-u-s-estate-tax/
Better to avoid the hell completely than to go through it.
Maybe you should change your name to Captain Obvious.
My point, admittedly not obvious in a short quip, is that for all his excellent work, JR rarely distinguishes between the compliant and the non-compliant, and this to me is a serious weakness, though perhaps understandable given that he’s a practicing lawyer. When he describes all the horrid limitations on Canadian investments by US persons, for example, he doesn’t add the essential qualifier: it’s only a problem for someone who files, and most Canadian duals really ought not to file. Of course everyone here knows that, but perhaps not someone whose only just had their OMG moment, and who finds one of his articles.
My point, admittedly not obvious in a short quip, is that for all his excellent work, JR rarely distinguishes between the compliant and the non-compliant, and this to me is a serious weakness, though perhaps understandable given that he’s a practicing lawyer. When he describes all the horrid limitations on Canadian investments by US persons, for example, he doesn’t add the essential qualifier: it’s only a problem for someone who files, and most Canadian duals really ought not to file. Of course everyone here knows that, but perhaps not someone whose only just had their OMG moment, and who finds one of his articles.
@RH
John doesn’t need to explicitly promote non-compliance – it permeates much of what he writes as a warning in doing so by describing the affects of complying. Again read “Impact of FATCA on individuals” and the increasing difficulties many people who have chosen to comply continue to face. If I could turn back the clock and again faced the choice of whether or not to comply, his words serve as more than a subtle warning against doing so.
@RH
John doesn’t need to explicitly promote non-compliance – it permeates much of what he writes as a warning in doing so by describing the affects of complying. Again read “Impact of FATCA on individuals” and the increasing difficulties many people who have chosen to comply continue to face. If I could turn back the clock and again faced the choice of whether or not to comply, his words serve as more than a subtle warning against doing so.
@ BB
“If I could turn back the clock and again faced the choice of whether or not to comply, his words serve as more than a subtle warning against doing so.”
Most of the people who are in compliance, if the clock turned back, would still choose to be in compliance. they are the kind of people that are impressed by title and rank, and tend take the word of someone with a CPA or JD title over regular people who may say don’t do it.
Hello All, I have a question??? Has anyone who has renounced or relinquished there US Citizenship had to get a Federal Tax Number because of a sale of property in US. Well this is what I am dealing with, Sisters and I have a small parcel of land we have sold, so of course Tax man wants us to pay taxes of course. But now that I don’t have a SSN number it means I have to get a Itin # which I do not want to do. I am afraid that this will open up a can of worms.. I did all my taxes when I relinquished 6 years ago. But now got myself in this situation. Anyone have any suggestions?? I feel like my back is against the wall..
@ Ecstatic Canadian,
Your SSN remains with you for life. A few years ago, I received some unexpected income from the US. This was after I relinquished (and obtained CLN). I used my US SSN number and marked my citizenship status as non-resident alien on the forms.
Also, in my case — I was the beneficiary of an IRA — I arranged that the US Financial institution would send IRS the exact amount of tax owed (the Treaty rate) before releasing the money to me. I didn’t have to file a 1040, as, being a non-resident alien with no other US income, there was nothing to file. Only peep I heard from IRS was I got some form (an S-2 or something) showing I’d paid $X in income tax. I confirmed with a (competent and trustworthy) cross-border accountant that “That’s it, you’re done.” If you can arrange that with this sale, that would be really good.
Good thing the IRS basically ignores US citizens abroad; the lack of equal concern and respect is irrelevant to the nine-tenths majority who aren’t sending them paperwork every year.
@RH
Ok you’ve made your required disclaimer and again in the process gave one-tenth of Americans abroad another kick in the teeth by saying we are not relevant. To you take joy in taunting people?
What IS relevant is intelligent and helpful discussion in response to this important and thoughtful post that adds fuel to the growing fire that may one day extinguish CBT.
You’ve made your point, so kindly move out of the way of those who don’t find non-compliance as a panacea in treating the scourge of CBT.
The interests of the 90 percent are not the same as the interests of the 10 percent. Brock seems to be very concerned with the compliant tenth, of late. Which is fine, it can evolve into a support and advocacy group for those who feel compelled to file US tax returns. Doing so does not however represent very effectively the needs and concerns of the vast majority of dual citizens Canada, whose best approach to FATCA and CBT is, quite clearly, to continue ignoring it.
[Ron Henderson] While what you state is seemingly factual, this may change tomorrow, or in the near future. Am totally against FATCA for all the reasons discussed in this site and as an IT Consultant, am very concerned for the future. Since the US put a crowbar into financial institutions around the World, and they yielded, under threat of industry wide sanctions of 30% withholding of all us sourced funds (Rather that just those attributed specifically to US Persons,……) the US now has a foothold with technological resources to conduct more warrant-less searches (4th Amendment of the US) of not just US Citizens, but those in the target country. This is already happening as people show up at the US Border, CBP computers there can address recent credit card transactions of non citizens, green card holders and of course US Citizens for daring to leave the homeland!
This is WHY the CANADIAN CHARTER challenge to FATCA is ESSENTIAL, and those challenges happening around the World in other countries that have signed up and chopped some of their own citizens rights away with legislation that counter’s that countries protections of it’s own citizens! The 90/10 argument may hold for now, this encroachment of rights is how it starts as it did with FATCA and the Canadian Government “Expunged Provisions” of MY RIGHTS UNDER THE CHARTER OF RIGHTS AND FREEDOMS!
The human tendency of those in power is to want more and more information & control. The 90/10 position is easily changed with technological resources already in place and governments willing to write away our rights under their respective constitutions!
Thanks for the info about my father-in-law’s estate. Story had a happy but bizarre ending: finally contacted a woman at the IRS office in Delaware (through Skype!) who laughed about the situation, told us that my father-in-law was compliant with all IRS laws, and, even if he weren’t, there’s no way the IRS could do much about it any way. Now happily in possession of an official IRS letter stating the above (not the ludicrous parts of course). One final question: have the IRS procedures changes in the past few years for the final filing of a renunciant? My recollection is as follows:
1. 1040
2. 1040NR
3. 8854 (i.e., statement of complete assets)
Thanks for all your assistance. Cheers Greg
@greg
Hilarious. Proof again that IRS threats are best ignored.
As far as I know, there has been no change in the IRS exit procedure for someone who’s renounced and previously been compliant. There is a new “super-amnesty” offered for renunciants who have never been in the US tax system, though I expect most folks in that situation would be wise to simply renounce without any filing.
After having been through my OMG-moment a few months ago, and having understood quite well the full impact of being a so-called Accidental American, I have decided I need to renounce to get my life back. I am well aware of the strong voices both here and there advising against filing anything (never have before), and that is likely an advice I will follow. Still, it’s nice to know my options regarding compliance post-renunciation, should the urge materialize for some unknown reason. I know about the Relief Procedures. I may not be able to stay below the 2M net worth threshold. If so, is the Streamlined procedures (with all 5+1 years) still an option, AFTER no longer being a US citizen (I do have an SSN)? I can’t really find anything that says otherwise.
Simply back filing 1 or more returns is always an option regardless of any “procedures” that are on offer at any given time. I filed 3 zero balance owing returns when I was in a big panic after my OMG moment years ago. The only thing I ever heard back from the IRS was the $300 cheque they sent me for an obscure Bush-era tax credit. Later, after my panic subsided and I came to my senses, I realized I’d made a big mistake and stopped filing. I’ve heard nothing from them since.
However, I’ll add my voice to the others advising against entering the US system if you haven’t already done so. No good can possibly come from sending them a complete shopping list of all your assets, particularly considering you are pushing that 2M threshold. (Plus at your level of net worth there’s always the possibility of actually owing some tax.) Just let sleeping dogs lie…. My $0.02.