The Isaac Brock Society consists of individuals who are concerned about the treatment by the United States government of US persons who live in Canada and abroad.
If clicking on a link brings you to the wrong page in the comment thread, click here to arrive on the current page of the thread: http://isaacbrocksociety.ca/2011/12/14/about-the-isaac-brock-society/
The United States is one of two countries in the world that taxes its people no matter where in the world they may reside. The other is Eritrea, which the USA has condemened for terrorism and for its diaspora tax. The majority of US persons who live abroad are not aware of their filing requirements. But recently, the US government has decided to crack down on those who are not in compliance.
But what is more, the US government has begun, since about 2004, to apply with great pressure a long-neglected requirement of 35-year old law called the Bank Secrecy Act. That requirement is FBAR, the foreign bank account report, which the United States government expects annually from those who have accounts outside of the United States which exceed $10,000 in aggregate. The fines for failure to file this form are extortionate, and virtually no US person who lives abroad even knew about FBAR, while most of them, over a certain age, own bank accounts with retirement savings exceeding that amount. The threats of fines and imprisonment has frightened many people who as a result have consulted expensive accountants and tax lawyers to get this mess sorted out, only to face high accounting or legal fees on top of potential fines and back taxes. In 2009 and 2011, the IRS offered voluntary disclosure programs (OVDI). Some who entered into the 2009 OVDI, because of fear of the penatlies, were shocked when the IRS assessed them fines in the tens of thousands, essentially treating them as tax evaders instead of a law abiding citizens in their countries of residence.
For many US expats, renunciation now seems like a really good idea. Why not? Many haven’t lived in the US for years and now they have few ties there except perhaps some family members. So they want to renounce their citizenship only to find that the laws regarding expatriation are confusing and that the exit tax requirements are at best complicated and invasive, and at worst, extortionate and utterly in violation of their right to expatriate.
The media coverage of this issue has been uneven. There have a been a few balanced stories, but most of the time, the media has merely publicized the purposes of the US government; this is especially true of US media sources. The Canadian media has generally done a much better job of grabbing the attention of the world about the abuses of the US government. That being said, even the Canadian media sometimes falls into the IRS trap of projecting fear in order to force compliance. Overall, we regret when the media offers only condemnation and fear without telling the story from the side of the victims or informing them of their rights and alternatives.
US persons abroad also face US border guards who are starting to put pressure on all those who have a US place of birth to travel only on a US passport, even if the person has not been a US person for decades–an arbitrary change of policy making those who relinquished citizenship into would-be loyal taxpayers to a profligate government that has to borrow 40 cents on every dollar its spends.
The Isaac Brock Society is here to fight. Sir Isaac Brock prepared Canadians for war with the United States and gave his life in repelling a US invasion in 1812. So we also want to fight for US persons who are frightened by the IRS, the border guards, the compliance condors, and the media. We are here to provide one another with resources and strategies, comfort and advice.
But not only so, we are here to warn other Canadians about the illegal incursion of the US federal government into the lives of the US expat community. Pretty soon, with the new FATCA legislation, this arrogant attitude of the United States will affect every man, woman and child on the planet who wants to open or maintain a bank account or to invest in a retirement fund. Now, according to FATCA, you will have to tell the United States whether you are a US person when you open up a bank account in, e.g., Australia or Thailand. This makes every country in the world a protectorate of the United States, for, if they comply with FATCA, they are ceding their very sovereignty to a nation which has not invaded or conquered the rest of the world, but only uses its waning hegemony over the financial sphere to coerce other nations.
So whether you are a US person living in exile, a Canadian or a citizen of any other country, we ask you to join us in this struggle for freedom and justice.
I have a follow up question regarding my reception of the CLN and the IRS. I know I have to fill out the Form 8854. Do I also have to submit a 1040 for that part of the year before I relinquished (i.e., March 2016)? I thought I was well done with of all this but unfortunately there are several potentially expensive administrative/IRS hurdles to go over yet. Cheers, Greg
Instructions for final year filing
I just received my CLN and now am faced with two IRS options: a) use an accountant to complete the 1040 (partial year) and the 8854, b) fill in the forms myself. If I choose the former, the quote is 2K (I have used this accountant before: he is very competent and professional). However, I am really tired of paying exorbitant fees to comply with my IRS obligations. If I fill the forms out myself, I fear I may screw them up. Any advice? If I do fill these inane forms myself, any good resources to decode “jargon” like “nonmarketable stock and securities”–what???? Is there any tax software that is decent for this? Thanks for any assistance with this last (and most annoying) hurdle. Greg
@greg, try posting your question above at this thread link http://isaacbrocksociety.ca/renunciation/ where more people will see it, and more who have done the 8854 may answer. I have but it was a while ago, my income/assets were limited and fairly simple – and still I struggled with it. Had an accountant help, but they did not really understand the form either – I did most of it myself with help from info here at IBS.
Leave yourself lots of time to send in the second copy of the 8854 – the one that does not go with the return.
One important thing to remember and plan ahead for is that the asinine 8854 requires TWO copies to be sent – one WITH the 1040 last return, AND A SECOND COPY to another IRS PO address in the US that has only a PO box listed, and which in its infinite wisdom the IRS does NOT make available any alternate street address ( see https://www.irs.gov/uac/where-to-file-forms-beginning-with-the-number-8 https://www.irs.gov/uac/submission-processing-center-street-addresses-for-private-delivery-service-pds ) for IRS recognized “Private Delivery Service (PDS)” couriers to use – for a situation where you need to send stuff to the IRS quickly, and need absolute proof of timely filing/timely delivery from OUTSIDE the US . As far as I know, it is still the case that the 8854 second copy is to be sent only to a PO Box with NO street address equivalent available (check the current mailing instructions on the form itself), so keep in mind the deadlines to file the two copies of the 8854 to separate IRS offices, and factor in the lead time needed to get the form done and delivered in a manner that will allow you to obtain adequate proof of delivery – particularly for the second standalone copy http://hodgen.com/you-cant-file-form-8854-via-fedex-or-ups/ .
Despite the obvious uptick in renunciatons/relinquishments over the last 5 years or more, the IRS as usual does not see any reason to make it easier for expats outside the US to securely and easily file the second copy of the 8854 form – which they demand, from ‘abroad’ – which is illogical, because by definition renunciants have to renounce OUTSIDE the US, and are logically usually then located permanently OUTSIDE the US – so it follows that they would have no direct access to the US Postal Service to file the second copy of the 8854 by an IRS recognized courier delivery service (for proof of timely filing/timely delivery) (unless and excepting if someone in Canada near the border decides to travel into the US in order to use a US postal outlet – travel which at that point may or may not potentially pose its own problems since the person would have already surrendered their US passport to the consulate/embassy at their renunciation appointment, and probably would not have a CLN proof of renunciation yet – so may or may not be stopped by US border agents and asked why travelling on a non-US passport with a US birthplace while seeking to enter the US).
I believe some people used turbo tax. Can you use your past returns as a template for the partial year? You can google specific tax terms. Keep the 8854 simple, many work from the premise ‘only tell them what they already know’.
You should ask your questions on the ‘US Tax and Expat’ section (found on right hand column). It is more often visited and responded to.
Greg. You can do it. Use your 2015 return as a template. For the partial yr 2016, you report income up to the date you relinquish. Then There is the 1040NR for the balance of the year where you probably had no US source income. There is a case to be made that you don’t have to file it if your income from the US is below the threshold. ( about 10K)
Keep the 8854 simple. Don’t tell them anything they don’t already know. You don’t need formal evaluations of your assets. If you are well under 2 million they won’t bother you. Don’t fret about small mistakes. The IRS is severely restricted in what they do. ( no money, no staff, a new admin intent on restricting them further).
They can’t go after minnows who live outside the homeland.
I am filling out form 8854 and have a question about my expatriation date. I formally relinquished (signed and gave all relevant papers to the US consular officer in march 2016). My CLN indicates that I ceased to be a us citizen in march 2007 (when I became a Canadian). When, then, did I actually expatriate? The instructions for this section of the 8854 are completely useless and my response significantly changes hoe I complete this wretched piece of paper. Thanks
The instructions are incomprehensible. I would use whichever date is better for you. Remember they have no resources to bother you.
Thanks DoD. What an exercise is frustration.
One quick follow-up: if I use the March 2016 date, do I then file my 1040 (partial) from Jan to March 2016?
@ Greg. The confusion arises from the fact that the US has 2 types of citizenship, citizenship for immigration purposes and citizenship for tax purposes. Now that you have your CLN, your citizenship for immigration purposes ceased in March of 2007 when you became a Canadian with the intent of relinquishing your US citizenship.
According to their stupid rules, your tax citizenship continued on until March of 2016 because that is when you finally notified the US government of your relinquishment. The fact, (assuming I understand your situation correctly), that you kept on filing US tax returns for the years after your relinquishment date, indicates to them that you still considered yourself to be a US citizen/taxpayer (their logic, not ours). I think at this point you are stuck with using March of 2016 for your expatriation date. In other words, you file both a partial year Form 1040 for 2016 and a Form 8854 by this spring’s filing deadline. As DoD said it probably doesn’t matter in the end because they can’t really do much to come after you.
Just for comparison, I became a Canadian in December 2012, immediately notified the closest US Consulate by email that I intended to lose my US citizenship, but I never followed through by booking an appointment and applying for a CLN. (I refused to pay the extortionate fee.) I filed a final US return for 2012 but never an 8854. I have filed nothing since, have heard nothing from the US government and don’t expect I will ever hear from them again. You are on much firmer ground than I am so just bang out a cursory 8854 and don’t worry about it too much. (Or you could choose to do nothing and ignore the whole business.) Either way you are finally free and they can’t touch you.
@maz57 : “according to their stupid rules”
Love this. I refuse to sort out what these forms are ex: 8854 etc., but like your general approach. I think you have to have been raised there to understand any of this. Anytime I try to read US tax rules/forms, and considering I am a lawyer and usually understand this stuff, my eyes just glaze over.
The take away lesson for me is to stop wailing about Canadian tax forms because, in comparison they are so much more straight forward. Or possibly, they are just what I am used to.
Overall my philosophy is: if you have never entered the US tax system before, don’t now. Especially important for us accidentals. Works for Gwen, Kazia and me and they know where we are. If I were to formally relinquish just to get a CLN- which as you know I won’t- I would do that part but never the tax compliance part. I owe them nothing for the five years I had to live there after my birth. They can go pound salt or sand, their choice. And more so, so can Harper/Trudeau2 for that matter for betraying me and classifying me as a second class citizen… which I totally reject. Salt or sand for all of them. Free tax free home delivery included.
There used to be a message board….is that still here? I have some new questions as an “accidental American” and I would like to read past comments before asking.
@Susan, have a look at the various subjects on the righthand side of your screen. Scroll down to find the one that best matches your queries and post there.
Regarding the links in the Sidebar boxes, some link directly to only one thread. But some Sidebar links bring up a list of links to threads on more specific sub-topics. Eg, I recall there’s a link to relinquishment for persons-born-dual on the list under “How to renounce/relinquish.” So, there may be links to other threads of particular interest to accidental Americans under other headings in the Sidebar as well; not sure but worth a look.
Also you can check the site’s Archives. That’s reached through the grey bar at the top of the page. You can find the threads about Accidental American matters if you do a Ctrl-F search there for “Accidental American.”
Hi, Susan. I don’t know anything regarding a message board. But, one thing that might help you find what you want is putting into a search *Accidental American* in the Archive on the main page, IsaacBrockSociety.ca.
Thanks for the replies. I had done all that. I’m just overwhelmed since it has been a LONG time since I last visited. How do I ask a question that isn’t necessarily related to one of the existing posts?
You don’t need a message board to ask a question at Brock. As long as you place it where someone willing to help can spot it, answers will follow (as best as possible, considering we are not professionals). Look under the “Ask Your Questions About” heading (on the right) to see if one of those threads suits the purpose.
A lot of questions seem to fall under these 3 threads– Expat Taxes and FBAR – FATCA – Relinquishment and Renunciation of US Citizenship — which are in the Sidebar Box “Ask Your Questions About.” Those 3 cover a lot of ground and seem to get a lot of activity. Perhaps one of them?
Sometimes someone posts a question on a thread where their question is kind of off-topic and another reader seeing it suggests that they might get more replies if they re-post it on such-and-such thread (mentioning one which is more on-topic or more specific).
So, if you’ve been looking but no thread’s jumping out at you, you might want to try a thread that has some relation, even if it’s a stretch, to your question and see how it goes.
@Susan – if you want to say what the question is about, someone might be able to answer it or suggest a thread in which to ask it.
There aught to be a rule against posting the sane comment in 3 or 4 different threads
Yes, we ask that people post a comment on only one thread, whichever they feel is most relevant. Otherwise, the site becomes repetitious and one comment takes up several spaces on the sidebar, causing others to drop off prematurely (and possibly not be seen at all by many people). I see the comments you are referring to and have contacted the commenter regarding this.
I guess Jack didn’t get the message
Can someone explain the paper-flow and repercussions of signing a w9 with a canadian bank (or refusing to sign)?
A lot depends on who you are. A W9 is for American citizens. Canadians can sign a W8-Ben. Best to ask on the ask your questions about expat taxes ad FBAR thread.