2012 tax topics
24-Jan-12: US and Canadian tax compliance update
14-Feb-12 US immigration and citizenship planning for high net worth clients
INCLUDES “SURPRISE! Your Client May Be an American Citizen and Not Know It” AND “Terminating American Citizenship”
AND Difficult cases – children, young adults or diminished mental capacity
19-Jun-12: Owner-Manager update
18-Sep-12: Estate planning
23-Oct-12: Common US-Canada cross-border taxation matters
Tuesdays 7:30 am – 11:30 am
Calgary: Is this for informational purposes only or because you endorse this particular law firm? Apparently at least one member of this firm is watching this blog (as he commented on the last blog post by renounce).
I would venture that much of the information that this seminar would be available on the internet. Furthermore, I would assume that the purpose would be to advertise the firm, in presenting to a lay person, there would be a strong bias towards recommending legal services from the firm presenting the information.
The vast majority of our folks are not criminals, and I think really can sort through their issues without expensive attorneys. That’s my opinion and I am sure that others have other opinions.
Take the questions of expatriation: since expatriation is a fundamental right, it is hardly necessary to have an attorney to do it–any more than it would be necessary to exercise the right to vote. Plus, I wonder if this law firm understands the injustice of retroactive US citizenship and laying US citizenship on those who were born in a US hospital–in many case, such people are considered unjustly US citizen by the United States, while they are true Canadians who should not need to renounce (in my opinion). Since many thousands of Canadians are border babies, I think this is something that needs to be worked out between the two governments, and not by expensive lawyers and the State Department, lest they become victims of the system.
Just informational. I have no ties to this firm, other than being in the same city. I think a lot of law firms will be bulking up on this subject, probably a growth industry.
I would like to hear what is discussed on “difficult cases – children, young adults or diminished mental capacity”. I’ll see at my January meeting at the US Consulate how the Consul addresses my son, as they have already told me:
“Basically, even if you have a court document to act on your son’s behalf, you cannot renounce his U.S. citizenship for him, as explained in the excerpt below:
7 FAM 1293 MENTAL COMPETENCY
a. Because loss of U.S. nationality occurs only when a would-be renunciant or person signing a statement of voluntary relinquishment has the legal capacity to form the specific intent necessary to lose U.S. nationality, cases involving persons with established or possible mental incapacity require careful review. This includes mental disability, mental illness, developmental impairment, Alzheimer’s disease, and similar conditions. It may also include cases of substance abuse.
b. A formal finding of mental incompetency by a court of competent jurisdiction, whether in the United States or abroad, precludes a finding that an individual has the requisite intent.
c. The requisite intent may also be found lacking if there is evidence that due to mental incapacity or impairment the individual does not understand the seriousness of renunciation, including its irrevocable nature and the major consequences that flow from it.
d. Voluntariness may also be an issue with persons who suffer from mental incapacity or impairment, as such individuals may be especially susceptible to the influence of others.
e. Parents, guardians and trustees cannot renounce or relinquish the U.S. nationality of a citizen lacking full mental capacity: A guardian or trustee cannot renounce on behalf of the incompetent individual because renunciation of one’s citizenship is regarded, like marriage or voting, as a personal elective right that cannot be exercised by another. Should a situation arise of the evident compelling need for an incapacitated person to relinquish citizenship, you are asked to consult CA/OCS/PRI for guidance.
Well, you can’t get rid of his citizenship, I would start applying for every form of social assistance that Washington provides (if there is any).
Furthermore, don’t do anything about filing FBARs for your son. He should at least reasonable cause, since he can’t do it for himself. Since you can’t renounce for him, I don’t see why you should file his FBARs.
Petros, just my 2 cents, but I don’t think it hurts anything for people to know that there are people who can help– for a fee. I can easily imagine tougher cases where outside help would be necessary, especially when you’re talking about wealthier people.
Keep in mind there’s a HUGE swath of people around the world who have been affected by this: the Canadians are the largest group, but I’m sure there’s tens of thousands of Americans who want to renounce in Hong Kong, mainland China, Europe, and to a lesser extent, in South America.
Don’t you think it’s good to put as much info as possible for everybody?
Well, several people have told me that they’ve paid accounts to come up to date $3000-7000. I think that a US tax preparer who has the person’s Canadian return, should charge in the range of $250-300. I met with someone yesterday, a salaried employee of a school, and his wife and daughter similarly employed, that said his account prepares all three returns for about $700.
Unethical people exist in all professions. Doctors who do unnecessary surgery. Mechanics who replace parts that don’t need replacing. In our case, Lawyers who charge $300-500 to do things that you can do yourself–and lead you into a program (OVDI) that you shouldn’t be in. Any lawyer who led a minnow into the OVDI last Summer is incompetent. A lawyer should have seen that the OVDI was amnesty for the criminal tax evader, but it was a one size fits all program that was bashing the heads of minnows. Then to turn around and 14 times more than the fine on such a person? What a schyster!
So yes, there are some reading this who will agree that everyone will need legal advice. And I think that is one reason to create an organization that can pool together resources so that we have one or two lawyers who work for one million people. Or we get the Canadian government to do it for us. Someone who is on salary and not working on a per hour basis. That’s what we need. You folks further abroad need something similar, or can join us, and we can pool our resources internationally because many of the issues will be the same. Or we find a retired lawyer, who is willing to give stock advice, to work pro bono. We must hang together, or surely we will hang separately.
Ok, this is me thinking out loud and that’s a dangerous thing. The lawyer who enters his client into the 2011 OVDI which had the 5% fine for a “accidental” American is actually exposing his client to an unjust law. The program however was however designed to catch such people. That is actually not the lawyer’s unscrupulousness but an inherent flaw in the 2011 OVDI–i.e., it really was aimed at innocent people.
… and thank goodness that Petros, especially, and others who have taken the lead to start and continually ramp up this continuing story and intelligent resources for all of us on the dedicated Isaac Brock Society website. It has been a godsend for me.
May each of us conquer this beast in whatever way we can in the coming New Year. Happy New Year All!!!
This is all a very serious problem. First of all, depending on the complexity of the situation, $3000 – $7000 is a very low fee. I have seen accounts of people paying far in excess of this. Obviously the fees paid will (in most cases) bear some relation to the complexity of the situation.
The OVDI situation is very troubling. A number of people made the decision to enter OVDI under extreme duress. They sought the advice of “trusted professionals” to find that they were encouraged to enter OVDI. Of course, there are many reasons why people chose to enter OVDI. But, suffice it to say, that there are many people in OVDI who regret it. Leaving aside the conscious motivation of the lawyer, once someone is inside the program, the person will continue to be in need of legal counsel. So, a law firm with a number of clients in OVDI will be on the receiving end of lots of legal fees.
In fairness to (at least some) the lawyers. They were operating with the information known at the time – “quite disclosures” were dangerous, etc. The thing is though: OVDI was designed for people involved in tax evasion. So, the idea that “quiet disclosures” are dangerous may apply to tax evaders. Not sure that it would apply to your average U.S. ex pat just trying to make a living abroad.
The bottom line is that people are very distrustful of the “trusted professionals”. This has added to the stress and anxiety. We are now in an environment where people are reluctant to approach the IRS and solve their problems. Sort of like the church in the middle ages – can’t talk to the IRS except through a high priced lawyer.
Yes, we must organize a group of “trusted professionals” on what may be a “full time” basis until this problem is resolved.
Petros, $250-$300 for a cross border US tax return an accountant that does not understand cross border tax. A good tax accountant would not even prepare a Canadian return for that fee. Check what H&R Block is charging for Canadian tax returns and remember they are essentially uneducated form fillers.
Perhaps you’ve noticed the complexities involved in filing a US tax return while living, working and investing in a foreign country?
There are considerable differences in a number of income items – the calculation of capital gains for example. How about Form 3520 which is commonly applicable to “average” Canadians? Form 5471? Again not an uncommon form for a Canadian. How about PFIC issues – do you know about those? Should you claim the Foreign Earned Income Exclusion? There’s a very good reason not to claim it. And don’t forget to add in Form 8938 this year. How about the time it takes to explain to the clients the issues on their returns because they want to understand what’s happening their tax returns and explain the differences between the Canadian and US tax return.
As a cross border tax specialist I’m tired of the comments that people are being gouged on fees. Most have no idea of the complexities involved their tax returns not to mention the education and knowledge required to be a cross border specialist.
How much does a plumber charge per hour? Looked at the shop rate for getting your car fixed lately? Ask Moody’s what the hourly rates are for their staff or what their quote was for the 2011 OVDI program. $700 for 3 Canadian simple, salaried employee returns = $233 per return. And you think that a US tax return should be $250 – $300?! You clearly have no idea what is required to be a tax professional and it would seem not a clear understanding of what is required to complete a US tax return for someone living, working and investing outside the US.
Ok enough ranting back to work.
Thanks for the comment. I’ve given it it’s own post, so anyone wanting to comment should go there.