IRS cracking down on U.S. expat taxpayers: Steep penalties for Americans who don’t comply with U.S. tax laws (Updated: CBC has corrected the article)
We should call for an apology from reporters from our own government funded media who fail to point out the specific protections that the Canadian government has offered: (1) Never to collect taxes for the United States from a Canadian citizen. (2) Never to collect an FBAR fine from anyone ever. Why does Jon Hembrey of CBC News fail to point out these protections in his article? Instead, this is what we get:
There are also steep fines for failing to file FBARs — up $10,000 US for non-willful violations and the greater of either $100,000 US or 50 per cent of the account balance for willfully failing to file.
The same December release from the IRS said FBAR penalties would be waived if they were the result of a “reasonable cause.”
Bewick said many people have expressed anger at the rules governing U.S. citizens living abroad, some going so far as to suggest they would renounce their citizenship to avoid the reporting requirements.
Renouncing American citizenship, however, requires a person to file five years of income tax returns, Bewick said.
“People just think it’s unfair — it’s completely unfair — and it probably is unfair. But unfortunately the law is the law and it’s just better to get compliant than try to fight off the IRS,” he said.
The issues of FBAR, FATCA and US extra-territorial taxation, have been around for a while, but Hembrey seems like a newbie, who has learned about the problem yesterday, and he relies mainly on United States government sources and Bewick, a cross border accountant.
UPDATE: The Isaac Brock Society (as reflected in the comment stream) has apparently been instrumental in getting the CBC to make certain corrections to this article. It now has the following note at the bottom:
Corrections and Clarifications
- CBC News added information to this story noting that the Canadian government says the CRA will not collect penalties imposed on Canadian citizens by the IRS under FBAR. The story was also updated to reflect the fact that the U.S. government requires Americans to file annual Reports of Foreign Bank and Financial Account (FBARs) if the aggregate value of all their foreign financial accounts exceeded $10,000 at any time during the calendar year. March 7, 2012 | 12:30 p.m. ET
Good job everyone!