Just retweeted this courtesy of Terry Ritchie.
US Citizens in Canada – Status of Penalty Forgiveness
Monday, March 05, 2012 by Kevyn NightingaleI have written previously about Americans in Canada who are delinquent in filing their US tax returns and Foreign Bank Account Reports.
What We Already Know
On December 1, 2011, David Jacobson, the US Ambassador to Canada suggested that the IRS may provide these people with some relief from the over-the-top penalties that can apply. The IRS issued a fact sheet on December 8, but that sheet basically reiterated the Service’s longstanding position. The IRS will evaluate each filing to determine whether the taxpayer has “reasonable cause” for filing late. There are no specifics about relief from penalties, so there is no certainty whether penalties will apply. Each taxpayer is dependent on the vagaries of the particular IRS agent assigned to her case.
The Good News
The good news though is that the IRS is acting on this imperative. On March 2 at the 36th annual Tax Law conference held by the US Federal Bar Association, IRS Chief Counsel William Wilkins said the IRS is “actively studying options for a different kind of kind of disclosure path for citizens residing abroad who do not have material US tax obligations.” This is the first time an IRS official has proposed something new on the record.
The 2011 OVDI has been reintroduced , essentially identically, for 2012.
But people anticipating coming forward should consider waiting until more details are forthcoming from the IRS.
This fellow is a lawyer in Toronto and I am quite surprised he would advise anyone to wait.
IF IRS really does develop a different kind of disclosure, do you think it would really change much? Would they stop asking for FBARS? 8938s? 1040s? Would they ever acknowledge our registered plans? Do you think anyone will re-consider renouncing?
Disclosure path? Take that flimflam and shove it. I want a closure path!
@Outragec: You have stated perfectly what I (and I’m sure the rest of us) believe:..”they have no right to any of my info and that I should not have to file any income taxes to the US. I don’t want a ‘disclosure path’, personally – I want recognition that I am Canadian and have no obligation to have anything to do with the US/IRS.”
In the meantime, I’ve got the tax forms and an FBAR (for an RRSP, “my foreign offshore account”) filled out but can’t bring myself to send them in because I resent the ridiculousness and unfairness of this whole mess. However, I want to visit relatives in the US and renounce. Maybe I’ll just keeping waiting for awhile longer.
“actively studying options for a different kind of kind of disclosure path for citizens residing abroad who do not have material US tax obligations” surely it’s because they need some expediency in getting the minnows processed.
I hear different stories as to whether they are or are not going to do something on this front. I’ll believe it when I see it and no government agencies are not very fast moving.
@Just Me, how do you catch all those flying tweets? You are everywhere!
This would be fantastic news if it’s true. If you read the official IRS page on declaring FBARs, they are very reassuring (I know, difficult to spit out that word in the same sentence as IRS), that people who honestly didn’t k now they had to file, and owed no taxes, would not be subject to penalties. What’s at least very very clear now is that most Americans abroad should NEVER have gone into the OVDP, which is a one-size-fits-all attack on tax cheats, not us living overseas. Check out the latest ACA press release on our letter to Commissioner Shulman about the effects of the OVDP program on Americans overseas, which is posted elsewhere on this fantastic blog.
Somerfugl: Don’t send it in. Once you do, you are reclaiming your US citizenship. My advice, as you know, if to try to relinquish.
Calgary411 can tell us first hand the nightmare that reclaiming US citizenship creates.
@Anne, Don’t believe even one word about what is supposed to happen with respect to US citizens in Canada and elsewhere outside of the US who have not submitted US tax returns, FBARs, etc. because they did not know they were required to do so, until it actually happens and everything is officially supported by enacted legislation. Until then just consider it smoke and mirrors. Sweet talk creates false hopes that are gone when the ax falls.
@Brock the Badger
Hardly… 🙂 Although I wished I were! I just keep throwing things against the wall to see what sticks!
re March 8, 2012 at 3:42 pm ‘IRS Ottawa
The Internal Revenue Service (IRS) does not maintain an office in Canada’ yes, they cancelled any in person tax help or assistance sessions; “Note: Owing to budget cutbacks, the Internal Revenue Service will not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada.”
True to form however (lots of hammer and pointy stick enforcement vs. nonexistent help and education) for those in Canada, on the Ottawa embassy website instead –
“Please note that the Internal Revenue Service office at the US Embassy in Ottawa was closed permanently in June 1997.” AND, this helpful tip – (which does refer to an Ottawa office),
“If you suspect a individual or business of tax fraud in the United States, email the IRS office in Ottawa. You may be eligible for a reward!”
I note that they have made revisions (fairly recently) and have now added other contact information and links, as well as a *note about the FATCA form, BUT STILL NOTHING WARNING AND EDUCATING ABOUT FBARs!!!!
Form 8938 (Statement of Specified Foreign Financial Assets) should be filed by taxpayers withspecific types and amounts of foreign financial assets or foreign accounts. It is important for taxpayers to determine whether they are subject to this new requirement because the law imposes significant penalties for failing to comply. Form 8938 — including the instructions, regulations implementing this new foreign asset report, and other information to help taxpayers determine if they are required to file the Form 8938 — is available on the IRS website.”
@ badger, that website is just about as helpful as a poke in the eye with a Montreal dill pickle.
: ) thanks @roger,
the image – re the pickle, made me laugh, a much needed stress/anxiety reliever/distractor – I haven’t really been able to smile or laugh or sleep much since last September!