Snowbirds may become an extinct species, at least within the borders of the United States. Few outsiders know this but Canadians live in igloos year round. Snowbirds are Canadians who seek warmer climate, especially during their retirement years. They have been a significant boon to the real estate markets in Southern states, especially Florida, but one should not forget places like my Dad’s trailer park in San Benito where numerous Winter Texans can play year-round golf and outdoor tennis. Mostly, they spend their enormous retirement wealth that it took many years working in Canada to earn. Expect the snowbirds to start flying further south, to places like Cayman Islands, Mexico, or Costa Rica, anywhere outside the reach of the IRS taxman.
It is no exaggeration to say that United States border guards now have had tax enforcement added to their list of duties. A few months back at the Expat Forum, Omater wrote a little anectdote (now apparently censored), still unverified:
I just got back from my local CGA who is doing our business tax return. He bought a house in the US at about the same time I did. I told him about my trip next week and he advised that I take copies of my last 6 tax returns, which I had already decided to do.
He said that last October a good friend of his who is a dual citizen as well as a CPA and CGA was headed to the US to visit family. They scanned his passport and told him that he could not board his plane for failure to file tax returns. The thing about this guy is that he had always filed his returns in a timely manner, every year since he had landed in Canada. He had to get his office staff to find 6 years of tax returns and fax them to wherever he was at the airport. By the time that happened he had missed his plane.
This is the only verifiable account I have heard of somebody being refused entrance to a plane headed for the states.
Numerous commenters considered the above story to be an urban myth. But Omater now offers a couple more stories of Canadians–not US citizens–who are planning to sell their US condos as a result of the recent crackdown and the hassles that they are receiving from border guards (emphasis mine):
The stories I am hearing first hand are not about United States Citizens, but about Canadians. I had taken a water aerobic class and was sitting in the hot tub afterwords when one woman talking to another woman got louder and louder about being stopped at the border on the way to Palm Springs and were told that they had to file a US tax return. She was very angry and said they would give the place away before they filed a tax return to the IRS when it was none of their business, taxes or no taxes.
A few weeks ago I took my dog to the vet and she asked where in the south I was from. She then told me she had done her residency in Memphis, my home town. I asked her if she had used a green card and she said no and, “Thank God”. She started telling me about her uncle who had a place in Arizona where he and his wife spent 6 months per year, mostly because of his allergies. This year they were headed down and were stopped at the border and told that they had been flagged as being required to file a tax return on their worldly income. When her uncle told them they never spend more than the 6 month allotted time, they were told that they could visit 6 months but would have to file a tax return based on a formula that would basically only allow them a few months per year otherwise. I once read that it worked out to around 120 days. (I am sure you know what I am talking about here.) However, the formula that these people were told about only allowed them a few months per year over a three-year period. Everybody is pretty livid that they will be required to pay tax and to expect no benefit in return. I asked the vet how the IRS knew about her uncle and she didn’t know.
People are talking about selling as soon as the economy allows them to. We just bought a place last April, before I heard of FATCA and FBAR and thankfully we bought cheap. I hate it but we will have to sell. We had hoped to have 6 months a year in our little villa for retirement. I am not sure what we will do now, but it will not be in the states. I can tell you, we spent a lot of money down there. It will be a loss to a depressed little community whose people are always grateful for our business.
I talked to several Real Estate brokers and agents there and I wonder why they are not flying off the handle about this! If they think things are bad now, just wait until the last Canadian leaves Florida, California and Arizona!
Thanks for all you do!
The words, “they had been flagged” provides further proof that this is a systematic usage of border guards to enforce taxes. I would like to track down when the border guards started doing the IRS’ dirty work. Which POTUS approved this crack down? Was it Obama, Bush, or did it start earlier than these two?
@alex – you’re right– that’s 1 way for someone to get a green card. There is another program for buying houses (because there’s a glut) and investing in a type of investment fund, if I remember correctly. The latter, I’ve read, if ripe with fraud. Yeah, fraud even in the “high and mighty – do not wrong – USA”.
Here’s the link about buying real estate = get visa. This is all OVER the mainstream media or was, since it’s from last year:
http://www.cnbc.com/id/44976426/Buy_a_US_Home_Get_a_Visa_But_There_s_a_Catch
Having a company and creating jobs is nothing new. It’s actually like that for many countries, I know for a fact in Brazil and Portugual do this. What I can’t say is how easy or difficult it is to set up a company and hire employees….
@geez
The link you sent me refers to the Schumer-Lee proposal. But I believe that bill was NEVER passed. So EB-5 is only quick way for wealthy foreigners. anyone know otherwise?
@ Petros
I agree with your opinion of Conrad Black. He did not get justice in the American court system. He was to all intents and purposes a politically expedient prisoner. They wanted desperately to put someone in jail but not a high profile American bankster. It was all a diversion to make it look like they were doing something. I hope his Canadian citizenship will eventually be restored but I just want it to be AFTER my husband gets his Canadian citizenship papers because his application went in before Mr. Black’s did … no queue jumping, that’s all we ask.
^^ Alex, that looks like just a proposal for now about the buy 500k in real estate = get a visa.
I know half a dozen lower-middle class (no education) Brazilians who are now US Citizens in the US. When I see them again, I’ll ask the how they did it. Because from what I know, if you are on an expired visa in the US, you can’t become a citizen.
But if they were able to acquire US Citizenship, I don’t think it’s very difficult to acquire.
@Petros
Well. Zero hedge is another guru:) among the others.
I understand Chinese are big investors in Australia also and UK. They want a safe haven – english speaking and perceived legal system which works.
Wealthy russians and Brazilians want the same
Guys who earned their riches in China by underhanded means prefer U.S. investment visas. Canada is not a safe haven for Chinese criminals, as the Lai Changxing and Zeng Hanlin cases illustrated. They don’t care how much they lose in tax as long as they can launder some of their ill-gotten gains and avoid getting extradited back to China to face the music.
In contrast, guys who earned cleaned money through legitimate enterprises they built up with genuine business skill increasingly prefer Canada, Australia, or New Zealand. Or they stay home entirely. I just noticed someone’s name in the Federal Register who I’m pretty sure is a famous entrepreneur from Taiwan who now lives in Beijing. (I’m pretty sure it’s him and not just some random guy with the same name, because someone matching his wife’s name is listed in the same quarter). I’m debating whether or not to do a post on this because as far as I know it’s never been mentioned publicly and it might just bolster the claims of ignoramuses like Al Lewis that all expats are fatcat tax evaders. (Though looking at this guy’s situation, I don’t think he would have saved much tax).
@geez
US citizenship is EXTREMELY DIFFICULT to acquire. if it were easy there would be an interminable line of the economically middle and lower classes stretching from los angeles to peking, from miami to buenos aires, from texas to southern mexico, and from new york to moscow and new delhi. zillions wanting to come here. don not underestimate that.
there are hundreds of millions in the world who dream of living in USA:)
only way to acquire is marriage to us citizen .
i
You must be a lawful permanent resident (green card holder) of the US for 5 years in order to apply for US citrizenship. For foreign spouses the green card residency requirement is 3 years. There are excptions for members of the US armed forces which allow this process to be shortened. Here’s the website:
http://www.us-immigration.com/us-citizenship-and-naturalization-application.jsp?gclid=CIfH9Pzx6a8CFS1a7AodRGYD1A.
Lawful permanent residents are encouraged to become US citizens.
@ Roger Conklin
I was a Resident Alien (that was the term used then, not the now more euphemistic sounding Lawful Permanent Resident) for 12 years and they certainly never encouraged me to become a US citizen. It would not have done any good anyway because I would never give up my Canadian citizenship and had no interest in becoming a Dual Citizen. The green card for me was merely a permission granted card making it possible for me to live with my new American husband in the USA for what turned out to be 12 years.
@Em, the “encouragement” to which I was referring is the words printed in the link. They go into some detail in listing the advantages of becoming a US citizen. Many, like you, come here on a temporary basis expecting to return to your homeland.
Most of our political leaders here in the US make the mistake of believeing that persons who come to the US do so for the purpose of becoming US ctizens, but that when Americans go abroad they never do so for the purpose of becoming a foreign citizen, unless it is to evade US income taxes.
@Roger, right you are! People obviously only leave the US to avoid those high taxes to go to move to tax havens like Canada and Germany and…
@outragedcanadian, and of course to that great tax haven of Sweden. In 2006, according to the Treasury Department statistics for that year, there were 1,399 IRS Forms 2555 claiming the Foreign Earned Income Exclusion submitted by US persons with addresses in Sweden. And Sweden is, as I undertand it, the only country where social security payments can be claimed for US foreign tax credit purposes because, in that country, they in fact are not separate payments but all lumped with and included in a single tax on income. So that is a REAL tax haven. If social security is a separate tax you cannot claim it for foreign tax credit purposes on your US tax return. So you end up paying double social security tax if you are US citizen self employed abroad. And that can kill your ability to compete with everybody else in that country.
@ Roger Conklin
I was just going by our USCIS interview to get my green card issued. The whole emphasis was on our “sincerity” about being married. There was no mention of how much they wanted me to become a US citizen as soon as possible. Truthfully my husband faced the same type of questioning at Canada Immigration when he applied for his Permanent Resident card here. I still remember the questions about whether my husband had ever worked in Canada while still under the temporary visa restriction. My husband had not worked but the officer said something to the effect that they could have had him followed. However at the end, he did get a welcome to Canada from the man.
@Em, the marrige of foreign nationals to US citizens used to be a growth industry here in the US, so that the foreign person would qualify for a green card. Then the instant it was received they filed for divorce and the US citizen was available for marriage to another foreigncitize willing to pay thousands of dollars for this “Service.” So a fewn years back Congress made this illegal and subject to severe fines.
I worked with a Brazilian-Venezuelan dual national in the US who had come to the US to go to the University and eventually become a naturalized US citizen with 3 citizenships. He fell in love and married an Italian girl and helped her apply for a Green Card. They seemed very happy together. But the day she received it she walked out on him. To say he was broken hearted is inadequate to describe what he went through.
He eventually went back to Brazil, married a lovely Brazilian girl and they now have a family. He is sales manager for the Brazilian subsidiary of a US company.
@ Roger Conklin
I understand why they questioned us so much about our marriage. I was just pointing out that there was no encouragement for me to become a US citizen. Maybe they didn’t like the looks of us and were hoping we’d go to Canada eventually (no medicare drain on the US in the future). We didn’t disappoint them in the end.
@Em, yes, the first hurdile is the green card. One hurdle at a time.
It is onlly after you have passed all the litmus tests and have it in hand that, when you go in and look at the how to apply for citizeshp page that you find the propaganda on what a great thing it would be to become a US citizen.
Alex – with all due respect, you are really sold on the USA being the safest haven and rich people around the world. Lemme give you an example:
Paulo Maluff – Brazilian politican. Loved by the people, but has very sticky fingers and a very creative mind for stealing money from public coffers. He sent money through a correpondent bank in New York to banks in the CHANNEL ISLANDS. As a result, the US indicted him and he got put on Interpol. He eventually worked the case out. I don’t know how much he had to pay off the US.
Notice – he used banks in the ** Channel Islands **, most likely a dollar account. Next time, I’ll bet he uses Euros or Sterling. The point is that there are many countries that have up-to-date banking systems and offer multi-currency accounts, The US isn’t the only stable place on the planet.
And if you are a criminal, why would you want a legal system that actually works? There have also been a few Brazilan execs. that have also been indicted by the US for insider trading because their companies trade on US Exchanges. For most corrupt people, I bet the US is the LAST place they want to actually go.
For an honest Joe Schmoe with hardly any money or future, I bet the US is at the top of his list, with the UK second.
@Geeez,, Paulo Maluff – wasn’t he the governor of the State of Sao Paulo, when I lived in Brazil 40 some years ago?
@badger…
Don’t know whether to thank you or curse you! LOL That Accounting today story got my blood boiling, as you can imagine.. 🙂 It did wake me up this morning more than the coffee!
I had to fire off this. Just can’t help myself… 🙂
++++++++++++++++++++++
My dear Mr. Russell…
First of all, the programs that the IRS has been operating in the past 3 years are hardly an amnesty. Even Shulman has said they are not. Not sure why we continue with this myth. Requiring people to go through a 2+ year inefficient process, to pay up to 27.5% of total offshore assets as an “in lieu of penalty” can hardly be called an amnesty!
Add onto that all the cost associated with hiring professional practitioners to help you collect your 8 years of data and amend returns, is not an insignificant cost in and of itself. Then, with foreign tax credits, you may not have any significant tax liability at all!!
This cost was also heaped on thousands of benign non willful compliance failures by Minnows yet you all blindly believe IRS claims of willful tax cheating Whales coming clean. Some egregious Whales did get relief, but you all have no idea of how many were Minnows because you NEVER ask. You just accept IRS assertions.
Also, there is very little data to support the contention that this new compliance will bring in a regular stream of new revenue. The IRS trumpets $4.4 billion collected, but ever idiot knows that this might just be “one off penalty revenue” and not reoccurring tax revenue. Not one journalists asks a question or tries to understand what is a happening and now much real new revenue this “non amnesty” compliance program is producing.
You are told that 33,000 have come forward, without any historical information or basis to determine if that is a statistically significant number.
I would think that readers of Accounting Today, would understand that one number does not a story make. You need a lot of other numbers for reference and context, and the IRS provides none, and no one asks!
Can you imagine a Conference call with a CEO being able to get away with such nonsense?
What is the compliance rates for FBAR offshore account reporting before and after these programs? Did we go from 3% to 5% ? Interesting to know, but again, NO ONE asks!!
I don’t get it. How come when it comes to IRS pronouncements that journalist and professional practitioners are sooo passive?
Now, if you want to know what a REAL amnesty program is, look at what Canada does…
Google this…Voluntary Disclosures Program for the Canada Revenue Agency
I quote:
So, if you want to talk Amnesty lets start there with a REAL Amnesty and not confuse that with what the IRS is doing now. It is having lots of unintended negative consequences and may actually be lowering future tax collection as many Americans Abroad are now walking out the door and renouncing their Citizenship rather than subject themselves to this stupid “non amnesty” jihad.
alex – “only way to acquire is marriage to us citizen .” – not true and you said it yourself. You can set up a company and employ people. Or you can invest in the pools, which is what 80% (reported) people do.
I’m not arguing that people don’t want to go to the US. I believe they do.. still.. even with the idiotic laws. What I don’t agree with is that it is impossible to to get US citizenship because I know too many people who have gotten it. I have to go out now, but I’ll look for more eligibility requirements when I get back. I wish they would let me sell mine!
Roger, yep, that’s him. Very interesting story. With the World Cup construction projects and the “way” things are here, I wouldn’t doubt it if a lot of high-level people get indicted by the US 🙂
@geez
i am just stating the facts- not necessarily being sold. I was not referring to criminals. think this way. There are few wealthy americans who want to move and keep their assets in china, russia, or india , or brazil while gthefre are maybe many millions of the latter (rich and poor) who want to do it in usa. even getting a usa tourist visa is a big challenge for young foreigners.
re; citizenship. yep. but what is a “pool”. i didnt understand that one? many foreigners get citizenship but they are a drop in the bucket compared to the ones who want it and cannot even get a tourist visa to usa. i have employed hundreds of young college grads in south america and in india and russia and I know they ALL without exception would give up everything if they could come and stay in usa:) even i was amazed when i saw it.
but seeing is believing
@omater
Thanks for your additional information on sources. Really appreciate it… As for the ‘disbelief!’ It is a common response I get too…
alex – I mentioned the Channel Islands because there are MANY places someone can park money in a “safe place” like Switzerland. (Personally, I think that the US is attacking Switzerland because it is one of the safest and they are competition to the US). Most countries nowadays have deposit insurance.
Pools – search on “pools of capital” in this link:
http://blog.do-business-in-china.com/2011/06/10/visas-lure-foreigners-seeking-u-s-residency-real-estate/
^^ I have seen uncountable links to this same information so it’s common knowledge.
You said it was impossible to get US Citizenship. I found a link for you. Here is how to get Citizenship starting with a student visa and then working your way up:
http://voices.yahoo.com/how-foreign-students-us-citizenship-484339.html?cat=17
I know of a few European nationals in the US now who are on work visas or green cards. Whether they apply for citizenship, I don’t know. I certainly told a few of them of the drawbacks. If they heed my warnings, I don’t know…
It’s also very commonly known that there are some very rich Brazilians that virtually “commute” between the US and Brazil, like Silvio Santos. I don’t know if Silvio is a US Citizen, but I doubt that he is. Moreover, with a typical tourist visa, a foreigner can live in the US for quite a while. Reference: the B vias. http://en.wikipedia.org/wiki/B_visa . In other words, for someone to have a house in the US and spend several months out of the year, citizenship is not required, whether they want it or not.
Alex, reference pools of capital:
http://blog.do-business-in-china.com/2011/06/10/visas-lure-foreigners-seeking-u-s-residency-real-estate/
Citizenship impossible?: The pathway from student visa to citizenship:
http://voices.yahoo.com/how-foreign-students-us-citizenship-484339.html?cat=17
I know of a handful of people that actually did this. I know others that went to the US on the H1B visas. Whether they decided/have decided to be US Lepers, I don’t know.
Even if someone needs to do business in the USA, have a house in the US, and spend 6 months out of the year in the US, the only thing that’s necessary is the B visa.
http://en.wikipedia.org/wiki/B_visa