For those of you who I been dying to know, the IRS has release Technical guidance on it’s e-News for Tax professions, Issue Number: 2012-28. I thought I would publish it for you, as I think it is illustrative the the core problem we have in our tax complexity. Just occasionally it is good for us novices to look behind the 1040 curtain. This is just guidance, so you get it right. All you need do is hire a team of Tax professionals to be sure you are legally applying the provisions covered by this guidance. That is what Romney did, and so can you! 🙂 BTW, the word “Foreign” is mentioned 29 times, and “U.S. Person” is mentioned 12 times, so something is happening here that could apply to you, your Corporation, your Entity or your Trust, or not! It is for you to figure out! Enjoy. Continue reading
Monthly Archives: July 2012
I Don’t Think That They Know Yet?
What a shame the responsible Americans are doing their best to find a job rather than stay in the U.S. unemployed, collecting food stamps and living in section 8 housing–only to find that their mindless politicians have new plans that will make their lives outside of the U.S. an impossibility. In 2013 the Foreign Account Tax Compliance Act will begin and under its IRS reporting rules these hard working Americans will find themselves unable to open a bank account unless they are willing to sign away their Canadian privacy rights. Add to this the IRS’s restrictions on the types of accounts that they can hold, restrictions on employer provided pensions, investment restrictions and the potential for double taxation, and you’ve got a recipe for U.S. government induced failure. Many Americans from all over the world are now moving back to the States because the U.S. Congress has decided to make their lives outside of the U.S. intolerable and embarrassing. There is no reward for doing what is right.
Tax Justice For Americans Abroad, by Steven J. Mopsick
The following article (pdf) appeared in the July 9 (2012) edition of Tax Notes. It is reproduced here with the express permission of the author.
Disappointing Information on Canadian Bankers Association Site
According to their website, “The Canadian Bankers Association works on behalf of 54 domestic banks, foreign bank subsidiaries and foreign bank branches operating in Canada…to promote an understanding of the banking industry and its importance to Canadians.”
It is all the more disappointing to find the following information on their site, intended for us Canadian consumers (says last updated July 5).
- For a US person – “If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, your financial institution may be required to withhold a tax of 30% on any U.S. source payments that you receive and send this money to the IRS. Also, your financial institution may refuse to open an account or may be required to close existing accounts” (emphasis mine).
- For ‘non-US person’ clients, the repercussions of not providing further documentation, if requested, are, “If you choose not to provide this additional documentation upon request, at a minimum, your financial institution may be required to withhold a tax of 30% on U.S. source payments1that you receive and send this money to the IRS.”
So, a Canadian born in Scotland that has US indicia who refuses to provide documentation will have 30% US source income withheld. A Canadian born in the US who refuses to provide documentation will not only have 30% withheld, but may have their account closed? Yet, if both refuse to provide further documentation, then how the heck will a bank know where a person was born? And how is this not discrimination? Continue reading
Canadian Citizens with Dutch tax “problems” be forewarned the CRA WILL collect on YOU
One reason perhaps for some of the governments silence on the issues people face hear at Brock is while the US Canada tax treaty does not allow for the collection of US taxes on Canadian citizens by the CRA(and the reciprocal) the Netherlands Canada Tax Treaty does allow for the collection of unpaid Dutch Taxes by the CRA on a Canadian citizen. It is my understanding that the Netherlands are the only country in the world where such a situation occurs but it does. Here the applicable parts of the Canada Netherlands Tax Treaty.
1. The States undertake to lend assistance to each other in the collection of taxes covered by this Convention, together with interest, costs, additions to such taxes and civil penalties, referred to in this Article as a “revenue claim”. The provisions of this Article are not restricted by Article 1.
2. An application for assistance in the collection of a revenue claim shall include a certification by the competent authority of the applicant State that, under the laws of that State, the revenue claim has been finally determined. For the purposes of this Article, a revenue claim is finally determined when the applicant State has the right under its internal law to collect the revenue claim and all administrative and judicial rights of the taxpayer to restrain collection in the applicant State have lapsed or been exhausted.
3. A revenue claim of the applicant State that has been finally determined may be accepted for collection by the competent authority of the requested State and, subject to the provisions of paragraph 7, if accepted shall be collected by the requested State as though such revenue claim were the requested State’s own revenue claim finally determined in accordance with the laws applicable to the collection of the requested State’s own taxes.
4. Where an application for collection of a revenue claim in respect of a taxpayer is accepted by a State, the revenue claim shall be treated by that State as an amount payable under the Income Tax Act of that State, the collection of which is not subject to any restriction.
5. Nothing in this Article shall be construed as creating or providing any rights of administrative or judicial review of the applicant State’s finally determined revenue claim by the requested State, based on any such rights that may be available under the laws of either State. If, at any time pending execution of a request for assistance under this Article, the applicant State loses the right under its internal law to collect the revenue claim, the competent authority of the applicant State shall promptly withdraw the request for assistance in collection.
6. Subject to this paragraph, amounts collected by the requested State pursuant to this Article shall be forwarded to the competent authority of the applicant State. Unless the competent authorities of the States otherwise agree, the ordinary costs incurred in providing collection assistance shall be borne by the requested State and any extraordinary costs so incurred shall be borne by the applicant State.
7. A revenue claim of the applicant State accepted for collection shall not have in the requested State any priority accorded to the revenue claims of the requested State even if the recovery procedure used is the one applicable to its own revenue claims. A revenue claim of the applicant State shall not be recovered by imprisonment for debt of the debtor in the requested State.
8. Notwithstanding the provisions of paragraph 1, the competent authorities of the States may by exchange of notes agree that the provisions of this Article also apply to taxes and duties other than the taxes referred to in Article 2 collected by or on behalf of the Government of the States.
9. The competent authorities of the States shall agree upon the mode of application of this Article, including agreement to ensure comparable levels of assistance to each of the States.
I am still not sure whether this was the work of Mr. Mulroney or Mr. Chretien. Amended Statement, the recently signed Canada New Zealand Tax Treaty negotiated by Flaherty also includes provision for the collection of NZ Taxes on Canadian citizens.
Incredible unfairness in the US tax code – IRC: Confusing capital gains with income edition – The price of unfairness and the cost to society as a whole
Cross posted from RenounceUScitizenship.
Introduction:
In other countries this sort of bribery takes place underneath bridges and with cash in brown envelopes. In America it is institutionalized and legal but it is the same thing: Cash to politicians in return for favorable treatment from the government.
The U.S. tax system is not simply corrupt, it is corrupt in a deceptive manner that has degraded the entire system of American government. Congress is able to funnel vast sums of money in perpetuity to its favored funders through the tax code without anyone realizing it.
Fareed Zakaria – America Needs a two page tax code Continue reading
Globe and Mail article – Canadians in U.S. on Bush tax cuts with interesting comment from U.S. citizen in Canada
This article may be worth commenting on:
@DemsAbroad @aaforobama A comment explaining why many @americansabroad will not be voting for @BarackObama http://t.co/g5z0bZ8a #FATCA #FBAR
— U.S. Citizen Abroad (@USCitizenAbroad) July 13, 2012
New article about taxation of U.S. Persons abroad by Prerna Rao of Quinnipiac Law School
Via TaxProf Blog, a new journal article about taxation of U.S. Persons abroad: Prerna Rao, Note, What Would Humphrey Bogart Do?: An Overview of Federal Taxes as They Apply to the International Community of U.S. Nationals, 25 Quinnipiac Probate Law Journal 298 (2012).
It can be downloaded (by subscribers or for a one-off charge) on WestLaw and on LexisNexis; unfortunately there doesn’t seem to be any freely-available version. The author is the president of the Asian Pacific American Law Students Association at Quinnipiac University School of Law. Abstract after the jump.
Is this the worst article ever written about citizenship renunciation?
FATCA Summit at NYU Videos
I though some might be interested in watching the videos below of a recent FATCA information summit held at New York University in June. The host of the summit is David Rossenbloom who is a law partner of Mark Mathews who was recently in Ottawa. Beforewarned the videos are long and I have not at all watched close to all four hours but for your viewing pleasure below:
http://www.youtube.com/watch?v=ZEqDO0tjDrg
http://www.youtube.com/watch?v=Y-iBk51zaKI&feature=relmfu
In the second video it appears much of pressure coming in Europe to comply with FATCA is coming in fact from local bank supervisors such as the Dutch Central Bank basically arguing their legal powers to maintain the “safety and soundness” of the financial system trump privacy law. This unfortionately is what I suspected all along. Bank supervisors are unfortunately arrogant a**holes that are fairly immune to political and public pressure. I will say this and it will probably annoy some here but I have to say if Stephen Harper had the b*lls to fire Linda Keen, the career public servant in Canada in charge of nuclear reactor safety. If you have the b*lls to fire the person in charge of nuclear safety because you don’t like her views then you probably have the b*lls to fire the head of bank safety and soundness. I will also note Itai Greenberg comments in the first video that to have an international agreement to simply impose the FATCA regs isn’t much of an negotiation.