Did Doug Ford file his FBAR for his Canadian Assets when he ran the Chicago/US branch of Deco Labels

18 thoughts on “Did Doug Ford file his FBAR for his Canadian Assets when he ran the Chicago/US branch of Deco Labels”

1. As Mayor Rob Ford http://en.wikipedia.org/wiki/Rob_Ford is very outspoken about being a foe of taxation in general, I would really like to hear his position on the ever-present threat of DOUBLE taxation by the US, imposed on Canadians born/naturalized here in Canada, and Canadian residents, former green card holders, snowbirds and the like. Toronto no doubt has a very high percentage of duals, accidentals, and other Canadian residents deemed ‘US taxable persons’ by the IRS. I don’t think it likely that either the Mayor of Toronto, or Councillor Doug Ford would come out in favour of compromising people’s financial privacy, or support turning over their legal, post-tax Canadian bank account details to the US. Or agree that the US under FATCA should be able to force Canadian banks – headquartered in Toronto, to search out and report on every single dual Canadian/US citizen and their accounts at the direction of the US and IRS.

   Their company has two US locations, so it is likely that they know at least something about the US system of extraterritorial taxation. See http://dougford.ca/doug-ford/ “…Deco Labels & Tags and employs 250
   people in Toronto, Chicago and New Jersey….”

2. @Tim

   For some reason, I couldn’t get the link to work on the post about Billionaire book. And you are right – 180 days and you hafta pay!  Wonder how we can find out how long he stayed?

   @badger

   My recollection is that there is an estimated 250,000 “Americans” in Toronto. I presume that does not include all the unfortunates who aren’t/weren’t USCs but now are. I don’t know all that much about the Fords, and maybe it’s just the pessimist in me, but I can’t really picture either of them getting overly involved, concerned, etc. In fact, I’ve become more and more negative and expect there will be many  unpleasant and destructive consequences that will be worse than we might imagine.

   I had intended to write a post about whether or not Canada will sell “us” out. And I came across 2 things that seemed contrary to what has been discussed here, at least earlier: 

   http://www.fasken.com/files/Publication/71fac56a-711a-4497-98c6-369f5c04ab80/Presentation/PublicationAttachment/2c86f85b-fba2-4748-85ae-eabf3472a5de/STRATEGIES_FOR_RESOLVING_CROSS-BORDER_TAX_CONTROVERSIES.PDF

   ((This information comes from the 11th (2005) Annual Conference on US-Canadian Cross Border Tax Strategies. The conference will be held this year in Toronto: http://www.citeusa.org/pdf/Canada.pdf)

    

   1) Revenue offences are now extraditable offences under the Treaty on Extradition between Canada and the US; offence must be punishable in both countries by imprisonment of at least one year.
   (Frame 27)

   2) Canadian courts cannot look beyond the Income Tax Act and settle issues of double taxation.  

   So the courts can’t/won’t help, the Treaty will always override the ITA and some can expect to be turned over to the bully. Just great, eh?

3. *NobleDreamer

   Yes but willful non filing is NOT in the punishable by more than one year’s imprisonment. The question is to what extent is exactly one year imprisonment fit under the extradition treaty. Technically one year is a “misdamenour” and generally countries don’t extradite for misdaemenaours. The US government is of course trying to change this. See the following below:

    

   MAKE REPEATED WILLFUL FAILURE TO FILE A TAX RETURN A FELONY

   Current Law

   Current law provides that willful failure to file a tax return is a misdemeanor punishable by a term of imprisonment for not more than one year, a fine of not more than $25,000 ($100,000 in the case of a corporation), or both. A taxpayer who fails to file returns for multiple yearscommits a separate misdemeanor offense for each year.

   Reasons for Change

   Increased criminal penalties would help to deter multiple willful failures to file tax returns.

   Proposal

   The proposal would provide that any person who willfully fails to file tax returns in any three years within any five consecutive year period, if the aggregated tax liability for such period is at least $50,000, would be subject to a new aggravated failure to file criminal penalty. The proposalwould classify such failure as a felony and, upon conviction, impose a fine of not more than $250,000 ($500,000 in the case of a corporation) or imprisonment for not more than five years, or both.

    

   The proposal would be effective for returns required to be filed after December 31, 2012.

4. @Tim,

   Is this info from IRS site?  Or?

5. *These are the current procedures under the IRM for criminal referral for willful non filing

   http://www.irs.gov/irm/part25/irm_25-001-007.html#d0e223

    

   Now this is non-filing of a tax return not an FBAR. A few observations. It is not clear whether the US government has ever been sucessful in prosecuting someone on willful FBAR(Title 31) who didn’t fill out a return and check Schedule B. Second there is no Canadian equivilent to FBAR(Title 31) so FBAR is evasion can’t be an extraditable offense from Canada. Third if you actually look at the above IRM section excluding Mr. FBAR it is not clear the “new” procedures for minnows are any better than just going through the “traditional” method a homelander American would do who has fallen behind in filing returns. Someone like Jack Townsend could give a better idea of this but the general impression I get is the US Department of Justice generally is not in the business of prosecuting misdamenors generally they are looking for felony’s. As an aside I suspect it would be tough to find any extradition from Canada to the US for misdemeanors.

6. *FBAR is still the big stick of the IRS but it is a brittle stick because they can’t extradite on FBAR and I am not sure of any cases of going after FBAR other than where there was an incorrect Schedule B checkoff. Now of course if you decide to back file 1040 then you would to check Schedule B and then backfile FBAR(Unless you take the position FBAR is non extraditable and uncollectable in Canada).

7. *The info about willful failure to file is from the US Treasury Green Book. It is not law but it is the official position of the Obama Administration in terms of what they want Congress to do. However, there has been no actually legislation introduced by anyone in Congress to do this.

8. *More info:

   An incorrect Schedule B checkoff could be considered a false return and then conceivable extraditable as a felony. A correct Schedule B checkoff but then a simple refusal to file FBAR would only be a non extraditable Title 31 violation. (I don’t know of any cases of a correct Schedule B checkoff was accompanied by a willful refusal to file FBAR).

9. *Check this out. US Attorney General Holder’s visit to Canada.

   http://blogs.justice.gov/main/archives/1863

10. Just to be clear, the reason the issue of extradition seemed frightening is that many of us had insisted, very early on in this blog, that we didn’t have to worry about extradition and several sites had lists which had no mention of any tax issues………….so it sounded rather ominous. Also, it seems Congress has become quite enamoured of it’s ability to do whatever it wants so it doesn’t seem that far of a stretch to imagine them changing whatever they need to do implement their nonsense. Maybe it wouldn’t affect many of us as most of us don’t seem to be in that income bracket but it’s still extremely offensive to watch them try to restrict passport renewal, etc….

    I believe you mean that CDA has no equivalent to Title 31? The T-1135 has similar function to FBAR; why is it that FBAR offence automatically non-extraditable? Not trying to be argumentative, I want to understand what you mean.

    It is interesting that IRS seems to think they can change the FBAR into tax evasion:

    http://www.irs.gov/irm/part25/irm_25-001-007.html#d0e223

    25.1.7.1
    (10-30-2009)
    Overview

    Willful failure
    to file a tax return is a misdemeanor pursuant to IRC § 7203. In cases where an
    overt act of evasion occurred, willful failure to file may be elevated to a
    felony under IRC § 7201, Tax Evasion.

     

    http://taxation.lawyers.com/tax-audits/blogs/archives/9813-Tax-Evasion-Charges,-Prosecution,-and-Penalties.html

    The IRS and the Justice Department only prosecute cases with a
    high chance of obtaining conviction and in which the taxes owed average around $70,000. 80 percent of tax cases result in a conviction, and half of those result in incarceration.

    The reason I mentioned the court was that it has often been quoted here, that no CDN court would ever enforce a foreign lien; but I infer from that report that the court would refrain from any action at all. And I read that as serious, and not good.

     

    Just my $0.02

     

     

11. *Here’s another one to wonder about: Mohamed Morsi, the newly-elected president of Egypt. He studied in the US and then was a US university professor for several years after he completed his studies and before he returned to Egypt.

    I wonder if he formally cancelled his Green Card when when resigned his professorship and returned to Egypt. He is in the US currently to attend meetings and to speak at the United Nations. If by chance he failed to do that, which was not an uncommon thing for foreign citizens to do when they went back home, then he is subject to US income tax on everything he earned after he went back to Egypt, including his current salary as President of Egypt. And of course there are those pesky FBAR reports and,effective this year, the new FATCA report.
    If he went through the proper formalities, then he should have no concerns, but if he didn’t then perhaps he better be careful lest the IRS take advantage of his physical presence in US territory to “you know what.” US tax laws must be enforced without favoritism
    Roger
    

12. *I suspect that they’ll focus on whales, though also pick out a few random minnows to instill the fear factor

13. So this was probably the first topic that I’ve read on the site which was 100% Canadian and I had no idea who the this person was 🙂

    Regardless, I would imagine that, yes, this fellow is in trouble if he hasn’t declared anything…but I also imagine that his team of lawyers and accountants would have prepared everything correctly.  Mursi is a more interesting question, but I seriously doubt that the US will do anything about that at all, seeing as US-Egypt relations are so fragile at the moment..

14. *Title 31(which included reporting requirement other than FBAR) would be equivilent to the Proceeds of Crime Act in Canada however, there is no Canadian/FINTRAC equivilent to the FBAR largely because the FBAR is a completely stupid form/requirement. Extradition or no extradition criminal charges always remain on the table. I think in the US context there are some important roadblocks though. First a case brought against a person outside the US with absolutely no ties to any location in the US must be brought in the District of Columbia. One problem with this is that particular US Attorney’s Office i.e. US Attorney for the District of Columbia tends to busy with a LOT of far more important issues to the US Government such as defending the government and all of its departments in most civil litigation. Additionally DC has its own District and Appeals with somewhat different judicial traditions. I could quite see the US Court of Appeals for the District of Columbia taking a far different view of the required records rule than the other appeals courts. Fourth the Justices on the DC Court of Appeals tend to be conservative and think they are on the way to the US Supreme Court(which they typically are see Roberts, Scalia etc). As Jack Townsend has noticed the US Supreme Court tends to rule in very odd ways in the few tax matters that get to its level. Fifth I am not sure there has been any criminal tax case in the DC Circuit for a very LONG time.

15. @nobledreamer,

    It seems to me that the US, with its now duplicative to FBAR Form 8938 (FATCA), attempts to get around its inability for extradition with FBAR. What other reason for the duplication and getting around, for instance, Canada’s statement that it will not collect penalties for FBAR for US Persons in Canada, either residents or dual citizens?

16. Perhaps a Form 8840 would have been filed???

    http://www.moodystax.com/moodystax-blog/21-us-taxation-services/92-snowbirds-beware.html

    If you are successful in establishing a closer connection to Canada by timely filing a Form 8840, you avoid the necessity of filing a US resident tax return and possibly incurring double taxation.

    Residence under the Canada-United States Income Tax Convention

    Generally, if an individual fails to file a Form 8840 on time, the individual will be considered a US resident for tax purposes and be required to pay US income tax on his or her worldwide income. Nonetheless, it may still be possible for the individual to have his or her residency status determined under Article IV of the Canada – United States Tax Convention (the “Treaty”).

    The main purpose of the Treaty is to reduce the potential of an individual being taxed twice on the same income. The treaty attempts to resolve the issue where an individual is deemed to be a resident in both the US and Canada. You may be classified as a non-resident alien under Article IV for the purposes of calculating your US income tax liability if the following conditions are met:

    you are deemed to be a resident of both the US and Canada pursuant to each country’s respective tax laws; and
    your permanent home is in Canada and your personal and economic ties are closer to Canada than to the US.

    Although relying on the Treaty may permit you to escape US taxation as a resident on worldwide income, you will still be required to file a US Form 1040NR with a “Treaty-Based Return Position Disclosure under Section 6114 or 7701(b)” (Form 8833). These filings are far more complicated (and thus more expensive to have prepared) and intrusive than a Closer Connection Exception Statement, so most clients prefer to file a Closer Connection Exception Statement if at all possible.

    Conclusion

    If you are among the thousands of Canadians returning to Canada after a long cold winter, you may want to consider your potential US tax liability and filing requirements before it is too late. If you are a Canadian who spends significant time in the US, it is imperative that you obtain professional advice to determine the extent of your tax filing and tax payment obligations. We expect that the IRS’s increased scrutiny of taxpayers with foreign connections, combined with increasing use of technology, will cause the IRS to pay closer attention to those that are not filing required US forms and returns.

17. @Roger,

    it would be interesting indeed if we could find out but I don’t think they would risk any more irritation of the Arabic Muslims-and I would even be willing to “let it slide” for that reason.

    @Tim,

    Good points and thanks for laying that out. I also think it’s unlikely it’s just that when I read that (revenue offences/extradition) I thought of Petro’s posts where he’d linked to lists where that information was not listed. It also had an inkling of the “OMG” moment, so thought I’d pass it on.

     

    @Calgary,

    Exactly, 8938 so IRS can come directly rather than go thru DOJ. I think Tim mentioned the Fords are known for having a disdain for doing proper paperwork, I wouldn’t be surprised if he just passed it by. You’d kind of have to live here to know why these two fellows are not respected for their brazenness-such as our Mayor driving as he reads, talks on his cellphone and flipping the bird (all photographed)!

     

18. *The issue is if someone doesn’t file any return(1040)to begin even on a willful basis can the US go after them for willful violations of FBAR and 8938. There is a reason I think they are trying to increase the penalties on basic willful to failure and that is they know this is a legal “out.”