Yearly Archives: 2012

Some of you might remember that during the French presidential campaign both Sarkozy and Hollande were proposing some sort of expat tax – Sarkozy wanted to tax those who “left for tax reasons”, that ever flexible political catch phrase, whilst Hollande wanted to implement a 75% income tax rate on earnings above 1 million Euros – A sure way to send many wealthy French expats flying towards London and Switzerland.

Anyway, I came across an article about the recent parliamentarian elections that have taken place and about how, for the first time, French expats will be represented by 11 deputies representing overseas constitutencies.  Here is an article from the Guardian which has an interesting graphic of how they divided the electoral regions up and how many of the 2 million French expats live in each.

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Some of you are aware that I wrote to each of Canada’s MP’s expressing my concerns regarding FATCA. I’ve heard back from a few, but most importantly from my own MP, John Weston, a member of the Conservative Party and designated by Minister Flaherty to look into matters concerning US citizens in Canada. Many of us have been anxiously waiting for some indication of the stance our government will take on FATCA. I believe that we now have one:

Thank you for your letter.  I share your concerns about the IRS’s actions in pursuing Canadians who also have US Citizenship.

I have taken the initiative among Government Caucus members to consolidate information concerning this matter and have worked closely with the Honourable Jim Flaherty, our Minister of Finance, who has taken our concerns forward effectively.  Among other things, I arranged for prominent US tax attorney Mark Matthews to come to Ottawa on May 30, 2012 to brief Caucus members concerning these matters.  Mr. Matthews not only works with Canadians who have US tax problems but he also served previously as Deputy Commissioner at the IRS.

Concerning the Foreign Bank Account Regulations (“FBAR”) matter, the IRS issued a directive in December 2011, “reviewed or updated June 13, 2012”, that appeared to acknowledge these concerns.  You can find the IRS Directive [here].

However, as you will see in Minister Flaherty’s statements, which I have enclosed, you will see there is still considerable uncertainty.  I join the Minister in recommending that you take US tax advice before making decisions on how to proceed.

Foreign Account Tax Compliance Act (“FACTA”)

Concerning the FACTA matter,

• FATCA has far-reaching implications as it would turn Canadian banks into extensions of the IRS and would raise significant privacy concerns for Canadians
• Since the beginning of last year, we have raised serious concerns directly with the US
• We strongly believe this is unwarranted
• Canada is not a tax haven and we already have joint arrangements in place to prevent tax evasion
• We strongly believe rigidly imposing FATCA on our citizens and institutions would not accomplish anything except waste resources on all sides.
• While we’re pleased the US has taken note of concerns we’ve expressed on behalf of Canadians by delaying FATCA’s implementation until 2014, clearly this only a first step
• As such, we have and will continue to express our strong concerns relating to FATCA with the U.S. government
• We are actively seeking a solution both countries will find agreeable

I wish you success and peace in resolving how to deal with the IRS.  I will continue to work on your behalf and with Minister Flaherty to try to bring this situation to a more satisfactory conclusion for all Canadians.

I think we have cause for encouragement that the Canadian government will not just roll over. I also like how Mr Weston has the sensitivity to not refer to us as “duals”. If anyone would like me to post Minister Flaherty’s statements I will, but I believe many of us are already aware of their contents.

I don’t know if anyone has posted the link to this news article from June 21st already.

FATCA ‘failure’ will cost the US

“The real liability of FATCA, legislatively or politically, is not what it costs you as US expats or foreign institutions, it is what it costs domestic US institutions to collect information for the foreign ‘partners’.” Some estimates have projected compliance costs of $7.5bn just for the top 30 banks.

I didn’t see The Newsroom last night but the rant of the anchor is worth a read.  A Business Insider article (cited below) also lists 25 other facts, some of which won’t surprise but taken as a whole, the effect is quite disturbing. It will be interesting to see if there’s any effect on the mainlanders and how they see the reality around them.

A few of the more “telling” facts:

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Unfortionately I don’t know if there will be any way to see the event afterwards but here are the details:

Event in Geneva:

http://www.aca.ch/SCFAS_Fatca_2012_Invite_GE_Final.pdf

Event in Zurich

Debate: FATCA- The worldwide end of Bank Secrecy?

Anyone in Switzerland planning to attend and report back to IBS?

Phoenix rises: Canadians still buying properties despite price hike

I published a letter that I sent with my 2009 tax, which was late because of sheer frustration about what to do.  In the letter, I explained that I had relinquished my US citizenship.  Yet the IRS seems to think that I do not qualify for the Foreign Earned Income Exclusion.  If you will recall, they sent me a threatening letter asking for more information, to which I replied about a month ago, possibly with insufficient time for them to take it into account (though I don’t see how they could not have received it before June 12, as it was sent in early May).  The original 2555, filled out by my cheap tax preparer (no longer qualified according to the new rules), did not include the dates of my residence abroad.  Thus, I amended that form and resent it.  This shows the problem of finding a good tax preparer.  If one is cheap, he will make mistakes.  If a tax preparer makes no mistakes, expect to pay over a thousand dollars for a simple return.  In any case, I will appeal this decision within the 60 days.

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