659 thoughts on “Solving the problems of U.S. citizenship – Information sessions!”

1. @LM

   Thanks, GwEvil. Here’s another one from Wikipedia:

   “Birth abroad to one United States citizen[edit]
   A person born on or after November 14, 1986, is a U.S. citizen if all of the following are true:[9]
   The person’s parents were married at time of birth
   One of the person’s parents was a U.S. citizen when the person in question was born
   The citizen parent lived at least five years in the United States before the child’s birth
   A minimum of two of these five years in the United States were after the citizen parent’s 14th birthday.”

   http://en.wikipedia.org/wiki/United_States_nationality_law

   The reason why I wondered if Phil is a female is because:

   “For persons born out of wedlock, the person is a U.S. citizen if all the following apply:
   the mother was a U.S. citizen at the time of the person’s birth and
   the mother was physically present in the United States or one of its outlying possessions for a continuous period of one year prior to the person’s birth.[10] (See link for those born to a U.S. father out of wedlock)[9]”

   The US government has not stated definitively (at least as far as we know) whether US citizenship for that child is something they or their parents on their behalf need to “opt into” in order for that child’s citizenship to be legitimate, or whether the US considers them citizens regardless.

2. @From the Wilderness

   Ron Paul is a republican. He supports all the republican values. The only sane one is their FATCA stand which is getting a lot of pushback from their ow party members.

3. @northernstar

   Let’s hope not too much push back!

4. @bubblebustin

   True. but what is happening here that is important is that the curtain is moved and FATCA is being exposed…”everyone, come and see the naked lady and her flaws. “

5. @bb and @ns: The Good is FATCA is getting media attention. The Bad is that it could turn into a partisan thing which means nothing will get done in Congress. The Ugly is that most people in the USA and Canada still have not an inkling of the issues about extraterritorial taxation by the USA.

6. I have been a Democrat since 1985. I am a Republican as of today. The Democrat’s love affair with FATCA has cost them my support. I never thought I would see this day.

   Thank you RNC and especially Republicans Overseas. At least one of the main parties has seen the light.

7. @Kermitzii

   I hope we slay the giant. The idea is that we keep commenting on blogs and newspapers and the other media…we keep reaching more eyes and ears. The grape boycott didn’t work right away , nor did the ending of South African apartheid. We must keep pressing, keep speaking out.

   My local reporter called me today to tell me that there will be a piece on FATCA in next week’s edition. Not bad for a small town with a circulation of 10,000. It will be a small article but I feel that it will get the news out because I know there are many American duals and permanent residents in my area.

   When Rick Mercer does something on it…This is news . We just have to keep plugging away. I am not giving up.
   I am not the same person I was 2 years ago.. I will take care of my money accordingly now that I know the IRS wants it. I hope to have my CLN but it may be awhile as there are so many now being requested. 🙂 I can say I have made a lot of friends on Brock. It has been an education and I have passed this education on our government and Constitution to my friends. Not giving up.. or backing down.
   

8. Petros, thank you for your work on Master Nationality and Dominant Nationality. I found a Dept State publication from 2012 that may be useful to you which is helping everyone else. It is a DoS publication on dual nationaliy;

   http://www.state.gov/documents/organization/86563.pdf

   I personally do not like the wording or terms dual national becuase you can only have one operative nationality at a time. You are not half Canadian and half US. Any so called dual in Canada while they are in Canada are solely and absolutely Canadian. You should not have to do anything to keep the US out of your pants because you are a Canadian in Canada. But on the other hand if you do want to cross border shop, once you cross the line you are equally and fully 100% star spangled US.

   Key wording as follows in the DoS document;

   “It is a generally recognized rule, often regarded as a rule of international law, that when a person who is a dual national is residing in either of the countries of nationality, the person owes paramount allegiance to that country, and that country has the right to assert its claim without interference from the other country.”

   Is this a nick in the armor? There are also other interesting items in the publication. I hope you can do another blog post on the subject and maybe this is useful.

   Petros, God bless you in your work as you are helping so many brothers and sisters. I have thanked the Lord in prayer for IBS.

   And God bless each and every Canadian, on and off this board, you are one of the last lines of defense and your effort is noble.

9. Good find george!

10. @George

    I’ve always felt the term “dual citizenship” sounded sort of like a dichotomous, hybrid-like citizenship – which of course no one can have. As someone else some time ago pointed out, few people in Canada would refer to Canadians with Japanese citizenship as “duals” and seems to apply only to Canadians with US citizenship, perhaps because of our proximity to the US.

11. Based on the Dept State publication if a so called duel owes “paramount allegiance” to the country of the nationality they are residing in and that country is not the US, then how can that person be “subject to the jurisdiction of the US” under international law?

12. The US will subject anyone to their laws as long as the outcome is in their favor. There is no reasonable answer to why the US is doing this to honest people except they have the power and feel nobody is big enough to stand up to them. Very simple, but true reason.

13. Greetings Brockers!

    I cannot even begin to tell you how amazing the meeting was today. There were 46 people there, the room was full. We were euphoric and thrilled and it was a completely rewarding experience. We were Petros, Marie, GwEvil, IRSCompliantForever, myself and our very special guest of honor Calgary411. (George and Attius and NorthernStar felt the weather was simply too dangerous to warrant venturing out.) And of course our presenter, who was energetic, entertaining, full of great information and unique perspectives that challenged. Many times, an answer or comment would initially sound right and yet, when considered more fully, almost the opposite would actually be true. I felt like I was re-learning and re-thinking many things in a completely different light.

    Everyone there was completely into it, though many were clearly in their OMG stage, most not in compliance and more than half were interested in info regarding renunciation. It was informal and completely interactive. My notes were not as complete as at previous meetings. However, some of the prominent points were:

    Citizenship (emphasis on how the laws can be interpreted)
    *a constitutionally (respected?) right
    *14th amendment- cannot take it away against your will
    i.e., you OWN your citizenship
    *so if you intended to lose it, for those who became CDN and were told they would lose their USC,
    YOU DID LOSE IT. And you are NOT OBLIGATED TO TAKE IT BACK.
    *so prior to 1986, one became a CDN citizen, you can take the position that you lost your USC

    Recently seen movies that paralled how US views it citizens
    *Oblivion” with Tom Cruise, aliens that “suck the life out of you”
    *the new Jack Ryan movie-unbelievably is focused on a COMPLIANCE OFFICER seeking out
    OFFSHORE ACCOUNTS!!!
    Question from audience concerned a child who was born in the US and was told would have to take decision as to whether keep or not. So, a USC or not?
    Answer-If the process not completed, NOT a USC

    Question – became a CDN citizen in 1995. Would being forced to use US Passport nullify ability to
    relinquish?
    Answer – was asked, use of Passport/Voting? Point being, passport not a direct effect on loss of
    citizenship or not. Voting is more problematic. Evidence of intention (as compared to passport which is
    more passive in terms of being just a govt-issued document).

    Discussion of situation also occurring in the past. In 1987, people could swear an affidavit that they did not intend to lose their USC by taking on CDN citizenship. Two people present indicated they had done just thought. Documents were sent to the State Dept. One person confirmed they actually checked to see if DOS had it, which they did. 🙁 These people are clearly in a different category than others who took CDN citizenship in the ’80’s.

    Comment from lady in the audience – Was told that DOS could deny claim of relinquishment.
    Presenter made the point that all loss of citizenship is relinquishment and that renunciation is one form of relinquishing. Renunciation is something that happens at that time, in the present as compared to relinquishment, which occured in the past.

    Of the various versions of the exit tax provision, the most punitive is 2008 (others being 1996 and 2004).

    Question was asked whether a SSN was need to file an FBAR. The answer is no, according to actual copy of FBAR there-providing a foreign passport or other foreign ID can be substituted. Though a SSN was necessary in order to file a 1040.

    An audience member commented he had been born in the US but was a British subject/Canadian citizen. Reference was made to a time period where this particular status of being a British subject was the norm and had since been changed. Not sure I understood all that was said but in this case, use of his CDN passport indicated intention (of being CDN).

    Tax Law
    *Agree that US tax law is definitely extra-territorial; i,e, citizenship-based taxation (CBT)
    *Rooted in the Internal Revenue Code and the regulations
    does not refer to US citizens but to US PERSONS
    consist of citizen, green-card holders and those who meet the substantial presence test.

    Correlation to hockey “You live your life in the Penalty Box.”

    In CBT, you get credit for some and only some very specific types of tax already paid
    Example, the IRC does not include VAT or Self-Employment Tax

    2 Principles of IRC

    * Thou shall not DEFER TAXES. US Tax law is hostile to tax-deferral.
    Most in CDN tax system consider their principal residence as a primary retirement resource and there
    are no capital gains (CG) The US taxes CGs of USCs abroad, after first $250k gain
    *The word foreign equates with penalty; punitive tax consequences; CDN Mutual Funds which amount
    to PFICs (Passive Foreign Investment Corporations) in the code since 1986. Actually not discovered by
    the IRS until 2009 correlating to the OVDP program of that year; the OVDP punishing investments
    made as long as 20 years ago
    US is in a league all its own; Eritrea only taxes those outside the country at 2%

    How PFICs (MUTUAL fUNDS) are taxed
    *in US Law, a corporation must pay out dividends/earnings every year; i.e., they cannot be re-invested;
    tax must be paid
    *in Canada, there does not have to be a payout so equals DEFERRAL
    *a PFIC 50% assets test or 75% income test; involves dividends and CGs

    US treats as if the MF is sold; example $1,000 times 10 years = $10,000; instead of valuing it is one $10k gain, the US assumes it is a $1,000 gain each year for the ten years times the prescribed rate, the interest and daily compounding. The taxes can be equal or greater than the entire gain. The tax is figured at the rate for income at the highest rate for the year.

    Canadian Controlled Private Corporation (CCPC) – Sub Part F Income Rules
    even if not paid out, must claim as personal income (higher rate than corporation)

    THIS IS IN RELATION TO PASSIVE (INTEREST, DIVIDENDS, CAPITAL GAINS) INCOME. THE EFFECT IS TO MAKE IT DIFFICULT TO DEFER INCOME. ALTHOUGH, THIS IS THE GENERAL PRINCIPLE, BUT IT HAS A NUMBER OF OTHER TWISTS AND TURNS. IN ANY EVENT, THE BASIC PRINCIPLE IS THIS:

    IT IS VERY PROBLEMATIC, AND VERY COSTLY FOR AN AMERICAN ABROAD TO CARRY ON BUSINESS IN A NORMAL WAY (BY CANADIANS STANDARDS). UNLESS THERE IS A LOT OF INCOME AT STAKE, AMERICANS ABROAD WILL BE SEVERELY PUNISHED FOR USING A CANADIAN CONRTOLLED PRIVATE CORPORATION

    THIS IS ONE MORE EXAMPLE OF HOW DIFFICULT IT IS FOR AMERICANS ABROAD TO ENGAGE IN MEANINGUL RETIREMENT PLANNING. THE INABILITY TO ENGAGE IN MEANINGFUL RETIREMENT PLANNING IS IS ONE MORE REASON WHY U.S. CITIZENSHIP IS AN EXTREME LIABILITY FOR THOSE LIVING IN “FOREIGN OFFSHORE JURISDICTIONS”

    Information Reporting – How will they find out one owns 10% of corporation – via f5471 to be continued. I have a few more pages to type but a falling asleep sitting up. More tomorrow

    *********
    CCPC’s- must report on form 5471; generally described as US Person who owns 10% or more of a foreign corporation; there are 5 different categories of US persons who must file. Failure to file can cause a penalty of $10,000 per year for failing to file the form; if the form is not filed, your personal income tax return is deemed to be incomplete and the statute of limitations does not begin to run until the information required by Form 5471 has been submitted.

    John Templeton, pioneer of foreign intesting and founder of the famous Templeton Fund had heard of 4 or 5 renunciations in the US in the 1960’s. In 1962, came the Sub Part F rules He renounced in 1964.

    FBAR
    *Not a tax form but of Title 31; adopted in 1970; Bank Secrecy Laws, Nixon. Notice that from 2003-2008 in Publication 54 (Tax Guide for Us Citizens and Resident Aliens Abroad) there is NO MENTION OF FBAR; however in 2009, coinciding with OVDP & the Swiss bank debacle, there is mention of FBAR. Perfect set-up for forcing the issue of ignorance of requirement and thus, obligation to enter OVDP

    There are approximately 40 Information Returns, common examples FBAR (which must be filed digitally at this point) and 8938.

    FBAR Marriage

    1) Surviving spouse, there is no estate tax if the marriage is US person to US person
    there is Estate Tax if the marriage is US person to alien

    2) US Tax Laws- punished for marrying outside the tribe; usually as married filing separately where income is very much lower; laws are punitive

    3) Tax Credit for Children – only if the child is a USC

    Think long term

    FATCA a mystery inside the HIRE Act
    HIRE Act – FATCA; Allison Christians so aptly described as the apple-pie filling with the poison-filled crust

    Law vs the Regulations

    2 Parts to FATCA

    1) the extra-territorial offshore aspect where FFI’s must search DBs and identify US Persons to withhold every pmt originating from or passing thru US
    30%; this aspect is more about reporting requirements and the focus is INFO similar to the NSA and mass spying

    2) the more dangerous part for Americans Abroad is the Information Return 8938 – an FBAR on steroids includes enhanced reporting of PFICs; and
    additional reporting requirements for Americans abroad.

    IBS & MSB are focusing largely on 1); missing the point of the danger of 2); the new reporting requirements will remain whether an IGA is signed or
    not

    NB: I don’t quite understand the following note I made:

    The discussion of citizenship based upon 14th Amendment
    CDN Charter
    & ?????
    ?? It may be legal to discriminate via citizenship

    BANKS want the IGA because

    They don’t want to deal directly with the IRS
    They don’t want to break the law
    The IGA covers All of them; an IGA will produce no holdouts which would produce a FATCA hunt

    Ironically, the very first Supreme Court of Canada decision following adoption of the charter was a case in 1989 where a citizenship law in BC was struck down

    Main concerns for expats: Will I be outed?
    Can I have a bank account?

    A discussion followed where it is noted that the government of Canada has nothing to gain by signing an IGA and it may very well be likely that they will not sign and throw the banks under the bus, letting it be the banks’ problem.

    Practical aspect

    If one is outed to the IRS – will probably just get a letter from the IRS asking to come into compliance and that will be the end of it

    if go to an accountant, will not have the protection of privilege
    if go to a lawyer, will have the protection of lawyer-client privilege

    Different ways to become compliant

    OVDP (called OVDP in 2009/ OVDI in 2011/ OVDP in 2012) ub 2009 required 8 yrs of taxes/FBARs; penalty based upon tax owed + interest + penalties of
    20% accuracy penalty and 25% of net worth (or in limited cases, 12/5% or 5%)

    Streamlined not as simple as seems; narrow and treacherous 20-pt questionnaire before admission

    so-called “quiet” disclosure – prior to programs, this was how one came into compliance

    IT IS NOT THE LAW THAT ONE MUST ENTER ONE OF THE PROGRAMS- no legislative program gives IRS the power to demand programs over “quiet” disclosure
    In essence, the IRS is advocating a form of not paying your taxes

    FS-2011-13, December 2011 Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.-was linked to another page geared to CDNs and Brits, interestingly enough spelled “duel” citizens; to do exactly that. Submit forms without entering one of the programs

    Simply submitting forms is not quiet disclosure

    George Bush “How do you like your freedom now?”

    US lawyers, EA’s and CPA’s are required to be ethical according to circular 230, thus there is more pressure in the US to enter OVDP
    They cannot advocate breaking the law; cannot just look at what the IRS says

    Renouncing changed again in 2008
    One can gift a total of $5 million over lifetime; if give away sooner, a way to lower net worth, and not end up as covered expatriate

    AVOID BEING COVERED

    PFIC can’t be given away without triggering the issue
    but won’t prompt by renouncing

    if one is covered and the deemed disposition is applied, there is a $600,000 exemption however, that threshold is allocated in certain ways to certain assets

    if gift tax is triggered, it still will lower net worth and is 45% if recipient is a US citizen

14. @ Tricia
    Well all I can get from that is it sounds like bad news for me. Maybe my husband will be okay though. All that leaves is the Flaherty promise which I suppose can get tossed away by an IGA. 🙁 Thanks for the quick report. What is the background of the presenter? Tax lawyer? Tax preparer? Working? Retired?

15. @Em,

    I am sorry it seems like bad news. Background of the presenter is lawyer, not specifically tax. Working.

16. Tricia, thank you so much for this extensive update to let us all know about this meeting. I’m thrilled so many turned out for it. You all have helped a lot of people today.

17. @Em
    Please note that provisions of the Canada-US tax treaty – especial regarding no assistance in collecting US taxes from Canadian citizens – cannot simply be “tossed away” by Flaherty or anyone else.

    The Tax Treaty is a law. Any changes would need to be ratified by both Parliament and the US Congress. I believe that any change to the Canada-US tax Treaty that disadvantaged Canadian citizens would be political suicide.

    It’s highly unlikely that the US would agree to any change regarding collecting of foreign taxes from US citizens; the US has never agreed to collect foreign taxes from US citizens.

18. @ Skeptical
    If the USA thought it could not collect then why did it even bother with FATCA? Does it think it can just blackmail people into “volunteering” to pay outrageous penalties by using the threats of never being able to go to the USA and not being able to have a bank account? Neither of those two threats mean much to me but they would to a great many people — probably enough to make them pay up. The IGA would be considered a tax treaty override, probably an illegal one, but then only the peons are expected to obey all the laws. Seems the government can just twiddle with the laws to make it “legal” to do whatever it sees fit. Anyway, if it comes down to it, I’m prepared to spend a good part of my savings to help with the cost of lawsuits. I do not want even one penny to go to the US treasury.

19. If I understand correctly what Tricia was writing about, it is impossible for an American abroad to own a local company (foreign from US perspective) for running his/her small family business without the US viewing all the money the company earns as personal income.

    In other words, the corporate veil is completely ignored as far as the US is concerned and the company is forced to treat all income as if its paid out as dividends which makes it impossible for the local company to retain any of its earnings for future investment and/or expansion of the business.

    If that is correct, it is basically financial suicide for an American abroad to own and try to grow a small family business.

20. For expats, there is only one way to solve the problem of US citizenship: Get rid of it!
    

21. Please do not take this the wrong way, I am not a FATCApologist. The law is bad law and deserves repeal for many reasons.

    I also understand that because of local custom, FATCA in one jurisdiction will operate much differently than another jurisdiction even with the same model agreement. Sadly for Canada, it does appear that many financial institutions which operate on the high street in Toronto also operate on main street in Miami. So I think you have far more to lose.

    In Europe (subject to exceptions) and possibly other jurisdictions that are not fully in the EU, many financial institutions even if they are very large, operate solely in their own country and will not open accounts for non-residents. That has always been the case and many years ago I could not open an account in advance of moving instead had to be resident with paper to prove residency. Proving residency was and is the main point, citizenship proof was simply a benefit of proving identity.

    I was intrigued by the work on the IGA with France over at the Flophouse.

    It is a positive development about the recognition of many types of account types that are exempt. That is a plus in the recognition side.

    But it appears there may be a more important recognition and that is deemed compliant and non-reporting “Financial Institution with a Local Client Base.” The restriction is only on location and whom you do business with, it has no restriction on size of the financial institution.

    For months now, I thought that carve out was for small credit unions, co-operative societies and alike but they are from reading any size financial institution as long as its customers were resident and itself did not have branches outside of its borders.

    I had thought from my corner in the EU that by now anyone and everyone would be asking place of birth and citizenship. The only ones seeming to be doing that are firms like Citibank. The non-global local firms are business as usual which in my mind was always far better than the US to combat neferous funds.

    I would guess that most nations could sign an IGA because of the “Financial Institution with a Local Client Base” clause there would not be a single entity sending any reports anywhere. But in Canada as I wrote, TD, RBC and many others are all cross border financial institutions so you have a big problem unlike much of the EU or the rest of the world.

    If others might take a look at the deemed compliant and non-reporting ” Financial Institution with a Local Client Base” and comment?

22. Thanks Tricia for covering the meeting for those of us who could not attend. Great job, everyone!

23. I was at the meeting yesterday. It was wonderful to meet some Isaac Brock Society folks in person. As well as gaining a better understanding of the issues affecting US persons in Canada – I also began to see a time in the future when I would be free of this mess. I began to feel some hope for the first time in months. A big thank you to everyone who helped with this meeting, and to the presenter.

24. The TTC let me down yesterday, so I’m especially grateful for Tricia’s very useful report on the “Meeting”. Many, many thanks.

25. Back to Tricia’s posting about the Toronto Information session:

    This was an important session because it provided some understanding and options for worried people who wanted this information. The message was balanced and included options for getting into and out of the system.

    Many of us in Toronto know the lawyer who presented and who is dedicated to our cause. He is at: citizenshipsolutions.ca

    Em is right about it all “seeming like bad news”: When I spoke individually to some of the attendees and listened to their problems it was so clear that ALL of the options to survive this were bad, but with perhaps (?) some options being worse than others. At a minimum, this information session made it possible for 46 anxious US citizens to discuss their fears with each other and with sympathetic people who wanted to help. There need to be many more information sessions.

    It was nice to have Carol-Calgary411 attend the session and provide inspiration.