I just noticed a comment from EmBee, who passed on to Brock a Maple Sandbox comment from “Anthony”, apparently a “Canadian lawyer”.
— Anthony actually says that the U.S. is planning to have homes of U.S.-tainted Canadian citizens FBAR’d (annual resale values etc. reported). Nonsense? Just a scare tactic?
If true, would this be that final straw that finally pushes affected, previously FBAR-obedient and quietly compliant Canadians into mass resistance, self-certification-without-permission-renunciation, and high anger?
Would you be willing to let FINCEN (Financial Crimes Enforcement Network) know the annual resale value of your Canadian-made family home in your yearly FBAR reporting?
“… This problem will only get worse in the near future.
I have been told that plans are underway to include the annual resale value of all non-U.S. property holdings, including your own home, on future FBAR reports.
That means that your primary residence will soon be fair game for the IRS.
Second, plans are underway to also include on the FBAR report any business that a designated U.S. person may own outside the U.S., including all personal details of non-U.S. partners in the venture.
So, if you are a Canadian with U.S. taint, you will soon have to report your Canadian home’s resale value, year of purchase, personal identifying details on those who also own the home, as well as the same sort of details for any business that you may own in Canada…”
I just left this comment at Sandbox. Thanks SK via Embee…….
http://maplesandbox.ca/2016/cra-gave-irs-bank-records-under-50000/comment-page-1/#comment-539097
Thanks to EmBee at IBS who brought this comment to my attention.
Anthony, your sentiments are much appreciated. I have two things. First, as much as we all hate it, there is not much we can do about banks overreporting $50k. The IGA specifically allows them to do this if they choose.
What is of more interest, is this business of reporting the re-sale value of one’s CDN principal residence on an FBAR. I would expect, should the US try to do something that outrageous, that it would be on the FATCA form 8938, which has more to do with assets. In fact, I vaguely remember it being on the original draft as a possible, possible, asset to be included. It was removed and I have never heard anything further about it.
Could you point me in some direction to look into this? Is this a suggestion in the Proposed RuleMaking section of the Federal Register somewhere? If this is going to happen, we need to understand exactly what it is and how they are going to do it.
If this is true, I pray for mass civil disobedience. The line has to be drawn somewhere. I still cannot get over this is happening and I’ve been involved since Fall 2011. The complicity of other governments will have to stop at some point……….
I can certainly see a mass exodus if Hillary gets elected and taxes us the way she plans to with a maximum 43.4% tax on our principal residences IN CANADA:
http://www.grantthornton.com/~/media/content-page-files/tax/pdfs/tax-flashes/2016/Tax-platform-comparison-60616.ashx
Remember the OVDP wanted 27.5% of a house value (irrespective of equity in the house) that produced say rental income you didn’t declare (like Charlie Rangel did).
So it makes complete sense to add these assets to the lever to be able to punish those with undeclared income. It just fits in with their model.
Now if they find GOP takers for this then I will be very disappointed with the party. Dems will lap it up but they can’t get it in at the moment. This assumes the IRS doesn’t have the power to just add it. Lets face it they are making their own tax laws with inversions.
The IRS Commissioner has a better chance at becoming Pope than me ever reporting my house or ever filing a FBAR.
I would like to know more about this from Anthony, specifically, where is his information coming from? Also agree with Tricia, “If this is true, I pray for mass civil disobedience.”
My comment on Maple Sandbox regarding his comments:
Can’t help agreeing with Anthony:
“If you give the U.S. your hand, they will want the arm and shortly after will cut off your head. That’s how a bully operates. We all should remember that from schoolyard recess!”
FBAR
No, this will not be happening on the FBAR without an amendment to the statute itself. The U.S. Government does NOT have the jurisdiction to do this under the existing FBAR law.
See this older post:
http://isaacbrocksociety.ca/2012/02/15/looking-for-mr-fbar-in-search-of-fbar-fullfilment-and-consciousness/
Form 8938
The legislative authorization for Form 8938 comes from S. 6038D of the Internal Revenue Code which reads:
If you look at Internal Revenue Code S. 1473, it’s difficult to see how a house is a “foreign entity”.
How would they do this?
https://www.law.cornell.edu/uscode/text/26/subtitle-F/chapter-61/subchapter-A/part-III/subpart-A
They would have to enact a new section of the Internal Revenue Code, (say s. 6041) which would require the itemization of all foreign real estate.
Would they like to do this? Yes.
Can they get away with under existing legislation? No.
Oh, and sorry, if anybody is reading this post, if I might offer the following concluding thought:
Renounce and rejoice!
Some good ideas just never go out of style!
Don says:
June 21, 2016 at 1:37 pm
The IRS Commissioner has a better chance at becoming Pope than me ever reporting my house or ever filing a FBAR.
Absolutely agree with Don — there is no quicker way to get the bully’s immediate attention then to file an FBAR. Keeping one’s head down is a useful strategy for quite a few of us methinks.
Hieronymus
I also would be interested in Anthony’s source for his information. @USCitizenAbroad, thanks for the current info.
Lawyers! Love ‘ em or hate’ em. Get two in a room and you will get at least three different opinions. Yes, I said three. At least.
I agree with USCA, but it does appear that if you own real estate through a trust as in an estate planning trust, you have a problem….
“Foreign real estate held through a foreign entity
No, but the foreign entity itself is a specified foreign financial asset and its maximum value includes the value of the real estate”
Do I think Congress could bury a tiny amendment to the tax code in a 5,000 page bill? YES
Do I think Congress would use such an amendment as a means to generate income by penalties to fund something else? YES
CONCLUSION, After everything we have been through……we are one step away…
From a Canadian:
The USG can take their 8938 and their FBAR and blow it out their @$$ for all I care. Hell can freeze over and I still won’t file on behalf of any US tainted within my household.
The US gets a big F-You!
The whale that spouts is the one that gets harpooned.
Does not surprise me. How many times has Obamma said that it is time for “US persons to pay their fair share”.
The US government lacks juristiction, authorization, legal basis for most of the FATCA, FBAR issues. Why would one more phase them?
@USCitizenAbroad
From the excerpt that you’ve quoted, it seems to me that a mortgage might qualify. Furthermore, the proceeds of a sale would have to go into bank account, so either way it’s going to wind up having to be declared in an FBAR, etc. Unless of course someone isn’t IRS-compliant, but I’m not sure how much longer that’s going to be possible given all the data flowing to the US.
Having said that, I’m just speculating. I don’t own real estate, so I haven’t checked into any of the potential IRS gotchas.
The IRS would want reports of all nonfinancial assets. This becomes quite a compliance burden and not as easily quantifiable as the value of a financial account.
Once all that is done, then why only for US persons overseas and not for US residents? All the rules are supposed to be pointed at US residents – they are US persons as well.
It was suggested to me basis for a legal case for the existing laws the equal protection clause under the Constitution.
Given all the above, may I suggest the headline story here is fiction.
In the US, the IRS can automatically get information on financial accounts. Because they could not get this so easily internationally FBAR and FATCA help serve this purpose.
In the US the IRS can not get valuations for nonfinancial assets. As pointed out by @Westcoaster once liquidated the proceeds go to financial accounts and this is captured. It may be argued the same for US based and nonUS based houses (now thanks to FATCA).
Now all they need is to get countries to find and report US person owners of real estate. Another IGA will do the trick. But for some reason I think the US’s political capital has dried up. Just as the Transatlantic Treaty is doomed, now that the EU has finally figured out that the US doesn’t do compromise, just steamrolls its demands.
Perhaps those US legislators are eyeing with envy and rubbing their hands in anticipation, trying to figure out how to impose further extra-territoritality on their CBT slaves in other countries as they see on Forms 8854 submitted to prove we are not deemed covered expatriates upon expatriation from the USA some lucrative capital gains in properties in, especially, big cities in Canada (and other countries) held by Canadians who are deemed US Persons (and equivalents in other countries).
@All,
How could the US find out about your house?
Insurance policy on home?
What would be the benefit as they will catch the sale when the money hits the bank.
Any comments
They want information, ALL information in existance on EVERYONE. Lord knows why, but they have said just that in regard to the IGA with Canada. Here are a few possible uses. In some States, residents are rewuired to report all purchases made out of state and pay sakes tax to the state the are residents of. Nobody does of course but that is the law. So, everything I purchased overseas during my time in the navy, I was to report to my state and pay sakes taxes on the purchases.
Every sale, by law, must be reported and taxes paid upon. Ever buy something second hand from a friend? Did you pay sales tax to your home state? If so, you are, in the eye of a law, a tax cheat. Ever sell something second hand to a friend? Did you include the income from sale on your tax return? According to some states, you are a tax cheat. Not new, but there has never been a way to enforce it, until now.
While there is not a federal sakes tax, income on these sales may have to be reported. Theses small sales would bring in little in taxes but the fines for not reporting seems to be where the feds get their money. ,
Yesterday I went to the post office to cash a $40. money order from my parents. I had to fill out a new form that states in English that it is for tax purposes and provide my “my number” and the purpose of the remittance. The post office made photo copies of my “My number” card and my photo ID. Seems that this $40. will be reported to both taxing authorities. All this for a $40 birthday gift of $40. in cash.
When a friend back home asks for me to pick up something for them in Japan, they reimburse me for the cost of the item and postage. The money received is not income but the forms I have to fill out state that they are for tax purposes. If the money is sent via a wire service, then I must also state the relationship I have with the remitter in addition to the reason for the remettance. This increasingly burdensome filling out of forms, intrusive questioning and documentation I must provide for simple personal transactions is worrisome.
Another possible facet to this is “Big Data”. I teach a couple of upper management types and have learned about big data from them. They are working on implementing Big Data in their power plant design, building operation and maintenance. I do not know how wide spread this concept is but have been hearing of it long before I had it explained to me, so it is out there. In short, it is the belief that if every piece of information that can be known and quantified about something, is and stored in a massive data base to be used by some kind of analysis, that any and all potential problems can be prevented before they occur. Think “Minority Report” if used for people.
When that movie came out, many said that it represented the not too distant future. I thought they meant the individualised advertising. Well that too but the whole idea of prevention is the bigger goal. There have already been reports in newspapers of trial runs of this kind of system to predict who is most likely to commit certain types of crime in one or more US cities. A notion I would have laughed at as absolutely off the wall just a few years ago, it doesn’t seem so out there now after FATCA and myself having to report for tax purposes $40. birthday gifts and provide multiple means of identification to do so.
billy,
Who knows? Would they / could they find ways to deputize more professionals as *arms of the IRS* to find US Persons? Those who hold the records — realtors, property assessment and property tax people? Did we ever dream that our own local *foreign financial institutions* just down the street that we entrust to hold our funds would be searching for US Persons? What financial penalties could be fashioned for such people to decide to assist?
In the meantime, to the back burner until there is more evidence of additional absurdity.
IF the IRS could see that my account has my house sale $$ deposited into it, at such a time as I do sell it… they will just have to sit on their side of the fence and whine and cry about it, because they won’t be getting any of those proceeds…quoting a famous American ***hole “they can try to pry it from my cold dead hands”…by the time they jump through any legal hoops to get their greedy fingers on it, it will be long gone and so will I!
@GwEvil
I agree with those sentiments wholeheartedly, but if you’re quoting Charlton Heston, he was not an a**hole but a decent man, smeared by a genuine a**hole’ Michael Moore. Heston served honorably in the military, won an academy award and marched in the civil rights event with Martin Luther King in Washington…was married to the same woman for decades , and will always
be Ben Hur to me.
@Lake Superior Guy, I may have felt the same way about CH until he became the spokesman for the NRA. That wrecked it all in my books.
Here’s an update on French banking. I renounced a while ago and have French citizenship. I have accounts in several banks. Most of them sent me letters about a year ago asking me to sign certain IRS forms, W9 and W8-BEN. I refused, invoking the French Constitution which forbids discrimination based on (national) origin.
One of these banks – Societe Generale – has now backed down and sent me a form letter (i.e. it’s not just for me, but for all those who were born in the U.S.) which says those who have renounced American citizenship must submit the following:
(1) an auto-certification, which is a bank document written in French (i.e. it’s not an American form)
(2) a non-American passport or other document proving nationality that is not American
(3) a CLN
The auto-certification form still has some objectionable elements. E.g. in case of an “incorrect” declaration the bank wants me to agree to be liable for an infinite amount of money. But I’ll be crossing that part out…