I was very surprised to receive the following email on Friday evening. I cannot recall ever getting anything like this before. I will not identify the author because it is not proper to publicly share an email without the permission of the sender. It is not anyone I have ever heard of before and I doubt any of you have either. It took me a while to decide if I would answer or not. I tried to put my reaction aside after all, why be surprised that a tax compliance professional would demonstrate so little awareness outside of his/her experience. In the end, I simply could not ignore how I felt. I replied and have decided to publish the email without naming its author and my response.
I wish I had pointed out to this person that technically, due to the Canadian IGA (or likely any Model I agreement), that there are no harsh penalties that have been implemented. A professional who is truly conversant with this situation should have stated this better. Does such a statement show a conscious attempt to confuse the expat, assuming penalties from FBAR, OVDP etc will come to mind? Could it be a reference to the idea that Form 8938 is a harsh penalty all on it’s own? (As a matter of torture, most definitely….) Or is the practitioner just sloppy? (Maybe we could get this person to rule on all the “plain language” misapplications we hear of….retroactive 877A, anyone?).
I also wish I had challenged the statement that “the program is working.” There is nothing to suggest that the majority of non-resident (or resident, for that matter) Americans have become compliant. The numbers quoted in the statistics for the OVDP are nowhere near 9 million and we know some of those who came forward are Homelanders. For some interesting figures regarding compliance please see Professor William Byrnes’ “Is FATCA Much Ado About Nothing“? . Prof. Byrnes states “The IRS War on the FBAR is simply not working.” (“The IRS received 807,040 FUBARS FBARs in 2012; compliance with FBAR filing appears to be declining.”) Every tax compliance professional should be required to read this report. It would go a long way in curtailing the inflammatory language we experience, intended to confuse & frighten and assumes we are all idiots.
I also should have challenged the nonsense about ICE not allowing visas of former citizens being allowed to enter the U.S. This amounts to the usual threat of the Reed Amendment. Does ICE have the power to override the State Department?
I am simply astonished at the arrogance of this person. What to say of the obvious limited exposure of such an “expert.” (I have never heard anyone suggest that there are bank problems in Canada). Mentioning OVDP and not Streamlined. Who on earth does this person think he/she is?
My USC/resident-CPA sister strongly suggests I complain to the appropriate accountancy board.
And the unmitigated gall of implying I should send clients………good gawd………
*******
(emphases are mine)
If this is the Patricia Moon who has given up her US citizenship because of FATCA, then this is for you. I have seen your “protests” regarding FATCA and filing US tax returns. You stated that you were delinquent in your filings, and that you caught yourself up and then renounced your citizenship.
You are one of the very reasons that FATCA with its harsh penalties was implemented. I have been practicing in the international tax area, specializing in US expatriates, for over 31 years. I am the chairman of a state CPA Society’s International Tax Committee, and have an international reputation in this area. Over my 31 years’ time I have prepared and/or reviewed several thousand tax return. I have seen dozens of people such as yourself , people who are American citizens, and enjoy the benefits of being an American citizen, while failing to fulfill the obligations that come with citizenship – namely filing a US tax return and paying any tax due. One cannot enjoy the benefits of American citizenship without complying with the responsibilities.
Since FATCA has been implemented, there have been citizens such as yourself who have renounced their citizenship. I understand from a couple of US Customs & Immigration attorneys that I work with that ICE often won’t allow visas to come back to the US, sometimes even for vacations, to former US citizens. However, a much larger number of persons have come forward and are now filing tax returns and complying with the responsibilities of being a US citizen.
So the law has worked. It is accomplishing its intended goals. I personally have worked with several formerly noncompliant individuals to “get them legal” through the Offshore Voluntary Disclosure Program.
Staying legal is not a difficult process. It requires filing a US tax return every year. Often there is no tax due from it, as the foreign tax credits and the foreign earned income exclusion will reduce or eliminate the tax on all but US-sourced income.
Giving up citizenship is a drastic step when compliance is so easy. It is like amputating your arm because you have a hang nail.
And, from my experience, most larger banks WILL continue to work with Americans abroad. Very few are closing American accounts. In Canada, for example, I know that BMO Harris actually promotes accounts for Americans. I have several clients in Canada who bank with them. RBS Bank, Banque Scotia, TD Mortgage Corporation, Canadian Imperial Bank of Commerce, and many others.
Just my thoughts. Feel free to give my name to any individual who wants to become legal, but does not want to go to the extreme that you did.
Thank you.
*******
My response:
Your email is extremely offensive and demonstrates that you understand this situation from one point of view and one only.
Perhaps you are unaware of the fact that the large majority of expats living outside the US for decades were simply unaware of any requirement to file taxes and information returns. The U.S. made no attempts to educate or notify people of these requirements. Surely you have known people who were “non-willful.” I certainly hope you did not put any persons such as these in the OVDP/OVDI.
Your comment “You are one of the very reasons that FATCA with its harsh penalties was implemented” is curious, given I did not owe any tax. I was a stay-at-home mother with an annual income that never exceeded $11,000 CAD from doing the books for my husband’s company. An annuity inherited from my parents was transferred at a later time and I most certainly paid the tax that was due.
As to “I have seen dozens of people such as yourself, people who are American citizens, and enjoy the benefits of being an American citizen….”
- I had not lived in the United States for thirty years and was/am a law-abiding, tax compliant citizen/resident of Canada
- I was not “enjoying the benefits of being an American citizen”
- If you are referring to having the right of return, there is nothing particularly unique there; the majority of countries on earth allow their citizens to return
- And I certainly am in no need of the Marines coming to save me in Canada (a “benefit” that one would have to pay for, were it even relevant to those living in first-world countries).
If by “benefit” you mean having access to “the greatest country on earth” I will tell you that a component of renouncing involved my observations about Abu Gharib, Guantanamo, the assassination of American citizens by drone without due process and other actions that frankly made me ashamed to have ever been an American citizen. In other words, your assertion that my renunciation was “like amputating your arm because you have a hang nail” simply does not cover all that was involved. Not the least of which, was my Canadian family and how they felt about the effect of U.S. policy on their lives. My husband resented any account information being turned over to FINCEN (given the fact it was his money)and it was a huge issue in the marriage.
I have remained active in this movement having renounced over 6 years ago. I don’t gain anything personally by volunteering a huge portion of my life to this. I am fully conversant with what is required regarding compliance. It is not always simple and it is very expensive. You fail to mention facts such as:
- the U.S. would expect capital gains tax on the sale of our personal residence for a gain greater than $250k
- the U.S. treatment of Canadian mutual funds as PFICs is particularly punitive and would require 8621 every year
- the U.S. insistence that my country’s tax-deferred vehicles designed to help save for education, disability and non-RRSP uses are foreign trusts requiring 3520 and 3520A every year; all of these plans mirror similar programs in the US (529s, ABLE and Roth IRAs)
- had I been signed on my husband’s company (I wasn’t) we could have found ourselves subject to an annual 5471 and the particularly abusive Transition Tax
I personally have no desire whatsoever to go to the United States. I don’t care what CBP and ICE do. It doesn’t frighten me at all. A Canadian does not need a visa to visit the U.S. anyway.
None of us have ever claimed that obtaining bank accounts or mortgages is difficult in Canada. This is a situation that primarily affects Europeans and it is very, very real. I know many people who have been severely impacted by it. It was perversely disingenuous for Judge Rose claim in the Bopp FATCA ruling, that this was not due to FATCA but to independent action of the banks.
Over the years I have encountered many people such as yourself, who seem to think they are entitled to inflict their opinions and judgments about character based upon presumptions made about U.S. expectations. I wonder if it could ever occur to you that there are other places and people in the world who do not base the value of their existence upon opinions such as you have expressed. I find it difficult to believe you would end asking me to send you clients. I trust this will be the end of any communication.
Regards,
Patricia Moon
Secretary-Treasurer
xxx-xxx-xxxx
Alliance for the Defence of Canadian Sovereignty &
Alliance for the Defeat of Citizenship Taxation
Excellent reply, Tricia. I’ve already deemed this condor’s name to be two 4 letter words — Damn Dolt. If he/she thinks compliance is “easy” then he/she isn’t aware of all the intricacies of all the 4 number forms involved and obviously has no empathy for how much it costs his/her clients in time, money and well-being. I can only hope very few (prefer none) find themselves in the tacky talons of this conniving condor.
We used a Vancouver based tax compliance professional. She recommended streamlined but we opted for quiet disclosure. 4 late yrs. worth. So far so good. Not overly expensive.
“…….enjoy the benefits of being an American citizen…….” What a pathetic joke. The truth is the US is the only country in the world that treats its expats like shit.
What are these so-called benefits a US expat enjoys?:
1. The right to file a US tax return every year even though I don’t own a single US asset and haven’t lived or earned anything in the US for almost 50 years.
2. The right to file multiple useless complicated forms (all of which have life altering penalties for the slightest mistake) along with that tax return .
3. The right to re-register with the Financial Crimes Enforcement Network all over again every year.
4. The right to have the tax-free capital gains on the sale of my Canadian home taxed by the US.
5. The right to have my Canadian tax-deferred accounts taxed by the US.
6. The right to enter the US anytime I want (provided they happen to feel like it). The worst entry experience I ever had was when I was carrying a US passport.
7. The right to lie to my chosen bank to open a simple account. (I don’t want an account at BMO Harris. That’s an investment bank. What I want is a basic savings and chequing account at my local credit union which I can’t have if I’m a US citizen.)
8. The right to pay US “exit” tax on all of my entirely accumulated in Canada assets when I finally renounce because I’m so sick and tired of “enjoying” all the previously mentioned “benefits”.
I could go on but there’s no point preaching to the choir here at Brock. That guy is an arrogant, ignorant prick who does nothing but spout all the usual Homelander-centric garbage. May he rot in hell.
I think it’s unethical for these “professionals” not to at least inform a client that ignoring the whole mess is a viable option, and often the one least likely to cause harm. Wouldn’t there be standing for someone living in, say Canada, whose Canada-based US tax advisor put them in harm’s way to sue, claiming that professional advice should have included doing nothing? As in, you made me think I had no choice than to pay taxes the sale of my house, put my company in the transition tax disaster, etc. You should’ve told me I could also ignore it and remain completely in compliance with Canadian law. Next time I meet one of these, I’m going to question their morals.
Not to imitate Trump, but two thumbs up . I do wonder how many such condors do we have in Canada .If they don’t use the hard sell of insighting fear and retribution, I doubt most of them would survive. It’s a cottage industry with a strong lobby .
Am I allowed to use the words arrogant prick on this website, because that is what he is (assuming it’s a he).
I wonder if business is drying up. I used Greenback Taxes a few years ago when I sold some mutual funds and always do their little annual surveys. After simplifying my finances, I now do my own paperwork, since I find it less stressful. This year, after I did their survey, I was bombarded with messages on Facebook about the services offered to delinquent taxpayers, even though I made it clear on the survey that I had already filed my taxes and have always done so. Seems desperate.
THESE ARE THE PEOPLE WHO GIVE ME HEARTBURN
Great reply to such an insult! It is the homelanders who have stashed money abroad who are the reason, and not expats who were dragged into this quagmire by no fault of their own. Not to mention that the tax systems just don`t jive and only in the most simple cases of wages earned abroad… sans real estate, sans investments, and sans retirement plans…. is anything even partially “easy”.
And then let us not forget that America is now considered for the black list as a tax haven itself!
If compliance was easy, why would anyone need him?
I’d love to see his response to the Transition Tax!
“I’d love to see his response to the Transition Tax!”
We need to engage here.
If he (she?) can’t be named, at least invite them here for a chat.
After all, they seem to have the solutions and are advertising for business then they should be really happy about coming here. 🙂
I for one would love to get their response to Maz57’s list of benefits of USCship. That would be fun.
@ Japan T
Ditto! All those “rights” make US citizenship seem so wrong for outlanders.
Patricia: Congratulations on your outstanding reply to that offensive email.
Three words: Homelanders gonna Homeland.
In case the main post didn’t put you over your Recommended Daily Allowance of ultranationalist butthurt & saltiness, here’s more:
https://www.reddit.com/r/tax/comments/8ebq2b/will_the_usa_ever_end_citizen_based_taxation/
The Reddit thread just confirms what we know, that trying to get sympathy and understanding from homeland Americans is a waste of time. It’s clear they enjoy the discomfort of the American who chooses to be so ungrateful as to live elsewhere, and they truly believe that the US passport is very special indeed, so special your British wife should be celebrating having his business ruined by her US husband.
You might as well bang your head off the wall, it’s just as affective as trying to get homelanders to understand they are wrong on this and are supporting their own tax slavery.
The USA is effectively making itself in to a fiscal prison of 320 million inmates and a tax haven at the same time while making the rest of the world pay to make sure they don’t compete in the tax haven game at the same time.
It will take other countries to wake up to what is going on here and to put a stop to the USA tormenting their own residents and citizens, it’s as simple as that. Just for once, let’s see the EU exercise some clout here.
BB –
“If compliance was easy, why would anyone need him?
I’d love to see his response to the Transition Tax!”
I agree. And the Exit Tax. I’d also be interested to know whether he thinks it’s reasonable for the US to make life difficult for US citizens and former citizens – telling every bank on the planet to treat every US citizen as a tax cheat unless/until s/he can prove otherwise – while deliberately making laws to obstruct the US citizen’s attempts to prove otherwise.
Turns out there’s a poster on US tax forums who describes himself in terms very similar to those used in the letter. His posts actually don’t sound very condor-ish, but he does seem to be totally, genuinely puzzled by the idea that anyone blessed with US citizenship could possibly want to escape.
A suitable case for polite re-education, perhaps, if it is he and if he’s open to a reasoned debate on the issues. De-condorization, so to speak.
If he’s really teachable, it’s a lucky thing that Polite Patricia replied to him instead of me.
Yes the letter is bizarre. It may not be the same person.
“If compliance was easy, why would anyone need him?”
That was my earlier point. A truly experienced CPA specialising in expat tax cannot say they are easy, therefore something does not add up.
My little follower on quora, an “experienced international CPA” constantly repeats that there is no problem here, there is a FEIE and it’s easy.
He’s lying, though why is not clear.
“therefore something does not add up”
Yeah, I would have told him to multiply with himself.
At any rate, the letter-writer’s stance on FATCA seems inconsistent with the position taken by AICPA in their 2016 letter to the US Treasury
(https://isaacbrocksociety.ca/2016/03/07/aicpa-recommends-that-treasury-implement-measures-to-reduce-tax-and-reporting-burdens-associated-with-various-cross-border-deferred-and-tax-exempt-savings-accounts)
If the writer really is Chair of the International Tax Committee of a state CPA society, s/he seems to be at odds with the body that (according to its website) “sets ethical standards for the profession” (https://www.aicpa.org/about.html)
That letter is dated 2016. Two years later and the problem has changed little.
Folks, this is starting to remind me of Japanese problem solving which may best been depicted as it played out with the 1995 Kobe earthquake.
As is common in earthquakes, fires soon engulfed much of the city. The national government in Tokyo got concerned about the possibility of firefighting water drowning some people that might be trapped in collapsed buildings and ordered the firefighters to stand down as Tokyo carefully concidered the situation.
Some time later, 3 days is what I remember, they decided that despite the possiblity of drowning some trapped people with firefighting water, the firefighters should resume extinguishing the fires. The fires had burned themselves out by then. Problem solved.
Problems solve themselves if you just wait long enough.
Our lives, families and careers having been destroyed by the time they get around to addressing the problem, they will not have a problem to expend political capital upon to solve. Problem solved.
JapanT – yes I think kicking the can down the road is a familiar approach in many countries.
It’s the contrast between the AICPA position, and the stance taken by (allegedly) a prominent AICPA member that struck me as odd.
All else aside, a professional person obviously ought not to be sending offensive unsolicited email of any kind. But perhaps the AICPA Code of Conduct doesn’t cover that. 🙁
True, kicking the can down the road is common every where, but they seem very very good at it here.
Wonder if a formal complaint would be in order. Thought that would be up to the receiver.
Does anyone remember that Canadian media personality (talk show host, I believe) who years ago stated publicly that to file US taxes he just wrote “taxes paid in Canada” across a 1040 and sent it to the IRS? Apparently he’d been doing it years and never heard back from the IRS.
Now that’s an easy way to file US taxes from abroad.
In response to that email, a Canadian account is little use if you’re living in Europe. If you live in the US and want foreign currencies, I know of ONE European bank which will take your business IF you have hundreds of thousands of dollars to deposit. This is after inquiring from many banks. Many will not even reply if you state you’re a US citizen and/or resident.
As to number of FBARs, I have recently filed after the Apr 15 deadline (when one would assume most file) but before the Oct. 15 deadline (automatic extension.) My filing number is in round numbers, 375,000. If numbers are issued consecutively and not at random, it would seem that 375,000 have filed form 114 so far, so a good guess might be 400,000 Form 114s filed for 2017. This says something about either compliance, or the choice of many to keep accounts just below the reporting limit, or expatriate.