Category Archives: Issues regarding US persons abroad

This has just been posted on the Moodys Tax Advisors blog.

IRS says hundreds of thousands of US citizens are not reporting Canadian trusts

This week the IRS released statistics on the number of returns it received in 2010 from US citizens with foreign trusts. The results are startling (you may find the report by clicking here). In all of Canada only 324 returns were filed that report ownership in a non-US trust, which likely means hundreds of thousands of US citizens residing in Canada had not filed the appropriate returns.  This is important for two reasons: first, the penalties for not filing are draconian (but waivable); and second, last week the US Government Accountability Office (GAO) issued a report that encouraged IRS to pursue those taxpayers who file late returns using a technique known as “quiet disclosure.”

Background

The US State Department knows of more than 687,000 US citizens residing in Canada but most experts agree that the actual number is several times that number.  Many common Canadian retirement and savings vehicles are considered foreign trusts under US law. These vehicles include registered education savings plans (RESPs), tax free savings accounts (TFSAs), registered disability savings plans (RDSPs) and the like. Of course, typical Canadian trusts used for income splitting and succession are also considered foreign trusts and carry the same reporting obligations. Any US citizen who owns, contributes to, or receives a distribution from any of these trusts must report that interest on the appropriate form at the appropriate time or face severe penalties.

Penalties for Failure to File

Contributions to or distributions from any of these trusts triggers the obligation to file US tax form 3520 on or before the due date of the US income tax return (form 1040). The failure to file penalty for the form 3520 is a minimum of $10,000. In addition, an ownership interest in any of these vehicles triggers the obligation to file the US form 3520-A on or before March 15. The failure to file this form triggers a minimum $10,000 penalty. Both of these penalties can be waived if the taxpayer has “reasonable cause” for not having filed.

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Shadow Raider has brought this to our attention and asked that it be posted:

The Ways and Means and Senate Finance Committees have just launched the website TaxReform.gov and are asking for the general public to submit comments on tax reform again. This time,  they even said they want “horror stories”, and many Americans abroad and immigrants have such stories to tell.

The form on the website asks for a US address, but, as Shadow Raider points out, “I suppose you could use your voting address (or perhaps try to input a foreign address using one of the obsolete postal abbreviations at the end of the list)”.

Dangerous FBAR’s and FATCA’s are known to slurk around in the wee hours of the morning outside of US jurisdiction.  To combat self-responsibility, all US persons and only US persons have now been prohibited from working late-night shifts or consuming local beverages which might encourage them to act independently.

MANAMA, Bahrain — A 1 a.m. curfew is now in force for all U.S. personnel, civilians and dependents in Bahrain, Navy officials announced Thursday.

Previously, curfew times varied depending on a servicemember’s rank. Dependents, civilians and contractors could stay out all night as long as they were with at least one other person.

The new policy retains a prohibition on public consumption of alcohol between midnight and 5 a.m.

Lt. Marissa Myatt, a U.S. Navy 5th Fleet spokeswoman, said the new policy simplifies and clarifies the previous regulations.

“It’s smart to get people off the streets,” she said. “Nothing good happens after 1 a.m.”

Source

“RT segment from April 15, 2013 in ‘honor’ of US income tax day. Features noted figures Jet Li and Eduardo Saverin, who recently quit their American citizenship for tax reasons. Freddi M. Weintraub, a tax attorney, provides insight into the law surrounding expatriation. Segment concludes with an interview with Mike Gogulski (me), who renounced his US citizenship in 2008 for political reasons and has lived without any nationality since — a stateless person.”

nostate.com

CARP: Canadian Snowbirds Might Be Able to Extend Their Stay

Toronto Sun: Canadian snowbirds might get to extend their stay south of the border

WASHINGTON – HIDDEN in a sweeping new American immigration reform bill is one small provision aimed at Canadians — making it easier for grey-haired snowbirds to spend more time in the sun.

The short section — buried in 844 pages of legislation — would boost the consecutive amount of time Canadian retirees can spend south of the border from six months to eight.

Canadian Snowbirds might be able to extend their stay

Canadian retirees may soon be able to stay in the United States for an extra two months, up to a total of eight months per year. The US legislation called Jobs Originated through Launching Travel (JOLT) Act, known to many Canadian snowbirds as the “Canadian Retiree Visa” is currently under review by the US Senate. In addition to the extended stay in the US, legislation would expand access to visa services, improve out-dated visa processing systems, speed up visa processing, and expedite entry for priority visitors as well as establish a visa video conferencing pilot program, if the legislation is passed.

The eligibility requirements for the Canadian Retiree Visa are the following:

Have Canadian citizenship;
Be 55 years of age or older;
Maintain a residence in Canada;
Own a residence in the U.S. or have a rental agreement for the duration of stay;
Will not engage in employment while in the United States; and
Will not seek assistance or benefit.

The Act is part of the United States’ efforts to boost their economy via tourism, and it is attempting to capitalize on the increasing number of Canadian visitors and the business they bring when travelling.

According to Statistics Canada, Canadian residents took 20 million overnight trips to the U.S in 2010, an 11.1% jump from the previous year, and spent $18.2 billion. It is no surprise that the US sees this as an opportunity, but at what costs to Canada and Canadian residents is unknown yet.

While many are happy about this news, Canadians should keep in mind that this Act may affect them, especially with respect to provincial health plans and residency issues for income tax purposes. CARP will seek more information from provincial and federal government, but at the moment it is uncertain whether Canadians will be able to keep their provincial health coverage if they are out of the country for the additional time provided by the JOLT Act. CARP will continue to monitor and report on the JOLT Act and its potential effects on Canadians travellers.

2013 US JOLT Legislation Section – by – Section

Another individual made the mistake of wanting to work in America.  Bad idea.

By Nick Greenizan – Peace Arch News
Published: May 03, 2013 8:00 AM

George wants to go home.

Home to his fiancée and her 14-year-old son in Blaine, Wash.; and home to all his possessions, currently packed and awaiting transfer to Ohio, where he and his new family were planning to move last month to start a new life.

Instead, for the better part of three weeks, home for the 45-year-old Ontario native –  who asked to be identified only by his first name – has been the backseat of his Acura TL, which he’s been living in with his dog since being denied re-entry into the United States on April 16, a day after the Boston Marathon bombings.

More

My favorite part of the article is the talk about the job title:

and told me they were not approving my TN visa, and that he didn’t really think I was a computer-systems analyst,” George explained. “He’d looked at my resumé and nowhere was that job title listed – it was always something similar, like application developer or software developer. But it’s all the same thing.”

It’s all the same.  Depending upon the situation or who I talk to, my job title could be computer-systems analyst, software analyst, application developer, software developer, software engineer, computer specialist, information technology, database administer, solutions architect, programmer, technical supporter, web developer, business information developer, etc.  The line between what one does and how it is called is not very clear and the more experience that one has working in other areas, the better.

By the way, last week on a week vacation, I drove 5 times into France, 5 times into Italy, once to Monaco and once to Switzerland with nothing but an expired Swiss id card which I used to check into the hotel and for a few other things.  Yet, nobody cared.  It’s not America.