Category Archives: Issues regarding US persons abroad

Tough tax penalty raises fairness concerns
CBC – Mon, 9 Apr, 2012 5:16 AM EDT

Most people know that if they file their personal tax return after the deadline, they’ll be assessed a penalty – five per cent of the amount owing, along with one per cent a month in interest. If they don’t owe any tax, there’s no penalty. But each year, tens of thousands of Canadians are hit by something they may not have known even existed – the “repeated failure to report income” penalty.

Read the complete article.

Bank of Israel wants to negotiate tax deal on U.S. citizens with Israeli accounts – Haaretz Daily Newspaper | Israel News.

The next domino to fall?

Democrats Abroad Canada held its annual general meeting on March 25th in Toronto and issued the minutes of the event a couple of days ago.  Of special interest was this brief update:

FBAR/FATCA
 
Joe Green, who chairs the FBAR/FATCA (Foreign Bank Account Report/Foreign Account Tax Compliance Act) task force reported that they are in ongoing discussions with members of Congress and federal agencies.  They hope to have some progress to report in the next several months.

I’m going to go out on a limb here and guess that “several months” means sometime after November 6, 2012.

At first reading, I think that this would seem to affect only the wealthy French that establish domicile in Switzerland for tax purposes:

http://www.rts.ch/info/monde/3850570-le-candidat-nicolas-sarkozy-propose-un-impot-lie-a-la-nationalite.html

Nonetheless, I would encourage a dialogue here on IBS about the implications.

What would happen if all countries tax their citizens abroad to death?   How can we grow wealth in society on both macro and micro scales with all of these punitive regulations?  How do we discern between “tax expatriates” and bone fide residents of a country that want to and deserve to pay only the taxes in their country of residence on the income and property they have/receive in such country of residence, without undue influence of their country(-ies) of nationality?

The IRS is intent on harvesting the assets of countless so-called “US persons” living outside the US, including individuals who had no idea they were US citizens. Meanwhile, the same IRS assisted Google in income shifting that saved Google $3.1 billion in taxes over three years.

From the Bloomberg article (link below):

“After three years of negotiations, Google received approval from the IRS in 2006 for its transfer pricing arrangement, according to filings with the Securities and Exchange Commission.

“The IRS gave its consent in a secret pact known as an advanced pricing agreement. Google wouldn’t discuss the price set under the arrangement, which licensed the rights to its search and advertising technology and other intangible property for Europe, the Middle East and Africa to a unit called Google Ireland Holdings, according to a person familiar with the matter.”

http://www.bloomberg.com/news/2010-10-21/google-2-4-rate-shows-how-60-billion-u-s-revenue-lost-to-tax-loopholes.html

Google was able to avoid taxes through a no-risk process supported by the IRS. Compare this with the December 2011 so-called amnesty for individuals, described by tax expert Kevyn Nightingale as ,”pay your money and take your chances.”

US / Canada Border Issues

Both governments are stressing that all the initiatives in the plan were developed under two principles.

1. That each nation has the right to act independent of the other in accordance with their own laws and interests.

Which nation do we, dual citizens, fall under in our crossings?

2. That both countries will endeavour to promote human rights, privacy, the rule of law and civil liberties.