Category Archives: Issues regarding US persons abroad

When Brock started, one of the major issues was that we questioned what we were being told; not just by the U.S. government but specifically, by the tax lawyers and accountants. It became painfully clear that many simply did not know what they were saying; some did not have direct cross-border experience and others simply repeated what their colleagues were saying. Sometimes they could not quite believe we would question their judgement or not be scared into believing what they said. Some of the concepts were fairly mundane while others, such as 877A being retroactive, were overwhelming. The story about PFICs is unbelievable and the application of interest etc, goes back to 1986.

When I first saw this, I thought of making a post just from Tom Paine’s longest answer. After thinking about it, I decided it would have more impact if seen in the context it was offered.I find it quite telling that after the initial question was asked, this person offers themself as an expert and seems to assume being a CPA/CA is ample proof of that. Tom Paine’s first comment clearly indicates he knows what he is talking about. Notice how the compliance person does not pick this up right away. And the contrast between: “The IRS considers TFSA’s ….” to “The IRS hasn’t given any gudiance…” But then THIS… “TFSA’s have that “wary” factor (i.e., “the IRS doesn’t say so but you better be sure and do it this way”). When that isn’t enough, relies upon Phil’s post. If this person was a specialist and really understood what a foreign trust was, wouldn’t one expect some clear explanation to indicate it? Would you be willing to pay this person $500 for a 3520A and another $500 for a 3520 ($500 being a standard starting fee for extra forms…). After Tom Paine’s last statement, there were no further comments from the CPA/CA.

A conversation on Facebook about TFSA’s

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Whereas, since the close of the last administration, the Legislature and Executive Branch, claiming a power, of right, to bind the people of American nationality by statutes in all cases whatsoever, hath, in some acts, expressly imposed taxes on them, and in others, under various presences, but in fact for the purpose of raising a revenue, hath imposed rates and duties payable in these colonies, established a board of commissioners, with unconstitutional powers, and extended the jurisdiction of courts of admiralty, not only for collecting the said duties, but for the trial and extra-judicial judgements and penalty assessments of causes merely arising within the body of a county:

And whereas, in consequence of other statutes, judges, who before held only estates at will in their offices, have been made dependant on the executive alone for their salaries, and standing armies of lawyers and accountants kept in times of peace: And whereas it has lately been resolved in Congress, that by force of a statute, made in the 1st year of the reign of President Obama, colonists may be transported to U.S.A., and tried there upon accusations for treasons and formcrimes and misprisions, or concealments of treasons committed in the colonies, and by a late statute, such trials have been directed in cases therein mentioned:

And whereas, in the last session of Congress, a statutes was made; one entitled, “Foreign Account Tax Compliance Act;” another entitled, “An act for the Revocation of Passports by the Executive Branch by Decision of the Executive Branch;” and another unconstitutional foreign agreement IGA was then made, “for Enforcing the FATCA through coercion of Foreign Governments.” All which statutes and executive agreements are impolitic, unjust, and cruel, as well as unconstitutional, and most dangerous and destructive of American colonist’s rights:

And whereas, assemblies have been frequently dissolved, contrary to the rights of the people, when they attempted to deliberate on grievances; and their dutiful, humble, loyal, and reasonable petitions to the executive and legislature and judicial for redress, have been repeatedly treated with contempt, by his executive’s ministers of state:

The good people of the several colonies about the world, justly alarmed at these arbitrary proceedings of congress and administration, have severally elected, constituted, and appointed deputies to meet, and sit in general Congress, in the embassies in our cities, in order to obtain such establishment, as that their religion, laws, and liberties, may not be subverted: Whereupon the deputies so appointed being now assembled, in a full and free representation of these colonies, taking into their most serious consideration, the best means of attaining the ends aforesaid, do, in the first place, as Americans, their ancestors in like cases have usually done, for asserting and vindicating their rights and liberties, DECLARE,

That the inhabitants of the American colonies throughout the world, by the immutable laws of nature, the principles of the American constitution, and the several charters or compacts, have the following RIGHTS:

Resolved, N.C.D. 1. That they are entitled to life, liberty and property: and they have never ceded to any foreign power whatever, a right to dispose of either without their consent.

Resolved, N.C.D. 2. That our ancestors, who first settled these colonies, were at the time of their emigration from the mother country, entitled to all the rights, liberties, and immunities of free and natural- born subjects, outside the realm of U.S.A..

Resolved, N.C.D. 3. That by such emigration they by no means forfeited, surrendered, or lost any of those rights, but that they were, and their descendants now are, entitled to the exercise and enjoyment of all such of them, as their local and other circumstances enable them to exercise and enjoy.

Resolved, 4. That the foundation of American liberty, and of all free government, is a right in the people to participate in their legislative council: and as the American colonists are not represented, and from their local and other circumstances, cannot properly be represented in the American congress, they are entitled to a free and exclusive power of legislation in their several provincial legislatures, where their right of representation can alone be preserved, in all cases of taxation and internal polity, subject only to the negative of their sovereign, in such manner as has been heretofore used and accustomed: But, from the necessity of the case, and a regard to the mutual interest of both countries, we cheerfully consent to the operation of such acts of the American Congres, as are bonfide, restrained to the regulation of our external commerce, for the purpose of securing the commercial advantages of the whole empire to the mother country, and the commercial benefits of its respective members; excluding every idea of taxation internal or external, for raising a revenue on the subjects, outside of America, without their consent.
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If it was possible for men, who exercise their reason to believe, that the divine Author of our existence intended a part of the human race to hold an absolute property in, and an unbounded power over others, marked out by his infinite goodness and wisdom, as the objects of a legal domination never rightfully resistible, however severe and oppressive, the inhabitants of these colonies might at least require from the Congress of U.S.A. some evidence, that this dreadful authority over them, has been granted to that body. But a reverance for our Creator, principles of humanity, and the dictates of common sense, must convince all those who reflect upon the subject, that government was instituted to promote the welfare of mankind, and ought to be administered for the attainment of that end. The legislature of the United States of America, however, stimulated by an inordinate passion for a power not only unjustifiable, but which they know to be peculiarly reprobated by the very constitution of that kingdom, and desparate of success in any mode of contest, where regard should be had to truth, law, or right, have at length, deserting those, attempted to effect their cruel and impolitic purpose of enslaving these colonies by violence, and have thereby rendered it necessary for us to close with their last appeal from reason to resistance. – Yet, however blinded that assembly may be, by their intemperate rage for unlimited domination, so to sight justice and the opinion of mankind, we esteem ourselves bound by obligations of respect to the rest of the world, to make known the justice of our cause.

Our forefathers, inhabitants of the island of the United States of America, left their native land, to seek on these shores a residence for civil and religious freedom. At the expense of their blood, at the hazard of their fortunes, without the least charge to the country from which they removed, by unceasing labour, and an unconquerable spirit, they effected settlements outside the distant and unhospitable wilds of America, then filled with numerous and warlike barbarians. — Outside of America, societies or governments, vested with perfect legislatures, have always existed under sovereign charters, and an harmonious intercourse has always existed between the colonies and the republic from which they had departed. The mutual benefits of this union became in a short time so extraordinary, as to excite astonishment. It is universally confessed, that the amazing increase of the wealth, strength, and navigation of the realm, arose from this source; and the minister, who so wisely and successfully directed the measures of United States in the multiple late wars, publicly declared, that these colonies enabled her to triumph over her enemies. –In the middle of these nonending wars, it pleased the executive to make a change in his counsel’s assignment. — From that fatal movement, the affairs of the United States empire began to fall into confusion, and gradually sliding from the summit of glorious prosperity, to which they had been advanced by the virtues and abilities of one man, are at length distracted by the convulsions, that now shake it to its deepest foundations. — The new ministry finding the brave foes of United States, though never defeated, yet still contending, took up the unfortunate idea of granting them a hasty peace, and then subduing her faithful friends.
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It is difficult to find a small enough violin to play for Mr. Stack and the United States Treasury. https://t.co/Sm3VUcRJaQ

— Allison Christians (@taxpolblog) May 16, 2016

Countries targeted US companies in BEPS project to increase tax revenue, US Treasury official charges

by Julie Martin
 
The first tweet I saw this morning was the one above. Really liked the “small-enough-violin” image and curious enough to read it (even though I saw “BEPS” in the first paragraph).

At any rate, I laughed so hard the tears were running down my face. The irony, hypocrisy and completely delusional state of mind of the U.S. and it’s representatives such as Stack, is beyond comprehension.

I think we’ve found it!

(NB: MNE= Multi-National Entity)

The best ones/excerpts:
 

Countries participating in the OECD/G20 base erosion profit shifting (BEPS) project sought to rewrite international tax rules for the digital economy and for intellectual property to increase their tax take at the expense of the United States, said Robert Stack, Treasury deputy assistant secretary (International Tax Affairs), May 13, at a National Tax Association conference in Washington.

The irony "at the expense of the US" Why, one would think Mr. Stack had never heard of #FATCA <snarl> payback time! https://t.co/YWhuWi8XIJ

— Patricia Moon (@nobledreamer16) May 16, 2016

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Dealing with Australian Superannuation has come up frequently at Brock, sometimes on the FATCA and Australia page and sometimes on various other threads.

JakDac suggested we have a post for this specific topic, so people can post helpful information (or ask questions) on Superannuation in one location, so people won’t have to search throughout the site.

We’re kicking it off with a text by JakDac, who asks that you remember these are suggestions, unless verified.

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Cross-posted from ADCSovereignty blog

Watch “Ottawa Forum 2016: Getting the North American Relationships Right” on @Vimeo https://t.co/Upfrv73NmC – see 57 minute mark – citizens

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) May 14, 2016

On January 31, 2016 I wrote a post about the Canada2020 conference on foreign policy. I noted with particular interest the participation of former U.S. Ambassador to Canada Gordon Giffen.

That post included:

From the perspective of Hon. Gordon D. Giffin, Dentons LLP:

This was of particular interest. I had forgotten that Gordon Giffin (U.S. Ambassador to Canada in the Clinton years) grew up in Canada. Mr. Giffin actually grew up in the Toronto area and attended Richview Collegiate (Stephen Harper’s High School). He returned to the United States for College and law school. In other words, the former U.S. Ambassador to Canada clearly has “Roots” (not the store, which also has a U.S. connection) in Canada.

He began by stating his view that the TPP should be understood to be an update to the NAFTA Treaty.

Mr. Giffin echoed the view that Canada, the U.S. and Mexico are “in effect” part of the same “neighborhood” and that each of the three countries should have a “North America Relations Department”.

Mr. Giffin made the statement (and this is a bit of a paraphrase) that it should “NOT be hard for people to move around the neighborhood”. Hmm… Do you think that FATCA and U.S. “citizenship taxation” might make it hard for North American residents to “move around the neighborhood”?

I assume that Mr. Giffin’s family was filing both U.S. and Canadian taxes during the many years the family was living in Canada. Therefore, he “might” have some concept of U.S. citizenship-based taxation. On the other hand, any concept of citizenship taxation that he might have, would have been formed prior to:

– FBAR, FATCA, PFIC, Foreign Trusts, etc.

– the FBAR Fundraiser

Assuming you are interested in the relationship between Canada and the United States, I highly recommend the video referenced in the above tweet. If you are impatient, you should pick it up at the 57 minute mark.

I would be interested in your comments.

John Richardson

Canadian Government to Pre-Screen Air Arrivals US-Style including returning Canadians

As if the next scheduled transfer of personal financial information to the IRS is not a bad enough omen for this date, a new assault will become an ingrained part of life in North America as of September 30, 2016.

While PMJT was whooping it up in Washington D.C., Public Safety Minister Ralph Goodale announced changes in regulations that fall under the Customs Act and the Immigration and Refugee Protection Act. These changes are a part of implementation of the Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness (2011). As must be ovbious by now, this nasty piece of business bugs me as much as FATCA does.

Airlines will now be required to provide advance and “real-time” information on anyone entering Canada by air to the Canada Border Services Agency (CBSA), in order to cross-check with security agencies. In the event there are any discrepancies or concerns, a decision will be made prior to the time the traveller boards a flight.

This system, called the Interactive Advance Passenger Information (IAPI ) will give CBSA the authority to identify persons who are inadmissable to Canada. Projected costs are $10 million annually. IAPI will be used to make “board/no-board” decisions on all travelers prior to their departure. This parallels the U.S. system known as Advance Passenger Information System (APIS) operating since 2009.

The regulations will require airlines to have a secure data link with the CBSA in order to provide access to the required information in the prescribed format in a “real-time” basis, including any changes to the information that may occur. Wow, yet another possible place for information to be breached. Note that credit card information will be included (see below).

Passenger reservation information will have to be provided by air carriers or travel agencies to the CBSA at least 72 hours prior to departure. I presume that if the airline fails to provide the information, the traveller will be unable to board and will not be reimbursed for any money lost from being unable to travel (hotel, vehicle reservations, etc).

As published in the Canada Gazette, here is the information that the airline must provide to CBSA. I have bolded items that I am puzzled as to relevance (if there is any at all to begin with).

Since there is nothing inherently criminal or “terrorist” oriented about any of this information, I expect what is really important, is what the CBSA has in its records (and which I presume may originate from and/or able to be shared with the US, meaning first off, CBP, DHS, FBI, CIA, etc etc). Actually, just where will this information at CBSA originate? Metadata from NSA? US no-fly lists? Any verification necessary before being applied?

I wonder what is next – strip searches by airline employees before proceeding to security? I mean, after all, one can’t be too careful.

SCHEDULE
(Paragraph 5(e))

Information About Persons in a Reservation System
1 Their surname, first name and any middle names
2 Their reservation record locator number
3 The date of their reservation and date their ticket was issued
4 Their itinerary, including the dates of departure and arrival for each segment of carriage
5 Information about their participation in a loyalty program and the benefits earned under the program, such as free tickets or upgrades
6 The number of the other passengers included in the reservation record and their surname, first name and any middle names
7 Contact information for each person mentioned in the reservation record, including the person who made the reservation
8 Billing and payment information, including credit card number and billing address
9 Information about the travel agent or agency, including the name and contact information
10 Code share information
11 Information about whether the reservation record has been divided into several records or is linked to another record
12 Their travel status, including travel confirmation and check-in status
13 Ticketing information, including the ticket number, automated ticket fare quote and whether a one-way ticket was purchased
14 Their baggage information, including the number and weight of their bags
15 Their seating information, including seat number
16 General remarks about the person in the reservation record, including other supplementary information, special service information and special service request information
17 The information referred to in paragraphs 5(a) and (b) of these Regulations
18 The history of any changes to the information referred to in items 1 to 17 of this schedule

Liability of https://t.co/6CNW7kgfII-Card Holders =RBT. What country treats its immigrants better than its citizens? https://t.co/2UmKT55ELn

— Patricia Moon (@nobledreamer16) May 12, 2016

Introduction (my own, not the author of the post, John Richardson).

What country treats its own citizens worse than it treats its immigrants?

Phil Hodgen’s Expatriation Letter of the Week is based upon this concept: whether tax liability of a green-card holder depends upon residency only or whether it includes other factors to consider in order to protect oneself from the long and complicated arms of IRS regulations. The example is simple and offers no less than 5 possible ways to deal with ending a non long-term status as a permanent resident of the United States. It is astounding that so much can be involved for a residence of 3 months with no income earned (US source or otherwise). Only in the USA could things be this complicated and full of possible issues (audits, penalties, etc).

Someone who is a nonresident will only be required to file a U.S. tax return because of:

• receiving income from U.S. sources; or
• being engaged in business in the United States, even if zero income is derived from it

Without unusual complicating factors, the general idea that one owes the US any tax is based upon either being a resident, or if a non-resident, having US-sourced income. What is interesting is that if one is a non-resident US citizen, none of the possibiities that apply to immigrants to the US are available to citizens. Phil’s letter is a demonstration of the extent of possibilities available to some but denied to other non-residents based only upon their place of birth.

This post, in addition to Physical presence as a necessary condition for being a US “resident” under the Internal Revenue Code , emphasizes the importance of physical presence as a condition of liabiity for U.S. taxation. Phil’s letter speaks to the (ridiculous) lengths the IRS will go to avoid taxing anyone who can prove they are a non-resident alien. This speaks to the level of residence-based taxation that is in reality, practiced by the U.S. and which shows the U.S. to be basically like any other country. If we want to get rid of CBT, we need to build arguments to point to practical issues as well as Constitutional ones. At present, to my mind, it makes a lot of sense to build the arguments based upon practicality. This removes the “pay-one’s-share” issue in a non-confrontational way. To immediately hit the “patriotic” “you-owe-us-everything-for-the-privilege-of-your-U.S.-birth” types with “CBT-is-a-violation-of-our-human-rights” is to close a door before it is even opened. We can see that readily from the inability of almost everyone to discern the difference between non-resident “foreign” accounts held for legitimate purposes versus those held by resident Homelanders for purposes of tax evasion.

Please take the time to consider these points and start building them into your comments to online articles, letters to representatives etc. This is an arrow they won’t see coming.
****
Tax jurisdiction and residential ties

The two types of residential ties considered for all aliens

When considering the meaning of “residence” for tax purposes, attempting to ascribe a place of “residence “to an individual, and imposing taxation on individuals, the Internal Revenue Code considers:

A. The extent of “residential ties” to the United States; and

B. The extent of “residential ties” to another country.

We see both aspects of residence considered as a way to defeat the “substantial presence” test in Internal Revenue Code S. 7701(b). If the country of residence is uncertain, or if a person is considered to be a “tax resident” of the United States and another country, the Internal Revenue Code considers ties to both the United States and the other country in question.

For “resident aliens” (Green Card Holders):

– both past and present residential ties to the United States and to other nations are considered in at least 3 ways under the Internal Revenue Code itself; and

– residential ties to both the United States and the other country of residence are considered in determining residence under Article IV of the Canada U.S. (and other) tax treaties**.

Green Card Holders and tax residence

A
previous post discussed the fact that:

1. Internal Revenue Code S. 7701(a)(30) defines “U.S. Persons”
   as including “citizens” and “residents”
2. The combined effect of Internal Revenue Code S. 7701(b)(1)
   and S. 7701(b)(6) define Green Card Holders in a way that
   ensures that they meet the statutory test of “residence”. (Of
   course Green Card Holders may be able to defeat the status of
   “resident” by making use of the Treaty Election in Article IV of
   the Tax Treaty)
3. The statutory defenses to “residence” found in S. 7701(b) of
   the Internal Revenue Code, available to “aliens” who are NOT
   Green Card Holders, take into account and are a function of the
   extent of residential ties to other jurisdictions

Residence matters and residence matters hugely. Hence, the definition of “resident” matters and matters hugely.

Please see more here
 

An unusual report from Metro News: MapleMatch.com offers to pair Canadians, Americans fleeing Trump

A new dating website is offering to pair Americans with Canadian singles to save them from a Donald Trump presidency.

MapleMatch.com promises love and a U.S. escape plan if Trump becomes commander-in-chief.

However, nowhere does MapleMatch.com see fit to warn their Canadian users about the severe dangers of becoming intimate with Americans: your new lover has a crazy stalker ex named Sam, who’s coming after you two across international borders to get his voyeuristic jollies. For the rest of your life, you’ll never be alone together: the weirdo will peep into the most private aspects of your relationship, keep trying to break into your house to help himself to money from your wallet, and threaten to drag your children into his perverted games.

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