Category Archives: Issues regarding US persons abroad

cross-posted from Citizenshipsolutions dot ca

For Americans, tax season gets even more stressful when they leave the U.S. https://t.co/u58zQy2LmF via @business quotes @Kred65

— John Richardson – Counsellor for US persons abroad (@ExpatriationLaw) March 30, 2016

Yesterday I was forwarded an email which originated from the U.S.
Consulate in Toronto. The purpose of the email (included at the end of
this post) was to give notice of U.S. tax obligations for U.S. citizens
living outside the United States. In other words, the State Department
is assisting the IRS by notifying Americans abroad of their U.S. tax
filing obligations. Put another way, this email represents:

“Tax Education Outreach” from the IRS delivered by the State
Department”

I do NOT recall this in previous years. That said, this email
notification is extremely significant. It means that the IRS can argue
that those who received this email may well have had notice that they
were required to file U.S. tax returns. Over time, this will increase
awareness of U.S. tax filing obligations. The greater the increase in
awareness of U.S. tax filing obligations, the harder it will be to claim
ignorance of those obligations. (This is in addition to the “Educational
Outreach” coming in the form of FATCA letters from your local bank and your friendly
journalists. In both cases, you are being asked to consider the question
of: “Are you or have you even been an American
citizen?“) Although, this is NOT an immediate problem, it seems
logical that sooner or later it will become more difficult for Americans
abroad to claim ignorance of their U.S. tax filing obligations. This may
have implications for coming into U.S. tax compliance.

Q. Who would have received this email from the U.S.
consulate?

A. Anybody who is on the U.S. Consulate email list.

Q. Who would be on the U.S. Consulate email list?

A. It would include almost anybody who has applied for a U.S. passport.

To put it simply:

One who applies for a U.S. passport is now putting oneself in a
position where one will be told about U.S. tax filing
obligations. Since most Americans abroad need a U.S. passport,
it stands to reason that those who apply for a U.S. passport are
creating a situation where they will be told about U.S. “taxation based
citizenship”. You can see where this is going.

This appears to be the next step in the progression that
includes …

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A paper detailing the Costs to Canada of the FATCA Agreement has been compiled and is now available. One of the two co-authors is a retired professor of economics at McMaster University. A separate document showing how the Average Annual Tax Payment was derived is also available.

This paper provides useful support for Brockers interacting with Members of Parliament as well as important information for journalists.

Here is the introductory paragraph:

This presentation is constructed to demonstrate the amount of money destined to leave Canada ANNUALLY as a direct result of compliance with the United States Foreign Account Tax Compliance Act (FATCA) regime. This money, instead of circulating in the Canadian economy, being invested to benefit Canadians or remaining in Canadian savings accounts for the future financial security of Canadians, will be paid directly to the United States Treasury where it will benefit THAT country’s residents. Another scenario is that it will be paid into the US Treasury and disappear as a meaningless footnote in the attempt to pay down its impossible multi-trillion-dollar debt.

Read this article from the National Post, then please consider volunteering as a witness in our Canadian lawsuit. If interested, contact me at: stephen.kish.chair@adcs-adsc.ca

From the article (in which our Plaintiffs Gwen and Ginny are mentioned):

“No one was clearer about his qualms about this agreement than now-Prime Minister Justin Trudeau, who wrote in a pre-election letter that, “The Government of Canada has a responsibility to stand up for its citizens when foreign governments are encroaching on their rights. We believe that the deal reached between Canada and the U.S. is insufficient to protect affected Canadians.” etc. etc.

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Thank you, MP Peter Julian for your responsible question in Question Period.

Video version with English simultaneous translation:

Alternate video version with floor audio (spoken English and French without translation):

GAO begins doublespeak already in the title  “Economic Benefits of Income Exclusion for U.S. Citizens Working Abroad Are Uncertain ” The entire report –investigating removal of the FEIE “tax expenditure” reads like the script of 1980’s shortwave Radio Moscow—full of “some experts say” and “it can’t be shown” doublespeak. Already on the 1st page “GAO made no recommendations in this report.” . GAO doublespeak already says that “uncertain” in its title means it has “No recommendations.” The table of contents itself is full of doublespeak conclusions.

In order to fully understand what the 74 page General Accounting Office (GAO) report is saying, one really needs to have fluency in doublespeak—-to grasp the real meaning. For those who can read doublespeak, this report might best be read alone in that quiet place after having your morning coffee. Otherwise, I will attempt to provide a translation.

May 20, 2014, The Honorable Jim McDermott, The Honorable Michael Honda. The Honorable Carolyn Maloney, House of Representatives

Apparently the report was commissioned by the well-meaning, yet passively-aggressively naive Abroad Caucus, in response to repeated visits by ACA/AARO.

The immediate cause of the caucus naive error is in commissioning the study to G.A.O. –the General Accounting Office. This band of merry men has a self-interest in making as much form filing work as possible, even though its extra-territorial taxation method might never create any tax revenues.

GAO then went on to interview the normal lackeys “government officials, experts, and stakeholders, including groups representing citizens working abroad and employers”. The list (described in Appendix 1) is stacked with “experts” in creating complicated compliance law in their own interest.  The last  on the list is American Citizens Abroad who has been profiling itself as “THE Voice of Americans Overseas” . AARO with a similar approach. As we know, there are still no other expat organizations than these two 40-yr-old organization

As the biases are built into the report by its authors and experts, it understandably comes up with a list of options in Appendix 1, Table 7, which range from worse to bad:
-Repeal the FEIE & tax all foreign earned income.
-Reduce the maximum exclusion
-Increase the maximum exclusion
-Restrict eligibility,
-Expand eligibility
-indexed for the cost of living.
– convert the exclusion to a credit

-targeted to employees of selected industries. —(oil & gas, construction, engineering, UN work)
-Uncap the exclusion and exclude all foreign earned income from taxation (but not enact RBT).
-Impose an exit fee on U.S. citizens and U.S. resident aliens living in a foreign country & exclude all foreign income for eligible individuals living overseas (ACA proposal).
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Identified by JC: https://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-3-of-3/comment-page-41/#comment-7345612. Brock commenters are there; comments are open (closed on previous of Elizabeth Thompson’s posts on this).

Brison, Garneau endorse deal to share Canadian banking records with IRS

 

Two Liberal cabinet ministers who had criticized a controversial agreement to provide Canadian banking records to the U.S. Internal Revenue Service now say they support the deal.

Speaking on the way into a cabinet meeting Tuesday, Treasury Board President Scott Brison and Transport Minister Marc Garneau rallied behind the position adopted last week by Revenue Minister Diane Lebouthillier, supporting the deal struck under the Harper government that saw 155,000 Canadian banking records shared with the IRS last September.

Brison, who sharply criticized the deal and tried to have it amended when he was Liberal Finance Critic, said the Liberal government has to work with the agreement.

“The previous government negotiated with the Americans on this and we have certainly inherited the situation we have,” Brison told iPolitics.

“At the time, the previous government could have negotiated more effectively at that time. The question is where are we now and it is a difficult one necessarily to deal with retroactively.”

In 2014, Garneau accused the IRS of trying to get the Canada Revenue Agency to “do its dirty work” through the deal – a deal he now supports.

“I take the position that our government is taking now and has been expressed by the minister of revenue,” he said Tuesday.

The controversy centres on an agreement worked out between Canada and the U.S. in the wake of the U.S.’s decision to adopt the Foreign Account Tax Compliance Act (FATCA), which pressured financial institutions around the world to reveal information about bank accounts in a bid to crack down on tax evasion by U.S. taxpayers with foreign accounts.

…

A second transfer of records to the IRS is scheduled for September 30, 2016.

While prominent Liberals, including Prime Minister Justin Trudeau, criticized the information sharing deal before the election, last week, Lebouthillier defended it.

“Minister Lebouthillier wants to reassure Canadians that all exchanges of information are subject to strict confidentiality rules,” reads the e-mail sent by Lebouthillier’s office.

“The CRA ensures that tax cooperation with its foreign partners is done in a manner fully consistent with privacy rights in Canada. It is important to note that Canada and the United States have a long history of exchanging tax information in a fair and responsible manner, going back to 1942.”

…

etc., etc.

More later…

Thanks for continuing to shine the light for ALL Canadians to realize, Elizabeth Thompson!  We need Canadian MSM to do the same.

@LizT1 Some interesting comments by Privacy Commissioner & SCOC ignored b4 passing of the #FATCA IGA https://t.co/t30Ch8SS38

— Patricia Moon (@nobledreamer16) March 20, 2016

 
Some might find it interesting that members of the Canadian Senate had concerns regarding the #FATCA IGA and one of them, Hon. Pierrette Ringuette, moved that Part V be deleted in its entirety. Ms Ringuette lives in a border town and perhaps we should be in touch with her. At the very least, along with Murray Rankin, Nathan Cullen and others, I now link the three Senators supporting a deletion of Part V of the IGA legislation with Canadian legislators who are worthy of their seats.

There are two issues raised in this material that I think need investigation. One is a comment of Hon. Joseph A Day:

I will refrain from talking about what transpired prior to Bill C-31 being received by this chamber and referred to our committee for consideration. It’s now back as a result of the consideration that took place.

I have yet to read all of the transcripts of that time period and have no idea what Mr. Day is referring to. Perhaps it has nothing to do with C-31 but if it does, it suggests something was not as it should have been. I think it probably does given her says “It’s now back.” Does anyone know?

And another by Senator Ringuette, speaking of a statement made by Privacy Commissioner Daniel Thierren:

But now that the Supreme Court has ruled that this information deserves a high level of privacy, the government needs to take C-13 and S-4 back to the drawing board, he said.

This is discussed below. I don’t remember any of this; perhaps I just never saw it and/or it seemed so hopeless given HOC clearly was going to pass C-31. However, now it seems very important.

The focus of this post is simply this last section of the debate (i.e., the portion beginning with Senator Ringuette); our general discussions have tended more toward the HOC FINA meetings and I think it is notable that there were strong objections within the Senate, to the #FATCA IGA legislation.
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