Liberty and justice for all United States persons abroad

The Isaac Brock Society

Category Archives: Tax Treaties

THANKS for Saturday donations from first- and long-time supporters — $24,612 donated so far in this funding round, more donations needed to pay legal costs of Canadian FATCA lawsuit: With your help this lawsuit will be moving to trial

Posted on by Posted in FATCA, Freedom, Law & Morality, Tax Treaties 106 Comments

CANADIAN FATCA LITIGATION UPDATE December 7, 2019:

You are contributing to raising the money needed to pay the legal costs to litigate with the Government of Canada — to prevent Canada from imposing the U.S. FATCA law directly on Canada and Canadians.

The Alliance for the Defence of Canadian Sovereignty and Gwen and Kazia have raised $24,612 in this funding round. We ask you for $20,388 in EIGHT DAYS to make $45,000 December 15 payment for appeal of FATCA Federal Court decisions.

You can DONATE by cheque, cash, PayPal (easiest) and transfers.

CBC says that, for 2018 tax year, information on 900,000 financial records of Canadian residents was turned over by Canada to U.S. IRS because of the Canadian FATCA law.

Gwen and Kazia, two brave Canadian citizens having no meaningful relationship with the U.S., are appealing on your behalf two Federal Court decisions to the Canadian Court of Appeal.

The grounds for appeal will include violations against their autonomy (Charter section 7), privacy (8) and equality (15) as well as arguments that the ruling was improperly based on the finding that the Income Tax Act is primarily regulatory in nature, and that factors such as the relationship between Canada and United States were not properly dealt with. Fleshed out details of appeal grounds will be provided in the Factum, likely early next year.

Gwen and Kazia ask for your help in paying for the legal costs of the appeal. If you feel that FATCA IGA laws harm you or someone that you know, PLEASE DONATE.

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Appellants Gwen and Kazia Today (September 30, 2019) Filed Notice of Appeal of Mactavish Canadian Federal Court FATCA IGA Decision: Donations will be needed to pay for appeal

Posted on by Posted in Canadian Government, FATCA, Freedom, Law & Morality, Tax Treaties 8 Comments

CANADIAN FATCA LITIGATION UPDATE September 30, 2019: Gwen and Kazia file Notice of Appeal

Appellants Gwen and Kazia have instructed Vancouver lawyer Mr. Greg Delbigio to appeal the Martineau and Mactavish Canadian Federal Court FATCA IGA legislation decisions.

A brief Notice of Appeal was just filed today (September 30, 2019) with the Canadian Federal Court of Appeal. The grounds for appeal will evolve and be broadened with detail at later stages. For the appeal process to continue we will need to raise monies quickly to pay for the legal costs.

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Brock project: Comparing the comments on the French version of the @LizT1 @USTransitionTax article to the comments on the English version

Posted on by Posted in Issues regarding US persons abroad, Tax Residency, Tax Treaties, Transition Tax 9 Comments

Reference to the English version of Elizabeth Thompson’s recent article on the U.S. Transition Tax was posted here. A person in Europe found the French version and forwarded it.

The French version has far fewer comments. But, I thought it would be interesting to perhaps do a bit of translation and see if they are as ridiculous as the majority of the comments on the English version.

More about the @USTransitionTax issue from @LizT1: Finance Minister Morneau responds (sort of)

Posted on by Posted in Accidental Americans, Canadian Government, Issues regarding US persons abroad, Tax Treaties, Transition Tax 14 Comments

Following up from yesterday’s CBC article by Elizabeth Thompson, CBC has today published a shorter article describing Mr. Morneau’s response or non-response (whatever the case may be) to the “transition tax”. Her article begins:

The Canadian government is talking to the U.S. government about the impact a retroactive tax signed into law by U.S. President Donald Trump is having north of the border, Finance Minister Bill Morneau revealed Monday.

Speaking to reporters in Windsor, Ontario, Morneau said he is aware that some of the U.S. government’s tax changes affect Canadian residents with U.S. or dual citizenship.

It is, at the end of the day, going to be up to them to manage their own tax code.
– Finance Minister Bill Morneau
“We’re continuing to consult with Americans to make sure that we fully represent the challenges that these changes have made for Americans or dual citizens living in Canada,” Morneau said. “That’s an ongoing process. We certainly hope that we can make progress.”

Here is Mr. Morneau in the Q and A:

The comments (at least so far) reflect the difficulty of understanding the issue.

Nevertheless, this is significant because it is now clear that the Trudeau Government is well aware of the “transition/repatriation tax” and its effect on Canadians. This is good news.

And across the ocean and and the question of legislative change …

The following message appeared from Lawyer Monte Silver:

Americans Abroad with small businesses subject to Repatriation/GILTI taxes:

To get an exemption for American small businesses abroad from the Repatriation tax, last month we focused on Senator Cassidy of Louisiana who volunteered to assist. It worked and we have a draft bill in hand.

Now we focus on Ohio Senator Portman for a bill exempting us from GILTI. Portman responded and wants to speak to Americans abroad impacted by GILTI. If you or someone you know owns a small business abroad and is impacted by GILTI – or the Repatriation tax, IT IS URGENT THAT YOU CONTACT ME BY PRIVATE MESSAGE OR AT MS@SILVERCOLAW.COM

Another article by @LizT1 about the @USTransitionTax – Just when you thought it couldn’t get worse!

Posted on by Posted in Issues regarding US persons abroad, Non Resident Taxation, Tax Treaties, Transition Tax, TTFI 28 Comments

Another good article by the Elizabeth Thompson. It would appear that compliance with the “transition tax” is getting more and more difficult. The article begins with:

Thousands of Canadian residents hit hard by a retroactive tax signed into law by U.S. President Donald Trump have been dealt another blow, CBC News has learned.

Newly proposed regulations issued by the U.S. Treasury Department and the Internal Revenue Service threaten to increase their tax hit.

“You have to almost empty out your company and pay a lot of Canadian tax to avoid the U.S. tax,” said Kevyn Nightingale, a partner with the accounting firm MNP.

Interestingly, Ms. Thompson does reference the Solomon Yue American Chamber of Commerce meeting this Thursday August 16 in Toronto.

The comments seem less vicious today (at least so far).

U.S., U.K., Canada, Australia and Netherlands form international tax enforcement group

Posted on by Posted in FATCA, Tax Treaties 43 Comments

According to an article by Michael Cohn in Accounting Today, a multi-lateral tax enforcement group has been formed. The Joint Chiefs of Global Tax Enforcement (or J5 for short), intend to “collaborate in fighting international and transnational tax crimes and money laundering.”

Membership of the J5 includes the heads of tax crime and senior officials from Internal Revenue Service Criminal Investigation (IRS CI), Her Majesty’s Revenue & Customs (HMRC) in the U.K., the Australian Criminal Intelligence Commission (ACIC) and Australian Taxation Office (ATO), the Canada Revenue Agency (CRA), and the Dutch Fiscal Information and Investigation Service (FIOD).

Leaders of the group met Thursday in Montreal to formulate their plans. The J5 plans to work together to gather and share information and intelligence, as well as conduct operations and build capacity for tax crime enforcement officials. Areas of focus include cybercrime and cryptocurrency, data analytics, and enablers and facilitators of tax crimes. The alliance will concentrate on building international enforcement capacity, as well as enhancing operational capability by piloting new approaches and conducting joint operations, to bring perpetrators who enable and facilitate offshore tax crime to justice

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Interrupting our regularly scheduled programming: It appears that there is a delay to the June 15, 2018 @USTransitionTax payment

Posted on by Posted in Citizenship Issues, FATCA, Tax Treaties, Transition Tax 30 Comments

Update from “Accounting Today” – June 4/18 – 11:00 p.m. EST:

https://www.accountingtoday.com/news/irs-provides-penalty-and-filing-relief-on-transition-tax-in-tcja

__________________________________________

I haven’t had time to really read and digest this Bulletin from U.S. Treasury.

You will have to read and draw your own conclusions, but it appears that paragraph 16 speaks to this issue:

Q16: If an individual fails to timely pay his or her first installment of tax due under section 965(h), will the IRS assess an addition to tax for failure to pay? Will the taxpayer’s requirement to pay all subsequent installments be accelerated under section 965(h)(3)?
A16: If an individual meets the criteria in this paragraph and pays the total amount of the first installment on or before the due date for the second installment, the IRS will not assess an addition to tax for failure to timely pay the first installment and will not accelerate subsequent installments under section 965(h)(3). An individual with a net tax liability under section 965 is required to report the liability on his or her tax return for the year in which or with which the inclusion year of the deferred foreign income corporation ends and pay the full amount of that liability on the unextended due date of that return, unless the individual elects to pay the liability in eight annual installments pursuant to section 965(h)(1). However, the IRS has determined that, if an individual’s net tax liability under section 965 in the individual’s 2017 taxable year is less than $1 million, the individual makes a timely election under section 965(h), and the individual did not pay the full amount of the first installment by the due date under section 965(h)(2), the failure to make the payment will not result in an acceleration event under section 965(h)(3) so long as the individual pays the full amount of the first installment (and its second installment) by the due date for its 2018 return (determined without regard to extensions). For this purpose, the relevant due date generally is April 15, 2019. In the case of United States citizens or residents whose tax homes and abodes, in a real and substantial sense, are outside the United States and Puerto Rico, and United States citizens and residents in military or naval service on duty, including non-permanent or short term duty, outside the United States and Puerto Rico, the relevant due date is June 17, 2019, which is provided by Treas. Reg. §1.6081-5(a)(5) and (6). Although the IRS will not assess an addition to tax for failure to timely pay the first installment, a taxpayer will be liable for interest on such amount from the due date of the installment. See I.R.C. §6601.

If the IRS sends a taxpayer a notice of an addition to tax for failure to timely pay the first installment, and the taxpayer meets all the conditions for relief described above (including making the required payment by the due date for the second installment due under section 965(h)), the taxpayer should contact the IRS office that issued the notice and request abatement of the addition to tax for failure to timely pay the first installment in accordance with the provisions in these FAQs.

Posted: 06/04/2018

Note that this does NOT apply to all people (appearing to give relief only to small businesses).

Brock project: Is the application of the U.S. Transition Tax to Canadian residents possible only because of the “savings clause”?

Posted on by Posted in Issues regarding US persons abroad, Non Resident Taxation, Tax Treaties, Transition Tax 34 Comments

In my previous post about the June 15, 2018 “transition tax deadline” I referenced the letter received from Minister Morneau’s office which included:

… Canada recognizes the sovereign right and policy choice, of the U.S. to tax its citizens, including citizens who are resident abroad. The Canada-United States Tax Convention (the Convention), preserves this right.

467306-470243
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Brock project: Seeking stories from “Proud Americans” who are being destroyed by @NonResidentTax and @CitizenshipTax

Posted on by Posted in Issues regarding US persons abroad, Non Resident Taxation, Tax Treaties, Transition Tax 80 Comments

This post is motivated by the following Brock comment from “JC”. His comment concludes with:

So do we have a feature here on Brock to come up with stories about being proud Americans? So we may give them to Solomon.

Why not? Yes, let’s use this post to create a “Brock Feature” from expected comments. This can be the the “Isaac Brock Society” contribution to U.S. Tax Reform!

I realize that the Isaac Brock Society is not a site that is populated particularly by “Proud Americans” (am I wrong?). But, the idea of compiling a set of comments, about how U.S. tax policies have destroyed the lives of those who have attempted compliance could be valuable. They could be forwarded to all groups (RO, DA, ACA, FAWCO etc.) in this fight.

For once, let’s focus on those who are compliant!

I have a request though. Much of the focus on this and other sites is on people who have NOT complied with U.S. tax laws – usually because they have not bothered to enter the U.S. tax system. I don’t understand why those who have not entered the U.S. tax system have TAX problems. It seems clear that, those who have NOT complied, have NOT had their lives destroyed. They still have their pensions and their marriages. Noncompliant Americans abroad are in no danger of having their passports revoked (because those not in the U.S. tax system cannot have a tax debt). Noncomplaint Americans are in no danger of having their retirement savings stolen. Noncompliant Americans have no fear of crossing the border. But, I digress …

The reality of U.S. tax compliance for Americans abroad

It is those unfortunate people who have complied (with the assistance of the “very best” U.S. tax advisors), who have suffered the most. Think of all those who were ushered into OVDP. Think of those who entered “Streamlined” with their Canadian Controlled Private Corporations. After being assured that the “business earnings” were not subject to U.S. taxation, they are NOW retroactively subject to the transition tax. Think of the “transition tax” (punishment for your past). Think of GILTI (punishment for your future).  Only those who have filed U.S. taxes generally and Form 5471 in particular are subject to the great “pension confiscation”. Those who have not complied will still have a happy retirement.

U.S. citizenship is primarily about penalties: Comparing the “penalties” for noncompliance with the “penalties” for compliance

Penalties for noncompliance: For years people have been forced to listen to a constant noise (that’s the problem with the internet isn’t it)  warning people about the penalties for noncompliance. These are expressed in the language of either “tax crimes” or “form crimes”. Yes, the penalties for noncompliance are truly frightening! But, they are suffered randomly and sparingly. Let’s compare them to the …

Penalties for compliance: Nobody (don’t understand why) really talks about the “penalties” for compliance. They are real! They are NOT speculative! They are automatically assessed! Think I am kidding? Talk to anybody who is suffering the “transition tax” or somebody who has a real fear of “passport revocation”. Talk to somebody in Australia who has had problems with their Superannuation.

Americans abroad are subject to penalties no matter what they do. What were you thinking when you left the Homeland? You should be punished! And you are punished. Americans abroad are NOT subject to the same tax rules that Homelanders are subject to. They are subject to a different set of punitive rules. You should NOT be permitted to, simply leave the Homeland and expect those left behind, to pay your “fair share”! It is the duty of ALL Americans, wherever they may be, to support the Government of the United States (which as Cook v. Tait teaches – confers benefits to you wherever you may be).

Your experiences please …

Therefore, I think it would of great value to hear from those who have complied with – that Great Bible of American Life – the U.S. Internal Revenue Code (whether you have complied from inception/conception or whether you have recently come into compliance).

Remember that ALL U.S. citizens who were “Born In The USA” are presumptive “Tax Cheats By Birth”! This is because the  USA confers citizenship by birth and imposes tax based only on citizenship.

Could you address the following 3 questions in your comment?

1. Why as a “nonresident” of the United States did you decide to enter the U.S. tax system? For example, did your accountant tell you do do it? Were you simply heeding “The Call Of The Condor?” Was your entry into the U.S. tax system associated with another significant life event (illness, divorce, etc.) Do you snap to attention when you hear the U.S. National Anthem?

2. How has U.S. tax compliance caused you specific damage (calling all “transition tax” victims and more)?

3. Will the proposed #TTFI bill (the one from Congressman Holding) solve your problems or not?

If you are not in U.S. tax compliance, you could comment on why you do not intend to enter the U.S. tax system. Were you lucky (probably) or clever (maybe)?

And now, turning it over to JC …
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Part 2: The Transition Tax: Is “Resistance Futile”? The Possible use of the Canada U.S. Tax Treaty to Defeat the “Transition Tax”

Posted on by Posted in Tax Treaties, Transition Tax 17 Comments

 

cross-posted from citizenshipsolutions blog

by John Richardson

Beginning with the conclusion (for those who don’t want to read the post) …

For the reasons given in this post, I believe that there are grounds to argue that the imposition of the Sec. 965 “transition tax” on Canadian resident/citizens DOES violate the Canada U.S. tax treaty. It is my hope that this post will generate some badly needed discussion on this issue.

If you are an individual who believes you may be impacted by the “transition tax”, you should consider raising this issue with the Competent Authority. I would be happy to explore this with you.

Need some background on the Sec. 965 “U.S. transition tax”?

The following tweet references a 7 part video series about the Internal Revenue Code Sec. 965 “Transition Tax” created by John Richardson and Dr. Karen Alpert.

(Video 6 gives examples of what various approaches to “Transition Tax Compliance” might look like.)

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