FATCA and Australia – Part 2 of 2
See also FATCA and Australia – Part 1 of 2
Let’s Fix the Australia/US Tax Treaty! The Australia/US tax treaty needs urgent revision to prevent double taxation. Get involved at www.FixTheTaxTreaty.org
Posts on The Isaac Brock Society website concerning FATCA and Australia
For articles on other websites, see Media and Blog Articles
For general discussion of FATCA, see FATCA Discussion Thread
For links to some websites and contact info (government, organisations, tax information), see Australia Information Links
25: John Richardson and Karen Alpert Session in Brisbane Australia Oct 25, 2018
August 2018
01: U.S., U.K., Canada, Australia and Netherlands form international tax enforcement group
January 2018
July 2017
March 2017
13: What Lessons Can Be Learned from the Sad Stories of “IRS Compliant” Australians Shaun and Mary?
November 2016
30: “Solving U.S. Citizenship Problems” – Online January 9, 2017 (Australia)
August 2016
25: Let’s Fix the Australia/US Tax Treaty!
May 2016
15: Australia: Dealing with Superannuation
February 2016
19: #Australia funds America’s #FATCA #Ethnic Identification System
September 2012
27: Last Day to make a FATCA submission to the Australian Govt
August 2012
28: Australian Government wants YOU to tell them what to do about FATCA
July 2012
20: Australian Financial Services Council lobbies Washington for FATCA exemption
Just a note to all the Australians who read and post here at Brock: Mightily hoping you are all OK!! The magnitude of what you’re facing there is appalling. Wishing for better days as 2020 progresses.
Fix The Tax Treaty’s Steering Committee have posted the latest version of their Strategy document.
Hello Everyone,
I am absolutely terrified.
I was born an accidental American (in Australia). Back in ~2014 i renounced. I have a CLN.
Never filed US tax returns, minimally filled in the 8854 form.
I live in fear.
I have worked hard, i have a family, i have a good income and wealth. My financial world is very complicated. If i get “caught” I’m well and truly f@#ked. Honestly, i would be suicidal. I just wont be able to work out what is due and the costs would be horrendous.
I never want to visit the US again.
I own some US stock.
Otherwise i have no US connections. I dont have a US bank account. i have never had a IRS Tax file number or Social Security Number.
My questions are:
– What are the chances the IRS comes after me?
– What can they do? can they tell the Aus govt that i owe them money and fines? Will Aus enforce it?
– Has anyone on this forum been chased down by the IRS (who was in a similar situation)?
Am i going to live in fear for the rest of my life???
I have lost countless nights of sleep and stress on this all the time.
Please help me.
Thank you all, keep up the good fight!
Jack
@Jack,
It appears you posted regarding this under a different name yesterday. To avoid confusion, we require people to use only one name. Please stick to one name going forward to ensure your future comments appear on-line.
@ Jack,
I’m not aware of anyone with no US connections who renounced being chased down by the IRS (been reading this site daily for nine years). I’m not sure about how US stock factors in, but someone else may comment on that.
Australia does not have a mutual assistance collection clause in its US tax treaty (Canada does, but it exempts persons who were Canadian citizens at the time the tax debt arose). I’m not familiar with Australian law, but generally overseas enforcement for IRS requires IRS to get a US Federal Court judgement ratified by the foreign country’s court to get such collection implemented. It’s an expensive labourous and uncertain process for the US to undertake, so they rarely do. I don’t know your entire fact set, but I can say that in my experience regarding renunciants with no US connections, it’s basically unheard of. I’m not aware of any renunciants being contacted by IRS, except for two which involved IRS disagreeing with a claimed deduction (or something relatively standard like that), both of which occurred shortly after (within a year) of their filing 8854.
I am puzzled that you said “Never filed US tax returns, minimally filled in the 8854 form.” as the 8854 asks the person if have complied with the previous 5 years tax obligations (this can be done as late as when filing the 8854). If you did not have a filing obligation for those years (for example, if your income was under the filing thresshold), it would have been correct to answer “yes” to that question, although you did not file. If a person answered “yes,” but no 1040s had been filed and the 8854 showed large assets, I could see that raising a red flag. But if that’s the case, I’d guess they moved on from your 8854, it having been filed so long ago (just my 2c, based on what I’ve read and observed.)
@Jack
1. Calm the f*ck down.
2. Don’t be surprised if you receive a stimulus cheque in the mail one day – they are that disorganized.
Jack The chance they come after you is nil, zero, nada, bupkis. Forget about it. Get on with your life.
They can’t come after you if they wanted to..
No one we know of has been chased down. See my recent post under FATCA discussion thread. Above all else DO NOT enter the US tax system.
If someone tells you otherwise they don’t have your interest in mind. There is a well known accounting firm doing seminars in Canada and Australia making good money by frightening people into using their services when they don’t need to.
Never say never….(even in most cases it’s true).
https://www.globalwitness.org/en/campaigns/oleg-tinkov-isle-of-man/
Although I have a SS number, I was never in the US tax system. I renounced in October 2018 and never filed a bit of US tax paperwork, and I won’t ever do so.
I’ve not heard anything from the IRS, nor do I expect to. And even if I did, I have no financial life in the USA.
I sleep easy at night.
Jack didn’t mention his private jet.
@Jack,
That’s not a dig at you. In case you didn’t open the link in Mike’s comment, the article is about an uber-rich guy. And if did/do read the article, don’t let it worry you about IRS pursuing you – this guy’s definitely not your average Joe.
Agreed about the uber-rich guy, he is very much an exception to the rule.
Hello
I’ve tried to post this before but have not been successful. Hopefully this works.
I was an accidental American. I renounced my US citizenship about 2014 and now just have my Australian.
I was born in Australia to a US parent.
I never had a SSN. I never filed a US tax return.
I am now mid 40’s.
I am well off financially, income and wealth.
I have a family.
i live in terror and fear from the IRS.
I filed a 8854 form but did not file tax returns.
I would have if i could but my financial affairs were just way to complicated.
I never plan to go to the US.
I have some US shares.
I am Australian.
I dont know what i would do if they came after me.
I am a covered expatriate (i think the term is).
I would like help with understanding:
– how often does the IRS come after people like me? has anyone on here been contacted/chased/audited/etc?
– if they do – what is their authority to impose fines and costs and orders?
– will the Aus govt enforce it?
Any insights or real experiences would be immensely appreciated.
Thank you!!
As a resident citizen of another nation you are largely untouchable by the IRS. The only people in your position they can audit are those who comply with being audited.
In the more than unlikely event the IRS did try to enforce any taxation or penalty I do not believe Australia would help at all. Unless I am missing something I see absolutely no reason for you to be terrified.
@Gerry
You have nothing to worry about. You haven’t heard a peep from the IRS since you renounced 7 years ago. You will never hear from them. And they have no power to touch you or your assets in Australia. Go back to sleeping soundly every night.
Out of curiosity, when you filed your 8854, did you indicate that you were not tax compliant for the previous 5 years? What did you actually put on the form? By submitting that form you basically waved a flag that said “I renounced without filing anything” and yet the US government took no notice. That should be encouraging to you.
I’m sure you realize this now, but given that you were not born in the US, the best thing you could have done at the time was nothing – don’t renounce, don’t file, don’t disclose your (undetectable) US citizenship to any financial institutions. Dual citizens born outside the US have a very easy time of this, they keep their mouth closed and stay completely off the IRS radar forever.
I renounced in 2018 and didn’t file any US tax returns. That makes me a ‘covered expat’ by default and I couldn’t care less. I have no financial life in the USA. I sleep well at night.
@Gerry
There are no tax collection agreements between the US and Australia.
The statue of limitations for any so called IRS tax debt has run out out anyhow.
Forget about it.
Just for the record, its unclear if failing to file a Form 8854 after renouncing makes one a “covered” expat or not. In view of the fact that the IRS needs the information on Form 8854 to make a determination as to whether one is covered or uncovered, not filing the form puts one into a state of limbo or undetermined status. After the IRS is notified by the State Department they know that you have renounced but not much else. I’ve heard plenty of people say that not filing Form 8854 makes you a covered expat but I’ve never read that on any official IRS website or instructions.
Technically, not filing the form could be described as a type of late filing, because there is nothing preventing a person from filing it, even if its long after the deadline. The instructions mention the deadline but don’t say anything about a late penalty. Its just a strange loophole that apparently no one thought of when they wrote the rules. Presumably, if not filing the form made you covered, the IRS would notify you of that fact. But as we know, those who skip Form 8854 never hear anything.
Now if, for some reason, you wanted to get back into the US tax system all of this might cause some problems, but no one in their right mind would do that.
Gerry. You say you live in terror of the IRS. We feel your pain because terror of the unknown is the worst kind.
No matter how many of us advise you to do nothing, to forget about it and to move on there is always that “what if ” at the back of your mind.
You should understand that the GOP pursued a policy of defunding the IRS for a generation. The idea was to starve the government in order to make it smaller. Of course it didn’t shrink. The deficit ballooned
Inn any case the IRS is a paper tiger. It has no ability to chase down foreign citizens after 7 years. It barely has the ability to chase down US Citizens living in the USA unless said person is brought to their attention by other means. Paul Manafort would still have offshore hidden bank accounts if he hadn’t been involved with the Donald.
As an Aussie living in OZ you have absolutely nothing to fear unless you make the grievous error of filing any more information with the IRS.
My wife renounced 7 years ago. For personal reasons she did file but we had previously carefully arranged our affairs over a 5 year period so that she wouldn’t pay a nickel. They didn’t even show the courtesy of acknowledging receipt.
Try your utmost to relax and move on. Do not even think about contacting the IRS or a certain law firm out of Canada that preys on victims like you. We know how easy that sounds and how difficult it might be but it is your only option. As they say in France Bon Courage.
Gerry, you’re out, you’re done.
Go on being a good Aussie and wipe your brow.
xx
@ Jane,
Sorry your comments didn’t go directly on-line today. That’s only supposed to happen with a person’s first comment, but occasionally there’s some glitch. It always clears up in a day or so, sometimes same day — meanwhile, we’ll keep an eye out, so we can release your comments asap.
@Gerry
As others have pointed out, this deserves not a further second’s thought. Absolutely no reason to worry.
I am however still curious to know what exactly you said on your 8854 concerning tax compliance. Did you say that you were compliant (despite having filed no US tax returns) or that you were not compliant? If the latter it definitely confirms the suspicion that the IRS doesn’t even look at these things.
If, as stated above, Gerry never had a SSN and filed his 8854 without one, it probably never even got processed. Without that number the IRS system stops dead in its tracks.
@ Gerry
Just for the record, before electronic filing of US citizenship of a US child born abroad, the registration would have been on paper and probably filed away deep in the bowels of some Gov office. Unless one had applied for a US passport or a SSN in the past, I doubt that paper registration would be evident or retrievable. Before FATCA, I have known people jump through hoops in the past to prove their registration to get a passport. So unless you have done something ‘American’ they probably had no idea you existed let alone that you were registered as a US person.
I was Naturalized back in the 80’s on paper and had to provide them with my certificate, they could not retrieve it.
@Heidi
Interesting. My child’s birth was registered at a US consulate in Europe circa 2000, and it was definitely a very paper-based process. They were not issued with an SSN, nor did we renew their (adorably cute) baby passport that was only valid for a year. That is really the extent of their contact with the US government.
They have entered the US many times using a Canadian passport with a fairly unique set of birth identifiers (name, date, city) and have never been flagged.* The US government just doesn’t have that sort of database. The IRS doesn’t know that they exist, and they are smart enough to keep it that way. If they decide to do grad school or work in the US in the future they can easily “activate” their US citizenship, but until then it remains safely dormant.
*As I’ve said before, I used both passports over the years to enter the US, and even once was stopped with a Canadian passport (showing US birthplace) and had many notes typed into my file, but in subsequent years continued using my Canadian passport without ever being flagged again. Honestly I don’t know what’s on those computer screens at the airport, but clearly “This person is actually a US citizen!” does not come up as a blinking alert when they scan your passport.