Liberty and justice for all United States persons abroad

The Isaac Brock Society

How to banish a citizen: a two-step transaction

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On Friday, the State Department released one of the remaining missing sections of the Report of the Visa Office for Fiscal Year 2014: Table X, “Immigrant and Nonimmigrant Visa Ineligibilities (by Grounds for Refusal Under the Immigration and Nationality Act)”. For our purposes, this is interesting because of its statistics on two particular grounds of ineligibility which apply to emigrants: 8 USC § 1182(a)(8)(B) (“Draft evaders”) and § 1182(a)(10)(E) (“Former citizens who renounced citizenship to avoid taxation”).

The latter ground, the infamous Reed Amendment, is not known ever to have been enforced officially, though oddly enough this year’s Table X does not give us the number of determinations of ineligibility for a non-immigrant visa under the Reed Amendment: unlike in past years, the table entry is blank. It is not listed as a dash, which is used in the report to indicate that a particular ground of ineligibility doesn’t apply to non-immigrants; there’s simply no symbol in that row & column of the table at all. (The last time the report failed to include the Reed Amendment, in 2003, there was simply no row in the table at all; this time, however, the row is present, it’s just that the non-immigrant column is blank.) I have no idea what this might mean.

One thing Table X does show is the continued decline in enforcement of the former ground: only about half a dozen to a dozen people per year are being found ineligible for visas on draft-related grounds, and in recent years nearly all of them have been able to overcome their ineligibility upon review. However, despite Jimmy Carter’s pardon back in the 1970s, the number of people unable to overcome their ineligibility is not zero.

The ban on re-entry for people who left the U.S. as draft evaders or deserters is rooted in a much older Civil War-era law which stripped such people of their citizenship and made them ineligible for naturalisation. At the time, the U.S. had very few immigration controls, but by the 1920s, new immigration laws began placing barriers in the way of entry of all aliens ineligible to citizenship, presumably including draft evaders & deserters. These banishment provisions were made explicit in the Immigration and Nationality Act of 1952, and even survived the Supreme Court cases Trop v. Dulles in 1958 and Kennedy v. Mendoza-Martinez in 1963, which declared the nationality-stripping provisions for desertion and draft evasion respectively unconstitutional.

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Orrin Hatch’s passport revocation bill passes Senate

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According to a post on the Democrats’ Senate Floor Twitter feed, 78 Senators voted in favour of Orrin Hatch’s Trade Facilitation and Trade Enforcement Act (S. 1269), which includes the passport revocation provisions discussed yesterday: to revoke passports from people with US$50,000 of unpaid taxes & fines, or people who never obtained or do not provide a Social Security number.

In November 2014, American Citizens Abroad issued a position paper explaining why passport revocation is an inappropriate and dangerous means of tax enforcement. Patrick Weil, in a Yale Law Journal article, has detailed the long history of abuse of the administrative power to revoke passports. And, as stated here previously:

Due to the U.S.’ sharply harsher penalty structure on under-reporting of similar assets & items of income simply because they’re located in another country, it’s likely that a disproportionate number of victims of this bill would be U.S. citizens in other countries. Hatch is the chairman of the Senate Finance Committee and the most prominent Republican supporter of Chuck Schumer (D-NY)’s Ex-PATRIOT Act, another well-known emigrant harassment proposal.

The roll call on this “trade facilitation” bill (showing the votes of each Senator) was posted after I first wrote this; it shows that all 44 Democrats, 32 Republicans, and both the independents voted for the bill, while 20 Republicans voted against and 2 Republicans did not vote. The “yea” voters include not just traditional enemies of the diaspora like Chuck Grassley, Chuck Schumer, Jack Reed, and Harry Reid, but FATCA opponent Rand Paul as well.

Similar passport revocation provisions passed the Senate once before three years ago (in a highway funding bill) but got shot down by a competing House highway funding bill which coincidentally did not include any passport confiscation provisions. On the bright side, The Hill has predicted that this “trade facilitation” bill, too, will get nowhere in the House — though again, not due to any concern for the diaspora, but rather because of the bill’s controversial anti-currency-manipulation provisions (Title VII).

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Orrin Hatch revives passport-revocation proposal in new trade bill

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As a revenue offset to S. 1269, “An original bill to reauthorize trade facilitation and trade enforcement functions and activities, and for other purposes”, which was introduced on Monday, Orrin Hatch (R-UT) includes the following unoriginal and tired proposal:

SEC. 7345. Revocation or denial of passport in case of certain tax delinquencies.

(a) In general.—If the Secretary receives certification by the Commissioner of Internal Revenue that any individual has a seriously delinquent tax debt in an amount in excess of $50,000, the Secretary shall transmit such certification to the Secretary of State for action with respect to denial, revocation, or limitation of a passport pursuant to section 1001(d) of the Trade Facilitation and Trade Enforcement Act of 2015.

This proposal was previously discussed here in 2012, and made its most recent appearance in 2014. Due to the U.S.’ sharply harsher penalty structure on under-reporting of similar assets & items of income simply because they’re located in another country, it’s likely that a disproportionate number of victims of this bill would be U.S. citizens in other countries. Hatch is the chairman of the Senate Finance Committee and the most prominent Republican supporter of Chuck Schumer (D-NY)’s Ex-PATRIOT Act, another well-known emigrant harassment proposal.

Another section of Hatch’s bill would deny U.S. passports to people without Social Security numbers, sharpening an existing law which requires the State Department to forward passport applicants’ details to the IRS. This would effectively require that U.S. citizens born in other countries obtain SSNs prior to visiting the United States. (Under current procedures, U.S. citizen without SSNs are simply instructed to enter all zeroes in the SSN field of their passport applications.) However, unregistered children of emigrants might just ignore the law requiring U.S. citizens to use a U.S. passport to enter the U.S., and instead use their non-U.S. passport.

26 U.S. Code §877A – The “Exit Tax” rules: Do you see them as applying “prospectively” or “retrospectively” or both?

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by Carol Tapanila & Tricia Moon
 
S. 877A of the Internal Revenue Code – “One picture/statute – Two contradictory ways of seeing it”
 
Note: This post will be best understood by reading the following two sections of the Internal Revenue Code:
 
S. 7701(1)(5) Definition – Termination of United States Citizenship

S. 877A(g)(4) – Tax responsibilities on Expatriation
 
Do you see a “Young Woman” or an “Old Woman”, or can you see both?
 
chica_o_vieja
 
If you can’t see both, watch this video!

 

 

flag grabs

The question: I lost U.S. citizenship years ago. Can the U.S. still tax me?

Nothing paralyzes a relinquished expat more than the notion of having their citizenship “restored” automatically (without their consent). For those who relinquished decades ago but who do not have CLN’s, this is becoming a major issue. How incredibly frustrating to have been warned/admonished decades ago by consular staff who failed to include the information that one “perhaps should” appear at the consulate, file forms and get a CLN. In fact, under the INA (“Immigration and Nationality Act“), neither notification NOR a CLN was required to relinquish U.S. citizenship.  And in the same spirit of the government’s complete lack in taking responsibility for due diligence in advising of tax and reporting requirements before the hideous spectacle of OVDP/OVDI, once again we are the ones bearing the brunt of the problem. As usual Americans abroad are faced with both (1) “ignorance” of the law because they never knew or heard  about it AND (2) Ignorance of the law because the law cannot be understood.

(1)  Ignorance of the law because nobody ever heard about the law: As far as “ignorance of the law is no excuse,” have a listen to this short, incredibly simple and completely clear explanation of why the government should not get away with this. Really, can the U.S. take away the “Stop Sign” and then fine people for not stopping?

Story of the Stop Sign
“Mike” interviewed for Senate Finance Committee submission
(@ 01’35” total- 02′ 15″)

 
(2) Ignorance of the law  because the law (S. 877A rules) cannot be understood: This frustration is captured by “Homelander_Not” in the following comment on Robert Wood’s blog

 

 

About the “Exit Tax” (S. 877A rules) – Do the rules apply prospectively only from June 16, 2008? Do they apply retrospectively to those who relinquished U.S. citizenship by becoming Canadian citizens in the 1970s?
 
The statute itself is said to be poorly written. Both sides of the fence can be quoted as saying it is/isn’t retroactive by the “plain language” of the statute. This is extremely confusing and unsettling; how is one to know who to believe? Is there even an answer to this important question?

Since Treasury/IRS have not, at this point, chosen to offer guidance, we are left with many very competent lawyers who do not read the statute in the same way. As long as the IRS remains quiet on these issues, the ways in which these advisers lead their clients become a secondary way of “making the law.” The longer the IRS is silent, the more the law is “established” by the compliance industry. (And this now includes the banks, who have no business being the arbiters of U.S. indicia determining U.S. Person-hood (or not)). The question then becomes, why should one point of view be any more (or less) compelling than another? There are many different perspectives on this issue. Why should one point of view be preferred to another?

As Homelander_NOT formulates the question:
 

A major concern is that people who relinquished their citizenship decades ago are being told they must formally renounce at a consulate, they must file taxes and so on. The same thing is happening with “border babies” and other types of “Accidental Americans.” The fact is, citizenship law is complex. What is true for someone renouncing today is not necessarily the same for people who have a different situation outside of simple dual-citizenship. And yet, if you read what the compliance industry is saying, this is “it” – you must become compliant, file 8854 and pay that outrageous $2350.

 
We would add that those who renounce U.S. citizenship today are (assuming they are “covered expatriates”) subject to the draconian U.S. “Exit Tax” rules which could trigger significant confiscation of your retirement assets. See examples here.

So, what do the lawyers suggest? Remember that the law is NOT clear and these are the perspectives of the individual lawyer.

The S. 877A “Exit Tax” rules took effect in June 2008. Could they really be understood to apply to people who relinquished U.S. citizenship before the “Exit Tax” rules even existed? Some lawyers say “YES.” Some lawyers say “NO.” Some lawyers say “NOT SURE.” Some lawyers say: “What? I don’t understand the question.”
 
“Fools jump in where angels fear to tread”

Few lawyers have demonstrated the courage to address this issue at all. Recently, the lawyers mentioned in this post have put forth their ideas on the subject. The difficulties involved in understanding the complexities can lead to quite a state/level of uncertainty. It is only natural to feel fearful when something is not grasped. It must be remembered that at this point NO ONE “knows.” Each person has to take responsibility for making the effort to become familiar with all the information out there and apply it to his/her situation as best one can before making a decision/taking action/going with any particular adviser. Ask your adviser why he/she interprets the S. 877A rules in the way that they do. Remember, that your choice of adviser will help shape the law! After you have read these points of view, please vote in the poll at the bottom of this post.

There appear to be at least three different perspectives:

1. No, the S. 877A “Exit Tax” rules do NOT have retroactive application because they cannot be reasonably interpreted to mean that they have retroactive application.

2. No, the S. 877A “Exit Tax” rules do NOT have retroactive application because the “plain language” of S. 877A says they they do NOT.

3. Yes, the S. 877A “Exit Tax” rules DO have retroactive application because the “plain language” of S. 877A says that they do.

Exercise: Can you decide which lawyers have which perspectives? You will probably have to read their individual posts/articles to fully understand their position. Some may have more than one perspective. Check your answers at the end of this post.

John Richardson B.A., J.D.  in his post: Are You or Have You Ever Been a U.S. Tax Citizen?”  introduces the problem. In a separate post he offers his thoughts on “The Plain Language of S. 877A – To Whom Does It Apply“.  This matters because if S. 877A applies, then the “Exit Tax” rules apply.

The interpretation of “retroactive confiscation” includes the following three fantastic assumptions: john_article 1. Fantastic – The idea that the U.S. Congress (remember that’s where the law comes from) intended to retroactively confiscate the retirement assets of former U.S. citizens (living outside the United States) is fantastic. 2. More Fantastic – The idea that the retroactive confiscation of wealth could have been intended without that specific intention clearly conveyed in the statute (which was buried in a section of the “HEART Act”) is more fantastic. 3. Most Fantastic – The idea that a former U.S. “citizen” should have to consult a lawyer to determine whether the law (which nobody would even imagine exists) should be interpreted as confiscation of (“post U.S. “Citizen”) assets is the most fantastic.

Virginia La Torre Jeker J.D. Part I: Living in the Past: Citizenship “Relinquishments” – Am I Still a US “Tax Citizen”? Part II: Living in the Past: Citizenship “Relinquishments” – Am I Still a US “Tax Citizen”? Part III: Living in the Past: Citizenship “Relinquishments” – Am I Still a US “Tax Citizen”?

Virginia La Torre Jeker Today’s Part III of the post also sets forth the premise that the manner in which legal professionals interpret a particular law will impact how that law is interpreted by other professionals, which in turn will help shape the future evolution of that law. With that as the touchstone, prudence is advised when it comes to interpreting the backward reach of the relevant Internal Revenue Code Sections — Section 877A and 7701(a)(50). Caution is necessary lest the tax professionals, themselves, create a situation where one professional blindly follows the next resulting in a scenario where, without the requisite aforethought and due consideration, the provisions come to be applied retroactively.

Michael J. Miller Expats Live in Fear of Malevolent Time Machine    COMMENTS ON THE TAX STATUS OF CERTAIN EXPATRIATES These Comments address the need for guidance regarding the tax status of individuals who expatriated on or before June 3, 2004.

michael j millerFor persons whose CLN shows a loss of citizenship date that is on or before June 3, 2004, section 877A should not apply. Even if the CLN is received today. I’ve discussed this with people at the IRS and they’ve informally stated that they agree.
***
Furthermore, since the 2004 Act quite deliberately included a “grandfather rule” for individuals who expatriated (within the general meaning of that term) on or prior to June 3, 2004, it’s extraordinarily difficult to imagine that the 2008 Act would have been intended to reverse that treatment.

Roy A Berg, JD, LL.M (U.S. Taxation), TEP FATCA, Cure for US Place of Birth  
Exhibit 1 Explanation of Reason Account Holder Does Not Possess a Certificate of Loss of Nationality Despite Having Relinquished U.S. Citizenship This is a very-well drafted suggestion for FFI’s to accept in lieu of a CLN.

Under a literal interpretation of current law Mr. Maple Leaf’s U.S. citizenship is terminated for nationality purposes in 1981. However under HEART, termination of his U.S. citizenship for tax purposes is determined under section 7701(a)(50)(A), which sends us to section 877A(g)(4). Under section 877A(g)(4), Mr. Maple Leaf’s U.S. citizenship is lost on the earlier of: berg_2f930c9 1. The date in 2015 on which he submitted a statement that confirmed a prior expatriating act (i.e., becoming naturalized in and formally declaring allegiance to Canada); or 2. The date in 2016 on which his CLN was issued. Because his submission to the Department of State antedated the issuance of the CLN, his tax-citizenship terminated in 2015. Thus, Mr. Maple Leaf is liable for tax and reporting obligations from 1981 through 2015. Further, since Mr. Maple Leaf and the Department of State did not concurrently consider his U.S. citizenship to have terminated, he will not be relieved of tax obligations under D’Hotelle de Benitez Rexach or Revenue Ruling 92-109 until 2015.

Mr. Berg’s interpretation of “retroactive application” is strongly supported by California tax lawyer Patrick Martin.

______________________________________________________

A discussion among Roy Berg, Michael Miller and Patrick Martin …

Okay, you have had the opportunity to read what various lawyers say when they WRITE in a non-interactive way. Interestingly, a recent interactive DISCUSSION on this topic took place on a blog between three of the lawyers mentioned above. The discussion demonstrates the total lack of agreement. You can read the comments here. What do  you think?

______________________________________________________

Possible answers to which lawyers have which perspectives?

1. No, the S. 877A “Exit Tax” rules do NOT have retroactive application because they cannot be reasonably interpreted to mean that they have retroactive application.

Michael Miller, Virginia La Torre Jeker, John Richardson

2. No, the S. 877A “Exit Tax” rules do NOT have retroactive application because the “plain language” of S. 877A says they they do NOT.

Virginia La Torre Jeker, John Richardson

3. Yes, the S. 877A “Exit Tax” rules DO have retroactive application because the “plain language” of S. 877A says that they do.

Roy Berg, Patrick Martin

________________________________________________________
 
Conclusion – if there is one …

The application of the S. 877A rules is so unclear that, as was previously reported at the Isaac Brock Society,  the American Bar Association has asked the IRS for a ruling on the correct interpretation.

What do you think? Do you see how the interpretation of the S. 877A rules can be seen as both the “young woman” and the “old woman”?

The message is: Caution is warranted!

You should take whatever step (or not) that you are most comfortable with. The interpretations of the lawyers/accountants, etc. are just that – their own interpretations. Hopefully, the IRS will answer the American Bar Association. Till then: Good luck. You are in uncharted terrain.

 

 

 

Should proof of non-U.S. citizenship be an absolute condition for accepting public office in Canada?

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I feel that USCitzenAbroad’s comment on Eric’s post is deserving of its own post.

The (former) Premier of New Brunswick David Alward, born in Massachusetts (who previously expressed frustration over his IRS tax compliance obligations) has renounced his U.S. citizenship.

USCitizenAbroad now alerts us to the possibility that another Premier, Premier-Elect Rachel Notley of Alberta, may also be a U.S. person.

For the protection of these hapless U.S. persons and that of the Canadian people, should proof of non-U.S. citizenship status be a requirement for accepting public office in Canada for all those who have a U.S. taint?

THE ORIGINAL COMMENT:

@Eric

Thanks for your continued research and attention to detail on this important topic.

Thanks in particular for including the chart of “some” recent renunciants. I note that “David Alward”, (the former premier of New Brunswick), is on that list. I note also that the reason given was his acceptance of his new role as Canadian Consul General in Boston. [I (SK) personally believe that there are other reasons; see below].

This may be a bit of a “homecoming” for Mr. Alward. A Wikepedia entry says that was born in Beverly, Massachusetts and moved to Canada at a young age (a familiar narrative).

http://en.wikipedia.org/wiki/David_Alward

Alward was born in Beverly, Massachusetts. The son of a minister, Alward moved to Atlantic Canada in his youth where he graduated from high school in Nackawic, New Brunswick.[4] Alward received his post-secondary education in psychology in the United States at Bryan College in Dayton, Tennessee.[5]

Mr. Alward’s renunciation of U.S. citizenship is of possible interest for another reason. It was reported in 2011, (and apparently confirmed by Mr Alward) that he was having the usual “U.S. tax compliance problems”. See the following blog post (which appears to have been based on news articles in 2011):

New Brunswick Premier, David Alward, caught in FATCA nightmare

At least we’re not alone; New Brunswick Premier David Alward is caught in the same broad net that is causing so much stress and lack of sleep for American expats the world over.

Alward, who was born in Massachusetts and spent a few years of his childhood in the US before his family settled in New Brunswick, has issued a statement that he understands the frustration we feel as we sort through years of records to bring ourselves into compliance with the US Treasure Department’s draconian regulations.

“I’ve had to scramble like thousands of other people,” Alward said, adding that he is complying with the U.S. demand for tax returns going back years and detailed disclosures.

“This is a difficult situation for a lot of people. I can tell them I am going through the very same thing they are going through.”

FATCA – which was enacted in an attempt to catch and punish tax evaders, drug lords, and money launderers – casts too broad a net, and is instead causing a great deal of fear among honest, law-abiding Canadian residents who do not owe money to the US. Many, like Alward, have only distant ties to the US.

“I don’t know where it will lead or what our success will be – they have the right to tax American citizens. But the fact is a lot of these people that are in Canada, and I think it’s over a million, most have never lived in the United States and it’s just happenstance they were born there,” added Keith Ashfield, Canada’s former revenue minister and the senior cabinet minister for New Brunswick.

We are not criminals, and we are not tax evaders. We’ve merely committed errors of omission and we do not deserve to lumped in alongside wilful tax evaders.

Such is part of the story of the former premier of the Canadian province of New Brunswick. I wish him luck in his new job.

Mr. Alward is one example of the many Canadians with some kind of U.S. connection in their past. A connection that they clearly regret.

Moving on to current premiers:

As you know, Rachel Notley has just become the NDP premier of Alberta. The following Wikipedia entry includes:

http://en.wikipedia.org/wiki/Rachel_Notley

Notley was born on April 17, 1964[4][5][6] in Edmonton, Alberta, and was raised in the town of Fairview, Alberta, the daughter of Sandra Mary “Sandy” (Wilkinson) and Alberta NDP Leader and MLA Grant Notley.[7][8] She is the sister of Paul Notley and Stephen Notley (author and illustrator of Bob the Angry Flower).[9] Her mother was born in Plunkett, Massachusetts.[10]

It appears that Rachel Notley “may” (further details would be required) have been born to a “U.S. citizen” mother. This of course leads to the tantalizing question for Ms. Notley of:

“Are you, or have you ever been a U.S. citizen?”

The Obama Legacy is such that one of the most interesting things to know about a person has become, is the degree of their “USness”.

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Late & unreliable Federal Register expatriates list causes political dispute in Haiti

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The Federal Register published expatriates list for the first quarter of 2015 is finally out for public inspection and due to be printed tomorrow, more than a week late. The IRS approved the list for publication internally on 28 April and sent it to the Federal Register folks, but it was not actually published on time, a clear violation of 26 USC § 6039G(d). However, this is barely even news: the list has been late for nine out of the past ten quarters too. And anyway one week is far short of the record of 599 days set by the Q2 1998 list (which didn’t appear until March 2000), or more recently the Q2 2010 list, which was 103 days late. Such habitual tardiness clearly indicates that this is a willful violation of the Internal Revenue Code by IRS employees, which should be punished but certainly won’t be.

This list contains 1,336 names of certain people who renounced or relinquished U.S. citizenship and whose information the IRS received in the first three months of this year. This is a smaller number than the 1,406 records — solely of renunciants, not of relinquishers — which were added to the FBI’s NICS gun control database over the same period, bringing it from 27,240 renunciant records up to 28,646. NICS also added another 767 renunciant records in April. (Given that the Federal Register list is too small even to cover all renunciants, it is not mathematically possible that it includes ex-green card holders, and no name of an ex-green card holder has ever been confirmed present in the list.)

This late, incomplete list isn’t merely a source of mild annoyance for us here at the Isaac Brock Society — instead, for the second time in recent years, it’s causing political controversy in the Caribbean. Haitian First Lady Sophia Martelly states that she renounced U.S. citizenship in March 2014 in preparation for her own entry into electoral politics this year. Local newspapers have complained that her name hasn’t shown up in the Federal Register list. But this isn’t unusual at all: nearly every single other public figure I know of whose 2014 renunciation/relinquishment was reported in the media hasn’t shown up either.

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Overseas Americans ramp up bid for tax relief – Good to see

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The post referenced in the above tweet references another interesting article on the blog at the Hill. Excellent opportunity for comments.

It begins with:

Organizations representing millions of Americans who work abroad are storming Capitol Hill in a push for tweaks to tax and banking policy.

American Chambers of Commerce (AmChams) operating in various countries all over the world collectively represent about 6.5 million U.S. citizens living outside the country.

Some, such as the AmCham Abu Dhabi, are stepping up their Washington advocacy, visiting with business groups, lawmakers and administration officials, just as Congress grapples with tax reform.

Their message: Well-meaning policies aimed at stopping money laundering and offshore tax evasion have translated into unworkable realities for Americans overseas.

“Our intention coming onto the Hill was to educate and present our case — what we’re facing, in terms of challenges in living abroad,” said Sharief Fahmy, chairman of AmCham’s public affairs committee for the U.S. and the United Arab Emirates.

 

Obama nominates OVDI lawyer as Tax Court judge

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Not sure if this is good news, bad news, or just business as usual. Here’s the press release (hat tip as always to TaxProf Blog):

Today, President Barack Obama announced his intent to nominate Elizabeth Ann Copeland as a Judge to the United States Tax Court.

“Elizabeth has demonstrated unwavering integrity and dedication throughout her career,” said President Obama. “I am proud to nominate her to serve on the United States Tax Court.”

Her employer Strasburger & Price describes her:

Elizabeth A. Copeland is Board Certified in Tax Law by the Texas Board of Legal Specialization and focuses her practice on civil tax controversies. She has expertise handling offshore voluntary disclosure matters, employment tax disputes, tax collection matters, innocent spouse representations, IRS Appeals and Tax Court litigation.

Copeland made the following comment to the San Antonio Business Journal in March 2011. I don’t find this comment particularly encouraging, but in fairness she said these words well before people had become aware of the disastrous and unfair effects of the 2011 OVDI on U.S. persons in other countries who paid taxes and kept bank accounts where they lived, and owed little or no U.S. tax despite their paperwork omissions; none of Copeland’s fellow practitioners interviewed for that article mentioned Americans abroad either:

Because there is a large budget deficit, the government is emboldened by the success of the first Offshore Voluntary Compliance Program, and the government wishes to combat international tax evasion. The government also wants to be fair to those of us who timely file our tax returns and pay our tax. As stated by IRS Commissioner Doug Shulman, “the goal is to get people back into the U.S. tax system.”

If a taxpayer has a foreign account that should have been disclosed to the U.S. government, contact a local tax attorney familiar with the OVCI or program that can guide them through the criminal and civil aspects of the program. Because certain taxpayers will not qualify for the program (e.g. those under audit or investigation) it is best to consult an attorney.

Here is a presentation Copeland made (jointly with Jack Townsend, the author of the Federal Tax Crimes blog) about FBAR, OVDI, and FATCA in August 2011, notable as an early example of practitioners discussing the possibility of opting out of the “offshore” disclosure meat-grinder. Other than that, I’m not able to find more recent material in which Copeland has spoken about this whole mess, and the available materials don’t reveal very much about whether her opinions have evolved over the past four years.

U.S. citizenship taxation burdens Canada’s sovereignty by imposing U.S. taxes on Canadian residents

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cross-posted from the Alliance for the Defence of Canadian Sovereignty blog

 

Prologue: Prime Minister Pierre Trudeau speaking to the Washington, DC Press Club – 1969

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The Elephant Today: FATCA, FBAR and U.S. Citizenship Taxation – How “even-tempered” is the beast?

I have been watching with interest a recent discussion at the Isaac Brock Society about U.S. citizenship taxation. Much of the discussion was focused on whether the Alliance For The Defence of Canadian Sovereignty  should initiate a lawsuit against U.S. citizenship taxation. (This post is NOT to comment on that specific question.) Interestingly, much of the discussion centered around the question of whether,  U.S. citizenship impacts on Canada’s Sovereignty. Some commenters believe it DOES impact on Canada’s sovereignty. Others believe U.S. citizenship taxation does NOT impact on Canada’s Sovereignty. I use the word “impact” to mean “effect” and NOT “intent”.

sovereignty

What if one were to ask the question this way:

Can one country forcibly impose taxes on the residents of another county? If so, does the imposition of those taxes burden the sovereignty of that other country?

Does U.S. citizenship taxation impose either direct or indirect taxes on Canadian citizens resident in Canada? If so, does the U.S. taxation of Canadian citizens resident in Canada  interfere with Canada’s sovereignty? Remember that FATCA is a deliberate attempt by the United States to enforce U.S. tax law on Canadian soil.

Let’s review some basic principles that are NOT in dispute.

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