Obama asked to intervene in IRS assault on Canadian residents

[aphid 0]

Just how broke is your country? Being compared to Eritrea is rather unflattering.

http://blogs.vancouversun.com/2011/09/06/obama-asked-to-intervene-in-irs-assault-on-canadian-residents/

[nanook 1]

From what I read, it seems the author needs to let the U. S. know he's not an American. Sounds like a simple error.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[aphid 0]

Re-read the portion that outlines the IRS considers every American responsible regardless of a dual-citizenship or residency.

ETA: I have friends here who have already been tagged in this tax-grab. Canadian lawyers and accountants really do appreciate the new business that has arisen because of this initiative though.

[nanook 1]

And that's right. If you are any part American, you owe taxes. Dual citizenship is still American. Americas pay taxes earned from foreign sources. It's not something new or a strange conspiracy this guy is making it out. If you don't want to pay any US Taxes, become a full resident somewhere else and denounce your U. S residency.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[aphid 0]

He did, as noted in his letter to your President.

As has my own spouse who has resided up here continuously since age 15 in 1973. She has been contacted by the IRS as well.

Not trying to be difficult, but don't be misguided to think it is just that simple to tell the USgov to get lost...

[nanook 1]

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He did, as noted in his letter to your President

1) No he didn't. In the letter, he is appealing to Obama as his elected representative.
2) He talks about his non-residency. This is different for Citizenship. A citizen will always pay taxes. Residency is just a set of rules about how you will be taxed.
2) He appeared to only file a OVDI form. That has nothing to do with Expatiriation. It is form 8854, for tax purposes. The form has to be submitted to both the IRS and a counselor's office.

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As has my own spouse who has resided up here continuously since age 15 in 1973. She has been contacted by the IRS as well

If your wife did not fill out the 8854 forms and her Expatriation is for the purpose of avoiding paying taxes as per IRS instruction: "You are presumed tax avoidance if for the past 5 years, your net income was 100,000 adjusted after 1997, and/or 500,000 in net worth." If you just leave the country and do nothing, you are presumed a tax dodger if any of the two above apply. You are always a Citizen, which is different from "resident" till you renounce. Looks like your wife is being targeted because she is still a Citizen.

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Not trying to be difficult, but don't be misguided to think it is just that simple to tell the USgov to get lost...

hey, no problem. But I'll tell you something about the IRS, They don't give a shit about politics. Show them the "money" and they will bugger off. But in this situation, I don't think the author has a leg to stand on. He is very wrong and kind of an fool for making assumptions and is not doing his homework and making things worse for him.

for you guys, Check out Publication 519 U. S Tax Guide for Aliens. It talks about your possible situation. It seems like you wife owes if she has been a Citizen all this time. If so, probably wouldn't recommend Expatriating now. It will be presumed a tax dodge and Expat taxes above other penalties will be applied.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[aphid 0]

I gave the publication a cursory glance and it appears to address taxation issues for non-US citizens working inside the USA. Hence addressing them as aliens.

I think in the eyes of the USgov, an American remains a citizen regardless of becoming a citizen of and residing permanently in a foreign sovereign country. Therein lays the rub, and the comparison to Eritrea regarding out-of-country taxation.

[nanook 1]

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I gave the publication a cursory glance and it appears to address taxation issues for non-US citizens working inside the USA. Hence addressing them as aliens

My bad. It starts on Ch 4. page 23. "Expatriation Tax". I so used to finding sources in the Tax Law that I learned the Code's nuances. Even though the pub is about foriegners earning income in the U. S., the pub talks about Citizenship and when citizenship still pays.

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I think in the eyes of the USgov, an American remains a citizen regardless of becoming a citizen of and residing permanently in a foreign sovereign country. Therein lays the rub, and the comparison to Eritrea regarding out-of-country taxation

This is correct. Becoming a citizen in another country does not automatically make you a non-citizen of the U. S. It never has. It just means you are a citizen of the US and another country. In the U. S., you have to file for non-citizenship. Also, file paperwork as stated earlier to let the IRS know. This is not something new. The author is not taking ownership of his lack of knowlegde. He's just mad that he has to pay. His article if full of crap.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[GeorgiaDon 340]

Out of curiosity, do you know if the IRS has any means to actually collect the tax from a delinquent citizen? If they have no assets in the US, can the IRS seize their Canadian (or other) bank accounts, retirement accounts, or real estate? Of course, these people would never be able to return to the US without risk of arrest.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[nanook 1]

Fuck no. Not without Canadian assistance. However, if someone gets picked up for breaking a law in Canada and there's a warrant good enough for an extradition, I can see canada handing them over. But, that's an area I know absolutely nothing about. This is serious speculation.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[nanook 1]

Since I opened my big mouth and possibly gave some bad advice to Georgia Don, I checked out the Extradition Treaty between the US and Canada and Article II states that for extradition to happen, both countries have to agree that the reason for extradition is a crime for both countries, and only for those offenses in the Schedule Appendix. There is nothing there about Tax Evasion specifically. And it appears it's for action by the FBI (Doesn't mean they can prosecute for IRS reasons). There are a lot legal studies about US extraditing people for tax evasion on line, but the few that I read say "no". So get an attorney.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[kelpdiver 2]

this isn't "assault."

[aphid 0]

The phrase tax-evasion has been used rather immodestly. These people have evaded nothing. They paid their taxes, as Canadian citizens, earned in Canada, while residing in Canada.

In a common-sense world, in my opinion, they don't owe the bully a damned thing.

[aphid 0]

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this isn't "assault."

I composed neither the article nor its title.

[Gravitymaster 0]

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this isn't "assault."

I agree. The language people use to desribe "actions" has gotten way out of control.

[kelpdiver 2]

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this isn't "assault."

I composed neither the article nor its title.

you composed the title of this thread.

[nanook 1]

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The phrase tax-evasion has been used rather immodestly. These people have evaded nothing. They paid their taxes, as Canadian citizens, earned in Canada, while residing in Canada.

In a common-sense world, in my opinion, they don't owe the bully a damned thing.

I believe I am the one who eluded to tax evasion here. I'll agree. Based on the article, there was no tax evasion. Yes, they paid their taxes, for Canada, but all that time owed for US Taxes. It appears innocent, thus not willful evasion. No crime here proven. But, US tax code has for many years taxed all foreign income. What appears to be happening here is the U. S. is starting to enforce a law that has already been in place. Now is this fair? Well, maybe it would have been fairer if the US has always enforced this than all of a sudden start up. But technically, ignorance of the law has never been a good defense. If they owe, they owe. They are still US Citizens. They made an assumption that gaining citizenship automatically negates their citizenship somewhere else. Bad assumption. To meet the author's issues point by point:

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1. As an individual who has not lived, worked, or been associated with the United States for many years. . .

Author has been a US Citizen all this time. He never legally renounced his citizenship, just assumed it.

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What is particularly disturbing is the position of the children of US citizens who reside in Canada. . .

This is a failure of not communicating with the US Consulate. Any US Citizen who has children born in foreign countries. . .thier children are US Citizens. Very helpful for Military who's spouses have children in foreign nations.

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3. There is also my exposure to the US Estate Tax. My accountant has confirmed that yes, upon my death, since the US considers me a citizen my children will be subject to the US Estate Tax as well as any taxes levied by the Canadian government.

Same problem here. Kids are US Citizens. He better expatriate them to prevent this.

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“Taxation without representation” was not tolerated in the late 18th century, nor should it be accepted today.

Now this is funny. All the taxes he has stated are definitely represented. The phrase was never over the amount of taxation, or "unfairness" but always on the decision-making process by which taxes were decided in London, without representation for the colonists in the Parliament. The taxes made here are by Congress. They were definitely represented.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[nanook 1]

One more thing. I'm not debating for the sake of debating. I'm worried that the article may lead you to make some bad choices. The Author is a douche-bag. Trying to help a brother out. Be careful. Talk to some tax accountants who deal with dual citizenships or maybe get an attorney who may help you lower fees the IRS may impose. Your wife may owe a lot of back-taxes. At least know your real options before making a decision.

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"The trouble with quotes on the internet is that you can never know if they are genuine" - Abraham Lincoln

[GeorgiaDon 340]

Nanook, thanks for all the informed input.

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Yes, they paid their taxes, for Canada, but all that time owed for US Taxes. It appears innocent, thus not willful evasion. No crime here proven. But, US tax code has for many years taxed all foreign income.

If I recall correctly, one gets to deduct taxes paid in the country where the money is earned from the US taxes. You don't get taxed twice, but if the tax is lower where it is earned than it is in the US you have to pay the difference to the IRS. If that is correct (and don't take my word for it, it's been years since I had any experience with this, and my situation was as a Canadian living in the US but receiving some income from Canada), then the main impact on people with all of their income from wages would be 1) the penalty for non-disclosure, and 2) the cost to hire someone with appropriate expertise to prepare correct tax returns. Since Canadian taxes are higher than they are in the US for most (maybe all) types of income, there should be little or no actual tax owed to the US, but the cost of complying with the reporting requirements might be considerable, in both time and money (accountant/tax attorney fees).

On NPR the other day, they had a story about a reporter who was doing an investigation about setting up a foreign bank account as a tax shelter. They initially reported on how they were able to set up an offshore account very easily and cheaply online. When the first story ran, they were contacted by a tax attorney who was concerned that the reporter did not understand the tax implications of what they had done to get the story. It turned out that even though the account was set up only to get information for the story, it never had more than a small amount of money in it, and it was quickly closed after the story ran, the reporter still had to report it on their tax return. The IRS estimate of the time needed to complete the paperwork was 82 hours, and the IRS is well known to underestimate the time needed. I think in the end the reporter had to hire someone with specialized knowledge just to complete all the forms correctly. So, even if no actual tax is owed, just complying with the law can impose a substantial burden on US taxpayers living abroad.

I predict that a consequence of this enhanced IRS enforcement will be a huge increase in the number of US citizens renouncing their citizenship.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[aphid 0]

It will be interesting to see what my son, a practicing attorney, will do as he is the offspring of an American. Allegedly he qualifies for scrutiny under this IRS initiative as well, although I don't think he'd have much success petitioning for an American passport.

He too, doesn't have much patience for bullies.

Thank you for your time.

John

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One more thing. I'm not debating for the sake of debating. I'm worried that the article may lead you to make some bad choices. The Author is a douche-bag. Trying to help a brother out. Be careful. Talk to some tax accountants who deal with dual citizenships or maybe get an attorney who may help you lower fees the IRS may impose. Your wife may owe a lot of back-taxes. At least know your real options before making a decision.

[ChrisL 2]

Anyone know if the reverse is also true?

My wife is a Canadian citizen. she came to the US 12 years ago
with me (I'm a US citizen, lived in BC for 2 years, got married, moved back to the states.

She is now a US citizen and holds dual citizenship and has been working here the entire time, paying US income taxes, but not Canadian taxes.

Does Canada require its citizens living and working in the USA and paying taxes to the US Govt to pay tax to Canada as well?

__

My mighty steed

[GeorgiaDon 340]

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Does Canada require its citizens living and working in the USA and paying taxes to the US Govt to pay tax to Canada as well?

I believe not. The article linked above says that only the US and Eritrea require their citizens to pay tax on entirely foreign income. Also, I recall that once I had no income from Canadian sources I was no longer considered a Canadian resident for purposes of Canadian taxes, and I did not have to file returns in Canada. Even when I did file in Canada (the first couple of years I was in the States) I never had to report my income from non-Canadian sources. I'm a dual citizen, but have had no income or assets in Canada and so haven't filed there in 20 years. However, I'm also not a tax attorney so to be absolutely certain maybe you should ask someone who is.

Don

_____________________________________
Tolerance is the cost we must pay for our adventure in liberty. (Dworkin, 1996)
“Education is not filling a bucket, but lighting a fire.” (Yeats)

[aphid 0]

No. Canada still recognizes the reciprocity agreement for taxation. That, according to my accountant.

ETA: Canada also allows you to work off-shore without ANY tax liability for those specific earnings, provided you live outside the country for more than (est) 185 days annually. A significant reason so many Canadians in the gas/oil industries work large-dollar contract-jobs in the North Sea and the Middle East.

[SivaGanesha 2]

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Just how broke is your country? Being compared to Eritrea is rather unflattering.

http://blogs.vancouversun.com/2011/09/06/obama-asked-to-intervene-in-irs-assault-on-canadian-residents/

Certainly the fact that the US government is broke is part of the picture here. And I'd tend to agree that the 'punishment' here--even the 'reduced' punishment that is being proposed should people come forward 'voluntarily'--is way out of proportion with the 'crime'--and is indeed draconian or, as you put it, bullying.

I'm sure there are a few multimillionaires who are, indeed, tax cheats and have transferred large sums of taxable income--that was earned in the USA--out of the US to foreign bank accounts without paying the appropriate tax. It's hard to have much sympathy for that group. But the vast majority of expats from the USA would be middle class (or lower) on the economic spectrum. These people wouldn't have owed any US tax--had they filed--and they have already paid all Canadian tax due on their income/assets. Seizing from 5% to 25% of these people's hard earned assets does seem way, way out of line.

It is my understanding that Canada has pledged NOT to assist Uncle Sam in collecting the money allegedly due. Since it is, technically speaking, not a tax, the IRS cannot use the tax treaty to force Canada to force Canadian residents to comply. So as long as someone never returns to the US, I think they can just ignore this requirement as a dual citizen and be safe.

However there is another side to this from my perspective. Once again I find myself surprised by the ignorance that some North Americans seem to have about dual citizenship issues. I think it may be a generational thing. I'm 47. I've noticed that North Americans even slightly older than I am have had a very laissez faire attitude about this kind of thing their whole lives and then are genuinely surprised when this sort of thing comes up to bite them.

Whereas anyone in my age group or younger understands that citizenship/residency issues are a serious matter--and, if they have ties in both countries, they make sure that they keep their lives in order in that regard.

This man who wrote this article appears to be in his sixties and clearly hasn't done so. And he's a full, tenured professor at a Canadian university--surely he must be an intelligent person. He claims that he wanted to renounce US citizenship when he became a Canadian citizen in 1986--but the question is why didn't he? There is some bureaucracy involved--you have to go to the consulate and take an oath--but people today who don't want to be a dual citizen deal with these issues--they don't let these things slide. This man appears to have moved to Canada as an intelligent, professional, adult--why didn't he research his responsibilities and take care of them?

Again, the punishment proposed here is way out of proportion to this guy's mistake--but he still clearly made a mistake and the question is why he did so as an intelligent person?

"It's hard to have fun at 4-way unless your whole team gets down to the ground safely to do it again!"--Northern California Skydiving League re USPA Safety Day, March 8, 2014

[tkhayes 123]

When I moved here, I was expected to pay taxes in both Canada and the US regardless of where the money was earned. That is the law in both countries. Fuck that - because the law can only be ENFORCED in one or the other - so people get to choose. Not sure how they expect people to file tax returns if they are simply 'residents' with no SSN's,

They can make all the rules they want - does not mean the rules are enforceable.

Every objective must be measurable, definable and attainable or it is a complete waste of time. These sorts of rules are not actually attainable, nor barely measurable.