# Perm Residents status vs FBAR penalties



## Guest

Hello,

Here is an exerpt;


"You should be aware that US has no direct legal power in Canada to collect taxes here; it cannot seize Canadian property, bank accounts or wages. Only Canada Revenue Agency can collect taxes in Canada. And only Canadian courts can enforce judgements here.

Canadian courts will not enforce US tax claims or judgements because of the longstanding rule that a sovereign state will not collect taxes for the benefit of a foreign state. This was affirmed in a Supreme Court of Canada judgement.

The Canada - US tax treaty has an assistance in collection provision. However, Canada Revenue will not collect US tax or penalties from Canadian citizens (including dual Canada-US citizens or US-born Canadian citizens) unless the tax claim pre-dates their Canadian citizenship. This is reciprocated by US: they will not collect Canadian taxes from US citizens in their country.

Also, Canada will not collect any US bank reporting penalties in Canada. "Thus, FBAR penalties are not collectible under article XXVI A (of the Tax Treaty) because they are not income or capital taxes or taxes imposed under the Code or related penalties." It is unlikely these would be recognized by Canadian courts as well, because "they are penal and thus are not enforceable in Canada."

I think I need a someone with legal knowledge here...but from the above text can I assume that a person residing in Canada with Permanent Resident status is not protected from having CRA dip into there accounts to pay an FBAR penalty...but if you are a Canadian citizen they can't touch you????

Help!


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## Vangrrl

Mach7 said:


> I think I need a someone with legal knowledge here...but from the above text can I assume that a person residing in Canada with Permanent Resident status is not protected from having CRA dip into there accounts to pay an FBAR penalty...but if you are a Canadian citizen they can't touch you????
> 
> Help!


That does seem to be what its saying. But I don't actually think that's the way its applied. 

Collection assistance is designed to prevent people from avoiding an unpaid tax bill by moving across the border. Basically, if you left the US while owing the IRS$50,000, then they can persuade the CRA to collect that for them.

In your case (and I would guess most PRs), you were up-to-date with your US tax obligations while you lived in the US. So you didn't move to Canada to evade taxes. I think it would be highly unlikely that CRA would be moved to collect from you.


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## 416

Mach7 said:


> Hello,
> 
> Here is an exerpt;
> 
> 
> "You should be aware that US has no direct legal power in Canada to collect taxes here; it cannot seize Canadian property, bank accounts or wages. Only Canada Revenue Agency can collect taxes in Canada. And only Canadian courts can enforce judgements here.
> 
> Canadian courts will not enforce US tax claims or judgements because of the longstanding rule that a sovereign state will not collect taxes for the benefit of a foreign state. This was affirmed in a Supreme Court of Canada judgement.
> 
> The Canada - US tax treaty has an assistance in collection provision. However, Canada Revenue will not collect US tax or penalties from Canadian citizens (including dual Canada-US citizens or US-born Canadian citizens) unless the tax claim pre-dates their Canadian citizenship. This is reciprocated by US: they will not collect Canadian taxes from US citizens in their country.
> 
> Also, Canada will not collect any US bank reporting penalties in Canada. "Thus, FBAR penalties are not collectible under article XXVI A (of the Tax Treaty) because they are not income or capital taxes or taxes imposed under the Code or related penalties." It is unlikely these would be recognized by Canadian courts as well, because "they are penal and thus are not enforceable in Canada."
> 
> I think I need a someone with legal knowledge here...but from the above text can I assume that a person residing in Canada with Permanent Resident status is not protected from having CRA dip into there accounts to pay an FBAR penalty...but if you are a Canadian citizen they can't touch you????
> 
> Help!


I'm not a lawyer or accountant, but my lay reading is that the CRA could collect taxes actually owing to the IRS but not FBAR penalties.


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## Vangrrl

416 said:


> I'm not a lawyer or accountant, but my lay reading is that the CRA could collect taxes actually owing to the IRS but not FBAR penalties.


I agree. The paragraph regarding not collecting FBAR penalties makes no mention of citizenship.


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## Pathologic1

*my understanding*

The FBAR penalty would be like any debt owed to a US entity. Basically they cannot collect them from you (unless you have US property or income) in Canada.

If you were not a citizen of Canada and you owe US taxes and penalties associated with taxes the CRA will enforce collection. The CRA will not collect FBAR penalties


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## Guest

Thank you all for the information.

To clarify...I have never worked or paid tax in the US. I have lived in Canada all my life and came to this country under 'landed immigrant' status. I HAVE applied for my Canadian Citizenship but currently hold a PR card.

I most recently filed all my 6 years of back 1040's and FBAR's and am now quietly waiting for the other shoe to drop.

Just looking at my options in case they decide to pounce.


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## The_Animal

Mach7 said:


> Thank you all for the information.
> 
> To clarify...I have never worked or paid tax in the US. I have lived in Canada all my life and came to this country under 'landed immigrant' status. I HAVE applied for my Canadian Citizenship but currently hold a PR card.
> 
> I most recently filed all my 6 years of back 1040's and FBAR's and am now quietly waiting for the other shoe to drop.
> 
> Just looking at my options in case they decide to pounce.


Hey Speedy (Mach7=8575km/hr  )

Yeah...my wife is in the same boat as you are, except that she came to Canada after the age of majority (she's in landed immigrant status) and is studying for her Canadian Citizenship test.  She has to make sure that she does her 1040s, and we're foregoing the FBARs because at no time in the past 11 years did our account go over $10,000 at any given time. 

Renouncing US citizenship seems to be the best way to keep Uncle Sam from sticking his grubby hands in our pockets.


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## Baird68

Mach7 said:


> Hello,
> 
> Here is an exerpt;
> 
> 
> "You should be aware that US has no direct legal power in Canada to collect taxes here; it cannot seize Canadian property, bank accounts or wages. Only Canada Revenue Agency can collect taxes in Canada. And only Canadian courts can enforce judgements here.
> 
> Canadian courts will not enforce US tax claims or judgements because of the longstanding rule that a sovereign state will not collect taxes for the benefit of a foreign state. This was affirmed in a Supreme Court of Canada judgement.
> 
> The Canada - US tax treaty has an assistance in collection provision. However, Canada Revenue will not collect US tax or penalties from Canadian citizens (including dual Canada-US citizens or US-born Canadian citizens) unless the tax claim pre-dates their Canadian citizenship. This is reciprocated by US: they will not collect Canadian taxes from US citizens in their country.
> 
> Also, Canada will not collect any US bank reporting penalties in Canada. "Thus, FBAR penalties are not collectible under article XXVI A (of the Tax Treaty) because they are not income or capital taxes or taxes imposed under the Code or related penalties." It is unlikely these would be recognized by Canadian courts as well, because "they are penal and thus are not enforceable in Canada."
> 
> I think I need a someone with legal knowledge here...but from the above text can I assume that a person residing in Canada with Permanent Resident status is not protected from having CRA dip into there accounts to pay an FBAR penalty...but if you are a Canadian citizen they can't touch you????
> 
> Help!


Yes, that's right. You need to get Canadian citizenship.


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## Guest

Mach7 said:


> Hello,
> 
> Here is an exerpt;
> 
> 
> "You should be aware that US has no direct legal power in Canada to collect taxes here; it cannot seize Canadian property, bank accounts or wages. Only Canada Revenue Agency can collect taxes in Canada. And only Canadian courts can enforce judgements here.
> 
> Canadian courts will not enforce US tax claims or judgements because of the longstanding rule that a sovereign state will not collect taxes for the benefit of a foreign state. This was affirmed in a Supreme Court of Canada judgement.
> 
> The Canada - US tax treaty has an assistance in collection provision. However, Canada Revenue will not collect US tax or penalties from Canadian citizens (including dual Canada-US citizens or US-born Canadian citizens) unless the tax claim pre-dates their Canadian citizenship. This is reciprocated by US: they will not collect Canadian taxes from US citizens in their country.
> 
> Also, Canada will not collect any US bank reporting penalties in Canada. "Thus, FBAR penalties are not collectible under article XXVI A (of the Tax Treaty) because they are not income or capital taxes or taxes imposed under the Code or related penalties." It is unlikely these would be recognized by Canadian courts as well, because "they are penal and thus are not enforceable in Canada."
> 
> I think I need a someone with legal knowledge here...but from the above text can I assume that a person residing in Canada with Permanent Resident status is not protected from having CRA dip into there accounts to pay an FBAR penalty...but if you are a Canadian citizen they can't touch you????
> 
> Help!


That's very interesting information, I will have to look into whether similar collection rules apply to Belgian citizens in Belgium. Thank You.

I don't mean to sound the alarm though, but what is the chance of the US looking to impose a new tax treaty with the FBAR in mind? How often are these treaties updated? Anyone know?


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## Guest

Hey Speedy (Mach7=8575km/hr )

Yeah...my wife is in the same boat as you are, except that she came to Canada after the age of majority (she's in landed immigrant status) and is studying for her Canadian Citizenship test. She has to make sure that she does her 1040s, and we're foregoing the FBARs because at no time in the past 11 years did our account go over $10,000 at any given time. 

Renouncing US citizenship seems to be the best way to keep Uncle Sam from sticking his grubby hands in our pockets.

That is all fine and good. But with respect to the FBARs if you have more than one account, and they add up to over the aggregate value of 10k, you must list both accounts. Also if she has signing authority on any of your accounts over the 10k value, you must include those as well.

If you read the fine print on the T-9-22.1 form, it gives and example of an individual who has two accounts, one with $5000 and the other with $5100. (In this case one would assume that each account is under the limit and therefore does not need to be reported). The text continues to say that if the accounts added together exceed the 10k limit, then both accounts must be reported on the form.

I have reported all my accounts, even the ones that have 11 dollar balance.

As for my Canadian Citizenship, still waiting but they say it could take up to 9mos to get....in the meantime a tax lawyer has advised me that the IRS would not be able to take FBAR penalties from a Permanent Resident, but can take tax owed as collected by CRA.

Renouncing ones citizenship is not an option unless you want to fork over the exit tax.


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## Vangrrl

I really think if they decide to "pounce", for logistical and economic reasons, they will do it based on residency and not citizenship. A green card holder in the US is a lower hanging fruit than a US citizen living legally in Canada. 

I know its hard not to worry, but PR or Canadian citizen - I think we're all in the same boat. If the IRS really lets it get to the point where we need the Canadian government to protect us, this will be a huge diplomatic row.


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## 416

Mach7 said:


> Renouncing ones citizenship is not an option unless you want to fork over the exit tax.


The exit tax may or may not apply - there's a good summary at renunciationguide.com.


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## Cafreeb12

416 said:


> The exit tax may or may not apply - there's a good summary at renunciationguide.com.


In general if your foreign assets are under two million it usually doesn't apply but, there are tax rules by year too so that site is a good guide to go by as to whether or not you will have to pay exit tax. 

In some places this is a ridiculous measure as for instance property values in places like Vancouver are really high. You are considered to have liquidated all your assets on the day you "exit" so someone living in an area where their property would be worth a high amount could easily go over the exit tax requirement even if when they bought the property it wasn't worth nearly as much. This too is disproportionate but, then nothing about these laws seems measured and fair.


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## Mona Lisa76

Vangrrl said:


> I really think if they decide to "pounce", for logistical and economic reasons, they will do it based on residency and not citizenship. A green card holder in the US is a lower hanging fruit than a US citizen living legally in Canada.
> 
> I know its hard not to worry, but PR or Canadian citizen - I think we're all in the same boat. If the IRS really lets it get to the point where we need the Canadian government to protect us, this will be a huge diplomatic row.


I tend to agree. Far easier for them to go after US residents (including immigrants and green card holders) hiding or failing to disclose their foreign accounts than to go after legitimate expats and accidental Americans. It would also cause diplomatic rows in the UK with its large US expat population of around 300,000...plus, I'm optimistic that Boris Johnson would be outspokenly supportive if things become ugly.

No one has heard of any longterm expats getting clobbered for merely failing to file fbars. Taxes are another mstter because hmrc will exchange information and collect for the irs but really doubt they'd want to be enforcing draconian fbar penalties especially when failure to file was unintentional. I believe it would also be an affront to UK banking privacy laws. I do, however, believe that are going to go along with fatca which is why I concluded I'd better sort it out and make an honest complete disclosure, and move everything into an investment portfolio which will produce annual 1099s. 

I really believe that if they were hammering quiet disclosures word would have been leaking out by now. My accountant and IFA have both explained that they haven't heard of a single quiet disclosure being hit with the fbar fines, except where there has been blatent evasion going on. The London office of the IRS has also told them that they expect compliance but are really mainly going after big fish, which I take to mean multi-millionaires. With their limited resources they have to use the bogeyman to terrify the peasants into compliance...certainly worked for me to get me to wave my hand!


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## Cafreeb12

Mona Lisa76 said:


> I tend to agree. Far easier for them to go after US residents (including immigrants and green card holders) hiding or failing to disclose their foreign accounts than to go after legitimate expats and accidental Americans. It would also cause diplomatic rows in the UK with its large US expat population of around 300,000...plus, I'm optimistic that Boris Johnson would be outspokenly supportive if things become ugly.
> 
> No one has heard of any longterm expats getting clobbered for merely failing to file fbars. Taxes are another mstter because hmrc will exchange information and collect for the irs but really doubt they'd want to be enforcing draconian fbar penalties especially when failure to file was unintentional. I believe it would also be an affront to UK banking privacy laws. I do, however, believe that are going to go along with fatca which is why I concluded I'd better sort it out and make an honest complete disclosure, and move everything into an investment portfolio which will produce annual 1099s.
> 
> I really believe that if they were hammering quiet disclosures word would have been leaking out by now. My accountant and IFA have both explained that they haven't heard of a single quiet disclosure being hit with the fbar fines, except where there has been blatent evasion going on. The London office of the IRS has also told them that they expect compliance but are really mainly going after big fish, which I take to mean multi-millionaires. With their limited resources they have to use the bogeyman to terrify the peasants into compliance...certainly worked for me to get me to wave my hand!


Actually, ACA does have accounts of people getting clobbered on FBARS as do some of the law blogs out there. I was just reading one today. Your accountant might not have heard of it but, that does not mean the law as it is written will not be applied. 

I'd love for the London office of the IRS to make a public statement such as the one above. If they do not intend to clobber families on FBAR then they certainly have the legal right to do so and the fear they have caused is immoral as well as heinous when if they did not intend to act upon it. I have no faith whatsoever in someone who would use that sort of fear on innocent families and citizens.

Mach 7 as the law is now you are responsible for FBAR penalties should they decide to impose them. I'm not entirely sure they are allowed by law to totally excuse those fines should they decide you are in willful non compliance. You have to prove to them your not filing FBARS was not "willful"


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## Mona Lisa76

Cafreeb, I'll have another look at the ACA site.


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## ajohnson

*FBAR penalties*

Please don't interpret my post as defending the IRS or US policy regarding FBAR or tax penalties, however.....

The US (IRS included) can be very imposing on foreign governments and institutions (eg, banks) when it decides to do so.

Just look at the case of the Swiss banks which were supposed to be protected by the Swiss constitution, the Swiss Supreme court and the tax treaty with the US. The investors were given assurance of absolute privacy.

Then the US threatened to liquidate (ie, sieze) the US holdings of Swiss banks if the demands of the IRS weren't met. Needless to say the Swiss government backed down. Last I heard the Swiss government was even offering to pay the US $10 billion just to move on.


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## Guest

_Mach 7 as the law is now you are responsible for FBAR penalties should they decide to impose them. I'm not entirely sure they are allowed by law to totally excuse those fines should they decide you are in willful non compliance. You have to prove to them your not filing FBARS was not "willful"_

I fully understand the "willfu"l and "non-will"penalty structure. But I am talking about "non-willfull penalties" here.

For a lot of us...living in canada all our lives (less being born in the states) is a "reasonable cause".

If the IRS would like to take me to task on that, then I will be asking why I was never sent an "advisory" of any sort??

I have never tried to hide from them...in fact I have a US passport.

I also blame the Canadian government for not allowing me...or should I say...give me the knowledge to comply under the US-Canada tax treaty. 

CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!

Could they not have included some fine print saying "all US persons must file a duplicate 1040 form to comply with the IRS"????

Does anyone hear me???


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## Cafreeb12

Mach7 said:


> _Mach 7 as the law is now you are responsible for FBAR penalties should they decide to impose them. I'm not entirely sure they are allowed by law to totally excuse those fines should they decide you are in willful non compliance. You have to prove to them your not filing FBARS was not "willful"_
> 
> I fully understand the "willfu"l and "non-will"penalty structure. But I am talking about "non-willfull penalties" here.
> 
> For a lot of us...living in canada all our lives (less being born in the states) is a "reasonable cause".
> 
> If the IRS would like to take me to task on that, then I will be asking why I was never sent an "advisory" of any sort??
> 
> I have never tried to hide from them...in fact I have a US passport.
> 
> I also blame the Canadian government for not allowing me...or should I say...give me the knowledge to comply under the US-Canada tax treaty.
> 
> CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!
> 
> Could they not have included some fine print saying "all US persons must file a duplicate 1040 form to comply with the IRS"????
> 
> Does anyone hear me???


That is an interesting point about CRA. I had noticed it too. I thought they WERE sharing info already but, I was claimed as a dependent here and had contacted the IRS with regard to my obligations several times. I was NEVER told about FBAR at all not even by the IRS!! Ever, not once. I called them so they can hardly say it was "willful" but, who knows. Others in OVDI have had problems on this issue. 

I think many people hear you. U.S. press have been directed to this site to read our stories which have caused no end of stress, worry, renouncing and on and on which is one reason I am so adamant because no one there has done anything in the press except laud and applaud this "Hire" legislation. We have ZERO representation. Our only representative is Obama and he's passed this without saying anything further. Levin does not respond at all so who represents us with regard to reasonable amendments. 

I will send a letter "explaining" my "non willful" intent with regard to the FBAR requirements but, it does assume you guilty and you have to prove otherwise. One would think they will not bother with us but, they haven't changed the law which says they can fine us and are supposed to fine us. Until that's amended we haven't got a leg to stand on with pats on the head and promises.


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## pwdunn

Cafreeb12 said:


> I will send a letter "explaining" my "non willful" intent with regard to the FBAR requirements but, it does assume you guilty and you have to prove otherwise. One would think they will not bother with us but, they haven't changed the law which says they can fine us and are supposed to fine us. Until that's amended we haven't got a leg to stand on with pats on the head and promises.


It is an interesting question to ponder whether the "wilful" position is not better since if it is wilful then the failure to file would be protected under the Fifth Amendment, for wilful failure to file is a felony. The interesting thing about the 5th is that it protects one from incriminating oneself. If by filing an FBAR, particularly late FBARs, one is admitting to committing a prior crime, i.e., to file on time. But if the failure is wilful--i.e., a crime--then one may safely not file at all on Fifth Amendment grounds.


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## Mona Lisa76

I agree it's very scary having to live with all this uncertainty. What makes it even more maddening is how my family back in the US and even my spouse believe I'm going around the twist. They're sorry for me that I've had to pay a five figure sum of taxes but refuse to believe the possibility of being clobbered with the fbar fines because they are so Orwellian.
They all think I'm being hysterical due to menopause, etc. 

For everyones' sakes, I try to bear up and be positive but I'm just as scared as Cafreeb here.

Nevertheless, when I looked more closely at the ACA site, it appears that the bulk of the unfair fbar penalties were linked up with partipants in the 2009 ovdp and 2011 ovdi official voluntary 'amnesties'.

The one guy in Denmark who appears to have been hit during a quiet disclosure appears to have already been on the IRS's radar though. There may be more to the story. The others were relatively wealthy. Maybe not big fish, but certainly larger than minnows!


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## Guest

Carefreeb12,

You have to remember one important fact about OVDI. OVDI is for someone who is willfull and evading taxes...you are not.

If you go into the OVDI program, you are admitting to them that you have something to hide and you want ammnesty from criminal prosecution.

Anyone who is innocent should NEVER go into this program.


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## AmTaker

PetrosResearch said:


> It is an interesting question to ponder whether the "wilful" position is not better since if it is wilful then the failure to file would be protected under the Fifth Amendment, for wilful failure to file is a felony. The interesting thing about the 5th is that it protects one from incriminating oneself. If by filing an FBAR, particularly late FBARs, one is admitting to committing a prior crime, i.e., to file on time. But if the failure is wilful--i.e., a crime--then one may safely not file at all on Fifth Amendment grounds.


Even assuming this argument is correct (and I'm sure a constitutional law/criminal tax law expert could poke holes in it), this doesn't protect one against willful civil FBAR penalties. And those are extremely severe.


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## Mona Lisa76

Mach7 said:


> Carefreeb12,
> 
> You have to remember one important fact about OVDI. OVDI is for someone who is willfull and evading taxes...you are not.
> 
> If you go into the OVDI program, you are admitting to them that you have something to hide and you want ammnesty from criminal prosecution.
> 
> Anyone who is innocent should NEVER go into this program.


Which was exactly why I did all I could to stay out of it! But to be fair, I'm convinced that many were effectively lured into it by their accountants, including the likes of Greenback who advertised the ovdi as a seemingly benign amnesty to get expats back into the system. I feel they will have a lot to answer for! All I can say is how grateful I am to have found a preparer who was already familiar and confident with other forms of disclosure. Though it will have cost me at least half a year's takehome pay, I'm just relieved I invested in a specialized accountant instead of going directly to the IRS, which could have wiped me out completely!!

What I hate about this is how it was effectively entrapment for the unwary.


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## AmTaker

Mach7 said:


> Carefreeb12,
> 
> You have to remember one important fact about OVDI. OVDI is for someone who is willfull and evading taxes...you are not.
> 
> If you go into the OVDI program, you are admitting to them that you have something to hide and you want ammnesty from criminal prosecution.
> 
> Anyone who is innocent should NEVER go into this program.


Well, OVDI is over so this is all moot. But you could say exactly the same thing for any form of voluntary disclosure, quiet or not, since in general any form of complete VD essentially would grant immunity (implicitly) against criminal prosecution.


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## Guest

I will say this. I DO NOT SUPPORT tax evaders or someone who is trying to bilk the government (ANY) out of tax whether it be income or investment.

I WILL say that I will support anyone who is fined or penalized for a NON-WILLFULL Fbar penalty.

If IF it comes to that...i think we should band together and apply a class action law suit against the US government.

Can you imagine the force we will have if we can represent ourselves with one voice??

Having said that i shall degress.......

Please remember that there are always two side to every story. I have seen the media enhance situations of individuals in Canada that have written the IRS checks for 30 or 40 grand just to become compliant. 

When I saw this story about the guy in Kelowna, I freaked as I assumed they were innocent. Who knows right?? maybe they had something to hide. 

He seemed awful calm and cool for someone that was giving someone money for no apparent reason....also he didn't live in a trailer park. (no offense to anyone living in a park...)

Remember, what makes a good story?? to feel sorry for someone who paid the US government for doing nothing....or for fessing up to having enjoyed tax free money for the better part of 10 or 20 years.

Don't be fooled until you know both sides. Although this whole situation pisses me off....I really honestly think that the Americans are targeting people that have something to hide. Anyone with a shred of innocence is not going to freak out like we are.

I will even go so far as to say that even if I am in the clear of all of this...I will still pledge money toward a lawsuit to helping anyone who has been innocently drawn into this mess as I have.

I know words are cheap...but when the S***t hits the fan, there will be no need for anninimity. I say let us take a stand when the time comes.


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## Arlington

Mach7 said:


> CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!


I have no recollection of ever giving my place of birth on a Canadian tax return.


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## pwdunn

Mach7 said:


> I will even go so far as to say that even if I am in the clear of all of this...I will still pledge money toward a lawsuit to helping anyone who has been innocently drawn into this mess as I have.
> 
> I know words are cheap...but when the S***t hits the fan, there will be no need for anninimity. I say let us take a stand when the time comes.


Phil Hodgen's blog has a number of legal minds who comment, some of whom believe that the FBAR is a just awaiting a lawsuit to test its constitutionality. In my view, FBAR cannot apply in most cases because it violates too many constitutional rights: 4th (security of papers), 5th (self-incrimination), 6th (venue, jury of peers for non-US residents), 8th (excessive fines), 9th (kitchen sink).


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## Mona Lisa76

Mach7 said:


> _Mach 7 as the law is now you are responsible for FBAR penalties should they decide to impose them. I'm not entirely sure they are allowed by law to totally excuse those fines should they decide you are in willful non compliance. You have to prove to them your not filing FBARS was not "willful"_
> 
> I fully understand the "willfu"l and "non-will"penalty structure. But I am talking about "non-willfull penalties" here.
> 
> For a lot of us...living in canada all our lives (less being born in the states) is a "reasonable cause".
> 
> If the IRS would like to take me to task on that, then I will be asking why I was never sent an "advisory" of any sort??
> 
> I have never tried to hide from them...in fact I have a US passport.
> 
> I also blame the Canadian government for not allowing me...or should I say...give me the knowledge to comply under the US-Canada tax treaty.
> 
> CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!
> 
> Could they not have included some fine print saying "all US persons must file a duplicate 1040 form to comply with the IRS"????
> 
> Does anyone hear me???


I definitely agree that all foreign governments who agree to changing their privacy laws to thus allow fatca to report on US citizens should also make a point of putting extra reminders to US persons on their tax return forms....ditto all complying banks and brokerages, insurance, pension plans, etc.

Had I known all this sixteen years ago, I wouldn't have complicated my life by investing in British mutual funds, insurance plans and personal pensions, all of which are 'pfics' and thus tax traps for me as a USC...I had quite reasonably assumed that as also a British citizen settled in England that I could consider myself British and invest like they do. Hadn't realised about all the double standards which protect UK citizens from US taxation but has get out clauses thus making the uk/us tax treaty practically worthless to US expats in Britain....even my UK citizenship will not give me any protection from all this American exceptionalism.


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## AmTaker

PetrosResearch said:


> Phil Hodgen's blog has a number of legal minds who comment, some of whom believe that the FBAR is a just awaiting a lawsuit to test its constitutionality. In my view, FBAR cannot apply in most cases because it violates too many constitutional rights: 4th (security of papers), 5th (self-incrimination), 6th (venue, jury of peers for non-US residents), 8th (excessive fines), 9th (kitchen sink).


I haven't read his blog comments, but I remember his saying that the IRS Commissioner would burst his gut laughing if one launched a constitutional argument against the statute. [ Well, the excessive fines one might hold if they went to 100% penalties]

In any case, the main point I was making is that its not 'better' to be willful as you imply because it leaves you open to massive willful penalties.


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## Mona Lisa76

I hope that if this forum draws enough attention that it might make a difference. But I can't help fearing that we're like the Palestinians throwing stones at the Israeli tanks...while I'd love to think they'll see the folly of their ways, I fear they may instead get so enraged by our defiance that they'll want to shoot all the jaywalkers just to prove they can!! I especially fear that to overtly renounce shortly after a delinquent disclosure could feed them extra ammunition to single those people out.

I hate to say it but it has crossed my mind...


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## pwdunn

AmTaker said:


> I haven't read his blog comments, but I remember his saying that the IRS Commissioner would burst his gut laughing if one launched a constitutional argument against the statute. [ Well, the excessive fines one might hold if they went to 100% penalties]
> 
> In any case, the main point I was making is that its not 'better' to be willful as you imply because it leaves you open to massive willful penalties.


This is the colossal miscalculation of the FBAR law: if indeed the consequences are criminal for wilful violation, then the defendant is protected by the 5th amendment; but the 5th does not protect anyone from civil penalties. By threatening with imprisonment and excessive fines, the law should become useless from the point of view of person's rights. For it requires self disclosure of a crime committed (provided only that the person is late in doing so). Sure, the fines and penalties are more severe, but that is all the more reason that I have the right not to cooperate with the IRS, since they have repeatedly indicated their intention of criminalizing my behaviour. I think therefore that all those being scared into filing late-FBARs now have a perfect constitutional reason not to do so.


----------



## Cafreeb12

PetrosResearch said:


> This is the colossal miscalculation of the FBAR law: if indeed the consequences are criminal for wilful violation, then the defendant is protected by the 5th amendment; but the 5th does not protect anyone from civil penalties. By threatening with imprisonment and excessive fines, the law should become useless from the point of view of person's rights. For it requires self disclosure of a crime committed (provided only that the person is late in doing so). Sure, the fines and penalties are more severe, but that is all the more reason that I have the right not to cooperate with the IRS, since they have repeatedly indicated their intention of criminalizing my behaviour. I think therefore that all those being scared into filing late-FBARs now have a perfect constitutional reason not to do so.


Well, I am seriously considering not filing the one I am already late to file. Number one I never did have any access to those funds whatsoever, number two filing it is me admitting I did something wrong which I did not, and number three I'm not sure given the fact that all five of my back tax forms are filled with ZEROS they will care or bother about it. That doesn't mean I'm not going to file it, I'm considering not doing it as the penalty is bad no matter what I do. And it's not my money! 

I think drawing attention to what is happening to innocent people is a GOOD thing. it gets the public opinion on our side which is how change occurs no matter what and if it does not happen in this case Levin and Obama can be at least held accountable for the consequences in the court of public opinion. I'm not going to end up giving up my citizenship and say nothing about why that happened or how. After all I'm going to be judged for it in certain cases for the rest of my life. Might as well speak up. There is a reason the press has got more interested in this as a human interest story and that is because it is an injustice that we are all paying for. I hope Carl Levin answers my emails soon. I would hate to have to report on Huffpo that he didn't respond.


----------



## Mona Lisa76

I admire your outspokeness. I just hope you're right that speaking out for this tyranny can make a difference! I believe that if it does get really bad that there will be court cases counter-challenging the IRS and DOJ. It will be fascinating to see how it all pans out. But it's for these very reasons why I believe they'll leave most of us alone who came forward in good faith before being discovered first.


----------



## pwdunn

AmTaker said:


> I haven't read his blog comments, but I remember his saying that the IRS Commissioner would burst his gut laughing if one launched a constitutional argument against the statute. [ Well, the excessive fines one might hold if they went to 100% penalties]
> 
> In any case, the main point I was making is that its not 'better' to be willful as you imply because it leaves you open to massive willful penalties.


Phil Hodgen has indeed warned against fighting the constitutionality of FBAR, not because a case can't be won, but because the fight is beyond the resources of most. See this post, where he says it will require a couple million bucks (to start with).


----------



## Mona Lisa76

PetrosResearch said:


> Phil Hodgen has indeed warned against fighting the constitutionality of FBAR, not because a case can't be won, but because the fight is beyond the resources of most. See this post, where he says it will require a couple million bucks (to start with).


Which is yet another example of how the rich will always be more 'equal' than the rest of us, unless Harvard Law School wanted to take it on!

Me, being a 'little person' determined I'd thus need to be pragmatic and cow my head...:'( But let's hope that collectively we can make a difference!


----------



## Cafreeb12

Mona Lisa76 said:


> I admire your outspokeness. I just hope you're right that speaking out for this tyranny can make a difference! I believe that if it does get really bad that there will be court cases counter-challenging the IRS and DOJ. It will be fascinating to see how it all pans out. But it's for these very reasons why I believe they'll leave most of us alone who came forward in good faith before being discovered first.


I come from a long line of American activists. My great grandmother was a suffragist who was beaten when she marched for women's right to vote during Alice Paul's western campaign. My grandfather was a Woody Guthrie democrat darn near a wobbly who told me many stories about the "Green Corn Rebellion", my mother worked for the civil rights movement in Memphis and we lived there when Dr. King was shot..I grew up in the shadow of these people and speaking out to me is a responsibility I take VERY seriously as an obligation. I don't know any OTHER way. lol.


----------



## pwdunn

While you guys are fretting about your FBAR penalties, Jon Corzine, former democrat governor of New Jersey, is still walking around free after stealing and then losing hundreds of millions of his private customers' cash. Just so you guys know, this is standard for the corrupt government of the United States of America. They bail out the bankters but expect the little Canadians to pay up. Aren't you sick of this? Why would you co-operate with this government which steals from the little guy to help out the most corrupt people in the world? I for one and going to stand up for my rights.


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## Guest

Mach7 said:


> CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!


I think you are very wrong.

I just checked my copy of my tax return to CRA for 2010. Nowhere on that form does it ask me where I was born. Nor does it ask me if I am or ever have been a US citizen. It does ask me if I'm a Canadian citizen, but only in the Elections Canada box for purposes of establishing whether I agree for CRA to provide my name and residential address to Elections Canada so I'll automatically be on the voter's list. I can opt NOT for them to do that.

Go to the CRA website and search the word "citizen." I doesn't appear there in any tax instructions. Taxation in Canada has nothing to do with your birthplace or your citizenship. It has everything to do, and only to do, with where you live and whether you earned income in or from Canada.

CRA doesn't know nor care where you were born or what your citizenship is, as far as I can tell. At least not on the T1 Special which is what I have always used (as a salaried employee and then pensioner all my life, my taxes in Canada are ridiculously simple, if only because I don't qualify for very many deductions or exemptions). Maybe it's different on the more complex forms that I don't use, but I find it hard to imagine they'd ask for birthplace or citizenship on one set of forms and not on another.

Please calm down and get your facts straight. It's the US that has this fixation on citizenship and birthplace, not Canada nor very many other countries on the planet.

These issues are upsetting and disturbing enough, without people adding mis-information to the flames.


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## Guest

Arlington said:


> I have no recollection of ever giving my place of birth on a Canadian tax return.


You have no such recollection for the very simple reason that you never have given, nor had to give, your place of birth on a Canadian tax return. Nor have I. Believe me, I'd remember and would have raised merry hell about it if it had happened. See my earlier post on this thread.


----------



## Guest

CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!

You are correct...I was wrong and apologize for that comment. I seriously thought it was the CRA form we listed our place of birth.

But now I remember it is an Aviation medical form.....(nothing to do with this).

Sorry again folks.


----------



## Cafreeb12

Mach7 said:


> CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!
> 
> You are correct...I was wrong and apologize for that comment. I seriously thought it was the CRA form we listed our place of birth.
> 
> But now I remember it is an Aviation medical form.....(nothing to do with this).
> 
> Sorry again folks.


Well, in the sea of information and the onslaught of this situation it's easy to get confused at times.


----------



## Guest

Mach7 said:


> CRA KNOWS you are a citizen of the United States because they ask you your place of birth on every f***ing income tax form you have filled out!
> 
> You are correct...I was wrong and apologize for that comment. I seriously thought it was the CRA form we listed our place of birth.
> 
> But now I remember it is an Aviation medical form.....(nothing to do with this).
> 
> Sorry again folks.


No problem. I know very well how upsetting and infuriating this is, for all of us, though for different reasons for some of us. I can imagine how un-nerving this must be for landed immigrants (because the exemption from collection in Canada under the tax treaty is specific to citizens of Canada, not landed immigrants or visitors). It is as infuriating, if not more so, for former-US Canadian citizens who have been Canadian citizens for 35-40 years, who do NOT consider themselves to be US citizens, do NOT WANT to be US citizens, and believed there ARE NOT US citizens by virtue of having become Canadians with the intent to relinquish their citizenship, only to be told by some US storm-trooper at State or IRS that because they didn't know about "Certificate of Loss of Nationality" 35-40 years ago nor how to get one, and hence don't have one, they have to file tax returns to a foreign country they left decades ago and to which they owe absolutely no loyalty nor allegiance, or pay a draconian "exit tax" in order to get a $450 piece of paper that 35 years ago would have cost them literally the price of a postage stamp and an envelope, no tax returns required. 

I can draw parallels here to Nazi Germany, Soviet Russia and other unsavoury situations ... but I'll spare you that (having just dropped the suggestion )

The US slogan "Don't Tread on Me" cuts several ways. The US would do well to remember this.


----------



## Guest

I think that the CRA will not collect FBAR penalties is also extended to landed immigrants and Permanent residents...according to some of my lawyer friends.

Nonetheless, I started down the path of Canadian citizenship some time ago and looks as though it should be a reality in a couple of months.

By the time the US figures out who and what they are going to attach penalties to (if they do) I should have already been a Canadian citizen for quite some time.


----------



## Guest

ajohnson said:


> Please don't interpret my post as defending the IRS or US policy regarding FBAR or tax penalties, however.....
> 
> The US (IRS included) can be very imposing on foreign governments and institutions (eg, banks) when it decides to do so.
> 
> Just look at the case of the Swiss banks which were supposed to be protected by the Swiss constitution, the Swiss Supreme court and the tax treaty with the US. The investors were given assurance of absolute privacy.
> 
> Then the US threatened to liquidate (ie, sieze) the US holdings of Swiss banks if the demands of the IRS weren't met. Needless to say the Swiss government backed down. Last I heard the Swiss government was even offering to pay the US $10 billion just to move on.


Welcome ajohnson - I think that is why many of us cannot trust what the future will bring. There may or may not be folks getting clobbered by FBAR fines so far but if the US gov/IRS can inflict FATCA as it looks like it will, who knows what is next?


----------



## Guest

Cafreeb12 said:


> Well, I am seriously considering not filing the one I am already late to file. Number one I never did have any access to those funds whatsoever, number two filing it is me admitting I did something wrong which I did not, and number three I'm not sure given the fact that all five of my back tax forms are filled with ZEROS they will care or bother about it. That doesn't mean I'm not going to file it, I'm considering not doing it as the penalty is bad no matter what I do. And it's not my money!
> 
> I think drawing attention to what is happening to innocent people is a GOOD thing. it gets the public opinion on our side which is how change occurs no matter what and if it does not happen in this case Levin and Obama can be at least held accountable for the consequences in the court of public opinion. I'm not going to end up giving up my citizenship and say nothing about why that happened or how. After all I'm going to be judged for it in certain cases for the rest of my life. Might as well speak up. There is a reason the press has got more interested in this as a human interest story and that is because it is an injustice that we are all paying for. I hope Carl Levin answers my emails soon. I would hate to have to report on Huffpo that he didn't respond.


I like everything you are saying here. While I dislike everything about FBAR, I don't see how filing the form is admitting something wrong has been done. That would be the case if one entered OVDI but simply filing the form is taking care of what is required. And, if they are true to their word, if no tax is owing, no penalties for FBARs will be assessed.


----------



## Guest

Mona Lisa76 said:


> I especially fear that to overtly renounce shortly after a delinquent disclosure could feed them extra ammunition to single those people out.
> 
> I hate to say it but it has crossed my mind...


I don't quite get what you are saying. Do you mean that if many renounce after filing late, they will make a point of making cases against others who do the same in the future?


----------



## Cafreeb12

nobledreamer said:


> I like everything you are saying here. While I dislike everything about FBAR, I don't see how filing the form is admitting something wrong has been done. That would be the case if one entered OVDI but simply filing the form is taking care of what is required. And, if they are true to their word, if no tax is owing, no penalties for FBARs will be assessed.


What I mean is I am filing it late as if it's my money. By filing it, I'm saying they their requirement for me to have to file on a foreign persons income is right, and I am wrong to be late which morally is wrong even if it is the law. 

I would love for this law to be amended. I fully agree they probably won't access any fine on me even though I am this late but, legally they can. Until that is amended to a more reasonable requirement I don't feel safe in this situation. I know you have been through this so many times in your own mind too. Fear etc. That's another problem I have with this is basically the deliberate use of fear against people who did nothing wrong really at all. 

The new form next year seems to want our houses listed in many cases or their worth on paper at least. My husbands been doing some reading about it today.


----------



## Guest

Folks...i started this thread and I still don't think I have a solid answer.

Will CRA collect FBAR fines if you are a permanent resident in Canada?.

I understand that they can collect tax owing....but what about a penalty levied? Do only Canadian citizens get a let on the collection?

I have done numerous google searches...but come up with two yes's and two no's all the time...no definite direction.


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## pwdunn

Mach7 said:


> Folks...i started this thread and I still don't think I have a solid answer.
> 
> Will CRA collect FBAR fines if you are a permanent resident in Canada?.
> 
> I understand that they can collect tax owing....but what about a penalty levied? Do only Canadian citizens get a let on the collection?
> 
> I have done numerous google searches...but come up with two yes's and two no's all the time...no definite direction.


FBAR fines are not tax. They fall under civil or criminal penalties but not the tax code. The government of Canada has explicitly said that they will not collect FBAR penalties from anyone, whether US citizen or not. This is what they have said.


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## pwdunn

Indeed, I should add further that FBAR penalties cannot be determined in a tax court, but are tried in regular criminal or civil court.

This is why the vast majority of the people don't have to do anything because the government of the US can't afford to take everyone to court, and so they will only go after the big fish, except of course, the volunteers.


----------



## AmTaker

PetrosResearch said:


> Phil Hodgen has indeed warned against fighting the constitutionality of FBAR, not because a case can't be won, but because the fight is beyond the resources of most. See this post, where he says it will require a couple million bucks (to start with).


Except the excessive fines argument (which is really only applicable to the large civil penalties), I doubt very much a constitutional argument would succeed, since all types of constitutional arguments have been made against the US tax code (and yes, I know the FBAR is not a tax doc) and they all fail each time. I remember back when I was in college in the US, there was one guy who insisted the tax code was unconstitutional, and he kept reiterating that for many years. He eventually ended up in jail for 3 years or so and my guess is that he was bankrupted by civil penalties as well. 

It doesn't matter what you or I think -- US courts decide what is constitutional and they have upheld practically every part of the tax code on constitutional grounds for 100 years.


----------



## pwdunn

PetrosResearch said:


> Indeed, I should add further that FBAR penalties cannot be determined in a tax court, but are tried in regular criminal or civil court.
> 
> This is why the vast majority of the people don't have to do anything because the government of the US can't afford to take everyone to court, and so they will only go after the big fish, except of course, the volunteers.


I'm not a lawyer so I am looking this up. The fact is that it is very complicated. The Williams case for example had a separate tax trial and FBAR, because one is under the tax code and the other is under the criminal code. I just read this article, but it shows that there are no easier answers to the question I'm asking about: http://www.aca.ch/joomla/images/pdfs/sheppar3.pdf


----------



## pwdunn

AmTaker said:


> Except the excessive fines argument (which is really only applicable to the large civil penalties), I doubt very much a constitutional argument would succeed, since all types of constitutional arguments have been made against the US tax code (and yes, I know the FBAR is not a tax doc) and they all fail each time. I remember back when I was in college in the US, there was one guy who insisted the tax code was unconstitutional, and he kept reiterating that for many years. He eventually ended up in jail for 3 years or so and my guess is that he was bankrupted by civil penalties as well.
> 
> It doesn't matter what you or I think -- US courts decide what is constitutional and they have upheld practically every part of the tax code on constitutional grounds for 100 years.


This is not part of the tax code but the criminal code, under the Bank Secrecy Act. And frankly, it does matter what I think and who I can convince, and so I am not daunted by your view that it only matters what the courts decide. The fact is that the People institute government, and it only takes enough angry people to go to war against the government and the courts.


----------



## pwdunn

PetrosResearch said:


> Indeed, I should add further that FBAR penalties cannot be determined in a tax court, but are tried in regular criminal or civil court.
> 
> This is why the vast majority of the people don't have to do anything because the government of the US can't afford to take everyone to court, and so they will only go after the big fish, except of course, the volunteers.


I think from my investigations that I found the following: The IRS can assess civil penalties. But we know that they cannot collect civil penalties in Canada; if you have assets in the US, that's another issue.

Criminal FBAR cases must be referred to the DOJ (Department of Justice) to determine if they will take them to indictment.

But as I said, I'm not a lawyer. See this article: FBar Enforcement Article


----------



## Guest

Cafreeb12 said:


> What I mean is I am filing it late as if it's my money. By filing it, I'm saying they their requirement for me to have to file on a foreign persons income is right, and I am wrong to be late which morally is wrong even if it is the law.
> 
> I would love for this law to be amended. I fully agree they probably won't access any fine on me even though I am this late but, legally they can. Until that is amended to a more reasonable requirement I don't feel safe in this situation. I know you have been through this so many times in your own mind too. Fear etc. That's another problem I have with this is basically the deliberate use of fear against people who did nothing wrong really at all.
> 
> The new form next year seems to want our houses listed in many cases or their worth on paper at least. My husbands been doing some reading about it today.


Oh, now I see what you mean. 

I would too. But I am not holding my breath.

If you are referring to Form 8938, I do not see anything that refers to listing our houses. It is FBAR stuff plus stocks and other types of investments. Plus, the reporting threshold that I think applies to us, is not the aggregate amount of accounts of $50,000. I recall this amount being mentioned in various places however, it seems to refer to "specified persons" in various situations, residing in the US. See if this fits you:

(from the draft version of i8938 - page two, middle column)

Determining the Reporting Threshold That Applies to You

*Taxpayers living abroad*

If you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or are present in a foreign country or countries at least 330 full days during any period of 12 consecutive months ending in the tax year, you satisfy the reporting threshold if you are not filing a joint return and the value of your foreign financial assets is more than $200,000 on the last day of the tax year or more than $400,000 at any time during the tax year.

I seem to recall that the house value may come up on form 8854 ( we have to file with our last 1040, after renouncing )and will look later.

We need Peg! :wink:


----------



## Cafreeb12

nobledreamer said:


> Oh, now I see what you mean.
> 
> I would too. But I am not holding my breath.
> 
> If you are referring to Form 8938, I do not see anything that refers to listing our houses. It is FBAR stuff plus stocks and other types of investments. Plus, the reporting threshold that I think applies to us, is not the aggregate amount of accounts of $50,000. I recall this amount being mentioned in various places however, it seems to refer to "specified persons" in various situations, residing in the US. See if this fits you:
> 
> (from the draft version of i8938 - page two, middle column)
> 
> Determining the Reporting Threshold That Applies to You
> 
> *Taxpayers living abroad*
> 
> If you are a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year, or are present in a foreign country or countries at least 330 full days during any period of 12 consecutive months ending in the tax year, you satisfy the reporting threshold if you are not filing a joint return and the value of your foreign financial assets is more than $200,000 on the last day of the tax year or more than $400,000 at any time during the tax year.
> 
> I seem to recall that the house value may come up on form 8854 ( we have to file with our last 1040, after renouncing )and will look later.
> 
> We need Peg! :wink:


Yes, calling Peg. You know I am not good at sorting through this newspeak type of language. Terrible at it in fact.:tongue1:


----------



## 416

nobledreamer said:


> I seem to recall that the house value may come up on form 8854 ( we have to file with our last 1040, after renouncing )and will look later.
> 
> We need Peg! :wink:


I think that's correct (and yes, we do need Peg. Peg?)


----------



## Guest

Mach7 said:


> I think that the CRA will not collect FBAR penalties is also extended to landed immigrants and Permanent residents...according to some of my lawyer friends. QUOTE]
> 
> see the link on post #77 by pathologic 1 on Fbar penalty in canada!
> 
> “It is extremely unlikely that Canadian citizens or residents will have to face collection of FBAR penalties, except in the very unlikely event that those penalties may be characterized as registrable civil judgments."


----------



## Ladyhawk

PetrosResearch said:


> This is the colossal miscalculation of the FBAR law: if indeed the consequences are criminal for wilful violation, then the defendant is protected by the 5th amendment; but the 5th does not protect anyone from civil penalties. By threatening with imprisonment and excessive fines, the law should become useless from the point of view of person's rights. For it requires self disclosure of a crime committed (provided only that the person is late in doing so). Sure, the fines and penalties are more severe, but that is all the more reason that I have the right not to cooperate with the IRS, since they have repeatedly indicated their intention of criminalizing my behaviour. I think therefore that all those being scared into filing late-FBARs now have a perfect constitutional reason not to do so.


This is why Jack Townsend has said that in certain cases, the best way forward is NOT back file, or do QD, but simply comply going forward. Then the statute of limitations is only 3 years if your past 3 years were filed on time and you were fully compliant.


----------



## Guest

If one of us gets hit with a 'non-willfull' FBAR penalty.....can we not employ the services of the IRS Tax Advocate??


----------



## Mona Lisa76

Mach7 said:


> If one of us gets hit with a 'non-willfull' FBAR penalty.....can we not employ the services of the IRS Tax Advocate??


was wondering the same thing. i suspect that when they received my six years of delinquent fbars that they will have realised I hadn't been aware until recently and probably just filed them away, especially as I'd submitted a letter begging a waiver of penalties for reasonable cause, etc.


----------



## AmTaker

Ladyhawk said:


> This is why Jack Townsend has said that in certain cases, the best way forward is NOT back file, or do QD, but simply comply going forward. Then the statute of limitations is only 3 years if your past 3 years were filed on time and you were fully compliant.


For FBAR its 6 years. if tax penalties were the only issue, there would be little reason for anyone (other than big time tax evaders) to be concerned.


----------



## AmTaker

Mach7 said:


> If one of us gets hit with a 'non-willfull' FBAR penalty.....can we not employ the services of the IRS Tax Advocate??


Its certainly worth trying. I did read that some people in the VD programs have had some success with the tax advocate, with some reduction of penalties. I think it might definitely be an issue if the penalty caused genuine hardship or was all out of proportion to any violation, or if there was a clear case of reasonable cause.

'Reasonable Cause' for FBAR non filing, as I understand it, isn't very well defined at all, so its not clear what would happen. 

The tax advocate's office is independent of the IRS at the highest level, but I'm not sure how much 'interbreeding' there is at lower levels. if people get transferred back and forth at lower levels (which I hope doesn't happen !), there may be a tendency to take IRS positions ....


----------



## The_Animal

Mach 7. 

All I can say is "Thank God, my wife SUCKS at saving". Our lone bank account (which is all we have) has a revolving amount that at maximum has been around $3,000 at any one time. We rent, so my wife doesn't have any home that could be considered taxable at exit. Until my wife renunciates, I don't think I can have a joint account with her that totals over $10,000 which makes it really stinkin' tough to go after that Nikon AF-S 600mm f/4 and 300mm f/2.8 VRII lenses (total retail cost of $20,000) that I plan to use for the wildlife portion of my photography business which isn't making very much either and until she renunciates, she cannot be a part of my photography business either. 

If you're unlucky enough to have accumulated life-savings, you get hit by the US government. In some respects, they go easier on you if you haven't got any savings so to speak of which isn't really fair to people who have worked their entire lives and made smart decisions with their money, is it?


----------



## Guest

If you're unlucky enough to have accumulated life-savings, you get hit by the US government. In some respects, they go easier on you if you haven't got any savings so to speak of which isn't really fair to people who have worked their entire lives and made smart decisions with their money, is it?

Well...we will see. I don't think the issue is how many accounts and how much money you have but rather where your accounts are and if you have been paying taxes on the investment income earned.

I am hoping that they will take my information and be satisfied with that. 

I have some other options as well....I have a clear case for 'reasonable cause' as compared to some.


----------



## Peg

Mach7 said:


> I have a clear case for 'reasonable cause' as compared to some.


Mach7 - would you be willing to share your "reasonable cause"?


----------



## Guest

Well...my reasonable cause is living in canada all of my life, less being born in the United States. I am not steeped in the US legislation and was never advised by ANY accountant that I have used over the years that I needed to file taxes.

It is nothing out of the ordinary...my resaonable cause is being unaware...like most everyone here.


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## Guest

I should point out...when I stated I have a clear case for 'reasonable cause' as compared to some.

I meant that when comparing to some people who actually worked in the US before moving to Canada...and actually filed 1040s for a number of years (while living in Canada) then stopped because it was, according to them, a waste of time and money (as they always owed zero tax). Then along came FBAR that I beleive nobody knew about.


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## Peg

Very similar to mine --- moved to Canada at age 9 and only had one passport in my 20s. In addition, I was told in the 80s by the US Gov that I didn't need to file unless I planned to move back to the US and at that time would have to backfile...


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## Guest

Hello Peg,

There seems to be a lot of mis-information and confusion when it comes the the IRS.

Like I stated in a previous post, my US passport clearly states that all US citizens who reside *overseas* must file there worldly income...there is some additional reference regarding the word 'abroad', but even if I read that 10 years ago, I would not have checked any websites or made any calls of clarification, because 'oversea's' and 'abroad' are clearly stated....end of story problem solved.

It has been a couple months since I filed, still waiting.

I thought i would be OK with all of this once I mailed the paperwork...but I am not. I have emailed almost every politician in Canada on this matter, (and i hope everyone is doing the same).

I have applied for my Canadian Citizenship and once that is done and have a Canadian Passport, I am going forward with the renunciation. I can't keep looking over my shoulder waiting for the US government to modify, introduce legislation that will put me thru this turmoil again.


----------



## Baird68

Mach7 said:


> I should point out...when I stated I have a clear case for 'reasonable cause' as compared to some.
> 
> I meant that when comparing to some people who actually worked in the US before moving to Canada...and actually filed 1040s for a number of years (while living in Canada) then stopped because it was, according to them, a waste of time and money (as they always owed zero tax). Then along came FBAR that I beleive nobody knew about.


Have you considered relinquishing and not renouncing your U.S. citizenship? Download DS-4079 and DS-4081 and to see if you can relinquish. That way you will avoid the taxes and FBARs. I know you filed 1040s but, if you can relinquish, then the State Department will provided you with proof of loss of citizenship. When I relinquished this week, the U.S. consul reminded me that if I had worked in the United States and owed any taxes, then I could still have to pay those taxes. Since I never worked there, then the IRS can't say I owe taxes. FBARs aren't taxes. Also, by relinquishing, there is no "market to market" death tax or $450 exit tax. There was no discussion about FBARs and filing in the U.S. at the consulate.


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## pwdunn

Peg said:


> Very similar to mine --- moved to Canada at age 9 and only had one passport in my 20s. In addition, I was told in the 80s by the US Gov that I didn't need to file unless I planned to move back to the US and at that time would have to backfile...


Do you have that in writing? If not, the name of the IRS employee and a date? 

Wow. That would be great to share with all the folks how are now being persecuted. If any of us could get a letter like that it could be great help to anyone trying to say that they didn't know ... Well, you were told that you didn't have to worry about it.

And after all, that is a sane policy. Why would the IRS require that 1 million residents of Canada file tax returns with no revenue? I mean, doesn't it cost a lot of money, with next to now taxes due, just having people to open those returns, and send the proper responses (such as the 1040 booklet that they were sending me every year--what a waste of money!!!)


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## Guest

Have you considered relinquishing and not renouncing your U.S. citizenship? Download DS-4079 and DS-4081 and to see if you can relinquish. That way you will avoid the taxes and FBARs. I know you filed 1040s but, if you can relinquish, then the State Department will provided you with proof of loss of citizenship. When I relinquished this week, the U.S. consul reminded me that if I had worked in the United States and owed any taxes, then I could still have to pay those taxes. Since I never worked there, then the IRS can't say I owe taxes. FBARs aren't taxes. Also, by relinquishing, there is no "market to market" death tax or $450 exit tax. There was no discussion about FBARs and filing in the U.S. at the consulate.

Hello Baird,

Thanks for that information, but I think what you are referring to is a CLN (Certificate of Lost Nationality). 

I would not be eligible for this as I have a US passport.


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## Peg

PetrosResearch said:


> Do you have that in writing? If not, the name of the IRS employee and a date?
> 
> Wow. That would be great to share with all the folks how are now being persecuted. If any of us could get a letter like that it could be great help to anyone trying to say that they didn't know ... Well, you were told that you didn't have to worry about it.
> 
> And after all, that is a sane policy. Why would the IRS require that 1 million residents of Canada file tax returns with no revenue? I mean, doesn't it cost a lot of money, with next to now taxes due, just having people to open those returns, and send the proper responses (such as the 1040 booklet that they were sending me every year--what a waste of money!!!)


It was in the 80s and I was young so never thought to get it in writing! I remember it distinctly because of them telling me I would have to backfile to the first day that I made income! Over the years when someone asked if I was dual I would say no because I thought I would have to beg the US to let me resume my citizenship :rofl:

I think an about face from the IRS could come within a year when thousands of us are filing but owing no taxes - what a lot of work for them!


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## Peg

Mach7 said:


> Hello Peg,
> 
> There seems to be a lot of mis-information and confusion when it comes the the IRS.
> 
> Like I stated in a previous post, my US passport clearly states that all US citizens who reside *overseas* must file there worldly income...there is some additional reference regarding the word 'abroad', but even if I read that 10 years ago, I would not have checked any websites or made any calls of clarification, because 'oversea's' and 'abroad' are clearly stated....end of story problem solved.
> 
> It has been a couple months since I filed, still waiting.
> 
> I thought i would be OK with all of this once I mailed the paperwork...but I am not. I have emailed almost every politician in Canada on this matter, (and i hope everyone is doing the same).
> 
> I have applied for my Canadian Citizenship and once that is done and have a Canadian Passport, I am going forward with the renunciation. I can't keep looking over my shoulder waiting for the US government to modify, introduce legislation that will put me thru this turmoil again.


I agree about the overseas or abroad part! It wasn't until I learned of FBARs that I learned I was an Expat...

Also agree about not wanting to always wonder what glorious laws the US Govt will put in place to catch us nasty tax cheats 

:canada:


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## 416

PetrosResearch said:


> And after all, that is a sane policy. Why would the IRS require that 1 million residents of Canada file tax returns with no revenue? I mean, doesn't it cost a lot of money, with next to now taxes due, just having people to open those returns, and send the proper responses (such as the 1040 booklet that they were sending me every year--what a waste of money!!!)


All of which _must_ be submitted on paper, yes. 

FWIW a US-based relative calculates his taxes on one of the e-file programs, prints out the result, then copies the results on to his returns in pen, just to be difficult.


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## Baird68

Mach7 said:


> Have you considered relinquishing and not renouncing your U.S. citizenship? Download DS-4079 and DS-4081 and to see if you can relinquish. That way you will avoid the taxes and FBARs. I know you filed 1040s but, if you can relinquish, then the State Department will provided you with proof of loss of citizenship. When I relinquished this week, the U.S. consul reminded me that if I had worked in the United States and owed any taxes, then I could still have to pay those taxes. Since I never worked there, then the IRS can't say I owe taxes. FBARs aren't taxes. Also, by relinquishing, there is no "market to market" death tax or $450 exit tax. There was no discussion about FBARs and filing in the U.S. at the consulate.
> 
> Hello Baird,
> 
> Thanks for that information, but I think what you are referring to is a CLN (Certificate of Lost Nationality).
> 
> I would not be eligible for this as I have a US passport.



I would assume many U.S. born Canadian citizens have U.S. passports because they were spotted as being U.S. born persons carrying a Canadian passport. I know of one such person who was bullied into obtaining one a few years ago and he only uses it when going to the States. 
Question 14 page 4 of DS4079 asks: "What passport do you use to travel to and from the United States?" 
Question 15 of DS4079 asks: "What passport do you use to travel to and from other countries?" 
I question why having a U.S. passport would prevent someone from relinquishing their U.S. citizenship if they never lived there or only lived there briefly, owned no property/bank account, earned no income from the U.S. and have few if any personal ties to the United States.


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## pwdunn

Baird68 said:


> I would assume many U.S. born Canadian citizens have U.S. passports because they were spotted as being U.S. born persons carrying a Canadian passport. I know of one such person who was bullied into obtaining one a few years ago and he only uses it when going to the States.
> Question 14 page 4 of DS4079 asks: "What passport do you use to travel to and from the United States?"
> Question 15 of DS4079 asks: "What passport do you use to travel to and from other countries?"
> I question why having a U.S. passport would prevent someone from relinquishing their U.S. citizenship if they never lived there or only lived there briefly, owned no property/bank account, earned no income from the U.S. and have few if any personal ties to the United States.


The assumption of travelling on a US passport is that you are accepting the protection of the United States of America (can anyone say, "Sopranos"?) and hence, it is a privilege of citizenship. Now in the case of certain people, they were coerced into getting one so that they could more easily travel to the US, but they did not want US citizenship. They were not informed that they could relinquish their citizenship and therefore, the US government employees broke US law by standing in their way of exercising their right not to be Americans (i.e., the right of expatriation). Be that as it may, the only way for them (those who got passports even after having relinquished their citizenship) to get rid of citizenship at this point seems to be to renounce. The US is actually entrapping people into citizenship so as to include them in the tax system. This is slimy.

The other way to entrap people is offering residential visas if you buy a home in the US. Then if you stay over the substantial presence test, you have to file taxes on your world wide income.

There was a good blog on this subject this morning: U.S. citizenship for Canadians « Renounce U.S. Citizenship – Be Free!


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## pwdunn

PetrosResearch said:


> ... the US government employees broke US law by standing in their way of exercising their right not to be Americans (i.e., the right of expatriation). Be that as it may, the only way for them (those who got passports even after having relinquished their citizenship) to get rid of citizenship at this point seems to be to renounce. The US is actually entrapping people into citizenship so as to include them in the tax system. This is slimy.
> [/url]


Forcing Canadians to get US passports, because they were born in the US, even though the relinquished their citizenship when they became Canadian is putting up an obstacle to expatriation which is explicitly barred in the 1868 Expatriation Act which says:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That any declaration, instruction, opinion, order, or decision of any officers of this government *which denies, restricts, impairs, or questions the right of expatriation*, is hereby declared inconsistent with the fundamental principles of this government.​


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## Guest

Forcing Canadians to get US passports, because they were born in the US, even though the relinquished their citizenship when they became Canadian is putting up an obstacle to expatriation which is explicitly barred in the 1868 Expatriation Act which says:

Be it enacted by the Senate and House of Representatives of the United States of America in Congress assembled, That any declaration, instruction, opinion, order, or decision of any officers of this government which denies, restricts, impairs, or questions the right of expatriation, is hereby declared inconsistent with the fundamental principles of this government.


This is correct, but you are under the misguided assumption that the United States operates as per there constitution...which they don't. They also said that they don't believe in torture to extract information...


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## 416

PetrosResearch said:


> The assumption of travelling on a US passport is that you are accepting the protection of the United States of America (can anyone say, "Sopranos"?) and hence, it is a privilege of citizenship. [/url]


I think anyone who has obtained a US passport, regardless of where they were born, has to go through the exercise of renouncing, like it or not. Remember that a passport application is what allowed the British to hang Lord Haw-Haw after the war.

If I hadn't done that I'd totally be looking into relinquishing - it sounds much simpler. I've done a number of things, like becoming a Canadian officer, which would have been automatically expatriating before Afroyim v. Rusk.


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## pwdunn

Mach7 said:


> This is correct, but you are under the misguided assumption that the United States operates as per there constitution...which they don't. They also said that they don't believe in torture to extract information...


Hi Mach7, I'm not under such a misguided assumption because I agree that the US government regularly violates the constitution. I wrote a post here a week ago about how taxing expatriates is a violation of the constitution.


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## pwdunn

416 said:


> I think anyone who has obtained a US passport, regardless of where they were born, has to go through the exercise of renouncing, like it or not. Remember that a passport application is what allowed the British to hang Lord Haw-Haw after the war.
> 
> If I hadn't done that I'd totally be looking into relinquishing - it sounds much simpler. I've done a number of things, like becoming a Canadian officer, which would have been automatically expatriating before Afroyim v. Rusk.


You are probably right. But being a Canadian officer is really quite contradictory to holding a US passport. I you are currently an officer in the Canadian military, active or reserve, you have a right to relinquish, because it is potentially relinquishing act that you are now doing. If it was 30 years ago, you may still have the right, but then, the State Department may not think so. In that case, the easiest route is to renounce.


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## Guest

Hello PetrosResearch,

I did not mean to make my response a personal comment towards you. For that I apologize.


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## pwdunn

Mach7 said:


> Hello PetrosResearch,
> 
> I did not mean to make my response a personal comment towards you. For that I apologize.


No need. I didn't take offence.


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## 416

PetrosResearch said:


> You are probably right. But being a Canadian officer is really quite contradictory to holding a US passport.


Service in an allied army is perfectly compatible with US citizenship where there is no intent to expatriate.


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## pwdunn

416 said:


> Service in an allied army is perfectly compatible with US citizenship where there is no intent to expatriate.


I wonder. If Prime Minister told you to defend the US border, would you be able to do it? As a citizen of Canada I am ready to take arms against the United States if they invade in order to honor my oath to the Queen of Canada. As long as we are allies, fine. That is why I say, if you are currently in the military, you have a right to relinquish your citizenship.

USC 1481 says that the following is a relinquishing act:

(3) entering, or serving in, the armed forces of a foreign state if 
(A) such armed forces are engaged in hostilities against the United States, or
(B) such persons serve as a commissioned or non-commissioned officer;​
Thus, it doesn't matter that you currently have a US passport, provided that you are now in service to the Canadian military, and have status as an officer.

Finally, when it comes to military service, there is a conflict of oaths. It is conflict to be in service to two national entities. Consider the oath of citizenship for US civilians:

that I absolutely and entirely renounce and abjure all allegiance and fidelity to any foreign prince, potentate, state, or sovereignty of whom or which I have heretofore been a subject or citizen;​
I.e., you cannot be in a foreign military and become a US citizen, for this part of the oath would cause you to renounce your ties with your country.


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## 416

> A person who is a national of the United States whether by birth or naturalization, shall lose his nationality by voluntarily performing any of the following acts *with the intention of relinquishing United States nationality*—


No intent, no relinquishment. 

(But try this on for size: if I appeared before a public notary, made an oath of allegiance to the Queen, just to reaffirm my citizenship, then sent the oath to the State Department saying that I had made it to relinquish my US citizenship, could I relinquish without fuss?)


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## pwdunn

416 said:


> No intent, no relinquishment.
> 
> (But try this on for size: if I appeared before a public notary, made an oath of allegiance to the Queen, just to reaffirm my citizenship, then sent the oath to the State Department saying that I had made it to relinquish my US citizenship, could I relinquish without fuss?)


Yes, but if you are currently serving, you can still change your intent--intent is for you decide, not them. It doesn't matter that ten years ago you didn't have the intent. You are now serving--and that in itself is potentially relinquishing act, provided you have the intent and you inform them that you have the intent to relinquish; so I'd go to the Consulate and then tell them as much. Insist on your right to relinquish.

Also, the scenario you suggest is probably also acceptable. But I would do it in military setting or in front of a judge if possible.


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## 416

PetrosResearch said:


> Yes, but if you are currently serving, you can still change your intent--intent is for you decide, not them. It doesn't matter that ten years ago you didn't have the intent. You are now serving--and that in itself is potentially relinquishing act, provided you have the intent and you inform them that you have the intent to relinquish; so I'd go to the Consulate and then tell them as much. Insist on your right to relinquish.
> 
> Also, the scenario you suggest is probably also acceptable. But I would do it in military setting or in front of a judge if possible.


I got out years ago, fwiw.


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## pwdunn

416 said:


> I got out years ago, fwiw.


Well, then like I said, renunciation is probably the simplest route, since State is probably not going to accept your relinquishment retroactive. Too bad really.


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## The_Animal

416 said:


> I think anyone who has obtained a US passport, regardless of where they were born, has to go through the exercise of renouncing, like it or not. Remember that a passport application is what allowed the British to hang Lord Haw-Haw after the war.
> 
> If I hadn't done that I'd totally be looking into relinquishing - it sounds much simpler. I've done a number of things, like becoming a Canadian officer, which would have been automatically expatriating before Afroyim v. Rusk.


In times of war, execution is the punishment for traitors. As such it is much safer if in the unlikely event of war versus the States, it would be best to renounce your citizenship. If you carry a Canadian citizenship solely, you are subject to the Geneva Convention and as a prisoner of war, you would have rights. Carrying a U.S. passport in such a case or having not renunciated your US citizenship (as unlikely as it may sound) would result in your execution in the worst case - life imprisonment at the best. And serving as an officer in the Canadian Armed Forces while carrying your U.S. passport and being captured by US Forces, would be tantamount to treason at the highest order (if a state of war were to exist between Canada and the United States) and would result in such offender being given the death sentence and summary execution.  

As ridiculous as it may sound, look at the US UCMJ. The penalties for treason are written out in full.


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## Deckard1138

Baird68 said:


> I would assume many U.S. born Canadian citizens have U.S. passports because they were spotted as being U.S. born persons carrying a Canadian passport. I know of one such person who was bullied into obtaining one a few years ago and he only uses it when going to the States.
> Question 14 page 4 of DS4079 asks: "What passport do you use to travel to and from the United States?"
> Question 15 of DS4079 asks: "What passport do you use to travel to and from other countries?"
> I question why having a U.S. passport would prevent someone from relinquishing their U.S. citizenship if they never lived there or only lived there briefly, owned no property/bank account, earned no income from the U.S. and have few if any personal ties to the United States.


Why? Because it can be reasonably interpreted as evidence that one has benefited from their U.S. citizenship, which undermines any argument of intent to relinquish at the time you became a Canadian citizen. In fairness, I would argue that applying for and using a U.S. passport does indeed contradict any stated intention to lose U.S. citizenship.


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## pwdunn

Deckard1138 said:


> Why? Because it can be reasonably interpreted as evidence that one has benefited from their U.S. citizenship, which undermines any argument of intent to relinquish at the time you became a Canadian citizen. In fairness, I would argue that applying for and using a U.S. passport does indeed contradict any stated intention to lose U.S. citizenship.


Yes generally this is right. But when the border guards insist that you have a US documents if you have US birthplace, then an official of the government is placing an obstacle to the person's right to relinquish, if that was their intention. So in other words, incompetence is creating a situation.


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## Peg

PetrosResearch said:


> Yes generally this is right. But when the border guards insist that you have a US documents if you have US birthplace, then an official of the government is placing an obstacle to the person's right to relinquish, if that was their intention. So in other words, incompetence is creating a situation.


Very curious to cross the border and see if anything is said since I entered then opted out of OVDI and the Consul would not give me copies of my renunciation forms!


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## Cafreeb12

Deckard1138 said:


> Why? Because it can be reasonably interpreted as evidence that one has benefited from their U.S. citizenship, which undermines any argument of intent to relinquish at the time you became a Canadian citizen. In fairness, I would argue that applying for and using a U.S. passport does indeed contradict any stated intention to lose U.S. citizenship.


I find it curious they say some benefit from a U.S. passport and I suppose some do. However, I never intended to obtain one and only did so when the law changed so that you could not cross the U.S. border driving without one. For years I crossed on my landing document and my birth certificate. I HAD to obtain a U.S. passport to cross the border as per their new rules. Otherwise, I would not have bothered with one at all. They do know people had to travel on one after 9/11/2001 so it wasn't a choice to "benefit" from that blue passport for a lot of people. They would argue otherwise but, the logic in telling people that you legally must travel on one then saying you intended to benefit from it is a little bit more word salad again for us I believe.


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## Deckard1138

Deckard1138 said:


> Why? Because it can be reasonably interpreted as evidence that one has benefited from their U.S. citizenship, which undermines any argument of intent to relinquish at the time you became a Canadian citizen. In fairness, I would argue that applying for and using a U.S. passport does indeed contradict any stated intention to lose U.S. citizenship.


I should have added that I have always used my Canadian passport when traveling to the U.S., even though it clearly shows my U.S. birthplace. A couple of times the border guards have given me minor hassles about answering "Canadian" instead of "American" when asking what my citizenship is, but they have never insisted that I need a U.S. passport to enter the country. This too could soon change, and they may begin to fully enforce this policy as well, and then people will have to decide where their true allegiances lie - and live with the consequences.

U.S. citizenship will no longer be retained as a mere convenience (or as a hedge against some unlikely, apocalyptic future where people flee screaming en masse from Canada to the U.S.) when there is so much more at stake - people will only want to keep it if there is an absolutely compelling reason to do so. Getting scolded by a border guard every once in a while isn't a good enough reason, in my book.

In general, I think that the whole idea of dual-citizenship is slowly going by the wayside. Governments in general are now so paranoid and/or broke that they will insist on a higher degree of clarity and commitment from their citizens, wherever they may be. Certainly this entire experience so far is forcing that kind of clarity of thinking in all of us.


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## Cafreeb12

Deckard1138 said:


> I should have added that I have always used my Canadian passport when traveling to the U.S., even though it clearly shows my U.S. birthplace. A couple of times the border guards have given me minor hassles about answering "Canadian" instead of "American" when asking what my citizenship is, but they have never insisted that I need a U.S. passport to enter the country. This too could soon change, and they may begin to fully enforce this policy as well, and then people will have to decide where their true allegiances lie - and live with the consequences.
> 
> U.S. citizenship will no longer be retained as a mere convenience (or as a hedge against some unlikely, apocalyptic future where people flee screaming en masse from Canada to the U.S.) when there is so much more at stake - people will only want to keep it if there is an absolutely compelling reason to do so. Getting scolded by a border guard every once in a while isn't a good enough reason, in my book.
> 
> In general, I think that the whole idea of dual-citizenship is slowly going by the wayside. Governments in general are now so paranoid and/or broke that they will insist on a higher degree of clarity and commitment from their citizens, wherever they may be. Certainly this entire experience so far is forcing that kind of clarity of thinking in all of us.


There are other compelling reasons that have nothing to do with being hassled by an occasional border guard. I felt a loyalty to my country of birth, I didn't come here to escape it but, rather as a kindness to my husband whose parents were much older than mine. I kept it because if I renounced I worried I wouldn't at some point be able to help out my brother and sister should our parents need us. In fact I have gone back once for three months to take care of my grandmother on hospice and again to take care of my mother on hospice. Once was a three month stay and another was one month. I had to rush there twice for family deaths and would have hated not being able to get there fast enough. All of that played a part in keeping my citizenship and it was part of my identity. 

I think you are right they are going to require more and even living outside the country is going to be seen more as a situation of having "turned your back" no matter the reason for doing so. It's gotten very hard with the attitude of insulation and one wonders how far that will go in times like these. I'll renounce, but I cannot say I am happy about it at all.


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