# Is this the official IRS announcement we've been told to exepct?



## Guest

I just received from one of the persons I'm trying to help here in Ottawa the following link to the IRS website. This was posted yesterday by IRS.

Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.

If this is what we've all been holding our breaths for, and what Minister of Finance Flaherty implied was an improvement, it's what I think my British friends might call a "damp squid." Or worse, a massive con and huge failure to deliver what was hinted at.

It doesn't seem to say a single thing or provide anything that wasn't already in IRS regulations. 

It's still all up to the discretion of the IRS what is reasonable cause for non-filing or late filing. I can't see any reference to OVDI penalties being refunded or waived. Nor about no one having to file returns before 2011, that's nowhere in this document.

There is utterly nothing in here of any relief or benefit to those people I've called in other posts "accidental Americans" (people born in the US while their Canadian parents were there temporarily but grew up and lived only in Canada, or Canadian-born children of US parents who likewise have grown up and lived only in Canada) and "relinquished Americans" who believed they'd lost their citizenship years or decades ago by becoming Canadian citizens.

Maybe there is more to come, but this is just a clarification of the old rules and tells us nothing new that I can see. Or maybe I've missed something that one of you can spot. I hope so, but I don't think so.

The one thin thread of hope might be in the final sentence of the opening paragraph which I quote below (see red font), but I think it's just more weasel words to lull us into thinking they're actually listening. 

"The IRS is aware that some taxpayers who are dual citizens of the United States and a foreign country may have failed to timely file United States federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), despite being required to do so. Some of those taxpayers are now aware of their filing obligations and seek to come into compliance with the law. This fact sheet summarizes information about federal income tax return and FBAR filing requirements, how to file a federal income tax return or FBAR, and potential penalties.

"Note that penalties will not be imposed in all cases. As discussed in more detail below, *taxpayers who owe no U.S. tax (e.g., due to the application of the foreign earned income exclusion or foreign tax credits) will owe no failure to file or failure to pay penalties.* In addition, no FBAR penalty applies in the case of a violation that the IRS determines was due to reasonable cause. 

"This fact sheet is provided for information purposes only, and the topics discussed may or may not apply to a particular taxpayer’s situation. The IRS continues to consider the topics discussed in this fact sheet and will provide additional information as it becomes available."

I'm not sure if what I've bolded and italicized is new, but none of the rest of it is as far as I can see.


----------



## Peg

At least they are finally acknowledging that millions of US citizens living outside the US did not know about the requirements *because* we live outside the US!

How would I know of the requirement?
via US passport: Although I have crossed the border many times by land and air, I have never been asked for a US passport and therefore not had one since the 80s and did not see the fine print on page 4. 

via Accountant: I do my own taxes. (my sibling who has financial planners and accountants only learned of it this summer)

via Lawyer: he only told me of the Estate Tax.

via US Gov't: when I did call in the 80s to ask about it they told me it didn't matter as long as I was below the Foreign Earned Income Exclusion and would only have to back-file if I planned to live in the US again.


This emphasizes to me why it really annoyed me to be called a Tax Cheat by the IRS in the news when I simply did not know of the requirement!


----------



## Omater

Whew! I read the link and my head is hurting, as it always does with a bunch of double talk and you are correct, not much has changed. However, the IRS and US Government is not inclined to admit it if they screwed up.


----------



## Ladyhawk

I see nothing here that has not been reported in the news. And frankly it's nothing more than what we'd been led to believe anyway, ie that the minnows who owe no money won't be targeted for huge fines for failure to file, because we aren't worth the effort and they'd never collect enough to pay their own expenses incurred in going after us, and they have bigger fish to fry.

This much-vaunted grand gesture to honest expats costs the IRS nothing since it doesn't change what they planned to do anyway. They confirm that non-filers will not be fined if they owe no tax, but everything else is still up for grabs, since it is at the discretion of the IRS to determine who had "reasonable cause" not to file FBARs. All that media blather about a huge relief to expats and how this shows what a great working relationship there is between the US and Canada, is just so much codswallop.


----------



## Guest

Schubert said:


> I just received from one of the persons I'm trying to help here in Ottawa the following link to the IRS website. This was posted yesterday by IRS.
> 
> Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.
> 
> It's still all up to the discretion of the IRS what is reasonable cause for non-filing or late filing. I can't see any reference to OVDI penalties being refunded or waived. Nor about no one having to file returns before 2011, that's nowhere in this document.
> 
> Maybe there is more to come, but this is just a clarification of the old rules and tells us nothing new that I can see. Or maybe I've missed something that one of you can spot. I hope so, but I don't think so.
> 
> "Note that penalties will not be imposed in all cases. As discussed in more detail below, *taxpayers who owe no U.S. tax (e.g., due to the application of the foreign earned income exclusion or foreign tax credits) will owe no failure to file or failure to pay penalties.* In addition, no FBAR penalty applies in the case of a violation that the IRS determines was due to reasonable cause.


I think you're right, this is it, or at least the beginning of it. 

It does indicate, last sentence in point 1, "Generally, you only need to file returns going back six years."

I don't think the IRS will be the source of what clarifies the situation for the accidentals and the relinquishants though, wouldn't that be DOS? Maybe the suggestion should be made to some Canadian MP's that they should push for a provision for an extension (filings) until determination of citizenship has been established. I doubt the IRS gives one hang about anything other than that Americans of any type have to abide by their rules.....

You are right, I also do not see any reference whatsoever to the OVDI issues. That *HAS* to be rectified, so many people have been pillaged.

The only thing that makes me feel a little better is that they give some of the factors they take into consideration with regard to "reasonable cause." Some seem kind of stupid such as "education" since no matter how educated one is, if there is no proper notification that something is required, what difference does it make how educated one is? I can't believe more emphasis has not been placed on the fact that they have a responsibility regarding notification. This is a huge part of the whole issue and they should be made to account for it. Shouldn't it be reasonable cause to not be aware of these requirements if one does not read the newspaper? That is the only consistent item that is mentioned as to how many of us became aware of all this. And "background?" Does that mean since I took one Accounting course nearly two years ago, it is assumed I should be reading the IRS site (ugh, why would I, I live in Canada) and should have known of the requirements? 

Example 4 does indicate that they take into consideration of compliance in the foreign country and this example generally does match my basic situation (don't owe any tax, have accounts for legitimate purposes, no history of non-compliance etc etc). I am not concerned about sending in my 1040's. Since renouncing for me at this stage depends upon some other factors as well, I think I will focus on those and not send FUBARS just yet. It would be nice to think they aren't going to penalize but I just don't trust them. And I was prepared to refuse to pay and never be able to enter the country anyway so what the hell? I am one meeting away from renouncing.....

For once I actually do feel like I understood what I read. At least in how the penalties are set up (failure to file, failure to pay penalty, accuracy-related penalty, fraud penalty, and certain information reporting penalties). This may not be a good thing at all! :scared:


----------



## AmTaker

*Some parsing*

Here is something interesting (about the FBAR penalty), I doubt many people are concerned about the tax penalty.

_Factors that might weigh in favor of a determination that an FBAR violation was due to reasonable cause include reliance upon the advice of a professional tax advisor who was informed of the existence of the foreign financial account, that the unreported account was established for a legitimate purpose and there were no indications of efforts taken to intentionally conceal the reporting of income or assets, and that there was no tax deficiency (or there was a tax deficiency but the amount was de minimis) related to the unreported foreign account. There may be factors in addition to those listed that weigh in favor of a determination that a violation was due to reasonable cause. No single factor is determinative._

1) The professional tax advisor part is totally useless in general. Even for a US resident, no professional tax advisor would have given such advice OR admit to such advice (given potential legal liability) . I wonder if the Turbo Tax as advisor defense would work  ?

2) Legitimate purpose. For an expat, not an issue at all. 

3) 'No indications of efforts taken to intentionally conceal the reporting of income or assets' -- slam dunk for most expats, although I think someone who filed returns and did not report the income in US tax returns and did not tick the question asking about foreign accounts correctly might not meet this criterion

4) 'There was no tax deficiency (or there was a tax deficiency but the amount was de minimis)': What is deminimis ? $1000 ? $1000/year ? 5% of income per year ? 5% of US source income per year. 


This is what they say. mind you. What they will take is another matter. I actually think they will definitely waive FBAR penalties if no taxes due for people who hadn't filed US returns.


----------



## Deckard1138

Schubert said:


> I just received from one of the persons I'm trying to help here in Ottawa the following link to the IRS website. This was posted yesterday by IRS.
> 
> Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.
> 
> If this is what we've all been holding our breaths for, and what Minister of Finance Flaherty implied was an improvement, it's what I think my British friends might call a "damp squid." Or worse, a massive con and huge failure to deliver what was hinted at.


Hi Shubert,

While this is indeed pretty thin gruel, there is a glimmer of hope in this sentence: "In addition, no FBAR penalty applies in the case of a violation that the IRS determines was due to reasonable cause". This at least seems a bit better than the nuclear-tipped, non-negotiable, "willful violation" penalties they were supposedly going to assess after the expiry of the latest OVDI. But we'll see, won't we?


----------



## CanadianHoosier

Peg said:


> At least they are finally acknowledging that millions of US citizens living outside the US did not know about the requirements *because* we live outside the US!
> 
> And here is my letter to the IRS, requesting that they waive the penalities after they cashed my cheque for $3500 bucks for 5 years worth of returns. No response as of yet, but I have hope.. A bit lengthy, feel free to use for your own submission to the IRS.. :boxing:
> 
> Internal Revenue Service
> Philadelphia, PA
> 19255-0025
> 
> Subject: XXXXXXXXXXX2007 1040
> XXXXXXXXXXX2008 1040
> 
> Dear Sir/Madam:
> 
> I immigrated to Canada from the US in April, 1982.
> I have lived and worked in Canada for over twenty nine years and became a Canadian citizen in 2003.
> Since 1981, I have not earned or received any income from US sources.
> No W-2’s. No letters from the IRS communicating the need to file a US income tax return.
> In essence, I have been off the grid.
> Yet I have been submitting my Canadian income tax returns for 30 years. Paying taxes as a responsible citizen; comfortable in the knowledge that I was compliant with my financial obligations.
> In August, my life changed. I read an article in the National Post, a Canadian newspaper .
> It indicated that as a US citizen, I was obligated to file an annual return, as well as an FBAR.
> In addition, by failing to file, I learned that I could face significant penalties and jeopardize my ability to travel back to the US to visit my family. The article also indicated that the Amnesty period was ending.
> I have not completed a 1040 form in 30 years. I have a tax preparer that I have used for over 15 years. She indicated that she was unfamiliar with the US returns and suggested that I “try someone else”.
> I searched the local yellow pages and found a certified accountant that suggested I file 5 years of income tax returns. He charged me $1500. When my wife and I met with the accountant, he indicated that I owed the IRS an additional amount of income tax. My wife left his office in tears.
> This is a clear example of double taxation. It conflicts with the foundation of the tax treaty between Canada and the United States.
> In order to bring my status current, I wrote a cheque, couriered the 5 years of returns and the FBAR to the US. Note that this was before the Amnesty program ended on September 9th.
> My cheque was cashed and I assumed my obligation was complete.
> On October 28th, 2011, I received a bill for $2518.28 referencing:
> •	Failure to file penalties
> •	Failure to pay estimated tax penalties
> •	Failure to pay penalties
> •	Interest charges
> On November 1, 2011, I received a bill for $2530.01 referencing same penalties/interest charges.
> I contacted the IRS via phone, twice. They agents indicated that I should ignore the two bills provided. They provided Account transcripts that indicated that I owed $2052 and/ or $2061.
> I dare say if I contact the IRS again, I will obtain yet another amount to pay. This is extremely confusing, and from my perspective, totally unnecessary and inappropriate.
> I came forward with my disclosure based upon my understanding that I would receive amnesty for my prior failure to file. Clearly I would have been much better off if I had not filed and paid my US income taxes. However, I am an honest, law abiding citizen. When I learned of my obligation, I complied.
> I understand that my rights as a taxpayer provide for an opportunity to seek relief from penalties and interest.
> This letter is a summary of the actions I took, in good faith, to comply with the obligations of a US citizen. In less than two months, I engaged an accountant, filed and paid applicable US income taxes.
> This letter also serves as a formal request to the IRS to consider my good faith actions and waive the applied penalties and interest.
> Again, I have not received any income from the US in 30 years.
> I implore you to review and approve my request.


----------



## Guest

CanadianHoosier said:


> Peg said:
> 
> 
> 
> At least they are finally acknowledging that millions of US citizens living outside the US did not know about the requirements *because* we live outside the US!
> 
> And here is my letter to the IRS, requesting that they waive the penalities after they cashed my cheque for $3500 bucks for 5 years worth of returns. No response as of yet, but I have hope.. A bit lengthy, feel free to use for your own submission to the IRS.. :boxing:
> 
> Internal Revenue Service
> Philadelphia, PA
> 19255-0025
> 
> Subject: XXXXXXXXXXX2007 1040
> XXXXXXXXXXX2008 1040
> 
> Dear Sir/Madam:
> 
> I immigrated to Canada from the US in April, 1982.
> I have lived and worked in Canada for over twenty nine years and became a Canadian citizen in 2003.
> Since 1981, I have not earned or received any income from US sources.
> No W-2’s. No letters from the IRS communicating the need to file a US income tax return.
> In essence, I have been off the grid.
> Yet I have been submitting my Canadian income tax returns for 30 years. Paying taxes as a responsible citizen; comfortable in the knowledge that I was compliant with my financial obligations.
> In August, my life changed. I read an article in the National Post, a Canadian newspaper .
> It indicated that as a US citizen, I was obligated to file an annual return, as well as an FBAR.
> In addition, by failing to file, I learned that I could face significant penalties and jeopardize my ability to travel back to the US to visit my family. The article also indicated that the Amnesty period was ending.
> I have not completed a 1040 form in 30 years. I have a tax preparer that I have used for over 15 years. She indicated that she was unfamiliar with the US returns and suggested that I “try someone else”.
> I searched the local yellow pages and found a certified accountant that suggested I file 5 years of income tax returns. He charged me $1500. When my wife and I met with the accountant, he indicated that I owed the IRS an additional amount of income tax. My wife left his office in tears.
> This is a clear example of double taxation. It conflicts with the foundation of the tax treaty between Canada and the United States.
> In order to bring my status current, I wrote a cheque, couriered the 5 years of returns and the FBAR to the US. Note that this was before the Amnesty program ended on September 9th.
> My cheque was cashed and I assumed my obligation was complete.
> On October 28th, 2011, I received a bill for $2518.28 referencing:
> •	Failure to file penalties
> •	Failure to pay estimated tax penalties
> •	Failure to pay penalties
> •	Interest charges
> On November 1, 2011, I received a bill for $2530.01 referencing same penalties/interest charges.
> I contacted the IRS via phone, twice. They agents indicated that I should ignore the two bills provided. They provided Account transcripts that indicated that I owed $2052 and/ or $2061.
> I dare say if I contact the IRS again, I will obtain yet another amount to pay. This is extremely confusing, and from my perspective, totally unnecessary and inappropriate.
> I came forward with my disclosure based upon my understanding that I would receive amnesty for my prior failure to file. Clearly I would have been much better off if I had not filed and paid my US income taxes. However, I am an honest, law abiding citizen. When I learned of my obligation, I complied.
> I understand that my rights as a taxpayer provide for an opportunity to seek relief from penalties and interest.
> This letter is a summary of the actions I took, in good faith, to comply with the obligations of a US citizen. In less than two months, I engaged an accountant, filed and paid applicable US income taxes.
> This letter also serves as a formal request to the IRS to consider my good faith actions and waive the applied penalties and interest.
> Again, I have not received any income from the US in 30 years.
> I implore you to review and approve my request.
> 
> 
> 
> Thanks for your generosity in sharing your situation and your request to the IRS. It will encourage and help others with their communication with them. Thanks for all the points you emphasized. And, of course, good luck to you and your wife!
Click to expand...


----------



## Guest

CanadianHoosier said:


> [QUOTE
> 
> And here is my letter to the IRS, requesting that they waive the penalities after they cashed my cheque for $3500 bucks for 5 years worth of returns. No response as of yet, but I have hope.. A bit lengthy, feel free to use for your own submission to the IRS.. :boxing:


Thank you for sharing this. From your posts, I knew you had paid about $3500 but did not realize you had received penalties. I do not remember you ever mentioning you had entered OVDI. I may be wrong, but I think you had to actually "enter" the OVDI by a process including :

Preclearance
Offshore Voluntary Disclosure Letter
Complete Voluntary Disclosure Package

Maybe they treated you as being outside the program? As if you had made a silent disclosure? I am thinking this is the case as the OVDI required 8 years of filings. And the penalties - I just read yesterday they have a whole slew of goodies - failure to file, failure to pay penalties, etc ad nauseaum. They also charge a percentage for each month the penalties are not paid.....

My accountant stressed to me, just Wednesday, that one only pays once, *only **once* on anything, due to the treaty. It sounds like the accountant may not have taken advantage of all the credits you are entitled to or failed to attach the proper documentation. He also should have known that the programs required 8 years of filings. Maybe you can use that. My CPA sister tried to clarify for herself, about FBARS, on the IRS site. She said she found 3 different sets of information, each contradicting the others. We have all experienced this but when the professionals do, it send a clear message that something is very wrong.

They should never have used the word "amnesty" with this program. They should have realized people would expect to be exempt from penalties. Since they _*are*_ so law-abiding, they would never have expected that the IRS meant amnesty from _*criminal*_ charges. The press coverage also may have contributed to this misperception.

What they have done to you is reprehensible. I'll ask my sister if she knows of anything to help. I just wonder if your returns will have to be amended, presuming the accountant has made a mistake.


----------



## CanadianHoosier

Silent disclosure, 5 years. Not OVDI.


----------



## somerfugl

nobledreamer said:


> I think you're right, this is it, or at least the beginning of it.
> The only thing that makes me feel a little better is that they give some of the factors they take into consideration with regard to "reasonable cause." Some seem kind of stupid such as "education" since no matter how educated one is, if there is no proper notification that something is required, what difference does it make how educated one is? I can't believe more emphasis has not been placed on the fact that they have a responsibility regarding notification.
> 
> I think the "reasonable cause" consideration is very scary. The education clause is very vague. Suppose a grumpy IRS agent having a bad day gets your file. You have a university degree, but he thinks should know all about US tax law even though you left the USA 40 years ago. He assesses a big fine and you lose your RRSP's and life savings. I think this whole thing is a trap to get more revenue for the US.


----------



## Guest

somerfugl said:


> I think the "reasonable cause" consideration is very scary. The education clause is very vague. Suppose a grumpy IRS agent having a bad day gets your file. You have a university degree, but he thinks should know all about US tax law even though you left the USA 40 years ago. He assesses a big fine and you lose your RRSP's and life savings. I think this whole thing is a trap to get more revenue for the US.


Hi Somerfugl. Yes, it is extremely difficult to put aside the anxiety created by the vagueness of wording they tend to use. I guess they avoid direct statements to give themselves leeway. Something they do not have to do, when they are talking about penalties. Those directions are always frightening and painfully clear.

I don't know your situation but I do know that I would *never* let them get my rrsp's and life savings. Fortunately, I am also CDN citizen and if I had to, I would close my accounts early, pay whatever bank fines I had to and give the $ to my husband.......and be willing never to go south again. Though that would be very hard and I am sure, very very sad.


----------



## smccarth

nobledreamer said:


> I think you're right, this is it, or at least the beginning of it.
> 
> It does indicate, last sentence in point 1, "Generally, you only need to file returns going back six years."
> 
> I don't think the IRS will be the source of what clarifies the situation for the accidentals and the relinquishants though, wouldn't that be DOS? Maybe the suggestion should be made to some Canadian MP's that they should push for a provision for an extension (filings) until determination of citizenship has been established. I doubt the IRS gives one hang about anything other than that Americans of any type have to abide by their rules.....
> 
> You are right, I also do not see any reference whatsoever to the OVDI issues. That *HAS* to be rectified, so many people have been pillaged.
> 
> The only thing that makes me feel a little better is that they give some of the factors they take into consideration with regard to "reasonable cause." Some seem kind of stupid such as "education" since no matter how educated one is, if there is no proper notification that something is required, what difference does it make how educated one is? I can't believe more emphasis has not been placed on the fact that they have a responsibility regarding notification. This is a huge part of the whole issue and they should be made to account for it. Shouldn't it be reasonable cause to not be aware of these requirements if one does not read the newspaper? That is the only consistent item that is mentioned as to how many of us became aware of all this. And "background?" Does that mean since I took one Accounting course nearly two years ago, it is assumed I should be reading the IRS site (ugh, why would I, I live in Canada) and should have known of the requirements?
> 
> Example 4 does indicate that they take into consideration of compliance in the foreign country and this example generally does match my basic situation (don't owe any tax, have accounts for legitimate purposes, no history of non-compliance etc etc). I am not concerned about sending in my 1040's. Since renouncing for me at this stage depends upon some other factors as well, I think I will focus on those and not send FUBARS just yet. It would be nice to think they aren't going to penalize but I just don't trust them. And I was prepared to refuse to pay and never be able to enter the country anyway so what the hell? I am one meeting away from renouncing.....
> 
> For once I actually do feel like I understood what I read. At least in how the penalties are set up (failure to file, failure to pay penalty, accuracy-related penalty, fraud penalty, and certain information reporting penalties). This may not be a good thing at all! :scared:


As a newbie, I inadvertantly posted a thread on this announcement this morning.
I've participated in OVDI, but haven't heard from the IRS. My U.S. lawyer thinks that example 4 on the IRS link applies to my situation, and hopefully to others.


----------



## AmTaker

somerfugl said:


> I think the "reasonable cause" consideration is very scary. The education clause is very vague. Suppose a grumpy IRS agent having a bad day gets your file. You have a university degree, but he thinks should know all about US tax law even though you left the USA 40 years ago. He assesses a big fine and you lose your RRSP's and life savings. I think this whole thing is a trap to get more revenue for the US.


They are required by statute to consider reasonable cause and that matter can go to courts. So I don't think they can be really unreasonable about it. I think the 'education' part may be intended to catch multinational execs or small businesspersons who should have enough business savvy to realize an issue like this. I don't think a few accounting courses many years back would count.


----------



## Guest

*My letter to IRS accompanying 1040's*



AmTaker said:


> They are required by statute to consider reasonable cause and that matter can go to courts. So I don't think they can be really unreasonable about it. I think the 'education' part may be intended to catch multinational execs or small businesspersons who should have enough business savvy to realize an issue like this. I don't think a few accounting courses many years back would count.


I like your comments AmTaker. They make sense. Below is my letter to the IRS to accompany my first set of returns. In red are the buzz words they use or phrases via my CPA sister. She thought the letter was fine. Also, the term "request the abatement of penalties" has come up in the past; some felt the definition was not precise enough. However, this is one of the ones the IRS likes, so that is the reason I am using it, FWIW.


12 December 2011



Department of Treasury
Internal Revenue Centre
Austin, TX 73301-0215
USA



Dear Sirs,

Enclosed are my US tax returns for 2007, 2008, 2009 and 2010. I am a United States citizen from birth (19XX) and lived in the US until I immigrated to Canada on 00/00/1982. I married my (Canadian) husband on 00/00/1982 and became a Canadian citizen on 00/00 2008.

I was *not aware *I was required to file US tax returns. I have been filing and paying my taxes *in Canada *and it simply did not occur to me that I was also supposed to file US tax returns.

I first became aware of this regulation in mid-September 2011. I *promptly* asked my accountant to begin preparing these returns. I received them in their final forms on Wednesday, December 7, 2011.

I have *complied with all tax filings and payment obligations in Canada*. I have no record of criminal penalties of any kind. I had* no willful intent *to evade or escape any taxes due to the United States. 

I hope that my situation will meet your definition of *reasonable cause *and respectfully *request the abatement of any penalties*.

Regards,


----------



## CanadianHoosier

To quote my English professor from Indiana State, "Brevity is virtue"


----------



## AmTaker

nobledreamer said:


> They make sense. Below is my letter to the IRS to accompany my first set of returns. In red are the buzz words they use or phrases via my CPA sister. She thought the letter was fine. Also, the term "request the abatement of penalties" has come up in the past; some felt the definition was not precise enough. However, this is one of the ones the IRS likes, so that is the reason I am using it, FWIW.
> 
> 
> 12 December 2011
> 
> 
> 
> Department of Treasury
> Internal Revenue Centre
> Austin, TX 73301-0215
> USA
> 
> 
> 
> Dear Sirs,
> 
> Enclosed are my US tax returns for 2007, 2008, 2009 and 2010. I am a United States citizen from birth (19XX) and lived in the US until I immigrated to Canada on 00/00/1982. I married my (Canadian) husband on 00/00/1982 and became a Canadian citizen on 00/00 2008.
> 
> I was *not aware *I was required to file US tax returns. I have been filing and paying my taxes *in Canada *and it simply did not occur to me that I was also supposed to file US tax returns.
> 
> I first became aware of this regulation in mid-September 2011. I *promptly* asked my accountant to begin preparing these returns. I received them in their final forms on Wednesday, December 7, 2011.
> 
> I have *complied with all tax filings and payment obligations in Canada*. I have no record of criminal penalties of any kind. I had* no willful intent *to evade or escape any taxes due to the United States.
> 
> I hope that my situation will meet your definition of *reasonable cause *and respectfully *request the abatement of any penalties*.
> 
> Regards,


The only change I would have made is to add a line about the IRS published guidance on the web (i.e. the release) and how you meet the conditions for relief described there. [ I'm guessing some of the newer agents may not even know the IRS's current standards for granting relief ]


And actually, maybe a line about not having any US source income (if that holds for you).


----------



## justbrowsing

FWIW, I just got back from our local accountant. He is a CA but not a CPA and has been doing US returns (with an PTIN number) for 30 years. He is the principal at the firm of 12 staff and deals with many higher income and net worth individuals.

His take on the irs announcement in the first post is that it is very significant. I pushed him on it a bit and said the forum members said it really didn't say anything new. His 30-year perspective was that this announcement was significant in that rarely is something like this seen from the irs.

So, while we may believe that it doesn't cover any new ground, he thought that it was important and did offer hope that penalties would not be assessed.


----------



## Ladyhawk

nobledreamer said:


> Below is my letter to the IRS to accompany my first set of returns. In red are the buzz words they use or phrases via my CPA sister. She thought the letter was fine.
> 12 December 2011
> Department of Treasury
> Internal Revenue Centre
> Austin, TX 73301-0215
> USA
> Dear Sirs,
> Enclosed are my US tax returns for 2007, 2008, 2009 and 2010......
> Regards,


I can't stop looking at the paragraph in the IRS document that says you must file returns "*for any tax year in which your gross income is equal to or greater than the applicable exemption amount and standard deduction*". This is the first time I have seen this in print on an IRS document, although others have said this elsewhere on this forum. I had always thought that I was required to file every year, period. Since I had not, I felt it was my own fault that I was now going through so much pain and grief, such that I quickly filled out and sent in my 1040 for the year 2010 in August just before driving to the US to visit family, fearing that the border agent would hassle me.

This paragraph tells me that I have _never_ had to file except for a very few years at the end of my career. Back in August I was not as aware of the FUBAR stuff as I am now, so I was focused on the 1040s. FATCA and FBARs may have been mentioned, but no one knew anything about them, so of course I was focused on the fact that the IRS was after me for failure to file tax returns. And here's what makes me mad: _so was the media_! Every article in the Globe or the Financial Post, apart from telling us to "come clean" as if we were deliberate tax cheats, spread the falsehood that we had all failed to file every year as US citizens, with no mention made of the fact that anyone who made less than the exemption amount was not required to file. Much was made about the fines, implying that they were levied for failure to file and that all one million of us were on the hook. 

Here's what the Globe said in June 2011: "In the end, many of those affected may not owe any U.S. taxes because they’ll get credit for any taxes they’ve already paid to Canadian authorities under a Canada-U.S. tax treaty.
But they’ll still have to file with the IRS. "

In another article on the same topic also in June: "If you are a U.S. citizen or resident, a dual citizen or a green-card holder, you are generally required to file U.S. federal income-tax returns."

Since the media is where the vast majority of us have gotten word of this, the media are fully complicit with the IRS in spreading distortions and fomenting fear and anxiety.


----------



## 416

Ladyhawk said:


> I can't stop looking at the paragraph in the IRS document that says you must file returns "*for any tax year in which your gross income is equal to or greater than the applicable exemption amount and standard deduction*"..


Does the "applicable exemption amount" include the FEIE?


----------



## Peg

Ladyhawk said:


> Since the media is where the vast majority of us have gotten word of this, the media are fully complicit with the IRS in spreading distortions and fomenting fear and anxiety.


Completely agree! I would also include either the tax professionals who were interviewed or the media who selected the quotes for the misinformation.


----------



## Bevdeforges

416 said:


> Does the "applicable exemption amount" include the FEIE?


No, it doesn't. Which is why the wording on that form that Ladyhawk quoted is very misleading, too.

There is a table of filing thresholds in the first few pages of the instructions for the 1040 form and its variants. The filing thresholds apply to *gross income* - which includes income from all sources including earned income from outside the US before the FEIE is applied.

But, in practice, they don't really worry too much about catching those who haven't filed who don't owe anything anyhow.
Cheers,
Bev


----------



## 416

Thanks, Bev -


----------



## Ladyhawk

Bevdeforges said:


> No, it doesn't. Which is why the wording on that form that Ladyhawk quoted is very misleading, too.
> 
> There is a table of filing thresholds in the first few pages of the instructions for the 1040 form and its variants. The filing thresholds apply to *gross income* - which includes income from all sources including earned income from outside the US before the FEIE is applied.
> 
> But, in practice, they don't really worry too much about catching those who haven't filed who don't owe anything anyhow.
> Cheers,
> Bev


OK I don't really understand this because what else would I be declaring but gross income earned outside the US? If that is always less than the exemption amount then I should not have to file. 
So maybe there is more to the FEIE than I know about and I suppose I should read up on that which I will as soon as I handle my higher priorities, like this really bad hangnail I have.


----------



## Mona Lisa76

I noted that the irs stated on a notice dated 14 Dec that the finalised version of the 8938 form is just days away


----------



## Guest

Mona Lisa76 said:


> I noted that the irs stated on a notice dated 14 Dec that the finalised version of the 8938 form is just days away


UGH, worst news I've heard today.


----------



## Lovecheese

So what is that form now?


----------



## Peg

Ladyhawk said:


> OK I don't really understand this because what else would I be declaring but gross income earned outside the US? If that is always less than the exemption amount then I should not have to file.
> So maybe there is more to the FEIE than I know about and I suppose I should read up on that which I will as soon as I handle my higher priorities, like this really bad hangnail I have.


Even if I was below the threshold amount I would file the 1040 just to show them that I did not owe anything. How else do they know that you do not owe?

Is the threshold applicable to any US citizen and not to do with the FEIE? For example, if the personal exemptions/credit/deduction is $8,000 then that could be the threshold since anyone with that income level would automatically have no taxes owing (unless of course self-employed with that darn 14% tax... but I digress).


----------



## Baird68

Lovecheese said:


> So what is that form now?


You can look at the description of the form released on December 14. 
IRS Releases Guidance on Foreign Financial Asset Reporting

There is a recent article in Forbes online about it too.


----------



## Omater

My biggest problem with this whole FATCA and form 8938 thing is that it discriminates against us, just like FBAR does. Everytime I think I have found a place where I can breathe they throw something else out there. I just had a look at the 8838 draft and it is insane.

Never once is an American living on U.S. soil asked for their checking or savings account numbers by the treasury department or and the dates they opened those accounts! I think I will have to refuse to give them that information as it is certainly abuse of my civil liberties. 

So where is that class action suit everybody is talking about?? Yes, I am angry and offended and just to the point that I will go say goodbye to America, sell any stateside assets and never go back there rather than take this abuse. We all really need to come together in actively taking a stand, to demand that we not be treated like this! If they continue to think they can get away with this, they will only get worse.


----------



## Bevdeforges

Omater said:


> Never once is an American living on U.S. soil asked for their checking or savings account numbers by the treasury department or and the dates they opened those accounts! I think I will have to refuse to give them that information as it is certainly abuse of my civil liberties.


In America, the banks and investment houses report all their accounts and account-holders, by their social security numbers to the IRS every year. The IRS simply runs the information against the returns it does receive and follows up on any interest or other income payments reported by the banks that don't appear on the appropriate income tax form.

They may not have to fill out a form every year, but the IRS has that information for all US based financial accounts. Just try opening a US bank account without a US social security number.
Cheers,
Bev


----------



## Guest

The best way to look at this situation is that we are technically US citizens and therefore have to play by there rules. Revenue Canada does the exact same thing that the IRS does ...they run numbers from the banks and investments and crosscheck the values on your income tax returns.

(If you ever had the priviledge of getting a letter from Revenue Canada in the middle of the summer, you probably forgot to list something you r bank sent you and now owe them some money).

Anyway, this is the situation, and as long as we are US persons this will not change. PetrosResearch might be right...this may be a bait and switch as well....they might use the 8938 form and FATCA to come after us with FBAR penalties

Having said this, and although I respect his opinion, I cannot think this way.

I, and most of, you under a trememdous amount of stress and anxiety over this, and I have to keep telling myself we will all get through this and the yanks just want to bring us back into the system.

To give you an example of the paperwork. I did my own FBARs...i checked them double checked them and them checked them again before mailing. Looking at my copies that I have I noticed I made a number of clerical errors....errors that will most likely dictate an amendment.

I attribute this to the complexity of the form, and the stress I was under when filling them out. (As everyone was told to comply ASAP before the IRS finds you....this was before the Dec 02 announcement).

Now comes form 8938....which in my opinion should be the only form we fill out. They should pick one or the other...Fbar or 8938.

Just keep true to your goal, and that is to get rid of your US citizenship and finally end this paperwork nightmare.


----------



## Ladyhawk

Omater said:


> So where is that class action suit everybody is talking about?? Yes, I am angry and offended and just to the point that I will go say goodbye to America, sell any stateside assets and never go back there rather than take this abuse. We all really need to come together in actively taking a stand, to demand that we not be treated like this! If they continue to think they can get away with this, they will only get worse.


My guess is that there will ultimately be some class action lawsuits, more than one because different groups among us are affected in different ways. Much will depend on the number of publicized horror stories from innocents caught in the web and badly hurt. 

Much will also depend on how non-US banks react to FATCA. How will they determine who are their USC account holders? We already know how panicky WE are about the IRS. What will happen if non-US Canadians feel threatened by having their banks asking for information to give the IRS? What will the Canadian government do about that? The best case scenario looks to me like getting Canada to follow the lead of Australia and Japan, and refuse to comply with FATCA. The US will never repeal it, so we can only influence our own government. It may be a bit early to start class action lawsuits but it may come to that. There are lawyers among my friends and relatives whom I can ask for opinions on the issue.


----------



## Guest

_Much will also depend on how non-US banks react to FATCA. How will they determine who are their USC account holders? We already know how panicky WE are about the IRS. What will happen if non-US Canadians feel threatened by having their banks asking for information to give the IRS? What will the Canadian government do about that? The best case scenario looks to me like getting Canada to follow the lead of Australia and Japan, and refuse to comply with FATCA. The US will never repeal it, so we can only influence our own government. It may be a bit early to start class action lawsuits but it may come to that. There are lawyers among my friends and relatives whom I can ask for opinions on the issue.
_

To my understanding, Canadian citizens (first class) will not be asked any information other than IF they have any ties to the United States that would classify them as a 'US person'.

For us other Canadian Citizens (second class), we will be asked to fill in paperwork and sign waivers of privacy.

Therefore, the pure Canadian has really nothing to worry about.

I am not sure how receptive the US is to watering down the FATCA legislation. I know for a fact that the Fincance Minister has offered an expansion on the QI program to facilitate the IRS in document gathering on suspect individuals...but I don't think they like that idea.

Another very important point to remember, is that if FATCA is not implemented worldwide...how is it going to work? Tax cheats will just move there funds into a NON-FATCA compliant country. 

And never mind the paperwork every Canadian will have to fill out to prove/disprove there US heritage....wait until the banks raise EVERYONE'S fees in order to facilitate the 1 mil or so expats in Canada.....then you will see the complaining.

So do the needs of the many out weigh the needs of the few?


----------



## Ladyhawk

Mach7 said:


> To my understanding, Canadian citizens (first class) will not be asked any information other than IF they have any ties to the United States that would classify them as a 'US person'.
> 
> For us other Canadian Citizens (second class), we will be asked to fill in paperwork and sign waivers of privacy.


Yes but that is my point - the bank is going to have to contact every account holder and ask about their citizenship. We have not, until now, had to declare our citizenship when opening a bank account. Why should the banks now be asking about citizenship unless they intend to use that information? Canada has a lot of refugees who may be suspicious about these questions.



Mach7 said:


> Another very important point to remember, is that if FATCA is not implemented worldwide...how is it going to work? Tax cheats will just move there funds into a NON-FATCA compliant country.


Which is why I wonder how Australia and Japan will get away with this. However, I am hoping that other countries will follow their lead and refuse to enforce FATCA due to the expense and hassle of complying.

.


----------



## Guest

Mach7 said:


> _What will happen if non-US Canadians feel threatened by having their banks asking for information to give the IRS? What will the Canadian government do about that? The best case scenario looks to me like getting Canada to follow the lead of Australia and Japan, and refuse to comply with FATCA. The US will never repeal it, so we can only influence our own government. It may be a bit early to start class action lawsuits but it may come to that. There are lawyers among my friends and relatives whom I can ask for opinions on the issue.
> _
> 
> To my understanding, Canadian citizens (first class) will not be asked any information other than IF they have any ties to the United States that would classify them as a 'US person'.
> 
> ...
> 
> Another very important point to remember, is that if FATCA is not implemented worldwide...how is it going to work? Tax cheats will just move there funds into a NON-FATCA compliant country.
> 
> And never mind the paperwork every Canadian will have to fill out to prove/disprove there US heritage....wait until the banks raise EVERYONE'S fees in order to facilitate the 1 mil or so expats in Canada.....then you will see the complaining.
> 
> So do the needs of the many out weigh the needs of the few?


Agree on the further insanity on cost and administration of every Canadian (or everyone else in the world) having to prove / disprove their US heritage!!!

This interpretation from International Taxation Conference sponsored by IRS may say those like me have further worries in that my filings of (my) back U.S. tax returns for 2005, 2006, 2007 (then followed by yearly ones for 2008, 2009, 2010) were done as what I would define as “quiet disclosure” rather than an OVDI (Option for Voluntary Disclosure Initiative), which they didn’t have at the time I showed my hand.

IRS Says No New Relief Planned For Canadians
December 15th and 16th I attended the International Taxation conference sponsored by the IRS and held in Washington DC. There were more than 700 people in attendance and the lunchtime speaker on the first day was Douglas Shulman, the Commissioner of the IRS. At the end of his prepared remarks he answered only three questions posed by the audience... 


The IRS is aware of the problems caused by including registered retirement savings plans (RRSPs) in the OVDI penalty computation. 
The IRS is on the lookout for taxpayers who attempt to bring their unfiled returns current by using “quiet disclosure” and those who attempt to resolve their filing obligations in this way
will face harsh penalties. 

What we can conclude from my interaction with Mr. Shulman and Ms. Sereti is the following:



First, it is unlikely that there will be a made-in-Canada-solution for those Canadian residents who are not current on their US filing obligations. 
Second, there is the possibility of penalty abatement for participants in the OVDI provided the participant “opts out” of the program and can prove they had reasonable cause for failing to file returns. 
Third, since the IRS is aware of the problems caused by including RRSPs in the OVDI penalty computation and has not issued guidance on the matter it is reasonable to conclude that, for now, the treatment of these accounts is an open issue. 
Fourth, those who attempt to bring their filing obligations current by using “quiet disclosure” may find themselves in much more trouble than if they had used “voluntary disclosure.


calgary411
The Isaac Brock Society | Liberty and justice for all United States persons in Canada and abroad


----------



## Ladyhawk

Calgary411 said:


> This interpretation from International Taxation Conference sponsored by IRS may say those like me have further worries in that my filings of (my) back U.S. tax returns for 2005, 2006, 2007 (then followed by yearly ones for 2008, 2009, 2010) were done as what I would define as “quiet disclosure” rather than an OVDI (Option for Voluntary Disclosure Initiative), which they didn’t have at the time I showed my hand.


My thoughts too, Calgary. I am not sure what a non-quiet disclosure is aside from the OVDI, unless it is backfiling with explanatory letters that will I hope qualify as "reasonable cause" and then hope they agree. Even with a QD, though the IRS says it is coming down hard on them, what are they going to do to someone who owes little or no taxes? If you backfiled 3 years in 2007 and then yearly since then, I wouldn;t worry, they have had time to get back to you. Late filing of 1040s is very common and rarely punished in the US, so the big worry is the FBARs.


----------



## Peg

Calgary411 said:


> The IRS is on the lookout for taxpayers who attempt to bring their unfiled returns current by using “quiet disclosure” and those who attempt to resolve their filing obligations in this way
> will face harsh penalties.
> 
> Second, there is the possibility of penalty abatement for participants in the OVDI provided the participant “opts out” of the program and can prove they had reasonable cause for failing to file returns.
> Fourth, those who attempt to bring their filing obligations current by using “quiet disclosure” may find themselves in much more trouble than if they had used “voluntary disclosure.


This appears to say that you are in trouble if you do not join OVDI and just use "quiet disclosure". Then it says that you must opt out of OVDI to not pay penalties.

Which is it? OVDI or Quiet Disclosure?!?

How ironic if the stress of me joining OVDI and then opting out actually works...


----------



## Mona Lisa76

I am utterly terrified, that's all I can say. It's been five and a half months since my qd but realise they have six long years. All I can hope is that it's a degree of posturing on their part...I desperately want to believe my accountant was right that they still felt that silent disclosures would still be accepted in some cases, especially where reasonable cause could be argued...otherwise, they're just going to get more expats hiding or becoming openly defiant. The word brutal comes to mind...


----------



## Guest

Ladyhawk said:


> My thoughts too, Calgary. I am not sure what a non-quiet disclosure is aside from the OVDI, unless it is backfiling with explanatory letters that will I hope qualify as "reasonable cause" and then hope they agree. Even with a QD, though the IRS says it is coming down hard on them, what are they going to do to someone who owes little or no taxes? If you backfiled 3 years in 2007 and then yearly since then, I wouldn;t worry, they have had time to get back to you. Late filing of 1040s is very common and rarely punished in the US, so the big worry is the FBARs.


...which I am up to date on too. 

My first renunciation meeting in Calgary takes place late January (as does my husband's) and I hope to get some insight into my son's situation. 

I have an adult daughter who has actually worked in the States but is back in Canada. She doesn't want to address any of this until after her current school year. She is carrying enough guilt for being the first person to tell me that I should be filing U.S. taxes. I don't want her to carry such guilt so I refrain from discussing all my involvement on this issue with her right now. 

I can remember the anger then because I considered myself only a Canadian -- it was much like the anger I feel now. It is healthy to be dealing with it in whatever way I can. When FATCA hits the fan, there will surely be similar anger to (first-class) Canadians having to prove they are not U.S. citizens.

calgary411
The Isaac Brock Society | Liberty and justice for all United States persons in Canada and abroad


----------



## Mona Lisa76

Peg said:


> This appears to say that you are in trouble if you do not join OVDI and just use "quiet disclosure". Then it says that you must opt out of OVDI to not pay penalties.
> 
> Which is it? OVDI or Quiet Disclosure?!?
> 
> How ironic if the stress of me joining OVDI and then opting out actually works...


I suspect you'll be fine, Peg. I'm also pleased about the Isaasac Brock Society though feel an outsider being based in Britain...so far, there seems to be little awareness of these issues over here.


----------



## Guest

Mona Lisa76 said:


> I suspect you'll be fine, Peg. I'm also pleased about the Isaasac Brock Society though feel an outsider being based in Britain...so far, there seems to be little awareness of these issues over here.


Mona Lisa -- you are not an outsider. The subtitle says it all -- Liberty and justice for all United States persons in Canada and abroad. Posts and threads were being deleted -- hopefully, this gives a forum for the Expat Tax Issue where that censorship will not happen.

calgary411
The Isaac Brock Society | Liberty and justice for all United States persons in Canada and abroad


----------



## Omater

Mona Lisa76 said:


> I am utterly terrified, that's all I can say. It's been five and a half months since my qd but realise they have six long years. All I can hope is that it's a degree of posturing on their part...I desperately want to believe my accountant was right that they still felt that silent disclosures would still be accepted in some cases, especially where reasonable cause could be argued...otherwise, they're just going to get more expats hiding or becoming openly defiant. The word brutal comes to mind...


I have been told by two accountants, one in the U.S. and one cross border accountant here that the IRS does not go back beyond 3 years unless something triggers them to go further because they just do not have the time to look at 6 or 7 years on everybody. The U.S. accountant told me not to bother filing beyond 3 years while the cross border guy said it had to be 6 years, because they want to see us send 6 years. I chose to go with the 6 years because the more paper they have to look at from a million plus of us, the slower they will be to respond if they need to. I owed them no taxes, but the reporting and paperwork were stressful. With this desparate money grab I worry that they will analyze the information they get and figure out another form that will guarantee them some funds. I will never trust the US government again.

I think I have a couple of years before I have to worry about what they will do about my late FBAR's and paperwork. I will keep sending tax returns, etc. I hope we will all know what to fear for sure in 6 months time. Hopefully I will know enough by then to make the decision of whether or not I will renounce. I still think we could all make some noise and make FATCA go away, but it takes numbers of us not just a few. 

I saw a documentary the other night about Chinese farmers who were fighting the government and utility companies who were flooding their farmlands. One guy said that they can easily bend and break a few chopsticks but they can't bend a handful.


----------



## Ladyhawk

Calgary411 said:


> Posts and threads were being deleted -- hopefully, this gives a forum for the Expat Tax Issue where that censorship will not happen.
> 
> calgary411
> The Isaac Brock Society | Liberty and justice for all United States persons in Canada and abroad


I think I missed something - what posts and threads were deleted? Here? I was away from here for a couple of weeks and haven't finished catching up yet.


----------



## Mona Lisa76

Omater said:


> I have been told by two accountants, one in the U.S. and one cross border accountant here that the IRS does not go back beyond 3 years unless something triggers them to go further because they just do not have the time to look at 6 or 7 years on everybody. The U.S. accountant told me not to bother filing beyond 3 years while the cross border guy said it had to be 6 years, because they want to see us send 6 years. I chose to go with the 6 years because the more paper they have to look at from a million plus of us, the slower they will be to respond if they need to. I owed them no taxes, but the reporting and paperwork were stressful. With this desparate money grab I worry that they will analyze the information they get and figure out another form that will guarantee them some funds. I will never trust the US government again.
> 
> I think I have a couple of years before I have to worry about what they will do about my late FBAR's and paperwork. I will keep sending tax returns, etc. I hope we will all know what to fear for sure in 6 months time. Hopefully I will know enough by then to make the decision of whether or not I will renounce. I still think we could all make some noise and make FATCA go away, but it takes numbers of us not just a few.
> 
> I saw a documentary the other night about Chinese farmers who were fighting the government and utility companies who were flooding their farmlands. One guy said that they can easily bend and break a few chopsticks but they can't bend a handful.


I understand that the statute of limitations cam be extended to six years if an expat has underdeclared their income by more than 25% though think you're probably right that they would rarely go beyond three years unless it was for a large sum of money. Though in saying that, they made a minor readjustment upwards on the tax balance due for my amended 2007 return. They made this adjustment upwards in Sept 2011 when the normal three year statute for 2007 should have run out on June 15 of this year, as the three years sol should have starte from 15 June 2008, etc.


----------



## byline

Omater said:


> I have been told by two accountants, one in the U.S. and one cross border accountant here that the IRS does not go back beyond 3 years unless something triggers them to go further because they just do not have the time to look at 6 or 7 years on everybody. The U.S. accountant told me not to bother filing beyond 3 years while the cross border guy said it had to be 6 years, because they want to see us send 6 years.


I was told the same thing by my accountant who specializes in U.S./Canadian tax laws. He said he advises all his U.S. clients according to his 6-3-1 rule. He says we can file six returns, but that's overkill and will cost us more money than we need to spend. We can file three returns, and three will suffice because they show the IRS our income pattern. Or we can file only one return, but he doesn't advise that because it doesn't show the IRS the pattern. I filed returns for 2010, 2009 and 2008, and (per his advice) filed only one FBAR for 2010. I guess I'll have to wait and find out if he was right. But he told us he gave the same advice to his clients when the 2009 "voluntary disclosure" period came and went, and he said none of his clients were penalized or audited. And they're all ordinary people like me, folks who owe no income tax in Canada and so of course owe no tax in the U.S.


----------



## Peg

Omater said:


> I saw a documentary the other night about Chinese farmers who were fighting the government and utility companies who were flooding their farmlands. One guy said that they can easily bend and break a few chopsticks but they can't bend a handful.


Love that analogy!


----------



## Ladyhawk

byline said:


> I was told the same thing by my accountant who specializes in U.S./Canadian tax laws. He said he advises all his U.S. clients according to his 6-3-1 rule. He says we can file six returns, but that's overkill and will cost us more money than we need to spend. We can file three returns, and three will suffice because they show the IRS our income pattern. Or we can file only one return, but he doesn't advise that because it doesn't show the IRS the pattern. I filed returns for 2010, 2009 and 2008, and (per his advice) filed only one FBAR for 2010. I guess I'll have to wait and find out if he was right. But he told us he gave the same advice to his clients when the 2009 "voluntary disclosure" period came and went, and he said none of his clients were penalized or audited. And they're all ordinary people like me, folks who owe no income tax in Canada and so of course owe no tax in the U.S.


Interesting take, sounds sensible to me if you owe no back taxes. But why only one FBAR? And with or without a cover letter citing "reasonable cause"?


----------



## byline

Ladyhawk said:


> Interesting take, sounds sensible to me if you owe no back taxes. But why only one FBAR? And with or without a cover letter citing "reasonable cause"?


Well, he didn't advise me to include a letter, so I didn't write one. And I don't know why only one FBAR. The deadline for the 2010 FBAR was nearing, and so maybe he wanted to make sure I met that deadline first. Basically I handed the FBAR over to him, and his office submitted it for me.


----------



## Guest

Calgary411 said:


> Agree on the further insanity on cost and administration of every Canadian (or everyone else in the world) having to prove / disprove their US heritage!!!
> 
> This interpretation from International Taxation Conference sponsored by IRS may say those like me have further worries in that my filings of (my) back U.S. tax returns for 2005, 2006, 2007 (then followed by yearly ones for 2008, 2009, 2010) were done as what I would define as “quiet disclosure” rather than an OVDI (Option for Voluntary Disclosure Initiative), which they didn’t have at the time I showed my hand.
> 
> IRS Says No New Relief Planned For Canadians
> December 15th and 16th I attended the International Taxation conference sponsored by the IRS and held in Washington DC. There were more than 700 people in attendance and the lunchtime speaker on the first day was Douglas Shulman, the Commissioner of the IRS. At the end of his prepared remarks he answered only three questions posed by the audience...
> 
> 
> The IRS is aware of the problems caused by including registered retirement savings plans (RRSPs) in the OVDI penalty computation.
> The IRS is on the lookout for taxpayers who attempt to bring their unfiled returns current by using “quiet disclosure” and those who attempt to resolve their filing obligations in this way
> will face harsh penalties.
> 
> What we can conclude from my interaction with Mr. Shulman and Ms. Sereti is the following:
> 
> 
> 
> First, it is unlikely that there will be a made-in-Canada-solution for those Canadian residents who are not current on their US filing obligations.
> Second, there is the possibility of penalty abatement for participants in the OVDI provided the participant “opts out” of the program and can prove they had reasonable cause for failing to file returns.
> Third, since the IRS is aware of the problems caused by including RRSPs in the OVDI penalty computation and has not issued guidance on the matter it is reasonable to conclude that, for now, the treatment of these accounts is an open issue.
> Fourth, those who attempt to bring their filing obligations current by using “quiet disclosure” may find themselves in much more trouble than if they had used “voluntary disclosure.
> 
> 
> calgary411
> The Isaac Brock Society | Liberty and justice for all United States persons in Canada and abroad


Please keep in mind that this was posted by a lawyer. (I can't believe I actually said that, it _proves_ one can calm down! :tongue1:

Also, in a different thread, someone said his/her lawyer/accountant indicated that there have been 5000 returns (FUBARS also?) from Canada without a single penalty.


----------



## Guest

Ladyhawk said:


> I think I missed something - what posts and threads were deleted? Here? I was away from here for a couple of weeks and haven't finished catching up yet.


They moved a set of posts Schubert had written and they moved it to the "US Lounge" and a day (or post) later, they deleted the whole thing. They also deleted a thread I posted about "Are Americans Exceptional?" saying it wasn't apropos to this forum. The idea was to discuss the way the original concept of exceptionalism had changed to arrogance........


----------



## Mona Lisa76

Perhaps with the irs still threatening fines for late fbars and the possible unwanted attention that filing several earlier years fbars could bring, i believe there is a growing trend for advisers to recommend only filing fbars on a going forward basis only, as those for earlier years would have reached their six year statute of limitations soon enough, though probably only worth the risk if it's obvious no taxes are owed to US. 

In some ways it's disconcerting that there are such varying opinions though. I do vaguely recall my accountant sugesting the going firward plan but only if I had no taxes owed, whic, alas, I owed substantial amounys (though I was in the vast minority).

Unless your situation is completely straightforward, I'd recommend seeking professional advise due to all the possible risks. It seems the stakes are far too high to get it wrong unless your situation is extremely simple.


----------



## byline

Mona Lisa76 said:


> In some ways it's disconcerting that there are such varying opinions though.


Yes!!! This is a big part of what bothers me. Not only has the IRS not taken the initiative to uniformly inform citizens worldwide of their filing obligations, but they have left it to various "interpretations" ... so do they wonder why there's so much misinformation? I don't. But in the end, we're still the ones left holding the bag.


----------



## Guest

Lets look at it from a different perspective. 

I am assuming that the IRS is going to penalize me, not for owing tax but for late filing. I have accepted that and so should everyone else.

I REFUSE to pay penalties, and as long as Revenue Canada maintains it position that they will not collect on behalf of the IRS...your money is safe.

This of course means that you might not be able to travel south...not sure, but I wouldn't.

As with most things in the US....these penalties will continue to grow year after year after year. Eventually...as long as we all stick together on this and fight....I can see some amnesty like they did with the draft dodgers of the 60s and 70s. Forgive and forget.

I was on the fence about this, but now I am in total agreement with PetrosResearch. 

This is a *Financial Civil War* here folks. And the Americans want to take is our bank accounts. There weapon is legislation and double talk...all we have are 6 mil expat soldiers and hopefully the backing of the Governments we reside in. When FATCA is implemented, the FFIs will become the _SS_ of the _IRS._


----------



## smccarth

The best case scenario looks to me like getting Canada to follow the lead of Australia and Japan, and refuse to comply with FATCA. The US will never repeal it, so we can only influence our own government. It may be a bit early to start class action lawsuits but it may come to that. There are lawyers among my friends and relatives whom I can ask for opinions on the issue.[/QUOTE]

I have seen several references to Australia and Japan refusing to comply with FATCA.
When I've tried to research this, I could find no documents confirming that this is the position of these countries. Can anyone provide a source to confirm this assertion ?


----------



## Guest

_The best case scenario looks to me like getting Canada to follow the lead of Australia and Japan, and refuse to comply with FATCA. The US will never repeal it, so we can only influence our own government. It may be a bit early to start class action lawsuits but it may come to that. There are lawyers among my friends and relatives whom I can ask for opinions on the issue.[/QUOTE]_

Unfortunatley i don't think that will happen. Canadian FFIs have too many attachments to the US to opt out. 

The only way we can make a difference is to NOT SIGN the privacy waiver that will be placed in front of you come 2013.

IF YOU SIGN THIS WAIVER, you can forget about a class action suit helping you.


----------



## Guest

I have seen several references to Australia and Japan refusing to comply with FATCA.
When I've tried to research this, I could find no documents confirming that this is the position of these countries. Can anyone provide a source to confirm this assertion ?[/QUOTE]

Related / close but no cigar...

Deloitte | FATCA Comment Letter to IRS and Responses

Don?t waste money on FATCA | Asian Banking & Finance

http://www.aca.ch/irstreas.pdf

Expats Call For FATCA Repeal - Forbes


----------



## Guest

Ladyhawk said:


> I think I missed something - what posts and threads were deleted? Here? I was away from here for a couple of weeks and haven't finished catching up yet.


If someone else hasn't told you, send me a private email and I'll tell you ... not on this forum.


----------



## Guest

Mach7 said:


> Lets look at it from a different perspective.
> 
> I am assuming that the IRS is going to penalize me, not for owing tax but for late filing. I have accepted that and so should everyone else.
> 
> I REFUSE to pay penalties, and as long as Revenue Canada maintains it position that they will not collect on behalf of the IRS...your money is safe.
> 
> This of course means that you might not be able to travel south...not sure, but I wouldn't.
> 
> As with most things in the US....these penalties will continue to grow year after year after year. Eventually...as long as we all stick together on this and fight....I can see some amnesty like they did with the draft dodgers of the 60s and 70s. Forgive and forget.
> 
> I was on the fence about this, but now I am in total agreement with PetrosResearch.
> 
> This is a *Financial Civil War* here folks. And the Americans want to take is our bank accounts. There weapon is legislation and double talk...all we have are 6 mil expat soldiers and hopefully the backing of the Governments we reside in. When FATCA is implemented, the FFIs will become the _SS_ of the _IRS._


I'll repeat here what I said in my letter to Flaherty, Baird, the opposition critics, and my own MP back on October 31 (and no I wasn't playing trick or treat). We're watching you politicians and what you do, and don't do, to protect us in this mess. We'll remember on next election day, and what you do or don't do will influence our vote.

I suggest you write to your MP and to the ministers and opposition critics and say the same thing, loud and clear. For whatever reason 39% of us voted some of those turkies in, and a lot more than 61% of us in the next election can turf them out on their fat butts.

For the record: from Flaherty, my October 31 generated a receipt acknowledgement saying my concerns would be called to the Minister's attention, but that's all I've heard.

From Baird, I haven't heard a g*****ned thing nor from Foreign Affairs.

The Liberal critics seem to be gazing at their navels. Diddly squat from them.

The NDP have replied to me several times and have an admirable group letter to Flaherty their BC caucus sent a couple of months ago, their Foreign Affairs critic was very responsive to me.

Elizabeth May hasn't replied either, but she's a caucus of one so that's little surprise.

Guess who gets my vote in the next election?

Yes this is war. Yes we should pull our investment money out of the US, NOW. (Did that two months ago.) But to fight we need to mobilize our all-too-often spineless politicians in our own country, which is why I suggest being blunt with them about what happens next election if they ignore us. And why I'm publicizing my own experiences to date with the political parties. I'm but one person, maybe others have had different experiences, if so please share them. (Where the blazes are the Liberals on this issue? Does anyone know? Do they even know?)


----------



## Miller Worsley

Schubert said:


> I'll repeat here what I said in my letter to Flaherty, Baird, the opposition critics, and my own MP back on October 31 (and no I wasn't playing trick or treat). We're watching you politicians and what you do, and don't do, to protect us in this mess. We'll remember on next election day, and what you do or don't do will influence our vote.
> 
> I suggest you write to your MP and to the ministers and opposition critics and say the same thing, loud and clear. For whatever reason 39% of us voted some of those turkies in, and a lot more than 61% of us in the next election can turf them out on their fat butts.
> 
> For the record: from Flaherty, my October 31 generated a receipt acknowledgement saying my concerns would be called to the Minister's attention, but that's all I've heard.
> 
> From Baird, I haven't heard a g*****ned thing nor from Foreign Affairs.
> 
> The Liberal critics seem to be gazing at their navels. Diddly squat from them.
> 
> The NDP have replied to me several times and have an admirable group letter to Flaherty their BC caucus sent a couple of months ago, their Foreign Affairs critic was very responsive to me.
> 
> Elizabeth May hasn't replied either, but she's a caucus of one so that's little surprise.
> 
> Guess who gets my vote in the next election?
> 
> Yes this is war. Yes we should pull our investment money out of the US, NOW. (Did that two months ago.) But to fight we need to mobilize our all-too-often spineless politicians in our own country, which is why I suggest being blunt with them about what happens next election if they ignore us. And why I'm publicizing my own experiences to date with the political parties. I'm but one person, maybe others have had different experiences, if so please share them. (Where the blazes are the Liberals on this issue? Does anyone know? Do they even know?)


There could be more going on behind the scenes than it appears. It's hard for the gov't to be both pursuing a new border deal and at the same time publicly telling the U.S. they can go stuff it. It would make sense to take every opportunity to stress to the U.S., even behind closed doors, what the likely unintended consquences are of these policies. There are the obvious ones, like a drop in tourism and dumping of U.S. securities. They could also quietly suggest that a lack of meaningful relief for Canadians could result in a much less friendly gov't on the U.S.'s northern border. There is a substantial number of votes at stake, which could make all the difference.

This seems like a gift for the opposition, particularly with the make-up of the current parliament. With his New Brunswick (where this has received extra attention) roots and his leadership ambitions, it's surprising Dominic LeBlanc isn't all over this. The timing for a really tough stance may not seem right for him or the Liberal party, as they go through their re-building.

The NDP may also have a significant opportunity. It wouldn't be shocking if they conclude that offering to set up a state or state-backed banking operation to protect Canadians from FATCA is a vote winner. Maybe in combination with Canada's declining postal operations. A year ago, the idea would likely have been laughed out of the room. It makes dubious economic sense and would likely have its own series of unintended consequences. Sense, however, seems to be one of the casualties in all of this. Two years from now, if nothing changes, it could look like a viable option.


----------



## Vangrrl

Schubert said:


> I'm but one person, maybe others have had different experiences, if so please share them. (Where the blazes are the Liberals on this issue? Does anyone know? Do they even know?)


I've received a reply from Minister Flaherty (undoubtedly the same as everyone else) and just as I was ready to write him off, I recently received a reply also from my local MP - Conservative, Mark Warawa. 

My feelings about politics aside, I actually think the current government understands the issue and has shown themselves to be on our side. I believe that the "solution" to this issue is ultimately going to come from OUR government and NOT the IRS. I will be continuing to pursue correspondence with them. My next round of letters will be concerning FATCA (as I'm sure many others will as well).


----------

