# FBAR Penalty in Canada!



## Guest

Hello.

I am a US citizen who has lived and worked in Canada all my life. I have permanent resident status in Canada, and very shortly will have my Canadian citizenship.

All my accounts are in Canada, i have no criminal record, have always been law-abiding, and have always filed my taxes on time (Revenue Canada).

As with most people, I was unaware of the filing requirements but, for the last month or so, have got my paperwork in order through an Accountant firm and will be filing 6 years of income tax returns and 6 years of FBARS tomorrow morning.

I understand the FBAR penalties are stiff, but I am also aware that even for a non-willfull violation no penalties can be levied if you have a 'reasonable cause'.[/B]

Here are my two questions;

If they reject my reasonable cause and deem necessary to place penalties on me for late FBAR filings. What happens if I refuse to pay them?

If for example, I refuse to fork over my hard earned $ because of filing late paperwork, I am assuming they have little power north of the border to freeze my accounts.

I agree that I would be in trouble if I went to the US...but what can they do?

Say that FATCA comes into effect in 2014...then what? Do they have the power to take from me then???

Question 2.

Since the IRS has been employed to collect for these fines and penalties...will the IRS Tax Advocate be available to me regarding a penalty against late FBAR filing?

For those of you who have not filed as of yet...make sure when you send in your FBARs you have a strong letter outlining your reason for late filing.

I have been told that no one in Canada has been penalized yet. There is a lot of mis-information out there, be careful what you read.

The best to everyone


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## pwdunn

I'd really be interested in the answer to these questions too. I don't know anything about the question, but my understanding is that Canada will not enforce FBAR penalties and you cannot be extradited for civil or criminal FBAR penalties. I think that Canadians are among the many who have been assessed penalties under OVDI programs. I have not heard that the IRS has assessed penalties against those making quiet disclosures but just give them time: they are after all overworked with so many cases at this point.

Whether the federal officials will eventually detain at the border someone owing FBAR penalties is the big question. See this post by Phil Hodgen, as an anymous testimony is given there and some knowledgable legal minds answer that questions (Hodgen.com).

Personally, I think it better not to give them account information, because they cannot assess penalties if they don't have that information. You might also consider filing a Fifth Amendment FBAR to satisfy filing requirements.


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## Guest

Mach7 said:


> Hello.
> 
> As with most people, I was unaware of the filing requirements but, for the last month or so, have got my paperwork in order through an Accountant firm and will be filing 6 years of income tax returns and 6 years of FBARS tomorrow morning.
> 
> I understand the FBAR penalties are stiff, but I am also aware that even for a non-willfull violation no penalties can be levied if you have a 'reasonable cause'.[/B]
> 
> Here are my two questions;
> 
> If they reject my reasonable cause and deem necessary to place penalties on me for late FBAR filings. What happens if I refuse to pay them?
> 
> If for example, I refuse to fork over my hard earned $ because of filing late paperwork, I am assuming they have little power north of the border to freeze my accounts.
> 
> I agree that I would be in trouble if I went to the US...but what can they do?
> 
> Say that FATCA comes into effect in 2014...then what? Do they have the power to take from me then???
> 
> Question 2.
> 
> Since the IRS has been employed to collect for these fines and penalties...will the IRS Tax Advocate be available to me regarding a penalty against late FBAR filing?
> 
> 
> 
> I have been told that no one in Canada has been penalized yet. There is a lot of mis-information out there, be careful what you read.
> 
> The best to everyone


Hi Mach 7, welcome to the forum.

If you refuse to pay them, their only recourse at this point is to instigate litigation, which would be rather difficult to actually put in play.When FATCAT comes into effect, yes, they can force the financial institutions who hold your accounts send 30% to IRS.

I don't know anything about Taxpayer Advocate - if you check out this FB page 
https://www.facebook.com/groups/281311018546415/#!/groups/281311018546415/members/ and contact Paul Mend, he can probably tell you about it as he has mentioned using them

I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?


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## Guest

nobledreamer said:


> When FATCAT comes into effect, yes, they can force the financial institutions who hold your accounts send 30% to IRS.


That is completely illegal and unenforceable under the Canada-US Tax Treaty. This has been stated repeatedly and publicly both by Canada Revenue Agency and by Jim Flaherty, our Finance Minister. Banks in Canada can NOT remit money directly to the IRS, either under that treaty or under Canadian banking legislation. For the IRS to try to collect or enforce tax liabilities or penalties directly from Canadian banks against Canadian citizens would be a clear violation of that treaty. In my non-lawyer opinion, for any Canadian financial institution to comply with a request for funds by the IRS would be illegal and eminently actionable in law in a Canadian federal court. And should be challenged, whether by individuals or in a class-action lawsuit.

Under the Canada-US Tax treaty, neither country can collect any tax liabilities or taxation information from residents of the other country except by requesting such action to be made by the other country's government (in practice, in Canada by Canada Revenue Agency). Under an article of that treaty, acknowledged in public letters by Minister Flaherty, no tax liabilities alleged by the US can be collected in Canada against anyone who was or is a Canadian citizen at the time those liabilities allegedly were incurred.

Please stop repeating as a given what the IRS (illegally) wants you to believe. What they are asking banks to do is, as far as I know (and I have asked Minister Flaherty by email to clarify this) illegal in Canada, and to my certain knowledge is also in violation of the treaty (just read the thing, if you can stand the turgid excuse for English prose in which it was written).

Let's hope our so-called "Harper Government" has the spine to uphold these facts and protect us from this.


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## pwdunn

*Again right*



Schubert said:


> That is completely illegal and unenforceable under the Canada-US Tax Treaty. This has been stated repeatedly and publicly both by Canada Revenue Agency and by Jim Flaherty, our Finance Minister. Banks in Canada can NOT remit money directly to the IRS, either under that treaty or under Canadian banking legislation. For the IRS to try to collect or enforce tax liabilities or penalties directly from Canadian banks against Canadian citizens would be a clear violation of that treaty. In my non-lawyer opinion, for any Canadian financial institution to comply with a request for funds by the IRS would be illegal and eminently actionable in law in a Canadian federal court. And should be challenged, whether by individuals or in a class-action lawsuit.
> 
> Under the Canada-US Tax treaty, neither country can collect any tax liabilities or taxation information from residents of the other country except by requesting such action to be made by the other country's government (in practice, in Canada by Canada Revenue Agency). Under an article of that treaty, acknowledged in public letters by Minister Flaherty, no tax liabilities alleged by the US can be collected in Canada against anyone who was or is a Canadian citizen at the time those liabilities allegedly were incurred.


The 30% withholding will be on payments made to non-compliant FFI (Foreign Financial Institution), and it will occur in the United states--but no Canadian bank should be able to do it. Nevertheless, I moved my accounts to a credit union. Here is a website that explains (pdf) (see #7-8).


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## Guest

PetrosResearch said:


> The 30% withholding will be on payments made to non-compliant FFI (Foreign Financial Institution), and it will occur in the United states--but no Canadian bank should be able to do it. Nevertheless, I moved my accounts to a credit union. Here is a website that explains (pdf) (see #7-8).


Thanks for this. That's a wrinkle that escaped me, and also may have escaped the person who extracted some wording from a BMO-Nesbitt Burns email that I posted elsewhere on this website.

If in fact the 30% (it's stated as 28% in the Qualified Intermediary Agreement stuff from BMO/NB but close enough) is only going to be assessed on US-source income, e.g., US T-bills, savings bonds, or US-head-officed stocks or mutual funds, then there is a simple solution. As I've already advocated elsewhere, if you own any US-sourced investments, dump them now before FATCA hits and reinvest the money in Canada or maybe elsewhere not in the US. That seems too simple, too stupid -- the IRS and US government would thereby be blasting both feet off their own legs, so to speak  I wish I could believe they're that dumb, and given the dysfunctionality of the US legislative process I guess I can believe it, but it seems too good to be true. Are we really sure of this point?

I do know that FATCA penalizes the FFIs 30% of their US assets if they aren't in compliance (if they haven't reported all their "US person" accounts, though how they can prove to IRS they've reported them all without in fact reporting all accounts for comparison, including accounts of Canadians who've never had any US citizenship in their lives even at birth, raises even more horrific concerns about imperialism and violation of our sovereignty). Which is why I've moved my accounts to a credit union (actually all my accounts already were with them, it's my RRSP that I moved over to them after dumping every US-anything that was in my portfolio), because they have no US assets at all so IRS can't penalize them so they aren't about to comply with FATCA. And of course no FFI wants to comply with FATCA because of the estimated millions, and with large FFIs it's estimated literally hundreds of millions, of admin costs to be in full compliance. Costs that the FFI will have to pass on to (presumably all) account-holders in (much) higher fees. If you think anti-bank and Occupy Everything protests have been big and noisy now, you ain't seen nothin' yet folks, if that happens.

But yes, if in fact the witholding occurs only at source for US-source investments, by gum they could enforce withholding from your RRSP or RRIF without violating the Canada-US treaty, I guess. But then if that is the case, who in their right noodle is going to keep one penny of their hard-earned-in-Canada savings in a US-source anything? And what will THAT do to the US economy?

This is starting to sound like a script reject from an ancient "Dumb, Dumber and Dummbest" flick.:clap2:

I read a column a few months ago, I forget whether it was in Economist or in the Guardian, suggesting that Obama and his cabinet are in way over their heads in terms of having a clue how to run a government or a country. It's possibilities like the above that start me wondering whether that column was rhetoric, wishful thinking, or the awful truth. If the latter, are these the people the world really wants sleeping with a black suitcase with a red button on it next to the bed?


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## Guest

_I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?_

I actually did my own research by calling Accountant firms all over the country (Canada). It seems that the words of our Finance Minister and the US ambassador to Canada might have had some effect...who knows.

Basically no one that has filed a 'quiet disclosure' has been penalized or fined. These individuals also attached a letter stating reasonable cause. 

As far as I was told, (and read). non-willful violations have a penalty attachment of not more than 10k per account.

In order for the IRS to attach a non-willful penalty, they must first ensure there was no reasonable cause, and your filed FBARs are in order (you didn't lie about your accounts) and you paid all investment income on said accounts.

The 'resonable cause' attachment letter is the big one. I actually got an Accountant firm to write mine up to make sure I had the 'buzz' words right.

The people that went into the OVDI program were basically fined and penalized. The way it was explained to me is that...if you have nothing to hide and have not evaded taxes...DO NOT GO INTO THE PROGRAM.

The Program assumes you have something to hide and is offering you amnesty.

Unfortunatley, for us up here in Canada, we are not steeped in the American way of (tax) life...so how the hell are we supposed to be up on IRS current affairs!

There is your reasonable cause.

So...i will play there game, i have filed my 1040's and fedex'd my FBARs to Detroit accuratley. 

But there is no way I am parting with my money that I earned with my own sweat because someone in Washington decided to dip into my bank account. The yanks are losin it!

My opinion of FATCA is this. It WILL be instituted, but in a water down version.

IMHO


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## pwdunn

*14 trillion in private foreign investment*



Schubert said:


> But yes, if in fact the witholding occurs only at source for US-source investments, by gum they could enforce withholding from your RRSP or RRIF without violating the Canada-US treaty, I guess. But then if that is the case, who in their right noodle is going to keep one penny of their hard-earned-in-Canada savings in a US-source anything? And what will THAT do to the US economy?
> 
> This is starting to sound like a script reject from an ancient "Dumb, Dumber and Dummbest"


I think that's exactly right; I read another report that said the US would lose 14 trillion in private foreign investment because of FATCA (see here). Let's face it, the world's banks can't comply with the information disclosure without violating the laws in their own countries. And since they can't comply, then foreign FFIs won't be able to do US transactions in the states.

Now there may soon be other solutions if you still want to trade US equities, bonds or other instruments (US dollars are a great thing to short right now). Other markets will open up US dollar transactions: so you will be able to trade US,CDN and international equities/options on the TSX/MSX or some alternative markets in Canada and elsewhere and the transactions will take place in US dollars--but they won't happen in the US. That means that non-US markets will get all the commissions. Right now, I trade CDN oil and gold mining equities and options on the US markets. But I won't be doing that once FATCA is implemented. But I am with you. I'm already 100% out of US investments since the day Obama announced his government's first budget.


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## LegalBeagle

*Canadian Human Rights laws vs. FATCA*

I also believe a strong barrier to FATCA in Canada is our Human Rights legislation.

For many Canadian citizens of US nationality, their only tie to US is "national or ethnic origin": place of birth. 

In Canada, banks and financial institution are governed by both the Charter and the Canadian Human Rights Act.

The Human Rights Act specifically prohibits discrimination based on "nationality or ethnic origin". FATCA requires discrimination against US-born Canadian citizens by their banks, because they would "differentiate adversely in relation to any individual" based on "nationality or ethnic origin".

To be rhetorical: Imagine if the US asked Canadian banks to identify all Canadian citizen customers who were born in Pakistan, and to then subject Canadians born in Pakistan to a US reporting and withholding regime which is different than any other nationality!

That's what FATCA asks banks to do – just substitute "Canadians Born in US" for "Canadians Born in Pakistan".

-----------------------------------------------
Here are the specific sections from the Human Rights Act:

"Prohibited grounds of discrimination
3. (1) For all purposes of this Act, the prohibited grounds of discrimination are race, national or ethnic origin, colour, religion, age, sex, sexual orientation, marital status, family status, disability and conviction for which a pardon has been granted.

Denial of good, service, facility or accommodation

5. It is a discriminatory practice in the provision of goods, services, facilities or accommodation customarily available to the general public

(a) to deny, or to deny access to, any such good, service, facility or accommodation to any individual, or

(b) to differentiate adversely in relation to any individual, on a prohibited ground of discrimination.


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## Pathologic1

If you don't pay the FBAR penalties after they knowingly waste their time and money to take it through a US Civil court, they can't do anything to you before or after FCAT to collect, unless you have US property in which case it can be seized. If you travel to the US they still can't do anything. You can't be arrested for a civil debt.

The only reason Canadians aren't specifically excluded from all this is that this one big scary phantom, but toothless boogeymen scares people like you and me into filing.

The only ones that need to be concerned about FBAR are those that are bona fide tax cheats and those that must file an amended tax return because they made a "mistake" and forgot about some income on their previous returns.

It's a sham for the rest of us so don't worry about it. As some have said no one that has filed quietly has had a problem and it's not just Canadians but anyone paying their fair share of taxes in a non-tax haven country.


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## Guest

When I first learned about the filing requirement, like most I became physically ill. It's hard to imagine losing everything you worked so hard for due to a paperwork misunderstanding.

Nonetheless, after that I began to educate myself and hunt for an Accountant. 

What impresses me the most about this forum is how many people understand our human rights and privacy laws. This is a comforting fact when talking about FATCA, and will be interesting to see how it is played out come 2014.

How ironic that the country that proudly boasts freedom and democracy are the ones that don't even understand there own laws...let alone another countries.

I have to agree with another poster. If the 'mad max' senario happens and the IRS decides to 'bait and switch' us after filing our FBARs, they are going to have a mob of Dual Citizens to deal with.


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## Mona Lisa76

Mach7 said:


> _I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?_
> 
> I actually did my own research by calling Accountant firms all over the country (Canada). It seems that the words of our Finance Minister and the US ambassador to Canada might have had some effect...who knows.
> 
> Basically no one that has filed a 'quiet disclosure' has been penalized or fined. These individuals also attached a letter stating reasonable cause.
> 
> As far as I was told, (and read). non-willful violations have a penalty attachment of not more than 10k per account.
> 
> In order for the IRS to attach a non-willful penalty, they must first ensure there was no reasonable cause, and your filed FBARs are in order (you didn't lie about your accounts) and you paid all investment income on said accounts.
> 
> The 'resonable cause' attachment letter is the big one. I actually got an Accountant firm to write mine up to make sure I had the 'buzz' words right.
> 
> The people that went into the OVDI program were basically fined and penalized. The way it was explained to me is that...if you have nothing to hide and have not evaded taxes...DO NOT GO INTO THE PROGRAM.
> 
> The Program assumes you have something to hide and is offering you amnesty.
> 
> Unfortunatley, for us up here in Canada, we are not steeped in the American way of (tax) life...so how the hell are we supposed to be up on IRS current affairs!
> 
> There is your reasonable cause.
> 
> So...i will play there game, i have filed my 1040's and fedex'd my FBARs to Detroit accuratley.
> 
> But there is no way I am parting with my money that I earned with my own sweat because someone in Washington decided to dip into my bank account. The yanks are losin it!
> 
> My opinion of FATCA is this. It WILL be instituted, but in a water down version.
> 
> IMHO


I'm pleased that this is being figured out so that the bulk of people who haven't filed will be ok. But I am that special case in which they may decide to clobber me with fbar because because I had to amend my returns showing that I had not checked the box in schedule B and thus technically deemed willful. I could well be the sacrificial lamb due to my quiet disclosure. As maddening as it is, I myself probably should have entered into OVDI so I could have salvaged at least something. But I agree that anyone else on here are better off not.

Knowing the American attitude, they are going to be enraged by what they regard as defiance and I wouldn't put it past them to realize that they're going to have to demonstrate that they are indeed going to start enforcing the fbar penalties to show they mean business.

I feel so desperately vulnerable right now, especially as I have till July 1, 2016 before I'll be through the statute of limitations for my last delinquent fbars for 2009 (having filed 2010's on time in 2011).

All I can think is that if they try to attack me is that I'll never cross the US border again if they try to ruin me. I will swear on the Bible that my mistakes were innocent and not intentional (not that they're going to believe that)....I would have been in a less onerous position had I not even been filing in the first place. In retrospect, I probably should have just started to comply on a going forward basis instead of amending four years of returns and six years fbars, etc.

I'm going to visit my parents early next year but explain to them that this may in fact turn out to be the very last time I'll be able to do so if this fbar thing becomes ugly.

What was so awful about all this is how no one could give me a straight answer on what to do to protect myself since they wereare legally obliged to stay within the law.


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## Mona Lisa76

I am starting to wonder if maybe it might be safer for my account and all my posts are deleted. For people like me, this could be the the perfect storm.


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## Guest

Mona Lisa76 said:


> I am starting to wonder if maybe it might be safer for my account and all my posts are deleted. For people like me, this could be the the perfect storm.


Is there a way to do this? I am thinking along the same lines.....


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## Mona Lisa76

nobledreamer said:


> Is there a way to do this? I am thinking along the same lines.....


Probably best to PM a moderator, especially as all these threads are openly searchable on Google...acall me paranoid, but IRS could become enraged by what's being discussed on this forum


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## Pathologic1

*paranoia*

Man we have some paranoid people out there.
If you just checked the wrong box but reported all of your income you wont hear anything, no one cares.
Unless its criminal there is no reason you need to worry about crossing the border. They don't arrest debtors like they did a few hundred years ago. 
And I'll say it once again. They can't collect from you unless you have property in the USA. They know that and so they wont even try and collect. Really. You can just ignore non-criminal FBAR penalties, IF they were to ever try and collect from someone..


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## Mona Lisa76

Pathologic1 said:


> Man we have some paranoid people out there.
> If you just checked the wrong box but reported all of your income you wont hear anything, no one cares.
> Unless its criminal there is no reason you need to worry about crossing the border. They don't arrest debtors like they did a few hundred years ago.
> And I'll say it once again. They can't collect from you unless you have property in the USA. They know that and so they wont even try and collect. Really. You can just ignore non-criminal FBAR penalties, IF they were to ever try and collect from someone..


But the point is, I didn't originally declare my UK passive income so could arguably be technically guilty of fraud. They need all the cash they can get right now. All I can hope is that they'll realize I made a good faith disclosure and paid back all my back taxes, interest and penalties as soon as I realized my error, along with the fbars. I'd like to think common sense will prevail but if they turn me into a golden poster child, they'll have to take it up through the courts. I doubt if they would go to all that expense when my total assets are less than $300,000 (including illiquid assets in a private pension scheme and collarateral in our jointly owned flat in London). 

My British husband has quite understandably said he'd obstruct any efforts for them to seize our home with a UK court injunction. He has paid all the mortgage for it from HIS account, purely from HIS UK sourced earnings. I will fight it tooth and nail if the s**t hits the fan. Though I am reasonably optimistic they won't try to get blood out of a turnip, it nonethless occurs to me that they may well decide to make an example by randomly clobbering a couple of quiet disclosures just to remind expats that they can do.

I think we all need to decide for ourselves what's the best course of action to take then get on with it and try to stop worrying so much....in my case, the ball's out of my court; I know I did the best I could to try and put things right so that is really all one can do in these sorts of onerous situations. Christmas is coming once again and I have a niece and nephews to think of; I've got to get on with living, especially as this will not be fully cleared up till at least sometime in 2016....I can't be continually living in terror.


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## Mona Lisa76

I've decided that while I'll still participate, that I'm no longer going to discuss my own particulars.


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## AmTaker

Pathologic1 said:


> If you don't pay the FBAR penalties after they knowingly waste their time and money to take it through a US Civil court, they can't do anything to you before or after FCAT to collect, unless you have US property in which case it can be seized. If you travel to the US they still can't do anything. You can't be arrested for a civil debt.


While I agree with the rest of your comments, I disagree with the last,. If a civil debt has been entered against you (whether private or government) and you don't pay in defiance of a court order, then you are technically in contempt of court and can be arrested. Of course, its not going to happen overnight, there will likely be lots of notices and the like, and chances for you to present your case, and its certainly not going to happen on a trip to the US. I am not going to restrict my movements across the border one bit.


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## Guest

_While I agree with the rest of your comments, I disagree with the last,. If a civil debt has been entered against you (whether private or government) and you don't pay in defiance of a court order, then you are technically in contempt of court and can be arrested. Of course, its not going to happen overnight, there will likely be lots of notices and the like, and chances for you to present your case, and its certainly not going to happen on a trip to the US. I am not going to restrict my movements across the border one bit._

IMHO, I honestly don't think that the US government is going to clog up the justice system for people that show 'reasonable cause' when filing late FBAR's.

Do you think that a US judisiary board is going to open up there busy court system for honest people like us who didn't file because they were too busy living and paying taxes in the country the reside?? It's hard enough to keep Revenue Canada happy let alone another entity I was unaware of.

If the above statement happens, there will be so many lawsuits and it will only take one successful one to set a presidence (spelling sorry).

Do you really think they will win when you present your 'reasonable cause' for a non willful penalty?? (Assuming of course that you tabulated everything on your FBARs and your tax history with Canada is clean).

Not to mention, what instruments do they have to advise us of changes to the US revenue system ie: I was NEVER advised and was NEVER told I had to file...and I have had numerous Accountants in the past who have done work for me.

Some could argue that point, but folks...this is life. I work, try to save money, raise my kids, try to make wife #2 happy, and hopefully save for a retirement.

There are a lot of things I do not know, and filing in the states was one of them.

I would hazard to guess that there are individuals that actually LIVE in the US that file there 1040 returns that do not know about the FBAR system (assuming they have accounts outside of the states).

Although the non willful penalty is draconian to say the least, if you have a good enough reason, like living in Canada or the UK all of your life...paying your taxes....abiding by the laws of your country...and honestly NOT knowing that you had this obligation with the IRS..i think you are going to be OK.

Remember as well that, although you divulge all of your FBAR information on your bank accounts, they DO NOT have the authorization to go into said accounts due to the Canadian banking privacy act.

They WILL however be able to look into your account information if you are under investigation, assuming you are targeted AND assuming FATCA comes into effect in 2014.

If FACTA becomes delayed again, then there fishing expeditions are on hold until such time.

This is why it is so very important to make sure the information on your FBARs is accurate and correct.

Another thing we haven't talked about here is the new IRS form that is to be filed with your 1040. Not sure of the form # 8838 or something...anyway, your account information will have to be tabulated on this form as well. Not sure but I think there is a draft version on the internet, and I think it comes into effect in 2011


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## Peg

What could the US Gov do with anything that I have said here? I've asked for clarification on how to file the required IRS and FBAR forms and how to renounce my citizenship. I have not broken any laws!


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## Baird68

Mach7 said:


> _I am quite curious as to who told you there have been no penalizations in Canada yet, presuming you are referring to FUBAR, not taxes?_
> 
> I actually did my own research by calling Accountant firms all over the country (Canada). It seems that the words of our Finance Minister and the US ambassador to Canada might have had some effect...who knows.
> 
> Basically no one that has filed a 'quiet disclosure' has been penalized or fined. These individuals also attached a letter stating reasonable cause.
> 
> As far as I was told, (and read). non-willful violations have a penalty attachment of not more than 10k per account.
> 
> In order for the IRS to attach a non-willful penalty, they must first ensure there was no reasonable cause, and your filed FBARs are in order (you didn't lie about your accounts) and you paid all investment income on said accounts.
> 
> The 'resonable cause' attachment letter is the big one. I actually got an Accountant firm to write mine up to make sure I had the 'buzz' words right.
> 
> The people that went into the OVDI program were basically fined and penalized. The way it was explained to me is that...if you have nothing to hide and have not evaded taxes...DO NOT GO INTO THE PROGRAM.
> 
> The Program assumes you have something to hide and is offering you amnesty.
> 
> Unfortunatley, for us up here in Canada, we are not steeped in the American way of (tax) life...so how the hell are we supposed to be up on IRS current affairs!
> 
> There is your reasonable cause.
> 
> So...i will play there game, i have filed my 1040's and fedex'd my FBARs to Detroit accuratley.
> 
> But there is no way I am parting with my money that I earned with my own sweat because someone in Washington decided to dip into my bank account. The yanks are losin it!
> 
> My opinion of FATCA is this. It WILL be instituted, but in a water down version.
> 
> IMHO


My accountant also told me that there have been no penalties reported yet. I am going to be getting rid of any U.S. stocks in my RRSP.


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## Guest

Mona Lisa76 said:


> Probably best to PM a moderator, especially as all these threads are openly searchable on Google...acall me paranoid, but IRS could become enraged by what's being discussed on this forum


Thanks Mona Lisa. I agree and imagine, for those of us who have yet to file anything, could create problems.


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## Baird68

Mona Lisa76 said:


> I'm pleased that this is being figured out so that the bulk of people who haven't filed will be ok. But I am that special case in which they may decide to clobber me with fbar because because I had to amend my returns showing that I had not checked the box in schedule B and thus technically deemed willful. I could well be the sacrificial lamb due to my quiet disclosure. As maddening as it is, I myself probably should have entered into OVDI so I could have salvaged at least something. But I agree that anyone else on here are better off not.
> 
> Knowing the American attitude, they are going to be enraged by what they regard as defiance and I wouldn't put it past them to realize that they're going to have to demonstrate that they are indeed going to start enforcing the fbar penalties to show they mean business.
> 
> I feel so desperately vulnerable right now, especially as I have till July 1, 2016 before I'll be through the statute of limitations for my last delinquent fbars for 2009 (having filed 2010's on time in 2011).
> 
> All I can think is that if they try to attack me is that I'll never cross the US border again if they try to ruin me. I will swear on the Bible that my mistakes were innocent and not intentional (not that they're going to believe that)....I would have been in a less onerous position had I not even been filing in the first place. In retrospect, I probably should have just started to comply on a going forward basis instead of amending four years of returns and six years fbars, etc.
> 
> I'm going to visit my parents early next year but explain to them that this may in fact turn out to be the very last time I'll be able to do so if this fbar thing becomes ugly.
> 
> What was so awful about all this is how no one could give me a straight answer on what to do to protect myself since they wereare legally obliged to stay within the law.


Could you have your parents come to a border town close to you and then you cross the border by car using an enhanced driver's license? 

I have a friend who is terrified to do anything as she came to Canada in the '80s and has joint signing authority on all accounts with her Canadian husband. He father is desperately ill as is her brother. Neither can travel so she is compelled to fly to the States to visit. She has no U.S. passport and didn't know about any of these issues until I told her last month. She is in a frozen state of denial and hopes this all goes away. I empathize with you but feel you are in a better state than my friend. My sense is that if you are fined for failing to report, then, so be it. You just stay in Canada and never cross the border again. If you didn't file, then the situation for you and all of us is the same... 2014 is just around the corner.


----------



## Nononymous

*update - reply from Flaherty's office, otherwise have totally forgotten about this*

A quick update on two fronts.

[1] I had a reply last week to my cranky-complaining-citizen letter, from Jim Flaherty's office. I am actually impressed, which is a rare thing. He sent an accurate, comprehensive two-page letter which stated quite unequivocally that Canada would under no circumstances collect FBAR penalties on behalf of the US.

[2] Since deciding not to proceed with renunciation last month (basically because of inconvenience) I had thought I'd do some minimal tax compliance this year and maybe renew my US passport. But now I'm just so relaxed about the whole thing I doubt I'll get around to it anytime soon. I am optimistic that FATCA will probably go away because of international resistance - and if it becomes an issue I can move my money to a credit union. FBAR simply offends me too much to comply. So for now I'm just going to return to my former state of willful ignorance, unless at some point I have problems crossing the border on a Canadian passport with a US birthplace, in which case I guess I'll deal with the paperwork.


----------



## pwdunn

Nononymous said:


> A quick update on two fronts.
> 
> [1] I had a reply last week to my cranky-complaining-citizen letter, from Jim Flaherty's office. I am actually impressed, which is a rare thing. He sent an accurate, comprehensive two-page letter which stated quite unequivocally that Canada would under no circumstances collect FBAR penalties on behalf of the US.
> 
> [2] Since deciding not to proceed with renunciation last month (basically because of inconvenience) I had thought I'd do some minimal tax compliance this year and maybe renew my US passport. But now I'm just so relaxed about the whole thing I doubt I'll get around to it anytime soon. I am optimistic that FATCA will probably go away because of international resistance - and if it becomes an issue I can move my money to a credit union. FBAR simply offends me too much to comply. So for now I'm just going to return to my former state of willful ignorance, unless at some point I have problems crossing the border on a Canadian passport with a US birthplace, in which case I guess I'll deal with the paperwork.


I agree. It offends me too.

It would be great if you could share the detailed contents of this letter from Flaherty's office, minus any private information of course.


----------



## Nononymous

PetrosResearch said:


> I agree. It offends me too.
> 
> It would be great if you could share the detailed contents of this letter from Flaherty's office, minus any private information of course.


To be honest, I tossed it in the recycling after reading it because it didn't tell me anything I didn't already know from this forum and the more responsible media coverage. It's just the generic information letter that his office is sending out - nothing personal. Send him a cranky letter and you'll probably get one too. That being said, it was a good summary of the current situation and I was pleased to see them state, on paper and for the record, that FBAR penalties are not collectible under the tax treaty.

Certainly better than my crap MP, Michelle Rempel in Calgary, who didn't even acknowledge receipt of her copy...


----------



## northof60

Nononymous said:


> A quick update on two fronts.
> 
> [1] I had a reply last week to my cranky-complaining-citizen letter, from Jim Flaherty's office. I am actually impressed, which is a rare thing. He sent an accurate, comprehensive two-page letter which stated quite unequivocally that Canada would under no circumstances collect FBAR penalties on behalf of the US.
> 
> [2] Since deciding not to proceed with renunciation last month (basically because of inconvenience) I had thought I'd do some minimal tax compliance this year and maybe renew my US passport. But now I'm just so relaxed about the whole thing I doubt I'll get around to it anytime soon. I am optimistic that FATCA will probably go away because of international resistance - and if it becomes an issue I can move my money to a credit union. FBAR simply offends me too much to comply. So for now I'm just going to return to my former state of willful ignorance, unless at some point I have problems crossing the border on a Canadian passport with a US birthplace, in which case I guess I'll deal with the paperwork.


I received the same letter from the Finance Minister's office, and was duly pleased. I would like to see the Canadian govenment use this oil pipeline thing to strongarm the US into scrapping FATCAT and FUBAR: "we would be happy to sell you our oil through a nice new pipeline, but here's the thing....".

As for point 2, I am equally offended by FBAR, and intend to follow the US ambassador's advice to do nothing and wait and see. My wife and I are Canadians living in Canada. I have never filed US tax forms and will not start now. The US is a foreign country. Their laws are without effect here. I would no more send my personal financial information in the form of FBAR to the government of a foreign country than I would to that nice Nigerian man who emailed me just the other day looking for the same information. The IRS can get stuffed.


----------



## pwdunn

northof60 said:


> As for point 2, I am equally offended by FBAR, and intend to follow the US ambassador's advice to do nothing and wait and see. My wife and I are Canadians living in Canada. I have never filed US tax forms and will not start now. The US is a foreign country. Their laws are without effect here. I would no more send my personal financial information in the form of FBAR to the government of a foreign country than I would to that nice Nigerian man who emailed me just the other day looking for the same information. *The IRS can get stuffed.*


I could only hit the "Like" button once. Thanks very much. This is exactly my plan. But I'm so lucky, they know about me because I had an accountant a few years ago that said that I should file in the states. But I'm Canadian now and I will not respond to any more of their correspondence. I am pleased to see that others are doing the same.


----------



## Guest

*MP, Calgary North Response / but not from Minister Flaherty*



Nononymous said:


> To be honest, I tossed it in the recycling after reading it because it didn't tell me anything I didn't already know from this forum and the more responsible media coverage. It's just the generic information letter that his office is sending out - nothing personal. Send him a cranky letter and you'll probably get one too. That being said, it was a good summary of the current situation and I was pleased to see them state, on paper and for the record, that FBAR penalties are not collectible under the tax treaty.
> 
> Certainly better than my crap MP, Michelle Rempel in Calgary, who didn't even acknowledge receipt of her copy...


I heard from Michelle Rempel's office (not from her) -- in fact I received the exact same obviously stock letter and attachments twice, the first time and then in response to my email back, saying I didn't need a copy of the Finance Minister's letter to the U.S. media nor their fact sheet -- that I was quite up to date on all media reports, thank you and didn't appreciate being patted on the head by the U.S. Ambassador to Canada. What I wanted to know is my MP's thoughts and how she was going deal with it on behalf of her constituents. I did get a phone call in response to that email, but just that it would take time to go through the correct avenues. I haven't yet heard from Flaherty's office.


----------



## Guest

1] I had a reply last week to my cranky-complaining-citizen letter, from Jim Flaherty's office. I am actually impressed, which is a rare thing. He sent an accurate, comprehensive two-page letter which stated quite unequivocally that Canada would under no circumstances collect FBAR penalties on behalf of the US.

[2] Since deciding not to proceed with renunciation last month (basically because of inconvenience) I had thought I'd do some minimal tax compliance this year and maybe renew my US passport. But now I'm just so relaxed about the whole thing I doubt I'll get around to it anytime soon. I am optimistic that FATCA will probably go away because of international resistance - and if it becomes an issue I can move my money to a credit union. FBAR simply offends me too much to comply. So for now I'm just going to return to my former state of willful ignorance, unless at some point I have problems crossing the border on a Canadian passport with a US birthplace, in which case I guess I'll deal with the paperwork.


I hear what a lot of you are saying. And relying on the Canadian government to pull our ass out of the fire is not an option. 

I too have emailed Mr. Flaherty, I too received a reply. Having said this I applaud our politicians for taking a stand...and this WILL help us if it comes down to that..but the question is will THEY help us.

To translate...political pressure and posturing is a good thing in this situation...but when it comes time to have them sanction the US government...its just not going to happen. 

What might happen is some sort of a 'grandfather' clause that gives blanket amnesty to anyone who has filed by a certain deadline, but after that you are on your own.

My advice....File your tax returns, and tabulate your FBARs. It is a painless and easy process to do. 

I understand and agree that this has to stop...but the situation is that you now know about it, so you should comply.


----------



## Baird68

Nononymous said:


> A quick update on two fronts.
> 
> [1] I had a reply last week to my cranky-complaining-citizen letter, from Jim Flaherty's office. I am actually impressed, which is a rare thing. He sent an accurate, comprehensive two-page letter which stated quite unequivocally that Canada would under no circumstances collect FBAR penalties on behalf of the US.
> 
> [2] Since deciding not to proceed with renunciation last month (basically because of inconvenience) I had thought I'd do some minimal tax compliance this year and maybe renew my US passport. But now I'm just so relaxed about the whole thing I doubt I'll get around to it anytime soon. I am optimistic that FATCA will probably go away because of international resistance - and if it becomes an issue I can move my money to a credit union. FBAR simply offends me too much to comply. So for now I'm just going to return to my former state of willful ignorance, unless at some point I have problems crossing the border on a Canadian passport with a US birthplace, in which case I guess I'll deal with the paperwork.


I got the same letter from Mr. Flaherty. It was reassuring to know the Canadian government has no intention to support the collection of taxes or fines from U.S. born Canadian citizens. However, he did send a third page explaining FBARs and FATCA and it seems while our government is doing all they can to smooth things over so we are not victimized by the FBAR tax grab, I have serious doubts they will be able to pull that off. It seems that the U.S. is reluctant to compromise on issues. Keystone comes to mind.


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## Baird68

I love your attitude!


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## Baird68

PetrosResearch said:


> I agree. It offends me too.
> 
> It would be great if you could share the detailed contents of this letter from Flaherty's office, minus any private information of course.


I have the letter from Flaherty and will always keep it just in case. I think that it is evidence that I was completely taken off guard to find that I am still an American citizen and hence subject to tax filing and "offshore" account reporting. I sought the help of our Finance Minister and my Member of Parliament.


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## Nononymous

Baird68 said:


> I got the same letter from Mr. Flaherty. It was reassuring to know the Canadian government has no intention to support the collection of taxes or fines from U.S. born Canadian citizens. However, he did send a third page explaining FBARs and FATCA and it seems while our government is doing all they can to smooth things over so we are not victimized by the FBAR tax grab, I have serious doubts they will be able to pull that off. It seems that the U.S. is reluctant to compromise on issues. Keystone comes to mind.


What I'm being sanguine about is two things: 

Massive non-compliance with FATCA from countries with things like, say, constitutions and privacy laws, will render it de facto pointless even if it stays on the books. Then there's the credit union option as fall-back.

Similarly the idiocy of FBAR when actually enforced could result in the reporting threshold being raised beyond $10k, which is ridiculous. This would make the problem go away for most regular folks. I rather enjoyed the US ambassador - bless his little heart - telling us all to wait and see.


----------



## Guest

*here is the link to the Flaherty letter*



PetrosResearch said:


> I agree. It offends me too.
> 
> It would be great if you could share the detailed contents of this letter from Flaherty's office, minus any private information of course.


The standard letter from Flaherty was also sent to Denise Savoie, MP from Victoria. Go to this link to see the text; I've seen a letter to someone here in Ottawa by Flaherty (he hasn't replied yet to my letter to him but it's only been a week or so since I sent it) and it's exactly the same letter my friend got, except for the addressee.

US Tax Information
scroll to the bottom of the page, it's the last PDF link called "response from minister flaherty"


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## Peg

Mach7 said:


> My advice....File your tax returns, and tabulate your FBARs. It is a painless and easy process to do.


While I agree that it is prudent to either file or at least have it ready to file, I disagree that it is "painless and easy". It took many hours to compile all of the information and track down account balances from the last 6 years. Trying to learn enough of the IRS rules to complete my own returns was a challenge! Perhaps if someone is meticulous with their record-keeping and already has an accountant who has their information and only has earned income it could be easy and painless. Although I had most of the information needed it had to be sorted out and I do not use an accountant. 

:canada:


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## Peg

Nononymous said:


> Similarly the idiocy of FBAR when actually enforced could result in the reporting threshold being raised beyond $10k, which is ridiculous. This would make the problem go away for most regular folks.


In 1971 the FBAR threshold was $10,000 and it is still that level 40 years later. Using an online inflation calculator, that would be $56,000 today. Do I hear $250,000???


----------



## Vangrrl

While I am totally on the side of "lets not be overly paranoid", I am going to just advise caution on the point of travelling to the US on a Canadian passport.

I HAVE been asked about my US birthplace (and Canadian passport) at the border on 2 separate occasions. It was enough for ME personally to decide that a US passport is something that I need to carry to the US. I have a pretty high threshold for uncertainty with regards to this tax issue and I don't fear being put in jail, but for me having experienced this first hand, not once but TWICE (at 2 different crossings), I don't want to be turned away at the border and potentially forfeit expensive airline tickets and a family vacation.


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## northof60

[/QUOTE] My advice....File your tax returns, and tabulate your FBARs. It is a painless and easy process to do. 

I understand and agree that this has to stop...but the situation is that you now know about it, so you should comply.[/QUOTE]


Painless and easy?? Not from what I have heard. If one requires the services of a tax accountant, the cost could be prohibitive to bring everything into line after many years of not filing. I have neither the legal smarts to correctly fill out the IRS's abominable forms nor the funds to pay someone to do it for me. Besides, it's a matter of principle. "I know about it so I should comply" is not a viable response to injustice.


----------



## Guest

Vangrrl said:


> While I am totally on the side of "lets not be overly paranoid", I am going to just advise caution on the point of travelling to the US on a Canadian passport.
> 
> I HAVE been asked about my US birthplace (and Canadian passport) at the border on 2 separate occasions. It was enough for ME personally to decide that a US passport is something that I need to carry to the US. I have a pretty high threshold for uncertainty with regards to this tax issue and I don't fear being put in jail, but for me having experienced this first hand, not once but TWICE (at 2 different crossings), I don't want to be turned away at the border and potentially forfeit expensive airline tickets and a family vacation.


Similar border incident for me, so I got my first U.S. passport in 2009, shortly after I had re-entered the U.S. tax system. Had I gotten my advice from an immigration lawyer instead of a major cross-border tax accountanting firm in 2008, I would not now be six years compliant with U.S. tax returns and FBARs. I came to Canada in 1969 and have recently been advised by an immigration lawyer from a respected Calgary law firm that I absolutely relinquished my U.S. citizenship when I took the Canadian oath of citizenship in the mid-1970's. With the different course of action my efforts would, instead, be me now seeking my certificate of loss of U.S. citizenship. Too late for that now -- for me and for the mess I've put my family in.


----------



## Guest

_Painless and easy?? Not from what I have heard. If one requires the services of a tax accountant, the cost could be prohibitive to bring everything into line after many years of not filing. I have neither the legal smarts to correctly fill out the IRS's abominable forms nor the funds to pay someone to do it for me. Besides, it's a matter of principle. "I know about it so I should comply" is not a viable response to injustice._

Ok...the process for me was pretty straight forward. I called my bank and explained my situation. I then requested them to forward (in PDF format) all my account information for the last 6 years.

This took about a week to do and cost a fee of 10 dollars per account. All accounts were neatly packaged with the running balance of each day for each year 2005 to 2010.

I then went through the transactions and highlighted the highest balance in each account.That was nothing more than scrolling down and jotting down the target number.

Filling out the TDF 90-22-1 form is very straightforward. Download the form, fill in the information (form is in PDF format and you can save the typed information), then print and sign.

Ensure you attach a cover letter explaining your reason for late filing...mail, or fedex your reports to Detroit.

In actuality, your bank will do most of the work for you...you just have to pick the highest number!

The Canadian RRSP was even simpler. I hold my RRSP with a different financial institution, and they tabulated all the information and forwarded it to my Accountant for the 8891 form (1040 attachment) for tax deferral and then sent me the highest value for each year.

(8891 forms require the closing balance , whereas the FBAR requires the highest balance of that same year).

Finally...apply the December 31st exchange rate to each value and tabulate that on the corresponding TDF 90-22-1 form.

Note...on the FBAR you do not use the 'average rate' for the year, but rather the December 31st rate for that year.

Now...having said all that...I DO NOT recommend you attempt the 1040 income tax returns yourself. Just the FBAR's.

I hired an Accountant for the 1040's but did the FBAR's myself...with the Accountant double checking my numbers.


----------



## Peg

Mach7 said:


> Ok...the process for me was pretty straight forward. I called my bank and explained my situation. I then requested them to forward (in PDF format) all my account information for the last 6 years.
> 
> This took about a week to do and cost a fee of 10 dollars per account. All accounts were neatly packaged with the running balance of each day for each year 2005 to 2010.
> ...
> 
> Now...having said all that...I DO NOT recommend you attempt the 1040 income tax returns yourself. Just the FBAR's.
> 
> I hired an Accountant for the 1040's but did the FBAR's myself...with the Accountant double checking my numbers.


Ingenious to get the PDFs sent to you.

I was determined to do the 1040s myself and I did. Only time will tell if I did them right


----------



## Ladyhawk

Peg said:


> In 1971 the FBAR threshold was $10,000 and it is still that level 40 years later. Using an online inflation calculator, that would be $56,000 today. Do I hear $250,000???


That is a common and sneaky tactic by the US government and they do this all the time - set some apparently high bar so the average schmuck thinks he'll never be rich enough to have to pay, then inflation happens and of course no US law ever gets updated, and before you know it the middle class is, once again, paying millionaire level taxes. Happened with the Alternative Minimum tax too, designed to ensure that the rich pay at least something. Now it's the most hated tax law in the land. This is by design, although sheer incompetence is the usual reason the US govt screws up.


----------



## Ladyhawk

> Painless and easy?? Not from what I have heard. If one requires the services of a tax accountant, the cost could be prohibitive to bring everything into line after many years of not filing. I have neither the legal smarts to correctly fill out the IRS's abominable forms nor the funds to pay someone to do it for me. Besides, it's a matter of principle. "I know about it so I should comply" is not a viable response to injustice.


I am not paying my hard-earned cash to an accountant to fill out what should be a straight-forward tax return that every citizen ought to be able to do. Yes it is complicated and time-consuming, but if the IRS can't say what it means in simple language, they deserve the mistakes people will make. It probably costs them more money in lost revenue due to excessively complex tax laws than they lose to all the tax cheats on the planet.

As a reasonably intelligent person, I fill the forms out as best I can and send them in. If there is a mistake, let them tell me how to do it right. At least I am making a good faith effort to comply, so they can't get me for non-filing. If they want the taxes, they have to be able to communicate what they want. If they cannot, it ain't my problem.

I have a cousin here who just fills in his name and address on the 1040 and staples the front page of his Canadian tax return to it. They have never sent it back or asked for more, and they even sent him a cheque for $300 as part of the "stimulus" bribe. Don't sweat it.


----------



## Guest

[QUOTE=Mach7
Ok...the process for me was pretty straight forward. I called my bank and explained my situation. I then requested them to forward (in PDF format) all my account information for the last 6 years.

This took about a week to do and cost a fee of 10 dollars per account. All accounts were neatly packaged with the running balance of each day for each year 2005 to 2010.


In Toronto, Scotiabank is supposed to charge $30 per hour per employee to pull up past histories. So I did not have it all in one neat little pile and had to locate old passbooks, statements etc. Plus my son's (who did not have most of what I needed). Did not know until later that his life insurance policy had to be included and that signing authority for charity has to be included....had to read a lot of information, thanks to many folks here who made it possible for me to understand it.

On top of the anxiety that does not give in, day or nite, I would not say it was painless or straightforward.


----------



## Stargazer

In my experience, it is not difficult to do US taxes using the 1040 and the 2555 (Foreign Earned Income Exclusion).

It's trickier to use form 1116 (Foreign Tax Credits), however, I use Turbotax and now that I've done it a few times, it's no problem.


----------



## Guest

*Has Anybody Seen/Heard About This?*

Offshore Voluntary Disclosure Initiative (?OVDI?) Update

excerpt:

"Yesterday, our firm received some news from a highly-placed source regarding some further activity. Apparently, a very influential US body has drafted a letter that should be made public later this week. The letter advocates lenient tax treatment for US Citizens residing in Canada who are not current with their filing obligations.

Here is what we believe to be the case:

The letter is addressed to President Obama, Secretary of State Clinton and Ambassador Jacobson.
•Notably absent on the distribution list are Secretary of Treasury Geithner and IRS Commissioner Shulman.
•We believe the omission of Geithner and Schulman indicate that the issue is being framed as a diplomatic matter and not as a tax matter.

The letter purports to advocate the following relief for US Citizens residing in Canada for X years provided they are compliant with Canadian tax filing and reporting obligations:
•Full abatement of the penalty regime under the IRS Amnesty Program;
•Penalty relief for those who missed participation in the Amnesty Program; and
•Ability to renounce US Citizenship without the imposition of the Exit Tax."


Sounds potentially interesting though I don't want to get my hopes up...


----------



## pwdunn

nobledreamer said:


> Offshore Voluntary Disclosure Initiative (?OVDI?) Update
> 
> excerpt:
> 
> "Yesterday, our firm received some news from a highly-placed source regarding some further activity. Apparently, a very influential US body has drafted a letter that should be made public later this week. The letter advocates lenient tax treatment for US Citizens residing in Canada who are not current with their filing obligations.
> 
> Here is what we believe to be the case:
> 
> The letter is addressed to President Obama, Secretary of State Clinton and Ambassador Jacobson.
> •Notably absent on the distribution list are Secretary of Treasury Geithner and IRS Commissioner Shulman.
> •We believe the omission of Geithner and Schulman indicate that the issue is being framed as a diplomatic matter and not as a tax matter.
> 
> The letter purports to advocate the following relief for US Citizens residing in Canada for X years provided they are compliant with Canadian tax filing and reporting obligations:
> •Full abatement of the penalty regime under the IRS Amnesty Program;
> •Penalty relief for those who missed participation in the Amnesty Program; and
> •Ability to renounce US Citizenship without the imposition of the Exit Tax."
> 
> 
> Sounds potentially interesting though I don't want to get my hopes up...


I am very skeptical of this. What is an influential US body? The House of Representatives, the Senate, the Supreme Court? In any case, it would be a fairly reasonable solution to the stupidity going, I wouldn't count on Obama doing anything about it.


----------



## Vangrrl

Stargazer said:


> In my experience, it is not difficult to do US taxes using the 1040 and the 2555 (Foreign Earned Income Exclusion).
> 
> It's trickier to use form 1116 (Foreign Tax Credits), however, I use Turbotax and now that I've done it a few times, it's no problem.


Can you use Turbotax if you live abroad? Does it include form 2555 and form 1116? 

I used an accountant to back-file the past 5 years because I didn't have the time to sit down and do it properly myself in the time frame I had given myself. But I have always filed my own Canadian taxes (as well as those of husband and my parents and inlaws) so it really does gall me to have to pay to have it done. I agree with Ladyhawk that any reasonable person should be able to file one's own taxes and if they can't then there's something wrong with the tax system.


----------



## Guest

PetrosResearch said:


> I am very skeptical of this. What is an influential US body? The House of Representatives, the Senate, the Supreme Court? In any case, it would be a fairly reasonable solution to the stupidity going, I wouldn't count on Obama doing anything about it.


I would also like to see who the "influential US body" is however, I am thinking that since the info is coming from a bunch of tax lawyers, who have a lot more to gain if these solutions do not come into play, must have some sense that whoever the body is, might be strong enough to exert some pressure to end all this nonsense...........


----------



## Guest

"Yesterday, our firm received some news from a highly-placed source regarding some further activity. Apparently, a very influential US body has drafted a letter that should be made public later this week. The letter advocates lenient tax treatment for US Citizens residing in Canada who are not current with their filing obligations.

Here is what we believe to be the case:

The letter is addressed to President Obama, Secretary of State Clinton and Ambassador Jacobson.
•Notably absent on the distribution list are Secretary of Treasury Geithner and IRS Commissioner Shulman.
•We believe the omission of Geithner and Schulman indicate that the issue is being framed as a diplomatic matter and not as a tax matter.

The letter purports to advocate the following relief for US Citizens residing in Canada for X years provided they are compliant with Canadian tax filing and reporting obligations:
•Full abatement of the penalty regime under the IRS Amnesty Program;
•Penalty relief for those who missed participation in the Amnesty Program; and
•Ability to renounce US Citizenship without the imposition of the Exit Tax."

If this is indeed true, then it is good news for all of us Canadians, especially for those who want to renounce there US citizenship. It would eliminate the exit tax, which in my opinion is another piece of draconian legislation.

It would make more sense to me for them to bill me for the Doctor and hospital visit way back when I was born before I was shuttled across the border to live out my life in Canada.

That is one bill I would GLADLY pay to get out from under the thumb of the US government.


----------



## Cafreeb12

Mach7 said:


> "Yesterday, our firm received some news from a highly-placed source regarding some further activity. Apparently, a very influential US body has drafted a letter that should be made public later this week. The letter advocates lenient tax treatment for US Citizens residing in Canada who are not current with their filing obligations.
> 
> Here is what we believe to be the case:
> 
> The letter is addressed to President Obama, Secretary of State Clinton and Ambassador Jacobson.
> •Notably absent on the distribution list are Secretary of Treasury Geithner and IRS Commissioner Shulman.
> •We believe the omission of Geithner and Schulman indicate that the issue is being framed as a diplomatic matter and not as a tax matter.
> 
> The letter purports to advocate the following relief for US Citizens residing in Canada for X years provided they are compliant with Canadian tax filing and reporting obligations:
> •Full abatement of the penalty regime under the IRS Amnesty Program;
> •Penalty relief for those who missed participation in the Amnesty Program; and
> •Ability to renounce US Citizenship without the imposition of the Exit Tax."
> 
> If this is indeed true, then it is good news for all of us Canadians, especially for those who want to renounce there US citizenship. It would eliminate the exit tax, which in my opinion is another piece of draconian legislation.
> 
> It would make more sense to me for them to bill me for the Doctor and hospital visit way back when I was born before I was shuttled across the border to live out my life in Canada.
> 
> That is one bill I would GLADLY pay to get out from under the thumb of the US government.


If this is true then I will be very happy to have it confirmed! People who have paid taxes in Canada for decades, have not lived or worked in the U.S. and who are not "tax cheats" by any measure should never have been swept up in this penalty grab on FBARS in the first place and to avoid FATCA we should be able to renounce asap without being hindered or delayed from doing so. With so many renouncing they should just stock pile the certificates and hand them over the same day we turn in our paper work. Clearly, we just want out. Asshats one and all, while Harper meets with Obama and discusses everything under the sun except us. He's gone along with this "cross border" boundary being policed by the U.S., he's kissed rear end on the pipeline as much as possible when he didn't have to, he's taken insults such as "coveted face time" with Obama as if Harper isn't nearly as important as the U.S. POTUS and he's said nary a peep about the cross border fee to get into the U.S. coming on Canadian citizens. The U.S. is just trampling all over Canada right now yet here's Harper not strongly holding the line for Canadian rights. Hello Harper??? Canada has the natural resources they want, we spend tourist dollars down there in the millions, the actions taken lately by the U.S. are so misguided. I have never seen Canada/U.S. relations so manipulated in my life. I wonder what the real result will be without Shulman being notified? 

I hope your news is real. If so, it would certainly be more fair than what they are doing now. In the mean time I've contacted Amy Feldman for Reuters who has asked for more personal stories related to this "Hire" legislation.


----------



## Stargazer

Vangrrl said:


> Can you use Turbotax if you live abroad? Does it include form 2555 and form 1116?
> 
> I used an accountant to back-file the past 5 years because I didn't have the time to sit down and do it properly myself in the time frame I had given myself. But I have always filed my own Canadian taxes (as well as those of husband and my parents and inlaws) so it really does gall me to have to pay to have it done. I agree with Ladyhawk that any reasonable person should be able to file one's own taxes and if they can't then there's something wrong with the tax system.


Yes, you can use it from abroad, but you can't e-file. Yes, it includes 2555, 1116, 8891, FBAR, etc. It has included everything I need. 

I paid a cross-border accountant to do them for me for a couple years. I learned that in using 1116 instead of 2555, I was eligible for IRS additional child tax credit. Even with paying someone, I came out ahead. But I still was paying him a few hundred dollars a year, so once my life here was more stable, I paid him a couple hundred dollars extra to tutor me through it, go into my Turbotax account and review what I had done. Then I felt confident to do it myself. Other people probably wouldn't require such handholding. 

I use the Turbotax Deluxe version. One nice thing about it is that it remembers my info from the last year. This is especially handy when it comes to keeping track of foreign tax credit carryovers. 

I would also like to recommend the forums at Serbinki Accounting firm. Serbinski Accounting Firms :: Index This is a great place to ask your questions, and to learn about new rules from the IRS and CRA.


----------



## Vangrrl

Stargazer said:


> Yes, you can use it from abroad, but you can't e-file. Yes, it includes 2555, 1116, 8891, FBAR, etc. It has included everything I need.
> 
> I paid a cross-border accountant to do them for me for a couple years. I learned that in using 1116 instead of 2555, I was eligible for IRS additional child tax credit. Even with paying someone, I came out ahead. But I still was paying him a few hundred dollars a year, so once my life here was more stable, I paid him a couple hundred dollars extra to tutor me through it, go into my Turbotax account and review what I had done. Then I felt confident to do it myself. Other people probably wouldn't require such handholding.
> 
> I use the Turbotax Deluxe version. One nice thing about it is that it remembers my info from the last year. This is especially handy when it comes to keeping track of foreign tax credit carryovers.
> 
> I would also like to recommend the forums at Serbinki Accounting firm. Serbinski Accounting Firms :: Index This is a great place to ask your questions, and to learn about new rules from the IRS and CRA.


Oh, thanks for this! I really thought my options were either an accountant or doing them by hand (which really didn't appeal to me!). My taxes are pretty easy - mostly earned income (form 2555) but I have a couple of small sources of income that my accountant applied the tax credit against (form 1116). And i have my past years professionally filed returns to compare against.

Is the RRSP form 8891 on there as well? Not a biggie (since I know it exists and would be filing by mail anyways) - just curious.


----------



## Stargazer

Vangrrl said:


> Oh, thanks for this! I really thought my options were either an accountant or doing them by hand (which really didn't appeal to me!). My taxes are pretty easy - mostly earned income (form 2555) but I have a couple of small sources of income that my accountant applied the tax credit against (form 1116). And i have my past years professionally filed returns to compare against.
> 
> Is the RRSP form 8891 on there as well? Not a biggie (since I know it exists and would be filing by mail anyways) - just curious.


If you're using 2555, I don't think it would be a problem to do it by hand, but Turbotax is just one step easier. You might even get by with the basic package. 

If you (or anyone else) has kids, it's advantageous to do 1116 instead of 2555 because of child tax credits. Also, we have gotten money back from initiatives like Making Work Pay. If we had excluded all our income with 2555, I don't think we would have been eligible for that either. Getting money back from the IRS has made me considerably less grouchy about having to file every year. 

Of course, like you said, 2555 won't cover all income anyway in many cases. I don't think it covers bank interest. 

Yes, 8891 is on there, but I don't get asked questions that lead me to it. There is a forms list you can scroll down. Don't type in 8891, or RRSP. Type in "Form 8891" exactly like that, and it will come up.


----------



## owlonabranch

Mach7 said:


> "Yesterday, our firm received some news from a highly-placed source regarding some further activity. Apparently, a very influential US body has drafted a letter that should be made public later this week. The letter advocates lenient tax treatment for US Citizens residing in Canada who are not current with their filing obligations.
> 
> Here is what we believe to be the case:
> 
> The letter is addressed to President Obama, Secretary of State Clinton and Ambassador Jacobson.
> •Notably absent on the distribution list are Secretary of Treasury Geithner and IRS Commissioner Shulman.
> •We believe the omission of Geithner and Schulman indicate that the issue is being framed as a diplomatic matter and not as a tax matter.
> 
> The letter purports to advocate the following relief for US Citizens residing in Canada for X years provided they are compliant with Canadian tax filing and reporting obligations:
> •Full abatement of the penalty regime under the IRS Amnesty Program;
> •Penalty relief for those who missed participation in the Amnesty Program; and
> •Ability to renounce US Citizenship without the imposition of the Exit Tax."
> 
> If this is indeed true, then it is good news for all of us Canadians, especially for those who want to renounce there US citizenship. It would eliminate the exit tax, which in my opinion is another piece of draconian legislation.
> 
> It would make more sense to me for them to bill me for the Doctor and hospital visit way back when I was born before I was shuttled across the border to live out my life in Canada.
> 
> That is one bill I would GLADLY pay to get out from under the thumb of the US government.


To be honest when I read that my heart sank. The Canadian expats are the only ones with the weight of numbers (and probably economic significance to the US) to lead to more than tiny amounts of publicity and diplomatic pressure. If that pressure leads to a special case being made for Canadians while long-term expats everywhere else are in the same position as ever - well forgive me for having mixed feelings about it as a solution.


----------



## pwdunn

owlonabranch said:


> To be honest when I read that my heart sank. The Canadian expats are the only ones with the weight of numbers (and probably economic significance to the US) to lead to more than tiny amounts of publicity and diplomatic pressure. If that pressure leads to a special case being made for Canadians while long-term expats everywhere else are in the same position as ever - well forgive me for having mixed feelings about it as a solution.


Some of us will continue fighting for the rest of the 5 million American Citizens Abroad, and the immigrants (esp. the East Indian community) living in the US who are also caught up in net.


----------



## Northof49

I have little confidence that the spineless Harper government will not kowtow to the IRS and throw Canadians under the FATCA bus if it means that the precious banks will lose revenue. So I am taking active steps to ensure that I'm not in the road when that happens. I was born in the USA, came to Canada in 1980 and became a Canadian citizen in 1983. Although I never officially renounced US citizenship, my position is that at that time I voluntarily relinquished my US citizenship since at that time one "expatriating act" under the Immigration and Nationality Act was taking an oath of allegiance to a foreign power. The INA was subsequently amended to require that the citizen have the intention of relinquishing US nationality at the time the expatriating act was committed. That may or may not have retroactive effect, but in any event I had the requisite intent. I have retained a US immigration lawyer to apply to the US consulate in Toronto for a Certificate of Lost Nationality (CLN) based on these facts. It's not easy because the low level bureaucrats in the US consulate cannot get their tiny heads around either (a) someone not wanting to remain a US citizen or (b) wanting to confirm that they have not been a US citizen for the last 30 years. But you have to be persistent. The US consulate will insist that you must be renouncing your US citizenship because that's what it says on their forms. Whatever you do, DO NOT renounce your US citizenship because the renunciation will be effective when the State Department receives notice of it, which means you are immediately liable for any unpaid US taxes and delinquent filings, which means you could be liable for penalties of up to $10,000 per account and 50% of ALL your invested assets plus hard time in a federal penitentiary. Not a good result. But if you get a CLN dated many years ago, pre FATCA and FBAR, you are home free. This is not a scam. You cannot have acted in a way inconsistent with not being a dual national. So if you lived in the US, held US property, held a US passport, voted in US elections, fugeddabout it. But otherwise you have a good chance of escaping the suffocating embrace of Uncle Sam.


----------



## pwdunn

Northof49 said:


> I have retained a US immigration lawyer to apply to the US consulate in Toronto for a Certificate of Lost Nationality (CLN) based on these facts. It's not easy because the low level bureaucrats in the US consulate cannot get their tiny heads around either (a) someone not wanting to remain a US citizen or (b) wanting to confirm that they have not been a US citizen for the last 30 years. But you have to be persistent. The US consulate will insist that you must be renouncing your US citizenship because that's what it says on their forms. Whatever you do, DO NOT renounce your US citizenship because the renunciation will be effective when the State Department receives notice of it, which means you are immediately liable for any unpaid US taxes and delinquent filings, which means you could be liable for penalties of up to $10,000 per account and 50% of ALL your invested assets plus hard time in a federal penitentiary. Not a good result. But if you get a CLN dated many years ago, pre FATCA and FBAR, you are home free. This is not a scam. You cannot have acted in a way inconsistent with not being a dual national. So if you lived in the US, held US property, held a US passport, voted in US elections, fugeddabout it. But otherwise you have a good chance of escaping the suffocating embrace of Uncle Sam.


I relinquished in Toronto and I was not required to pay $450. I explained to Mrs. A. my situation and she was able to understand what I wanted. I was able to do this without the aid or expense of an immigration lawyer. The consular officer took my sworn statement that I took Canadian citizenship with the intent of relinquishing my US citizenship. No CLN has yet been issued.


----------



## Guest

Calgary411 said:


> Similar border incident for me, so I got my first U.S. passport in 2009, shortly after I had re-entered the U.S. tax system. Had I gotten my advice from an immigration lawyer instead of a major cross-border tax accountanting firm in 2008, I would not now be six years compliant with U.S. tax returns and FBARs. I came to Canada in 1969 and have recently been advised by an immigration lawyer from a respected Calgary law firm that I absolutely relinquished my U.S. citizenship when I took the Canadian oath of citizenship in the mid-1970's. With the different course of action my efforts would, instead, be me now seeking my certificate of loss of U.S. citizenship. Too late for that now -- for me and for the mess I've put my family in.


Would purposely travelling to the US with a different passport be able to expedite renunciation? I mean, would that be considered in and of itself "a renunciating act"? 

What exactly does the US do to people who have US birth places but refuse to show a US passport? Is there a fine? Slap on the wrist? Soul-piercing stare from the border guard? Anything? I have only heard that you "must" have one when travelling there but never heard of any of the actual consequences for not doing so.


----------



## pwdunn

DonPomodoro said:


> Would purposely travelling to the US with a different passport be able to expedite renunciation? I mean, would that be considered in and of itself "a renunciating act"?
> 
> What exactly does the US do to people who have US birth places but refuse to show a US passport? Is there a fine? Slap on the wrist? Soul-piercing stare from the border guard? Anything? I have only heard that you "must" have one when travelling there but never heard of any of the actual consequences for not doing so.


Boris Johnson was refused entry on a flight on Continental, in transit to Mexico. So it can mean that you will be delayed.

Also, since dual citizenship is allowed, travelling on a foreign passport is not a relinquishing act. There are seven ways to relinquish citizenship according to US code.


----------



## Guest

PetrosResearch said:


> Boris Johnson was refused entry on a flight on Continental, in transit to Mexico. So it can mean that you will be delayed.
> 
> Also, since dual citizenship is allowed, travelling on a foreign passport is not a relinquishing act. There are seven ways to relinquish citizenship according to US code.


Yes, but I meant that you could show travelling to the US as one of the potentially renouncing acts on the questionnaire that you fill out when you renounce. There is also a question "What passport do you use to travel to and from the United States?", and I would love to be able to fill in "_Any other_ passport but a US one - And here is my personal case study at the border". Have a look at the form:

http://www.state.gov/documents/organization/97025.pdf


----------



## Guest

Also, the cynic in me thinks that Boris just drummed up a bit of publicity with this story and hasn't actually legally renounced his citizenship. If so, he's in for a surprise in the future when his portfolio manager gets wind of FATCA 

Only way to be sure is to see if he is in one of those renunciant lists that the IRS produces...


----------



## pwdunn

DonPomodoro said:


> Yes, but I meant that you could show travelling to the US as one of the potentially renouncing acts on the questionnaire that you fill out when you renounce. There is also a question "What passport do you use to travel to and from the United States?", and I would love to be able to fill in "_Any other_ passport but a US one - And here is my personal case study at the border". Have a look at the form:
> 
> http://www.state.gov/documents/organization/97025.pdf


Oh yeah. I filled out that form. These are murky waters, and it is important to know what they are looking for. In this case, they are trying to trap you into admitting that you did not really commit a potentially expatriating act with the intent of relinquishing. Here are some of the things which would tell them that you did not intend, not really, to relinquish:
(1) You travelled on US passport since the expatriating act.
(2) You voted in a US election since the expatriating act.
(3) You intended to take or keep up residency in the US after since the expatriating act and/or work in the US.

If you have done any of the above it can be grounds for them not accepting your relinquishment.


----------



## pwdunn

Also, it is good to make a written statement explaining why you relinquished your citizenship, and that it was done with intent. Say nothing about FBAR or taxes. That might confuse them into thinking that you are trying to get out of paying taxes. Here is what I wrote in my written statement to the State Department, which I gave them in my April 7 visit to the Toronto Consulate:


I have lived in Canada most of my adult life. I have married a Canadian. After so many years in Canada it became clear that I have a great attachment to Canada, to my Canadian friends, to my Canadian wife and her family, and to my church community in Canada. I felt that it was therefore necessary to become a Canadian citizen so that I may become a full member of this great and wonderful country and its people. Therefore, I applied for Canadian citizenship in 2010, and I also had, even at that time, the intention of relinquishing my US citizenship. For in taking my pledge to the Queen of Canada, Elizabeth II, on February 28, 2011, I realized that it would be absurd for me to be of divided loyalty. My duty to the Queen and to the Dominion of Canada precludes me from maintaining citizenship in the United States of America, since when one country calls me to serve, dual citizenship could potentially create a conflict of interest. To avoid all such conflicts, I have decided with my full volition and all my heart, to relinquish my United States citizenship once and for all, realizing that it is an irrevocable act.​


----------



## Northof49

PetrosResearch said:


> Also, it is good to make a written statement explaining why you relinquished your citizenship, and that it was done with intent. Say nothing about FBAR or taxes. That might confuse them into thinking that you are trying to get out of paying taxes. Here is what I wrote in my written statement to the State Department, which I gave them in my April 7 visit to the Toronto Consulate:
> 
> 
> I have lived in Canada most of my adult life. I have married a Canadian. After so many years in Canada it became clear that I have a great attachment to Canada, to my Canadian friends, to my Canadian wife and her family, and to my church community in Canada. I felt that it was therefore necessary to become a Canadian citizen so that I may become a full member of this great and wonderful country and its people. Therefore, I applied for Canadian citizenship in 2010, and I also had, even at that time, the intention of relinquishing my US citizenship. For in taking my pledge to the Queen of Canada, Elizabeth II, on February 28, 2011, I realized that it would be absurd for me to be of divided loyalty. My duty to the Queen and to the Dominion of Canada precludes me from maintaining citizenship in the United States of America, since when one country calls me to serve, dual citizenship could potentially create a conflict of interest. To avoid all such conflicts, I have decided with my full volition and all my heart, to relinquish my United States citizenship once and for all, realizing that it is an irrevocable act.​


Thanks for this. I wish I had seen your post before I retained a lawyer. He seems to think it's a lot more difficult than your experience would suggest (assuming you actually get our CLN). He's written a 10 page treatise on expatriating acts, evidence of intention and so on, and I am submitting a long affidavit explaining my story. After a long discussion with the lawyer Mrs. A. proceeded to send him all the forms relating to renunciation (complete with oaths), not relinquishment. However your experience seems to indicate that she may be more on the ball than her initial response would suggest and I've probably paid for a US lawyer's winter holiday for little real benefit; but I'd rather be safe than sorry. By the way if all I had to pay for was the $450 filing fee I'd be over the moon. Let us know if you get your CLN and whether it's dated retroactively.


----------



## pwdunn

Northof49 said:


> Thanks for this. I wish I had seen your post before I retained a lawyer. He seems to think it's a lot more difficult than your experience would suggest (assuming you actually get our CLN). He's written a 10 page treatise on expatriating acts, evidence of intention and so on, and I am submitting a long affidavit explaining my story. After a long discussion with the lawyer Mrs. A. proceeded to send him all the forms relating to renunciation (complete with oaths), not relinquishment. However your experience seems to indicate that she may be more on the ball than her initial response would suggest and I've probably paid for a US lawyer's winter holiday for little real benefit; but I'd rather be safe than sorry. By the way if all I had to pay for was the $450 filing fee I'd be over the moon. Let us know if you get your CLN and whether it's dated retroactively.


I'm sorry to hear that. I guess I take after my Dad's Scottish side, cheap, or perhaps too frugal to want to pay for lawyers or accountants that I don't need. Also things may have changed since I saw Mrs. A. She's seems to be pretty much an appointments person and a people handler, doing a lot of the work for the consular officers, and they come in to do their bit and you see them for a just a few minutes. A lot has happened since I was there in April and her superiors might be worried and expecting her to collect $450 from everyone. But after a paying an immigration lawyer a few thousand, I guess $450 is not much at all.


----------



## Vangrrl

DonPomodoro said:


> Would purposely travelling to the US with a different passport be able to expedite renunciation? I mean, would that be considered in and of itself "a renunciating act"?


Americans appear to view travelling on a passport other than a US passport as an act of fraud, rather than an act of renunciation. 

Their entire view of dual citizenship is ridiculous. They used to say they don't accept dual citizenship which meant "You are a US citizen whether you like it or not and we don't acknowledge any other citizenship you think you hold". Now they say they DO accept dual citizenship, which seems to mean "You are a US citizen whether you like it or not and we still don't care what other citizenship you think you hold".


----------



## Vangrrl

Stargazer said:


> If you're using 2555, I don't think it would be a problem to do it by hand, but Turbotax is just one step easier. You might even get by with the basic package.
> 
> If you (or anyone else) has kids, it's advantageous to do 1116 instead of 2555 because of child tax credits. Also, we have gotten money back from initiatives like Making Work Pay. If we had excluded all our income with 2555, I don't think we would have been eligible for that either. Getting money back from the IRS has made me considerably less grouchy about having to file every year.
> 
> Of course, like you said, 2555 won't cover all income anyway in many cases. I don't think it covers bank interest.
> 
> Yes, 8891 is on there, but I don't get asked questions that lead me to it. There is a forms list you can scroll down. Don't type in 8891, or RRSP. Type in "Form 8891" exactly like that, and it will come up.


Thanks again, this is very useful information. I may just try out the program this year and if I'm not comfortable with it, no biggie, I'll contact the accountant and have him do the return. 

I assume you can purchase it for download? Or would I need to drive across the border to pick it up? Its only me filing (no other Americans in the family) so I just need a single return.


----------



## Stargazer

Vangrrl said:


> Thanks again, this is very useful information. I may just try out the program this year and if I'm not comfortable with it, no biggie, I'll contact the accountant and have him do the return.
> 
> I assume you can purchase it for download? Or would I need to drive across the border to pick it up? Its only me filing (no other Americans in the family) so I just need a single return.


Yes, you can just fill it in on the TurboTax site. If you're happy with it and feel it's correct, only then do you pay and print it out.


----------



## Guest

_excerpt:

"Yesterday, our firm received some news from a highly-placed source regarding some further activity. Apparently, a very influential US body has drafted a letter that should be made public later this week. The letter advocates lenient tax treatment for US Citizens residing in Canada who are not current with their filing obligations.

Here is what we believe to be the case:

The letter is addressed to President Obama, Secretary of State Clinton and Ambassador Jacobson.
•Notably absent on the distribution list are Secretary of Treasury Geithner and IRS Commissioner Shulman.
•We believe the omission of Geithner and Schulman indicate that the issue is being framed as a diplomatic matter and not as a tax matter.

The letter purports to advocate the following relief for US Citizens residing in Canada for X years provided they are compliant with Canadian tax filing and reporting obligations:
•Full abatement of the penalty regime under the IRS Amnesty Program;
•Penalty relief for those who missed participation in the Amnesty Program; and
•Ability to renounce US Citizenship without the imposition of the Exit Tax."
_

Well...this update was on November 01...with an outlook that something would be published the following week.

Folks, it is already the 15th of November, so I think it is safe to say that there will be NO update.


----------



## pwdunn

Mach7 said:


> _excerpt:
> 
> 
> Folks, it is already the 15th of November, so I think it is safe to say that there will be NO update._


_

If you ask me, this news is even better, for those here in Canada and the rest of the world: 5400 IRS agents are going to lose their jobs. I can barely contain my Schadenfreude._


----------



## Peg

Northof49 said:


> Whatever you do, DO NOT renounce your US citizenship because the renunciation will be effective when the State Department receives notice of it, which means you are immediately liable for any unpaid US taxes and delinquent filings, which means you could be liable for penalties of up to $10,000 per account and 50% of ALL your invested assets plus hard time in a federal penitentiary. Not a good result. But if you get a CLN dated many years ago, pre FATCA and FBAR, you are home free. This is not a scam. You cannot have acted in a way inconsistent with not being a dual national. So if you lived in the US, held US property, held a US passport, voted in US elections, fugeddabout it. But otherwise you have a good chance of escaping the suffocating embrace of Uncle Sam.


Time in a federal penitentiary? For not filing my IRS returns and FBARs when I have nothing to hide? That seems harsh and unrealistic.

The renunciation I believe is effective the day before you sign your Oath of Renunciation which can be months before State receives it.

There has been much debate about the "relinquishing act" and that it won't apply to some of us --- I've recently learned (thanks Vangrrl) that I was probably a dual citizen at birth and therefore would not have a relinquishing act since I could not knowingly at birth give up my US citizenship. I did get my Cdn citizenship certificate in 1991 which also I believe is too late to be a relinquishing act.


----------



## Baird68

Vangrrl said:


> Thanks again, this is very useful information. I may just try out the program this year and if I'm not comfortable with it, no biggie, I'll contact the accountant and have him do the return.
> 
> I assume you can purchase it for download? Or would I need to drive across the border to pick it up? Its only me filing (no other Americans in the family) so I just need a single return.


The form is on the internet and downloadable. Just google: DS-4079. You can probably fill it out in on your computer. "PetroReseach" told me to try it, and it works!:clap2:


----------



## Vangrrl

Baird68 said:


> The form is on the internet and downloadable. Just google: DS-4079. You can probably fill it out in on your computer. "PetroReseach" told me to try it, and it works!:clap2:


Thanks - I actually knew that (I filled out my own fbars and 8891s). I was more just curious what Turbotax was "aware" of with regards to foreign/expat tax forms. 

The fact that its not e-filed is good, because obviously we can collect forms from a variety of sources and tack them all together, but I'm lazy - I want turbotax to do everything for me!


----------



## Pathologic1

*Little concern for Canadians*

This is an article from Thorsteinssons LLP, one of the most well known tax law firms in Canada. Their conclusion.

"In summary, a Canadian citizen need have little concern about the collection of US tax, interest, and ancillary penalties. However, a US taxpayer who is a Canadian resident and not a Canadian citizen and who owes US tax, interest, and penalties may face collection thereof by the CRA pursuant to treaty article XXVI A. 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."

http://www.ctf.ca/ctfweb/EN/Newsletters/Canadian_Tax_Highlights/2011/9/110901.aspx


----------



## Peg

Pathologic1 said:


> This is an article from Thorsteinssons LLP, one of the most well known tax law firms in Canada. Their conclusion.
> 
> "In summary, a Canadian citizen need have little concern about the collection of US tax, interest, and ancillary penalties. However, a US taxpayer who is a Canadian resident and not a Canadian citizen and who owes US tax, interest, and penalties may face collection thereof by the CRA pursuant to treaty article XXVI A. 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."
> 
> Canadian Tax Foundation


That link didn't work for me so Pathologic1 PM'd me this one: 
http://www.ctf.ca/ctfweb/CMDownload....b-5640190f4a0a

I take it to mean that CRA will not collect FBAR penalties for the US Gov. Not that the US gov won't charge them.


----------



## Cafreeb12

Peg said:


> That link didn't work for me so Pathologic1 PM'd me this one:
> http://www.ctf.ca/ctfweb/CMDownload....b-5640190f4a0a
> 
> I take it to mean that CRA will not collect FBAR penalties for the US Gov. Not that the US gov won't charge them.



I am still waiting on my oath of Canadian citizenship ceremony. Oddly enough I filed for citizenship in November of 2010 BEFORE I ever heard of any of this. I owed zero in taxes but, won't be "protected" We'll see how this plays out, it's not much relief for people like me who may be pigeon holed. Perhaps they will let others off the hook more and then hope to make up that on the rest of us. Who knows what they are going to do. I really wish a clear concise statement or amendment to this confusing situation would be forthcoming. 

Due to the discussion at the G20 I think Canada like every other country is going to fully roll over for FATCA and believe they already at that meeting promised to do so. But these FBAR fines and penalties still have some wiggle room there. It seems it should not be such a difficult matter to amend that part of "Hire" OR to issue a statement to the IRS from the U.S. government to forego severe or any penalty on obvious innocents. I am not holding my breath on this however. How long do you have to wait after filing an FBAR to find out if or how much they intend to steal these fines from you?


----------



## Mona Lisa76

Cafreeb12 said:


> I am still waiting on my oath of Canadian citizenship ceremony. Oddly enough I filed for citizenship in November of 2010 BEFORE I ever heard of any of this. I owed zero in taxes but, won't be "protected" We'll see how this plays out, it's not much relief for people like me who may be pigeon holed. Perhaps they will let others off the hook more and then hope to make up that on the rest of us. Who knows what they are going to do. I really wish a clear concise statement or amendment to this confusing situation would be forthcoming.
> 
> Due to the discussion at the G20 I think Canada like every other country is going to fully roll over for FATCA and believe they already at that meeting promised to do so. But these FBAR fines and penalties still have some wiggle room there. It seems it should not be such a difficult matter to amend that part of "Hire" OR to issue a statement to the IRS from the U.S. government to forego severe or any penalty on obvious innocents. I am not holding my breath on this however. How long do you have to wait after filing an FBAR to find out if or how much they intend to steal these fines from you?


Cafreeb, I honestly think you are going to be fine!  It's been almost five months since my disclosure, including 6 years of delinquent fbars, and have not heard anything back apart from compter-generated notices concerning small adjustments to my bills plus a couple notices claiming they haven't yet got my cheque (which is also probably computer generated). Nothing concerning fbar fines. I'd like to think they would have contacted me by now if they were planning to levy fines on 41 accounts over six years (would result in fines of several million on a lower six figure sum of assets). And especially as you had no US tax due. I'm paranoid too but sense that you're even more worried than me!!

If the worst comes to the worst, I will simply never cross the border again because though the HMRC would probably enforce US taxation as agreed by treaty, the draconian fbar fines would almost certainly be laughed out of a UK court in cases such as ours.

However, I think it's more likely that they could potentially be awkward by examining recent expats who've renounced (though even this is probably unlikely).

Boris Johnson is a interesting case in point and will make a point of writing to him, as he would be sympathetic and outraged, I'm sure. Plus, he could even be directly affected by all this! If he were targetted, all this fatca/fbar nonsense would become more widely known about here in UK.


----------



## Cafreeb12

Mona Lisa76 said:


> Cafreeb, I honestly think you are going to be fine!  It's been almost five months since my disclosure, including 6 years of delinquent fbars, and have not heard anything back apart from compter-generated notices concerning small adjustments to my bills plus a couple notices claiming they haven't yet got my cheque (which is also probably computer generated). Nothing concerning fbar fines. I'd like to think they would have contacted me by now if they were planning to levy fines on 41 accounts over six years (would result in fines of several million on a lower six figure sum of assets). And especially as you had no US tax due. I'm paranoid too but sense that you're even more worried than me!!
> 
> If the worst comes to the worst, I will simply never cross the border again because though the HMRC would probably enforce US taxation as agreed by treaty, the draconian fbar fines would almost certainly be laughed out of a UK court in cases such as ours.


I agree that I don't think they will impose the ten thousand dollar fine on my one late FBAR but, the whole experience here has been so stressful. Your situation was far more complicated than mine so I know you get the ludicrousness of all of this. You never do know what they will dream up next. I'm glad you've heard nothing back!


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## Mona Lisa76

I'd like to think the USA still has some decency left, which I still think it does.


Cafreeb12 said:


> I agree that I don't think they will impose the ten thousand dollar fine on my one late FBAR but, the whole experience here has been so stressful. Your situation was far more complicated than mine so I know you get the ludicrousness of all of this. You never do know what they will dream up next. I'm glad you've heard nothing back!


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## AmTaker

Cafreeb12 said:


> I am still waiting on my oath of Canadian citizenship ceremony. Oddly enough I filed for citizenship in November of 2010 BEFORE I ever heard of any of this. I owed zero in taxes but, won't be "protected" We'll see how this plays out, it's not much relief for people like me who may be pigeon holed. Perhaps they will let others off the hook more and then hope to make up that on the rest of us. Who knows what they are going to do. I really wish a clear concise statement or amendment to this confusing situation would be forthcoming.
> 
> Due to the discussion at the G20 I think Canada like every other country is going to fully roll over for FATCA and believe they already at that meeting promised to do so. But these FBAR fines and penalties still have some wiggle room there. It seems it should not be such a difficult matter to amend that part of "Hire" OR to issue a statement to the IRS from the U.S. government to forego severe or any penalty on obvious innocents. I am not holding my breath on this however. How long do you have to wait after filing an FBAR to find out if or how much they intend to steal these fines from you?


The statute of limitations is technically 6 years from the date the FBAR was originally due. I remember the IRS used to be slow (doubt they've changed that much since I left) so it could take them a while to get to anything non routine (i.e. not part of a regular return). But I believe from your previous comments that you only had one FBAR due and no tax due. I think your chances of being hit with anything beyond a token fine are lower than your chances of winning the lottery, so I wouldn't worry about it, and even the token fine chance is pretty low.


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## AmTaker

Mona Lisa76 said:


> t's been almost five months since my disclosure, including 6 years of delinquent fbars, and have not heard anything..
> 
> However, I think it's more likely that they could potentially be awkward by examining recent expats who've renounced (though even this is probably unlikely).
> 
> .


I doubt they care at all (either way) whether someone has renounced or not.

For FBARs submitted 5 months back, was 2010s timely (i.e. before June 30th) ?


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## Cafreeb12

AmTaker said:


> The statute of limitations is technically 6 years from the date the FBAR was originally due. I remember the IRS used to be slow (doubt they've changed that much since I left) so it could take them a while to get to anything non routine (i.e. not part of a regular return). But I believe from your previous comments that you only had one FBAR due and no tax due. I think your chances of being hit with anything beyond a token fine are lower than your chances of winning the lottery, so I wouldn't worry about it, and even the token fine chance is pretty low.


I hope you are right. This is all speculation and being left to speculate is difficult.I'd like to see a push to change some of this to reflect actual "tax cheating" with regards to fines. FBAR isn't even taxes as you know. My situation is a little complicated by the fact that in Jan. 2012 I will be filing on my inherited monies in 2011. So I'll have a string of zeros followed by a jump in income. I *think* you are right as to a fine, I would wonder what they will consider a "token" as I'm not prepared to accept ANY fine on zero taxes owed. 

I'd love to see some amendments to rectify some of the confusion, to clarify who exactly they are going after with some more fairness built in but, it's obvious to me that when they decided to add these FBAR penalties for every single account with the "signing rights" wording included they knew full well what they were doing. It seems the attitude is that it's time for ex pats to "pay their *ahem* fair share to dig the U.S. out of this hole" without regard to any personal circumstances. I'm sure these things were discussed, indeed the IRS considered amending their requirement on "signing rights" and then decided to keep the requirement. I'd love to have been a fly on the wall with knowledge of why they considered amending it in the first place AND their reasoning for not doing so.


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## Mona Lisa76

I agree that all this has been tremendously stressful (and expensive) though. I've concluded that they should accept good faith disclosures and that we should be OK going forward if we're compliant. If the IRS will clobber people like us, it will be for failure to directly list our foreign assets on the upcoming 8938 fatca form which will have to be attached to our 1040, but only if you have more than $200,000 mfs or $400,000 mfj. The fbar on the other hand requires the doj to file a separate law suit under art. 31 (as opposed to the irs's art. 26).

This is why I concluded that I still had a window of opportunity to file my delinquent fbars quietly under resonable cause, whereas it will be much harder to claim reasonable cause if in future I fail to directly declare my UK assets and accounts on the 8938. This form has not yet been released though understand it will have to be retoactively filed from 2011 tax year. This means if it's not released till 2014 that all the earlier tax years going back to 2011 will have to be attached to that year's 1040 (such as 2013). This will also mean that statute of limitations for those retroactive years won't begin running till their retroactive 8938 is filed, thus giving the IRS more time to investigate for those transistional years. Gotta say it's rather clever stealthiness!


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## Mona Lisa76

AmTaker said:


> I doubt they care at all (either way) whether someone has renounced or not.
> 
> For FBARs submitted 5 months back, was 2010s timely (i.e. before June 30th) ?


Yes.

I'd also like to think they're not going to give me a hard time over the 8621s, etc. 

I would also like to think they'll realise they can't get blood from a turnip, etc. To clobber someone like me who invested in pfic's completely innocently would put off others like me, especially as the pfic taxation on foreign mutual funds is so complex and also requires filing what are obscure forms for expats like me. If I hadn't read the internet, wouldn't have had a clue about 8621 because the main forms are 1040, 2555, and 1116. 

Might have been different if I were resident in US but have spent over 23 years here in uk. I knew I had to file but had thought my investment income was covered by the foreign esrned income exclusion, plus thought that the treaties mean't that the IRS would honour my UK investments from double taxation since they were already being taxed here in UK. Also thought that I could make use of tax free investments for UK residents such as ISAs since I live in UK and also have British citizenship. It's all been a terrible misunderstanding and would earnestly hope that with my good faith disclosure and full payment of back taxes should be looked upon with favour.


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## pwdunn

AmTaker said:


> The statute of limitations is technically 6 years from the date the FBAR was originally due. I remember the IRS used to be slow (doubt they've changed that much since I left) so it could take them a while to get to anything non routine (i.e. not part of a regular return). But I believe from your previous comments that you only had one FBAR due and no tax due. I think your chances of being hit with anything beyond a token fine are lower than your chances of winning the lottery, so I wouldn't worry about it, and even the token fine chance is pretty low.


I agree that Cafreeb is an unlikely target. She could easily do nothing about her case, since the IRS would have first to learn about her accounts and then press charges if they wanted to collect anything. Of course, that is not going to happen since it is such a small amount as to be trivial and would not give them sufficient reward for their efforts. Unless she hands them information in a quiet disclosure. This would give them the information they need to assess a fine.

The real problem is that the IRS is not acting in a consistent manner or in good faith. In the voluntary disclosure programs, they changed the rules after the fact , by assessing fines to innocent people that exceeded what they could have received if they had done a Quiet disclosure. Thus, there is fear that they cannot be less stringent to those who decided to go the Quiet Disclosure route, when they threw the book at those who did the "amnesty" programs and 'fessed up. *Thus, those who express apparently paranoid fear over Quiet Disclosures are not being unreasonable.* I think the best route is to do no disclosures and force them to find out your accounts on their own. Then, for peace of mind, move to a credit union with no ties to the US. It is possible to file a Fifth Amendment 1040NR wherein the filer writes "FIFTH AMENDMENT" (PDF) on any lines that could possibly incriminate them under the Bank Secrecy Act (FBAR). Hence, the IRS would be entitled to far less information than they are seeking because FBAR has criminalized foreign bank accounts. The background of this is that mafia types have been filing Fifth Amendment 1040s now for some time, in order to avoid admitting to the criminal source of their income. But they still must file the income tax form but they write "Fifth Amendment" as any source of income which from criminal activity. Hence, a Canadian resident, who has been criminalized under FBAR, may now file a 1040NR using the same Fifth Amendment right and refuse to give account information that could lead to an FBAR conviction or penalty.

I am personally not planning to file any FBARs and thus admit to the government that I have broken the FBAR law. This is the absolute case of filing no form in order to avoid a criminal penalty, because filing at this point would make me liable for a federal felony and a prison sentence.


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## Mona Lisa76

PetrosResearch said:


> I agree that Cafreeb is an unlikely target. She could easily do nothing about her case, since the IRS would have first to learn about her accounts and then press charges if they wanted to collect anything. Of course, that is not going to happen since it is such a small amount as to be trivial and would not give them sufficient reward for their efforts. Unless she hands them information in a quiet disclosure. This would give them the information they need to assess a fine.
> 
> The real problem is that the IRS is not acting in a consistent manner or in good faith. In the voluntary disclosure programs, they changed the rules after the fact , by assessing fines to innocent people that exceeded what they could have received if they had done a Quiet disclosure. Thus, there is fear that they cannot be less stringent to those who decided to go the Quiet Disclosure route, when they threw the book at those who did the "amnesty" programs and 'fessed up. *Thus, those who express apparently paranoid fear over Quiet Disclosures are not being unreasonable.* I think the best route is to do no disclosures and force them to find out your accounts on their own. Then, for peace of mind, move to a credit union with no ties to the US. It is possible to file a Fifth Amendment 1040NR wherein the filer writes "FIFTH AMENDMENT" (PDF) on any lines that could possibly incriminate them under the Bank Secrecy Act (FBAR). Hence, the IRS would be entitled to far less information than they are seeking because FBAR has criminalized foreign bank accounts. The background of this is that mafia types have been filing Fifth Amendment 1040s now for some time, in order to avoid admitting to the criminal source of their income. But they still must file the income tax form but they write "Fifth Amendment" as any source of income which from criminal activity. Hence, a Canadian resident, who has been criminalized under FBAR, may now file a 1040NR using the same Fifth Amendment right and refuse to give account information that could lead to an FBAR conviction or penalty.
> 
> I am personally not planning to file any FBARs and thus admit to the government that I have broken the FBAR law. This is the absolute case of filing no form in order to avoid a criminal penalty, because filing at this point would make me liable for a federal felony and a prison sentence.


Oh well, I let the cat out of the bag! But I really don't think they're going to clobber me. It would only turn me into a martyer case and cause many far wealthier people to counterchallenge them in court. I could also claim protection under the European Human Rights Court as a British citizen. Another thing that has occured to me is that they could more likely try to assess fbar fines against companies and corporations which could bring them far more money.

I still believe the fbar is directed against tax evaders. Unfortunately, people were effectively lured into the ovdi programmes by greedy tax mills (attorneys and cpa's). I believe the IRS was intending to target whales and US residents hiding money offshore but then decided to also focus on accidentals with its lower 5% penalties. It's true it's all a gamble but would have thought that many would have been better of either opting out or quiet. There's also the Taxpayersc Advocate who have condemned their heavyhanded treatment towards minnows who innocently joined the official 'amnesty programme. Perhaps the irs themselves presumed that such people would have done quiet disclosures and thus assumed thst anyone joining ovdi were presumed guilty of some form of fraud. Almost seems like entrapment though...I agree it's disconcerting. 

Perhsps I would have been safer merely complying going forward and thus enabling the sol's to run on the earlier years, especially as I'd already been filing. But if they had audited me, it might have looked like willful intent not to fully disclose. Thus thought it safest to hedge my risks by making full disclosure going back six years via quiet.

What's done is done; at the time, everything seemed so urgent. I felt frozen in the headlights and concluded that I was far too exposed to not come forward. The IRS in London said they were far more likely to be lenient with someone going to them first rather than after being discovered.

Someone like Cafreeb with only one foreign account and/or modest undeclared assets would probably not be worth their while to punish especially if they had made an unprompted honest disclosure.

It's occurred to me that I have effectively become an apologist for the IRS; i will have thus served them far more usefully as someone who has encouraged others to also come forward by demonstrating their merciful treatment towards me.


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## owlonabranch

Mona Lisa76 said:


> I still believe the fbar is directed against tax evaders. Unfortunately, people were effectively lured into the ovdi programmes by greedy tax mills (attorneys and cpa's).


This isn't the only route in, as it happens. Also I'd be surprised if there's very much less work involved in a quiet disclosure than in helping someone go through OVDI, for tax professionals (OVDI would be more work for the individual though, because of having to provide all bank statements and so on). Unfortunately both are good for the professionals with their high hourly rates!


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## Guest

PetrosResearch said:


> If you ask me, this news is even better, for those here in Canada and the rest of the world: 5400 IRS agents are going to lose their jobs. I can barely contain my Schadenfreude.


Awwww the poor darlings! Maybe their former employer will provide them with tin cups and a supply of government-issue pencils to sell on street corners. (More likely, some of them will get jobs, hopefully at minimum wage, working for some of the fat-cat consulting firms that hope to make out like bandits consulting with treasonous foreign financial institutions willing to throw some of their account-holders under an IRS bus. I hope their new employers treat them very badly, hire them only on contract with no benefits and no job security. I'd never wish that on any other laid-off employee, but for former IRS people -- oh my yes indeedy. )
:clap2::clap2::clap2:


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## Stargazer

Stargazer said:


> Yes, 8891 is on there, but I don't get asked questions that lead me to it. There is a forms list you can scroll down. Don't type in 8891, or RRSP. Type in "Form 8891" exactly like that, and it will come up.


I would just like to add to this bit I posted about Turbotax and form 8891. I said I didn't get asked questions that led me to form 8891.

I think this is because I have been in error. On Schedule B, there is a question at the bottom that asks about foreign trusts. I have checked no, because I knew the RRSPs did not require form 3520. In fact, the 8891s can be filed instead of 3520, but RRSPs are still considered foreign trusts. I have made a note that I need to check yes when asked if I have foreign trusts. I suspect that in doing this, I will be led to form 8891. Regardless, people who have RRSPs need to check yes on that foreign trust box.


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## Cafreeb12

Stargazer said:


> I would just like to add to this bit I posted about Turbotax and form 8891. I said I didn't get asked questions that led me to form 8891.
> 
> I think this is because I have been in error. On Schedule B, there is a question at the bottom that asks about foreign trusts. I have checked no, because I knew the RRSPs did not require form 3520. In fact, the 8891s can be filed instead of 3520, but RRSPs are still considered foreign trusts. I have made a note that I need to check yes when asked if I have foreign trusts. I suspect that in doing this, I will be led to form 8891. Regardless, people who have RRSPs need to check yes on that foreign trust box.


Does this include being named as beneficiary of a spouses RRSP even if it's not yours? I'm confused on this point.


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## Stargazer

Cafreeb12 said:


> Does this include being named as beneficiary of a spouses RRSP even if it's not yours? I'm confused on this point.


I don't know the answer to that, My spouse and I both have RRSPs, both are the beneficiary for the other, but we only do 8891s for the RRSP attached to our name. 

Your question is the kind of thing you could ask at the Serbinski forums.


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## pwdunn

Stargazer said:


> I don't know the answer to that, My spouse and I both have RRSPs, both are the beneficiary for the other, but we only do 8891s for the RRSP attached to our name.
> 
> Your question is the kind of thing you could ask at the Serbinski forums.


I'm sure the IRS would not mind one bit if you added accounts to FBAR on which your sole relationship to them is that you are named as a beneficiary. Not one bit.


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## Mona Lisa76

PetrosResearch said:


> I'm sure the IRS would not mind one bit if you added accounts to FBAR on which your sole relationship to them is that you are named as a beneficiary. Not one bit.


I agree. If it's not going to effect anything, I can't see what over reporting could do; after all, it's only a reporting form, not about assessing tax (though realize it could pertain to possible future wealth taxes).

Perhaps I'm unique on here but while I'm obviously upset about all this tax I've had to pay, I also can appreciate that it's a privilege to be able to continue holding the blue passport in addition to my British citizenship. We're in an unprecedented time of deficits and consequently, I am prepared to muck in a bit to help.


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## Guest

With respect to the FBAR...IMHO it is better to over-report than under report.

I have listed bank accounts that have only .59 cents in them (just to keep them open).


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## pwdunn

Mach7 said:


> With respect to the FBAR...IMHO it is better to over-report than under report.
> 
> I have listed bank accounts that have only .59 cents in them (just to keep them open).


You misunderstand me. I'm of the opinion that while they wouldn't mind, it is not to our benefit to do any reporting at all. Indeed, I will be doing no FBAR reporting, ever, because it violates 5 of my constitutional rights, above all the 4th and 5th amendments. When it comes time for them to assign penalties to those who have done quiet disclosures, I don't see how they can be any more lenient then on those who were in the OVDI, which was an amnesty program. So this is what is the scaring the hell out of people--the more information that you give them, the higher the fine assessment can be, even it is only 5%.


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## Guest

I understand you point, but for some of us this is not an option. 

I NEED to be able to travel to the United States...it is part of my job description. If I cannot perform my duties then I cannot maintain my employment therefore compliance for me is the only answer.

If I get penalized, then I will cross that bridge when it comes...hopefully the Canadian government will have another rabbit they can pull out of there hat.

My other point is this, if you entered the OVDI program, the IRS basically mandates that a penalty assessment has to be attached, as in there eyes the only reason you wanted amnesty is due to the fact you have, or had something to hide. 

You can debate me on this if you want, but I have spent the better part of two weeks talking to lawyers, and accountants on both sides of the border on this matter, and they all agreed that the OVDI program is not something one should sign up for if you are law-abiding, paid you tax in Canada, and have nothing to hide (accounts in the grand caymans etc).

Not filing an FBAR is not an option. They will find you eventually and the penalty for them getting to you before you get to them is around 75% of the accounts. 

Yes..you are correct, and yes you are protected under the constitution and yes it does violate your rights. But let me ask you this....being right does not always mean you are going to win. You might spend a good part of your life fighting these people and ending up winning, but with less than you started.

I truely think there will be some leinency for US citizens living in Canada, and I hope that is extended to the rest of the world. But the truth of the matter is this 'help' will most likely only be available to individuals who have begun the process.


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## pwdunn

Mach7 said:


> Not filing an FBAR is not an option. They will find you eventually and the penalty for them getting to you before you get to them is around 75% of the accounts.
> 
> Yes..you are correct, and yes you are protected under the constitution and yes it does violate your rights. But let me ask you this....being right does not always mean you are going to win. You might spend a good part of your life fighting these people and ending up winning, but with less than you started.
> 
> I truely think there will be some leinency for US citizens living in Canada, and I hope that is extended to the rest of the world. But the truth of the matter is this 'help' will most likely only be available to individuals who have begun the process.


I understand why you have to do what you have to do. But that is not the only right response. My response, relinquish and get on with my life is another right response.

I am not an American any more. They can find me, but they can't have my money. I'm not going to pay. I am not going to join any process. I just want the divorce. It's already over for me.

All my assets are here in Canada, and the government of Canada will not enforce FBAR. So I don't have to worry about 300% fines. Nor can I be extradited to the United States for criminal FBAR.


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## Stargazer

In our case, it just seems redundant. We do an 8891 for each of our RRSP's, sent in together with our tax forms, as we are married filing jointly.

Our FBAR is sent in as one as well, as you can list joint accounts and separate accounts on the same form.


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## Stargazer

Found this old question from 2008 on the Serbinski forums:

Serbinski Accounting Firms :: View topic - Quick Question 8891

Unless things have changed, the fact that you would inherit an RRSP should someone die, does not make you a beneficiary for 8891 purposes now.


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## Northof49

For US expats living in Canada who want to pursue the backdated Certificate of Loss of Nationality (CLN) option, it apparently is possible to obtain such a thing. Ms. Anderson of the US consulate in Toronto has agreed with my (somewhat expensive) US lawyer that on the basis of my affidavit evidence submitted to date and subject to appearing before her and explaining the situation, she sees no problem in issuing a CLN bearing a date in 1984, when I took the oath of allegiance to Canada in the belief that in so doing I was relinquishing and did intend to relinquish my US citizenship. It's not a done deal yet but they are not giving us an especially hard time. This solution will not apply to everyone. First, you must have genuinely intended to relinquish your US citizenship in taking up foreign citizenship. Second, all your actions since the date of that expatriating act must be consistent with that intention -- e.g, you have not traveled on or even possessed a US passport, you have not attempted to assert US citizenship for your children born outside the US to you when you were still a US citizen, you have not voted in any US elections, you have not filed US tax returns, your have not worked in the US or lived there for any length of time. All these are true of my situation, and I can honestly say that I did not consider myself a US citizen since 1984. I am not renouncing my US citizenship but instead asking for official confirmation of an historical fact that I lost it in 1984.




PetrosResearch said:


> Also, it is good to make a written statement explaining why you relinquished your citizenship, and that it was done with intent. Say nothing about FBAR or taxes. That might confuse them into thinking that you are trying to get out of paying taxes. Here is what I wrote in my written statement to the State Department, which I gave them in my April 7 visit to the Toronto Consulate:
> 
> 
> I have lived in Canada most of my adult life. I have married a Canadian. After so many years in Canada it became clear that I have a great attachment to Canada, to my Canadian friends, to my Canadian wife and her family, and to my church community in Canada. I felt that it was therefore necessary to become a Canadian citizen so that I may become a full member of this great and wonderful country and its people. Therefore, I applied for Canadian citizenship in 2010, and I also had, even at that time, the intention of relinquishing my US citizenship. For in taking my pledge to the Queen of Canada, Elizabeth II, on February 28, 2011, I realized that it would be absurd for me to be of divided loyalty. My duty to the Queen and to the Dominion of Canada precludes me from maintaining citizenship in the United States of America, since when one country calls me to serve, dual citizenship could potentially create a conflict of interest. To avoid all such conflicts, I have decided with my full volition and all my heart, to relinquish my United States citizenship once and for all, realizing that it is an irrevocable act.​


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## Vangrrl

Stargazer said:


> I don't know the answer to that, My spouse and I both have RRSPs, both are the beneficiary for the other, but we only do 8891s for the RRSP attached to our name.
> 
> Your question is the kind of thing you could ask at the Serbinski forums.


I believe a spousal RRSPwould be reported like an RESP - by the person who is making the contribution (and receiving the tax benefit). Like the RESP, once you are drawing from your RRSP, then it will be your income/investment to report.


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## 416

Northof49 said:


> For US expats living in Canada who want to pursue the backdated Certificate of Loss of Nationality (CLN) option, it apparently is possible to obtain such a thing.




This is an interesting development, and probably deserves a thread of its own.


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## Stargazer

Vangrrl said:


> I believe a spousal RRSPwould be reported like an RESP - by the person who is making the contribution (and receiving the tax benefit). Like the RESP, once you are drawing from your RRSP, then it will be your income/investment to report.


Well, I have a spousal RRSP. The tax benefit does go to him, as far as the CRA is concerned. But the RRSP is mine, and it's my name on it on the 8891 and the FBAR.

See, http://forums.serbinski.com/viewtopic.php?t=3214&highlight=spousal+rrsp


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## Peg

Vangrrl said:


> I believe a spousal RRSPwould be reported like an RESP - by the person who is making the contribution (and receiving the tax benefit). Like the RESP, once you are drawing from your RRSP, then it will be your income/investment to report.


Although my husband has contributed the money to my spousal RRSP, it is mine. He has no say over it whatsoever - i.e., the investment firm cannot take his instructions on what to do with the account other than add more money to it. If the rules haven't changed, if I took the money out within I think 2 years of first deposit, he would even have to pay the taxes on it even though he wouldn't have any official input on the decision. The monies, when withdrawn, will be taxed in my name.

RESP is different - the account is in my name and my husband's name - don't recall if the kids are beneficiaries or trustees but they have no say on the investment of funds either. The monies will be taxed in their names when withdrawn.


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## Guest

PetrosResearch said:


> When it comes time for them to assign penalties to those who have done quiet disclosures, I don't see how they can be any more lenient then on those who were in the OVDI, which was an amnesty program. So this is what is the scaring the hell out of people


Yes, this is definitely why no matter what people say, they're not after Canadians or it will all be fixed just wait, it is impossible to believe that we will get off scot-free.


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## Mona Lisa76

Mach7 said:


> I understand you point, but for some of us this is not an option.
> 
> I NEED to be able to travel to the United States...it is part of my job description. If I cannot perform my duties then I cannot maintain my employment therefore compliance for me is the only answer.
> 
> If I get penalized, then I will cross that bridge when it comes...hopefully the Canadian government will have another rabbit they can pull out of there hat.
> 
> My other point is this, if you entered the OVDI program, the IRS basically mandates that a penalty assessment has to be attached, as in there eyes the only reason you wanted amnesty is due to the fact you have, or had something to hide.
> 
> You can debate me on this if you want, but I have spent the better part of two weeks talking to lawyers, and accountants on both sides of the border on this matter, and they all agreed that the OVDI program is not something one should sign up for if you are law-abiding, paid you tax in Canada, and have nothing to hide (accounts in the grand caymans etc).
> 
> Not filing an FBAR is not an option. They will find you eventually and the penalty for them getting to you before you get to them is around 75% of the accounts.
> 
> Yes..you are correct, and yes you are protected under the constitution and yes it does violate your rights. But let me ask you this....being right does not always mean you are going to win. You might spend a good part of your life fighting these people and ending up winning, but with less than you started.
> 
> I truely think there will be some leinency for US citizens living in Canada, and I hope that is extended to the rest of the world. But the truth of the matter is this 'help' will most likely only be available to individuals who have begun the process.


This is just it: some of us are tied to the US (family ties in my case). I need to be able to continue visiting, plus I couldn't bear to hurt them. I am reasonably optimistic they're not going to clobber me with fbar fines because all my omissions were completely unintentional, plus my pfic mess was unintentional. At the time, it seemed to make sense to invest in pooled funds rather than individual shares as I hadn't been aware of anomalous pfic taxation.

I would like to think that they will be happy enough that I made a good faith disclosure and had the decency to pay back my taxes I'd unwittingly accrued. I've been honest about having made a mistake but didn't feel I had anything to hide which is why a quiet disclosure seemed to make sense.

Of course, if they decide to play rough with fbar fines, I will do what I have to do, but as it's been almost five months, I am reasonably optimistic that they are going to let me back into the system without penalizing me harshly. I've already suffered enough with all the stress and professional expenses...


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## Cafreeb12

nobledreamer said:


> Yes, this is definitely why no matter what people say, they're not after Canadians or it will all be fixed just wait, it is impossible to believe that we will get off scot-free.


Completely agree, they are in a situation where they have already assigned fines on those who were in an amnesty program. How can they let everyone else off without a fine on FBAR without really seeming to have totally pulled the wool over the eyes of everyone who entered OVDI.


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## Mona Lisa76

nobledreamer said:


> Yes, this is definitely why no matter what people say, they're not after Canadians or it will all be fixed just wait, it is impossible to believe that we will get off scot-free.


It has been implied to me in no uncertain terms that while we're caught up in the net of this new legislation, we're not their intended target. So, yes, life can indeed be grey rather than black and white.

I haven't ruled out renunciation but it would be a last resort.


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## Mona Lisa76

Cafreeb12 said:


> Completely agree, they are in a situation where they have already assigned fines on those who were in an amnesty program. How can they let everyone else off without a fine on FBAR without really seeming to have totally pulled the wool over the eyes of everyone who entered OVDI.


I hear you but hope that the 'amnesty' was in fact not intended for the likes of some of us who unwittingly entered into it. This why I believe people like Peg are right to opt out.


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## Cafreeb12

Mona Lisa76 said:


> I hear you but hope that the 'amnesty' was in fact not intended for the likes of some of us who unwittingly entered into it. This why I believe people like Peg are right to opt out.


Oh, I so hope you are right. O/T, I was thinking of you the other day. My son is going to Singapore for a course he entered into and has a placement exam on Dec. 28th. In order to get there on time and have some time to adjust for jet lag he'll have to leave Toronto on Dec. 23 and get there on the 26th Singapore time. His layover is twelve hours in London on Christmas Eve. I imagine Heathrow will be madness and most things will be closed so I suppose he cannot hope to leave the airport. Spending Christmas in the airport is not my idea of fun but, it has to be this way, he's paid for the course and HAS to be there on time ready to write the placement exam. Should have made this a pm. At any rate if you've any brilliant thoughts on things to do in Heathrow on Christmas send a pm my way.


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## Vangrrl

nobledreamer said:


> Yes, this is definitely why no matter what people say, they're not after Canadians or it will all be fixed just wait,* it is impossible to believe that we will get off scot-free*.


I think we could still get off "scot-free". Not in the sense that we will get a letter from the IRS saying "Thank you for your filing, we don't want anything more from you", but I think its a real possibility that we will be completely ignored and hear nothing from the IRS.

That's the reason I chose to file at this time. To get on the radar as someone not worth their while to pursue. I maintain that it would be a diplomatic nightmare for the US to impose and pursue Canadian duals for fbar fines and regardless of what laws are actually on the books, they have neither the time, money, resources or political/diplomatic will to go after us (specifically us as Canadian dual citizens living in Canada).


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## Guest

Mona Lisa76 said:


> It has been implied to me in no uncertain terms that while we're caught up in the net of this new legislation, we're not their intended target. So, yes, life can indeed be grey rather than black and white.
> 
> I haven't ruled out renunciation but it would be a last resort.


I would imagine we are not their intended target and I hope they will totally ignore my 1040'sw/FUBARS too...........but one just never knows and it would seem awfully unfair to those who entered OVDI or did a silent disclosure if they got hit and we don't...


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## Guest

I would imagine we are not their intended target and I hope they will totally ignore my 1040'sw/FUBARS too...........but one just never knows and it would seem awfully unfair to those who entered OVDI or did a silent disclosure if they got hit and we don't... 


While I 100% agree with your comment, one has to examine the OVDI program to first make a decision if that is the best route for them to go. 

If you look at other amnesty programs, they are usually designed to allow people to come forward who know they are doing something wrong....do you remember the Canadian fire-arm amnesty when they told you to bring your un-registered fire arms in and there would be no questions or penalties attached?

Well....you knew you had an unregistered fire arm...you knew what the law of the land was....and this was your chance to avoid prosecution.

If any fault should be placed, it should be directed to the Lawyers and Accountants of this land who convinced people they should go into an amnesty program when they had nothing to hide.

Opting out of OVDI I think was a smart thing to do if you are innocent.

IMHO


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## RødGrød

Cafreeb12 said:


> Completely agree, they are in a situation where they have already assigned fines on those who were in an amnesty program. How can they let everyone else off without a fine on FBAR without really seeming to have totally pulled the wool over the eyes of everyone who entered OVDI.


I believe the OVDI was intended for people who _purposely_ underreported; i.e., would have owed taxes to the IRS and were at risk of criminal penalties. It was especially aimed at US residents with unreported foreign bank accounts. The fact that the OVDI net caught so many people outside the target group is the result of fear-mongering by tax attorneys and accountants, expecially on the internet, as well as the IRS's own poorly designed, "one size fits all" application of the the program. It is still possible, according to the IRS website, to do a kind of "quiet disclosure" with an explanatory letter and not be penalized.


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## Mona Lisa76

Yes, it simply doesn't make sense in an amnesty to seize up to 25% of someone's assets for merely fauling to submit a reporting form. But what it does make clear is that they mean business.

It's harsh enough that I've had to pay back thousands in back taxes with interest, especially as I'd innocently believed that as a longterm resident and dual citizen, that it was ok under the tax treaties to take advantage of tax shelter investments like ISAs. So it was a bitter pill to swallow because not only did I learn that my investments were liable to us capital gains tax, they were in faxt liabke to these taxes even though zi hadn't sold the funds. But in this particular instance, I blame myself for not having double checked the US taxtreatment of my uk investments. I had been naive and negligent so I have to deal with it.

But while I have suffered a hit with the unexpected tax bill and accounting costs, it will not bankrupt me whereas the fbar fines would.


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## Mona Lisa76

RødGrød;657003 said:


> I believe the OVDI was intended for people who _purposely_ underreported; i.e., would have owed taxes to the IRS and were at risk of criminal penalties. It was especially aimed at US residents with unreported foreign bank accounts. The fact that the OVDI net caught so many people outside the target group is the result of fear-mongering by tax attorneys and accountants, expecially on the internet, as well as the IRS's own poorly designed, "one size fits all" application of the the program. It is still possible, according to the IRS website, to do a kind of "quiet disclosure" with an explanatory letter and not be penalized.


This is just the thing. I had no idea about pfic taxation from unrealised capital gains plus had naively thought that it was enough that I was declaring my worldwide income on my uk tax returns because I thought the treaty protected me from onerous conditions and double taxation. As it's almost impossible to open a roth ira or regular ira account outside the us, isa's seemed to make sense as a resident of Britain.

I hadn't been aware of the saving clauses in the tax treaty that allow for double taxation against US persons. I feel badly let down though by the British as well because you'd have thought they would have warned me as an American citizen about blindly going into uk pooled investments. But I should have read the small print more clearly, looking back...you do need to keep your wits about you!


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## Stargazer

The IRS really constrains American expats. I can't have RESPs for my kids, a TFSA, or mutual funds outside of RRSPs, without being taxed by the IRS. Not to mention the difficult forms I'd probably have to pay someone to fill out to report on all of those.

Pretty much, I can pay off my mortgage with extra money, and/or have an RRSP (and I'm hoping the IRS doesn't introduce more reporting on this than it already has).

And what are expats to do in countries that have no sort of 8891 equivalent for the primary retirement accounts offered?


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## Mona Lisa76

Stargazer said:


> The IRS really constrains American expats. I can't have RESPs for my kids, a TFSA, or mutual funds outside of RRSPs, without being taxed by the IRS. Not to mention the difficult forms I'd probably have to pay someone to fill out to report on all of those.
> 
> Pretty much, I can pay off my mortgage with extra money, and/or have an RRSP (and I'm hoping the IRS doesn't introduce more reporting on this than it already has).
> 
> And what are expats to do in countries that have no sort of 8891 equivalent for the primary retirement accounts offered?


The whole situation stinks. I am just so grateful that I'll be able to switch to my employer's pension sscheme and hopefully also roll over my personal stakeholder pension into it as well so I'll no longer have to worry so much about being accused of trying to set up a foreign grantor trust with all the expensive onerous form filling required. It looks better to the irs if it's being done through my employer than privately.


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## Accidental

I am new to this forum. It seems like many of you have complied with filing. Does the accounting alone not cost a great deal to go back 6 years? What about the U.S. ambassador recently telling us to SIT TIGHT. Does that not buy us some time to see what comes of all of this mess? I for one have too much money at risk to go handing myself over prematurely.
Any comments would be appreciated.


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## pwdunn

Accidental said:


> I am new to this forum. It seems like many of you have complied with filing. Does the accounting alone not cost a great deal to go back 6 years? What about the U.S. ambassador recently telling us to SIT TIGHT. Does that not buy us some time to see what comes of all of this mess? I for one have too much money at risk to go handing myself over prematurely.
> Any comments would be appreciated.


I refuse to file FBAR on account of my Fourth and Fifth Amendment rights. In order to avoid prison, therefore, I've renounced my US citizenship. If they throw me in jail, then I will become a cause-celebre of the little guy who was criminalized by unjust laws, if they try to make an example of me.


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## Deckard1138

Northof49 said:


> For US expats living in Canada who want to pursue the backdated Certificate of Loss of Nationality (CLN) option, it apparently is possible to obtain such a thing. Ms. Anderson of the US consulate in Toronto has agreed with my (somewhat expensive) US lawyer that on the basis of my affidavit evidence submitted to date and subject to appearing before her and explaining the situation, she sees no problem in issuing a CLN bearing a date in 1984, when I took the oath of allegiance to Canada in the belief that in so doing I was relinquishing and did intend to relinquish my US citizenship. It's not a done deal yet but they are not giving us an especially hard time. This solution will not apply to everyone. First, you must have genuinely intended to relinquish your US citizenship in taking up foreign citizenship. Second, all your actions since the date of that expatriating act must be consistent with that intention -- e.g, you have not traveled on or even possessed a US passport, you have not attempted to assert US citizenship for your children born outside the US to you when you were still a US citizen, you have not voted in any US elections, you have not filed US tax returns, your have not worked in the US or lived there for any length of time. All these are true of my situation, and I can honestly say that I did not consider myself a US citizen since 1984. I am not renouncing my US citizenship but instead asking for official confirmation of an historical fact that I lost it in 1984.


Hi there, Northof49. I am in a very similar situation as you. In fact, I too have not been a US citizen since 1984 due to my specific relinquishing acts. I have not yet gone to the Embassy and filed any papers, but I would be curious to compare notes with you a bit. When you are able to send a private message, would you mind contacting me please? I am also still trying to find qualified legal support as well, so I'm hoping that maybe you have some ideas there as well.

Thanks.


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## Omater

This whole thing has me sick. I am an American and I applied for Canadian citizenship (which is suppose to happen in a few months) before I ever heard of this just a few weeks ago. Now I am afraid that this will delay me getting my citizenship. I talked to my accountant who tells me he just heard of it on a course he was on 4 weeks ago. I am seriously feeling betrayed by the USA. I have not been hiding and I feel they have the responsibility in making sure I am informed! I moved here because I married a Canadian who has never lived a day in his life in the USA. However, I heard on a radio show that the IRS will expect me to report our joint accounts as well? Our retirement is income derived from HIS earnings, not mine, but the financial adviser divided some of it up in both our names and all (Canadian) taxes have been paid outside of the TFSA's. This radio show interviewed a cross border accountant who stated that the US will expect us to pay as much as 25% of our retirement funds in penalties. We have been excited about having purchased a property in April in Florida for a retirement getaway in a few years. I suspect we had better unload that soon. What a mess!!! I guess this means I will lose the social security benefits I earned before I moved here 15 years ago too if I don't give away my husband's hard earned retirement funds. 

I hope the previous, more optimistic posts are more in line than those interviews were. I tried to post a link to that radio show but I guess I am too new to this site to be able to post a link. 

Ugh...


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## Mona Lisa76

Omater said:


> This whole thing has me sick. I am an American and I applied for Canadian citizenship (which is suppose to happen in a few months) before I ever heard of this just a few weeks ago. Now I am afraid that this will delay me getting my citizenship. I talked to my accountant who tells me he just heard of it on a course he was on 4 weeks ago. I am seriously feeling betrayed by the USA. I have not been hiding and I feel they have the responsibility in making sure I am informed! I moved here because I married a Canadian who has never lived a day in his life in the USA. However, I heard on a radio show that the IRS will expect me to report our joint accounts as well? Our retirement is income derived from HIS earnings, not mine, but the financial adviser divided some of it up in both our names and all (Canadian) taxes have been paid outside of the TFSA's. This radio show interviewed a cross border accountant who stated that the US will expect us to pay as much as 25% of our retirement funds in penalties. We have been excited about having purchased a property in April in Florida for a retirement getaway in a few years. I suspect we had better unload that soon. What a mess!!! I guess this means I will lose the social security benefits I earned before I moved here 15 years ago too if I don't give away my husband's hard earned retirement funds.
> 
> I hope the previous, more optimistic posts are more in line than those interviews were. I tried to post a link to that radio show but I guess I am too new to this site to be able to post a link.
> 
> Ugh...


I would guess that it's more likely that the irs would accept six years of back filed returns if they can prove you owed no US tax. Ditto with the fbars with a letter of explanation where you explain quite honestly that you only recently became aware of your obligation to list your non US assets to the Dept of Treasury which also begs and respectfully requests a waiver of penalties.


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## Guest

Omater,

Welcome to the forum. 

You, like many of us are just finding out about the US draconian legislation, so don't panic. This will NOT affect your process to becoming a Canadian Citizen and has nothing to do with it (unless you have a criminal record of some sort that you have not told the Canadian Govenment, or you lied on you residency test).

Don't believe everything you hear and read, just do the right thing, find a reputable Accountant, and move forward from there.


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## pwdunn

Omater said:


> This whole thing has me sick. I am an American and I applied for Canadian citizenship (which is suppose to happen in a few months) before I ever heard of this just a few weeks ago. Now I am afraid that this will delay me getting my citizenship. I talked to my accountant who tells me he just heard of it on a course he was on 4 weeks ago.
> 
> Ugh...


First, it will not delay your getting Canadian citizenship--if you want protection from the IRS, Canadian citizenship is the very good, and so just show up for your Citizenship test and your Citizenship Ceremony when they tell you to. Secondly, your accountant is pretty low on the learning curve right now if he just heard about it 4 weeks ago. That's means he hasn't have time to learn what he needs to know. Heard about it at a course? Wonderful. That makes him an expert? Some of the people on this forum know a lot more than he does: just read some of the threads.

Our retirement is income derived from HIS earnings, not mine, but the financial adviser divided some of it up in both our names and all (Canadian) taxes have been paid outside of the TFSA's. This radio show interviewed a cross border accountant who stated that the US will expect us to pay as much as 25% of our retirement funds in penalties.​
Ok, I'm in a similar situation with my Canadian spouse being a bigger earner. I think you have grounds for taking a minimalist approach to FBAR in order to protect your Canadian spouse from FBAR. The Canadian government says that it will not collect FBAR penalties. So in my case, I'm not telling the IRS about any accounts, and they have no information if I don't give it to them. Once FATCA is implemented (if it is permitted in Canada which is doubtful under our PIPEDA), then you will have no place to hide. So you can now move your accounts to Credit Unions who don't need to be FATCA compliant. My Canadian lawyer told me to move my trading accounts into non-FATCA brokerages as well. So I moved from TD Waterhouse to a Canadian only brokerage. I waited until after I was a Canadian to do this, so that the move itself would not be a crime--as the US would interpret this as an obstruction of justice --Conrad Black is sitting in a federal jail now for being caught on video, get this: moving boxes out of his Toronto office! So the federal government in the US likes to put people in jail for doing non-crimes in another country. I remember reading somewhere that moving my accounts in order to avoid the IRS finding about them is a crime. Like I care.

Finally, the 25% that you are talking about applies to the Voluntary disclosure program of 2011. It's too late to join that, and you shouldn't have done so anyway. You can do a Quiet Disclosure, which is what a lot of people on this forum feel that they have to do. But beware that the IRS can use that information against you and that giving that information means that you are voluntarily waiving your 4th and 5th amendment rights. But the IRS says that a Quiet Disclosure--filling out the late FBARs for six years, all tax forms for three years, and a letter explaining why you have failed to do this--will get you into compliance. However, I personally do not trust this government not to give Quiet Disclosures penalties. They have been acting in bad faith--not according to me, but according to the Tax Advocate (also a branch of Federal Government). So the Tax Advocate has rebuked the IRS and they have done nothing substantially to change their approach to make it fairer. So this where we are. I don't trust the IRS--they are not giving any reasons for people to trust them. They don't get my account information. I am a Canadian now, and all my wealth is here.

Finally, if you have substantial assets in the US or a big inheritance that you are counting on, then some level of compliance is necessary to avoid seizure (filing income tax forms). The IRS can control people's assets in the US. Also, if you have to travel to the states, in the future you will probably have to do some filing to cross the border.


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## Omater

Thanks for all the replies, everybody... and my apologies to Mach 7 for hijacking this thread! This information has been both comforting (re: citizenship) and a little stressful. 


PetrosResearch said:


> Secondly, your accountant is pretty low on the learning curve right now if he just heard about it 4 weeks ago. That's means he hasn't have time to learn what he needs to know. Heard about it at a course? Wonderful. That makes him an expert? Some of the people on this forum know a lot more than he does: just read some of the threads.


I could not agree with you more. Unfortunately we moved to this town 2 years ago and he was the only CGA that I could find who was taking new clients. I guess this might explain it, but there is a shortage of many professions like this in the north. I think I will have to look for someone in the city, which is about 6 hours from here. It is difficult to know who I should call. If anybody has any recommendations in Alberta, I would like to hear them.


PetrosResearch said:


> So I moved from TD Waterhouse to a Canadian only brokerage. I waited until after I was a Canadian to do this, so that the move itself would not be a crime--as the US would interpret this as an obstruction of justice.


Our securities are with RBC Dominion, which are indeed busy in the US. Thank you for this information. 


PetrosResearch said:


> Also, if you have to travel to the states, *link removed*.


So there is the rub. I have to travel to the states in less than 3 weeks. I have family there, including a daughter and grandchildren. If not for them I would not care if my shadow ever landed on American soil again. My passport expires in 3 months and I was going to get it renewed while there, possibly having it expedited to a relative's address. I guess I need to find that knowledgeable accountant or attorney to help me get through this. 

Again, thanks to all who commented. I have never attempted to "hide out" or defraud the US in any way. I would have thought they had the responsibility to contact us with notices that they were not receiving information they required, just like they do to Americans who live in the country. They are treating us differently, which stinks a little like discrimination.


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## pwdunn

Omater said:


> So there is the rub. I have to travel to the states in less than 3 weeks. I have family there, including a daughter and grandchildren. If not for them I would not care if my shadow ever landed on American soil again. My passport expires in 3 months and I was going to get it renewed while there, possibly having it expedited to a relative's address. I guess I need to find that knowledgeable accountant or attorney to help me get through this.
> 
> Again, thanks to all who commented. I have never attempted to "hide out" or defraud the US in any way. I would have thought they had the responsibility to contact us with notices that they were not receiving information they required, just like they do to Americans who live in the country. They are treating us differently, which stinks a little like discrimination.


Hi Omater, don't worry about hijacking anything. This is exactly what the expat forum is for--discussing issues that affect expats.

You should have no trouble going to the states for you are going on a US passport. The border guards may poke their nose in your tax business, but just politely answer that you are doing your best to keep up with requirements. What gets tricky is after relinquishing your citizenship, which is most easily done when you become a Canadian citizen, then you will need to have proof of your relinquishment when you travel on a Canadian passport. Furthermore, you won't be able to work or take up residence in the United States without a visa. You will have the same rights as any other Canadian. Finally, if you decide not to comply with FBAR requirements, as I myself have done and publicly stated it, then you risk being arrested at the border--however small that risk is--my point about compliance is that the need to go to the US implies a certain level of compliance in order to avoid hassles. But most of the lawyers I've chatted with at hodgen.com or federaltaxcrimes.blogspot.com, indicate that there should be little risk, and I've not heard of Canadian citizens being arrested at the border for tax crimes or FBAR violations--nor for that matter can anyone on this forum point to actual arrests of that nature.


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## Accidental

PetrosResearch said:


> Hi Omater, don't worry about hijacking anything. This is exactly what the expat forum is for--discussing issues that affect expats.
> 
> You should have no trouble going to the states for you are going on a US passport. The border guards may poke their nose in your tax business, but just politely answer that you are doing your best to keep up with requirements. What gets tricky is after relinquishing your citizenship, which is most easily done when you become a Canadian citizen, then you will need to have proof of your relinquishment when you travel on a Canadian passport. Furthermore, you won't be able to work or take up residence in the United States without a visa. You will have the same rights as any other Canadian. Finally, if you decide not to comply with FBAR requirements, as I myself have done and publicly stated it, then you risk being arrested at the border--however small that risk is--my point about compliance is that the need to go to the US implies a certain level of compliance in order to avoid hassles. But most of the lawyers I've chatted with at hodgen.com or federaltaxcrimes.blogspot.com, indicate that there should be little risk, and I've not heard of Canadian citizens being arrested at the border for tax crimes or FBAR violations--nor for that matter can anyone on this forum point to actual arrests of that nature.


I am traveling to the U.S. in 2 weeks and I don't have an American passport. I wonder if I will have a difficult time? I understand they are getting stricter about having to travel with an American passport if you are an American citizen. Wish me luck. Can anyone tell me how I can change my profile? I put Canadian instead of American for where I am originally from.


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## Peg

Accidental said:


> I am traveling to the U.S. in 2 weeks and I don't have an American passport. I wonder if I will have a difficult time? I understand they are getting stricter about having to travel with an American passport if you are an American citizen.


I have never been asked for my US passport at either land or air crossings. I always show my Canadian passport which clearly shows that I was born in the USA.

If I was asked I would just say that I either did not know about the requirement or that I was in the process of applying for one or that I have renounced and not allowed to have one... (whatever is the truth  )


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## Guest

Accidental said:


> Can anyone tell me how I can change my profile? I put Canadian instead of American for where I am originally from.


Click on your username near the top of the right hand side. Then click on the left hand side "User CP." Still on the lefthand side, under "Your Profile" click on "Edit your Details." In the blue box to the right of that column, you will see 4 drop down boxes - the third one is "Expat from Country" and you just click, the drop down will open and you click on "usa", scroll down to the bottom of the page and click "save changes."


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## Guest

Northof49 said:


> Second, all your actions since the date of that expatriating act must be consistent with that intention -- e.g, you have not traveled on or even possessed a US passport, you have not attempted to assert US citizenship for your children born outside the US to you when you were still a US citizen, you have not voted in any US elections, you have not filed US tax returns, your have not worked in the US or lived there for any length of time.


One question -- assuming you got this from the consulate or the lawyer -- have you worded correctly that part about children born outside the US? It seems to me the question should be whether you attempted to assert US citizenship for a child AFTER you committed the expatriating act, not when you were still a US citizen. What you did before committing the expatriating act, e.g. having a US passport never mind registering a child with the US, should have no bearing on whether your actions after the expatriating act are consistent. I'd have thought the only inconsistency would be if you claim you expatriated yourself and then after that tried to get your child registered as a US citizen.

And isn't it ironic that the consultate admits that NOT filing US tax returns all those years is in fact quite consistent with a claim you intended to relinquish and have never considered yourself to be a citizen. So why should IRS get to claim five years of tax returns from you or hit you with an exit tax, that is totally inconsistent and absurd of them!


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## Omater

I'm back after a few days of stress and worry about what in the world we are to do. I was hoping my Canadian citizenship would be granted in the spring. I received notice to have fingerprints done and took care of that yesterday. I then contacted CIC to ask when they would be in this area and they said it would be MAY or JUNE! That will make it a year and a half since I applied. I tried to call today to find out if there is any way I can get it done sooner at another location but their lines are jammed and they disconnect. I would feel much better if I had the Canadian government behind me so that I could join in on some of the group protests that are happening. Right now I can't do anything.

Am I right to assume that we should we go ahead and sell the little villa we purchased in Florida? We have not even had it a year but I read where the IRS intends to tax any foreigner (like my husband) for worldly income if he is there more than 122(?) days and will expect a cut of their worldly assets if they were to die. If I do not disclose with FBAR they will probably seize that property. What is this going to do to the snowbird revenue that the US has enjoyed over the years? This doesn't just involve Canadians, they are talking about anybody who has purchased a home anywhere in the US for vacation, etc.

I know I am showing my ignorance here, but I just found out about this and I am still trying to get over the shock of my home country trying to bully so many seniors out of their retirement funds. Do you think the government of Canada is prepared to take on that financial burden when we can't afford to take care of ourselves because the USA stolen all of our money?

Nobody I have talked to in the states has heard of FBAR and they all say that the USA wouldn't do this. I don't know what to do, so I have just been spinning my wheels. Ignorance is NOT bliss!


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## Guest

It seems strange to me they are asking for fingerprints....is there more to the story than that??


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## Baird68

Mach7 said:


> It seems strange to me they are asking for fingerprints....is there more to the story than that??


It seems they are now requiring fingerprints in some cases. This site explains it:
Reasons Why Your Application for Canadian Citizenship May be Delayed


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## pwdunn

*finger prints*



Mach7 said:


> It seems strange to me they are asking for fingerprints....is there more to the story than that??


Immigration Canada took my finger prints when I landed, not when I became a citizen.


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## Guest

Curious...would they still ask for fingerprints if you have a Permanent Resident Card??


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## Omater

I had to give them fingerprints from the US and an FBI check when I landed. I just thought it was standard procedure. I told the woman who took my prints yesterday that I had already done the fingerprint check when I landed and she said this is a totally different thing. Fingerprints were definitely a requirement to land. Furthermore, it only took me 9 months to get landed. This is taking 18 months unless I can get it transferred to another city. 

I have a very common name. It's almost as bad as Mary Smith. The letter they sent says: "After reviewing the biographical information on your application form, I understand there may be a question in your case with regard to provisions of sections 21 and/or 22 of the Citizenship Act, or possibly involving another person having the same name and biographical data as yours."

I don't know if fingerprints are usually required, but I come from a big American city, a high crime area and I would imagine there are more than a few people with my name there. It's all so frustrating!! Even though the letter is in first person, it is signed simply "Citizenship Official".

I have never committed a crime, I have never had a ticket in Canada. I never did a crime anywhere. The only time my prints have been taken was always something to do with my move and my citizenship to Canada.


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## Omater

Baird68 said:


> It seems they are now requiring fingerprints in some cases. This site explains it:
> Reasons Why Your Application for Canadian Citizenship May be Delayed


Great, something else to worry about!! That link states that it might take up to 12 months to check out the fingerprints! I hope they are wrong. 

The letter I got also states: "Once your fingerprints are received by the RCMP, the results will be sent to the citizenship office and processing of your application will resume." My prints were taken electronically by the local RCMP and sent to Ottawa as I was standing there. She told me it may be 4 weeks before I hear back. I hope that is the case. I will still try to get my case moved. 

I was at a different community thing today and a woman approached me and asked if I was American. She is also a senior, originally from the states but has lived here for 40 years.. and has never filed a tax return. None of the Americans I have talked to know a thing about FBAR or FATCA and none of them have filed tax returns since they were landed or got their citizenship. She seriously didn't believe I was right about this. Nobody does!


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## Pacifica

Omater said:


> Great, something else to worry about!! That link states that it might take up to 12 months to check out the fingerprints! I hope they are wrong.


Omater, I took a look at the link. Based on its placement in the list, I think the 8 to 12 months period looks like it's only referring to fingerprint checking "where there is an indication a criminal record may be involved." So, I'd guess the routine ones go through in 4 weeks as you were told today.


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## Peg

Omater said:


> I was at a different community thing today and a woman approached me and asked if I was American. She is also a senior, originally from the states but has lived here for 40 years.. and has never filed a tax return. None of the Americans I have talked to know a thing about FBAR or FATCA and none of them have filed tax returns since they were landed or got their citizenship. She seriously didn't believe I was right about this. Nobody does!


My friend had me explain this mess to her friend "Sally" who had talked with _*a tax professional with many US clients*_. From talking with the professional, Sally thought that FBARs were for $10k in investment income and that there was no filing requirement if you were under the Foreign Earned Income Exclusion. After a few minutes Sally said that perhaps the lawyer meant to just sit tight since they probably won't do anything to her --- she is living in Canada but if she leaves she might not be let back in. (didn't get into what that was about).

There is so much misinformation out there that I sure hope I got it right!


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## Omater

Peg said:


> After a few minutes Sally said that perhaps the lawyer meant to just sit tight since they probably won't do anything to her --- she is living in Canada but if she leaves she might not be let back in. (didn't get into what that was about).
> 
> There is so much misinformation out there that I sure hope I got it right!


Thanks Peg. If there is no filing requirement under the Foreign Income Exclusion, then I will not have to worry about FBARs. However, the retirement savings accounts are over 10K and will fall under FATCA. This was not my income, but my husband's income with my name on it (he is Canadian). I would, however, like to know why she thinks she should not leave the country. I am suppose to the states in a few weeks and I am going to be traveling on a US passport.

Thanks for the replies, everybody. I do not live in an area where I can find knowledgeable professional representation. I am going to have to travel to find help with this.


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## Mona Lisa76

Omater said:


> Thanks Peg. If there is no filing requirement under the Foreign Income Exclusion, then I will not have to worry about FBARs. However, the retirement savings accounts are over 10K and will fall under FATCA. This was not my income, but my husband's income with my name on it (he is Canadian). I would, however, like to know why she thinks she should not leave the country. I am suppose to the states in a few weeks and I am going to be traveling on a US passport.
> 
> Thanks for the replies, everybody. I do not live in an area where I can find knowledgeable professional representation. I am going to have to travel to find help with this.


I assumed the US Ambassador meant not do anything in haste like renouncing, that the US system would still be merciful to people like ourselves. I think he's probably correct that we're not their main target though we're expected to get back into compliance.


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## Guest

Omater said:


> Thanks Peg. If there is no filing requirement under the Foreign Income Exclusion, then I will not have to worry about FBARs. However, the retirement savings accounts are over 10K and will fall under FATCA. This was not my income, but my husband's income with my name on it (he is Canadian). I would, however, like to know why she thinks she should not leave the country. I am suppose to the states in a few weeks and I am going to be traveling on a US passport.
> 
> Thanks for the replies, everybody. I do not live in an area where I can find knowledgeable professional representation. I am going to have to travel to find help with this.


I don't quite follow this - I am under the impression that we must file even if we owe no tax, which is a completely separate issue from FBARS. If you have any type of foreign financial accounts and the aggregate value is $10k, you have to file the FBARS. FATCA is another thing altogether......I know how frustrating this is because I am in the same boat as you - all the accounts I have to file FBARs on are completely my Canadian husband's-not a penny earned by me.....this is one of the reasons I cannot seem to get around and can't change my mind about renouncing......

I just came back from a trip to the US on a US passport and didn't have any problems crossing....


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## AmTaker

nobledreamer said:


> I don't quite follow this - I am under the impression that we must file even if we owe no tax, which is a completely separate issue from FBARS. If you have any type of foreign financial accounts and the aggregate value is $10k, you have to file the FBARS.


Not only if you owe no tax, a US person is supposed to file FBARs even if he or she has ZERO income (although there is no reason to file tax forms in that case). !!


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## Accidental

Hey Everyone... What do you all make of the article in the Globe this morning. Although all penalties are being lifted it does not help someone like me who is incorporated. It also says nothing about Fbar and how much they will take from our RRSP's. Just because there are no FBAR penalties doesn't mean they still won't take 5%-25% of them. I still don't trust the IRS. I still plan to lay low. The other thing they stated was that there are no penalties if you owe no taxes but if for some reason you owed a bit, would they then hit you with the penalties? Far to vague for me.


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## Guest

Accidental said:


> Hey Everyone... What do you all make of the article in the Globe this morning.


See the main thread on the Globe article for what I think of this and what I've done about it, and what others think.

In a nutshell, I don't see that it changes things much for a lot of people on this forum, though it may help others. And it does nothing for expats living in countries other than Canada, as far as I can tell. They're human too, and they're no more tax cheats than we are.


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## Mona Lisa76

Accidental said:


> Hey Everyone... What do you all make of the article in the Globe this morning. Although all penalties are being lifted it does not help someone like me who is incorporated. It also says nothing about Fbar and how much they will take from our RRSP's. Just because there are no FBAR penalties doesn't mean they still won't take 5%-25% of them. I still don't trust the IRS. I still plan to lay low. The other thing they stated was that there are no penalties if you owe no taxes but if for some reason you owed a bit, would they then hit you with the penalties? Far to vague for me.


This is wha concerns me. I have done all I can to put it right so the rest is in God's hands...


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## Baird68

Accidental said:


> Hey Everyone... What do you all make of the article in the Globe this morning. Although all penalties are being lifted it does not help someone like me who is incorporated. It also says nothing about Fbar and how much they will take from our RRSP's. Just because there are no FBAR penalties doesn't mean they still won't take 5%-25% of them. I still don't trust the IRS. I still plan to lay low. The other thing they stated was that there are no penalties if you owe no taxes but if for some reason you owed a bit, would they then hit you with the penalties? Far to vague for me.


The National Post has an article online with the same topic. I'm drafting a letter to Mr. Flaherty today and I talked with my MPs assistant. We need further clarification before we submit taxes and FBARs. The assistant said there was no way Canada would allow the U.S to interfere with our privacy laws. However, I don't think she fully understands the issue, so I suggested she do some research.


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## Guest

I believe if you read the Globe and Mail article carefully, they DO refer to both the income tax forms and the FBAR as they are related in our situation;

The 'not owing any tax' makes sense, because if you DO owe tax, say for year 2005, you are going to have to pay that tax and any applicable interest attached to it. I don't think this would amount to much in any case if the average Joe had a 300 dollar outstanding to the IRS...there is a payment plan available as well.

“Our intention was not to abscond with some innocent grandmothers’ savings,” he said. “From where I’m sitting, it’s going to take care of the problem I was most concerned about ... which is that people just didn’t know they were supposed to do this.”

Failure to file so-called Foreign Bank Account Reports can result in penalties of $10,000 (U.S.) a year for every account – fines that can quickly reach hundreds of thousands of dollars. In some extreme cases, the IRS can seize up to half the contents of accounts. Neglecting to file certain tax schedules also triggers fines.


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## pwdunn

Mach7 said:


> "Failure to file so-called Foreign Bank Account Reports can result in penalties of $10,000 (U.S.) a year for every account – fines that can quickly reach hundreds of thousands of dollars. In some extreme cases, the IRS can seize up to half the contents of accounts. Neglecting to file certain tax schedules also triggers fines."


I made this comment at the Globe:

This is very inaccurate: The IRS cannot seize money in Canadian accounts. They don't have the power to do that. Secondly, they cannot get the CRA to collect it because it is not a tax, but a filing penalty which the Canadian government has said it will not collect under the tax treaty between the US and Canada.

This is the kind of misinformation in the press that is causing US citizens resident in Canada to lose sleep and it is incumbent upon the Globe and Mail to be more accurate. 

The IRS can assign a civil penalty of 50%. But how can they make a Canadian resident pay FBAR penalties? Only by seizing their assets in the United States, or by invading and occupying Canada. Thus, Canadians need to remove their investments from the grasp of Uncle Sam.


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## Guest

I made this comment at the Globe:

This is very inaccurate: The IRS cannot seize money in Canadian accounts. They don't have the power to do that. Secondly, they cannot get the CRA to collect it because it is not a tax, but a filing penalty which the Canadian government has said it will not collect under the tax treaty between the US and Canada.

This is the kind of misinformation in the press that is causing US citizens resident in Canada to lose sleep and it is incumbent upon the Globe and Mail to be more accurate. 

The IRS can assign a civil penalty of 50%. But how can they make a Canadian resident pay FBAR penalties? Only by seizing their assets in the United States, or by invading and occupying Canada. Thus, Canadians need to remove their investments from the grasp of Uncle Sam.


PetrosResearch I agree with you 100%. In fact, yesterday I spent the first part of the day collapsing my TFSA then dumping all ALL of my RRSP portfolio's and placed everything I had in a canadian money market fund. (1.3% return but at least I can liquidate it if I refuse to sign the privacy waiver...when and if FATCA comes...this way I am not in the jaws of the markets and will be able to retain some of my money...after paying CRA there share of tax of course).

I have also dumped all of my US holdings and transfered the funds into my canadian accounts.....i am now totally free from US siesure if and when the time comes.

With respect to the media and misinformation....i think we can all agree this is "standard operating procedure" and will not change in the near future. There hasn't been an informational news cast since Walter Kronkite.


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## pwdunn

*McKenna contradicts himself*

Americans living in Canada who’ve neglected to pay their U.S. taxes are getting a big break from Uncle Sam.

The U.S. Internal Revenue Service is poised to waive potentially massive penalties for Americans who agree to come clean and don’t owe any taxes, The Globe and Mail has learned.​
That's how McKenna started the article--with two sentences, one paragraph each. That way the sentences don't have to be coherent. The first one says that those who've neglected to pay their US taxes are going to get a break. But the second one says that if they "come clean" and don't owe any taxes, the IRS will waive penalties. So those who haven't been paying their taxes (paragraph 1), aren't going to get a break at all; it's only those who don't owe anything that will get the break (paragraph 2). But then it's only if they come clean, because you are dirty by definition if you are a US person in Canada, that doesn't file tax or fill out FBAR forms. If this is the language of Jacobson, it shows that the US government still does have a clue. We are not dirty ones.

Nay, it is the government officials who are the dirty ones: they are the ones requiring us to file trivial returns; furthermore, they are expecting us little people to tell them about everything in all our bank accounts--our own, our spouses', and our employers'--and they haven't exempted our RRSP and TFSA or our other retirement pensions. If we don't tell all, they are threatening to break us and take all our wealth, and in some extreme cases, to throw us in prison. Well, Tony Soprano is fairer than that. Tony only breaks your legs if you owe him money. These IRS folks are threatening us and we can't possibly owe them money. They are crazy.

Or not. It's crazy only if it is mindless stupid busy work that keeps government employees in their jobs. But it may not be crazy, for there may be a sinister reason why this government has people inventory their goods; _it is so that some day down the road it can know what is out there. Today you have to report your gold. Tomorrow the government confiscates it._ If we must assign rationality to government, the idea that they know what they are doing, then all we can assume is that they want to know what's there so that they can take it later.

Sorry I'm not buying the offer Mr. Jacobson. The US must drop the FBAR requirements. You must also drop extra-territorial taxation of US citizens and all filing requirements. You must also repeal FATCA. Or the US will see a mass exodus of foreign investment. And the US will see millions of people tell them to take this citizenship and shove it. Change the policy. Get the IRS off our backs, or Mr. Jacobson, you folks in the State Department are going to have to start having mass citizenship renunciation ceremonies (a couple hundred people at a time). That will start the day they make an example out of someone like me, who doesn't cower in the shadows, but stands up to your tyranny. My name is Peter W. Dunn. The world is watching what you are doing, be careful how you handle my case.


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## pwdunn

Mach7 said:


> PetrosResearch I agree with you 100%. In fact, yesterday I spent the first part of the day collapsing my TFSA then dumping all ALL of my RRSP portfolio's and placed everything I had in a canadian money market fund. (1.3% return but at least I can liquidate it if I refuse to sign the privacy waiver...when and if FATCA comes...this way I am not in the jaws of the markets and will be able to retain some of my money...after paying CRA there share of tax of course).
> 
> I have also dumped all of my US holdings and transfered the funds into my canadian accounts.....i am now totally free from US siesure if and when the time comes.
> 
> With respect to the media and misinformation....i think we can all agree this is "standard operating procedure" and will not change in the near future. There hasn't been an informational news cast since Walter Kronkite.


I am surprised by your statement of "collapsing" TFSAs and RRSPs. I guess you left your funds in the plan, but have moved them to a liquid form, cash. I am an investor, and if you don't mind my saying, if you open up an an account at a new institution and do not give them any information about your citizenship and especially not your Social Security Number, your RRSP and TFSA and other investments should be untouchable. The day that they start asking us for our citizenship we launch a class action suit against the banks--it is a no brainer, because under the human rights codes in Canada, they are not allowed to ask that question.

Also, I don't think cash is safe in the current environment (I know it has been king lately, but it is subject to constant devaluation by central banks--and the latest move to save Europe is just another example, more is coming).


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## Mona Lisa76

Yes, I live in chronic dread of what may await me in the mail every evening I return from work. I realize that the odds are in my favour but there's still that very real if remote risk that they will clobber me. I suspect that because I've been contrite they'll leave me alone so long as I'm comoliant from now on, having paid back thousands. But it wouldn't surprise me if they try to scare the Hell out of you for being confrontational.

I admire your guts, Peter!


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## pwdunn

Mona Lisa76 said:


> Yes, I live in chronic dread of what may await me in the mail every evening I return from work. I realize that the odds are in my favour but there's still that very real if remote risk that they will clobber me. I suspect that because I've been contrite they'll leave me alone so long as I'm comoliant from now on, having paid back thousands. But it wouldn't surprise me if they try to scare the Hell out of you for being confrontational.
> 
> I admire your guts, Peter!


Hi Mona Lisa:

Thanks for the encouragement. I admit I am a little nuts.

But I am of the belief that the USA is insolvent, and they will soon have no money--
How long do you think that the US can spend 1.5 trillion (about 40 cents for every dollar spent) more than they bring in tax revenue before the dollar becomes worth nothing? (See this history of money). As soon as the dollar becomes hyperinflationary, then the vast majority of the IRS agents will be out of a job--or will be working for nothing. Once that happens, the US will not have the resources to go after folks like us in other countries: it's the principle of low hanging fruit. They will create a police state and confiscate all the gold of the folks in the United States. But they will not have the resources to go after us in Canada, short of going to war and annexing the entire country. But if that happens, it won't be just the expats whose account information they want.


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## Mona Lisa76

Gosh, that sounds ominous for my family over there! I still think they may choose to make examples of non-compliant minnows, especially defiant ones. My guess is they'll go easy on those who come to them first, especially through a qualified enrolled agent or cpa/attorney up until Fatca takes effect. But afterwards, I'd imagine they'll carry out their threats especially if they find you first.

I'm not brave enough to rebel, I'll leave the martyerdom to others...not proud to admit it but am into self-preservation. I feel it's a futile battle unless you're prepared to risk everything.


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## pwdunn

Mona Lisa76 said:


> Gosh, that sounds ominous for my family over there! I still think they may choose to make examples of non-compliant minnows, especially defiant ones. My guess is they'll go easy on those who come to them first, especially through a qualified enrolled agent or cpa/attorney up until Fatca takes effect. But afterwards, I'd imagine they'll carry out their threats especially if they find you first.
> 
> I'm not brave enough to rebel, I'll leave the martyerdom to others...not proud to admit it but am into self-preservation. I feel it's a futile battle unless you're prepared to risk everything.


Well, the US has the further problem that the only thing they can get me on is non-compliance before February 28, 2011, the day I became a Canadian citizen with the intent of relinquishing my US citizenship. Thus, if they want to throw me in prison for FBAR, they are turning it into a diplomatic incident with a Canadian citizen who is not a US person. But at this point they have very little information about my accounts and if they wanted to create a scene about the RRSPs that they know about (reported in my tax returns up to 2008--no more!!!), then they go from venial to petty. But then how can they suggest an FBAR penalty when I told them about those accounts in my tax returns? It shows no intent to conceal from the government secret bank accounts (wilfully or non-wilfully), if you report them in your tax returns. And they know nothing about any other accounts. It could be nothing, or it could be billions. They can't subpoena my Canadian banks to get that information, so what would be the basis for going after me?

I think those who fill out Quiet Disclosure FBARs are far more vulnerable than me to the capricious confiscatory IRS, since the IRS now has their inventory. They can fine you because they know how much you've been hiding from them all these years. But I am a black box. How does IRS assess a fine to someone who doesn't waive his 4th and 5th amendment rights and give IRS the information that it needs to penalize him?


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## Mona Lisa76

True. But if you have more than 25 accounts you can just list the number of accounts on the fbar form. My theory is that they will accept most quiet disclosures for now, then start clobbering people after they introduce the 8938 form which will force people to fully list all their foreign accounts as well as individual stocks.


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## pwdunn

Mona Lisa76 said:


> True. But if you have more than 25 accounts you can just list the number of accounts on the fbar form. My theory is that they will accept most quiet disclosures for now, then start clobbering people after they introduce the 8938 form which will force people to fully list all their foreign accounts as well as individual stocks.


I read about a guy who opened up a few extra ING accounts online to get them up to 25 to avoid filling out the form. That's a good idea in the short term to avoid all the paperwork. The IRS however could audit such a person and ask for all the information which you must keep on file.


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## Guest

Rumour has it (from an MP and I cannot disclose the source sorry) that when the 'announcement' is made in a couple of weeks regarding the Dec 02 globe and mail article...that the requirement will call for US citizens to begin filing for 2011 only...1040, FBaR, and 8839 (assuming it is cleared from draft form).

This is good new for those who have waited, but late news for those of us who have spent thousands of dollars trying to comply


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## Mona Lisa76

Mach7 said:


> Rumour has it (from an MP and I cannot disclose the source sorry) that when the 'announcement' is made in a couple of weeks regarding the Dec 02 globe and mail article...that the requirement will call for US citizens to begin filing for 2011 only...1040, FBaR, and 8839 (assuming it is cleared from draft form).
> 
> This is good new for those who have waited, but late news for those of us who have spent thousands of dollars trying to comply


True, but no one could know for sure. In my case the irony is that I would have been better off not filing at all and starting now rather than filing all these years but with unintentionally under-reported income.

As for fbars being audited, they'll get all the detailed information about the accounts and maximim values from the upcoming 8938 form which will have to be directly attached to the tax return. most of what they'd want to know was already reported on my 8621s so I doubt they'll want to audit me....it wouldn't be viable, especially with me going to them first. Might be different if they'd discovered me or thought I was guilty of fraud, or talking millions...

Think they will be more interested in the low hanging fruit back back home and the cheating billionaires abroad. They are probably mainly reminding us they mean business going forward though.


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## pwdunn

Mach7 said:


> Rumour has it (from an MP and I cannot disclose the source sorry) that when the 'announcement' is made in a couple of weeks regarding the Dec 02 globe and mail article...that the requirement will call for US citizens to begin filing for 2011 only...1040, FBaR, and 8839 (assuming it is cleared from draft form).
> 
> This is good new for those who have waited, but late news for those of us who have spent thousands of dollars trying to comply


I will wait for the news to come out before I send anything in. As you saw from a previous post, the IRS is waiting with baited breath for my 2009 return. Does this mean now, that I don't have to send that in? I think not. So you see, the moral of the story, is that if you were being compliant with tax filing obligations from 1998-2008, but had lapsed out of fear of FBAR, you are much worse off than if you had never paid any attention whatsoever to any of the filing requirements.

The only real solution is to stop requiring offshore Americans to file. If they create ad hoc rules like this, it will just lead to further chaos and resentment.


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## Mona Lisa76

I agree they are going to upset people no matter what they do. But at least it seems they're not being as heavy-handed as we once feared.


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## Deckard1138

We'll see.


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## Omater

I have talked with a few local bank branch managers to find out if they will have to comply with FATCA. One was Canadian Western because I read somewhere that they would not fall under the FATCA umbrella. The first person I had to talk to in order to get to the manager looked at me like I was some wacko off the street. Finally the branch manager came out and told her that I was about the 6th person in a week to ask these questions and they were going to have to get educated about it. Maybe it has something to do with where I live but anybody I talk to about FATCA or FBAR think I am an FNUT. Finally that bank manager told me she had been trying to talk to somebody in the head office but because of holidays it was hard to get the time with the person with the answers. However, they did find it in their system and she felt they would have to comply.

I then made my way to Alberta Treasury Branch and asked an account manager there who had much the same experience as the other manager. Her answer guy was busy with holiday issues in the city and she wasn't able to get answers. It must be nice to be a banker this time of year.

Am I right to assume that all credit unions will be a reasonable place to move our TFSA's and retirement securities? If my husband was to move them (he is Canadian), would I still be considered criminal for doing so before my citizenship is in effect? I feel as if I am just spinning my wheels up here. I don't want to make any mistakes, but I do think it would be a mistake to leave everything where it is now. I am not impressed that our financial adviser didn't know about FBAR until now.


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## Guest

Omater said:


> Am I right to assume that all credit unions will be a reasonable place to move our TFSA's and retirement securities? If my husband was to move them (he is Canadian), would I still be considered criminal for doing so before my citizenship is in effect? I feel as if I am just spinning my wheels up here. I don't want to make any mistakes, but I do think it would be a mistake to leave everything where it is now. I am not impressed that our financial adviser didn't know about FBAR until now.


Don't assume anything about any financial institution, ask them. My credit union says they won't comply, but an association of credit unions in Canada (to which my credit union doesn't belong) says some of their members may have to eventually, due to dealings with banks. FATCA may have secondary and tertiary-level compliance requirements, that is, a bank can't do business with another institution that isn't compliant, and that may cause problems for some credit unions but perhaps not others. FATCA is incredibly intrusive.

However I think it's fair to assume that credit unions are going to be less sympathetic to FATCA than chartered banks, and that individual credit unions may cut you a little more slack about your citizenship affiliation than will a clerk in a chartered bank. It all depends on how the reporting "requirements" are worded and what documentation is "required" and what the institution will accept, assuming our government actually allows the reporting to occur. It's one thing to report place of birth (in fact to do so for US borns but not for everyone else would be illegal discrimination under Artlce 15 of the Canadian Charter of Rights and Freedoms). It's another thing to ask someone are you a US citizen yes/no -- there's nothing in the Charter preventing discrimination on the basis of citizenship (as distinct from place of birth or other definitions of national origin). Your answer to that latter question may be under penalty of perjury or uttering a false document, but someone has to prove that in court against you 

There is absolutely nothing wrong with your moving your money out of a bank and into a credit union, for any reason your heart desires. Ditto selling off any and all US-source investments in your investment portfolio and re-investing only in Canada. It's your money and no bank, no government in Canada, can deny you the right to deposit or invest your money in whatever bloody financial institution you want to. No one can prosecute you for moving your money around, unless you're laundering it into some REAL tax haven outside Canada. If you're dealing within Canada no one can tell you where you can or can't deposit/invest your money under what conditions. That applies to legal residents of Canada regardless of citizenship, as far as I know.

Yes what the US is doing is horrible and outrageous, but don't let paranoia trick you into worrying about things that simply can't and won't happen under any reasonable scenario short of the US becoming an absolute dictatorship and invading Canada. Tempting though it may be to attribute such possibilities to some of the stupidity and craziness of governments on both sides of the border, even I think such a worry would be way over the top. And as an avid NDP supporter and former US draft-dodger I think I can safely say there are very few, if any, people on this forum who are more inherently suspicious of and hostile to the United States and the Conservative Party under Stephen Harper's leadership than I am.

No one is going to arrest you in Canada for moving your money out of a Canadian bank and into a Canadian credit union. And if they did, I don't think such an action would stand up to a federal court challenge for five nanoseconds.


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## Guest

Mach7 said:


> This is good new for those who have waited, but late news for those of us who have spent thousands of dollars trying to comply


This is a prime example of why I’m so glad I live in a parliamentary democracy and not in a terminally screwed-up political system such as the US has.

Before Stephen Harper came along (this isn’t the place to get into a rant about everything that is wrong, not to mention not truly conservative, about our present federal governing party), in Canada legislation (and draft treaties and agreements) didn’t (and still shouldn’t) get into first reading in the House, or get signed in the case of international treaties and agreements, unless they’ve first been reviewed by experienced federal public servants in Finance, Treasury Board Secretariat, Foreign Affairs as well as in all affected or related line departments’ and agencies’ policy shops, then by Privy Council Office and by at least part of the federal Cabinet.

In the US, Bubba the Congressman or Bubba the Senator dreams up a crazy idea in a drunken stupor or whatever, moves it as an amendment to some other act of legislation which has little or no relationship to the amendment, no one reads the amendment in detail (and anyone who tries needs degrees in law and Swahili to be able to decipher the obtuse “language” in the amendment), and no one does a serious analysis of costs of administering the thing and possible unintended consequences and balances that against alleged benefits. The thing gets passed into law without any careful, rational analysis of it. Then somebody has to figure out how to administer it once the President signs it (and very few Presidents have the time, training or in some cases even brains to do their own analysis of what they’re asked to sign, nor do a lot of their staff persons).

And in a parliamentary democracy an opposition party or even a lone MP can stand up in Question Period and demand the government to explain why some citizens got screwed over on personal costs for trying to comply with some draconian tax law and those who waited don’t get screwed over, and what is the government going to do to compensate those poor citizens. Don’t hold your breath ever to hear about that happening on the floor of either house of the US congress. Never happens as far as I’m aware.

My blood boils when I think of all the bullcrap teachers pontificated to me in high school about how the US has the best, wisest form of government on the planet. Name me one other country that has adopted that screwed-up, paralyzed, illogical and irrational “checks and balanaces aka terminal gridlock” Rube Goldberg affront to any conception of “good government” that keeps thousands of lawyers, lobbyists and consultants in clover in Washington DC. Gee why aren’t other countries clamouring to have the same system of government they have in the US? Let me guess ...

And you have no recourse here in Canada because this isn’t a Canadian tax law, no one in our government asked for the US to do this, not even Harper would have been that perverse. 

If anyone is looking for another reason to shed US citizenship, ponder the above. They did it to you once, they can very easily do it to you again. And they've been passing stupid, bad laws for a very long time.

Not that we're perfect in Canada, but in my experience and observation both from within and outside the federal government, we do a heck of a better job of providing "good government" than my poor beleagered friends and family south of the border get subjected to by their crackpot Congress.


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## Omater

Schubert said:


> No one is going to arrest you in Canada for moving your money out of a Canadian bank and into a Canadian credit union. And if they did, I don't think such an action would stand up to a federal court challenge for five nanoseconds.


I don't mean to imply that I am worried about what the Canadian government would do. I have been working to get my citizenship in Canada before I ever heard of the latest US ploy to drain our retirement savings. But until I get that citizenship I feel almost like a woman without a country. I read somewhere on these forums that someone received advice from their lawyer that they should wait until after they received Canadian citizenship to move the accounts or it could be considered criminal in the USA. I have property there that I guess we will have to unload, I have family there that I would like to visit, but this threat from the US government has yes, made me paranoid and I will never trust them again. I want to make the move, but I would imagine that we are going to have to be careful that we don't end up owing taxes to CRA based on *how* we change things around. I am thinking of accounts where we would have been paying later when we started to draw from them. Frankly, I would like to get those that are in my name back into my husband's name but that probably would cost him some taxes. I will start seeking help outside of town next week. In the end, I guess I would rather give a little to CRA than to give it all to the IRS, but I won't do anything until they make an official announcement.

Thanks for the helpful reply!


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## pwdunn

Omater said:


> I don't mean to imply that I am worried about what the Canadian government would do. I have been working to get my citizenship in Canada before I ever heard of the latest US ploy to drain our retirement savings. But until I get that citizenship I feel almost like a woman without a country. I read somewhere on these forums that someone received advice from their lawyer that they should wait until after they received Canadian citizenship to move the accounts or it could be considered criminal in the USA.


Hi Omater: that may have been me. I wrote here: http://www.expatforum.com/expats/expat-tax/94539-fbar-penalty-canada-13.html

This is what I wrote: 
I waited until after I was a Canadian to do this, so that the move itself would not be a crime--as the US would interpret this as an obstruction of justice --Conrad Black is sitting in a federal jail now for being caught on video, get this: moving boxes out of his Toronto office! So the federal government in the US likes to put people in jail for doing non-crimes in another country. I remember reading somewhere that moving my accounts in order to avoid the IRS finding about them is a crime. Like I care.​
Let me try to track this down; but honestly, I've read so much that I'm not sure I will be able to find it. I would go with Schubart. He is right. It is no criminal act to change bank accounts. But the thing is that the only reason it is necessary to move your accounts is to avoid FBAR. If you are planning to fill out the FBAR, then there is no point in moving anything. But since I've decided I'm not going to fill out the FBAR, then if I had moved my accounts while still a US citizen to a non-FATCA compliant bank in order to avoid detection of my non-FBAR compliant accounts--that could be interpreted as an obstruction of justice. Do you see what I mean? FATCA won't be in place until 2014, so there is no rush.


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## Omater

PetrosResearch said:


> Let me try to track this down; but honestly, I've read so much that I'm not sure I will be able to find it. I would go with Schubart. He is right. It is no criminal act to change bank accounts. But the thing is that the only reason it is necessary to move your accounts is to avoid FBAR. If you are planning to fill out the FBAR, then there is no point in moving anything. But since I've decided I'm not going to fill out the FBAR, then if I had moved my accounts while still a US citizen to a non-FATCA compliant bank in order to avoid detection of my non-FBAR compliant accounts--that could be interpreted as an obstruction of justice. Do you see what I mean? FATCA won't be in place until 2014, so there is no rush.


I remember, it was you. Thanks for the above! That makes me feel a little better as far as haste might go. But aren't some banks already filing that information away? The last time we invested (about 1 month before I ever heard of FBAR and FATCA) they asked me to sign a form that stated I was not an American citizen. In my ignorance, I didn't sign the form. The account manager knows I am. It is with RBC Dominion and as you know they are pretty thick in the soup.


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## AmTaker

Mona Lisa76 said:


> True. But if you have more than 25 accounts you can just list the number of accounts on the fbar form. .


You still have to report income on all the accounts, which is a bigger headache than simply listing them. Besides, I would think that having more than 25 accounts would be an additional reason for an audit flag to pop up on a return.


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## Mona Lisa76

AmTaker said:


> You still have to report income on all the accounts, which is a bigger headache than simply listing them. Besides, I would think that having more than 25 accounts would be an additional reason for an audit flag to pop up on a return.


Too true and part of why I'm so scared. It's an an onerous mess that had been created completely unintentionally. Many of the accounts were for miniscule amounts because they included dormant nominee accounts from transferred mutual fund administrators; matured savings bonds which had been transfered out but which I stupidly failed to close the actual accounts themselves; dormant credit cards; sub accounts within main accounts; even travel cards and pre-paid cell phone sims!

Perhaps I've just made things even harder for myself but what's done has been done. I'm scaredbecause I don't have complete records....I'll have to hire an attorney if things get really bad. But I have lived in the UK for over 23 years, I never had any intention to defraud the US government, it was all completely unintentional but agree they may indeed want to audit me, especially as they will have six years to do so.

I'm wondering if I should ring the fbar hotline and ask them if I should send in more information explaining why I had such a huge number of accounts or if it might increase a risk of an examination. I figure they can write and ask for more information if it's really an issue.


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## Northof49

Deckard1138 said:


> Hi there, Northof49. I am in a very similar situation as you. In fact, I too have not been a US citizen since 1984 due to my specific relinquishing acts. I have not yet gone to the Embassy and filed any papers, but I would be curious to compare notes with you a bit. When you are able to send a private message, would you mind contacting me please? I am also still trying to find qualified legal support as well, so I'm hoping that maybe you have some ideas there as well.
> 
> Thanks.


Hi Deckard,
Last month I attended at the US consulate in Toronto with my lawyer to file a formal application for a Certificate of Loss of Nationality (CLN), to which I attached a fairly detailed explanation (drafted for the most part by my US lawyer) of how and when I relinquished my US nationality through the expatriating acts of becoming a Canadian citizen and pledging allegiance to the Queen in 1984 and thereafter acting in a manner consistent with my intention to relinquish. The actual process was somewhat anti-climactic and oddly comic, in a grotesque Monthy Pythonish sort of way. As a side note, the US Consulate is an armed camp (quite literally - lots of Kevlar vested guards bearing automatic weapons behind bulletproof glass). What we didn't know was that cell phones and any other electronic equipment (including key fobs and computer mice) are not allowed inside and no provision is made for storing them anywhere outside. If you make the mistake of coming there with a cell phone it's up to you to figure out what to do with it out on the sidewalk. We wandered around in the cold until we found a security guard who recommended that we go to the bar in the Rex Hotel (I'm not making this up) . Seems the barkeep there has a nice little sideline in holding onto cell phones and the like for two bucks while the owners attend at the US Consulate. Ah, capitalism! Anyway, when we finally got inside, the famous Ms. Anderson was nowhere to be found. She wasn't in and left no instructions to anyone. While we were waiting for them to retrieve the file, the head consular officer (Ms Anderson’s boss, as she rather brusquely informed me) told my lawyer that he had no right to be there and that it was consular policy not to permit anyone to be represented by counsel. (According to her this policy is to avoid overcrowding, although when we were there only one other applicant was present.) This came as a surprise to him since he had made it quite clear to Ms Anderson that he was acting as my lawyer and would be attending at the consulate with me. She also asked why I thought I needed to be represented by an attorney since the process was very straightforward. When I tried to explain that the process and the legal issues did not seem to be at all straightforward and that the distinction between renunciation in the present and confirmation of relinquishment in the past seemed to be lost on many staff, she cut me off impatiently and later took me aside and said, in so many words, that I was foolish to spend money on a lawyer for something so routine. The clerk who handled the actual application then proceeded to demonstrate how (un)routine it was: he obviously had no idea what I was talking about and simply had me sign and swear the application that I had already filled out. So there was no interview at all, and in fact for this part of the process there was no need for my lawyer to be present. I gathered from my lawyer that the drill in Ottawa may be different: there they had no objection to his being present but subjected his client to a two hour grilling. Anyway, if you decide you need a lawyer, I would recommend Stephen Flott of Flott & Co in Virginia. (The Webmaster won't let me include his email but you can Google him.) He’s done a number of these applications and knows the drill. However, he is not cheap.


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## Peg

Northof49 said:


> ... the head consular officer (Ms Anderson’s boss, as she rather brusquely informed me) told my lawyer that he had no right to be there and that it was consular policy not to permit anyone to be represented by counsel. (According to her this policy is to avoid overcrowding, although when we were there only one other applicant was present.) This came as a surprise to him since he had made it quite clear to Ms Anderson that he was acting as my lawyer and would be attending at the consulate with me. She also asked why I thought I needed to be represented by an attorney since the process was very straightforward. When I tried to explain that the process and the legal issues did not seem to be at all straightforward and that the distinction between renunciation in the present and confirmation of relinquishment in the past seemed to be lost on many staff, she cut me off impatiently and later took me aside and said, in so many words, that I was foolish to spend money on a lawyer for something so routine. ...


If someone successfully relinquishes does that mean their loss of citizenship is effective to the date they did the expatriating act? In your case, would your CLN be effective 1984? If that is the case then are you released from requirement to file IRS returns and FBARs? If yes then it is absolutely worth some legal fees!!! :clap2:


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## Guest

Peg said:


> If someone successfully relinquishes does that mean their loss of citizenship is effective to the date they did the expatriating act? In your case, would your CLN be effective 1984? If that is the case then are you released from requirement to file IRS returns and FBARs? If yes then it is absolutely worth some legal fees!!! :clap2:


Excellent question, Peg. It needs a lawyer or a court challenge, alas, I think anyway.

My understanding is as follows:

The instructions on Form 8854 seem to indicate that the IRS considers that the date of expatriation "for tax purposes" is the date you notified State of your relinquishment, not the date of the actual expatriating act (in this case in 1984). That isn't absolutely clear in the instructions, because the date ranges only go back to 2004. But the wording in the instructions, and also in another IRS website I found 
Publication 519 (2010), U.S. Tax Guide for Aliens seems to imply, and it of course is confusing in the latter link but I think the implications are, that even before 2004 your relinquishment date "for tax purposes" would be when you notified State (now, in 2012).

According to another website I can't lay my hands on at the moment, the law or regulation passed by Congress decreeing that "for tax purposes" relinquishment is when you tell State not when you committed the actual act, was passed in February 1996 (or maybe 1994 but no earlier than that). Given that the US Constitution forbids Congress from passing ex post facto laws, it seems to me that this "for tax purposes" interpretation by the IRS would be illegal if they tried to apply it to people who committed an expatriating act voluntarily and with intent to relinquish (and can support this with balance of evidence on form DS-4079) any time prior to 1994 or maybe 1996.

In which case the applicable law is what was in effect in 1984, which was you were liable for taxes for ten years after reqlinquishing if you met the income tests (no mention made back then of tax filing though ...) however by 1994 and certainly 1996, never mind 2012, you are way past the ten-year window. (We won't grapple with who can possibly file back taxes in 1984, no one I know keeps receipts and tax returns back 28 years I sure don't).

The rubber hits the road when State tells IRS of your CLN in 2012 and IRS sends you the form 8854. You could write back to IRS and tell them you aren't going to comply with any forms, because your relinquishment (which State definitely should date to 1984 as long as you didn't do something regrettable later like apply for a US passport) pre-dates the legislation under which form 8854 was created, hence is ex post facto application of a law and hence unconstitutional. The ball then is in their court whether to tell you they're fining you $10,000 for not filing their form (they say they can repeat this fine every year you continue not to file it), and then in your court whether to tell them to get stuffed, not to cross the border, or hire a lawyer to fight it in US court.

If you don't need or want for family or business reasons to go to the US ever again, I would simply refuse to file any tax forms including 8854 in your case, assuming that you've gone through all the subquestions under item 13 on State's form DS-4079 and can swear you haven't maintained any significant connections with the US as listed under that heading -- particularly getting a US passport, living and working in the US unless with a green card, owning property (arguable), etc. I don't think they can possibly come after you for penalties for non-filing of 8854 or other forms as long as you stay in Canada, but again, get legal advice (from a CANADIAN lawyer) on this point before doing anything.


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## Canadian Guy

Schubert said:


> Excellent question, Peg. It needs a lawyer or a court challenge, alas, I think anyway.
> 
> My understanding is as follows:
> 
> The instructions on Form 8854 seem to indicate that the IRS considers that the date of expatriation "for tax purposes" is the date you notified State of your relinquishment, not the date of the actual expatriating act (in this case in 1984). That isn't absolutely clear in the instructions, because the date ranges only go back to 2004. But the wording in the instructions, and also in another IRS website I found
> Publication 519 (2010), U.S. Tax Guide for Aliens seems to imply, and it of course is confusing in the latter link but I think the implications are, that even before 2004 your relinquishment date "for tax purposes" would be when you notified State (now, in 2012).
> 
> According to another website I can't lay my hands on at the moment, the law or regulation passed by Congress decreeing that "for tax purposes" relinquishment is when you tell State not when you committed the actual act, was passed in February 1996 (or maybe 1994 but no earlier than that). Given that the US Constitution forbids Congress from passing ex post facto laws, it seems to me that this "for tax purposes" interpretation by the IRS would be illegal if they tried to apply it to people who committed an expatriating act voluntarily and with intent to relinquish (and can support this with balance of evidence on form DS-4079) any time prior to 1994 or maybe 1996.
> 
> In which case the applicable law is what was in effect in 1984, which was you were liable for taxes for ten years after reqlinquishing if you met the income tests (no mention made back then of tax filing though ...) however by 1994 and certainly 1996, never mind 2012, you are way past the ten-year window. (We won't grapple with who can possibly file back taxes in 1984, no one I know keeps receipts and tax returns back 28 years I sure don't).
> 
> The rubber hits the road when State tells IRS of your CLN in 2012 and IRS sends you the form 8854. You could write back to IRS and tell them you aren't going to comply with any forms, because your relinquishment (which State definitely should date to 1984 as long as you didn't do something regrettable later like apply for a US passport) pre-dates the legislation under which form 8854 was created, hence is ex post facto application of a law and hence unconstitutional. The ball then is in their court whether to tell you they're fining you $10,000 for not filing their form (they say they can repeat this fine every year you continue not to file it), and then in your court whether to tell them to get stuffed, not to cross the border, or hire a lawyer to fight it in US court.
> 
> If you don't need or want for family or business reasons to go to the US ever again, I would simply refuse to file any tax forms including 8854 in your case, assuming that you've gone through all the subquestions under item 13 on State's form DS-4079 and can swear you haven't maintained any significant connections with the US as listed under that heading -- particularly getting a US passport, living and working in the US unless with a green card, owning property (arguable), etc. I don't think they can possibly come after you for penalties for non-filing of 8854 or other forms as long as you stay in Canada, but again, get legal advice (from a CANADIAN lawyer) on this point before doing anything.


It is my understanding that FBAR is not a tax. I agree that if the relinquishing act predates the law, then the law should not apply. What I am wondering is if the law saying that the date of relinquishment is the date I notify the state department might only apply to taxes. Could people like me who committed a relinquishing act decades ago at least be off the hook as far as the FBAR's go?


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## Northof49

Peg said:


> If someone successfully relinquishes does that mean their loss of citizenship is effective to the date they did the expatriating act? In your case, would your CLN be effective 1984? If that is the case then are you released from requirement to file IRS returns and FBARs? If yes then it is absolutely worth some legal fees!!! :clap2:


That is certainly the result that is being sought. It would definitely not be worth the time, effort and expense if the CLN ends up being dated currently. In fact, this would be the worst possible result because it would produce a huge, immediate exit tax liablity for all capital gains on all my assets as if they had been sold on the date of renunciation. I raised this point repeatedly with the lawyer and he seems confident that we can get it backdated.


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## Guest

Canadian Guy said:


> It is my understanding that FBAR is not a tax. I agree that if the relinquishing act predates the law, then the law should not apply. What I am wondering is if the law saying that the date of relinquishment is the date I notify the state department might only apply to taxes. Could people like me who committed a relinquishing act decades ago at least be off the hook as far as the FBAR's go?


Interesting question, and I haven't a clue what the answer might be. I've seen reference to the 1996 date but I don't have any reference to the specific legislation, which is what one needs to check the wording in terms of what it applies to. In any case, this is where I'd want a legal opinion from a lawyer.

FBAR penalties are penalties not taxes, as you said, and as Flaherty and CRA have announced they are NOT enforceable in Canada. (You may want to get confirmation of that with a Canadian lawyer who has examined the OECD treaty that Flaherty signed in early November though. I've emailed Flaherty and Finance separately asking about that treaty and whether it over-rides anything in the Canada-US tax treaty, and I've yet to get a reply other than a robo-acknowledgement.) Whether they're enforceable if and when you cross the border after getting a CLN is something only a lawyer (and in this case, it would probably need to be a US lawyer) can advise you properly. Assuming you want or need to cross the border after getting a CLN; I think a growing number of people are coming to the stage of cutting all the traces and ties with the US forever over this, if they can.


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## pwdunn

Northof49 said:


> That is certainly the result that is being sought. It would definitely not be worth the time, effort and expense if the CLN ends up being dated currently. In fact, this would be the worst possible result because it would produce a huge, immediate exit tax liablity for all capital gains on all my assets as if they had been sold on the date of renunciation. I raised this point repeatedly with the lawyer and he seems confident that we can get it backdated.


Definitely yes. Clearly yes. If you are not a person under the jurisdiction of the United States, FBAR does not apply to you, and the statute of limitations is six years. Get a CLN that says your expatriation dates more than six years ago and your laughing, and there is nothing Obama can do to you--well, nothing lawful.


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## Deckard1138

Glad I checked this thread again as this is all about my situation, as well as several other's here. I'll have some more information to contribute before the week is out.


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## jimmyjam

*reasons to change banks*



PetrosResearch said:


> But the thing is that the only reason it is necessary to move your accounts is to avoid FBAR. If you are planning to fill out the FBAR, then there is no point in moving anything. .


That is not true.

There can be hundreds of legitimate reasons to move your account.

(1) you have heard rumors your bank is in financial difficulties

(2) you have received poor customer service and want to change banks

(3) your bank is too expensive you are moving to a cheaper solution

(4) you asked for a loan but your bank did not give it to you while another bank did

etc 
etc
etc


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