Location: Aylmer (Gatineau) across the river from Ottawa
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Quote:
Originally Posted by eMacMan
It is one thing to say ignorance of the law is no excuse, quite another when the entity in question makes it almost impossible to find out what the law is until after the fact.
Personally I am not particularly impacted other than the insanity of having to file the forms in the first place. I am quite capable of figuring out this is just plain wrong and demanding that the Government of Canada should refuse to participate. At the very least the Government of Canada should make it quite clear that it does not support this insanity, that banks will not be required to file W9s or 1099s with the IRS no matter how strong a customers ties to the US are. Banks should also face severe penalties for giving any customer data to the IRS without a Canadian Court Order. Banks do file T4s and this information is available to the IRS when they can make a case for it. This is all the IRS needs to track down clear cases of tax fraud. Had they needed more believe me they would have asked for it when the tax treaty was negotiated.
Do download form 8938, then see if you can track down a plain English translation. It will be an eye opener. Remember miss an account or do it wrong and you're out 10G$ for each account missed or muffed and you are subject to arrest should you cross the US border, even if you don't owe the IRS a dime in taxes.
The good news here is that when the Harper gang signs on to the NA Union, in all likelihood all Canadians will be subject to this form insanity, at the hands of the IRS. It is even possible they will have to back file all these forms for several years with severe penalties for having failed to anticipate the new rules.
Flaherty's total capitulation is a mighty clear indication that this government is unwilling to stand up for Canadian Sovereignty.
As a US national it is one's responsibility to stay apprised of US tax law that is applicable to you... just as it is for Canadians living and working abroad.
They are not participating beyond respecting existing Tax Treaties and US sovereignty.
More FUD and conspiracy theory...
Sigh... this is not a matter of Canadian sovereignty it is a matter of US sovereignty get your facts straight. Just because a US citizen or dual citizen lives in Canada does not make them exempt from US tax law. Also you make it sound like these filings only need to be filed by US citizens living in Canada... they need to be filed by a US citizen living anywhere abroad where tax treaties with the US exist.
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Last edited by screature; Jul 6th, 2012 at 10:23 AM.
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.
The new rules will be announced within weeks by the IRS, according to David Jacobson, the U.S. Ambassador to Canada, who has been swamped with complaints from anxious Canadians.
“What the IRS is saying here is that if ... you don’t owe taxes to the U.S., and you file your return and they show you don’t owe taxes, there aren’t going to be any penalties for having filed late,” Mr. Jacobson said in an interview Thursday.
Fears of a looming U.S. tax crackdown has caused a wave of angst among the roughly one million Americans living in Canada. Many of them long ago stopped filing, assuming they owed no tax.
Unlike most countries, the United States requires its citizens to file annual tax returns regardless of where they live and work. Many are now worried they'll be hit with punishing penalties as a result of recent U.S. efforts to expose citizens hiding assets in offshore tax havens.
Every year, Americans must also report all their foreign bank, brokerage, mutual fund and pension accounts. And by 2014, Canadian financial institutions will have to identify accounts held by U.S. citizens to the IRS.
“We had an obligation to make our situation clear,” Mr. Jacobson explained. “What they have done is clarify what’s going to happen with innocent folks who didn’t know their obligations and are now going to try to comply with the law.”
Even Mr. Jacobson acknowledged the penalties for not filing can be “draconian,” even for “typical” Americans in Canada who owe nothing because Canadian taxes are typically higher.
“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.
Mike Vance, a 26-year-old doctor from Nanaimo, B.C., who moved to Canada as a child, said the partial amnesty is good news. But he said he no longer trusts that the United States won’t come after his assets in the future as the country struggles to deal with its massive debt.
“I’m using this as a warning sign,” explained Mr. Vance, who recently began the complex process of renouncing his U.S. citizenship. “I’m just starting out as a young doctor and going to have a fair bit of money invested in Canada.”
Finance Minister Jim Flaherty, who repeatedly complained about the problem, said he was “happy” with the IRS policy shift.
“We told the U.S. that the vast majority of Canadians targeted were honest, hard-working and law-abiding individuals and they listened,” Mr. Flaherty said in a statement. “It’s a victory for Canadians and a testament to our positive working relationship with our American neighbours.”
The policy shift will come in the form of new guidance from the IRS, expected to be issued before the end of December. U.S. officials said the statement will make it clear that:
If a U.S. citizen files tax returns late and owes no taxes, there are no penalties for failure to file.
U.S. citizens who were unaware of the bank account reporting requirement can file previous reports now, along with a statement explaining why they’re late. No penalty will be imposed if the IRS determines that there is reasonable cause.
Individuals who took part in earlier amnesty programs this year and in 2009 can reapply and get back penalties already paid.
Accountant Kevyn Nightingale, a U.S. tax specialist with MNP LLP in Toronto, said the changes are “fabulous news” and “a reasonable response” for Canadians unwittingly caught in the crackdown.
But he said it remains unclear how many years of back taxes are covered, or how professionals and consultants who often incorporate their businesses in Canada will be treated. U.S. officials would also not say what would happen to people who owe relatively small amounts to the IRS.
Nor does the change end the concerns of Canadian financial institutions, which complain they’ll face massive costs trying to track all their U.S. account holders. Mr. Flaherty has warned that the new U.S. bank reporting rules, slated to come in 2014, could violate Canadian privacy laws.
Canada and the United States are neighbours and have long been the closest of friends. We share a common border and we share many common values.
One of those values is fighting tax evasion. We believe in fair tax systems where everybody pays their share.
Many Canadians, however, have become concerned about the impact of a proposed piece of American tax legislation – the Foreign Account Tax Compliance Act, or FATCA.
I share their concern.
We appreciate efforts to combat tax evasion. In fact, our two jurisdictions co-operate to prevent it. But FATCA has far-reaching extraterritorial implications. It would turn Canadian banks into extensions of the IRS and would raise significant privacy concerns for Canadians.
To be clear, Canada respects the sovereign right of the United States to determine its own tax legislation and its efforts to combat tax evasion – the underlying objective of FATCA.
But put frankly, Canada is not a tax haven. People do not flock to Canada to avoid paying taxes. In addition, we have existing ways of addressing these issues with the United States through our Bilateral Tax Information Exchange Agreement. As I said, we share the same goal of fighting tax evasion and we already have a system that works.
To rigidly impose FATCA on our citizens and financial institutions would not accomplish anything except waste resources on all sides.
Another issue, this one affecting more directly the large numbers of dual U.S.- Canadian citizens and their relatives living in Canada, is the IRS’s Foreign Bank Account Report (FBAR) filing requirements.
Most of these Canadian citizens, many with only distant links to the United States, have a very limited knowledge of their tax reporting obligations to the United States. These are honest and law-abiding people, including many senior citizens now caught in a nerve-wracking situation. Moreover, because they work and pay taxes in Canada, they generally do not owe any taxes in the United States in any event. Their only transgression is failing to file the IRS paperwork they were never aware they were required to file.
These people are not the targets of a crackdown on tax evasion. These are not high rollers with offshore bank accounts. These are people who have made innocent errors of omission that deserve to be looked upon with leniency
Rather, these people are typically hard-working citizens of our two great countries.
Faced with the knowledge that they do have an obligation to file U.S. tax returns (even if they most often do not actually owe any taxes) they want to do the right thing.
But the threat of prohibitive fines for simply failing to file a return they were unaware they had to file, is a frightening prospect that is causing unnecessary stress and fear among law abiding hardworking dual citizens.
We support efforts to crack down on legitimate tax evasion. These measures, however, do not achieve that goal.
Quote:
FACT SHEET
U.S. Tax and “FBAR” Filing Requirements for U.S. Citizens in Canada
This fact sheet is intended for information purposes only and should not be construed as tax advice. It is not intended or written to be used and cannot be used by any taxpayer for the purpose of avoiding any tax or penalties that may be imposed on such taxpayer by the U.S. Internal Revenue Service (IRS) or the Canada Revenue Agency. Taxpayers who think they may be affected by any of the measures discussed herein should seek advice based on their particular circumstances from an independent tax advisor with appropriate experience.
U.S. citizens in Canada have to file U.S. tax returns: The U.S. government requires its citizens living abroad, including in Canada, to file income tax returns and associated tax forms - even if those U.S. citizens do not have to pay any U.S. income tax because they already pay Canadian income tax, and even if they have dual citizenship with Canada. This requirement has been in place since 1913.
They may also have to file another U.S. form – the FBAR: Under the U.S. Bank Secrecy Act, U.S. citizens must file a particular form if they have a total of more than $10,000 in accounts at non-U.S. financial institutions. This form is the Report of Foreign Bank and Financial Accounts, commonly known as the “Foreign Bank Account Report”, or “FBAR”. The FBAR filing requirements have been in place since 1972.
Failure to file FBARs can lead to large penalties: The U.S. can levy significant financial penalties for failure to file an FBAR*. There are potential criminal sanctions as well.
For more information (including penalties and consequences of non-compliance), please visit the IRS website:
The IRS has announced simplified filing procedures for U.S. citizens living abroad who pose low compliance risk to become compliant with their tax and FBAR reporting requirements, available as of September, 2012. Visit New Filing Compliance Procedures for Non-Resident U.S. Taxpayers.
For advice, please contact a tax advisor: Canadians who think they may be affected by the U.S. filing requirements for tax returns or FBARs should contact a tax advisor with experience in U.S. taxation issues.
* Penalties imposed under FBAR will not be collected by the Canada Revenue Agency (CRA): The Canada-United States Income Tax Convention contains a provision which allows for the collection by a country of taxes imposed by the other country, including civil penalties. This provision does not apply to penalties imposed under laws, such as the U.S. Bank Secrecy Act, that impose only a reporting requirement (as opposed to those that impose taxation along with reporting requirements). Also, CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time the liability arose (whether or not the individual was also a U.S. citizen at that time).
Quote:
US Tax and FBAR Filing Requirements (Update)
· Building on recent positive developments, please find below an IRS press release and backgrounder that provides additional relief to dual-citizen Canadians and others on the US tax and FBAR issue (Foreign Bank Account Report):
· This situation has been the cause of great anxiety for many dual-citizen Canadians. The government shares their concerns and have raised them directly with the US government.
· The Canadian government has told the US government that the vast majority of Canadians targeted were honest, hard-working and law-abiding individuals and they listened.
· The Canadian government has been persistent in raising these issues with the US government. Indeed, in this latest announcement, the IRS specifically noted special provisions for Canadian savings plans.
· This builds on the December 2011 IRS press release which laid out the parameters the IRS will use in applying leniency for dual citizens and green card holders who have not been filing their US tax returns and/or FBAR forms. For more information, see Information for U.S. Citizens or Dual Citizens Residing Outside the U.S.
· The Canadian government is happy with these further developments. It is yet another victory for Canadians and a testament to our positive working relationship with our American neighbours. Nevertheless, the Canadian government will continue to advocate on behalf of Canadians on such issues with the US government, including the implementation of FATCA (Foreign Account Tax Compliance Act).
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Last edited by screature; Jul 6th, 2012 at 10:52 AM.
The Canadian government has been persistent in raising these issues with the US government. Indeed, in this latest announcement, the IRS specifically noted special provisions for Canadian savings plans.
Yep that special provision is yet another form with the same old clause; $10,000 fine or they take half of it, whichever is greater.
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Location: Aylmer (Gatineau) across the river from Ottawa
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Quote:
Originally Posted by Macfury
So again, what does this have to do with Canada? U.S. citizens are subject to the laws of their land.
Yep it seems eMacMan wants US nationals to have their cake and eat it too when they live and work abroad... he wants Canada to become a tax haven... if he wants to live in a tax haven maybe he should move to the Caymans.
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Would be sweet to declare bankruptcy any time you want, and put all of your cash into a U.S. bank a mile from the border. Alas, the international cabal has agreed that creditors can reach across international borders to satisfy debts.
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Yep it seems eMacMan wants US nationals to have their cake and eat it too when they live and work abroad... he wants Canada to become a tax haven... if he wants to live in a tax haven maybe he should move to the Caymans.
Again we are not talking about taxes. In almost every case the IRS victims do not owe a dime in taxes and are already paying taxes to whatever country they happen to live in.
What we are talking about is the IRS creating an ever changing mechanism to steal the life savings of any one living outside the USA that can in any way, however briefly be connected to the US. This would include Canadians who happen to stay a day or two to long in their Florida or Arizona winter retreats.
And yes the brown-nosing of the Harper regime to the IRS is entirely relevant.
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Again we are not talking about taxes. In almost every case the IRS victims do not owe a dime in taxes and are already paying taxes to whatever country they happen to live in.
What we are talking about is the IRS creating an ever changing mechanism to steal the life savings of any one living outside the USA that can in any way, however briefly be connected to the US. This would include Canadians who happen to stay a day or two to long in their Florida or Arizona winter retreats.
And yes the brown-nosing of the Harper regime to the IRS is entirely relevant.
No, we are talking about a rule that applies to all U.S. citizens, regardless of whether they live in the U.S. or elsewhere. What difference does it make if it's a penalty or tax? A Canadian who "spends a day or two too long" in their U.S. winter retreat may be subject to some rule about filing a return for that year--who knows?--but not for every previous year of their life.
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Last edited by Macfury; Jul 6th, 2012 at 01:15 PM.
Location: Aylmer (Gatineau) across the river from Ottawa
Posts: 16,063
Quote:
Originally Posted by eMacMan
Again we are not talking about taxes. In almost every case the IRS victims do not owe a dime in taxes and are already paying taxes to whatever country they happen to live in.
What we are talking about is the IRS creating an ever changing mechanism to steal the life savings of any one living outside the USA that can in any way, however briefly be connected to the US. This would include Canadians who happen to stay a day or two to long in their Florida or Arizona winter retreats.
And yes the brown-nosing of the Harper regime to the IRS is entirely relevant.
No it doesn't.
And no it isn't.
Renounce your connections to the US if you are so concerned about it....
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Renounce your connections to the US if you are so concerned about it....
For Canadians who did not even know the IRS considers them Americans, this involves back filing taxes, FUBARS, 8851s and possibly 8938s for 6 years. Flaherty did manage to persuade the IRS to drop that back from 10 years. Of course all the late filing penalties will apply, even though most of them will not owe the US any taxes whatsoever. So these individuals can expect the IRS to seize at least one quarter of their life savings. Then of course there is the exit tax which individuals who have managed to accumulate a reasonable degree of wealth will have to file for 10 years after they renounce.
Oh and should you live in say Manitoba where the nearest US consulate is perhaps 1000 miles away be prepared to got to TO or Ottawa or Calgary at least twice, as this must be done in person and you will never accomplish that in one visit. And good luck getting an appointment.
BTW many Americans are doing just that because it is better than having to deal with the upward spiral of rape forms as they get older and are not quite as mentally alert.
Can you say Catch-22
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