Monthly Archives: August 2014

#FATCA debate via Twitter – Defines some well articulated positions and provides structure for debate

This week the National Post published an article about the possible effects (suggesting it could be damaging to Canadians) of the FATCA lawsuit. The article is a report on an interview that the author had with Calgary based U.S. tax laywer Roy Berg.

The above tweet references an article, published by Moody’s in which there is a suggestion that by participating in this lawsuit, that the plaintiffs would incur further tax liability to the IRS. The article states:

As an aside, we acknowledge that the two Canadian plaintiffs are exposing themselves to tremendous tax and other legal risks. Sticking to what we know, the plaintiffs seem to have admitted that they willfully did not file FBARs and US tax returns, both of which are criminal acts. In addition, there might be US tax exposure to them personally because a Canadian non-profit organization is raising funds and paying their legal fees to fund the litigation. Even the most casual observer has to applaud the bravery of the plaintiffs and the not-so-subtle parallel to original signatories to the Declaration of Independence.

Since this “aside” is irrelevant to the issue, we can assume that this is an attempt by Moody’s to somehow intimidate the plaintiffs. (Or at least that’s how I view it.). The simple reality is that the compliance industry is the sole beneficiary of FATCA.

But, that “aside” aside,  the article generated a number of interesting comments. I suggest that the following stream of comments do a good job of framing the issues in the context of a broader FATCA debate.

Continue reading


Want to shed U.S. citizenship? Get in line

In the meantime, Nightingale warns, the tax side of renouncing U.S. citizenship can be expensive:

“If somebody comes to us and says, ‘I’m a U.S. citizen, I’ve never filed tax returns, I’ve got a pretty ordinary life, but I’ve got an RRSP, an RESP, a TFSA and some mutual funds, and can you prepare all my returns and get me ready for expatriation?’, by the time we do all that, it’s not hard to spend $15,000 or $20,000 for a fairly ordinary person.”

Global News

A controversial tax deal with the United States, under which Canadian banks agree to try to find U.S. citizen clients and report them to the IRS, using the CRA as an intermediary, took effect July 1.

But many dual citizens in southern Ontario aren’t waiting to be found – they’ve decided to shed U.S. citizenship. In the process, they’ve created a backlog at the U.S. consulate in Toronto that stretches into the third week of January 2015.

Dundas-based tax and immigration lawyer David Lesperance said on Twitter yesterday that he booked 2014’s last renunciation appointment at the Toronto consulate for a client on Tuesday.

In an e-mail Tuesday, the Toronto consulate said the earliest date they could book for a renunciation is January 22, 2015.

Until recently, appointments to renounce U.S. citizenship in Toronto could be made within three to six weeks, said Toronto-based cross-border tax accountant Kevyn Nightingale, who…

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Vancouver, Toronto, Calgary named among the best places to live in the world by The Economist
But, are they safe cities for Americans being subjected to FATCA Hunt?

Financial Post | Business

TORONTO — Three Canadian cities — Vancouver, Toronto and Calgary — have been named as some of the best places to live in the world, according to a report by The Economist.

[np_storybar title=”Top 10 Most Livable Cities” link=””]

1. Melbourne, Australia

2. Vienna, Austria

3. Vancouver, Canada

4. Toronto, Canada

5. Adelaide, Australia

6. Calgary, Canada

7. Sydney, Australia

8. Helsinki, Finland

9. Perth, Australia

10. Auckland, New Zealand

Source: The Economist Intelligence Unit

In the annual poll, the magazine’s Intelligence Unit ranked Vancouver as the third most livable city in the world; followed by Toronto at number four, and Calgary tied for fifth place with Adelaide, Australia.

Melbourne, Australia topped the list of 140 cities for the fourth year in a row, with Vienna, Austria coming in second overall.

The Economist ranks the cities on 30 factors across various categories, including stability, health care, culture…

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Canada-U.S. dual citizens could be worse off if FATCA lawsuit succeeds
FATCA is nothing more and nothing less than an attempt by the U.S. (with collaboration from the Harper Government) to forcibly impose a U.S. law on Canada. The article fails to point out the long run costs of compliance with U.S. law will far exceed the costs of non- compliance. Well, assuming that you want Canada to continue as a free and sovereign nation.
Roy Berg continually says:
The is U.S. law and therefore we must comply.

Financial Post | Business

Two women have challenged the constitutionality of a Canada-U.S. agreement to share the tax information of U.S. citizens resident in Canada, with the IRS.

[np_storybar title=”Ottawa is violating Canadians’ constitutional rights to help the U.S. collect taxes” link=””]Marni Soupcoff: At the Americans’ behest, Canada will now be sharing tax information even about Canadians who have never lived a day of their lives in the United States, never worked in the United States, and never owed the IRS a single penny. Merely having dual U.S. citizenship — for example because one’s parents were Americans or one was born on U.S. soil to Canadian parents — is enough to trigger the mandatory sharing of private financial details. While one can understand Washington’s desire to crack down on tax cheats, FATCA goes too far, and it’s distressing that the Canadian government has so willingly stepped up to help. Keep reading.

But an…

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#Americansabroad are not tax evaders. The U.S. is a tax invader


What follows is a comment ot a rencent Robert Wood post.

This is a “must read”.

UrbanNomad 21 hours ago

I was born in California to foreign parents who were temporarily working in the USA. I left in 1968, aged 1, and haven’t been back except on vacation. I have been fully compliant with my IRS and related obligations since the 1980s.

I have lived in South Africa since 1979, and have spent the past 5 years attempting to naturalise as a South African citizen without success, so I am unable to renounce my US citizenship. I am not in violation of any of the naturalisation requirements; rather the granting of citizenship here is a privilege not a right. Being Africa, I suspect I could make a ‘payment’, but that is not how I operate (and it might put me in violation of the US Foreign Corrupt Practices Act).

I identify fully with Marilyn. Until recently, I had little objection to meeting my US tax obligations. I did think it unfair that the US could assert taxing jurisdiction over me so far away after so long, thereby depriving an African nation of some much needed revenue. However I am more pragmatic than idealistic: the tax rates are similar, and the tax treaty and foreign tax credits meant that the additional burdens (mostly admin & CPA costs) were manageable. This has changed dramatically in the last five years.

Since the IRS’ success against the Swiss banks in 2009 revealed a number homelanders evading tax, they have gone on a global witch hunt. Congress has armed the Treasury Department with some constitutionally dubious legislation which has exponentially increased my tax compliance efforts. I’m spending well over $15K, and up to 100 hours of my time, every year meeting these requirements. The biggest concern I have, given the complexities of the US tax code, is the egregious penalties applicable only to foreigners. Homelanders might be assessed penalties of around 20% of the tax owed, while we are potentially subject to the confiscation of the asset that generated the tax.

The IRS’ PFIC regulations make it almost impossible to hold savings outside the USA. A foreign mutual fund, if held long enough (a wise strategy), can similarly result in taxes approximating the value of your investment in the fund. Having been aware of the PFIC laws for many years, I decided to invest my savings in the USA, but the new AIFMD laws prohibit the sale of mutual funds to non-resident citizens.

I don’t dispute a country’s right to tax its citizens, even if the USA is only one of 2 countries in the world that does so. I am grateful for the Fourteenth Amendment which has granted me the right to hold a US passport and travel freely around the world. However, when you combine these factors with the US tax code and the IRS’ new enforcement abilities, they collectively amount to a violation of some basic rights. I am fortunate that I have savings and assets, and my circumstances may not elicit much sympathy from the homelanders, but the founding fathers intended for all of us to enjoy our rights, not just those on welfare.

To those who might brand me unpatriotic, that has no meaning to me. How patriotic do you feel towards South Africa? If you think that the USA is better off without the likes of Marilyn and me, think again. We don’t fill up your schools and we don’t congest your streets. We don’t crowd your courts with spurious claims nor do we claim medical benefits or welfare. The only thing the USA has ever given me is six passports, and I paid a fee for each of them. Meanwhile, for decades we’ve been swelling the coffers of your treasury with earnings generated in foreign countries. Tax evaders? I think not; the appropriate term is Tax Invaders!

Called-out comment

Robert W. Wood Robert W. Wood, Contributor 21 hours ago

Dear UrbanNomad: Thank you for this thorough personal account. Your costs and perceptions about the changes since 2009 are important for others to note. I have seen some people anxious to expatriate “buy” a passport in a country even where there are not living, if they can’t obtain citizenship in their country of residence. In any case, thanks for your comments. I like your “Tax Invader” term too!

Marni Soupcoff: Ottawa is violating Canadians’ constitutional rights to help the U.S. collect taxes

This is a good and interesting article with the usual comments from the compliance industry. If nothing else, it clarifies how difficult it is to understand the FATCA issues and the lawsuit against the Canadian government.

Canadian government faces constitutional challenge over FATCA deal

Important step forward in preventing the IRS Commissioner replacing the Governor General as Canada’s head of state.
Although the FATCA IGA is an initiative of the Harper Government, there are other reasons why it is unconstitutional.

Financial Post | Business

Two women are suing the Canadian government over a controversial deal in which Canada has agreed to share the tax information of U.S. persons resident in Canada with the IRS.

Gwen Deegan, a graphic designer from Toronto, and Ginny Hillis, a retired lawyer from Windsor, filed a statement of claim in the Federal Court of Canada that accuses the Canadian government of overstepping its constitutional powers by agreeing to comply with a new U.S. law called the Foreign Account Tax Compliance Act (FATCA).

Under the Canada-U.S. agreement, which was reached in February and which took effect on July 1, the Canada Revenue Agency is to provide tax information to the U.S. Internal Revenue Service about the estimated one million Americans and dual U.S.-Canadian citizens who reside in Canada. Canadian financial institutions are required to search their records for accounts held by clients who meet the definition of “U.S. person” under…

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