Monthly Archives: March 2015

Thoughts on Exit Taxes in the Modern World by @VictoriaFerauge – Do the S. 877A rules go too far?

The above tweet references a comment that appeared on post written by Victoria Ferauge on her “” blog. It is a old post that was written about “Exit Taxes” in general which she refers to as:

An exit tax is a tax that is levied against an individual or a corporation who wishes to transfer residency or citizenship from one country to another.  It is a tax on emigration and/or expatriation.  How does it work and what is its purpose?:

In general, ET [Exit Taxation] aims at levying the potential or latent gains (also called “hidden reserves”) related with the assets that an individual, a company or a PE located in a given country, economically (eg., through allocation to a foreign PE of a trademark or a shareholding), or physically transfer to another tax jurisdiction. A first feature of ET is, thus, related with the fact that it is imposed when no asset disposal takes place, and no revenue is generated.

It is a tax that the United States levies against certain individuals who relinquish U.S. citizenship. I recommend this Victoria’s post as an objective description of what is meant by an Exit Tax. I also found that I had left the following comment on the post:

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U.S. Republican senators write to Iranian leaders in attempt to undermine nuclear talks

“The Obama administration believes it has authority to lift most trade, oil and financial sanctions that would be pertinent to the nuclear deal in exchange for an Iranian promise to limit its nuclear programs. For the rest, it needs Congress’ approval. And lawmakers could approve new Iran sanctions to complicate matters.”

One more example of the use of sanctions in foreign policy. On this note see:

National Post

WASHINGTON — Republican lawmakers warned the leaders of Iran on Monday that any nuclear deal they reach with President Barack Obama could expire the day he leaves office. The White House denounced the Republicans’ latest effort to undercut the international negotiations as a “rush to war.”

Monday’s open letter from 47 Republican senators marked an unusually public and aggressive attempt to undermine Obama and five world powers as negotiators try to strike an initial deal by the end of March to limit Iran’s nuclear programs.

Republicans say a deal would be insufficient and unenforceable, and they have made a series of proposals to undercut or block it — from requiring Senate say-so on any agreement to ordering new penalty sanctions against Iran or even making a pre-emptive declaration of war.

Obama, noting that some in Iran also want no part of any deal, said “I think it’s somewhat ironic that…

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Andrew Coyne: Imperious Conservatives and runaway Supreme Court set to collide

National Post

Between an imperious federal government and a runaway Supreme Court, we are headed for a legal and constitutional imbroglio.

The Harper government, it is widely observed, has taken with increasing frequency, if not glee, to stuffing the bills it presents in Parliament with measures that are in self-evident violation of the constitution. Not only is the government making no apparent effort to “Charter-proof” legislation, that is by seeking the advice of Justice department lawyers on its constitutionality in advance of its introduction, as it is required by law to do, it seems if anything to be taking advice on how to offend it.

It is impossible to read the several dubious provisions of Bill C-51, the Conservatives’ anti-terrorism legislation — allowing the police to detain people on suspicion an act of terrorism “may” be about to occur; permitting intelligence officers to break the law, bizarrely, with the permission of a…

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Don’t panic, American citizens in Canada: The IRS is not coming to seize your house

The comments to this article and other comments  express the concern over the content and the purpose of this article.

Two points:

1. U.S. tax law is NOT enforced by the IRS, it’s enforced by the tax compliance community.

2. Therefore, the tax compliance community has a responsibility to NOT “invent” the law that they are enforcing. For example, many tax practitioners in Canada assume that a TFSA is a “Foreign Trust” for U.S. tax reporting purposes. Income from a TFSA is taxable on the U.S. tax return. If it were a “Foreign Trust” it would be subject to additional (expensive) reporting requirements and penalties (think Form 3520). The author of this Financial Post article, Max Reed has been helpful  in taking the position that the TFSA is NOT a Foreign Trust for U.S. tax purposes.



Financial Post

One million American citizens in Canada face double tax troubles. Max Reed explores these challenges in a spring series.

This spring, a new tax law hangs heavy over U.S. citizens who call Canada home.

The U.S. Foreign Account Tax Compliance Act, or FATCA, has generated a lot of attention because, as of July 1, 2014, it requires Canadian financial institutions to send information about their U.S. account holders to the Canada Revenue Agency, who will hand the info off to the Internal Revenue Service.

It’s all part of an IRS crackdown on foreign tax evaders that began in 2011. FATCA, understandably, frightens people.

Americans in Canada (U.S. citizens, certain U.S. green card holders, those who have a U.S. address) have always been expected to file, but FATCA makes these tax obligations more pressing.

This series will try to enlighten U.S. account holders and help them understand the implications in this…

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