Friday, December 2, 2011

IRS Will Give Canadians Some Breaks!!! (12/2/11)

There is breaking news that the IRS will give some breaks to Canadians in the application of the penalty regimes.  I have not had time to assimilate the information, so just now link to some news items as they come in.  I will later add such summaries and comments as appropriate,'

Addendum 12/3/11:

As reported, the relief is only for U.S. / Canadian dual citizens living in Canada.  I can understand why such dual citizens living in the U.S. would be excluded, but what about such dual citizens whose center of gravity was in Canada but they resided outside both the U.S. and Canada?

The second test they must past is that they owe no U.S. taxes.  Under the two initiatives to date, U.S. persons (regardless of dual nationality) could be penalized even if they owed no U.S. tax (usually because of foreign tax credits or related deductions that might have offset any offshore income); if they failed to report the income even though owing no additional tax, they were subject to penalty.  So this is some relief that would be available.

Finally, this is from an article published to on Tax Notes Today (Kristen A. Parillo, IRS to Minimize Penalties on Dual U.S.-Canadian Citizens Unaware of U.S. Tax Filing Obligations, 2011 TNT 233-9)):
While the IRS spokesperson didn't provide any details on what that guidance will provide, Jacobson said in the Globe and Mail interview that the IRS will make it clear that if a dual citizen living in Canada files a U.S. tax return late and owes no taxes, there will be no penalties for failure to file. The guidance also will provide that those who were unaware of the FBAR filing requirement will be able to file previous reports now, along with a statement explaining why they're filing late, and that no penalty will be imposed if the IRS determines that there is reasonable cause. Finally, individuals who took part in the IRS's 2011 offshore voluntary disclosure initiative or in the 2009 special offshore voluntary disclosure program will be able to get back penalties already paid, according to Jacobson. 
Jacobson said in the interview that it is unclear how many years of back taxes will be covered or what would happen to people who owe relatively small amounts of tax to the IRS.
The news items are:

Barrie McKenna, U.S. taxman to go easy on American residents in Canada (The Globe and Mail 12/2/11), here.

Kristen A. Parillo, IRS to Minimize Penalties on Dual U.S.-Canadian Citizens Unaware of U.S. Tax Filing Obligations, 2011 TNT 233-9)


  1. I think a lot of US Expats who had no tax due who dont reside in Canada will also benefit from this rule as the article says that this rule would apply to US Citizens not just dual US-Canada citizens. That means that immigrants are the only minnows caught in the OVDI without any relief. Thats not surprising given immigrants unlike Canadians and Expats in general have no lobbying power.

  2. it would have been great relief if they do not impose base penalty on RRSP.

    Also, this "no tax policy no penalty" should be extended to all expats -- not just those in Canada.

    Other wishful thinking is OVDI base penalty should be less for visa workers, although I would not qualify..

    A good/sensible policy will make this country stronger.

  3. "Thats not surprising given immigrants unlike Canadians and Expats in general have no lobbying power."

    It has nothing to do with lobbying power in this case. The key is "no tax due" missing filing will have no penalty. I think that would have applied to immigrants as well.

    Most immigrants (including myself) are in OVDI --because tax due related to offshore accounts.

  4. If you are an immigrant and if your offshore funds are assets acquired before coming here and if they are tax compliant in the (offshore/parent) country then those should be taken off of the base penalty.

  5. Good to see Barrie reporting this. He has done some of the best reporting anywhere in the world on these issues.

    Now, the proof will be in the details, and we will have to wait to see what comes of it. Count me in the skeptical camp that it won't be as good as it seems, as there will be some gotcha somewhere. And, it will be a technical fix, that one dollar on either side of the ledger lets you off the hook, or nails you!

    I will with hold euphoria for Expats in Canada until I see the actual rules. We really need to get congress to move to a residency based tax system like the rest of the world, but fat chance of that!

  6. IJ - I am very happy for the Canadian and other Expats - justice is finally being done for them because their government has been able to convince the IRS on fairness of the OVDI program.

    The temporary visa workers in OVDI cannot hope for any relief. Is the Chinese or Indian government going to stand up to USA to seek relief for their citizens? At the end of the day to quote Orwell "All animal are equal but some animals are more equal than the others"

  7. I am not ready to put the buggy before the horse.

    The IRS has been so inept with expats thus far, it would be commendable if their next moves were well thought out. I will give them some hints here.

    The following questions need to be answered:

    1) Is this a broad relief to be extended to all overseas US citizens?

    2) What if someone has owed taxes? Is there still relief for the FBAR penalties?

    3) Is there some de minimis rule for the amount of taxes owed?

    4) What if the overseas citizen has entered OVDI? What is the appropriate course of action? Should one opt out immediately? Is "opt out" the appropriate route to take or is there another procedure?

    5) If opt out is the appropriate way to go, then are these overseas OVDI participants, automatically exempt from the possiblity of a full audit?

    6) What tax (not FBAR) penalties should be paid if tax is owed? Is the 20% accuracy penalty really appropriate? The IRS has waived the accuracy penalty in earlier disclosure initiatives in order to bring more people into compliance in a cost effective manner (see IRM (07-01-2008)). As most of the overseas residents were filing taxes overseas and did not understand the US requirements, but they want to be compliant, if they owe some tax, why put on the 20% penalty? Ideally, only interest should be charged.

    7) What will be the procedures for refunds and how long will it take?

    Furthermore, the IRS is still showing they do not understand the realities of overseas US citizens by their statement that "no taxes must be owed".

    If relief from tax and FBAR penalties hangs on the fact that no taxes must be owed, then many people are still stuck in OVDI and with huge penalties. The reality which many overseas people are finding is that they owe minimal taxes. Even residents in some of the highest tax countries in the world, are finding when they calculate their US taxes that they owe taxes to the US. We know of several cases in which there was a loss in a foreign mutual fund in the currency in which the overseas citizen lives and works in. This currency is the usually the most important for the overseas citizen. PFIC calculations require simulating that a fund is sold each year and these proceeds must be translated to dollars using the rate at the time of purchase and the rate at the time of the fictitious sale. A weak dollar made the loss look like a gain. US taxes had to be paid on this "phantom" gain. There were no foreign passive tax credits to take against this gain as the fund had a loss and there were never any taxable gains in the country of residence.

    So using the absolute of "no taxes owed" is nothing to rejoice about. It would be much simpler and fairer if the IRS accepted proof of bona fide overseas residence. Taxes paid overseas could be used for backup, if for some reason the bona fide overseas residence was questioned.

    Defined de minimus amounts of taxes owed also lead to problems. What if someone resident overseas sold their house, followed their local tax rules in their country of residence, but still owed taxes on the house sale to the US due to differing tax rules. This tax could be a potentially high amount, so putting a deminis limit on taxes owed as a way to decide if FBAR penalties should be assessed is inherently unfair as it assumes that all taxes overseas translate directly to the same liability in the US, which is far from the case.

    As one can see, there are a lot of issues to be thought out in order to make this fair and cost efficient. It is also an opportunity to set up a policy that can be used in the future for the million of non-compliant overseas US citizens.

  8. "What if someone resident overseas sold their house, followed their local tax rules in their country of residence, but still owed taxes on the house sale to the US due to differing tax rules. This tax could be a potentially high amount, so putting a "

    exactly. For example in India till 2006 if you invest the proceeds of long term capital gains
    in a govt recognized bonds (54EC) for 4 years at a lower interest rate then you get a remission from paying the long term capital gains tax of 20%.
    Though long term capital gains tax in US is 15%
    and 20% in India, anyone investing all the gains
    india govt bonds may have 0% tax liability there and still end up with 15% tax liability here if he/she does not know about these differences.

  9. I see that Just Me and ij share my skepticism related to the “good news” for Canadians and possibly other expats.

    I think we have been in this system too long. I now have more than one year in the system dealing with the FBAR fines fiasco. I am sick of the costs. I am sick of the about faces of the IRS, which, while often to my benefit, show that I would have been better off never listening to their recommendations to follow the preferred course of action and enter a Voluntary Disclosure program.

    I feel like a maltreated guinea pig in an experiment that has gone horribly wrong.

    In addition to the concerns about the “good news” that I mentioned in a previous comment, I have another one related specifically to the FBAR penalties.

    Assuming that FBAR penalty relief is divorced from the fact that tax is owed, will the IRS accept as “reasonable cause” the fact that expats did not have good access to US tax professionals or information and therefore had no knowledge of the FBAR?

    Pre-OVD, I understand that letters sent by expats explaining their lack of awareness were accepted by Detroit. Now the IRS may indicate that overseas resident taxpayers can send a letter with a “reasonable cause” explanation to waive the penalties. I am not a tax professional (obviously) and my reading of “reasonable cause” for FBAR penalties does not allow for “just not knowing”.

    Am I correct?

    Therefore, unless there is explicit guidance issued, we will only know defacto if there really is relief for those overseas resident taxpayers who just did not know about the FBAR requirement.

    What do you think?

  10. I also want to point out that relief in terms of "no penalty for failure to file if no taxes are owed" is no concession at all.

    The failure to file penalty is calculated as a percentage of the tax due as shown on the tax return.

    So big deal. If you don't owe any tax, you were never going to be charged a failure to file penalty anyway. 5% to 25% of 0 is 0.

    So the Canadians shouldn't celebrate yet. If what is stated in Barrie McKenna's article is what the IRS is willing to do, then it is just a reiteration of the current rule and nothing has changed.

    True tax penalty relief will only be when the IRS waives or lessens the tax penalties for those overseas filers who owed taxes. Maybe granting that to those who entered OVDI would be one way of recognizing the effort those in the program have made to comply.

  11. To Anonymous December 3, 2011 3:20 AM

    The more I think about it the more skeptical I become.

    You make some excellent points, and someone else isn't buying it either...

    Did you see this from the Righteous Investor, Peter Dunn. Title: "New IRS policy recasts the same old shameful policy as good and friendly, but we are not buying it"

    I certainly have sympathy for these comments, and think the devil is in the details. Given how the technical modifications were made from the OVDP to the OVDI, with no deminis provisions, and adding an opague Opt Out procedure on top of an already onerous process, this really doesn't solve the issue for so many Expats. You are still going to eat up your LCUs complying.

    To get the IRS to cease and desist, we really need a change in Statutes, and need Congress to do away with the Civil War based Citizenship taxation model. Do you see much hope for that? Me either. Do you see any sponsors in Congress for such legislation? Don’t know of any. Maybe this is something a Congressman like Ron Paul would take on, but you see how little notice the majority of the GOP and mainstream media give him when he talks. And as for the Dems, well forget it. They have a Carl Levin who more any other Senator is responsible for the current FATCA mess.

    If there was any other OECD country trying to assert that type of Tax on their citizens residing in America, there would be outrage. There would probably calls to do away with it, like there are in Eritrea’s extortion against its citizens in Canada. But they are a 3rd world country, so never mind. What good company we keep! So, I guess we have to look at the US taxation model for what it is, involuntary "donations for the defense of the American Homeland." That is how an empire thinks.

  12. Jack,

    I do not know if you moderated out my comment on FBAR penalty relief for overseas resident US citizens, or if something else happened. I will submit it again without the small diatribe about my experience in OVDI. Please use the text below as the comment and do not post this part of text.
    In addition to the concerns about the “good news” that I mentioned in a previous comment, I have another one related specifically to the possible FBAR penalty relief. My concern is that this proposed relief mentioned in the McKenna article is really not a relief at all.

    Assuming that FBAR penalty relief for overseas resident US citizens is divorced from the fact that tax is owed, will the IRS accept as “reasonable cause” the fact that expats did not have good access to US tax professionals or information and therefore had no knowledge of the FBAR?

    Pre-OVD, I understand that letters sent by expats explaining their lack of awareness were accepted by Detroit. Now the IRS may indicate that overseas resident taxpayers can send a letter with a “reasonable cause” explanation to waive the penalties. I am not a tax professional (obviously) and my reading of “reasonable cause” for FBAR penalties does not allow for “just not knowing”.

    Am I correct?

    Therefore, unless there is explicit guidance issued, we will only know defacto if there really is relief for those overseas resident taxpayers who just did not know about the FBAR requirement.

    What do you think?

  13. Anon5% and Just me,

    I think you have made good points on this penalty relief news. If the condition is "no tax owed", that would not even qualify to enter OVDI/ODP. Just simply file amend FBAR and return.

    The real relief should be a waive FBAR penalty to all expats and US visa workers. Also get rid of penalty on retirement plans.

    I do feel guilty for under reporting of my offshore bank income, and I do not even want to make an excuse of it (such as being misled or uninformed), I am willing to pay the penalty that has caused loss of IRS (12.5% or 25%) I only hope IRS can keep their words on what they have list on QA --- such as 5% should be applied to accounts with less activities, and late tax deferral election on retirement plan should be considered based on reasonable cause (who would not have done so if he knew such a thing ?)

    Based on what I have seen the news and rumor -- IRS has no plan for being "reasonable" on "tax cheats" at all. they want to rip off as much as they can on those who are in OVDI, and they know they won't be able to catch most of the other smart/brave.

    While I do not stand a chance to fight with them, but I will speak out/tell the truth -- how I have been treated -- and I will publish all my documents and their rulings -- so alert the public.

    1. do you think they really care. Come on.
      they just need to squeeze the last bit of oil from you and throw you out

  14. The Globe article cites 3 points of relief for Canadians with US filing obligations. Only one of these points is really worth commentary, the other two points are simply restatements of existing law:

    Point 1: Penalty relief for Canadians participating in OVDI. This is potentially great news, though we'll need to see how this relief will be administered.

    Point 2: No late filing penalties for untimely returns if no tax is owed. This is simply a restatment of existing law. check out 6651(a)(1).

    Point 3: No FBAR penalty if "reasonable cause" is shown. Again, this is simply a restatement of existing law. check out 31 USC 5321(a)(5).

    I'm glad to see some movement on these issues however, there seems to be little new news in the announcement.

  15. The Canadians in OVDI and OVDP have very little to be happy about. As Jack says, confirmed by my attorney, the relief is just for Canadians. No penalty is just where no taxes are owed.

    This means that, unfortunately, Mr. Flaherty’s work on behalf of Canadians is not done.

    Only those Canadians not owing taxes who participated in OVDP and OVDI and owed no taxes can get 100% of their FBAR penalty back. Based on OVDI FAQ 52.3 from June 2, 2011, their penalty was already reduced to 5%, so there is very little concession here.

    What about the Canadians in OVDI who owe US taxes? What about the Canadians who are filing quietly and owe taxes? There are lots of stories about them on the Internet. It appears they are still subject to the FBAR penalties and as they are not in OVDI, there is still uncertainty as to those penalties.

    As has been stated in previous comments, failure to file and reasonable cause in waiving FBAR penalties are nothing new. The IRS relief for Canadians appears to be a gratuitous action equivalent to swatting pesky little flies away.

    The one hope is that the IRS is signaling that those Canadians who state that their reasonable cause for not knowing about the FBAR is because they have lived outside of America many years can avoid the FBAR penalties. That would set a precedent for others throughout the world.

    What is also interesting is by this “relief” the IRS has made its position on non-Canadian grandmothers as tax cheats official. Ambassador Jacobson is confirming through the meager concession given only to Canadians, that “typical” American grandmothers in high tax countries such as those in Europe: Germany, Holland, France, the UK, Belgium, Denmark, Sweden, etc., are considered to be tax cheats and the IRS wants to abscond with their savings, even if they owe no tax. His remarks in Mr. McKenna’s article support this view.

    And if a grandmother owes tax, it is impossible for her to be innocent (of FBAR filing requirements), even if the tax owed is due to accounting differences between countries. This applies to grandmothers in Canada, too.

    What is also grossly unfair is that the IRS did not magnanimously grant all US citizens who did not owe taxes and were in OVDI and OVDP relief from the FBAR penalties. Why is “Cindy”, the German-American featured in the Financial Times article of last June any different from Canadians? Why wasn’t she granted the same consideration?

  16. For those of you who may have a problem following the link in my previous comment to the article on a Cindy, a German-American who owed no taxes and was still charged a huge FBAR penalty, try posting the following in your browser and you will find the article:

    Financial Times, “Tax Compliance Bill Drives Expat to Despair of US”; June 12, 2011

  17. I just found this article and according to it, the relief extended to Canada may apply to citizens of other countries. So "Cindy" mentioned in previous comment, may get all her penalty refunded.

    Nevertheless, the "relief" offered remains no more than putting a band-aid on a broken leg.

  18. Anon5% @ December 3, 2011 12:50 PM

    I am not sure that I understand what you are asking. So I think I may be able to answer the thrust of your question as follows:

    The nonwillfulness penalty does not require that you know of the legal duty (although it is hard for me to think the IRS would assert without have some basis to believe that reasonably you should have known; think the foreign account question on Schedule B). The reasonable cause exception is somewhat like the parenthetical in the preceding sentence except that it thrusts on the taxpayer the burden of showing reasonable cause. The base line, however, will be the false answer to the question on Schedule B, but it is clear from the IRM that more than that is needed.

    Now your question is whether lack of access (I think you mean most convenient access) to professionals is reasonable cause. I don't thiink there is a crisp answer to that. If that is your only basis for reasonable cause and you filed your return, I don't think it would be very persuasive. But, the truth is that in these types of cases there are usually a lot more facts and circumstances that bear on the issue of reasonable cause. This particular fact could be among other facts that make a persuasive case for reasonable cause.

    So, at least theoretically, just not knowing may not be a defense to the nonwillfulness penalty but if the taxpayer can persuasively show that he really did not know or, under his or her circumstances, reasonably should not have known, I don't think that the IRS will assert the penalty. But, where the IRS has reasons on the facts to believe that the taxpayer knew or reasonably should have known and there are other facts (not reporting the income which he or she should have known to report), then the IRS may not be so bold as to assert the willfulness penalty, but might assert some nonwillful penalty of from $1 to $10,0000 per account, with the position in that arrange based upon the unique facts.

    It is all about the details.

    Jack Townsend

  19. Thank you, Jack. Your answer helps me a lot and I am sure it will be a good initial starting point for further investigations for those who may want to consider an opt out strategy.

  20. Hi All,
    I at first rejoiced somewhat as an American living 40 years in Canada. I filed for Canadian Citizenship 2 years ago but have not received it yet. On the first calculation, I owned no taxes but then an advisor informed me that between 2003 and 2007 the US had an Alternative Minimum Tax and so I owe $30,000 over 5 years. This may disqualify me from FBAR penalty freedom. I agree with most that this is just whitewash and no new policies have been made at all. They are simply restating current regulations if no tax owed then you may file FBARs penalty free. Whistler 64

  21. What about the Canadians living in the USA as students, temporary workers, or snowbirds who had no idea about the FBAR? Our Canadian funds are still likely to flow south of the border. The Canadian government still needs to do more! We need equal protection. Contact Brian McKenna in Canada at

  22. Hi Whistler '64: It doesn't make sense to me that you owe any taxes in the US, given Canadian tax rates. I think that you should consider a second opinion or least explain to me how, with the foreign tax credit, which is a dollar per dollar tax credit for every dollar paid in tax here in Canada, that you could owe something in the US. The only thing I can think of is that the majority of your income is passive and not subject to too much tax in Canada, and therefore, is exposed to the Alternate Minimum Tax in the United States--as the first $90K is the earned income exclusion.

    There is a major reason why such a tax is absolutely unconstitutional and that is you are exposed to taxation without representation. Extra territorial taxation is indeed that because you do not have proportional representative in the House of Representatives because you were not counted in the census. Thus, there are grounds for civil disobedience for those who are truly still American in spirit--"No taxation without representation." The IRS is worse taskmaster than King George.

    I recommend that you write up your tax issue at the Canadian Expat Forum, where others may interact with your situation. It could be very informative. Also there is a recent discussion at , about whether the tax treaty might even permit such a surtax on a Canadian resident, as it exposes you to the worst sort of double taxation.

    At the time of taking Canadian citizenship, you should know, you can relinquish your US citizenship (as I explain in my at my blog,

  23. Information is posted on IRS website:,,id=250788,00.html

    Now that is good and this specifically benefit Canadians.

    Now if only IRS could come up with some meaningful proposal for the thousands of IT workers, H1B, Green card that should benefit the Indians.

  25. Jack - my reading of the IRS press release suggests that the relief offered by IRS only applies to dual citizens and will not apply e.g. if someone is a US citizen resident overseas but not citizen of the country that that person is resident in. Is that understanding correct?

  26. thanks for the link, i accidentally found out abour form 8938. does it apply for 2010? i found some constroversial info. my cpa did not mention this form for ovdi

  27. Does anyone know to what extent the IRS will communicate with Canada Revenue Agency (CRA?) If the IRS asks, does the CRA turn over all tax documents? What about Canadian banks, does the IRS subpoena all bank records from them? Does the IRS do a full blown asset search on any Canadian in the OVDI? I am curious because, while I discussed everything, I want to know what information the IRS has or will get to confront me with. I also want to know if CRA can open a simultaneous investigation and leave me in a two front war battling two tax agencies. Thanks

  28. To Anon December 8, 2011 9:54 PM

    Tax form 8938 does not apply for 2010. It applies for tax year 2011, and you are supposed to file it in 2012 when you do your taxes. I don't know if the instructions are finalized.

    More info on this form at ACA

    They have posted comprehensive comments to the IRS on the new 8938 from here…

  29. To Anonymous December 9, 2011 12:46 AM

    In the OVDI, I seriously doubt that any of the activity you are concerned about happens. (of course I could be wrong.) At least I can say with certainty, that none of that happened for my 2009 OVDP with New Zealand. Now, if you were in a full blown civil audit, maybe that would be different, and someone else who has gone through that would know.

  30. "Does anyone know to what extent the IRS will communicate with Canada Revenue Agency (CRA?)"

    According to the treaty, they should exchange information all the time. For example, if you are US resident, and you cash out your RRSP, CRA will notify IRS. This is what I heard from an agent of CRA.

    That is why Canada gov has assure US --that Canada is not tax heaven for US taxpayers.

  31. jack,
    Is there a way an author could remove/delete/modify his prior postings?

  32. To Anonymous at 12/9/11 7:01am

    I don't know of any way to modify a comment. I could perhaps delete a comment if I can be absolutely certain the actual author of the comment is making the request to delete, he or she offers a good reason to delete, and there are no subsequent comments that make sense only if the original comment is not deleted. All of this will take some time and there are elements that are not likely to be met.

    I recommend that you just forget about the comment(s) and move on.

    Jack Townsend

  33. "Does anyone know to what extent the IRS will communicate with Canada Revenue Agency (CRA?)"

    To follow up my last post, here is a cut/paste of a letter from TD Bank that sent to Assistant Secretary (Tax Policy) Michael Mundaca and IRS Commissioner Douglas Shulman

    "Automatic Information Exchange under U.S.-Canada Tax Treaty

    In Canada, financial institutions (as payers or agents) are required to report amounts paid
    or credited to non-residents that are subject to Canadian withholding tax on Form NR4, whether
    such withholding tax is reduced by treaty or not. The information required to be reported to the
    Canada Revenue Agency on the Form NR4 includes: (1) the nonresident recipient's name and
    address; (2) the country in which the recipient is a resident for tax purposes; (3) the type of
    income being reported; (4) the amount paid; and (5) the nonresident tax withheld. Information
    received by the Canada Revenue Agency on the Form NR4 is regularly reported to the IRS
    through information exchange under the U.S.-Canada tax treaty."

  34. New article in the Financial Post by Jamie Golombek. Here is a link:

    The two paragraphs at the end sums up what the new IRS promise to grant relief to the estimated one million U.S. citizens, including dual citizens, living in Canada really means.

    I quote:

    "In the week since the Fact Sheet was released, Toronto cross-border lawyer Christine Perry of Keel Cottrelle LLP has been besieged with calls from anxious clients wondering whether they are now home free.

    'People need to be aware that ‘reasonable cause’ … is a very narrow technical concept. Behaviour that you or I may consider ‘reasonable’ in an intuitive sense may not cut it for the purposes of penalty relief,' Ms. Perry cautions."

    Caution indeed!!

  35. For you Canadians, you might want to read this blog about what the IRS really has planned for you...

    S Says No New Relief Planned For Canadians

    I quote...

    After he answered my question he introduced me to Rosemary Sereti, who is Director of International Individual Compliance for the IRS. Ms. Sereti is the chief architect and is in charge of the Offshore Voluntary Disclosure Initiative (OVDI). I spoke with Ms. Sereti at length at the conclusion of the lunch. Ms. Sereti was very generous with her time and provided the following insight:

    She confirmed Mr. Shulman’s comment that the Fact Sheet was the guidance the Ambassador had alluded to.

    Penalty abatement for Canadian residents participating in the OVDI is available only if the taxpayer “opts out” of the program and successfully argues that he had “reasonable cause” for failing to file the returns.

    The IRS is aware of the problems caused by including registered retirement savings plans (RRSPs) in the OVDI penalty computation.

    The IRS is on the lookout for taxpayers who attempt to bring their unfiled returns current by using “quiet disclosure” and those who attempt to resolve their filing obligations in this way will face harsh penalties.

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

    First, it is unlikely that there will be a made-in-Canada-solution for those Canadian residents who are not current on their US filing obligations.

    Second, there is the possibility of penalty abatement for participants in the OVDI provided the participant “opts out” of the program and can prove they had reasonable cause for failing to file returns.

    Third, since the IRS is aware of the problems caused by including RRSPs in the OVDI penalty computation and has not issued guidance on the matter it is reasonable to conclude that, for now, the treatment of these accounts is an open issue.

    Fourth, those who attempt to bring their filing obligations current by using “quiet disclosure” may find themselves in much more trouble than if they had used “voluntary disclosure.

  36. Just me, thanks for sharing that post. In a post at the Isaac Brock Society, I mention that this whole problem could go away if the Secretary of the Treasury would just simply wave his magic wand, for USC 31, IV, 53, ii, § 5314 allows him to exercise his discretion in what may be "reasonable classificiation of persons subject to or exempt from a requirement under this section" or a foreign country. Phil Hodgen had applied this § 5314 to the defining those who need to file the form as US persons (under the tax code) but the FBAR law itself says, "each person subject to the jurisdiction of the United States"--which could be interpreted to exclude any number of "United States persons" such as Green Card holders who live in their country of citizenship, workers in US under a temporary permit, students on student visa, and Canadian dual citizens--for such people while in Canada would be subject to Canada not to the United States.

    I.e., the executive branch in this case has a lot of leeway, and they have not heard the suffering of people who are rightfully worried about their retirements savings, their disability savings, their savings for the children's education. This application of the law by the Obama/Geithner team has created real hardship for people, and yet § 5314 also says that the tax-cheat Treasurer should consider the "need to avoid burdening unreasonably a person".

  37. And Ho, Ho, Ho to all...

    Breaking news from Canada. Santa Claus arrested.
    Cute Parody.

  38. Breaking story on the NYTs Home page...

    This is big, I think... As the NYTs is the paper of record, and when it speaks others listen. I have already sent this to all my reporter email addresses. Make as many aware of the issue as possible...

    Article title: Law to Find Tax Evaders Denounced

  39. Just Me

    I was hoping from your comment that the law in the article referred to was the FBAR law, but it refers to FATCA and the law is being denounced mostly because of the impact it has on foreign banks. Its not really a coverage of the problems (and ridiculous penalties) that expats/immigrants face under the FBAR laws, which are even more stringent than FATCA penalties.

  40. To Anon December 27, 2011 6:05 AM

    I understand your desires, but don't be too dismissive or disappointed. FATCA is actually the biggest and most significant part of the entire IRS crackdown efforts, and you have to get the news public anyway you can, even if it is talking about the cost to financial institutions. The Mainstream media in the US may not care about impacts of FBAR rules or VD programs on Minnows, but Bank costs in a very fragile financial climate will get attention. Any thing that potentially freezes up the investment environment gets discussion. That starts other reporters looking into the issues and why we got here and what other insane unintended consequences there are. That leads right back the VD efforts and the FBAR.

    Note these comments… “Congress created the act after the Justice Department’s successful pursuit in 2009 of UBS that resulted in the Swiss bank — which had encouraged American citizens to set up secret offshore accounts”

    That was the beginning of the VD efforts and the application of FBAR ridiculousness.

    Also note the quote by ACA… “The Fatca legislation treats all Americans with overseas bank accounts as criminals, even though most of them are honest, hard-working individuals who happen to be living and working or retired abroad,” said Jacqueline Bugnion, a director of American Citizens Abroad.

    or this on FATCA “Congress came in with a sledgehammer,” and “The Fatca story is really kind of insane.”

    That is exactly what is wrong with the FBAR rules and enforcement practices of the IRS too. In the pursuit of tax evasion, normal folks are being criminalized and fearfully just paying ridiculous fines.

    To have the NYTs report on FATCA, a long neglected story is very important. That starts the conversation in the mainstream media and leads to more in depth discussions around subjects dear to your and my heart. At least that is the way I see it. Maybe it is more hope then substance, but it is a strategic opening. Don't look that NYTs gift horse in the mouth. :)

  41. Now the WSJ takes up the NYTs theme from the 27th...

    Banks Sweat as Tax Net Tightens

    New Rules Target U.S. Citizens With Accounts Abroad and Noncitizens With Deposits at U.S. Banks

    Like I have been hoping, this subject is now creeping into the mainstream, and not just discussed on specialized blogs like here...

    Also, this has been the first report in the Mainstream about IRS attempts to create a DATCA or Domestic equivalent of FATCA unilaterally without Congress passing any statutes...

    See this comment from the WSJ...

    "U.S. banks, meanwhile, are trying to quash a proposed regulation that would require them to report interest income earned by non-U.S. residents to the Internal Revenue Service, which could then pass the information to their home countries.

    Banks in Florida, Texas and California say the effort could drain the coffers of banks that rely heavily on foreign deposits."

    "This is just a bad, bad idea," says Alex Sanchez, president and chief executive of the Florida Bankers Association. He estimates that Florida banks hold about $80 billion of deposits from non-U.S. residents, representing about 20% of the state's deposits. An IRS spokesman declined to comment.

    Across the U.S., banks held roughly $2 trillion in deposits from foreign companies and individuals as of June 30, according to the Treasury Department. The agency doesn't provide figures on individuals' aggregate holdings.

    "It's a little bit hard for the U.S., which has been at the forefront of the transparency battle, to have this kind of resistance to these regulations, which should not be a problem for people who are properly reporting their tax information," Ms. Corwin said."

    Maybe more reporters will now be reading the letter the letter to Geithner by Congressman Charles Boustany, Jr., MD Chairman Subcommittee on Oversight on September 27th. Wonder what reply he got?? It is a real irony that Congress is against reporting requirements for US banks after it has imposed huge costs and requirements on all the Worlds Foreign financial Institutions (via the Hire Act) for them to meet the compliance objectives of FATCA. Hummm.

  42. Another story on Reuters for you Canadians...

    Ottawa awaits U.S. accommodation on tax law

    OTTAWA (Reuters) - U.S. Treasury officials are working on a proposal that would make it less onerous for Canadian banks to comply with a new U.S. tax law, Canada's Finance Minister Jim Flaherty said on Wednesday.

  43. Oops... That Reuter's article I just posted was a bit old. As we know, there is really no Canadian special relief yet. Sorry. I see it was written Dec 7th, and I thought it said Dec 27th. Will have to put my glasses on for closer inspection before I assume. :)

  44. Are Canadian Tax Free Savings Accounts trusts or, as the name says, savings accounts? I submitted my 2011 OVDI application calling the TSFA a savings account, but now hear there is debate about this issue. If they are trusts what should I do if I did not include IRS form 3520 in my OVDI application? I still have the TSFA and will likely file 3520 as part of my 2011 US income tax forms, but what about earlier years? When will this nonsense / confusion end?

  45. To Anon...December 30, 2011 1:29 PM

    "When will this nonsense / confusion end?"

    I know that is a rhetorical question, that really does not have an answer. But…until there is enough public knowledge (media stories), [pressure for Congressional action with changes in citizenship taxation legislation, repeals of FATCA laws, changes in FBAR statutes plus a change in leadership and direction at the IRS, I am somewhat pessimistic that it will ever end. There is nothing about the current political process that gives me much hope either. Maybe I am being a "glass half empty" guy, but given the technological advances which being ever more surveillance, the connecting of more and more data bases with the information sharing that results, the new IRS John Doe summons fishing for more and more data on you, the ever eroding loss of privacy and interconnected nature of our financial world, it is hard to see us doing other than just rolling merrily along down the current path to something not so pleasant to contemplate.

    Sorry I don't have the answer to your Canadian Tax Free Savings Account questions. There are lots of Canadians that read JATs blog, so maybe they will come back with an answer.

    While you wait, in the archives back on September 26th there is a blog thread on RRSPs. Maybe there is an answer there for you…

    Or, there is a new blog by Canadians and someone there might know the answer for you.

  46. To - Anon, Dec 30: 1:29 PM
    I tend to agree with Just Me - to end this confusion and related non- sense, we need to raise awareness in the media, put pressure on our elected leaders and highlight the discrimination between treatment by IRS of folks holding foreign accounts vs those living in US and holding local bank accounts. I entered OVDI to clean by a small mess - less than $4K in back taxes for 4 years. If I was living in the US, all I needed to do was file an amendment, and that's it. The vey fact that now I reside overseas, the only way for me to correct this is through the OVDI process and pay in- lieu penalty : no other option, plus hire legal and accounting help to guide me through this.
    IRS needs to have some threshold criteria for folks like us (who are not tax evaders) to decide if we need an OVDI mechanism to fix our mistakes, or some other reasonable process. I read a lot that IRS now is open to "reasonable cause" arguments with respect to FBAR's etc - why not start with giving law abiding citizens an alternate route than this OVDI mess?

  47. At last a well known author and blogger, James Fallows of the Atlantic, with lots of cred in the progressive community, is writing about FATCA.

    This hopefully will get attention in a more bipartisan way, as it is now not just a conservative or libertarian issue. It is an issue that can and will affect all Americans not just those of a particular political persuasion.

    I know I have been a bit of a pest to James on this subject for months, but I have been beseeching to look into FATCA and current IRS actions and perhaps comment on it, as so few in the MSM have given it any attention. I thought that the recent stories from the NYTs and the WSJ would provide the opening. NPR has been totally silent on the subject, which was a big disappointment to me. James is a regular commentator on NPR, All Things Considered on Saturdays. I had to think that if he would look into the subject, and find the that the story had relevance, his giving voice to it might help move the conversation along. I had no idea that he would make it his New Year's eve story on his Atlantic blog. It has taken him a while to get his brain around the subject, as we know it is complicated story for Americans to understand, but I knew, with him living overseas as much as he has, that this would start to resonant eventually.

    Enjoy this New Years gift.

    If you would like to comment to James, his email is...

  48. Just Me: read James article - a great beginning for raising awareness on FACTA, and sounds like James plans to write a series of articles on this subject - way to go.

    Appreciate your efforts in bringing so much momentum to this important issue. We also need to draw James attention to the OVDI mess, especially for small value cases and unintended consequences on ordinary citizens. The design of the program and collateral damage it is creating ( for small foot faults) is very detrimental to American families and The American Dream ( in- lieu penalties).

    One real issue is the discrimination and penalties associated with
    making honest mistakes in tax reporting (which can happen to anyone), for expats vs residents. This disparate treatment based on one's location is violation of our fundamental rights.

  49. I'd also like to know, does anyone have any input on whether Canadian Tax Free Savings Accounts are trusts or savings accounts in the eyes of the IRS?

  50. Dear Canadians... It isn't with much pleasure, that I note that others are saying what I have been thinking. IRS not Santa Claus. Hopes are being dashed for US tax reprieve.

    "Public remarks from the U.S. ambassador to Canada at the beginning of December seemed to hint that U.S. citizens living here might get a special tax exception. This would apply to Canadians who were unaware of their U.S. tax filing obligations and followed a letter sent by our federal government, asking for reasonable treatment."..............

    "unfortunately, it (the IRS) did not announce any special programs or amnesty. Rather, it simply reiterated the existing policies for people who are behind on filing their U.S. taxes."

  51. AB,

    I just posted this about James Fallows at another thread on Jack's blog, and if he will be indulgent, I think I will post here again, just in case you do not see it...

    James Fallows has now posted a trilogy, called the FATCA Chronicles dealing with the US citizenship taxation model, Fatca, FBAR, etc. Here is the link to all of them in order of posting... I am very appreciative for the outlet his column has provided.

    Fatca - The Menace You'll Hear About in 2012

    The Fatca Menace!

    The Fatca Chronicles: Tales From China, Canada, and Estonia

    It has taken a while to get a person in the public opinion forum interested in the subject, but James has sunk his teeth in for the new year. Now the conservation and the debate has started, we need to keep it going to assist with the education of normal Americans, and attempt to keep it non partisan, in my opinion. I know James trilogy is narrowly defined toward the Expat perspective, but there is nothing but fear stopping Immigrants from making their voices heard too. Email James about the OVDI too, if you like. Maybe he will provide an outlet there also. You never know, and you never get anywhere unless you try.

  52. New story just posted tonight at WSJ, January 3rd by

    Washington's Assault on American Expats

    The subtitle is slightly wrong and should read...

    “The U.S. is the only developed nation in the world that taxes its citizens who live abroad.”

    But,otherwise, it is an excellent piece that sheds light on the Expat experience related to taxation and IRS reporting requirements. If you would care to email the author, his email address is...

  53. Just Me:
    thanks for posting, I read through James trilogy and also Bill's article is WSJ. I am not sure if readers of this blog have read through the comments posted under Bill's article, they are already two pages long and many expats are posting their stories. I think it is an excellent way to provide visibility to what's happening with the expat community and the IRS mess called OVDI. I plan to post my story and others who are participating in OVDI to clean up small foot faults can decide for themselves. I want to highlight that just because I am based overseas now ( at the request of my American employer) the only way for me to fix small errors is through the OVDI process - no other right way. And, the cost of doing this enormous, vs the tax and related penalties and interest. This is IRS lunacy and needs to be fixed. They should be able go screen out the real tax cheats from folks like us, who made some honest mistakes and will be paying a high price for doing the right thing.

    Also, really appreciate your efforts in giving this item public forum - the momentum from here on will only get stronger. Bill has done a great job with his article.

  54. AB,

    I agree with you on the WSJ piece by Bill. There were some real good comments there, and I especially understood the one by Patrick Hale

    The cost of having an American Expat working for your Corporation overseas has just become unbearable and non competitive, so why would you bother? Such sad bad policy for America! Sometimes it seems hopeless that reason will ever prevail in Congress or the IRS. There is plainly no strategic vision or understanding of the burdens placed on businesses or individuals, Cost plus LCUs = a great loss to America.

    The comment by the Congressional Staffer to James Fallows FATCA trilogy just made me sick to my stomach at how little they understand. With mentalities like that, you just want to throw up your hands in frustration, as if, "oh we made an exception for that" is the answer to every bad act coming out of congress. Or statements like "very few people actually have more than $50K" or "can afford the small extra burden imposed...." or "My knowledge of the issue is largely the result of constituents coming to our office." I will refrain from impolite adjectives for this type of rationale and thinking which is so easily debunked. Basically he doesn't have a clue, in my opinion. Actually I am glad that Fallows allowed him the forum, as I think is strengthens the merits of the arguments against the unintended assault on Expats. Wonder what that staffer would have meaningful to say to Patrick Hale's comments on the WSJ. Nothing!

  55. Just Me,
    The congressional aides that I have seen are bunch of kids, so no wonder 50K is a big deal for them, plus they do not understand what it means to live overseas would require - including owning bank accounts and assets. So, this only shows their level of depth and the sad part is, our congressmen are relying on these folks to write up laws. They don't seem to either review or contemplate the ramifications of these laws written by these young kids. This is the state of union.

    Patrick Hale has written very factual comments and are worth a read. The comment section now is 4 pages long, yesterday it was two.

    We all need to continue to provide visibility to this and the OVDI mess, particularly in an election year.

  56. A "bunch of kids" ruling the world of OVDI. Good one, made my day. Now I understand the substance of American Democracy. Love the American public but the government, no offense to anyone.


  57. Dear Immigrant...

    Not that it matters now, especially if you are in the OVDI, but maybe you would be interested in how a progressive and reasonable country just north of the border conducts it's VDPs..

    I quote from the first paragraph...

    "The Voluntary Disclosures Program (VDP) allows taxpayers to come forward and correct inaccurate or incomplete information or to disclose information they have not reported during previous dealings with the CRA, without penalty or prosecution."

    What a novel idea... "without penalty or prosecution." "Come clean, pay up, and we treat you well." No gotcha FBAR penalties apply!

    Sorry to make you feel bad, and hope this did not ruin your day, but bet you wished you had gone to Canada instead of the US of A.

  58. Great point Just Me:

    "Sorry to make you feel bad, and hope this did not ruin your day, but bet you wished you had gone to Canada instead of the US of A."

    Its funny but I read an interview with Alan Greenspan(by no measure my hero) but he stated that one of the things America needed in the future in order to maintain the competative edge in the world was to attract highly talented, trained and educated immigrants into the workforce. I would think that after these initiatives and the new regulations being put in place, these types of people will go elsewhere.
    Surely if aware of the events over the last 3 or four years along with all the complex regulations: FBAR, FATCA, Tax Code, Exit Tax and etc., they will choose a different country.


  59. Dear Just Me,

    I dumped CRA for IRS -:) and now in OVDI. How stupid I could have been ?

    Just an update, I got a note from my agent requesting all bank records. It is about 10lb documents (small font and double side). I spent 3 weeks to go through -:).

    I want to give IRS the credit for being due diligence as my peak balance is less than 70K (far much less than 500K which OVDI wants all bank records).

    It seems to me that OVDI is not just after taxpayers' money. How much could they get to go through 10 lb documents with most penny transaction ? They want to do it right as most of us who are in OVDI.

  60. Just me,

    I think you are reading my thoughts. After being 6 years in USA I have serious regrets for choosing USA. It is not only about OVDI and FBAR, which is by far the most ridiculous law out there. You have to see the reaction of my family when I told them about this. They thought that was out of my mind...

    The immigration laws, the racism, greed and discrimination present in the American society as well as basic disrespect for human rights and family values makes me sad.

  61. IJ - congrats on getting an agent assigned. Hopefully you will reach a resolution shortly either in the program or outside it. Is there any update on RRSP or how the agent intends to treat it?

  62. ij,

    are your bank statements in English? did u get them translated?

  63. "Is there any update on RRSP or how the agent intends to treat it?"

    I do not know how RRSP will be treated. My impression is that they will grant 9100 relief -- so deferral tax will be granted. I am not so sure they will not impose 25% penalty.

    I do not see my case will be closed anytime soon as they will have to read over 300 pages of bank documents.

    By the way, the agent seems very friendly... and once you have an agent assigned, you can call him directly so it will save a lot time..

  64. "are your bank statements in English? did u get them translated?"

    I sent them all in original -- so there won't be "lost in translation".

  65. ij, is this the call/letter from the IRS Seattle office you mentioned earlier ?

  66. "ij, is this the call/letter from the IRS Seattle office you mentioned earlier ?"

    Yes, it is Seattle IRS international/big business div.

  67. IJ - so the agent assigned to you is not in Austin? I was under the impression that all OVDI cases are processed in Austin. What a circus if you have to first send all the documents to Austin and then they send them to Seattle - great way to keep the US Postal Service going.

  68. "IJ - so the agent assigned to you is not in Austin? I was under the impression that all OVDI cases are processed in Austin. What a circus if you have to first send all the documents to Austin and then they send them to Seattle - great way to keep the US Postal Service going."

    Good points, besides bank records, my agent also wanted me to send original return 1040, and amended return 1040X for these years --which I had sent already in my ovdi package. I am wondering if USPS is doing a good job for not losing my papers -- I have lost three times of bank order checks (domestic banks in US), so this might be a problem. I am in contact with my agent trying to understand what are missing in my files.

  69. "IJ - so the agent assigned to you is not in Austin? I was under the impression that all OVDI cases are processed in Austin."

    I am not sure if I have been single out for further examination ? like being audited while most other are processed in Austin ?

    I do not have problem with that, but it certainly will take longer time to have it closed.

  70. ij,

    do you live in seattle area?

  71. ij, we pray you get your closure soon, so you can
    move on in life. We sent in august 2011 so have to wait...

  72. "do you live in seattle area? "

    No, I don't and have never been close enough to the area. I think it is because international division is there.

    Most ovdi participants may not get such a treatment, and some may get a closure out of blue. Mine might have been single out for through review..

    I appreciate the fact that IRS treats me like a VIP (a fat cat).

  73. ij,

    are you saying you have been "kicked out" of the OVDI and were put into an audit process or just a closer examination inside OVDI?

  74. ij...

    It appears to me that they are processing you just like they did me in the OVDP. So guess we were both VIP fat cats! I too had to produce about 10 lbs of bank records with all the transaction minutia. They also wanted copies of all the 1040s and 1040x that they should already have. They wanted copies of my FBARs, AGAIN! Of course they should have them, but never mind, you produce them again just to make them happy!

    It also took me about 3 weeks to produce everything and cost me $83 to express mail it, and no, that is not tax deductable! :) If you are lucky, once they see the pile of paper they will never look at it, and just take your word for what you say your high aggregates balances are. I had produced that as a separate spread sheet, and I don't think my agent ever reconciled it to my bank records.

    I think they like putting you through the production effort because they can, not because they will use it for anything meaningful. Maybe if you “Opt Out”, and they decide to do a full blown examination, your bank records will actually be scrutinized. However, I bet they do few audits in the Minnow Opt Outs. You have to think they are coming to realize that they are wasting their time that could be better spent on Whales. But then again, I don’t know that this prehistoric bureaucracy is capable of evolved learning!

    Regarding the Examiners that are processing these OVDIs: Yes, they can be very nice, and polite, and even sympathetic, but remember their hands are tied. No discretion allowed by their Technical Adviser. However, if you are to consider an "Opt Out", they will be the one recommending their findings and disposition to the management committee, so it is important to maintain a good relationship. Keep your frustration from becoming personal with them. Consider this one long job interview, so show your very best side and build a positive relationship. Anger will not serve you well now.

    I don't know your personal facts, but if appropriate, now is the time to begin building your story as to why you are non willful with your FBARs, and/or why you have reasonable cause that all of this BS should not apply to you. I would constantly put everything in writing, and keep records of every contact and every phone conversation. Don’t be intimidated. I would look back at Moby’s comments about why he is opting out, and consider what he has said.

    As for being assigned to an office in Seattle, that is not surprising to me, as I think they are assigning them to offices all over the country. I was assigned to Phoenix, so there is nothing special about Austin for audit work.

    Finally, as for your transition from CRA to IRS to FBAR to OVDI and now FATCA; yes, it is unfortunate, but I can't call you stupid without pointing a stupid finger at myself too. How could we know that America would degenerate to this? The consequence is that now, unfortunately, I actively discourage all Kiwis, POMs and Auzzies I meet from ever considering immigration to America. Congratulations Mr Shulman. Great marketing campaign for American you have created! Even this past weekend, I strongly suggested to a young lady that she not marry a Yank! It eventually will pull her into a "US Person" category when they intertwine their financial lives. FATCA is going to add complications to their life together even if she never ever goes to America. But love is blind to tax consequences, so I am sure my warning will go unheeded.

    Hang in there. You will get through all this crap eventually! Best of luck.

  75. To Anonymous January 5, 2012 12:18 PM

    It to makes me sad to read your comments, and I have a lot of empathy for what you say. America has lost the plot I fear, and there is nothing in the current political process or parties that encourages me that there will be a reversal of trend. We are going down a big IRS totalitarian rate hole, I fear. Maybe that is hyperbole, but here is how CNBC just characterized it today... Yuk! They are doing the IRS fear stoking work for them!

    Will Your Offshore Accounts Land You in Jail

  76. Anon123: "Surely if aware of the events over the last 3 or four years along with all the complex regulations: FBAR, FATCA, Tax Code, Exit Tax and etc., they [immigrants] will choose a different country."

    I certainly did.

    I hold two advanced engineering degrees and have more than twenty years experience in my field. Three years ago, after over ten years as a US permanent resident, I moved myself and my family out of the US in direct response to HEART and the exit tax, which threatened over $100k in additional unrecoverable tax on my retirement savings.

    I still do the same job as I did while in the US, just based outside the US and no longer a green card holder. I pay about the same tax annually as I did when in the US, but now to a different (and more appreciative) country. The cumulative tax lost by the US already dwarfs the amount it tried (and failed) to extract with the "exit tax", and grows larger with each year that passes.

  77. Jack,

    Is it advisable to directly call the Austin centre for details on processing status. I remember seeing a phone number here on this blog but I am not sure where it is now.

    Can someone provide me that number please.

    Thank you

  78. Just Me,

    Thanks for your detail of your process. I will keep my cool to the end.

    I will call my agent on other request such as f1040/f1040X. I will provide whatever is missing -- but I am sure they should have them as I sent them with my check (cashed). The lost documents could only happen between the Service local offices. Some might have been locked up in Austin office.

    To Anon, I do not think I have been kicked out from OVDI, but they may just want to spend more time on my files. In a way, it makes feel the penalty money well spent.

  79. To Annon January 6, 2012 4:11 AM

    You are a prime example of exactly what I have feared. Often, and in a lot of the press we have gotten recently, the story is being told from an Expat perspective, but the Immigrant community has no advocacy organization like ACA, and so, ultimately they just vote with their feet by walking down a jetway. What a sad loss for America both economically, and from a negative marketing perspective. A customer lost to a business who is angry and goes away mad, repeats his story continually and does untold damage to the brand. America has set it self up for a lot of unhappy VD customers, and so has a very negative marketing campaign operating, and doesn't even know it, or worse yet, doesn't really seem to care. The American Brand of fairness and justice for all is being seriously eroded by its own actions. The FBAR, OVDP, FATCA are roads to hell paved with good intention. After my trip, I understand someone not wanting to venture down those highways.

    You have to pay taxes somewhere, and this is not about avoidance as much as a feeling that you are being dealt with in a fair and reasonable manner, and not put through hell or feel extorted just to be compliant.

    All the best to you. It is sad for me to say, but I think you did the right thing for your HEART and your family.

  80. ij, was your balance close to 75 K (minus RRSP) ? They may be looking more closely at accounts just below 75K (say 70-73k).

    Also, were you asked for domestic info also, or only for foreign accounts ?

  81. "ij, was your balance close to 75 K (minus RRSP) ? They may be looking more closely at accounts just below 75K (say 70-73k).

    Also, were you asked for domestic info also, or only for foreign accounts ?"

    Without RRSP, my peak balance is 68K. With RRSP it would be 118K. I don't think they should put my RRSP in the same category of non-RRSP which I did have some tax implication even after foreign tax credit.

    I have some transaction between accounts, so duplicates were removed in calculation of base penalty. My bank documents can establish that transactions (same amount out from one account, then same amount into another account). I guess this might be the reason they want to check.

    They only ask me foreign, as matter of fact, anything that are reflected in f1040X. For this reason, I did not even bother to send them my RRSP documents.

  82. Hello. I too have been waiting for a response re. Canadian Tax Free Savings Accounts. Are they trusts or savings accounts in the eye of the IRS / US Tax system? Confused.


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