U.S. Citizens in Canada InfoShop

Perspectives

 
Commentary on specific aspects of the situation faced by U.S. citizens who reside outside the United States.

 
Uncertainty  (2012 Jan 23)

How Many Extraterritorial U.S. Citizens?  (2012 Jan 28)

Ex  (2012 Feb 5)

How Many U.S. Citizens Reside in Canada?  (2012 Feb 9)

U.S. Passport as Enforcement Tool  (2012 Feb 13)

Official Interpretations of U.S. Expatriation  (2012 Feb 24)

Renunciation  [poem]  (2012 July 15)

How Many U.S. Citizens Become Canadian Citizens?  (2012 July 22)

Diminishing Returns  (2012 September 2)

Air Takeoff from Canada  (2013 Jan 7)

Flaherty on FATCA  (2013 Sept 10)


 
 
Uncertainty

 
Uncertainty has two poles. One, external conditions may be unclear or unstable. Two, an affected person may be unable or unwilling to take action. Factors from the two poles may interplay. A high level of uncertainty tends to parallel a high level of risk.

Expatriate Americans start from a situation where much is confused. Why can’t life be as it has been, with most Americans de facto enjoying the same status as that of practically all other nonresident citizens throughout the world — taxed only in place of residence?

Questions proliferate. Who is an American? Can problems be solved by ceasing to be American? What is required to become compliant with US tax expectations? Is it possible to become compliant without paying extra taxes and/or exorbitant penalties? Is there any hope for an individual to complete in a correct fashion the complex, unfamiliar, multiple paperwork that needs to stretch back over a series of years? If not, will the individual face paying thousands of dollars to uncertainly qualified “professionals” who can offer no guarantees? Will the IRS launch an ongoing regime of torturous scrutiny?

Add to this set of circumstances unstable and inscrutable IRS policies. In January 2012 unspecified further details are supposed to be forthcoming within a month. Recent history on the Canadian front does not promise arrival of clarity. Ambassador Jacobson offered up a vague reassurance on 18 October 2011. The ensuing 7 December 2011 restatement of existing IRS policy made his words look like mere gesture.

To cite one prominent example, application of narrow technical “reasonable cause” criteria to failure to file FBAR reporting offers no certainty. The return of “voluntary disclosure” on 9 January 2012 offers only the certainty of being penalized like a criminal, though not being prosecuted in court.

The U.S. Congress and the IRS have generated huge anxieties by enacting new tax and reporting legislation and by shifting enforcement practice for existing requirements. The first decade of the 21st century has not been kind to the United States, and the United States has compounded its difficulties by struggling to maintain an unrealistic position in the world.

A lot of that lack of realism traces back to unfamiliarity with the rest of the world — except perhaps through imposition of military force or through “travel” cocooned in cruise-ship compound or guided-tour enclave.

The United States is projecting its own massive uncertainties onto the rest of the world. The primary motivation seems to be crass expectation of easy “found money” among extra-territorial citizens.

By imposing perpetual uncertainty on its own offshore people, and leaving them to respond in fear, the United States will sever much of the only real connection it has with other countries.

Amid the confusions, one thing does seem certain: the United States is pursuing its own isolation with a vengeance.

(23 Jan 2012)


 
 
How Many Extraterritorial U.S. Citizens?

 
A search for the data that underlies “estimates” of the numbers of U.S. citizens resident outside the United States does not lead far. A total of 6.35 million, excluding military personnel, is one handy number.

A map [2] provided as part of the information on the web site of American Citizens Abroad (ACA) [1] appears to be as good a piece of information as any that can be obtained. And even that map data is contradictory (see note following citation).

ACA and Association of Americans Resident Overseas (AARO) pass along figures said to be provided by the U.S. State Department. The only level of detail is for seven regions that cover the entire world. These organizations have been hacking away valiantly for years at this data situation. It seems peculiar that a direct State Department source for this same data cannot easily be found.

Smith [3] cites older State Department estimates and says that “security concerns” prevent release of more current figures. The Johnson map [2] likewise contains a note saying that “security concerns” prevent access to any level of detail more fine-grained than the seven large regions.

In reality, “security” concerns seem to equate to embarrassment concerns. The same embarrassment circumstance may also apply to another tarpit of mushy data, the numbers for renunciations of US citizenship. In both cases, lowball might look better for the United States under present policies.

Perhaps the most solid general indicator of numbers is recent ten-year data that indicates “503,585 consular reports of birth abroad (CRBA) were made and passports issued as a result by U.S. embassies between 2000 and 2009” [3]. Factor in births not reported. Consider likely ratios of adults to children. Adjust for possible divergence from norm among adult population. Etc.

There is a history of how the U.S. census has and (mostly) has not dealt with extraterritorial citizens — [1] and [5]. Any further pursuit of that topic would be a digression from the focus of this short essay.

The ironies of this situation astound. The United States clearly has no good data on citizens who reside outside its boundaries — nor much will to use the U.S. census to develop such data.

Nevertheless, whoever those yet unknown citizens may be, and wherever they may live, the United States seems eager to pursue them, to try to extract resources from them, to give them almost nothing, and to subject them to neverending uncertainties. Especially the ongoing uncertainty that surrounds whatever new measures it may unilaterally decide to unleash on them next.

One unhappy likelihood is that the United States will only deepen the morass that already confronts persons who seek to shed that toxic US citizenship.

In 2012, enjoying liberty translates into declaring independence from the United States?

* * *

[1]  How are we counted?  American Citizens Abroad  (17 Oct 2011)

[2]  Don L. Johnson.  American citizens living abroad [map based on U.S. State Dept. estimates 2011]  Association of Americans Resident Overseas  (4/08/11)
[Note: Map states total of 6.32 million, yet figures for seven regions add up to 6.35 million]

[3]  Claire M. Smith.  These are our numbers: civilian Americans overseas and voter turnout  Overseas Vote Foundation  (Aug 2010)  13 p.

[4]  Claire M. Smith.  Defining the universe: the problem of counting UOCAVA voters  Overseas Vote Foundation  (May 2009)  8 p.

[5]  Issues of counting Americans overseas in future censuses.  U.S. Census Bureau  (27 Sept 2001)  iii, 17 p.

(28 Jan 2012)


 
 
Ex

 
X marks the spot. The spot where the ex has to take a stand. Perhaps even the spot where the ex eventually gets buried.

The Isaac Brock narratives turn on many different themes. How the ex came to be — and how the ex came to be even more subjected than the peculiar majority that remains encircled by the geographic borders that define such a singular nation as the United States.

The foremost word in this tangle is expatriation. The IRS offers Guidance for Expatriates Under Section 877A and Expatriation Tax. That is the you-can’t-go-home-again (if home it ever was) expatriation of an irrevocably redefined status.

The for-profit web site that calls itself “Expat Forum” decided in early 2012 that only the simulacrum of expatriation was a permissible topic. Overnight two of its highest-traffic threads vanished. When is an expatriate not an expatriate? When the talk gets real?

Opportunity. Marriage. Finance. Happenstance. War. Advantage. Education. Resistance. Heritage. Adventure. Preference. Labor. Fear.

These are among the factors that have produced the millions of the American diaspora. Diaspora may be the second most prominent term that is being used to describe what is going on right now. The scattering of a diaspora is the opposite of a magnet, of a new world that attracts. Always diaspora is a premonition of disaster; when full-blown, diaspora becomes a consequence. Immigrant transmutes to emigrant.

Lurking behind all of these words is exile, perhaps the most powerful word. Another ex word. The shame that the word exile brings to the word freedom, was, at the most abstract level, why Jimmy Carter historically had to extend unconditional pardon to the unresolved cases of Vietnam War offenders who remained outside the borders of the United States. Despite strenuous administrative efforts that had cleared most of the slate, a proclamation was required to erase that recalcitrant final residue.

The United States is on the verge of creating a real horde of exiles. Cases already abound of individuals who do not feel safe in crossing the security perimeter of the “homeland” (unfortunate term so associated with the segregation of recent South African history). Evidence grows that passports are being scanned for signs of U.S. origin. Uncertainty leads a majority to adopt a rational practice of staying off the radar, at least for the time being. Why choose to attract a heat-seeking missile rather than fly low? Even formal renunciants are left to speculate that their actions are being disappeared by dodgy statistics.

So far, the Isaac Brock Society web site has eschewed the word exile, except for the appeal to history in its inception, and in one other incidental occurrence.

For meditation, here are two brief passages from an essay by Leszek Kolakowski titled In Praise of Exile:

More often than not, however, modern expatriates have been refugees, rather than exiles in the strict sense; usually they were not physically deported from their countries or banished by law; they escaped from political persecution, prison, death, or simply censorship.

That the position of an outsider offers a cognitive privilege is well known and unquestionable. A tourist often sees thing which a native does not notice, as they have become a natural part of his life.

We have become the tourists to the United States who can scarcely tell the natives what we are seeing.

[ Cross posted from Isaac Brock Society ]

(5 Feb 2012)


 
 
How Many U.S. Citizens Reside in Canada?

 
Newspaper stories tend to say something like “up to a million.” Or half a million to a million. Nobody really knows.

There seem to be only two publicly available and relatively recent sources that offer anything more than pure guesstimate — one from the United States, one from Canada, tables appended. Both offer numbers that are half a dozen to a dozen years old.

According to the U.S. figures, as of mid-1999 there were almost 688,000. How many of those had died or left Canada? On the other hand, how many U.S. citizens in Canada have ever registered themselves in the first place? Likely a minority. And how many of that minority came into being only as registration of a birth abroad? The total number indicates an order of magnitude and little more than that, especially with no other breakdown.

The Canadian figures from 2006 encounter a different set of problems. (1) The basis is self-reporting by persons who may have no good idea of their own status as a U.S. citizen. (2) The data is based on a sample, not a count. (3) The difference in the totals for the two Canadian tables intuitively looks too small, if every Canadian-born child of a U.S.-born parent is to be accounted for. The order of magnitude may be the most reliable contribution of these two assessments.

Even with all this fuzz, it seems safe to proclaim hundreds of thousands. That is a common feature of the two completely independent sources. Given the definitions that the United States applies to citizenship, and the existence of many persons who do not even think of themselves as anything other than Canadian, it also seems safe to conjecture that the real figure would tend to be higher than available indicators rather than lower.
(9 Feb 2012)

 
*     *     *

Source:  Private American Citizens Residing Abroad

Americans registered abroad by embassy or consulate
Subset from list compiled July 1999 by the U.S. Bureau of Consular Affairs
[U.S. government employees (military and nonmilitary) and their dependents are not included]

           CANADA

 24,300    Ottawa   

105,000    Calgary

 40,000    Halifax

 65,000    Montreal

  3,400    Quebec City

250,000    Toronto

200,000    Vancouver


687,700    Total

 
*     *     *

Source:  2006 Census of Canada

20% sample data collected using the long form census questionnaire

 
A.         USA Place of birth (35) [with Citizenship (5)]

298,370    Total Citizenship
160,950    Canadian citizens
117,425    Canadian citizens only
 43,520    Citizens of Canada and at least one other country
137,425    Not Canadian citizens

Citizenship (5), Place of Birth (35), Sex (3) and Immigrant Status and Period of Immigration (12) for the Population

 
B.         USA Place of birth (33) [with Period of immigration (9)]

 31,930    Before 1961
 42,670    1961 to 1970
 58,410    1971 to 1980
 35,830    1981 to 1990
 42,925    1991 to 2000
 18,770    1991 to 1995
 24,155    1996 to 2000
 38,770    2001 to 2006

250,535    Total

Place of Birth (33), Period of Immigration (9), Sex (3) and Age Groups (10) for the Immigrant Population of Canada

 
*     *     *


 
 
U.S. Passport as Enforcement Tool

 
Credit here goes to an unnamed (by request) source who set me on the trail of this topic.

As the United States attempts to enforce tax and reporting compliance on millions of its extraterritorial citizens, a great majority of them presently noncompliant, what tools can it exercise?

  Threats embodied in voluntary disclosure programs since 2009, with related FBAR penalties
  Future financial institution reporting through FATCA to match against what extraterritorials as individuals
    have or have not reported
  New annual tax reporting starting with 2011 on Form 8938 of non-U.S. financial accounts, duplicating FBAR
  Passport issuance and border examination of travel documents

This report focuses on steps being taken to make use of passport data.

At present the citizenship functions of the U.S. Dept. of State are quite separated from the revenue functions of the U.S. Dept. of the Treasury (the FBAR agency) and the Internal Revenue Service (IRS). The Foreign Affairs Manual of the State Department makes clear this separation as related to the matter of issuing Certificate of Loss of Nationality: “Consular officers no longer obtain tax information from renunciants” [7 FAM 1243 c].

In the case of passports, this separation of function may be about to cease. On 26 Jan 2012 — less than a month ago — the Federal Register published a “notice of proposed rulemaking” [1]. In barest terms, the proposal calls for four bits of passport application data to be routinely supplied to the IRS (1) Full name (2) Addresses (3) Taxpayer identification number, typically SSN (4) Date of birth. In other words, all extraterritorials who carry a U.S. passport will also become an IRS file. And IRS can enforce on SSN while Dept. of State cannot: “The IRS may impose a $500 penalty amount on any passport applicant who fails to provide the required information.” A similar rule was proposed in 1992 but never took effect.

The CPA Global Tax Blog [2] sees this as IRS tightening grip. Their brief account is more easily comprehended than the official document itself. Also see coverage by Rubin [3].

The backstory on this move is far more enlightening than the few pages of recent turgid bureaucratic prose. Less than a year ago, the U.S. Government Accountability Office (GAO) released a report [4] on using passport issuance to increase collection of unpaid taxes. A one-year study in 2008 showed

         The State Department issued passports to over 224,000 individuals who owed over $5.8 billion in known
         unpaid federal taxes.
(p. 4)

The report goes on to conclude that the data

         substantially understates the full extent of unpaid taxes owed by these or other individuals. (p. 7)

At present it appears that the Department of State lacks the authority to require an SSN, the ability to validate an SSN, and the right to withhold issuance of a passport in absence of a valid SSN (p. 8).

An appended Table 1 details 15 specific cases of individuals in the study sample who were judged to owe sums ranging from $46.6 million down to $20,000. An appended Table 2 details 10 more cases that were “audited and investigated” showing unpaid federal tax ranging from $31.7 million down to $200,000.

The unsurprising conclusion:

         Legislation would be needed to facilitate screening for outstanding federal tax liability with linkage to
         the passport issuance process.
(p. 16)

The GAO report occasioned comment at the time: [5] and [6] and [7] offer a selection.

A current U.S. passport renewer encounters a form [8] that calls for the specified four bits of data. The data itself is not new, but handing it over to the IRS would be new. The Federal Register notice ends by stating that the measure would take effect “after the date of publication of the Treasury decision adopting these rules as final regulations in the Federal Register.” So, not yet. Maybe soon, though.

It seems likely that tax non-compliant U.S. citizens will face increasing difficulties in travelling to the United States. By extension, persons seen to be U.S.-born will likely face corresponding challenge to demonstrate their status if they are not travelling on a U.S. passport.

The U.S. passport seems destined to become a tax enforcement tool, an unsurprising complement to FBAR and Form 8938 and FATCA.
(13 Feb 2012)

 
*     *     *

[1]  Steven T. Miller.  77 FR 3964 — Information reporting by passport applicants (26 Jan 2012) Federal Register 77:17 (26 Jan 2012) 3964-3966
http://www.gpo.gov/fdsys/pkg/FR-2012-01-26/pdf/2012-1567.pdf

[2]  CPA Global Tax Blog.  IRS tightening grip — issues proposed regs on information reporting by U.S. passport applicants
http://cpaglobaltax.wordpress.com/2012/01/26/irs-tightening-grip-issues-proposed-regs-on-information-reporting-by-u-s-passport-applicants/

[3]  Charles Rubin.  Reporting of tax information with your passport application  (26 Jan 2012)
http://rubinontax.blogspot.com/2012/01/reporting-of-tax-information-with-your.html

[4]  United States. Government Accountability Office.  Potential for using passport issuance to increase collection of unpaid taxes  (Mar 2011)  i, 22 p.
http://www.gao.gov/assets/320/316478.pdf

[5]  Paul Karl Lukacs.  U.S. government investigating whether to condition passport issuance on payment of taxes  (16 Apr 2011)
http://nomadlaw.com/2011/04/government-investigating-whether-condition-passport-issuance-on-payment-of-taxes/

[6]  Edward Hasbrouck.  State Dept. wants to make it harder to get a passport  (22 Apr 2011)
http://www.consumertraveler.com/today/state-dept-wants-to-make-it-harder-to-get-a-passport/

[7]  FoxNews.com  Study suggests feds could recoup billions in unpaid taxes by withholding passports  (12 Apr 2011)
http://www.foxnews.com/politics/2011/04/12/study-suggests-feds-recoup-billions-unpaid-taxes-withholding-passports/

[8]  Embassy of the United States, Ottawa, Canada.  Renewing your passport
http://canada.usembassy.gov/passports/renewing-your-passport.html


 
 
Official Interpretations of U.S. Expatriation

 
The following comment comes from a Canadian-qualified lawyer who is currently engaged in relinquishment of US citizenship through an Asian consulate:

 
I am a US citizen by birth to a US parent abroad, relinquishing based on having accepted employment with a foreign government. Here is a link I used to prepare my application, which may be useful to others with atypical cases. It is information only — please do not take it as legal advice, and seek such independently if required.

The US Citizenship and Immigration Services (USCIS) publishes its “Service Law Books”, including its interpretations of various sections of the Immigration and Nationality Act (INA). The link is:

http://www.uscis.gov/ilink/docView/SLB/HTML/SLB/0-0-0-1/0-0-0-45104.html#0-0-0-156

and the links from 349.1 to 349.10 (plus appendices) provide interpretations of the various expatriation provisions in section 349 INA. These interpretations contain a useful overview/summary of the law as it has developed and been applied over time.
(24 Feb 2012)


 
 
Renunciation  [poem]

 

Renunciation

has a ring
   of the religious but not
   anything even close to
      annunciation
breaking with a present
   tie to a state and condition
   that you have come to see is
      detrimental
so far from a breaking in on the present of
      good news

if the circle is
   perfect because
      it has no end
then the turning away forever from
   a rogue realm
   while it brandishes a threat of how
         this is irrevocable
      must become
         an arc
   with no expectation of return
      to point of origin 

you can't go home again
   home was never the place where
   if you have to go there they have to
      take you in
   for a long time though
      they took you in
using a clever set of tools
   flag and anthem and pledge
      to make a tool of you
   all to try to keep you compliant
   not to mention make you
      complicit

since somehow you came to jump ship
   all they say they want
is to bring you back into the system
   but you've already crossed the line
      gone south or some other direction
         followed the rainbow
      left the mother country
      lived another life
   broken out far beyond the accidents
         of birth or
      simple adoption

now you see the need
   to dissolve the particular
      bands
   to make your declaration
   disavow allegiance
      for the sake of your own sacred honor
since you're not yet impressed cut yourself loose
   fork over the stiff fee
      pay felonious tribute
      the present cost of

Freedom


 
 
How Many U.S. Citizens Become Canadian Citizens?

 
The Canadian government has stated that it will not enforce IRS tax collection against U.S. persons from the point at which they have acquired Canadian citizenship. This raises the question of how many U.S. persons in Canada have become Canadian citizens and will therefore enjoy such protection.

Table I below aligns annual immigration to annual citizenship acquisition date with a consistent five year offset. (Prior to February 1977 immigrants to Canada faced a minimum five-year waiting period before being eligible to apply for citizenship; after February 1977, that period was reduced to three years.) Calculation shows that from 1968 through 1988, take-up of Canadian citizenship by U.S. immigrants ranged in a fairly tight band around the 15% level.

A sharp upward divergence for 1989-1991 seems to reflect a spreading awareness that the United States, due to Supreme Court decision, had altered its policy of regarding foreign naturalization as clear cause for loss of U.S. citizenship. If this trend had foundation in pent-up hesitancy, a subsequent regression downward seems plausible.

Given the available data and the shifting circumstances, it is difficult to extrapolate very much with any degree of certainty. However, it seems reasonable to conclude that a significant number of U.S. persons in Canada have remained U.S. citizens only. It also seems easy to imagine that this quantity could amount to one-quarter of immigrants, and quite possible that it could amount to half or even more.

On a tangential topic, an historical series (ten-year data terminating with a figure of 309,640 for 1971) allows for backward comparisons with the 2006 census figure of 250,535 that has received earlier scrutiny. A rough match can be see between later lower rates of U.S immigration to Canada (1983-2004) and the reduced 2006 figure.
(2012 July 22)

 
Canadian Citizenship Act, 1946 (came into effect on 1 January 1947):
        Naturalization in Canada after five years’ residence as a landed immigrant

Canadian Citizenship Act, 1976 (came into effect on 15 February 1977):
        Citizenship acquired by grant after grant after three years’ residence in Canada

 
    •     •     •     •     •     •

 
Table I

1 — Columns A and B derive from CANSIM Table 051-00061,2
Immigrants to Canada, by country of last permanent residence annual (persons)

The data below is a part of CANSIM table 051-0006
Geography=Canada
Last permanent residence=United States

[ Data Source: http://www5.statcan.gc.ca/cansim/a26?lang=eng&retrLang=eng&id=0510006&paSer=&pattern=&stByVal=1&p1=1&p2=-1&tabMode=dataTable&csid= %5D

 
2 — Columns C and D derive from Canadian Citizenship Statistics [0575-8033] 1952-1991

 
3 — Column E = D as % of B (calculation)

 

A       B            C      D          E

1955 	10,395
1956 	 9,777
1957 	11,008
1958 	10,846
1959 	11,338
1960 	11,247
1961 	11,516
1962 	11,643
1963 	11,736       1968=  1459       12.4%
1964 	12,565       1969=  1462       11.6%
1965 	15,143       1970=  1573       10.4%
1966 	17,514       1971=  1944       11.1%
1967 	19,038       1972=  2458       12.9%
1968 	20,422       1973=  3381       16.6%
1969 	22,785       1974=  4742       20.8%
1970 	24,424       1975=  4454       18.2%
1971 	24,366       1976=  3357       13.8%
1972 	22,618       1977=  2670       11.8%
1973 	25,242       1978=  3672       14.5%
1974 	26,541       1979=  3423       12.9%
1975 	20,155       1980=  3182       15.8%
1976 	17,384       1981=  2813       16.2%
1977 	12,918       1982=  2395       18.5%
1978 	 9,949       1983=  1477       14.8%
1979 	 9,948       1984=  1526       15.3%
1980 	 9,953       1985=  1744       17.5%
1981 	10,573       1986=  1720       16.3%
1982 	 9,375       1987=  1486       15.9%
1983 	 7,399       1988=  1110       15.0%
1984 	 6,949       1989=  1853       26.7%
1985 	 6,672       1990=  1691       25.3%
1986 	 7,283       1991=  3279       45.0%
1987 	 7,963
1988 	 6,521
1989     6,913
1990 	 6,147
1991 	 6,664
1992 	 7,596
1993 	 8,040
1994 	 6,248
1995 	 5,173
1996 	 5,846
1997 	 5,036
1998 	 4,800
1999 	 5,547
2000 	 5,833
2001 	 5,909
2002 	 5,294
2003 	 6,013
2004 	 7,507
2005 	 9,263
2006 	10,943
2007 	10,453
2008 	11,230
2009 	 9,744
2010 	 9,263
2011 	 9,062

 
 
Table II

Data derives from CANSIM Table 075-00221
Historical statistics, country of birth of other British-born and foreign-born population, *Terminated*
[every 10 years (foreign-born persons)]

The data below is a part of CANSIM table 075-0022.
Geography=Canada
Birthplace=United States

[ Data source:  http://www5.statcan.gc.ca/cansim/pick-choisir?lang=eng&p2=33&id=0750022 %5D

1871    64,613
1881    77,753
1891    80,915
1901   127,899
1911   303,680
1921   374,022
1931   344,574
1941   312,473
1951   282,010
1961   283,908
1971   309,640


 
 
Diminishing Returns

 
From a broadscale, abstract perspective, the voluntary and other disclosure programs of the IRS after 2009 bear resemblance to the post 9/11 decade of tottering toward ever more byzantine and restrictive financial reporting to U.S. authorities by unfortunate “U.S. persons” who merely reside “overseas.”

 
The Decade

At the level of decade, the multiple period provisions of Form 8854 Initial and Annual Expatriation Statement bear witness to a wish to tighten the screws ever more, with very different regimes operating pre-2004, 2004-2008, post-2008. One other indicator, from a different direction, is the institution in mid-2010 of a punitive $450 fee for renunciation of U.S. citizenship, in face of a skyrocketing rate of ship-of-state jumpers.

 
Voluntary Disclosure

The voluntary disclosure programs of 2009 to the present manifest steadily upward penalty increases, to a current 27.5 percent.

According to sketchy IRS reporting as of early 2012, the 2009 program generated $3.4 billion with 95 percent closure, and the 2011 program generated another $1 billion. [1]

More IRS reporting in mid-2012 shows acquisition of another $0.6 billion and 1500 further disclosures (compared to 33,000 in the first two) under the new third open-ended program. [2]  (This 1500 quantifies the “hundreds” who were said to be eagerly coming forward after September 2011. [1])

This looks like a clear case of diminishing returns.

 
All Extraterritorials

Yet another enforcement prong, in operation for about a year, deserves scrutiny. In December 2011 the IRS restated existing procedures for persons “residing outside the U.S.” under the guise of advertising policy relaxation. [3]  The IRS then followed up in mid-2012 with an announcement of specific guidelines to come. [4]  At the end of August 2012 the specifications [5] made it apparent that potential participants would gain little assurance by “coming in from the cold,” could well expose themselves to unwarranted harsh scrutiny, and would certainly subject themselves to severe compliance costs in the form of legal and accounting fees.

The IRS together with its master the United States government increasingly look like dancers paired as a mad duo dervish, whirling ever faster in dubious pursuit of payoff phantasms, with onlookers increasingly bemused by the perverse chasing of the partner’s tail.

 
References

[1]  IRS Offshore Programs Produce $4.4 Billion To Date for Nation’s Taxpayers; Offshore Voluntary Disclosure Program Reopens

[2]  IRS Says Offshore Effort Tops $5 Billion, Announces New Details on the Voluntary Disclosure Program and Closing of Offshore Loophole

[3]  Information for U.S. citizens or dual citizens residing outside the U.S.

[4]  IRS announces efforts to help U. S. citizens overseas including dual
citizens and those with foreign retirement plans

[5]  Instructions for new streamlined filing compliance procedures for non-resident, non-filer U.S. taxpayers
(2012 Sept 2)


 
 
Air Takeoff from Canada

 
The following comment on an article at the Globe and Mail points to the implications of advanced passenger screening agreement between Canada and the United States.

Mark Shore

9:24 AM on January 7, 2013

Note that the advanced passenger screening agreement, also quietly enabled
by a handful of lines in a legislative amendment, gives US authorities the
ability to impose an arbitrary veto on individual passengers traveling on
commercial flights through US air space (even direct flights without scheduled
US stops). This constitutes the vast majority of Canadian flights to and from
Latin America and the Caribbean, as well as a substantial number of flights
to and from Europe and Asia.

 
An attempt to verify these details led to the Canadian government web site of Beyond the Border: A Shared Vision for Perimeter Security and Economic Competitiveness, which consists of a substantial document provided both as html and as pdf.

Perhaps the most relevant information falls under this heading (pdf p. 11):

Establish and coordinate entry and exit information systems, including a system which permits sharing information so that the record of a land entry into one country can be utilized to establish an exit record from the other.

The action target is “expand the program to include the exchange of data on all travellers at all automated common land border ports of entry” by 30 June 30 2014. At that stage, “airlines will be required to submit their passenger manifest information on outbound international flights.”

To the extent that this program and timeline are realized

   U.S. resident persons will encounter exit control if they attempt to leave Canada on an international flight
   U.S. persons resident in Canada may encounter troublesome controls if they have become listed as
     “wanted” for failure to comply with IRS filing requirements

This developing enforcement mechanism serves as a footnote to U.S. Passport as Enforcement Tool.
(2013 Jan 7)


 
 
Flaherty on FATCA

 
Transcription of 9 September 2013 Public Comment on FATCA by Minister of Finance Jim Flaherty

 
 
Reporter:
Minister Flaherty, I was wondering if I could get an update on where things are with FATCA, given that the deadline is approaching and Canada is not among the countries so far that has signed a side deal. Obviously there’s concerns — Canadians who might be married to an American or that kind of thing. Dual nationals have concerns about this and you’ve expressed some concerns as well in the past. So, where are things on that?

 
Flaherty:
I have expressed a lot of concerns about it, and I’ve discussed it of course with the different Secretaries of the Treasury in the United States. I understand — I know, that we have had continuing discussions with the United States Treasury about this issue. We’ve made some progress, we do not have an agreement yet, but they clearly understand the Canadian position that we want to avoid any disadvantages to persons who happen to be citizens of both countries.

 
Reporter:
So I guess — what would you say then to Canadians who are concerned they might not have been filing US taxes for a long time and they could face penalties for that — what’s your response?

 
Flaherty:
Well, I think we will have some news before too long on the issue. But having said that, people have to take care of their own financial affairs. I can’t deal with people’s individual tax returns.

 
 
Source:  http://www.ctvnews.ca/business/flaherty-announces-3-year-freeze-in-ei-premiums-1.1446387

Time segment 4:23 — 5:47

 
Salient Points:

Discussions between Canada and the United States continue and progress.

Avoidance of disadvantage is a vague criterion.

That criterion is expressed as a want rather than a requirement.

That criterion is specific to “persons who happen to be citizens of both countries,” likely excluding
U.S. persons who are not Canadian citizens.

The impending news seems likely to consist of the terms of the agreement.

Canada understandably will take no position on the responsibilities of any U.S. citizen toward the
U.S. government.

(10 September 2013)

 
 
 
 
 
 

 
[ Last update 18 February 2014 ]
 

Advertisements

Written by usxcanada

1 January 2012 at 12:00 pm