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  #171 (permalink)  
Old 3rd December 2011, 10:52 PM
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No one is going to arrest you in Canada for moving your money out of a Canadian bank and into a Canadian credit union. And if they did, I don't think such an action would stand up to a federal court challenge for five nanoseconds.
I don't mean to imply that I am worried about what the Canadian government would do. I have been working to get my citizenship in Canada before I ever heard of the latest US ploy to drain our retirement savings. But until I get that citizenship I feel almost like a woman without a country. I read somewhere on these forums that someone received advice from their lawyer that they should wait until after they received Canadian citizenship to move the accounts or it could be considered criminal in the USA. I have property there that I guess we will have to unload, I have family there that I would like to visit, but this threat from the US government has yes, made me paranoid and I will never trust them again. I want to make the move, but I would imagine that we are going to have to be careful that we don't end up owing taxes to CRA based on *how* we change things around. I am thinking of accounts where we would have been paying later when we started to draw from them. Frankly, I would like to get those that are in my name back into my husband's name but that probably would cost him some taxes. I will start seeking help outside of town next week. In the end, I guess I would rather give a little to CRA than to give it all to the IRS, but I won't do anything until they make an official announcement.

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  #172 (permalink)  
Old 4th December 2011, 12:36 AM
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Originally Posted by Omater View Post
I don't mean to imply that I am worried about what the Canadian government would do. I have been working to get my citizenship in Canada before I ever heard of the latest US ploy to drain our retirement savings. But until I get that citizenship I feel almost like a woman without a country. I read somewhere on these forums that someone received advice from their lawyer that they should wait until after they received Canadian citizenship to move the accounts or it could be considered criminal in the USA.
Hi Omater: that may have been me. I wrote here: http://www.expatforum.com/expats/exp...canada-13.html

This is what I wrote:
I waited until after I was a Canadian to do this, so that the move itself would not be a crime--as the US would interpret this as an obstruction of justice --Conrad Black is sitting in a federal jail now for being caught on video, get this: moving boxes out of his Toronto office! So the federal government in the US likes to put people in jail for doing non-crimes in another country. I remember reading somewhere that moving my accounts in order to avoid the IRS finding about them is a crime. Like I care.
Let me try to track this down; but honestly, I've read so much that I'm not sure I will be able to find it. I would go with Schubart. He is right. It is no criminal act to change bank accounts. But the thing is that the only reason it is necessary to move your accounts is to avoid FBAR. If you are planning to fill out the FBAR, then there is no point in moving anything. But since I've decided I'm not going to fill out the FBAR, then if I had moved my accounts while still a US citizen to a non-FATCA compliant bank in order to avoid detection of my non-FBAR compliant accounts--that could be interpreted as an obstruction of justice. Do you see what I mean? FATCA won't be in place until 2014, so there is no rush.

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  #173 (permalink)  
Old 4th December 2011, 04:49 AM
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Let me try to track this down; but honestly, I've read so much that I'm not sure I will be able to find it. I would go with Schubart. He is right. It is no criminal act to change bank accounts. But the thing is that the only reason it is necessary to move your accounts is to avoid FBAR. If you are planning to fill out the FBAR, then there is no point in moving anything. But since I've decided I'm not going to fill out the FBAR, then if I had moved my accounts while still a US citizen to a non-FATCA compliant bank in order to avoid detection of my non-FBAR compliant accounts--that could be interpreted as an obstruction of justice. Do you see what I mean? FATCA won't be in place until 2014, so there is no rush.
I remember, it was you. Thanks for the above! That makes me feel a little better as far as haste might go. But aren't some banks already filing that information away? The last time we invested (about 1 month before I ever heard of FBAR and FATCA) they asked me to sign a form that stated I was not an American citizen. In my ignorance, I didn't sign the form. The account manager knows I am. It is with RBC Dominion and as you know they are pretty thick in the soup.
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  #174 (permalink)  
Old 5th December 2011, 12:00 PM
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True. But if you have more than 25 accounts you can just list the number of accounts on the fbar form. .
You still have to report income on all the accounts, which is a bigger headache than simply listing them. Besides, I would think that having more than 25 accounts would be an additional reason for an audit flag to pop up on a return.

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  #175 (permalink)  
Old 5th December 2011, 12:36 PM
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You still have to report income on all the accounts, which is a bigger headache than simply listing them. Besides, I would think that having more than 25 accounts would be an additional reason for an audit flag to pop up on a return.
Too true and part of why I'm so scared. It's an an onerous mess that had been created completely unintentionally. Many of the accounts were for miniscule amounts because they included dormant nominee accounts from transferred mutual fund administrators; matured savings bonds which had been transfered out but which I stupidly failed to close the actual accounts themselves; dormant credit cards; sub accounts within main accounts; even travel cards and pre-paid cell phone sims!

Perhaps I've just made things even harder for myself but what's done has been done. I'm scaredbecause I don't have complete records....I'll have to hire an attorney if things get really bad. But I have lived in the UK for over 23 years, I never had any intention to defraud the US government, it was all completely unintentional but agree they may indeed want to audit me, especially as they will have six years to do so.

I'm wondering if I should ring the fbar hotline and ask them if I should send in more information explaining why I had such a huge number of accounts or if it might increase a risk of an examination. I figure they can write and ask for more information if it's really an issue.


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  #176 (permalink)  
Old 4th January 2012, 06:56 PM
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Hi there, Northof49. I am in a very similar situation as you. In fact, I too have not been a US citizen since 1984 due to my specific relinquishing acts. I have not yet gone to the Embassy and filed any papers, but I would be curious to compare notes with you a bit. When you are able to send a private message, would you mind contacting me please? I am also still trying to find qualified legal support as well, so I'm hoping that maybe you have some ideas there as well.

Thanks.
Hi Deckard,
Last month I attended at the US consulate in Toronto with my lawyer to file a formal application for a Certificate of Loss of Nationality (CLN), to which I attached a fairly detailed explanation (drafted for the most part by my US lawyer) of how and when I relinquished my US nationality through the expatriating acts of becoming a Canadian citizen and pledging allegiance to the Queen in 1984 and thereafter acting in a manner consistent with my intention to relinquish. The actual process was somewhat anti-climactic and oddly comic, in a grotesque Monthy Pythonish sort of way. As a side note, the US Consulate is an armed camp (quite literally - lots of Kevlar vested guards bearing automatic weapons behind bulletproof glass). What we didn't know was that cell phones and any other electronic equipment (including key fobs and computer mice) are not allowed inside and no provision is made for storing them anywhere outside. If you make the mistake of coming there with a cell phone it's up to you to figure out what to do with it out on the sidewalk. We wandered around in the cold until we found a security guard who recommended that we go to the bar in the Rex Hotel (I'm not making this up) . Seems the barkeep there has a nice little sideline in holding onto cell phones and the like for two bucks while the owners attend at the US Consulate. Ah, capitalism! Anyway, when we finally got inside, the famous Ms. Anderson was nowhere to be found. She wasn't in and left no instructions to anyone. While we were waiting for them to retrieve the file, the head consular officer (Ms Andersonís boss, as she rather brusquely informed me) told my lawyer that he had no right to be there and that it was consular policy not to permit anyone to be represented by counsel. (According to her this policy is to avoid overcrowding, although when we were there only one other applicant was present.) This came as a surprise to him since he had made it quite clear to Ms Anderson that he was acting as my lawyer and would be attending at the consulate with me. She also asked why I thought I needed to be represented by an attorney since the process was very straightforward. When I tried to explain that the process and the legal issues did not seem to be at all straightforward and that the distinction between renunciation in the present and confirmation of relinquishment in the past seemed to be lost on many staff, she cut me off impatiently and later took me aside and said, in so many words, that I was foolish to spend money on a lawyer for something so routine. The clerk who handled the actual application then proceeded to demonstrate how (un)routine it was: he obviously had no idea what I was talking about and simply had me sign and swear the application that I had already filled out. So there was no interview at all, and in fact for this part of the process there was no need for my lawyer to be present. I gathered from my lawyer that the drill in Ottawa may be different: there they had no objection to his being present but subjected his client to a two hour grilling. Anyway, if you decide you need a lawyer, I would recommend Stephen Flott of Flott & Co in Virginia. (The Webmaster won't let me include his email but you can Google him.) Heís done a number of these applications and knows the drill. However, he is not cheap.
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  #177 (permalink)  
Old 4th January 2012, 07:58 PM
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... the head consular officer (Ms Andersonís boss, as she rather brusquely informed me) told my lawyer that he had no right to be there and that it was consular policy not to permit anyone to be represented by counsel. (According to her this policy is to avoid overcrowding, although when we were there only one other applicant was present.) This came as a surprise to him since he had made it quite clear to Ms Anderson that he was acting as my lawyer and would be attending at the consulate with me. She also asked why I thought I needed to be represented by an attorney since the process was very straightforward. When I tried to explain that the process and the legal issues did not seem to be at all straightforward and that the distinction between renunciation in the present and confirmation of relinquishment in the past seemed to be lost on many staff, she cut me off impatiently and later took me aside and said, in so many words, that I was foolish to spend money on a lawyer for something so routine. ...
If someone successfully relinquishes does that mean their loss of citizenship is effective to the date they did the expatriating act? In your case, would your CLN be effective 1984? If that is the case then are you released from requirement to file IRS returns and FBARs? If yes then it is absolutely worth some legal fees!!!

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  #178 (permalink)  
Old 4th January 2012, 08:24 PM
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If someone successfully relinquishes does that mean their loss of citizenship is effective to the date they did the expatriating act? In your case, would your CLN be effective 1984? If that is the case then are you released from requirement to file IRS returns and FBARs? If yes then it is absolutely worth some legal fees!!!
Excellent question, Peg. It needs a lawyer or a court challenge, alas, I think anyway.

My understanding is as follows:

The instructions on Form 8854 seem to indicate that the IRS considers that the date of expatriation "for tax purposes" is the date you notified State of your relinquishment, not the date of the actual expatriating act (in this case in 1984). That isn't absolutely clear in the instructions, because the date ranges only go back to 2004. But the wording in the instructions, and also in another IRS website I found
Publication 519 (2010), U.S. Tax Guide for Aliens seems to imply, and it of course is confusing in the latter link but I think the implications are, that even before 2004 your relinquishment date "for tax purposes" would be when you notified State (now, in 2012).

According to another website I can't lay my hands on at the moment, the law or regulation passed by Congress decreeing that "for tax purposes" relinquishment is when you tell State not when you committed the actual act, was passed in February 1996 (or maybe 1994 but no earlier than that). Given that the US Constitution forbids Congress from passing ex post facto laws, it seems to me that this "for tax purposes" interpretation by the IRS would be illegal if they tried to apply it to people who committed an expatriating act voluntarily and with intent to relinquish (and can support this with balance of evidence on form DS-4079) any time prior to 1994 or maybe 1996.

In which case the applicable law is what was in effect in 1984, which was you were liable for taxes for ten years after reqlinquishing if you met the income tests (no mention made back then of tax filing though ...) however by 1994 and certainly 1996, never mind 2012, you are way past the ten-year window. (We won't grapple with who can possibly file back taxes in 1984, no one I know keeps receipts and tax returns back 28 years I sure don't).

The rubber hits the road when State tells IRS of your CLN in 2012 and IRS sends you the form 8854. You could write back to IRS and tell them you aren't going to comply with any forms, because your relinquishment (which State definitely should date to 1984 as long as you didn't do something regrettable later like apply for a US passport) pre-dates the legislation under which form 8854 was created, hence is ex post facto application of a law and hence unconstitutional. The ball then is in their court whether to tell you they're fining you $10,000 for not filing their form (they say they can repeat this fine every year you continue not to file it), and then in your court whether to tell them to get stuffed, not to cross the border, or hire a lawyer to fight it in US court.

If you don't need or want for family or business reasons to go to the US ever again, I would simply refuse to file any tax forms including 8854 in your case, assuming that you've gone through all the subquestions under item 13 on State's form DS-4079 and can swear you haven't maintained any significant connections with the US as listed under that heading -- particularly getting a US passport, living and working in the US unless with a green card, owning property (arguable), etc. I don't think they can possibly come after you for penalties for non-filing of 8854 or other forms as long as you stay in Canada, but again, get legal advice (from a CANADIAN lawyer) on this point before doing anything.

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  #179 (permalink)  
Old 4th January 2012, 08:40 PM
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Excellent question, Peg. It needs a lawyer or a court challenge, alas, I think anyway.

My understanding is as follows:

The instructions on Form 8854 seem to indicate that the IRS considers that the date of expatriation "for tax purposes" is the date you notified State of your relinquishment, not the date of the actual expatriating act (in this case in 1984). That isn't absolutely clear in the instructions, because the date ranges only go back to 2004. But the wording in the instructions, and also in another IRS website I found
Publication 519 (2010), U.S. Tax Guide for Aliens seems to imply, and it of course is confusing in the latter link but I think the implications are, that even before 2004 your relinquishment date "for tax purposes" would be when you notified State (now, in 2012).

According to another website I can't lay my hands on at the moment, the law or regulation passed by Congress decreeing that "for tax purposes" relinquishment is when you tell State not when you committed the actual act, was passed in February 1996 (or maybe 1994 but no earlier than that). Given that the US Constitution forbids Congress from passing ex post facto laws, it seems to me that this "for tax purposes" interpretation by the IRS would be illegal if they tried to apply it to people who committed an expatriating act voluntarily and with intent to relinquish (and can support this with balance of evidence on form DS-4079) any time prior to 1994 or maybe 1996.

In which case the applicable law is what was in effect in 1984, which was you were liable for taxes for ten years after reqlinquishing if you met the income tests (no mention made back then of tax filing though ...) however by 1994 and certainly 1996, never mind 2012, you are way past the ten-year window. (We won't grapple with who can possibly file back taxes in 1984, no one I know keeps receipts and tax returns back 28 years I sure don't).

The rubber hits the road when State tells IRS of your CLN in 2012 and IRS sends you the form 8854. You could write back to IRS and tell them you aren't going to comply with any forms, because your relinquishment (which State definitely should date to 1984 as long as you didn't do something regrettable later like apply for a US passport) pre-dates the legislation under which form 8854 was created, hence is ex post facto application of a law and hence unconstitutional. The ball then is in their court whether to tell you they're fining you $10,000 for not filing their form (they say they can repeat this fine every year you continue not to file it), and then in your court whether to tell them to get stuffed, not to cross the border, or hire a lawyer to fight it in US court.

If you don't need or want for family or business reasons to go to the US ever again, I would simply refuse to file any tax forms including 8854 in your case, assuming that you've gone through all the subquestions under item 13 on State's form DS-4079 and can swear you haven't maintained any significant connections with the US as listed under that heading -- particularly getting a US passport, living and working in the US unless with a green card, owning property (arguable), etc. I don't think they can possibly come after you for penalties for non-filing of 8854 or other forms as long as you stay in Canada, but again, get legal advice (from a CANADIAN lawyer) on this point before doing anything.
It is my understanding that FBAR is not a tax. I agree that if the relinquishing act predates the law, then the law should not apply. What I am wondering is if the law saying that the date of relinquishment is the date I notify the state department might only apply to taxes. Could people like me who committed a relinquishing act decades ago at least be off the hook as far as the FBAR's go?

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  #180 (permalink)  
Old 4th January 2012, 10:00 PM
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Originally Posted by Peg View Post
If someone successfully relinquishes does that mean their loss of citizenship is effective to the date they did the expatriating act? In your case, would your CLN be effective 1984? If that is the case then are you released from requirement to file IRS returns and FBARs? If yes then it is absolutely worth some legal fees!!!
That is certainly the result that is being sought. It would definitely not be worth the time, effort and expense if the CLN ends up being dated currently. In fact, this would be the worst possible result because it would produce a huge, immediate exit tax liablity for all capital gains on all my assets as if they had been sold on the date of renunciation. I raised this point repeatedly with the lawyer and he seems confident that we can get it backdated.

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