Monthly Archives: November 2021

Republicans Overseas Begins Its Support and Advocacy for Pure Residence-based Tax

This is an incredibly significant development. See the following posts on their Facebook site. They also have a new Twitter feed. Follow them at @RepOverseas.

Republicans Overseas position On What Pure Residence-based taxation means:

Tax Talk 1 – November 22, 2021

Tax Talk 2 – November 29, 2021

A US Social Security Primer: What you didn’t know and didn’t know to ask!

Hat tip to Mr. L.J. Eiben of Raymond James who provided this excellent presentation.

Social Security script and slides

Now a discussion about US Social Security with L.J. …

Mr. L.J. Eiben is a Financial Advisor at Raymond James.

The information in this podcast and contained in these slides was obtained from sources RJA and believed to be reliable; however, we cannot represent that it is accurate or complete. It is provided as a general source of information and should not be considered personal investment advice or solicitation to buy or sell securities. The views expressed are not necessarily those of Raymond James (USA) Ltd. Raymond James (USA) Ltd. (RJLU) advisors may only conduct business with residents of the states and/or jurisdictions for which they are properly registered.

Raymond James (USA) Ltd. is a member of FINRA / SIPC

Bonus!! Renunciation and US Social Security

The Beyer “Tax Simplification For Americans Abroad Act”: A First Look

Updates November 22, 2021:

1. I have also written a post on the SEAT site which compares (in a general way) the Beyer Bill of 2021 to the Holding Bill of (2018). Any attempt to solve this problem through amending the FEIE actually has the effect of strengthening citizenship based taxation.

2. With respect to the 402(b) exclusion:

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Update – Podcast November 24, 2021

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Introduction

On November 19, 2021 a post on the Democrats Abroad site introduced Congressman Beyer’s “Tax Simplification For Americans Abroad Act”. The Bill has been introduced as HR6057. I just saw this a few hours ago. Therefore, this post is necessarily a summary of my first impressions. It is likely that this will evolve and be updated over the next few days.

For those who do not want to read this relatively long post, the following excerpt provides an executive summary:

The Beyer Bill does NOT end US “citizenship-based taxation” and does NOT enact “residence-based taxation” as understood in the rest of the world. That said, the Beyer bill is intended to provide administrative (less to do) and substantive (less to pay) relief to middle class Americans abroad as long as they are not “entrepreneurs abroad” who carry on business through a CFC. “Entrepreneurs abroad” continue to be presumptively GILTI. If I am reading this correctly, GILTI income appears to NOT be included in the expansion of the scope of 911. Furthermore, the bill appears to provide conflicting directives on some “foreign pensions” (specifically excluding 402(b) pensions from the proposed new 911 exclusion while generally allowing foreign pensions generally to be excluded). It is my understanding that many Australian residents treat employer Superannuations as 402(b) pensions under the Internal Revenue Code.)

Like all “carveouts” the proposal purports to provide relief to a narrowly defined group of Americans abroad. In addition (this cannot be overemphasized) the bill retains US citizenship-based taxation. It should be clearly understood that ANY attempt to provide relief through expanding the FEIE (including the 2018 Holding bill) necessarily assumes the continuation of citizenship-based taxation.

This post is composed of the following four parts:

Part A – The General Purpose

Part B – General Impressions

Part C – The relevant modifications to IRC 911 Foreign Earned Income Exclusion

Part D – Tentative conclusion

* Appendix – The text of 911 with the proposed changes

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John Richardson Interview With Danielle Smith About FATCA and @Citizenshiptax

On November 12, 2019 CBC Reporter Elizabeth Thompson published an interesting article. The article, reported that “Nearly a million bank records sent to IRS“. Ms. Thompson’s article is quite brilliant for one simple reason. The article focuses on the fact that it is the bank records of CANADIAN RESIDENTS that are being sent to the IRS. Specifically the article leads with:

Number of government transfers of records of bank accounts held by Canadian residents to U.S. has been rising.

The number of banking records the Canadian government is sharing with U.S. tax authorities under a controversial information-sharing deal has increased sharply, CBC News has learned.
The Canada Revenue Agency sent 900,000 financial records belonging to Canadian residents to the Internal Revenue Service in September — nearly a third more than it sent the previous year. The records were for the 2018 tax year.

It also has updated the number of records shared for the 2017 tax year to 700,000 from the 600,000 originally reported.

“That’s a lot,” said John Richardson, a Toronto lawyer and co-chair of the Alliance for the Defence of Canadian Sovereignty, which is fighting the information-sharing deal. “That’s a lot of files.”

The number of financial records of Canadian residents being shared with the IRS has risen steadily since the information sharing agreement began — from 150,000 in 2014 to 300,000 in 2015 and 600,000 for the 2016 tax year.

Now, that (as reflected in the comments) is what got people’s attention! The article does not focus on FATCA (which is often portrayed in the media as tax evasion law). Rather the article focuses on the effect of FATCA and describes FATCA as:

The information transfer is the result of a controversial information-sharing agreement between Canada and the U.S. that was negotiated after the U.S. government adopted the Foreign Account Tax Compliance Act (FATCA).

The law, adopted in a bid to curb offshore tax evasion, obliges foreign financial institutions to report information about accounts held by people who could be subject to U.S. taxes.

Unlike most countries, the United States levies income taxes based on citizenship rather than residency; some Canadians end up facing U.S. taxes because of an American parent, or because they were born in a hospital on the other side of the border.

The article makes the connection between the transfer of information to the IRS and the imposition of U.S. tax on the holders of those accounts! In other words, this information sharing agreement (called FATCA) is described as being for the purpose of helping the United States of America (that “Great Citadel of Freedom and Justice”) impose direction taxation on Canadian residents. Yes, it’s true.

First, the United States imposes worldwide taxation, according to the U.S. Internal Revenue Code, on certain residents of other countries.

Second, the U.S. Internal Revenue Code imposes a separate and more punitive tax system on residents of other countries (here are 12 different examples) than it does on U.S. residents (“Separate but equal” anybody).

Third, the information sharing agreement (referenced in the article) called FATCA is a tool to enable imposing U.S. taxation on the residents of Canada and other countries.

Fourth, the primary impact of FATCA is on individuals who were born in the United States but do not live in the United States. Individuals experience the impact of FATCA in the following two ways:

1. Impact Via The Tax Compliance Industry: It pressures them to comply with the tax and reporting provisions of the Internal Revenue Code. Some people enter the U.S. tax system and effectively agree to U.S. taxation.

2. Impact Via The Banks: In some countries people have experienced limited access to bank (and other financial) accounts unless they are willing to supply U.S. tax identification numbers.

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John Richardson – Follow me on Twitter @Expatriationlaw

@AmChamCanada Presents: November 18/21: Work From Anywhere

Thursday November 18, 2021 – “Work From Anywhere” – registration link:

November Work From Anywhere Webinar Flyer

Further details:

On Thursday, November 18 from Noon-1:00PM, AmCham will be holding a webinar titled Work from Anywhere: Tax and Legal Considerations for Employers and Employees. This webinar, which was originally scheduled earlier this year and which follows from the successful webinar AmCham held addressing corporate tax issues, will analyze tax and legal matters that arise from the pandemic induced trend to have employees work from anywhere in the world.

This webinar will discuss pertinent topics in this area such as:

1. What are the recent trends regarding work from home arrangements in Canada and throughout the world?
2. What are some of the emerging issues associated with remote working arrangements? and
3. What are some of the practical steps businesses and executives may take to manage these risks?

The panel for this webinar features four knowledge leaders in the field of law and taxation.

They are:

* Michael Pereira, Partner, KPMG – Michael focuses on providing consulting and compliance services to high-net-worth individuals and senior executives with complex U.S. and Canadian tax issues. Michael specializes in intricate tax matters such as: 1) U.S. estate tax issues affecting U.S. citizens living in Canada and their U.S. citizen and/or U.S. resident children; 2) tax issues regarding foreign private equity structures, and 3) U.S. anti-deferral tax system for interests in foreign corporations, including the passive foreign investment corporation and controlled foreign corporation regimes. Michael is a Chartered Accountant and a Certified Public Accountant who earned a Masters of Science in U.S. Taxation from Wayne State University.

* Laura Tippett, Partner (Leader of Program Services – Regions East), KPMG – Laura has 15 years’ experience in Canadian and US personal tax and expatriate issues. Laura assists companies and their employees who are travelling cross-border, working with a variety of industries, including technology, defense, construction, consulting, energy, crown corporations and non-profit organizations. She works with employees who are on foreign assignment, travelling internationally on business, working remotely cross-border or relocating abroad. Laura has managed the Canadian/US expatriate programs for numerous multinational organizations, including overseeing several programs that have hundreds of Canadian-touching assignees annually.

* Kaley Dodds, Senior Manager, Employment & Labour Law, KPMG – Kaley’s is a management-side employment lawyer who represents private, public and institutional clients in a wide range of matters. Her practice covers employment, labour and human rights issues, ranging from litigation strategy, legal risk management, policy development, workplace training, to day-to-day employee relations and human resources advice. Kaley is called to the bar in Ontario and Alberta and has appeared before all levels of courts, arbitrators and human rights tribunals in both provinces.

* Ellen S. Kief, Principal and Managing Attorney at Kief Law – Ellen works with clients across Canada, the United States, and throughout the world addressing issues associated with U.S. immigration law. Ellen’s practice focuses on cross-border travel, business visas, investor visas, entertainment and sports, family visas, permanent residence and citizenship. Ellen is a national speaker and educator who has presented on numerous U.S. immigration topics including cross-border business travel, family immigration, inter-company transfers, and various types of immigrant and non-immigrant visas.

If you would like more information about this event, please see the flyer attached to this message. The flyer contains a link at the bottom where you may register to attend the event.

We hope you will be able to join us on November 18 for what should be a stimulating event. Thank you for your support of AmCham and its mission. Have a good day.

Registration link:

November Work From Anywhere Webinar Flyer

The Form 3520 Penalty Debacle: Podcast And Discussion With CPA Gary Carter

November 8, 2021 …

I just got off the phone with another person who was assessed a $10,000 penalty in relation to a Canadian TFSA (which is probably not even a trust for US purposes, which means it can’t be a foreign trust). Predictably her response is to simply renounce US citizenship.

The conversation reminded me of a podcast that I did (last January with CPA Gary Carter) about the 3520/A IRS penalty problem. As I result, I am posting this podcast.

This podcast features a discussion with CPA Gary Carter that includes:

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