9/20/2011 8:43 PM ET|
Canada tells IRS to back off
Tax crackdown could ensnare tens of thousands of innocent US citizens, and our neighbor to the north is having none of it.
Does anyone really need to state the painfully obvious -- that "Canada is not a tax haven"? Apparently so, and to his credit, Canadian Finance Minister Jim Flaherty did just that the other day. And I'm glad he did.
"Back off our taxpapers, Flaherty tells U.S.," read the recent headline in Canada's Financial Post after Flaherty fired off an angry letter to the Washington Post, The New York Times, and The Wall Street Journal blasting a new Internal Revenue Service tax crackdown that could ensnare tens of thousands of innocent Americans living in Canada. Stop targeting "innocent and law-abiding people" who owe no U.S. taxes, added the angry Conservative Cabinet minister.
'Stress and fear'
The simmering cross-border battle over new rules applying to dual-citizen Canadian residents is spreading "unnecessary stress and fear," wrote Flaherty, referring to a little-known IRS proviso that requires all U.S. citizens to file annual returns with the IRS, regardless of where they live and work. Many transplanted Yanks had no idea of this requirement. The Toronto Globe and Mail reports there are roughly a million Canadian-American citizens living in Canada. (That figure seems a bit high to me, coming from a country of 34 million, but it's possible.)
"Most of these Canadian citizens, many of which have only distant links to the United States, have a very limited knowledge of their reporting obligations to the U.S.," Flaherty added.
Flaherty also addressed pending U.S. legislation that would compel Canadian banks to turn over their information on American clients to the IRS, a giant headache Canadian banks have resisted. Because of their objections in July, the IRS agreed to delay enforcement of that new rule until 2014. It was originally scheduled to kick in a year earlier. Canada banking authorities say this battle is not over.
Flaherty noted that many of the transplanted Yanks are not the real targets of a crackdown on tax evasion -- "high rollers with offshore bank accounts."
Maybe not, but they're still feeling the revenue heat from a country desperate to vacuum up money wherever it can -- anything to avoid raising taxes on the wealthy and upset the dismal House Speaker John Boehner bunch.
"These are people who have made innocent errors of omission," said Flaherty of the dual citizens affected.
Bridges, roads still being maintained
If most of the people the IRS is targeting wanted to dodge taxes, this one-time Canada resident can testify, they certainly wouldn't have come to Canada, which has a tax rate -- federal and provincial -- considerably higher than does the U.S. Then again, Canadian residents expect to have to pay for things like schoolteachers, firefighters, and keeping parks open and roads and bridges maintained, and so they pay higher taxes than Americans.
The concept of "there is no free lunch" hasn't really sunk in down here in the U.S. yet.
What's especially ludicrous and galling about this new IRS directive, say Canadian tax experts, is its "one-size-fits-all" provisions that lump Canada with countries like Panama and the Bahamas.
Canada not only -- let's say it once more -- is NOT a tax haven , it's also not a banana-belt country, climatologically or politically. Just the opposite. And, it has a stronger banking system than the U.S. does.
Flaherty added that "to impose FACTA (the Foreign Account Tax Compliance Act) on our citizens and financial institutions would not accomplish anything but to waste resources on both sides." That pretty much sums it up. Flaherty also points out that there's already a bilateral tax treaty to deal with tax evasion.
The deadline passed two weeks ago for Americans who hadn't filed income-tax forms in the past to throw themselves on the mercy of the court -- i.e., the IRS. I can't find any reports -- yet -- about the IRS prosecuting any malefactors in Canada, but I'll be watching this carefully.
The last word on this ridiculous policy today goes to Jamie Golombek, the director of tax and estate planning for CIBC Private Wealth Management.
After noting in the Financial Post that Canadians affected by the tax crackdown would take comfort in the Canadian government finally stepping up with objections to the misguided tax-enforcement cross-border battle, he added that this all comes down to the fact that the U.S. -- having come close to defaulting on its debt this summer -- "is in dire need of revenue."
The IRS needs to send its enforcement bloodhounds in directions other than north.
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If only the U.S. could get thier sh-t together and go get all of the people who DO NOT pay taxes (at all!) here in the U.S.
Then work out a system on what would be fair for the rich and for the poverty crowd when it comes to paying taxes.
Investigate all people on welfare (especially the 2nd and 3rd gernerations groups!) looking for the ones who are committing fraud.
Its time to cut the cord people!
No it doesn't give them the right to go after taxes on money earned elsewhere while not living in the US and I don't give a rats purple a$$ what you think about it. Our govt. with their complete inability to control their spending have continually went after whatever means they can find to raise more revenue so that they can fund their pork barrel projects for their cronies and home states. Both sides of the aisle are guilty of this obscene abuse of power and it is time you woke up and smelled the rotten stench wafting from Washington. If I can't pay my bills I don't get the option of making someone else give me more money to get by yet our govt does on a regular basis without any reflection of who the POTUS is.
Washington can't finger out why people are so upset about the way things are as far as taxes go.It's not the tax we have to pay, it's the way its spent.I don't mind paying taxes if it goes where it's it should go and not in a general fund thats ripping us off .
Why do we need to go to mars (just to see what's there ) or the moon(been there done that).
get rid of the things we don't need and programs that overlap,thats what obama said he was going to do in 08 the epa is killing us the irs is holding us hostage. we lost our freedom and can't make a move without the government letting us.
If they want to save money start in washington we don't need most of them anyway
I have ALWAYS been proud to be a US citizen as well as a Canadian citizen. At this point, I am embarrassed to be associated with a country (USA) that "attacks" its own citizens.....this is not the America I know. Yes I live in Canada and yes I am proud to be a Canadian. My decision to come to Canada had nothing to do with hiding money. I moved to Canada because I fell in love with a Canadian and got married. Unfortunately, the country that I lived in (USA) would not provide my new husband with a Visa to work in the States. At 22, not making more than $7 an hour as a teacher at a Catholic school, I could not support us. Therefore I moved to his country (Canada). Canada accepted me as the spouse of a Canadian with no limitations to work and to become part of their country. Today I am successful in the education field which is fully funded by the Canadian government. I forgave my home country for letting me leave because I was a 5th generation proud American. Now? I cannot forgive. Finding out via the media that not only is my country "after me" for earning a living in Canada, not in the USA, and that I have passed their "grace period" for leniency is disgusting!!!!!! As this law is surprising to most Americans and Canadians, I cannot believe how this "went down"; no letter, no national announcement, no discussion with Canada, no courtesy - YUCK! My response to anthony (BANONE)'s comment ("If these dual citizens don't want to abide by our laws then revoke their US citizenship. Problem solved.")................. I must follow Canadian laws not US laws unless I am in the USA. I do not live in the USA, have assets in the USA, have never gained income from ANY US citizen and do not live under US laws in Canada. Let the US government keep arrogant, narrow-minded citizens such as yourself. I will no longer defend in ANY conversation the ideals of the US government. Take your citizenship and SHOVE IT.........now that's an American response, isn't it, eh?
The concept of "there is no free lunch" hasn't really sunk in down here in the U.S. yet."
Why don't you tell that to the 50% of the population that pays no income taxes whatsoever? You know the ones who even get money back after paying no taxes? You know the ones who sit around all day in their Section 8 apartments, relaxing and thinkng up more ways to scam the taxpayers so that they can continue to sit around and relax all day while the taxpayers are out there busting their butts to pay for it all? It does appear that there is indeed a free lunch for these people. We workers have to pay for our lunch as well as theirs. And why don't you tell that to all the gov't hacks out there making six figure incomes with incredible benefits while people in the private sector are getting pay cuts and part time jobs with no benefits if they are lucky. It appears that there is a free lunch for the hacks as well. I know, you are just another libnut, existing in this alternate universe called liberalland where truth and facts are whatever you want them to be.
Washington is out of control. And I mean all of the federal government! When are they gonna wake up and realize they are not doing whats best for Americans but whats best for their political careers? Its really up to us to vote them outta office but I can never decide anymore because I don't like any of them. IRS is just a big bully, too large, too complicated, and just a tool for the richest of the top earning 1% who are not interested in bringing jobs back to America from overseas.
Good old America, always sticking its nose into other countries business. Two can play that game.
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