USA Tax Compliance
The USA is the only nation in the world that taxes its citizens on the basis of citizenship, instead of residence. As such, the Law was always on the books as far back as I can recall, that USA citizens must file annual tax reports (even if no tax is owed,) as well as reports of their financial holdings in foreign bank and investment accounts if they exceed $10,000 in their aggregate.
In the summer of 2012, legislation was passed by the U.S. Congress, providing for $10,000 penalties per occurrence for non-compliance, as well as the seizing of up to 50% of a taxpayer's bank account to enforce this law.
To discourage people from renouncing their USA citizenship, instead of bothering with the necessary paperwork, the fee to renounce the citizenship was also increased to $2,725. (It was $450. previously.)
Since up to 90% of Canadian-Americans were estimated to be non-compliant at that time, a procedure was instituted, the so-called "STREAMLINED PROCEDURE" for orderly compliance, at the urging of our Minister of Finance at the time, the late James Flaherty.
With certain exceptions it was decided that if taxpayers file 3 yrs of back taxes and 6 yrs of back financial reports, and answer certain questionnaires, and make certain declarations, then their past ignorance and non-compliance with the Law will be forgiven without any penalties.
The International dragnet to catch American citizens who have failed to file U.S. tax returns keeps tightening. The U.S. has signed sweeping international agreements with 77 nations so far, including such bastions of bank secrecy as Switzerland and the Cayman Islands. As a result, information about foreign bank accounts of American citizens will be handed over automatically to the U.S. tax authorities starting in 2017.
Canada is already FACTA (Foreign Account Tax Compliance Act) compliant. In September 2015, the CRA furnished Canadian banking information on 155,000 U.S. citizens to the IRS. This means that time is running out for non-compliant taxpayers wishing to take advantage of the leniency the IRS offers for voluntary disclosures and the "Streamlined" procedure.
Please feel to contact me to discuss your USA tax compliance needs.
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