Phil Hodgen meets with IRS to solve RRSP problems – Thank you Phil!

Phil’s blog post is a “must read” (The Isaac Brock Society is mentioned). Full of all kinds of great ideas – including teaching how people how to get at “Private Letter Ruling”.  Also, some interesting “non legal advice” thoughts on the FBAR problem. You will find the actual paper that was submitted to the IRS here.  The paper was supported by the New York Society of CPAs.

Phil, thanks again for your help and support!


100 thoughts on “Phil Hodgen meets with IRS to solve RRSP problems – Thank you Phil!

  1. @recalcitrant

    Of course its pathetic. But, it’s about forms, forms and more forms.

    The U.S. has pioneered the development of “Form Crime”.

    Welcome to the United States of America – The World’s Leader in “From Crime”

    As the rest of the world thinks about production and innovation, the U.S. thinks about forms.

  2. [Editor’s note: Roy Berg has kindly offered a correction of this comment, which as can be seen, has created a certain level of panic; this correction includes the following line: “The appreciation in an RRSP IS tax deferred for US purposes until it is withdrawn provided the 8891 is filed on a timely basis”. Please read the following comments with this correction in mind. Petros]

    Those US citizens who reside in Canada should be mindful that, for US purposes, ONLY employer-sponsored RRSPs qualify for a) deduction; and b) tax-deferred growth. Individual RRSPs don’t qualify.

    The treaty analysis goes like this: for US citizens the 2007 Protocol allows: a) a deduction for contributions to an RRSP; and b) deferral of income generated by an RRSP ONLY IF the RRSP is a Qualifying Retirement Plan (Article XVIII(13)). An RRSP is not a Qualifying Retirement Plan if it is an individual plan (Article XVIII(15)(b)).

    Just my $0.02… Query, would the $0.02 be rounded down to $0.00 now that Canada has gotten rid of the penny?

  3. @ Roy Berg: I will avoid killing the messanger this time. Thanks very much for your comment. I have reported my individual RRSP for years, with not a single word from the IRS: 8833 Treaty-Based Return Position disclosure / 8891 (Canadian Registered Retirement Plans). I suggested that others do the same. This is the first time I’ve seen that it is only a employer sponsored plan that is eligible for tax deferment. You may be the only one who knows this. The IRS either doesn’t know that my accounts are not eligible, or they don’t know the rule.

    The more I learn about this crap, the more I hate and detest dual citizenship and am glad that I’ve renounced. It seems impossible to be a US person in Canada unless you are poor.

  4. @RoyBerg

    Have never heard of what you are describing in your comment.

    It is hard to believe that this could be the intent of the treaty. I can’t even invent a public policy reason that could justify this. Perhaps you can help.

    In any case, I agree with Petros – get rid of your U.S. citizenship! There isn’t even enough time to learn about it.

    So, let me ask you this question:

    If Moodys does a U.S. tax return for a dual citizen client who has an RRSP, are you saying that, assuming it is an individual RRSP, that the annual growth of the RRSP is taxable income in the U.S.? Is that the position your firm is taking?

    I would my last dollar (of course I don’t have any – I am one of the “Petros poor”), that the Canadian government would not interpret the treaty in this way.

  5. @RoyBerg, @renounce, @All,

    How can we determine the Canadian Government’s interpretation?

    Will more letter writing do any good? Will this wake up our government representatives from the deafening silence we now have?

    Another kick in the gut for all of us who have filed 8891’s or had them filed on our behalf?

  6. @calgary411

    My sense is this could be an area subject to binding arbitration under the tax treaty between Canada and the US. We’ll have to wait and see how this turns out over the long haul.

  7. @All

    Relax, I believe I am right that the treaty is to be interpreted in the way that it was intended. The suggestion that Canada would enter into a treaty that would protect only Employer sponsered RRSPs undermines the very purpose of having the RRSP at all. Therefore, I am quite confident that individual RRSPs (notwithstanding any language in the treaty will be included). There is already enough stuff to worry about. We don’t need to add this.

    I have an idea. I think that the Isaac Brock Society should list all of the problems that U.S. citizens abroad worry about. We will then designate one individual to be the “Official Worrier For That Problem”.

    Who would like to the official worrier about Individual RRSPs? All of this is just gotten to be too much.

  8. OK, I guess I can be the designated worrier for individual RRSPs. That means I can’t worry about any other aspect anymore? Relaxing is something I’ve not been good at through all this. Thanks renounce and Tim.

  9. @All
    I could be wrong here but I believe that ‘royaberg’ could be referring to the fact that individual plan RRSPs would need what is called a “private letter” ruling. Also, employee sponsored RRSPs qualify for a deduction (as RRSPs do on a Canadian return). Individual plans do not qualify for the deduction on U.S. returns.

  10. @Tiger

    The Hodgen post refers to private letter rulings. If all of this is true, then it is one massive class action lawsuit against the HR Blocks of the world, who have been simply filing the 8891 with any kind of RRSP. As the Hodgen post indicates, you need to pay $2000 fee (plus legal costs) to get the private letter ruling.

    An interpreation of the treaty that excludes individual RRSPs is contrary to the whole purpose of having an RRSP at all.

  11. @tiger- doesn’t a “private letter” ruling require the payment of a fee of 2000.00? To pay the fee would be like paying a cop to write the ticket that he is going to give you.
    It is just regulatory opportunism. An RRSP is the same beast no matter what. Most Canadian workers are covered by employer sponsored retirement plans and certainly the self employed aren’t covered. When you considered that RRSP’s were introduced at a time when there was no Canada Pension Plan it wouldn’t make sense that Canada would allow the Tax Treaty to exclude this retirement plan based solely on who makes the contributions.
    It is all IRS foolishness.

  12. @renounce. Thanks. I love Bette Midler (and her outrageousness — she would definitely be fighting this nonsense) and I love and believe in the power of music! That’s one reason I married a musician late in this life and he does keep me somewhat grounded. I do want the complete joy of music back.

  13. @renounceuscitizenship- all of this just goes to show how archaic the tax treaty structure itself is. The IRS does not have the manpower or the intellectual depth to remain abreast of all the tax changes that occur in the other 195 countries of the world and the other independent tax jurisdictions.
    Territorial taxation is the only just method of taxation.

  14. @renounceuscitizenship and @ recalcitrantexpat
    I agree with the comments above. It is ridiculous. But isn’t all that the IRS requires and is doing, ridiculous. I wasn’t saying ‘this is the way it is and that we should just all meekly obey’ – my comments just reflect what I believe they, THE IRS, in all their stupidity expects and hopes will happen.
    On the weekend, I was speaking to a dual American/Canadian citizen. She came to Canada in 1974 and immediately started to file U.S. returns. She became Canadian in 2000, continues to file both Canadian and American tax returns. Her plans are to continue – says she has never owed anything nor has there ever been any costs involved as she does the returns herself. She is completely unaware about “Private Letter Rulings”, FBARs, FATCA etc. She files everything online and other than a “Thanks so much for your forms”, she has heard nothing. My point is – she is actually ‘getting away’ with her mistakes by not going to a Professional to do her filings.
    BTW. A friend, here in Vancouver, working for a cross border tax attorney said they charge $650 for the Private Letter ruling.

  15. Well, surprise surprise. Just another way to wipe out the middle class and protect the top 1%.

    I for one am sick of this sh*t!

    I have complied, apologized, used up way too many LCUs (life credit units), and have emptied my bank account time and time again to pay for accountants and tax lawyers to get me through this mess.

    Every time i turn around there is another ‘professional’ telling me there ‘take’ of the US tax law and how i will have to ‘belly up’ to the trough to give another pint of blood.

    This RRSP interpretation may seem like a fly in the ointment right now…but wait until it is enforced by the IRS and you they won’t allow you to relinquish or renounce your US citizenship because all of a sudden you are no longer compliant and owe them a bunch of cash due to unrealized RRSP gains. Gains that you will be taxed on by CRA when you start to withdraw….

    This is now my concern as i want to shed this dark cloud as quickly as i possibly can!

    can anyone say double taxation!

  16. It was why my financial adviser recommended that I moved my assets in my personal stakeholders plan into my employer-sponsored pension plan. I understand that the IRS places similar restrictions on personal pension plans though my accountant has tried to invoke the treaty….now it’s a case of waiting out the audit lottery…so won’t be able to relax until at least mid-october 2016 (for my 2012 tax return’s statutes of limitations to have run) which is a long time to be biting my nails!! I hate how the US artificially creates all this unnecessary stress to my life through all the blasted technicalities. My accountant believes I’ll be fine but she has had to take an aggressive position when I am by nature a cautious person…I still fear an aggressive audit, even though I have lived in the UK for almost 24 years. I resent this intrusion in my life.

  17. @ all

    Canada and the US’s interpretation of the treaty is found in the Technical Explanation.

    Please look at the Technical Explanation [2007 Protocol] at page 37 (link below). While the TE is the US Treasury’s formal interpretation of the treaty provisions, the Minister endorced the Technical Explanation on July 10, 2008 (link below).

    Nothing is simple or straightforward when dealing with cross-border issues.

  18. @Mach73 and all

    In this case, we have the benefit of the Canada U.S. tax treaty which is intended to allow for the non-taxation of RRSPs. (The treaty also protects us from IRS “FBAR Fundraising Activites.) Because it is a treaty issue, the IRS (assuming they have even thought about this, which they obviously haven’t), could (as Tim points out) find this issue subject to arbitration. Trust me, they are not going to want this.

    At the moment it appears that it only the Isaac Brock Society that is making this an issue. Even if there were a reason to worry about this, I don’t know how to worry. The cross border professionals don’t know how to worry about this.

    Furthermore, Calgary411 has agreed to worry about this issue on behalf of all U.S. persons abroad. Mach73, what issue would you like to worry about?

    This whole think has gotten so preposterous that I am just starting to find it funny.

    Mach73 – a song to brighten up your day:

  19. @Monalisa,

    I am assuming you live in the UK?

    Having said this…and correct me if i am wrong…..but your accountant probably made that decision based on the UK/US tax treaty (or lack there of).

    I think there is more language in the Canada/US treaty based relationship than anywhere else in the world. (?)

  20. @ All –

    The interpretation of the treaty can be found in the Technical Explanation [2007 Protocol] (see first link below). You can find the issue addressed on page 37 (it’s a 67 page document).

    Admittedly, the TE is the US Treasury’s handiwork, however the Minister endorsed the TE on July 10, 2008 (see second link below).

    Nothing is easy or straightforward in the cross-border world.

  21. The ‘private letter’ would only be required if the return had not been filed in a timely manner. Unfortunately, that is too often the case, as many ‘U.S. persons’ are only now realizing they should have been filing U.S. tax returns.

  22. @Tim

    You did a post in the last week or so, describing a mechanism to get help with double taxation/treaty based issues.

    You point out in relation to the 2007 tax treaty that:

    “The other key thing to note since 2007 is the US and Canada have a binding arbitration mechanism in their tax treaty. (Historically the US hasn’t liked binding arbitration and Canada is the only country the US has such a mechanism with).”

    You note in the following comment that:

    “From CRA PDF

    One of the significant benefits to taxpayers in the Fifth Protocol is the introduction of mandatory arbitration for residents of Canada or the United States who face potential double taxation that is not resolved by negotiation between the Canadian and United States competent authorities. For certain issues that the two competent authorities cannot resolve, taxpayers can compel them to refer their dispute to binding arbitration. This procedure is entirely elective for the taxpayer: the new rule is described as “mandatory arbitration” because it is mandatory for the competent authorities. The competent authorities for Canada and United States developed procedures and administrative practices for the implementation of mandatory arbitration.”

    Is this a way to address this problem?

  23. @Mach, yes, I’m in the UK. Our stakeholders and group stakeholders pension plans are similar to RRSPs. From what I understand, the treaty only officially recognizes employer-sponsored pension plans, though it’s a grey area.

  24. @renounceuscitizenship
    I don’t want to be left out of the ‘worry’ group. My kids and friends tell me if I don’t have something to worry about then I will make up something to worry about. So to all, just pass them along, I will worry for you.
    In actual fact, Isaac Brock Society has done so much to alleviate so many of the worries I have had since first learning about this whole situation. I am so grateful that I found all of you. And my kids and friends also thank you.

  25. Which brings another question — how would the IRS view moving assets from a personal stakeholders plan into an employer-sponsored pension plan. And, how would one even do that?

    It’s like a bloody maze — and someday many of us will get to the end of it. The reward, for me at the end of the maze, is renunciation.

  26. According to Phil Hodgen this site has already turned up on some radar screens down in DC. I have had that feeling for a long time because I have access to the site logs and the US always comes up second in terms of hits after Canada.

  27. @royaberg, that used-to-be copper coin has always been called a “one cent piece” in Canada (at least officially), never a penny (that’s way too American).
    Phil: “My feeling is that there is an informal, unspoken policy at the IRS to not pursue ordinary people filing late FBARs. They dare not say this out loud. And even if this is not the case at IRS World HQ, I sense that most of the Revenue Agents have no stomach for amputating huge chunks of a regular person’s retirement savings.”
    Yes it’s called the Internal Revenue Manual and if you read Nina Olsen’s 2011 report to congress you will see that she condemned the IRS for implying in OVDI’s Q & A that it was no longer available as a way of resolving penalty issues. That is exactly how my husband and I got duped!

  28. @monalisa

    The problem in a nutshell is that the US/UK tax treaty was last revised in 2001, but UK pension legislation was massively overhauled in 2006. And like so much else that they don’t do, the IRS has never offered any form of clarification on the changes.

    As a result, much of what folk have as pension savings now in the UK was never envisaged by the tax treaty. That leaves professionals of all calibre simply fumbling around in the dark, trying to hammer the square peg of current pensions into the round hole of US tax treaties. If any do luck into the right formula, it’ll be mostly serendipity.

    Clearly the IRS has absolutely no clue whatsoever about how to treat UK stakeholder and SIPP plans, and on its track record is completely unlikely to ever develop one. So… it’s entirely reasonable to take the liberal interpretation of the treaty (and one that obviously follows the intent, no matter the actual language) and see if they challenge it. Dollars to doughnuts they won’t. Can’t.

    This entire “compliance” jihad from the IRS is a massive waste of manpower across the board. Even if they do get the “compliance” they’re after, it will be compliance defined as receiving a massive bunch of paperwork each and every year, all with a big fat zero stuck at the bottom of it. Lot’s of work, no gain whatsoever. The only people to gain from this are accountants and lawyers. It must be like all their christmases and birthdays came at once for some of them.

  29. @all- I remain convinced that the Tax Treaty structure was not designed to apply to people who have taken up permanent residence in another country.
    In my reading of the treaty the focus is on itinerant workers who have maintained ties with the U.S.
    The misapplication of the Treaty to others is a grave error and may be purely a historical accident arising from false assumptions.

  30. @royaberg, if my accountant had strictly followed the rules, she would have had to file both a 3520 and 3520a which would have cost me around $5,000 in professional fees on top of her already expensive accounting fees… and as I was at most paying in around $4,000 per year into the plan, this would have been exorbitant. The UK encourages these sorts of personal pension plans for part-time and even unemployed workers as a means of building up a safe income for old age…my spouse had actually been the one who had so kindly been paying into it for me because I have Asperger’s so have never found it easy to work full-time. He was simply trying to protect me and from his fully UK-sourced earnings.

    I have been most fortunate to be able to transfer the modest holdings into my employer’s pension scheme which only became available to me late last year. And because I only work part-time, the most I will be able to pay into it is 10% of my gross wages which would be about $2,500 tops (5% from me, 5% from employer)…

    I simply cannot afford to be paying what the accountant would be charging for the ‘foreign Grantley trust’ forms. I just hope things will go smoothley and that I won’t have to go through all the hassle and expence of a private ruling.

  31. @all

    I think its pretty obvious that U.S. persons are owned “lock, stock and barrel by the IRS”. You have no chance of every being truly tax compliant, because there is always one more form or provision. As I have slowly come to this conclusion, I have also come to the conclusion that all U.S. persons (because they can’t know all the laws) are criminals. That is the inevitable and necessary consequence of being a U.S. citizen. It explains why the U.S. has such a high rate of incarceration. The U.S. is a nation of so many laws that one is always in violation of something.

    I used to say have to choose between being a U.S. citizen and having a life.

    Now, I will add that you have to choose between being a U.S. citizen and not being a criminal.

    Hell, even the U.S. Treasury Secretary is a tax cheat.

    If you don’t want to be a criminal, then renounce.

  32. @renounceuscitizenship
    I am more than willing to take on any and all problems associated with the stupidity of citizenship based taxation. My only request is that I get a ‘free pass’ to not worry for one month each year.

  33. @ renounce
    I renounced; I am still a criminal.
    That’s why I invoke the Fifth Amendment in my filings, because I’ve committed crimes.

  34. [Editor’s note: this comment has been edited to remove defamatory content, and besides the commenter has written a retraction]

    Royaaberg [edited] specifically stated today on this thread

    ” Those US citizens who reside in Canada should be mindful that, for US purposes, ONLY employer-sponsored RRSPs qualify for a) deduction; and b) tax-deferred growth. Individual RRSPs don’t qualify.”

    Part b) [edited] The earnings and growth of a Canadian RSP, individual or not, can be deferred until they are withdrawn. An election has to be made ‘in a timely manner’


    United States – Canada Income Tax Convention, provides that a beneficiary of a Canadian Registered Retirement Savings Plan (RRSP) may elect, under rules established by the competent authority of the United States, to defer U.S. income taxation with respect to income accrued in the plan but not distributed, until such time as a distribution is made from such plan, or any plan substituted therefor. Deferral is only available for income that is reasonably attributable to contributions made to the plan by the beneficiary while the beneficiary was a resident of Canada. The technical explanation to the Convention states that the purpose of this provision is to avoid a mismatch of U.S. taxable income and foreign tax credits attributable to the Canadian tax on such distributions.

    and from the IRS instructions

    “Form 8891 also can be used to make an election pursuant
    to Article XVIII(7) of the U.S.-Canada income tax treaty to
    defer U.S. income tax on income earned by an RRSP or an
    RRIF that has been accrued, but not distributed. Taxpayers
    who have not previously made the election can make it on
    this form by checking the box on line 6c. “

  35. I apologize for the post I made . It was made in the heat of the moment. I would have edited out any criticism of Mr. Berg if I could. I do not wish to impugn or malign him in any way. I’m sure these things are open to various interpretations. I’m going to take a holiday from all of this.

  36. @Chester12, Don’t worry about it, everybody gets caught up in the moment. I think all of us are very sensitive these days.. It is a very hard time to cope..I would love to just enjoy the summer and forget about all this aggravation..

  37. @ Chester12 – this isn’t your first pesonal rant directed at me. If you’re a CA, i’m sure you are familiar with Rule 201 of the Rules of Professional Conduct.

  38. The way I see it, I won’t feel truly safe till I get through my statutes of limitations which could be as late as 2016-19, depending on the issue.

    I have considered renouncing in order to simplify my life but fear it might make me more of a target. Seems only safe to consider in either a completely straightforward situation or if said person never planned to cross US border again.

    And as I still have my parents to visit plus could be looking at a significant inheritance, felt it would be foolhardy not to have become fully compliant with IRS. Hopefully my amended returns and delinquent FBARS will be treated mercifully but it’s still only just over six months since the SOLs will have started running for 2010, for instance. returns will pass through

  39. SORRY, WAS HARD TO EDIT… I’VE SAID THIS BEFORE BUT FEAR THAT RENOUNCING COULD BE REGARDED BY THE US govt as a treasonable act and could thus result in a higher risk of IRS harrassment. I would feel safer waiting out my SOL’s and hopefully by then there will have been major tax reform, perhaps even to residence-based taxation.

  40. If there’s one thing I’ve learned about the US it’s that they love to take sharp turns. If the Republicans win this November, we could be in for a completely different and greatly improved set of circumstances with regard to US taxation.

    Before everybody starts talking about how nuts that is, let me remind you that what is currently happening is also nuts and nobody could have foreseen that either.

  41. SO DO I! BUT I instinctively fear that renouncing shortly after a huge disclosure could make me even more of a target. On the other hand, I would like to think that ad I’m obviously not a whale, nor with significant assets in the USA, that the IRS will honour my sincere efforts to correct my past commissions and be merciful with my good faith disclosures and genuine efforts to become fully compliant and a ‘faithful tax citizen’.

  42. SO DO I! BUT I instinctively fear that renouncing shortly after a huge disclosure could make me even more of a target. On the other hand, I would like to think that ad I’m obviously not a whale, nor with significant assets in the USA, that the IRS will honour my sincere efforts to correct my past
    ommissions and be merciful with my good faith disclosures and genuine efforts to become fully compliant and a ‘faithful tax citizen’.

  43. @ Roy Berg, The instructions for Form 8891 ( ) :

    Form 8891 is used by U.S. citizens or residents (a) to report contributions to Canadian registered retirement savings plans (RRSPs) and registered retirement income funds (RRIFs), (b) to report undistributed earnings in RRSPs and RRIFs, and (c) to report distributions received from RRSPs and RRIFs. See Notice 2003-75, which is available at

    Form 8891 must be completed and attached to Form 1040 by any U.S. citizen or resident who is a beneficiary of an RRSP or RRIF. A U.S. citizen or resident who is an annuitant of an RRSP or RRIF must file the form for any year in which he or she receives a distribution from the RRSP or RRIF.

    So in other words, the distinction between employer RRSP and individual RRSP that you make is not made in the instructions for Form 8891. It seems to me that if the IRS was ritually making such a distinction, the instructions would make it clear between which kinds of RRSPs are allowable and which are not.

  44. @monalisa1776
    renouncing is not a treasonous act, treason has a limited legal definition. when I renounced, I was still considered an officer of the US subject to recall to active duty. The strongest language in DOS and DOD documents is ¨expatriation is inconsistent wtih my oath of office¨

  45. @rivka88,

    Thanks for your info for monalisa.

    monalisa, please refer to renounce’s advice to us all above — to relax and not worry about the whole big picture as it will drive us all crazy(ier). Take care.

  46. mona – I don’t think there’s anything wrong with wanting to keep ties to the US, even though you may not actually live there.

    For the past few weeks, I’ve been asking myself the following two questions:
    1- What if I needed to go back to live and work?
    2- What would I do there!?

    At least for #2, I haven’t found an answer yet. My wife has a friend who is married to an American. They went to the US for a few years and then came back to Brazil. I guess they didn’t like it there.

    I still have some time because I’m not going to renounce until my Brazilian citizenship papers move forward.

    But like recalicantexpat said, you are very brave to trust Washington. I have yet to see them act “reasonably” and sensibly with expats. I have just seen the screws get tightened and baseless rhetoric get turned up, with the help of the media. If the US were reasonable, like every other country on the planet, except Eritrea, renunciation for me would be out-of-the-question. It’s a shame they aren’t like all the other countries.

    Like someone else said, I think renounceuscitizenship, the US really seems to live in an alternate reality.

  47. @Rivka, Calgary, and Geeez, I appreciate your empathy very much. It’s true that I’m driving myself to despair with worry: not just about the IRS, but about what my accountant’s going to be charging me. They know they can charge more or less as they please as they realise they have me over a barrel.

    I almost resent the industry of professionals whom I’m artificially dependent on to do the complex PFIC calculations more than the IRS, itself. They know I have little bartering power at least for the 2011 tax return…but I have to keep reminding myself how they spared me from the OVDI fertiliser factory, etc.

  48. @monalisa1776- if not for the IRS you wouldn’t need the professionals. So the IRS and Congress are the one’s who should receive your full wrath. The professionals would not have your money if it wasn’t for them.

  49. @Petros

    Great minds must think alike.

    Thanks for that clarity on the 8891 instructions. I received the exact same response from my Accountant regarding this matter.

    To quote his words. “if it ain’t on the page it ain’t on the stage”

    I think it is safe to say that a citizen (i will use Canadian as an example) would have good backing if he or she was to refer to the 8891 instructions whilst the IRS tried to make a claim for distinction between ‘individual’ and ’employer sponsored’ plans.

    This process is much like flying….hours of boredom injected with moments of shear terror.

  50. I can’t remember of this has been posted on IsaacBrockSociety. I apologize if it already has.
    I found this link that says that the FBAR/FATCA Task Force of the American Democrats Abroad has been asked to participate in an IRS hearing being held on May 15 in Washington DC in relation to FBAR and FATCA issues, amd is asking for our stories. They have a link to a survey to take.

    Please fill it in if you get the chance!

  51. @Em
    Good find. Elizabeth May is most interested in the problems of American born – Canadians, as she herself is one. Of all the politicians and bueracrats that I wrote regarding FATCA and the U.S. tax issues, her response was definitely the most thoughtful response. She even added a personal note in her own handwriting to the letter.

  52. @ tiger
    I’ve always had a good response from Elizabeth May on whatever issue I’m concerned with at the moment. I never get anything back from Harper though and so far nothing back from Flaherty re: FATCA either.

  53. @monalisa and All,

    I guess I feel much differently from Mona in the professionals I have helping me. I am paying dearly, but I have to feel confidence in what they are doing for me and my son (and, by extension, other families). Worry not — I feel very sorry for myself that this is happening to me; I resent having to use my retirement savings for getting out from under my “supposed” USA citizenship. This is the fight of my life and the life of my son so we can go forward without this burden.

    I absolutely could not do this by myself!!!! I don’t have the background, the education, the intestinal fortitude to fight this by myself. I need the help of professionals — ones that my gut tells me I can trust. (I have let go one US tax attorney from New York who was doing absolutely nothing for me.) I see and feel the difference in the professionals I now have helping me. I am glad for the long education they undertook, their years of practice and the expertise they now have. I also like the fact that both are down to earth and I can talk to them, which is something important to me.

    I know that the former CA who did my Canadian and US taxes will no longer do US taxes — she says it just isn’t worth the time and what she would have to charge her clients, especially with the new 8938. I think finding a professional that can truly help end this horror is difficult. I am fortunate to be in Calgary — I don’t know where some have to go to find help. Yes, professionals are expensive and they come in varying degrees of expertise and reliability. I believe they do have professional standards they must meet. If cost was my only criteria, and I know it is for so many which I am truly up in arms about, I would go to H&R Block — except that they did my daughter’s US taxes when she came back to Canada to live and the US sent her a notice to appear in Tax Court and gave her an outrageous fine. H&R Block did nothing to help remedy THEIR mistake — she had to solve it herself with the IRS and she did, so I’m proud of her.

    That’s why I have to do what I do. For others, the choice will be different. So, because I am not savvy enough to figure this out for myself, this is the only way I can get through it all without becoming a raving maniac. Some of you are much stronger; most of you are more educated; none have more passion than I have for everyone of us getting through this nightmare.

    I isolate myself from friends because I don’t want to subject them to me — I don’t like listening to myself / I don’t want to lose friends over this. I thank all that is holy that my husband and I are still together. He has put up with a lot and supports what I choose to do (although he might choose a different path).

    I’m thankful for the help of the professionals I’ve chosen. I’m thankful for the Isaac Brock site. I am thankful for the support of all of you — and your own varying ways of dealing with this. It helps to look at other points of view.

    May our government representatives represent us properly. May the US come to its senses regarding the folly of citizenship taxation. May we all have better days ahead.

  54. @calgary 411. Yes, it truly is nice to have support here. Not only do you have to worry about the outcome as it effects you, you are responsible for a child who will need an advocate for the rest of his life as he can’t renounce. I can only imagine your worry. Have hope that sanity may once again restored in our lives!

  55. @ calgary 411
    You are situated among the brighter bulbs at IBS and the words of support you generously pour on others who are wandering in the desert of stress the IRS has created are cherished. Thank you. And as for that last paragraph — AMEN!

  56. “except that they did my daughter’s US taxes when she came back to Canada to live and the US sent her a notice to appear in Tax Court and gave her an outrageous fine. H&R Block did nothing to help remedy THEIR mistake — she had to solve it herself with the IRS and she did, so I’m proud of her. ”

    See.. this is incredible! This is why I don’t file! I know it is my civic responsiblity to file. I *want* to file, but I’m scared that if I actually DO send them some paperwork, this is going to happen to me. I don’t have the money to travel several times to the US and back to the whims of an IRS agent.

    I have YET to find a Brazilian that DOESN’T say “WTF is that!” when I describe the US tax machine. I told yet another person tonight. The issue came up because I told him that he had to tell me when I say a word that has an accent. I want ZERO traces of the US.

    Taxes here are bad (very high), but the “trickery” that that the US Congress / IRS / Geitner / Schulman are much worse.

  57. Since renouncing I have talked with 10 different IRS reps and they have never flinched when I explained that I gave up my US citizenship. Recently when I called I was told that my Social Security Number was no longer valid which I hope means my Certificate of Loss of Nationality is on its way. I have started the plans for my fabulous Canada Day party!

  58. @em- I don’t think that I would expect to hear anything back from the Finance Minister. He has pretty well said all that he can say publicly for now. There can be little doubt that Canada and the U.S. are engaged in some very heated discussions at the moment and for the Minister to say anything before the conclusion of these talks would probably jeapordize any progress that has been made so far.
    Those are just my thoughts on the matter.

  59. @Em, You are so right about Calgary411 she is one of the Brightest Bulbs on IBS. She is a real sweetheart!!

  60. @recalcitrant,

    That can be our hope — it’s the only way I can rationalize the silence.

  61. A lot of us will be with you in spirit at your Canada Day party, Peg. You’ve earned that Canada Day party!!! I feel in your words the joy in moving on in your life. Congratulations!

  62. My hunch is that the US is working on a deal with Canada, one that would allow the US to save face and stop the renunciations. I think the delay in issuing CLNs for Canada may be in the hope that they can get some who have already renounced to change their minds before the CLN is handed out.

  63. @truenorth- they would have to offering some serious coin as compensation, a public apology and an exemption from any future filing requirements to get even a fraction of us to change our minds.
    There is no way that I want to play the battered spouse role.

  64. My sense is the only chance for citizenship-based taxation to be repealed is if the number of expatriations reaches a level of political embarrassment.

    I agree the delay tactics are meant to frustrate renunciants with hopes people might change their minds.

    As for a special deal in the offing for Canadian Americans, I wouldn’t hold my breath.

  65. @Truenorth

    Once you have renounced that’s it. The CLN is not a necessary condition for the renunciation of citizenship.

    I don’t think the U.S. cares about renunciations. As far as I can tell, the U.S. government and the homelanders can’t imagine people renouncing unless they are tax cheats. Furthermore, they are simply not capable of understanding anything else.

    It’s as though the U.S. is living in some kind of time warp – a time when the U.S. had a moral authority that they sorely lack now.

    I think that there may be a deal for the banks, but not for the people. The reality is that U.S. citizens who are Canadian residents are a long term danger to the sovereignty of Canada. So, the Canadian government should really be cutting some kind of deal to get U.S. citizens out of Canada (a cost free mass renunciation or something like that).

    In 1783, the end of the American Revolution forced a mass exodus of Loyalists. This is the second mass exodus from the U.S. Petros is one of the more prominent examples.

  66. @True North, I don’t know what to think about that possibility. What would Canada be asked to give up? To agree to a form of FATCA? Will it meant giving in to the super improved FBAR successor – the super evil FATCA? The existing tax treaty has proved to be of only limited use as protection – witness the decades long problems with RRSPs. Will duals be protected, and all others sacrificed?

    If both countries have known about the problems with RRSPs for so long, and have known that TFSAs, RESPs, RDSPs, and the newly touted PRPPs, etc., along with the axe of FBARs, and all the other forms (like 3520s, and others I probably still don’t know about) all with fines over 10,000. – and they have existed for so long as traps for us ; what will be gained, and what will be lost in any deal? I find it incredible that all the Canadian lawyers and government officials who read and signed off on those tax treaties did not see how they could and would lead to the scale of grief and ruin we are now facing. They had to have at least some idea of how many duals by birth and by inheritance lived in Canada. Or maybe they just thought the US wouldn’t actually go insane and start ruining the lives of so many actually permanently inside Canada on the current scale of magnitude.

    Will any deal only help those born with dual citizenship? Or those who were duals ‘during the period when the liabilities and penalties arose’? It sounded from Phil Hodgen’s very helpful posts, that changing even the problems some of those US officials acknowledged re RRSPs was not going to be quick or sufficient due to the layers upon layers of liabilities – although a potentially positive step in the right direction. If the US will threaten and punish those outside the US as they have – without remorse or just cause, then I don’t believe they will offer much. They want money however they can get it – if not in direct taxes, then penalties ‘in lieu of’ – and they’ve certainly worked very very hard to make certain that it would take a lot of help from expensive professionals, and a miracle to walk unscathed between all the mines they’ve set up for us. I can’t believe that is not deliberate. I believe that we are just cash cows for them – no matter how small we are – and I believe that they chose to pursue those they thought would have the least recourse or voice, and to make it hard to comply, because compliance wouldn’t bring in enough money.

    Canada cannot afford to give in. If so many lose so much, and our savings go to either professional fees, or to the IRS, we’ll be relying on whatever Canadian government safety net remains. Canada will pay double – once because our savings will be lost to Canada’s economy, and again, because we’ll have nothing left for living on – and it is not just individuals here and there – we all have families who depend on our savings too. If FATCA is implemented, that drain on Canada’s economy – through the claims on us and our children will be permanent. Basically, FATCA is really about the US trying to get around existing tax treaties by another door, to try and get at our assets via another route.

  67. @All, I just read that Globe story, and after reading Phil Hodgen’s post about the RRSPs, I think Canada would be insane to make any FATCA deal. If they couldn’t work out a way over decades, to make RRSPs exempted from US taxation and penalties for those of us INSIDE CANADA, then we haven’t a hope in hell of surviving FATCA. There isn’t a shred of logic or ethics in treating RRSPs the way they have – unless it is just to grab anything the US can. And the newly proposed PRPPs are going to be treated as trusts – just like every other modest Canadian registered savings option – so are poisoned for millions of us.

  68. @badger, your well thought-out analysis makes a lot of sense. Thanks for laying it out so clearly.

  69. Key comments:

    The framework that the U.S. has developed with certain European countries appears to demonstrate an interest in greater joint government collaboration to address [Canadian] concerns,” Finance Department spokesman Jack Aubry said.

    Finance officials are now working with U.S. officials to “minimize the red-tape burden, minimize conflicts with privacy and other laws, and improve collaboration between governments,” Mr. Aubry added.

    The U.S. Foreign Account Tax Compliance Act, or FATCA, has provoked a storm of protest in Canada, home to roughly one million Americans.

  70. The day the Government of Canada capitulates to the U.S. on FATCA is the day we must be prepared to hit the streets in mass protest. I mean it – this game will then move to a whole new level and we, as leaders in this movement, must assume that duty. We must NEVER allow our government and our banking system to kowtow to the U.S. in the pathetic way the big five in Europe have. F**k “realpolitik” and the supposed importance of the U.S. dollar as a reference currency – no one in the world needs that overprinted trash anymore and it will be worthless soon enough anyway. We DO have a choice, goddamit, and we better make sure no one ever forgets it.

    There will be a firestorm in Parliament when this begins to go down and we must do everything we can as citizens of this country to keep our government from caving in. When the day comes, the Conservatives will conclude that they are safe behind their precious majority. Our job will be to prove them wrong. We still have the best Charter of Rights and Freedoms in the world and it will soon be put to the test again in a contest whose outcome may determine our very survival as a sovereign nation. We must not fail.

  71. omg –

    If there’s one thing I’ve learned about the US it’s that they love to take sharp turns.

    But if you look at the history, the details over the longer haul, the sharp turns all seem to spiral in the same direction! So, that’s a kiddie going ever dizzier. I see no reason to expect significant reversal in this demonstrated long-term trend. This latest news of “negotiations” can only amount to the US perhaps trying to save some face and to befuddle the masses who really have not caught on yet.

    I lay my wager on a one-time clean-up opportunity for extraterritorials who already have clear severance from the United States, in particular a second citizenship, plus institution of even more hurdles for current US residents who might attempt to exit the the land of the fee and the home of the slaves.

  72. I don’t wish to put too fine a point this, however, I’m afraid my post yesterday has caused some confusion. Therefore to clarify: a) the official interpretation of Canada and the US on the treaty protocol is found in the Diplomatic Notes. The Technical Interpretation is, as I said yesterday, US Treasury’s interpretation of the Treaty, the Protocol, and the Diplomatic Notes. b) The appreciation in an RRSP IS tax deferred for US purposes until it is withdrawn provided the 8891 is filed on a timely basis. Article XVIII(7) is the support for this. I had meant to make this distinction in my post yesterday but in my haste neglected to clarify.

    What is most important for US citizens who have RRSPs, however, is not the tax-free appreciation but the deduction for contributions made to RRSPs. Article XVIII(13), (14), and the accompanying Diplomatic Notes and Technical Interpretation make it clear that you can deduct RRSP contributions only if the RRSP is part of a group plan.

    I apologize for the confusion

  73. @usxcanada

    I agree with your second point – the U.S. will make it harder to leave/renounce. Canada on behalf of its citizens (who were born in the U.S.) needs to negotiate not only a compliance opportunity, but an opportunity to use that compliance opportunity to renounce easily and inexpensively.

  74. Pingback: Some thoughts for immigrants caught in the IRS Jihad – This is for you! | The Isaac Brock Society

  75. A link re RRSPs and other related retirement savings vehicles – a recommendation to the IRS to treat them fairly – NY State CPA group notes that they see many clients who do not understand that the way the US treats these plans is onerous and underscores that the clients cannot access the plans prematurely, and are not using them to evade US taxes.
    ‘Accountants Urge IRS To Simplify Foreign Pension Reporting
    by Leroy Baker,, New York
    23 May 2012’

    “The New York State Society of Certified Public Accountants (NYSSCPA) is calling on the US Internal Revenue Service (IRS) to provide a simplified method of electing deferral of US taxation on Canadian pension plans, and is requesting additional guidance on the taxation of foreign retirement and pension plans due to consumer confusion over the filing procedures required by such programs.

    As noted in a comment letter sent to the IRS on May 3, the NYSSCPA says that the IRS must consider mechanisms and policies for addressing potential inequities associated with foreign retirement plans.”……..

    ….” The NYSSCPA also wants the IRS to address how to more equitably treat retirement savings plans from countries that do not have tax treaties similar to the US – Canada agreement”……………

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