IRS trying to fuck Canada and the rest of the world

[The Duchess of Zeon]

That's actually not true. You can deduct foreign taxes from your own taxes, but if you would have owed more in the US (which is unlikely if you are living in any other industrial nation, but potentially might be true in a third world country with very low tax rates), you still have to pay the difference.

[Straha]

I've heard different from a number of tax attorneys. I'll gladly defer to any hard evidence on the subject that doesn't come from the OP article, however.

[Enigma]

Never have truer words been spoken, but with exactly the opposite intent.

That said I'm not sure that this is a real issue. Firstly, there is a massive question of enforcement which will be a de facto impossibility. Secondly, I am reasonably certain the article confuses the question of who the IRS regulates with what the IRS taxes. Due to how Social Security, Medicare, and other government programs are structured the IRS keeps tabs on all U.S. citizens, but only levels payment on earnings made inside the U.S. or to U.S. residents. Which is the exact same thing that every other country does, though through different governmental organs. All this law represents is the United States trying to update its laws and give some sort of teeth to its tax enforcement division to find tax dodgers according to its own peculiar system.

There do seem to be bigger questions here, before going on though I'd like to see a less ranty/hysterical article.

It is more than going after tax dodgers. With FACTA, the IRS wants to go after every American regardless whether they've put a step in the U.S. or not. Living and working in Canada but your parents are American (no matter if they're in Canada or the U.S.)? Then the IRS wants you to pay them. This is beyond going after tax dodgers.

In my case, I'm Canadian and I'm (apparently) qualified to take the U.S. citizenship test. What if five years down the road my wife and I decide to move back to Canada and stay there for the rest of our lives. The IRS will still expect me to pay them income taxes (if applicable) for as long as I make money. If I end up having kids in Canada and they decide to stay in Canada, well tough, the IRS will want them to pay U.S. income taxes too.

This is a load of bull.

[Phantasee]

As for the 30% penalty, well the US needs Canada's resources and trade, more than Canada needs the US. A few slowdowns in oil and natural exports while conducting economic and environmental reviews, maybe hike the cost of electricity sold to offset the penalty while the Canadian Government analyzes the economic impact of this law would be nice way to hit the US government between the eyes with a clue bat.

Dammit what Canada needs is another Trudeau or Jack Layton rather than Harper. Right now the US economy does not need the firestorm this could create, but the US government sure as hell needs a firestorm.

The US doesn't need us more than we need them. The economic engine of this country, Alberta, is fucked if anything happens to the flow of oil, bitumen, and gas. As it is we're being fucked hard by the lack of other markets to export to. We need Keystone to get close to Brent prices, we're getting less than fucking WTI at this point. Either that, or Clark in BC needs to shut the fuck up and let us build Northern Gateway to sell to the Chinese and Indians for near Brent prices.

[The Duchess of Zeon]

Hey Straha, how about the IRS website:

http://www.irs.gov/Individuals/Internat ... ens-Abroad

"Your worldwide income is subject to U.S. income tax, regardless of where you reside."

Heck, they even force you to convert it into USD based on the yearly average exchange rate, too.

[phongn]

The formal document is Publication 54. There are substantial exclusions, deductions and credits that can apply. Publication 514 goes into the foreign tax credit (which is different from the foreign earned income credit).

[Malivotti]

As for the 30% penalty, well the US needs Canada's resources and trade, more than Canada needs the US. A few slowdowns in oil and natural exports while conducting economic and environmental reviews, maybe hike the cost of electricity sold to offset the penalty while the Canadian Government analyzes the economic impact of this law would be nice way to hit the US government between the eyes with a clue bat.

Dammit what Canada needs is another Trudeau or Jack Layton rather than Harper. Right now the US economy does not need the firestorm this could create, but the US government sure as hell needs a firestorm.

The US doesn't need us more than we need them. The economic engine of this country, Alberta, is fucked if anything happens to the flow of oil, bitumen, and gas. As it is we're being fucked hard by the lack of other markets to export to. We need Keystone to get close to Brent prices, we're getting less than fucking WTI at this point. Either that, or Clark in BC needs to shut the fuck up and let us build Northern Gateway to sell to the Chinese and Indians for near Brent prices.

Totally agree, too much of Canada's resources go south, when they could go east and west. Considering Canada's good relations with Europe and other countries in Asia and we should be exploring those areas to sell our resource to if for no other reason than to point out that it's a sellers market to Washington.

On an aside please build the damm pipeline, doesn't have to be the Enbridge line just something to make easier to move oil from Alberta to somewhere else than the US. I'd enjoy that, might help revitalize shipbuilding in Canada and other industries in Canada.

[Aaron MkII]

We are. Harper has been inking deals with China for a free trade agreement, India as well.

Though there are some pretty dodgy rumours flying around about the China deal.

[Losonti Tokash]

Great, keep Keystone XL out, thanks in advance.

[Irbis]

You know, while A) USA needs to get fucking clue how to make working tax system, and B) rest of the world needs to get a clue about not bending down for USA; I wouldn't mind if EU and NAFTA working in tandem finally applied pressure on all the 'tax havens' to shut the fuck up these damned things. Going for your closest ally when an island 100 kilometres off American shore has more profitable "companies" than the rest of the world combined makes me lose faith global economy will ever return to 20th century standards

[Fingolfin_Noldor]

You know, while A) USA needs to get fucking clue how to make working tax system, and B) rest of the world needs to get a clue about not bending down for USA; I wouldn't mind if EU and NAFTA working in tandem finally applied pressure on all the 'tax havens' to shut the fuck up these damned things. Going for your closest ally when an island 100 kilometres off American shore has more profitable "companies" than the rest of the world combined makes me lose faith global economy will ever return to 20th century standards

What are you talking about? Just a year or so ago, the Europeans were busy buying off whistleblower data on Swiss accounts. Everyone is pretty much doing the same thing. Swiss bank secrecy is practically in the past.

This thread is funny. If you wanted to do the huffing and puffing, you should done it years ago when the US started making all these moves. Canada just so happens to be the next on the list.

[Irbis]

What are you talking about? Just a year or so ago, the Europeans were busy buying off whistleblower data on Swiss accounts. Everyone is pretty much doing the same thing. Swiss bank secrecy is practically in the past.

Swiss? You mean, on a tiny handful found on stolen list?

That would work if A) tens/hundreds of thousands not found on the list were also targeted, B) EU went for other countries, not only Swiss (Malta, Cyprus, Liechtenstein, Monaco among others in Europe alone), C) if fucking Double Irish/Dutch tax tactics didn't make it all meaningless anyway. Here, read how Cayman Islands or Bermuda somehow siphon profits from all of EU, and how thanks to that eBay France pays less taxes than local pizza network.

[Dartzap]

Private eye has been covering the dodgy tax havens for the last decade or more. Vodafone in particular are the UK's biggest bunch of tax dodgers.

[Solauren]

I hate to burst the Globe and Mail's bubble, BUT.....

The IRS has Zero ability to actually enforce shit outside of the United State's borders. Just the the Canada Revenue Agency has no authority to enforce anything outside of Canada's Borders.

Between the United States and Canada, there is a treaty specifically related to tax collections. If the United States wants to try to enforce a Garnishee or similiar legal demand in Canada, they have to do it via treaty. The same if Canada want's to do the same in the United States.

There are very specific parameters as to what the IRS/CRA will enforce for each other. Age, Nature and Size of Debt all factors.

For example, Non-Filer Debts are rarely, (if ever) enforced. If the debtor in question does not have a tax debt in the foreign country, the likelyhood of enforcement is low, and debts over 6 years old (unless they've been active in the court system or enforcement) are usually ignored as well.

[SomeDude]

Solauren, of course the IRS can enforce this. They can penalize banks for not complying. If someone wants to have any U.S. securities, the foreign bank is legally obligated to hold them in a U.S. bank. As such, the U.S. bank is in a position where it can (and does) withhold taxes from any transactions (be they trades, dividend payments or interest payments). This already happens to U.S. persons: foreign banks are legally obligated to report the income of U.S. persons; if they do not, a "back-up withholding tax" of 28% is withheld, which means the bank is either going to take losses or going to pay its clients less. (Cfr. http://www.irs.gov/taxtopics/tc307.html) There's already an entire program, called "Qualified Intermediary", dedicated to using foreign banks as reporters to the IRS. (And it's a large part of why Americans aren't wanted anymore at those foreign banks, because the thing is a pain.)

[LaCroix]

Same here. After the Bank BAWAG P.S.K. got bought by Cerberus, they were forced to go through their accounts and politely terminate accouts of Cuban nationals. Stated reason was that they would have to pay huge fines in their US business if any of their daugthers, anywere, would have Cuban customers.