Note to Readers:
If readers have any further questions regarding this story it is suggested they visit http://www.irs.gov/ or the Canada Revenue Agency for any possible additional information.
Anyone with an opinion on this matter can write a Letter to the Editor, up to a maximum 300 words, and send it to editor@interior-news.com.
****
For several Hazelton residents who are citizens of the United States, a potentially devastating financial situation is looming on the horizon.
Currently, hundreds of thousands of U.S. citizens living in Canada are potentially looking at receiving substantial fines from the Internal Revenue Service of the U.S. The fines are a result of not filing a particular tax form that has previously been in a well known document.
The problem stems from two, six-month Offshore Voluntary Disclosure Initiative (OVDI) programs that were implemented by the IRS and the second program deadline is fast approaching on September 9th, 2011.
Prior to 2004 there wasn’t a fine for filing late, however, it appears that there hasn’t been a lot of public notification about this form through the media and other outlets until this past summer.
A few U.S. citizens living in the Hazeltons have little or no income tax owing to the U.S. Many of them have lived in the area for decades and had never been notified in any manner from the I.R.S. or through the Canadian Government that tax return enforcement with huge penalties existed or that foreign tax filing was mandatory.
Many Canadian residents with dual citizenship or landed immigrant status will be potentially penalized at a rate of 25 per cent of all financial assets and real property rather than a lower penalty of 5 per cent on just financial assets due to the fact they have RRSP’s and/or the new tax free savings accounts. It appears that legal fees to file seven years of complete U.S. tax forms could even range from $7,000 to $20,000 for late filing according to a few Hazelton residents.
According to current documentation provided by one resident, “those individuals who have lived within their means and have been financially careful and have had combined accounts in any given year in the last seven years of more than $10,000, will be expected to pay the IRS between $50,000 and $200,000 in fines.”
One particular Hazelton resident who wishes to remain unnamed at this time says he feels that the IRS purposely initiated these massive fines in 2004, then took action seven years later before the statue of limitations ran out, to “entrap unknowing working Canadian residents and landed immigrants with these potentially crippling penalties for late filing.”
He and several others in a similar situation are calling on the Canadian government to take a stand and they are demanding political and legal intervention.
“Something needs to be done soon,” he said. “Many lives are and may be greatly affected by this injustice. This has the potential to impact the Canadian economy and our local economy unless some form of intervention happens.”
However according to a columnist for the Vancouver Sun, Don Cayo’s correspondence with the Canada Revenue Agency (CRA) the Finance Department is in keeping both with the actual content of the Tax Treaty and the Canadian High Court decisions rejecting extra-juristictional revenue claims.
While some are suggesting the current situation is similar to the one when the IRS rightfully went after U.S. citizens who were hiding money in offshore accounts this past spring, the reality is for Hazeltons involved in this current problem, they were not hiding anything. They simply didn’t know about the forms and are now in a “potentially crippling financial” situation.
For more information on forms and fines check the irs.gov website.
