EDUARDO SAVERIN AND DENISE RICH — EXAMPLES OF US “EXIT TAX” ON RENOUNCING US CITIZENSHIP

You can leave the US, but it will cost you……

In a prior post I described the US exit tax on US persons who renounce their citizenship or green card status and move overseas.  Two recent examples are Eduardo Saverin (co-founder of Facebook) and Denise Rich (songwriter and husband of a billionaire commodities trader).  A recent CNN article describes the exit tax on Ms. Rich.
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FBAR RELIEF UNDER IR-2012-65 — THIS IS THE REAL DEAL

There are untold numbers of US citizens who have lived in Canada for many years.  Most have never filed US tax returns and (because of the US foreign tax credit) owe no US tax.  Nor have they filed FBAR Form 90-22.1 to report their “offshore” (i.e., Canadian) accounts.

One might intuitively view this as a “no harm no foul” situation.  Guess again.  The US civil penalties for failure to file Form 90-22.1 are prohibitive, and range from 5% to 50% of the account balance.  Criminal prosecution is also possible.

Finally, there is tangible relief under IRS Internal Release 2012-65, which was issued June 26, 2012 and becomes effective on September 1, 2012. Continue reading

PART 2 – WHAT CANADIANS SHOULD KNOW ABOUT DOING BUSINESS IN THE US – STRUCTURE OF US PRESENCE and US INCOME TAXES

 A patchwork of generous treaties and international agreements have encouraged Canadian businesses to sell goods and services in the US, and vice versa.  Cross border ventures can be a source of trepidation because one must comply with a completely new set of federal and local laws.  However, with advance knowledge of the relevant rules, a business can make the process both manageable and profitable.  This article covers several key considerations of a Canadian business that decides to conduct operations in the US.

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PART 1 – WHAT CANADIANS SHOULD KNOW ABOUT DOING BUSINESS IN THE US: CROSSING THE BORDER

The threshold issue for Canadians conducting business in the US is crossing the border.  How can we ensure that Canadian business visitors will be admitted to the US?  Due to the 1994 North American Free Trade Act (“NAFTA”), Canadians enjoy advantaged access to the US compared to other countries in the world.  However, applications for admission for the purpose of working (rather than visiting) in the US are technical and must follow very complex rules and regulations.
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