Taxable Talk

Last Sunday I linked to two well-written articles by Don Cayo of the Vancouver Sun. One question that has interested individuals residing in Canada who are impacted by FBAR (Form TD F 90-22.1) is whether the Canadian tax authorities would collect penalties on behalf of the IRS.

Mr. Cayo corresponded with Revenue Canada (the Canadian equivalent of the IRS) and got the answer: No. You can read his correspondence here, but it boils down to CRA noting that the FBAR provision is not included in the US-Canada Tax Treaty. Additionally, CRA says they will not collect taxes for the IRS for an individual who is a Canadian citizen at the time the liability arose.

This will have even more meaning in the years to come as Congress is forcing foreign banks to collect information on Americans (beginning in 2013). I expect to see significant pushback, and it will be interesting to see how that plays out.

Hat Tip: Phil Hodgen

When last I reported on the Gilbert Hyatt case, Mr. Hyatt had won nearly $400,000,000 (yes, that’s $400 million) in a lawsuit from the Franchise Tax Board. This case began when Mr. Hyatt moved from California to Nevada in 1992, but the Franchise Tax Board didn’t think so. So agents of the FTB rummaged through Mr. Hyatt’s garbage in Nevada, and in the view of a Las Vegas court, committed torts against Mr. Hyatt. Including legal fees and continued interest, the tab is now around $500 million.

This case went to the US Supreme Court before it was tried; the FTB attempted to hold that California couldn’t be sued. The Supreme Court ruled against the FTB, and the case was tried in 2008…ten years after it was filed.

Not surprisingly, the FTB has appealed the decision. I’ve been trying for a while to discover the status of the case, and this evening finally found a blurb noting that the case is awaiting a date for oral arguments at the Nevada Supreme Court. [Go to page 12 of the link to see the status.] (Nevada does not have intermediate courts of appeal.) So sometime in the next year or so we’ll likely get a final verdict on how much the Golden State will be out in this case. Of course, the FTB could appeal this case to the US Supreme Court if they lose at the Nevada Supreme Court.

Meanwhile, the underlying alleged liability that triggered the whole fiasco–whether Mr. Hyatt was a California resident when he earned money off a semiconductor patent–is trickling through the California administrative hearing process.

Tomorrow is Tax Day in Canada. The Edmonton Journal has an article about how Revenue Canada (their equivalent to the IRS) is not feared though it perhaps should be.

There’s an interesting quiz at the end of the article. The answers to those questions in the U.S. are almost identical to those in Canada.

It’s a parody (of course), but it reminds us what confiscatory tax rates are like….

Hat Tip: AllahPundit (via HotAir)

As I perused this morning’s Orange County Register, I was surprised to see the Nevada Development Authority advertising in the Register. You can find the ad on page 7 of the business section. It reads:

“California Business Profits After: Worker’s Comp, Business Taxes, High Power Bills, Anti-Business Legislation = [hand shown holding some peanuts]. 5 Ways to lower your nut. Eliminate personal income tax, axe corporate income tax, don’t pay inventory tax, lower workers’ comp costs, relocate to Las Vegas.”

A similar ad appears in today’s Los Angeles Times. The NDA’s website has links to some of their television commercials, which are quite humorous (and effective).

Meanwhile, in the “Am I Really This Stupid” side of the ledger, both the Los Angeles Chamber of Commerce and the San Francisco Chamber of Commerce are supporting Proposition 82, the Mandatory Pre-School/Income Tax Increase, Help Las Vegas, Phoenix, and Denver Initiative. Showing some sanity, The California Chamber of Commerce opposes Proposition 82. If Las Vegas really wants to see an increase in business relocations, they should hope that Rob Reiner’s flawed initiative passes.