Posted on January 9, 2012 by Petros Posted in Issues regarding US persons abroad 22 Comments Hat tip: johnpg http://www.scotiabank.com/pdf/ Share this:TwitterFacebookEmailLike this:Like Loading...
All I can say.. renounce now!
It’s almost hard to believe that this is happening — that the other countries who have resident-tax schemes are going to concede to the American citizenship-based system. What’ next, if the US says you owe them money, they are going to debit your account to the IRS?
I hope somebody sues Scotiabank and the Canadian Banks over this.
I didn’t read every single word of the paper, but it didn’t seem all that horrendous. Scotiabank is just telling us what we already know. The banks are really stuck in a hard place. They can’t renounce! And I think it would be very difficult for Scotiabank to divest it self of all US connections. If they just say “forget it, we won’t do it”, they are open to enormous financial repercussions. The question I am wondering is about what I should do when they come to me with US tax forms to complete. Hopefully I’ll have renounced by then. Just called for my appointment today. It is beginning to seem like the only way., although it is sad, and I am hoping something might change before it gets to that point.
The letter seems they were careful not to say things like.. “You have to tell us you are a US citizen”, They just say, if you think you might be affected, contact a US tax advisor. Good advice (other than the problem with even tax advisors not knowing the answers). This whole mess is such a hornets nest, it will have to eventually be corrected. But who knows how bad things will get before then.
A class action suit needs to be organized against the Canadian
banks. In the interim – there are credit unions.
I don’t think it’s the banks fault. They follow rules from the government. I mean, common.. isn’t Canada a first-world country? Aren’t they required to protect residents and citizens?
Just the simple fact that Canadian mutual funds will be taxed at the highest rate in the US penalizes the Candadian citizen/resident. Crazy.
I really wish the Canadian government would be the first to put their foot down and tell the US – “No!” Maybe that would start a chain reaction to other countries, or maybe I’m just dreaming. The relative silence from other countries DOES have me wondering what they were promised to them– that we don’t know about?
I wish so too, but I am not sure it is easy for the Canadian Government to “just say no” It’s a big game of chicken. On paper, at least, the IRS holds all the cards…. “If you don’t do what we want, we will withold 30% of anything we can get our hands on” It is aimed at the banks, not the government, and It is unilateral action, and doesn’t require the cooperation of anyone for the US and the IRS to put their threat into action. It could potentially throw the entire financial system into crisis, and I don’t know how the IRS wold handle it if a large number of banks/countries refused to cooperate. Like i said, it’s one big game of chicken. Governments can try to negotiate, but in the end if the IRS wants to go ahead, nobody can stop them. Not to say Canada and everyone else shouldn’t try, and who knows how hard they are trying. Next week my local (NDP) MOP is holding an information session for locals with these issues. Cross border lawyers and accountants will be present. It will be interesting.
Banks are apparently not your allies. Below is an extract from a post made yesterday to a UK discussion site:
“I was a permanent resident in the USA until very recently. During my time in the US I opened a couple of IRAs for my retirement savings. One account was with TD Ameritrade…
TD Ameritrade have now told me I need to close my account with them … due to my now residing in the UK – apparently some regulations changed in August 2011.
TD Ameritrade have also said that one option is for me to transfer my holding to TD Waterhouse who operate in the UK so I contacted them.
They have said they will not open an account for me, and this is their explanation why……
‘I have referred this to our Customer Accounts Department and they have advised that unfortunately, we cannot offer a sharedealing service to you as you have previously paid tax whilst in the US.
The above is not to do with the length of time you have spent in the US more to do with that you have paid tax. The IRS would still require that you have to be reported on and although they may not chase you as an individual they would chase us as a company. The IRS would always class you as a US tax payer so would always have this recorded that you would need to be reported on.’ ”
So here we have the UK branch of a major Canadian bank citing a US tax law as reason to refuse service to a UK citizen who was not born in the US, does not have US citizen parents, and has him/herself never has been a US citizen.
wow.. unbelievable really. I’m betting that the banks are worried you might still have a US connection (greencard), which I don’t think is unreasonable to assume if someone lived in the US for a time.
Keep an eye out for people who live in other European countries as well, or deal with banks from foreign countries. Because possible “the Canadian” part is a bit of a knee-jerk due to their proximity to the US.
Here is an interesting read.
which is a letter sent to the IRS by the Japanese bankers Association about the issues. It is written in mostly plain, readable english, rather than legaleze of many such letters, and it clearly outlines the problem the banks all around the world will be facing. It really helped me understand where the banks are coming from in this.
You have to download the PDF and I can not cut and paste, but on page 7 or thereabouts, it refers to the IRS’s “6 indicia of US persons” which are not specified, but i presume include US address, declared US passport. Given the above, i would suggest that “having paid US taxes at any time” is also one.
As an American, with PR status in Canada, married to a Canadian wife, who banks with Scotiabank, I’m going to have to take my name off of every joint account that I have with her, just to protect her from my own government.
I wish I was Canadian, and ONLY Canadian!
Meanwhile, I still have two more years before I can even qualify to apply for Canadian citizenship. That means I will have to wait at least that long, plus the time it takes until I can take the citizenship oath, before I can even dump my US citizenship. That is, unless I want to become stateless instead!
What a load of malarkey!
If you join a credit union, you are a member and part-owner of it. The only way that your account can be closed is for just causes and a vote by the Board of Directors. Why anyone would bank with a BIG BANK when credit unions are available is way beyond me.
Totally agree with you about Credit Unions. I don’t know for sure whether at the end of the day they will escape FATCA but I do have pretty good knowledge that they aren’t blowing millions of dollars paying for FATCA compliance experts like the big banks are.
Last July I sent an e-mail to the CBA and below is the reply I got. I kind of think I was more correct in my assessment of bank capitulation than I was given credit for by Ms. Drew-Lytle. This is a “last laugh” I really did not want to have, believe me.
Thank you for your e-mail. Rachel has forwarded it to me to respond.
We certainly understand the concerns that you have with FATCA. However, you seem to be under the impression that Canadian banks are planning to willingly go along with the FATCA requirements and this is certainly not the case. In fact, the Canadian banking industry agrees with your concerns and we have been and will continue to fight to change the extraterritorial reach of FATCA and lessen the impact it will have on Canadian banks and their customers.
We have information on our stance on FATCA at the following link:
For more than two years, the CBA and the Canadian banks have raised our concerns with the IRS and the US Treasury Department and have also done so through our membership in the International Banking Federation. I have attached some of those letters for your review. We have also had discussions in Washington with IRS and US Treasury officials and Canadian Embassy officials. In May, the CBA made a presentation in Washington at public hearings before Treasury and the IRS and our president spoke out against FATCA in speeches in Calgary and Vancouver this spring. Here are the links:
Last week we also submitted an opinion piece with our concerns about FATCA to the Washington Post and we are waiting to hear back about whether it will be printed.
In Ottawa, we have raised concerns with officials from the Department of Finance, the Minister of Finance and the US Embassy. Finance Minister Jim Flaherty has supported our position and expressed his own concerns publicly and we appreciate the support from the Minister and his officials. And we are not alone in fighting this legislation.
Governments and banking groups from around the world share your concerns and ours. You can find more documents here:
If banks were required to identify US persons under FATCA, they would not be doing this willingly. However, they may have no choice as FATCA is currently written because the non-compliance would have a much larger impact on more of the financial institutions’ customers. The penalty for being unable to comply with these complex rules is very severe for both banks and their clients. The penalty includes a 30 per cent withholding tax on all U.S. source income flowing to the bank and its customers, and a 30 per cent withholding tax on the gross proceeds of the sale of U.S. securities by the bank and its customers, and withholding on some portion of so-called “foreign pass-thru” payments. According to Statistics Canada, as of 2010 Canadian direct investment in the United States totalled nearly $250 billion. As outlined on our website, banks would only provide information to US authorities with a customer’s consent (http://cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients).
There is nothing in the Canadian Bank Act or the Access to Basic Banking Services (ABBS) Regulations that prohibits a bank from closing an account. The ABBS regulations give reasons why a bank can refuse to open an account for someone, but they don’t give any restrictions on closing an account. You can find information here:
I hope this is helpful in explaining why Canadian banks would comply, however reluctantly, with FATCA if it became necessary and why Canada’s banking industry, with the support of the federal government, will continue to fight for changes to the FATCA legislation. As your concern seems to be the requirements under FATCA, you may wish to add your voice to the growing opposition to this legislation by raising these issues with the US Treasury, the IRS and the U.S. embassy in Ottawa.
Maura Drew-Lytle | Director, Media Relations and Communications | Directrice, Relations avec les médias et Communications
CREDIT UNIONS NOW!!!
On another subject we might be slowly getting Neil Brooks on our side. He was very interested in the Toronto FATCA Forum.
Indeed. A credit union will be something that I’ll have to consider. However, if they end up becoming subjected to FATCA anyway, then I will be screwed no matter what I do.
Ultimately, it is abundantly clear that my best defence is renouncing. That is okay. To be frank, when I’m placed in a position to where I have to protect her from what is in her view, a foreign government wanting to pry into her financial business, just because I’m a joint account holder with her, then I can accept the fact that by my feelings and actions, that I feel more loyalty towards my wife, than I do the US Government. To my view, this is not about money, or taxes. This is about resisting imperialistic overreach, and this is about resisting the attitudes of the homelanders that would rather look at us as though we’re disloyal tax dodgers, who really could care less about the fact that we may simply have hum drum lives just like them, and that the ONLY difference is that we don’t live in the US.
But really. If someone’s going to accuse me of being disloyal without cause, then why should I be loyal to them? They don’t care about us, and they can’t even be bothered to hear our story. Why am I wasting my breath trying to explain myself to these people? Why do I even owe them any explanation at this point?
My bourgeois lifestyle is wiping my disabled wife’s butt, and for that, I’m subjected to the tyranny of the IRS tax form and penalty club, and I get to be treated like a second class citizen on top of it. Meanwhile, while the US totters over the fiscal cliff, the do-nothing Congress gets a raise! Fancy that! They do work sooooooo hard, you know! (sigh)
Yeah, I just want out!
*On another subject we might be slowly getting Neil Brooks on our side. He was very interested in the Toronto FATCA Forum.
My question is, which credit unions are planning on not complying with FATCA. To keep the information safe, if you can help me out, e-mail me or PM me via the PM feature on the forum. I went into one and asked about their reaction to FATCA. They looked like deer in the headlights.
Who can honestly say that a credit union can even shield me from FATCA when there is such limited information on the matter? On the other hand, it might potentially be my ace in the hole if Canadian banks go the way of Europe and my bank decides to close my account.
If this is the Neil Brooks that Tim is talking about, he is definitely an important opinion maker and needs to have a positive image of the Isaac Brock Society. He may even task some of his students or research assistants to follow the the IBS website.
The credit unions may not sign on to FATCA, but I have been told by two executives of QTrade and Credential Securities (two corporations who do the trading of securities for the credit unions) that they must be onside with FATCA. So it might be possible to have an ‘ordinary’ trading account with the Credit Union but not an account with QTRADE or Credentail Securities.
Then it seems that I could be in the clear at least for normal chequing services. That is good to know so that I know how to minimize any inconvenience. Matter of fact, there is a credit union not far from me, and I think I’ll inquire about an account within the next few days or so.
More importantly, I can calm down some, knowing that there are at least some options. No one makes really good decisions when they feel they’re under duress.