Liberty and justice for all United States persons abroad

The Isaac Brock Society

1,012 thoughts on “FATCA Discussion Thread (Ask your questions) Part One”

  1. Sorry… I meant do I have to file Form 8938. I believe I do.

    Yes..I agree it is an ACT being shoved down the throat of FIIs. I do hope most countries will reject it. So far it seems only the Canadians and Chinese have stood firm against the bullying tactics of the IRS.

  2. @All: One thing everyone interested in FATCA should do is file a comment of any kind before April 30th with the IRS regarding the FATCA regulations. These are the regulations which set forth the rules about Foreign banks outing you to the IRS.

    DATES: Written or electronic comments must be received by April 30, 2012. Requests to speak and outlines of topics to be discussed at the public hearing scheduled for May 15, 2012, at 10 a.m. must be received by May 1, 2012.

    ADDRESSES: Send submissions to: CC:PA:LPD:PR (REG-121647-10), room 5205, Internal Revenue Service, PO Box 7604, Ben Franklin Station,Washington, D.C. 20044. Submissions may be hand-delivered Monday through Friday between the hours of 8 a.m. and 4 p.m. to: CC:PA:LPD:PR (REG-121647-10), Courier’s Desk, Internal Revenue Service, 1111 Constitution Avenue, N.W., Washington, D.C., or sent electronically via the Federal eRulemaking Portal at http://www.regulations.gov (IRS REG-121647-10). The public hearing will be held in the auditorium, Internal Revenue Building, 1111 Constitution Avenue, N.W., Washington, D.C.

    FOR FURTHER INFORMATION CONTACT: Concerning the proposed regulations, John Sweeney, (202) 622-3840; concerning submissions of comments, the hearing, and/or to be placed on the building access list to attend the hearing, Oluwafunmilayo Taylor, Oluwafunmilayo.P.Taylor@irscounsel.treas.gov, (202) 622-7180 (not toll free numbers).

  3. Thanks for the info Steven. I personally am not going anywhere near either IRS or DOS. I have learned from past experience with DOS you can’t trust them to stand by their answers.

    The last thing I want to do is to alert either agency as to where I am.

    I notice written comments are to be mailed to Ben Franklin Station. I think Ben must be rolling over in his grave at what has happened to his great ideals. I suspect Ben would be cheering on Isaac Brock in Isaac’s drive to ensure no taxation without representation and to ensure all have the right to freely choose, relinquish or renounce their citizenship–including respecting decisions that were made “permanently and irrevocably” decades ago. l

  4. @Blaze

    I am thinking though that Flaherty will probably send a very long winded letter although it will be hand delivered by the Canadian Embassy on the very last day of comments. I am still trying to get those sessional papers with the governments latest response to FATCA and FBAR.

  5. @Steven: Considering your excellent comment on relinquish and renounce thread, how do you see FATCA affecting people who have not been in IRS sight for years or decades? Many of us have significant life savings and assets in financial institutions where staff who have known us for a long time may realize we were born in US. They cannot legally ask for this information in Canada, but I understand it is routine in other countries to require birth certificates.

    My question relates not just to IRS demands that banks report to IRS, but also demands that banks close accounts of anyone who will not give consent for information to be conveyed to a foreign government. This is a violation of Canadian law, but Brock has given us examples of where this is already happening in other countries. Like Canada, most of these countries are not tax havens.

    As you know, FATCA affects joint accounts and assets held with non-US spouses, as well as accounts we have signing authority and responsibility for with an employer or a voluntary agency.

  6. @All
    I am working on my 2011 Canadian tax return. My financial institution includes a “Client Guide to Tax Reporting Book”. Just came across something I find interesting – it is possible this info was in prior years guides and I might have missed it. Under a section entitled U.S. TAX REPORTING FOR U.S. PERSONS, they state the following: “RBC Dominion Securities will be issuing U.S. based tax reporting slips to U.S. non-exempt and U.S. suspect recipients to report certain amounts received, paid, credited or cancelled during the year.” It then goes on to list the types of 1099 slips they refer to. They then say: “These U.S. forms will be issued to U.S. non-exempt and U.S. suspect recipients in addition to the regular Canadian tax reporting slips that they receive. U.S. non-exempt or U.S. suspect recipients include U.S. citizens, U.S. residents and U.S. green-card holders, effectively most account holders who have provided a Form W-9.”

    Not sure what is meant by ‘U.S. suspect recipients’ but I find it alarming. I did not receive any U.S. slips so I guess I should be grateful for that. As I said, I have no idea if this info was sent out by RBC in prior years as I did not hang onto the guides,nor would I have paid any attention to it as I have believed myself for 40+ years to be only a Canadian (now they might be wanting to reclaim me!) Is it a sign of ‘gearing up’ for what they (the banks) know is inevitable?

  7. Don’t panic. They are saying that they will issue information slips to/for clients who have already identified themselves as US taxpayers by giving to them ( RBC) a Form w-9. Don’t give them a W-9 if you (correctly) assume you are Canadian!

  8. @Chester12
    No way will I give them a W-9. It could be a case that the words in the RBC guide were there in previous years and I had not noticed them or paid any attention to them. I suspect though that RBC has added this info to their guide because of pending FATCA agreements. Also, very curious about their use of ‘U.S. suspect recipients’.

  9. I wonder what they would do if you said you legally lost your US citizenship decades ago and would be happy to sign a W8-BEN (this is a certificate of foreign ownership, it means you’re not American). That form does not go to the IRS, the bank keeps it on file as proof that you are not a US tax payer.

  11. @Everyone

    That is the proto FATCA Qualified Intermediary program. Perhaps they are becoming more stringent but these requirements when dealing with “US Source” income such as from US Stocks and bonds have existed for many years. Definitely don’t fill out form W-9. If you are given a real hard time by your bank perhaps you need to get in touch with that human rights lawyer in Vancouver I recommended in the past. I don’t believe the qualifying intermediary program is necessarily compatible with Canadian law but I suspect its legal underpinnings are stronger given it deals more strictly with US Source income.

  12. @All
    I checked my files and I have a copy of a W-8Ben that I signed with them when the account was opened. I see it states on it, to sign it only if you are NOT American.

  15. If I relinquish my American citizenship and obtain my CLN, do I need to file an 8854 even though I never worked?
    Do I make my appointment online and if so what website should I use?

  17. “I wonder what they would do if you said you legally lost your US citizenship decades ago”

    The IRS does not seek to enforce tax claims on persons who claim to have lost citizenship under the Immigration and Nationality Act prior to Vance v. Terrazas & Afroyim v. Rusk and who did not thereafter claim an attribute of US citizenship. This is because under international law and practice no state can assign its nationality to an alien at any time other than birth, adoption or (in the past) marriage without the consent of that person (or parent or guardian).

    Only the State Department and the immigration judiciary have the power to determine the citizenship of a purported American citizen.

    “I read in an article that FATCA does not apply to government-owned banks.”

    I am aware that many US persons have sought to avoid FATCA by banking with postal banks, such as the Swiss Post. Foreign banks where US persons have mortgage loans are in a tricky position. UBS for example allows accounts up to CHF 10,000 linked to the loan without the CHF 40 monthly charge it imposes on other foreign-held accounts. (Banks reneged on mortgage offers to US persons starting in or around 2009, but those who already had mortgages were dealt with more carefully.)

  18. @ punktlich, I searched the FATCA regulations when they were first published. Those who lost their citizenship but did not obtain a CLN will have no other clear way to prove to their bank that they are not US citizens. Since FATCA regulations do not require the banks to ask the State Department for a ruling, they must report those who have a US birthplace who do not present “a reasonable explanation” or a CLN. The CLN is not the sine qua non, but to my knowledge the IRS has yet to define what is “a reasonable explanation” to prove to the bank that one is no longer or never was a US citizen.

    http://isaacbrocksociety.com/2012/02/11/is-a-certificate-of-loss-of-nationality-really-necessary-new-fatca-regulations-are-in-gobbledygook/

  19. @punktlich
    ‘The IRS does not seek to enforce tax claims on persons who claim to have lost citizenship uner the Immigration and Nationality Act prior to Vance v Terrazes and Afroym v Rusk and who did not thereafter claim an attribute of U.S. citizenship’.
    Afroym v Rusk was in 1967 and Vance v Terrazes in 1980. Do you refer to these two cases as the basis of the amendment to the INA in 1986? And is your belief thus that persons who performed an expatriating act prior to 1986, resulting in relinquishment of U.S. citizenship, would therefore not be required to file any tax forms with the IRS and/or treasury department?
    I became a Canadian citizen in October, 1972 and at that time, part of the oath of Canadian citizenship was to also swear a renunciatory oath regarding prior allegiance to any foreign state or sovereign. I certainly believed and still believe that oath resulted in my ceasing to be an American citizen.
    I would appreciate your comments.

  20. Try Rev. Rul. 75-357, PLR 8138071 http://groups.google.com/group/alt.lawyers/browse_thread/thread/e235a5271a92cfb6#
    Compare Rev. Rul. 92-109, 1992-2 C.B. 3 http://www.fordham.edu/law/faculty/colon/INTLTAX/rr92-109.htm
    A quick read of 92-109, which I hadn’t looked at in years, shows that it does not consider the case of someone who had US nationality revoked by act of law and who did not accept its restoration nor claim an attribute of US nationality. So I don’t think it changes the rule of 75-357. I mentioned elsewhere the rule of international law that no state can impose its nationality without consent (of the person or a parent or guardian) except at birth, adoption or, formerly anyway, marriage. You can look at some of the Nuremberg Law cases: no Jew expatriated by the Nazis was restored involuntarily to German nationality despite Allied Control Council (Kommandatura) Law No. 1 revoking all Nazi racist laws, and Basic Law Art. 116: http://tinyurl.com/cfx7hvk One case that comes to mind is Oppenheimer v. Cattermole, a House of Lords tax decision: http://uniset.ca/naty/maternity/oppenheimer.html

  21. “… persons who performed an expatriating act prior to 1986, resulting in relinquishment of U.S. citizenship, would therefore not be required to file any tax forms with the IRS and/or treasury department?”

    Persons who lost nationality by act of law would not have any documentation to prove it (other than proof of facts that the law required) unless that person had applied for, and been refused, a US passport.

    Persons affected by Rev. Rul. 75-357 would by now have fallen off the IRS radar and it is wildly improbable that the IRS would address their cases unless forced to do so by circumstances or a petition of some kind.

    There are of course thousands of persons who are US citizens but whose birth abroad has never been registered with a US consular office. In some cases, take for example the nonmarital child born to a US mother who has lived abroad her whole life, the requisite maternal residence (1 uninterrupted year in that case) may be hard to prove: and how does she prove she never in that year crossed the border into Canada for even a day (it’s a badly drafted statute, as so many are)? I know of such cases. If the child has no need of a US passport or right of residence, why seek it when there is no time limit to doing so other than the fact that US consuls must refer cases of persons over age 5 to Washington for determination.

  22. @punktlich11 You say

    “the rule of international law that no state can impose its nationality without consent (of the person or a parent or guardian) except at birth”

    I had US citizenship imposed on me by birth, that may be fine under international law. What I find troubling is that citizenship sticks to me, I think what would be more fair for the accidental class of US citizens would be that some positive act on our part must be taken after 18 years of age to retain it. The older US laws were much more reasonable before the supreme court got a hold of them. If what you are saying is correct then a child of a US citizen should not be a US citizen unless the parent registered the birth or the person asked for the citizenship on their own. PS I do like the word impose!

  23. @TrueNorth: Well, that’s how it is. Actually “nationality” is a civil-law concept; the common-law one is “allegiance” (as in Pledge Of). Read what Frencis Piggott said about that: http://uniset.ca/naty/maternity/ligeance.htm

    And remember the War of 1812 was fought over the issue of Perpetual Allegiance, among other things.

    That the US concept of citizenship changed over the 20th Century is best illustrated by two books, “A Nationality of Her Own” (and the Cable Act, women’s nationality) and “Laws Harsh as Tigers” (the Chinese Exclusion Laws). And, now, the draconian laws of nationality, tax and foreign assets. But expatriates are nobody’s constituency. Fortunately the person who, born abroad, has never claimed or used an attribute of US nationality is, expatriated or not, probably safe from IRS action, whatever the underlying law. Can you imagine some third party trying to claim a reward for denouncing some such person? Would the IRS start hiring genealogists to conduct research? (The fact is, there’s a lot online about ancestry and property, but it still takes an expert to interpret it. And the recent instances of identity theft, including of dead people, and fraudulent tax refund claims suggests a certain incompetence on their part.)

  25. Still no awareness in these articles that if you are of modest or low income, and live permanently or are born outside the US, your choices are nearing zero. You can’t pay for the specialized tax and legal services to be sure of being compliant with all the complex rules – in spite of zero US taxes owed. You can’t save anything – without complex filings and threats of draconian fines and penalties – which means hundreds to a thousand annual accounting fees. Investing in the country you live and/or were born in comes with barriers that those in the US don’t face, and neither do the non-US persons around you. Investing in the US – if you live outside it, brings problems with the taxes where you live – and /or hold other citizenship. Your non-US family has no reason to agree to live in the US. Reporting your bank account numbers, balances , SSN, and other personal information leaves you open to identity theft. Your children are born into involuntary servitude if they inherit US citizenship from you. You bring the US into your non-US family accounts and threaten their security.

    Let the world know – the US is unethical and unjust, and cannot be trusted. If this is what it will do to countless millions of innocent US ‘persons’ and US citizens who live and are born outside the US, paying taxes in full where they live, then how will it treat non-US people?

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