This just out on the Wall Street Journal Blog, by Christopher Chung.
The U.S. Internal Revenue Service is brandishing a “very big stick,” and it’s called the Foreign Account Tax Compliance Act.
But the government isn’t looking to hit foreign funds and institutions to bring in tax revenue. “[The IRS] would say, ‘We would be thrilled if we didn’t collect a dime under FATCA,” Laurie Hatten-Boyd, a principal at KPMG, said. “They view this as an information gathering regime, not a withholding regime.”
Note: No mention of impacts on Minnow Americans abroad, or immigrants new to America.
@bubblebustin- I have already made that same suggestion to both the Minister of Finance and the Immigrations Minister. I am sure that others have also suggested this step be taken but who knows if they will have the guts to do it. The other thing that Canada could do is what Singapore does which is to disallow dual citizenship, at least for U.S. citizens. The Americans of course would cry that this is discrimination but they can’t do anything about it. If the U.S. is into playing the unilateral game so can anyone else.
@calgary411- I don’t think that there would be any need for parents, guardians or trustees to take any action. Refugee status is something that the government grants unilaterally without the cooperation of any other agents.
If Canada were to do this it would overnight eliminate over 1 million U.S. persons from the U.S. Treasury’s tax roles. When Canada accepted these people into its economic system it did so in good faith and the U.S. has broken both the explicit and implicit contract that Canada thought existed.
The Canadian Treasury should have not to shoulder any responsibility for funding the U.S. Treasury. No exclusions, credits need to exist. Either people pay their taxes in FULL where they live and work or they don’t. There is no way that Canada should have to cope with U.S. legislative opportunism on this matter.
@don pomodoro- You are correct. My intent is to do something now to help those who don’t want to move back or can’t move back. The nations of the world have to rescue the hostage and this I hope is a unilateral move that is open to them. It would sure make the Americans smart but since their brains are too thick for them to understand then this move will clear the decks. Post FATCA then no Americans will be able to get off their little island.
I believe that in the case of a U.S. citizen who marries a Canadian that there should be a quick route to citizenship that is established, provided of course that all security checks are passed. That citizenship though must involve a formal renounciation of U.S. citizenship before Canadian citizenship is granted.
I think that we can look to Singapore for an example of how this would work. Of course then this would draw up the whole issue of whether or not a tax treaty with the U.S. would be of any need. I understand that Singapore has no such treaty with America.
@recalcitrant, maybe the Canadian government will consider a ban of US persons when 1st class (non-US) Canadians start requesting it…
Oh, and no ‘anchor babies’ born of US citizens allowed to get Canadian citizenship. Now don’t I sound like a bona fide redneck?
@recalcitrant, ” The Americans of course would cry that this is discrimination but they can’t do anything about it”. Of course they will, just like they’re going to assume that those who object to FATCA are supporting US tax fugitives in Canada.
@recalcitrant,
A real amnesty by the US, giving US persons the choice to have gone in peace and friendship, OR remain US persons, fully knowing their tax and reporting responsibilities;
or
Canadian protection, with refugee status.
Something that sounds fair for our economies and individual citizens. Let us choose our allegiance and the company we pay our taxes to, not have unwanted US citizenship forced upon us. Dual citizenship was not well thought out if there is no individual choice possible.
@recalcitrant and bubblebusin,
Please grandfather the ones already here to remain though.
@Calgary, of course! I’m not planning to move back to the US!
@joe smith, I’m getting a repetitive strain injury from all that c & p-ing! Just about done the list though. Here’s my letter:
Dear Member of Parliament,
The Foreign Account Tax Compliance Act that the United States of America seeks
to impose on Canadians is harmful to our country and must be stopped.
The US in its extraterritorial reach is attempting to offload to Canadian
financial institutions its responsibility of educating its citizens of their
duty to file US income taxes. All Canadians will suffer the effects of this
economic burden and loss of privacy resulting from its implementation in
Canada. Our currently strong banking system will be significantly weakened by
the burden of compliance and every customer will bear the cost.
I am a US citizen who moved here as a child. I am also a citizen of Canada. I
am in the process of becoming tax compliant in the US and our banker already
knows that I am a US citizen, so it is not fear of being ‘caught’ by the IRS
that concerns me. What concerns me is the complete recklessness and lack of
regard the US government has for the rest of the world when imposing FATCA on
it. Even in the unlikelihood that every US person in Canada were to become US
tax compliant, our financial institutions will still need to be vigilant to
insure that no one has ‘slipped through the cracks’ resulting in the severe
reprisals promised by the US. How will banks be able to thoroughly vet their
customers of US persons when a US person may not have any outward signs of US
personhood, for example a Canadian birthplace? What about those Canadians who
don’t even know they are US citizens because they ‘inherited’ it through a US
born parent? Or US persons who object to the US’s unique citizenship based
taxation laws, thus don’t comply? The future for Canada is wrought with danger
and vulnerable to the increasing demands by the US government if we allow FATCA
to enter our banking system.
It is inevitable the Canadians who aren’t also US citizens will begin to resent
the negative effect US citizens living within Canada cause, giving rise to
anti-Americanism in our country. Canada may even one day have to ban US
citizens from immigrating to Canada to ensure that it will eventually be purged
of their toxic effect. Our government must stop FATCA to ensure that this does
not happen.
Yours truly…
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@all , it was sad to pass over Jack Layton on the list of MP’s as I was sending my letter. I’m sure he would have been very outspoken against FATCA. Rest in peace Mr Layton and thank you for your immeasurable contribution to Canadian politics.
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Just today:
http://www.wogx.com/story/18813326/us-offshore-tax-crackdown-reaches-israel
That’s interesting. I would have thought that we would have seen tax prepares sued by OVDI victims to try to get their penalties back…
*This is where you can get an excel file of all members of Parliament, apologies for not providing earlier.
http://howdtheyvote.ca/data.php
See mention of the clash between FATCA and NAFTA. “”I believe it’s an illegal attempt to access tax information from Canadians. It doesn’t comply with the Canada-U.S. tax treaty and it doesn’t comply with the American obligations under NAFTA,” he said. (quote from Queen’s University tax law professor Arthur Cockfield).
from; http://www.ottawacitizen.com/business/fp/cheats+finding+fewer+havens
/6798181/story.html#ixzz1yAo9Mfao“
‘Tax cheats finding fewer havens; More countries crack down as debt levels rise’
By Julia Johnson, Financial Post
June 18, 2012
Read more: http://www.ottawacitizen.com/business/fp/cheats+finding+fewer+havens/6798181/story.html#ixzz1yAoEFcg6
Can’t remember which Brocker mentioned the incompatibility of the two (NAFTA and FATCA) in previous posts.
Also interesting quote from tax lawyer Hay, re a ‘global tax environment. (GATCA, @Just Me).
Well, after writing to every MP regarding FATCA, I’ve gotten 3 robo-responses, one of which is from Denise Savoie. As some of us know, Denise has been outspoken against FATCA so her form letter response at least addressed FATCA and US tax issues but didn’t offer anything new, at least to me in the way of information. Her response also included three attachments, one from her to Minister Flaherty dated September 17, 2011 expressing concerns on behalf of her US constituents, another called ‘FATCA’ filing which outlines US tax filing and financial accounts reporting, and the last was strongly worded letter from the BC NDP caucus to both Ministers Flaherty and Baird on October 14, 2011. There’s deafening silence everywhere it seems.
@bubblebustin
I know that this whole mess has made me paranoid. We are now eight or nine months past the time that Denise Savoie first addressed the issues. Responses are ‘robo-responses’! I don’t think it is my imagination that we heard more from our politicians (on both sides of the floor) 9 months ago, than we hear today. I have been saying this for weeks now – THE SILENCE IS DEAFENING – and why is that?
@tiger. I don’t think it’s because everyone’s forgotten about it…it just hasn’t reached critical mass yet. Keep the letters going on both sides of the border to ensure it does! FATCA has to get on 1st class Canadian’s radar. Remember, what’s happening is incomprehensible to most people, so the gravity of it will take a while. How many outside of Terry Campbell’s audience would know he’s declared a war on FATCA during his address to the Vancouver Board of Trade?
@Christophe
Here is the source of the story you noted from WSJ…
Israeli Tax Preparers Snared
Indictment Shows the U.S. Is Broadening Pursuit of Secret Offshore Accounts
Of course, the headline about “secret” is a narrative that sells, but as we know that is just a pretense for a much broader effort.
BTW, I think it has been mentioned on another thread, but Accounting Today is also reporting this, probably from the same source, but with a Different headline and a little more neutral.Tax Preparers Charged with Hiding Funds in Israeli Banks
But they are all getting this from their main source, the DOJ… back on the 15th, but just getting around to writing about it today.
http://www.justice.gov/opa/pr/2012/June/12-tax-762.html
PS @tiger, my complaints to my MP about the deafening silence (to use those precise words) have been met with mostly, guess what, deafening silence for months now! Something’s got to happen soon.
@all- The fact that these schemes were hatched and executed within the boundaries of the U.S. should be the relevant fact.
This still does not amount to justification of citizenship based taxation. All of the OECD member countries subscribe to the AML/KYC rules and that should be enough for the U.S.
I asked my favourite mortgage broker what effect he sees FATCA will have on the mortgages involving US persons:
“To my knowledge, nothing is changing imminently with FATCA but the implementation is still a couple of years off. Admittedly, it isn’t something we deal with from our end of the deal. It mostly has to do with a lender reporting back to the IRS and because of that lenders will normally limit the mortgage loan to value for Americans to 65% as they are fearful the IRS will swoop in and attach the property in some manner, I assume. We haven’t seen any updated policies from any lenders at this point that I am aware of, so it is business as usual for the time being.”
Again, due to US policies, US persons residing in Canada will likely be precluded of benefits offered to other ‘regular’ citizens, namely the high ratio mortgage, thus leaving many unable to purchase a home.
The responses to my letter sent of every MP keep dribbling in, this time from none other than the Prime Minister’s office. I assume it wasn’t a robo-letter as it was directed to me by name:
Dear Ms. *:
I would like to acknowledge receipt of your e-mail regarding the U.S. Foreign Account Tax Compliance Act.
Thank you for sharing your concerns with the Prime Minister. I have taken the liberty of forwarding your message to the Honourable James Flaherty, Minister of Finance, who, I am certain, will appreciate being made aware of your interest in this matter.
M. Bredeson
Executive Correspondence Officer
for the Prime Minister’s Office
@bubble: It’s a form letter. I received the exact same one several months ago.
At least the PM didn’t send you an FBAR Fact Sheet advising you of your obligation to submit them to IRS as my Conservative MP did–although I told him I had relinquished 40 years ago.
Even worse was the fact my letter wasn’t about FBARs. It was about FATCA. Oh well, they’re both “F Words,” right?
@Blaze, they’re getting pretty wily with their form letters when they interject your name in them, aren’t they? I think it shows that an actual human being read them and made a choice as to how they are categorized. They must being receiving a fair amount of correspondence re FATCA to have a form letter for it.
I already got the FBAR/FATCE form letter from when I wrote to Minister Flaherty. Perhaps they have some software that makes sure your email address doesn’t receive redundant email message. If so, the US could benefit from something similar with their forms and laws. Maybe ‘law-check’?
A form letter may not be a bad sign. The form letter I got was on topic, and the fact that they had a form letter told me they were already aware of the problem. They must also keep track of how many copies of the letter they send. Each time the have to send another form letter they know the problem is growing. Don’t be discouraged and not contact you MP because you think all you will get is a form letter, the more people that contact them the bigger the problem is in their eyes. Keep up the pressure, I call the office of my MP about once a month just to ask if they have any new information.