There has been a lot of bantering across multiple threads about the nature of the FATCA IGAs which the IRS is entering into with other Treasury technocrats. I have come to realize that I didn’t have a clear understanding of the difference between a Tax Treaty, which requires ‘Advise and Consent’ versus this animal called an IGA which apparently does not.
I asked the question of the two who I consider to be the resident IBS experts, Tim and Jim over on this thread here, but I think they missed seeing it.
I wondered if anyone besides me was struggling to understand the technical nature of these things, and so I asked again via email on this Thanksgiving, and to my surprise, in spite of the holiday, I got a couple good answers. It was very much appreciated. Thought I would share it here for others that are looking for clarity.
I have restated my original question below, and then provide the answers I received via email which might clarify the issue for others. If it is just me, that is confused, than I guess this will just be a handy link for me to use for tweeting, if nothing else. 🙂
In my original question, I wrote:
Technical question. Are these IGAs actually considered a treaty? Or are they just an administrative agreement between regulatory bodies and need no further Parliamentary or Congressional approval?
I think for U.S., Treasury is trying to say that they can do this without any “advise and consent’ process as they are already have the regulatory power. In Canada, I am less sure about what that process is in relation to the States, so just looking for any clarity to my befuddled mind you can provide.
Tim, you speak of them as Treaties, and maybe from the Canadian side they are, but can one side consider them that, and the other decide that it is not?
I am somewhat confused by these Treasury technocrats who are shrewdly manipulating the FATCA process to get something in place that was never the intention of Congress. They did NOT sign up for a DATCA or a GATCA, and that is clearly what US Treasury is trying to create, IMHO.
From my reading, I think they are very much trying to keep any of this from rising to the level of Congressional or Parliamentary over sight, but then my understanding is lacking in these areas. It seems to me, for them to win, any process that is required must just be perfunctory in nature, so no debate occurs. Help flesh out this picture for me, if you can.
First comes Tim’s answer.
The answer is yes they believe they can do it by regulator fiat without the advice and consent of the Senate. Now is that actually the legal correct answer, “who knows?” I guess the question is do you want to spend the money to fight them in court on a fairly academic point. Clearly though out most of American history all treaties required the ‘advice and consent’ of the Senate to come into force. However, the executive branch since World War Two and especially since the 1980s has drifted from this view. I would also add this is not necessarily a Democrat Republican thing. Ronald Reagan’s Administration entered into to several of these “Executive Agreements” and more recently some Democratic Senators such as Ron Wyden of Oregon have criticized the Obama Administration for entering into these types of agreement also (in areas other than tax).
Tim followed later with this.
From the US State Department:
What is the difference between a treaty and an executive agreement?
As explained in greater detail in 11 FAM 721.2, there are two procedures under domestic law through which the United States becomes a party to an international agreement.
First, international agreements (regardless of their title, designation, or form) whose entry into force with respect to the United States takes place only after two thirds of the U.S. Senate has given its advice and consent under Article II, section 2, Clause 2 of the Constitution are “treaties.”
Second, international agreements brought into force with respect to the United States on a constitutional basis other than with the advice and consent of the Senate are “international agreements other than treaties” and are often referred to as “executive agreements.” There are different types of executive agreements.
Now is the above really b****t? Personally I think yes, and I suspect several Supreme Court Justices like Scalia, Thomas, Alito and probably both Roberts and Kennedy would agree with me. Again the question is are you going to spend the money required to sue the government on this point?
Then Jim Jatras weighed in
Yes, Tim is right. (Sorry to be so late responding — it’s Thanksgiving here, just got free).
That’s part of the shell game here. Yes, from the constitutional perspective of the non-US “partner” (UK, Canada, etc) the IGA very well may be a treaty and have to run the parliamentary traps as such. In most cases (again, depending on the particulars of the legal system of the non-US “partner”) domestic legislation would be required to implement the IGA. But since most of these countries (like UK, Canada but unlike the US) are parliamentary systems it is presumed that because the Government rests on a parliamentary majority, they can enact anything the Government agrees to with the US.
At the George Mason seminar, I asked Jesse Eggert of Treasury specifically what kind of instrument the IGA is. He confirmed that it is *not* a treaty but is an Executive Agreement.
(Again, Tim is right.) The article and section authority for a treaty is spelled out in the Constitution. But just try to get any coherent explanation for what an EA is and where it gets legal authority. Ditto with “Executive Orders” which are also standard features of what passes for American “law”. But EAs and EOs have become so prevalent the courts don’t strike them down and Congress rarely raises a fuss.
They don’t call it the “imperial Presidency” for nothing.)
Btw, one of the questions in the Ron Paul + 3 Senators letter to Geithner in July was the legal authority and type of agreement the IGA is. The response (which Eggert drafted) ignored that question.
Nov 24: Updated with response from Treasury to Geithner
With respect to Fatca IGAs this means that while the non-US “partner” country may have to jump through a bunch of hoops, Treasury doesn’t expect to have to break a sweat fooling around with some pesky democratic process. They claim they have all the legal authority they need to impose the Fatca-like requirements in the IGA Art 2(b) on US domestic institution just by issuing regs without new statutory authority from Congress.
(And since on the US side it’s not considered a treaty, no need for Senate advice and consent). Now, the Art 2(b) regs would be quite burdensome, as is but far less so that those the non-US “partner” agrees to impose on itself under Art 2(a). So it’s not at all “reciprocal“.
But to save face for the non-US “partner” and let everyone pretend the IGA is an act between consensual adults, the US promises in Art 6 that someday, somewhere in an alternate universe it will provide information to the non-US “partner” on an equal basis.
Treasury concedes, however, that would require new legislation, which is why it won’t happen before (as Nikita Khrushchev said in a slightly different context) “shrimps whistle.” The Art 6 promise is just window dressing so the non-US “partner” can claim the IGA is “reciprocal” to whomever is naive enough to believe it.
I followed up with this:
Maybe we should be approach the ACLU or some deep pockets somewhere to file a suit. Even if nothing happens with it, and it goes no where, I think it was Patric (or was it Jim) that pointed out, it still gets attention and might help change the narrative of this stealth GATCA process.
I wonder what the cost would be for just the filling and a Press release to follow? Of course, Treasury would immediate oppose it, but again, doesn’t that get attention? We desperately need to do something to get attention in DC and the media, is there a strategy where this might work?
To which Jim Jatras responded:
Filing a lawsuit (or several suits — for example, trade violations are likely to carry more weight with the courts than constitutional arguments), and associated media, could be a useful complement to a broader media and lobbying campaign to implement a strategy to repeal Fatca. But as a stand-alone without such a campaign, it’s probably not the best use of resources.
Tim weighed in:
Perhaps some more “conservative” political group in the US might be interested its hard to say. Under US law it is not necessarily an open and shut case. The legislation for example Canada would have to implement to hold up its side of an IGA is far more problematic from a Canadian constitution standpoint.
I came back with this:
Thanks James and Tim, that clarifies the issue for me. But surely there is some monkey wrench that we can throw into the machinery. I don’t know what it is, as my ignorance of the process shows, but there must be some technical thing we could do to slow it up. However, if the Congressman who write the letters, here, here, here, here and here just accept the responses without calling in Treasury for questioning in their committees, or pushing back harder, I guess we have little hope!
And Tim had additional comments on New Zealand, Australia and Canada.
Remember even in a parliamentary system parliament is not necessarily a rubber stamp. In New Zealand for example NZ Labour, NZ Greens, and NZ First could probably kill an IGA if they wanted too or at the very least put John Key under a lot of pressure on it. Key may or may not have John Banks (an “independent” conservative leaning NZ mp with major ethics problems) as a vote on this in a few months time. In Australia and Canada you also have the Senate which could kill this if either body wanted too.
Clearly Treasury is hoping FATCA partner countries will try to “low bridge” any type of domestic approval needed for these agreements under their domestic laws. The problem is all of these countries have dramatically different budget cycles. The main French 2013 budget bill for example is going to be voted in the next week or two with no FATCA IGA provisions and no actual IGA signed between France and the US yet. So unless France wants to make implementation of FATCA a “freestanding” law they would have to wait until very late next year to get it into place before 2014 as part of an omnibus budget bill. That seems very risky to me. In Canada for example if implementation is a “freestanding” piece of legislation I can’t see it passing and I can’t really see the Conservatives whipping the vote too strongly either.
And then added this on Germany:
German banks fear being unfairly disadvantaged if US institutions would be spared tougher capital rules due to be introduced in 2013. Their warning comes as US regulators seek to ditch the landmark Basel III accord.
Growing resistance in the United States to implement new banking rules under the so-called Basel III agreement has raised concern among senior German banking officials.
“Americans must not be allowed to ditch at the last minute an accord they had negotiated themselves,” said Andreas Dombret, senior board member of the German central bank, in a statement released Wednesday.
Dombret added that any attempt at “watering down” the Basel III agreement was bound to lead to “new strains” in financial markets.
The above definately shows a certain degree of militancy on the part of German Banks to the US Treasury albeit on an issue unrelated to FATCA.
Finally Jim weighed in with his last ‘post Turkey’ analysis.
Good question. I think the Germans are quite aware the IGA obligations are not reciprocal. From the German Embassy speaker at the George Mason event, it’s unclear if they really believe the US will follow through later. I’m guessing they know it’s a fig leaf. As you say, they aren’t *that* thick.
From what I hear, German banks were among the most active in pleading for their goverment’s help in the form of an IGA. Will they balk based on details? Possible, but I doubt it.
Two other factors:
1. Not to be too stereotypical, but Germans (and especially their bankers!) follow orders. It never would occur to them not to follow a rule. Fatca is a rule. Therefore they must obey. Period.
2. They are particularly deferential toward the US. As the Embassy guy told me re repeal prospects (paraphrase), “No. I know Americans well enough that once they make up their minds to do something, they do it”.
The article you sent is interesting though. Maybe they’re getting fed up? Aside from all else observed above, German bankers do get pretty hardheaded when it comes to money: how much will this cost? Of course if Berlin did balk on Fatca, that could be a damaging as Ottawa’s doing so. But I’m guessing they will sign. If they do, I think prospects for pulling out later are small. Besides, in terms of the bandwagon Treasury is trying to create, the signing now is the problem more than what they might do at some future point.
Re ur: ” I guess we have little hope!”
No, that’s not at all the case. I hate to say it, but it all comes down to money, money, money. Institutions that should be fighting Fatca are instead already spending millions to manage their compliance with Fatca and thereby (whether or not that’s their intention) helping lock it into place.
Think of what could be done if the same institutions (who can well afford it) were willing to commit in aggregate a few hundred thousand dollars to this effort. Picture the IBS Appeal and other initiatives, maybe better stated but to the same effect, on numerous websites and publications in Canada — and thousands of people, (as opposed to a few dozen activists) writing in in opposition to an IGA.
Picture similar initiatives to inform Americans (fewer than one in a thousand of whom, if that, have heard of it) and mobilize them to contact their Congressmen and Senators. As the recent posting about Reagan on IBS noted, politicians see the light when the feel the heat. They feel the heat when media are banging on a issue and they hear from constituents.
But that doesn’t happen unless a campaign is stirred up — how can people get riled up about something that’s never been brought to their attention? And that, pure and simple, takes money. A small group of volunteers just doesn’t have the ability to reach a wide enough circle of people to have the impact needed in the required time frame.
Also (there’s no nice way to say this), a lot of people are like lemmings, and politicians even more so. When things appear in media, when ads appear in influential publications, when commentators with known names say thus and such, it has a *validating* effect on the message, and politicians take notice. Absent that, they don’t.
In an earlier email I believe I mentioned a chat I had yesterday with a former colleague at the Senate who’s been banging his head against the wall at his current firm (he’s now in the private sector) to suggest that they fight FATCA. The response he’s been getting from others in his firm is that they’ve invested so many millions of dollars already, and uncounted man-hours, on figuring out how to comply with FATCA, it’s hard for anyone to admit that may have been a waste and another approach might be possible, even as a hedge.
(There’s no overestimating the damage caused by people motivated by the fear of looking foolish. Luckily, among my many faults that’s not one of them!).
At one point my former colleague asked me if I saw any movement in the direction of repealing Fatca in Congress. This set me to thinking. I’ve heard that question in one form or another several times and it struck me as misplaced, but I couldn’t quite think why. Then this thought occurred to me: Picture a big rock on a hill near a steep slope. Someone suggests, “You know, if we could get a little muscle together, I bet we could roll it down the hill. It isn’t far and look at that slope!”. A listener looks at the rock and then at the speaker and replies with a shrug, “I don’t think so. The rock doesn’t appear to be moving . . . “. Of course it’s not moving — nobody’s pushing it yet.
I don’t know how it is in the Canadian parliament, but US Senators and Congressmen — and even more so, their staff — respond to message that is validated by money. Sometimes when I talk with people on the Hill who are receptive on the message re Fatca, they ask, “So, where’s industry on this?”. We know the short answer — at best, sitting on their hands; at worst, effectively helping the other side.
If you open up any edition of Politico or Roll Call it’s full of expensive issue ads placed by companies, unions, associations, etc, giving their point of view for or against something or other. The validating message is the answer to the question of “Who cares about this issue?”. The answer is: these people do — you can tell, because they’re putting their money where their mouth is.
So ask the same question, “Who cares about Fatca?” Right now, the answer, sad to say, is “no one with a lot of political throw weight”.
You have a several-million-large community of expats but their influence is dispersed (they aren’t a voting bloc in anyone’s district or state) and they don’t have the kind of money you need to “pay if you want to play”. That’s not to say merits on an argument are entirely irrelevant and you can’t get a fair hearing, even on a somewhat more modest issue like citizen-vs-resident-based taxation. But even that wouldn’t be easy. The institution isn’t used to changing things just because something makes sense. It’s used to responding to pressure, which gets right back to money.
So, all this back and forth and trying to get the word out is useless? No. I’m convinced we can get the rock to the slope, and if we do, Fatca a goner. But to mix the metaphor a bit, the best “push” we can give is to find the right kind of support — a firm, association, or even wealthy individuals, which I expect nobody on these messages is — who can give this the visibility it needs. That’s how we enlarge the public notice (I have yet to talk with anyone about Fatca who wasn’t appalled by it — but many, many more people need to hear about it than can be reached by word of mouth), get media coverage, and make politicians take notice.
So what does this tell you?
It sure feels to me, that these Fatcanatics are winning right now. They are pulling a fast one, on the American people by forcing countries into these IGAs, without any discussion in Congress about what is happening. With budget talks and fiscal Cliff around the corner, is anyone going to risk any political capital by opposing what is seen as needed tax revenues to defend offshore tax cheats? That is how it will be spun.
However, as Rumsfield once said, their are “unknown unknowns”, and it could be that something totally unrelated to FATCA (like Germany opposition over U.S. re-nigging on Basill III) could come out of left field, and derail this freight train. U.S. Hubris might still undermine this fiasco. However, while we can be morally right in our opposition to FATCA, strategically, at this stage of the game, I think they have out flanked us, unless as Jim says, some deep pockets can step forward for active opposition and lobbying. I don’t think we can depend on a “unknown” miracle to save America from itself!
Surely, somewhere in this long list of FATCA Comment letters is someone willing to spend some money on something besides just compliance efforts.
Finally, speaking of IGAs, and the difficulty of putting these all together before they expire in 2016, Jim Calvin at FSI has some interesting comments here. There are other complexities that could undermine the entire process. As he says, in conclusion “The bilateralism of FATCA seems almost quaintly simple compared to the multilateralism envisioned by the IGAs.”
Nov 24: Updated For our Records.
Here is IGA Model I
and IGA Model II
This might be a stupid comment, but would it be possible to reach out to rich influencial people, like Warren Buffet?
Masterpiece of a post Just Me. I get more of this part of things than I did. Much thanks as always – and for weaving in the information from Tim and Jim (between the turkey and the sweet potato pie).
Perhaps being able to cite this to the Canadian federal ‘shadow cabinets’ in opposition might get them thinking about the treaty vs. executive agreement processes – and the differences between what that means for our process vs. the US.
And, I don’t get why the delegation from Florida, and those Senators (Rubio, etc.) who wrote the letters opposing DATCA don’t try to derail it by questioning Treasury authority to do it – and thus would help us to budge FATCA. They’ve got the money – since it is the US banks who they are protecting, (and the related revenues held in accounts in their State ) that don’t want to pay for any part of the process and for collecting and reporting reciprocal information. Unless they are satisfied that the reciprocal portion is as good as effectively dead – or only available in an alternate universe.
By the way, did we ever get the reply to the Senator’s letter posted here? Can be useful to provide to our representatives as proof that the US has no intention of anything even remotely like any reciprocation. Which doesn’t get any advantage to Canada over and above what could already be achieved under the reciprocal tax treaty already in place – (already giving the US the upper hand – re not recognizing our registered accts – so dear to Finance Minister Flaherty!) + savings clause + last in time rule).
So that leads me to ask again – what else is on the table between the US and Canada – something non-tax related? Raw materials/natural resources? Pipeline? Tar-sands oil? What?
Just Me,
Thank you, thank you for your brilliant analysis, using the answers you got from Tim and Jim.
Such brings to mind the post over on Maple Sandbox, “Are we talking to ourselves?”.
Onward.
Since I found out about this stuff, it appears to me that these legislators are only in the business of creating whatever law fits at the time. Once the law is in place, they go back to sleep. “Repealing” is not a word that the Congressional field reps want anything to do with
Thank you Just Me, Tim and Jim for this very informative post ( Jim, I’m impressed with your ability to fight the effects of tryptophan so well)
As we know, FATCA is too complex for people to understand at first glance. A banner that puts ‘banks’ and ‘sovereignty’ in the same sentence makes it hard to drum up a lot of outrage against a policy that appears to only hurt the banks, as most folks couldn’t care less about any difficulties the banks might be having as they think they make too much money anyway. I often find myself saying/writing “You don’t have to love banks to hate FATCA!” If we replace “financial institutions” with “puppies and kittens”, we would get the attention we need.
@badger,
Indeed,
The Tories better consider whether they ever want to be elected again. This is going to hit seniors, with assets – one of their most faithful constituencies. FATCA may be enforced, but when the banks start notifying their customers, and the customers start seeing that the forms mention the IRS, the s–t is going to hit the fan. Picture headlines: “Harper government and Finance Minister Flaherty sell out Canadian seniors to the IRS”
@Badger
Now we’re getting somewhere. “Seniors” sounds almost as good as “puppy”. How about throwing “disabled” in there too? We may just have to reframe our message, hmmm.
The voices that may speak the best and loudest against FATCA are the million plus US persons living in Canada. But how many US persons are going to stand up against an IGA through the Canadian government when that government is seriously considering collaborating with the enemy? Some, fearful of not knowing how deep in bed Canada will get with the US, may even fear their names could get turned over to the IRS.
The spider may just be perceived as having an assistant in the name of the Government of Canada.
*Yes, @Just Me, absolutely brilliant post!! But that almost goes without saying…;) @Bubble, yes, I agree, especially as Canada has the most US Persons abroad.
It might sound crazy but wonder if writing to the Queen would make any difference, at least for anyone who belongs to the Commonwealth. If Canadians in the hundreds and ideally thousands could write to Her Majesty, it might just produce the rippling effect we will need, especially as we will never have the money or power to defeat this directly. It will thus have to be done via influence rather than sheer might. If the Canadians could write enmass to the Queen who is Head of Commonwealth might get the heat up enough…
She might be our greatest potential ally, especially as she’s above politics. While she herself probably couldn’t do anything because she has no power, she nevertheless as enormous influence. (Particular relevant for anyone with duel nationality with a Commonwealth country such as Canada, NZ, Australia, etc.)
Does anyone think this is a potential?
The Queen is almost saintly in her unwavering devotion to her duty and her quiet but steadfast Christian faith. She is to my mind the best defender of innate fairness, especially as she is above politics and represents the Commonwealth as well as Britain. The other delightful thing is how she appeals to our sense of what represents true class vs mere MONEY, MONEY, MONEY…LOL
She is so gently diplomatic but astute….the world’s greatest ambassador to my mind.
What’s also wonderful about her is that she genuinely represents all her subjects, whereas it seems that Congress only really recognizes BIG FU MONEY.
We may not have the power but we can appeal to someone with influence. My mother always said that money can’t buy class. They can go together but are not one and the same
The Best of British…the rippling effect 😀 😀
@Just Me,
Thank you so much for your informative post. Brilliant weaving the comments of both Tim and Jim into the post. So a big thank you to them also. I now have something to use in my attempt to explain to others why I keep telling them that “Yes, this does affect you also”.
*Would anyone be able to produce a parody ‘FATCA style’ video (Gangham Style)? Especially as that video went so viral…perhaps one extolling Canada.
*monaLisa Unfortunately, writing to her majesty would be a waste of time, paper, and LCUs. It might make the writer feel warm and fuzzy but that would be the only benefit. HRH has much bigger issues to deal with. Harry for one.
*The difference between an IGA and a Tax Treaty are irrelavent to the congresscritters that gave us FATCA. FATCA unilaterally abrogated every tax information exchange agreement the US ever signed, including a comprehensive one with Canada.
The congress is ready to block implementation of any reciprocity agreement.
IRS and Treasury will mine the data for non-reporting of assets. The primary goal is to collect huge penalties, even when no taxes are due,
Pingback: The Isaac Brock Society - Eight reasons Canada MUST say NO TO FATCA! – updated
And what I have feared most out of FATCA to GATCA evolution. Here come the copy cats.
Exclusive: UK to impose son of FATCA on Crown Dependencies, despite government’s denials
A leaked government document seen by International Tax Review reveals that the UK is planning to impose its own version of the US Foreign Account Tax Compliance Act (FATCA) on its Crown Dependencies and Overseas Territories. The move will deal an almost fatal blow to tax evasion through the UK’s Tax havens.
Amazing post Just Me, with super input from Tim and Jim. (Sounds like a team, eh?)
I find some hope in these comments from the “Germans warn..” article:
“The accord was signed by 27 industrialized
nations, of which only eight have so far adopted implementation legislation.
…..leveled sharp criticism at the United States,
claiming financial institutions in Germany and Europe would be treated
unfairly.
Hoenig urged the rule-setting Basel
Committee on Banking Supervision to give up implementing the accord because it
was too complex and would provide loopholes for banks to bypass some of its
rules.”
@bubblebustin;
I think you’re right on about the puppy – senior parallel. It is interesting that CARP wrote to, and got a long reply from Flaherty on this months ago. Does CARP know that Flaherty is planning to sign Canadian seniors away to the IRS under FATCA? And the US Ambassador chose to use the example of Canadian grandmas.
So, we know that grandmas and seniors are an important constituency (they vote in large numbers) and they’ve got registered assets – particularly RRIFs, and they’ve got savings, and their houses will be subject to capital gains tax by the US – and perhaps result in an IRS bill, and penalties for tax owed, and seniors will have estates, and it looks really bad to threaten and fine seniors. The FEIE also doesn’t work for them because they aren’t usually primarily earning through wages, rather, through earnings on investments – and if those are mutual funds, etc. – here come the US punitive forms and penalties – threatening their life savings. So, all in all, I think that is a very vulnerable angle to work on.
Any CARP members here? And if you’re planning to write politicians, etc. – remember to say you’re a senior, mention life savings potentially wiped out, mention US taxing the sale of your primary residence if/when you either downsize or have to pay for longterm care or assisted living, etc. Mention estate planning, and your non-US heirs being burdened with reporting to the IRS, etc. List as many negative effects on seniors as possible. Mention your non-US spouse not being eligible for receiving estate from US person, etc.
It’s a big list – and no Canadian politician (or US ambassador) in their right mind wants to accuse seniors and grandmas of being criminal tax-evading money-laundering terror-funding drug lords do they? So, then why are their accounts going to be reported to the IRS?
Thanks, badger. I will continue to emphasize the “puppy”-like qualities of what affects me and my family.
I got this acknowledgement:
I hope I or someone hears further from Zoomer, the magazine of CARP.
Thank you for contacting Carp/Zoomer.
We have received your correspondence, and it is being sent to a customer service representative for proper handling. If additional information is required regarding your inquiry, the representative will contact you directly. Please do not respond to this e-mail.
to this:
From: calgary411
Calgary 411, glad to know that you’re on the CARP angle – and working those puppy qualities! Everybody loves a puppy – except the IRS. Maybe since FATCA is too hard to explain in detail, we should in some cases, hammer the ‘seniors and puppies are not tax-evading terrorist drug-lord money launderers’ line over and over and over….
My spouse just reminded me that though the US Ambassador Jacobson felt the pressing need to assure us – via public statements in the media, that the IRS, Treasury and US government weren’t out to persecute Canadian grandmas (a big fat deliberate lie), since when was it okay to persecute children born in Canada on the basis that they have US parents (ex. by punishing their RESP college savings)? And are Canadian families more likely to be tax evading criminal terrorist drug lords than those in the US?
Lets work the child angle too. Because somebody has to sign for and report on the RESPs and accounts of minors deemed to be US persons too. And you can’t close out RESPs to minimize the reporting cost and complexity. The rules are very very restrictive. What if we could publicly (and truthfully) accuse Ambassador Jacobson, the IRS, (and the Canadian government) of using FATCA against children, seniors – and puppies?
@all
Another thing to be aware of regarding Seniors and the U.S. tax issue is that most seniors are no longer working and therefore can not claim the “Foreign earned income exclusion”. Also, it is the seniors who are much more likely to have investment accounts, both registered and non-registered. And most seniors today at least make an attempt to save money in a TFSA. Also, they likely have alot more equity in their homes and might be downsizing, thus resulting in a large Capital Gain on a U.S. tax return if they have to file one. It is my belief that the most likely tax payers who would owe tax both in Canada and the U.S. are the seniors of this country.
@tiger, good points to make when we’re talking with our representatives. The ones who don’t want to hear about the other details will sure understand that anything seen to attack seniors taints anyone being a FATCA apologist.
And, I think it may be an effective soundbite antidote to the baseless charges that “US citizens are hiding their money abroad to avoid paying the taxes they owe”. Right, so Canadian citizen and resident seniors and children are seeking out the tax haven of Canada to avoid US tax?
Just saw this: http://www.tax-news.com/news/Mexico_US_Sign_FATCA_Agreement____58421.html
Don’t know if it’s been posted elsewhere – move it if you like.
@Badger,
Good find re above article on the agreement between Mexico and U.S. When I read it, I found the following paragraph particularly interesting and a bit puzzling: “A government to government agreement, as signed between the U.S. and Mexico, does not contain any exemption from FATCA, but instead, a model for information sharing is offered BASED ON EXISTING BILATERAL TAX TREATIES and……..”
Now does this mean that this new agreement requires no more than the present tax treaty requires? If so, and using Canada as an example, based on our treaty with the U.S. our financial institutions already have W-9’s signed when the client has U.S. securities and they know the client to be a U.S. citizen. If the client is not a U.S. citizen, and they hold U.S. securities, the client signs a W-8BEN (which clearly states on it ‘not to be signed if a U.S. person for tax persons). I guess my point is could these new government to government agreements contain regulations that our financial institutions already follow.
Good question tiger, and glad you pointed out the phrase;”“A government to government agreement, as signed between the U.S. and
Mexico, does not contain any exemption from FATCA, but instead, a model
for information sharing is offered BASED ON EXISTING BILATERAL TAX
TREATIES and……..””
I didn’t really know what to make of that. Hoping for others here to weigh in.