This post appeared on RenounceUScitizenship.
@sunlife Throwing ur customers under the Bus are you?It could be some of your own family members who r “U.S. Persons’ bit.ly/12i39fC
— Marvin Van Horn (@FATCA_Fallout) December 16, 2012
[https://www.youtube.com/watch?v=rNtIDy78DdE]
Once upon a time there was a Canadian life insurance company. It’s name was Sun Life. Sun Life was founded in 1865 in Montreal (predating Confederation by two years). It was a proud Canadian institution. It was in the business of protecting families. The story of Sun Life parallels the history of the world since 1865. It is an international company with a presence in most of the developed world. It saw itself as a “good corporate citizen”. During World War II the wealth of Great Britain was stored in the Sun Life building in Montreal. During World War II the company provided entertainment for Canadian troops abroad. After World War II it helped “protect” the middle class of North America. The name “Sun Life” meant “trust”. If you want to learn about Sun Life, review a bit of history and understand Sun Life’s important role in Canadian history, I urge you to watch the video history of Sun Life financial.
No company that has been in business as long as Sun Life could be “mistake free”. But, businesses should never be judged by their mistakes (we all make them). Companies should be judged by how they remedy their mistakes. Like many insurance companies, Sun Life participated in selling the “vanishing premium” whole life policies of the 1980s. (The basic theory was that premiums contained a “built in” extra amount that was to be invested to earn the money to make the payments after a projected number of years. The problem was that the calculations assumed a level of interest rates that was unsustainable. The policies themselves required the annual payments for the life of the policy. You get the idea …) In any event, Sun Life was one of the first companies to settle a “class action” lawsuit. The lawsuit was settled on the basis that the affected clients would not have to pay premiums beyond the premium offset date. This is what clients believed they were getting. Once again Sun Life proved that it was a great institution that could be trusted! Although it was not a perfect solution. Sun Life agreed to NOT require that affected customers to pay any more premiums.
Sun Life has a big legal department and knows that many of its clients are U.S. persons
Sun Life failed to tell its customers who were U.S. persons in Canada that many of their life insurance offerings would lead to tax and reporting problems for U.S. persons! Did they misrepresent the policies? Will they be forced to defend a class action over this lack of disclosure? Time will tell. Hopefully Sun Life will continue its history of being reliable and protecting its customers. After all, the only thing a Life Insurance company has its reputation for protecting its customers. That’s what insurance is for. That’s what Sun Life is all about!
Sun Life Clients need “Sun Life Protection” more then every before!
On December 3, 2012 an announcement on the Sun Life site informed the world that rather than provide protection for its customers, that Sun Life was planing to assist the IRS in locating and identifying U.S. persons (which include Canadian citizens). To ensure no mistakes, here is the announcement on the Sun Life site as it appeared on December 17, 2012. This is shameful, extraordinary, shocking and a complete betrayal of what SUN LIFE STANDS FOR!
The U.S. Foreign Accounts Tax Compliance Act (FATCA) and your group retirement plan
December 3, 2012
In March 2010, the U.S. federal government passed the Foreign Accounts Tax Compliance Act (FATCA).
The Act increases the ability of the U.S. Internal Revenue Service (IRS) to detect tax evasion by U.S. persons who hold financial accounts at foreign financial institutions. This includes U.S. persons who hold a group retirement plan account administered by Sun Life Financial and other Canadian financial institutions.
What this means to you
According to the latest information beginning January 1, 2014, FATCA will require Sun Life Financial to collect and report certain information on accounts held by U.S. persons to the IRS.
This means that we may require plan sponsors or plan members to provide us with information or documentation to determine if a plan member is, or is not, a U.S. person (a term that refers generally to a U.S. citizen or U.S. resident in this context). It should be noted that the term “accounts” includes life insurance policies with a cash value and annuities.
It also means that we may have to report certain personal and account information to the IRS or the Canada Revenue Agency if a plan member is identified as a U.S. person.
At this time, we do not have the specific details relating to these requirements. There are two reasons for this:
- Regulations are not finalized: The final regulations that will outline the detailed requirements of FATCA have not been released. We understand the IRS may release these before the end of 2012.
- Intergovernmental agreements are being negotiated: The U.S. is in the process of negotiating intergovernmental agreements with Canada and other countries with the goal of reducing the scope of FATCA’s compliance requirements for financial institutions in those countries. If Canada enters into such an agreement, it may allow us to report U.S. person account information to the Canada Revenue Agency instead of to the IRS directly. The Canada Revenue Agency would then be responsible for reporting the information to the IRS.
We’ll keep you informed
Sun Life Financial is currently participating in various FATCA industry working groups in Canada, U.S., and Hong Kong to address issues related to the implementation of FATCA. We’ll continue to monitor and track FATCA developments and keep you up-to-date on any changes that could affect you or your plan members.
Questions?
Please contact your Sun Life Financial Group Retirement Services representative.
It is clear from the Sun Life announcement that:
1. Sun Life is simply prepared to follow a U.S. law and actively seek out and identify its customers who the U.S. defines as “U.S. persons” even though they are Canadian citizens living and working in Canada.
2. Identify them as being members of certain retirements plans (which may well be PFICs under U.S. law).
3. Identify their clients who own life insurance policies with “cash value” (many investments are prohibited to U.S. persons and no U.S. person can have anything but “term insurance”).
This is a shocking betrayal of its clients. It is estimated that approximately one million Canadians are considered by the IRS to be “US persons”. They are your friends, your neighbours and their families. These people are being subjected to an IRS campaign to identify them. (Many of these people don’t even know they are U.S. persons.)
Sun Life built its business on protecting its customers. Instead Sun Life is doing the exact opposite. Sun Life is doing two things:
1. It is failing to provide protection by considering complying with the demands of a foreign government.
2. It is going much further than failing to provide protection. Sun Life is specifically cooperating with the IRS by turning over the names of it client to the IRS and sending them off to IRS processing. Sun Life is actively assisting the IRS.
How can a company that built it business by selling protection for its clients participate in such immoral and outrageous behavior? Sun Life has only its “moral capital”. This is not a question of obeying Canadian law in Canada (which one would expect). This is a question of of obeying the law of a foreign country. FATCA is specifically designed to loot the Canadian Treasury.
What should Sun Life Do?
Sun Life has a long history of providing protection for its clients. To provide protection is the very reason it exists! I call upon Sun Life to evaluate its conduct. I call upon Sun Life to consider whether to comply with a U.S. law and apply that law to Canadians in Canada. I call upon Sun Life to live up to its promise to provide protection.
If Sun Life fails to protect it clients, it has repudiated its very reason for existing! By seeking out U.S. persons and turning them over to the IRS for processing Sun Life would betray its clients. It would also betray itself. It would have betrayed its very reason for being – a bitter end to a company with a proud history!
Sun Life still has time to honour its traditions. Sun Life still has a chance to do the right thing and the moral thing!
What can you do?
If you agree with these sentiments, then you get the word out. If you are a Sun Life customer let them know how you feel. Sun Life has is in the process of betraying the trust of its customers Under no circumstances should you do business with Sun Life of Canada!
While you are at it, get the word out that the world must:
What a coincidence. This very day Sun Life ate up a quarter of a working day – still no resolution – for a bit of business that should have taken 10 minutes max. Their back room has to be a quagmire of attempts at systems whose detritus-design can only cascade the datatrocities. To harp on a favorite theme, that big bUS will gleefully run down anything in the road. As a person irretrievably yoked to SunLife through a “benefits” plan, I am so glad to have taken appropriate long range action based on absolute nonconfidence in both Canada and its corporate minions.
@usxcanada,
Congratulations on your getting out! Sun Life now; what such employee notification re their benefits plan of which Canadian corporation will be next? I can feel the horror of some poor ‘USP’ employees reading this, thinking all this really wouldn’t affect them / all they have to do is lie low, be quiet, live in hiding.
fantastic. Now each and every person can file a discrimination claim against that Corporation. And there will be new people who will understand FATCA legislation in an intimate way.
@calgary411, I got the impression from your comment that you thought this message was directed to employees of Sunlife. However, I think the Sunlife announcement is targetting all customers who have pension plans with Sunlife, not just its employees.
Regardless, the obvious uncaring, matter-of-fact tone, makes my blood boil. It is disgusting.
I thought that RRSPs and possibly all registered retirement plans, had a good chance of being excluded from FATCA reporting, as part of the current ongoing IGA negotiations between Canada and the USA.
Isn’t Sunlife jumping the gun a bit here by making such a bold warning announcement when no IGA has yet been signed, particularly since they are forewarning release of information regarding registered pension plans, as opposed to investment accounts?
Two of my daughter-in-law’s employers and one of my son’s employer offers extended health through Sun Life and also “Definied Contribution” Pension Plans. There will be thousands and thousands of Canadians affected by this. How many of those Canadians might also be considered ‘US persons’? I shudder to think of it.
This trickle will soon turn into a flood. Canadians simply MUST rise up and fight this FATCA monster. Far too many other countries have either already capitulated or are about to. We cannot allow this to happen here!
@WhiteKat,
It could refer to Sun Life employees and to any other corporation who uses Sun Life for their benefit plans. There have to be so very many to have the news from this first Sun Life missive.
I predict there will be a lot of Canadians with zero US connections who will refuse to be party to their charade. What do they plan to do if 50 percent (or 80 percent or 20 percent)of their customers are “recalcitrant”? FATCA calls for them to close the accounts and/or withhold 30 percent for the IRS. How do you plan to make a living then, Sun Life?
Urgent to report this newest development re Sun Life, to CARP – since it impacts their core constituency, and they have written to Flaherty re pension issues in general, and about FATCA, and US extraterritorial taxation, and posted his response on their website. http://www.carp.ca/2012/06/15/minister-flaherty-canada-continues-to-press-for-fair-tax-deal-with-united-states/ Flaherty acknowledged the problem with the TFSA and RDSP not being covered in the Canada/US tax treaty – same with RESPs, and he knows that the PRPPs won’t be either, and that RRSPs and RRIFs require the annual forms and treaty election …”Many individuals are also concerned that the investment or interest
income earned in their Canadian Tax-Free Savings Accounts (TFSAs) and
Registered Disability Savings Plans (RDSPs) may be subject to U.S. tax.
While TFSAs and RDSPs – both introduced by our Government in recent
years – do not yet receive an exemption from U.S. income tax under the
existing Canada-United States Income Tax Convention, the Government will
argue for such an exemption as the Convention is renegotiated with the
United States.
Another piece of U.S. legislation causing concern is FATCA, which is proposed to come into force on January 1, 2014.”….
Susan Eng is a lawyer, http://www.carp.ca/about-carp/bios/susan-eng/ and a key function of CARP is advocacy and lobbying on issues affecting their members. http://www.carp.ca/category/advocacy/your-finances/
http://www.carp.ca/2012/12/13/carp-poll-urgent-need-to-enhance-cpp-and-improve-prpps/
…”CARP issued an open letter on December 5th to Canada’s Finance Ministers http://www.carp.ca/2012/12/05/open-letter-to-finance-ministers/ in
advance of their meeting later this month calling on them to fulfill
their 2010 promise to enhance the CPP and to facilitate PRPPs but only
if there are better safeguards….”…..
The Federal Conservatives do NOT want public attention drawn to FATCA and US extraterritorial taxation and treatment of our ‘foreign’ Canadian retirement plans and accounts. The effect of the US punishing all duals and ‘US taxable persons’ in Canada – all > 1million, is a serious spoke in the wheel of PRPPs – currently a pet project of the federal Conservatives – they do not want to give the provinces or the public any fuel to reject the PRPP – which Flaherty and the Feds are pushing (at the greedy behest of banks, insurance companies, investment firms, etc.) rather than giving us an enhanced CPP.
Obviously the PRPP cannot be used by any of those in Canada, who are claimed as taxable by the US – because the PRPP is another one of those ‘foreign trusts’ – as the US deems our TFSAs, RESPs, etc. That creates and solidifies the two classes of Canadians – those who can enter into a PRPP in a workplace without penalty, and those whose participation brings down the 3520/3520A threat and burden – which defeats the purpose of having a PRPP.
In contrast, enhanced CPP is not subject to the ‘foreign trust’ jeopardy.
Flaherty and the Feds know this full well, but are deliberately keeping silent on it. What is the impact of the Canadian public knowing that the Harper government is entering into FATCA – knowingly turning Canadians over to the IRS, and at the very same time pushing PRPPs that they are entirely aware would jeopardize any of the 1,000,000. in Canada that the IRS is hunting? If a private workplace has a PRPP plan, it may be mandatory to participate, or at least to be enrolled, and then to opt out. Problem is that the mere enrollment would create a ‘foreign account’ – even if nothing were in it. And thereby triggers the FATCA, FBAR, and 3520 reporting obligations and the matching penalties.
CARP also made a presentation on the federal budget:
http://www.carp.ca/2011/11/18/carp-october-31st-presentation-to-the-finance-committee/
Pensions are a core advocacy issue for CARP. Who knows how many of their members also would be account holders with Sun Life?
Has to be at least a few Sun Life employees who are deemed US persons doing full ostrich. This is tragic for them.
I wish someone would just sue them.
To me, it’s incredible to think that the US could force a sovereign nation to handover details about their private citizens to a foreign government. Universities should just abolish all International Law programs and just teach US Law, since that’s the only one that counts.
It is obvious why Sun Life is compromising Canadian Charter rights and privacy laws. It is because they have investments in the United States. The Canadian government must now step in and tell all Canadian financial companies to immediately sell their US divisions, in order that Ottawa will regulate these business not Capitol Hill. We have no representation in DC. Sun Life yesterday was selling an annuity business in the United States at an apparent loss (hence the stock price fell).
The damage that Obama et al. are doing to the normal business relations between these two friendly countries–threatening economic sanctions if we do not comply with their dumb-ass laws is beyond belief, and the stupid media in Canada is nowhere to be seen (AWOL)–they are still publishing articles contemplating whether now is the time to invest in US stocks. We have to get our financial institutions out of the Untied States and the United States out of financial institutions. We have to retaliate by threatening 30% withholding fees to transfers to the United States.
Yesterday, I received a check from my Dad. What will the future hold? If I were a US person, would that check be subject to 30% withholding fee–certainly if I were a recalcitrant account holder.
The impact of FATCA and how this will be handled by Canadian Financial institutions and Investment Firms is of extreme importance to me.
Although I have relinquished my US citizenship and should no longer be affected by FATCA. I have made it painfully clear to my Financial advisor, (who feels confident now that I will stay with there Firm), that I am prepared to move my funds elsewhere should they begin to throw others under the wheels of this legislation.
*Petros You must be prescient. Sun Life announced today they had sold their US division. but only because its’ financial risk was unpredictable.
When all is said and done, the decision by Sun Life is completely predictable, and will be repeated by other insurance companies, not to mention the banks.
http://www.sunlife.ca/advisor/v/index.jsp?vgnextoid=e83d1708de6a4410VgnVCM1000002993d09fRCRD&vgnextfmt=default&vgnLocale=en_CA
“When does this take effect and what products are impacted?
Identification of accounts held by U.S. persons will be required for some new accounts opened after June 30, 2014. Canadian financial institutions reporting to the CRA will start in 2015 for the 2014 year. Impacted financial accounts include cash value insurance and non-registered wealth products.
Sun Life Financial is reviewing the agreement and the proposed Canadian legislation and will be reviewing the CRA guidance and their implications on our business. Our project team is preparing detailed training and communication support to be shared in early June in advance of the July 1, 2014 implementation date.”
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