FATCA Fact Finding Forum: JUST SAY NO
Thanks to the Progressive Canadian Party for hosting the event and to Deckard1138 for doing a superb job of recording and uploading the proceedings.
Here are each of the videos and their transcripts (if available):
FATCA Forum – Part 1 of 9 – Opening Remarks by The Honourable Sinclair Stevens (transcript)
FATCA Forum – Part 2 of 9 – John Richardson Introduces the Forum (transcript)
FATCA Forum – Part 3 of 9 – CCLA’s Abby Deshman on FATCA Privacy Rights Issues (transcript)
FATCA Forum – Part 4 of 9 – John Richardson presents FATCA Principles video
FATCA Forum – Part 5 of 9 – Allison Christians on FATCA and International Tax Law (transcript)
FATCA Forum – Part 6 of 9 – Dorian Baxter on Canadian Government Accountability
FATCA Forum – Part 7 of 9 – James Jatras on How FATCA Can Be Defeated (transcript)
FATCA Forum – Part 8 of 9 – Peter Dunn on the Human Consequences of FATCA (transcript)
FATCA Forum – Part 9 of 9 – Final Comments and Closing
Some feedback on the recent December 15 Toronto FACTA Fact Finding Forum:
http://www.linkedin.com/groups/Interesting-Anti-Event-on-FATCA-3694878%2ES%2E199389978?view=&gid=3694878&type=member&item=199389978
The comment associated with the link was:
Interesting (Anti) Event on FATCA in Toronto
Very good event on FATCA from an “anti” perspective was held in Toronto. Videos on Youtube are available below. Overall a very good event. Allison Christians now of McGill but formerly a US international tax lawyer professor out of U of Wisconsin Madison simply dismantles the legal justifications given by Treasury and its lawyers for FATCA and the related IGAs. FATCA in her mind is a treaty override and the IGA’s are unconstitutional executive agreements as Congress never in the FATCA “legislation” gave the Treasury authority to enter into them unlike TIEA’s, Social Security Agreements etc which were specifically authorized by Congress. The argument given by some FATCA promoters that the FATCA “legislation” can be used as a framework for multilateral cooperation is false because again there is no legal standing for Treasury to use the legislation to enter in to intergovernmental agreements.
*USXCanada
Referring to the part of your comment where you say:
“The math indicates that about 95% of assessable US persons in Canada are not compliant, and most of those are hamstrung by costs and bureaucratic tortuosities, with little prospect of ever becoming compliant. Simple passage of time viciously erodes the carapace of “reasonable cause.” Perhaps the largest subset of that massive herd of free meat is yummy ostrich. Out on the horizon lies Head-Smashed-In-Ostrich-Jump. Two beacons of hope for all this meat on the run: the kindnesses of the IRS (Irrational Rogue Suckmachine) and the bold defenses of TNSF (Twit North Smug & Feeble).
Sauve qui peut!”
Obviously in a perfect world most rational people would like to NOT BE IN NON-COMPLIANCE. That’s different from wanting to be in compliance (a double negative does not always make a positive). The anecdotal evidence is that most people are NOT in compliance. Furthermore, I expect that they never will be able to solve their PAST compliance problems. Why? Because the IRS simply won’t let them. The IRS has reduced all incentives for people to fix past problems. Reason: they have created a situation where people cannot afford to come into compliance. (This is of course unbelievably stupid on their part, but hey …)
1. This thread and others have estimates of professional fees of $20,000 to navigate the compliance terrain. These might be the fees for some simple back filings and legal advice. But, they will NOT be the fees for anybody with any degree of complexity. Any degree of complexity and the fees will be much more. Why? Because there are a number of compliance options and the hope is that there is a way to come into compliance that avoids OVDP (most long term expats should think long and hard before entering OVDP). The more complex your circumstances the greater the cost to come into compliance.
2. The professional fees are independent of and in addition to any taxes and penalties. The reality is that only those U.S. citizens abroad with the most simple lives imaginable will not owe any US taxes.
3. Let’s assume a successful reasonable cause argument for FBAR and other information return penalties – so $0 there.
3. Let’s imagine a low end situation of $20,000 prof fees and another $20,000 taxes. That’s $40,000. Where does the money come from to pay this? Answer you have to sell something which will generate more taxes payable. You see the problem.
Given that it is likely that it will be prohibitively expensive for people to come into compliance, what are they to do? You have made several comments suggesting that the window of opportunity for “reasonable cause” is closing. I think you are correct. It will get much worse if the FATCA comes to be and the FFIs start advertising for the IRS.
So, people with the most simple of situations must now deal with the question of:
“To be an ostrich or to not be an ostrich,
Whether tis better …”
Either way they are in trouble. But, one can cease to be an ostrich by simply filing on a “going forward basis”. This sort of person then assumes the risk of the IRS getting into the past. But, if it’s clear that there are no assets, why would the IRS do this? They know they can’t collect FBAR penalties in Canada. There is nothing to indicate high tax liability. There is nothing to indicate willfulness (meaning they may have trouble imposing 3520 fines, etc.) The IRS can’t get blood out of a stone.
Perhaps the real issue is whether one should:
1. Comply on a going forward basis (which would be a bar to “willful non-filing”) and deal with past problems if they do arise; or
2. Do the full ostrich. Remember that to ignore the whole thing it to keep “US tax compliance” around as a “life-time worry project”. Furthermore, since the window for “reasonable cause” is closing, the door for “willfulness” is opening. The opening of the “willfulness” door is I think the bigger concern.
It is possible to come into compliance on a “going forward” basis. You may or may not have to get into the past. “Going forward” compliance should protect one from allegations of “willfulness”.
My musings apply only to those with no assets, low income, and simple lives. Those with more complexity probably should determine their possible exposure to back taxes and seek several competent legal opinions. But, remember you don’t ask the “OVDP Lawyer” whether you should go into “OVDP”!
Perhaps one should separate the decision of how to proceed from what professionals you use in order to proceed.
Finally, look at the numbers here. There are so many non-compliant U.S. persons abroad that I really don’t see how the IRS can deal with them. Furthermore, U.S. persons abroad are going to be destitute anyway because FATCA/FBAR etc. have made them unemployable, and undesirable for sharing any form of human activity. So, what’s the poor IRS to do – assuming there is no evidence of income and assets?
*@USCitizenAbroad, I concluded that I had no choice but to come into full compliance because I’d already been filing so was already in the system. I will have indeed had to pay close to $20,000 to come into full compliance along with well over $10,000 in double taxation due to having had mutual funds where I live. I hadn’t even sold those funds but was taxed on phantom gains at a much worse rate than had I just had individual stocks and shares. This seems like a penalty on the middle class because investors of modest means tend to to invest in mutual funds rather than individual shares as a way of spreading risk. So the PFIC tax regime is a penalty on the middle class rather than the rich.
So, considering I’ve spent all my adult life in the UK and have been here for almost a quarter century, I would say that this was pretty harsh. But I also agree that it could have been even worse in terms of accounting fees and/or heaven forbid, had I been railroaded into OVDI.
I would have been virtually ruined by OVDP, after taking into account all the extra accounting and legal fees, plus the misc. FBAR penalty. I would have been virtually wiped out.
I honestly don’t know what will happen if FATCA goes full-steam ahead…I still think that due to the HUGE number of expats who haven’t even been filing that the IRS will have to focus on whales and obvious tax evaders. I was more of an anomaly because I’d already been filing and was thus already in the system so saw no way around amending the past.
The thing is though, that the IRS could be onto a winner in terms of collecting extra taxes and fines for non-compliance because I agree that many who’ve invested will probably have significant PFIC taxes and many will have capital gains taxes owed for real estate sales. So I agree, it probably wouldn’t be at all unusual for expats to wind up often owing over $20,000 in taxes to the US.
I actually think though that it would be easier for the IRS to collect fines for not filing tax returns at all rather than the more obscure foreign trust forms, for instance. So perhaps many expats will wind up being hit with $10,000 for not filing 1040s (rather than FBAR) if FATCA discovers them. Who knows, but scary times for sure, especially with this financial cliff looming. They’ll want any extra revenue they can get!
When will we meet to burn blue passports?
Can it be done outside the embassies without getting shot at?
Possibly it is better to do in the city Squares—-some of us cannot travel to the Capitol cities where the consulates and embassies are.
Wear your US person t-shirts—-bring your US flag with the hole cut out where US Citizens abroad used to be.
@monalisa,
re; “I actually think though that it would be easier for the IRS to collect
fines for not filing tax returns at all rather than the more obscure
foreign trust forms, for instance. So perhaps many expats will wind up
being hit with $10,000 for not filing 1040s (rather than FBAR) if FATCA
discovers them.”
I read somewhere recently that imposing a fine merely for not filing a 1040 – even in the absence of any US taxable income, or assets, or US tax owed, is something that those in the US have considered. Will try to find it again. Not sure why they haven’t done it yet.
On the other hand, how many zero returns from abroad do they want to pay IRS federal civil servants to process, for no actual US tax revenue recovered? If there had been lots of those zero or minimum returns during 2009 and 2010, wouldn’t they have had to pay out lots of those Obama economic ‘stimulus’ credit refunds? I was told by one highly paid professional here, that in those two years, even they qualified to get money back (350. – 400. ) – based specifically on that initiative.
Was remembering that one participant here – months ago, mentioned accountants or tax preparers stating that at one time the IRS discouraged the filing of zero returns from abroad. Not sure of the accuracy of that statement, or my understanding of it, but found it interesting at the time – and would have liked to pursue some kind of firm evidence of that policy or practice if it existed.
More immigrants being enticed to join the U.S. tax and penalty club.
Couldn’t resist this one from NPR’s Morning edition…
Big Project In Vermont Banks On Immigrant Investors
Comment in moderation:
I hope these immigrants are doing their due diligence as to the U.S. tax, Form and Penalty club that they are joining. I would pay the $1,000s required for good international tax advice. Their accounts left back in their homeland, are now subject to reporting via the FBAR and the now duplicative FATCA form 8938. VERY serious penalities for not disclosing these accounts, even if the failure is ‘non willful’.
Also, with FATCA, the IRS is attempting to get EVERY financial institution in the World to report a broad-brush of data on your account activity, and so, if they have their way, they will eventually find your failures. Remember that old account your father or mother set up for you, or the joint account with your wife or business partner? All subject to disclosure if you have signing authority and it meets as low of a threshold of an aggregate $10K for all accounts.
If you haven’t noticed, the IRS, Treasury and Congress are on an offshore jihad right now. They need money, and they think salvation is offshore. FATCA was an out growth of this, passed in the 2010 Hire Act, it is basically the Worst Law ever passed that most Americans know nothing about. Don’t be one of those Americans! It is NOT a pleasant development and for all it’s good intentions, the collateral damage, and unintended consequences to YOU far out way the original target of Homeland Americans hiding funds offshore.
So, BEWARE dear. immigrant. Be sure you know what you are getting yourself in for. Once you get that greencard, or proceed down the path to Citizenship, you might someday come to regret it if you decide to return home. You will find nothing about this in your Visa package, and it is left up to you to avoid the FBAR / FATCA penalty trap that is affecting thousands of Americans Abroad that are going the opposite direction, I.E. renouncing their citizenship. You might want to ask some of them why? It is so much the taxation as much as the complexity, hassle and penalties.
Good luck, and welcome to America. I would make IRS.gov your browser homepage, and then search for all things FBAR and FATCA related. It is a daunting compliance regime you are entering.
.
cheers
@KalC, White Kat, Petros, Mach 3
I think it would have been a lot to expect more than 25 attendees seeing as no one picked up the press release from the newswire and I am unaware of any other advertising except a lot of Tweets. What disappointed me in that regard, was the small number of Brockers there. I can’t believe there are not more in the GTA who might have chosen to join us.
Perhaps Mr. Stevens mentioned his old battle but he did speak eloquently to the issue of the violation of the Charter. As I was brand new to Canada at that time, I did not realize how difficult it had been to get that done. I felt respect for Mr. Stevens’ part in that. And the fact that the PC Party put this together and to the best of my knowledge, paid for it.
As to the moderator, I found him to be passionate, forceful and very convincing. It did not come across to me as yelling at all. And were it not for Jon Richardson, I think most of us would have remained mired in hopelessness when it was asked “How many of you feel this (FATCA) is more or less, a done deal?” It was Mr. Richardson who interjected that that was the worst thing we could give in to and we had to fight that. I think he is a natural at leading and not being afraid to say what is needed. And I have to say again, it was very different to be in the room and to watch it on video is not quite the same.
I found it refreshing to find an academic who admitted less-than-perfect command of the subject and deferred to a lot of self-educated folks from IBS. I learned a lot from her and don’t quite follow just what it is that others seem to think is not up-to-par. I am not sure the criticisms I am familiar with are from this thread. I understood her explanation of sovereignty vs autonomy and think she was referring to something outside the normal definition of those terms. I also think her point about taxation on citizenship was subtle. In Canada, according to my tax textbook, with regard to individuals with dual residency, the order of tie-breaker rules is:
Permanent Home
Centre of Vital Interests
Habitual Abode
Citizenship
Competent Authority
I think she was trying to steer us away from criticizing citizenship-based taxation in order to build a stronger argument that focusses on what it is the US achieves by doing that; to attack their motives as a less-than legitimate process.
I think we should be aware that this was only a first step and that it may be up to us to try and begin liasoning with other groups to get more meetings, with more PR, etc. We can’t wait for someone to do it for us.
Just my .02.
and in the meantime, the FCC Woote War Profiteers continue their mission of compliance training… 🙂
Last Chance to Register for the FATCA Compliance Conference
If you’ve been planning to register for the Operational and Technical Changes for FATCA Compliance Conference, January 31-February 1 in Miami, FL, this is your last opportunity to do so! Book your place here: http://ow.ly/gwpnK.
We limit each of our conferences to 50 senior-level delegates, in order to provide a more intimate networking experience. Don’t expect a large trade show format. Do expect to attend an event with all of your industry peers: VP’s, Directors and Heads working in FATCA, Tax and IT.
Current speaking companies include BNP Paribas, Financial Services Commission, Jamaica, ING Bank, Banco Santander, Mexico, FEBRABAN, Cayman National Bank, Barclays and many more! Hear from financial institutions focused on the Carribean and Latin American markets!
This is a conference not to be missed, so ensure your spot today before they run out! Book here: http://ow.ly/gwpnK.
For more information, please contact me at Michelew@marcusevansch.com.
@Just Me
These FATCA Compliance Complex members must be as giddy as schoolgirls at the prospect of the gazillions of dollars they stand to make in the coming years ruining the lives of millions of U.S. Persons. They disgust me – every single one. They’re no better than arms merchants or mercenary soldiers. Really, they’re like the Haliburtons and Blackwaters of the financial services industry.
@Deckard1138
Worse yet to come are the bottom feeders in the form of “whistleblowers”.
@bubblebustin
True. In history books they’re usually referred to as collaborators. I also seem to recall a bible story about a man named Judas.
I just had to give the little girl that posted this on Linkedin, some mild grief without getting thrown out of the group! 🙂
But of course, I would really rather have it fail, but decided not to be that pointed! I am sure they took it as disingenuous ‘hope’ as it was intended.
FATCA Compliance Vultures and Ostrich Eggs
Pingback: What a FATCA IGA “would” mean for non-compliant U.S. citizens abroad « Freedom from the tyranny of U.S. citizenship-based taxation for U.S. and dual citizens outside the U.S.
I have been following this great blog and wanted to post about the new privacy policy recently sent out by Loblaws which runs PC Financial. Allison Christians was correct about information and lack of privacy.
I quote here from Section D “How we use personal information” ” loblaws collects uses and shares Personal information for the following purposes”
Then under “Financial”
“In connection with the provision of finacial services ,(such as banking, credit card, insurance etc. which includes: Meeting regulatory obligations, such as “know your clients” and anti money laundering requirements which require that we collect, among other things, yoiur name, address, date of birth, citizenship, occupation and government issued identification.
So there you have it PC finacial wants your citizenship – they even say it is required !!! (by who???)
in contrast, The local credit union does not require your citizenship. They are not federally regulated only operate in the province, in their privacy information they actually list what third parties they will share your private information with. They did not ask to see ID other than a driver’s license no questions about citizenship were asked when I opened an account.
The Royal Bank has their customers signing a fincial agreement that allows them to share your information with aany third party. Later in the agreement they state that no personal information will be shared without your written consent. I was told that this agreement could not be used in a court of law??? really?
Wait a minute though you have already agreed further up the document page that you will allow them to share your info with third parties. Unlike the credit union they do not list who these third parties may be. There is nothing in the document that asks your citizenship, however you do agree by signing it that you will share any pertinent finacial info with them. The RBC is closing the accounts of anyone who does not sign this financial agreement. None of this is in the press.
So there is a quiet tide rising to get more info even though no agreements have been signed.
@downtherabbithole,
Very troubling reports! Thanks for these.
@downtherabbithole,
Now I wonder if Scotiabank has already put their “fine print” in since they have signed on directly with the IRS. Will take a look though we have begun closing many of our accounts (for other reasons actually, but I figure, it can’t hurt!).
General question-are there any repercussions if Canada signs an IGA and a few like Sun and BNS have already signed directly with IRS or would they simply revert to reporting to CRA and, what happens to BNS and Sun and their customers if Canada does not sign. Will they still have to deal with IRS (keyboard is acting up, sorry about lack of punctuation)
@downtherabbithole, thank you for contributing that important information. That is the first report I’ve read re PC Financial.
sorry for the mispellings in the last comments I made.
So far Loblaws or the RBC have not sent out a request for citizenship info.
It is interesting the letter that came with the privacy policy for PC Financial indicates the following ” If you have recently held PC Financial banking products (other than the PC finacial Mastercard) please note that the privacy policy applicable to those products which are provided by the direct banking division of CIBC, has not changed. The new policy applies only to your relationaship with the PC points loyality program associated with thosde banking products.”
So what does this mean? If you have some type of PC points product you now have to give your citizenship too?? I don’t recall any request for this info in the original PC mastercard application. Are these applications now going to change? or have they already?
Hmmm… the devils in the details all that fine print etc.
Can someone educate me how a FFI can identify you as a U.S. person if you were born in Canada. How do you prove a negative*
*They can’t
*@Small,
In my opinion, its all about the place of birth on the passport. Someone born in Canada has little or nothing to worry about, presuming that person has been flying under the radar all along. Banks are not likely going to drill down so far as to seek out who their newly minted US person’s children are. Having to prove a negative in the scenario you describe is a remote possibility IMHO.
A person born in Canada using a Canadian passport that doesn’t identify a US birthplace, especially if your parents had the foresight to not register your birth with the US, will have an easier time of not being identified by a foreign financial institution or in crossing the border (in the future when technology is at work there). Part of the absurdity is that you are not considered “Only a Canadian,” having been born in Canada and did not have a choice in deciding if you wanted to claim US citizenship. Maybe you’re not quite a first-class Canadian, tainted by the US; but you’re more first-class than me and your US parent(s).
It does seem likely, going forward, that a US person born in Canada may find themselves in a very dubious situation of having to LIE when doing the paperwork on opening a new financial account. An ostrich who expects to fly [more willful misuse of struthio camelus biology here] into to the far future under the radar may get zapped by a data drone.
What a travesty that some have to be put into that position.
What a travesty that the US Department of State tells me and any other Parent, Guardian or Trustee we do not have the right to renouce the “supposed” US citizenship of my son (born in Canada, raised in Canada, blah, blah, blah) and those like him who happen to have a developmental disability or any other mental incapacity and therefore do not have the capability to understand the rights and responsibilities of citizenship or the consequences of its renunciation.