On May 30, 2013 Accidental post the following comment:
Accidental says
May 30, 2013 at 8:01 pmI read that the Eritreans had formed a group and retained the services of a human rights lawyer. Why don’t we co-ordinate as many foreign Americans as we can, spanning, say, 30 cities worldwide? We’ll need a lawyer in each city, and probably a constitutional lawyer in the US to co-ordinate the case. When we’re ready, we co-ordinate the service of 30 class action law suits at 30 embassies simultaneously. We should all challenge the ‘Saving Clause’ in the bilateral tax treaty, without which the taxing authority where we live would have precedence over the IRS; Cruel and unusual FBAR punishment; citizenship based taxation, taxation without representation etc. It seems fraught with jurisdictional and diplomatic issues, but we could at least explore the idea.
Maybe even better. Let’s try to put 1000 of us together. We all contribute according to our means, but that should give us America’s best human rights lawyer, all the way to the supreme court if need be. File in DC and make sure we’re all there for the trial. It’s not just for ourselves, it’s for all the Accidental American’s who’ll be meeting the IRS via FATCA, but most importantly, for our kids, present and future, who stand to inherit a most unfortunate ‘gene’, unless we tend to it now.
It’s time to get started. I note the following comment on June 25, 2013 from Marie:
Attn:Brockers
This afternoon I put a call into the CRA to request some info on Canada’s existing treaty with the US. They forwarded me to Competent Authority, the division of the CRA that deals with tax treaties. They are in Ottawa and can be reached at 613-957-2071. I spoke to a representative that had a great deal of info on the matter. I called with some general questions, she gave me info on the “Agreement”. Here is what she confirmed for me.
First off, the Ministry of Finance had some concerns about s.15 of the Charter of Rights and Freedoms. They concluded that Fatca reporting does not contradict or conflict with the charter.
1. FATCA is a reality. The agreement will be signed this summer. Info will be available on the CRA website beginning in September 2013.
2. All US persons in Canada are considered US residents for tax purposes according to the US, based on that, Canada considers us US residents as well.
3. Beginning in 2014, Canadian financial institutions will begin identifying US persons to report to the CRA. CRA will report individuals with bank account #’s balances, etc. to the IRS.
4. All bank accounts over $50K will be reported.
5. Registered account such as RRSP’s, RIF’s, TFSA’s and RESP’s are exempt (she did not mention RDSP’s)
6. If your bank account is held jointly with a non-US person, it gets reported as well.
7.CRA’s first wave of reporting to the IRS will take place in April 2015 and will cover 2013 and 2014. After that, balances will be reported once per year in September.
8. CLN/renounciation/relinquishment does not get you off the hook for taxation for 10 years. Your balances will continue to get reported for 10 years after issue of CLN.She recommended that I get my hands on a copy of “A Tax Guide for Citizens in Canada” by Carswell.
There are many more questions that I would like to ask her. I encourage everyone seeking answers to call the CRA for information.
This means the time has come to organize the following legal actions:
1. Class action FATCA lawsuit – A “representative plaintiff” is required. This must be a “tax compliant” (who else would do this) U.S. person who has been “outed by a bank”. I know several tax compliant U.S. persons. One of them might be persuaded to act in this capactiy.
2. Complaints to provincial human rights tribunals – discrimination based on citizenship, national origin, etc.
3. Complaint to those at the UN responsible for the administration of the Universal Declaration of Human Rights
We are going to need some central coordination of these things.
I am going to try to transfer subsequent comments to Marie’s comment (as per your request). So, I have (at least for the moment) put all subsequent comments in one long comment. The idea (as per Em) is to try to create a new thread out of this important information. I would note that some of the information that Marie received is clearly incorrect (there is no obligation to pay taxes after one ceases to be a U.S. person). Nevertheless, the gist is significant.
It will be very interesting to see where Congress goes on the question of citizenship-based taxation. I have long been of the opinion that the US will have to move to RBT in order to get FATCA. I still would renounce though. Who in their right mind would want to be caught up in the fear of this any longer than necessary.
By the way, for those who have become lover of Canada in the last couple of years:
The Government of Canada, at the request of the banks, is getting ready to cooperate with the IRS to destroy you.
As USXCanada always says:
Look out for yourself and your family first (in English).
On a practical level I think you can mitigate a lot of the effects of this by using a number of bank accounts at different banks to keep your balances low. Also, RRSPs are not reported. You should get rid of the TFSAs and carefully consider how to deal with the mutual fund issues. You do have time to organize your lives and we have time to organize the lawsuits.
But, taking the lead from “accidental” – It’s time!
Em says
June 25, 2013 at 9:59 pm
@ Marie
That’s terrible news. I’m about to start building a fund for when the “lawyering up” begins.
@ Tim
Can you get written confirmation about this agreement to be announced this summer? Won’t it have to be ratified by parliament in the fall or would that just be a rubber stamp exercise?
WhiteKat says
June 25, 2013 at 10:13 pm
This is a bad joke, right?
calgary411 says
June 25, 2013 at 10:16 pm
I agree, Em. Thanks for giving us this important information you got, Marie. My stomach is again churning.
I piece Marie’s comment with Wondering’s comment: http://isaacbrocksociety.ca/2013/06/25/another-response-to-a-constituent-from-john-weston-mp-for-west-vancouver-sunshine-coast-sea-to-sky-country/comment-page-1/#comment-405146.
It is absolutely time to plan for that class-action suit.
WhiteKat says
June 25, 2013 at 10:18 pm
@calgary411,
Yeah, looks like it doesn’t it.
WhiteKat says
June 25, 2013 at 10:36 pm
So, based on what Marie’s post, even the CLN’s won’t save us until 2023.
Marie says
June 25, 2013 at 10:37 pm
My stomach has been churning all evening, especially considering the part about filing taxes for 10 years after a CLN has been issued. I can’t see how they do not consider this a direct violation of the Charter.
WhiteKat says
June 25, 2013 at 10:42 pm
I regret signing on to IBS just before I was about to hit the sack. IBS reading at the best of times is not relaxing, but Marie’s post is gut wrenching.
WhiteKat says
June 25, 2013 at 10:56 pm
I would imagine that the reason the US wants bank account reports for those with CLN’s for 10 years after the CLN date is so that IRS can assess penalties for all those bad ex-US persons.
Wanna bet that the next thing Canada will agree to is to collect penalties on behalf of the USA?
My mattress is looking like a good place to put my money.
Marie says
June 25, 2013 at 10:57 pm
Anyone looking for info on the Canada/US treaty or governmental agreement needs to contact Competent Authority, not the regular CRA info line. They are the treaty branch located in Ottawa and can be reached at 613-957-2071.
Em says
June 25, 2013 at 11:14 pm
@ calgary411
Could this thread from Marie’s initial comment on be moved to a post of its own? I have a feeling there could be a lot of follow-up comments and the “fatca” thread is overloaded already.
Tim made these comment at the Maple Sandbox yesterday and earlier today …
“My personal belief at this point is we are still several rounds of fighting away from this becoming an issue for the judiciary. The biggest problem is there is still a lack of understanding of the issue in Ottawa and quite frankly Washington too. This is starting to change but only very slowly. The main consequence of all of our efforts seems to be at this point is that given Canada has not yet signed and ratified a deal that if/when it does Parliament will be much more educated on the issue than the UK Parliament was when they ratified their IGA this past spring.”
“I will add currently right now Parliament is scheduled back on September 16th however, it is widely expected that there will be a fall throne speech so Parliament might not be back until late September or early October. If an IGA is signed prior to then there needs to be a minimum of 21 sitting days before any ratification and implementation legislation is introduced in the House. So that brings us after the October recess and perhaps even into November before legislation can even be introduced. So the odds of this thing getting wrapped up this year even if the government puts its foot to the metal are quite low.”
Duke of Devon says
June 25, 2013 at 11:15 pm
Marie’s informant left out some of the details. The details are important.
According to the model 1 IGA;
Not all accounts over 50K will be reported. Accounts over 50 k will be checked ‘electronically’ for so called US indicia. If a US indicator is found, then the account may be tagged. If the FI has no information on file as to the nationality of an account holder nothing will be done. Acconts over 1 million $$ will be more closely checked.
A CLN will protect you from having an account reported to the IRS.
If someone renounces and chooses to file 8854 and is not a ‘covered expatriate’, then that’s it. There is nothing in the model 1 IGA about being on the hook for 10 years. No one is obliged to file or pay taxes for 10 years after receiving a CLN. If someone chooses to do so, they are supposed to assert that they have been compliant for 5 yrs. BEFORE renouncing; NOT 10 years after.
WhiteKat says
June 25, 2013 at 11:17 pm
@DukeOfDevon,
I think the 10 year time period Marie refers to is with regard to the FATCA reporting requirements of the bank, not the number of years of tax compliancy.
WhiteKat says
June 25, 2013 at 11:27 pm
@ Marie
Re: CLN/renounciation/relinquishment does not get you off the hook for taxation for 10 years. Your balances will continue to get reported for 10 years after issue of CLN.
Are you saying that your understanding is that the banks will report account details for 10 years after issue of CLN?
calgary411 says
June 25, 2013 at 11:28 pm
Em, I agree this should have a post of its own. I don’t have the capability of moving the comments over to a new post. I am hoping that USCitizenAbroad or Petros or someone more literate than me will post. Petros is the only one who can actually move the comments we now have here.
Duke of Devon says
June 25, 2013 at 11:36 pm
This was Marie’s comment
“My stomach has been churning all evening, especially considering the part about filing taxes for 10 years after a CLN has been issued.”
I tried to reassure her that no one has to file taxes for 10 yrs. after a CLN has been issued.
Wondering says
June 25, 2013 at 11:38 pm
@ Maria
Wow, what a “scoop”.
It’s remarkable that a mid-level functionary (I assume that level based on ease of direct telephone access) has provided more specific – and alarming – information on this issue than various elected officials.
Suggest calling CRA Competent Authority directly, taking careful notes, and then immediately:
– express your concerns about these facts to your MP, the Minister of Finance, and the Opposition parties.
– send a brief note about your conversation noting the facts, noting how this may harm you or your family, and expressing interest in a FATCA class action or plaintiff’s suit to Joe Arvay at Arvay Finlay:
http://www.arvayfinlay.com/lawyers/j-arvay.htm
– suggest also cc Peter Hogg at Blakes:
http://www.blakes.com/English/WhoWeAre/FindPerson/Pages/Profile.aspx?EmpID=101698
This is on Mr Arvays’s radar, but keep in mind he is professional for hire.
WhiteKat says
June 25, 2013 at 11:43 pm
@Duke of Devon,
Yes, but in her overview of what she heard, she also said this: “Re: CLN/renounciation/relinquishment does not get you off the hook for taxation for 10 years. Your balances will continue to get reported for 10 years after issue of CLN.”
My take on that was that the banks will continue to report for 10 years from date of issue of CLN, not that one has to file US tax returns for 10 years. It would not surprise me if banks were to continue to report for a period of time after the issue date of a CLN. They have to have some sort of cut off date. This would be a sneaky IRS “gotcha” for all those US persons who renounced recently….a pay back of sorts for all the embarrassment we’ve caused and all the fibbing they’ve had to do with the renunciation stats.
I dearly hope my instincts are wrong on this one.
Duke of Devon says
June 25, 2013 at 11:59 pm
I think you will find that Marie’s contact got that detail wrong.
In the model 1 IGA (take the time to read it), using the UK as an example.
“Notwithstanding a finding of U.S. indicia under subparagraph B (1) of this section, a Reporting United Kingdom Financial Institution is not required to treat an account as a U.S. Reportable Account if:
a)
Where account holder information unambiguously indicates a U.S. place of birth, the Reporting United Kingdom Financial Institution obtains or has previously reviewed and maintains a record of:
(1)
a self-certification that the account holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);
(2)
a non-U.S. passport or other government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States; and
(3)
a copy of the account holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
(a)
the reason the account holder does not have such a certificate despite renouncing U.S. citizenship; or
(b)
the reason the account holder did not obtain U.S. citizenship at birth.”
note that a CLN makes the account non reportable.
Everyone take a deep breath.
Marie says
June 26, 2013 at 12:14 am
I sincerely hope that the woman I spoke to at CRA left out some details. I asked her specifically if presenting a CLN would stop the reporting of accounts to the IRS. Her response was “no, they have thought of everything, we continue to report accounts for 10 years”. I didn’t ask her if I had to file taxes for ten years because I just assumed that meant it did. Why would the IRS want the accounts reported if the person was no longer taxable?
When I phoned the CRA this afternoon, i was not prepared for this bomb-shell. I did my best to stay calm and get as much pertinent info as I could. Does an individual need to file taxes for ten years after a CLN has been issued? should have been my next question to her. This is worth a follow-up phone call on Wednesday.
calgary411 says
June 26, 2013 at 12:15 am
Duke of Devon. It’s good to hear from you.
Thanks for your reasoned explanation, citing the Model 1 IGA of the UK. What you point out does make me breathe a bit easier.
I’m so tired of the relentless see-saw of all of this.
Saying that, we do need clarification on the point in question from this CRA department / agency for everyone’s peace of mind on what the rules will be — what Canada is willing to give away for its US Persons in Canada, be they Canadian citizens or permanent residents.
Pingback: The Isaac Brock Society
badger says
June 26, 2013 at 12:22 am
The Canadian Civil Liberties Association CCLA needs to know about this too. And Prof Christians.
How can Canada assert that we – Canadian permanent residents and Canadian citizens are Americans for tax residence purposes? How can Canada define who is an American, and uphold US laws on Canadian soil? That would seem to be potentially very very embarassing for the Harper government – when a sovereign autonomous country is willing to assert that its residents and citizens are actually taxpayers of another country over and above the total irrefutable and absolute fact of their actual residence on Canadian soil and Canadian status?
There is nothing worse than a Canadian who is willing to betray a fellow citizen – to further US interests.
I say at that point, we who have renounced, or relinquished, can start picketing with signs that state that Harper Conservatives are traitors betraying Canadian citizens and our families.
How can Canada allow Canadian banks to deliver our bank information for 10 years after we have our CLNs – proof that we have no US status or obligation? That seems so egregious that it stretches so far beyond the breach of privacy and rights that have already been identified. And, there is still no explanation of how that can possibly be legal in Canada given the other accounts held jointly with others who have no US relationship whatsoever. There is no acknowledgement that those accounts belong to non-US person with no relationship or legal responsibility of any kind with the US – except via our status.
So was the exaggeration in the more recent lines from Flaherty that with the announcement of the Streamlined program that ‘the US has listened’ – designed to be a careful set up to explain away the contemplated betrayal via FATCA ? ““We told the U.S. government that the vast majority of Canadians targeted were honest, hard-working and law-abiding individuals and they listened,” said Minister Flaherty……”. ………“……….These are positive developments. It is yet another accomplishment for Canadians and a testament to our strong working relationship with our American neighbours. I appreciate the cooperative approach of the American authorities. Nevertheless, we will continue to advocate on behalf of Canadians on such issues with the U.S. government, including the implementation of FATCA (Foreign Account Tax Compliance Act),” said Minister Flaherty….”
http://www.fin.gc.ca/n12/12-072-eng.asp
If the Harper government enables this, affecting >1 million US citizens and ‘US taxable persons’ in Canada, the Conservative party can look forward to going down in history as traitors to Canada and betrayers of Canadians. The Conservative party will certainly live to regret any such collaboration, as even staunch conservatives would never ever forgive or forget such a threat to their assets and family.
No spin the Harper government can muster will suffice in the face of the actual threat to our legal, local and tax compliant Canadian assets.
@ badger
I’ve started typing an e-mail for my MP and I’ll probably have to borrow a bit from you. I want to let my head clear though before I send something off. Right now there are some really bad words sitting on my fingertips and it’s best they don’t get transferred to the keyboard.
I will have more to say later but a quick suggestion to be considered. A group of perhaps four or five people able to make it to Ottawa(or live there to begin with) should request a meeting with Mr. Brian Ernewein of the Department of Finance(Kevin Shoom’s boss). If you are able to get one I would flat out ask Ernewein what the governments stance on FATCA is and I would make clear in a firm but polite way what all of us will do the current government politically and legally if a satisfactory outcome is not reached from our standpoint.
My sense is the lower level CRA person may have gone out on a limb just a little bit compared to her superiors. Nonetheless I have no reason not to believe the overall gist of what she said.
Em
Your MP (I am pretty sure I remember who he is) is right up to his neck on FATCA. Give some thoughts to my previous comment and let me know what you think.
“First off, the Ministry of Finance had some concerns about s.15 of the Charter of Rights and Freedoms. They concluded that Fatca reporting does not contradict or conflict with the charter.”
Who is “they?” They,Harper? This is shocking information and I wonder how this person had the authority to give it out? Really upsetting. How does it NOT violate the charter?! The transparency on these things has been nonexistent.
I can make it to Ottawa. How does one go about getting such a meeting and how long will it take to get it?
Well the good news amongst all that bad news is that the Tax Free Savings Accounts will probably be protected or given the same treaty as the RRSP’s. . . which was one of my biggest concerns, since it will be a primary savings account for retirement.
I agree with Duke of Devon. One of the things stressed in the June 15 meeting was to get a hold of one’s emotional reaction and balance it with rational assessment. It was repeated over and over again that 1) try to stop freaking out over FBAR and 2) try to remember that there really isn’t a whole lot the US can actually do if you are out of the country.
The Congress would have to pass a law in order to change the current law that puts into play the expatriation process affecting those of us who renounced on or after June 16, 2008. There is no 10 year period of taxation following expatriation on or after June 16, 2008. Those who expatriated after June 3, 2004 and before June 16, 2008 have a different set of rules that apply. And those before June 3, 2004 have another different set of rules that apply. I am not aware of any law that has changed the current law for those renouncing on or after June 16, 2008. So there is no way whatsoever, that anyone with a recent CLN would be liable for tax for 10 years afterwards (presuming they are compliant at the time the last returns are filed). And the CRA cannot just turn around and put something in the Treaty that is not there. If FBAR penalties are not covered in the Treaty, they aren’t covered. And if you were Canadian at the time the tax was incurred, they cannot collect it.
In a similar way, there is no logic whatsoever to the idea that any future accounts are reportable. Perhaps they can report the old ones, but it is probably helpful to remember that most of us probably do not meet the thresholds for those accounts. One could take protective measures to split up things so the totals are below the thresholds. There would still be the option to close old accounts and insist on filling out a W8BEN for any new ones. I guess we will have to wait and see exactly what it is they intend to do and we will do exactly as we did when we first learned about all this – we investigate, share our resources and take action. Such as, one does not have to file taxes before renouncing. How many of us doubted that when we first realized we may have to actual go through all this?
As far as punishment for embarrassing the IRS by renouncing? They are embarrassed? The State Department? The Congresscritters? They seem more angry, judgmental and full of vindictive revengefulness to me. They wouldn’t even question their right to be so overreaching. And even if they were, they’ve earned every microsecond of it. One thing I noticed about our meeting on June 15 was that many indicated they had feelings of guilt, as if somehow, they were responsible for this mess they are in. At least I have all along been clear about one thing-there is not one damn thing we have done to warrant this treatment. Period. I have zero guilt and lots and lots of healthy anger. Don’t forget – (at least some of us) we are Americans and we fight back! We will do just as we have from the beginning, let them drop their latest threat, research, share info and find our way. Don’t let them get the better of you – they’re no different than Osama – who truly achieved what it was he set out to do. Pulverize the West into thinking they could be attacked at any minute. Every possible protection is worth loss of freedom and rights. Our government is no different. They just want to scare the pants off of you to think you have to do what they want. Don’t let them.
@ Tim
Your suggestion is very good. We need some Shadow Raiders in Ottawa right now. And thank you AtticusinCanada. I’m a long way from Ottawa but my MP (Ted Menzies) will be hearing from me via e-mail (again) — as soon as I digest this latest news.
@Atticus,
s 15 in the Charter is very clear to Peter Hogg and to Sinclair Stevens. They simply cannot pass the buck on this so easily. You may already know but Peter Hogg is considered the authority on constitutional law. He wrote a 5 page letter to the Finance Committee that discussed s 15, that FATCA clearly was in violation of it and that the government could expect instant lawsuits the first time that line was crossed. We tweeted all of those members on a regular basis about that very issue/letter. They certainly have some explaining to do. As Tim has often reminded us, this is a marathon, not a sprint and I think we can remember we have some powerful facts/people who are on our side of the fence.
I cannot understand how countries can accept to implement US law overriding their own laws, applying it to their own citizens, living there, earning income there and owning assets there. I honestly did not believe that the US had so much power.
I think that the person who mentioned the 10 years is severely misinformed. The issue only applies to “covered expatriates” who renounced between 1995 and 2008, it doesn’t apply to those who are not “covered expatriates”, nor to anyone who renounced before 1995 or after 2008. The law changed 5 years ago, but many people keep repeating things that no longer apply. For example, many people still say that the Philippines also taxes based on citizenship, but it abolished this 16 years ago. Beware of misinformation.
My MP has been totally useless on this. I wrote to him but, he isn’t available to speak to directly as was our last MP. He has asked us to get a twenty five signature petition up despite the fact that someone before me already submitted him with such a petition. Their office said they had got quite a lot of calls on this but, again with the “petition” which they ask be formatted a certain way. I’m utterly disgusted with this approach. Either the MP is for or against FATCA’s influence in Canada. Either the MP will or won’t do a thing about it. He also included in his response a letter he got as a response from the U.S. stating they had been taxing citizens since 1913. This is not exactly right since I don’t think they concerned themselves with expats until the early 1960’s.
At any rate my MP will be useless here. Elizabeth May could be alerted to this information. Getting a meeting may be a very good idea. I agree alerting Allison Christianson is also a step to take.
@Em, as Bubblebustin says – about typing with the middle finger – I am finding that most of what I want to say is unprintable. And I believe that not only the Conservatives, but the other parties (other than the Greens) know about this and are ducking making a definitive official party or leader’s statement on FATCA. Maybe they are hoping to see what happens and let the Conservatives take the flack for signing an IGA – while tacitly standing by and letting it happen. I certainly feel that there is a certain amount of active evasion happening – where opposition MPs from the Liberals and the NDP now certainly know about FATCA from the last two years worth of contacts with constituents and other concerned Canadian residents and citizens (as they have acknowledged in various letters and in meetings to us) but they refuse to raise this in public or take an official party-wide stance. For example, for me, it is very glaring that after the very strong and laudable questions that MP Mai raised in Parliament (ex. see Hansard http://www.parl.gc.ca/HousePublications/Publication.aspx?DocId=4937782&Language=E&Mode=1 ) and very strong stance the BC caucus and other individual NDP MPs have taken, the NDP as a federal party has refrained from bringing this to the attention of the wider Canadian public, and their leader Mulcair has not spoken out about it at all. He is in a position to know about FATCA because he has been participating in Parliamentary Finance committee meetings about taxation, where Scott D. Michel and H. David Rosenbloom of Caplin and Drysdale testified in front of the Canadian parliamentary committee (*see note below)
Various NDP MPs have been contacted, and provided with not only anti-FATCA and anti-US extraterritorial taxation critiques from party members and supporters, and with ample documentation – including the Hogg letter to the Ministry of Finance obtained via FOI by MP Elizabeth May. Some MPs have been very forthcoming with supportive statements and letters, (and some have not acknowledged e-mails at all) but this has not translated into a partywide statement or anything at all from Leader Mulcair. There is nothing on the federal (or provincial) NDP website that acknowledges that FATCA even exists, much less any of our concerns about US extraterritorial taxation and the imminence of the Harper government’s intent to reach a FATCA IGA agreement.
I never expect much of the federal Liberals as a party, but expected a far more principled stance from the NDP as a whole.
*Note:
http://www.capdale.com/scott-michel-and-david-rosenbloom-quoted-on-recent-us-efforts-to-tackle-offshore-tax-evasion
“Scott Michel and David Rosenbloom Quoted on Recent U.S. Efforts to Tackle Offshore Tax Evasion
June 10, 2013, Tax Notes
“Tax Notes quoted Scott D. Michel and H. David Rosenbloom regarding their testimony in front of a Canadian parliamentary committee on recent U.S. efforts to tackle offshore evasion. ”
“Excerpt taken from the article.
Two U.S. practitioners, Scott D. Michel and H. David Rosenbloom (both of Caplin & Drysdale in Washington), testified on recent U.S. efforts to tackle offshore tax evasion.
Michel, who also previously discussed his February 2011 testimony with Tax Analysts, gave the committee an overview of some of the problems U.S. taxpayers and practitioners encountered when navigating the special voluntary disclosure initiative announced by the IRS in 2009 in the wake of the U.S. government’s high-profile enforcement activities against Swiss banks. Based on his experience with the U.S. initiative, Michel said an effective voluntary disclosure program should include amnesty from criminal prosecution, penalties proportional to the offense, no penalties for nonresident individuals who pay foreign income tax, timely resolution of cases, random checks of amended returns to ensure compliance, and aggressive enforcement of tax law.”
“….‘‘The efforts of the Canadian House of Commons to address offshore enforcement issues underscore the fact that this is a global problem, and not just an American problem,” Michel told Tax Analysts. ‘‘Canada, like the U.S. and other countries, has a strong interest in ensuring that its taxpayers pay their proper share of taxes and that they file complete and accurate reports of their assets as required by Canadian law.
‘‘The House of Commons’ work in this area also makes it clear — for the many families that have footprints in both the U.S. and Canada — that disclosure efforts in either country will generally necessitate confronting the possibility of disclosure in the other, given the robust information sharing between both nations,” Michel added….”
“2. All US persons in Canada are considered US residents for tax purposes according to the US, based on that, Canada considers us US residents as well.”
I question the legality of this. Canada considers us U.S. residents? Does this mean we don’t need to pay Canadian taxes? lol…it’s ludicrous. My address for 35 years says Canada. Canada issued my citizenship and at that time I was told Canada considered me Canadian. So is Canada going to consider some Canadians more so than others?
A couple of comments:
1. The fact that this low level person released all this info was a screwup by the government. I don’t really think they intended to have all this be publically known. If the media called Flaherty’s office tomorrow I suspect they would receive a far more vague and non committal response.
2. There is an Ottawa bubble where expediency becomes the norm. This is a simple a symptom of that just as the whole Nigel Wright check to Mike Duffy was.
3. We have all summer and then some. Legal action cannot be brought until whatever legislative changes are made to Canadian law receive royal assent. That could be a relatively long time. Like not even this year.
Clarification:
1. People who renounced before 1965 are not subject to any exit tax or reporting requirement.
2. People who renounced between 1965 and 1995 are subject to tax on certain kinds of US income and assets for 10 years after renouncing, if they are deemed to have renounced for tax purposes. Otherwise, there is no reporting requirement.
3. People who renounced between 1995 and 2004 are subject to the same rules as before 1995, but they are automatically assumed to have renounced for tax purposes if they had average tax liability or assets above certain thresholds. Otherwise, there is no reporting requirement.
4. People who renounced between 2004 and 2008 are subject to the same rules as before 2004, but they also have to file form 8854 annually for 10 years after renouncing. They also become taxed as US residents for a year if they are present in the US for more than 30 days during that year, if that year is within the 10-year period after renouncing.
5. People who renounced after 2008 are not subject to any 10-year regime, neither for taxes not for reporting. Instead, they are subject to the exit tax.
@Atticus,
http://isaacbrocksociety.ca/2013/03/12/the-best-news-we've-heard-since-this-nightmare-began/
“But a major obstacle to all this is Canada’s Charter of Rights and Freedoms, which prohibits (Section 15.1) discrimination based on several criteria, including “national or ethnic origin.” Constitutional expert Peter Hogg has pointed this out in a five-page letter to the Finance Department, which is co-ordinating the IGA negotiations with the US.
Other excerpts:
The Supreme Court has ruled that citizenship is an analogous ground to the prohibited grounds of national or ethnic origins protected by s 15. The case quoted is Andrews vs Law Society of BC, (1989), 1 S. C. R. 143.
Mr Hogg also indicates that if any member of the committee has any doubt as to his observations, they should contact the Deparment of Justice for an interpretation. He is “confident they will agree with me.”
He advised that instead of citizenship or birthplace, the IGA should be based upon the parameter used in the Treaty; i.e., residence. Due diligence would be modified in such a way that an account held by a Canadian resident for Canadian tax purposes would not be considered a US account. Accounts held by US residents for tax purposes would be reportable accounts.
The IGA will require Parliament to enact legislation that will direct the financial institutions to apply the IGA provisions even where there is conflict with privacy laws, data protections and human rights matters. Some financial institutions are regulated provincially so a new question will be raised; i.e., the constitutionality of the Federal government passing legislation that affects those institutions.
Compliance with U.S. tax law may violate Charter of Rights
Opinion: Creating tax misery for nearly seven million U.S. expatriates
By Don Whiteley, Special to The Vancouver Sun March 12, 2013
http://www.vancouversun.com/news/Compliance+with+violate+Charter+Rights/8086718/story.html
Where either of these two people who Marie talked too:
Spice, Patricia, Director………………………………………………………………………. 613-941-7831
Nguyen, Tam – Treaty Specialist …………………………………………………………. 613-941-2829
By the way, this whole thing started because Forbes wrote this article in 1994.
@Shadow Raider, excellent summary. @Duke of Devon, good IGA commentary.
The old 10 year shadow period covers only US source income and gains. If there is a ’10 years after CLN’ clause in here it may be aimed at that. It is also likely that any Canadian IGA would offer a ‘most favoured’ clause, and the current UK IGA specifically says that a CLN is enough to prevent reporting to the IRS, so maybe recourse there if nowhere else.
For those paying attention, Reed, Schumer and Casey aim to add a number-6 to Shadow’s list:
6. People who renounced after 2003 (ten years prior to 2013) are subject to tax on on certain kinds of US income and assets in perpetuity after renouncing, if they are deemed to have renounced for tax purposes.
This breaks most (if not all) US tax treaties, which usually allow the US to tax this stuff for 10 years only. But congress does not give a fig for treaty partners. To them, reneging on a treaty is just a minor detail on the way to securing the plantation.
The obvious way to defuse any 10 year shadow period or future 30% tax under Ex-PATRIOT is not holding any US situated investments. After all of this which of us would, anyway?
So…what to do now?
1. Can’t afford to file by ourselves – penalties will kill us.
2. Can’t afford to get an accountant (who knows US tax law) to help prep returns.
3. Can’t afford to get a lawyer to fight this.
So…what to do???
I know Animal. I’m in your position. I don’t have the extra funds to hire someone. I tried that last year and they filled out the forms wrong and just handed them back to me. Now I’m stuck. There’s really only one year I would need to file a tax form and it shows they owe ME six hundred dollars. The rest of the years I wasn’t required. I didn’t know about FBARs at all. I want them filled out properly but, I want advice. Sorry, I can’t pay for it. All these forms are greek to me and handling this on my own is so daunting because if you get it wrong then who knows.
Sure, it’s easy to say nothing will happen. Nothing probably will I suppose, However, my trust of these people is at zero. They are lower than low and the betrayal they’ve been showing so far doesn’t give me confidence. For all I know they’ve been told to fine all of us. The only reason this all started up was due to the opportunistic ability to get a penalty grab. It really wasn’t about taxes in countries like Canada so the point had to be penalties.
If I do get a penalty however rare that supposedly is, then my spouse will hit the roof. Also, I am one who IS worried about crossing the border. I NEED to go back there. I’m sorry but, I”m not going to be cut off from my family. I want to be out of this all once and for all but, this is a big catch 22. No good path and no good way out. All for zero tax owed? There seems to be no reasonable person to appeal to in their government. No reasonable path and our government is not answering questions about this at the moment. Limbo!
The comment from Marie should be verified as actually coming from the CRA before posting it in a separate thread, because it is obvious either that it is hoax or that the person from the CRA had no clue what she was talking about. If this is even close to what the CRA thinks, and reflects the Finance Ministry’s position, it is asinine and is a GREAT BETRAYAL of Canadian citizens and residents of US national origin.
But it is possible that that’s exactly what they are thinking and planning to do, and that shows when you have the criminals from one government meeting with the criminals from another government, they can only come up with deals on how to share the action. The US has flexed it’s muscle and our criminal organization here in Canada is laying down. But they are all criminals and they think what they are saying to each other is actually true. When this kind of thing happens, government loses all inkling of moral authority.
Petros, we met at the meeting in Toronto a few weeks ago. You said to keep in touch. Well, here I am!
I left a message for the girl I spoke to yesterday afternoon asking her to clarify whether one needs to file taxes for ten years after a CLN has been obtained. I strongly encourage others to phone this branch of the CRA to confirm the information and get some follow-up questions clarified. The girl I spoke to had quite a thick French-Canadian accent and I could not make out her name. The phone number is in my original post and can also be obtained through the CRA website under Competent Authority. I believe I mentioned in a previous post that I did not ask her for this information on FATCA. I was simply phoning to find out what the current treaty included as far a info exchange was concerned. She volunteered the information.
I’m hoping that she is an over-zealous, low-level CRA employee that just got ahead of herself. She spoke confidently and at no point did she pause to check information, check with a fellow associate or supervisor. She answered every one of my questions without missing a beat.