This post appeared on the RenounceUScitizenship blog
#Americansabroad in Canada may soon be unable to receive payments from Government http://t.co/5eikEu9NXV
— U.S. Citizen Abroad (@USCitizenAbroad) September 16, 2013
Update September 17/13:
What began as a simple post describing that the Government of Canada will soon be discontinuing sending cheques took a sharp turn. It quickly became an attempted discussion between:
U.S. citizens abroad desperate to be heard and a compliance lawyer. Although the comments have interesting content, they are more important for what they reveal about attitudes. It’s tough for tax
tax chattels Americans abroad to be heard. The compliance lawyer tweeted some of his comments to this thread as follows:
Are you a US taxpayer abroad in denial about FATCA? See discussion at http://t.co/5Crhpq7ets
— David S. Lesperance (@dslesperance) September 16, 2013
Denial dies hard for people who recently discovered existing US tax liability. See discussion at http://t.co/5Crhpq7ets
— David S. Lesperance (@dslesperance) September 16, 2013
More on those following the discussion re: Hidden Americans in Canada and FATCA http://t.co/5Crhpq7ets
— David S. Lesperance (@dslesperance) September 17, 2013
The discussion reminded me of two ships passing in the night – never to meet.
Government of Canada to phase out cheques in favour of Direct Deposit to bank accounts
With direct deposit, the Government of Canada deposits payments automatically into your bank account.
It’s a way to receive your payments without any postal delay. Not only will you receive your payments on time and be able to access them quickly, but you can also be sure they will never be lost, stolen, or damaged.
By April 2016, the Government of Canada will be phasing out cheques in favour of direct deposit for all government payments. You will therefore need to sign up for direct deposit. Given the benefits, why wait?
Sign up for direct deposit now! It’s convenient, secure and reliable.
How to apply
Select the program that applies to you:
Direct deposit for Employment Insurance
Direct deposit for Canada Pension Plan (including Post-Retirement Benefit) and Old Age Security
Direct deposit for apprenticeship grants
Direct deposit for Canada Child Tax Benefit and for Universal Child Care Benefit
Direct deposit for GST/HST credit
Direct deposit for other Government of Canada programs and services
Looks like the Government of Canada will require a bank account for all government cheques. Therefore. anybody who is:
1. Suspected of being a U.S. person; and
2. Who becomes “FATCA Recalcitrant” and has his/her account closed
Will be unable to receive payments from the Government of Canada. It’s important to note that at the present time, any person, on showing the appropriate ID can get a Government of Canada cheque cashed at any bank. To be specific:
You can cash your Government of Canada cheque at any branch of a bank in Canada that has tellers.
The “noose is tightening” around U.S. citizens abroad. Frankly, if you don’t take steps to
escape from U.S. slavery relinquish your U.S. citizenship and become a free human being – you deserve what is coming to you!
How do you like freedom now?
To watch a video of the benefits of NOT being a U.S. person and being a free person click here.
This is another of a thousand practical reasons an American abroad needs to have a local bank account. You are right. Continuing to ignore the issue; yell at your foreign banker for closing your account; hoping and praying that FATCA and the Qualified Intermediary Regime will be revoked; etc. are all a waste of time. It is time to either comply with the law or expatriate. Complaining is just a waste of time.
@David S Lesperance, since America recommends that its citizens living abroad renounce US citizenship, why doesn’t it drop the renunciation fee and exit tax? Individuals should be able to avoid US problems without having to pay a fine.
David, we’re not complaining to the U.S. here in Canada. That indeed would be a waste of time. FATCA violates our Charter and several leading constitutional experts believe we can sue should a bank here do anything near what you are saying. This is a U.S. issue. I could care less what the U.S. thinks about this and my renunciation appointment is within two weeks. Nobody is “continuing to ignore” the issue here but, we do have the right to tell our government that going along with this WILL result in law suits. That’s not a U.S. law, U.S. issue or anything else. If the U.S. wishes for us to expatriate or put up with this every year. So be it. They’ll get their wish. Nobody will be yelling at their “foreign banker” who is not “foreign” to us. However, we may be causing them to be part of a Charter challenge.
If you don’t plan on living in the U.S. again or cannot because there is no job waiting for you there then we agree. Send in the paper work and renounce. Being dual is priced out of reach.
Guess who won’t be calling ‘Lesperance and Associates’ for any ‘tax-efficent, citizenship, resident and domicile solutions’? Pedal your fear-mongering somewhere else.
Who is this ‘foreign banker’ you say we should not yell it? Canadians in Canada, with a ‘US connection’. consider our banker as well as our bank account to be ‘local’. You are the ‘foreigner’.
Expatriate you suggest? We are already long gone, many since childhood.
As for playing on this one particular fear, i.e. that someone in Canada will not be able to get a chequing account anywhere in Canada in which to have their Canadian government cheque, direct deposted – HOGWASH! All that a Canadian with a ‘US’ birthplace has to do in order to have a chequing account, is open one in any financial institution, preferrably before end of 2014, and keep the balance under 50K.. There is no need to hire you or any other lawyer, until we are in the position of being able to launch a Charter Challenge – something that is beyond your field of expertise.
I have to agree with Atticus. If you are here, you are not ignoring but searching for a solution.
One solution is to lobby our home governments – Canada in my case – and point out the very real legal problems with enforcing US laws and concerns within our borders and to point out potential fallout.
In the case of simple banking, though it hasn’t begun to happen yet in Canada to my knowledge, is that banks can simply turn away potential USP customers and close the existing accounts of current ones. Perhaps not an issue if you are aware of your status and what it means so you can take steps, but there are those who’ve yet to discover that the Americans consider them American only (remember the US does not recognize dual citizenship) and their first clue might be when the bank closes their accounts.
Sadly, there probably is no remedy other than renouncing for now and probably for some time to come. By the time the USG and the rest of the world govts wake up to the idiocy of the current law, there could conceivably be no such thing as a dual American (aside from those immigrants living within the US borders that is).
Where did you get the idea that Canadian banks will be closing bank accounts of people unable to prove that they are not ‘US persons’? Worst case scenario is that they report your accounts to the CRA who reports to the IRS. If that happens, so what – still no reason to panic and pay David money.
Kalc, feel free to chime in here.
I respectively disagree. Renouncing is not the only solution, although maybe the best for some people now, and maybe for most people at some point in the future.
Everyone’s situation and risk tolerance level is different, plus none of us has a crystal ball. It is important to look at all the facts as we know them now, and proceed with caution before going down any path.
I agree with you.
many of my older friends, who are Canadian born have their government cheques mailed to them. They want that piece of paper…and they want to go to where they want themselves. I guess they wil have to adjust.
Also, I am waiting for my CLN but I am willing and ready to protest, go in with a class suit or help in any way, like with letter writing. I have been emailing my MP, Flagherty, Schoom and Trudeau. They must be sick of hearing from me. 🙂
WhiteKat, banks have decided USP’s where too much trouble in other places, why not in Canada too? I didn’t say it had happened or that it will but it can’t be rules out either.
It’s not like we are such a huge segment of the population that in the interest of doing business free of the cost of compliance and the inherent risk of not flushing all USP’s out that such a thing is impossible.
I am not all that concerned for myself but I don’t feel that my husband or anyone I work with should be tarred and reported on for association with me.
Is Canada a sovereign nation or a vassal of the US? Am I a free person with the right to live outside the USA without being tracked like an animal in the wild or should I allow the USG to tattoo my passport id number to my forearm to make it easier for those who need that information to simply scan it into their system. Should we be ok with being second class Canadians? That’s what this gets down to for me.
If the Canadian govt can do this to us – find some justification for being the enforcer of law that didn’t originate in Parliament and create a special tier of qualified citizenship for USP’s only – then what prevents them from doing it again? And if the Canadian govt goes along with this, they are in fact agreeing that in terms of dual citizenship, those with USP status are not really Canadian citizens at all because the USG doesn’t recognize our Canadian status.
I hear you, but it is important not to panic. Not everyone can easily become ‘compliant’ which is the followup to renouncing. A ‘wait and see’ approach is still valid. No IGA has been signed yet – we don’t know how banks will apply the ‘rules’, etc.
Watching the reaction of Americans abroad to their liability to the US tax regime is similar to watching someone who is stricken with a possibly terminal disease caused completely by their own actions/inactions. As a result, the whole process can best be viewed through the Kubler-Ross model of “Stages of Death” :
1) Denial — Denials fall into several categories including
A) Denial of being a US person for tax purposes: Eg. “I am not an American, I don’t have a US passport”; “One of my parents is American but they never registered my birth, so I am not an American”; “Yes I had a Green Card, but it expired so I am no longer a Resident Alien” ( Note: See the widget on my webpage to determine if you are a US taxpayer);
B) Denial that the US has the ability to enforce and collect: Eg: “I haven’t filed in the US for 40 years I have been abroad, why should I worry now?” (In short, while the liability was always there, the ability to find you and collect from you has increased dramatically); “I pay taxes in a foreign country with a tax treaty with the US already (This doesn’t relieve you of filing obligations. It may only provide you with a foreign tax credit on all or part of your US tax liability IF you file in the US); “All my assets are in Canada, so the US cannot collect” (Suggest you look at the mutual exchange of information and collection clauses of the Canada-US tax treaty).
Denial can be a conscious or unconscious refusal to accept facts, information, or the reality of the situation. Denial is a defense mechanism and some people can become locked in this stage.
2) Anger —”The US is being imperialistic”; “I already pay tax in my country of residence on this income. That’s double taxation and unfair!”. Once in the second stage, the individual recognizes that denial cannot continue. Because of anger, the person is very difficult to deal with due to misplaced feelings of rage and envy. Anger can manifest itself in different ways. People can be angry with themselves, or with others (Including me or their non-American bank when advised of the facts of the situation) When I get a call from a client who is at this stage, I let them rage against the machine for about 15 minutes and then say, “I agree it is unfair, but at some point, your cellmate is going to get tired of hearing about it”;
Bargaining — “I would give them something but the cost of this Voluntary Disclosure Program is too much” “I will pay all my tax from this point forward and let sleeping dogs lie”. The third stage involves the hope that the individual can somehow postpone or delay the impact of US taxation and legislation on their financial lives.. In terminal disease, bargaining rarely provides a sustainable solution.
Acceptance —With US tax problems, it is the last chance to have the least worst result. At a minimum, this means catching up on existing US filing and tax obligations. Once in compliance, the individual then needs to decide to either continue to remain a US person and comply with US law or expatriate.
Dear SwissPino: I agree that not having a fee or deemed disposition (IF you trigger the tests in IRS 8854!) may match our mutual sense of “fairness”. Unfortunately this “unfair” law is not going to change anytime soon.Time to move from Anger and Bargaining to Acceptance.
Dear Atticus: I applaud you for having accepted your situation and decided to expatriate. As for a Charter of Rights and Freedoms challenge, as someone who has been involved in a few constitutional tax issues, I would be extremely interested to hear on what basis you would “sue a bank”. (Note to WhiteKat: I retained and instructed specialized Constitutional lawyers in these cases. I agree that this is beyond my field of expertise. While I have NO interest in being retained to plead a constitutional case, I would venture to say that I am fairly well versed in the issues involved.)
Dear WhiteKat: You are clearly in both denial and anger. EVERY Canadian financial institution has been a voluntary signatory to the Qualified Intermediary Regime for well over a decade. This is true in EVERY country in the world. They “volunteered”, because if they did not then they would have lost access to the US markets and US correspondent banking relationships for all of their non-US person clients (IOW economic suicide). Being a QI requires the financial institution to go through EVERY existing and future account and determine if the beneficial owner is a US person. If they are then you must have them sign a W-9 and then report, withhold and remit. If the client refuses to sign a W9, then the bank will close the account immediately, so that they do not face sever punitive reprecussions from the US.
You may have just become aware of this sea-change in going after US persons abroad, with the publicity around FATCA. However FATCA is just the latest escalation. Your statement that the US person will be able to open a Canadian bank account without signing a W9 is sheer fantasy.
Your statement that many people in your situation, lost there US citizenship as children, is a glaring example of denial. One is either a US citizen at birth or not. If they are, then their ONLY way of getting rid of US citizenship (and the resulting US person tax liability) is to expatriate. One can only expatriate when one has legal capacity. Despite some discussion in the Foreign Affairs Manual suggesting that one might have this capacity at 16, this has never been actually tested. Therefore, there is universal agreement amongst legal experts that one needs to be at least 18 to expatriate (Note: I personally had this confirmed by the US State Department Legal Department about 15 years ago). A possibility is that some people may think they are not US citizens at birth. That is why I created I created the widget (which is free) on my website.
If there is any part of any of my statements above or previously which you can factually challenge, then I look forward to hearing from you.
Yoga Girl’s statement and the ensuing conversation reminds me of one suggestion that I forgot to make. Even if you decide not to retain me, this is not a Do It Yourself exercise. No matter what your net worth or income, retain proper legal counsel!
The stakes are VERY high and the area complicated. One piece of misinformation (such as YogaGirl not knowing that the US has recognized mutiple citizenships for almost FOUR DECADES) will through the whole exercise off-track.
@David S Lesperance
Would you kindly be more specific on that quote? please provide a specific date…I seem to have a different point of view on that subject from personal experience…
Um, David, if you check the State Department website, you will see that “officially” the USG doesn’t recognize dual citizenship though they admit it exists and that legally they have no power to prevent it, which I don’t think is the same thing and is quite convenient in terms of policy. And if one is compliant – and not just a few of us are – dumping citizenship is pretty easy. Even if you have to backfile, I haven’t heard of anyone who has just gone ahead and done this being hunted down and dragged off. Despite what many fear, most of us are simply beneath the notice of the USG.
WhiteKat, I am not panicked. I left the US only in the last decade and I’ve not been out of compliance and I plan to relinquish upon the taking the oath (which I am nearer too every day). I am merely pointing out the potential issues that might arise with an IGA. And you are right, it hasn’t happened yet despite all the crowing to the contrary and the Canadian govt does appear to be reluctant and probably quite aware of the quagmire of issue’s that will jump out of this particular Pandora’s Box.
It would be easierthough in the Canadian govt simply moves to collect dual status information via the CRA itself. Tick off a box on your Canadian tax form. And also requires Canadian financial institutions to supply more than just interest info yearly by adding account types, id numbers and balances. This way, when the next nation comes knocking, the CRA already has a database and the necessary info to supply. But I am not really a believer that govt exists for the common good. It exists as a way to organize society in an efficient a manner as possible and to keep us from degenerating into “tribal” factions, which of course, is what things like labeling us by national origin does but we do that ourselves anyway, right?
Aboriginals call themselves the only true native Canadians. Canadians whose immigrant ancestors are generations enough back to have separated them from their mother countries call themselves native Canadians. The rest of us are hybrids to varying degrees with those of us from English speaking countries (and who are white) being able to “pass” and everyone else categorized by things like “first or second generation”, “dual”, “permanent resident”. It reminds me of the way they used to qualify “whites” and “coloureds” down south with their half-breeds, quarters, octaroons, etc.
Equality is complicated. Even in the 21st century.
One is either a US citizen at birth or not. If they are, then their ONLY way of getting rid of US citizenship (and the resulting US person tax liability) is to expatriate.
In theory. In practice, there are different levels of liability. Someone born to a US parent abroad, who is in principle a US citizen, can count on being invisible indefinitely, if they want to be. There’s nothing in their Canadian passport, or in the metadata, that would indicate to the US that they’re actually American (from a US point of view..
The 5 Stages of Grief for me mean that I am in total Acceptance for myself — and had been at that point in 1975 when I became a Canadian citizen.
I moved back into Denial when I learned of all this, answering my daughter when she returned from the US and asked who did my US taxes: “I don’t do US taxes; I am a Canadian.” How could that be? I was warned I would be relinquishing my US citizenship when I became a Canadian. I took that as gospel; I did not know anything, nor was I advised, about the need for a Certificate of Loss of Nationality.
I certainly made mistakes in allowing myself to be put in the position where I could no longer claim my 1975 relinquishment. Is there a step for “Fool”?
I am pretty much in Isolation, except for my family and what I post on Isaac Brock and I am stuck in Anger regarding my son’s entrapment into supposed US citizenship. By his birth to me, I put him, and by extension me as his parent/trustee, into an unresolvable situation.
The Anger stage would resolve if I knew that my country, Canada, really would protect my Canadian-born son and all others like him from the US required cost and hassle of year-after-year tax and reporting compliance for no actual taxes owed to the US. If I learn that Canada will uphold the Canadian Charter of Rights and Freedoms and not allow discrimination against my son because of his accidental ‘US nationality,’ ensuring his banking and RDSP needs are his rights the same as for any other Canadian citizen, I’m won’t go into Bargaining and can skip Depression . I will, thus, go straight to Acceptance and regain the joy of life (with a few battle scars as reminders never again to take anything for granted).
Among help from other professionals, I employed a Washington, DC immigration / nationality lawyer for advice on the status of my adult son, who happens to have a developmental disability. I was told by the US Consulate that he was not able to renounce his ‘supposed’ citizenship (I did NOT register him with the US at birth) because of ‘mental incapacity.’ I was also told that a parent, a guardian or a trustee did not have the right to renounce citizenship on his (or anyone like him) behalf, even with a court order.
He could do nothing for my son. He unofficially had conversations with those high in Department of State, especially regarding a situation like my son and another more profound case where there is no communication on the part of the disabled person, but there is some comprehension. We discussed my two options – go through with trying to “teach” my son everything they could ask him regarding his knowledge of what citizenship means, what US citizenship means for him; what renunciation of US citizenship means for him – what he would be giving up. Did he have any influence from anyone? Of course he would have – a very strong minded mother.
DOS persons he talked with on an informal basis have “sympathy” for such cases. However, the developmentally disabled person will have to have FULL understanding of what he’s doing; if any question of lack of comprehension and grasping meaning and importance of ramifications, they could NOT approve such a case. From DOS point of view, US citizenship is precious and they have therefore established fundamental requirements for “compelling reason”. Even though there is the risk that a person’s financial resources could run out before his/her life was over, they will never approve a renunciation for financial / economic reasons. DOS has NEVER had such a renunciation case approved due to “compelling circumstances”. Bottom line: “compelling reason” in their regulations is not helpful to my son’s case. I could sue – persons he talked with at DOS are SURE no one would ever win such a case as the courts view the discretionary action that DOS has would take precedence.
I have formally renounced my US citizenship and finished to process through filing of the 8854. I am not wealthy. I was a single mom for most of my children’s growing up years and I saved for retirement from my Canadian earned income, which was taxed by the Canadian government. My son was born in Canada, raised in Canada, has never lived in the US, has never benefited from anything from the US. I don’t see any way out of this US entrapment for my son other than being part of a class-action suit for my son’s Canadian rights in regard to banking and FATCA.
What is your advice to families like mine who have, in their minds, more important duties to children like these, keeping in mind most of these families are cash-strapped to begin with?
How about the US State Department’s Foreign Affairs Manual (http://www.state.gov/documents/organization/120532.pdf)
The key case in the area is Schneider v. Rusk, 377 U.S. 163 (1964) (http://supreme.vlex.com/vid/schneider-v-rusk-19994254)
On one point I must stand corrected. We are now coming up to FIVE not four decades that the US has allowed dual citizenship. It allowed it before this but the individual had to make a statement upon foreign naturalization that they did not intend to lose their US citizenship thereby.
Denial dies hard!
Someone should read the US UK IGA – the UK government has ‘exempted’ a whole slew of financial products from FATCA including tax free ISAs if I haven’t read it wrong. It would be interesting is someone else comes to the same conclusion.
Here the link –
The document is oddly enough off the US Treasury website.
So if it’s true UK banks won’t have to report these accounts under FATCA to the HMRC which in turn has nothing to report to the IRS. Of course the Yanks will still think it’s taxable but they’re left in a data desert.
The US department of travel specifically says that they recognize dual citizenship but don’t encourage it, because of the problems that can arise.
“The U.S. Government recognizes that dual nationality exists but does not encourage it as a matter of policy because of the problems it may cause.”
As I noted in my earlier post, trying to get people through the anger or denial stages is very difficult and often futile. I hope that some people who visit this site and see my comments and/or go to the video and widget on my website, help themselves move through these stages. Continuing to answer each and every denier or angry person is just too exhausting and non-productive for me.
To Calgary411, I have great sympathy for your situation, as I have a very close family member who has special needs. I would have to agree with your prior US counsel that your son needs to have legal capacity in order to expatriate. Since he may not be able to demonstrate this capacity, then your only option is to do the best planning possible, with him being a US person. I would strongly suggest that you retain a Canadian lawyer who specializes in special needs issues such as Hanson Trusts, and have that lawyer work with a US tax lawyer to make sure that this trust works efficiently and is tax compliant from a US viewpoint.
There is one other bit of news in the US UK IGA – the account holder will self certify there status whether or not they are a US person.
So it makes a bit of a mockery when someone can walk into a bank and self certify they’re not a US person and the bank won’t report.
Again check out the wording in the US UK IGA and it might give FATCA opponents in Canada more fire power as to why should Canada sign an agreement more stringent than the UK?
If someone else reads it they may get the same take on it.
@Benedict Arnold be me
Yeah, I’ve lost track and not about to look it up just to argue with David S Mouthpiece. Was it 1978, 1986?
When talking about true American tax cheats (a current American taxpayer who hides some of their income), I agree with everything David says. They deserve whatever their government decides to do with them. However, he makes no distiction between an Accidental American (left the US as a child etc) and a tax cheat. Unfortunately, neither does his government.
I wasn’t suggesting you were panicking, I was thinking about others who read here.
I am not in denial. but definitely angry. I disagree that resistance is futile, and my risk tolerance is fairly high, but hanks for your warnings. In any event, for those who are looking for ‘professional’ assistance getting into compliance, I won’t be recommending you.
‘The United States does not formally or officially recognize dual citizenship, says Daniel Cosgrove, a spokesman for the U.S. Citizenship and Immigration Services.’
If there is confusion over this issue, perhaps this is why. When even those who should know the official position of the USG, appear not to. Of course it is my understanding that it’s all based on the Constitution, the interpretation of which is somewhat akin to the reading of Tarot cards or tea leaves.
Also on the on the issue of traveling with your “second” nationality passport, the rules appear nonsensical. A holder of USC has to enter and leave the country with a US passport but yet it isn’t illegal for them to use their other nationality passport, but yet it is but then you won’t be punished for it but the right to punish you is still an option. Hmmm. Really?
I am glad we’ve cleared this all up.