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 applySelect 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.
Thank you for answering. What do you say to families who do NOT have funds to retain a Canadian lawyer who specializes in special needs issues such as Hanson Trusts, etc. Should these individuals / their families be discriminated against in having CANADIAN REGISTERED Disability Savings Plans (RDSPs)? We will wait to see what the Canadian government comes up on this issue in their negotiations with the US regarding FATCA. This is IMMORAL and does not make sense. No one should be entrapped — there should be choice for these families.
(Off to the dentist.)
Final comment to WhatAML. I am a Canadian, who grew up in the border city of Windsor. Although I do not have nor have ever had either US citizenship or US resident alien status, I assisted my first US expatriation client in 1991 and have been helping clients and lecturing on the issue to other lawyers in the over 2 decades since. Therefore, I don’t think I ambeing out of line by suggesting that I am somewhat of a legal expert in the area.
As I said before and I will say in closing. I agree that citizenship-based taxation is grossly unfair. However, it is the law of US and they have the ability to enforce it.
@David,
Re: “Your statement that many people in your situation, lost their US citizenship as children, is a glaring example of denial.”
For the record, I have never said such a thing, and have no idea where you got that from. I am well aware, thanks to FATCA, that I did not lose my US citizenship despite having been born to Canadian parents, and having left USA as an infant. I am not in any denial about this.
ooops…excuse typos in last post, but David pisses me off putting words in my mouth.
It looks like a compliance condor is dropping panic plops on us. Resistance is futile and all that jazz. We’ll see. Our numbers are small right now but we are expecting reinforcements just as soon as they get a wake-up bugle call from a bank which tries to force a W-9 on them or threatens their account with closure. Meanwhile we will try to reach the sleepers ourselves. Forewarned is forearmed. Laws pile upon laws until they become legal terror. Recognizing this tactic is the first step towards combatting it. Take a listen to this …
http://www.lewrockwell.com/podcast/harvey-silverglate-on-legal-terror/
@WhiteKat, @Yogagirl, all Americans living abroad are compliant. They are innocent unless proven guilty. Some nations, like N. Korea, US or Iran seem to argue that Americans living abroad are “guilty” of some odd thing, but those nations seem to hate Americans living abroad no matter what they do and such hatred is usually baseless and based on false motives. As such, the concept of “guilt” or “non-compliance” by foreign jurisdictions usually has no meaning.
@David S Lesperance, oh, I’m not at all angry, I respect many of your views and I appreciate the efforts you have made against organized crime. Yet, I disagree with your generalizations against Switzerland and I don’t find exit fines as being logical. Nazi Germany had exit fines, and how logical was that? Not at all.
@David S Lesperance, oh, it looks like I just confused you for Jeffrey Robinson. I don’t know why I thought that you were that person. Sorry for making that mistake. I should have checked my twitter account prior to making assumptions.
WhiteKat, understood on both counts. I wish people wouldn’t panic though or pay too much attention to those who think there is some reason that they cannot find a solution without professional help or admitting to being a criminal when they clearly are not. Everything has a solution and often multiple ones. We just haven’t gotten to a point where all options for everyone effected have been discovered and made clear.
Swisspinoy, true, everyone is compliant given the nature of the beast.
@Em, yes. @Calgary, ditto. Compliance Condor. lol.
I would not retain someone who believes this about their clients and this very complex situation. Law is full of nuance. There is NO nuance in this worldview:
“….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. “… http://isaacbrocksociety.ca/2013/09/16/americansabroad-in-canada-may-soon-be-unable-to-receive-payments-from-government/comment-page-1/#comment-538787
Bad enough to pay our hard earned Canadian-made and Canadian-taxed savings to those US tax law professionals who want to point out the ‘advantages’ retaining unwanted US status, or of erring on the side of claiming sufficient months of US residence that would transform someone’s Canadian child into a US taxable person, thus condemning their Canadian RESP opened by a Canadian-only relative into a toxic US taxable ‘foreign trust’ subject to the draconian 3520 and 3520A regime and confiscatory penalties. Which would eat up the benefit of their RESP – and erode any ability to give them a chance at university. What kind of a legal counsellor would try to convince someone that destroying their child’s chance at a life free of US extraterritorial asset-sucking, fatally compromising their RESP, and increasing a parent’s FBAR liability and burden was worth the theoretical future ‘benefits’ of potentially qualifying for US status?
Bad enough to be courted by US tax law professionals in Canada who charge even for correcting the obvious errors which were entirely the fault of their US preparers and US Enrolled agent staff rushing to process too many clients. Charging once for the errors made, and charging again for the errors to be corrected – only after the client caught them. Then the enrolled agent charged a third time for ‘reviewing’ the returns and forms. The lawyers charged for ‘reviewing’ the reviewed returns and forms. Strange that all those layers of ‘professionals’ couldn’t identify really glaring data entry and other basic errors.
Who needs to pay significant sums to US tax law professionals to be insulted and blamed in addition to the egregious abuse at the hands of the US? Is it because they are US homelanders at heart if not in fact?
@badger, I’ve also seen him say elsewhere that he was “enjoying” watching this happen to people.
Compliance condor goes with:
Keep Calm…Carrion
I do not think that it is enjoyable or funny when I see people standing in the way of a US IRS steamroller. (“Atticus: I look forward to your showing where I ever said anywhere that I enjoy watching this happen. While you are at it, also an outline your constitutional basis for suing Canadian banks)
Based on over 2 decades of legal experience, I believe that this is not a problem which will go away because of denial; belief in “magical solutions” like Charter applications; or lobbying the US or Canadian government. The steamroller will roll over you, if you just stand there and do nothing but close your eyes, swear, and cry about the unfairness of it all. It will roll over you whether you were an “active tax evader”; an “innocent Accidental American”; or compliance is expensive.
I do not act on behalf of any government, and as my client group tends to be fairly HNW people, when I started posting here, I didn’t for a moment believe that I would find a client in the readers of this site. I posted because I thought that if even one person was shaken out of the early stages and acted before the steamroller profoundly changed their lives and those of their children, then it was worth the effort.
Do not mistake straight talk with callousness. Do not shoot the messenger, even if it is not the message that you want to hear.
Here is the basis for suing the Canadian government and Canadian banks.
http://elizabethmaymp.ca/wp-content/uploads/peter_hogg_fatca.pdf
Hogg has been in the top 10 lawyers in Canada for years.
@Don. Could you direct us to the clauses in the UK IGA which exempts certain accounts such as tax free savings? Thanks.
@David, I did see you post something about enjoying watching people hair pulling or something to that effect. I’d have to go dig it up but, I remember it because at that time you were on my twitter feed. You said on that feed for us to just get over it and get compliant. You say on one hand not to confuse your approach with callousness and yet you do come off that way at times.
You are assuming the people here are not doing something about their personal situations while at the same time attempting to lobby their government and preparing things such as a Charter Challenge. There is a basis for it and it’s no small minor point that FATCA violates our Charter. This doesn’t just affect duals nationals. I hardly think the U.S. would adopt a law passed outside their country that violates their constitution without some sort of a public uproar and challenge to it.
Many here have already taken care of their situation with the U.S. Many have renounced or are in the process of doing so. I do not why you assume that just because people are angry at the expense caused to our foreign family by “virtue” of having married one of us or been born to one of us, that this excludes our having taken care of our situation. It doesn’t. We’re dealing with the bully, that doesn’t mean we have enjoy it.
From the UK IGA (link provided by Don above)
Page 39 and 40
Annex II Part III
This is why I have been saying that if Canada signs an IGA, it is likely that TFSAs and RESPs will be exempt. RRSPs will certainly be exempt.
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@KalC. Thanks. I hope those negotiating the IGA for Canada have or are looking at this. @David. Because it is the law does not make it right or in the least bit fair. Are we not allowed to object? Are we not allowed to have input? Are we not allowed to point out the serious deficiencies in an ill conceived piece of legislation, the implications of which were not thoroughly thought out by the legislators? Are we not allowed to clearly point out how this legislation seriously misfires regarding its real intent to catch real tax evaders? The answer would be no for those living in an autocracy. So we will go on objecting and providing input and influence where we can. And your understanding of human psychology and the human reaction to major change is quite superficial and quite worn.
@Atticus and @Joe, exactly
@David, no one here is an idiot or a Pollyanna, but thanks again for assuming so. Oh, and just because you don’t know of anyone who’s renounced USC before the age of 18 doesn’t necessarily mean it’s never happened and given the rather abysmal stat keeping the US does on those who’ve given up citizenship in general, I am not sure anyone there would be able to lay a quick finger on the answer to that question either. In many countries, the US largely excepted, a large number of teens are graduated from high school and off to university or trade school or work by the time they are 16 or 17. I would imagine than that the maturity considered necessary to renounce is probably relative to the population where the consulate is located and decisions are made accordingly.
@Yoga Girl, one of my kids is 8 years old and surprised me by stating that they would renounced US citizenship if things didn’t improve. All I have to do is to make one single recommendation and off to Bern they will go to renounce their US citizenship.
SwissPinoy, I find it baffling that a stranger who doesn’t know my child is a better judge of her than her father and I but so be it. She says she IS going to the consulate to renounce as soon as she is 14 and if they say no, she will simply show up again when she is 15. She will be finished with high school before she turns 18, like most of her peers here, and I really can’t see anyone thinking she doesn’t know her own mind or understand her intentions. If you ask her, she will tell you she is Canadian and we’ve had the discussion here at Brock before, citizenship is more than being told you are “the property of”.
Oh and I should add that my daughter has already made it known that she will not under any circumstances renew her US passport once she has taken her oath as a Canadian, which she also insists she will do though she isn’t required to and wants it video’d for “the record”.
-A few points:
-I applaud those who are taking active and useful steps to deal with the situation. By active and useful I mean a) bringing their US tax compliance up to date then b) either remaining US compliant or expatriating and severing their on-going US tax connection. I also do not begrudge these individuals the opportunity to complain loudly about unfairness or support efforts to try and stop what I have referred to as the IRS steamroller.
-What I find alarming is people who do not take active and useful steps, for all the reasons I have outlined, I firmly believe that these people will join some cases I have seen first-hand, in being run over by the IRS Steamroller. Continuing to delay because one is caught in the denial, anger, or bargaining stages will eventually result in them coming onto the IRS radar screen. Once on the radar screen either because they were completely unaware of the issue or where aware but stuck in these early stages immediately results in a) limiting of options to deal with the situation; b) increased cost to execute those options; and c) vastly increased stress dealing with the IRS in this reactive situation.
-Peter Hogg is indeed the dean of Canadian Constitutional law. In fact it is “Hogg on Constitutional Law” which every Canadian law student studies (including me). However, in reading his letter carefully, you will see that it is limited to questioning whether the Canadian government should implement, as is, legislation that gives effect to FATCA. In short, the purpose of the Charter is to stop legislators from passing legislation that is contravention of the articulated rights. They can still pass it under section 1, but I will agree that this is probably not a case where the section 1 override is appropriate.
-Assuming that the Canadian parliament follows Professor Hogg’s guidance and does not implement the IGA as currently drafted or even in the revised form the UK adopted, I would take the position that the IRS steamroller will continue to roll onward because:
1) The “Hidden American” will still be discovered under any one of the following
a) Qualified Intermediary Regimes requiring the Canadian financial institution to report, withhold and remit on any US person account;
b) US uncovering the Hidden American through datamining of i) birth records within and outside the US held in publically available databases such as those held by the Morman church; ii) US passport and immigration application records; iii) Americans abroad who have applied for US benefits such as Social Security; iv) Americans who joined organizations such as Democrats or Republicans aborad; and most easily by v) air travel records which are shared internationally where the Hidden Americans have travelled anywhere with a passport that shows a US birthplace.
2) Once uncovering the Hidden American, the IRS will be able to collect. They will first ask CCRA for copies of the target’s Canadian returns under the Mutual Exchange of Information Provisions of the US-Canada tax treaty. Based on this information, then the IRS will collect on the assessed US tax, interest and penalties under the mutual collection clauses and by requiring under the QI agreement with the target’s Canadian financial institution, that the institution seize the target’s assets held by that institution.
In summary, my assessment of the EXTREME danger for Hidden Americans of not taking active and useful steps to solve their US situation is the same.
For those who object to my “style” of not sugarcoating these dangers, I would counter that in my long experience this straightforward style is in the best interests of the Hidden American. It saves them time (and wasted legal fees) in wallowing in the denial, anger and bargaining phases. It also reduces the chance that the Hidden American does not act before the IRS discovers them.
A final note on children under 18 and expatriation. My knowledge that no CLNs have been issued to underage children is based on a) First asking the State Department about this 15 years ago and checking again every year or two; b) Continuing discussion within the very small group of legal practitioners in the area who discuss this issue ad nauseum, since a large percentage of our clients have underage children.
Also it is important to understand that while the act of expatriation takes place at a US embassy or consultate aboard, the decision whether the expatriation is valid is done by officials in the State Department in Washington. If they do not agree that the expatriation is valid (for example because an underage applicant does not have legal capacity), they will refuse to issue a Certificate of Loss of Nationality. The CLN is the US government’s acknowledgement that the individual has lost their US citizenship. This is also the document which the IRS accepts as prima facie proof that the individual is no longer a citizen. Finally, in practice it is usually the only document that the compliance departments of financial institutions will accept as evidence that the individual is not subject to W-9 filing.
In summary, it does not matter whether the parents of the applicant think that the underage child has capacity (either because they are intelligent or eligible to do things like drive) to expatriate. It is the State Department that has to agree that the applicant has capacity. If they do not, they will not issue a CLN.
P.S. Not have a US passport, or having a Non-US citizenship in no way effects whether the individual is still a US citizen. While YogaGirl’s daughters desire is admirable in a young person, it will ultimately have no effect on her US citizenship.