Northernstar emailed Justin Trudeau in July 2013 regarding her concerns about FATCA. Today she received the following email in response:
Dear XXXXXXX,
Thank you for taking the time to write to me with your concerns regarding the Foreign Account Tax Compliance Act (FATCA).
Despite its good intentions, the unfortunate consequence of FATCA is that Americans who hold dual citizenship still fall under its authority, and it requires access to their financial information through their banks. As a result of FATCA, there has been a surge in US citizenship renunciations over the past few years, and this trend continues to grow.
I share your concerns about personal privacy, an issue that is increasingly important to all Canadians. The Conservative government’s efforts to protect the personal privacy of Canadians have been inadequate. The implications of having Canadian banks report directly to a foreign government agency are troublesome. The Liberal Party of Canada will continue to press the government on this issue, and demand a closer examination of FATCA’s effects.
Thank you once again for writing to me and taking the time to share your concerns with me. It is through such exchanges of ideas and opinions that I can best represent not only my constituents, but all Canadians.
Sincerely,
Justin P. J. Trudeau
Member of Parliament for Papineau
Leader of the Liberal Party of Canada
Offline, a friend of Isaac Brock Society says:
It is one thing for the USA to say to individuals across the planet: if you have status under our law you must follow all of our laws no matter where you are. It is another thing entirely for Canada as a nation to voluntarily, with no compensation except the conditional promise of removal of a threat of economic sanctions, assist the United States in globally rounding people up to force them to comply with its patently untenable and unjustifiable position. Such assistance fundamentally conflicts with a universally recognized (and far more just) jurisdictional claim based on actual residence, which Canada practices along with the rest of the world.
@WhiteKat
Compliant or not, I’m taking a chance no matter what, simply because I can’t predict the future.
However, if someone is going to renounce without being compliant with the IRS, then they best not EVER go to the US to visit.
As for my situation, I’m only compliant because I want a clean divorce from the US via relinquishment once I become Canadian. If the US in the future wants to be so spiteful as to actually deny peoples right to expatriate, renounce, relinquish, etc…. a basic fundamental human right, then I will refuse to be compliant beyond that point.
But more importantly, why live in fear? If I wanted to do that, I could just go back to that oh so exceptional police state. There, I would be popping blood pressure meds like candy, and always looking over my shoulder. Here, I have normal blood pressure without having to take any meds, and I sleep much better overall.
@Worldwide
Whatever you may owe in the past, you still owe. For whatever they’re trying to assess after you’ve lawfully expatriated, tell them to get bent and don’t even worry about it.
@whitecat
After receiving a CLN you still have an addition part year to file and an 8854. This triggered some immune response by some underling who denied my foreign tax credit because I was no longer a citizen. When the demand for payment arrived I contacted the IRS by phone they could not explain the assessment but that would contact agent who processed my return. Six months later, another demand for payment + penalties+interest. Again on the phone. There was some question about form 1116. I pulled up my copy read what was on it. The response looks ok. The they was the government shutdown. Interesting no agents for foreigners,but the computer was able to spit out another demand for payment+penalties+interest. One more phone call after the start up. It seems that I did not file a form 1116. I have no idea what they were looking at on the previous two phone calls. I faxed a copy of the 1116. Six months later, a demand for payment+penalties+interest. Another phone call, fax confirmation in hand the agent said that it was too late to change the assessment. I asked her to look at it anyway. I was put on hold. She came back and said everything was ok and that my account would be reduced to $0.00. Two months later I received a demand for payment $0.00. I hope they do not expect a check! That’s why I wonder what they might have done with the 8854 I also filed at the same time.
What do you think the US will do when they realize that CLN’s are preventing them from accessing account information? Maybe, as Swisspinoy suggested, they’ll designate covered expats as US persons for tax purposes?
Worldwide, the actual IGA, should it happen, might alter this, but as it stands, the banks are under no obligation to send your information as you aren’t a US citizen. The IRS would have to go through a number of legal hoops to get at you in Canada and in any event, the Canadian govt wouldn’t help them collect any taxes or fines as long as you were a Canadian citizen at the time they were incurred (dual counts as Canadian but if you were a permanent resident that would be different). If you cross the border into the US, different story.
But Justin isn’t throwing anyone under any bus (excluding his former Senate caucus) anytime soon because he is Prime Minister and with just a paltry 36 MPs, he doesn’t have much influence legislatively speaking. Could he influence the debate? Maybe but FATCA isn’t a simple thing and big, hard to completely explain b/c it has too many parts issues don’t make for the same type of easy homerun as say legalizing pot or fixing the Senate.
@bubblebustin
They’re going to have one helluva time at trying to pull that off without lumping everyone with a CLN into the mix.
Also, the banks here don’t have to consider anyone with a CLN as a US person for FATCA purposes, provided FATCA gets implemented, and not repealed.
To my mind, if I was a covered expatriate, I would stand to lose a lot just by complying and paying the blood tithe…er….I meant exit tax. I’m already being targeted the most by being successful in the first place by my own hard work, by envy specialists demanding that I pay my fair share, even though I’m already paying much more than my fair share simply by being in a higher tax bracket. There are also spiteful politicians that want to pass a bill of attainder to essentially punish me for renouncing while rich with exile.
To hell with compliance! What I need is an exit plan! It would be my hope that most all of my fortune would be located outside of the US at that point. Could this also be the reason why the multinationals tend to keep their money out of the US in the first place?
Eduardo Saverin did everything right when he exercised his right to renounce, and he was publicly vilified for it, anyway.
Sir John Templeton did a lot more good with philanthropy than the government ever would with his tax money. Who do you think was all outraged when he renounced back in 1964? The envy specialist in government back in the day, of course.
GREAT NEWS FROM LONDON
Two top American bankers commit suicide in London as one jumps 500ft to his death from JP Morgan skyscraper and another hangs himself in luxury home
http://www.dailymail.co.uk/news/article-2547684/TWO-senior-American-bankers-working-London-commit-suicide-just-two-days-one-jumped-500ft-death-JP-Morgan-skyscraper.html#ixzz2rxphocZt
@mjh49783
It wouldn’t surprise me if the US required that the banks send them everyone’s CLN for authentication, especially since they’re going be of such high value. From there they can verify whether their taxes are up to date or not? To be sure, agreeing to FATCA sends us down the slippery slope of the US calling all the shots, and you know they stop at nothing. I think of mission creep when I think of any act of aggression by the US. Look what’s happening in Switzerland, where banks are accepting penalties when they weren’t actively trying to help Americans hide money – and in doing so are forcing Swiss citizens into OVDP.
@bubblebustin,
There is no predicting what USA will do. Personally, I feel that renouncing without going all the way (i.e. becoming compliant) is potentially opening up a can of worms even bigger than the stay low and wait approach. To each their own I guess.
@WhiteKat
When you can’t trust anything else, trust your gut.
Last night I wanted to scream at the TV listening to Nancy Pelosi tell John Stewart how she can’t understand why the government can’t implement all of the great ideas that Congress comes up with. She had Stewart pretty flustered too. Is she daft, when Congress recently cut the IRS’s already inadequate budget?
Unfortunately, the interview isn’t up on the Comedy Network yet.
For those of you concerned about becoming a “covered” expatriate when renouncing, consider (before your “Oath of Renunciation” day) using some of the $5M “Gift Tax” allowance that currently exists since you’re not going to be a citizen any longer to take it – – or the Estate-tax equivalent – – when you die.
While the annual gift allowance to anyone is only around $14,000, such a one-time gift can be much larger (has to be documented with IRS). Something to think about if you have a spouse; Canada doesn’t tax gifts to spouses (tho you, not the spouse, technically have to pay the taxes on the income from this gift).
@bubblebustin
Indeed, I could see them doing that just to be a pain in everyone’s ass, once they have to deal with the fact that renunciations are skyrocketing. But, I also believe that the amount of renunciations has to cross some sort of threshold in order for them to start getting really worried in the first place. Namely, more people have to be emigrating than are immigrating.
Until that happens, we really are insignificant to where they think they can afford to lose us.
When you think about it, they’re looking for whales. Not minnows. We’re not even the target. We’re only collateral damage. Their attempt at implementing FATCA, if they even manage to succeed in it, will cost them far more money to run it, than they’ll EVER get back from it, and they’re already in debt up to their eyeballs. How long do you really think they can act this fiscally stupid and get away with it, until the chickens come home to roost?
The man behind the mirror is really more desperate than he wants us to believe, in spite of his display of overwhelming power.
Our exit plans need to take that into consideration.
My gut says….
If you are all caught up on your taxes, stay caught up on your taxes, renounce at your earliest opportunity, send in your final tax forms, and watch the US implode from a minimum safe distance.
If you’re not caught up on your taxes, consider whether or not it’s even financially feasible to get compliant. If so, then get compliant, and then renounce. If it’s not feasible, then you may as well renounce, hold on tightly to your CLN, and never return to the US.
People can do whatever they want with their lives, but fear isn’t going to stop me from doing what I have to do in the name of self preservation. There is a risk in everything we do. Talking about our plight here isn’t exactly safe these days, neither. Hell, a desperate and broke future America, beset with civil strife and economic privation, might push the red button out of fear, and try to nuke the world.
Basing one’s decisions on fear is no way to live your life.
@MJ, so are you saying that those of us who refuse to formally renounce and acquire a CLN to show our banks are living our lives the wrong way?
For me refusing to renounce is also a way of sticking it to the USA. Why should I HAVE TO DO ANYTHING? To renounce is to admit that I am American. As far as I am concerned I am not American,and I am not afraid of not renouncing or not having a CLN to show my bank. I don’t think I should have to prove anything to my bank. I’d rather leave, take my millions with me(kidding), deposit my life savings in the local credit union, and carry on living just as I always have been – as a Canadian.
@WhiteKat
What I am saying is that, if you feel that you are NOT an American, but the US insists otherwise, sooner or later, you’re going to have to deal with it. Running away from it is not a solution.
How can you know that the US won’t try to squeeze the credit unions next in a desperate bid for more revenue, leaving you in a lurch again?
Maybe I’m biased here, but I was in that situation, and I believe that if my US personhood was the result of some sort of unwanted accident, despite my being Canadian, that I’d be fighting like hell to be rid of the US personhood label in order to be ALL Canadian. (Matter of fact, I know I’m biased because I feel that dual anything/US citizenship is but an exercise in absurdity)
If you say you’re not an American, I believe you. I have no reason to doubt your assertion if that is what you truly feel in your heart. However, I am not the person to convince. If the US government says you are, then you saying otherwise means nothing to them, and they don’t deal with matters of the heart. On the other hand, renouncing only means that you recognize their assertion, but that you don’t want them to recognize you under that assertion anymore. It doesn’t mean that you’re dismissing your own assertion that you’ve never recognized yourself as a US citizen. This is how you should be looking at this problem.
Otherwise, if you try to hide, the US will just consider you guilty. If you’re caught, your pleas of your non-US personhood will never be heard. If you’re charged, the Canadian consulate will be powerless to help you, because the US authorities will tell them to butt out. If you are imprisoned, you will be so in a foreign country, though they’ll recognize you as a prisoner in the homeland.
Honestly. I’m not saying this to be a jerk. God knows I need no help in doing that! I just don’t want to see bad things happen to good people, just because of some bullshit that people shouldn’t have to deal with in the first place.
Here is Nancy Pelosa blaming the people and systems that don’t support the Democrat’s utopian vision on last night’s Daily Show. Stewart suspects there is a “systemic” problem in Washington.
http://www.thecomedynetwork.ca/shows/thedailyshow?videoPackage=142694
WhiteKat, mjh,
I believe that for those of us who believe we and / or our children are NOT US Persons (I just can’t use the term ‘American’), we need to read and thoroughly and carefully absorb what George has recently highlighted (and USCitizenAbroad and Petros has previously told us):
Can this be any more clear? I think; I hope it holds water!
@mj Your argument doesn’t make sense to me if you are only going half way – i.e. renouncing without complying, because to renounce but not comply is also to hide and live with uncertainty. As you say, if US catches you, it will find you guilty, just as it will find the non-renouncer guilty.
On the other hand, if you both renounce and comply, you have cleanly washed your hands of the USA, and have truly done everything you can possibly do to cut all ties, and should be able to live the rest of your life without looking over your shoulder.
The other two paths of escape are wrought with uncertainty. imho
@WhiteKat
If anything, once caught, the US would consider the renouncer more guilty than the non-renouncer, as the former would have an almost impossible time of claiming non-wilfulness.
Maybe we should push the Canadian government to pay for the cost of getting into compliance, since Flaherty has expressed his approval with the streamlined program. Better yet, get them also to pester the US for a much less restrictive ‘amnesty program’ with guarantee of no penalties as long as all taxes owed are paid. Free accounting, combined with no penalties, would solve most people’s compliance problem. Then there would really be a surge of renunciations.
@tdott, agreed.
How’s about a direct write-off on your Canadian taxes for all legal and accounting costs associated with becoming a ‘compliant’ US person?
I believe it was Roy Berg who wanted to make the cost of doing US taxes a tax deduction in Canada. In fact, I believe he made an appeal to the Canadian government to make it so. Sure would be a boon to those in his business!
A tax deduction for someone who does not have enough income to pay Canadian taxes is absolutely useless. The cost to comply for a non-filer would either create a lifetime of debt or wipe out all savings. The form filing penalties do not take into account that someone actually doesn’t have enough money to pay the penalties. As Petros has pointed out, 6 years of FBAR penalties can take 300% of an account’s value. Top that off with the tax expert fees and you have then created a Canadian on welfare for life or another homeless person where none existed before. BTW, the USA is creating debtors’ prisons by stealth. Will Canada do the same?
I agree that the penalties are the biggest problem of all. Because it isnt just an account stashed away from the IRS while living on another account/income in Cinncinati. Its the WHOLE spiel. Its everything a person owns! Thats what makes it so toxic for expats. I say penalize those tax evaders living in America. Do NOT penalize an expat living in another country for whom their accounts are not “foreign”.
@em
The penalties apply if the IRS finds the taxpayer’s actions to be willful. But who knows what will happen when you open that Pandora’s Box?