397 thoughts on “The Canada United States FATCA Intergovernmental Agreement”
To the extent that the IRS believes a CLN was improperly issued, the IRS could present such evidence to the Department of State and request that revocation proceedings be commenced.
I’m sure in the mind of the IRS, this means people who did not file taxes and the 8854 after they renounced. The renunciation papers indicate that renouncing does not free you from IRS or military service obligations:
E. TAX & MILITARY OBLIGATIONS /NO ESCAPE FROM PROSECUTION
Persons who wish to renounce U.S. citizenship should be aware of the fact that renunciation of U.S. citizenship may have no effect whatsoever on his or her U.S. tax or military service obligations (contact the Internal Revenue Service or U.S. Selective Service for more information). In addition, the act of renouncing U.S. citizenship does not allow persons to avoid possible prosecution for crimes which they may have committed in the United States, or escape the repayment of financial obligations previously incurred in the United States or incurred as United States citizens abroad.
So, it comes down to an individual’s best guess and gamble as to the best place to position themselves such that the IRS won’t bother coming after them.
Although I wouldn’t act on it, I try to believe the IRS wouldn’t bother going after people who don’t have at least enough assets to make them covered expats. Having said that, if the IRS barely knows you exist, they don’t know what your assets are. Oh crap, yes they will. FATCA will send the info to them unless you renounce to get a CLN.
@Joe Smith
My post about an hour before yours is suggesting that FATCA may report your existence as a US person even though your account balance is below $50,000. Possibly even sarting this year even though account balance info is not required until next year.
I also asked, what info are you wanting to protect? That Joe Smith has a balance of $49,000, or that Joe Smith exists as a US person?
Credit unions may be the only safe place to be, but the descriptions of credit union involvement in FATCA are not clear to me yet.
@ WhatAmI?
I don’t see how that could happen because the loss of nationality would still have occurred, as per INA s. 349. Tax obligations from before the date of loss of nationality and those arising from it remain, and that could be problematic, but tax compliance is not a requisite for citizenship loss. If IRS felt they could prove the CLN was issued based on lack of intent or voluntariness or on fradulent statements/documentation (a false backdated relinquishment date comes to mind), I could see revocation proceedings arising from that.
DoS’ 7 FAM 1230, “Administrative Review and Appeal of Loss-of-Nationality Findings” contains no reference to tax. In particular it lists the following at 1235(b):
“This procedure may be followed when:
(1) The law under which the holding of loss of nationality was made is later held unconstitutional; for example, a law concerning voting in a foreign election;
(2) A major change in the interpretation of the law on expatriation is made as a result of a U.S. Supreme Court decision; for example, the decision in Afroyim v. Rusk or Vance v. Terrazas;
(3) A major change is made in the interpretation of the law by the Department or is made by another agency and adopted by the Department. Most of these changes arose under previous statutes and prior to the decision in Afroyim v. Rusk; for example, cases involving naturalization of a minor; and
(4) Substantial new evidence of involuntariness or intent, not previously considered but contemporaneous to the time when the potentially expatriating act was performed, is presented by the individual.”
@pacifica777
These cases all seem to be about persons wanting to KEEP US Citizenship…none are about people wanting to lose US Citizenship…It is a common theme amongst these cases…so I never did understand why they are relevant to the intent to lose US Citizenship nor should they have a bearing on such purposeful loss…
Afroyim v. Rusk, 387 U.S. 253 (1967), is a United States Supreme Court case in which the Court ruled that citizens of the United States may not be deprived of their citizenship involuntarily.[1][2] The U.S. government had attempted to revoke the citizenship of Beys Afroyim,
Vance v. Terrazas, 444 U.S. 252 (1980), was a United States Supreme Court decision that established that a United States citizen cannot have his or her citizenship taken away unless he or she has acted with an intent to give up that citizenship.
The USG states in many places (usually in the form of warnings) that loss of citizenship is “irrevocable”. They may well attempt to punish you if they think you have renounced for tax reasons, but they cannot unilaterally reinstate an unwanted citizenship (i.e: revoke a CLN). Even if they could, what would they do? Send someone out to take it away from you?
They’d have to break their own laws (not that they haven’t done so in the past). In view of the fact that loss of US citizenship involves eliminating a person’s US taxable status, it logically follows that everyone who renounces does so at least partially for tax reasons.
A key term is “improperly issued.” Tax compliance, before or after expatriation, is not a requirement for a “properly issued” CLN.
If IRS felt they could prove the CLN was issued based on lack of intent or voluntariness or on fradulent statements/documentation (using false evidence to get backdated relinquishment date comes to mind), I could see that revocation proceedings could arise from that, because these are requirements for a valid CLN to be issued — but not from failure file/pay tax as that does not impact on the proper issuance of a CLN.
I’m aware of a case in the 90s where IRS contested the effective date of relinquishment (date of the act vs date of notification), which gave IRS an extra year of very substantial tax to collect (sorry I can’t put my fingers on it right now — the people involved conceded to the later date, so that point was not litigated), but I’m not aware of any cases about them trying to restore citizenship based on the person’s filing/paying or not filing/paying tax. There’s nothing in the law (at this time anyway) that makes citizenship contingent upon tax status.
@ Pacifica. I understand your point, but I think it would be tough for the IRS to get the sort of information they would need to prove such an allegation. In addition to the laws preventing agencies within the USG from sharing information, they have their own “turf wars” going on and tend to be uncooperative with each other. I think it would be much more likely that State itself would initiate such an action, as they at least have access to the entire file.
Previously on Brock it was shown that that was why the Reed Amendment has never been used. There was (and continues to be) no way for the State Dept to get the necessary information from the IRS.
Depending on the date of the expatriation (and notification), the date of loss of citizenship (the date on the CLN) may be different from the date of expatriation for tax purposes, always to the IRS’ advantage, of course. Why does it always have to be so damn complicated?
@ Maz,
I completely agree with you. I meant to convey that although the possibility exists to attempt a CLN revocation on certain grounds, tax compliance is not one of those grounds.
But although a CLN can be revoked if proved to have been improperly issued, the way things work in reality, I agree with you — I don’t believe that IRS the least bit interested in trying to prove that our CLNs were improperly issued.
@Duke of Devon
@Calgary411
@bubblebustin
This agreement will not impose any U.S. taxes or penalties on U.S. citizens or U.S. residents holding accounts in Canada.” – – Kerry-Lynne D. Findlay, Minister of National Revenue
My impression of this statement was that the Minister was clumsily referring to the non-collection of the taxes and penalties from Cdn citizens, which is already in the tax treaty which the IGA is added to. However, she really gives the erroneous impression that it applies to everyone.
Despite this FATCA, FBAR and CBT business being a horrible thing for all of us, we should keep in mind that the destructive potential is far greater for those of us who are not Cdn citizens, as eell as for those who absolutely have to travel to the US.
i know there is no us indica with the CU and I know they will not report on accts <50,000. i am a member and they work for me. enuff said.
I beg to differ…“U.S. residents holding accounts in Canada” has nothing to do with Canadians…
They are simply US residents who happen to have overseas accounts in Canada…
As mentioned earlier (which I plan to take up with the Minister) concerns the following.
The answer to this question:
16. I am a U.S. citizen living in Canada and was not aware that the U.S. wants me to file tax returns. Will the Agreement mean that I now have to pay U.S. tax?
Should be:
“Yes. However, The Agreement is strictly an information-sharing agreement and does not involve any new or higher taxes.”
NOT:
“The Agreement is strictly an information-sharing agreement and does not involve any new or higher taxes.”
The CRA is obfuscating in its reply, imo.
@Joe Smith
So if someone had more than 50K could one use more than one CU? Not a different branch but a different Cu…
@Joe Smith
So if someone had more than 50K could one use more than one CU? What’s to stop the IRS from sorting on a name and seeing if it appears in more than one institutional report?
Why not? I think diversifying is a great idea! How can they prove that this Joe Smith is the same as that Joe Smith?
@hieronymus
The FATCA IGA talks about aggregation of accounts “linked” within the FFI:
Account Balance Aggregation and Currency Translation Rules.
1. Aggregation of Individual Accounts. For purposes of determining the
aggregate balance or value of Financial Accounts held by an individual, a
Reporting Canadian Financial Institution is required to aggregate all
Financial Accounts maintained by the Reporting Canadian Financial
Institution, or by a Related Entity, but only to the extent that the Reporting
Canadian Financial Institution’s computerized systems link the Financial
Accounts by reference to a data element such as client number or taxpayer
identification number, and allow account balances or values to be
aggregated. Each holder of a jointly held Financial Account shall be
attributed the entire balance or value of the jointly held Financial Account
for purposes of applying the aggregation requirements described in this
paragraph 1.
Accounts in multiple CUs would not be linked in that way.
Having said that, the IGA clearly gives the FFI the option to report regardless of the $50K threshold. Note the phrase “Unless the Reporting Canadian Financial Institution elects otherwise…”. This quote is for “New Individual Accounts” but the same words appear for “Preexisting” accounts:
A. Accounts Not Required to Be Reviewed, Identified, or Reported.
Unless the Reporting Canadian Financial Institution elects otherwise, either with respect to
all New Individual Accounts or, separately, with respect to any clearly identified
group of such accounts, where the implementing rules in Canada provide for such
an election, the following New Individual Accounts are not required to be
reviewed, identified, or reported as U.S. Reportable Accounts:
1. A Depository Account unless the account balance exceeds $50,000 at the
end of any calendar year or other appropriate reporting period.
2. A Cash Value Insurance Contract unless the Cash Value exceeds $50,000
at the end of any calendar year or other appropriate reporting period.
I have not seen any assurance that they $50 threshold is something you can take to the bank (pun intended). I believe FATCA reporting includes non-interest paying accounts, such as chequing accounts.
I’m not yet clear if _any_ CUs really are exempt from reporting.
@WhatAmI
“I have not seen any assurance that they $50 threshold is something you can take to the bank (pun intended).”
Correct – forget about the $50K threshold; assume it doesn’t exist. As I’ve stated before, it will cost banks lots of $$$ to implement, will add to the complexity of determining which USPs to report and thus increase their risk of non-compliance. Why should they bother with it?
@notamused
@WhatAmI
@GwEvil
So us little folk tainted with US ‘personhood’ are about to be hosed.
Govt’s of both sides are moving smartly along. Lot’s of speculation by us, but few hard facts. Enabling legislation coming up along with 1 July implementation.
Will there be a Charter challenge? How can we assist in making that happen — should that not be our focus?
Yes, I have written to everyone I can think of.
You see hieronymus, the Canadian government is going beyond facilitation of taxation by the US by actually setting up Canadians to pay even more in US taxes by telling us that our TFSA’s, RESP’s, etc won’t be reported under FATCA, knowing full well that they are taxable by the IRS. You see, this facilitates the banks to continue to sell us financial products that ‘regular’ Canadians can, and the US agreed to it because they’ll tax everything once our other financial info is sent to the IRS. We’re getting set up to get fleeced.
@heironymous,
More will be posted here soon when we know what the next steps are re: class action law suit.
OMG, has nobody noticed this Easter Egg in the IGA? Annex II, Section III, page 40.
My interpretation: If a Financial Institution sets and enforces a policy that refuses accounts for US citizens not resident in Canada, and closes such preexisting accounts, the FI becomes a Deemed-Compliant, Non-Reporting Canadian FI. I think that means they don’t have to report anything to the CRA. No account thresholds, nothing. Verifying residence would be cheap and easy to do compared to citizenship verification, would not violate anybody’s privacy, and there is no IT cost to develop reporting systems to the CRA.
Sounds like residence-based-BANKING to me! No wonder it took 2 years to negotiate this IGA. Who knew? Only in Canada? Pity!
Yes, the section says the FI could choose to report non-Canada-resident account holders under normal FATCA procedures instead of closing their accounts, but that just puts them back into the normal FATCA-land anyway.
Canada could do what Switzerland did, and set up just one FI that caters to US citizens (but in our case, we’d only need it specifically for non-Canadian-resident US citizens), and every other bank can ignore implementing FATCA reporting.
I don’t yet understand the definition of a “Financial Account” on page 4 to know if this Annex Section III includes just simple depository accounts or if it includes investment accounts such as holding Canadian mutual funds. Generally, exactly what such a FI can offer in the way of services. Obviously, this is a crucial detail.
There is a lot more to say about this but I won’t waste the space or time if people think I’m interpreting this incorrectly.
III. Deemed-Compliant Financial Institutions
The following Financial Institutions are Non-Reporting Canadian Financial Institutions
that shall be treated as deemed-compliant FFIs for the purposes of section 1471 of the
U.S. Internal Revenue Code.
A. Financial Institution with a Local Client Base. A Financial Institution that
qualifies as a local FFI as described in relevant U.S. Treasury regulations,
applying subparagraphs A(1), A(2) and A(3) of this section in lieu of the relevant
paragraphs in those regulations:
1. Beginning on or before July 1, 2014, the Financial Institution must have
policies and procedures, consistent with those set forth in Annex I, to
prevent the Financial Institution from providing a Financial Account to
any Nonparticipating Financial Institution and to monitor whether the
Financial Institution opens or maintains a Financial Account for any
Specified U.S. Person who is not a resident of Canada (including a U.S.
Person that was a resident of Canada when the Financial Account was
opened but subsequently ceases to be a resident of Canada) or any Passive
NFFE with Controlling Persons who are U.S. residents or U.S. citizens
who are not residents of Canada;
2. Such policies and procedures must provide that if any Financial Account
held by a Specified U.S. Person who is not a resident of Canada or by a
Passive NFFE with Controlling Persons who are U.S. residents or U.S.
citizens who are not residents of Canada is identified, the Financial
Institution must report such Financial Account as would be required if the
Financial Institution were a Reporting Canadian Financial Institution
(including by following the applicable registration requirements on the
IRS FATCA registration website) or close such Financial Account;
3. With respect to a Preexisting Account held by an individual who is not a
resident of Canada or by an Entity, the Financial Institution must review
those Preexisting Accounts in accordance with the procedures set forth in
Annex I applicable to Preexisting Accounts to identify any Financial
Account held by a Specified U.S. Person who is not a resident of Canada,
by a Passive NFFE with Controlling Persons who are U.S. residents or
U.S. citizens who are not residents of Canada, or by a Nonparticipating
Financial Institution, and must report such Financial Account as would be
required if the Financial Institution were a Reporting Canadian Financial
Institution (including by following the applicable registration requirements
on the IRS FATCA registration website) or close such Financial Account;
Following the above Annex section, the following describes another FATCA-free FI, but looks to be restricted to simple deposits and not investments. However, again, there is no $50K limit on the account holdings. This doesn’t mention anything about citizenship, so I don’t really understand why the IRS lets such FIs off the hook for reporting.
B. Local Bank. A Financial Institution that qualifies as a nonregistering local bank
as described in relevant U.S. Treasury regulations, using the following definitions
where applicable:
1. The term “bank” shall include any Depository Institution to which the
Bank Act or the Trust and Loan Companies Act applies, or which is a trust
or loan company regulated by a provincial Act; and
2. The term “credit union or similar cooperative credit organization that is
operated without profit” shall include any credit union or similar
cooperative credit organization that is entitled to tax-favored treatment
with respect to distributions to its members under Canadian law, including
any credit union as defined in subsection 137(6) of the Income Tax Act.
http://www.gpo.gov/fdsys/pkg/GPO-CPRT-JCS-2-03/pdf/GPO-CPRT-JCS-2-03-7-2.pdf
I’m sure in the mind of the IRS, this means people who did not file taxes and the 8854 after they renounced. The renunciation papers indicate that renouncing does not free you from IRS or military service obligations:
http://travel.state.gov/content/travel/english/legal-considerations/us-citizenship-laws-policies/renunciation-of-citizenship.html
So, it comes down to an individual’s best guess and gamble as to the best place to position themselves such that the IRS won’t bother coming after them.
Although I wouldn’t act on it, I try to believe the IRS wouldn’t bother going after people who don’t have at least enough assets to make them covered expats. Having said that, if the IRS barely knows you exist, they don’t know what your assets are. Oh crap, yes they will. FATCA will send the info to them unless you renounce to get a CLN.
@Joe Smith
My post about an hour before yours is suggesting that FATCA may report your existence as a US person even though your account balance is below $50,000. Possibly even sarting this year even though account balance info is not required until next year.
I also asked, what info are you wanting to protect? That Joe Smith has a balance of $49,000, or that Joe Smith exists as a US person?
Credit unions may be the only safe place to be, but the descriptions of credit union involvement in FATCA are not clear to me yet.
@ WhatAmI?
I don’t see how that could happen because the loss of nationality would still have occurred, as per INA s. 349. Tax obligations from before the date of loss of nationality and those arising from it remain, and that could be problematic, but tax compliance is not a requisite for citizenship loss. If IRS felt they could prove the CLN was issued based on lack of intent or voluntariness or on fradulent statements/documentation (a false backdated relinquishment date comes to mind), I could see revocation proceedings arising from that.
DoS’ 7 FAM 1230, “Administrative Review and Appeal of Loss-of-Nationality Findings” contains no reference to tax. In particular it lists the following at 1235(b):
@pacifica777
These cases all seem to be about persons wanting to KEEP US Citizenship…none are about people wanting to lose US Citizenship…It is a common theme amongst these cases…so I never did understand why they are relevant to the intent to lose US Citizenship nor should they have a bearing on such purposeful loss…
Afroyim v. Rusk, 387 U.S. 253 (1967), is a United States Supreme Court case in which the Court ruled that citizens of the United States may not be deprived of their citizenship involuntarily.[1][2] The U.S. government had attempted to revoke the citizenship of Beys Afroyim,
Vance v. Terrazas, 444 U.S. 252 (1980), was a United States Supreme Court decision that established that a United States citizen cannot have his or her citizenship taken away unless he or she has acted with an intent to give up that citizenship.
The USG states in many places (usually in the form of warnings) that loss of citizenship is “irrevocable”. They may well attempt to punish you if they think you have renounced for tax reasons, but they cannot unilaterally reinstate an unwanted citizenship (i.e: revoke a CLN). Even if they could, what would they do? Send someone out to take it away from you?
They’d have to break their own laws (not that they haven’t done so in the past). In view of the fact that loss of US citizenship involves eliminating a person’s US taxable status, it logically follows that everyone who renounces does so at least partially for tax reasons.
A key term is “improperly issued.” Tax compliance, before or after expatriation, is not a requirement for a “properly issued” CLN.
If IRS felt they could prove the CLN was issued based on lack of intent or voluntariness or on fradulent statements/documentation (using false evidence to get backdated relinquishment date comes to mind), I could see that revocation proceedings could arise from that, because these are requirements for a valid CLN to be issued — but not from failure file/pay tax as that does not impact on the proper issuance of a CLN.
I’m aware of a case in the 90s where IRS contested the effective date of relinquishment (date of the act vs date of notification), which gave IRS an extra year of very substantial tax to collect (sorry I can’t put my fingers on it right now — the people involved conceded to the later date, so that point was not litigated), but I’m not aware of any cases about them trying to restore citizenship based on the person’s filing/paying or not filing/paying tax. There’s nothing in the law (at this time anyway) that makes citizenship contingent upon tax status.
@ Pacifica. I understand your point, but I think it would be tough for the IRS to get the sort of information they would need to prove such an allegation. In addition to the laws preventing agencies within the USG from sharing information, they have their own “turf wars” going on and tend to be uncooperative with each other. I think it would be much more likely that State itself would initiate such an action, as they at least have access to the entire file.
Previously on Brock it was shown that that was why the Reed Amendment has never been used. There was (and continues to be) no way for the State Dept to get the necessary information from the IRS.
Depending on the date of the expatriation (and notification), the date of loss of citizenship (the date on the CLN) may be different from the date of expatriation for tax purposes, always to the IRS’ advantage, of course. Why does it always have to be so damn complicated?
@ Maz,
I completely agree with you. I meant to convey that although the possibility exists to attempt a CLN revocation on certain grounds, tax compliance is not one of those grounds.
But although a CLN can be revoked if proved to have been improperly issued, the way things work in reality, I agree with you — I don’t believe that IRS the least bit interested in trying to prove that our CLNs were improperly issued.
@Duke of Devon
@Calgary411
@bubblebustin
This agreement will not impose any U.S. taxes or penalties on U.S. citizens or U.S. residents holding accounts in Canada.” – – Kerry-Lynne D. Findlay, Minister of National Revenue
My impression of this statement was that the Minister was clumsily referring to the non-collection of the taxes and penalties from Cdn citizens, which is already in the tax treaty which the IGA is added to. However, she really gives the erroneous impression that it applies to everyone.
Despite this FATCA, FBAR and CBT business being a horrible thing for all of us, we should keep in mind that the destructive potential is far greater for those of us who are not Cdn citizens, as eell as for those who absolutely have to travel to the US.
i know there is no us indica with the CU and I know they will not report on accts <50,000. i am a member and they work for me. enuff said.
I beg to differ…“U.S. residents holding accounts in Canada” has nothing to do with Canadians…
They are simply US residents who happen to have overseas accounts in Canada…
As mentioned earlier (which I plan to take up with the Minister) concerns the following.
The answer to this question:
16. I am a U.S. citizen living in Canada and was not aware that the U.S. wants me to file tax returns. Will the Agreement mean that I now have to pay U.S. tax?
Should be:
“Yes. However, The Agreement is strictly an information-sharing agreement and does not involve any new or higher taxes.”
NOT:
“The Agreement is strictly an information-sharing agreement and does not involve any new or higher taxes.”
The CRA is obfuscating in its reply, imo.
@Joe Smith
So if someone had more than 50K could one use more than one CU? Not a different branch but a different Cu…
@Joe Smith
So if someone had more than 50K could one use more than one CU? What’s to stop the IRS from sorting on a name and seeing if it appears in more than one institutional report?
Why not? I think diversifying is a great idea! How can they prove that this Joe Smith is the same as that Joe Smith?
@hieronymus
The FATCA IGA talks about aggregation of accounts “linked” within the FFI:
Accounts in multiple CUs would not be linked in that way.
Having said that, the IGA clearly gives the FFI the option to report regardless of the $50K threshold. Note the phrase “Unless the Reporting Canadian Financial Institution elects otherwise…”. This quote is for “New Individual Accounts” but the same words appear for “Preexisting” accounts:
I have not seen any assurance that they $50 threshold is something you can take to the bank (pun intended). I believe FATCA reporting includes non-interest paying accounts, such as chequing accounts.
I’m not yet clear if _any_ CUs really are exempt from reporting.
@WhatAmI
“I have not seen any assurance that they $50 threshold is something you can take to the bank (pun intended).”
Correct – forget about the $50K threshold; assume it doesn’t exist. As I’ve stated before, it will cost banks lots of $$$ to implement, will add to the complexity of determining which USPs to report and thus increase their risk of non-compliance. Why should they bother with it?
@notamused
@WhatAmI
@GwEvil
So us little folk tainted with US ‘personhood’ are about to be hosed.
Govt’s of both sides are moving smartly along. Lot’s of speculation by us, but few hard facts. Enabling legislation coming up along with 1 July implementation.
Will there be a Charter challenge? How can we assist in making that happen — should that not be our focus?
Yes, I have written to everyone I can think of.
You see hieronymus, the Canadian government is going beyond facilitation of taxation by the US by actually setting up Canadians to pay even more in US taxes by telling us that our TFSA’s, RESP’s, etc won’t be reported under FATCA, knowing full well that they are taxable by the IRS. You see, this facilitates the banks to continue to sell us financial products that ‘regular’ Canadians can, and the US agreed to it because they’ll tax everything once our other financial info is sent to the IRS. We’re getting set up to get fleeced.
@heironymous,
More will be posted here soon when we know what the next steps are re: class action law suit.
OMG, has nobody noticed this Easter Egg in the IGA? Annex II, Section III, page 40.
My interpretation: If a Financial Institution sets and enforces a policy that refuses accounts for US citizens not resident in Canada, and closes such preexisting accounts, the FI becomes a Deemed-Compliant, Non-Reporting Canadian FI. I think that means they don’t have to report anything to the CRA. No account thresholds, nothing. Verifying residence would be cheap and easy to do compared to citizenship verification, would not violate anybody’s privacy, and there is no IT cost to develop reporting systems to the CRA.
Sounds like residence-based-BANKING to me! No wonder it took 2 years to negotiate this IGA. Who knew? Only in Canada? Pity!
Yes, the section says the FI could choose to report non-Canada-resident account holders under normal FATCA procedures instead of closing their accounts, but that just puts them back into the normal FATCA-land anyway.
Canada could do what Switzerland did, and set up just one FI that caters to US citizens (but in our case, we’d only need it specifically for non-Canadian-resident US citizens), and every other bank can ignore implementing FATCA reporting.
I don’t yet understand the definition of a “Financial Account” on page 4 to know if this Annex Section III includes just simple depository accounts or if it includes investment accounts such as holding Canadian mutual funds. Generally, exactly what such a FI can offer in the way of services. Obviously, this is a crucial detail.
There is a lot more to say about this but I won’t waste the space or time if people think I’m interpreting this incorrectly.
Following the above Annex section, the following describes another FATCA-free FI, but looks to be restricted to simple deposits and not investments. However, again, there is no $50K limit on the account holdings. This doesn’t mention anything about citizenship, so I don’t really understand why the IRS lets such FIs off the hook for reporting.
B. Local Bank. A Financial Institution that qualifies as a nonregistering local bank
as described in relevant U.S. Treasury regulations, using the following definitions
where applicable:
1. The term “bank” shall include any Depository Institution to which the
Bank Act or the Trust and Loan Companies Act applies, or which is a trust
or loan company regulated by a provincial Act; and
2. The term “credit union or similar cooperative credit organization that is
operated without profit” shall include any credit union or similar
cooperative credit organization that is entitled to tax-favored treatment
with respect to distributions to its members under Canadian law, including
any credit union as defined in subsection 137(6) of the Income Tax Act.