I have read with interest the claims that this is a “good deal” because it provides “reciprocity” to the Canadian government. This is not true, according to my investigations. Anyone who believes this is true should check out a post by James George Jatras on his RepealFATCA.com website. Check out the links to the two letters at the top of that page. Following is an excerpt from the article written by Mr Jatras in July 2013:
Without this new authority, on which the Congressman’s letter pronounces what amounts to a veto, Treasury cannot deliver on promises of “equivalent levels of reciprocal automatic exchange.”
And without imposing “equivalent levels of reciprocal automatic exchange” on domestic U.S. banks, credit unions, and other institutions, Treasury cannot pretend that IGAs are anything but a one-sided, extraterritorial diktat that foreign governments enforce FATCA to the detriment of their countries’ institutions, taxpayers, and consumers, and in violation of their sovereignty.
And without the IGAs, FATCA is unenforceable.
Thus, by sounding the death knell for reciprocal authority, Congressman Posey is sinking the IGAs, and in turn FATCA itself.
I don’t pretend to speak for Mr Jatras, but I assume that when he wrote this he could not conceive that any rational foreign government (including Canada) would sign IGA’s knowing that there will be no reciprocity. How could any responsible government agree to a deal that the American’s themselves recognize as violating that nation’s (Canada’s) sovereignty?
Couple the foregoing with the recent IGA negotiated by Canada. Reciprocity is addressed on page 16 under Article 6, and here is what the US promises in return for the Canadian banking information:
Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with Canada. The Government of the United States is committed to further improve transparency and enhance the exchange relationship with Canada by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic information exchange.
The US “acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange”? Nowhere does it say they will actually reciprocate, just that they acknowledge the need to reciprocate. I believe the Canadian government knows the foregoing to be true and could, in effect, block this whole thing by demanding the US actually reciprocate. In other words, the US is forcing legislation on Canada that cannot pass muster within the US itself. This agreement is wrong-headed to begin with, but for the Canadian government to capitulate on this without demanding exactly the same in return is mind-boggling. If you are going to sell us out, at least sell us out for something!
To pretend this is a bilateral agreement to catch tax cheats is disingenuous. This was outright extortion by the US and the Canadian government capitulated. Under the threat of financial penalties, the US demanded banking information in violation of numerous Canadian laws. Canada is giving them the information, and there will be no reciprocity.
I am no lawyer, but I can read. I may not be very smart, but I am smart enough to know when I have been knowingly sold out by my own government. A simple demand for complete reciprocity would likely have killed this deal, and how could the US blame anyone but themselves? Why should we give them information that they will not give to us?
Suckers deal.. Renounce properly and b free … They are overloaded and unpopular and the gov. Will change ..I had better b an observer than a gladiator
What Jatras wrote may have been correct when it was written, but may not be true now. A U.S. judge surprised everyone by ruling last month that the U.S. financial institutions would have to adhere to DATCA. From what I have read, the U.S. banks didn’t kick up much of a fuss about FATCA/DATCA because they figured that it wouldn’t affect them, just the foreign competition. The U.S. banks have been caught off guard. Since the U.S. has some tax haven qualities, it may lose out more than it has anticipated. Probably the most skewed agreement is Russia-U.S.IGA, since no American or any other person in their right mind is going to keep any assets in Putin’s Russia a second longer than absolutely necessary given the Putin’s government reputation.
Further on that, Publius: Bankers take fight over U.S. anti-tax dodge rules to appeals court
Re: Canada IGA with the US:
Comment:
…and comments:
http://isaacbrocksociety.ca/2014/02/05/the-canada-united-states-fatca-intergovernmental-agreement/comment-page-15/#comment-1077363
http://isaacbrocksociety.ca/2014/02/05/the-canada-united-states-fatca-intergovernmental-agreement/comment-page-15/#comment-1077585
http://isaacbrocksociety.ca/2014/02/05/the-canada-united-states-fatca-intergovernmental-agreement/comment-page-15/#comment-1077633
A basic rule law is of contract law is that any contract which is entered into under duress or as a consequence of deliberate deception on the part of one party, where there was never any intent to fulfill the contract or where it is foreknown that delivery of the satisfaction was in question, is that such contract is void.
@Calgary411
The use of the term ‘legislation’ in the Canadian IGA is interesting:
According to Robert Wood’s article in Forbes, Jan 16: “Even U.S. Banks Must Aid IRS Hunt For Offshore Accounts” it isn’t laws that are requiring banks to act but Treasury Department and IRS rules to implement FATCA. These rules come into effect in March 2014, so people who don’t want their accounts reported to their home countries may be shifting to more secretive locations. This may be more difficult, since there is a whole web of IGAs being negotiated.. “The rules under attack require U.S. banks to disclose information to the IRS about accounts held by non-resident aliens (of all countries with which the U.S. has a tax treaty or other information exchange agreement). The threshold is low–any such account that earns at least $10 of interest per year must be disclosed. It may not look it, but this rule is part of FATCA too.”
Appreciate your very clearly written and argued post. Which adds to our archive of ways of clearly explaining the non-existent reciprocity.
Reciprocity which in fact was NEVER what the US Congress intended under FATCA – although EXTORTION clearly was. Advances the critique of the Harper government – who literally gave away Canadian’s personal and financial data at the urging of the CBA and IIAC, etc. – and which ALL Canadian taxpayers will pay to implement.
The blatant lack of any reciprocity, and any gain for Canada makes the Harper government’s gift to the US of the Charter and Constitutional rights of children born Canadian citizen-duals in Canada (as well as all the others on the spectrum of US deemed ‘taxable persons’) even more egregious. The Harper government has given away the wellbeing and best interests of Canadian citizen children and their families to the US. Our rights to the integrity of our own personal and financial data were gifted to the US – a victory won by the US on Canadian soil with nary a shot fired. And, with the added injury of having to prove that we are NOT American taxpayers – AS DEFINED by a FOREIGN power under a FOREIGN law which Canadians have no control over. Quite a different task than being forced to prove that we ARE Canadian citizens and permanent residents – as per Canadian laws.
What is the purpose of a government if it does not protect its native born children – ‘children’ in the literal and the figurative, as all citizens – by birth and by naturalization are part of the family of a nation.
Sovereign autonomous nations don’t usually deliver their citizens; children and families over under the extraterritorial demands of a foreign government. And legal residents are also part of this Canadian community – particularly those longterm ones with legal permanent residency status – who would often, over time, qualify successfully to be citizens.
Publius, the $10 interest per year seems low but you’d be hard pressed to find a checking account at a US bank that was earning that and even a savings account would have to have quite a bit of money in it to generate double digit interest.
Do the IGA’s have to be ratified by Congress? I have trouble picturing that happening and after the mid-term elections – barring a miracle for the WH – I don’t see it at all, which is why Obama put that “I am going it alone” thing into the SOTU speech. Can he unilaterally impose DATCA? I am doubting that too.
The wording of the Canadian IGA seems to imply that the CRA will pass on info only in return for info. This could get interesting.
@Publius
As I recall from this web site… sorry… don’t remember who made the mention of this interesting fact… or if I read it correctly or understand….because some of this stuff is above my pay grade… I think they can shift funds into a non-interest earning situation so they won’t be reported because I don’t think there is a dollar amount minimum threshold that needs to reported other then making more then $10 of interest.. not dividend. So basically if u say… really rich… not a normal person living a normal life.. over a few million sitting in a bank… interest on your account is not something u really care about…
There is a combination of very heavy intimidation by the US and a willingness for naivite at the codependent nations of the world.
If you’ve had personal contacts with these goons (ambassadors, negotitators), you will immediately get the feedback that they have a flotilla of battleships behind them and they have no interest in hearing any dissent from the serfs. This same behavior goes on behind the doors and in the wide open on the floor of the European parliament.
The high tax nations are so hungry for money and friendly media coverage that they will do anything as long as the media calls it fighting those criminal tax evaders. THey immediately shut out logic, on the first contact.
The DATCA lite issue is pretty hilarious. The judge was appointed by Obama in 2011 and had also ruled for the administration against releasing Obama Bin Ladin corpse pictures according to a Freedom of Information request.
The judge made no legal determination about the fact–he ruled that the requirement wasn’t that difficult to implement. If the US banks get their head out of their arse, they will not lay down for that kind of bs.
@YogaGirl
Actually… there are accounts in a bank that can produce that kind of interest… I asked a family member… there are accounts called money market accounts which are similar to savings accounts but produce more interest…how…don’t know… he started to tell me.. I heard high interest..blah…blah…then I noticed I hated the rug in my kitchen… yeah… never said I was that bright…sigh.. Also if your accounts in one bank..total or singular are over say 100,000 then that can produce interest over $10
@ At all.
Maybe Robert Stack should add the reciprocity myth to his list of FATCA myths!
Publius wrote:
“Probably the most skewed agreement is Russia-U.S.IGA, since no American or any other person in their right mind is going to keep any assets in Putin’s Russia a second longer than absolutely necessary given the Putin’s government reputation.”
Actually, I don’t keep anything in the USA and I never will given the US government’s reputation. Putin ranks better in my books than Obama and now Harper too.
Recalciatrant wrote:
“A basic rule law is of contract law is that any contract which is entered into under duress or as a consequence of deliberate deception on the part of one party, where there was never any intent to fulfill the contract or where it is foreknown that delivery of the satisfaction was in question, is that such contract is void.”
How does this basic rule hold up with regards to the “social contract” between the USG and Americans living outside the Homeland?
@CanadianCop…
Thanks for your post. You are new to me and I am please that you took up this subject. You are right to call it a myth, but, don’t underestimate the determination of the FATCAnatics to try and impose FATCA reporting requirements on U.S financial Institutions (USFIs)
Some of us have been following the evolution of these attempts by Treasury and the IRS to impose a domestic version of FATCA, or DATCA onto USFIs for a few years now.
They have NOT accomplished it yet, but the Non Resident Alien (NRA) interest reporting requirement is what I like to call DATCA lite.
The entire history, as I have discovered it, is posted here at IBS at this link…
H.R. 2299 Calls for Withdrawal of FATCA IGA Reciprocity Tool (DATCA timeline update)
Keep up the good work of calling attention to the myth, but watch out of the sneaky approach to imposing their will that these ideologues of the Left are working on. Everybill that comes out of Congress is a vehicle for their amendment subterfuge, and you have to remain alert!
Tax Attorney Destroys Obama Over Continued IRS Targeting Scandal (Video)
http://tinyurl.com/l3k6onb
“……….Everything Obama has uttered in regards to this massive IRS targeting scandal has been a huge lie and the people of the US need to hear it, know it and act accordingly………..”
@Publius
Regarding banks FATCA impacts in the U.S.
In many ways, while FATCA is a pain in the kiester to BIG U.S. INTERNATIONAL BANKS, the Too Big To Fail (TBTF) types, compliance is just a cost of business. They have the IT bench strength, the FATCA compliance experience in their international branches, and implied government guarantees to be able to withstand the regulatory cost, complexity and penalties for faillure.
Look how Jamie Dimon and J.P. Morgan bank have withstood all the Penalties imposed on them since 2010. The fines total $27,210,400.00, and Jamie gets a bonus!
• June 2010: $48.6 million fine – Commingling JPM and client funds in London.
• April 2011: $56 million fine – Overcharging or wrongfully foreclosing on active-duty military personnel.
• June 2011: $153.6 million fine – Failed to inform buyers of CDOs it sold that a hedge fund assisted picking and bet against those CDOs.
• July 2011: $228 million – Fraudulently rigged at least 93 municipal bond transactions in 31 states!
• August 2011: $88.3 million fine – Conducted transactions with people or entities tied to Iran, Sudan, Cuba, and Liberia.
• February 2012: $5.29 BILLION fine – Settled what was called years of “shoddy loan servicing, illegal robo-signing, and faulty foreclosure processing.”
• February 2012: $110 million fine – Charged unwarranted overdraft fees.
• March 2012: $150 million fine – Settled with pension funds and other investors for post-2008 shady investment deals.
• April 2012: $20 million – Improperly extended credit to Lehman Brothers based in part on customer funds that were required to be kept separate.
• August 2012: $1.2 billion – Conspired to set the price of credit and debit card interchange fees.
• November 2012: $296.9 million fine – Misleading investors about the quality of mortgages that underlay mortgage-backed securities it sold.
• January 2013: $1.8 BILLION fine – Fined over “robo-signing” and other alleged abuses of the foreclosure process.
• March 2013: $100 million fine – Mishandling of the MF Global account that went bankrupt thanks to Jon Corzine, who is also not in jail.
• July 2013: $410 million fine – Manipulating energy prices!
• Sept. 2013: $389 million – Unfair billing practices (2.1 mln customers) that charged for credit monitoring services they did not receive.
• Sept. 2013: $920 million – The “London Whale” disaster clearly broke many rules and regulations that JPM ignores.
• Sept. 2013: $13 BILLION – Record deal to end U.S. probes of its mortgage-bond sales.
• Jan 2014: $2.6 BILLION – Acknowledged that it ignored red flags for about 15 years that Madoff used his account to run a fraud!
• Jan 2014: $350 million – Widespread deficiencies in the bank’s BSA and anti-money laundering compliance programs.
One of the BIG loopholes in the DATCA lite (or NRA interest reporting requirement) is that it does NOT apply to foreign entities, and so for the BIG evader from New Zealand say, it is very easy to structure their holding in the USFIs to avoid personal detection! Go figure.
@Robert
“They are overloaded and unpopular and the gov. Will change ..I had better b an observer than a gladiator”
Why do you use the term “gladiator”? Who is glad? I would rather use the term “sadiator”. 😉
JAMAICA
BTW Jamaica is having their arm twisted at the moment to sign an IGA
See this email address folks? avia.collinder@gleanerjm.com
Contact Avia Collinder business reporter in Kingston covering the story. Maybe she would like to hear our experiences? Article today http://jamaica-gleaner.com/gleaner/20140209/business/business1.html
“The rules have already resulted in the outflow of $500 million from the Texas banking system, Eric Sandberg, president of the Texas Bankers Association, said in the statement.”
Sorry I have to post this
http://wmlbooklists.wikispaces.com/file/view/laughing.gif/37722077/laughing.gif
CBE, I have been writing the Gleaner for two years whenever I could about this. I have a special place in my heart for Jamaica and have done volunteer work there in rural schools as well as having sponsored and SOS child there for some time now.
I keep up with their news and read the Gleaner every week as well as “On the Ground News”
Jamaica is a very poor place outside of the resort areas for the most part and those living there cannot afford higher banking fees! There’s also a lot of corruption in the system and I don’t see how something like this could be put in place without harming a lot of innocent and very poor people. It’s awful for Canada but, for poor countries it’s a disaster as the costs to comply with this for so little in return will be just another straw breaking the camels back there. I think they will find it very hard to resist this with so little push back power and with so many Americans who own resorts there! Most of the money made from those resorts is taken out of Jamaica and does not stay there to strengthen local economies as much as it should as it is. Sure it provides some low paying jobs but, the millions made are largely going out of Ja as it is.
Someone selling their wares in a lean to make shift shop is not going to be able to pay higher banking fees. Some of these people cannot even send their kids to school since they can’t afford the supplies and uniforms to do so. When it comes to small nations already struggling FATCA makes me particularly angry. Jamaica does not have CBT.
A total betrayal.
It is a good strategy to require true reciprocity insofar as the US would never accept it and making it a condition just might torpedo FATCA altogether. It is unlikely however to bring significant tax revenue benefit to Canada. Taking this position will of course be conveying the message to the bully that we expect and should have equal treatment and will not roll over and play dead, which we have just done! If they can do nothing else the opposition in Ottawa should demand absolute guarantee of reciprocity before the deal is ratified by parliament.
US_Person_Foreigner, I was talking only about the kind of ordinary, need-it-to-live accounts. There are definitely a variety but some of them are like our GIC’s and stuff. You have to put the money in and leave it. You would be lucky to find a check/savings account anywhere that makes anything in interest and some checking accounts make nothing. If Canada is hoping to find Canadians in the US who are raking in gobs of interest to the point that the US will fork them over, they are going to be disappointed.
@YogaGirl
Thank u for the clarification… u are so right.. I have no clue what Canada will get for this but it won’t be canadians hiding craploads of funds… because the US is the biggest tax haven & if u have the correct connections which majority of criminials do… they will never be found
“Putin ranks better in my books than Obama and now Harper too.”
EXACTLY Long live Putin, the only REAL leader on the planet who doesn’t mind to tell the USA where to shove it
@all…
Just a reminder to all, that if you post links to media stories in any of the comment threads, also go over and drop them in here:
to make it easy for the moderator to spot and post. It helps us all, as with the volume of good posts and comments it is getting harder to keep up, and hate missing something good…
and Joe Zinger…
Yes, that would have been a good strategy, and we heard early on, it was exactly that issue that was holding up the German signature on the IGA, but in the end they signed without getting it. Treasury is NOT about to change the boiler plate of the IGA for ANYONE, so it really is a ‘take it or leave it’ approach, and sadly, the governments give in. If they hadn’t, FATCA would have been dead by now. It is the IGA that is keeping FATCA breathing and alive. Other Government complicity is essential, and the FATCAnatics have been very clever in getting it, with the help of the FFIs begging for it. Good divide and conquer strategy.