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?
Just saw this on Breitbart:
http://www.breitbart.com/Big-Government/2014/02/09/Americans-Renouncing-Citizenship-Up-221-percent-All-Aboard-the-FATCA-Express
Not sure if this is the appropriate way to get the message out, but it would be nice to educate people in the US about FATCA.
@Canadian Cop
That is the Robert Woods article from Forbes, I think…
http://www.forbes.com/sites/robertwood/2014/02/06/americans-renouncing-citizenship-up-221-all-aboard-the-fatca-express/
A fair number of Brocker comments there from folks I recognize. I put up a couple.
There is no reciprocity, Canada was bent over the table and took one with “no lube”. I envisioned this image summing up FATCA.
@Publius
Re: “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.”
No, what I wrote is still valid. Aside from the fact (as others have pointed out), that the Texas and Florida banks are appealing the District court’s ruling, that case only pertains to so-called “reciprocity lite”: bank interest reporting on non-resident aliens’ accounts. CANADA ALREADY GETS THAT INFORMATION, EVEN WITHOUT AN I.G.A. The IGA Article 6 language to the effect that the US “acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with Canada” (which is standard in the Model 1, Treasury-dictated IGA), is nothing more than an IOU that at some future date the US will provide real reciprocity (i.e., DATCA) on not only interest income but the full range of principal and equity reporting Canadian institutions must supply under the IGA. That would require new legislation passed by Congress, which is exactly what Mr. Posey says ain’t gonna happen.
@Jim Jatras and all,
So when the class action lawsuits start, can we use the reciprocity myth to show that that the Canadian government acquiesced to extortion, and that the IGA is not an ‘agreement’. We also have Hsu’s and Brison’s order papers with their non-answers to show amongst other things that our government did not do a cost-benefit analysis, and did not attempt to apply its own sanctions back at US in defense of its citizens.
The US isn’t interesting in Reciprocity, they’ll just use and abuse the relationship with Canada until we stand up for ourselves.
advertising
US Treasury International Counsel admits that US reciprocity is a MYTH:
……At that same conference, the Treasury’s International Tax Counsel Danielle Rolfes acknowledged that the United States currently does not have legislation in place that would permit the U.S. to comply with reciprocal reporting under FATCA or the OECD’s Common Reporting Standard, but added that the Administration was committed to pursuing such legislation.”
from; Treasury Official Says Penalty Grace Period Unlikely for FATCA
March 5, 2014
http://www.cadwalader.com/thecabinet/regulatory_updates.php?ID=7327&date_filter=5
Hey, Storage Units, why the hell would I want to move to Tucson. Your money grubbing government is what we’re trying to “get away from”…
@ The_Animal
The spam you are replying to eventually gets removed. It’s not easy for Admin. to keep up with things that slip through the filters but they do a good job.
What is the difference between the trade issues in the softwood lumber dispute, and the trade issues in the US effectively denying ALL non-US FIs not only direct access to the US market, but access via third parties too. The Canadian government pursued the case of our softwood lumber shingles and shakes with such vigour against the US at such expense and over such a long period of time, but doesn’t argue that FATCA being one sided provides distinct advantages to US banks that Canadian banks cannot enjoy if they comply. FATCA deliberately disadvantages non-US FIs and many non-US NFFIs BY DESIGN (“FATCA’s enforcement mechanism is both potent and innovative….” say Blank, Joshua D. and Mason, Ruth “Exporting FATCA” (2014) Tax Notes) with the effect that it is intended to severely disadvantageevery other country in the world who must pay for its implementation – via our local taxes gone to implement the IGA and automatically report all the information the US demands, forever and ever, plus all our accountholders paying higher fees to reimburse the costs of the FIs, and the revenue lost to the US if FATCA does what it is intended to do and assists the US in locating and collecting assets outside the US.
Is this not a trade issue that would have given the Canadian government a lever which they declined to use? Are there not other jurisdictions who also have trade agreements with the US which would preclude such a blatant advantage given to the US financial institutions over that of the rest of the world?
The 30% withholding is unrelated to any actual legal duty the non-US FFIs have to the US in terms of any actual assessed taxes. It is a deliberate economic sanction. Isn’t that embarassing for the Harper government (and the FATCAllaborators who are seeding the Canadian media with propaganda against the fight for our Charter and Constitutional rights) to so cravenly accede to such a blatant use by a trading partner, the US, of the FATCA economic weapon against the financial sector of a country with a NAFTA or similar agreement?
They’ll fight tooth and nail when its the right to sell wooden shingles and shakes to the US at stake, but turn traitor when it involves the legal local Canadian made and sited savings of Canadian families and individuals, and our human rights.
This article provides a pretty thorough examination of why FATCA reciprocity from the USA is indeed a myth.
http://www.compasscayman.com/cfr/2014/08/08/U-S–can’t-deliver-on-FATCA-promises/#.VBtgAvkRYVI.twitter
This article link posted on another IBS thread by another reader, but also belongs here:
http://www.financialtransparency.org/2015/01/26/loophole-usa-the-vortex-shaped-hole-in-global-financial-transparency/
‘Loophole USA: the vortex-shaped hole in global financial transparency’
January 26, 2015
By Nicholas Shaxson