To help you judge if,
your experience with your local bank, credit union or insurance company (or as the US defines them: “foreign financial institutions”) will be a comfortable one, as some advertise,
shared here are excerpts of notes from a meeting set up with a “US Person” and Canadian husband by a Vice-President of the wealth management branch of one of the Big Five Canadian banks:
1. ..all previous recommendations for changing investments have been done by telephone… In all the years as clients, they never requested a meeting with us.
2. re green card assumption and location of the company worked for (this question is one way to find out if a person has worked in the USA). *(see below)
3. Bank representative met with each of US Person and Canadian husband alone as they do not have joint accounts.
…wanted to sell US Person’s non-registered mutual funds and give the cash back to local branch of the bank (it is not worth their while “all the paperwork” to accept clients with less than $500K!!!!) US Person refused….had asked on numerous occasions for the names of PFIC compliant funds. At the end of the meeting he agreed to come up with a list of PFIC compliant funds. Until 10 days ago he did not know the meaning of PFIC. Asked why he would sell me mutual funds if other investment companies have known about the IRS rules since 2010. His answer: “we’re not expected to know – we ask people to check with their tax accountant” Then he asked ME if it is OK to have mutual funds in an RRSP.
4. … asked to do a review of our net worth. When I told him that for the past five years my annual gross income is about $23,000, he looked horrified. US Person says “I don’t think I fit the “wealth management” profile, even if I were not a US person.” He kept asking about credit lines – three times and looking at me each time. Non-US husband uses credit line. It is important the other US persons know that credit lines will count in their highest and year end balances for FBARs and FATCA tax forms 8938, and of course in the aggregate $50K US that the banks will report to CRA.
5. US Person asked him how many accounts the “wealth management” part of this bank has with Canadians with US connections. He replied “not as many as you think”. US Person said that she should have replied “by the time you get through with turning over all the names of people with US indicia, you could be looking at 200,000 or more (dividing the one million US persons among the big five) Canadian clients that you will lose!”
6. Same story about registered accounts being exempt – this V.P. could not grasp the concept of US persons being thrown under the bus (did not bother to try to explain – and his office spent hours writing letters etc. when my very savvy (sarcasm) IRS agent could not understand that the separate tax slips for each mutual fund were declared on both my Canadian and US returns. “This V.P. knew about the monstrous fine, but I am sure he must think that I am one of those tax cheats you read about in the newspapers.” AND, the head office used to issue 1099 forms, but this stopped in 2011.
Comment by US Person after this experience: Wealth management V.P. said that the reason for all the paperwork was because of 9/11 – does he think we are as ignorant as he is?!
Definitely an uncomfortable experience.
*US Person said from separate meetings V.P. assumed that Canadian husband had a green card and that he had lived and worked in the USA. Canadian husband wrote letter saying that he worked for an international company for almost 40 years in three different countries but NEVER worked or lived in the USA. He has only one citizenship, Canadian. Canadian husband told the V.P. that he did not have permission to send his Canadian citizen private financial information to CRA for onward forwarding to the IRS.
Canadian husband also asks for copies of all documents signed the day before (should they have been changed after the fact). …and finds it rather odd to have to give the name and location of the company he retired from 13 years ago (before 9/11), as a source of investments.
@Publius, she also recommended that I declared my credit card account because I had overpaid it a couple of times so had a postive cash balance on it…in theory, people could launder money by overpaying credit cards…plus, this account pays me an annual cash bonus which is taxable by the IRS.
@Mona Lisa, if you have copies of your forms and a copy of your sent Fed-Ex signed for delivery documents you should be fine. If you want to you could see if they want you to resend it. My guess is they are over whelmed with forms at the moment. I think it’s all going to be a big mess even for the IRS and treasury will all these forms coming in such a deluge.
They have experienced cuts to funding and are trying to deal with this huge surge in forms to deal with at the same time. I don’t expect to ever hear anything back from them but, as long as I have copies of everything, if I DO hear something back saying they haven’t got my paperwork I’ll be fine. You will too. Those copies on file are good to go. Your accountant or lawyer will also have copies of everything if needed for proof of what you have filed.
I’m more concerned that even though we have CLN’s we’ll be treated differently and that things are going to get extremely ugly for those with a U.S. birth place CLN or not. The banks are going to get testy and big headed in their quests. The citizens of the countries we reside in are going to resent us since the only reason this is happening is that the U.S. has CBT. If we weren’t in these nations then there would be no problems for these people. So, the more FATCA ramps up the more the U.S. birth place is going to be seen as something to be resented and demeaned by others. “Why didn’t you just go home, you jerks!” Especially in nations where FATCA violates the laws of those countries. It’s not going to be two tiers of citizenship. It’ll be two tiers of birth place.
I want it behind me too. @LM, I was never offered nor was it suggest to me that I could have an interim letter. I have contacted them twice now. They’ve said they are deluged with these applications and that it is going to take much longer than I was originally told. I told them I need to travel and was not offered a letter. In fact I was told I was to act as if I was American in every way possible until my CLN arrives which could take up to a year now as they are “back up with these” I still think these numbers on renunciations are sky higher than we know. If they are going to make it impossible for some to be a U.S. person abroad then the U.S.. needs to help State out and make this process more “streamlined” Start allow local consulates to approve and issue the CLN’s. Sending them to D.C. where a tiny office tries to deal with all this is not cost effective or efficient. Besides, I don’t like the idea that CLN’s go through the mail anyway. Allow people to pick them up in person where they are issued at local consulates. This is going to get to be a big, big problem soon. Worse than it already is.
@Mona Lisa, yes…I just want it over with too. This is dragging on and on and life is so short. Is this what millions of U.S. expats want to spend their life dealing with? You already have so many of those LCU’s invested in this. I keep thinking back to when we all first found about this. How far we’ve come! And yet it’s a snail’s pace to get free of this and move on with NORMAL life.
@Atticus, so true, I just want it all behind me. A more immediate concern is that I’m due a $1000 refund….I wonder if I’ll realistically ever see it arrive…I might just have to write it off.
I also shall concerns that people with US indica such as a US birthplace could continue to face discrimination even with a CLN. It’s why I will continue to use my expensive financial planner because she is aware of issues facing Americans abroad so would keep my investments with portfolio administrators who are familiar with problems posed by FATCA.
So in some ways, my US birthplace as well as mannerisms will leave a scar. I wouldn’t want to risk going back to being a do it yourself investor even though that had much lower charges….after all, it turned our to be a false economy, having screwed up by unwittingly investing locally mostly in PFICS.
We’re moving into a brave new world.
Thank you for this, USCitzenAbroad, and for your earlier comment, Schubert. I am printing it all off right now to take to a morning meeting of “Unlikely Radicals”. Two Brockers will be there. This will be my contribution (thanks to you) at the meeting.
I have been offline from Brock, since yesterday afternoon, and log on this morning, to read this. The knot in my stomach which never leaves, just got tighter.
Maybe Brokers would like to tell their story here:
https://help.consumerfinance.gov/app/tellyourstory
It might just get some needed attention?
@Mona Lisa – I’m in the process seeking out assistance to ‘clone’ my second passport and change the place of birth. Until they try to implement biometrics, this investment will see me through a number of years and keep me off the FATCA radar and regain my financial freedom.
It’s a sad state of affairs someone has to resort to these measures because of a few d*ckh*ed US politicians and weak European politicians that won’t tell the US NO.
To USCitizenAbroad:
Thank you for your fabulous comment! I particularly endorse this quote:
“What is needed is a worldwide coordinated response to stand up to the U.S. Tax Terrorism. The message must be very clear and it’s this:
“The world will NOT tolerate U.S. tax terrorism, tyranny and extortion. The world will take steps to end the status of the U.S. dollar as the primary world reserve currency. The world will NOT allow the U.S. to levy taxes on any resident of another country. The world will NOT tolerate U.S. spying. The world will require the U.S. to play by the same rules as other countries.”
Absolutely! For months now I have been including words to that effect in all my communications with those who have an ability to get this onto the world stage. If the U.S. will not voluntarily change its tax policy the world must do it for them.
@MonaLisa1776
It seems like your accountant may just have really cautious about the travelcard and phone. I just needed to check because I have an Oystercard that had at most $17 on it last year and a phone with at most $34. This blog suggests that things like EZ-passes don’t necessarily to be reported:
http://intltax.typepad.com/intltax_blog/fbar-1/
Part of me thinks I should report these just to clog the system up a bit.
The bank issue worries me as well. I haven’t had problems so far, but if I run into any I plan to bring up Binckbank’s recent loss in the Dutch courts. It closed the accounts of all U.S. persons because of FATCA and was found guilty last week of discrimination based on national origin. Unfortunately, this case hasn’t been reported in anything but Dutch, but I plan to act as if any person I am speaking with should know about it, just to throw them off.
FATCA fallout will just be more proof that US policies make its citizens incompatible with the rest of the world. Obviously the US hasn’t suffered enough to be bothered to make the distinction between incompatible and exceptional, always boasting about the good they bring the world and overlooking the bad.
I think Mona Lisa’s accountant must have had a big London mortgage to pay. She played Mona for all it was worth.
@Don, Biometric passports are already being issued in the EU. @Publius, another reason my accountant asked about tiny accounts like oyster travel cards or phone Sims was so I could bring the total number of accounts over 25; this meant I could file a much simpler FBAR form. At the time, back in spring 2011, I was making filing amended returns with the possibility of going way back to 2005, hence the huge fees. In the end, we backfire three years to 2007 though my delinquent FBARs were submitted back six years to 2005. Obviously, sending the shorter +25 account version for six years of FBAR made things a lot less tedious. I also believe they thought that if I were going to be hit with FBAR fines that I would hopefully only be fined per year rather than per account.
Even paying $10,000 going back six years at $60,000, while obviously horrible, would have still been less than the miscellaneous FBAR 25% penalty in the 2011 OVDI. They said that if they didn’t feel comfortable arguing reasonable cause that they would have referred me on to a tax attorney who would have then advised OVDI or quiet.
@Duke of Devon, of course I feel like a mug with hindsight but I still think that I was stuck because had already been filing so was already in the system. The PFIC situation was what made me conclude that I would need this accountant’s help, especially because I was above the asset threshold so had to file 8938.
I believe to have knowingly not filed the PFICS (which the 8938 form directly asks about) could have been deemed willful. In many ways I regret that I ever even became aware of PFICS because had I been blissfully ignorant, I believe that I would have had an even stronger case for reasonable cause. After all, I gather that even many CPAs hadn’t become aware of the widespread PFIC problem for Expats till about 2009-2010.
What I regret with hindsight is that I hadn’t relinquished ASAP after becoming naturalized in Great Britain seven years ago… I could have done so without being on the radar for PFIC taxation and would have also been able to avoid worrying about all the risks involved with renouncing that relinquishing doesn’t cause. But of course, hardly anyone back then even had an inkling of what the issues would become…
@ USCitizenAbroad
Thank you for your comment re
@Anne Boleyn
A non-interesting checking account should never have been part of the OVDP penalty base because (am assuming this is true). the account did not pay interest – therefore it didn’t interest which just belonged to the U.S. Treasury.
You are correct in your statement. Unfortunately, it was a checking plus account which earned less than $1.50 interest per year. I had not paid attention to that and did not declare the interest to CRA or IRS. Therefore the full FBAR penalty was applied to the highest balance in that account (although the credit line transfer-in was eventually taken out of the checking account balance). The well respected legal firm I hired (having fired the first “US attorney” who erroneously put me in the OVDP in the first place) told me that many of their clients were fined on FBARs because they had not declared $1.00 (per year) interest on their accounts. On my 2013 tax returns to CRA and IRS I declared two cents interest on one account ….CRA must think I am mad, but paranoia and fear definitely put a person over the edge.
@ USCitizenAbroad
Wonderful comment. I’ll be keeping it on hand.
I don’t think it will be as easy to Switzerbang our banks in Canada because they have so many US afflicted clients and the public relations problem alone would hit the banks here very hard. Anyway, the USA’s dirty little CBT secret is coming out in a big way soon. I don’t think they factored that fact into FATCA. When the world finally sees what the USA does to its own when they dare to live elsewhere it could be just what is needed to put the USA on the right path towards RBT. Most countries in the world are gracious when one of their own leave. It’s goodbye, good luck and you’re welcome to come home anytime. The USA is pitifully clinging and only sees a tax slave/inmate escaping the plantation/prison, not a potential goodwill ambassador setting out to perhaps soften the hard US image a bit.
@Anne Boleyn
It’s not called “The FBAR Fundraiser” for nothing.
It’s interesting in that, according to some U.S. CPAs one is NOT required to report interest of less than a dollar on a tax return (1040). Yet the failure to disclose an account on an FBAR, that paid less than one dollar of interest would put it in the OVDP penalty base. It’s because of reasons like this that one can have nothing but contempt for a government that would allow honest people to sign up for OVDP.
This will be reported in the history books as a significant reason for the decline of the United States. Once law becomes a substitute for morality, the decline is sure to follow.
Absolutely disgusting.
@Em
The change will be when the rest of the world sees how US CBT is a tax on the GNP of their countries!
@monalisa1776
I know that had I known that I was a US taxpayer I wouldn’t have created a tax liability for myself by selling my home in Canada. But hindsight is always 20-20, isn’t it? Unfortunately, once the liability was created, all bets were off and made much precarious for us by the fact that there’s no statute of limitation for people who’ve never filed before. If the US was truly interested in bring people into the system, they wouldn’t be smacking benign actors with a carrot, and offer a true amnesty.
The fact is, as best as I can tell, is that had we just filed going forward, there would be nothing to guarantee that when the IRS finally gets to our file 20 years from now, it wouldn’t find something urging them to take a closer look. The prospect of that was intolerable to us.
@Anne Boleyn, wow, I’m lost for words. It just goes to show how dangerous even mere technicalities can be…it would seem that with its colossal deficit, that the US has lost its way. It is so desperate for funds that it is no longer following the spirit of the law. I presume that you’ve been a bona fide expat living abroad for many years and have been fully tax compliant in Canada (bar a few dollars under-reported interest income); the USA is thus using penalties as a revenue generator, as a de facto form of confiscatory taxation. Couldn’t one argue that this equates to ‘cruel and unusual’ punishment?? This seems unconstitutional to me.
@US Citizen Abroad,
Thank you for your all enlightening comments, which help all of us understand this better from a global perspective.
@USCitizenAbroad
“Once law becomes a substitute for morality, the decline is sure to follow.”
My husband and I had a conversation about this this morning, how too many laws create too many criminals. The libertarian view is that given the responsibility, the majority of citizens will behave in a manner that’s best for society at large, and that the lack of freedom felt when citizens are subjected to many laws only encourages the opposite.
Try as they might, no government can legislate morality, no matter how many laws they pass.
@Bubblebustin, I agree that it’s legally riskier for expats who’ve created a US tax liability if they have never filed because their statute of limitations is technically still completely open. Up to fairly recently, the IRS wasn’t interested in anything more than six years’ back, but with aggressive enforcement, they could go back much further as technology advances.
I could see how FATCA could make easy prey of non-filers. Many expats will have substantial liabilities due to incompatible tax systems…PFIC taxation and capital gains on real estate are obvious examples though I’m sure there are even more…another example is how (at least in the UK) people can take a 25% tax-free lump sum on the value of their personal pension fund, whereas I believe all withdrawals from an IRA are taxable to the US.
There’s also the foreign trust penalty generator via forms 3520/3520a. Several types of widely popular pension plans could be deemed foreign trusts by the IRS even though they’re plain vanilla here in the UK. If nothing else, it means increasing reliance on accountants and attorneys to maintain compliance and avoid fines…it’s such a mine field out there!!!
I renounced mainly to reduce all the complexities in my life…I didn’t want to be burdened with 150-300 page long tax returns costing me $2000-$5000 per year …I simply can’t afford that when I earn below average wages.
@monalisa1776
*This seems unconstitutional to me*
For US persons who never got the memo on all the crap that needs to be done to be 1st class citizens… are u really surprised… To the US… expats are the easy targets… Immigrants within the US will get it worse… no voice… no vote… no say… they will have to fork over hard earned funds because they took their after tax money out of the US or had funds that never entered the US. Then they can lose their immigration status in the US… Picture it… caught… flip u over to shake every penny out of your pockets… then toss u out…
@Bubblebustin, the Drugs War is another prime example in which law becomes a substitute for morality. Non-violent hippy types can be locked away for many years for enjoying psychedelics…and we can’t forget that even a mere possession charge for marijuana can effectively ban any former American from ever even visiting the US due the USG’s draconian stance on ‘crimes of MORAL turpitude’…the visa waiver becomes void and it can be almost impossible to get an approved visa in such a situation…to my mind, it reeks of hypocrisy.
@US_foreign-person, you make a valid point about how immigrants are even more vulnerable as they have no voice…my example concerning drugs could also get a green card holder deported too, especially as many types of drug possession records would be deemed felonies. Something is not right here. There is a certain brutality at play here.
@monalisa1776
If u are busted for small amts… I don’t understand what the big deal is.. they ain’t selling it… I have a hard time sometimes understanding the logic on minor crimes being made into a big thing… Ohh… I made 50 cents of interest… but I didn’t file the correct forms… so I am being punished for it? All those political people who also had *off-shore* & were caught… here u go… a light tap on the hand… u… let me get the bat…