Stephen Kish and Lynne Swanson have reviewed the legal opinion provided by constitutional lawyer Mr. Joseph Arvay on the constitutionality of the pending legislation “Canada-United States Enhanced Tax Information Exchange Agreement Implementation Act”. This act is aimed at implementing the “Intergovernmental Agreement” (IGA) designed to make the “Foreign Account Tax Compliant Act” (FATCA) operative in Canada.
The opinion has also been discussed with Mr. John Richardson, a Toronto lawyer, with whom we now have solicitor-client privilege, and who will be part of Dr. Kish’s and Ms. Swanson’s “litigation committee”.
The lengthy opinion provides in detail the pros and cons of the arguments, and possible outcomes.
There are good arguments that the proposed legislation infringes at a minimum on constitutionally protected rights and freedoms. Nevertheless, there are also arguments that the Government of Canada may employ to counter our position and, we emphasize, there is no certainty that litigation will be successful. Further, any litigation will be hard fought and very expensive. This litigation is not for the faint of heart.
Given the opinion of Mr. Arvay and discussion with Mr. Richardson, we advise that it is our intention to take all necessary steps to commence litigation against the Government of Canada once the IGA implementation legislation is enacted. Moreover, the nature and impact of the unprecedented legislation on all persons in Canada and those throughout the world who will be impacted by FATCA demands that we exercise this option that is in the public interest.
Very significant fundraising will be required.
Stephen Kish
Lynne Swanson
I posted on another thread but I would like to know if the challenge will cover the ? apparent inclusion of any Canadian funds held in a joint bank account with a “deemed” US person see how Meridian Credit Union will treat joint accounts according to their FATCA FAQ fact sheet:
15. How are joint accounts handled under FATCA?
If at least one of the joint owners qualifies as a U.S. person, any required reporting would treat the U.S. person as the owner of the entire account. If more than one of the joint owners are U.S. persons, any required reporting would treat each U.S. person as the owner of the entire account.15. How are joint accounts handled under FATCA?
@Mr. A, thanks, but I am no lawyer, and have no special knowledge, just an outraged Canadian.
@Anne Frank, good points. There is no obligation for Canada or any country to recognize, ‘respect’, much less implement another country’s laws merely because they exist. Asserting that they should be effective extraterritorially in this case is only working because the US is imposing economic sanctions. The US can make whatever ‘sovereign’ laws it wishes within its own borders, and we do not have to ‘respect’ or implement them in Canada. ‘Respect’ is a two way street. I’d like to see some reciprocal respect from the US. Instead, they advise that Canada should change its own sovereign laws in order to accord with the US ones. Nauseating.
Harper knows all this I am sure. He just finds it a convenient fiction in order to force it on Canadians, and rationalize to the public what is really unjustifiable. In the case of those born Canadian duals inside Canada, with no US economic connection, Harper is ceding master nationality and jurisdiction over Canadian born citizens and those residing within Canada’s sovereign and autonomous borders. He is willing to suspend the Charter rights of those he has a sworn duty to protect. Can’t get much lower than that in a Canadian elected official, much less the Prime Minister.
@downtherabbithole, the issue of joint accountholders and joint accounts is a very good one. The assets and the information associated with them belongs to the holders – and I can’t see how our federal government can assert that US extraterritorial claims over the USP can suspend the Charter rights of the non-US person. That came up in the EU questions that Sophie In’t Veld posed re FATCA and privacy provisions in the EU http://youtu.be/zRoU-JNFhr0 and she specifically mentioned the issue of joint accountholders and those who were EU citizens.
As reported by those who attended;
“Sophie in ‘t Veld was the heroine of the day. She spoke forcefully and eloquently for honest EU citizens who would be caught up in this wide net thrown to capture rich tax evaders. She asked about the dual nationals and EU partners of U.S. persons. She complained angrily about the lack of transparency and wondered if the IGAs were even legal under EU law. She was most adamant about protecting personal data and the rights of EU citizens.” http://www.aaro.org/banking/402
Moreover, if the FIs want to lose depositors, they’ll be successful at offending multiple accountholders, not simply the sole USP.
unfortunately, Sophie lost the discussion and has been using her air on more productive discussions. She couldn’t succeed against the entire corrupt EU. She still hates FATCA, but she doesn’t have a route to fight it for now.
The reason why she said those things was because there were 4 Brockers that talked to her in the minutes prior to the meeting. And she valiantly presented their points whilst the corrupt EU shooed her away.
However, Sophie is acquiring information to come back again from another angle.
if there is a joint account that has both a “deemed US person” and a Canadian spouse who has contributed into an account wouldn’t reporting the money in entire account as being owned by a “deemed US person” and say eventually penalties/ and US taxes are applied to the entire account – wouldn’t this be a virtual confiscation of the Canadian spouses money? How can this be legal? to say that money earned by a Canadian, in Canada, and taxed in Canada is now subject to US law?? Especially when there is no law that prevents a Canadian from having a joint account with anyone they want to??
@downtherabbithole
That is an excellent point which I don’t recall anyone else quite making before.
That point isn’t limited to Canadian spouses of so-called US persons living in Canada. It should, both in theory and in law most places, equally apply to a non-US spouse of any so-called US person living in ANY country on the planet. I hope our non-Canadian friends take note of this, and maybe consider investigating whether legal cases could be brought against FATCA implementation legislation in their own countries on this ground, whatever the civil rights or Charter rights or equivalent might apply in their own countries. This is a point which politicians in ANY country who have caved in to the IRS on FATCA need to have their noses rubbed into. It may also be a useful argument to raise with politicians in those countries which haven’t yet signed an IGA.
I have private email addresses of a few folks in other countries; I’m going to pass this comment on to them for their attention and consideration.
Thanks. Well observed and well done.
@schubert1975
In New Zealand, they are just pretending the joint account problem does not exist. Despite several submissions to the Select Committee highlighting the issue such as this one: http://bit.ly/PaIFCK the response back from IRD was as follows:
So, it seems that, as a non-US person, having all of your information reported other than your name is somehow acceptable and not a breach of privacy?
What do these people smoke?
@osgood
Obviously they don’t care to think things through in their panic to get NZ on the US Treasury and IRS’s “white list”. It’s convenient for them to state that a non-US person won’t have a SSN, because with that ridiculous statement it’s like saying every US person will have a SSN.
And it’s not only spouses holding joint accounts with a known USP that will be affected. With the knowledge that US citizenship can be genetically transferred to their children, a US person’s children too will have to prove they aren’t US citizens. What happens when the child of a known US person tries to open an account? There will be no end to the madness once we go down this slippery slope.
In the end, it’s going to come down to a great many people having to prove they aren’t a USP – to have to prove a negative. My mother at one point had to prove to the Canadian government that she never took US citizenship while living in the US. The State Department issued her a letter stating such. Can we expect that there will be a deluge of similar requests come July 1st?
Just a thought: I don’t know when an account will be opened up, and the information provided to us as to where we all can begin to send our donated funds for the Charter Challenge, but even now – – right away – – I suggest having a top-of-each-IBS-page clear eye-catchy advertisement about this movement and the need for financial support to protect all Canadian’s rights (as there was for the CCCF). As we get closer (so more and more across Canada and elsewhere begin to know about FATCA, and as (hopefully) the US-born famous Canadians who will be receiving their directly-mailed information begin to take a peek at the IBS site, we need to zing them with this legal challenge information at the start of their read-around on the issue. .
Lynne (Blaze) Swanson would like anyone who has a lead to a potential large donor to contact her at maplesandbox at yahoo dot ca. Does anyone know a multi-millionaire with a US taint? Or, maybe someone who might be inclined to want to play a part in a campaign for justice?
The Wikipedia & Famousfix lists that were gathered last month (with contact info for most) has some great names – – some are likely reasonably wealthy. All the individuals in this list of just over 200 are VERY WELL connected and could be strong allies. But the direct-mailing campaign (letters snail-mailed & emailed & tweeted over the last week) will not be enough.
Not being a real maven of famous-people-gossip, I have no idea where these folks’ politics and energies lie. Some, it is clear, have shown their bent towards fighting the good fight over the years – – I can pull out those names easily. I can send names/locations but wonder if (and by whom) these individuals could be approached face to face?
Are their IBS folks who are willing to contact individuals face to face? I’m willing to help build a lets-visit-XYZ US-born famous-person list if others are willing to work towards direct meetings to see if they will join our efforts.
There also must be SOME non-US folks who will be moved by the awful audacity of FATCA and Harper’s Govt stealth in distorting the Charter of Rights on behalf Uncle Same and the Cdn bankers… Blogging our brainstorming ideas may help but we also may need to have a more centralized/cohesive organization than currently exists if we are going to be mounting a mega-thousand $ Constitutional Challenge. It’s just my opinion.
@bubblebustin
Good point. What will happen if a US born Kiwi has never filed US taxes because they left when a child. They won’t have a SSN. So according to IRD the data will be rejected as incomplete and they won’t be able to meet their FATCA “reporting obligations”.
This just gets more and more absurd with all these different scenarios. What an absolute mess this is going to be.
@LM,
Please keep sending in the brainstorming ideas.
A really eye-catching funding ad on Brock and Sandbox that alerts at a glance the increasing number of first time readers will help. We need a comprehensive advertising plan and, as you say, a co-ordinated Canadian (and international) approach that includes face to face meetings with potential donors including sympathetic businesses and organizations.
If you or anyone has names of potential major donors (persons, businesses, organizations) as well as contacts for these who might be helpful, please send this information to Lynne’s address above.
It may appear that we are quiet right now, but a group of us are working every day on this.
I am a financial advisor and executive in large Canadian corp (with signature rights in all major accounts). FATCA would require me to disclose all those accounts and activities to IRS. My clients (which are not US citizens) and board members (of a non-US company) will never accept that, and eventually I will lose them all and most likely my position. This is absurd!
@Herald,
If you are comfortable doing this, could you please send me an email at:
CanadianCharterChallengeFund@gmail.com
Stephen Kish
I bet there are also a large number of IRS tax compliant executives in Canada who currently have signing authority on their corporate accounts who will be negatively affected once their Canadian employer finds out the IRS wants their corporate banking info.
Even renouncing their US citizenship probably won’t solve their problem because mean people like Harry Reid may block them from entering the US on business. If you are a top level Canadian executive who can’t travel to the US you’re not much good to your company.
Executives at small and mid sized companies are likely most affected since their employer will have a limited number of people who they can assign signing authority to. This means the number of victims will be greater than if it mostly affected the biggest corporations.
@Herald – you MIGHT be on the outside (at least professionally) if your employer is a registered dealer or a listed public company since they are deemed not to be a “Specified US Person” in the IGA and thus their accounts are not reportable.
That being said, I strongly suggest that you contact your MP with your fact situation. The US has only the foggiest idea of the implications of this FATCA regime on outsiders just as they have little idea of the impact of FBAR, CBT and the rest on their diaspora. They simply do not care and did not spend five minutes trying to craft their rules or regulations so as to be less discriminatory towards the diaspora. Indeed, to the extent they accepted any input at all in the process, it was with a view to lessening the howling of banks complaining about compliance costs (hence the IGA regime).
Canada, on the other hand, should care. I am pretty sure Finance must have thought that this agreement was all sizzle and no substance – i.e. it will have little practical impact since almost nobody is on record with their banks as being a US Person and they don’t intend to require or encourage banks to find out. Nevertheless, your situation is doubtless an instance of unintended consequences that I doubt they recognized. It cannot hurt to send a poignant scream up the chain in Canada and see if it moves the needle a bit. A half-baked US system foisted unamended on Canada will result in real prejudice to real people beyond simple disclosure of alleged existing obligations to the US. Fundamentally, however, you are another instance of why compliance with US extraterritorial law is simply a non-starter for expats living in Canada (or likely elsewhere). The only answer is silent expatriation. The only answer for Canada that works is to have Parliament or the courts exclude Canadian citizens and permanent residents. That will reduce the annual number of accounts to be disclosed from several millions to several dozen.
As for that $250K exemption on corporate accounts, it’s a joke. Even the smallest company with say 10 employees is going to exceed the $250K limit easily.
http://www.sciencedaily.com/releases/2014/04/140402095844.htm
Could we frame donating to the Canadian Challenge a LIFE EXPERIENCE?
@Herald – the IGA definition of “Account Holder” (which excludes investment advisor, nominee or signatory) would likely give you a window out providing you have no beneficial interest in the accounts or the beneficial owner is not itself a US Person. A crazy state of affairs that it should be so complicated to figure out who is “in” and who is “out” of course.
@Calgary411, I just thought another question to ask MPs in Canada. I am trying to come up with more teeth and a ways to leave a bad taste in the mouths of politicians.
The data stream will include name, address and date of birth. Date of Birth is “key” for another USA favorite and that is Selective Service, yes it still exists.
Will Canada help the USA in adopting a hypothetical SSATC?
All as in ALL, male US Citizens age 18 to 25 are required to register for US Selective Service. It does not require that you live in the US. The only requirement is that you are a US Citizen.
Does the Government of Canada guarantee that the information handed over will not ever be used to determine Selective Service Registration of Canadian young males with clinging US Nationality?
Here is what can happen with that data;
http://www.acfcs.org/by-taking-certain-steps-the-irs-may-share-bank-data-it-gets-from-foreign-banks-under-fatca-with-other-us-agencies/
@Brockers. A reminder from the US Embassy (Ottawa), if you are a male age 18 to 25 you MUST register for Selective Service.
http://canada.usembassy.gov/consular_services/selective-service.html
Remember, the Canada IGA requires date of birth be submitted to the USA.
Penalty? Remember this is form nation;
“Registration is the law. A man who fails to register may, if prosecuted and convicted, face a fine of up to $250,000 and/or a prison term of up to five years. ”
YOUR Government is going to hand over data that identifies likely males, their names, address and date of birth.
Ask Stephen Harper for an iron clad guarantee that no Canadian young male will have his private data used under FATCA to be attacked for Selective Service with a Foreign Power.
Thank you so much, George, for bringing up the further horror*** of turning over Canadians who happen to be determined *US Persons*. This has been discussed here before, but not in the context of what it happening with the implementation of the FATCA IGA in Canada.
Absolutely, that should be emphasized!!!!!!
*** http://billmoyers.com/content/body-of-war/ (more data collection and punitive action for those who don’t buy into,
http://www.youtube.com/watch?v=8y06NSBBRtY
whether or not there at the moment is such a thing as “The Draft”)
@calgary411, I thought that would be especially appropriate in the history of Canada with respect to the Vietnam draft.
I am sure there are many Brockers who could weave my thought on Selective Service into a powerful anti-FATCA message. The keys is that date of birth is submitted in the data stream.
Wait…….a powerful thought…..Surely your Government could insist on an IGA amendment while its working through Parliament that states,
Article 3, Subsection 4 is amended by adding the following;
Under no circumstance may information provided for in the agreement be used in regards to 5 U.S. Code § 3328 – Selective Service registration.
Could a friendly MP be made aware and be made to think along these lines maybe propose an amendment in Parliament? Forcing the Conservatives to vote against such an amendment would be utterly toxic IMO.