The Canadian IGA says:
Accounts under $50K are not reportable “unless the FFI elects otherwise”.
Accounts with unambiguous US birthplace are reportable by the FFI “unless it elects to apply subparagraph B(4)…” (which is to try to cure the indicia).
The CRA draft guidance says:
The CRA expects that financial institutions will generally attempt to cure indicia before determining that an account is reportable.
I persisted with my own financial investment advisor, saying I wanted none of our information to go to the CRA as we have CLNs (US-ness was known) and finally got this statement:
I have reviewed all of your documentation that I have for you here and in all of this; I have only noted Canadian Citizenship. Given this, yours and XXX’s status would be noted as Canadian Citizens only with no indication of indicia on record, therefore TD would be reporting to CRA for you as per every other Canadian Citizen.
Comments from persons I’ve been communicating with in Israel:
Well on Monday will be the last step for my wife and I to finally be Extricated from US Person Status at Bank Discount. I will be going in to sign a W8-ben and pick up the W9s we were forced to sign last year.
I was not able to convince the bank to do this on my own, they told us we were US Persons forever by staff at the main branch if we were born in the US regardless of having CLNs backdated to 2005.
I filed a complaint with the Bank of Israel 3 months ago which outlined our status and the reaction we got at the bank. I also requested they educate my Bank and help them develop procedures for persons with our status.
A few weeks ago Bank of Israel (The Federal Reserve Bank of Israel) contacted me to say they were working on my case.
Beginning about a week ago, we began to get a string of phone calls and Faxes from at least 3 persons working together at my Bank who were working on getting our status corrected. We provided some copies of paperwork to them via fax and answered a couple of follow up questions.
At least now we will be fully extricated, and there will be a procedure at Israel’s Third largest Banking Chain for others who are in the same situation.
***********
While the two largest banks in Israel have processed family members of mine out of US Personhood without problems we found that it’s not universal, that some banks may not remove your account from those being reported despite evidence of a CLN.
The Bank has the OPTION of deciding if it wants to attempt to “cure” that indica. The IGA provides legal cover for the bank that does not want to cure the defective indica.
So the procedure is to AUTOMATICALLY report accounts based on US place of birth REGARDLESS of actual Citizenship.” A bank is under no obligation with the IGA to look at a CLN or even ask for one. I did not get this figured out until this week after seeing some posts from Israel on IBS. Then I looked at the document again and it was shazam.
I did an experiment with a major UK High Street Bank. To open an account online they ask both citizenship and place of birth. If you have a CLN then you are absolutely not a US Citizen. But I could see that programming as problematic. There was no question, “Do you have a CLN?” So I call the number to open an account by phone. Get passed along three times but get to someone who knows FATCA. I was advised that this bank would report any account I may open regardless if I gave them a CLN because I would be declaring a US place of birth. It did not matter to them that a holder of a CLN was absolutely not a US Citizen. The individual explained further that this bank was not making the election in the IGA to cure that defect and that I would have to take this up with HMRC.
In some ways it’s better in Israel. At least here, they say sign a w9, waive your privacy rights, or we close your accounts. It gives those Americans a choice.
The U.S.Law is convoluted and you may not be extricated as you think. If you failed to declare all your worldwide assets and pay a 25% capital gains tax, then file all the paperwork doting all the I’s and crossing all the T’s and filing an income tax return fro the next ten years and paying all the taxes they say is due, then you are still a citizen of the U.S. even if it was an accident of birth.
Many people who never set foot inside the U.S., were not born here,do not speak a word of English, and don’t know they are citizens, but had parents who were born here are what I call ”accidental citizens”. The bunch we, well not me, voted into office have said anyone who gives up American citizenship is a tax cheat and did it for tax reasons. They want to bar them from ever coming here as tourists and won’t be considered for citizenship ever again.
Now is that convoluted enough for you. I am sure I missed a nitch or two so they wanted it that bad so you’d have to hire one of their friends as a tax preparer or a tax lawyer which some of them are also. What a bunch of PUKES?
Canadian banks are not going to try to “cure” or even positively diagnose someone with indicia. They’re going to error on the sign of caution and send it all to the CRA. The Canadian government is going to rue the day they took their direction from Canadian banks, and not Canadian citizens.
My bank was happy to receive a copy of my CLN. They assured me that I am listed in their files only as a local citizen.
IMO, if one is able to, it is highly beneficial to obtain a CLN. Then you can shop around for a bank that will respect it.
The waiting periods for expatriation appointments are only going to get longer so it is probably better to seek an appointment sooner rather than later if you plan on getting a CLN.
@Bubblebustin
This link suggests TD will indeed reach out and try cure and depending on the date published have already done so with some (?).
http://www.td.com/fatca/index.jsp#09
Any comments?
Like most things business and money, some banks will be dicks and not care and others will see opportunity and make themselves the banking services of choice to ex-Americans.
It’s up to us to ask questions and shop around, recognizing that some of the countries where we live might not afford much choice.
It will only get harder, as has been noted, to get CLN’s so documenting your own relinquishments as much as possible is a must too.
I have hopes that the Charter challenge here will be successful and perhaps provide a blueprint for other countries to follow.
We are all doing everything we can. We should be proud of ourselves and remember that if this was a soccer game, the ball would still be considered “in play”.
@arctic raven
That TD Q & A is terrifyingly Orwellian in its scope.
“I was born in the U.S., but have lived outside the U.S. my whole life. How does FATCA impact me?
“Generally, if you were born in the U.S., you are considered a U.S. person. However, there are circumstances where an individual born in the U.S. is not considered a U.S. person, including those who have renounced their U.S. citizenship.
TD may contact you if we require additional documentation to determine if you are a U.S person.”
I think the key word here is “may”.
As far as I have heard, the taxes owed are for he past 3-5-6 years, so a CLN dated from today won’t cover taxes owed from then. It would be extremely “nice” of a bank to honour a CLN and not deliver the information. I don’t know if they would actually be that considerate – although the injustice of this all screams to high heaven.
I have even heard of people who have closed their accounts and UBS still reported them “retroactively” as having HAD an account with them. I think it was all a part of their agreement from the courts: Pay 780 million $ and give us the information.
@arctic raven– I love this answer:
“I closed my TD accounts. Why am I being asked to complete forms?
Even though your account is closed, you were identified as a possible U.S. person before closing your account. TD has the obligation to properly document the account. If you do not provide this documentation upon request, TD may be required to report your account information to the CRA.”
Call it, “You can run, but you can’t hide.” This is why I think it’s very important to already have the answer planned in your head for when the questions come up. Like GwEvil, the only answer a bank will get from me about citizenship and place of birth is “I’m a Canadian and I’m born in Canada.” I’ve counselled my spouse to say the same. My kids know to deny any connection to the US via their parents.
I opened a new account last week with RBC Direct Investments. I told the agent that I didn’t want or need to file a W8 BEN form since none of my investments would be in the US. The agent told me that it would be “good to send in anyways because regulations might change.” She then asked me if I were a dual US citizen or if I had any US connections. I told her I am a Canadian through and through and that I resent being asked to complete forms for and provide information to a foreign country where I’m not even investing.
Reporting on ex-USPs is intolerable. One can change nationality, but no one can change his/her place of birth. Subjecting such persons to reporting to a foreign country based on their place of birth is the definition of discrimination, pure and simple.
As far as FATCA reporting goes, I think most/all IGAs have defined the initial reporting period to be Jan. 01, 2014. As of that date, either the highest account value or the value on the account closing date is to be reported. No reporting is to be done for periods prior to that. (I think CH is a special case and what UBS is reporting is not specific to FATCA.)
It may also be the account value on Dec. 31, 2014, I’m not so sure about that.
The banks are required to MINIMUM go through checks of the indicia points for those suspected of having US indicia. FATCA is bounded by the minimum at the bottom but totally unbounded at the top. With the IGA, they don’t need to threaten to close your account–they can just send it on. They can send their entire customer list if they want to.
To @All, the thing that particularly frightens me about all this is that the IRS could make mistaken assumptions about a filer’s tax status even if they’ve received a CLN and 8854. I never received any official acknowledgment that they’ve logged me out of the system; if my 8854 somehow got lost and HMRC sends the IRS information on accounts opened in 2014 ( after I’d expatriated), the US could get in their heads that I still had US tax status if they don’t believe I’ve properly logged out of the system; they could then try to assess penalties for me not having reported these accounts, etc.
It seems to me that we will thus never be able to enjoy full certainty that we are fully out. Hotel California
After the huge fines meted out to Bnp Paribas, a lot of banks are simply too scared to challenge the U.S. or even get caught having made a mistake. I am fairly sure the date for account reporting from 31 December 2013. Very interesting info about that U.K. High street bank just asking about U.S. Birthplace.
@wilton
Is the 10 year filing requirement for all renunciants or just covered ones? Of course, a lot of people without much in the way of assets have ended up covered because of the need to have five years’ of filings at the time of renunciation.
I have been pointing out on left-leaning websites that cbt doesn’t just hit fatcats hard, but am not sure message is getting through.
@polly
The Swiss banks are different because there were obviously some people using them to hide money. Some people then moved that money on to other countries and the IRS has used that info to figure out what other countries to target.
@Publius, once you have back filed, if that is necessary, and filed for the year you renounced or relinquished and checked out with your 8854, you are done. The ten year thing isn’t a requirement anymore.
It’s confirmed. The banks are going to practice ‘data discrimination.’ Once the data is collected, they’re going to separate those with ‘US indicia,’ and those without.
Would it be any different if you were entering a building and it had two entrances, one for white people and one for black? We’re back to the segregation days of the US south.
Okay I guess it acceptable to do segregation in the virtual world now and because it’s not physical people turn a blind eye to it.
It’s ironic the US first half black president would allow such discrimination among his citizens.
Perhaps a poster with a Canadian bank, with two doors one with First Class Canadian Citizens only and the other other Second Class Canadian Citizens / US Persons would bring the point home to people who think this doesn’t affect them.
@Don, perhaps the fact that we know this for sure will help the Charter challenge?
I’ll sound like a broken record saying this, but here goes: In almost no “normal” case in Canada is a bank going to have any record of your birthplace or prior US citizenship unless, for some unique reason, you had occasion to volunteer the information. If you have relinquished – with or without a CLN – they are still not going to report your account because they simply don’t have the information and have no reason to go looking for it. It is not a question of bank balances or registered accounts – the first step in reporting is identifying and you are simply not identified in their records in all but a few cases. This includes current US Persons as well as former.
When is a bank likely to have a record of present or former “US Personhood” of a customer? Almost never. Exceptions will be: (a) you used a US passport as primary ID; (b) you had a brokerage account that purchased (or was authorized to purchase) US securities and you filled out a “W-8BEN” with your broker giving an SSN to the IRS in order to qualify for no withholding tax on dividends if a US Person. As for informal disclosure to branch personnel – I would say that is a theoretical but not likely avenue. At the limit, for high value accounts, they may inquire. I fully expect banks will prefer less rather than more due diligence – they do have to follow the IGA provisions which only mandate such inquiries for high value accounts. I doubt they will be heroic about it. In short, it is very unlikely for all but a small number of people that there is ANY record of past OR present “US Personhood”. Having a CLN does not enter into the equation at this point. Giving it to a bank that has no record of your past status seems to me to be asking for trouble as it introduces a data point (US birthplace or former citizenship) that they didn’t formerly have and relies on them to correctly process the CLN (negligence alone could result in unintentional reporting without having to impute intent).
I quite agree that banks are not required to filter out former citizens – indeed, they are not required to filter out registered accounts or low-value accounts if they choose not to. That was an issue with Bill C-31 that was pointed out but not corrected by Finance. The CRA guidelines “expect” them to do both and given the “quasi-constitutional” nature of privacy laws and the relatively shaky foundation of the exception to them introduced by Bill C-31 (approving the IGA) as well as the marked tendency of banks to do what governments “guide” them to do unless patently illegal, I would say that it is almost certain that the banks will adhere to the guidelines and not over-report (at least not intentionally).
In summary, your PAST accounts are NOT going to be reported to the CRA/IRS under the IGA unless you fit into one of the small number of exceptional cases where they banks have birthplace or citizenship data on file. Thus, whether or not you have a CLN, the simplest and most effective thing to do is let sleeping dogs lie and do absolutely nothing (at least as far as the banks are concerned). From where I stand, at least, the ONLY use of a CLN as far as BANKS are concerned is if you are one of the small number of people who, for whatever reason, have put your former US Personhood status on the record with the bank. I would expect the most likely avenue for having done so in the past would have been purchasing US stocks since if you had a SSN and a US Passport, you would not have been subject to withholding taxes on dividends had you declared your status.
Also, as I have often repeated – IF you are a current citizen of the US and have any ambitions of staying that way, the IGA and FATCA are not your primary problem. The Tax Code and FBAR are. You need to figure out how to get into compliance as painlessly as feasible – that is a completely different issue. There are several in this group that are current citizens but compliant – there are plenty of resources here to help you on your way to figure out how to get through the maze as they have done. I wish you well and feel your pain. The sooner you roll up your sleeves and dive into the archives, the sooner you will sleep at night. Whether or not the banks report your accounts today, you have a longer term problem that needs addressing.
If you are a former citizen who has renounced or relinquished in the past at some point, the questions you need to consider and the actions you need to take are quite dependent on, among other things, timing (pre-or post various threshold dates between 1994 and 2004 – consult resources sidebar on this site for more info) and your own circumstances (for example, those who will neither invest in nor visit the US in future may not give a fig what the IRS thinks, others may wish to keep their options open in that regard). The whole question of whether to get a CLN or not, whether to enter the streamlined process or not – all of that is discussed at great length on this site and you need to do some homework and get some advice to see where you best fit in. There is no one-size fits all answer.
I don’t like the application of FATCA to Canadian citizens any more than anyone else does and the Court Challenge offers an excellent prospect of freeing Canadian citizens from any worries about it in future (as well, potentially, in giving the US an incentive to accept RBT in order to get into the “GATCA” club which will certainly be residence-based if it ever gets off the ground). For almost everyone frequenting this site, however, your bank doesn’t know anything about your past or present dual citizenship and you have no reason to bring them into the picture.
For NEW accounts, the situation is different and clearly this site is doing us and Canada a service by shining a light on the inconsistent application of the new law. Given the “quasi-constitutional” nature of privacy laws and the clear “don’t ask, don’t tell” bias evidenced in the CRA guidelines, I would expect banks will be very sensitive to push-back telling them they are going too far in inquiring into the personal affairs of new account applicants. The CRA guidelines allow for self-certification and the banks should very likely be pushed hard to go no further. If a former citizen certifies that they are not a CURRENT citizen, that should end the matter as far as the banks “know your client” obligations are concerned. Nothing in the law obliges them to go further and the CRA guidelines can hardly be interpreted as license to go further. Strong grass-roots push-back is appropriate here as would complaints to OSFI (Office of the Superintendent of Financial Institutions) that regulates them. Obviously, a CURRENT dual citizen will be flagged by such inquiries for new accounts. The Court Challenge may or may not deal with that in time. However, as noted, such people (current duals) have other problems to deal with than Canadian banks.
I hope this helps calm a few frayed nerves. There is plenty to be upset about in the current situation, but most people who can say that they are former US citizens who have not volunteered information about their birthplace or nationality in the past have nothing to worry about in the short run unless and until they decide to open new accounts. Even then, they should likely have no problems if the banks consistently apply the CRA guidelines (and, quite possibly the Court Challenge will make the matter moot).
If as many as a few thousand people (and maybe a small multiple of that number of accounts) are actually caught up in the data dragnet when reporting is initiated next year from Canada, I will be very, very surprised.
Another great post Anne Frank, thank you. I’m glad my husband and I changed banks in 2012 and made sure he didn’t use any ID that could identify his place of birth. All our banking is done online so there’s no reason for him to have any interactions with a bank teller.
All our retirement funds are held outside of a bank and are untouchable. I won’t go into the details but it’s all legal. We didn’t plan it that way it just worked out that way for the past 25 years. CRA and IRS have no way of finding out about our retirement assets because of the way they are structured.
Prior to all this FATCA nonsense, Canada and the US already had an agreement to share information on RESIDENTS of their respective countries only. I read some statistics a few years ago which showed that the CRA and IRS hardly ever used the old agreement to get information on suspect tax payers. The total number of annual inquiries between CRA and IRS was in the hundreds NOT thousands so clearly they were only going after the wealthiest tax payers who were likely residents of both countries at the same time.
If the US wanted information on residents of the US hiding money in Canadian banks, why did they not use the old agreement more aggressively to get information? They have had that tool for a long time and rarely used it.
It seems the IRS is more concerned about scaring the shit out of people than they are about actually catching tax evaders. They already had the tool to do their job if rich US residents hiding money in Canada was their concern. They chose not to use that tool because unlike what 30 Year IRS Vet said they are probably not all the best and brightest.
@Anne Frank
Your post above is certainly a lot to chew on. Thank you so much for trying to help people, Canadians in particular, to keep a reasonable sense of perspective throughout this nightmare. Your words of wisdom are most appreciated.
But for people living in other countries, where gringos stand out and can’t so easily blend in with the locals, the situation is very different.
We are contagions that others need to inoculate themselves against. If it wasn’t so tragic, it would be absolutely hilarious to see the US reveal itself to be the opposite of what it keeps telling the world it is. “They envy us for our freedom”, LOL!!!!!!!
@bubblebustin
Those crazy expats, why would anyone in their right minds want to get rid of the passport from the freest country on this planet? How ungrateful (cough, cough) of them for doing such a thing?
The situation has become so absurd, I can’t make up my mind whether to laugh or cry about it.
How many of us are verging on a Walt moment?
(My comments are only dealing with Canadian Banks and FFI(s) ).
If you have logged out of the system and possess a CLN…your information is NOT going to be sent to the IRS (through the CRA) by any Canadian FFI.
Even if this was a remote possibility, the banks CANNOT just sent your information without having confirmed or denied your US Indica. This means some form of communication with you, and your proving your status as a pure Canadian with a copy of your CLN.
For those who believe that this is the case, then why not just continue to file FBARs and income tax forms??
The only true freedom from this nightmare is to renounce or relinquish your citizenship…as legislation changes things are only going to get worse.
How are US green card holders affected by this FATCA? Obviously, I can use my home country passport to open an account and I have non-US birthplace.
If a case of being asked by the bank “Are you US person”, what are the consequences if I simply lied?
For some reason cannot edit my post:( My comments are only dealing with Canadian Banks and FFI(s)