Is this what CRA, Banks & Compliance Industries have not been Upfront about? IOW, "US Persons" in Canada "Screwed"
http://t.co/Roy2tWwvLZ
— U.S. Expat Canada (@USExpatCanada) August 29, 2014
I just came across a rather disturbing bit of information that destroys any sense of security we’ve derived from the statements that “CRA will not collect taxes from anyone who was a Canadian at the time the tax was incurred.”
The author claims that Canadian Financial Institutions are not signed on to the Tax Treaty and that the IRS can take the information received from the CRA, contact the bank directly and ask the bank to collect penalties (not taxes and interest?) from the account holder and remit to IRS.
This doesn’t sound correct to me as the IGA may allow the banks to give info to CRA but I’m not aware that the IGA nullifies PIPEDA, which would still stand. If the argument is made that the “Treaty” trumps domestic law, and they can get away with applying that, we are in serious trouble. Allison’s arguments become very important and the government should have listened.
This position seems to depend upon a relationship between a Canadian bank that has branches in the US:
“IRS will go with a demand to collect penalties from the account holder’s information they have received from CRA to Canadian Banks operating in the USA, namely RBC, TD, HSBC etc. Once the USA branch of Canadian Banks gets the demand letter from IRS, they will forward it to respective Canadian Branch where the account holder has account with the banks. As far as bank operation goes, they will either collect and remit the penalties on behalf of IRS or freeze the account until the penalties are paid.
If Canadian banks don’t comply with IRS demand, any payment coming to them from the U.S. will be subject to 30% withholding tax on gross income. They will be also forced out of doing business in U.S. capital markets and markets that conclude contracts in U.S. dollars, 1.e. the commodity or petroleum market.
U.S. persons now must comply with USA tax laws, or risk the discovery by the CRA and IRS which can make their life miserable and wealth diminished.”
If this is truly the case, why haven’t the compliance community/politicians pointed this out? Is this a willful omission on their part? This information comes from a company in Vancouver “Cross Border Tax Service.”
Those of you in the legal community, please weigh in on whether a subsidiary branch of a Canadian bank in the US can force the Canadian parent company to collect/withhold. It sounds rather tenuous to me yet as we have seen in the last few days, they seem to be able to do whatever they want.
Here is the article.
.
The Canadian courts have already ruled against the legality of doing this.
http://uniset.ca/other/cs6/68OR2d379.html
In my view, there can be no question of unjust enrichment, at least at this stage, as there is no evidence that anything has been paid by the bank to the foreign state. [**12] Indeed, evidence of foreign law submitted by the respondent bank in the form of an affidavit to which is attached a letter of opinion from a New York attorney is far from conclusive as to the question of whether the United States courts will enforce the notices of levy served on the New York branch of the bank. The case cited in support of the proposition that United States courts do have jurisdiction refers to a case in which jurisdiction over a foreign branch was obtained by virtue of the fact that jurisdiction existed over the home office of that bank in New York. It seems to me far from obvious that jurisdiction over a branch in New York would give
United States courts, in United States law, jurisdiction over a Canadian head office or Canadian branch.
In any event, while acceptance by the bank of a penalty imposed in the United States might seem to be a hardship, the effect of permitting the Ontario branches to defend the applicants’ claim on the basis of the bank’s liability in New York State would be to enforce indirectly a claim for taxes by a foreign state and one that has, so far as the evidence discloses, not even given rise to a New York or Federal Court judgment.
Tricia. Posting bullshit like this without any due diligence makes IBS look like fools.
So far as I can see, this company is not publishing their address; there is only a phone number and the website. The “team” is composed of two individuals, one of them, “SuperSam”, using a pseudonym. Moreover, the “article” is very poorly written, with egregious grammatical errors. None of this inspires confidence in me.
@ Tim
Thanks. That’s the case I was thinking of.
I believe Domino has a fairly balanced view on this. It is within the realm of possibilities and indeed the US could try these tricks and cause some damage and chaos. However, at least in the foreseeable future it seems likely that they would not try this on a widespread basis. It might be something for a real high profile case, however or at some point as a scare tactic, but for now it looks like some “tax professional (?)” is looking for some easy money. Of course I cannot pass legal judgement on this, but there are certainly precedents wherein the USG has held FIs ‘hostage’ in the US.
@KalC
I agree that the title is alarmist, but the post is resulting in a lot of information being exchanged about the feasibility of such a thing happening, which is good.
Tricia does not deserve to be castigated for this, especially since she was just exploring the possibility that it might be true.
Besides that, I don’t give a rat’s derrière what anyone thinks about Brock!
I’ve scanned some of the postings on this thread. All I can say is “simmer down”.
The article is by a troll who is “trolling” for business. His command of English is rudimentary and his understanding of the law in Canada is even more so. I could launch into chapter and verse under the Bank Act why his claimed scenario is silly, but it is hardly worth the electrons to do so. That is not to detract from the unpleasantness of having the IRS mark you for waterboarding for the crime of living in Canada with US ancestry.
The Swiss situation, while unpleasant, was quite a bit different. The allegation against them was that they had agents who made frequent trips to the US to drum up business among the super-rich. The sold the virtues of their accounts and investments as tax evasion strategies fairly openly. A whistle-blower blew the whistle on them and the IRS rained down Holy Terror upon them. Unfortunately, not only the US-resident and quite deliberate tax evaders were drawn into the net but ALL US-connected accounts (since they are all tax evaders unto the eyes of the Lord and the IRS according to the Gospel According the Presbyterian Church of the USA I am now reading!). The end result has still not been wholesale turning over of anything since Swiss banking secrecy laws can only be lifted on a case-by-case basis through channels with proof of criminal conduct encompassed by the US-Swiss Treaty. The public executions which have been held to date have been as a result of the data which the whistleblower stole and handed over to the IRS: none of the Americans affected knew if their data was compromised so many stampeded into OVDI in hopes of copping a plea before that became impossible.
Their focus is and remains Switzerland, Cayman etc. Canada is a by-catch for them and a rather prickly and pesky one at that since they are getting embarrassing PR black-eyes in the press and have proverbial armies of retirees, widows and orphans mashalled by sites like this one nipping at their heels. When they go to sleep at night, they prefer to dream of themselves in white hats atop magnificent chargers defending helpless damsels in distress against the nefarious designs of wealthy “one percenter’s”. When they show up at work in the morning and see more press clippings reflecting the tireless work of Calgary411, Gwen, etc, they feel more like marauding Huns in Belgium being sent to eat babies then the defenders of the downtrodden they yearn to be seen as. They’ll keep following orders and process the fish on the dock, but I don’t see them devoting scarce resources to casting their nets here too seriously any time soon. IBS reminds them of how morally ambiguous – if not downright malevolent – their role in this sorry story is. I’d be ashamed to be one of them if I knew all the facts. Some of them do.
@Bubblebustin. You are correct…we should be glad Tricia bought this up. All the possibilities should be considered, not only by the potential ‘victims’, but by many others as well. It is also a good way to see, explore and understand what the potential ‘compliance parasites’ have in their bag of tricks.
Finally, it is just one more of a thousand reasons why everyone should support http://www.adcs-adsc.ca/ .
Bubble, you might not care what people think but maybe you should.
IBS is closely associated with ADCS. ADCS is trying to raise serious amounts of money from contributors around the world; many of whom arrived at ADCS via this website.
What people think of us might just be important.
@Hazy, Tim Thanks for that link, excellent reference, worth bookmarking and/or downloading as PDF which I’ve done.
Good discussion on this thread. There are real things to worry about and other things that are unlikely, and it’s useful to separate those as best we can. As I think has effectively been done in this instance.
I agree that concerns like these are additional reasons for contributing to the ADCS legal action fund. Also for thinking seriously about a CLN if you don’t already have one, and can stomach the hoops (and procedural delays and increasing costs) you may have to go through especially if renouncing.
Although not ready for prime time yet, this is one reason I am a huge believer of Bitcoin. This is a virtual store of wealth that is cryptographically secured. No entity can get to it or even know you have funds there. You can essentially be your own bank, send funds, accept funds around the world instantly with no transaction fees. I’ve been using Bitcoin for 8 months now and it’s slowly starting to become stable, also mass adoption is in progress. It is easily the most disruptive technology I have ever seen. If you felt in serious threat of your savings being targeted and stolen by these thugs, then Bitcoin could be an option at some stage. http://www.bitcoin.org has more details. Just putting that out there..
1. I think it is important that all the news is displayed here- that includes the good, the bad, and the ugly. Sometimes when thinking gets too scary, people tend to rationalise with that fear in mind and their logic becomes skewed and only the good case scenarios are afforded room for thought. Its a form of wishful thinking. It can get people in trouble. So it is good to look at all sides as calmly as possible.
2. I dont think America would be going to such trouble if they didn’t expect to cash in on it. At one point, they will do some more pushing and some more “negotiating” to get their agenda done.
3. If nobody did anything to stop this, then America would already have had its way with everybody. The only way to stop this avalanche is by legal opposition. And I think many people in this world are working on it, from quite a few angles. Personally- I`d like to see everybody band together and go for the jugular of this beast, but various efforts are not for naught.
And you never utter a word that may be viewed as radical or offensive? Get real. Isaac Brock is probably more admired for its diversity in thinking than anything else.
If you had it your way, everyone who’s got any kind of US taint would stop paying their US taxes and never go to the US again – even if they are US tax compliant.
Although the site may have BS, it brings to light a second-rate ‘cross border services’ firm who does not tell us who Super Sam is or give his expert credentials. I like that such a firm is identified here so readers can be alerted / cautioned. Tricia has not endorsed this firm; she is asking questions about what they say on their ‘perhaps exploitative site’. Such questions needed to be asked and commenters at Isaac Brock have outed such a site for what it likely is. I certainly don’t think we lose anyone over this.
( Also listed as a “Cross Border Tax Services” event is:
26 Nov 2013, 3:58pm
Attend Our Event
You Know Jack about Tax for Self Employed and Network Marketers.
Tax Planning Event Cancelled. Will be rescheduled soon.
When: Tue December 10 2013 5:30 PM – 9:00 PM
Where: Vancouver )
The USG lists names those who renounce citizenship, and uses threat of financial terror against USP abroad. Where is the list of IRS agent names, especially those with international focus? May they be reminded of their duties where they may be considered unjust.
Some Brockers need to go there and tell them they are full of sh-te. Comments are allowed on their posts (probably to their regret once Brockers visit!)
While I would hope that this is not the case and complete ‘BS’ – here are two data points for us to throw in the mix:
1. In Thailand the FATCA form presented to all new account customers and existing account holders who seek to open a new account includes a full consent for the bank to comply with any demand of the IRS to deduct fees, penalties, taxes stated to be due. In other words, if this consent is signed, the bank does the IRS work – regardless of what the Thai/US tax treaty says.
2. There is currently a very important case in US federal court that Microsoft is fighting with the US DoJ. The US sought and obtained a federal search warrant for emails/data stored on a server in Ireland owned by a Microsoft subsidiary (in Ireland). The search warrant was issued to Microsoft USA and served on Microsoft USA in the USA. Microsoft resisted the search warrant saying that the US government must go to Ireland and seek the email/data from the non US person suspect’s account in Ireland. Microsoft lost the case at the District Court level and is going to appeal to the Court of Appeals. This is a critical case for the cloud based services business, but also has potential application to FATCA.
This is all a very slippery slope.
KalC wrote:
“Posting bullshit like this without any due diligence makes IBS look like fools.”
I respectfully disagree. IMO you are underestimating the ruthlessness of the US when it comes to grabbing money. Just ask the Swiss.
Domino wrote:
…” I suspect the USA will not resort to a UBS style seizure unless they identify a case of such criminal magnitude that few would argue against it; but then the precedent will have been set.”
“Those who are concerned by this eventuality might consider using only financial institutions without a US presence.
I agree with Domino. Don’t keep money in banks with branches in the US. Better yet, invest in hard assets like real estate and precious metals.
I have been away and not seen these responses until now. I want to make the following points.
I am a Director of ADCS-ADSC and would consider any post’s effect on our fundraising efforts before publishing it. Certainly some of the recent visual, hateful rants & references to Nazi’s are something that I have concerns about. I do not see any similarity here at all.
I found this via Micah Willbrand’s Fatca Daily li paper which Brock/Sandbox twitterers are familiar with and would tend to view as a reasonable source of information. The title of the post is Sam’s, not mine.
I found out the following by going beyond the first page of the website, which I was willing to give the benefit of the doubt as I know many people like Sam, who have difficult names and use what we might consider unusual nicknames, so people can remember them. The presentation also may seem strange but I attribute that to approaches based upon cultural differences in expression – easily seen in the GTA all the time.
His full name is Sam Elahee (Shaikh Elahee).
I listened to & read one of the testimonials on the site, which is how I found out his real name.
I looked at other pages of the website which are better written than the page the link connects to.
I looked up his co-worker Nathan Zang, found nothing objectionable & he does have a university degree in another field and a diploma in accounting.
Sam appears to be a well-liked business personality in the Burnaby area; he is a member of many Meetup Groups and is a guest speaker on many of the sites which seem to be professional business sites
I checked the Better Business Bureau for all the company names I came across and found no reports.
The contact information is on the site; click on the Income Tax Service tab on the left.
email: info@taxsupport.ca
Telephone:
Western Canada : 604-764-7864
Office Fax No. : 604-696-3745
Office Address:
Main Office:
New Edge Tax Consulting (taxsupport.ca)
170 – 422 Richards St, (the network hub)
Vancouver, BC V6B 2Z4, Canada
We have a Burnaby location too. If you would like to meet us in Burnaby, give me a call
Thanks to those who know me well enough to understand I would not post without “due diligence: nor without some thought as to the effect the post might have. I focused on this as it presented a possibility that I could not evaluate but had concerns about for our entire community.
See http://www.irs.gov/irm/part5/irm_05-021-003.html#d0e69
Thanks, Trish, for all of the real due diligence you now feel compelled to defend yourself with, having been called out by another commenter. I, for one, am glad that you brought this site and the subject discussed there to light and have posed the questions you have here at Brock.
I will have a good look at the link from Moonglow: http://www.irs.gov/irm/part5/irm_05-021-003.html#d0e69, along with Steve’s “slippery slope” comment and see if I can get my mind around it all.
Thanks again!
To expand upon Tim’s comment, not only is it established in case law that the IRS cannot serve a Notice of Demand upon a Canadian bank’s US affiliate (as that would be allowing a foreign jurisdiction to satisfy a tax debt); the Canada-US Tax Treaty, which precludes FATCA, says that the CRA does not collect for the IRS in instances where the debt occurred while the individual was a citizen of Canada.
Now, I know the Conservatives have screwed us over once, and treaties can be renegotiated; for now, these are the only two glimmers of hope I have to hold on to for the short-term.
If people are really afraid, then don’t bank with BMO, TD, and RBC because they operate affiliates in the US.
http://en.wikipedia.org/wiki/Banking_in_Canada
Read Section 2.2 “Brands used by the Big Five by Major Financial Service”
With RBC in particular, they sold their US Retail Operation to PNC Bank in 2011, but they sill maintain a unit based in Georgia to serve Canadian customers who are Snowbirds.
@calgary
Thanks calgary, I appreciate your comments!
@Tricia,
I think your post was just fine. I want to know the opinions and what people here think of them. I appreciate the extra info. Like you I scour the news for new info. You never know when HMRC or the IRS sets a new trap for me. Hell for all I know France could adopt me next year to get a few bob because I went up that funny looking tower 25 years ago. It’s war. I am not joking.