Originally, my understanding was that existing customers would not be signaled under FATCA regulations unless their accounts were over $50,000. Yesterday, I spoke with a woman whose accounts never exceed $10,000 in aggregate. Furthermore, she is a young mother who hasn’t worked much in the last few years since coming to Canada, and so she has never had an IRS tax liability, as her income would be well below the Foreign Earned Income Exemption. She holds her accounts jointly with her Canadian-only husband. This case highlights why we need the legal action of ADSC.
Yesterday she received the following correspondence from her bank. It shows that they have determined that she has US indicia. They have threatened her with reporting her accounts to the CRA in violation of section 8 of the Canadian Charter of Rights, which would require the CRA to obtain a warrant before seizing her account information. But now the TD Bank has threatened to transfer her account information to the CRA. But what crime has she committed that the TD has threatened this action? None at all.
I have recommended that she do nothing–not fill out the self-certification form. But I’d like to hear what others think. Please discuss.
Here is the self-certification form. Please note the date at the bottom: June 9, 2014.
@CanadianGirl – Here’s the wording from the IGA –
4. Notwithstanding a finding of U.S. indicia under subparagraph B(1) of this
section, a Reporting Canadian Financial Institution is not required to treat
an account as a U.S. Reportable Account if:
a) Where the Account Holder information unambiguously indicates a
U.S. place of birth, the Reporting Canadian Financial Institution
obtains, or has previously reviewed and maintains a record of:
(1) A self-certification that the Account Holder is neither a
U.S. citizen nor a U.S. resident for tax purposes (which
may be on an IRS Form W-8 or other similar agreed form);
(2) A non-U.S. passport or other government-issued
identification evidencing the Account Holder’s citizenship
or nationality in a country other than the United States; and
(3) A copy of the Account Holder’s Certificate of Loss of
Nationality of the United States or a reasonable explanation
of:
http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
A copy of the Account Holder’s Certificate of Loss of
Nationality of the United States or a reasonable explanation
of
(a) The reason the Account Holder does not have such a
certificate despite relinquishing U.S. citizenship; or
THE STATE DEPARTMENT SAYS I DO NOT HAVE TO HAVE A CLN.
@joe smith: good link
however, footnote #193 in that link is the key one. that footnote is to Sec 1221 of the foreign affairs manual. i searched online and that section is now listed as “unavailable.” ??
check yourself:
http://www.state.gov/m/a/dir/regs/fam/07fam/index.htm
@bubblebustin,
re; http://isaacbrocksociety.ca/2014/09/19/is-td-bank-overzealously-ferreting-out-of-us-persons/comment-page-1/#comment-3065578
“……TD’s decided to error on the side of caution on two fronts, that is with detection and over-reporting…”
The Privacy Commissioner of Canada warned Parliament of that danger:
“The risk to privacy here is therefore mainly related to over-collection, over-reporting, and information security. ” https://www.priv.gc.ca/parl/2014/parl_20140514_cb_e.asp
and,
“41:2 Committee Evidence – FINA-35 (2014/5/14)
(1620)
[English]
Ms. Chantal Bernier:
” Absolutely. So the obligation of consistent use remains, the obligation to only collect what is necessary remains, and, of course, the obligation to protect the information remains. The reason we are putting to your attention the risk of over-collection and over-reporting is our experience with FINTRAC. With the PCMLTFA, we find that there’s a built-in incentive to over-report. We would want to make sure that this doesn’t occur here. ….”
http://www.parl.gc.ca/CommitteeBusiness/SearchBrowseEvidence.aspx?Arpi=1&arpist=s&arpit=bernier+privacy+%22Foreign+Account+Tax+Compliance+Act%22&arpidf=2013%2f10%2f16&arpidt=2014%2f09%2f30&arpid=True&arpij=True&arpice=True&arpicl=20179&arpialtid=&arpitp=bernier+privacy+%22Foreign+Account+Tax+Compliance+Act%22&arpics=False&arpicp=False&arpicd=False&arpico=False&arpicc=False&arpicpd=0&arpicid=0&ps=Parl41Ses2&arpisb=Publication&arpirpp=10&arpibs=False&Language=E&Mode=1&Parl=41&Ses=2#TopSearch
For some additional discussion of issues, see:
https://www.priv.gc.ca/resource/cp/2013-2014/p_201314_02_e.asp
* ‘FATCA and the Erosion of Canadian Taxpayer Privacy’
Organization: Queen’s University, Faculty of Law
Published 2014
Project Leader(s)
Arthur Cockfield, Professor
Vancity:
“If you are a Vancity member, a non-Canadian resident and a U.S. person living outside of the United States, FATCA may affect you.”
What the heck is this supposed to mean?
It affects permanent residents of Canada living outside the US, or non-residents of Canada living outside the US?
@Isaac,
Here’s a link to an archived copy of 7 FAM 1220. It’s dated 11-07-2013.
In our present case, the government and the banks are erring on the side of giving too much information. Rather than to protect the husband of our expat mother, the bank and government has decided to punish both husband and the wife.
But has it not been a principle of justice in the Western world, that one does not punish the innocent with the guilty? So if they were going to err, they should err on the side of not giving any information to the CRA or the IRS, because that would risk destroying an innocent person, the Canadian-only husband (though this is just for argument’s sake, both people are completely innocent).
Petros doesn’t mention whether or not this woman has become a Canadian citizen. If she has, she could sign that self-certification with no qualms (claiming a relinquishment but no CLN). If she hasn’t, it becomes more complicated.
What she might be according to US law is irrelevant; this is Canada and only Canadian law should apply regardless of what the morons in Ottawa believe. Personally I would sign that self-certification and sleep well at night. This is, after all, an illegal question being asked for the express purpose of discriminating against her on the basis of her place of birth. I think the chance of prosecution is very small. What prosecutor would want to prosecute someone for a false answer to a question that is a charter violation in the first place? Choosing this course is not for the faint of heart, however.
If it ever became an issue she could argue she misunderstood the question; her income is too small to be a US taxpayer. Therefore, truthfully, she can state she is not a US taxpayer. None of us who live here in Canada are US taxpayers; we are Canadian taxpayers. Who knows and who cares what the US government might believe? We cannot and must not allow the USG to define us as US taxpayers.
TD will accept it. They have done their due diligence and will not take it any further. (If this is their way of making FATCA “a comfortable experience”, its a damn good reason to ditch TD, however.) Never did like the bastards after being their customer for a short time many years ago.
I’ve updated my new blog to include the letter I sent to Congress last month. The next letter I send them will probably be less polite.
http://fanaticbarf.blogspot.ca/
Our expat mum is a permanent resident of Canada.
As long as TD doesn’t suffer any consequences releasing any data, the banks will operate on a default position to release data if in doubt.
If they send extra data, the US doesn’t care, but if they don’t send data they should’ve the IRS could accuse the bank of breaching the IGA.
@Petros: The simple answer to your question is Yes, TD is being over zealous on behalf of their master the IRS.
CRA guidelines are clear. Canadian financial institutions are not required to ask for place of birth. Those that do are choosing to do so.
FATCA regs only require a search for accounts under $50,000. Financial institutions that are seeking information on accounts under that threshold are choosing do do so.
FATCA regs also allow a financial institution to accept documentation of non-US citizenship and a CLN or a reasonable explanation of why the person does not have one if the person has relinquished or renounced US citizenship.
The first thing I would do in that situation is transfer to a non-reportng credit union–if she can find one. Not all credit unions are taking the position of Van City. Many in Ontario plan to fully comply–including my former credit union.
Then, I would file a Human Rights complaint with the Canadian (not provincial) Human Rights Commission and a privacy complaint with the Privacy Commissioner. I have no idea if they would be successful or not, but it’s worth a try.
On one hand, the enabling legislation for FATCA IGA prevails over all other Canadian laws. However, the Interim Privacy Commissioner testified at Finance Committee that privacy laws are quasi-constitutional and that it was her opinion that they would prevail over this new law and that the standard of necessity must be met. IMHO, the standard of necessity has not been met in this case because even under FATCA regs, TD is not required to seek out aggregate accounts under $50.000.
I have also learned that Human Rights laws are quasi-constitutional, so it may be worth trying a Human Rights complaint based on national origin.
A lawyer is not required for either. However, the process can be long and daunting. I would not expect it to be as long an daunting as our lawsuit will be.
Please note, I am not a lawyer and none of this should be considered legal advice–just some practical sharing of information.
Canada Trust has not been the same since they were taken over by TD. This certainly proves it. There is no trust left for me at Canada Trust. In fact, the American now supersedes the Canadian. TD has more branches in the United States then they do in Canada. They are attempting to grow that even more–which is probably the reason they are so willing to allow the IRS to FATCA their long-time, loyal honest customers.
That was a very long answer to what I intended to be a simple Yes to your question.
Finally, in that person’s situation, I would also donate to ADCS and consider being a witness in the lawsuit. Unfortunately, that is not a short term solution.
@Petros: Sorry I posted before I saw that the individual is a permanent resident and not a Canadian citizen. Based on that, she does not have a relinquishing act to provide to TD.
At the same time, her accounts are under the threshold and TD should have had no reason to ask her about other citizenship or place of birth.
So, still think a Human Rights or privacy complaint would be worthwhile.
I also still think TD is being overly zealous. How do they know she is a “US person?” Did they previously have her U.S. passport?
It would seem that if she does nothing, the bank will either:
1. Contact her again for the information
2. Report the account to the CRA
3. Close the account
The bank could take any of those actions either:
a) after a considerable wait time
b) promptly
If the banks notifies the CRA, the CRA could either:
i) ignore the info as being insignificant
ii) promptly pass the info on to the IRS
IF the IRS receives it, they could either:
I) throw it in a “useless info” file
II) cross-ref it with other tax info on the individual
If the person has never had $10,000 in aggregate accounts and never enough income to have to file US taxes, then it is all just a waste of time for the bank, CRA, and IRS, which is a good thing, but rather like a crumb to offset the horror of the bank’s action in the first place.
As alternatives to ignoring the communication, she could bend the knee and accept the indignity of the W-9 without financial loss. Or they could change FI. Or maybe take her name off the account?
Upon opening the account, she was a new arrival in Canada and used her American ID to open the account. So either the birthplace was recorded by photocopy in her file or in her electronic record somewhere.
FATCA is a one sided law. There are reporting requirements when the MINIMUM FATCA conditions are met.
There is no restrictions against reporting everybody. They can send in their entire list of customers-Americans, Chinese, Canadians, Lilleputians, anything. $50000 or 50 cents CAN be reported. ($50,000 MUST be reported) There is no US law against it and there is no Canadian law against it (not any more at least, not after the FATCA IGA was ratified).
@Petros: What a bummer. A credit union account may still be a good option. Also, now that she has Canadian ID, she may be able to open an account at another bank that has no record of her U.S. personhood. I believe RBC and Scotia are not asking for place of birth.
I hope she will not take her name off joint accounts. FATCA is setting women and equality in marriages back decades. Even mt grandmother was the main manager of money in the family back in the Depression.
Even as a permanent resident, she could file Human Rights or privacy complaints. That is not a short term solution and I don;t know what the outcome would be or if the complaint would even be accepted. I am not an expert, but I am willing to assist if that is something she would like to consider.
She needs to become a Canadian pronto.
“FATCA is setting women and equality in marriages back decades.”
Ya think? This criminalization of joint accounts is among the more corrosive aspects of FATCA and the IGA agreements. I hope the ADCS suit is highlighting just how this endangers spouses and children in “mixed” marriages.
But the young mom in question as a PR doesn’t have any good options here and I agree that she needs to get her citizenship and relinquish. Unfortunately the wait times from beginning to end of that process currently stand at 24 months and if she lives in the West, she is looking at a longer wait.
@Joe Smith, “She needs to become a Canadian pronto.”
Or ANY other nationality such as Irish through a grandparent or maybe Polish or German by descent.
@Brockers, This does not solely apply to TD in Canada as TD has a footprint worldwide to include the EU. They have recently taken over accounts from a major FI allowing a seamless switch/transfer. It is seamless until “the letter” arrives that they need more info for the file. TD is toxic to anyone and that includes those that have relinquished cleanly or not cleanly.
Stay away from TD worldwide.
YogaGirl, “FATCA is setting women and equality in marriages back decades.”
It hits men too!! But I admit the media effect is better using the woman example.
This situation makes me very angry. Because no lower limits were set, the financial institutions can over react and are, as evidenced by this letter. I wonder if the CRA would apply the proper limit if the banks don’t. It’s a hard thing (emotionally) to do but she could consider not having access to the family accounts, particularly an RESP if she owns one. So much for the hard won woman’s rights. She could still use her credit cards. Her husband can open an account in his name only at another financial institution and transfer the funds there. This would not be a permanent solution as it is very hard to live without joint accounts but it might buy her some time to decide how to deal with US taxation situation.
I have warned since the beginning, not to put faith in the so called $50K safe harbor, and was accused by some of fear mongering. The 50K “de minimis rule” was NOT a requirement, rather just a threshold. Rather than repeating the warning endlessly, I have just let time be the arbitrator. So nothing about this surprises me.
It is a buyer beware world when it comes to your deposits in a “foreign bank” IE, local to you. I would take the position, especially in the evolving GATCA world, that EVERYTHING will be reported. That is the OECD Common Reporting Standards rules, (soon to be adopted in the meeting of the G19 in Australia) and so if a banks now facing FATCA complexity and then GATCA stupidity, which the Canadian government seems to be enthusiastically accepting, then I can understand TD not following the FATCA $50K guidelines to the letter. Reporting everything is easier than filtering to certain thresholds.
There was even a bank in NZ, during their capitulation review and comment period (the Stealth “Remedial Matters” bill) that argued exactly that point. They suggested no thresholds or exceptions but rather just follow the coming GATCA Rosemary baby from the union of the OECD elites and FATCAnatics from Treasury.
So it goes.
@ Joe Smith
“She needs to become a Canadian pronto.”
As YogaGirl points out, that cannot be done pronto. My husband waited 18 months for his invitation to the Canadian citizenship ceremony. The wait period is even longer now. I wrote to the immigration minister to strongly suggest they fast track citizenships for Americans but of course there was no reply and they actually made things worse in the months that followed.
If this was a melodrama (and at times it seems it is) we would all be hissing and booing the TD.
@Just Me, “I have warned since the beginning, not to put faith in the so called $50K safe harbor, and was accused by some of fear mongering. ”
I have cautioned as well on and off the board.
I am in the EU and certain FIs have asked persons for additional documents on pre July accounts that had the equiv of less than fifty dollars in them ever.