Sweeping U.S. tax crackdown inflicts heavy collateral damage http://t.co/i3PovIgioQ – Is #FATCA damage really collateral damage?
— U.S. Citizen Abroad (@USCitizenAbroad) October 13, 2014
The article referenced in the above tweet includes:
Fraud isn’t the law’s only unintended consequence. FATCA has also spawned a booming business for cross-border accountants in Canada, which is home to hundreds of thousands of U.S. citizens. Most Americans living here owe no U.S. taxes because Canadian taxes are generally higher. Many, however, have never filed or stopped filing years ago, and now risk being exposed by FATCA’s net.
The threat is forcing many Americans out of the shadows and into the offices of accountants licensed to do U.S. taxes. With demand brisk and supply of experts limited, some individuals report being charged as much as $4,000 a year to do relatively straightforward U.S. taxes – filings that would typically cost less than $1,000 in the United States. An individual who hasn’t filed for years can easily face tens of thousands of dollars in accounting fees to come clean, even if they owe no U.S. taxes.
Given that roughly 7 million Americans live outside the United States, FATCA is an accountant’s dream.
FATCA is also proving to be extremely costly to most financial institutions. In a recent speech, the head of a U.S. umbrella organization for banks, brokers and asset managers said his industry is facing compliance costs that could eclipse the IRS’s $11-billion (U.S.) annual budget.
There is no new information in this article. The “FATCA effects” described are old, well known, and well worn. At what point does “FATCA damage” evolve from “collateral damage” to intentional damage.
The #FATCA is that this damage is NOW willful!
Here is the first comment to this article from a certain JCDoubleTaxed:
JCDouble Taxed 21 minutes ago
FATCA is very significant in that the US forced Canada under threat of being banned from the global banking system, to adapt FATCA as part of Canadian law in the form of an IGA agreement. In the process, the US forced Canada to disregard Charter Rights and privacy laws of Canadian citizens, and adapt institutionalised financial discrimination of Canadian residents who happen to have US citizenship.
Such institutionalised discrimination – asking ALL account holders if they have US citizenship or not – and potentially confiscating 30% of an account value without appeal mechanism, and without any relation to if they owe US tax or not, if a US Person answers that they are not a US Person; such discrimination has similarities to the institutionalised financial discrimination of Jews in preWorld War II Germany. You heard this right, the US has become a totalitarian state in regards to its US persons abroad!
Part of it all is that the US is the only country in the OECD that practices citizenship based taxation – taxation rights based on citizenship rather than by country of tax residence. Picture a Canadian living in Canada for 50 years, the US wants to tax them. Picture a mother brought to a US hospital for a birth because of a strike in the Canadian border area – this US person for a few days, the US wants to tax them for life. Canadian FATCA IGA laws will now smoke these US persons out and force the CRA to hand over their account information to the US IRS.
There is a tax treaty that helps reduce double taxation but it does not prevent it. Often there are taxes that the US has that Canada does not and then these just flow on top. It gets worse. Many tax deferred accounts that Canada has such as for retirement, education, and disability, the US does not recognise as they are not allowed in the US and the US wants to tax unrealised gains and to penalise them so that there is no benefit to them. Do these sound like accounts of US tax cheats?
Canada has not defended the rights of the roughly 1 million Canadians who are US persons to live a normal life in Canada. Canada has let the laws of the US sweep over the border without opposition. Is then Canada an independent country or the 51st state?
Any taxes the US collects from Canadians do not go back into services for them such as road, hospitals, schools, etc. “Taxation without representation and without government services or benefits is tyranny.” The US becoming more totalitarian, where the freedom and well being of its citizens does not even enter into the equation.
Where the Canadian Government has allowed these US laws to flow across the border and become the laws of Canada, The Alliance for the Defence for Canadian Sovereignty (ADCS) opposes these laws though legal claim to uphold and defend Canadian Charter Rights. ADCS is accepting donations for their fight. See the message boards at IsaacBrocksociety dot ca for more information.
Every time I hear that ignorant so-called journalist Mckenna use the phrase “come clean” I want to puke. He just doesn’t get it, and if he hasn’t gotten it by now its doubtful he ever will. Canadians don’t need to “come clean” because they have done nothing wrong in the first place. What they need is for the US government to get out of their life and stay out of their life. And for the Canadian government to stand on its own two legs and protect its people, not round them up and hand them over to a foreign bully.
If he can’t comprehend that perhaps he should consider a career change….like how about a job in a laundry so he can “come clean” himself. That guys like Mckenna can make good money regurgitating the same old garbage underscores how useless the mainstream media is. The guy should be ashamed of the crap he writes and the Globe and Mail should be ashamed for publishing it. Come clean, my ass.
Perhaps this could be an IBS feature: response to ‘we had to accept FATCA/IGA because we were up against an 800 ibs Gorilla.’
I just put this comment in on the article, yet it is under Reply, Reply to my first submission:
JCDouble Taxed 5 minutes ago
I have heard this comment before. My view is that such a comment lacks imagination and creativity and constitutes capitulation.
Please provide example of 800 lb gorilla jumping up and down on a country because they would not sign an IGA? The US did jump up and down on Switzerland yet that was a known tax haven country and that was before FATCA and IGAs.
The Canadian government could have taken other approaches to FATCA/IGA rather than just agreeing to it and “putting their head in the sand” on the issue; turning their backs on the roughly one million Canadians who have US personhood and their families.
Canada did not have to be an early adopter of an IGA. Canada could have taken a very public opposition to it and demanded concessions from the US and there are reasonable ones such as follows: (1) the IGA would need to first be approved by the US Senate (before enacted in Canada) – as is U.S. law for international treaties, (2) Before Canadian adaption, Canada requires US Supreme Court ruling on the Constitutionality of FATCA/IGA’s on privacy, discrimination, and excessive fines grounds, then, (3) Canada would require Canadian Supreme Court ruling to see if laws in accordance with the Canadian Constitution; (4) Canada would only provide the data only at the same instant that the US provides reciprocal information (certainly not provide this in advance); (5) Canada would require consideration from the US for the implementation costs of Canadian Financial Institutions – to cover the cost of implementation; (6) Canada will not sign any agreement in which Canadian banks are known as “Foreign Financial Institutions;” (7) Canada would require US tax amnesty for Canadian residents up to a certain future date years in the future as the US has done nothing to communicate US FBAR and tax filing requirements, even to Canadian taxpayers who filed US returns and their Canadian address with the IRS; (8) Canada would require update of the Canadian US tax treaty to exempt from US taxation and reporting for Canadian tax residents Canadian retirement accounts, Canadian education savings accounts, Canadian disability savings accounts, the family home, Canadian mutual funds, Canadian estate, and general $5 million wealth exclusion per family.
There are only roughly 1 million Canadians with US personhood and this may be multiplied by 3 or 4 when families are considered. What the US has “forced” upon Canada and Canadians is not trivial at all. It is certainly a worthy issue for Canada to cash in its years of friendship and military alliance with the U.S. The U.S. should know that friends jeopardize friendship when they threaten and treat their friends as servants.
@JC
Canada’s capitulation was at the request of the Canadian banks. If the banks had not so firmly requested that the Government of Canada sign an IGA, things might have been different.
What the banks don’t understand is that the U.S. Government will steal their money anyway. The banks were concerned largely because of their business interests in the U.S. But, those very interests will result in the USG imposting a substantial tax on their capital base.
Obviously you don’t become a banker because of your brains.
History has shown that appeasement is NOT a good option.
@USCitizenAbroad Is that spin that the banks requested signing? Is that the Canadian Government trying to shift blame and responsibility?
@USCitizenAbroad Isaac Brock is not about submission to US laws that are unjust and restrict liberty for US persons abroad.
…and yet again, these ignorant journalists keep forgetting the 800lb stick that the IRS is wielding. The FBAR form; that if you don’t file (if your account is over a certain amount ($10,000!!)), you get dinged $10,000 fine if you are non-wilful, $100,000 if you’re considered wilful. Guess which the DoT will apply more often.
So all these compliance condors/apologist-journalists are ignoring that and letting everyone think that it’s all about “unpaid taxes” when it’s actually a crab-net for fines.