This week I had a chat with a kind donor to our Canadian FATCA IGA lawsuit. She is a Canadian citizen who has lived in our country for more than four decades.
I asked her (as I now ask many) to predict what Canadians will do when the FATCA law identifies them and turns them over to a foreign country.
This Canadian told me how she will respond when her neighborhood bank turns her over to the United States Internal Revenue Service. She said:
“First time visitors to the “Isaac Brock” and “Maple Sandbox” websites are regularly advised to “Read, read, read before you take any action” when you discover that the IRS wants you.
Generally good advice, I would say, except that I would change the channel a bit and say “Read, read, read, and then take NO action“.
I would strongly urge people to read, read, read, and then take the time to live with the injustice, the absurdity, the absolute moral bankruptcy of FATCA before they commit themselves to any course of action.
Live with the feelings of unfairness and discrimination that surround FATCA; let the oppressiveness of the situation really take hold. Then take a deep breath, and another, let the fear subside, and then let the outrage and anger come forth and “Just say NO”.
We all know that the whole premise of FATCA (Citizenship-Based Taxation) is fundamentally wrong, so why do so many of us so readily agree to participate in a system that is “wrong”? Fear, anxiety, expediency, whatever?
When I am faced with a really complex situation that is impossible to figure out, and FATCA would be one of those, I try to pare things down to fundamental principles that let me see things more clearly. Really, in my mind, FATCA is no different from the scenario of the school yard bully.
The Harper Canadian Government should have stood up to the U.S. bully’s threat of sanctions and said “No”. It didn’t.
Canadian banks and financial institutions should have refused to become agents of the IRS. They didn’t.
Our Members of Parliament should have challenged the government to address issues of sovereignty, privacy, and equality of ALL Canadians. By and large, with a few notable exceptions, they didn’t.
So now it’s my turn; it’s my turn to stand up and say “No”. And I will.
I will refuse to fill out any “foreign” tax information forms, I will refuse to give my financial institutions any information on place of birth, and, if necessary, I will lie with an absolutely clear conscience.
I will refuse to let the bully play in my yard.
I realize that this is a course of action (or inaction) that might make some people feel uncomfortable. But, speaking personally, I feel much more uncomfortable being forced to do things that I know are wrong, and I know that FATCA is wrong.
It’s just wrong, plain and simple. So I’m not doing it.
I am now, and will remain, willfully non-compliant. End of story.”
@Blaze
‘However, if the bank asks “Were you born in the United States?” it’s a game changer.’
I agree. I’ve made this point myself several times–including as recently as yesterday.
‘The FATCA enabling Act overrides all of that, which is the reason for the lawsuit.’
Well I would think that it is a reason for the lawsuit not the reason for the lawsuit. There are definitely other things highly problematic with the FATCA enabling act which are also addressed in the claims.
‘Yet Canada Revenue Agency has been clear that banks are not required to ask for place of birth’
I think that eventually a lawsuit against the banks is going to be needed too–although given limited financial resources I think starting with the gov’t was the right strategy. Even if one could argue that C-31 somehow overrides the Charter, it seems to me that the Charter should prevail in all situations not specifically authorized by C-31. Yet the banks are clearly violating the law in ways that go beyond even what is authorized by C-31.
@ Nonymous
Definitely you would not want to cross the border with that. The border crossing computers are linked to the DOS list of CLNs so they know. They even know if your CLN is in the processing stage I believe. Eventually, if not already, there will be IRS linkage to show the border guard if you have been naughty or nice regarding your tax filings as well.
@Dash. I agree a reason would have been better to use than the reason.
Because the banks are going way beyond what the Canadian government agreed to and way beyond the law or CRA information, it is possible a Human Rights and-or Privacy complaint could be made. A lawyer is not required for either and there should not be significant costs. However, the process is long and can be stressful. I have no idea if it would be successful or not.
Maybe we’re approaching this from the wrong angle. It should be really easy to to prove that the Canadian government’s IGA is incapable of detecting all USP’s, therefore is ineffective in achieving it’s stated goal – that is to detect all US persons living in Canada thorough the stated ‘indicia’. There are a great many people who will be able to fly under the radar because of the IGA’s gaping holes and for this reason alone will be more of a failure than a success, a boondoggle, and a tremendous waste of taxpayers dollars.
@Blaze
‘it is possible a Human Rights and-or Privacy complaint could be made.’
Interesting. I didn’t know this was another front this battle could be fought on. It would be informative to hear if anyone has any success in this regard although it sounds like it would take some time before the outcome of such a complaint would be known.
To anyone thinking they can create their own CLN, I would advise against it. There is a raised seal? imprint? over the signature. That cannot be easily duplicated. Additionally, one would have to forge the signature, which IIRC would be of the vice consul? I’ll have to check mine.
Lying to the bank about whether the US considers you a US person is one thing, forgery within your own country is a whole other ball of wax.
bubblebustin,
The IGA the Government of Canada implemented in Omnibus Bill C-31 is absolutely incapable of detecting ALL USP’s. If it is incapable of detecting ALL USP’s
[and why would any undetectable USP whose only crime was ignorance of US citizenship-based taxation law and compliance responsibility (as the US did not properly educate) come forward to lose a good portion of their legally earned and taxed in Canada investments and savings they have in this country for their responsibly planned retirements and for eventually passing on to their children when they are no longer here — because it is US law and they live in Canada and should be protected by the Canadian Charter of Rights and Freedoms? That we are even talking about the definition of “lying” to protect ourselves and our families shows the absurdity of our criminalization by the USA and our own governments (by defining us as *US citizens who happen to reside in Canada) — while real tax evaders residing in the US get off scott-free or with little penalty],
it is a nothing but another Keystone Kops episode.
The vote-in-lockstep, majority Canadian Conservatives (wannabe-Americans) ARE such a bad joke as protectors of the rights of ALL of the people in this country!
@Dash. Before the enabling act, a human rights pr privacy complaint would have been an obvious route to pursue against the banks. With the legislation overriding all Canadian laws, it is now unclear about how effective that might be.
However, with the banks and credit unions choosing to go. Far beyond what the Canadian government has provided, it would be worth a try.
In her testimony, the Interim Privacy Commissioner testified (in response to a question from Murray Rankin) that the Privacy Act is “quasi-constitutional” and takes precedence over the enabling act. I have since learned that the Human Rights Act is also quasi-constitutional, so there may or may not be an option there.
I have considered making a Human Rights and Privacy complaint against TD based on what is on their website, but that would definitely out me as a U.S. Person to my bank of 34 years.
In the country where I live (not Canada) I have noticed that different banks ask the ‘citizenship’ question differently. I have checked the wording at every bank (almost literally) and will only open accounts at banks that use wording that I can live with and can answer truthfully without outing myself as US citizen (I am dual but haven’t lived in US for 30 years). I am completely compliant – FBARS, IRS returns every year, etc – but it’s none of their damn business whether I was born in the USA … or wherever.
This may be a minor glitch but something to keep in mind. Banks keep tabs on your accounts for “activity”. They look for movement in and out of your account. I have a simple savings account which I put a lump sum into many years ago. I don’t deposit into or withdraw from that account. Twice in the past few years I’ve spotted in very tiny print on my monthly statement that the bank had flagged my account as “inactive”. Luckily I saw the tiny print and went into the bank to give them a written assertion that my account is NOT inactive. They must know that I, myself, am not inactive because I also have a normally active chequing account at the same bank but that didn’t seem to matter. I’ve read that in Australia, for instance, they are seizing inactive accounts after only 3 years and making the holders go through a process to retrieve their own money from the state.
So, if your strategy is to just hang pat with an existing account, rather than take the risk of facing some questioning when opening a new account, be sure that you don’t inadvertently let the bank flag your account as inactive. Your account might eventually get closed and force you into opening a new account once you retrieve your deposit. Currently the time period in Canada is 10 years before your bank will send your money off to the Bank of Canada for “safe-keeping” but these time periods can be shortened without you being aware of it.
Let me restate a comment I have made on these forums several times before. This applies regardless if you are in Canada, France or Japan or points in between.
You must always tell the truth
If telling the truth would cause problems at a FI then you have no choice but to leave that FI.
If you are asked “Are you a US Citizen?” You must answer YES if that is a true statement.
If you consider yourself a US Citizen and/or hold the benefits/trappings of US Citizenship then you are a US Citizen.
If you relinquished US Citizenship based on the law at the time of the act and have not done anything since and do not consider yourself as a US Citizen, then you are not a US Citizen.
If you are a landed immigrant who entered Canada on a US Passport then you are a US Citizen.
If you are an accidental in Canada who has exercised no trappings/benefits of US Citizenship, the burden is on you. There is ample literature on the subject of dominant, effective and master nationality.
Post July, I have seen disclaimers that typically state “I declare the information provided is true and correct to the best of my knowledge.” Questions need to be answered accordingly.
I think many have fallen into the trap “I must prove I am not a US Citizen” when in reality you need to approach this as “They need to prove I am a US Citizen.”
Under Canadian Law, is an accidental permanently resident in Canada with solely a Canadian Passport, a US Citizen? I do not believe this issue was addressed by the IGA and I think it has a bearing on the lawsuit. Or stated another way, Does the Government of Canada recognize imposed US Citizenship on a Canadian Citizen resident in Canada? I think no and its a question that needs to be asked to an appropriate Minister.
@Star, ” (I am dual but haven’t lived in US for 30 years).”
In the name of ____, please stop using the term DUAL!!!!
You can ONLY have a single citizenship at any point in time!!
Why do you think the USA requires you to enter on a US Passport? So they can solely recognize you as US, dual means nothing to them.
You are the citizenship of the country based on whose passport you entered under and are staying in!!
A person might have access to a Canadian, a British, an Irish and Estonian Passport but if they are living in Ireland they are solely and absolutey IRISH!!!!!
Using the term means you are falling prey to their trap.
I won’t delve into whether you can or should answer questions on bank forms deliberately incorrectly. That being said, on the matter of citizenship, anyone with a bona fide belief that they have relinquished citizenship in the US by oaths or actions taken with intent to relinquish (lots of threads on this site discussing that issue) should have little difficulty swearing an oath that they are not a US citizen. Relinquishment depends on (i) and objective act (such as swearing allegiance, accepting employment in the civil service, becoming a citizen of another state, etc.) plus (ii) subjective intent to relinquish. The US government cannot definitively establish the negative fact of lack of subjective intent. You have no obligation to get a CLN to prove to a bank that intent: you know your own intent yourself. The CLN – only remotely necessary for relatively recent acts of relinquishment – is nothing more than the US government saying “I agree”. If you are asked to swear on a form “I am not a US citizen” and you did the action and had the intent when you did it, the opinion of the US government on the matter won’t make your action more or less valid. Swear away in all good faith. As for birth place well, I guess you could say that you were awfully young at the time and don’t remember….(or, more likely, just object that not required by law and respectfully declined).
Self-certification on the TD Form would not require a “lie” per se, but a failure to acknowledge the authority of US tax law as applying to Canadians living in Canada.
See http://isaacbrocksociety.ca/2014/09/19/is-td-bank-overzealously-ferreting-out-of-us-persons/
@AnneFrank: I believe some banks are taking the position that if you decline to answer the question about U,S, birthplace , they will treat you as a U.S. person and forward your information to CRA to pass on to IRS.
State Department says I do not have to get a CLN. I agree. When I became a Canadian I assumed that this was a relinguishing act. End of Story.
@Blaze, It is my humble opinion that if a FI asks for place of birth it should be avoided even if you renounced and have a CLN.
That said in the EU I opened an account and made a statement that the POB question on the application was racist. I was quickly advised by the manager that question was voluntary and I could leave it blank.
The IGA says:
ee) The term “U.S. Person” means
(1) a U.S. citizen or resident individual,
(2) a partnership or corporation organized in the United States or under the
laws of the United States or any State thereof,
(3) a trust if
(A) a court within the United States would have authority under
applicable law to render orders or judgments concerning
substantially all issues regarding administration of the trust,
and
(B) one or more U.S. persons have the authority to control all
substantial decisions of the trust, or
(4) an estate of a decedent that is a citizen or resident of the United States.
This subparagraph 1(ee) shall be interpreted in accordance with the U.S. Internal
Revenue Code.
Of course, YOU did not sign the IGA and the bank did not ask if you are a U.S. Person as defined in the IGA or if you are a U.S. person according to the U.S. Internal Revenue Code.
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@George
Here’s an addition to your list.
If you have to lie to build the case that you’re not a US person, you’re a US person.
@Blaze
“I have considered making a Human Rights and Privacy complaint against TD based on what is on their website, but that would definitely out me as a U.S. Person to my bank of 34 years.”
Can you provide a link to the TD website on which you’d potentially be able to base a human rights and privacy complaint?
Most of the websites I’ve seen seem to stay within the requirements of C-31–although of course C-31 violates the Charter in my view. It is more in the individual experiences with Canadian banks that I’ve heard of banks going beyond what C-31 authorizes. Examples include basing “US personhood” on showing a 3rd country passport with a US place of issue or an informal conversation indicating some connection to the US. I would be interested to see if you have a link to something at TD that clearly goes beyond what C-31 authorizes.
People can “act” as if they relinquished and they will honestly think they did. But answer that “where were you born?” question when the bank asks and you are now an American all over again and guilty until proven innocent. I will never blame anyone for lying to protect themselves. It is like a female saying she has aids to stave of a rapist. Do what you have to do to protect yourselves from unjust laws…..
@Bubblebustin
“If you have to lie to build the case that you’re not a US person, you’re a US person.”
While I’m advocating neither for nor against lying, I can certainly imagine scenarios where someone is absolutely NOT a US person but still choose to lie. It’s been noted on Brock that even casual conversations can be considered “US indicia” by a Canadian bank.
So let’s imagine someone is travelling to the US on business. In practice they spend only about 2 weeks a year in the US on business–not enough to come close to being a US person. Yet if they are talking in casual conversation with their bank manager, I could certainly imagine them lying and saying they are staying in Canada or going to Asia, Europe, etc. Minimizing US ties by lying–even if the truth would not render someone a US person–strikes me as a strategy some would consider in a world where we don’t really know what the banks consider “US indicia” or what the consequences will be.
Whether someone should actually lie or not is not for me to decide.
@Joe, George and others: It would be nice if it were that simple. As many of you know, my Canadian citizenship oath from 1973 contains a signed and witnessed statement renouncing any other citizenship. I don’t see how any Canadian bank could refuse to accept that as evidence that I am not a U.S. person.
However, TD may have other ideas about it.
http://www.td.com/fatca/
Especially note:
“What documentation do I need to provide TD to advise I have renounced my U.S. citizenship
The following is a list of acceptable documentation:
– a self-certification (via W8, etc.) showing that the account holder is neither a U.S. resident for tax purposes nor a U.S. citizen AND
– evidence of the account holder’s citizenship in a country other than the United States AND
– a copy of the account holder’s Certificate of Loss of Nationality of the United States.”
Note this goes far beyond what CRA says is required. It even goes far beyond FATCA regulations, which allow for a “reasonable explanation” of why the account holder does not have a CLN.
I forwarded the TD link to Joe Arvay last week.
Actually, Dash, I think telling the truth would clear up any misconceptions the bank might have in this case.
Remember, Martha Stewart didn’t do time for insider trading, just lying about events pertaining to it.