TORONTO Sunday, May 31, 2015
12 noon – 2 p.m. – $20.00
Carr Hall, 100 St, Joseph St.
Toronto ON M5S 2C4 MAP
VANCOUVER Wednesday, August 5, 2015
6:00 – 8:00 pm – $20.00
Further details TBA
Have you received a FATCA letter or been warned of the consequences of being a U.S. person?
Why am I getting letters from my bank all of a sudden?
The “FATCA Hunt” – the hunt for U.S. persons (whatever that is) began on July 1, 2014 which was “Canada Day”. Although both the definition of “U.S. person” and whether one meets the definition is not always clear, the search has begun. The level of FATCA awareness has begun. Some organizations are actively warning people that “U.S. Personness” matters. The purpose of the warning is presumably to encourage people to ”come clean” and deal with their U.S. tax situations. In some cases, there is no particular warning – just a letter indicating that they are suspected to be a “U.S. person”. Often one must prove to the institution sending the letter that one is not a U.S. person.
What individuals are U.S. taxpayers? Who is a U.S. citizen?
There are individuals that the U.S. government would define as “U.S. citizens” who:
- do NOT agree that they are U.S. citizens because they have performed a “relinquishing act” under applicable U.S. laws;
- do NOT even know that they may be U.S. citizens because they have never lived in the United States
- are citizens and residents of countries that do NOT allow multiple citizenships
To put it another way: one’s status as a U.S. citizen is NOT always clear.
I have never heard of these requirements! What determines the income that must be reported to the IRS? What “Information Returns” are required to be reported to the IRS?
- FBAR (Now called FinCen 114)
- FATCA 8938 – Report of Specified Foreign Assets
- 5471 – Information return for Foreign Corporation
- 3520 – Information return for a “Foreign Trust”
- 3520A – related to the 3520
- 6251 – AMT
- 8621 – for mutual funds
- 8960 – ACA (“Obamacare” Tax)
- 8965 – for exemption regarding ACA (“Obamacare”)
I am only a snowbird! Why does this affect me?
- Substantial Presence Test
- Form 8840 Closer Connection Exception Statement for Aliens
- Caution: Streamlined Programs & 35 day rule – Catch 22
What are the ways I can become compliant?
- Offshore Voluntary Disclosure Program – AKA “OVDP – Not appropriate for the vast majority of people
- Streamlined Compliance – A pre-packaged way to “clean up” past compliance problems
- Obeying the law – filing amended tax returns outside the “IRS Created” programs
- Delinquent FBAR Submission Procedures
What costs are involved in renouncing U.S. citizenship?
- The costs of a total of 6 years (5 years prior the year of renuncation plus the year of renunciation) of tax compliance and information returns
- The cost of any back taxes and penalties
- A $2350 administrative fee
- Possibility of having to pay an “Exit Tax” (which can be the biggest problem)
WHO: John Richardson, B.A., L.L.B., J.D., is a Toronto lawyer and a member of the Ontario Bar.
Hope to see you, your families and friends! Spread the word!
Information presented is NOT intended or offered as legal or accounting advice specific to your situation.
I have received repeated letters from HSBC on this. Our representative there has assured us that our W8-BEN form has been accepted and certified that we are not US persons. But the threatening letters keep coming, so much so that I have threatened to close all of our global accounts with HSBC. I have told them that if they want to keep us as global customers (we have assets with HSBC around the world,) HSBC needs to send us an official letter stating that they acknowledge our non-US status.
They’re so quick to send out these threatening FATCA letters, it’ll be interesting to see if they’ll be as efficient in confirming what has been told to us in a short e-mail, in that we have NO us ties…
I’m getting VERY fed-up with this FATCA crap, and we’re only at the beginning!
I expect that many of us would like to see the text of these letters, anonymized of course.
From Phil Hodgen today (Jello-Shot email) and I’m putting it here only as it is related, the account (RRSP) most Canadians hold in the banks that will be sending some of us letters:
For what it’s worth, my MPs researcher asked me to write a summary of John’s London meeting. This is what I wrote –
re: Citizenship Meeting, University of London, International Hall, 2 March 2015
Your Researcher kindly asked that I email a summary of the meeting held in London last night hosted by John Richardson – a dual Canadian/US lawyer highlighting the injustice of the US extraterritorial tax laws. John actively supports the Isaac Brock Society which has filed a Canadian lawsuit stating the IGA conflicts with the Canadian Charter of Rights and Freedoms. The lawsuit can be viewed here: https://adcsovereignty.files.wordpress.com/2014/10/hillis-filed-amended-statement-of-claim-to-the-defendants.pdf
The main points raised at the meeting were:
The US levels taxes on ‘US Persons’ resident in any other country on income and assets not related in any way to the US. This is basically a US tax/asset grab taking money out of the economy of the countries that duals actually live in. For example, tax on capital gains on the sale of your UK principle residence takes that money out of the UK economy and gives it to the US. Punitive US taxes on UK pensions, ISAs, etc does the same and removes the dual’s ability to use preferential tax options available in their country of residence. The Obamacare 3.8% tax applies to some duals resident in the UK when they can in no way benefit from the US healthcare programme – and so the list goes on. Solely UK spouses and business partners are also negatively affected by US extraterritorial tax law.
It seems countries acquiescent to the US extraterritorial tax grab and accepting FATCA and IGAs could not have realised the implications in regard to it being a fund raiser for the US and the damage it does to their own economy – and indeed Sovereignty.
FATCA and the IGAs are clearly NOT reciprocal because an IGA is not a treaty and was NEVER ratified by the US Congress. Experts say there is no way the US will ever agree to impose the same reporting requirements on US banks and residents as those they are requiring from other countries. Also, several US states are known to be major ‘tax havens’ allowing financial secrecy and perhaps this contributes to the fact the US has NOT signed up to the OECD Common Reporting Standards for the Automatic Exchange of Information.
The US is overriding local human rights and laws – such as privacy, etc. Dual citizens and other US Persons are deprived of the same rights that people residing in the US have and also those that citizens in other countries have if they don’t have the US ‘taint’. If you are a US Person and do not live in the US you are severely economically penalised.
It appears the US has confirmed its ability to run roughshod over other countries. The Master Nationality rule states that a person with multiple citizenships has the right to be treated as if he or she were solely a citizen or national of that country when residing in a country where they have citizenship.
The US imposes its own definition as to who they consider US Persons and thus subject to its extraterritorial tax laws. Children born in the UK to some US citizens are subject to US tax laws even though they may have NEVER lived or worked there. To renounce US citizenship now costs $2,350 plus 5 years of tax compliance, usually costing thousands of pounds to employ a specialist accountant knowledgeable in both UK and the much more complex US tax laws. For some duals an ‘exit tax’ also applies on the value of ALL their assets, even if the assets are not related in any way to the US. Assets include your UK home, UK pension, savings, etc. The cost of renunciation alone puts it outside the scope of many non-wealthy duals (of which there are many) and infringes on their human right to change citizenship.
I hope you can see the serious implications of the US extraterritorial laws and that you and your colleagues will take steps to address these issues. Many of those attending this meeting had already written to their MPs expressing their concern regarding these matters. The outrage is growing and with the US in effect seizing money from the UK economy it should be a concern to the UK government as well as US Persons.
Thank you for your wonderful write-up of the Information Session you attended in London.
I need to clarify that the Isaac Brock Society is blog where many of us have come together to research and share information regarding situations Americans abroad (and accidentals, etc) find themselves in. Brock generously supports the initiatives of the lawsuit but has not filed the lawsuit. The lawsuit is a completely separate initiative.
The suit has been filed by the Alliance for the Defence of Canadian Sovereignty/ L’Alliance pour la Défense de la Souveraineté Canadienne, for which John Richardson is the co-chair and Legal Counsel. John is a citizenship lawyer in Toronto and you can find information about him here: http://www.citizenshipsolutions.ca
Thanks Tricia. If any further information is wanted by my MP I will clarify those points. I should have checked my facts before sending!
That is an excellent summary to send to your MP. I think that the argument that capital of the UK is being syphoned off to the US is a persuasive point. This is resource that might otherwise been spent, invested or taxed in Britain. My MP has written to me saying that he understands this and finds it deplorable.
I would add that it was evident that some people at the meeting have suffered significant mental anguish, either now or in the past. These are good people, who had tried as US citizens to do the right thing, but who have been stymied by rules and complexities of the IRS code which, to paraphrase John, “no rational person would ever have suspected or guessed would remotely be true”.
I find the damage to mind and body to be one of the most heart-rending things about this whole mess. Someone wrote to me recently, “So I’m not alone in my panic!! Yeah, there’s been
plenty of sleepless nights. Just can’t get it out of my head.” Many reading have had that experience.
I am waiting for the day that someone in government finally notices and apologies, perhaps admitting, “We tortured some folks.”
@ricard: My MP has written to me saying that he understands this and finds it deplorable.
Government MP, or opposition one? My (Con) MP has written to me on several occasions over a period of more than three years. While appearing superficially interested he has never indicated an understanding of the issue, and has consistently offered no opinion of his own beyond parroting the official stance of the UK treasury. I wonder if I would have had more success if my MP was from the opposition.
My MP is Liberal Democrat. I will dig out the letter and recall his words.
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Had a response from my MP regarding the summary I sent of John’s London UK event on the 2nd March (as posted above).
“I understand your continue frustration. Issues such as these just go to show how effective the European Union has been at harmonising regulations and red tape across the continent.. Clearly, we have some way to go when it comes to EU-US bureaucracy. Indeed, this may be something you should consider raising with your Members of the European Parliament, in case it is not already on their radar. As the negotiations over the EU-US Trade and Investment Partnership are showing, when it comes to negotiating with the US, the twenty-nine countries of the European Union have far more clout than the UK acting alone.”
Being realistic, I think his reply has more to do with him hoping to get re-elected in May than a real concern for the issue. Sounds rather like passing the buck. And I hardly consider this an issue of bureaucracy, more a breach of sovereignty and my rights as a UK citizen, which I consider far more serious.
Any suggestions as to how I reply?
It’s a total pass-off Old English. The EU has not signed the IGAs; individual countries have.
If you want to engage him, you might point out that the EU has absolutely no standing in this regard and that you expect a more direct answer to your questions. I suspect he/she does not have a clue what the IGA is about. Perhaps:
1) Are you aware that in spite of no capital gains on sale of private residence in UK, US will charge same on amounts over $250k; how do you feel about the US reaching in & extracting capital from the UK?
2) How are you prepared to protect UK dual citizens from this $$/info grab?
I would make it very clear that no vote is forthcoming without a reasonable answer.