“DOING NOTHING” WAS NEVER AN OPTION. TODAY THIS POEM OF DRYDEN COMES TO MIND:
“Fight on, my men,” says Sir Andrew Barton,
“I am hurt, but I am not slain;
I’ll lay me down and bleed a while,
And then I’ll rise and fight again…”“Fight on my men,” says Sir Andrew Barton,
“These [English dogs] they bite so low;
Fight on for Scotland and Saint Andrew
Till you hear my whistle blow!”
[Republican Overseas motion for preliminary FATCA injunction denied (September 29) by Thomas Rose, U.S. District Court Judge in Ohio. Here is the link to the decision.
— Win or lose our Canadian injunction, we will do as George says: “…get straight on to the Charter challenge.”]
This is the affidavit of Sue Murray, which is part of the submission of Government of Canada in response to our request for a delay in the banking information turnover. Go to this link which contains this and other affidavits.
Canada claims that a delay is not possible given the specifics of the IRS regulation.
Also, it appears that about 155,000 bits of private banking information are waiting to be turned over to a foreign country.
Here is her affidavit:
I, Sue Murray, of the City of Ottawa, in the Province of Ontario, SWEAR THAT:
1. I am the Director, Competent Authority Services Division, International and Large Business Directorate, Compliance Programs Brancl1 (“CPB”), Canada Revenue Agency (“CRA”), and as such have personal knowledge of the matters deposed to in this affidavit, except where they are stated to be based on information and belief, in which case I believe them to be true.
Discussions with the IRS
2. Subsequent to the hearing of the summary trial (which took place August 4-5, 2015), on August 27, 2015 there was a call between representatives of the CRA (myself, Richard Montroy, Assistant Commissioner, CPB, and Ted Gallivan, Deputy 000059 2- Assistant Commissioner, CPB) and Douglas O’Donnell, Commissioner-Large Business and International Division, of the US Internal Revenue Service (“JRS”).
During that call the issue of a possible injunction application in this case was raised with Mr. 0′ Donnell. There was general discussion ·of the impacts of such an injunction. Although no definitive answer was provided, it appeared that it would be very unlikely that the IRS would be willing to grant Canada an extension of time to provide information to the IRS in order to avoid an injunction application.
3. On the afternoon of September 18, 2015, the IRS issued a notice, attached as 1::-;hibit ‘ A’ (the «Notice”), in which they indicated on pages 18 and 19 that they would consider granting extensions of time to certain jurisdictions to comply with reporting requirements under an intergovernmental agreement (IGA) related the US FATCA provisions. Specifically, the portion of the Notice that could be applicable to Canada is that pertaining to B. Model 1 IGAs for which the Obligation to Exchange is
in Effect.
4. Mr. Montroy again requested a call with Mr. O’Donnell. When the call occurred, on September 21, 2015, after the appellants had withdrawn their request for an injunction hearing, Mr. Montroy was not available, but a number of CRA representatives, including me and Lisa Anawati, Director General, International and Large Business Directorate (ILBD), CPB participated in the call. The CRA representatives informed Mr. O’Donnell of the outcome of the summary trial application in this case, and that an appeal would be filed, and sought clarification from Mr. O’Donnell on the application oftbe Notice to Canada. Mr. O’Donnell made clear that the Notice did not pertain to Canada’s circumstances and that the U.S. continued to expect that Canada would comply with its obligation to provide its information by September 30,2015.
5. On September 23, 20J 5, after the appellants indicated that they would once again be moving forward with an injunction application, [sought clarification from the IRS 000060 – 3 – regarding whether they would grant an extension of time to provide the information if the appellants were successful in obtaining an injunction.
6. On September 24, 2015, there was a call between representatives of the CRA (myself, Mr. Montroy and Ms. Anawati) and Mr. O’Donnell. During that call it was confirmed that the US was not prepared to grant an extension because the Canadian situation is not covered by the Notice criteria, as the legislation and systems are in place to be able to effect exchange. Given that the Notice does not contemplate such an exception, this was the US position even if Canada is subject to a Court ordered injunction. In addition, Mr. O’Donnell confirmed that the exchange is anticipated to be reciprocal [!] and should Canada be prohibited from delivering its information, the US would not provide theirs.
Change in transmission date 7.
Under the IGA there is an obligation to exchange information by September 30, 2015. Leading up to the summary trial hearing we were asked to advise when the transmission would actually take place and we estimated that it would occur sometime within the September 15 – 30, 2015 time period, in order to allow for technical difficulties that may arise once transmissions began. When, after the hearing of the summary trial, we were asked to advise the court exactly when transmission would start, we determined that September 23, 2015 would be the probable date. However, just prior to September 23, 2015 we realized that we would need more time to make the appropriate arrangements for transmission. In recognition of the need to again provide a date before the September 30, 2015 deadline, and to avoid having to change the date again, we decided that transmission will not take place before September 29, 20:15 and will instead take place either the 29th or 30th of September. 00061
-4 –
Information to be sent to the IRS
8. I have reviewed tbe information which has been provided by Canadian financial institutions and is to be sent to the IRS. The package consists of approximately 155,000 information slips. Each slip represents one account and one account holder.An account holder can be either an individual or a corporate entity. There are instances where a single individual or entity holds multiple accounts. Allbaugh unable to provide a precise number, I can say that the number of individuals represented by the 155,000 information slips is less than 155,000.
lJ. Based on my review of the information slips I can confirm that there are no information slips in relation to either of the appellants in this proceeding. I have reviewed the appellants’ notice of application and note that the injunction they seek in paragraph 1 applies to any information to be sent under the Canada-United States 1:·11/wnced Tax !Hformation Exchange Agreement Implementation ct, being s.99 and Schedule 3 of the Economic Action Plan 2014 Act~ S.C. 2014, c.20. However they also state in their notice of application that they are only seeking an injunction in relation to a “subclass” of information. I have reviewed the remedy sought by the appellants’ in their summary trial application, on the assumption that this is the relief being sought in paragraph 68 of their notice of application, and note that the CRA is not generally in possession of information which would permit it to sort the information slips provided by financial institutions to narrow them to a subclass of information.
Impacts of an Injunction
W. If the CRA is unable, due to an injunction, to transmit the required information to the IRS, and no extension of time is granted by the IRS, Canadian financial institutions will risk losing the benefit of the deemed FATCA compliance that they would otherwise obtain through the IGA. ln particular, as of October 1, 2015, if the 000062 – 5 – ·000063 information has not been received by the IRS and no extension of lime has bct.:n granted, it is possible that the Canadian Financial Institutions could be considered noncompliant.
II . The lGA not only requires the CRA to provide information to the IRS , but for the JRS to provide information to the CRA If an injunction is granted and the CRA is not able to meet its commitments under the lOA, the IRS will not provide CRA with the information it has committed to provide. This would have a detrimental impact on CRA ‘s tax compliance work. The information to be provided by the IRS is helpful to tax compliance work in Canada because it would quickly and easily permit the CRA to match financial holdings in the US to specific taxpayers in Canada to, in a timely way, assess their compliance and if necessary commence audit action. As with other information obtained by the CRA, it is compared to that reported on tax returns and where inconsistencies are identified. compliance actions are undertaken and reassessments made.
12. Canada has a long-standing history of exchange of information with many countries, particularly the United Stales and non-compliance with the lGA would have a detrimental effect on our international reputation in this regard.
SWORN before me at the City of Ottawa,
in the Province of Ontario, this 25th clay of
September, 2() IS .
Commissioner
See the affidavit:
Canada argues delay not possible. CRA discloses maximum number of Canadians who will be turned over to the IRS.
The affidavit says that CRA’s opinion is the IRS would not grant Canada an extension if one was requested. This is as I expected (another post to the other thread), and also suggests that no, the extension is not there for the asking and would be granted automatically, that the IRS would make their own judgment whether an extension was warranted in the case of a particular country.
Whether the CRA’s interpretation is correct, and whether the IRS would in fact agree to an extension of the deadline if CRA asked for one, can’t be known for certain unless CRA actually makes the request. Which seems highly unlikely, given the affidavit and my personal opinion about the vindictiveness or deafness (your choice; mine is both actually) of Harper and crowd to the plight of Canadians tainted with US tax-personhood.
I am not happy to make these comments, but I think it would be unrealistic for anyone to plan on the turnover of information not going ahead as scheduled under the IGA, unless the court grants an injunction (which I think unlikely but again one doesn’t know until one tries).
Given that many of holders of those 155,000 accounts may not know whether their own accounts are in that list, one can’t say for certain, but there are probably tens of thousands (and, as the affidavit says, less than 155,000) potential voters on October 19 who presumably aren’t going to be inclined to vote Tory and are, I hope, angry enough to vote and to vote ABC. Which is the only silver lining in the black cloud, that I can see. Given that pundits have been saying for some time now that about 6400 voters nation-wide were the difference between Harper’s majority of seats in 2011 and a minority of seats (in a new parliament where both Trudeau and Mulcair have publicly stated recently there are no circumstances under which they’d support a Harper minority), this could be a game-changer in a very close election.
Shame on the powers that be for not even trying to get the delay!
This is who Douglas O’Donnell is:
http://taxprof.typepad.com/taxprof_blog/2015/06/douglas-odonnell-to-replace-heather-maloy-as-commissioner-large-business-and-international-division-.html
“12. Canada has a long-standing history of exchange of information with many countries, particularly the United Stales and non-compliance with the lGA would have a detrimental effect on our international reputation in this regard.”
Canada has NO history, ZERO history, of reporting the accounts of Canadian citizens and residents with absolutely NO financial ties to a foreign jurisdiction, to that foreign jurisdiction.
@Bubblebustin Actually, in fairness to CRA and in embarrassment to myself, in reading Stephen’s post more carefully and the text of the affidavit, it appears that CRA did in fact raise the question of an extension of one year pursuant to the recent IRS announcement, in a telephone conversation with a senior person at IRS, and was told the IRS wouldn’t agree in Canada’s case because they think Canada has the mechanisms in place to meet the deadline. Whether CRA raised this question on their own initiative, at the direction of the Minister, and/or in response to requests from Brockers or those involved with the lawsuit, I wouldn’t presume to guess. So it sounds like the IRS is playing hardball with Canada, and one can’t really lay the blame for no extension at the doorstep of CRA or the government more generally. Signing the IGA in the first place, as currently worded, is another matter, but we’ve been through that ground to exhaustion over the past year and more …
Notice the wording throughout totally suggests that the CRA is 100% kissing US ass, and totally accepting that what the USA says is gospel. It was EXTREMELY annoying to read the sentence “U.S. continued to expect that Canada would comply with its obligation to provide its information by September 30,2015” which totally demonstrates who’s in charge, and it ain’t our wimpy excuse of a government.
ABC is right.
@PierreD. Yep.
@Schubert1975
I tend to agree with Schubert. The IRS appears to be playing a bit more hardball than I expected. In the long term though the harder ball the IRS plays the WORSE it will be for the US. So if the IRS wants to play hardball I am quite willing to step up to the plate.
**The reciprocal information thing is interesting. There is nothing under US law that would prevent the IRS from stopping sharing of the “existing” pre FATCA information agreements with Canada(with regards to Canadian residents). This would be VERY HARDBALL to say the least but it appears there at least was some possibility that threat was on the table.
Also it is my belief that Brock has been monitored by the IRS for many years. The IRS response to CRA only makes my belief in this much stronger.
I am curious if the site admins have any insights into the degree to which the IRS monitors Brock.
Thanks for the correction and clarification, Schubert1975.
Shoulda coulda woulda, but if our wonderful Canadian government had taken pause and given our constitution the consideration it so duly deserved as suggested during the SCF hearings, we may have found ourselves in the same position as the Philippines, going through the proper procedures in order to ratify the IGA – and granted the delay.
Act in haste, repent at leasure.
It is very clear in the wording that the USA is calling the shots with Canada. The Canadian CRA is in a tough place. They Made a decision to avoid financial war with the USA at the cost of around 1 million Canadians as “sacrifices” Hopefully our court cases will prevail for the Canadian victims of this, however, we likely will not see the US letting up until FATCA is totally stopped on US soil at the source. The USA has pretty much garnered the hatred of the world. They have no friends left in the world and have made their own country go from bad to worse. Until we see a world boycott of the US, they will feel, with their arrogance, that they control the world. My hats off to all in Canada helping expose this as loud as you can….
Anyone wanting to know whether their information is included in the 155,000 records CRA intends to transfer to the US should be able to obtain that information under the Privacy Act.
How to access information at CRA:
http://www.cra-arc.gc.ca/gncy/tp/frmlrqst-eng.html
More information from the Privacy Commissioner:
https://www.priv.gc.ca/faqs/index_e.asp#q008
The Privacy Act (Justice Canada site)
http://laws-lois.justice.gc.ca/eng/acts/p-21/
@NorthernShrike
Thanks for the links. I’ve though about requesting information from the CRA. Unfortunately by requesting the information you’re basically identifying yourself as as “US Person” to the CRA. It’s like calling the FBI and asking if you’re on one of their most wanted lists.
@Shubert and Tim Yes, the USA is strong arming Canada to do as it is told. All in All, the CRA is not our enemy here. They were forced to act on the American threat. This seems to be a decision to impact the least number of Canadians in a negative way. The victims here are getting the most damage, which is most of our families. My largest fear in all of this is that the USA, once processed and sends fines and penalties to unsuspecting Canadians, gets told to get lost as Canadians are told that Canada will not collect them. If the USA has fined and penalized so many people and the amount of uncollected fines etc total millions, the USA will act on it. The unknown action of the US government is the scariest thing. Just look at what they have accomplished so far bullying Canada…..
It doesn’t look like common sense will prevail but it seldom does these days. It doesn’t look like the stay of execution of the data transfer will be granted so our focus can now shift to the charter challenge and doing whatever we can to HEAVE STEVE. Even though this time I can’t offer my pension cheques to help with the $70K fund drive, I will be saving whatever I can from our monthly budgets to send a donation around the first of January. It absolutely infuriates me that there are 155,000 data rat-outs about to be sent to a hostile foreign nation. Yes, HOSTILE, because anyone who thinks the USA is anyone’s ally needs to have a sober rethink about the true nature of that nation.
What kind of devious game was the IRS playing when it make up that notice on September 18th? That agency doesn’t do anything for the benefit of anyone but itself. Does anyone have a theory? Mine would be that it was a half-assed attempt to appear reasonable so it could say it made an offer which nobody took and therefore assumes all IGA countries are eager to send their data now, rather than later. There was probably only a handful of countries that even read the September 18th notice. Canada was excluded because it has dissidents, not because the CRA has, in IRS eyes, been the poster child of compliance (or maybe that’s complicity).
@Marie
I understand your apprehension, and I am uncertain myself. However, as I look at it, the entire operation is a dragnet, not a targeted investigation. CRA is receiving standardized information from financial institutions, which they are aggregating for turning over to the IRS. Making a request under the Privacy Act might raise suspicions, but what are they going to do? Ask every financial institution in the country if they have any accounts under your name? What is in it for CRA to do so? They chiefly just want do what they promised under the IGA, no more. That being said, this is nothing more than my interpretation.
I hope the Canadian Federal Appeals Court Judge understands that the USA fully expects the CRA to comply with the IGA regardless if a Canadian Judge issues a stay. The USA expects the CRA to disregard a Canadian Judge.
Our thoughts are today on the stay, but I just received a cash donation (two currencies) in the mail to keep our lawsuit going.
The letter said:
“From George, for second round — God bless you all.”
— Also received a donation from a Central Canada couple.
CRA’s decision as reflected in the above affidavit is a reminder of two things:
1) Why, as an immigrant to Canada, it’s best to lie about place of birth– “I was born in Montreal.”
2) Why I donate to the Charter challenge.
Kind of amazing that they do seem to be talking about sending info both ways. I didn’t think it was legal for them to do this.
The 30% withholding would be devastating to everybody in Canada not just FFI. Go to 411 story last page for a my more detailed explanation. This would be why any government in power would apply the non withstanding clause. Any political party that bring this up would be devastated in election.
What country has a better deal? Putin wanted to sign a IGA but the USA would not allow so he had to change Russian laws.
The Liberal government in 1995 broke the revenue rule and that was why there is an obligation for USA citizen to file taxes. This was done with no threat and is a lot worse than FATCA.
There is no USA person for tax purposes or 30% in our IGA.
Look the government tried to do the minimum to comply look at the following
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
They frequently ask question illustrates the government are trying to do the minimum.
“5. If I spend a certain number of days in the U.S. over a period of three years, does the U.S. consider me to be a U.S. resident?
According to the IRS website, you (unless you are a U.S. citizen) are considered a resident alien for U.S. tax purposes if you satisfy the substantial presence test. This test uses the number of days you were in the U.S. during a three year period. The IRS website has more information to help you determine if you are a resident alien based on the substantial presence test.
The IRS also says that even if you are a non-U.S. citizen and you satisfy the substantial presence test for a particular year, you can still be considered a non-resident alien, if you meet certain conditions. One of these conditions is that you maintain a closer connection to a foreign country in that year.
IRS Publication 519 states that the U.S. domestic rules that determine if a non-U.S. citizen is a U.S. resident do not override tax treaty definitions of residency. If you are considered a resident of Canada and the U.S. under each country’s laws and the Canada–U.S. tax treaty considers you a resident of Canada, the U.S. has to treat you as a non-resident taxpayer and you should not identify yourself as a U.S. resident to your Canadian financial institution.”
“7. Will my financial institution ask me if I was born in the U.S.?
A financial institution does not have to ask its account holders about their place of birth.
If a financial institution, applying the due diligence rules of the agreement to its accounts, finds records that have an unambiguous indication of a U.S. place of birth, the financial institution must treat the account as a reportable account or follow up with the account holder to obtain documentation that shows he or she is not a U.S. resident or a U.S. citizen.”
Please note New York, New York is not an unambiguous place of birth. It must say USA.
“19. Does the agreement require Canadian financial institutions to report to the CRA on any individuals who relinquished their U.S. citizenship?
No. Canadian financial institutions do not have to report on any individuals who have relinquished their U.S. citizenship and are not residents of the U.S.
Financial institutions may ask individuals who have relinquished their U.S. citizenship for documentation to this effect. ”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/fq-eng.html#q2-5
I hold a U.S. green card. How does this affect my tax residency?
“If you are a green card holder (that is, a lawful permanent resident of the U.S.), the U.S. considers you to be a U.S. resident.However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
“8.28 In the context of an electronic record search, an “unambiguous indication of a U.S. place of birth” must include identification of the U.S. as the country of birth. Identification of a city and/or a state as the place of birth, without identification of the country of birth as the U.S., is not considered to be unambiguous.
The CRA’s views of what may be accepted as a reasonable explanation for not having a CLN despite relinquishing U.S. citizenship for purposes of Part XVIII and the Agreement are informed by certain practical realities and how changes in law over time would have influenced reasonable courses of actions taken by individuals.
Generally, it is the CRA’s view that an explanation demonstrating a relinquishment of U.S. citizenship (other than by a renunciation before a U.S. consular or diplomatic official) before June 4, 2004, and in accordance with the U.S. Immigration and Nationality Act (Title 8 of the U.S. Code) as it existed at the time of relinquishment, is sufficient to demonstrate a reasonable explanation as to why an account holder does not have a CLN. Financial institutions are not expected to be experts in U.S. nationality law; any such explanation accepted by a financial institution is accepted for the purposes of Part XVIII and the Agreement only and is not finally determinative of tax or nationality status.”
However, if you are a resident of Canada for tax purposes and do not hold U.S. citizenship, you should not identify yourself as a U.S. person to your Canadian financial institution.”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html#Toc390079679
You could have done it a year ago for $450. You do not have to be tax complaint to avoid FATCA.
Regarding 155 k accounts
How many are for people who are Canadian resident who are tax compliant?
If you work for a big company that brought you up to Canada it is more likely you are tax compliant.
How many of these 155 K accounts are for American residents?
Unlike USA long term non resident of Canadian can vote in election.
USA allows non resident citizen to vote but there is no obligation to file.
Canada has RBT but does not allow not allow long term non resident to vote.
Which of the two do you want?
Ever heard of taxation without representation.
The corollary should apply even though taxation the correct way of saying it would be requirement to file to obtain voting rights.
I think Dash would prefer not the requirement to file taxes over the right to vote.
Putin on FATCA
“With just one day left before the Russian financial system was to fall foul of the U.S. Treasury, President Vladimir Putin has signed a law allowing Russian banks to send information about U.S. tax payers to their native government and appease a contentious piece of legislation known as FATCA.
“Putin Signs Last-Minute Law to Satisfy FATCA
For over a year, the U.S. has been busily negotiating information-sharing agreements with countries worldwide. Eighty-six have already reached official or preliminary arrangements with the U.S., including China, who joined the list just last week, and known tax havens such as the Cayman Islands.
…
Russia is not on the list. The two sides were deep in negotiations up until March, but the Treasury Department quietly abandoned the talks after Russia’s annexation of Crimea and the international condemnation that followed. Russian financiers were left in the lurch and on course to collide with FATCA’s rapidly approaching July 1 deadline.
http://www.themoscowtimes.com/business/article/putin-signs-last-minute-law-to-satisfy-fatca/502732.html
What has happened to KalC? The only other person who seemed to realize that minnows had no big worries.
I will also republihs Schubert original analysis.
@Schubert1975
Bill C31 changed the original language of the IGA with regards to notification of the account holder. Most of the references to the IGA on the web do not show the change.
The original text was:
This paragraph has been replaced with:
Paragraph B(4) is where they ask for a self-certification, a CLN or a reasonable explanation. So the banks are required to contact the account holder to check for these things before they send your information to the CRA.
All the account holders of the 155,000 accounts should have been contacted by their financial institution already.
“Canadian citizens still protected from IRS tax collection and penalties, in Canada
Posted by schubert1975 ”
….
“I don’t know what effect the Tax Treaty has with respect to the application of FATCA on Canadian soil. No doubt that is something being raised by Flaherty and his officials even now. Bear in mind, however, that the only real financial cost that can be imposed on you for failure to comply with FATCA, as far as I can tell, is a 30% withholding of certain transactions ARISING FROM US-SOURCE INVESTMENTS. Do you have US source investments? How important are they to you? Can you unload them and re-invest the funds in Canada instead, before FATCA comes into play? Think about it.”
….
“And, speaking in spite of being a life-long supporter and member of the NDP who has never voted Conservative in his life, God Bless Jim Flaherty. Our government is in fact standing on guard for its citizens. As is the NDP. Who knows what the Liberals stand for?”
https://isaacbrocksociety.wordpress.com/2012/02/13/3200/
Of course the 30% withholding on USA transaction does not exist.
I think it is terrible that KALC quit this website.