[PRIVATE BANKING DATA ON 155,000 CANADIAN ACCOUNTS WERE (PRESUMABLY) TURNED OVER ON SEPTEMBER 30 BY YOUR OWN CANADIAN GOVERNMENT TO THE UNITED STATES.
Plaintiffs Ginny and Gwen, ADCS, and our legal team are now planning the next steps for round two of our fight.
Professor Allison Christians, an expert witness in our Canadian lawsuit, comments:
“In my view it was political malfunction in both the US and Canada that brought forth FATCA and then the FATCA IGA, and that FATCA as applied can be summed up in terms of administration as a case of continuous indifference to individuals who are wrongdoers in no real sense yet bear the brunt of severe punishments meant for others. If the judiciary is also not to blame and not to fix, then it seems there is no avenue to right the wrongs of FATCA anywhere. I hope that is not the case.”]
Cross posted at ADCSovereignty
Here is the actual Order for denying the injunction:
Here are the reasons provided by the Court for denying the injunction request:
RENNIE J.A.
[1] On September 15, 2015 the Federal Court dismissed, in part, the appellants’ action for declaratory and injunctive relief with respect to intention of the Minister to disclose certain financial information to the Internal Revenue Service of the United States of America. The summary trial decision of Justice Martineau addressed only that part of the action dealing with what might be characterized as the statutory interpretation and statutory authority of the Minister to make the disclosure. Charter challenges to the proposed action were, on consent, not addressed and await trial. Thus, the summary judgment dealt exclusively with the allegation that the disclosure was contrary to the Canada–United States Tax Convention Act, 1984 (S.C. 1984, c. 20), the Canada-US Tax Treaty and Income Tax Act (R.S.C., 1985, c. 1 (5th Supp.)), collectively described as the authorizing legislation.
[2] The appellants move on an urgent basis for an interlocutory injunction, effectively staying the disclosure of their financial information by the Canada Revenue Agency (CRA) to the Internal Revenue Service (IRS) under the authority of this legislation. The Minister has made clear that she intends to disclose this information at the close of business today, hours from now.
[3] By way of background, and at the highest level of generality, the legislation mandates the disclosure of information about “US persons” held by Canadian banks to the CRA, and provides for the CRA to automatically disclose that information to the IRS on an annual basis. The IRS may or may not use that information to pursue enforcement actions against US persons resident in Canada.
[4] The appellants are “US persons” by virtue of birth, but have spent their working lives in Canada and are Canadian citizens. They do not hold US passports. They claim to be “accidental Americans”, US citizens only by reason of birth. Their information would be disclosed under the regime, which could lead to the IRS enforcement action. The judgment below is candid that the application of the law could cause the appellants serious difficulties.
[5] The appellants argue, amongst several other grounds, that the disclosure of this information constitutes assistance to the United States in its enforcement and collection of its taxes, which is prohibited under Article XXVI A of the Canada-US Tax Treaty. The Federal Court found that this prohibition only applies once tax liability has been determined and is enforceable, and is thus not triggered, and that in any event, any such claim was premature.
[6] The appellants further argued that information sharing was only permissible when that information “may be relevant” to enforcing the treaty or domestic laws of a contracting state (Article XXVII), and as such the information must be assessed for relevance on a case-by-case basis rather than handed over in bulk. The judge below found that, even when the information is still in bulk form and has not been shown to have any further utility, it already meets the “may be relevant” test. The appellants argue, in support of the interlocutory injunction, that the learned judge’s reasons fail to respond to this argument; the judge erred in focussing on the fact that Canada cannot challenge US tax policy choices, but failed to explain how that establishes or meets the statutory requirement of relevance.
[7] The appellants also argue that the regime violates the non-discrimination provision of Article XXV, wherein a US National resident in Canada cannot be subject to a burden that is not also imposed on Canadians in Canada. The appellants argue that the privacy intrusion, and the burden of complying with the filing requirements, are thus unequally imposed on them as US Nationals resident in Canada. The judge rejected this argument. While he did not directly address the privacy interest, he said that the filing costs are borne by the banks rather than the individuals and thus cannot ground unequal treatment.
I. The test for an interlocutory injunction
[8] I am not satisfied that each of the three criteria governing the grant of an injunction or stay pending appeal set forth in RJR — MacDonald Inc. v. Canada (Attorney General), [1994] 1 S.C.R. 311, 1994 have been met.
[9] The appellants assert four serious questions to be addressed on appeal. At this stage the Court only needs to examine the questions and be satisfied that they “may” form the foundation of a meritorious appeal. In addition to the grounds reviewed above, the appellants argue that the automatic disclosure of taxpayer information of Canadian residents who are also US citizens, is not authorized by the Canada –US Tax Treaty. While Martineau J rejected this argument, and the subsidiary arguments which underlie it, the question at this stage is only whether the appellants might have a credible case to make an appeal. I am satisfied that they do.
[10] I am not, however, satisfied that the criteria of irreparable harm has been met. The Minister concedes, on two occasions in her memoranda, that “there is no taxpayer information concerning the Appellants in the batch of ‘slips’ that have been collected by the Minister from financial institutions pursuant to Par XVIII of the Income Tax Act and which the Minister must disclose to the United States, pursuant to the IGA, on or before September 30, 2015.”
[11] On this understanding, the appellants do not meet the second criteria of the RJR — MacDonald test. As no financial information concerning the appellants will be sent to the IRS, there can be no irreparable harm.
[12] Turning the third criteria, the balance of convenience, the Minister concedes that the appeal will not be moot as of this transfer of information this afternoon. The Minister concedes the existence of a continuing live controversy. While mootness is always an question for the panel of this Court hearing the appeal, at this stage, the Minister’s position that the appeal will not be moot tips the balance of convenience in favour of the Minister.
“Donald J. Rennie”
J.A.
Can we assume that if your FI hasn’t contacted you for your tax ID #, then you aren’t on their hit list?
Ginny and Gwen, I’m glad your accounts are not being turned over, no matter what the reason. You both are so brave, and I wish you great success at the Supreme Court.
I wonder how many of the 155 000 accounts belong to people who already have been filing tax forms with the IRS as opposed to people who will be newly exposed. I wouldn’t expect the number of accounts to capture most remaining (not renounced) “US persons” in Canada. Many people are either well hidden in long-established Canadian accounts or set up in a benign credit union, and still others (like myself) live pretty much paycheque to paycheque without enough in our bank accounts to be flagged.
Our morale will get a huge boost when a few weeks from now, the Conservatives no longer form the gov’t, right?
@Jan
What makes you think the other party will be any different? The fact remains that the banks have the politicians by the balls. The US knows this and is exploiting it to the max.
“What are the specific obligations of US Financial Institutions?
There are three categories of obligations: withholding, identification and reporting in case of an Intergovernmental Agreement.
[…]
All US Financial Institutions and generally foreign branches of US FIs are withholding agents.”
So if Bank of America still has a Canadian branch the Canadian branch is a withholding agent, but TD’s Canadian branches aren’t withholding agents. Someone remind me why TD Waterhouse’s Canadian operation withheld both Canadian and US withholding from Canadian sourced income in 2002?
“2. Are there specific identification criteria?
Yes, including citizenship or country resident, mailing and resident address, unambiguous place of birth.”
OK, US FIs have to identify me three times, by citizenship, residence, and place of birth. More on this in a moment.
“1. What are the reporting obligations?
The name, address and Tax Identification Number for each account held by an IGA citizen or resident, or entity”
Do they have to report all three of my TINs? One country changed one of my TINs a few years ago, another country will change one of my other TINs, and I don’t recall any US FI asking me for all three TINs.
“4. To whom?
To the US Internal Revenue Service.”
The same agency which publicly discloses US TINs. Does anyone know what’s to stop them from publicly disclosing other countries’ TINs?
@Bubblebustin
“Can we assume that if your FI hasn’t contacted you for your tax ID #, then you aren’t on their hit list?”
That’s what I’ve been wondering. This is a very good question. We will find out but it may take a while. In the meantime, I’m glad that at least Ginny and Gwen know their “slips” did not go to the IRS. On with the lawsuit. If people start to get IRS letters, we may have more ABC voting and more publicity.
“middlefingerx2 says
September 30, 2015 at 8:22 pm
If I may make an observation. The fact that the Harper government had to resort to the removal of the appellants names from the list means that they thought they could lose the case. As expected, the government is more than willing to fight dirty, they had better be prepared for some of the same.”
We don’t know that CRA (NOT the Harper government) removed anyone’s name. For all we know, all 155,000 information “slips” were attached to Canadians with US mailing addresses. These are likely electronic searches for US indicia by the FIs.
Quite some time ago I approached my “Big 5” red bank regarding FATCA reporting, any US indicia on my accounts, and finally with my CLN. They had exactly ZERO interest in anything the US called me, showed me there was no US indicia attached to my accounts, and finally had no interest in my CLN.
No one likes this crap…not us, not the banks, not the insurance companies, not the brokers, and not the Canadian government. Just look back at Flaherty’s words. And I’d bet not even CRA or the government lawyers like this.
“middlefingerx2 says
September 30, 2015 at 8:22 pm
If I may make an observation. The fact that the Harper government had to resort to the removal of the appellants names from the list means that they thought they could lose the case. As expected, the government is more than willing to fight dirty, they had better be prepared for some of the same.”
Steve Kish picked plaintiff with minimal assets, so that if they lose case they would not have to pay. Thus it was extremely unlikely there were picked up by Bank guidelines (50,000 for low value account). You do not need a birth place for a bank account in Canada. 99% of people use driver license or provincial photo ID for bank account opening.
Also do not vote in US elections or have a USA passport.
8:28
“Financial institutions should not accept as reasonable any explanation which is unlikely or ambiguous in light of an account holder’s actions. For example, if a financial institution knows that the individual voted in an U.S. election or travelled from Canada to a country (other than the U.S.) under a U.S. passport after the date the account holder claims to have relinquished U.S. citizenship, the financial institution does not have to accept the explanation.”
All I know is I don’t have the nerve to do what Gwen and Ginny have done and are committed to doing. Power to them! As this progresses, they will come to champion a growing number of people. May their resolve remain strong for all who will draw from their strength. Thank you Gwen and Ginny.
@News
I don’t know who you are but like me, I suspect you are not a frequent commenter in this forum.
I find your comments to be rather ill informed and quite presumptive. Do you have access to our banking information? I think not.
In particular, the second half of your comment is especially inaccurate and egregious. Courts do not take into consideration the assets or lack of same when considering awarding costs for or against litigants. If you have read Mr. Justice Martineau’s comments as to why he did not award costs against us, you will see his well articulated reasons.
And finally, perhaps you might ask Dr. Kish why he ‘ selected’ Gwen and I as plaintiffs rather than speculate as you have done.
What I do know is that as stressful as it is some days for Gwen and me, neither of us regrets our decision to stand in the name of so many of us who have been affected in Canada and elsewhere. We are motivated by the great support we have received and are very grateful for it. We are also aware we will be subject to inaccurate comments and criticisms. That’s the nature of litigation.
Stephen did not pick the plaintiffs. Our legal team, led by Joe Arvay, chose them.
Why was Ginny Hills a good plaintiff for the case?
1.) Ginny is a Bold Person!
2.) Ginny is comfortable with the FACT she is a Canadian Citizen, nothing more and nothing less, equal to any other Canadian no more and no less, regardless of what any other Country may think considering her nationality.
3.) A trained lawyer….perfect for this as with that comes understanding.
4.) The cream of the milk is that she is the “perfect” border baby having been born on the border separated only by a small and slow river.
——
Having said that…me wonders for publicity would it be possible for a class action suit be set up against the Government for border babies because their Government “compeled” their birth in the USA? If anything it would attract attention and put the Government in a very awkward pretzel position.
Lastly….Ginny and Gwen are not “tainted” border babies. They never used the misfortune of being born down south somehow to their “advantage.”
The only more perfect plaintiff would have been a Ginny or Gwen but who was born in Canada to one US Parent…never spent a day in the USA….who the local bank manager ratted out.
I have no doubt the perfect plaintiff is out there but they are staying in their bunker…
Calgary411’s son would have been a perfect plaintiff.
Fascinating.
I assume Mesdames Ginny and Gwen (whom I respectfully salute and could never thank enough) had “foreign accounts” in the eyes of the IRS that were reportable (i.e. bank accounts in Canada).
Their case is well-publicized, as is the fact that they were not among the “slips”.
What will the IRS do about non-reported reportable accounts? Will they pretend not to know?
If Canada does this, if France is considered “at risk” of doing this (as I read in earlier comments), well there quite possibly are less organized, less democratic, and less transparent regimes on earth than Canada and France.
Maybe IGAs were only signed with completely democratic countries where the well-connected wouldn’t dream of, uh, requesting that the list of “slips” sent to the IRS be somewhat shortened (although one does not have to go far down the list of Model 1 signatories to imagine that things may not be that simple http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx)
Sooner or later the IRS is going to ask for the rest. If there are about 1 million Canadians that were born in the US, they will wonder where the other “slips” are won’t they???
Norman,
I was interviewed regarding being a plaintiff on behalf of my son and it didn’t pass muster, one reason being that my son would likely have been called for cross-examination, an experience which I judge would be detrimental to him PERIOD. My line in the sand was drawn from my start of this absurdity that this is NOT about only my son but all other sons and daughters and other persons without *requisite mental capacity*, including their being entrapped into a US-deemed acquired US citizenship and its consequences.
I will, if needed, be a witness in the future of Canadian litigation, about my son, on behalf of my son, but it will not be my son. As a parent, it seems my duty to look after his best interests.
He was born in Canada to TWO US parents. Although he has never lived in the US or had any benefit from the US, he certainly has stepped into the US as we have prior to all of this never felt threatened to cross the border to visit relatives. I no longer feel that my son could travel to the US with me ( who would be using a Canadian passport with a US place of birth) — I’ve determined that the sting of one border conversation with me will not be the experience for my son.
My understanding is that the first CRA reporting is for reportable accounts >$1 million. The rest are to be reported next year???
From: http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html#Toc390079604
Lower value accounts
8.21 Generally, a lower value account is a preexisting individual account with a balance or value that is less than US$1,000,000 on June 30, 2014, and which is not eligible for a threshold exemption. Such an account remains a lower value account until it exceeds US$1,000,000 on December 31, 2015, or on December 31 of any subsequent year.
Electronic record searches and lower value accounts
8.22 A financial institution must review its electronically searchable data for any of the following U.S. indicia:
identification of the account holder as a U.S. resident or a U.S. citizen;
an unambiguous indication of a U.S. place of birth;
a current U.S. mailing or residence address (including a P.O. Box);
a current U.S. telephone number;
standing instructions to transfer funds to an account maintained in the U.S. (regardless of who holds the account);
a current effective power of attorney or signatory authority granted to a person with a U.S. address; and
an “in-care-of” address in the U.S. that is the sole address the financial institution has on file for the account holder.
8.23 When none of the indicia listed above are discovered through an electronic search, no further action is required in respect of lower value accounts, unless there is a subsequent change of circumstance that results in one or more U.S. indicia being associated with the account. When that happens, the account will become reportable unless further action is taken by the financial institution to cure the indicia. By virtue of subsection 265(5) of the ITA, a financial institution is required to apply subparagraph B(4) of section II of Annex I of the Agreement and attempt to cure the indicia before determining that an account is reportable (see paragraph 8.18).
Note
(Note: Subsection 265(5) of the ITA does not require a financial institution to make any attempt to cure U.S. indicia that is the identification of the account holder as a U.S. resident or a U.S. citizen.)
8.24 A financial institution will not be treated as having reason to know that an account holder’s status is incorrect merely because it retains information or documentation that may conflict with its review of the account holder’s status if it was not necessary under the procedures described in this section to review that information or documentation. There is no requirement that information or documentation be reviewed beyond what is necessary under those procedures.
Yes it is a marathon and not a sprint. Yes injunctions are hard to get and this shouldn’t make people think the law suit will not be successful. However, I think we need to have more the one iron in the fire. We can’t solely rely on this FATCA suit. We may win or we may lose. We need to have a plan B in the event we lose. A plan B is a CBT law suit filed inside the USA. A few weeks ago one was hinted here and said it would happen “very soon” by a different group other then the ADCS. What ever happened to that? Our only chance at relief is through the courts. We need a CBT suit as well.
It was interesting that the judge said there is no additional burden on US born Canadian citizens because the banks are bearing the cost of reporting.
If some is opening a bank account, and during the KYC interrogation, the bank only asks identified ‘US persons,’ to fill in a W9 while other Canadian citizens do not have to, is that discrimination?
Unless the bank is asking everyone to follow the same KYC procedure, they have to discriminate between customers.
To make the Judge understand, it would perhaps help to present the entire KYC procedure to what happens with the data in the bank’s back office before passing it own to the CRA in an open courtroom to exemplify how this discrimination takes place.
The discrimination may not take place up front, but certainly in the backroom it does.
Bob, you’d asked me why I think another party will be any different (because the banks have the politicians by the balls)?
I realize that sometimes the promises parties make before they get elected are promptly forgotten after they get in. However, the promises the all the other parties have made is that the current IGA created by the Conservatives is unacceptable. I expect that a rival party would reform the IGA to provide exemptions for Canadian citizens residing in Canada.
It is unacceptable that Canadian citizens like our brave plaintiffs have an unwanted extraneous citizenship foisted on them, with onerous reporting requirements and penalties, simply because they were born across the border. Even though they haven’t lived in the US since very small children, and attended Canadian schools, took jobs in Canada, have SIN numbers not SSNs, married Canadian spouses, etc. the Conservatives consider them and others like them “US citizens who happen to live in Canada” and treat them accordingly. Moreover, getting rid of the citizenship they do not want means entering into a ridiculous situation; they would have to try to obtain TINs or SSNs and try to prove they have US citizenship in order to get rid of it!!
@Phil
I already responded to you on another thread yesterday about the CBT lawsuit. It will come when we can get to it.
@The Mom
“No one likes this crap…not us, not the banks, not the insurance companies, not the brokers, and not the Canadian government. Just look back at Flaherty’s words. And I’d bet not even CRA or the government lawyers like this.”
I’m sure none of the above want this carp, we can agree on that, however except for “us” the rest of the pack hated it so much that the banks lobbied government to enable it and government readily agreed without a hint of protest (other than the late Flaherty’s one public remark), the enablers went on to make sure that the issue was kept out of the public spot light and the main stream media agreed, to get around privacy laws (what a joke) they created laws to allowed the CRA to snub privacy and the legislators readily agreed despite warnings that it was likely not constitutional, they even went so far as to hire expensive lawyers using public money to defend it in court.
What is really going on, and we all know it, is that our so-called government does not give a flying sh– about what is right or wrong, or even what makes a country a country, it’s all about the money, and in the enablers eyes, going along with US imposed tyranny was the path of least resistance, human rights and ruined lives be damned. There’s no question they could have resisted, they could have even said “no”. Is Canada a country or is it nothing more than a massive psychopathic corporation? If it walks like a duck …
Tricia, thank you but I am lost with all these different threads. Please let me know which one. Thank you.
“Calgary411′s son would have been a perfect plaintiff.”
Calgary411, I did mean your son and did not mean you.
‘didn’t pass muster, one reason being that my son would likely have been called for cross-examination, an experience which I judge would be detrimental to him PERIOD’
Yes, I understand why you couldn’t allow it, but in the discussion of who would be a perfect plaintiff he is perfect.
I think there are cases where a disabled person can be a plaintiff without testifying. I don’t know if a tax case is one. US Tax Court rules allow for a continuance if a petitioner’s lawyer dies, but otherwise the tax court schedule takes priority over everything. First the IRS and courts damaged my heart and then I had to postpone heart surgery twice because of US Tax Court schedules.