After having read Professor Christian’s presentation, I request that you respond to the following in as comments:
In a purely practical, “day to day” sense, how has U.S. citizenship-based taxation affected and/or changed your life?
Understanding the Accidental American: Tina's Story https://t.co/BzxDfmAjT4
— Allison Christians (@taxpolblog) December 9, 2015
"We can do better by this population of individuals abroad adversely and unfairly affected by U.S. tax law." https://t.co/6xN7RR7zKn
— U.S. Citizen Abroad (@USCitizenAbroad) December 9, 2015
On November 18, 2015 McGill Professor Allison Christians spoke at the Taxpayer Advocate Tax Conference in Washington, DC.* On November 20, 2015 a video of an interview with her was posted here at the Isaac Brock Society. It was an excellent interview which highlighted and demonstrated some of the injustices of U.S. ‘place of birth taxation”. The interview was also posted on the IBS YouTube channel.
Now, TaxNotes has made the text of her speech available for general reading.
Why Professor Christian’s speech is important
Tax legislation in general and the U.S. Internal Revenue Code in particular is an excellent place to hide legislative evil. (See a series of Charles Adams videos on this topic.) Tax laws are written in complicated convoluted language that cannot be understood by the general public and are understood by ONLY those tax professionals who make it their clear goal to understand the legislation. What this means (if you haven’t figured this out) that the vast majority of U.S. tax preparers (AKA “Form People“) do NOT understand the purpose, intent and effect of the rules they are applying. This is one of the many reasons that the tax prep people (possibly “bounty hunters” are so dangerous to you.
To put it simply:
In the age of computerized tax prep and form completion:
There is NO relationship between knowing what information to put on a form and knowing what that information means in the life (or rather what’s left of life for Americans abroad) of the taxpayer. None whatsoever.
Professor Christian’s speech begins with:
I would like to tell you a story about the taxpayer’s right to know what the law requires of her and to have the law administered fairly. This is just one story based on things happening now, but it is a common story. I’m telling this story instead of giving an exposition on the underlying legal texts because sometimes the rules are too complicated and too technical for anyone to really understand, even tax lawyers. Moreover, reading the law itself doesn’t explain what isn’t written on the books, which can matter more in how things play out in human terms. As you will see, the implementation of the law gives rise to a taxpayers’ rights issue — one that wouldn’t be clear from reciting the law alone.
___________________________________________________________________________________
*Abstact of her presentation
Across the globe, banks are flagging accounts with indicia indicating their owners may be “US Persons,” clearing the way for the United States to enforce citizenship-based taxation extraterritorially for the first time in history. For individuals who permanently reside outside of the United States, this is a “where there’s smoke” method of establishing tax jurisdiction because none of the indicia are themselves incontrovertible evidence of one’s status as a citizen and therefore a US Person for tax purposes. The indicia method guarantees that certain individuals will be presumed to be citizens and subjected to repercussions regardless of their actual legal status as such, while others will be overlooked even if they are in fact citizens. Establishing a tax jurisdiction in this manner is arbitrary and capricious, with significant practical and normative consequences. Moreover, it violates one of the most fundamental and universally- acknowledged tenets of taxpayer rights, namely, the right to be informed about what the law requires. Because of the extraordinary demands that the United States attaches to citizenship, indicia-searching and self-verification of nonresidents violate principles of both international law and human rights. Both should be universally rejected as an invalid exercise of state power.
Re: Tina’s story
If Tina only has Canadian sourced income and her bank withholds 30%, how does she get her money back?
The text of Prof. Christians’ speech would be an excellent link to include on any correspondence with the Canadian government. It is the life of “Tina” that the Canadian government has consigned each and every one of us to by its adoption into law of the IGA.
I particularly like Professor Christians’ emphasis on a taxpayer’s right to be informed about tax laws that apply to them. The current GOTCHA tactics exercised by the IRS at the direction of US lawmakers are in themselves negligent, or worse, unconstitutional from what I’ve been able to gather.
There seems however to be a big divide between what a taxpayer should and shouldn’t know about the tax laws of a country to which they are a citizen. Is it reasonable for someone who left the US at the age of 12, who’s never worked in the US to know about US tax laws that affect her, or is reasonable to assume that a tax obligation based on citizenship doesn’t exist because it virtually doesn’t outside the US – with the exception of one other country that the US has condemned for exercising?
Heck I know several Canadians living abroad who’ve stopped filing in Canada and don’t even know about Canada’s departure tax!
@Muzzled
Exactly what I was thinking when I read it last night. I also can’t think of a better advisor to our MP’s on these issues either, if they’re eager to listen.
We need our MPs eager to listen, which the Liberals said they will do — they are our conduit to action regarding what is happening but not readily seen. They need to represent us and effectively communicate how we are affected. Without that knowledge, bad and not-well-thought-out decisions will be based only on economic factors, for the country as a whole, leaving out the human aspect.
I just listened to a CBC Calgary morning program that talked about the etiquette of discussions at Christmas (or other) party gatherings. One of things mentioned verboten is discussion on how particular political decisions affect the person in conversation, along with health and stress issues (like the unemployed in this part of Canada). That likely carries through to all places we discuss our issues with FATCA in Canada and other countries. It is no wonder we aren’t heard / taken seriously as we are effectively isolated. Keep it all sanitized!
My continued thank you, Allison Christians. I would like to see our MPs really listen to you (and Professor Arthur Cockfield / others — like John Richardson). I will certainly forward this on to my government representatives. It seemed that up until now those consulted were more likely US *tax experts* — similar to the mindset of *Congress has spoken*.
@Muzzled @All
Compelling as Tina’s story and Prof Christians’ remarks about it are, if we were to take it to our MP’s how would we make it their concern? In other words, how can we implicate Canada in all the US’s offences against it’s citizens? Prof Christians talks extensively about how US taxpayers have a right to be informed of their tax obligations. I would think by signing the IGA, the CRA would also need to inform Canadians of what’s going on before the bank does – after all the CRA benefits from the information too, and by its own admission intends to use it for its own purposes. Let’s not overlook the fact that both Canada AND the US are getting a lot of information about both its taxpayers WITHOUT PROBABLE CAUSE!
@USCitizenAbroad:
Is this letter real or hypothetical? This part of the letter makes no sense at all:
First, the bank in Canada is now assessing and collecting a fine on behalf of the government? Since when did governments start allowing private businesses to fine the public on their behalf?
And collecting withholding tax in Canada on a Canadian citizen? The tax treaty expressly says that is not possible. Did the IGA change that?
Cancellation of a mortgage account? First I’ve heard that a Canadian bank was going to do that. Swiss banks have been doing it for years now.
Dunno about most of your question and I haven’t heard of anyone getting a letter worded like this in Canada (as no one’s posted such here,to my knowledge). But re the $100 fine for not providing a “US federal taxpayer identifying number …”, they put it into the Income Tax Act last year when they approved the enabling legislation for the IGA. I assumed that CRA would collect it directly from a person after being notified by a bank, but I sure don’t know; this sub-article 162(6) is all I know about it.
(1)
5 February 2014. Legislative Proposals Relating To the Canada-United States Enhanced Tax Information Exchange Agreement.
http://www.fin.gc.ca/drleg-apl/2014/can-us-eu-0214l-eng.asp
2. (1) The portion of subsection 162(6) of the Income Tax Act before paragraph (b) is replaced by the following:
Failure to provide identification number
(6) Every person or partnership who fails to provide on request their Social Insurance Number, their business number or their U.S. federal taxpayer identifying number to a person required under this Act or a regulation to make an information return requiring the number is liable to a penalty of $100 for each such failure, unless
(a) an application for the assignment of the number is made within 15 days (or, in the case of a U.S. federal taxpayer identifying number, 90 days) after the request was received; …
(2)
Currently. Income Tax Act, s. 162(6).
http://laws-lois.justice.gc.ca/eng/acts/I-3.3/page-288.html#h-99
Failure to provide identification number
(6) Every person or partnership who fails to provide on request their Social Insurance Number, their business number or their U.S. federal taxpayer identifying number to a person required under this Act or a regulation to make an information return requiring the number is liable to a penalty of $100 for each such failure, unless
(a) an application for the assignment of the number is made within 15 days (or, in the case of a U.S. federal taxpayer identifying number, 90 days) after the request was received; …
@Bubblebustin Re; how we take the letter to Canadian MP’s. It is all only allowed possible in Canada by the tax treaty that inadequately protects Canadians from double taxation etc. JC put together a letter about it in the Australian context here: http://isaacbrocksociety.ca/fatca-and-australia/comment-page-20/#comment-6726208
@pacifica, I am copying my question to Tricia at Facebook:
But since when could a bank assess a fine to a client on behalf of the government? This makes absolutely no sense. The bank can withhold taxes for the CRA. I understand that. But do banks have the authority to fine patrons as well? What kind of sociopaths would pass a law like that and what kind of sociopaths would uphold a law like that? Really.
How can the government authorize a private company to assess a fine on behalf of the CRA? Hell, why don’t they give me that authority? Furthermore, which court are you supposed to be able to question the fine? Even traffic fines can be argued in court, and those are given out by police officers, i.e., employees of the government.
Thanks JC, I’ll have a look.
@Petros:
You bet the letter is real. Not just for banks but brokerages.
Brokerages IN PARTICULAR! In force long before IGA implementation.
AND applies to Canadians with Canadian only investments but with a so-called “U.S. Person for tax purposes” spouse.
ANY hint of even the remotest US connection results in vomiting up such a coercive letter threatening such fines. NO recourse to protect privacy of Canadian spouse. OR to prevent form fines as a result of obtaining that information.
NO Probable Cause. NO warrant.
Considering many have been living under these threats with various results around the world and in Canada it is amazing that our lawsuit funding is struggling.
When a family gets one of those letters it is one of the most life threatening events ever in the history of democratic society. It is marriage threatening and family destroying even unto generations.
Various decisions must be made. Many do comply. Many do not.
It is the most vile lawless bullying, clearly violating both US and Canadian law.
Millions of people , their spouses and their families threatened, bullied and harassed by thugs and thieves SHOULD have resulted in the Conservative government slamming the door in the face of such lawlessness. And Congress putting an end to it at their end.
But we know that did not happen.
Had Bank of Canada belonged to Canada still and not to BIS, IMF , etc. they might have felt they could get away with slamming the door in “Bruin’s face” !
Reality is that the shots are called elsewhere. Not on Canadian soil or by Canadians.
Changing government will make no difference.
Perhaps in one area only: Court Challenge revived. Should that happen, funding would be provided for the Court Challenge. At least as I understand it.
Funding the Charter suit with our after tax dollars fighting a government USING our own tax dollars to thwart our liberties and freedoms is quite a bitter pill.
A bitter pill willingly swallowed and enthusiastically supported to END this travesty of Generational Theft.
Theft not just in compliance condors fees, form fees, but continued financial flogging year after year after year after year. It is why they have made it so expensive to get out. To get you in and keep you in, even if you do not belong.
At least when the sailor on the high seas committed some slight the Captain could only have him flogged until he died if it so suited the Captain.
Even in their evil enthusiasm for punishment they did not subscribe to continued flogging of the dead body and finding family members to flog to death when they came into port.!!!
@Bubblebustin: You said:
“Compelling as Tina’s story and Prof Christians’ remarks about it are, if we were to take it to our MP’s how would we make it their concern? In other words, how can we implicate Canada in all the US’s offences against it’s citizens?”
The US offends it’s own residents, citizens and otherwise RESIDENT within it’s borders.
The IGAs around the world allows the US to offend the citizens of all countries NOT resident within it’s borders!!
I have heard the plaintive cry that Canada had no choice. However the IGA’s were never ratified by Congress. They were a ploy by Treasury to get around the clear illegality of FATCA.
Without an IGA there was NO legal way to implement FATCA.
Canada implicated itself by her government ignoring all Constitutional Law advice, passing and implementing the IGA which threw open the door and invited in the ravenous wolves to feast on not only so called “U.S persons” but the Canadians with whom they are associated in any way.
The IGA permits the financial raiding and ruination of an entire country and believe me, if it is allowed to carry on that is EXACTLY what it will do!!
These fundamental facts SHOULD have persuaded the past government. What we can expect from the current government remains to be seen.
So far, all we’ve managed to do in court is confirm that the US has a right to tax its citizens whether they are Canadian or not. The Gerald Keddy’s of the current Canadian government will stand behind this – if only to not have to stand up for anything at all, or to toe their party’s line. We have to accept the fact that this stance is the most we can expect from many of our legislators. The AG and MNR are going to take their que from the PM, are they not? It wouldn’t surprise me if neither the AG or the MNR had heard about the FATCA IGA before the election.
I’m still behind trying to kill this thing on the reciprocity issue, if all else fails in the next year.
Peter There you go with the sociopaths thing again ( with no evidence). The letter from the bank is hypothetical. This is obvious except to the wilfully blind.
Re: letter. Fictitious as is the name Tina. From elsewhere:
‘the story is representative of real phenomena aggregated across individual experiences’
“If Tina only has Canadian sourced income and her bank withholds 30%, how does she get her money back?”
If Tina is a US person, she should file Form 1040 (the same as she already should have been filing unless her income was below the threshhold). If she’s not a US person, she should file Form 1040NR. In either case, the withholding reported on Form 1099 should be reported on the line of the tax return that says to enter withholding from various forms including 1099.
If all of Monica Hernandez’s cohorts have been arrested by now (some were arrested just a few months ago) then the IRS should have its own record for the Form 1099 and Tina should get the refund.
If Monica Hernandez’s cohorts are still in business, the IRS will not have records of Tina’s Form 1099, the IRS will have already paid Tina’s refund to an identity thief, and the IRS will frame Tina for fraud. Tina will not know the reason for the penalty unless she’s reading this. Tina will further be penalized over and over for every effort that she makes to try to find out the reason for the first penalty. If the IRS proceeds to file a tax lien or intent to levy, and if Tina files petitons within very short time limits, she will end up in US Tax Court — but if the IRS doesn’t proceed then Tina will die without ever getting her refund. If Tina gets to court, and if Tina proves that she committed perjury as required by IRB 2005-14, and fabricated a social security number as required by US Court of Appeals for the Federal Circuit, then the IRS might settle for penalties totalling $0.00, but the IRS STILL won’t pay the refund owing to Tina. (By the way, I didn’t know that my name was Tina until I read this story.)
Anyway, that’s supposed to be the method of getting the refund. In some parallel universe.
“Heck I know several Canadians living abroad who’ve stopped filing in Canada and don’t even know about Canada’s departure tax!”
I stopped filing except for years when I had Canadian sourced income of kinds that didn’t have the correct amount of withholding taken at the source. (A nonresident Canadian has withholding taken at the source from Canadian interest and dividends, the same as a foreigner, and doesn’t include them in a Canadian tax return even if some other reason requires a return.)
I declared the departure declarations mostly as described in the instructions. I made a few mistakes in susbstituting departure date instead of Dec. 31st for everything, but there were a few places where Dec. 31st was really still supposed to be Dec. 31st and my residence was in Japan instead of Canada for those. However, the former Revenue Canada made bigger mistakes. I still don’t know yet if the mistakes were in the published instructions or if the mistakes were in Revenue Canada not obeying the instructions. My deemed dispositions yielded losses not gains, and as far as I can tell they were required to go on income account not capital account, but Revenue Canada/CCRA/CRA still hasn’t sent a new assessment.
“Failure to provide identification number
(6) Every person or partnership who fails to provide on request their Social Insurance Number, their business number or their U.S. federal taxpayer identifying number to a person required under this Act or a regulation to make an information return requiring the number is liable to a penalty of $100 for each such failure, unless
(a) an application for the assignment of the number is made within 15 days (or, in the case of a U.S. federal taxpayer identifying number, 90 days) after the request was received; …”
If the application for US social security number was made 21 years before the number has to be provided to a person required under that Act to make an information return requiring the number, does that count as being within 90 days after the request was received? If not, does the person have to submit a new application to the US Social Security Administration every 90 days? That would be 86 times so far.
Why doesn’t the Act require every Canadian to provide 190 foreign taxpayer identification numbers? Why just US numbers? Is it because the Charter prohibits discriminating on the basis of every nationality except one of the two exceptional nationalities?
I think we all have become “Tina” in the last 3 years and this is now the number 1 most popular name if you are unlucky enough to have US indicia. By the way, after the 14,000 for streamlined for the two of us I have now spent another 2,000 for 2014. So… in one year I’ve spent 16,000 euros in compliance costs! Mind boggling. Call me Tina
The banks don’t withhold 30%. The payor of the income does. There is no withholding of Canadian source income for banking accounts-only brokerage accounts where securities are held in street name.
Some one who supplies a SIN but not a TIN and is a US person could be liable for a $100 fine. The fine isn’t collectible by the bank. It would cost the gummint 10X that amount to try and collect it. It’s a farce- designed to scare people.
Remember . Hutchins “One of the beginnings of human emancipation is the ability to laugh at authority”
“The banks don’t withhold 30%. The payor of the income does.”
When the income is interest in a bank account, the bank is the payor of the income and the bank does the withholding.
“There is no withholding of Canadian source income for banking accounts-only brokerage accounts where securities are held in street name.”
In 2002 TD Waterhouse, in Canada not the US, paid Canadian sourced interest on the credit balance in my brokerage account. TD Waterhouse deducted both the 10% Canadian withholding (which was correct because I live in Japan) and 30% US withholding, total 40%, from this Canadian sourced interest income.
I declared the 30% on my US return. The IRS wrote that it would not tell me the reason why it considered my return frivolous, and so far it has kept that promise for tax year 2002. In 2006 the IRS refunded that 2002 withholding, but later they provided enough information for me to figure out that the refund was a mistake, they intended for Monica Hernandez and cohorts to keep the embezzled money forever. In 2012 US Tax Court ruled that the IRS shall not collect the alleged penalty for tax year 2002. In 2013, 13 months after the ruling, the IRS partly collected. In 2014 US Court of Appeals for the Federal Circuit ruled that the IRS doesn’t have to refund the partly collected penalty which Tax Court had ruled shall not be collected. In 2015 Tax Court ruled that Tax Court doesn’t have jurisdiction to enforce Tax Court’s ruling.
In some years my chequing account also received Canadian sourced interest income, and trust companies and banks withheld 10% Canadian tax because I live in Japan, but they didn’t withhold US tax. To the best of my understanding, if they had known that I was a US person and if they had affiliated companies operating in the US then they should have taken 30% US withholding too. I wonder what would have happened. I’ve figured out that the IRS probably had embezzlers going back decades but the IRS didn’t used to have enough database matching systems to catch and frame the victims for it.
Allison Christians comments on the reception to her speech at the conference:
http://taxpol.blogspot.com.au/2015/12/understanding-accidental-american-tinas.html?utm_source=twitterfeed&utm_medium=twitter
“I did hear from a number of participants that they appreciated my talk, learned from it, thought it raised valid concerns, should be addressed etc. After my panel, Commissioner Koskinen gave a talk about tax system fairness and integrity and mentioned the central importance of FATCA in ensuring such fairness and integrity.”
@Bubblebustin
“There seems however to be a big divide between what a taxpayer should and shouldn’t know about the tax laws of a country to which they are a citizen.”
Agreed, we should not have to become an accountant+tax expert+economist+financial activist to try to understand the overwhelmingly complicated extraterritorial tax laws from our country of birth and (imposed) citizenship. At the end of the day, I’m just an average guy who wants an average life.