Liberty and justice for all United States persons abroad

The Isaac Brock Society

Posted on by Posted in Issues regarding US persons abroad 28 Comments

March 18, 2020 marks the tenth anniversary of FATCA? What are you doing to celebrate?

Coming off a successful article yesterday, CBC Reporter Elizabeth Thompson is keeping FATCA in the news. FATCA is real news and not fake news.

(Look carefully at the above tweet. Notice that the text refers to the CRA. The picture is of the IRS building. Yes, it’s true that FATCA has turned the CRA into an extension of the IRS. Maybe, Canadians should just start filing their tax returns directly with the IRS.)

In Canada Elizabeth Thompson is the only journalist demonstrating an interest in this issue. Because of the number of articles she has written, she has “in effect” become a “One Reporter FATCA Wrecking Crew”. Opponents of FATCA should be grateful that she is keeping FATCA in the Canadian media. No other reporter in Canada is.

FATCA at ten …

In 2012, some in the compliance industry referred to FATCA as “The Gift That Just Keeps On Giving”. Careers have been and continue to be built around FATCA. In fact, I am reminded of the following @USCitizenAbroad tweet from March 19, 2013 which worshipped the compliance opportunities generated by FATCA:

The link referenced in the above tweet was to a blog post written by U.S. Tax Lawyer Stephen Mopsick (a former Brock contributor). The post included:

The overriding sense of the conference concerned how to use FATCA as a business and growth opportunity. All over the world, there is a race between mega-corporations, giant financial institutions, CPA firms and business leaders to get ready for FATCA and position themselves and their clients into the best posture possible over their competitors to ensure that FATCA spells financial success.

(This tweet was the basis for the Brock post published on March 22, 2013: “When law becomes a substitute for morality“. (Newer participants at Brock should read this post which was reposted at Brock by Patricia Moon on March 8, 2017.))

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Yesterday’s article from Ms. Thompson focused on the evolving enforcement climate of FATCA – focusing on the role of Social Security Numbers (or lack thereof) and FATCA. Her article today, discusses FATCA from four different perspectives.

They are:

1. FATCA and the right to privacy – This reminds me of Jenny’s U.K. based lawsuit which is based on FATCA conflicting with the GDPR regime. At a minimum, shouldn’t people be told that their private information is being sent to the IRS?

NDP Revenue Critic Matthew Green said those whose records are being shared should have a chance to defend themselves or rectify the situation.

“They should be well informed and then have the ability to then follow due process that allows for them to appeal or adequately address the situation before hefty fines are imposed by their own domestic government in favour of a foreign interest,” he said.

and further down (for those who think this is a small number)

Last year, the CRA sent 900,000 records from banks and financial institutions to the IRS. The CRA has refused in the past to proactively tell Canadians when their financial account records have been shared

2. The FATCA that the Canada Revenue Agency is now doing free “slave” labour for U.S. Treasury. Of course this comes at a direct financial cost to the Government of Canada. Do Canadians realize that their tax dollars are going to pay for the Canada Revenue Agency to help the United States impose U.S. taxation on Canadian residents? To quote from the article:

“Our CRA is being used as free labour by the U.S. tax system and I think we have enough work for the CRA to do here, like conducting audits and recovering taxes from those named in the Panama Papers,” he said. “So they shouldn’t be forced to do the legwork for the IRS.”

3. If the Canada Revenue Agency has costs, then clearly the Canadian banks have costs. I wonder if their annual balance sheets have a column where they acknowledge the financial costs of maintaining obedience to the United States?

Under FATCA, financial institutions outside the United States are obliged to search their files for customers who could be subject to U.S. income tax and report information about those accounts.

4. An acknowledgement of the Alliance For The Defence Of Canadian Sovereignty FATCA lawsuit. This included the obvious suggestion that FATCA IGAs should be renegotiated worldwide so that that they do NOT apply to individuals who are tax residents of and citizens of the IGA partner country.

And now turning this over to Elizabeth Thompson …

You can read her article here.

28 thoughts on “CBC Reporter @LizT1 continues to keep #FATCA in the news – acknowledgement of direct costs to Canada and mention of @ADCSovereignty FATCA lawsuit”

  1. The letter to Ms. Thompson includes with respect to account opening:

    Canadian banks ask customers for their US person status when they open new accounts or update other information (and they may proactively ask customers who have US indicia such as an address or telephone number on file) but they take no steps to validate the answers given. Nor do they require ID showing place of birth when a customer opens an account – a drivers license is sufficient. What this means is that it is very easy for Canadians to simply not disclose their US citizenship to any bank or financial institution. This conveniently solves the problem of missing Social Security Numbers, as well as keeping the IRS unaware of their existence.

    You are now informing Ms. Thompson that the practice of the Canadian banks (according to you) is not consistent with the requirements of the IGA (with respect to new account openings) which state:

    Other New Individual Accounts.

    1. With respect to New Individual Accounts not described in paragraph A of this section, upon account opening (or within 90 days after the end of the calendar year in which the account ceases to be described in paragraph A of this section), the Reporting Canadian Financial Institution must obtain a self-certification, which may be part of the account opening documentation, that allows the Reporting Canadian Financial Institution to determine whether the Account Holder is resident in the United States for tax purposes (for this purpose, a U.S. citizen is considered to be resident in the United States for tax purposes, even if the Account Holder is also a tax resident of another jurisdiction) and confirm the reasonableness of such self-certification based on the information obtained by the Reporting Canadian Financial Institution in connection with the opening of the account, including any documentation collected pursuant to AML/KYC Procedures.

    https://home.treasury.gov/system/files/131/FATCA-Agreement-Canada-2-5-2014.pdf

    It’s pretty clear that the description you include in the above excerpt to your letter describes a process that is not consistent with what is required by the IGA. The IGA actually requires the banks to ask for information that allows the bank to make the citizenship (or other “U.S. Person”) determination. Do you want an investigative reporter to start investigating whether the banks are really compliant with the IGA?

    I can just imagine the next article …

  3. In the art world there is a saying that “all publicity is good publicity.” If you get a bad review, well, hey, you still got your name in the paper. And that is the name of the game. No name in the paper? Nobody talks about you. Out of sight, out of mind.

    I’m thrilled that Elizabeth Thompson has written about us so often, and this week, not once but twice. If she ever drops in here I want her know that some of us are deeply grateful for her attention and her belief that this is a matter that deserves to be brought to light. Fear-mongering, like so much else, is often in the eye of the beholder. I, for one, am glad to be informed of what may be down the road. It is up to me to decide if I will succumb to fear or stand and fight (or hide and lie which may be the same thing in this instance). But I can’t make any kind of decision without information. Elizabeth has provided us with some this week.

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