Category Archives: Issues regarding US persons abroad
BMO FATCA Reporting
RefugeeFromAmerica was in contact with BMO’s President’s Office about BMO’s FATCA policies and also with the CRA Commissioner’s Office and has sent in the following report.
In response to the CBC story about the vast number of bank accounts reported to the CRA/IRS, I thought I’d share an experience we had at a BMO branch back in August. In particular, I wanted to provide a data point to corroborate the suspicion that at least some Canadian financial institutions are not observing FATCA reporting minima and that, at least at the local level, they are violating Canadian law by not readily providing information to customers about FATCA reporting. Quoted below is a previously composed account of what transpired during our branch visit [and the events that followed it]
Recently Released Survey Report and Conference Paper Dispel Myth of the Wealthy American Expat
Last year Laura Snyder asked visitors to the Isaac Brock website to participate in a survey about FATCA and the taxation of US citizens living overseas.
In addition, in early December the report will be the subject of a presentation at a conference in Prague on the subject of diasporas. Snyder’s conference paper that specifically addresses the myth of the wealthy American expat is available here .
The survey report corroborates and complements the results of other surveys demonstrating that US citizens and green card holders living outside the United States experience a wide range of hardships as a result of US non-resident taxation and banking policies.
Further, as discussed in detail in Snyder’s conference paper, the new survey data dispels the myth of the wealthy American expat whose principal purpose in living overseas is to avoid US taxation.
Notably, among the 602 survey participants living in 47 different countries:
- 67% have an income of less than $70,000 per year and 90% have an income of less than $150,000 per year;
- 39% left the United States to join a romantic partner in another country, 28% left to pursue professional opportunities, and 2% were born outside the United States and have never lived in the United States; just one participant reported leaving the United States in order to avoid US taxation;
- 48% of those with annual income of $21,000 to $40,000 and 41% of all participants pay significant fees for professional tax preparation despite owing nothing in US taxes;
- 32% of those with annual income of $1 to $20,000 and 38% of all participants are unable to reconcile the US tax system with the system of their country of residence, with the result that their investments and retirement vehicles are harshly penalized by the US system;
- 37% of those with annual income of $41,000 to $70,000 and 30% of all participants have been unable to open one or more bank accounts because they are a US citizen or green card holder;
- 19% of those with annual income of $1 to $20,000 and 13% of participants overall have been removed from one or more joint accounts with their non-US citizen spouse because the survey participant is a US citizen or green card holder. With respect to unemployed participant, the number experiencing this problem jumps to 26%.
What do the residents of Campobello Island and US Citizens living in Canada have in common?
More on the insatiable US search for information. First, your bank accounts. Second, your mail: U.S. customs officials have been searching packages bound for a community that, for most of the year, can only be reached from Maine – and locals aren’t happy. https://t.co/UVIJ5UMriR pic.twitter.com/lVIFTLxjHp
— U.S. Citizen Abroad (@USCitizenAbroad) October 28, 2019
The above tweet references an article in today’s Toronto Globe and Mail about the tiny New Brunswick island of Campobello. Basically, the issue is that the primary access from Campobello is through the state of Maine. A recent article in the National Post included:
The island Canada forgot: On Campobello, citizens are left exiles in their own land https://t.co/xMV0QsqXsf via @nationalpost
— U.S. Citizen Abroad (@USCitizenAbroad) October 28, 2019
But despite Campobello’s postcard-worthy attributes, the 23-year-old Matthews has pretty much had it with the place. It’s not that the island doesn’t feel like home. It’s that Campobello makes her feel as though she is a Canadian living in exile — physically, politically, practically, medically and economically separated from the rest of the country — which, more or less, she is since the bridge is the island’s only physical link to mainland North America and it’s not to Canada.
The bridge goes to the State of Maine in the United States. This means that all mail sent to residents of this Canadian island must go through Maine for delivery to Canada. According to the article, a disproportionate amount of this mail is being searched by U.S. customs officers.
It also means (as noted by the National Post) that:
“The residents of Campobello must travel through a foreign country while transporting goods and services from one part of N.B. to another,” Richards said in an email to the Financial Post. “The regulations imposed and the new regulations enacted will make it almost impossible to conduct daily affairs.
(and you think you have problems …)
Ottawa Brock Lunch – Saturday 16 November
We’ll be getting together for lunch Saturday, 16 November, at 1:00 pm, at Montana’s BBQ Restaurant, 1750 Ogilvie Road. Plenty of free parking on site, also accessible by OCTranspo.
We’re currently expecting 10 people. Hope you can join us too! Please rsvp by leaving a comment or e-mail me at pacifica@isaacbrocksociety.ca
Seeing this at the last minute? Please rsvp, if you can. If not, just come and join us.
“FATCA: The 2010 ‘tax evasion law’ that’s now an ‘extra-territorial money sucking machine’”
A great FATCA backgrounder from John Richardson, published in American Expat Finance yesterday. FATCA articles aimed at the general public often focus on the impact on individuals, but this one primarily covers the macroeconomic impact. It packs a lot in a short article, good for sending to people who want to know more about FATCA (friends) or who should know more about FATCA (policy makers).
American Expat Finance Editor’s introduction below, article itself continues next page. Reprinted with permission of American Expat Finance.
Over the last few weeks and moths, more media attention than usual has been paid to the 2010 Obama law knows as the Foreign Account
Tax Compliance Act (FATCA). And invariably, we have been noticing, journalists from respected media organizations like The Guardian and Financial Times newspapers in London keep referring to it as a “tax evasion law,” no doubt because that was its original purpose.
That may well have been true in 2010, says Toronto-based expat lawyer and expat rights campaigner John Richardson…
But, he argues here, as anyone familiar with FATCA’s massive impact on individuals who don’t live in the U.S. now – and indeed haven’t for decades and possibly never did, and are tax residents of other countries – it has evolved into an all-but- impossible-to-avoid “extra-territorial money-sucking machine.”
It has also made it very difficult for such individuals to engage in normal financial and retirement planning – or even to get, and keep, a local bank account.
And while it may remain a disincentive for Homeland Americans to attempt to hide their wealth (the way some used to) in Swiss banks, FATCA (along with the Common Reporting Standard, as the OECD’s global version of FATCA is called), is now playing a role in enabling the U.S. to act as a tax haven to wealthy individuals in other countries who are seeking to keep their personal wealth from their own tax authorities.
The fact that the U.S. hasn’t signed up to the CRS, arguing that it has no need to – because FATCA gives it all the information it needs to know about its own citizens – helps to make this possible, Richardson points out. Continue reading
Canada: Opposition Leader Andrew Scheer is a US citizen
Thanks to Calgary411 for posting this on the Media thread. There’s been a lot of discussion on this, so I’ve created a separate post for it and moved the comments here.
New #FATCA based lawsuit organized in the UK – momentum building
Support the UK legal challenge against #FATCA. Indiscriminate #data transfers are unlawful. #AccidentalAmericans #AmericansAbroad #GDPR #DataBreach #HumanRights @Jesse_Norman @ft @UKParliament @Jude_KD @PreetKGillMP @DougChapmanSNP @guardian @SophieintVeld https://t.co/CoCw5SE6BW
— Jenny
The link in the above tweet links to a post describing this upcoming litigation. There is (along with the presumed upcoming ADCS appeal in Canada) growing pushback against FATCA.
Is the IRS enticing a sub-group of deemed and former US Citizens to enter the system, including unstated potential consequences?
From ‘Accounting Today‘ September 6, 2019:
The Internal Revenue Service outlined new procedures Friday to allow some expatriates who have relinquished their U.S. citizenship the chance to comply with their U.S. tax and filing obligations and in turn qualify for relief from back taxes, penalties and interest.
The Relief Procedures for Certain Former Citizens will apply only to individuals who haven’t filed U.S. tax returns as U.S. citizens or residents, owe a limited amount of back taxes to the U.S. government ($25,000 in the past six years), and have net assets of less than $2 million. Only those taxpayers whose previous compliance failures were non-willful can take advantage of the new procedures, according to the IRS. Many in this group may have lived outside the U.S. most of their lives and not been aware that they had U.S. tax obligations.
…
A post for Brock readers to analyze and discuss.
As well, analysis / commentary here:
IRS provides limited tax relief for certain individuals renounced(ing) after March 18, 2010
Update – My thoughts the Morning After – September 7, 2019:
After having digested this for a day (it was announced the afternoon of September 6/19, I offer the following thoughts:
I think that this IRS announcement/program has value. It may be that those who have renounced would NOT want to come into compliance (although there are certainly some who would – just to bring closure). But, the IRS announcement makes clear that this procedure is available to those who have not yet renounced/relinquished and wish to do so in the future. The point is that these future relinquishers can:
1. Come into tax compliance and have up to $25,000 USD in tax forgiven; and
2. Come into tax compliance without getting a Social Security number. This has the potential to be enormously helpful to a lot of people (but this is a minority view). It’s a way to make the compliance/renunciation process easier and less expensive (tax forgiveness) than it has been to date.
Of course, this will anger the thousands who have previously come into compliance, paid taxes and gone to the trouble of getting a Social Security number.
But, I can so how this new program has value.
Now on to the post as originally written …
Breaking news – just released today – September 6, 2019
Only those who have lived under US #FATCA and @CitizenshipTax can understand the proposed Elizabeth Warren Wealth Tax!
Introduction – your assignment if you choose to accept it …
After having read this post, please consider the following questions/thoughts and comment …
1. Do you see similarities between the proposed wealth tax and the tax regime that is imposed on Americans abroad?
2. Do you see how FATCA and citizenship-based taxation provide the support and foundation for a wealth tax?
3. Do you believe that a proposed wealth tax would make it more likely that the United States will retain citizenship-based taxation?
4. Note that the Holding bill is NOT a move away from citizenship-based taxation. While retaining citizenship-based taxation it removes foreign INCOME from the U.S. tax base.
On to the post …
The Isaac Brock Society has been a leader in providing education about the U.S. policy of citizenship-based taxation, FATCA (information exchange in general) and offshore accounts (to the extent that the United States regards the local day-to-day financial accounts of Americans abroad as offshore relative to the United States). The purpose of this post is to suggest how these three things have become relevant to U.S. tax policy in general and the U.S. election in particular. You may know that Massachusetts Senator Elizabeth Warren is proposing a wealth tax. As a result, it is likely that a wealth tax will receive significant discussion (at least among the Democrats). Interestingly, President Trump (before he became President) had flirted with the idea of a wealth tax (although I suspect that he would not support a wealth tax in his current role as President).
Why Americans abroad are uniquely positioned to contribute to the debate on a wealth tax
Individuals who are tax residents of other countries and are subject to U.S. worldwide taxation are living the confiscatory effects of U.S. tax policy. They are already subject to taxes that are not income taxes but are in reality wealth taxes. A few examples include: phantom capital gains taxes, Transition tax, GILTI, etc. The cost of filing returns and information reporting is also a wealth tax. In addition, they are already subject to the kind of information reporting that would be required to make a wealth tax work.
