FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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Busy now but will at some point later dig through the guidance. However I suspect it’s a can’t prove a negative kind of thing where it doesn’t specifically say “not required to ask about birthplace” but rather just doesn’t anywhere state that they are required to ask about birthplace. If that makes sense.
I have also heard of people being asked about birthplace, though it’s going back a few years. It’s certainly not on any of the online or paper forms now used for FATCA/CRS compliance. I suspect it was direct conversation with bank employees during the early days when procedures were still being sorted out and everyone was in a bit of a panic.
Also, being asked about birthplace is one thing, being asked to show documents to validate the answer is quite another. Though if one is caught off guard or unaware of the risk (which happened in the case I’m remembering) the “correct” answer cannot be undone. And I’m sure that answering questions incorrectly violates something in the T&Cs one signed, with some unknown consequence if caught, but probably no worse than loss of account unless part of some enormous fraud.
3 / 4
@ Nononymous,
I have seen this question on a bank’s new client form here about 2 years ago. I suspect it depends on the bank’s policy. My impression is that most FIs here just ask for citizenship/tax residency. Probably best to take a look an FI’s form on-line, even if planning to go in and open the account in person; and if they ask birthplace on the form, try another FI.
“ I don’t remember that the Guidance explicitly states they’re not required to ask the question. Could you let me know where that is in the Guidance”
I think you’re right – it says they’re not required to ask if the individual is a US citizen. Apologies for my error.
As I understand it, CRS treats everyone as potentially reportable, therefore everyone is subject to due diligence and can be asked about tax residency. If you’re tax-resident in more than one jurisdiction, you’re reportable and perhaps may be required to provide requested information such as the relevant tax id number.
The IGA Model 1, however, doesn’t place obligations on the accountholder – only on the FI. Happy to be corrected.
It would surely be very useful to be threatened with a fine by a tax agency for refusing to self-certify as US-tax-resident if in fact you’re not (i.e., you live in the same country as the account, and your income is solely from that same country.
It would be an excellent opportunity to challenge the agency in court.
Which is why the IGA1 doesn’t require it; instead, the account is treated as “refractory.”
From the guidelines
The standard form is RC 518. Quote. 1). Are you a tax resident of Canada ? give SIN
2) Are you a tax resident or citizen of US.? give TIN.
Thanks Portland, for s. 8.85 and for CRA form RC 518, “Declaration of Tax Residence for Individuals.”
Re the bank form I referred to which asked for place of birth, that was the FI’s own form, produced in-house for persons opening an account. Did not appear to be have the same function as CRA’s RC 518. Not specifically for tax matters, the form was of a general nature and, as well as place of birth, included questions about employment, rent or own your home, etc.
A financial institution which really is foreign (it’s located in the US) asked for place of birth and then required a copy of my CLN, which I uploaded. I don’t know how they handle people who relinquished long ago.
A point worth pondering when considering CBT, legality, morality, and the saving clause.
The IGA1 countries all claim to “respect” America’s right to tax the interest from non-US tax-favoured savings accounts of US citizens residing in the IGA1 partner country.
But the IGA1 country doesn’t recognise as “foreign tax paid” the US tax which the obedient US citizen pays on the interest from the savings account, and won’t allow FTCs.
What the IGA1 country actually means, when it claims to “respect” America’s right to tax its citizens, is that it respects the right of its resident US citizens to pay US tax in addition to paying the domestic tax that is legally due.
Double taxation, in a word.
Some of the Swiss banks went a stage further and asked people to sign their info forms ‘under the pain of purjury’
This was before the banks fines had been settled, not sure if this is still practiced since they have now moved to IGA model 1 agreement
“Was our trial unnecessary since some claim in this post that it’s really “easy” for Canadians affected by the US-Canada FATCA IGA legislation to get out of paying any tax to the IRS (forever?) — as long as they are “smart” and go into hiding?”
I hope that neither the plaintiffs nor their lawyers see it as “getting out of paying US tax” or “hiding” when a resident of Canada or Europe or Australia doesn’t volunteer to file US tax returns.
US citizens are entitled to file US tax returns to claim US tax breaks, wherever they reside. By doing so, they are agreeing to be taxed by the US on their worldwide income, as if they were US-resident. This can be a very sensible choice, for US expats who have invested in the US rather than the residence country, or for US expats who want to claim e.g. US tax credits.
But for many USC residents of other countries, it’s much more sensible to stick to investing in the residence country and claiming residence-country tax breaks, such as tax-free saving accounts. This is exactly what many of did, for decades, before the IGA1 came along to force renunciation.
Perfectly legal, perfectly sensible, perfectly easy. No hiding required.
“INTERGOVERNMENTAL AGREEMENTS (IGAS): Amend Internal Revenue Code § 1474 to Allow a Period of Notice and Comment on New IGAs and to Require That the IRS Notify Taxpayers Before Their Data Is Transferred to a Foreign Jurisdiction Pursuant to These IGAs, Unless Unique and Compelling Circumstances Exist”
https://taxpayeradvocate.irs.gov/Media/Default/Documents/2018-ARC/ARC18_Volume1_LR_06_IGAS.pdf
excerpted from
NTA’s 2018 Annual Report To Congress
“12
. Harmonize Reporting Requirements for Taxpayers Subject to Both FBAR and FATCA By
Eliminating Duplication and Excluding Accounts a U
.S . Person Maintains in the Country
Where He or She Is a
Bona Fide
Resident
. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .
25″
https://taxpayeradvocate.irs.gov/Media/Default/Documents/2018-ARC/ARC18_PurpleBook.pdf
There is a middle way, which would be renegotiation of the IGA to address the specific injuries.
Birth should not be used as a justification for removing privacy rights from an individual who has no crossborder income or financial interest. Citizenship should not be used as a justification for removing privacy rights from an individual who has no crossborder income or financial interest.
A renegotiation of the IGA1 to bring certification in line with civil rights, and a concomitant renegotiation of CRS treaties to do the same, would be a great outcome, it seems to me.
This just turned up – freedom of information request denied in the UK:
https://www.theamerican.co.uk/pr/ne-FATCA-FOI-Request-Refused?fbclid=IwAR1o1f11UJ9NJr25bD__JsRNyBHtNX7pH8sbUKsCF2K6KHm2VHAXuAkuxdI
The detailed response (the PDF document) reproduces the original request, which provides a useful template for anyone wanting to spend $5 to make a similar request in Canada. The more the merrier. Go here:
https://atip-aiprp.apps.gc.ca/atip/welcome.do
Bumping this back up because I thought it rather interesting, particularly for anyone in the UK, and it was lost in the general outrage over yesterday’s report of consular behaviour.
“Specifically: more Europeans are experiencing: pressure to provide U.S. Social Security Numbers, bank account closures and the resulting pressure to enter the U.S. tax system.”
I’m not clear on the logic here: how do banks’ demands for SSNs and threats of account closure result in pressure to enter the US tax system? Only in a very few cases (in Switzerland and possibly Germany) have we heard of banks requesting evidence of customers’ US tax compliance.
Indirect pressure exists, of course – an accidental learns of their US tax obligations via FATCA, panics, contacts a compliance firm and makes a bad decision to begin filing – but there is no direct pressure.