FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See FATCA Discussion Thread (Ask your questions) for earlier discussion.
Hi I was just wondering how information under FATCA will be shared between your Canadian CPA,(who does only your Canadian Taxes) the CRA and the US. Here is the reason why I am asking:
The CRA sends out a confirmation letter (Form T1114E(06) “Subject: Authorizing a representative for online access
it reads like this
“Dear Sir or Madame:
You recently signed a consent form that authorizes the following representative to conduct business on your behalf with the CRA for all your income tax matters and for all your tax years. This will allow your representative o transact on your behalf using our electronic Represent a Client service as well as by telephone, in person and in writing”
XXXXXX (name of your account and his # is here)
“By this letter the CRA is taking an extra step in protecting the confidentiality of your tax information by confirming that you have authorized the the above representative to access your tax information.
Your authorization takes effect XXXX ( on such and such a date)
To me this raises privacy questions e.g. can the CRA now by pass you without your knowledge and deal directly with your accountant. Does your accountant have to legally notify you that the CRA has contacted them? It sounds like your accountant has your signed legal authorization to send all of your tax info to the CRA FOR ALL TAX years — what does this mean?? Should anyone who uses an accountant be cancelling their agreement with the accountant as soon as you have received the all clear from the CRA that your last years’s filings are in order , no audit is forthcoming and nothing is more is required by the CRA? Should one send a letter to the CRA after the all clear that you have cancelled your agreement with your accountant until the next filing is due??
Do these sound like legitimate concerns??
http://www.cra-arc.gc.ca/tx/ndvdls/tpcs/chng_rps/llw-eng.html
The page above explains the 3 levels of authorization and what each level is allowed to do.
The info your CPA gives CRA with respect to your taxes has nothing to do with FATCA and cannot legally be shared with anyone.
Hi KalC and WhatAml. that’s good to know. We give our tax info to the accountant so they can file our taxes
I am not trying to cause alarm but I have started to look at all the privacy statements and agreements to access your personal info that people sign and look at how, who, what and why they can be used. With all the concern about privacy and access to info now I wonder how many people really read the fine print in everything they sign? I know there is no expectation of privacy with your CPA unless the CPA works, in effect, for you, thru your lawyer.
a good example is the difference between the privacy statements of the banks and credit unions.
.
@GeorgeIII @badger
The best thing I have seen on Israel is Nathan Guttman’s article “IRS Is Coming for American Tax Evaders in Israel.” It helps explain the cultural reasons why the state of Israel may be more understanding. It has long been known that certain immigrant groups tend to squirrel away money offshore for cultural reasons (it is even in Shaxson’s Treasure Islands, p. 127, although I don’t think Shaxson quite gets that what these people fear probably isn’t tax but, ironically, confiscation).
@Just Me
Christian Aid UK has already voiced concerns about the ability of poor countries to meet the standards of the OECD information exchange, which just requires sending information out to a country of residence. I am not sure how well those countries would cope with the more demanding FATCA. Some countries in central America are really stressing out about their lack of an agreement because they are very dependent on remittances.
“bubblebustin says
May 14, 2014 at 12:40 pm
@GeorgeIII
Under the Model 2 IGA agreement, there’s something called the “most favoured nation” clause that assures that no country can get a better deal than another.”
page 17 “Page 17 of 47
3. Development of Common Reporting and Exchange Model.
The Parties are committed to working with Partner Jurisdictions and the Organisation for Economic Co-operation and Development on adapting the terms of this Agreement and other agreements between the United States and Partner Jurisdictions to a common model for automatic exchange of information, including the development of reporting and due diligence standards for financial institutions.
4. Documentation of Accounts Maintained as of June 30, 2014.
With respect to Reportable Accounts maintained by a Reporting Financial Institution as of June 30, 2014:
a) The United States commits to establish, by January 1, 2017, for reporting with respect to 2017 and subsequent years,
rules requiring Reporting U.S. Financial Institutions to obtain and report the Canadian TIN of each Account Holder of a
Canadian Reportable Account as required pursuant to subparagraph 2(b)(1) of Article 2 of this Agreement; and
b) Canada commits to establish, by January 1, 2017, for reporting with respect to 2017 and subsequent years, rules requiring Reporting Canadian Financial Institutions to obtain the U.S. TIN of each Specified U.S. Person as required
pursuant to subparagraph 2(a)(1) of Article 2 of this Agreement.
Article 7 Consistency in the Application of FATCA to Partner Jurisdictions
1. Canada shall be granted the benefit of any more favorable terms under Article 4 or Annex I of this Agreement relating to the application of FATCA to Canadian Financial Institutions afforded to another Partner Jurisdiction under a signed bilateral agreement pursuant to which the other Partner Jurisdiction commits to undertake the same obligations as Canada described in Articles s 2 and 3 of this Agreement, and subject to the same terms and conditions as described therein and in Articles 5 through 9 of this Agreement. “pg 17 since there is no 30% withholding for US person on US income and no shutting down of recalcitrant accounts why are not the European asking for a better deal.
All you need is a CLN,
This is explicit
“9.29 If a financial institution wants to provide more instructions in connection with the question of where the individual resides for tax purposes, it may explain that a U.S. citizen is, in all cases, a U.S. person even if that individual also resides in Canada or another country. Non-U.S. citizens may take into account the application of any relevant tax convention in answering the question of where they reside for tax purposes.”
page 103
http://isaacbrocksociety.ca/wp-content/uploads/2014/03/CRA-Draft-Guidance-for-Financial-Institutions-March-06-2014-2.pdf
The USA treasury may still consider you an American for tax purposes even if you have not completed 8854 but Canada IGA says you are not a USA person for tax purposes when you get a CLN. Of course there is still that damn rule from the 1995 USA Canada tax treaty for collection of people who recently became Canadians.
Some colourful writing here for your enjoyment:
All Aboard FATCA Express
US Citizenship Renunciations Up 221%
“The US Embassies abroad are wringing their hands because there is a new phenomenon of US citizens renouncing their citizenship and getting passports from other nations. The reason is the stupid new law Obama and Congress put into effect called FATCA. This one goes well beyond ill-advised to stuck-on-stupid territory. Yet another acronym from DC and this one means Foreign Accounts Tax Compliance Act and was a dimwitted tag along to the pretense jobs creation bill they labeled the 2010 H.I.R.E. Act; i.e. Hiring Incentives to Restore Employment Act.”
http://www.rense.com/general96/allaboard.html
This is today’s propoganda tweet coming out of Obummer’s mouth.
Every American should be able to marry the person they love. #MarriageEquality
It’s posted on the Whitehouse facebook page.
But, Why would someone want to marry an American?
“When all Americans are treated equal, no matter whom they are or whom they love, we are all more free.”
POTUS
So, Barry, start handing out those FBAR forms to all the homeland straights and gays, too! Let them get their FATCA whoopin’ like the others!
@Mark Twain
**Every American should be able to marry the person they love. #MarriageEquality**
Unless u live outside the US… Then u have a deadly disease worse then STDs which u can get rid of with meds.. you get to have no rights, privacy, & funds… but u have *cough*… love… yep… that sucker will pay for the roof over your head and put food on the table. Yes… marriage equality… be as broke as US persons outside the US together
‘Lawmakers warn Russian banks against giving up data under US FATCA’
Published time: May 22, 2014 13:52
“The head of the Lower House financial markets committee said that until Russia passes a law, any report to US tax authorities about a client accounts in Russian banks would be considered a violation of bank secrecy. MP Natalya Burykina (United Russia) added that bank employees who permit it could face criminal prosecution. She also said that if the United States applies sanctions to Russian banks for refusing to comply with the requirements of the Foreign Account Tax Compliance Act (FATCA), Russia would reciprocate with similar sanctions……”
Here’s the URL for the article above
http://rt.com/politics/160764-russian-banks-fatca-ban/
“What does FATCA actually do? FATCA is a new law—it was passed in 2010, but it hasn’t come into effect yet—it’s supposed to come into effect July 1, 2014. But the fact is, basically it orders every country in the world to enter into a tax information-sharing agreement with the United States to the satisfaction of the United States. If you do not do so, if you fail to do so, then any interest payments on your securities to parties in your country will be subject to a withholding tax at the source, and the rate is fairly high. I think it’s 30%. And so now Russia was actually in the process of negotiating such a treaty with the United States, but that negotiation was blown up by the confrontation over Crimea. As of now, Russia has no such agreement with the United States, which means that come July 1, Russia will not be in compliance with the dictates of US law, which means that interest payments on Treasury securities to account holders in major Russian banks such as Sberbank and VTB will be subject to this withholding. So what would you do? Well, you would dump the Treasuries, because you don’t want to sit there and hold the Treasuries, if they’re going to be subject to a withholding tax. So basically it’s a way to force the Russians to dump US Treasuries, which increases US interest rates, which hurts our housing recovery and hurts our stock markets. This is like pointing a gun at your own head and saying, “If anyone moves, I’ll shoot.”” .. from http://www.internationalman.com/articles/the-collapse-of-the-international-monetary-system-and-petrodollar-part-2
from American Chamber of Commerce;
https://www.uschamber.com/blog/irs-delays-fatca-enforcement-banks-start-date-looms
‘IRS Delays FATCA Enforcement for Banks as Start Date Looms’
Friday, May 23, 2014 – 9:15am
by David Kinkade
“……But as has become par for the course with the nation’s bloated and dysfunctional tax code, the new law is rife with unintended consequences—the hallmark of a poorly conceived policy. And a long string of implementation snafus and delays only serve as further evidence that FATCA is not ready for prime time….”
“…The Treasury Department’s stock response to critics has been to suggest they’re overstating the problems with FATCA. Yet a late 2013 report from the IRS’s own Office of the Taxpayer Advocate serves to validate the questions and concerns raised by FATCA critics, noting that the law “has the potential to be burdensome, overly broad and detrimental to taxpayer rights.”
“FATCA carries with it the potential for substantial resource burdens and significant due process concerns that will arise to the extent that the regime is not correctly and effectively implemented in practice as well as properly conceived in theory,” the IRS report notes.
But there’s little evidence that the agency has taken heed of the advocate’s report—and Americans living and working overseas are growing increasingly edgy as the July 1 FATCA launch grows nearer.”
Calling KalC
I really do not want to spend a lot of time at this website, I am tired of paranoid and other ridiculous stuff. I am principally interested in helping newbies beat the system.
I am wondering if you can do a couple of thing.
A while back I saw a post saying that during FATCA hearing the Conservatives (CRA) will only collect from non Canadian for USA source income.
This would mean that a Canadian permanent resident (US Citizen) should not pay taxes on Canadian income. This may effect his decision making.
Can you post a thread, to see if we can get a confirmation of this statement. This is tighter than the rules from 1995 USA Canada tax treaty which is less specific.
In addition it would be nice to get supporting comments from the other political parties,
I remember a couple of months ago a Canadian permanent resident asking what to do. This would help the person. Of course he should become a Canadian. Then get a CLN. The USA may still consider him a US person for tax purposes until he does the exit taxes, but all Canada requires is CLN. Paragraph 9.29 of
page 103
http://isaacbrocksociety.ca/wp-content/uploads/2014/03/CRA-Draft-Guidance-for-Financial-Institutions-March-06-2014-2.pdf
Can you post a thread, seeing if anybody can confirm what the Conservative said and comment from a political party.
I will relate 2 more story.
I knew an American who was in Canada for about 20 year (before 1995) and returned to USA 20 years ago. He never knew he had to file USA taxes and was never bothered in USA. He has passed away several years ago, so I do not if they have been more vigilant. This confirms your minnow rules.
I knew a Canadian only who received nasty letter from IRS every 2 months. He was highly paid but he worked in USA under Free trade agreement as professional (no Green Card). He was not able to cross border. Of course no CRA collection or legal action in Canada,
It may be helpful that you bookmark these two legal decision in Canada (if you have not already don,e
http://scc-csc.lexum.com/scc-csc/scc-csc/en/item/7322/index.do
Of course since 1995, the CRA will collect from a person in a similar situation but the courts will not.
I think as well this statement should kill the idiot that talk about extradition for failing to file taxes.
“The views, (i) that the application of the rule that foreign States cannot directly or indirectly enforce their tax claims in our courts is not affected by the taking of a judgment in the foreign State, and (ii) that the liability to pay tax does not become converted into a contractual obligation, both appear to me to be supported by the following passage in the speech of Lord Somervell of Harrow in Government of”
http://uniset.ca/other/cs6/68OR2d379.html
Thanks KalC I think you do a excellent job helping newbies beat the system.
FATCA – A Canadian perspective / commentary
By Kim G C Moody FCA, TEP
http://www.moodysgartner.com/fatca-a-canadian-perspective-commentary/
George. PULLEEZE!! I’m not trying to help anybody ‘beat the system’. I’ m trying to help them to see their options clearly and without fear.
@Kalc
We nn your comments as an offset to much fear out there, so I appreciate them… but given our governments evolution into the Total Awareness State, (Dragnet Nation) inept and under resourced as the IRS currently is, there is still risk that each person has to assess on their own. Tolerance levels vary. Yours maybe higher than others. I understand that you are not “trying to beat the system” as much as help remove some unnecessary fear, but then when you have those in government now equating legal avoidance to the same thing as evasion, you have to wonder.
More info on the upcoming FATCA lawsuit in the US.
http://www.bilan.ch/argent-finances-plus-de-redaction/fatca-lappel-mondial-aux-sponsors
Weird that this comes out in a French article. I haven’t seen the info anywhere else yet. But the main point is the approximate cost of $250k to start legal action and in approximately 2 weeks, Solomon Yue will start fatcalegalaction.com to finance the campaign.
Stay tuned.
@George III, riddle me this.
A British Citizen with clinging US nationality is a permanent resident in Canada.
His/her permanent residency is based on their British Citizenship and they enter and leave on a UK Passport.
Will the CRA help collect against that person?
found this dated May 29 this year re FATCA and Australia
http://www.comlaw.gov.au/Details/C2014B00107
Tax Laws Amendment (Implementation of the FATCA Agreement) Bill 2014
– C2014B00107
Current
A Bill for an Act to implement the FATCA Agreement, and for related purposes
Administered by: Treasury
For authoritative information on the progress of bills and on amendments proposed to them, please see the House of Representatives Votes and Proceedings, and the Journals of the Senate as available on the Parliament House website.
Registered 29 May 2014
Introduced HR 29 May 2014
2013‑2014
The Parliament of the
Commonwealth of Australia
HOUSE OF REPRESENTATIVES
Presented and read a first time
Tax Laws Amendment (Implementation of the FATCA Agreement) Bill 2014
No. , 2014
(Treasury)
A Bill for an Act to implement the FATCA Agreement, and for related purposes
Contents
1………… Short title………………………………………………………………………………… 1
2………… Commencement……………………………………………………………………….. 1
3………… Schedule(s)…………………………………………………………………………….. 2
Schedule 1—FATCA 3
Income Tax Assessment Act 1997 3
Taxation Administration Act 1953
RBC Direct Investing: The US Persons Round-Up:
I was helping a family member open an on-line investment account with RBC Direct Investments today. I couldn’t help but notice the many different ways RBC DI is trying to identify so-called “US Persons.”
Here are the questions asked by the on-line application:
Are you a U.S. Citizen or a U.S. resident for tax purposes?
If you answer yes, the next prompt is:
To comply with regulations, you will be presented with a W9 form with your application package.
Enter your US Social Security Number (SSN).
If you answer no, the next question is:
How many countries are you a resident of for tax purposes?
You are then asked:
Country of residence for tax purposes.
Next up is:
Enter your City of birth.
Followed by:
Enter your Country of birth.
Next up is:
Are you, the co-applicant, a U.S. Citizen or a U.S. resident for tax purposes?
If you answer yes, you are prompted to enter your US Social Security Number (SSN).
You also get the statement, “To comply with regulations, you will be presented with a W9 form with your application package.”
If you answer no, the next prompt is:
How many countries is the co-applicant a resident of for tax purposes?
This is followed by:
Co-applicant’s country of residence for tax purposes.
Co-applicant’s city of birth.
Co-applicant’s country of birth
Are you married or do you have a common-law spouse?
Is your spouse the joint applicant?
I think we can consider this a sign of things to come from Canadian banks and investment firms in the coming months. Forewarned is forearmed.
One more thing. A W-8BEN for is a part of the package. RBC-DI requires completion of the W-8BEN form so that Canadian citizens are given the more favourable 15% tax withholding by the US on their dividends (versus the standard 30% I believe if a W-8BEN is not completed). New on the W-8BEN are two questions:
City of Birth
Country of Birth
I have banked with RBC-DI since 2007. Prior W-8BEN forms did not ask city and country of birth.
The net has been cast!
@BC_Doc “Forewarned is forearmed.”
forearmed for what? There’s not much to do to escape the net if you have obvious US ‘indicia’.
Might as well enter the bank with your red and blue star pinned on your shirt.