FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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latest from James Jatras – highlights costs incurred by Canadian banks to implement FATCA
http://www.repealfatca.com/index.asp?idmenu=4&title=News
“……Also appearing today in the Wall Street Journal is an important note regarding Canada – a “must have” country for keeping FATCA alive. While inaccurately calling FATCA a “law aimed at cracking down on tax evasion by expatriates,” the article (“Canada Banks Tally Their Tax-Compliance Tab”) exposes the recklessness of Canadian banks’ seeking to appease the U.S. Treasury Department on the backs of their customers and Canadian taxpayers, not to mention compromise of Canada’s sovereignty. The projected costs so far: a billion dollars and counting. Benefit to Canada: zero. Commendably, the article flags the heroic effort of the Alliance for the Defence of Canadian Sovereignty to challenge Ottawa’s capitulation to FATCA in violation of citizens’ constitutional rights…….”
Once we win our Charter legal challenge to the IGA in Canada, I want to try this government’s lackey’s, the CRA and the PM for treason. I think we could gather enough funds to do that as a class action lawsuit.
@Badger
Professor Christian’s response to the possibility that information will be used for other purposes:
@taxpolblog: yes, that’s the idea. If US congress changes the rule, q is would CRA stop exchanging info; if so, do FATCA sanctions apply
Also, there don’t seem to be any lines of defense whatsoever to stop the flow of information on customers who aren’t but are suspected of being USP’s, and NO mechanism in place to retrieve this information should it be known the IRS has it.
@Gwevil “Once we win our Charter legal challenge to the IGA in Canada.”
I have had a lousy day and that put a big smile on my face.
We will win……………
I am so enthused about this you would think I was Canadian. 🙂
@GWEvil, the more I look at the current and preexisting Canada US tax treaty gaps – even apart from the FATCA stuff, the more incredibly guilty and egregiously willful the Harper government, Conservative MPs, and lackeys like those at the Finance Dept. appear. (ex. Kevin Shoom currently Senior Chief, International Taxation and Special Projects, Department of Finance or Ernewein of the CRA know that there is no mechanism for redress, recourse, oversight or accountability with the FATCA IGA http://openparliament.ca/committees/finance/41-2/31/the-chair-31/ http://openparliament.ca/committees/finance/41-2/39/brian-ernewein-1 ).They already know, or have reason to know of the serious EXISTING flaws of the current Canadian US tax treaty – quite apart from FATCA – which just made them exponentially worse. The Conservatives say they ‘respect’ the ‘right’ of the US to make its own tax laws – and they offer no qualification of their endorsement – and now offer a step towards assistance in collection – which Prof Christians said the FATCA IGA could be considered on that continuum, via wholesale automatic information remittance to the IRS – pointing out what assets Canadian taxpayers and residents own in FIs and nonFIs, where they are, and where we live.
We may have given up speaking with our MPs after the FATCA IGA enabling legislation passed in omnibus Bill C-31, but I say we continue to make an effort to highlight the current egregious and glaring flaws in the current Canada US tax treaty in correspondence to them, so that they cannot say they were unaware – we will have it on record that we attempted to bring it to their attention that it remains unremedied – and it is their duty to provide remedy and protection – which is what a tax treaty is designed to do. Even apart from the IGA, it is their duty and responsibility for the current egregiously flawed terms of the tax treaty.
‘Respecting’ US tax law, a stupid vow to make by Conservative MPs and Harper minions which is already questionable, does NOT relieve the Canadian government of their primary and overarching duty to protect its own tax base and the best interests and rights of Canadian citizens and taxpayers. That is why the treaty exists at all with the US. The Harper government has criminally and weakly and incompetently failed to assure any protections for their own and other federal government creations – the RDSP and TFSA and RESPs. They have NOT won any protection from US extraterritorial capital gains taxation imposed from afar on Canadian family homes. They have not won any protection for Canadian residents who seek to invest in CANADA via Canadian mutual funds. They continue to allow the US to stake claim to the very assets that would keep Canadians more self sufficient, and less reliant on the Canadian social safety net. They have no mechanism for redress, recourse, oversight or accountability if the US abrogates agreements http://openparliament.ca/committees/finance/41-2/39/brian-ernewein-1/ . I don’t think that a public avowal of ‘respecting’ US tax law is going to cut it as an explanation for that singular failure.
I say we continue to chip away at that aspect of things at the same time as the legal challenge. It will be election time soon. The Cons make a point of saying that the FATCA IGA does not impose any ‘new’ US taxes. But they have not done anything about the Obamacare investment tax – which is NEW. And, one could argue that the taxes on registered accts was NEW, because RESPs, TFSAs and RDSPs have not existed for very long. So there was no reason why Canadians should know that savings in them would be taxable by the US or that their very existence would be reportable and penalizable as ‘foreign trusts’. And there is NO defensible reason why the Harper government should continue to allow a foreign government to assert a tax or penalty claim to those savings.
That alone is such a singular failure that they CANNOT explain away at all. They make a point of pretending that an ‘exemption’ was negotiated for registered accts under the FATCA IGA. It was significant enough to them for them to continue to keep offering that up for public dissemination. There is NO justification for our federal government to allow a foreign government to extraterritorially tax our Canadian child’s education savings, our Canadian disability savings or taxfree savings. I think that is simple enough to explain without even getting into the weeds of FATCA and FBARs. I think that their failure to protect and exempt our Canadian registered accts could be a major Achilles heel. There is no US threat of economic sanction equivalent to the 30% FATCA withholding that is preventing the Harperites from better terms in the Canada US tax treaty – only lack of motivation and US intransigence. More publicity of that can only hurt the Harper government and Conservative MPS. This is not about ‘compliance’ and ‘duty’ to the US as individuals deemed UStaxablePersons, it is about the Prime Minister and his minions failing at the core business of a federal government vis a vis a foreign power. Negotiating treaties and protecting Canadians cannot be waived away by placing blame on victims. The treaty exists – it is the Feds fiduciary duty and duty of care, and they have failed spectacularly at it – even more so because they purport that the FATCA IGA ‘built’ on the existing egregiously flawed tax treaty. They are responsible for the treaty, they chose to pretend the IGA built on it, they must take responsibilty for the consequences for their incompetence, and disingenous and deliberate wilful failure.
We should see that what the Harper government has chosen as their preferred and repeated talking points signals their weaknesses. They choose to raise the non-reporting of registered accts in the IGA, so they recognize that as a vulnerability and an issue that would resonate with the Canadian public. They choose to repeat that they ‘respect’ US ‘right’ to taxation. Therefore they realize that there is some kind of vulnerability that they are trying to counter. They choose to repeat that the IGA is not a tax and imposes no ‘new’ taxes, so that is a point they have strategized about. It is all a web of deliberately crafted halftruths and disingenuous claims – and when I see almost the same words being offered up by leaders in several other countries saying almost the exact same thing, then I think it tells us that they’ve been fed suggested talking points by the likes of Mythter Stack, or they’ve all conferred and borrowed stuff from each other at meetings of the G8, G20, OECD, etc on how to rationalize what they’ve done to their own citizens and taxpaying permanent residents.
@Bubblebustin
Sure, it’s worth a try (forever the optimist).
I’m wondering why financial institutions are under no obligation to verify US indicia on an account and are under no obligation to notify their customers if their banking information is forwarded to the CRA and then in turn forwarded to the IRS.
On the CRA FAQ about FATCA, it states:
If a financial institution, applying the due diligence rules of the Agreement to its accounts, discovers any records connected to the account that have an unambiguous indication of a U.S. place of birth, the financial institution may treat the account as a reportable account or follow up with the account holder to obtain documentation that shows the account holder is not a U.S. resident or U.S. citizen.
There is no assurance that there will be follow up. A person could potentially have an unambiguous US place of birth on their banking records, but they may have relinquished their US citizenship years ago and are not a “US person for tax purposes.” Why is the bank under no obligation to follow up with this customer and under no obligation to even notify the customer once their private banking data is sent to a foreign government?
This means that a Canadian only citizen would have their private banking information sent (and continue to be sent) in error and they would have no idea. If this is acceptable, then sending all Canadian banking information to the IRS must be acceptable.
The customer (who likely hasn’t even heard of FATCA) cannot be expected to notify the bank about something that happened perhaps decades ago and is likely not even a consideration to them any more. The banks should be REQUIRED to verify “US indicia” and should be REQUIRED to notify all customers whose data is forwarded.
@Kathy, I agree that the banks should be REQUIRED to verify “US indicia” and should be REQUIRED to notify all customers whose data is forwarded. I could see former US citizens having their data erroneously sent to the IRS with fines for non-reporting assessed, especially if they failed to certify five years tax compliance via form 8854.
Badger hits another homer here:
“Negotiating treaties and protecting Canadians cannot be waived away by placing blame on victims. The treaty exists – it is the Feds fiduciary duty and duty of care, and they have failed spectacularly at it – even more so because they purport that the FATCA IGA ‘built’ on the existing egregiously flawed tax treaty. They are responsible for the treaty, they chose to pretend the IGA built on it, they must take responsibilty for the consequences for their incompetence, and disingenous and deliberate wilful failure.”
We should all be pressing MP’s of every stripe to make changes to the current Canada – US tax treaty.
This request will dove-tail very nicely with Kathy’s comments about non-US persons having their account info sent to the IRS is error, AND the fact that once gone, it’s not coming back – unless that black hole of information called the US government decides so (which isn’t likely no matter how nicely we ask).
Thank you Badger and Kathy for your excellent comments.
@bubblebustin, Harper and the Cons have drawn unwelcome attention to the question of their incompetence and willingness to let the US predator savage Canadian citizen and permanent resident taxpayers, leaving significant US economic incursions into Canada unopposed under the pre-existing tax treaty pre-FATCA. Post FATCA is an even greater travesty. I say we approach MPs to ask them to explain the unconscionable deficiencies of the Canada US tax treaty – and what they propose to do about it. In this way, Cons cannot divert off onto whether those affected should ‘know’ of their so-called ‘obligation’ to a foreign country – the US. They must explain how it was that those in power in Canada – the Harper government with one of the longest serving Finance Ministers in Canadian history, who as our federal government with treaty making responsibility, is tasked with intimate knowledge of the most important tax treaty Canada has with any country, yet allowed and CONTINUES to allow the TFSA, RESP, RDSP, Canadian mutual funds and Canadian family home be left vulnerable and exposed to extraterritorial claims by the US.
I wonder if this recent FOI victory by the EU Sophie in’t Veld re the US and the SWIFT agreement http://www.pcworld.com/article/2450760/eu-court-orders-more-transparency-over-useu-terrorist-finance-tracking-program.html will also have an impact on the transparency and FOI she requested re the content of the FATCA negotiations between the EU Commission and the US earlier (see at 42 here http://www.youtube.com/watch?v=zRoU-JNFhr0 ).
See;
“The SWIFT agreement regulates the transfer to the US of information on international bank transfers conducted through the SWIFT system. So far, the Council refused to disclose the opinion of its Legal Service on the legal basis of the agreement. But the Court now finds that documents on international relations or negotiations should not be automatically exempted from the principle of openness of government.
MEP in ‘t Veld commented, ‘This is a great victory. The Court clearly states that transparency is a prerequisite for a truly democratic Europe. The European Union must develop from a Europe of diplomats, discretion and confidentiality to a Europe of citizens, administrative transparency and trust. ‘ ” http://www.freshfields.com/en/news/Dutch_MEP_Sophie/
http://www.freedominfo.org/2014/07/t-veld-ruling-raising-bar-denying-access-eu-documents/
https://www.documentcloud.org/documents/1212239-cjeu-swift-transparency-ruling.html
For example, see this thread:
https://twitter.com/SophieintVeld/status/326323659767689218
Sophie in ‘t Veld @SophieintVeld 23 Apr 2013
@MiaChupacabra I am afraid so. Docs on talks between EU Commission and US are covered by transparency regulation”
We need transparency on the content of the FATCA talks between Canada and the US. Where is our Canadian equivalent of Sophie in’t Veld?
See Sophie in’t Veld speaking about FATCA, and her comments about FATCA being “policy laundering”:
http://youtu.be/F-rsqi9IwoE
http://www.youtube.com/watch?v=zRoU-JNFhr0 particularly starting at 39 minutes
Listen to Sophie’s words and depth of understanding of the democratic and civil/human rights crisis that FATCA provokes. What she says about FATCA and democracy in the EU, is applicable outside the EU as well.
Supporting and FUNDING the efforts of the Alliance for the Defence of Canadian Sovereignty ADCS http://www.adcs-adsc.ca/About_ADCS.html is our avenue for getting redress against the FATCA IGA legislation as enabled in Canada by the federal Harper government – and successful efforts in Canada – will assist others in challenging US FATCA’s unconstitutional rights violations and forcible application in the rest of the world.
http://www.scmp.com/business/article/1565727/fatca-regime-may-have-unintended-consequences-financial-system
Monday, 04 August, 2014, 3:40am
UPDATED : Monday, 04 August, 2014, 4:51am
‘Fatca regime may have unintended consequences for financial system
Crackdown on Americans’ money in overseas accounts may lead to the growth of shadow banking and the financial power of other countries’
by
Peter Guy
………..”…..represents the most ambitious tax and personal data collection strategy in financial history. It will embolden and encourage more global intrusions by US government agencies. More people will be driven underground to seek shadow banking services.
Fatca is controversial because it dramatically shifts the burden of disclosure from the American person to their banks. Foreign financial institutions are now more than just tax bounty hunters for the US Internal Revenue Service (IRS), but pawns in an historical power play for control over the global financial system…..”…..
,,,,”The ascendance of parallel financial powers represents a threat to US dollar hegemony. Fatca extends US taxing authority far beyond legally requiring expatriate Americans to file accurate tax returns….”……
.”the goal and reward isn’t improved tax collection, it is a surveillance exercise made possible through the creation of a massive global database.”
#Obama revises bait&switch program 4 #OVDP #FATCA, means more money stolen 4 USA from emigrants & legal immigrants http://bit.ly/1pSPcgR
The FATCA infection spreads to the domestic doctor and his patients…
FINCEN Issues New Due Diligence for Beneficial Owners of US Accounts to Provide FATCA Reciprocity to Foreign Governments
Creating the domestic DATCA to impose on USFIs without Congressional Authority. Never underestimate the FATCAnatics and this Administration Executive power to do what they hell they want, to impose what they can not get legislatively. DATCA reciprocity is buried on page 203 of their FY15 budget, and that hasn’t passed, so this move does NOT surprise me.
http://1.usa.gov/OY69ff
FATCA is truly the Ebola virus of the financial system. Its infection has spread to the global GATCA, and now just like the Doctor patient coming home from Africa for treatment of Ebola contracted overseas, DATCA is now spreading back to the homeland to infect USFIs. There is no known cure to stop the spread without voting the Dems out of the Senate in the midterms to put the virulent Executive Branch in an isolation chamber to stop further infections..
@Badger & @Mark Twain
Thank you for the interesting articles. I forwared to my FA and MP.
I am so thankful to have my CLN
On another note I find more spam coming in from this site. I realize I have to go directly into the site rather than rely on email alerts. The frequent spam is a turn off.
I believe that the Canadian-US IGA, in theory at least, is “reciprocal”. Has anyone actually seen any examples of it working in the reverse direction in practice? Any examples of US banks looking for evidence of “Canadian indicia” on their customers and then turning that data over to the IRS and from there to CRA?
@Dash1729, of course not. They’re not geared up to do any kind of search and are beginning to realise how much it would cost them to do the same system changes that the rest of the world are having to do for FATCA.
http://www.forbes.com/sites/robertwood/2014/01/16/even-u-s-banks-must-aid-irs-hunt-for-offshore-accounts/
They may get there eventually, but I wouldn’t expect results any time soon.
@Medea
Thanks for that link. It does beg the important question of why the US banks are suing, though, whereas the Canadian banks are rolling over and playing dead and leaving it to much less deep-pocketed folks (eg ADCS) to sue.
@Dash1729, I guess they never thought FATCA would apply to them as it’s aimed at foreign account holders only. There’s nothing in FATCA itself iirc about reciprocy, it’s the IGAs that have introduced that side of things. And as most US banks don’t operate outside the US the threat of 30% withholding on US transactions didn’t bother them either. Now they’ve realised they’ve been shafted like the rest of the world and they’re screaming about it. Of course it does make people like Senator Rand Paul take notice so I suppose that’s the good thing about it.
@Dash1729
I had a few savings accounts in the states that I forgot about… under 10K…. with my canadian addy… got a letter from CRA about them… had to pay a fine… wasn’t slammed to death with penalities…
@US_Foreign_Person
That reciprocality was pretty quick! Unless this happened prior to final implementation of FATCA on 01 July?
That wasn’t because of FATCA. The US bank would have sent an information slip (electronically) to the IRS. They would have noted the Can. address and lack of SS number and forwarded it to Ottawa under the existing tax info sharing agreement. Nothing new.
On March 06 2014 the CRA issued draft guidance to financial institutions about FATCA. Does anyone know if there has been any different or additional guidance issued since then? I’d particularly like to know if there has been any change in this section:
I may have found the answer to my question here:
“Guidance on enhanced financial accounts information reporting”
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/gdnc-eng.html#Toc390079679
That was issued on July 31 2014. Now I just have to wade through it to find a comparable section to 8.64 to 8.66 from the March 06 2014 guidance. I wonder how many times the guidance will change as the years go by? I hope the FIs will enjoy their FATCA experience. (snark)
It would seem that at least some banks in Japan are being a bit slow in gearing up for FATCA.
My wife opened an account at the end of July at Japan Post Bank and was not asked anything about being a “US person”
An application for an account at an online bank has a check box for “US person” or “non-US person” (no check box for “non-US person with US indicia”.
An application form for a major trust bank requested at the beginning of August has no question regarding being a US person.
In all 3 cases, the ID required could easily be of a type that does not indicated US indicia even for someone who’s only nationality is US.
So as of right now, it is a bit like “don’t ask, don’t tell”.
Prime example of serious misinformation about FATCA. This coming from some site; “the European Institute for International Law and International Relations” in Brussels, that says one of its goals is that it seeks to:
“Influence”
“The EIILIR wants to persuade individuals or groups with decision-making power to support a position that we have analyse. It is important to influence people with power to act in support of the needs and interests of those who do not have direct power and influence.”
http://www.eiilir.eu/global/economic-strategies/usa/133-fatca-a-big-leap-against-fat-cats