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.
Here’s another from Robert Wood;
http://www.forbes.com/sites/robertwood/2014/09/22/armed-with-fatca-irs-hunts-offshore-tax-evaders-while-canada-eases-up/
Wood has produced an article full of innuendo and implication, without reference to the nuances and complexities that he is very aware of.
The article seems designed to goad, and to validate the forcible and arrogant imposition of US FATCA on Canada and the rest of the globe.
He has slanted it to say that somehow Canada is lax on tax evasion because of cuts to the CRA. throws in mention of the ADCS legal challenge with a premise that it plus the CRA cuts demonstrate laxity on tax evasion, and conflates the FATCA IGA as support for a crackdown on it – even though as we AND he know very very well, the IGA was signed under threat of significant economic sanction, and does Canada NO good – and no better than the Canada US tax treaty already provided for. And, that the US has not promised anything other than faux ‘aspirational’ ‘reciprocity’.
Wood could have acknowledged the horrendous, useless and ongoing costs for Canada and the CRA and all our FFIs and non-FIs to implement and continue to automatically report under the US FATCA, and that diverts Canadian made and owned taxpayer and accountholder assets from our own revenue base – yet we have agreed to subsidize the US IRS instead.
Of course he didn’t mention that the IRS has had less resources to dedicate to enforcement overall as well, and that the US has done nothing in terms of implementing the faux ‘aspirational’ reciprocity the IGAs allude to which is supposed to be the US ‘assisting’ Canada. Or that the IGAs may not even be legal and constitutional in the US, much less in Canada and elsewhere. He doesn’t mention the difference between the RBT of Canada and CBT of the US. Nor that Canada has signalled intent to sign up for the OECD Common Reporting – which is to be based on true RESIDENCY, and NOT US and Eritrean citizenship. He knows the US will NOT agree to abide by the Common reporting if it is based only on residency. AND that the US has done nothing that would shake its own position as the world’s largest tax haven. Delaware is still merrily marketing to the companies it courts to incorporate there.
Nor does Wood make clear that those affected by FATCA in Canada are compliant with local Canadian laws, and already pay a full set of high taxes – we are NOT tax evaders – regardless of how the US chooses to spin it. Or that in his description of trusts, that our Canadian registered savings (which are ‘registered’ with our SIN# and name) are considered by the US to be ‘taxable foreign trusts’, yet are transparent government legislated savings vehicles in Canada – where we actually live.
He mentions the ADCS legal challenge, but only in the midst of all the other usual stuff about FATCA, UBS, etc. Nothing about CBT, the OECD Common reporting based on actual RESIDENCY, the ‘unintended’ consequences of CBT, FATCA and the BSA FBAR/Form114 on those deemed USPs outside the US, etc.
Nothing about the Republican challenge to FATCA.
Upshot – the article is full of deliberate spin and twist, without reference to any of the facts, nuances, context etc. Wood knows all about those, but this article is written as if he doesn’t.
Note also re the Wood article I refer to above (9/22/2014 ‘Armed With FATCA, IRS Hunts Offshore Tax Evaders, While Canada Eases Up’).
He conveniently questions the CRA budget in Canada, but deliberately ignores the US regarding the growing enforcement responsibilities of the IRS – ex. FATCA, Obamacare, etc. – but with concomitant decreases in budget funds allocated to them. So, why mention Canada? Its another attempt to cast and support FATCA as something other than what it truly is.
I can’t see that as anything other than a deliberate sin of omission to goad Canada and pretend that FATCA is actually about tax evasion. Wood also knows that Senator Levin and ‘Dick’ Harvey intend that FATCA go far beyond information to track assets for US taxation, into the realm of enforcement re terror funding, money laundering, gangs, organized crime, drug ‘kingpings’ etc.
http://www.cbpp.org/cms/?fa=view&id=4156
http://www.thenewamerican.com/usnews/congress/item/18712-house-slashes-irs-enforcement-budget-almost-25-percent
http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=13&ved=0CDMQFjACOAo&url=http%3A%2F%2Fthehill.com%2Fblogs%2Fpundits-blog%2F212007-less-with-less-new-agency-mantra&ei=vCsgVJitD4amyASIw4LICQ&usg=AFQjCNG4CwLZKZr5BoK0AOCttBMIUiG5SA&bvm=bv.75775273,d.aWw
http://www.washingtonpost.com/opinions/catherine-rampell-stop-starving-the-beast-of-the-irs/2014/07/01/d3f819d6-008f-11e4-8fd0-3a663dfa68ac_story.html
Sweden is allowing a verbal explanation to take the place of a CLN or W8 or W9
p24 of the Swedish FATCA as written by the Lemmings in charge,p24
I stället för ett sådant intyg som avses i första stycket 1 c, kan den rapporteringsskyldiga finansiella enheten inhämta eller ha tillgång till en rimlig förklaring av skälet till att kontohavaren inte har ett sådant intyg
trots att han eller hon upphört att vara amerikansk medborgare eller varför han eller hon inte blev amerikansk medborgare vid födseln.
Instead of a certificate referred to in paragraph 1 c, then the obligation to report financial unit collect or have access to a reasonable explanation of why the account holder does not have such a certificate
even though he or she ceased to be an American citizen or why he or she became an American citizen at birth.
I suppose now that I have pointed it out, the Nazis at the NSA are already telephoning their agents in the Stockholm embassy to go straighten out the Swedish govt.
Video from RNC and Republicans Overseas explaining FATCA, why it needs to go, and what you can do http://youtu.be/zUism7KaqQ8
+1: Brazil
http://brazilbusiness.einnews.com/article/225956860/kFSjzgKG7sSET78H
On September 23, 2014, Brazil signed a FATCA IGA. The agreement is a Model 1 agreement, meaning that Brazilian financial institutions will report information about U.S. customers’ accounts to the Secretariat of the Federal Revenue of Brazil, which will then send that information to the IRS. The agreement is reciprocal, meaning that the IRS will report information about Brazilian customers’ accounts at U.S. financial institutions to the Brazilian tax authority. This reciprocity is made possible by new regulations requiring U.S. banks to collect more information about their account holders, which this blog covered here:
http://www.globaltaxenforcement.com/fatca/treasurys-fincen-proposes-rules-forcing-u-s-financial-institutions-to-collect-data-for-fatca-reciprocity/
The 2010 Congress, Administration, Treasury Dept & IRS Trust Al-Queda and ISIS–Because They Don’t Trust US Citizens
http://bit.ly/1BmwJQ1
@Banc de L’asteroide B612, Le President d’amateur ;
I like your explication re;
“……..the list of all of the banks of the world that the 2010 Congress has deputized to bounty-hunt US citizens. A number of them are in ISIS and Al Queda regions. Does that Congress and this administration believe that they’ve only hired “moderate” bounty hunters in these locations?
Now you understand the logic of the 2010 Congress and the existing administration of the United States. They have deputized governments in dangerous regions. They trust bank personnel in Yemen, Afghanistan, Pakistan, Sudan, Burma, and Iraq to bounty hunt US citizens—that they don’t trust.”
The US has willfully placed those it claims as US citizens and USPs in danger:
http://blogs.angloinfo.com/us-tax/2014/09/24/thank-you-fatca-maybe-youll-get-me-kidnapped/
https://now.mmedia.me/lb/en/commentaryanalysis/fatcas_security_problem
The US State department should now add FATCA phishing and kidnapping warnings to its travel advisories list by country:
http://travel.state.gov/content/passports/english/alertswarnings.html
And don’t expect any help from the US State Department if you are still a US citizen and you need assistance once you’ve been kidnapped or had your local bank account data stolen:
See;
http://travel.state.gov/content/passports/english/emergencies/crisis-support.html
“What the Department of State Can and Can’t Do in a Crisis”
“What is the Department of State’s role during a crisis overseas? Do you always evacuate U.S. citizens during a crisis overseas?”
” The actions we take depend on the nature of the crisis. In some instances, we may only need to provide information on conditions in the country, such as warning about areas of unrest, how and where to seek help, and other useful advice. In more serious situations, we may recommend that U.S. citizens leave the foreign country, and, if commercial transportation is not available, provide departure assistance, as our resources permit.”
“Will the U.S. government come and pick me up if I need assistance getting to the airport or other evacuation point?”
“Crises place an enormous strain on our resources as embassy personnel focus on assisting U.S. citizens affected by the crisis. Security conditions can also limit our ability to move freely around the country. It is almost impossible for the U.S. government to provide in-country transportation service to individuals or specific groups during a foreign crisis. You should therefore pay close heed to our travel and safety information for the country they are traveling to or residing in, monitor local conditions, and have a plan of action in case of emergency.”
“Will the U.S. government pay for my travel? How much will it cost?”
“Departure assistance is expensive. U.S. law 22 U.S.C. 2671(b) (2) (A) requires that any departure assistance be provided “on a reimbursable basis to the maximum extent practicable.” This means that evacuation costs are ultimately your responsibility; you will be asked to sign a form promising to repay the U.S. government. We charge you the equivalent of a full coach commercial fare on a comparable mode of transportation at the time that commercial travel ceases to be a viable option. You will be taken to a nearby safe location, where you will need to make your own onward travel arrangements. Typically, you will not have an opportunity to select the destination to which we will take you; it will be to the nearest safe location (only in rare circumstances will that be to the United States). If you are destitute, and private resources are not available to cover the cost of onward travel, you may be eligible for emergency financial assistance.”
The IRS is unable to prevent US tax return related data theft or assist the victims of identity theft WITHIN the US, so there will be no effort or effective assistance when FATCA data is stolen:
http://www.taxpayeradvocate.irs.gov/2012-Annual-Report/identity-theft/
http://www.accountingweb.com/article/tigta-reports-examine-irs-identity-theft-processes-services/222692
Q: In the #FATCA Regime, What’s an American Worth ? A: Priceless
http://bit.ly/1Brw6Va
Paris—isn’t that a great location for a favored IRS agent to live out his days?
https://samuelclemmons.wordpress.com/2014/09/30/exotic-3-year-vacations-for-top-irs-agents/
Help!
How can I answer a potential Liberal MP, whom I emailed today, saying
“I recently received a request to send in my big idea for Canada. After making a donation, I sent the following message:
‘All Canadians should have equal rights. Prohibit discrimination based on claims by another country, as is now required by the FATCA IGA.’
I hope that a Liberal government will ensure that every Canadian citizen has equal Charter protections, and will prohibit discrimination by financial institutions based upon national origin or any other possible connection to another country claimed by a foreign power.
From the “incentive” to donate to the Liberal Party and win a trip to hear Hillary Clinton, I fear that a future Prime Minister Justin Trudeau might grant demands of a future President H. Clinton that Canada cede even more of our sovereignty to the U.S. and actively enforce IRS claims on Canadian citizens living in Canada who are claimed by the IRS to be American taxpayers who happen to reside in Canada, as described by our current PM. The outrageous extraterritorial legislation passed by the Harper government and in effect since July 1, requires Canadian financial institutions to identify all account holders claimed by the US to be US ‘persons’ and send their account information to the CRA, which will transfer it to the IRS. The IGA enabling legislation included in Bill C-31 includes a section that states that in case of a conflict between the FATCA IGA and the Canadian Charter, the IGA legislation shall prevail.
I hope that the Liberal Party and you, as my future Liberal MP, can assure equal rights and and equal protection to all Canadians.
Sincerely,”
His reply:
“While I do want to earn the honour of being your MP, we have to win this nomination first. And, yes we had the opportunity to briefly discuss your concerns about the IRS a few weeks ago. Is the legislation reciprocal, in the sense that US banks have to equally provide this information about Canadians in the US? Is the purpose of these laws to prevent tax evasion? As I said when we spoke about this, I am not intimately familiar with the context surrounding these changes.
As a general statement, as Liberals, yes we endorse the Charter of Rights & Freedoms since we created it.”
How can I answer him in a concise, pertinent manner, short enough that he will read it and understand the the issues, that FATCA cannot be reciprocal and that it imposes two-tiered citizenship on Canadians based on the claims of a foreign power?
I’m counting on Brockers to suggest a quick response to replace my impulse to send a massive tome, including many links, notes, even an index.
Thanks.
@Queenston
It is most certainly NOT reciprocal. For example, Canadians in the US who are also US citizens will have nothing reported on them – as far as the US is concerned, they are US citizens and only US citizens.
Even for Canadians who are not USCs but are resident in the US, it is not reciprocal. I’m not sure if anything is reported on them, but if it is it is limited, for example, account balances are not forwarded. Hopefully, others can fill in more so we can have a comprehensive response for this potential Liberal MP.
Also, you may want to gently point out to would-be MP that the NDP has come out strongly against FATCA overreach and that this is a very important issue to you (I’m assuming it is).
tdott:
Thanks for your input.
It’s what we would normally tell someone asking questions after hearing about FATCA for the first time. But this potential candidate is a lawyer, so even though we know that US banks will certainly not be asking all of their customers for their place of birth and other questions that Canadian banks may ask to identify “U.S. persons or taxpayers”, a lawyer might read the IGA and see that the US promises (in a weaselly way) to attempt “reciprocity”. Of course, reciprocity, even if implemented, would provide useless information – why does Canada care about the financial accounts of Americans who happen to have been born in Canada, but who are citizens or permanent residents of the US with no financial or property ties to Canada?
I hope someone more experienced than I can suggest a short, pertinent, accurate response. I believe that the NDP candidate is not likely to defeat the Cons in my riding, which is a brand new riding. At least the riding is not divided between urban and rural voters any more, but the NDP candidate is a professional union spokesperson who now lives out of the province, so he may not get the support his party might normally receive here.
Thanks, tdott, and thanks to anyone else who can offer a suggestion.
@Queenston
A reason Canada *might* care about Canadians resident in the US is because these people have to officially sever their tax residency in order to not be subject to Canadian tax. Note that severing tax residency results in a (exit) tax on unrealized gains (with certain exceptions). Thus, for people with a significant amount of unrealized gains, there would be an incentive to not officially sever tax residency, and thus not pay the exit tax. However, if tax residency is not severed, then such people are taxed on their world-wide income just as if they lived in Canada. Reciprocity would aid Canada in tracking down such people and getting them to pay up.
Also, true reciprocity may help the Canadian government identify Canadian residents who are attempting to hide money in the US, and thus not pay Canadian tax on it. This is apparently a reason that many countries signed a model 1 IGA; they believe FATCA will help them find their own ‘tax cheats’.
And you’re right that all Canada gets in terms of reciprocity is a bunch of weasel worded promises. However, I would think that a lawyer is *more* likely to appreciate that this is not true reciprocity than a non-lawyer.
Too bad about the NDP candidate.
This is what Canada’s departure tax looks like:
http://www.agtax.ca/personal-taxes/emigrating-from-canada/
It’s not nearly as inclusive as the US’s is, and you get to come back! This what the US Standing Committee on Tax Reform were considering after hearing dozens of submissions from individuals living abroad – a departure tax similar to Canada’s. Sticking to the status quo is just plain stupid, but then we know the US seems to be stuck on that.
” IV. NON-RESIDENT U.S. CITIZENS
1. Provide an election to citizens who are long-term nonresident citizens to be taxed as nonresident aliens if they meet certain conditions (Schneider, “The End of Taxation Without End: A New Tax Regime for U.S. Expatriates,” 2013; similar to the law in Canada)
a. Require a minimum period of residence abroad
b. Impose an exit tax on electing taxpayers where deemed to sell all assets at the time of election
2. Repeal the foreign-earned income exclusion (H.R.2 (108th Congress), Jobs and Growth Tax Relief and Reconciliation Act of 2003, sponsored by Rep. Thomas)”
http://www.finance.senate.gov/issue/?id=0587e4b4-9f98-4a70-85b0-0033c4f14883
So I have a question regarding my own situation for a change rather than offering opinions on the situations of others:
As people may know I am a naturalized US citizen originally from Canada–and all of my family except me is in Canada. As my parents age, the day may come–although I don’t think we’re at this point yet–where I am asked to help support them financially. If we get to that point, under IRS rules, I would be allowed to claim them as dependents–dependents who are residents of Canada or Mexico can be claimed on a US tax return.
However to do that I believe they would need to obtain a US ITIN. My question is whether in doing so, they would become “US persons” subject to all the problems of FATCA? Any thoughts? Like I say this we aren’t in this situation yet but it could be coming.
@ Dash1729
No, an ITIN has nothing to do with the IRS definition of a “US person for tax purposes” (except in cases where the person filing elects to have their NRA spouse treated as a “US person for tax purposes”; I don’t know how that complicates things, but I’m pretty sure that is impossible to do for a non-spouse dependent, so it is irrelavent in your case).
Many foreign nationals who maintain accounts in the US obtain an ITIN in order to not have to keep filing a W-8BEN every 3 years, since a person with an ITIN only has to file the W-8BEN once (with each FI) unless the information changes.
I don’t know the requirements for claiming NRA parents as dependents, but I know it is required to obtain an ITIN for a NRA spouse in order to claim an exemption, and the ITIN has no bearing on the NRA spouse’s tax status.
@Dash1729
My family… some in the US & other countries… *gift* each of our elders funds every yr from each of us… which its allowed under a certain threshold without reporting the gift to the US.. My US family thought of claiming them as dependents & the answers we got was very confusing & with the changing views… this was easier… some *experts* suggested a trust which we formed then broke because we had to treat it as a corporation with a separate id.. separate tax reporting… too much trouble… u should look at gifting rather then dependent cause I don’t see an advantage to claim them when they are in Canada who has better tax advantages for the elders… Only problem is moving the funds… that has become an issue for my family… some banks won’t deal with international wire transfers… takes over month for a cheque to clear & they charge like $50 for it… even if the cheque is in their currency
I am a dual citizen born in Canada. I attended university in the USA and worked there during that time. I paid my taxes for those years, but haven’t filed a US tax return since returning to Canada in 2001. I don’t own a home, or any investments, and earn a modest salary as a teacher. My bank account with TD was set up long before I went to school, would they know I hold US citizenship? When I was in the US, I had a US bank account. I do not have a current US passport, but I used to. Do I have anything to fear from this FATCA-IGA situation? Will I be fined or denied entry to the US?
@SnaggleToof, what do you want to do exactly? Lose the American citizenship or not? From the answer to that comes all your future decisions.
Snaggle Toof. More clarity please. Your bank has no way of knowing that you are a dual citizen. You won’t be fined or denied entry. If you wish to maintain your US citizenship, you might want to explore tax filing requirements. There would be a choice between filing going forward or the so called streamlined program. Let google be your friend.
in a press release, Democrats Abroad blows their horn
https://www.democratsabroad.org/group/fbarfatca/special-report-irs-offers-fairer-way-longdelinquent-tax-filers-come-out-shadows-0
Thank you Duke of Devon and Medea Fleecestealer.
Maintaining my US citizenship is not important to me. I will never work or live there again. From what I understand, I can’t “lose” (relinquish) my US citizenship without cost and bureaucratic inconvenience. So my answer to your question Medea Fleecestealer is, I don’t want to do anything about it, but I also don’t want to be punished for lack of saying to the US Consulate that I no longer want to be an American citizen, or for lack of filing my taxes. And yes, Duke of Devon, Google will continue be my friend … thank you nevertheless for taking the time to respond to my query.
@Mark Twain
What next… they are going to say… we did it.. we got everyone up to code… without any penalities.. what a load of crap they are spinning… here is how u can help… get rid of this Fatca…. stop hoisting US citizenship on people who don’t want it… Let people go easily if they don’t want the US citizenship… Stop treating residents as *US citizens* rather then legal guests… maybe then… I will be impressed with their bs…
@SnaggleToof, then you need to do your research and work out what is going to cost you the least amount of money. Hanging on to your American citizenship means you need to file US tax returns every year for the rest of your life (assuming you meet the reporting thresholds) along with FBAR’s for your Canadian accounts if the aggregate amount comes to more than $10,000. Getting rid of your American citzenship means a fee of $2,350 and you’ll need to do 5 years of backfiling of US tax returns/FBAR’s to be able to fill in the 8854 form truthfully that you have fulfilled your tax obligations and so avoid becoming a covered expatriate – which could cost you even more money depending on how rich you are. But once that’s done, you’re through with the US for the rest of your life as far as tax goes.
Don’t rush into anything, you need to take the time to research and understand all your options to find out which is best for you. There’s plenty of info here, starting with the Important Information section on the top righthand side of the screen and you should also explore the IRS website, starting with this page:
http://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad
If you have questions, ask away. We’ve all been through this in one form or another so someone’s bound to know the answer. It’s difficult enough trying to understand and work things out without trying to do it all on your own with no support. We’re here to provide that support so feel free to use it.
Snaggle Toof. Medea says ‘ unless you renounce, you have to file tax returns’. I say you don’t have to do either if you choose not to.