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.
@JC
I’m sure you’re right about that. I certainly feel discriminated against. But I was just saying it isn’t new, and comes from the inability of the two share markets to come to terms on some issues.
http://www.nytimes.com/2015/02/08/nyregion/stream-of-foreign-wealth-flows-to-time-warner-condos.html?_r=0
Article from the NYTimes investigating US real estate investments and “….United States laws that foster the movement of largely untraceable money through shell companies..”.
More US hypocrisy – as long as the US profits, they don’t give a damn about other countries. The goal is for the US to hold all the chips, and receive tribute and hold on to assets originating from the rest of the world.
US FATCA is a foreign aid program where Canada and all other countries of the world are forced via US extortion to send a portion of the fruit of their own citizens and resident labour to the US – in tribute, as a form of foreign aid to the US Treasury.
I’m posting this comment and link from LM.
LM writes:
“A friend forwarded this article to me. While it is NOT something Brockers can comment on (indeed, it is from last summer, and written by a Cross-border financial planning service), this is a well-written article to refresh the memories of people who are in the midst of dealing with this (and to quickly explain the situation to newbies) RE all the details of what information is being gathered/transferred and who is about to be affected.
I like the re-anacronyming of FATCA to “FORGET ABOUT TRUSTING CANADA AGAIN”. ”
http://cardinalpointwealth.com/fatca-forget-about-trusting-canada-again/
There’s a petition on the white house gov site to get rid of FATCA so get signing folks.
https://petitions.whitehouse.gov/petition/tax-us-citizens-residency-and-not-citizenship-remove-fatca-requirements-we-already-pay-taxes-abroad/dwZ1c5wL
Not sure if this has been mentioned or not, but Canadian Direct Financial won’t open (online) accounts for USCs. I just tried to open an online account and this was the result for me checking the USC question:
So was this known before, and is it something that can be taken up with the appropriate authority?
If you want to give it a try yourself, here’s the URL:
https://www.canadiandirectfinancial.com/Personal/GetStarted/CustomerApplication/
@tdott
In April last year I opened accounts at about 10 “on-line” credit unions with high-interest savings accounts that appeared to only allow Canadian residents to open accounts. The hope was that several would be FATCA free. At the time, none of the application forms asked about US personage.
MAXA Financial initially said they were non-reporting, but later a Brocker reported they ask the nasty questions, which I confirmed by looking at the new applicaiton form.
I have not gone back to any of the FATCA reporting credit unions to see what their application forms look like since July 1, 2014 (other than Maxa). I also gave up asking them what it is about their business that they are reporting to FATCA even though they have a local client base.
In the end, 3 are non-reporting: AcceleRate, Acheiva and Implicity.
Canadian Direct Financial was one of the credit unions where I opened an account, but in late May they told me: “We have analyzed our business and determined that CWB/CDF is not eligible under the local client base exception or any other exception under FATCA.”
It’s interesting that they exclude both US citizens and US residents. All credit unions with a local client base will refuse US residents (in fact, all non residents of Canada regardless of citizenship), but why are they refusing US citizens who are resident in Canada? Are they closing pre-existing accounts of US-tainted people? I don’t even know what any of this means in terms of the IGA provisions.
Could it be that by refusing all US persons, they do not have to bear the $100 million cost of implementing _any_ FATCA reporting to the CRA, period? What I’m getting at by this is that even a deemed-compliant non-reporting FI due to having a local client base still has to have a reporting system in place in order to report US persons resident in Canada who later leave Canada but keep their account open. This applies to all such FIs, including VanCity, the darling of FATCA-free credit unions.
If this guess is correct, I’m not sure how I feel about it. On the one hand, they may well have lower service charges and higher interest rates from not bearing the FATCA cost! On the other hand, they are discriminating against Canadian citizens with a US taint. Would it far-fetched to be glad that there is at least one such FI, creating an example to report to our government of the harm FATCA is causing Canadian Citizens?
@tdott
Great find. I just took a screen shot of the page with the refusal and have tweeted it out.
I think that one after another more Canadian banks will refuse to take on US citizens as new customers. Why would they? From a the bank’s point of view, it just isn’t worth the extra trouble or risk. They have a big enough problem trying to root out all the US citizens in their existing client base; no need to compound it by taking on new ones. They are scared to death they will get dinged because of a mistake or oversight and just want to get back to business as usual.
For would be customers who lie on their account application, the bank’s fallback position can then be that they did the due diligence and it is therefore not their fault. I suspect it will soon turn into a little game where the bank asks the question, the customer lies, the account is opened, and everyone’s happy. Just think about it; the bank asks a question they aren’t supposed to ask, the customer gives an answer they aren’t supposed to give, and voila!, FATCA goes away!
Hello,
Recently found out about this mess…..and had no idea about US tax requirements.
About me:
In my early 40’s and came here at age of 10 months after being born in the US to both Canadian parents. Never earned a dime in the US and have been a Can Cit for over 20 years. I can count on one hand how many times I have been across the border to shop or whatever – but that is it. No need to ever go back. My financial institution has no idea ( I believe) that I was born in the US.
I have a Can Cit card and ONT drivers license as valid ID with no indication of my US place of birth.
Should I just ignore all this FATCA crap and never mention my birthplace? Seems like it would do me no good to mention it.
Thanks in advance for your responses.
ProudCanadian
Hi there,
About me:
Early 40’s Can CIt born in the USA to Can parents moved here a 10 months old….my bank does not know I was born in the USA. No need to travel to the USA ever. Should I just not say anything and live my life as normal?
@ProudCanadian – “why poke the hornets nest?” “Let sleeping dogs lie”, and any other metaphors that apply.
Seems to me that you have already done a great job of figuring it out.
Open source free download of new paper, which mentions growing opposition to FATCA and number of renunciations rising
February 20, 2015
Avi-Yonah, Reuven S. and Savir, Gil, Find It and Tax It: From TIEAs to IGAs (February 20, 2015). Available at SSRN: http://ssrn.com/abstract=2567646
@ badger
Thanks for finding that paper for us. I wonder if this is in preparation for the October symposium that Prof. Avi-Yonah and Prof. Christians are collaborating on? Or maybe he was just asked to write about the situation with China and the USA regarding information sharing. I noticed that even Prof. Avi-Yonah makes the FACTA-FATCA mistake (and quite often actually). Anyway, I thought I was getting to know all the acronyms but then along comes MAATM … sheesh!
http://business.inquirer.net/187213/us-foreign-account-rules-raise-concerns
Re FATCA and the Phillipines. Recommends IBS as source of information.
@badger @EmBee
Good point the authors of that paper made – that the IGA’s defeat the IRS’s objective to avoid another government’s interference in the collection of US taxes!
I would guess that this paper has EVERTHING to do with Professor Christian’s upcoming symposium in Michigan state:
http://taxpol.blogspot.ca/2015/02/icymi-call-for-papers-conference-on.html
@bubblebustin and embee;
Will be interesting to see what other papers are presented at that symposium. We’re lucky that Prof Christians is studying these issues.
Another instance of the continuing Canadian foreign aid programs for the US – transferring our Canadian resources/taxes/assets to the US continues;
http://www.theglobeandmail.com/report-on-business/canada-to-pay-entire-cost-of-detroit-windsor-us-customs-plaza/article23062321/
I think we should start referring to the FATCA IGA applied to those in Canada as a Canadian government foreign aid program designed to facilitate the transfer of Canadian assets/resources to the US Treasury.
CBT is a form of tribute paid to the US, foreign aid extracted from Canadians and other non-US countries and delivered to the US Treasury under the duress of extortion.
FATCA = Foreign Aid Transfer from Canada to America
As if US extraterritorial citizenship/parentage/birthplace taxation of the globe wasn’t already oppressive enough in practice, the author below raises issues of taxation and greater surveillance. Surprisingly (or not?, coming from a US homeland author), the extraterritorial aspect of the US tax system, the significant conflict with laws and systems outside the boundaries and jurisdiction of the US, FBAR, and FATCA are never mentioned.
The paper mentions the issue of the security threat that social media tracking by opponents of the US might pose to US military families, but bizarrely for a US law article about issues of privacy, surveillance and US tax, never mentions FATCA, (barely notes the FBAR) and does not raise or discuss the very real threat that the collection and transmission of banking and personal data collected by banks outside the US complying with FATCA might pose to the personal and financial security of those deemed US citizens living outside the US, either if obtained by hackers, or by opponents of the US in countries where being identified as an American can be very hazardous (see https://now.mmedia.me/lb/en/commentaryanalysis/taking-your-money-and-your-life and https://now.mmedia.me/lb/en/commentaryanalysis/fatcas_security_problem ).
Hatfield, Michael, Taxation and Surveillance: An Agenda (December 17, 2014). Yale Journal of Law & Technology, 2015, Forthcoming; University of Washington School of Law Research Paper No. 2014-34. Available at SSRN: http://ssrn.com/abstract=2539835 or http://dx.doi.org/10.2139/ssrn.2539835
“….This Essay provides an agenda of items for discussion, debate, and research related to the development, implementation, and effects of moving towards a surveillance-facilitated tax system.”
@badger @EmBee
Have either of you read anywhere that new account openings have to attain a balance of $50K in order to be reportable under FATCA?
I can’t find any information that confirms this, but the paper written by the two gentlemen from the Michigan law school states this to be the case:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2567646
May be related…
http://www.cra-arc.gc.ca/tx/nnrsdnts/nhncdrprtng/ndvdls-eng.html
II. Guidance on how a Canadian financial institution identifies accounts that must be reported to the U.S.
The agreement is strictly about government-to-government information sharing. If a financial institution applying the due diligence rules of the agreement determines that any of its account holders are U.S. persons, such as U.S. residents or U.S. citizens (including U.S. citizens who are residents or citizens of Canada), the financial institution must collect and report information on the account to the CRA in respect of that account holder. The CRA sends this information to the IRS under the existing provisions of the Canada-U.S. tax treaty on exchange of information. The information about the account holder that is collected and shared with the IRS includes the name, address, and, in most circumstances, the individual’s U.S. taxpayer identification number, and certain financial information about the account.
Under some circumstances, financial institutions may need to ask certain account holders for more information if their records show that the account holder may be a U.S. person. Financial institutions may also ask their clients to provide a self-certification to declare whether they are a U.S. person. Financial institutions are required to send to the CRA information on account holders who do not cooperate with requests for information. The information is similar to that information reported on U.S. account holders. The CRA then sends the information to the IRS.
The CRA has not developed a form for Canadian financial institutions to use in collecting information under the agreement. Instead, financial institutions can design solutions that are tailored to their particular businesses, as long as they get the required information.
@Bubblebustin,
I think the answer to your question is that it’s up to the individual FI whether or not to report US-person accounts under $50K.
The paper says:
This is incomplete. Yes, US-person accounts over $50K _must_ be reported, but this doesn’t mean that accounts less than $50K must _not_ be reported. The (Canadian) IGA says the reporting (or not) of accounts under $50 is an election a FI may make. The CRA Guidance further says that the FI does not have to tell the CRA whether or not they have elected to use the $50K minimum reporting threshold.
Of course, FIs must determine the client’s US-person-ness at the time of opening new accounts.
The IGA says:
@WhatAmI @Calgary411
Thanks for this. I was looking specifically at this line in the paper “In the case of new accounts, opened after a certain date, if the aggregate balance of the accounts exceeds $50,000 at the end of any calendar year, the accounts need to be reviewed for U.S. indicia by asking the client to file a “Self-Certification””.
In Mr Savir’s response back to me, he wrote:
“You are right, there is no reporting threshold under the FATCA from the FFIs side only. However, under the Internal Government Agreements (IGA) you can find an exclusion for banks accounts that shouldn’t be reported to the local governments. For example, if you read the IGA between the U.S. and Canada, (which is generally similar to all other IGAs) you can find the following exclusion:
“Accounts Not Required to Be Reviewed, Identified, or Reported. Unless the Reporting Canadian Financial Institution elects otherwise, either with respect to all Preexisting Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Canada provide for such an election, the following Preexisting Individual Accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts:
…1) Any Depository Account with a balance or value of $50,000 or less.””
I was under the wrong impression that ALL new accounts holders, regardless of their account values have to self-certify, but Mr Savin is saying that the bank can choose to request a self-certification only when the new account balance reaches $50K. Of course, if the FI ignores the $50K threshold entirely, all self-certifications will be requested upon opening. Is this a correct interpretation?
Any interpretation can be given, as there is the qualifying…
Why can’t it all be straight-forward, with no gotcha phrases like the one above to cancel out any real regulation and confuse what should be clear interpretation?