FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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@ downtherabbithole
Of course it violates the non-US person’s privacy (US person too for that matter) but they don’t care. They want to know what you’ve got and where you keep it and I don’t think their motives are the least bit honourable. For the time being they would need a search warrant in the USA to get this type of information about a US resident. Meanwhile Obama just snuck through legislation which protects the privacy of congressional members regarding their stock holdings, even though with insider information available to them their holdings could present a clear conflict of interest. Remember the last act of a dying government is to loot the nation and in the case of the USA other nations too.
http://www.fromthetrenchesworldreport.com/obama-signs-law-gutting-insider-trading-regulations-for-congress/41266/
@Em, and downtherabbithole. Very early on in this – before I fully understood just how punitive, arrogant, unethical and extortionate the US IRS and Treasury demands are on those of us born and/or living entirely outside the US – I also called and asked for clarification from the FBAR hotline because I couldn’t understand the gobbeldygook on the website, and because I couldn’t believe that we were to report on balances and account information on accounts jointly owned with a non-US person, and that in one instance mostly came from the post-tax, Canadian NON-US wages of my NON-US spouse, created and held here OUTSIDE the US. Which is none of the US’s business and violates the privacy rights of my spouse. It’s registered with my domestic tax agency, and automatically generates a tax slip IF any interest accrues. When I pointed out that most of the funds belonged to someone with no connection or tax obligation to the US, the IRS FBAR hotline person was really rude and hostile (actually, they had already started out rude and hostile in tone from the get go, and demanded my name). I did read in some of the IRS literature, that they specifically state that they don’t care whether it conflicts with non-US laws, or the rights of the NON-US person. They state that US domestic law trumps other country – our local laws – extraterritorially. Then there is the issue of the non-personal accounts of others – like our Canadian employers, or voluntary organizations where we have zero financial interest, no real control, no ownership, but merely co-signing powers – even if not actually in use.
You know, all those Canadian local Girl Guides, school fundraising committees, church fundraisers, little league teams, etc. – more important for the US IRS and Treasury to keep tabs on than the offshore untaxed funds of General Electric. Because it is so likely that I’m hiding US taxable income in the jumble and cookie sale accounts. Not like those US residents like Obama’s appointee – the new Treasury secretary Jack Lew, with the Cayman accounts http://articles.washingtonpost.com/2013-02-11/opinions/37028444_1_cayman-islands-jack-lew-tax-scam . Nope, it’s really Canadians and Swiss duals selling mint chocolate Girl Guide cookies to neighbours that are the source of the US domestic ‘tax gap’.
So they give us the stark choice – violate the laws of Canada and the privacy rights of NON-US persons, or be penalized into dust re the FBAR (and other US financial reporting demands).
Which is only one of the many compelling reasons to renounce if/when you can.
@ badger
Yuck … not a pleasant conversation for you on that IRS hotline. but at least you got through to someone. In a similar phone experience regarding FBAR reporting (2009 actually) I was passed along the line until I ended up talking to a fellow in a warehouse which housed the tax forms (actually he was quite nice). The arrogance is astounding, simply astounding.
Well if your job is to enforce inhumane US policy, you may as well act the part.
@ calgary411 (for Old&Simple)
The wording is the same as the e-mail pdf that I received on April 10th. It had a good cop/bad cop feel about it because at the end was a “Fact Sheet” about US tax obligations and FBAR filing.
@badger,
Besides astounding as Em says, the treatment you experienced is disgusting, showing US entitlement to IRS bullying, disrespect to you for seeking information from abroad, and by extension echoing that you are a traitor and not paying your fair share. *&%$@*!!!!!
Here is the reply from Canada’s Finance Minister James Flaherty, latest version of previous responses to others.
Finance Minister Flaherty Response to Old&Simple re FATCA & FBAR, April 5, 2013
Comments In reference to the pdf file of Flaherty’s last letter:
I sent several copies of the same email respectively to the Prime Minister, the Finance Minister and to various MPs at the beginning of the year, following a request for an email campaign on a post on IBS ( I don’t remember which ). It was framed as an objection against FATCA, especially as it would cause problems for those of us who took Canadian citizenship back when the US consulates told us we would loose our US citizenship ( my case ). You’ll notice that Flaherty’s letter does not address that specific problem. It may seem selfish of me to obsess on that one problem of old relinquishers but there are tens of thousands of us.
For the FATCA issue as it may affect all categories, I think Mr. Flaherty’s stated concern about privacy is genuine, and that he may find some way to come to better terms concerning privacy in an IGA.
As for those of us who are Canadian citizens, whether truly dual or deemed so, I am glad to see that he repeats his assurance that there will be no collection by CRA of either FBAR penalties or tax liabilities. Also, I noticed for the first time that the refusal to collect FBAR penalties is not limited to Canadian citizens, but seems to include US alone citizens residing in Canada. This is stated both in the letter and the attached fact sheet. My feeling is that he would really like to say to the duals “Just say no!” but that he won’t dare it. Another thought on this protection against penalty collections, is that the 30% withholding on pass-through payments is just that – a penalty for non-reporting. Is he aware of this apparent conflict?
What disappoints most me is that he seems to have no inclination to tell the US that Canada refuses to recognize the US’s right to impose taxes on economic activity inside Canada, which is what taxing the Canadian income of American residents of Canada amounts too. ( Can you imagine if Canada proposed to collect GST on the purchases of all Canadians living in the States? )
The other big disappointment in that not only Flaherty, but the MPs from other parties seem to refuse to take a stand on Canadian relinquishers who have been rebaptized as Americans. Does anyone out there think a letter and email campaign addressing this single issue would be of some use? It would be nice to hear the Canadian government object to having its citizens turned into citizens of a foreign country without their consent. This is not just a tax thing, but goes to the heart of the very concept of citizenship.
Old&Simple, Your comments and Flaherty’s letter convince me more that the focus should not be on stopping FATCA, which is a done deal for Canada.
Instead, the Ministry of Finance should be shamed into amending the US-Canada tax “treaty”, before the agreement is signed and while Canada has some slight upper hand, to prevent as much as possible IRS from causing further harm to Canadian resident US persons through penalizing those who have RDSPs, TFSAs, a house that appreciates in value through no fault of ours, a business, a Canadian mutual fund that magically turns into a “corporation,” interest on a savings account that will be subject to new 3.8% Obamacare tax and quarterly payments etc.
This, not FATCA, is the problem.
Old&Simple and All,
As in this February 2012 post, http://isaacbrocksociety.ca/2012/02/13/3200/, Minister Flaherty CONTINUES to say the same:
@IRSCompliantForever,
I agree with you that:
In Finance Minister Flaherty’s May 16, 2012 response to me: http://isaacbrocksociety.ca/2012/05/23/canadas-registered-disability-savings-plan-rdsp-canadas-finance-minister-flaherty-responds-regarding-this-as-well-as-the-resp-and-tfsa/, he states:
The rest of the letter relates to our requirement to file a Foreign Bank Account Report (FBAR) and what has been reported in the Finance Minister’s correspondence to others. It also highlights the December 7, 2011 IRS guidance on U.S. tax return and FBAR filing requirements for citizens living in Canada and other countries.
It reiterates that penalties imposed by the IRS under FBAR will NOT be collected by the Canada Revenue Agency (CRA) on their behalf and that the CRA does not and will not collect the U.S. tax liability of a Canadian Citizen if the individual was a Canadian Citizen at the time the liability arose (whether or not the individual was also a U.S. Citizen at that time).
The Fact Sheet was enclosed for information purposes only, not to be viewed as tax advice.
“Since an RDSP, a TFSA or an RESP can be set up to pursue financial objectives other than he exclusive provision of pension or retirement benefits, they do not meet the criterion set out above and, consequently, they do not receive an exemption from U.S. income tax under the Convention.”
Let’s add the proceeds of the sale of a principal residence in Canada to that list!
FATCA Details Slowly Emerging — Credit Union Central of Canada
Though RRSP and RRSP accounts may be taxable, according to a communiqué sent by Credit Union Central to its members institutions on March 15 of this year, they need not be scanned for FATCA.
Isn’t this confusing!? Sometimes I imagine myself on my death bed thinking “Gee, this death business is so much easier than taxes.” 😉
Germans buy another tax CD
It won’t be just the Germans official government thieves buying, once FATCA data on Americans abroad is in full circulation and in Third Party hands, it will be the terrorist and ID thieves too…
Calgary411,
Thanks for clarifying Flaherty’s present position in his letter to you– that Canada will wait until some time in future to consider dealing with RDSPs, sale of house etc. in tax treaty negotiations.
Nevertheless, my feeling is that there still is a slight chance (which should be pursued by submissions to MOF) that the US might agree to resolving some of the above problems as part of an overall FATCA agreement with Canada, and zero chance after FATCA is signed off.
Sweden banks closed out US Citizens. This situation has existed awhile, I suppose, but my google searches just now hit the right buttons.
Nordea: If you are in the United States, or a U.S. Person (any US Citizen or greencard holder living in Sweden), but you are not a QIB, you may not access the following materials. https://www.nordea.com/Investor+Relations/Debt+rating/Nordea+Bank+AB+US+MTN+Program/1150742.html
SEB: Varken materialet eller de produkter som beskrivs häri är avsedda för distribution eller försäljning i USA eller till person bosatt i USA, s.k. U.S. Person (anyone with citizenship or US green card living in Sweden), och all sådan distribution kan vara otillåten. http://www.seb.se/pow/wcp/index.asp?ss=/pow/wcp/templates/sebcollection.cfmc.asp%3Fduid%3DDUID_400D336DF6DB9912C1257A690029C31D%26xsl%3Dse%26sitekey%3Dseb.se
“The Bank does not offer or sell investment deposit to US persons and the Client hereby confirms to the Bank that it is not a US person. The Bank has the right to terminate the agreement immediately if the Client is a US person or becomes a US person during the term of the agreement. The Client undertakes to inform the Bank immediately of any circumstances which could cause the Client to be qualified as a US person. The Bank can also use public information when assessing the qualification of a client as a US person. A legal person can be a US person, among other things, when it is established in the US, acts in accordance with US law, has a US postal address or has some business activities in the US. A representative office or a branch of a foreign legal person can be qualified as a US person on same conditions. A natural person can be a US person, among other things, when it is considered a US resident for tax purposes or if the person stays in the US for some time for educational or work purposes. A person can be considered a US person also under other conditions deriving from US laws. The Bank shall not be liable for any loss which the client may suffer as a result of termination of the agreement.”
https://www.swedbank.ee/static/pdf/private/investor/deposits/cond_investdep_eng_2012_08_20.pdf
Per your suggestion, IRSCompliantForever,
I did present another submission to MOF on Tuesday, a plea that the RDSP (and similarly RESP, TFSA, etc.) be part of the present FATCA IGA negotiations. I 100% agree with you that NOW is the time for Canada to really pin this down. The opportunity should not be lost and gone forever.
Calgary 411,
Thanks, I hope that other IB commenters in Canada will make similar submissions to the Ministry of Finance CC Harper and their local MP.
@old & simple,
I support your idea to write to canadian government officials about the specific issues related to citizenship for those of us who by our actions became Canadian citizens year ago. The government clearly understood the implications of our actions back then, and advised us on these matters. I will write a letter, but am thinking it need to not just go to Flaherty, but to the immigration and external affairs folks as well. The challenge is these matters are complex, ‘we’ have a range of different circumstances. I will attach Michael Miller’s article to my letters, because I think it helps to describe the complexity in a way that can easily be understood.
IRS Releases Draft Form 8957 for FATCA Registration
The IRS continues to work on improvements relating to tax reporting of assets held in foreign banking accounts. Now it has released a new draft of Form 8957 that it expects will lead to increased compliance. The form may be used for online registration by financial institutions under the auspices of the Foreign Account Tax Compliance Act of 2010 (FATCA). In the latest draft of Form 8957, Foreign Account Tax Compliance Act (FATCA) Registration, the IRS provides for easier and more efficient registration by foreign financial institutions through a streamlined electronic online process. There will no longer be a need to print, complete, and mail paper forms. The IRS expects the draft form to go viral by July 1.
http://www.accountingweb.com/article/irs-releases-draft-form-8957-fatca-registration/221573
Why US Citizens living in Canada should be Concerned
http://canadafreepress.com/index.php/article/54529
Living as a U.S. citizen outside of the United States is at best difficult and at worst impossible
A new paper by Susan C. Morse on the FATCA IGAs http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2252843
‘Why FATCA Intergovermental Agreements Bind the U.S. Government’
Susan C. Morse
University of California Hastings College of the Law
April 15, 2013
Tax Notes International, Vol. 70, No. 3, 2013
Abstract:
“Bilateral intergovernmental agreements (IGAs) relating to the Foreign Account Tax Compliance Act (FATCA) and entered into by the U.S. government reduce the reach of FATCA’s withholding tax regime, including the reach of that regime as applied to non-U.S. taxpayers. The validity of these IGAs has been questioned. Yet IGAs have a strong case for binding status as valid congressional-executive agreements or treaty-based agreements. In addition, regardless of IGAs’ status as international agreements, they should bind the U.S. government as valid administrative guidance. ”
Will be interesting to see what Prof. Christians says in response to this article.
A new paper by Susan C. Morse on the FATCA IGAs http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2252843
‘Why FATCA Intergovermental Agreements Bind the U.S. Government’
Susan C. Morse
University of California Hastings College of the Law
April 15, 2013
Tax Notes International, Vol. 70, No. 3, 2013
Abstract:
“Bilateral intergovernmental agreements (IGAs) relating to the Foreign Account Tax Compliance Act (FATCA) and entered into by the U.S. government reduce the reach of FATCA’s withholding tax regime, including the reach of that regime as applied to non-U.S. taxpayers. The validity of these IGAs has been questioned. Yet IGAs have a strong case for binding status as valid congressional-executive agreements or treaty-based agreements. In addition, regardless of IGAs’ status as international agreements, they should bind the U.S. government as valid administrative guidance. ”
Will be interesting to see what Prof. Christians and others say in response to this article.
Here’s the PDF from the Taxprof blog:
http://taxprof.typepad.com/files/70ti0245.pdf
Author directly mentions Allison Christians and Itai Grindberg as having commented during the development of this paper.
From the opening paragraph;
“In an essay published recently in this magazine, pro-
fessor Allison Christians questioned the binding le-
gal force of bilateral intergovernmental agreements
(IGAs) relating to the Foreign Account Tax Compli-
ance Act and entered into by the U.S. government.
(Prior coverage: ‘‘The Dubious Legal Pedigree of IGAs
(and Why It Matters),’’
Tax Notes Int’l, Feb. 11, 2013, p.
565.) Yet IGAs have a strong case for binding status as
valid congressional-executive agreements or treaty-
based agreements. And regardless of their status as
international agreements, IGAs should bind the U.S.
government as administrative guidance………..”
On the issue of ‘reciprocity’; ….”The U.S. is also obliged to provide information, in-
cluding, for example, about U.K. taxpayers with ac-
counts at U.S. institutions. However, its ability to do so
is constrained by its lack of access to such information,
partly because of the qualified intermediary rules. It
goes too far to label any of the IGAs ‘‘reciprocal’’ as
yet, even though IGA recitals state that the U.S. ‘‘is
committed’’ to ‘‘pursuing equivalent levels of ex-
change.’’…”
@Badger…
I have tweeted Allison and emailed her, because of this paper and the recent Norway IGA which I assume you saw the comments over here…
http://isaacbrocksociety.ca/2013/02/09/what-are-you-hiding-just-file-it-a-personal-account-of-a-norwegian-tax-seminar-hosted-by-the-u-s-embassy/
I do think it means that some countries are finally realizing this IGA is a one way street without DATCA. Maybe the Administration is hoping for a House take over by the Dems in 2014 elections so then it can push its reciprocity through, because I seriously doubt the Republicans will give it to him.
and then this follow up, raises a CRITICAL question, I think, but admittedly haven’t had time to explore more…
So, we know FATCA reciprocity (DATCA) is in the Obama 2014 budget, but this Norway IGA seems to say that the FATCA IGA is effectively a sterile instrument unless DATCA comes into play on U.S. Shores?
Something to contemplate. What’s the rush to sign these? Might as well wait to see what Congress does, and they don’t seem to be in a hurry.
Anyway, that most favored nation (MFN) article has Allison contemplating right now! Of course, I am not waiting to sow seeds of doubt in the FCIC on linkedin… 🙂
Good points @Just Me. I had wondered about some of that after reading about Norway. Don’t really understand all the ramifications of the Morse article, but good that the issue is getting debate, traction, and more scrutiny than the relative silence (other than the constant whine and robotic voices of the FATCAComplianceIndustrialComplex).
Am interested to hear what Prof. Christians says. Thanks for e-mailing her. The lawsuit filed by Texas and Florida banks made my day. And the prospect that the IGAs with a lack of even faux ‘reciprocity’, and very questionable authority, may become so glaring as to make those hanging back baulk further. So infuriating that the US continues to discuss FATCA as if it was some mutually beneficial and collaborative agreement rather than a gun to other countries financial heads.