FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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I regret signing on to IBS just before I was about to hit the sack. IBS reading at the best of times is not relaxing, but Marie’s post is gut wrenching.
I would imagine that the reason the US wants bank account reports for those with CLN’s for 10 years after the CLN date is so that IRS can assess penalties for all those bad ex-US persons.
Wanna bet that the next thing Canada will agree to is to collect penalties on behalf of the USA?
My mattress is looking like a good place to put my money.
Anyone looking for info on the Canada/US treaty or governmental agreement needs to contact Competent Authority, not the regular CRA info line. They are the treaty branch located in Ottawa and can be reached at 613-957-2071.
@ calgary411
Could this thread from Marie’s initial comment on be moved to a post of its own? I have a feeling there could be a lot of follow-up comments and the “fatca” thread is overloaded already.
Tim made these comment at the Maple Sandbox yesterday and earlier today …
“My personal belief at this point is we are still several rounds of fighting away from this becoming an issue for the judiciary. The biggest problem is there is still a lack of understanding of the issue in Ottawa and quite frankly Washington too. This is starting to change but only very slowly. The main consequence of all of our efforts seems to be at this point is that given Canada has not yet signed and ratified a deal that if/when it does Parliament will be much more educated on the issue than the UK Parliament was when they ratified their IGA this past spring.”
“I will add currently right now Parliament is scheduled back on September 16th however, it is widely expected that there will be a fall throne speech so Parliament might not be back until late September or early October. If an IGA is signed prior to then there needs to be a minimum of 21 sitting days before any ratification and implementation legislation is introduced in the House. So that brings us after the October recess and perhaps even into November before legislation can even be introduced. So the odds of this thing getting wrapped up this year even if the government puts its foot to the metal are quite low.”
Marie’s informant left out some of the details. The details are important.
According to the model 1 IGA;
Not all accounts over 50K will be reported. Accounts over 50 k will be checked ‘electronically’ for so called US indicia. If a US indicator is found, then the account may be tagged. If the FI has no information on file as to the nationality of an account holder nothing will be done. Acconts over 1 million $$ will be more closely checked.
A CLN will protect you from having an account reported to the IRS.
If someone renounces and chooses to file 8854 and is not a ‘covered expatriate’, then that’s it. There is nothing in the model 1 IGA about being on the hook for 10 years. No one is obliged to file or pay taxes for 10 years after receiving a CLN. If someone chooses to do so, they are supposed to assert that they have been compliant for 5 yrs. BEFORE renouncing; NOT 10 years after.
@DukeOfDevon,
I think the 10 year time period Marie refers to is with regard to the FATCA reporting requirements of the bank, not the number of years of tax compliancy.
@ Marie
Re: CLN/renounciation/relinquishment does not get you off the hook for taxation for 10 years. Your balances will continue to get reported for 10 years after issue of CLN.
Are you saying that your understanding is that the banks will report account details for 10 years after issue of CLN?
Em, I agree this should have a post of its own. I don’t have the capability of moving the comments over to a new post. I am hoping that USCitizenAbroad or Petros or someone more literate than me will post. Petros is the only one who can actually move the comments we now have here.
This was Marie’s comment
“My stomach has been churning all evening, especially considering the part about filing taxes for 10 years after a CLN has been issued.”
I tried to reassure her that no one has to file taxes for 10 yrs. after a CLN has been issued.
@ Maria
Wow, what a “scoop”.
It’s remarkable that a mid-level functionary (I assume that level based on ease of direct telephone access) has provided more specific – and alarming – information on this issue than various elected officials.
Suggest calling CRA Competent Authority directly, taking careful notes, and then immediately:
– express your concerns about these facts to your MP, the Minister of Finance, and the Opposition parties.
– send a brief note about your conversation noting the facts, noting how this may harm you or your family, and expressing interest in a FATCA class action or plaintiff’s suit to Joe Arvay at Arvay Finlay:
http://www.arvayfinlay.com/lawyers/j-arvay.htm
– suggest also cc Peter Hogg at Blakes:
http://www.blakes.com/English/WhoWeAre/FindPerson/Pages/Profile.aspx?EmpID=101698
This is on Mr Arvays’s radar, but keep in mind he is professional for hire.
@Duke of Devon,
Yes, but in her overview of what she heard, she also said this: “Re: CLN/renounciation/relinquishment does not get you off the hook for taxation for 10 years. Your balances will continue to get reported for 10 years after issue of CLN.”
My take on that was that the banks will continue to report for 10 years from date of issue of CLN, not that one has to file US tax returns for 10 years. It would not surprise me if banks were to continue to report for a period of time after the issue date of a CLN. They have to have some sort of cut off date. This would be a sneaky IRS “gotcha” for all those US persons who renounced recently….a pay back of sorts for all the embarrassment we’ve caused and all the fibbing they’ve had to do with the renunciation stats.
I dearly hope my instincts are wrong on this one.
I think you will find that Marie’s contact got that detail wrong.
In the model 1 IGA (take the time to read it), using the UK as an example.
“Notwithstanding a finding of U.S. indicia under subparagraph B (1) of this section, a Reporting United Kingdom Financial Institution is not required to treat an account as a U.S. Reportable Account if:
a)
Where account holder information unambiguously indicates a U.S. place of birth, the Reporting United Kingdom Financial Institution obtains or has previously reviewed and maintains a record of:
(1)
a self-certification that the account holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);
(2)
a non-U.S. passport or other government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States; and
(3)
a copy of the account holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
(a)
the reason the account holder does not have such a certificate despite renouncing U.S. citizenship; or
(b)
the reason the account holder did not obtain U.S. citizenship at birth.”
note that a CLN makes the account non reportable.
Everyone take a deep breath.
I sincerely hope that the woman I spoke to at CRA left out some details. I asked her specifically if presenting a CLN would stop the reporting of accounts to the IRS. Her response was “no, they have thought of everything, we continue to report accounts for 10 years”. I didn’t ask her if I had to file taxes for ten years because I just assumed that meant it did. Why would the IRS want the accounts reported if the person was no longer taxable?
When I phoned the CRA this afternoon, i was not prepared for this bomb-shell. I did my best to stay calm and get as much pertinent info as I could. Does an individual need to file taxes for ten years after a CLN has been issued? should have been my next question to her. This is worth a follow-up phone call on Wednesday.
Duke of Devon. It’s good to hear from you.
Thanks for your reasoned explanation, citing the Model 1 IGA of the UK. What you point out does make me breathe a bit easier.
I’m so tired of the relentless see-saw of all of this.
Saying that, we do need clarification on the point in question from this CRA department / agency for everyone’s peace of mind on what the rules will be — what Canada is willing to give away for its US Persons in Canada, be they Canadian citizens or permanent residents. And, make decisions based on what we learn.
Why is there not effective communication with us? Where is the leadership in our Canadian government representatives? We must know who and what our MPs really represent.
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The Canadian Civil Liberties Association CCLA needs to know about this too. And Prof Christians.
How can Canada assert that we – Canadian permanent residents and Canadian citizens are Americans for tax residence purposes? How can Canada define who is an American, and uphold US laws on Canadian soil? That would seem to be potentially very very embarassing for the Harper government – when a sovereign autonomous country is willing to assert that its residents and citizens are actually taxpayers of another country over and above the total irrefutable and absolute fact of their actual residence on Canadian soil and Canadian status?
There is nothing worse than a Canadian who is willing to betray a fellow citizen – to further US interests.
I say at that point, we who have renounced, or relinquished, can start picketing with signs that state that Harper Conservatives are traitors betraying Canadian citizens and our families.
How can Canada allow Canadian banks to deliver our bank information for 10 years after we have our CLNs – proof that we have no US status or obligation? That seems so egregious that it stretches so far beyond the breach of privacy and rights that have already been identified. And, there is still no explanation of how that can possibly be legal in Canada given the other accounts held jointly with others who have no US relationship whatsoever. There is no acknowledgement that those accounts belong to non-US person with no relationship or legal responsibility of any kind with the US – except via our status.
So was the exaggeration in the more recent lines from Flaherty that with the announcement of the Streamlined program that ‘the US has listened’ – designed to be a careful set up to explain away the contemplated betrayal via FATCA ? ““We told the U.S. government that the vast majority of Canadians targeted were honest, hard-working and law-abiding individuals and they listened,” said Minister Flaherty……”. ………“……….These are positive developments. It is yet another accomplishment for Canadians and a testament to our strong working relationship with our American neighbours. I appreciate the cooperative approach of the American authorities. Nevertheless, we will continue to advocate on behalf of Canadians on such issues with the U.S. government, including the implementation of FATCA (Foreign Account Tax Compliance Act),” said Minister Flaherty….”
http://www.fin.gc.ca/n12/12-072-eng.asp
If the Harper government enables this, affecting >1 million US citizens and ‘US taxable persons’ in Canada, the Conservative party can look forward to going down in history as traitors to Canada and betrayers of Canadians. The Conservative party will certainly live to regret any such collaboration, as even staunch conservatives would never ever forgive or forget such a threat to their assets and family.
No spin the Harper government can muster will suffice in the face of the actual threat to our legal, local and tax compliant Canadian assets.
@All
As per Em’s suggestion I moved this over to a new thread as a post of its own.
You did good, Marie. You brought this information to the forefront where it can be examined more closely. Thanks so much for reporting this for all of us.
“They have thought of everything.” I am again typing with my middle finger.
@Calgary411,
We likely helped them to think of everything.
Thanks, USCitizenAbroad
This is the link, everyone …
http://isaacbrocksociety.ca/2013/06/26/its-time-competent-authority-confirms-canandian-fatca-iga-to-be-signed-summer-of-2013/comment-page-1/#comment-405369
Duke of Devon, I believe what she was referring to was the simple fact that the CRA would report your accounts to the US for 10 years after the fact if I’m correct in reading that. That is in direct violation. Once you receive your CLN; you are no longer a US citizen and the United States should not have any rights to your banking information. That is a violation of the Banking Privacy Act. Am absolutely disgusted to be a Canadian citizen right now…and highly pissed off.
@Badger
You ask “How can Canada define who is an American, and uphold US laws on Canadian soil?
I ask, how can a financial institution be expected to define who is an American, and uphold US laws on Canadian soil? Duke of Devon’s information on IGA’s states:
“Notwithstanding a finding of U.S. indicia under subparagraph B (1) of this section, a Reporting United Kingdom Financial Institution is not required to treat an account as a U.S. Reportable Account if:…
(a)
the reason the account holder does not have such a certificate despite renouncing U.S. citizenship; or
(b)
the reason the account holder did not obtain U.S. citizenship at birth.”
Who at the bank will be given the task to decide what’s ‘reasonable’?
I also ask, how can this overreach be anything but repelled by a nation that itself does not have a tax system based on citizenship? To act as a facilitator for laws that contradict our own threatens Canada’s identity as a nation, and confirms to many that we are patsies to the US.
FATCA round up continues: Sri Lanka Banks Association today informed all U.S. citizens living in Sri Lanka to comply http://bit.ly/1aNDzmY
Scalia in DOMA opposition ruling provides the best line for #FATCA opposition: “The most expert care in preparation cannot redeem a bad recipe.” http://bit.ly/11Ic76Y
@Just Me
Sri Lanka needs more ‘tigers’ in its banker’s association. I guess the government isn’t so willing to capitulate to an IGA, leaving the banks on their own?