FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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.
Any residents of Quebec reading here? Anyone with a Bloc MP?
Not being a resident of Quebec, and not bilingual, I have no idea if any of this FATCA and US extraterritorial tax-and-penalty arrogance has ever been discussed there online, in the media, or elsewhere.
How do Canadian international and federal taxation issues interact/intersect/overlap with Quebec sovereignty issues and powers?
Example: re the Conservatives signing away Canadian rights and changing our laws in order to implement a FATCA IGA with the US:
What status does that agreement and ANY contemplated changes to existing Canadian laws, Charter rights, Constitution, and legislation that would enable the CRA to report directly to the IRS have under any agreements between the Canadian federal government and Quebec?
Are there Quebec sovereignty issues here as well as Charter and Constitutional issues? Are there issues re First Nations and Aboriginal sovereignty?
This is an area that has not been explored.
Further to my comment above:
In a preliminary search, I found;
http://global-economics.ca/dth.chap2.htm
” The PQ definition of sovereignty was first set out in a white paper before the 1980 referendum. It was subsequently accepted by the Bélanger-Campeau commission and the National Assembly used it in the 1991 referendum legislation. According to this definition, Quebec sovereignty means:
all taxes in Quebec are collected by the Quebec government;
all laws in Quebec are drafted by the National Assembly; and
all international treaties and agreements involving Quebec are negotiated by the Quebec government and ratified by the National Assembly.”
I found also this:
http://www.spiegelsohmer.com/documents/sohmer/official-ali-aba-presentation-dhs.pdf from ALI-ABA Institute on International
Trust and Estate Planning by David H. Sohmer
August 24th, 2012 “Offshore Tax Enforcement: Voluntary Disclosure, FBARs and FATCA”
which notes re Quebec: “….Note no tax collection
agreements with Canada, other provinces, or foreign
countries. ….”
“Federal administers individual provincial tax for all
provinces except Quebec.
C.
Federal and Quebec exchange tax information. ”
“Canada has signed but not yet ratified the “Convention on
Mutual Administrative Assistance in Tax Matters”. Canada
will reserve against Articles 11 to 16 of the Convention so
that it will not collect U.S. taxes from Canadian citizens. ” (NOTE: is this still the case?).
I don’t know enough about this area to critique or weigh what I find, so that is a major caveat.
Question for IBS Administrator:
Should IBS have a dedicated “Quebec and FATCA” thread that might turn up in any Google search if anyone there was looking? – or have a bilingual thread title so that if they searched in French, it would be at the top of their search results?
Is there a scholar or contact who would know whether Quebec sovereignty inside Canada could provide a block to FATCA’s implementation in Canada or by Canada?
Philippines Central Bank tells their financial institutions to just make a business decision and comply or not.
[Complying with FATCA] is ultimately a business decision of banks. FATCA imposes reporting responsibilities upon all banks dealing with customers who are US nationals,” Bangko Sentral ng Pilipinas Deputy Governor Nestor A. Espenilla, Jr., said in a text message yesterday. “Such customers will be expected by banks to give written consent so banks can report to US tax authority; otherwise, banks may be constrained to terminate the relationship.” –
See more at: http://www.bworldonline.com/content.php?section=TopStory&title=Local-banks-told-to-comply-with-US-tax-law&id=72828#sthash.Kl9a3PD2.dpuf
http://www.ipolitics.ca/2013/07/04/canada-expected-to-accept-tax-reporting-deal-with-u-s-in-fall/
Interesting article with some details or speculation that we haven’t seen before:
Including that “..While the Finance department has kept mum on the deal, people involved in the process in the private sector say the government has made an effort to prepare institutions for the burdensome reporting scheme by briefing insiders on the progress of the deal….”
and,
“According to a May 14 letter on FATCA from the Credit Union Central of Canada found online, finance officials told industry stakeholders the deal would not be announced publicly for weeks after it had been signed.
“On May 2, Canadian Central was told by Finance Canada that negotiations are continuing; it will be several weeks before further information is available; and a public announcement may follow many days or weeks after officials conclude their negotiations,” Gary Rogers, vice president financial policy, wrote in the note…”
Obviously Finance feels that the Canadian citizen and resident public and voters do not have the same rights as banks do. We are subject to any FATCA IGA, but have apparently no democratic right to information or public debate or discussion. A pretty good indicator of the contempt that both countries hold us in as citizens and taxpayers?
“……….Speaking by phone Wednesday, Rogers said he thought Ottawa was trying to reach a favourable reciprocity agreement with the U.S. on sharing financial information. While the U.S. has agreed to share financial information about foreign residents from countries with whom it has a bilateral deal under FACTA, the terms of that information swap are negotiated from country to country.
“Are U.S. financial institutions prepared to scour their accounts for people?” Rogers asked. “It’s all good to say there will be reciprocity, but I imagine Canada is saying, ‘Let’s define that.’”
He said he suspects U.S. officials were offering Ottawa “crumbs” in terms of reciprocity. Rogers said he thought the deal would be signed in October, but added that a delay in signing could be good news for credit unions because it could push back implementation dates as well……….”
from: ‘ Canada expected to accept tax-reporting deal with U.S. in fall’
By Olesia Plokhii | Jul 4, 2013 4:25 am | iPolitics
I found this online:
http://www.cucentral.ca/Connections/FATCA%20Anxiety%20Increasing%20FINAL.pdf
“….On May 2,
Canadian Central
was told by Finance Canada that negotiations are continuing; it will be
several weeks before further information is available; and a public announcement may follow many days
or weeks after officials conclude their negotiations. It appears that Canada is trying to extract more
concessions than the U.S. intends to give…”
Found this re Quebec and international tax treaties:
http://www.revenuquebec.ca/en/citoyen/situation/nouvel-arrivant/declaration-de-revenus/conventions-fiscales.aspx
”
International Tax Treaties
Tax treaties exist between Québec and France, as well as between Canada and several other countries. The purpose of such treaties is to ensure that people do not pay income tax on the same income in two different countries. Although Québec is not a party to the tax treaties signed by Canada, certain provisions of these treaties are taken into account in Québec’s tax legislation.
The Canada Revenue Agency’s International Tax Services Office can provide additional information on such treaties and agreements.
If Canada or Québec has not signed a tax treaty with the country in which you earned your income, you cannot claim a deduction for income exempt under a tax treaty on your income tax return. However, the foreign income tax you paid may entitle you to the foreign tax credit.”
Here is a story about what we can expect under a FATCA IGA when the CRA and the IRS get together and both are mistaken – the onus is on the taxpayer to fix it. One of the suggestions made by the IRS to fix their own mistake originating from a SSN typo was for the Canadian to reapply for US citizenship.
‘
Man gets relief from tax debt he didn’t owe: Roseman
Told he owed thousands because of a U.S. mistake, he gets help after contacting the Star.’
By: Ellen Roseman On Your Side, Published on Tue Jul 02 2013
“David Gauci worked in the United States from 1999 to 2003. An error made by the U.S. Internal Revenue Service — and compounded by the Canada Revenue Agency (CRA) — threw his life into disarray.”
http://www.thestar.com/business/personal_finance/2013/07/02/man_gets_relief_from_tax_debt_he_didnt_owe_roseman.html
@Badger, Could there ever be a better poster child for the problems coming from FATCA?
https://lh6.googleusercontent.com/-Xw07mJs91yU/UdZuma29FFI/AAAAAAAAAoc/-WTYWBippMg/w600-h480-no/Canadian-Expat-Eagle_LauraSecord.jpg – My response. Laura Secord’s father was an American Patriot against the British taxation of the Colonies. Laura was an “American Expat” from American tyranny under the administration of James Madison. And Expats, like Laura Secord, will not roll over under any circumstance. We’ll fight and we’ll die fighting!!! And I am one Canadian who will fight alongside my American expat brothers and sisters.
@Just Me, that Star story is just exactly what I would anticipate to happen – multiplied million fold by having FATCA imposed.
I myself once had a terrible time trying to get the CRA to recognize an error that originated in the accidental duplication of computer files generated by my financial institution during a system amalgamation. Even after I figured out the problem – and even when the institution notified the CRA formally, and the CRA acknowledged the error, the onus was on me to identify the source of the error, and see that it was finally corrected – even though I was not the originator, and even though I had no access or power over the computer files. In the initial stages, the financial institution was of no real help either.
I shudder to think at the inevitable complexities that will result for us under FATCA, and with electronically filed FBARs. If for example I make a typo on an FBAR and discover it after the fact – how can I demonstrate that it was inadvertent rather than misreporting? If the bank mis-reports, or makes an error – how to prove that? Banks do not want to admit errors – or liability – ever. We would end up fighting the CRA, the IRS AND the bank.
The risks via accidents and inadvertent errors are so fraught with the danger of penalties that can condemn us to bankruptcy or at the very least months or years of fear and anxiety trying to prove our innocence.
On forms that are not directly reporting a ‘taxable event’.
Even without FATCA, once I learned about FBARs, that was enough to taint US citizenship as a potent toxic threat to my family’s wellbeing forever – and that is on entirely legal local post-tax accounts that are transparent and registered with my local tax agency.
@badger
Correct me if my interpretation of events is wrong, but it sounds to me like this guy said “F-you IRS, you made a mistake and if you want to collect you have to come and get it”, which the IRS managed to do through the CRA. I don’t understand how that’s done considering the guy is a Canadian citizen, but then I’m no treaty expert.
It appears that it wasn’t proving that the US government made a mistake that did the trick, but the guy having to prove he’s had a history of mental illness which caused him to not to rectify the situation at the time.
I think we should expect a lot more mentally ill US persons in Canada over the next many years.
@Bubblebustin,
Might CRA have been collecting for CRA? Eg, Was he resident in Canada at the time the dead lady’s income was reported (as his) to CRA? In which case he’d owe CRA tax on his worldwide income, unless he paid the tax on his US income to the US? CRA believed the dead lady’s income was his income; and CRA says, “prove you’ve paid US tax on it or get IRS to inform us it was not your income?”
Another thing struck me, what’s this IRS saying if he reapplies for US citizenship, it would solve the problem. Was he once a US citizen? When? Or had he applied for US citizenship (the application being withdrawn or not approved)? What I really want to know is -why would his becoming a US citizen solve the problem?
This story needed a much longer article because his case is a complicated and bizarre situation. There’s a lot of steps and relevant information missing but we don’t know what they are.
Reading it, I got the feeling that CRA was collecting for CRA. Though it’s not clear – but the whole article is foggy to me. Whatever the missing details are, it’s clearly a Kafkaesque nightmare. And as JustMe wrote, “Could there ever be a better poster child for the problems coming from FATCA?”
@bubblebustin
I found the article difficult to understand. My *interpretation*, which is possibly wrong, is that the IRS somehow incorrectly created a Canadian tax liability for the guy; and that’s what the CRA was trying to collect on. The part about “reapply for US citizenship” seemed to come out of left field as nowhere in the article (did I miss it?) did it mention he had lost US citizenship or had been previously denied it on application. I think this article was written under time and/or space constraints as the writer’s articles I’ve read are usually better.
Unless anyone reading is a cross-border tax specialist who can read between the lines, I agree that the article lacks enough details for us to understand what transpired. To me though, these facts stand out: the CRA acting on information they had began garnisheeing him, which they for some unknown reason reimbursed him for after he proved that he had some mental health issues (which to me is a reasonable cause plea for not having done something he should have).
Maybe he became a US citizen when he went to the US and because the US requires someone becoming one to renounce all other citizenships they didn’t consider him a Canadian at the time the tax liability occurred, therefore denying him the protections under the treaty? He since renounced and somehow re-applying would have helped his situation?
Just a very uneducated guess on my part.
@bubblebustin, and all, I couldn’t figure out the scenario either – but it was clearly a nightmare to resolve. Loved the IRS suggestion that US citizenship would help somehow. Yeah right. How could that help – it only makes things more perilous for us. Then FBARs would kick in too.
Going back to the reply received by @Marie from Kevin Shoom http://isaacbrocksociety.ca/fatca/comment-page-28/#comment-418432 ;
“Your questions relate to the substance of the agreement under negotiation with the U.S. Consequently, the answer would depend on the outcome of the negotiations. The Government does not comment on the substance of negotiations that are underway.
If an agreement is reached, it would be made public….”
Parse those words. The agreement “would be made public”. Well I guess, eventually. And we know from another article and letter on the web that the Finance Dept. said there would be days or even WEEKS before the Canadian public was told.
And, we know from the same sources that the banks and other ‘interested parties’ are being kept apprised of the state and progress of the FATCA negotiations. The CBA (Canadian Banking Association) and most probably also the IIAC http://iiac.ca/ are being kept informed behind the scenes – AND we know they’ve been lobbying behind the scenes for the IGA all along. Which all adds up to conspiring with the banking and investment industry to get concessions that favour them – but with NO-ONE charged with the task of standing up for the best interests of Canadian citizens and permanent residents and the Canadians who would be bound and subjected to this and suffer under FATCA are being stonewalled with 2 year old letters from Minister Flaherty, and empty platitudes.
So, I guess that in the eyes of the Harper government, banks and the financial industry have more rights under Canada’s Charter and Constitution than voters and citizens and taxpayers.
Contrast the answer Marie – a Canadian citizen taxpayer and voter was given by the Finance Department with the information being voluntarily offered to industry insiders:
“While the Finance department has kept mum on the deal, people involved in the process in the private sector say the government has made an effort to prepare institutions for the burdensome reporting scheme by briefing insiders on the progress of the deal.” http://www.ipolitics.ca/2013/07/04/canada-expected-to-accept-tax-reporting-deal-with-u-s-in-fall/
It occurs to me to wonder if one reason why the financial industry would be told of the signing of the FATCA IGA, and given a head’s up of potentially weeks BEFORE the CANADIAN public is to stave off our ability to choose then to close all accounts with the banks and withdraw our assets – if able to do so.
What would happen if > 1 million Canadian citizens and residents decided to change their banking and investment arrangements as a result of being alerted to the imminent or actual signing of a FATCA IGA, and coming to understand what that would mean for their family savings?
Would there be a rush to close accounts with the CBA collaborators and to open them in small credit unions, or invest in property, or Canada Savings Bonds, etc. – or whatever individuals feel are the least toxic ways to safeguard their assets? Or at least the least offensive? Some who have CLNs, or who have already renounced and do not need to fear FATCA for themselves may choose to close their accounts held with CBA collaborators out of distaste and opposition – especially against those banks who jumped the gun many months ago.
Are the CBA and the IIAC concerned about that? Is the Finance Department and the Harper government?
@badger
You ask “Are the CBA and the IIAC concerned about that?” I think they’re planning on those very things happening. What is the most important message that any bank needs to send to it’s customers? That their money is safe with them. This doesn’t only effect US persons, but every banking customer when they are eventually told that the US government has the potential to ruin where they keep their money. Just the potential of this happening could seriously destabilize the Canadian banking industry.
It’s important to also note in Mr Shoom’s statement “If an agreement is reached, it would be made public….” that he said “if” not “when”.
In light of what’s currently going on down there with the Posey/Paul dynamic duo, the Canadian government would have to be total lemmings to acquiesce to the banks right now by entering into an IGA.
@bubblebustin;
Shall we write the Department of Finance that in light of their choice to keep the skulking CBA and financial industry lobbyists apprised of FATCA negotiations, while choosing to stonewall us and keep FATCA effectively a secret from the Canadian public and subvert the democratic process; it is worth re-considering who we entrust with our assets in ANTICIPATION of their announcement of an ‘imminent’ signing of a FATCA IGA. It was their deliberate choice to keep the Banks and Investment industry apprised of the progress of the talks behind the scenes, while deliberately choosing to keep this secret from the Canadian public who would be bound forever by their actions, and it was the deliberate choice of the CBA and associates to lobby for an IGA despite knowing that > 1 million Canadian households would wake up one day to the secretive arrangements made to subject them to overt discrimination based on their birthplace, inherited US status and any other US indicia.
We should not reward the behind the scenes machinations and skulking secret lobbying of Canadian Banks and the Canadian Investment industry. It would pose no pain to me to close my last vestigial accounts with a CBA member. I prefer Credit Unions anyway. I will just boycott CBA members for the rest of my life – and influence everyone I know to do the same wherever possible. Not just those deemed ‘US taxable persons’ here in Canada, but all our family and friends and acquaintances too. Banks are not popular anyway – it is a common topic of conversation to voice dissatisfaction with them and compare horror stories – it comes up all the time. I’m not going to reward back stabbing conspiratorial financial industry lobbyists with my Canadian family assets. I so strongly resent the manner in which all this is being done – so no matter the outcome – even if FATCA fails in Canada, I will remember and bank and vote accordingly.
The CBA says “Of all the companies that consumers have relationships with, few are more intricate than the relationship they have with their bank. Canadians turn to their banks to SAFEGUARD their money, buy a home, manage their investments and plan for retirement. Given the nature of this relationship, TRUST and CONFIDENCE are VITALLY important.” http://www.cba.ca/en/media-room/50-backgrounders-on-banking-issues/480-what-canadians-think-about-their-banks
Well, guess what? I trust Canadian banks and the investment industry even less than I did before they CHOSE to skulk about lobbying for our own sovereign government to sign our Canadian Charter and Constitutional rights away in a FATCA IGA – and they CHOSE to throw their clients under the IRS bus. Even if credit unions are made to comply, at least they exist primarily to serve their members. The banks will reap what they sowed.
@Badger
Amen. I suspect that we may just be rounding errors for the banks in Canada 🙁
DATA challenges of FATCA…
“Identify relationships between one account holder to another to ensure that individuals who are subject to FATCA guidelines are also identified regarding the relationships to other customers as well as corporate customer entities”
Guilt by association. Sounds like something out of Germany in the 1930’s
What does evil Data sound like?
Shouldn’t his shirt be brown?
highlighting again how institutions are creating their own laws — the base is the FATCA control and more control is piled on top. And in most countries they can get away with it
Are Family Offices Affected By #FATCA? http://taxconnections.com/taxblog/are-family-offices-affected-by-fatca/ via @taxconnections