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.
@Edelweiss: Should I be concerned by the wording “is not required to treat an account as a US Reportable Account”? Why doesn’t it say “shall not treat an account as a US Reportable Account” …?
No idea, but personally I probably would not worry too much about this. If I were implementing this in a bank — and mercifully I am not — I would not volunteer to send more than needed.
Even if they do send your non-US person information, what would the US do with it? You are no longer a citizen and completed a clean and legitimate exit. Anything the IRS does receive on you now just frustrates their hunt for the few genuine needles by unnecessarily enlarging the entire haystack.
@Watcher
As a natural born cynic, I am always very wary when the perfectly obvious and definitive language that could have been used is not used. I don’t believe this was an accident. I suspect this would have been outsourced to a major law firm whose job it is to get it right.
I’m hypersensitive to the idea that the decision over whether to send my data which should be definitively ruled out in the IGA could rest with the designated FATCA compliance person at a bank whose job it is to minimise potential liability and reputational damage for the bank and their own personal liability they accepted when they became the FATCA designate. I’m also hypersensitive to the idea of feeding the NSA data monster with my private financial information which, I believe, no country should have access to.
I think I will ask them for written confirmation that my account is not US Reportable and will not be reported.
Have a read of the latest FATCA news here at the Credit Union Central site:
http://www.cucentral.ca/Search/Pages/Results.aspx?k=fatca&s=All%20Sites&r=write%3E%3D%226%2F15%2F2013%22
Particularly the one where Canadian credit unions are to look to the terms of the UK IGA as guidance in lieu of any firmer details from our Canadian federal government on the terms and status of the current FATCA IGA negotiations between Canada and the US.
Helpful to see what they might be thinking about.
I specifically noted that for those considering moving their accounts from banks to credit unions, or from large credit unions to small ones, there are specific considerations that might prove important.
This posted on ACA’s Facebook page:
U.S. offshore banking industry strikes back at FATCA IGAs – See more at: http://emergingmoney.com/bank/79984/#sthash.hqUoohBp.dpuf
See important excerpts from the Connections credit union newsletter of July 9, 2013
‘FATCA: UK Guidance assists Canadian preparations’
by Gary Rogers, Vice President, Financial Policy, Credit Union Central of Canada
“………While no recent news or update has come from the Canadian government, we are assured by officials that negotiations with the U.S. are continuing. They express confidence that a FATCA Inter – Governmental Agreement (IGA) will result.
It is generally assumed that the eventual Canadian/US IGA will be similar to that reached by the
Americans with the UK government. Therefore, this 145 – page UK government document provides a very useful starting point for Canadian financial institutions. Credit unions that are
beginning their FATCA preparations are encouraged to review this document. Canadian Central is preparing a summary of the most important provisions of the UK Guidance which will be posted
later this summer on the FATCA site http://www.cucentral.ca ”
(my note, the FATCA portion of the cucentral site is locked and not publicly accessible – which is very interesting to note if you are a credit union member – how much information should members be given about matters like FATCA which directly affect them? See Credit Union Central of Canada’s explanation: “THE CREDIT UNION DIFFERENCE; WHAT IS A CREDIT UNION?”
“Credit unions are co-operative financial institutions, owned and controlled by their members. One of the fundamental principles of a credit union is democratic control. As shareholders, all credit union members have a voice in setting their credit union’s direction at the local level. Each credit union member has one vote, regardless of the amount of deposits or shares they have in their credit union. Members also elect their credit union’s board of directors, which is responsible for governing their credit union.
While each credit union is an independent, democratic and locally-controlled financial institution, all credit unions share a common bond: their dedication to the people and communities they serve. In addition, all credit unions are guided by the seven Co-operative Principles, which shape credit union business decisions and governance, setting them apart from other financial institutions………” from http://www.cucentral.ca/SitePages/TheCreditUnionDifference/HistoryOrPhilosophy.aspx
See also the Co-operative Principles http://www.cucentral.ca/SitePages/TheCreditUnionDifference/CooperativePrinciples.aspx
Also interesting that they cite this statistic: “Currently, about one out of every three Canadians belongs to a credit union or caisse populaire.” That’s a higher proportion of the Canadian population than I thought. Even more reason to boycott the banks entirely! There are more than enough small credit unions to choose from in order to switch from using the banks.
Seems to me though that the FATCA portal on the Credit Union Central site would be against the Cooperative principles if they use it to instruct CU staff how to get ready to inflict FATCA IGA principles on CU members – particularly in advance of a signed IGA.
Regarding the 30% withholding that FFI’s must impose on US source income in an account held by a “US Person”……
How about if the only US source income is Social Security? Does anyone know if that falls under different rules?? I was always under the impression that government pensions were difficult to garnish or withhold.
@Marie
You may misunderstand the FATCA 30% withholding. It is not individual related. It has nothing to do with a U.S. Person. It is the Foreign Financial Institutions (FFI) who is subject to the withholding without regard to who the owners are of the underlying products! It could be a Australian grandma’s retirement money that would be withheld if the FFI is not a “Participating” FFI or PFFI. Make sense? or better yet, do you understand?
@Just me
What you’ve just explained is what I had always thought. However, if you go to the Canadian Bankers’ Association website, under their FATCA guidance page it states the following..
“I am a U.S. person. What does FATCA mean for me?
If you are a U.S. person, you may be asked to complete IRS Form W-9 (Request for Taxpayer Identification Number and Certification) which will be kept on file at your financial institution. You may also be asked to provide consent to your financial institution to provide the IRS with personal and account information.
If you do not complete IRS Form W-9 or provide your consent to disclose information to the IRS, your financial institution maybe required to withhold a tax of 30% on any U.S. source payments1 that you receive and send this money to the IRS. Also, your financial institution may refuse to open an account or may be required to close existing accounts.”
Also, here is a note from Senator Rand Paul’s response to me regarding this issue…
” This legislation drastically expanded government involvement in the financial goings-on of Americans who live and work abroad. FATCA, the tax evasion provision in this bill, requires all foreign financial institutions (FFI) to provide a detailed report on American account holders to the Internal Revenue Service (IRS) beginning in 2014, or be subjected to a 30 percent withholding tax on income from U.S. assets. American account holders with more than $50,000 who fail to file a report with the IRS would also be subject to a 30 percent withholding tax.”
It sounds like there are two withholding taxes being discussed.
@marie
What may be interesting to note is that my mother (not a USP) was recently overpaid a SS payment after her death. Under the treaty, SS was able to claw the direct deposit overpayment back out of her Canadian bank account.
@Marie
What they are talking about is current tax withholding requirements that are not new or specific to FATCA legisaltion. What is new, is that their U.S. source income is subject to 30% withholding if they don’t administer FATCA or become a PFFI. So, they are now acting as IRS agents for the U.S and informing you what will happen to you, if you don’t do as you are told!
A letter about FATCA to the president, from the organization that supported him.
http://blogs.wsj.com/corporate-intelligence/2013/07/12/union-letter-obamacare-will-destroy-the-very-health-and-wellbeing-of-workers/
” As you both know first-hand, our persuasive arguments have been disregarded and met with a stone wall by the White House and the pertinent agencies”
“Time is running out: Congress wrote this law; we voted for you. We have a problem; you need to fix it. The unintended consequences of thIS are severe”
http://blog.kpmg.ch/financial-services/fatca-start-postponed-again-good-or-bad/?goback=%2Egde_4245552_member_258073106
Some details on the nitty gritty by our KPMG compliance friends. NOt sure that I follow what they are saying, but maybe someone else does.
For the US indicia search (electronic and physical) it simply gives some more time to effectively do that. For those that already have done part of the search or have planned to do that this additional time period is certainly welcome as the amount of work is enormous (BUT ! – READ NEXT PARAGRAPH).
How does this impact or is related to the discussion around the US tax program?
FATCA and the US tax program must always be kept apart. While FATCA applies worldwide and is significant for the future, the US tax program regulates the past in terms of the relationship between the US and Switzerland, in which there are overlaps regarding requirements.
According to the timelines published in the press, the search for US clients that might have committed “tax-related offenses” over the past 5 years, the shift in the FATCA timelines for the review of pre-existing customers do not help. Even under the old timelines these searches would have to be accelerated.
The relief for not reporting accounts as of end of 31 December 2013 does not apply for FATCA anymore, but most likely under the US tax program.
The notice regarding FATCA and IGA is no longer on the Canadian Ministry of Finance website.
http://www.fin.gc.ca/fin-eng.asp
I guess the matter is closed for discussion.
Switzerland going after it’s latest whistleblower:
http://www.swissinfo.ch/eng/business/Bank_whistleblower_faces_criminal_backlash.html?cid=36449010
@Marie
Putting “FATCA” in the Finance Canada search bar produces no results, however a google search of “Finance Canada FATCA” turned this up:
http://www.fin.gc.ca/treaties-conventions/notices/unitedstates-etatsunis-eng.asp
The search also turned this up, an article about FATCA’s latest delay in ipolitics published July 12, I hadn’t seen yet:
“After months of delay, stakeholders say Canada is expected to sign the agreement in the fall. Finance officials have kept mum on the progress of talks or when they would sign an intergovernmental agreement (IGA) with the U.S. It is unclear how the extension of FATCA’s start date could affect negotiations…
Canada’s IGA with the U.S., which follows the 1A model, would require Canadian banks, mutual funds and credit unions, as well as life insurance companies and other financial institutions, to disclose to the Canada Revenue Agency the names, addresses, and financial information of U.S. citizens, green card holders, and permanent residents holding money in Canada. The banks will have to comb through dense electronic and paper financial accounts for possible tax criminals, probing accounts that have links to the U.S., including those having an American address, birthplace, or phone number.”
Author sounds pretty confident of the type of IGA and when the agreement will be signed.
http://www.ipolitics.ca/2013/07/12/irs-extends-fatca-start-date-by-six-months/
PS: The article is ripe for commenting!
@bubblebustin
Thanks, now I see it.
@Marie
It’s still odd that it doesn’t show up in the search bar. I wonder if it ever has?
@Mark Twain
That is some letter…. Wonder if these Unions would have an enlightenment moment regarding FATCA. Probably NOT! Let’s see if Obama stonewalls that one! I love it when these guys get bitten by the hand of unintended consequences!
Excellent article about FATCA in the Wall Street Journal entitled:
How to Lose Friends, Citizens and Influence
http://online.wsj.com/article/SB10001424127887323848804578607472987119796.html#articleTabs%3Darticle
I recieved a geen card in 1983 and returned to Canada that year. I am Canadian born citizen with Canadian only parent. I have lived in Canada since 1983 and threw out the card 1 year after I left. I only lived IN USA from June 1982 to Aug 1983. I did not even visit USA for 20 years. In 2008 a US border agent asked about the card and I told him I through it out. He made me sign a 407 form which I have misplaced. I have no USA asset except for Canadian banks US index currency neutral which own future contracts on a online account. Is this considered US source income? I have no plan to ever visit USA
I never used the green card.
Money. Not sure what ‘canadian banks US index’ is. In any case you have nothing to worry about and nothing to do. If you have US source income, tax will be withheld at source. You will get a T3 or T5 slip showing what was withheld (if anything) and that becomes a foreign tax credit on your Can. tax return. You do not file anything with the US. Lucky!
These are mutual fund (national bank altamira) which buy future contract on the S&P 500 on a online international market? I have receive dividend in past and is listed as other income, I am very careful about Canadian taxes and laws.
If a Canadain company sell product in USA (i.e Canadian Oils sands) could the American start claiming because it sells part of the oil to USA it should be considered USA income. Will the Canadian government allow Canadian bank brokerage company to enforce the 30% USA witholding in that case?
Even by the letter of proposed law I am not a USA permanent resident I just do not have paper work. I really have not been a USA permanent resident 1 year after I left USA 1983 if you use the law thjat were in effect before 1995. The Canadian goverment has all my tax record.
I posted this on another IBS thread, but want to make sure it is not missed;
Well worth reading Victoria’s cogent and informed analyses over at the Flophouse, great comments too:
http://thefranco-americanflophouse.blogspot.fr/2013/07/fatca-project-audit.html
“Monday, July 15, 2013
FATCA: A Project Audit ”
Money Do you have a concern? You shouldn’t.