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FATCA Discussion Thread (Ask your questions) Part Two

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Please ask your questions here about FATCA.

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3,498 thoughts on “FATCA Discussion Thread (Ask your questions) Part Two”

  2. @WhatAmI,
    I cannot know what will happen with the credit unions for certain. I didn’t see any of them on the IIAC list. They have been trying to resist FATCA.
    Even if they don’t succeed, they aren’t celebrating it like the IIAC. Look at the wording in the IIAC document, and the list of members.

    This US credit union organization opposes FATCA:
    http://www.cuna.org/Stay-Informed/News-Now/Washington/CUNA,-World-Council-Back-Bill-To-Repeal-FATCA-Provisions/
    http://www.americanbanker.com/bankthink/credit-unions-fear-collateral-damage-from-fatca-1059360-1.html

    I see this kind of thing from CU Central Canada
    http://www.cucentral.ca/Connections/Connections%20FATCA%20July%2023%202013%20FINAL.pdf

  5. Calgary411, thank you for catching that. I did a search of the other document and didn’t catch any. I see there is a Vancity name listed too.

    My credit unions are not there.

    I just don’t want to reward the collaborators if I can help it.

  6. @Calgary411
    so if my credit union bank is not on the IIAC…I would be safe to move my RRSPs….I have an amount in just savings RRSP….no date to wait. Maybe I should do that…not much interest but ……

  7. northernstar,

    Our RRSPs and RRIFs are not an issue according to the FATCA documentation I’ve seen. Those we need to really worry about are TFSA’s and RESP’s and RDSP’s, not exclusively for retirement = “foreign trusts” and all that entails with 3520 and 3520A, PRPP’s (?), plus of course mutual funds (US = PFIC’s). RRSP’s and RRIF’s are part of the Canada-US Tax Treaty (and yearly Form 8891) — unless that gets negated with FATCA. Of course, everything is affected in one way with the FATCA form 8938 which must be attached to 1040’s.

  8. @Calgary 411
    I will sit tight then..Cashed in my TFSAs , got out of Mutual fund RRSPs before the bank crash. I saw it coming. Don’t have the others.
    I have a few ideas where to put my savings..I am not a millionaire no assets that add to it. I am totally against FATCA…..It is against my Canadian rights.

  9. @calgary411,
    Was wondering about Canada Savings Bonds? I know they’d hit the account when you cash them in, and thus add to a FBAR aggregate, but I thought I saw something that said they are not a reportable ‘account’ in and of themselves?

  10. Credit Union Centrals of both BC and Manitoba are on the IIAC list. I don’t see my provincial bank or my credit union in Alberta listed (thank goodness). Thanks for providing this information, Badger.

  11. @badger,

    I don’t know. “Bonds” are in the descriptions below.

    http://www.irs.gov/Businesses/Comparison-of-Form-8938-and-FBAR-Requirements shows what is reportable with FATCA Form 8938, compared with FBAR.

    http://taxes.about.com/od/preparingyourtaxes/a/Foreign-Financial-Assets.htm
    This article discusses the self-reporting requirements of US taxpayers under FATCA.

    What Counts as a Foreign Financial Asset
    Foreign financial assets, or “specified foreign financial assets” as the IRS calls them, consist of:

    Financial accounts maintained at financial institutions outside the United States, such as bank accounts, investment accounts and mutual funds;
    Stocks, bonds or other securities issued by a non-U.S. person and not held through an investment account;
    Any interest in a foreign entity, such as a foreign corporation, foreign partnership, or foreign trust;
    Any financial instrument or contract that has an issuer or counterparty that is not a U.S. person.

    Foreign investments held through U.S.-based investment accounts are not reported on Form 8938.

    Who Is Required To File Form 8938
    Technically all U.S. taxpayers are impacted by FATCA. But for now, the IRS is requiring only individual taxpayers to report their foreign financial assets. The IRS’s instructions for Form 8938 refer to “specified individuals” and delineate when reporting is required. The following “specified individuals” may be required to file Form 8938: U.S. citizens, resident aliens, non-resident aliens who elect to be treated as if they were resident aliens, and non-resident aliens who reside in American Samoa or Puerto Rico. (For more details, see Do I Need to File Form 8938, “Statement of Specified Foreign Financial Assets”? on the IRS.gov Web site.)

    Reporting Thresholds for Form 8938
    Taxpayers will need to track two measures of the market value of their foreign financial assets: the maximum value of the asset at any time during the year and the value of the asset at the end of the tax year. Taxpayers will then take the sum of all the maximum values and the sum of all the year-end values. These totals are then used to determine if the value of the assets exceed the reporting thresholds. If so, taxpayers will need to report all their foreign financial assets to the IRS. If the thresholds are not met, then taxpayers are not required to file Form 8938.
    …
    The Structure of Form 8938
    Form 8938 spells out all information that needs to be reported to the IRS. Form 8938 consists of four parts:

    Part I is for financial accounts, such as a deposit or custodial account with a financial institution.

    Part II is for other types of financial assets, such as stocks, bonds and other financial instruments.

    Form 8938 has room for just one asset in Part I and one asset in Part II. Taxpayers may use as many Forms 8938 as needed to report their foreign financial assets.

    Part III is a summary showing where income from the foreign financial assets is reported elsewhere on the tax return.

    Part IV is a summary for certain types of financial assets excepted from reporting on Form 8938 because that information is reported elsewhere on the tax return.

  12. I found this on ING Direct Canada’s web site:

    http://www.ingdirect.ca/en/legal/foreignaccounttaxcomplianceact/

    The Foreign Account Tax Compliance Act (FATCA)

    The Foreign Account Tax Compliance Act was signed into United States law in March 2010 as a way to prevent American taxpayers from using financial accounts outside of the U.S. to evade taxes. Scheduled to go into effect on July 1, 2014, FATCA will require non-U.S. financial institutions (including ING DIRECT) to collect and report annual information about accounts that are identified as “reportable accounts” for reporting to the U.S. Internal Revenue Service (IRS), potentially through the Canada Revenue Agency (CRA).

    Starting on July 1, 2014, financial institutions must ensure that when accounts are opened by new clients, information regarding U.S. tax status is received. In 2014 and 2015, financial institutions will need to identify existing accounts that require reporting under FATCA. FATCA reporting to the IRS will begin in March 2015.

    FATCA only applies to “U.S. Persons” as defined by U.S. tax law.

    Under U.S. tax law, you are considered a U.S. Person if you are:

    A citizen of the U.S. (including an individual born in the U.S. but living in another country without renouncing U.S. citizenship)
    A lawful resident of the U.S. (including a U.S. green card holder)
    A person residing in the U.S.
    A U.S. corporation, estate, or trust

    You also may be considered a U.S. Person for tax purposes if you spend a considerable amount of time in the U.S. annually. The IRS provides information on the rules applicable to non-U.S. citizens here:

    irs.gov/Individuals/International-Taxpayers/Alien-Taxation—Certain-Essential-Concepts

    If you’re unsure about your U.S. tax status, contact your tax advisor. If our records show that you might be affected by FATCA, we will contact you to explain why your Account may be affected, and we will work with you to ensure that the situation is handled correctly. If you qualify as a U.S. Person, we’ll look at your Accounts with you and let you know which ones will be reportable under FATCA.

    If you are a U.S. Person, we may ask you to complete an IRS W-9 form (Request for Taxpayer Identification Number and Certification). We may also ask you for consent to provide personal and Account information to the IRS. The Canadian Federal Government is currently working towards an agreement with the IRS to determine exactly how Canadian financial institutions will need to report this information. We’ll be able to let you know more about the information required and how we will be reporting it as soon as this agreement is finalized.

    Detailed information on FATCA can be found on the IRS website at irs.gov/FATCA. The Canadian Bankers Association website also includes answers to many frequently asked questions.

    Information on FATCA is also available in the Help section of our website.

  14. @Em
    There is 195 countries in the world…194 must sign with one – USA….9 have signed out of 194…Hmmmmmm. Not happening too fast,eh?

  15. @Em
    I think I will make a sign on that info you posted…and print out your stats given with the link….and have it with the sign.

  16. @ northernstar
    Exactly! And for the ones that are signed up, the Treasury has to keep “updating its versions” of their agreements. Do I feel sorry for their grueling load of paperwork? NOPE, not a bit.

  17. @calgary, thanks for the information that lists ‘bonds’. Maybe I am confusing the FBAR requirements and the FATCA form 8938 ones. Not hard to do.

    @Em, thanks for pointing out the contrast between the 2012 IGA list and the 2013 one.

    @northernstar, don’t mean to confuse re the credit unions vs. the banks. Just angry with that IIAC document and every member on it. I don’t want to willingly let FATCAnatic collaborating Banksters/INvestmonsters have the use and deposit of my family’s money if I have alternatives. Some people’s assets and accounts will be locked in though, and some will not be able to choose to move assets because of potentially negative Canadian and US tax implications, or not wanting to draw attention to their US status by saying the reason is FATCA, so not something to do in haste. But, I still think it is a good thing in general terms to make the banksters and the IIAC take note of this as a possibility that we can explore. Some of us will have more choices than others, and those who have relinquished/renounced have the rest of their lives to boycott those financial institutions that were FATCA cheerleaders and lobbyists. What makes the banksters and investmonsters think that we will forget or forgive?

    Just my two cents on the Banksters.

  18. @ Badger
    I guess Mr. Stack-O-Lies would say they got twice as many signups in 2013. I would say they merely went from roughly being 2% to 5% finished with the sign-ups in 2013.

  20. ACA notice of event in the UK, re FATCA and US extraterritorial taxation:
    http://americansabroad.org/news-and-events/events/
    “Town Hall Evening in London England

    “Changes in the US Tax Laws:
    How they impact US Citizens Abroad”

    Wednesday, 27 November 2013 18:30 to 21:30

    To be held at:
    Royal Overseas League
    Park Place, St James’s Street,
    London SW1A 1LR, United Kingdom

    What’s happening with new US and UK tax rules? How do these fit together?
    What does FATCA mean for Americans living in the UK?
    What are my options for “catching up” if I am out of compliance for income tax and FBAR reporting?
    What is the short course in US and UK pension and estate planning for Americans living in the UK?”

    See full description and PDF at ACA page

  21. http://www.economist.com/news/international/21589462-cleaning-up-trusts-and-similar-entities-will-hurt-money-launderersbut-it-will-need-lot
    ….”…Under America’s Foreign Account Tax Compliance Act (FATCA), which is to take effect next year, trusts will face many of the same Draconian reporting obligations as banks.”….

    So the US dogged and lunatic insistence on treating our Canadian registered savings accounts (ex. RESP, TFSA, RDSP, PRPPs) punitively as ‘taxable foreign trusts’ may face even more problems under FATCA because they refuse to make any meaningful distinctions between these government registered accounts and other types of trust arrangements.

    I keep reading about the tortured, punitive history of how RRSPs were suddenly and without warning to Canadians, deemed by the IRS and Treasury to be ‘foreign trusts’, and taxable and penalizable as such.

    Look at this past story (2003?) about the RRSP http://www.nationalpost.com/financialpost/story.html?id=A5F6348F-EDA6-493A-A822-1179D3FD07DD
    and IRS Notice 2003-25,

    and read the history of the US taxation of Canadian RRSPs here:
    https://www.chamberlainlaw.com/assets/attachments/Bygones%20Article%20-%20Canadian%20RRSPs.pdfhttp://www.nationalpost.com/financialpost/story.html?id=A5F6348F-EDA6-493A-A822-1179D3FD07DD

    It beggars belief that our government could trumpet the creation of the RESP, TFSA and RDSP which they knew full well the US-Canada tax treaty wouldn’t cover. They knew very well that the RRSP and RRIF are only exempted NOW, with an annual treaty election for each one, and the form 8891. They had to have known this because even that ‘solution’ was only arrived at due to outrage and pressure from Canadians in response to the 2003 IRS notice Notice 2003-25, and the sudden decision of the US to tax and penalize RRSPs and announcement that the complex 3520 form was to be applied to them.

    There are other countries who have equivalent savings plans that never did get their RRSP equivalent tax exempted under US tax treaties – an example is the ISA in the UK, which Phil Hodgen wrote about recently here; http://hodgen.com/is-an-isa-a-foreign-trust/

    Again the US demonstrates its essential hypocrisy and lack of any concern with fairness. US residents can use IRAs and other tax deferred or tax exempted US savings that are similar to our savings options abroad, but we are punished for saving, and US residents are rewarded.

    I think that FATCA is only going to put another layer on this essential conflict re our savings deemed to be ‘foreign trusts’. This is perhaps a stumbling block re the FATCA IGA negotiations in Canada.

    Our federal government was criminally negligent in allowing the US-Canada tax treaty to continue as is containing the huge gaping double taxation and penalty holes re registered savings like the RDSP, etc., (and the PFICs and the US capital gains tax on Canadian principal residences). But imagine if the very same Finance Minister and Prime Minister Flaherty have to admit in public that they have signed an agreement that allows – whether by ommission or commission the US to tax our TFSAs, etc. ?

    I believe that is why they have not tried to warn Canadians about the huge problem. Because they created and marketed these savings plans to ALL Canadians – but knew that they would face the same insane treatment by the US as the RRSPs and RRIFs – but without the retirement savings angle as a lever to get less punitive treatment under the existing treaty.

    Here is where the last-in-time rule comes in, and the savings clause. No matter how important those registered savings are to Canada and Canadians, and no matter how unlikely to be funding terror and drug lords and money laundering, the US just wants our money, and doesn’t give a fig about the costs or the conflicts or the pain and suffering of any individuals – whether they are our children, our dependents, those with disabilities, families, etc. The US FATCA crusade has shown that they are willing to sacrifice as many of us as is necessary to implement Obama and the Democrats signature legacy pieces like Obamacare and FATCA.

    I believe that emphasizing the impact of FATCA on RDSPs, TFSAs, RESPs, and soon PRPPs is a key issue.

    Look at the history of the RDSP:
    http://rdsp.com/tutorial/a-bit-of-history/
    http://www.torontosun.com/2011/10/21/disability-plan-touches-flaherty

    Harper might not give a flying fig for us, but some publicity will be hard to counter.

    So the signs at the banking/compliance event should include signs about FATCA and RDSPs and RESPs and TFSAs.

  22. re my statement;”Here is where the last-in-time rule comes in, and the savings clause.”

    I was referring to the policy of the US to treat treaty partners like lesser beings, and to enact any change they want to and elevate US laws later that conflict with the tax treaties and nullify the intent. Even if there was to be some kind of exemption gained for our registered accounts (RDSP, TFSA, RESP) in these FATCA negotiations, the US can just turn around and pass something that nullifies any remedy – similar to what they did with our RRSPs. FATCA as a US creature magnifies what we already suffer under.

    The history of the RRSP and IRS treatment of same is a clear warning.
    Past behaviour is the best predictor of what the US will do in the future – except even more so.

  23. Yes, badger, the Canadian government has dropped the ball, and continues to drop the ball. Some would argue that it’s not the Canadian government’s duty to inform US persons of their US tax obligations, but to not so would constitute entrapment – especially since we have a treaty that should address these issues.

  25. @All ..
    I closed my TFSAs. So now my RRSPs may be targeted….
    I have a good cartoon that I could send to all via email….I sent it to the Brock protest group..It seems to fit in this topic.

    I wonder if it would be good to put a sign in our protest as FATCA GIVES NO EXEMPTION TO TSFA, RDSP. RESP…ARE RRSPs NEXT?

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