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.
@badger, excuse me, but where in any IGA does it say that only interest on accounts needs to be reported? As far as I know that’s not what’s going to happen here in Switzerland, it’ll be the whole amount in any account should the IRS do a follow up. US still trying to fudge their responsbilities in reciprocal reporting.
@Nick, WhatAmI has given you a good summary of what’s likely to happen. I can only add that should your bank ask about your US status, you lie about it and the bank finds out they WILL close all accounts immediately. It’s part of FATCA that the banks must do so if any client refuses to allow them to pass your account info on to the IRS. Have you by any chance worked for the Canadian government? If so, then you might be able to relinquish rather than renounce your US citizenship. Depending on how long ago that might have been it may or may not help regarding the tax side of things.
Above all, don’t rush into any decisions. Do your research and take as much time as you need before deciding on anything. Keep up to date with what’s happening with FATCA in Canada and adjust accordingly. We’re here to support you if you need us, answer questions and help as much as we can.
This game is only in the second inning. Imagine what happens if a Canadian Bank reports the account of a dual cit residing in Canada. If the IRS were wise they wouldn’t do a thing.
But we know they aren’t wise so imagine they send a threatening letter asking said dual to file some tax returns and pay some ginormous penalties. Said dual ignores the letter. Ask yourself ‘what can they do?’ Answer – bugger all.
Imagine they demand the bank close the account and said bank is foolish enough to comply. Our dual now approaches the CBC. The ensuing s**tstorm would be a hoot.
@Em, least I could do. You guys have been awesome. Carol and Gwen being bravely interviewed and so articulate, and all that fielding of all those misinformed online comments on CBC. So much incomprehension and misunderstanding of the situation by many commenters. So much effort and energy it must take about something so personal and hurtful and seemingly without remedy – and without any real assistance from the Canadian government – the country where she chose to be a citizen and where her son was born. Fellow ‘Canadians’ Minister Flaherty and Harper, as well as unhelpful MPs should be very ashamed of themselves when they see the bravery of Carol and Gwen and all the other ordinary people fighting for what is right here, mostly without any real resources.
What is this Canadian government for if it won’t protect and assist the most vulnerable?
And as for Marion Wrobel and the CBA – how do they live with themselves? They barely mention their accountholders at all – only as an afterthought. And they only reluctantly admit that they’ll be passing the costs on to those same accountholders – “cost of doing business” don’t ya know (and deliberately omit the costs to ALL Canadian taxpayers). What hubris considering that the money in the accounts is OURS. They want to sell us the RDSPs (and the RESPs, the TFSAs and the big juicy plum of potential PRPPs) but don’t care what happens to those who own them.
@Medea,
Just part of the fake ‘reciprocity’ the US is pretending to offer. They DEMAND account numbers, locations, balances, activities, owners/co-owners, contact info, withdrawals, deposits, etc. for any and every type of financial and many non-financial accounts and assets – and they offer only the interest on certain accounts? Wow, what ‘transparency’. Particularly for all those US corporations incorporated right there in Delaware – the Vice President’s home state.
And this may not be the end of the efforts by Texas and Florida bankers. Who knows?
@badger
Notice that the reporting on the rejection calls these IGAs “treaties”, but we know better!
“U.S. judge tosses bankers’ suit over rules to fight tax-dodging”:
http://www.globalpost.com/dispatch/news/thomson-reuters/140113/us-judge-tosses-bankers-suit-over-rules-fight-tax-dodging
“Judge James Boasberg of the U.S. District Court for the District of Columbia, in a 23-page opinion, dismissed the lawsuit, finding that the new rules “would cause minimal burden to banks and their customers.”
Written in 2012, the rule would require disclosure by U.S. banks of information about accounts held by non-resident aliens that earn at least $10 of interest per year.
“The court’s opinion today represents an important step in our commitment to work with our treaty partners to eliminate cross-border tax evasion,” said Assistant Attorney General Kathryn Keneally, head of Justice’s tax division, in a statement.”
Note that the reporter, Patrick Temple-West, who has been reporting on FATCA for about two years, at one point spelled FATCA as FACTA.
http://www.antibuerokratieteam.net/2014/01/14/fatca-obamas-schlechter-vorsatz-fuer-2014/?utm_source=feedburner&utm_medium=feed&utm_campaign=Feed%3A+antibuerokratieteam+%28antibuerokratieteam.net%29
google translated
What the United States of America and Eritrea have in common? Both tax their citizens , even if they live abroad. Thus, they serve as a model for all those who desire a similar regime for Germany . Such a measure wealthy tax exiles eventually could be dissuaded to escape – to the Treasury to achieve through the resettlement , they would have to then take the German citizenship.
Abandoning the citizenship is a way has the a rapidly increasing number of overseas Americans embarked in recent years . The denaturalization of Eduardo Saverin and Tina Turner found , as expected, the way into the headlines. The increasingly frequent denaturalizations unknown Americans are mentioned less frequently. Nevertheless, the current increase in Ausbürgerungsanträge is not to be overlooked : 2013 submitted over 3,000 U.S. Americans from their citizenship .
The decisive factor here is not about a tax increase , or the fear of rich tax evaders to be discovered. Rather it is about draconian penalties levied , even with small errors in the tax return , the resulting expenditure for tax consultants and a new bank transparency law called the Foreign Account Tax Compliance Act ( FATCA ) . FATCA is a law that foreign banks committed U.S. authorities have balances of ‘ U.S. persons’ inform – regardless of whether they live within the United States or not. Do the banks fail to do so , they must be expected that 30% of their income earned in the United States by the local tax office will be retained. For the new year (2014) , making it the USA have made a bad intent FATCA roll out worldwide .
It is probably no coincidence that FATCA almost sounds like fat cat . Finally, it is presented to the public as a means of tax evasion through offshore accounts . However, a side effect is that some U.S. banks simply exclude Americans from their services because the costs are too high – for the savings account or the mortgage of a normal wage earner , the effort is not worth it . So there are because some emigrants with the alternative facing either lay their citizenship or return to the U.S. if they can not lead a normal middle class existence more than U.S. citizens abroad or difficult to an annual tax is for them to make in order to avoid disproportionate fines .
To the depopulation of the U.S. or the erosion of the entire Diaspora ( 6-7 million people) , this situation will not lead well . Also, the total economic damage can be limited. However, what is clear here is how tax policies that are ostensibly directed at a small group of rich tax evaders , can have life-threatening consequences for average wage earners regardless of the tax-free allowance . Because one should always think if left populists call for a Schumi – tax or the expansion of FATCA standards to the entire OSCE is considered. Who is really rich , will be able to always provide the necessary tax advice. Who deserves normal, it runs the risk of caught in the crossfire of redistribution conflicts. Any action against ” tax- evading fat cats ” will therefore call their victims in the middle layer .
@Nick
I don’t know how or when you become a Canadian citizen, but a change to Canada’s Citizenship Act in 2009 may have made you a Canadian citizen at birth. The direction you go in is entirely up to you, but if you fear being US tax complaint would subject you to an exit tax, being a Canadian citizen at birth will exempt you from it.
http://www.cic.gc.ca/english/citizenship/rules_2009.asp
Sorry, bubblebustin, but it won’t. Unless you can also confirm that you’re also tax compliant you will still considered a covered expat. This from the IRS 8854 instruction sheet:
“Covered expatriate. You are a covered expatriate if at least one of the statements in paragraphs (1), (2), or (3), set out (under Who Must File) applies.
1. Your average annual net income tax liability for the 5 tax years ending before the date of your expatriation is more than the amount listed
2. Your net worth is $2 million or more on the date of your expatriation.
3. You fail to certify on Form 8854 that you have complied with all of your federal tax obligations for the 5 tax years preceding the date of your expatriation.
Exception for dual-citizens and certain minors. Dual-citizens and certain minors (defined next) will not be treated as covered expatriates (and therefore will not be subject to the expatriation tax) solely because one or both of the statements in paragraph (1) or (2) above (under Who Must File) applies. However, these individuals will still be treated as covered expatriates unless they file Form 8854 and certify that they have complied with all federal tax obligations for the 5 tax years preceding the date of expatriation as required in paragraph (3) above (under Who Must File).”
http://www.irs.gov/pub/irs-pdf/i8854.pdf
@MedeaFleeceStealer:
I did write “but if you fear being US tax complaint…”
But Nick might find the additional info you provided valuable. Thanks.
couple of goodies
Offshore Tax Havens – Obama Has Identified the Enemy it is Him
President Obama’s war on offshore tax havens targets every country on the planet with the exception of the United States; the world’s largest tax haven. Obama is the consummate politician and has perfected the ability to speak from all sides of his mouth at the same time.
In speeches regarding his war on non-U.S. financial centers the U.S. President has invoked the words and terms; “Tax haven”, “tax evasion”, “money laundering”, “offshore banks”, “terrorist” and “drug cartels”, so many times they have been emblazon on his teleprompter.
http://offshorewealthpreservation.wordpress.com/2013/06/08/money-in-offshore-tax-havens-is-okay-if-you-are-obamas-friend/
Money in Offshore Tax Havens is Okay if You are Obama’s Friend
“When he was first elected, the president said tax avoidance through international tax havens forced ordinary Americans to ‘pick up the slack,’ ” said Senator Charles E. Grassley, Republican of Iowa and a Finance Committee member. “He railed against fat cats who avoid taxes offshore.”
Michael Froman is President Obama’s nomination to be the United States Trade Representative. Mr. Froman is a longtime Obama White House economic aide and has half a million dollars in a fund based in the Cayman Islands; according to financial documents provided to the Senate Finance Committee
Ok…sonew to all of this. And so so angry. I am assuming this has been answered a million times but please provide any insight you may have…
I am apparently a US Citizen…born in the US to Canadian parents. Lived there for 4 months. Returned to Canada. Been here now over 35 years. Never worked in the US, filed Canadian Tax Returns since I was 16. But apparently, even though I hold a Canadian Citizenship card (I think I got it and a SIN number at the same time and said the oath) and a Canadian Passport and have NVER applied for anything US…I am a citizen of their country.
I am confused by all of this. We have a minimal amount in our TFSA that apparently the US thinks they can tax me on. Am I right? What do I do? I have never thought to file a US tax return. Why would I?
I am seriously looking into renouncing my would be citizenship. Can someone please help explain all of this in SIMPLE terms…
Much appreciated
More Canadian media coverage:
http://www.ctvnews.ca/business/q-a-how-will-the-new-u-s-tax-law-affect-canadians-1.1638582
‘Q & A: How will the new U.S. tax law affect Canadians?
Very similar to my situation. This has come as a shock and is extremely stressful. I never in a million years considered that a government I consider to be foreign could get its hands on my Canadian earnings (on which I pay plenty every year to the CRA, thank you very much). I have asked informally for advice and have gotten all kinds of responses, but don’t know what to do and I’m terrified. I’ve worked hard to build up a small nest egg but I am hardly wealthy.
@ Me
You are considered by the USA to be a US citizen (we know better but we are not an evil behemoth foreign government either). You have to read more here before you come up with a strategy. I know that is a daunting task. This site has “grow’d like Topsy” in the past 2 years. You might have noticed that things got a bit hectic here yesterday with all the CBC coverage so Brockers may not be able to jump in immediately to attempt to help you sort things out. For now, I’ll just say welcome and hang in there. And to both @ Me and @ Nick (@ treehugger too). Yes we know it is a shock. Everyone here has had their OMG (Oh My God) moment. I think this is all building up to big time protests and when the time comes we hope you will help swell the numbers. Meanwhile, take deep breaths and keep reading and post comments to make sure we don’t lose you in the back pages. Again, WELCOME!
BTW, thanks to everyone who attempted to address my question, although for the most part there seems to be more uncertainly than anything else. I agree with those who advised the best thing to do is wait for more info, although its hard because I am in a bit of a panic. I would certainly dump U.S. citizenship without any qualms (never considered myself American anyway) although this seems like a bit of a hassle and would still require filling out U.S. tax returns, something which I simply can’t get my mind around. I suppose putting my money into my Canadian-born, non U.S. person wife’s individual (not join) account could also be an option (and then hope the relationship doesn’t end…)
Nick,
While that is a good strategy going forward depending on what you decide to do with the privelidge of being an “exceptional” American. My understanding is that all of the information that the US government is looking for is retroactive, so it won’t change the fact that to them that you had these accounts. The require the last seven years of information for your FBAR (foreign bank account reports) on all accounts if your total between all your accounts is greater then $10,000. This includes all joint accounts and any account that you have signing authority on. (if you were a treasurer for a local charity or something like that it would include that account as well)
To the other Brockers here, if I have posted some erroroneous information please correct it, but I believe that everything that I have stated is correct.
Cheers.
Nick…thats how I feel. I did tell my parents that if I was flagged and had to pay I would send them the bill 🙂
This is a citizenship I never wanted and don’t want. In fact when I took that oath when I was 16 we were told I would have to apply to have duel citizenship. Go figure.
Well then renunciation seems the only choice. But… if this is going to affect relatives of so-called U.S. persons and even organizations for which they may have had signing authority in Canada, there will be an impact for millions of Canadians meaning that surely it will become a political issue when the broader public becomes aware. Right now, this is completely off the radar for Canadians other than those who the U.S. considers citizens (and even many of them still don’t know, I just found out yesterday via the CBC). Once this starts getting implemented and starts causing havoc for millions of Canadians, it will cause a stink and with an election year next year, surely this will be an issue.
@Badger
Thanks for the heads up. I sent this to my local newspaper editor. Hot off the presses as they say.. More Canadian media coverage:
http://www.ctvnews.ca/business/q-a-how-will-the-new-u-s-tax-law-affect-canadians-1.1638582
It is so nice to see new Brockers, Me, Nick and KrackerJack121.
And I read there were 8700 hits on Brock yesterday. awesome!!
@Nick, @Me, welcome to our hell, and I’m sorry you find yourself in it.
The devil is in the details. First, you must examine the details of your citizenships…meaning all that you hold. If you choose to shed yourself of wanted or imposed US citizenship, read to see if you could relinquish vs. renouncing. Relinquishment gets you out of the tax/information reporting hell. It also saves you the $450 US renunciation fee, and a trip to a US consulate.
Please note that most of the time, those born dual (ie. me, born in US to Canadian parents, returned to Canada as an infant) are not allowed to relinquish. I was refused.
Read, ask questions, read, ask questions…. We all fit into a variety of citizenship and financial circumstances, find where you fit in. Until then, you cannot make informed decisions.
And breathe.
** Sorry, poorly worded above. You DO have to appear at a consulate to relinquish, but currently no fee charged.
@Mom
You got that right. FATCA is hell on earth.
Tomorrow is 6 months since I went for my CLN (relinquised back dated to 1993)
Thank you everyone. Currently we are just waiting and collecting (and trying to understand) this information. Most of all, I am just so angry right now.
We are just getting by right now as a family. Making ends meet, paying a mortgage. My husband has money coming from his dad’s estate and this will be put into an account that my name is not a part of. He wants me to renounce, pay the $450, be done with it. If only it were that easy. Do I not then have the honor of paying fines and such for not filing tax returns previously (I seriously have no idea what they would tax me on…there is nothing to really tax). I have no issues renouncing…there is nothing to be sad about as I never even thought I was still and American.
I cross the border a lot too…live right on it. I get asked by US Customs all the time why I don’t have a US Passport. Now I have a really good answer…
I have a very bad feeling about the sudden very comprehensive coverage the CBC is giving to fatca. Has anyone considered that it maybe as a result of a government directive to the CBC to barrage the public on behalf of the IRS and a pending IGA? That way no “U.S PERSON” in Canada can say that they didn`t know they had filing and reporting requirements.