Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part Two
Ask your questions about Renunciation and Relinquishment of United States Citizenship and Certificates of Loss of Nationality.
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 Renunciation and Relinquishment of United States Citizenship: Discussion thread (Ask your questions) Part One
@KalC
There is only one problem with that summary….
Reporting may be exempt…such as RRSP’s..however it has been my experience having dealt with TD Waterhouse (who is already following FATCA due to it’s US Registration), that my trading was restricted/frozen because I would not sign their documents attesting to a US Citizenship which they presumed to be the case from my place of birth on my Canadian Passport…nor could I provide a SSN as I never had one nor would I sign their disclaimer of Private Information Release…Therefore, I would caution anyone that assuming you can operate an account even if it is under the “exempt reporting requirements” may still be a problem as the institution will flag ANY US indicia and take measures to protect itself from a future oversight…(this is my observation only…an account could be under $50,000 when opened, but may be higher at a later date, therefore they will insure they have covered for this possibility by asking EVERYONE )…
So I would suggest, though one should not panic, one should be prepared for a possible requirement to provide a CLN or you may find yourself without any banking services…(again this is my opinion only)
The reasoning is simple..Institutions will not risk an oversight, so they will build in the questions regarding US Indicia…thus they will cut the problem off at the pass and that will likely be by using the same approach TD Waterhouse did with me..regardless of my arguments to the contrary…
(still waiting for my CLN since April 10th)…my banking/trading activities have been drastically curtailed…
Logical thinking. With or without an IGA, the bank (shorthand for FFI) does a search of its clients accounts. It comes up with a list of US accounts that are not exempt according to the rules I posted.
The bank forwards that list to our gov’t or to the IRS. Period
There is absolutely no requirement or expectation that our government will somehow ‘give up US birthplaces if the banks don’t have it’ That is absurd. Do you think that our government is going to take a list of every bank client in Canada and match it against some list or other that they may have listing places of birth?
@DM56,
Everyone’s situation, sense of personal injustice, and risk tolerance level varies. In my opinion, based on how you describe your situation, for the most part I agree with Kalc.
I wouldn’t say ‘do nothing’, but I wouldn’t suggest spending money and LCU’s on filing and renouncing just yet. There is no Canada IGA yet. When/if, we don’t know what the details will be. You might want to think about how to arrange your financial affairs though – for example small local credit unions with assets under 175 mill are exempt from FATCA. It is a win-win to transfer your accounts to them – you get to avoid being reported on by FATCA and stick it to the big banks by removing your money from their pot.
TD waterhouse had no business asking your birthplace. Most of us opened accounts with a driver’s licence. Can’t imagine why you would stay with TD under those circumstances.
@Kalc,
I think you are right. Banks don’t want FATCA. CRA doesn’t want FATCA. The ‘search’ for ‘US persons’ is likely going to be half-hearted at best. Now, if someone is foolish enough to say wear a ‘born in the USA’ t-shirt to the bank or stand outside local businesses with anti-FATCA signs and talk to reporters – well they will get what they ask for. Oooops!
@KalC
Let’s not target a specific bank or the emotional judgement of no right…
from CIBC then….
You need the following things to apply (for each applicant):
Social Insurance Number (Social Security Number for U.S. persons)
2 pieces of photo ID
Banking information (Bank address, transit number and account number)
I consider the TD Waterhouse experience…an ADVANCED SCOUTING PARTY to FATCA July 2014…
For what it is worth…
WhiteKat I appreciate your sense of humour. (or humor)
@KalC
Yes I do, of course, absolutely. It’s a trivial programming task, but the implementation may not be as you suggest. Some people here seem to think that a birthplace is a more sacred secret than bank balances. Web pages are full of birthplaces but nary an account balance.
It would seem like only FATCA Lip Service by the Canadian goverment if they don’t, and that seems absurd to me.
I sincerely hope for everyone’s sake that you are right and I am wrong, but I choose not to apply logical thinking when guessing what either government might do. When you don’t tack something like “in my opinion only”, people will continue to ask for a reference pointing to your most welcome news.
It’s a hard decision to make: applying for a CLN now (whether through relinquishment or renunciation), or wait until and if FATCA causes the feds or FFIs to ask your birthplace, or simply hoping it won’t be available to the FATCA searches.
Will it be any harder or different to get a CLN one way or another after a FATCA enforcer asks you where you were born? Will there be time to get one between the time you are asked and the time your account is frozen or closed? Will the FATCA enforcer acept a receipt for $450 from the US consulate?
These are some of the questions people are considering when trying to take the common advice here “to do nothing if you don’t mind never entering the US again”.
Once the camel’s nose is in the tent, the body soon follows.
@bubblebustin…LOL. I am afraid to ask, ‘what’s in the tent?’
FWIW, I was told by a BNS officer (way back in late 2011) that every new account applicant would be required to fill out either a W9 or W8BEN. If I were still a USC, I would imagine I’d think twice before willfully filling out the wrong form. I am of the type though, that scares very easily. 😉
@WhiteKat
I imagine once it’s in, mostly camel 🙂
There is another angle to the ‘wait and see’ approach, which is not nearly as passive as the ‘do nothng’ approach – and that is the power of numbers.
If the CRA initiates a fool-proof method of seeking out all of us unfortunate ‘US-borns’, it will have a big, big list of people to send to the gas chambers. If most of these have renounced, it will be no big deal to gas the few remaining. On the other hand, our government will have a much harder time getting away with such a mass killing.
that’s ‘imagine’
In this new document:
http://www.fsitaxposts.com/2013/09/10/correcting-amendments-fatca-regulations-released-today/
I found the following, which gives some hope that a birthplace not come up in an electronic search (because it specifically mentions the FFI):
but later I see this:
I don’t have time today to find the orignal document to see what the actual content is of the above statement.
Not directly related to renouncing US citizenship but this seems to be the best Q&A thread here.
Hypothetical question: what would happen if, say, the UK were to sign an IGA but Canada were to refuse to sign an IGA? At least as I understand FATCA, this would mean that all monies transferred from the UK (a compliant country) to Canada (a non-compliant country) would be subject to a 30% withholding to be sent directly to the IRS. So, for example, if someone used a British credit card in Canada, their actual account would be assessed a “gross up” sufficient to cover both the cost of the transaction and the 30% withholding? This seems bizarre but is this really how it would work? At least as I understand FATCA, it divides the world into compliant people/institutions/countries and non-compliant people/institutions/countries. Whenever money crosses the boundary between the compliant and the non-compliant world, the last compliant entity to touch that money has to assess the 30% withholding and send it to the IRS–or risk losing their compliant status.
It also seems to me that this could subject ALL transactions in compliant countries to audit by the IRS–not just those involving US persons. Otherwise how do they prove that they’re not involved in money laundering by sending money out to a non compliant country, institution, or person?
thank you everyone for your interesting comments. @WhiteKat – your idea of forcing the issue by having thousands of US born persons to deal with is a good one. I do think it would make things more difficult than if we renounce and provide a CLN and are then just collaborating in this tremendous invasion of privacy.
From the privacy perspective, I also think that Canadian born persons should refuse to answer any question about place of birth posed by any financial institution. I have told my Canadian born partner and Canadian born children that they are not to answer that question. Interestingly, almost 2 year ago, when I first became aware of FATCA, my financial planning company asked u to fill out forms and the question about birth in the US was already on their forms and was highlighted in yellow for us. We left it blank.
@DM56,
My Canadian born husband would not have answered that question even if he’d never heard of FATCA.
He would tell them straight out that, his birthplace is none of their business.
@KalC
I would love to believe that “do nothing and they won’t bother you unless you’re rich” is true.
Now it may very well be so that the IRS really IS interested only in ‘rich tax evaders’ and the rest of us are mere collateral damage they don’t care much about. Personally I don’t imagine a minnow/plankton will be extradited to the US and thrown in prison for not filing an FBAR when they actually have $10,000.50 as a highest balance of their accounts in a financial year – it’s not worth it to them.
However the perhaps unintended, collateral damage can be bad enough for us to have to wake up and take notice. Some of that has happened already, some can be reasonably (I use the word advisedly) expected given the statutes in place and the way things are going.
US citizens in some countries cannot open a new bank account.
US citizens in some countries have had their accounts closed.
US citizens in some countries have had their mortgages cancelled.
The bank I work for will no longer open an account for someone with a US birthplace without a W-9 or a CLN. My former boss was called back to the home country to head the team charged with closing accounts of US citizens who might be problematic with the IRS (most depressing job ever, he said).
These are things that have happened already, it’s not a figment of someone’s wild imagination.
Personally my local bank has not yet asked me for any information. I don’t know if it’s because my balance is nothing special, because they already know I am a US citizen (I opened the account with my passport), or because they’re just not ready yet. However, my son who was born abroad ran into this when he took a business loan. As he could not honestly sign that he was not a US citizen, they had him sign a W-9 and waiver of confidentiality, and asked for his Social Security number. So far it hasn’t had any consequences, but he hasn’t tried to renew his passport, and by the time he does I wouldn’t be surprised if they are hooked up the the IRS and can see he hasn’t filed tax returns ever. Denial of passport renewal would fall in the “didn’t happen yet but might well happen in the future” basket.
If FATCA goes ahead, and it shows every sign of doing so no matter what a stupid and destructive piece of legislation it’s turning out to be, life is not going to get easier for USP’s, it’s going to get worse. Banks that have not yet come down on their US customers are going to do so. So the practice of doing nothing is going to have a limited shelf life IMHO. How is a normal everyday person supposed to live without a bank account?
When I first started finding out about this whole mess (not so long ago!) I really wanted to believe that Brockers were some sort of tinfoil hat fringe group with a Chicken Little approach. Unfortunately the vast majority here are reasoned, logical and often highly pi$$ed off present and former USP’s, who back up their estimations with observations on what’s happening in the real world. So if you’re privy to some information lacking to the rest of the posters here, I for one would be happy if you’ll share it.
Shunrata wrote:
“My former boss was called back to the home country to head the team charged with closing accounts of US citizens who might be problematic with the IRS (most depressing job ever, he said).”
Does anyone know what closing someone’s account actually entails? Does the bank cut a cheque to the victim for the full amount in the account? That cheque could prove to be useless if the victim is blocked from opening an account anywhere else. Would the bank be obliged therefore to give the victim cash instead? Banks are very adverse to doling out large sums of cash. I once made a kerfuffle in a bank when I asked for $5K in cash. They made me take half and come back the next day for the other half. I surely hope it doesn’t mean the bank freezes or actually confiscates the victim’s account like they did in Cyprus. Actually I don’t think it means that but remember Canada and other countries have legislation in place now to do “bail-ins”. If someone was deemed a bad, bad recalcitrant could a bank twist that into an excuse to freeze or confiscate? Just wondering, not tin foil hatting … I think.
We shall see.
@Em, as I understand it, as soon as a bank discovers US indica, then it will request that the account holder fills out a form. If the account holder refuses to fill out the form, then they will be declared “tax cheat” and will be given a month or so until their account will be closed. At the going rate of things, it will be impossible for the “tax cheat” to open up an account with any other bank. So, their best bet is to either renounce, sign the form or bank under the bed. Guilty with no option of being proving otherwise.
@Em
I don’t know the technical details but we’re talking about sums too large to take out over the counter.
Customers were told to find another bank to transfer funds to. At the time (this was a few years ago, before I started paying attention) it was possible. Don’t know what the situation is today.
Thanks for the replies. FATCA could change a USP into a USPNG (US persona non grata). That is so evil.