Woofy pulled this off the Canadian Banker’s Association website:
I am not a U.S. person. What does FATCA mean for me?
The majority of Canadians are not U.S. persons and, in most cases, FATCA will have little impact. If you have an existing account and there is an indication that you may be a U.S. person, or if you are opening a new account, your financial institution may ask you to provide additional information or documentation to demonstrate that you are not a U.S. person.
If you choose not to provide this additional documentation upon request, at a minimum, your financial institution may be required to withhold a tax of 30% on U.S. source payments that you receive and send this money to the IRS.
This is really just a game. The CBA should just tell the IRS to take their regulations and shove it. How can people prove that they are not US persons for tax purposes? Imagine the following scenarios:
Scenario One
Banker: Were you born in the USA?
Client: Yes, but I am not a US person.
Banker: Prove it!
Client: Here is my CLN.
Case settled: Possession of a Certificate of Loss of Nationality is the proof positive that one is not US person.
Scenario Two
Banker: Were you born in the USA?
Client: No.
Banker: Prove it!
Client: Here is my birth certificate that shows that I was born in Country X which is not the United States.
Banker: Well, that proves nothing, only that you were born in Country X. We will need to see the original form birth certificates of both your parents and your grandparents.
Client: But I’ve been a Country Xer since birth–why do I have to do this?
Banker: We don’t make the rules, we just follow them.
Client: My grandparents passed away a long time ago; I guess that means I can’t prove that I’m not an American.
Case settled: Client is a recalcitrant account holder because of a stubborn unwillingness to prove that he/she is not descended from the Americans going back two generations.
Scenario Three
Banker: Were you born in the USA?
Client: No.
Banker: Prove it!
Client: Here is my birth certificate that shows that I was born in Country X which is not the United States. Here are also my parents and grandparents original birth certificates, proving that no one in my family has been American for the last three generations.
Banker: That’s great! Now please prove that you are not a holder of a Green Card. And also please prove that neither your parents nor your grandparents were naturalized US citizens.
Client: But I’ve never worked or even lived in the US. Also, my parents and grandparents lived in Country X all their lives–they never became Americans.
Banker: Can you prove that?
Client: How do I prove that?
Banker: Well, that’s up to you.
Client: Your bank sucks.
Banker: We don’t make the rules, we just follow them.
Case settled: Client is a recalcitrant account holder because of a stubborn unwillingness to prove that he/she has never held a Green Card and that his parents and grandparents had not become naturalized citizens.
Scenario Four
Banker: Were you born in the USA?
Client: Yes, but I am not a US person.
Banker: Prove it!
Client: Here is my CLN.
Banker: Now prove that you haven’t become a Green Card holder after your relinquishment.
Client: I can’t do that!
Case settled: The account holder is recalcitrant because the possession of a CLN is no proof that one is not US person because a former US citizen may be a holder of a valid Green Card. (N.B.: I actually knew a former US citizen who was a Green Card holder).
Please forgive me if this whole affair reminds me of another attempt to round up people of a certain ethnicity. The vast majority of Canadians won’t be able prove that their parents and grandparents are not Americans nor that they are not holders of Green Cards. Perhaps, the absence of “the property of the USA” tush tattoo would convince the CBA. But then the banks will have to become like the TSA.
well, you point out the advantage of living in the USA. Now, with the intergovernmental agreements coming nicely into place, a homelander will have to prove that he is not a citizen of 47 other countries.
The US, the Banks, and now perhaps Canada’s Federal government, are all placing the entire onus on the individual taxpayer to shoulder the burden of proof – to whatever standard they decree, and bear the brunt of their priorities, with no benefit to us, only injury, and apparently no avenue exists for recourse.
There is now no onus placed on any of those entities to prove that any of this is warranted, that any crime has or may be committed, that any tax is owed, that our assets are potentially illegal, that we must identify our citizenship or lack thereof, etc. The strategy has been to reverse all onus onto the individual to prove that they are continually innocent, in the face of an automatic and ongoing presumption of guilt, before the fact.
Where are our rights in Canada? Do we actually have any?
Such is the difficulty of proving a negative!
“The absence of evidence is not evidence of absence”.
How does a Canadian snowbird prove that they did not stay too long in the US last winter? I suppose when the Canadian government starts tracking our exits from Canada it might be possible, but it would still involve applying border services for those records, a waste of taxpayers money!
@Mark Twain, No, he will have to prove he is not a resident of 47 other countries, which is much easier because physical presence is mutually exclusive (you can’t be at more than one place at the same time). Banks already know the country of residence of their customers from their address, and for practical purposes they can assume that people don’t have another residence somewhere else. The EU has already implemented something similar to FATCA and it faced way less opposition because the taxation system there is based on residence. If the US had residential taxation, we wouldn’t see so much opposition to FATCA and this website would not exist.
I’ve searched for academic papers on citizenship-based taxation, and found five scholars who have written about it:
Reuven Avi-Yonah disagrees with citizenship-based taxation completely;
Cynthia Blum and Paula Singer disagree with it based on practical purposes;
Edward Zelinsky disagrees with it if citizenship cannot be linked to domicile;
Michael Kirsch disagrees with it if change of citizenship is not allowed without penalties or additional taxes.
There you go, all experts on the subject disagree with the system of taxation implemented by the United States.
And @ShadowRaider, re “If the US had residential taxation, we wouldn’t see so much opposition to FATCA and this website would not exist.” And, we’d still have our non-US family’s emergency savings, spent on legal and accounting fees – to prove that we still didn’t owe any US taxes, and that all our post-taxed, Canadian registered and reported to the CRA accounts were still legal, and that we’re still not drug lords, and that we still shouldn’t pay any penalties – because we still hadn’t committed any financial crimes.
Presumed guilty before the fact – for living outside the US, we’re forced to prove the absence of any US tax and financial crimes committed, annually, forever. Nice to know exactly where you stand with the country you’re presumed to owe allegiance to for life.
I recommend reading Philip West‘s testimony before Congress, page 6.
@Shadowraider, I’m pretty sure that Congressmen don’t read legal papers nor have time to. Not that they would understand them if they did. That’s because US politics is not about doing what is right, it’s about getting re-elected. In order to do that you have to promise goodies to a majority of your electorate and find scapegoats to blame for the problems that result. Expats are the scapegoats. That’s why Victoria’s comment was deleted from Huff Post. If you are a scapegoat, your voice does not exist: it has been swallowed by a time vortex–a crack in the time-space continuum–swallowed along with all our constitutional and other legal rights.
@ShadowRaider, I see what you mean about Philip West’s submission, and I did watch the full video testimony as well. Unfortunately, just as he was about to bring in the issue of the impact of citizenship based vs. residence-based or territorial based taxation on individuals abroad – as per his written statement, he ran out of time and curtailed it – and no one else really referred to individuals at all – except Hines, peripherally, as in his explanations about how business costs (including those derived from US taxation) were transferred downwards onto labour and individuals as workers/employees, through reduced wages to control costs.
I am interested however that West chose to include the situation of individuals in what was of course by necessity a pared down and time limited submission – with carefully considered content. The others all focused only on corporations. My question is why West chose to allocate space and time to consider, and to address that facet – when what the committee and politicians were intent on was only the impact of changes on business – with individuals abroad left to fend for themselves.
Perhaps Mr. West would be willing to answer a question about that if someone interested and knowledgeable asked him.
Also very evident that Orrin Hatch had no interest in hearing about VAT taxes, and so, though the US system is in essential conflict with the majority of systems as practiced around the world, the US will never give us credit for other types of tax we pay abroad, because if it isn’t how the US does things, it doesn’t count – no matter how that impacts us living abroad.
They’re not going to consider us and the contradictions and conflicts we face, our only hope is to renounce when/if/as we can. The US is blind, and will not see. We must protect ourselves if we can. They will never let us go as potential taxpayers – even if factually there is little or no income to be had from us. They simply are incapable of seeing things any other way. It is also very clear that they will entertain as reasonable and logical when corporations like Cargill (as represented by Mr. Naatjes) clearly describe the amounts they spend on figuring out how best to minimize tax and maximize deductions, etc. – it is seen as logical acceptable business behaviour. But, if we use a TFSA to save small amounts for family emergencies, that is characterized as a ‘tax avoidance’ strategy – though it is an arrangement blessed and promoted by our true government of residence and dominant citizenship. As if the TFSA is a direct insult to the US – just in case there might be a small amount of deferred tax or exemption. Ignoring that we cannot use the US equivalents.
They hammered on the Caymans as tax havens, knowing full well that Cargill in the hearing explained why they park their money there – to avoid having it taxed at a higher rate if they ‘repatriated’ it back to the US. So, a corporation can baldly state their purpose was to protect their assets from US taxation – and that they use the Caymans for that purpose, but I cannot use a Canadian registered account like a TFSA to hold small amount of legal and already taxed savings.
It is disgusting.
@badger, I also watched the video. It was exciting when Philip West started talking about citizenship-based taxation, but frustrating that his time was soon over and no one else mentioned the subject. I found the rest of the video so boring, they talked for over an hour about all the minimal details of corporate taxes. I felt like screaming: come on, stop making everything so complicated! Just abolish the whole corporate tax already, and simply tax dividends as any other regular income of individuals, like Estonia does.
For those who want to watch the video, here is the link (Philip West’s speech starts at 53min).
haha, funny. This would be even funnier if we could get it into video form.
I still stick to my 2nd to the last comment:
The FATCA is unworkable in its current form. If the US really wants REVENUE, then they need to go after people that are really cheating in the US. How can they expect to get more money out of us if we already pay more where we live than we would be pay in the US.
Plus, the disgust I have for Resident Americans now after seeing their consistent comments in the MSM. Who would want to be associated with such idiots? I still.. to this day.. can not understand why you guys say “homelanders”. Jeez Louise, homeland = HOME, people. How many of you consider the US to be your home nowadays and those idiot American commenters to be your countrymen?? Seriously…
Sorry for the rant, but the inconsistency in logic has been driving me crazy since last year.
@bubblebustin, re determining substantial presence for snowbirds, etc. , one of the journal articles that ShadowRaider cites and links to above has this note;
“This Part considers how to make the determination of who is a
“tax resident” without undue complexity and uncertainty. The
concept of “substantial presence,” already incorporated in § 7701(b), is
the best tool for this purpose. This argument is based on the
assumption that the United States will continue the process of
implementing a new border control system that will greatly simplify
the determination of an individual’s actual days of presence in the
United States.” pg 719
and pg 707 “Residence would be determined
largely through days of physical presence, monitored through an
electronic entry-exit system at the borders.”from Van d e r b i l t J o u r n a l o f Transnational L aw, VOLUME 41 May 2008 NUMBER 3 ‘A Coherent Policy Proposal for U.S. Residence-Based Taxation of Individuals’
Authors: Cynthia Blum, Paula N. Singer
In fact I’m pretty sure that in one very recent media story about new enhanced crossborder security cooperation initiatives between Canada and the US (I posted on another thread at IBS but can’t locate now) they alluded to plans for just that type of monitoring, with Canada I believe currently tracking citizens from other countries, and collecting data on entries and exits, but not yet completely implemented for tracking and collating info re Canadians – although planned to in the near future. The US was doing the same – not sure how extensive and complete their efforts were reported to be as yet. Can’t remember what it said about the current sharing of the information.
@ShadowRaider, the Blum, Singer article (like some of the others I’ve seen) keep willfully ignoring the issue that the taxpayer has already paid taxes in full where they live – yet saying that it isn’t equitable unless they pay the same or are treated the same taxwise as US residents. Well the US residents are never in danger of being taxed twice – by two different countries with conflicting tax systems – they answer to only one.
They also act as if lower taxes elsewhere, or too generous a US tax credit or income exclusion would be a strong or primary incentive for US citizens to deliberately move to another country – ignoring the many reasons why people move around the increasingly global world, and the many many generations that keep being born abroad as duals – and stay where they are raised up – because they are at birth citizens of the non-US country where they permanently reside and their families are there too. Insane to follow their illogic – that somehow these baby duals contrive to be born outside the US for tax reasons – and then study tax systems to decide where to go next?
The authors have obviously never met anyone abroad, or even been abroad themselves.
For supposedly rigorous journals, it seems that in general, US authors writing on this topic are allowed by their editors to make leaps of unfounded and somewhat ridiculous assumptions and claims – totally unsupported by logic or research. Same as the author Kirsch they footnote, who makes specious claims about the great worth and value the US status confers on those abroad – as the justification and valuation of whatever size US tax or double tax might be imposed. There is such a lot of personal bias and skewed ideology disguised as academic thought in this area apparently – mixed in with references to other articles equally ill considered and badly argued. This is not scholarship, nor is it a sound basis to make policy decisions.
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@geeez
‘homelanders’ has that imperialistic ring to it that I find appropriate.
I remember this from a comment thread on the Hodgen site http://hodgen.com/vancouver-consulate-backlog-for-expatriation/ . Wonder if she’d be interested in seeing what things are like from expat land a year later? Don’t know if the contact info still current.
Amy Feldman
212-787-2794
amy@amyfeldman.com”
“Recently ACA wrote to Amy Feldman, a Reuter’s journalist who wrote
and published an article on November 9th (2011) entitled, “Undisclosed Foreign
Accounts, The IRS is Coming.”
@geeez The name “homelander” is probably derived from the comic strip character of that name. Here is a partial description from Wikipedia:
I don’t know. That’s seems pretty accurate for those we’ve dubbed “homelanders”.
When I heard what Dubya named the “Department of Homeland Security” I realized what an imperialistic nation the US had become when a department’s title would imply that it has counterparts in other US jurisdictions (the rest of the world). “Homeland” is an antiquated and nationalistic sounding term that suits the mindset of a nation that knows no boundaries, which with FATCA, the US has proven itself to be.
@badger
Yes that is Amy’s email, and here is her twitter account:
https://twitter.com/amyfeldman
She doesn’t tweet very often, and doubt she checks her feed much either.
Here was the link to the article she wrote.
Taxpayers with overseas accounts seethe at penalties
@bubblebustin, I also thought that “homeland” was an an antiquated term. I thought “Department of National Security” would sound better. But did they forget that there is already a Department of Defense?
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@bubblebustin and @badger,
The automated tracking of time spent in the US will start June 30:
http://www.moodysgartner.com/canadian-snowbirds-beware-2014-border-crossing-rules-increase-stakes-for-day-count/
And we need banks because…?
Oh right, banks, especially the Central kind have taken such good care of us and our currencies and assets. Last time I checked the US dollar was worth about 3% of its value when the Devils from Jekyll Island put their nefarious plans in motion. I’ll take a 1912 gold or silver piece over a piece of linen with dead guys on it any day.
Your mattress is the safest place for your assets, not any “institution” that creates currency out of thin air.
The Boot-Strap Expat
http://7thpillar.wordpress.com/
@Alex Z, The problem with the idea of putting assets under one’s mattress is that, as you obviously know, the banks destroy its value through intentional devaluation. Hence, “assets” should be defined as tangible assets, never made up of currency, paper money, or what is often called “fiat money”.
It is better to stock up on canned foods (canned salmon, chicken, tuna, corned beef, spam), dehydrated foods, and have some silver coins (as you suggested); it would be good to own a farm where one can raise one’s own chickens, ducks, and sheep and grow some low-carb vegetables.
i have a certificate in my saftey deposit box that says “certificate of canadian cizenship” on the top of it, a certificate number, an oath to the queen and “the person named herein, having taken the oath of citizenship where applicable, became a canadian citizen on the date indicated below” on the bottom.
if the banks will not accept this certificate as me being a canadian i will be more than willing to join in a class action lawsuit against both the banks and the canadian gov’t. if i can help it the americans will get zero from me. they never wanted any information when i freely returned to the country and they had ample oppertunity to request what ever information they wanted they sure as heck are not going to be getting anything from me with strong arm tatctics.
i plan on never returning to the united states ever and am counting on the canadian gov’t to protect me a canadian citizen from a foreign gov’t.