This was proposed by Just Me and seconded by a few others so I thought we could take a shot at it together.
The basic idea is to create a one page (maybe two) tract that could be used as a template – something that could be adapted to the local circumstances. It could be sent to journalists, passed out during demonstrations or just emailed to people we know who are still very confused about what FATCA is, what it means, and why they should care.
Here are the latest updates as of September 17, 21:51 Paris time.
What is FATCA?
The Foreign Account Tax Compliance Act (FATCA) is an extra-territorial U.S. law that demands that all financial institutions in the world report to the United States’ Internal Revenue Service (IRS) the confidential account information of millions of people it classifies as “U.S. persons”.
What is a U.S. Person?
A U.S. Person can be a U.S. citizen, a Green Card Holder, or the citizen of another country who has a connection to the United States.
Here’s how you may have a US connection:
* born in the USA
* born outside the USA with one or two American parent(s)
* lived in the USA for a number of years
* visited too long in the USA in any given year
* married to a US person
* share signing authority on an account with a
US person
Chances are very good that you, or someone you know, is a U.S. Person. That means FATCA affects you personally. Millions of people worldwide who do not consider themselves to be U.S. citizens are still considered U.S. Persons by the U.S. government even if they have never lived or worked in the U.S., are citizens of another country, and have never held a U.S. passport or Green Card.
But I’m not a tax evader or a U.S. citizen or Green Card Holder!
Under FATCA you are presumed to be guilty until proven innocent.
If your local bank suspects you are a U.S. Person, they will require that you prove you aren’t.
If you clearly are a U.S. Person, and your country has signed an agreement with the United States (called an “IGA”), then your local bank will send your account information to your local government who will then turn it over to the United States.
Under these agreements, this will happen even if your country has strict laws protecting personal privacy. So far the following countries have either signed these agreements or have agreed to do so: UK, France, Germany…..
What will the United States do with that information?
Under American law U.S. Persons are also U.S. taxpayers. Those who live outside the United States are required to file tax returns, bank account reports and pay American taxes. This is true even if the U.S. Person earns no income and has no assets in the United States.
You might consider yourself a responsible tax-paying citizen of another country but the United States sees it differently. If they think you are a U.S. Person then they feel they have the right to add you to the American tax base.
There are others ways they could use that information. If enough countries are bullied into complying then the United States government will have a master list in their databases of all the people (and their assets) in the world who have any connection however innocent to the United States of America. That sounds a lot like the recent NSA scandals where the United States spied on citizens of other countries.
FATCA is spying by other means.
But I thought FATCA and all those reporting rules only applied to the rich?
Not true. FATCA impacts ALL U.S. Persons: rich, middle, or low income .
The filing threshold for one form, the FBAR (Foreign Bank Account Report), is only 10,000 USD. This threshold is the total of all that person’s accounts (checking, savings, and retirement) combined – not the value of any one account. This means that even very low-income U.S. Persons must file and face stiff penalties – up to 500,000 USD and 5 years in jail – if they fail to do so. The American IRS can impose these fines even if the U.S. Person is too poor to file a tax return and doesn’t owe any tax.
I’m not a U.S. Person and I don’t have any connection to the United States. What does FATCA have to do with me?
FATCA impacts ALL citizens in ALL countries in three ways:
1. All financial institutions worldwide are affected by FATCA. The billions they will spend in compliance costs will be passed along to customers in all countries through higher FEES.
2. Local governments and local taxpayers will bear the cost of the staff and information systems required to implement FATCA in that country.
3. Existing privacy and anti-discrimination laws will have to be downgraded in every country in order to facilitate FATCA. This means that citizens everywhere can expect less protection of their privacy from their local government.
Part IV (What they can do about it)
Some ideas for this section:
Here I would point them to Isaac Brock first as a resource. As them to join us or pass the link around to people they know who are affected by FATCA.
Then we can list the other sites we think they would find useful: Maple Sandbox, ACA, AARO and so on.
Excellent point. If we look at the AARO estimates here:
http://www.aaro.org/about-aaro/6m-americans-abroad
The Americas have the highest number. The only other country that rivals Canada is Mexico but I’ve never (alas) seen anyone here from there.
I’m getting tired and need to go to bed. How about we stop there. Is what we have so far good enough for a basic template? Is there any more general stuff to add or does that pretty much cover it?
If so, we can call it good and then each of us can start adapting for our respective regions.
And I can work on translating mine into French tomorrow. 🙂
I can probably put an image into a comment. Petros walked me through it and I’ve used that knowledge successfully a few times here.
For continuity, USA instead of US.
* born outside the USA with one or two American parent(s)
And maybe put the dots in that I left out of U.S.A. and U.S.
This is shaping up amazingly fast, Victoria. You are wizzard at this.
My pesky inner proofreader suggests one small change:
“Does FATCA effect me?” may be more widely acceptable if spelled as “Does FATCA affect me?”
Your choice, of course.
And good luck and thanks for all your work!
Looks brilliant. Quick thoughts:
Definitely should be ‘affect(s)’, not ‘effect(s)’.
‘Failure to file any of the forms may result in steep fines and penalties. For example, failure to file a Foreign Bank Account Report – FBAR – may result in a penalty of 10,000 USD per year.’ reads like IRS form instructions and/or accountant speak.
Maybe a mention that even if you are definitely not a U.S. Person you will nevertheless share the costs of your bank’s FATCA compliance (or complicity?!), increasing your banking charges and reducing your investment returns.
Should be ‘U.S. Persons at ALL socio-…’
Bonne nuit, Victoria. Sweet dreams 🙂
Have you considered Go Public on the CBC’s The National? Check it out on their website and see if there might be a way to tailor the FATCA and FBAR harm/story to get their attention:
Go Public is an award-winning, weekly investigative national news segment on CBC TV, radio and the web.
We tell your stories and hold the powers that be accountable.
If you have a story for us, email gopublic@cbc.ca or use the form on this page.
Em and anyone else, here’s a good place for your excellent card summary: http://www.huffingtonpost.ca/2013/09/12/canada-us-relations-poll_n_3915230.html?utm_hp_ref=canada
…and then there is FATCA coming to Canada:
Foreign Account Taxation Compliance Act
FATCA affects 1 million Canadian residents. If you
have any connection to the USA you need to know
what this US legislation is and how it will affect you,
your family and your bank. To find out more visit
isaacbrocksociety.ca.
Here’s how you may have a US connection:
* born in the USA
* born in Canada with US parent(s)
* lived in the USA for a number of years
* visited too long in the USA in any given year
* married to a US person
* share signing authority on an account with a
US person
ALL Canadian financial institutions are affected by
FATCA and their billions in compliance costs will
be passed along to ALL Canadians.
Hopefully when you learn about FATCA you will join
the opposition to it.
visited too long in the U.S.A. in any given year(s) (e.g. Snowbird, 3 year avg. rule)
ALL Canadian financial institutions are affected by
FATCA and their billions in compliance costs will
be passed along to ALL Canadians through higher FEES or lower investment returns.
Great work, but one correction. Not everyone of every socio-economic level need file a 1040. Exemptions are for incomes <9,750 for under 65 and 11,200 if over 65 USD. Has it been determined that you have to file an FBAR even if you aren't required to file a 1040?
Maybe it would be a good investment to run any printed material by a lawyer before disseminating.
You statement of balances that require informational filing (10k) might make more of an impact if you point out that account transfers are double counted in the year.
It should have a link to an internet page which is specifically tailored for the recipients of that paper.
(modern World, you know)
@bubblebustin:
I’m certain that fbar has to be filed regardless of your income if your accounts’ aggregate total reaches the fbar threshhold. So not having to file 1040 would NOT excuse it. Sorry to bring bad news….
In the back of my mind, I think it’s the parallel IRS form (?8938) that may have such an exemption. Not sure.
Good idea to have lawyer check final version….
10,000 USD for failing to file FBAR is the penalty ‘low end’. The ‘top end’ is three times total assets (and bankruptcy), even if no tax due.
Indeed, according to the officail instructions, the fines may be up to $500 000 and 5 years of imprisonment/>!!!
“Civil and criminal penalties, including in certain circumstances a fine of not more than $500,000 and imprisonment of not more than five years, are provided for failure to file a report, supply information, and for filing a false or fraudulent report. ”
and
“A person who is required to file an FBAR and fails to properly file may be subject to a civil penalty not to exceed $10,000 per violation. If there is reasonable cause for the failure and the balance in the account is properly reported, no penalty will be imposed. A person who willfully fails to report an account or account identifying information may be subject to a civil monetary penalty equal to the greater of $100,000 or 50 percent of the balance in the account at the time of the violation. ”
from http://www.irs.gov/pub/irs-pdf/f90221.pdf
Just an example:
Say you had $3500 in an account and over the course of the year you transferred it twice to other accounts. Each account therefore had a max value of $3500, i.e. 3 x $3500 = $10,500. If you “willfully” fail to file an FBAR, you would theoretically be liable to pay a fine of $100,000. Whether a prison term would apply is not clear from the instructions – but it isn’t ruled out.
@Victoria,
Another possible question for handout (needs work):
Why is the Canadian (French, UK…etc) government allowing my personal financial account information to be passed over to a foreign government?
Because the USA will impose a 30% withholding on all US sourced pass through payments to the financial institution if it does not agree to USA demands.
Another possible question (sorry for so many posts, i do wish we had an edit function):
Ok, so I am not a ‘US person’, nor do I have any connections to one. I have no issue with proving I am not a ‘US person’ to my bank. Why should I care about FATCA?
FATCA harms all Canadians (Australians, etc) because it:
– increases banking fees for all customers
– requires tax payers to pay the costs for CRA (…etc) to work as enforcer for IRS, and for any increased demand on social assistance programs for ‘US persons’ who may find themselves in extreme financial difficulty due to potential penalties imposed by IRS as fallout from FATCA reporting
-threatens existing privacy and anti-discrimination laws which will have to be downgraded in order to facilitate FATCA. All Canadians (Australians, etc) can expect less protection of their privacy and human rights in general.
One more point re: above list
– takes money out of the Canadian (Australian, etc) economy since ‘US persons’ will be fined heavily for not reporting there Canadian (Australia, etc) accounts voluntarily to the IRS.
A few fast comments.
This kind of handout may be more successful if it’s initially tailored to the specific situation in Canada. There is big difference between the role of human rights laws play in in Canada and other countries (such a Saudi Arabia). Basically, FATCA’s criteria to search of US nationality is unlawful in Canada and a special issue because of our tradition of immigration. However its a non-issue in Saudia Arabia: there are no immigrants only guest workers, and they have very limited rights. Also the UK already has a FATCA IGA, whereas Russia is unlikely to ever participate, and Canada is the BATTLEGROUND STATE for this issue due to proximity, high % US persons, and human rights laws.
Suggest not getting too specific about various penalties and tax reporting requirements – its too complex and hard to get right and providing tax guidance is not the mandate here. Just explain that CBT is unusual, very hard to reconcile with the tax systems of every other state, the requirements can be impossibly complex, and the penalization cruel, unusual and disproportionate especially for the person who’s remote US tie is birthplace.
A big point is that in Canada (where everyone is equal under law) FATCA creates two classes of Canadians – those with a tie of US birth and everyone else.
Was thinking about headings like:
“Why should ordinary Canadians care about a Made-in-the-US law?
“The US says millions of Canadian citizens and permanent residents living in Canada should pay for US domestic debt. *”Today’s Federal Debt is about $16,738,158,460,000. ” (*source http://www.usgovernmentspending.com/federal_debt_chart.html )
“Canadian banks set to become arms of the IRS. The CRA will be the legs”
(my note, Canadian banks and the CBA will hate any public attention being drawn to them in this context, even though they’ve actively lobbied for the FATCA IGA, and have been jumping the gun by providing ‘helpful’ factsheets )
“Our Canadian family assets to pay down US national debt”
badger,
Excellent — thanks for your, as usual, hitting nails on heads.
“FATCA means Fund America – Tax Canadians Assets “
“FATCA + FBAR = F.und-A.merica-T.ax-C.anadian-A.ssets”
“Canada + FATCA = the 51st US state”
“FATCA-canatics say : “Welcome to the US state of Canada”
or “FATCA says: Welcome to Canada – the 51st state.”
“F FATCA now and save Canadian families” Ask me how.
for t-shirts and signs?