If ObamaCare rollout is the most recent example of U.S. Government (USG) incompetence, then is this what we should expect of FATCA?
I just read this article by Tina Brown of the progressive Daily Beast about the ObamaCare Cock-up. I thought it was the good metaphor (not perfect) for the predictable FATCA Cock-up. The only difference is FATCA is global. Americans don’t know it exists, so don’t know that a Cock-up is in process.
I don’t think I need to expand much on why what she says is generally true, other than to note the opening and closing paragraphs. You can draw your own parallels, as I did mine, but generally this rollout fits the bigger theme, that American government is culturally unable to do these BIG COMPLEX programs well.
The big announcement and lousy follow-through, the technical glitches no one can figure out—not only was the roll out mess utterly predictable, it’s also a sign of our cultural moment.
Obamacare is the wildly complex Rube Goldberg contraption it is because getting the legislation through Congress required so many political trade offs and so many unavoidable deals with so many vested interests. But that’s no excuse. Lost in the raucous cable noise are the voices of desperate people shut out yet again, this time by incompetence. And that’s tragic, not uncool. That’s obscene, not a juicy partisan spin for Ted Cruz. How ironic if Obama’s signature accomplishment becomes instead a metaphor for his presidency’s signature problem: big pronouncements and lousy follow-up, the curse of our times.
Governments have never learned the KISS Principle, and/or never devote the attention to detail necessary to make the complex work! They don’t know how to “sweat the small stuff”, and instead take on the hugely complex and expensive instead. And if you are a U.S. Person living abroad, the predictable Cock-up consequences will fall on you!
Sorry it should be CLN. Will the banks ask for CLN / I-407 or the Form 8854 to determine US status
@badger
I don’t know how the Canadian government can in good conscience pass tax deferring/eliminating vehicles knowing that at least 3% of Canada’s people (and as a result, their families) will not be able to participate in them due to FATCA, and therefore knowingly creating a 2nd class of Canadians. This is what Flaherty was referring to when he was questioned about FATCA at our first protest event, no doubt, when he said “We have made some progress,” Mr. Flaherty told reporters in Ottawa. “They clearly understand the Canadian position that we want to avoid any disadvantages to persons who happen to be citizens of both countries.”
@badger
But what about the ‘regular’ Canadians who are disadvantaged by missed opportunities because the Canadian government must create a level playing field for US persons in Canada?
@bubblebustin, since it is Flaherty and the Government of Canada to negotiate tax treaties that don’t disadvantage Canadian citizens, residents and taxpayers, and since clearly they failed in that respect re the US treatment of Canadian mutual funds, and ALL registered savings (since the RRSP was finally made non-taxable only after the IRS originally declared them to be taxable ‘foreign trusts’ – and then only exempted with the annual treaty election), and since Flaherty has been the Finance Minister to preside over the creation of the TFSA, RESP, and now PRPP, he has know that these were not exempt from US double taxation and penalties for years now.
We bear a portion of the price paid for the availability of aggregated registered savings and deferrals under current Canadian policy, but can not benefit.
How can the Canadian government explain that they failed to do what was in their power in order to prevent double taxation of Canadian residents, and Canadian citizens via the Canada/US tax treaty, and also then neglected to alert > 1 million to the shortfalls of the treaty – and publicize the problem so that we could protect ourselves as best we could? They aggressively marketed – and continue to market the TFSA as fantastic for ALL those in Canada – at the same time knowing what toll the US offshore account crusade was wreaking on lawful taxpayers and families in Canada – and the US insistence on calling all Canadian registered savings to be ‘foreign trusts’.
How can they justify that?
Flaherty was also the Finance Minister to preside over the creation of the RDSP (Registered Disability Savings Plan).
But no one has attached the WARNING STICKER that registered Canadian accounts are not advisable for Canadians with a US indicia, are only for first-class Canadians, not those deemed second-class by virtue of their ‘US nationality.’
Sorry, Harry, I didn’t realize you were referring to what had to be presented to banks when they start the process of finding ‘US Persons.’ We don’t really know what they will accept yet, but your CLN should be good proof that you are no longer a US citizen. The filed I-407 MAY be proof that your green card has been surrendered — it may need some kind of US stamp of acceptance on it??? If you will have a 8854, you will also then have the CLN, which I would think would be the better proof of loss of US citizenship, or at least one that they may better understand. Summation: I don’t know. It’s all a guess.
You know you are in trouble when Jon Stewart spends 10 minutes on a blistering take down of your signature program roll out..
http://youtu.be/2Qtx_ZcHOjw
Oh, that was BRILLIANT! Thanks for the laugh!!
@Harry
Yes, there is an official form which you can/must provide to your banks in which you inform them that you are a non-USP for taxation purposes: W-8BEN. (This is basically the opposite of the form W9 which USPs provide to indicate their US taxation status.) You can also provide a copy of your CLN to banks if you wish. Depending on where you live, some may ask for it. Here in Germany, I provided my banks with both of these documents.
Under no circumstances should you provide form 8854 to your banks! That contains far too much personal information and is none of their business!
@notamused @harry
If you have a US birthplace many banks will not take your word for it with the W8-BEN, they will want to see a CLN as well.
@shunrata
Yes (see my post above).
@calgary411, thank you for the reminder about the RDSP being a Flaherty/Harper creation as well. If they created the RDSP (and the RESP and the TFSA, and now the PRPP) to solve an identified problem, and to further some Canadian policy priority, then how can they allow a foreign government (the US) to use extraterritorial laws to defeat those priorities for over 1 million Canadian citizens, taxpayers, voters and residents – and their associated families?
They cannot say they ‘respect’ the US aggression which alters the domestic tax and social policies of Canada in its own home. Does the US say it ‘respects’ the right of Canada to determine and pursue its own domestic priorities?
The two are in essential conflict.
Which will it be? That Canada will ‘respect’ the made-in-the-US domestic tax system applied extraterritorially by force and threats? Or will Canada ‘respect’ its own sovereignty, autonomy and the rights of Canadian citizens and residents?
The US does NOT respect Canada and other countries. That is very very clear. This is being done by coercion couched as ‘negotiation’.
@badger, calgary411
It would seem to me that the Canadian government has been wilfully ignorant of the effects US taxation has a large segment of its population and in spite of a treaty between the two countries. If I had been warned by either country of how US tax law effected me in Canada, I would not have incurred a tax liability on the sale of my home in Canada. Period. In my pre-2013 Budget Submission to Canada’s Finance Committee I suggested that if the US continues to be negligent in making its taxpayers abroad aware of their tax filing responsibilities, Canada should pick up the slack if only to protect their own citizens and tax base. FATCA can be seen as going to far in doing this though.
Badger asks “That Canada will ‘respect’ the made-in-the-US domestic tax system applied extraterritorially by force and threats?” In their ‘respect’ for FATCA and the banks they hope to facilitate, to what degree will Canada be forced to consider FATCA in its policy making, policies that effect ALL Canadians once they start down that slippery slope?
Mark Milke has written an interesting retrospective on how Canada’s founding fathers had intended to keep taxes lower than the US’s in order to attract more immigrants to Canada, but eventually began playing monkey-see-monkey-do with the Americans on taxation. How Canada avoided adopting citizenship based taxation is a mystery (and a blessing).
From the Ottawa Citizen: “How the U.S. created Canada’s high-tax state”
http://www.ottawacitizen.com/news/created+Canada+high+state/9024844/story.html
Thanks for the interesting link on how Canada followed the US on so much of its taxation policy. Thank all that’s holy that Canada didn’t adopt, as well, citizenship-based taxation. I hope enough people will be aware so that doesn’t happen, starting with us? Monkey-see-Monkey-do should not be Canadian policy.
@shunrata, “won’t take your word for it.” along with all the other proof we end up having to show. “Oh no IRS agent ever told you about FBAR?” “Did you write down their names?” “Prove they didn’t tell you.”
I’m so, so tired at this stage in my life of being put on trial and questioned like a common criminal. This cock up with FBAR fines and fees and all these programs where innocent families have to PROVE their “innocence” to a foreign government is so repugnant. What happened to the burden of proof being on them! Innocent until proven guilty? Assumed innocent unless there is reasonable cause? NOT If you are a U.S. expat or considered a “U.S. person” “abroad.”
I’m not abroad. Canada has been my home for all my adult life. I can’t wait to get my CLN as “proof” my bank has to treat me the same as every other Canadian.
@calgary411
As we have seen, it is a copy cat world when it comes to governments mimicking what the U.S. does. “Son of FATCA” by the UK is the most recent example.
It is a wonder, that others haven’t latched onto the idea of Citizenship Taxation. That is the fear I have as an unexpected outcome of FATCA. US does not follow the “international norm” of residency based taxation and other countries begin to think, “hey that is a good idea” Heaven help us if it happens. That said, I think I see signs of creeping citizenship taxation by other means, as countries define their Tax residency broader and broader to encompass more and more of their citizens who have left for green pastures. New Zealand is heading down that road.
@All
DO think there will be a trade? The US agrees to the Keystone pipeline and Canada agrees to FATCA.
@bubblebustin, I agree re; ..”It would seem to me that the Canadian government has been wilfully ignorant of the effects US taxation has a large segment of its population and in spite of a treaty between the two countries. ..” They are complicit in that they know how the US views ALL Canadian accounts as ‘foreign’ and registered accounts as reportable ‘foreign trusts’.
I wonder if Canadian representatives and Flaherty just decided that as long as it wasn’t really getting enforced in Canada, then they could let the huge gaps in the treaty slide, and just sacrifice anyone who actually moved down to the US – and then found to their horror that their pre-existing Canadian registered or other savings were magically transformed into a nightmare relationship with the IRS. They have done nothing to dispel the myth that ALL those in Canada can benefit from holding a TFSA for example – and even added extra PR announcements to that effect well AFTER this latest US ‘foreign’ account jihad started rolling http://www.fin.gc.ca/n12/12-179-eng.asp .
They had to have known about the problem with the more recent registered savings, because of the tormented history of the IRS treatment of the RRSP which came before (see the history described up to 2008 here ‘When Bygones Aren’t Bygones: Exploring Solutions for U.S. Persons with Undeclared Canadian Retirement Plans and Accounts’, 34(4) International Tax Journal 35-43 (2008). http://www.chamberlainlaw.com/attorneys-96.html and here ‘IRS Introduces Two Unique Tax-Compliance Remedies for U.S. Persons with Unreported Canadian Retirement Plans and Accounts’, 39(1) International Tax Journal 11-20 (2013). ), and which still the IRS obstinately still requires an annual election on the 8891 form (and previously in 2003 req’d a 3520 and 3520-A) under the Canada/US tax treaty to ensure a treatment which the treaty provides for – and the IRS refuses to make it automatic even now – which Flaherty would well know. And because I’m sure that the CBA and investment buddies would have been screaming about the discrimination against Canadian mutal funds (since 2010) http://www.investmentexecutive.com/-/ific-asks-for-changes-to-pfic-rules , it is not a surprise to the Department of Finance that they are toxic assets for those in Canada with a US connection.
How could the non-relief from these very significant US tax and reporting burdens be described as mere ‘oversights’ on the part of whoever negotiated the Canada/US tax treaty over the years? Those eager lobbyists in the CBA. IIAC, IFIC, etc. would have been pressing the government of for better US treaty conditions for these products for years now https://www.ific.ca/en/?search-what-full=full&s=ways+and+means+pfic&x=0&y=0 .
@northerstar, I have wondered about that or some other big and unrelated concession myself. Otherwise, how can we interpret why Canada would have allowed the grossly unfair treaty gaps that exist so far to be widened ever larger and now they say they’re in talks to go even farther – with a FATCA IGA.
Big brother around the world soon to come. Countries will want to FATCA law their own citizens. We will all be slaves to the countries we are born in. Glad I am old. I hate to see what it will be like to live in this world 30 years from now. I won’t because I most likely be dead.
The Jon Stewart video now has this posted…
This video contains content from Viacom, who has blocked it on copyright grounds.
So, here are the alternatives… in 3 videos.. I am sure Canadians have a .ca link)
http://www.thedailyshow.com/watch/mon-october-21-2013/the-weakest-link
http://www.thedailyshow.com/watch/mon-october-21-2013/the-weakest-link—healthcare-gov
http://www.thedailyshow.com/watch/mon-october-21-2013/the-weakest-link—a-few-glitches
@JUSTME
Canadians must go to Comedy Central
It’s now clear that not only does the #ObamaCare system not work, it never worked—not even in testing. http://bit.ly/17Kbp8m via @reason
A good story here about the Canadian firm (CGI Federal) that was one of the main contractors… But how do you blame them when there were 55 contractors and no one in charge…?
http://www.npr.org/blogs/alltechconsidered/2013/10/23/240242572/its-easy-to-blame-the-canadians-for-healthcare-gov-glitches
And another good perspective of how the UK has dealt with major government tech failures…
http://www.npr.org/blogs/alltechconsidered/2013/10/23/240268497/u-k-official-urges-u-s-government-to-adopt-a-digital-core
Ok, the Obarfacare Steamroller is now out on the road, getting ready to roll over all of the 1%’ers (which includes all of the global elite who live overseas).
“people must sign up by Dec. 15 to receive insurance by Jan. 1, and by March 31 (actully it is about Feb 15th due to some practicalities) to avoid a fine for violating the individual mandate portion of the law.”
now we near November and I see nothing that describes or shows how overseas filers will be exempted. Perhaps my memory is bad of how it shows up in the legislation and 20,00 pages of instructions discussed previously.
Definitely my memory is clear enough to absolutely know that I have seen no form which I would use to exclude myself.
So, doing a risk assessment upon my own situation regarding Obarfacare, I would say that I am at a huge risk. First risk of not being excluded. Second risk of being buried by a stack of papers (risk 2A is more papers along with my tax forms, 2B of more papers outside of my tax forms, risk 2C is both 2A and 2B together).. Third risk that the papers will come out late or can’t be found. 4th risk is the risk of not knowing what risk I have, which is Always greater than any identified risk.
We are nearly in November, the mandatory Obarfacare signup is going on, and I am working from 2nd hand information saying I might be excluded. Please tell me that I am stupid and have nothing to worry about.
“4th risk is the risk of not knowing what risk I have, which is Always greater than any identified risk.”
As most of us will concur, is definitely the worst risk of all!