Ok, so now that everyone has consumed the last of the holiday egg nog, booze and fattening treats, time to face reality: 2014 is not likely to be a celebratory year for US Persons. Robert W. Wood, frequent contributor to Forbes, has wasted no time in reminding us just how few and terrible are the choices facing most Americans abroad as the torturous countdown to FATCA approaches its final half-year:
Woods only sees things from a Homelander’s point of view.
@Don
Yes, naturally he does tend to – that’s where he lives. However, he is also willing to directly engage his readers and to learn more about our plight, which is a lot more than can be said about most stateside commentators. I believe Mr. Wood is generally quite sympathetic to our situation and his frequent articles about FATCA, FBARs and the rest are, on the whole, helping to keep these issues at the forefront, at least amongst the demographic which frequents Forbes.
I would encourage you and others to contribute your comments to the article. Mr. Wood is quite open to differing points of view and his articles provide an excellent opportunity for us to state our case. As of this moment, the article has already had 7,179 hits, which is a lot of chances for us to make some impressions.
@Deckard1138 – Mr Woods won’t probably be able to comment on the rights of dual citizens abroad, but if he’s taking a real interest that’s a good thing. My feeling all along is sole US citizens are going to take the brunt of FATCA. Dual citizens may have a chance for a ‘carve out’ by local courts by some sort of discrimination legal challenge. Local politicians don’t care. They’ve signed these IGAs with the view their own courts may eventually strike them down and the debate will be passed to Parliament.
The courts will decide whose data is passed to whom eventually.
Perhaps Mr Wood needs to be advised to read the Jatras interview on Currents.
Here’s a great comment that was just added to the article – bravo to the author!
Double Bravo, PatriotToExPatriate! Thank you so much.
Especially:
And why aren’t our own countries standing up for ALL of their citizens and residents against the extra-territoriality of US FATCA combined with US citizenship-based taxation? Where is the outrage? Where is the media whose job it is to inform their readers, the citizens and residents of a country, what the issues are — or should be?
@Calgary The main reason our own country and other countries are not standing up to the USA is simple. Nobody knows. The media has been told to shut up and there simply are not enough of us to force the media to make everyone aware of what is going to happen. One of the only rays of light I have recently been working on is the idea that this will cost ALL Canadians, not only duals or permanent residents. A good start is to keep up making as much public noise as we can. We all know banks will hide these costs in higher banking fees that will be strategically hidden. The one banking system that cannot hide these costs are the credit unions. This is where I think the whistle will be blowing the loudest at ALL Canadians. The cost of Fatca cannot be hidden to people who are with credit unions. My hopes are that, with a lot of work from everyone here at IBS and those reading the IBS site, we will keep pressure on the media. I set aside 1 hour per day towards educating and getting the word out to all media outlets using all methods I have at my disposal. We need everyone in Canada to have that “surprise” moment we have all felt and let the shit hit the fan. This will win the battle and Canada can set a precedence by not letting ANY Canadian be a second class citizen.
Native Canadian,
Re: The Cost to ALL Canadians
From Allison Christians blog TAX SOCIETY AND CULTURE, as provided in comment by northernstar earlier today.
Cockfied on governance and the international tax regime
http://taxpol.blogspot.ca/2014/01/cockfied-on-governance-and.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+TaxSocietyCulture+(Tax,+Society+%26amp;+Culture)
@calgary, good extract from that article by Arthur Cockfield ‘THE LIMITS OF THE INTERNATIONAL TAX REGIME AS A COMMITMENT PROJECTOR’ Virginia Tax Review [Vol. 33:59 11/05/2013
Page 98 to the end is a MUST read for Canadians.
Also see the footnote 171 (bottom of pg 108);
“171 Instead of incurring higher compliance costs under FATCA, Canadian taxpayers can
switch their accounts to smaller financial institutions, including caisses in Quebec and credit
unions in other provinces, which are not affiliated with any U.S. financial institution (and
hence do not need to comply with FATCA to avoid the imposition of the withholding tax).”
@NativeCanadian,
re; …”..We all know banks will hide these costs in higher banking fees that will be strategically hidden. The one banking system that cannot hide these costs are the credit unions. This is where I think the whistle will be blowing the loudest at ALL Canadians. The cost of Fatca cannot be hidden to people who are with credit unions….”
I think you are really on to something.
Even if credit unions eventually are also forced to comply, at least they were not pro-active eager FATCA collaborators and traitors like the Canadian banks of the CBA and their related investment fellows at the IIAC – lobbying and urging Flaherty and the Harper government to cave in and sign an IGA – in total contradiction to the first letter that Flaherty wrote in opposition to FATCA and the aggressive US extraterritorial and confiscatory fundraising targeting our Canadian made and held assets.
I am urging all those I come across to switch to credit unions if they can – not only because I don’t want the CBA to profit from their FATCA lobbying and skulking betrayal of fellow Canadians and accountholders, but because I have gotten far far better service from my credit union than from the banks our household has had relationships or interactions with – in several instances, and over several issues.
If you do the numbers, if it costs each major Canadian bank $500M each and say 4 banks, that about $2B. If there’s 20M bank accounts in Canada, that means the banks have to ‘hide’ about $100 per account at least. If anyone has more accurate figures, it would be interesting to see them.
“Support for Canadian banks from various agencies reached $114 billion at its peak. That works out to $3,400 for every man, woman and child in Canada, and also to seven per cent of Canada’s gross domestic product in 2009.”
… so in comparison, $100 per account is still a small price to pay for free trade (i.e. no 30% withholding duty). So much for NAFTA!
source: http://bit.ly/1g2ZnMR
@NotThatTara – It may not be a huge monetary price per customer which the banks may not have to recoup all at once, but for dual US/Canadian citizens it’s all about privacy from the IRS, and having full rights as a Canadian citizen. How can you treat one Canadian citizen different from another by virtue of the place of birth. That’s discrimination. Duals need to be ‘carved out’ of FATCA whether the US likes it or not.
@Don – I beg to disagree …. you don’t have that privacy due to FBAR reporting requirements. Simply because your bank does not report the data through a FATCA regime, does not eliminate your obligation to file the same data on an FBAR.
Exception: if you have more than 25 accounts, you can save yourself from a lot of FBAR reporting.
the Caisse Populaire Desjardins movement in Quebec would be totally compliant
because they own and operate banks and commercial services in the US
http://www.desjardinsbank.com
All Quebec credit unions are part of Desjardins movement, the only real alternate would be
provincially chartered banks; as was Montreal District and Savings Bank before in received and federal charter and became the Laurentian Bank of Canada.
the next step would be not to pass enabling legislation to allow provincially chartered companies to share data with the IRS. the provinces need to continue opposition to a single regulator for financial services
Thanks very much, badger. In my cursory reading, I missed that footnote.
And, I do think / hope the author is / has been in contact with our Canadian government on this. We have heard from him in the past as it affects Canada.
Mr Cockfield’s comment caught my attention too:
“Finally, Canadian financial institutions may raise their administrative fees for all Canadian customers to help pay for their new compliance costs. Because all major Canadian financial institutions have announced they will comply with the new U.S. measures, there are few noncompliant competitors that can offer lower-cost services, which could otherwise discourage the major institutions from raising their fees across the board.”
Sounds like collusion, doesn’t it?
The hidden costs of compliance is nicely documented here:
http://mercatus.org/publication/hidden-costs-tax-compliance
Someone may wish to inspire one of the authors of this study to reflect the impact to FFIs.
http://mercatus.org/jason-j-fichtner
http://mercatus.org/jacob-feldman
@NotThatTara – I agree getting a ‘carve out’ doesn’t absolve you from FBAR reporting from the US’ point of view, however, without the bank data how is the IRS going to know? A ‘carve out’ keeps the status quo.
Yes the IRS could start comparing active US passports vs 1040 filings, but they’ve always had that ability. Please remember FBARs fines are civil fines at present so it’s similar to collecting credit card debt if I’m correct. It would need verifying, but the IRS can’t throw liens out to collect FBAR fines. And in most cases foreign governments won’t collect for the IRS anyways.
At the end of the day, the IRS will have to exert a tremendous amount of man power to go through an awful lot of data to collect very little taxes or fines. It’s expensive money. At present there are only 6 countries that have signed Mutual Collection Assistance, but it seems like what they do is plug the IRS request into their own tax collection procedure. Again if I’m a Dutch tax collector and I have a local claim to go after vs a US claim which ‘my’ Government collects zero, which one would I work on? Which one enhances my career opportunities? Working on behalf of the IRS is a zero sum game for a local tax collector. Again the IRS is going to have to exert an awful lot of resource to chase a claim through a foreign system they don’t fully understand and receives very little support. The domestic IRS lien machine won’t work abroad in the same way. Foreign tax collection procedures may not benefit IRS with easy payment options that take forever to collect, no liens, long dragged out court proceedings, etc.
Unless other Governments change from RBT to CBT the incentive is mainly going to be putting resource for their own tax collection not working for the IRS for free. FATCA is a data collection exercise for the benefit of the US only. The US will struggle keeping IGAs working due to apathy. Other Government’s do not have any real incentive to do anything but the bare minimum into FATCA and pay ‘lip service’ at present.
At the end of the day is it worth it for the IRS to chase someone on the opposite side of the world, deal with tax collection procedures that a different and perhaps more expensive for a lousy $10,000 or even $20,000. One must ask themselves at what point does the IRS consider foreign tax collection economical? Having a call centre in Kansas calling abroad only to have people hang up is not going to collect an awful tax. Are they going to employ an IRS agent to live in Paris to chase people to collect $10,000 or even $100,000? It doesn’t seem reasonable to me. A face to face chat would have to have a threshold of much more substantial money.
Working many years dealing with foreign legal systems, cultures, and other barriers, the IRS is simply not up to the task. Like it’s been said before ‘This isn’t Kansas Dorothy.”
@Native Canadian
I have a friend who was involved with a group that was fighting the provincial government and Altalink over a massive power overbuild. He informed me that whenever they found a sympathetic reporter willing to share their story, they would discover that reporter shortly thereafter employed by the provincial Conservatives. Another sympathetic reporter shared that they are assigned stories to report and are not at liberty to chose.
You have to believe your work is not in vain, I too make many phone calls each day in an effort to find an advocate, it’s surprising how many times the person at the other end of the phone is also impacted by the same issues. It ocurred when I called Maude Barlow’s office and the young receptionist was an American dual national who had a vague knowledge of Fatca, I made her aware of the looming 2014 deadline and the “People fighting Fatca websites” available as resources.It also occured when I called Michelle Rempels office and spoke with an American who married a Canadian and has been employed in Canada since graduating University.
I called a retired MP from Alberta who I knew to be a dual. I brought him up to speed, regarding Fatca. I complained to him that our Federal Government is acting secretively and is refusing to answer our questions. He was outraged, and told me he’d be on the phone with Flaherty the next day. True to his word Flaherty took his call the next day, he passed him off to an expert who informed him that he should simply go to the American Consulate, birth certificate in hand and renounce his citizenship.
I am left to think “Really ? Is it just that simple?”
I have contacted Jameel Jaffer at the ACLU, his reply in an email stated that he is sympathetic to our situation but unfortunately feels it is not within the scope of his expertise to be able to assist us.He offered that Joe Arvay and Peter Hogg are excellent.
I’ve also contacted Duff Conacher @DemocracyWatch on several occasions despite knowing he will be of no help to my particular situation, I have woken up to the fact that democracy is a broken system and I have joined the campaign Coffeeparty (Coffeeparty.ca) in an effort to nurse it back to health.
My New Years resolution is to make an appointment at the embassy to renounce my US citizenship. As a veteran, it has been an emotionally difficult decision to make, but I really need to end this FATCA madness once and for all. It has made me resent the country that I once loved and at one time was willing to give my life for.
Happy New Year to everyone on this website. Your posts have helped me keep my sanity since the day I found you.
Robert Wood is sympathetic towards expats and very constructive when replying to comments. this is important because his column is in the main stream and widely read.
The more comments from Brockers, the better.
If you’re wondering how FI’s will find out about possible American status
My husband went in for dealer financing from John Deere Credit Canada over Christmas holidays. They required not only a Driver’s license but also wanted him to bring along his birth certificate or passport. This is a new development as he did the same thing last summer & was not asked for that additional ID. Unless you got your passport to specifically exclude the information about birth place, they will know whether you were born in the U.S. without even having to ask you. Although he is 100% Canadian & born here, he was annoyed at so much information being requested & managed a work around by asking if they would take his firearms license instead. Since it is also Government issued photo ID, they were willing to take that.
My guess would be that this additional ID is going to be a new requirement coming from the Federal Government under the Money Laundering and will be the new norm for any account opening, new loans or new deposit accounts.
Hiding will be almost impossible if you were born in the U.S.
@northof49th
This is what burns me about the FATCA ferreting out of US person’s – the discrimination based on birthplace, whereas equally US persons without a US birthplace pass under the radar – making FATCA a complete farce in its ability to do what it’s supposed to do.
Welcome, and Happy New Year @John Smith.
Glad that IBS has been a source of support for you – it has been invaluable to myself and many others – allowing us to keep plugging along and retain some semblance of wellbeing in the face of US extraterritorial economic aggression against the legal, local, transparent and post-tax assets made and held where we live outside the US (or in the case of new American residents, where their pre-existing non-US assets originated and were already reported to and taxed by their domestic tax agency).