Two very good articles from Amber Hildebrandt of CBC.
Article 1 – Introducing FATCA
— U.S. Citizen Abroad (@USCitizenAbroad) January 13, 2014
The article referenced in the above tweet, by Amber Hildebrandt, is good because it IS NOT focused on U.S. citizens in Canada. The focus is more on Canada and Canadians! This is a welcome relief and an indication that, slowly the media is beginning to realize what FATCA really is.
Who is affected by this law?
The short answer is almost every Canadian. It is expected to cost banks substantial amounts of money to implement the systems required to find residents with U.S. connections, costs the banks may well pass along to all their clients.
Some estimate it could cost $100 million for each financial institution.
Those directly affected by the law include dual citizens, Canadians with Green Cards and some snowbirds who spend considerable time in the U.S.
Article 2 – The Absurdity of Citizenship-based taxation
Ms Hildebrandt has also written a more specific article on the effects of U.S. extraterritorial taxation.
Disabled Canadian among 'accidental Americans' caught in U.S. tax quagmire http://t.co/clo75KVsNk
— Amber Hildebrandt (@cbcamber) January 13, 2014
A Calgary woman’s developmentally disabled son is caught in a U.S. tax quagmire that she fears may cost him the money she spent years setting aside for his financial future.
“He’s entrapped,” said Carol Tapanila, the 70-year-old mother. “There’s no way out. He is entrapped into U.S. citizenship.”
Her 40-year-old son was born in a Calgary hospital, but automatically received U.S. citizenship because both his parents were American. That simple fact may soon create financial woes for the Tapanila family.
Starting in July, a new U.S. tax law, the Foreign Account Tax Compliance Act (FATCA), goes into effect. It requires banks around the world to sift through client accounts to find anyone with U.S. connections and send that information to the U.S. Internal Revenue Service.
- Canadian banks to be compelled to share clients’ info with U.S.
- FATCA under fire from tax experts and Canadians
The law is aimed at Americans who are hiding offshore accounts, but the information sharing is likely to unearth many unsuspecting Canadians with U.S. citizenship, like Tapanila’s son, who didn’t realize they were required to file U.S. taxes.
Tax law expert Allison Christians calls the Tapanila case “ridiculous” and a “classic example of why the law is unjust.”
The law “was intended to find rich American tax cheats hiding out in Switzerland,” said Christians, who teaches tax law at McGill University, but it “will now punish poor, disabled Americans living in other countries, who are only American by birth.”
These so-called “accidental Americans” also include an Ottawa woman who was born in the U.S. to Canadian parents and moved back north at one year of age.
This woman, who asked to remain anonymous, said her husband is livid that their joint account information will soon be shared with U.S. tax authorities.
Both fear that FATCA will reveal her U.S. citizenship and saddle them with hefty penalties for failing to file U.S. tax returns that will eat into their retirement savings.
“It’s stressful. I think about this every day,” said the woman. “It’s like a big weight over your head that never really goes away, and I’m starting to wonder when and if it’s ever going to go away?”