Posted on June 27, 2014 by Joe Smith Posted in Issues regarding US persons abroad 125 Comments What do people think will happen if a “US Person” Canadian citizen gets their bank records sent on to IRS? Share this:TwitterFacebookEmailLike this:Like Loading...
“Compliance condors,” more like compliance vultures.
Polly CRA will collect taxes for the IRS now for permanent residents of Canada who are not citizens, but will not collect penalties or taxes for IRS for either citizens or residents.
I agree what is to stop the IRS for upping the blackmail and extortion. We saw at Finance Committee what the Cons and Finance Canada think of us. Plus, “Congress has spoken“ for Canada`s Parliament. Because US Treasury says so.
Worst of all is the unbelievable fact that Canada`s Taxpayer Ombudsman published information on obligations to the IRS without even mentioning CRA will not collect for IRS!
My thoughts exactly: “I suppose the treaty clause that protects Canadians against collection is as only as strong as the government in charge of defending it…”
My lawyer suggested that Canada and the US will at some point address things like TFSA’s and the like in the treaty, but he may just be saying that to people to keep them from renouncing. I’d like to be proven wrong, but I think we’ll be lucky if we can hold on to what we have, never mind trying to get some concessions from US lawmakers when they see the treaty as protecting US tax evaders.
On the subject of willfulness. When exactly does one become willfully non-compliant? In 2011, when you may have heard about OVDI and did nothing?
For many it’s not going to be when you actually knew about their tax filing obligations, but when the US has caught you knowing about tax filing obligations. This is going to get very ugly before it gets any better.
Moving money around to conceal anything just seals your fate. Think hard before you do it.
and all the more power to you WhiteKat.
Whatever happens, the charter challenge and Mr Bopp are necessary to get people to come to their senses. IF they are successful.
@Polly, BB On Twitter, Barry McKenna has been singing the praises of a recent ACA news release on how fair the amnesty program is. This is two weeks after yet another article from him telling us to come clean.
I posted a few of the tweets at Sandbox.
Why is the world is a Canadian journalist telling Canadian citizens how “fair” an amnesty program from a foreign government is and asking Allison Christians how IRS would stop tax evaders from renouncing without forms, penalties and back taxes.
It seems he agrees with Sorenson, Keddy, et. al. We are “American citizens abiding here in.” He is determined to launder us until we “come clean” to a foreign government.
If I had followed McKenna’s advice three years ago and entered OVDP, I likely would have lost a huge amount of my retirement savings at the very time that I began retirement!
I expect that it will be even worse for those blindsided now, in light of the IGA and the collusion of the Harper government traitors who betrayed Canada and Canadians, and sold us to the US. The Streamlined does not solve the problems of those who have Canadian mutual funds, ‘taxable foreign trusts’, etc. Or who can’t find competent and affordable expert help if a compliance type path is the one they decide to follow.
I remember how I felt when I first found out about all this, and just how bad and complex it was. I had many dark thoughts then. IBS was my only support, and got me through some very sad and anxious days and sleepless nights. IBS and Maple Sandbox will be needed more than ever.
And it feels so much worse now that Canada has betrayed us – contrary to the initial public anti-FATCA statements of Conservative Finance Minister (the late) Jim Flaherty. As an ex.USP, and now Canadian only, I continue to be deeply angry and nauseated by the fact that my chosen home of Canada – where I’ve lived since being a small child over 50 years ago, has deliberately chosen to subvert the Charter, and to turn over its citizens and permanent residents to a foreign country, and enable US laws to overrule our own. AND, on video and Hansard record is the insulting and deliberately offensive remarks of the Conservative MPs supporting and rationalizing that subversion. Not content to confine their remarks to pleading the CBA/IIAC case, they chose to belittle and disrespect ALL Canadians – since though they have enshrined discrimination on the basis of parentage and birthplace, we all will be subjects of the US Treasury under FATCA as accountholders and as Canadian taxpayers.
May the renunciations increase, and may many find a path out of this morass. I look forward to the upcoming figures re renunciation rates – even those flawed figures tell us something, and have caught the eye of the media.
May all you readers contribute to the ADCS fund and may the legal challenge not only succeed, but be a public rebuke to those who betrayed Canadian citizens and residents. May the Conservatives live to regret their betrayal of our Charter and Constitutional and privacy rights. May those Conservative MPs who laughed and snickered about the plight of Canadians like Calgary’s son be forced to rue that day.
Fund the legal challenge for any one of these great reasons:
– Help put a stake in the heart of FATCA and US extraterritorial economic aggression. If we are successful, other countries may follow suit.
– Defend Canadian sovereignty and Canadians.
– Revenge the insults, threats, confiscation of personal data and assets, infringement of civil and human rights, treatment we have endured at the hands of the US and now, at the hands of the Harper government.
– Bite the hands of the FATCAnatics and the FATCAllaborators so that they think twice about any more incursions in this vein.
No honest Canadian would actively promote Canadians tainted with US status coming into compliance with US taxation without representation, no access to US public goods and services, and now a US court ruling confirming that Americans abroad have zero US constitutional rights.
Barrie McKenna appears to be an agent of influence of sort. He is probably in bed with some Canadian based US compliance vultures. They feed him information for his stories and he steers them in their direction.
It would seem that the most compelling reasons for staying out of OVDI and entering OVDI were the presumptions that one had something to lose by not doing either.
I agree, Barrie McKenna should be concerning himself more with how this affects Canadians and our protections under the Charter. He needs a paradigm shift in the way he’s viewing the situation.
Blaze, as I commented on MapleSandbox, which does not show up yet (if ever because of problems you’re experiencing there),
Gee, thanks ACA who do not / will not encourage renunciations or relinquishments from the homeland. It is apparent that the goals of ACA do NOT align with the goals of most Canadian *US Persons* — although some working and living here are in Canada just for a good time, not for the long time, having made Canada their country and will agree with Mr. McKenna, the Conservatives and the ACA.
Barrie McKenna, Canadian journalist, appears to be now a PR mouthpiece for the US IRS, the Conservatives, the ACA point of view in direct opposition to any rights of Canadians under the Charter of Rights and Freedoms!
I’ve been quiet a while as, frankly, I think I’ve said most of what I have to say and, after a lengthy trip abroad, I feel I have regained a more balanced perspective. CBT is rotten policy; FATCA is rotten policy. However, I DO think (as I have frequently reminded people) that some perspective is needed. The main weight of this will fall on dual citizens who insist on retaining their “US Personhood”. I know that is precious to some and, in that case, it would seem getting in line to be compliant is about the only choice remaining open. For anyone who is content to lose their right to a US passport in future and has a Canadian or other passport, the situation is not as bleak as some fear.
I can’t speak to the rest of the world. As far as Canada is concerned, In almost NO cases that we can cite will ANY data be sent by Canada to the United States. This is because, until now, NO Canadian bank has EVER had a policy of asking for your place of birth or “other” nationality as part of the account opening process. If you have a credible case for pre-1996 expatriation (after 1996, Uncle Sam wanted notice in the form of a CLN to stop the tax clock), you can and should very likely find something else to do than worry about this. If you are post 1996, you have a choice to make: do nothing, get a CLN and do nothing or get a “enter the system” (with or without getting a CLN). The CRA has pretty clearly put the word out to the banks along the lines of “don’t ask, don’t tell”. If you are prepared to live your life as a Canadian (or wherever you live), there is little reason to believe your life will change. They won’t send your data because they don’t know enough about you to do so and DON’T WANT TO.
Where data will likely to be sent to Uncle Sam is: (i) new accounts (although doubtful given CRA policy unless someone positively claims dual status and self-certifies with a target on their chest); (ii) old accounts if accidentally one used a US passport or somehow disclosed other nationality on the record; and (iii) brokerage accounts for those who disclosed US nationality as part of the process of being eligible to buy US stocks.
That doesn’t mean that nothing should be done. FATCA is bad policy, Bill C31 implementing it is bad policy and knuckling under to second class citizenship is bad policy. Hopefully, most of us have, by now contributed to the Charter challenge fund or will do so soon. The second useful thing to do is “keep it up” by which I mean post comments on things like the Economist and so on to raise awareness, send in letters to the Editor to your local paper, write and re-write to your MP. All of these are useful and will help to create the momentum that can create change.
I guess what I am really saying is PLEASE don’t give yourself an ulcer worrying about this stuff. If you don’t plan on living there or investing there and if you assess your own situation and take the steps that seem right, you are almost certainly going to be just fine. I am NOT recommending going to sleep, ceasing any activism etc. I just don’t want people to succumb to paranoia or despair.
Happy Canada Day – really! It’s a bit sad that FATCA is coming into force, a bit sad that it needs so many little people to fight it, but don’t let it ruin your day!
PS – I notice that Joseph Arvay was on the list of successful lawyers who argued the Supreme Court of Canada case about aboriginal title. I don’t want to deflect into a discussion of that case, but another victory notched in his belt won’t hurt his reputation when he takes FATCA on!
As I keep quoting Lincoln: “The best way to have a bad law repealed is to enforce it strictly”.
If what you are saying is true, FATCA will only hurt a few and will not provide the momentum to get America’s dirty little secret (CBT) out in the open where it might one day stand the chance of one day being repealed. What a diabolical face saving move by the current administration.
Please expand on 1996. I became Canadian in 1995, never did any American-related thing since then.
It is good to see you back after your lengthy trip abroad. Thanks for your wise words and point of view to tone down the fear that a lot are feeling. We respected your comments before and will always read them with open eyes and mind. Happy Canada Day to you as well!
I agree that retaining US status is problematic, though severing it is still onerous and is not possible for those deemed incompetent, minors, and those who would be deemed covered expatriates, those subject to the exit tax, those with other pressing family and other circumstances that force them to have to keep it – at least for now.
I am not so sanguine about the numbers affected in Canada. I think there will be errors. I think there will be over-reporting. The Privacy Commissioner has cited over-reporting as a concern in another instance, and I expect that the FIs are more likely to do whatever they see as less risky and more efficient for themselves. If caught between their perception of risk from the CRA or the IRS and any resistance from ordinary individuals, they know it is all stacked against us – we have very little resources or knowledge, and do not have law firms on retainer standing at the ready to defend us, nor the funds to protect ourselves the way that both the government AND the FIs do.
Problem with relying on ‘don’t ask don’t tell’ is also that many people will not be prepared with the requisite knowledge if the banks ask them for ID. The banks ask for a passport as one of the IDs they’ll accept to open a new account. I asked President’s Choice bank reps recently (which is CIBC), and the Canadian passport was the first piece of ID they requested as acceptable for a checking account, though when I said I didn’t have one, they offered alternatives. A CU I called recently said that for a TFSA they required a birth certificate, though they were willing to accept other ID for a basic bank account. I don’t see why a birth certificate would be necessary. I didn’t want to get into it any deeper or ask why, because I wasn’t certain that the rep knew much. It is hard to know if these frontline reps have accurate information, and we might be ambushed if the paperwork that would be the final step to open an account includes something that would out us even if the ID they initially list at the initial contact didn’t.
Many of us would have only a US birth certificate if the banks demand it. For Canadians who were born in the US, who are not aware of the situation, or for Canadian-only citizen parents opening an account for a minor with a US birthplace, they may proffer it out of ignorance, not knowing why it is better to offer only ID without a US birthplace. The Canadian passport will show a US birthplace for those who naturalized. More Canadians now have a passport because of the stricter border crossing laws (see “1.4.1 Canadian Passport Possession Rate: The percentage
of Canadians who hold a valid Canadian passport continues to climb, driven by high and
growing levels of outbound travel by Canadians….. since 2008, the passport possession rate has increased by 20 percent and is forecasted to reach 70 percent in 2013, which would bring the total number of valid passports in circulation to 23 million” See page 14 of http://passport.gc.ca/publications/ar_12.aspx?lang=eng ). So, Canadians might just routinely use their passport as ID with the banks because they happen to have one. In border areas, it is not uncommon or unheard of for people to routinely carry it with them or in their cars because they regularly and on the spur of the moment go across to the US for shopping, etc. .
And then there are issues potentially with special accts such as those for Canadian estates. We can’t know how they will treat estates, vs. what they will ask of individuals. Do death certificates, wills, POA, etc. list the deceased’s birthplace? Those are the types of documents that FIs ask for when opening an estate acct., Can’t get a CLN for a deceased person. Can’t offer a driver’s license instead.
I am not trying to make people afraid. That is counterproductive, but I forewarned is forearmed.
Thanks so much for your positive and realistic (I hope 🙂 perspective. Personally, I find myself much more capable of tackling challenging situations if I am not overcome by fear.
That might be a good policy…. to change the content in passports. Swiss passports don’t show place of birth. Why should they? And get rid of birth certificates and use something else for verification. That could help many! Because I think the banks don’t want 30% withholding, so they will want to make sure they make no mistakes. But if nobody knows birthplace- well then- people could possibly remain hidden.
It is possible to get a Canadian Passport issued without a birthplace. You do have to fill out a separate form with your passport application. The problem is that most countries (including the USA) refuse to accept Passports without a birthplace listed, which limits its usefulness as a travel document. As to using it as an identity document, whether or not the banks or other financial institutions would accept a Canadian Passport without birthplace is another matter.
I don’t wish to be taken as suggesting letting up pressure, by the way. While I believe that very, very few will be caught in the dragnet THIS time, there is always the thin edge of the wedge problem. Having established the right to single out Canadian-Americans with impunity, there would be little to stop them from adopting measures in future that are actually more effective at finding them in future if this stands. So, by all means: this does need to be dealt with!
Re: relevance of 1996, I would direct you to the resources on this site. Am just heading out so can’t footnote as much as would be helpful but: the “anti-expat” laws began in 1996 (I seem to recall some are back to 1994). At any rate, the relevant provision is the addition of, I believe, s. 877a to the Tax Code. This nasty little provision effectively deems an expat to still be American and subject to the tax code notwithstanding relinquishment due to having taken out Canadian citizenship. In short, you are a citizen for tax purposes only after that. The only way out after 1996 was to apply for a CLN (which has the effect of notifying the IRS). Prior to 1996 you didn’t need to do anything and there was no obligation to apply for a CLN. After that, in theory, you could be a non-citizen but still owe tax, FBARs and exit taxes (the latter added, I believe, in 2004 in lieu of the old 10 year post-expatriation tax). It’s possible the cut-off date was 1994 and not 1996 – I’d direct anyone who is in the middle there to study the resources on the site more carefully.
As far as ID goes, I believe Canada has stopped issuing citizenship certificates. I agree there is risk of people unknowingly using their Canadian passport to open an account showing a US place of birth, but if the bank is following CRA guidelines, they should permit self-certification (i.e. “I am not a US Person”). They will take other ID as well short of a birth certificate or passport. The paper they give you on naturalization is still valid id. As well, in Ontario you can now get an “Enhanced Drivers License” which does NOT show place of birth and is valid for, among other things, travel to the US by land (not by air). Other provinces I believe have this or are about to,. The enhanced driver’s license has your citizenship embossed on it and, if you believe the government at least, the only information they send the US when their border guards scan it at the border is name, address and nationality (not birth place). It takes a bit longer to get and you need all the same ID as for a passport to get it. You should be able to open a Canadian bank account with a driver’s license, health card and SIN number and possibly a credit card – I’ve seen nothing to indicate the contrary. You should not need a passport to get a bank account and, if you are prepared to put your hand on your heart and say that you intended to relinquish when you became Canadian, you can truthfully answer “no” to any questionnaire about whether you are a US Person. They should not be asking birth place if they are following CRA guidelines. Also, while Canada will discourage you from doing so, you can get a passport without birthplace shown on it. Many places (including, I believe, the US) won’t accept it without birthplace though.
This is the link for information about relinquishment date and relevance of it before 2004: http://isaacbrocksociety.ca/relinquishing-acts-performed-prior-to-2004/
I have reviewed it some time ago. I will do so again, but @JoeSmith I would recommend you read it carefully having regard to your relinquishment date.
Ditto on most of what Anne Frank said.
Streamlined v 2.0 is a good deal for uni-national USA expats. If the blue book is your passport, Uncle Sam gets to dictate your rules and you need to dance. If you do not like the rules, you should have dumped the blue book for another cover.
The era of dual US and something else, that lasted a generation is now over. Streamlined is a good deal for the dual who is an “American Firster.” They know who they are, they picked up another passport to make life easier NOT because they became immersed in another land.
For those with clinging US nationality, if you want to ever visit the USA again then you need to get a CLN which would entail Streamlined 2 as an additional requirement. But the US can rightfully write the rules and can require anything they want if you want to go there and cross that border.
Then there are those who have fullfilled the requirements of 8 U.S. Code § 1481 having relinquished. I agree with Anne Frank that life can go on and even though your financial life is more complicated you are not a US Citizen and a CLN is NOT a requirement to lose US Citizenship. Congress is on record that a CLN is not required and had it been a legal requirement then the IGA would not have provided a path without a CLN. If that person does not want to go through the CLN process, they probably need to document how they relinquished which may involve a few hours with a lawyer to document same.
There you have it, the lay of the land……..and one of those paths which I think many will take is permanent exile from the USA. I think back on the young men in the 60’s/70’s who left the USA to Canada. They immigrated to Canada and became Citizens with the very clear knowledge that they were crossing the border for the last time. Yes, Carter changed that but the young men knew what they were doing….exile from the place of their birth.
I believe the Charter Challenge will prevail in the Supreme Court in Canada. But will that change the calculus of the above? I do not think much will change to the calculus other than degree of your financial life in Canada………………
The US has been evolving a nationality policy where dual nationality is fine if you are in the homeland but discouraged outside the homeland. Some have called a CLN a ticket to freedom, actually its a ticket to “visit the USA because you can not visit without it.”
Brockers, in Canada and in every country you visit (minus USA) with your Canadian Passport, you are CANADIAN!!!! Rejoice in that. But if you want to add the USA to that list you will need either a CLN or US Passport and to get those you need to dance.
For some this will be easy psychologically, for others rather difficult.
One other thing, I think ACA is correct in support of Streamlined 2. It is a great deal for American Citizens who are currently Abroad.
But as someone else on these boards wrote, I am not an American Citizen having relinquished and I am at home which is not abroad.
The title ACA implies that one is likely to return home to the homeland. That is fine for many but for many others we have left and are not returning, its not our homeland. Home for us is Canada, Ireland, the United Kingdom, Australia, New Zealand and many other places…….