#FATCA #IGA ALL British trusts will be reviewed at expense of client; even w/out ANY US indicia http://t.co/2hL3nOXMes Please RT widely
— U.S. Expat Canada (@USExpatCanada) August 23, 2014
“Some individual customers are being contacted by their banks or other financial providers if, for example, they appear to have links with the US or own property there. But tens of thousands of other families are beginning to receive letters, and invoices, simply because they have established run-of-the-mill family trusts.”
The family in the article owes at least $635 CDN plus VAT. This is beyond outrageous. At what point will people begin to take action?
Article is HERE
Thanks to nervousinvestor for being so persistent in replying to comments on the article and promoting
ADCS.
Although for many of us, it’s kinda like watching paint dry, the many hidden costs of FATCA are slowing making their way into the public domain. The article gives a great example of how far reaching and costly
FATCA can be, even to persons who have absolutely no connection to the U.S., and the folly of governments for allowing this to happen.
Appalling.
This type of situation–if and when it happens in Canada–would lead to a very interesting new group of potential witnesses. These are people who have been directly harmed–through these fees which were imposed through no choice of their own–already. This is definitely a different group than those who have been threatened with harm and then have made a choice–either to comply or not.
The one concern I have with regard to our lawsuit is that it sounds like this action–as abusive thought it is–is actually non-discriminatory. They are abusing everyone equally badly, US indicia or not. This might not be good for a lawsuit that is based on allegations of discrimination. However, I suspect that if the initial review costing £500 turns up even the slightest hint of US indicia, that a much more thorough and expensive review will follow.
I’m sure the situation of the family described hits rather close to home for calgary411. One additional concern: what happens in later years if their are further “reviews” after the parents are no longer on the scene, and the adult child doesn’t–due to their disability–have the wherewithal to address a complex review?
The accounting firms sending out these letters is actually good news. It will raise awareness of the FATCA problem and now raises the odds that someone will mount a legal challenge.
Things work different across the pond. Any EU citizen can mount a legal challenge through the courts ultimately to either the European Court of Justice or the European Court of Human Rights.
The accounting firms and banks will provide the anti-FATCA campaigns a measure of publicly for free.
In Europe you’ll find in future some unassuming person will have mounted a legal challenge and a European Court will strike down the IGAs leaving the FATCA issue squarely back to Parliament and the banks that colluded in this bad law to please the Yanks.
Come on Europe let’s get on the legal challenges like in Canada.
Dash,
I’ve sent the article on, for information, to the Director of Policy & Planning of Planned Lifetime Advocacy Network (PLAN) [a membership-based non-profit organization, established by and for families committed to ensuring the safety, security and well-being of our relatives with disabilities and who planned and helped implement the Canadian Registered Disability Savings Plan (RDSP)] who published on their blog, http://rdsp.com/2014/03/10/rdsps-and-fatca-warning-to-people-with-disabilities-with-any-connection-to-the-u-s/.
The “if and when” — how will this affect families who have “Discretionary Trusts” set up for their family member who is disabled — in whatever country? http://www.trustlawyers.ca/services/disability_planning/index.html and http://rdspresource.ca/wp-content/uploads/2011/07/Library-Article-1-RDSPs-versus-Trusts.pdf
It sounds like all trusts in the UK (US or not) must be assessed whether or not there is a *US Person* component. It will all be very confusing, invasive and troubling for families who try their best to provide for their family members when they are gone.
I fear the US, enabled by the Canadian Conservative government who in stealth (at least not in the media to any extent) “negotiated”, signed and passed omnibus Bill C-31 legislation to implement the IGA with the US to waive rights of *US Persons* in Canada, will be able to put their grubby sleazy hands on what I (and others) try to provide for my son (and others like him) after I (we) am gone — my son who was born in Canada, raised in Canada, never registered with the US, never lived in the US, never had any benefit from the US but who had this misfortune to have conveyed to him supposed automatic US citizenship by birth to me. A pox on them and their punitive ways. I’ve tried my best to get the US out of my life. I have renounced and officially have a CLN to show to my Canadian “foreign financial institution”. What a complex absurdity that a trust like the RDSP, the RESP, the TFSA, etc., and ‘Discretionary Trusts’ set up for the needs of disabled persons would be considered “foreign financial institutions” and need a GIIN. Who makes up this crap? Really!!!
Please! Donate to http://www.adcs-adsc.ca/ and bring sanity back to US-defined US Persons, wherever they may be outside the USA.
“Any EU citizen can mount a legal challenge through the courts ultimately to either the European Court of Justice or the European Court of Human Rights.”
This must happen. I will certainly donate towards the litigation.
I had a short comment about cracking the FATCA egg. Also a plug for adcs-adsc. I hope the suit will re-establish Canada as a leader in human rights.
I wonder, once the numbers are crunched here in Canada, how much this is costing Canadian families? What if we can show the “cost” of having a US law overpower Canadian laws at Canadian families expenses? This would clearly help the ADCS and help explain the “true costs” of doing nothing.
my favourite comment on this article:
“Time for a reverse Boston tea party.. No tax without representation. Dump all American goods in the thames”
It would be nice if the Canadian government started issuing passports to Canadian citizens who have renounced/relinquished their US citizenship with a place of birth in Canada. Former US citizens can be refused entry into the US and face other consequences, because their passports will still show they were born in the US–inviting scrutiny from the US.
@Bob Mills
Your suggestion sounds illogical until you realise that Switzerland puts “place of origin” (Swiss) on passports instead of place of birth. Would be good for other countries to emulate.
http://en.wikipedia.org/wiki/Swiss_passport
I haven’t travelled yet with my Australian passport and am not planning on visiting the US again ever if possible, but have a mild interest in seeing the reaction to my city of birth. The name is so common it could be from about six countries, including Canada. and Australia.
“Time for a reverse Boston tea party.. No tax without representation. Dump all American goods in the thames”
They deserve to be dumped in the Rhine, Danube, Yangtze, Nile, Amazon etc rivers as well.
@FromTheWilderness
The environment deserves better than that – just send the American goods back to the Yanks!
@Bob Mills @ shunrata
Japan’s passport is similar to the Swiss; it list my “Domicile”, which is simply the city in which my Family Register is filed, which can be anywhere in Japan and does not have to be in the place were one resides.
In recent years passports around the world have become much more similar, for security reasons, but “Place of Birth” is not one of the items that require uniformity, probably because few countries consider it to be very important. Maybe someday it will go the way of “hair colour”, “eye colour” and “height”.
@TokyoRose
I was also trying to figure out the use of birthplace. Except for those poor trapped US-born accidental americans, probably not much at all.
And “race”, which features so prominently on my US birth certificate.
In the case of hair colour, mine would have to read “whatever”. 🙂
Getting back to “trusts” some may find this interesting:
http://taxinterpretations.com/?p=28228
and this
http://taxinterpretations.com/?page_id=28090#Guidance2014_2
Yes, Hazy. Apparently Canada’s IGA treats trusts differently than the UK’s. Hoping for clarification on this…
@Bubblebustin
Isn’t it the case under FATCA that if a country receives a concession/benefit/whatever, then all countries are entitled to it?
If so, then I imagine it would just be a matter of time before all countries treat trusts as Canada is doing, no?
@tdott
You mean under the “most favoured nation” clause? Apparently not unless the UK and Canada have exactly the same deal.
@ shunrata
Thanks for the reply. Yes, that is very instructive. I suppose we need to somehow push this idea to Canadian lawmakers as a way of protecting Canadians…
I am an American, though, and this process is foreign to me. Very sad to watch everything erode in my home country. Who knows if I shall ever move back…
@ TokyoRose
Thanks for the response…
More on trusts and how the compliance condors are hard at work:
My friend received a package in the mail from RBC last week requiring her to validate U.S./non-U.S. status. She is the executor of her late brother-in-law’s estate and oversees a trust for his two young adult daughters. The package was approximately 10 pages in length and was complicated enough that my friend’s accountant husband found it confusing. Neither my friend, her late brother-in-law, or his two daughters have U.S. status. Here is the cover letter (the first line in a large font with bold print):
“IMPORTANT NOTICE: Documentation Required to Validate U.S./non-U.S. Status
As a result of the Canada-United States Enhanced Tax Information Exchange Agreement (including amendments to the Income Tax Act), Canadian financial institutions are obligated to identify accounts held by U.S. persons as well as accounts for certain non-U.S. entities in which U.S. persons have an interest. Under Canadian law, Institutions must report information about these accounts (“U.S. Reportable Accounts”) on an annual basis to the Canada Revenue Agency (CRA). In turn, the CRA will forward the information to the U.S. Internal Revenue Service (IRS).
Based on a recent review of your client records, we required additional documentation from you to validate your U.S. or non-U.S. status for U.S. tax purposes. (Please see the notes on the back of this letter for more details.)
Please review and complete the appropriate form, and return in in the self-addressed postage-paid envelope within the next 30 days.
PLEASE NOTE THAT IF YOU DO NOT PROVIDE THE DOCUMENTATION REQUESTED, UNDER THE NEW REPORTING REQUIREMENTS CONTAINED IN THE INCOME TAX ACT (CANADA), RBC WILL BE REQUIRED TO AUTOMATICALLY REPORT YOUR ACCOUNT INFORMATION TO THE CRA.
If you have questions or require assistance with this request, please contact the RBC Customer Support Compliance Team at 1-855-873-7232. For more information about these changes, you can visit our website at http://www.rbc.com/aboutus/fatca.html, which also contains the official IRS website links. If you have questions about your tax status for U.S. tax purposes or how the changes may affect you, please contact your professional tax advisor–RBC does not provide advice regarding the impact of these changes to clients.
RBC takes your privacy seriously and complies with all relevant privacy rules.”
Yikes! I added the all caps to the one paragraph. Also, under the “Notes” section in the package:
“The IRS defines a “United States Person” for U.S. tax purposes to include:
– A trust if (1) a court within the U.S. is able to exercise primary supervision over the administration of the trust, an (2) one or more U.S. persons have the authority to control all substantial decisions of the trust.”
I didn’t think it was possible to dislike RBC even more that I did previously………
@Pollyanna – the letter suggests that your firend had some US indicia showing through on their account review (unlike the UK which seems to want to conduct an in-depth review of each account whereas the IGA only calls for a fly-over review of electronic records for existing accounts at least). If there were indicia, then the letter does sound pretty much in line with what C31 and IGA require of the banks. I would be pretty annoyed at them however if there were NO indicia as they are not required to go back and get ex post facto certification of non-US status from ALL existing accounts. That would be a case of overkill were that true. Your note mentions that the neither your friend (the trustee), nor the settlor of the trust (late brother in law) nor the beneficiaries are US persons. I don’t see where they would be finding any indicia?
@Anne Frank @Pollyanna
If they have no US indicia then “overkill” is an extreme understatement.
We’ve had long discussions on IBS as to whether the banks would bother sifting out accounts of less than $50,000, etc in their reporting. In the case of trusts, in both Pollyanna’s friend’s case and those in the original article, they’re not fiddling with little details like that, but considering everyone guilty until proven innocent. (And in the case of the $50,000 threshold, I’m inclined to go with those ticking the “they won’t bother” box.)
Obviously they’ve got lawyers aplenty to advise them on the legality of this step, but I would wonder how they can violate someone’s privacy rights just by sending them a letter first? Who says you have to give them eight pages of information as “protection” just so they won’t report you to a foreign government?
Sad and scary times. Hopefully if the banks keep it up they’ll give FATCA the infamy it deserves so the general public will realise that yes, this does affect them.
@Tricia Moon
“The family in the article owes at least $635 CDN plus VAT. This is beyond outrageous. At what point will people begin to take action?”
They already are–in Canada.
People in the UK have fewer options in that I believe that the UK is still technically an absolute monarchy without a written constitution–making the equivalent of a Charter challenge impossible. I believe that UK citizens do enjoy certain rights as Europeans–such as the right to a bank account–but people in the UK never seem too sure of their relationship with the EU so I’m not sure how far that will go.
In short it is looking to me increasingly like Canada is going to have to lead this one. I have no problem with that. Too often Canada has been in the role of follower. It is time for Canada to lead for a change.
I’m not sure how people here feel about Robert Wood but have a look at Robert Wood’s latest article:
http://www.forbes.com/sites/robertwood/2014/08/19/ten-facts-about-fatca-americas-manifest-destiny-law-changing-banking-worldwide/
He says the following:
9. Forget Repeal or Dismantling FATCA. Republicans have mounted a lackluster repeal effort, but there’s no serious push to repeal FATCA. At least not one that’s getting traction. (No hate mail please, but honest, repeal now isn’t likely.) Some say FATCA will be like prohibition, lasting for a time but doomed. We’ll see, but it sure doesn’t look that way now.
Still, Canadians recently Filed Suit To Block FATCA And Prohibit Handover Of U.S. Names To IRS. The suit claims the Inter-Governmental Agreement under which Canada can turn over private bank account information is illegal. The legal claim challenges the constitutionality of the agreement the Canadian government struck with the United States.
People are beginning to take note of the fact that Canada is emerging as the leader in this fight. Note also Mr. Wood’s comments on the US lawsuit effort. I still have some hope for that effort given the brief signs of life we saw on http://www.fatcalegalaction.com yesterday. But I also think that the adjective Mr. Wood uses to describe the Republicans Overseas efforts so far–‘lackluster’–is a fair one especially as compared to ADCS.
Dash,
and, as you quoted from from Robert Wood:
Perhaps hindsight for the Canadian Conservative government: Too bad we didn’t take advice that Canadians could be the leaders in the world in saying “No” to FATCA and negotiated properly for Canadians who happen to be US-defined “US Persons” as ALL Canadians have the same protection under the Canadian Charter of Rights and Freedoms and other Canadian laws.
Help Canada lead the fight for Canada and make a statement for what the rest of the world can likewise do: Donate to http://www.adcs-adsc.ca/.
Other oppressive overreach has been stopped in its tracks — stand up to the bully taking from individuals, families, business partners, other countries!!