In our September 18 ADCS blog post we advised you that, for whatever reason, the United States Department of Treasury will now permit a one year extension, to September 30, 2016, to turn over private bank account information to the U.S. Internal Revenue Service, to comply with the U.S. FATCA law. However, the affected country HAS TO ASK FOR THE EXTENSION.
On September 18 we said on the blog:
“Well, it’s been quite a week. At approximately 4:45 p.m. today the IRS issued a notice confirming that the FATCA implementation date will be extended to September 30, 2016. As you know Canada has a Model 1 IGA. Assuming the correctness of the post in the above tweet:
Model 1 IGA Jurisdictions for Which the Obligation to Exchange Is In Effect — For those Model 1 IGA jurisdictions where the obligation to exchange is in effect now, Notice 2015-66 provides that FFIs in that country will be treated as FATCA compliant, and not subject to withholding, so long as the partner jurisdiction notifies the U.S. before September 30 that it requires more time, and “provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible.” Notice 2015-66 does not, however, change the deadline for FFIs to report information to their local tax authority, which remains governed by law of that country.”
We therefore instructed our legal counsel to notify the Government of Canada (and they have) of this development and request that the Government of Canada NOT disclose your banking information to the IRS.
— Today, September 21, we posted a new ADCS blog in which we specifically asked Canada’s Minister of National Revenue, Kerry-Lynne Findlay, a defendant in our lawsuit, to apply for the extension before September 23, the date the private account information is due to be sent to the U.S. IRS.
We said:
September 21, 2015
The Honorable Kerry-Lynne Findlay,
Minister of National Revenue
House of CommonsDear Minister Findlay,
We have an urgent time-sensitive request regarding our litigation in which you are a defendant, which we believe will be helpful to both plaintiffs and Government defendants, but which needs to be acted on no later than by end of business day September 22, 2015.
We are the chair and co-chair (and legal counsel) of the Alliance for the Defence of Canadian Sovereignty. We are the non-profit organization which is prosecuting the FATCA lawsuit against the Government of Canada. The lawsuit is “live”, “well” and expected to move to full trial in 2016. We are at: http://www.adcs.adsc.ca.
By way of background:
1. On February 5, 2014 the Government of Canada entered into a “Model 1” IGA agreement concerning the imposition of the U.S. FATCA (“Foreign Account Tax Compliance Act”) law in Canada.
2. On June 19, 2014 the Government of Canada enacted the FATCA enabling legislation through Bill C-31.
3. On July 1, 2014 FATCA became the law of Canada. The IGA required that Canada (via the CRA) report the banking information of those defined by the U.S. to be U.S. Persons to the IRS
4. The FATCA IGA required that the information be reported no later than September 30, 2015.
5. The Government of Canada has indicated to our legal counsel that it intends to report the banking information of those identified as “U.S. persons” to the IRS on September 23, 2015.
On the afternoon of Friday, September 18, the U.S. Internal Revenue Service issued Notice 2015-66, pursuant to which the deadline for the turnover of FATCA data (for countries with a Model 1 IGA agreement) has been extended for one year. Countries with a Model 1 IGA (including Canada) are no longer required to report to the IRS by September 30, 2015. It is required that Model 1 countries request this extension from the IRS.
See:
https://adcsovereignty.wordpress.com/2015/09/18/irs-extends-fatca-compliance-date-for-one-year-to-september-30-2016/http://www.irs.gov/pub/irs-drop/n-15-66.pdf
REQUEST:
In light of the large number of Canadian citizens potentially affected AND in view of the fact that the Government of Canada and the Minister of National Revenue are defendants in the Deegan and Hillis lawsuit AND in view of the fact that the Government is NO longer required to transfer the FATCA data to the IRS we request:That the Government of Canada apply for the extension, no later than by end of business day September 22, to NOT transfer the data with a view to meeting a September 30, 2015 deadline that is NO longer required.
Clearly, the Government of Canada, irrespective of its FATCA obligations to the United States, has the opportunity to not transfer the private banking information of innocent Canadian citizens to the United States Internal Revenue Service.
Your action in requesting the permitted delay in the transfer would be significant for both plaintiffs and defendants as we move down the litigation road.
Should you need more information I ask that you contact Mr. John Richardson our legal counsel and co-chair. [I included John’s cell phone number for Minister Findlay to make it easy for her to contact our ADCS legal counsel for further information.]
Sincerely,
Dr. Stephen Kish, Chair, Alliance for the Defence of Canadian Sovereignty
John Richardson, Co-Chair and Legal Counselcc:
Andrew Treusch, CRA
John Ossowski, CRA
Kevin Shoom
The Honourable Joseph Oliver
Hi Dash
I can appreciate what you are saying and am glad you brought this up. You always have a unique take on things which is interesting. We listen and weigh issues regardless of whether we are commended or not.
My main focus/concern is to do whatever can still be done to prevent the information leaving the CRA. I am not worried about the “good faith” issue because that is probably not the real driving force here. We likely cannot know the real reason but it may be safe to say that it is not all due to compliance issues from non-US tax agencies. That may play a role but it also likely true that the IRS has its own agenda in allowing a delay. These sorts of “conditions” are just about “saving face”. I would also imagine the IRS knows darn good and well why Canada would ask for a delay and as long as the right words are said publicly, the issue of “good faith” would not even be discussed privately. The US has nothing to gain by denying a request by Canada. We are the one place where organized dissent has been particularly effective/influential and nobody wins if a delay is denied. Not the US, the Harper government or us. Imagine the reaction in Canada if CRA denies this. We are in litigation with the government and an election is coming up. I am sure they realize we are of sufficient number to make a difference in who forms the next Parliament. Imagine the reaction in the world if the US would treat Canada in such a fashion; it would be akin to assessing the $30k sanction on an FFI just to make an example of the “offender.” There are so many moving parts in this situation.
Again, regardless of the endless possibilities of why it may be a good move or a bad one, my efforts since this information was released is to find any/all ways to notify expats and communicate to press, governments etc, that a delay can be had. That is my job. Whatever it takes to prevent that information from leaving Canada. A year is a very long time and any one of those moving parts can make the “good faith issue” irrelevant. Nothing stays the same over time, except change.
Well said, Tricia.
ADCS / the Arvay legal team ran out of time to prepare for and apply for a STAY at an additional cost to donors here, after Justice Martineau’s decision was announced.
This announcement of a possible delay from the US (if asked for by Canada) appeared instead (thanks again, Tim), a means which could and should prevent the first batch of Canadian private financial information leaving the CRA to go to the US IRS.
@Calgary
Thanks! However someone pointed out something that I have no answer for.
What will the government want in return. Drop the suit? Obviously we can’t do that………
I hope the Harper government wouldn’t stoop to wanting something in return for a year’s delay in turning over Canadian financial information to the US.
We’re asking for what should be — what will amount to a stay for those *US Persons in Canada* whose private financial information is/was to be sent across the border on September 23 — 7 days earlier than the September 30, 2015 deadline.
All of US Persons in Canada and All Canadians might better now to have a say in what we should have had a say in in the first place if Canada’s Members of Parliament had been responsible legislators and not gone behind the backs of the people of Canada.
— approval of Murray Rankin’s NDP proposed amendment…
as he went on to say:
But, no, the Harper Conservatives marched in lockstep to their Leader’s and the US *Congress* orders.
We can ask if they want something in return — Will they have a second look at what they’ve done to Canada’s people and this country’s sovereignty?
Stephen and John: Great letter to Minister Findlay! Thanks also to the tweeters and everybody else who is raising the alarm.
Yesterday I contacted the Privacy Commissioner’s office by phone and asked them to urgently do what they could to alert the government to its need to apply for the deadline extension. I also spoke on the phone to a very nice woman in the Privy Council office who had never heard of FATCA!
It shocked me that anyone in an office that advises the Prime Minister on public policy would have had no knowledge of a matter that is so hurtful to so many. I would very much recommend that a few more callers contact the Privy Council. I was asked to leave a message and my call was returned later in the morning. Thank you for the idea, Tim!
@Dash, creating a devils advocate is always good. Iron sharpens iron………
I believe honesty is the right choice and that is there is ongoing litigation. That is a reasonable and bonafide reason for requesting a delay.
The IRS says ““provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible.”
The CRA can state;
“We are defendents in litigation pertaining to a Charter Challenge. The status of the IGA must be determined lawful in accordance with Canadian Law. We are making a good faith effort to expedite that lawsuit and obtain a verdict in order to proceed with an information exchange. As proof of our good faith effort, we went to court for a summary trial of some of the issues in order to remove these issues from the litigation table and shrink the scope of claims. we hope to have this litigation completed prior to September 2016.”
In the end…….me thinks the Canadian Government will hand over the information on Wednesday.
Thats the bad news.
The good news is that not seeking the delay shows the contempt of the Government towards the Court.
I am confident Joe Arvey and ADCS will raise this weeks lack of actions in the next litigation step.
The bonus is damages. As I said before and will say again, the Government of Canada shoudl bear the full cost of renouncing $2,350 US plus the professional fees to file Form 8854 and past returns. And thats for every Canadian with clinging US Nationality.
“the Government of Canada shoudl bear the full cost of renouncing $2,350 US plus the professional fees to file Form 8854 and past returns”
The Government of Canada should enact an Expatriation Act like the US did 150 years ago, so every Canadian who wants[*] or needs[**] to renounce unCanadian citizenships can do so without any filing obligations to other countries.
That still leaves Calgary411’s son in trouble though.
[* For a fee of C$100.]
[** For a fee of C$100 but waived for those who can’t afford it but need to do it.]
George: I agree with you completely that the Canadian government, in fact governments around the world, should pony up the $2,350.00 for every US-born citizen of their countries that they are so readily throwing to the US wolves. The “just renounce” crowd needs to feel it in their pocket books if not their hearts when they use those two words so cavalierly.
That’s right, MuzzledNoMore. If citizenship is that disposable and of so little value, maybe Donald Sutherland should renounce his Canadian for Canada having denied him his voting rights for living outside of Canada.
After I contacted the NDP National campaign and Murray Rankin’s office yesterday, I received this reply sent from Murray Rankin’s Assistant at 10:57 last night:
I will post any updates when I receive them. I am working on Scott Brison and the Libs.
Justice Martineau’s comment about renouncing citizenship has stuck in my craw. He was there to judge on the FATCA IGA, not whether people should renounce because of CBT. I think he overstepped his boundaries here by suggesting people renounce their citizenship to avoid FATCA. It’s not citizenship that’s at issue here, it’s the treaty’s enforcement of FATCA that is. Maybe Justice Martineau is prejudiced against Canadians with other citizenships.
Thanks, Lynne/Blaze.
I have made this a post so more might read this important news and will stay tuned for updates from you.
http://isaacbrocksociety.ca/2015/09/23/important-ndp-has-stepped-up-to-the-plate-with-another-letter-to-the-minister-thank-you-murray-rankin/
@Blaze
Nice! Pressure from all directions.
@Norman, “The Government of Canada should enact an Expatriation Act like the US did 150 years ago, so every Canadian who wants[*] or needs[**] to renounce unCanadian citizenships can do so without any filing obligations to other countries.”
I have been banging that trash can too.
The problem is a citizenship problem not a tax problem, full stop.
And we did not have the problem when it was very easy to get thrown out of the club before the courts stepped in.
For the moment lets just talk about the Master Nationality Rule Countries……like the UK.
A UK Citizen in the UK can only be……..British, full stop.
There is a slippery slope on all those, if you can be treated under an IGA as a USA Citizen having solely a valid UK Passport then the next step is the UK Government declaring that your DOMINANT NATIONALITY is the USA and then deport you back to the USA.
But before we get that far the tide can be turned, surely a country that has signed on to the Master Nationality Rule as law could jump to the next step under which its own courts could accept voluntary renouncement of foreign nationality for all public and private purposes in that country.
The step beyond that would be for the USA and said country to sign a treaty recognizing and reciprocating said renunciation. When you naturalise in the USA you do renounce foreign nationality, well we need a treaty on that so everyone can get rid of clinging nationality.
@Norman, “The Government of Canada should enact an Expatriation Act like the US did 150 years ago, so every Canadian who wants[*] or needs[**] to renounce unCanadian citizenships can do so without any filing obligations to other countries.”
@George, “But before we get that far the tide can be turned, surely a country that has signed on to the Master Nationality Rule as law could jump to the next step under which its own courts could accept voluntary renouncement of foreign nationality for all public and private purposes in that country.
The step beyond that would be for the USA and said country to sign a treaty recognizing and reciprocating said renunciation. When you naturalise in the USA you do renounce foreign nationality, well we need a treaty on that so everyone can get rid of clinging nationality.”
VERY ELEGANT solution. How could the US possibly object, since they did it themselves first? (Yes, I’m well aware that this sentence could be considered naive, and I’m SURE they would object. My point is that they will have no grounds to do so). Heck, the wording of any law adopted could practically mirror the US law.
Would love to see this written up and promoted by IBS.
Some thoughts here on “clinging” nationality and others who say “oh just go and denounce yourselves then” (and please correct me if I’m wrong):
People who’d have you renounce would have you believe that it’s citizenship that’s the problem, when really it’s CBT. Unless you have other reasons, no one should be put in the position of having to renounce because of US laws that makes it impossible to live outside the US. If the US doesn’t want people leaving then it should pass a law denying people the right to emigrate. But it can’t (nor does it really want to).
For this reason, I don’t view US citizenship itself as “clinging”, although I do see how others would. Countries can put as much baggage as they want on their citizenships, but that doesn’t change the nature of citizenship itself, which is to benefit the individual. If Rand Paul became president and applied a flat tax on earnings only in the US, we would be forgiven for the real monetary costs of the so-called “benefits” we derive from US citizenship (benefits, by the way many other nations deal with more effectively).
Question: If taxation is an integral and constitutional part of citizenship, how is it that under a flat tax for residents only it would be constitutional to not tax non-residents?
Again, citizenship isn’t the source of the problem, but Cook v Tait married taxation to citizenship. It’s time for a divorce. CBT exists because it’s the law. It’s effects determine whether it’s good or bad. It’s pretty clear that it’s outlived its usefulness of being good for America, if it ever was. The same goes for FATCA.
(End of rant)
@Bubbles….If the US Citizenship rules that existed in 1970 still existed, would there be an uproar and would IBS even exist?
CBT is very bad however if there is a path out of citizenship as directed and required under the Expatriation Act of 1868, much of the sting is gone.
Individuals that say “just denounce” honestly think all you need to do is turn in your passport and you are done with the USA, honestly.
The problem was that fifty years ago he had citizenship laws and tax laws on the books that were finely balanced, they were in tune, the ying and the yang were in harmony.
But the courts got involved, closed the “emergency exits” and then to make matters worse administrativly switched the presumption from relinquishing to retention!!
Strict overseas tax rules are balanced out by easy get out of citizenship rules. But instead we have strict overseas tax rules and strict loss of citizenship rules.
@Bubbles……politically what option do you think would more likely pass?
A. Making it easier to strip away the citizenship of dual loyalty persons.
B. Providing tax breaks for expat Americans living overseas
“If the US Citizenship rules that existed in 1970 still existed, would there be an uproar and would IBS even exist?”
Canadians born in Canada to a US parent would still be in trouble, though they could renounce around age 22 (or was 18 already the age of majority in 1970? could 18-year-olds drink whiskey?)
Landed immigrants and holders of employment or student visas would still be in trouble, if their passport was US.
Canadians who spend too much time in the US would still be in trouble.
If some other country is involved instead of Canada, banks in their country would still close their accounts.