Q: “How can I avoid FATCA?”
A: “Avoid US-sourced income, US investments and US investors/account holders and that should do the trick.”
http://www.ustaxfs.com/fatca/fatca-faqs/
This is just one FATCA compliance consulting house of all of the jillions of FATCA compliance houses .
FATCA is a way to get a bigger chunk of a shrinking pie.
Don’t forget to remind your legislators.
Cross-posting from ADCS-ADSC.ca blog congratulations to constitutional lawyer, Joseph Arvay, and his team on today’s unanimous Canadian Supreme Court decision, with the disclaimer as rightly suggested…
This post and the Canadian Supreme Court unanimous ruling is being cited solely to show the legal skills of Canadian constitutional lawyer, Joseph Arvay, and his team, not to discuss our agreement or disagreement with the ruling itself.
Congratulations to @ADCSovereignty lawyer Joe Arvay – SCC allows doctor assisted suicide
Joseph Arvay and team will use their same skills in working to uphold the rights of approximately one million Canadians, their spouses, their children, their business partners who presently face national origin discrimination (US-defined US citizenship / personhood) after the signing and implementation by Omnibus Bill C-31, of an intergovernmental agreement to allow US FATCA law to override Canadian laws and the Canadian Charter of Rights and Freedoms.
At least that’s my best guess of what they’re trying to do, based on the rather strange contents of (and omissions from) their latest guidance to U.S. Persons abroad. Patrick Martin of Procopio, Cory, Hargreaves & Savitch LLP reports on recent State Department efforts to communicate with the diaspora about their IRS obligations. State sent out an e-mail blast, and posted the same message on the websites of various U.S. consulates and embassies, for example Tokyo, Bern, and Athens. The guidance was prepared by the IRS rather than State; State is merely the messenger.
Here’s the IRS’ complete answer to the question “What Forms May I Need” (I eliminated references to instructions and Spanish or “EZ” versions of forms):
1040, U.S Individual Income Tax Return
1116, Foreign Tax Credit
2350, Application for Extension of Time to File U.S. Income Tax Return (for U.S. citizens and residents abroad)
2555, Foreign Earned Income Exclusion
4868, Application for Automatic Extension of Time To File U.S. Individual Income Tax Return
8802, Application for United States Residency Certificate
8938, Statement of Specified Foreign Financial Assets
14653, Certification by U.S. Person Residing Outside of the United States for Streamlined Foreign Offshore Procedures
Form 8802 is only useful to you as an individual if you have a credible case for tax non-residence in the country where you are present, and a claim that such non-residence should exempt you from local taxation on some of your income which the U.S. also does not tax under its own system.
The mention of Form 8938 notwithstanding, this e-mail doesn’t appear to be aimed at accidental Americans or long-term emigrants who conduct all their finances locally — the largest category of non-resident non-filers who have assets which could be subject to fines and actually might owe U.S. taxes in unusual years (e.g. on the sale of a house). None of us have any claim to U.S. residency under a tax treaty. If the IRS were aiming at us, it would have been far more relevant to mention Forms 3520 and 8621 than Form 8802.
Nor is this e-mail likely to be aimed at short-term corporate assignees — who might be able to benefit from Form 8802, but in general have Big 4 assistance as part of their overseas assignment package and so are far likelier than average to be compliant with their U.S. tax obligations (thus artificially driving up the average income of FEIE users). Rather, the IRS seems to be trying to contact people to whom Form 8802 is relevant and who currently have a low rate of compliance. My guess is that means students, teachers, and researchers, in particular young graduates teaching ESL classes.
Post authored by Bubblebustin for you…
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This feature article covers what James Jatras told us long ago when he said that the FATCA IGA’s are “dead on arrival”. The US Congress will not pass the legislation to make these IGA’s truly reciprocal, but my question is,
Will our governments choose to ignore this fact when our banks are running scared?
It’s up to each any every one of us to tell our MP’s that the banks should not collect the private banking information on EVEN ONE CANADIAN when the US isn’t holding up it’s end of the deal!
This confirms my worst fear, that our governments may turn a blind eye to the US’s lack of legislative authority on this matter, again sacrificing us just to make things run smoothly for the banks. Is there any reason to think they’d act otherwise?
Not applicable to adult emigrants. No other proposals to simplify income taxes for individuals who don’t live in the United States. No help with the insane reporting requirements on foreign retirement & medical & disability savings plans. Some people may hope it’s a start from an administration which up until now has been totally deaf to the “special concerns and issues of Americans abroad” which the president claimed he would address when he was campaigning for our votes. Others will take it as what it appears to be at face value: a chance to get out while the getting is semi-good. At page 282 of the “Green Book” (all links added by me):
Individuals who became citizens of both the United States and another country at birth may have had minimal contact with the United States and may not learn until later in life that they are U.S. citizens. In addition, these individuals may be citizens of countries where dual citizenship is illegal. Many of these individuals would like to relinquish their U.S. citizenship in accordance with established State Department procedures, but doing so would require them to pay significant U.S. tax.
Under the proposal, an individual will not be subject to tax as a U.S. citizen and will not be a covered expatriate subject to the mark-to-market exit tax under section 877A if the individual:
1. became at birth a citizen of the United States and a citizen of another country,
2. at all times, up to and including the individual’s expatriation date, has been a citizen of a country other than the United States,
3. has not been a resident of the United States (as defined in section 7701(b)) since attaining age 18½,
4. has never held a U.S. passport or has held a U.S. passport for the sole purpose of departing from the United States in compliance with 22 CFR §53.1,
5. relinquishes his or her U.S. citizenship within two years after the later of January 1, 2016, or the date on which the individual learns that he or she is a U.S. citizen, and
6. certifies under penalty of perjury his or her compliance with all U.S. Federal tax obligations that would have applied during the five years preceding the year of expatriation if the individual had been a nonresident alien during that period.The proposal would be effective January 1, 2016.
This didn’t appear to be covered in the table of revenue estimates. Correction: As Tim points out, the revenue estimate is in the summary tables file on the White House/OMB website, rather than the Treasury website. They estimate it would cost $400 million over ten years, with more than half of that coming in the first three years as people scramble to take advantage of the offer.
I relinquished 20 years ago, and they know it. If they decided to re-write history, they obviously can’t play nice, and I’m not going to play with them. I got as far as talking to the vice consul, and she wanted me to start by taking an oath that we both knew was false. I am proudly Australian, let them prove otherwise. — ProudAussie, 1 February 2015
We’ve suggested here several times that Washington should bear the burden of proving continued U.S. citizenship in the event an emigrant claims loss of citizenship occurred long ago — especially if the claim of continued citizenship is accompanied by a demand that an emigrant fulfill one of the alleged duties of U.S. citizenship or submit to punishment for failure to fulfill such duties. The U.S. government should have to prove not only that an emigrant took actions which could only be performed lawfully by U.S. citizens but that such actions were actually taken with intent to retain U.S. citizenship. To require otherwise is a deliberate perversion of the spirit of the Warren Court’s efforts to prevent the executive from using nationality law as a tool of punishment.
Unfortunately, the law as it stands — 8 USC § 1481(b) — places the burden of proof “upon the person or party claiming that such loss occurred”, and in October 2014 the State Department updated the relevant sections of the Foreign Affairs Manual to ensure that consular officers understand all the nuances of their power to make negative recommendations in relinquishment cases when they feel the emigrant has not provided sufficient evidence of action or intent to meet the burden of proof.
The legislator who wrote § 1481(b) — a detractor of the Warren Court’s rulings on nationality — falsely claimed he intended to place the burden of proof on the government. He was certainly aware that it would not always be the government asserting loss of citizenship; a very peculiar phrase in § 1481(b) suggests he was not only aware of such instances in general terms but knew in detail the legal strategies used by an individual in one such case. So this legislator lied to his colleagues and the public to get his law passed. He apparently expected he could avoid any scrutiny of his lies by making vague and jingoistic speeches, and he was correct — half a century later, it’s beyond the power of any mortal to hold him to account.
This legislator was quite famous, too: if you were alive when he was in office you’ll likely be familiar with his name, and even if you weren’t you’ll recognise the name of the infamous committee he headed, whose annual report crowed about its great achievement of getting this law passed.
WHERE:University of Toronto, St. Michael’s College, Carr Hall Room 405
100 St. Joseph Street – Toronto ON M5S 2C4 MAP
WHEN:SESSION ONE: 9:00 – 11:00 am Info Session
“2015- Solving U.S. Citizenship Problems-Have You Received a FATCA Letter?”
ADMISSION: $20 per individual or $40 for a family of up to 4 people
Payable in cash at the door, please (to cover costs).
WHEN: SESSION TWO: 12:00 – 6:00 pm Open Forum
“Have You and Your Family Been Harmed by U.S. Government Tax Policy?”
ADMISSION: FREE
WHO: John Richardson, B.A., LL.B, J.D.
Member of the Ontario Bar
SESSION ONE
“Have you received a FATCA letter or been warned of the consequences of being a U.S. person?”
Why am I getting letters from my bank all of a sudden?
The “FATCA Hunt” – the hunt for U.S. persons (whatever that is) began on July 1, 2014 which was “Canada Day.” Although both the definition of “U.S. person” and whether one meets the definition is not always clear, the search has begun. The level of FATCA awareness has begun. Some organizations are actively warning people that “U.S. Person-ness” matters. The purpose of the warning is presumably to encourage people to “come clean” and deal with their U.S. tax situations. In some cases, there is no particular warning – just a letter indicating that they are suspected to be a “U.S. person.” Often one must prove to the institution sending the letter that one is not a U.S. person.
What individuals are U.S. taxpayers? Who is a U.S. citizen?
There are individuals that the U.S. government would define as “U.S. citizens” who:
To put it another way: one’s status as a U.S. citizen is NOT always clear.
I have never heard of these requirements! What determines the income that must be reported to the IRS? What “Information Returns” are required to be reported to the IRS?
I am only a snowbird! Why does this affect me?
What are the ways I can become compliant?
What costs are involved in renouncing U.S. citizenship?
SESSION TWO
We want you to send your stories and videos of harm done to you by CBT to us by February 14, 2015. These will be sent to WASHINGTON DC
Continue reading
IT HURTS MY HEART: On Renouncing American Citizenship
Essay by Christina Warren with Photographs by Lars Deutschlaender
Bern, Switzerland is built on a horseshoe bend of the river Aare. Its old town is in the center of this horseshoe and is designated a UNESCO World-Heritage site. Bridges lead to the ‘younger’ neighborhoods. Mine, the Monbijou, is only a ten-minute walk from the Bundeshaus or Parliament building. My favorite route to the old town is through Flora Park, past the gated compound of the American Embassy
and through the Kleine Schanze, a park
bordering the Bundeshaus and offering
views of the Alps. I have taken this
walk countless times, passing the embassy,
sometimes stopping to light a candle at
the Dreifaltigkeitskirche, a catholic church
located just outside the Kleine Schanze.
After reading the completely unacceptable response to MP Ted Hsu’s order paper question (OPQ 816), WhiteKat decided to reach out, once again (in spite of previous communications being unsatisfying) and this time, write her story from the heart. Her MP, the Hon. John Baird is the Minister of Foreign Affairs, the Department that provided this “response.”
I thought it deserved a thread of its own as this letter is a real gem.
WhiteKat:
“Its been awhile since I’ve emailed/mailed any government reps. I was inspired by a comment, written by Stephen Arvay on the Allison Christians post.”
If you have two to four hours to watch the “Stupid Bowl” coming up on Sunday, then you have a few hours per week to read, be informed and write your representatives. We must put the pressure on in volumes of letter, emails, faxes, phone calls!
“I hope lots of you do the same! Yes, the lawsuit is important, but we cannot stop our bitching either!”
“Here is my latest to my MP John Baird.”
I am writing to you about the FATCA IGA with the USA, that was signed by the Conservative government in Feb 2014.
I am very, very sad and totally disillusioned. I cannot believe I have lived in such an innocent state of unknowing for nearly 1/2 a century in that I thought Canada would protect ALL her citizens from foreign threats – not just a subset of them.
Apparently, I am a second class Canadian citizen. You really have no idea how horrible this feels unless it happens to you. It is a living nightmare that I stress about every single day. The last two Canada Days, I have found myself in tears. And if it can happen to me, it can happen to any Canadian.
I don’t remember the first 20 months or so of my life, which was spent in the USA while my Canadian parents lived there. I haven’t got an American bone in my body, but had the misfortune to be born on US soil. I’ve lived and worked only in Canada since moving back ‘home’ as a toddler.
Can you imagine the shock I went through just over two years ago, when I heard about FATCA and discovered that not only was I a delinquent US tax-filer, but was also required to report my Canadian accounts to the FINANCIAL CRIMES ENFORCEMENT NETWORK every year? And worse, my own country was going to shine a light on me so that the IRS would have knowledge of my existence, along with the private details of my bank accounts, most of which are held jointly with my 100% pure Canadian husband. He was not too pleased to say the least, and this has caused big rifts in our marriage.
Please help Mr Baird. I have done nothing wrong, unless to be born on US soil is a crime. How was I to know all these years, that USA was unique in the world with its byzantine ‘place of birth’ taxation laws? I have paid all taxes ever owed to the Canadian government and have been a law abiding citizen and productive member of Canadian society for over 50 years.
I am seriously stressing out, and at age 52 this is not good for my health. I have NO IDEA what to do. I cannot afford the financial costs to get into good standing with the IRS. I estimate 15-20K as I have lots of low-value Passive Foreign Income Corporations (i.e. Canadian mutual funds), several RESPS (one for each of my 3 children), several small RRSPS, and a TFSA (all considered foreign trusts).
Although I thought I was being a responsible parent and adult, saving for my children’s education and my retirement, I have in fact caused nothing but huge problems for myself and family.
I am scared to death of the penalties that IRS will assess for my not reporting my and my husband’s so-called ‘foreign accounts’ to the Financial Crimes Enforcement Network, which is what will happen when my financial institution reports me to the CRA under FATCA.
Did you know that the penalties for not filing FBARS (FOREIGN bank account reports) for my CANADIAN accounts are 50% of the value of the account for each of the last 6 years (i.e. 300% of the value of the account)?
Will the Canadian government take care of my husband and me after we hand over our life savings to the US government?
I would love to renounce US citizenship, but this does not relieve me of past compliance requirements for US tax reporting and FBARs, and in fact puts a red X on me for the IRS. Not only that, but renunciation is expensive! In 2008 it was free. In 2010 it was $450, and in 2014 it was raised to an unbelievable $2,350 (US dollars). I believe Canada charges $100 to renounce Canadian citizenship and that it can be done by mail.
So basically, I am damned if I do, and damned if I don’t. There is NO painless way out of the mess I am in, yet I am just a decent person trying to live an average life. Why is this happening to me? Why is my government not protecting me? Why is it handing me over to the USA which will allow it to literally destroy me and my Canadian born spouse and children?
I don’t know which is worse – the threat of financial devastation from the USA simply for spending the first 20 months of my life there, or the horrible feeling that the ground I thought was beneath my feet all these decades was never really there! Sometimes, I think it is the latter – it is that soul destroying.
Please, is there someone in the Conservative party who actually cares about the millions of Canadians who are suffering like I and my family are, or is everyone just concerned about keeping their jobs and their pensions? I have truly lost faith in Canadian government.
Very sad second-class Canadian
Kxxxxxxx Pxxxx (name not withheld from Mr. Baird)
Nepean ON
A recent comment by calgary411 reminds us of a truly bizarre problem in U.S. diaspora policy. Much unlike the problems with tax paperwork and FATCA-related bank account denials — which could be largely ameliorated by mere executive fiat, and totally resolved by ordinary House bills — this problem might not be fixable by anything short of a constitutional amendment.
The U.S. Constitution gives the federal courts original jurisdiction in cases involving disputes between Americans from different U.S. states, or between Americans and foreigners. This is commonly known as “diversity jurisdiction”. In Guaranty Trust Co. v. York, 326 U.S. 99 (1945), the Supreme Court concisely stated the reason why the U.S.’ Founding Fathers wanted federal courts rather than local courts to have jurisdiction in such cases:
Diversity jurisdiction is founded on assurance to nonresident litigants of courts free from susceptibility to potential local bias. The Framers of the Constitution, according to Marshall, entertained “apprehensions” lest distant suitors be subjected to local bias in State courts, or, at least, viewed with “indulgence the possible fears and apprehensions” of such suitors … And so Congress afforded out-of-State litigants another tribunal, not another body of law.
The Supreme Court has held that this “benefit of citizenship” does not extend to U.S. citizens abroad — the rights of the diaspora in this regard are thus inferior to those of both Homelanders and foreigners. However, if Homelanders are trying to sue you in federal court, you can turn this against them. The most recent example of this is explained in a new Baker & MacKenzie article about a Third Circuit decision from last September. An Ohio resident attempted to sue an American citizen in Germany in a U.S. federal court; however:
The Third Circuit affirmed the decision, dismissing the dispute for lack of subject matter jurisdiction. For purposes of diversity jurisdiction, “citizenship is synonymous with domicile.” Domicile is an individual’s “true, fixed and permanent home and place of habitation. It is the place to which, whenever he is absent, he has the intention of returning.” The court further cited Supreme Court doctrine implying that an American citizen not domiciled in a particular state is essentially “stateless” under 28 U.S.C. § 1332(a). These individuals cannot litigate in federal court based on diversity jurisdiction since they are not “citizens of a State,” or “citizens or subjects of a foreign state.”
