This article is actually about Panama-US FATCA negotiations. Buried in the article may be a real glimmer of hope for Canada.
A lawyer who has been advising foreign firms on FATCA says:
“There is a lot of tension between the U.S. and Canada.”
That seems to indicate Canada is holding out. On the other hand, he also said:
“The Canadians have been really exasperated by the inability of the U.S. to have more concessions”
So, that sounds like the U.S. is not budging, which is not good news.
Treasury “is struggling to complete deals with China and Canada, leaving two potentially gaping holes in the FATCA dragnet,” tax experts said
Keep digging Jim Flaherty!
18 thoughts on “"Lot of Tension" with Canada. "Gaping Hole."”
Blaze, thank you for this important post. I have put the same (but by Reuters) onto Isaac Brock. I tried to comment on your post here yesterday but had no luck with a few tries.
Here is the comment I put on Isaac Brock on the thread of the new National Post piece which has garnered good comments: http://fullcomment.nationalpost.com/2013/09/27/american-expats-feeling-less-free-as-draconian-tax-law-kicks-in/
It seems that statement “The Canadians have been really exasperated by the inability of the U.S. to have more concessions” has been made before, going back at least several months. I would be fairly sure that his statement was picked from somewhere else. Who is the source of the original comment on the negotiations between Canada and the U.S?
Also, the wording of the statement, especially “inability” is curious. Why is the U.S. unable? Don’t you think “unwilling” would be a better way to put things?
Is the U.S. unable because of the most favoured nation clause in the Model 1 agreements. That clause means that if another country gets a better deal, then possibly all existing IGAs could be amended to match the improved IGA.
If the U.S. is unable, then its inability has been self imposed. No wonder signing of additional IGAs are progressing so slowly.
Maybe Cuba will sign an IGA with United States. A truly reciprocal one where US would report to Cuba on anyone born in Cuba but living in US (including, of course, naturalized US citizens born in Cuba) and Cuba would report to US on anyone born in US but living in Cuba (including, of course, naturalized Cuban citizens).
Which country do you think would be reporting greater numbers? Which country do you think would scream the loudest?
Inability is just unwillingness to have more concessions. What they do not get and don’t want to is that if they simply told people to go ahead and file FBARS no penalty and just go forward that most people would just do it! It’s the big stick approach which they think is the only way and that they must frighten people into doing it that is not working! That’s what is causing the renunciations because they have set people up in a damned if you do or don’t situation. I also think waiving the signing rights portion with a foreign spouse or child in high tax countries would be far, far more workable. And this is a huge sticking point for them and for us. Foreign spouses should NOT be included in a U.S. law. Period! Yet to them they have a perfect right to keep that signing authority portion of FATCA. They do not see citizenship based taxation as wrong and never will.
In a way FATCA has given all expats a way to see what they really do think of you and what they will or won’t do for or against you. If they really valued expats they would make a workable way to go forward and try to work WITH people instead of holding threats over their heads. Complain and you get more threats. This is just going to cause more and more renunciations, more and more of a wide gap between the U.S. and other countries. They are mad because they cannot make expats see their “sense” They are never going to admit that it doesn’t make any sense what they are doing.
The keep siting UBS this and UBS that without any respect for the fact that the vast majority of expats are NOT those people. If they were acting in good faith by implementing this at HOME first that would be very different. Most of the real tax cheats with “secret” “off shore” accounts are living in the United States not Canada or Europe. Calling someones local checking account “off shoring” when they have ZERO holdings in the U.S. is quite literally insane.
Treasury’s Myths vs FATCA info last week mentioned “illicit activities” as the reason we don’t want them to know about our “foreign” accounts.
Yep, those mortgage payments and debit transactions for groceries are “illicit.” So is that money in retirement accounts. The Swiss are now closing those accounts for people living in Switzerland who were born in US
I am still astounded that they assume if you don’t live there you MUST have been engaging in criminal activities if you never heard of FBAR! They were NOT telling anyone about it in any way shape or form. I wish there were some legal precedent set about this. Where was their responsibility in letting people know and who legal is it for them to impose such penalties on something not even the IRS was aware of. IRS didn’t tell anyone about it and I am going to say their over seas phone line workers were totally unaware or didn’t think it was important to inform anyone. This is a law that was NOT enforced to the point not even the workers at IRS knew it existed.
They are desperate and the evidence is piling up that this was deliberately pulled off a shelf in order to trump up fines and penalties on expat families. That’s all it was done for. UBS was the excuse. It’s so clear when you consider they could so easily go after those living there who actually are “off shoring” while not harming those long term expat families. They had a choice and are not that stupid. It has been done on purpose and when you are doing something wrong to good people and you have the kind of power they have then the only way to get away with it is to demonize those you are harming.
I contacted Bruce Zagaris, one of the lawyers mentioned in the article. Much to my surprise, he responded quickly, although he did not answer all my questions which were rephrased from what I posted above.
Here is part of his response:
“I follow FATCA daily and advise clients, including a couple of governments. In DC I attend a number of meetings with USG officials.
Yes, one of the problems is the MFN clause. Another is the US lacks resources. One way to compensate for lack of resources is a uniform agreement, so that any negotiations are extremely minimal.”
I’m almost certain that one of the governments he advises is Brazil
The MFN clause is the Most Favoured Nation clause. Perhaps that can be added to the Acronyms listing.
If I hear anything more, I’ll post it here.
Thanks for the info Hazy. I suspect the US government shutdown will not be helping anything in this department.
KPMG is advising Canadian FIs to stand pat until an IGA is signed. In other words, they should not register through the IRS FATCA portal.
“Canadian FIs should wait and see
Canadian FIs that are considered to be FFIs should have additional time to finalize registration beyond the April 25, 2014 deadline once the Canada-U.S. IGA comes into effect. Therefore, affected Canadian FIs may want to wait until the Canada-U.S. IGA is released and further guidance is provided before registering their FATCA status.”
One that I haven’t seen before that I have sent to my Canadian government representatives: http://www.ifcreview.com/restricted.aspx?articleId=6827
To: Kevin.Shoom@fin.gc.ca ; Minister James Flaherty
Cc: Michelle.Rempel@parl.gc.ca ; Prime Minister Stephen Harper
This is a scathing report from the IFC: http://www.ifcreview.com/restricted.aspx?articleId=6827
I hope that anyone who leads Canada will take this message seriously – the reasoning behind FATCA, the selling of FATCA to other nations and the very daunting issue of the data security in relaying Canadian citizen or US Person resident in Canada financial information to a foreign entity.
Why would Canada do that?
… and here is USCitizenAbroad new post on this subject. http://renounceuscitizenship.wordpress.com/2013/10/01/trust-is-required-to-lead-and-fatca-undermines-trust/
Tax evasion: sophisticated scam revealed by CBC hidden camera
I wonder if this is along the same lines as all American citizens not living in the US are tax evaders, or if it’s real? The lawyer says that what he told his client was grossly misrepresented. If it’s real, it’s not doing anyone any favours.
Right. Sending my Canadian child to school, and saving for their tuition with an RESP here in Canada where they were born and where we live is apparently an ‘illicit’ activity in a ‘foreign’ account in the view of Robert Stack and the US Treasury and IRS. Saving for the support of a dependent with a disability in Canada, using an RDSP is apparently also illicit, foreign, and punishable by confiscation by the US. That is NOT a MYTH Mr. Stack.
Funding the US debt by taxing children and dependents with disabilities, and our retirement savings is the true crime.
Here is the interview done by The Take Away WWNY/WGBH New York Boston http://www.thetakeaway.org/story/why-americans-abroad-are-giving-us-citizenship/
Extremely well done! Very clear and to the point.
With what is going on in D.C., this seems like a perfect time to gain support for the Anti-FATCA movement. I suspect not too many Americans are feeling overly enthusiastic about their country right now.
Persons who moved from the U.S. may now be seen in a different light. We’re the smart ones.
Is anyone else having a problem listening to the audio of Atticus interview?
I am unable to get any audio on either my tablet or my computer. I was able to listen to the BBC interview with no problem.
I just listened again — Atticus came through loud and clear in her audio and in her actual words! Thanks again, Atticus and Jackie.
I can’t get any audio at all. Either it’s my computer and tablet or my software.
It’s weird I didn’t have this problem with the BBC or other radio interviews.
Does anyone know if I’m doing something wrong?
I’m am the last one to be of any help, but some help might be in this link — http://news.bbc.co.uk/2/hi/help/5286426.stm