Monthly Archives: March 2014

Canada’s FATCA Law “Kind of a Mess”

“What’s proposed is kind of a mess”

That understatement is according to Calgary tax lawyer Roy Berg in an article in Lexpert, the Business Magazine for Lawyers.

Mr. Berg also says:

“Fortunately, the Parliamentary Joint Committee on Taxation is putting together a paper to fix it.”

I’m not sure it’s fixable. The total disregard for our submissions tells me how seriously either Finance Canada or the Cons take take our very real concern.

The article also says:

But even if it’s fixed, a constitutional challenge may be looming. Peter Hogg, a leading constitutional law scholar and a scholar-in-residence at Blake, Cassels & Graydon LLP, has warned that the implementing legislation may violate the Charter of Rights and Freedoms.

Synopsis: Solving U.S. Citizenship Problem with John Richardson (London, Ontario)

Finally, I’m posting a synopsis of Solving the Problem of US Citizenship information session presented by John Richardson of citizenshipsolutions.ca that was held in London, Ontario on February 8, 2014.

I apologize for the delay. Other FATCA projects have consumed my life.

You can read the synopsis in the link, but here are a few highlights:

CITIZENSHIP:

John first gave an overview of US citizenship laws, tax laws, renunciation and relinquishment and many changes that have taken place over decades.

People have many differing circumstances and each one is unique. Because of the complexities, John stressed:

 “The bottom line is you have to check the law at the time the act took place.”

 For people born in Canada to one or more parent born in the U.S., John suggested they should not automatically assume they are US citizens or US persons. There are many different rules around that. In addition John questions whether the US can apply their laws on people born outside of U.S.  So, he recommended people explore that before making an assumption they must be a US citizen.

He said:

“I would never, never, never under any circumstances advise someone to simply swallow hook line and sinker, well my father was American, therefore I am American for a number of reasons.:

A Supreme Court decision from the 1960s dealt with the forcible destruction of US citizenship. John confirmed many in the room felt they were being forced to relinquish US citizenship.

John believes:

The forcible destruction of US citizenship is going to become THE argument on this issue.

 

John explained renunciation is one form of relinquishment, along with other expatriating acts like becoming a citizen of another country with the intent of relinquishing US citizenship, working for a foreign government and other actions.

For numerous reasons, John recommended people who are renouncing or relinquishing by other means should get a Certificate of Loss of Nationality (CLN) through US Department of State by renouncing or reporting relinquishing at a US Consulate.

John reported there are various reasons to

“Deal with this sooner, rather than later.”

For many different reasons, John thinks:

“U.S. citizenship is probably the most dangerous, toxic citizenship in the world today.”

Lynne advised people who became naturalized Canadian citizens may be able to get information from their Canadian citizenship file by applying through Access to Information at (http://www.cic.gc.ca/english/department/atip/form-imm5563.asp)

PERSONAL EFFECTS:

John recognized the toll these issues are taking on people.  He stressed:

“Your life, your health, your family is so, so much important than any of this stuff. If you focus on this in a way that jeopardizes the things that make life worthwhile, you’re going to let these people win–absolutely destroy your life.”

TAXES:

John said there are two types of US persons:

1. Those Who Are Compliant

2.  Those Who Are Not Compliant

No matter what, you’re going to have a problem.  “When we talk about U.S. taxes, we’re talking about much more than taxes. It’s a whole information reporting regime, which is a huge problem.”

He covered many of the issues relating to taxation, but said the most important message was:

“One thing you should absolutely not do is enter the Offshore Voluntary Disclosure Program” (OVDP).

CANADA REVENUE AGENCY, CANADIAN COURTS:

John explained that under the Canada-US Tax Treaty, CRA will not collect penalties for the IRS for Canadian citizens or residents. CRA also will not collect taxes for the IRS on a US citizen who also was a Canadian citizen at the time the tax liability arose.

Plus, under the Revenue Rule, Canadian courts will not issue a judgement for the IRS.

FATCA:

John thinks FATCA is a “gross abuse of power” by the United States.

“FATCA allows them to redefine any time they want what the information is and any person who is affected.”

 Lynne noted the proposed legislation to allow FATCA to be implemented will prevail over other federal laws, including banking, privacy and human rights laws.  Some individuals have contacted a constitutional lawyer about this and more information will be posted at Maple Sandbox (maplesandbox.ca and Isaac Brock Society (isaacbrocksociety.ca)

UPDATE: Money was raised and constitutional lawyer Joseph Arvay was retained on March 10 by Dr. Stephen Kish and Lynne Swanson to provide a legal opinion on a possible challenge to the FATCA IGA enabling legislation under the constitution and Charter of Rights and Freedoms.

 

BREAKING NEWS: Cons Hiding FATCA Law in Budget Act!!!!

The Cons continue their sneaky games. They have hidden the law to enable FATCA and the IGA in the 375 page omnibus Budget Implementation Act 2014..

The enabling law begins on page 72 (Clause 99). The IGA begins on page 313.

A source tells me it is possible the FATCA legislation could pass by late May or June.

So, now we know what Finance Canada did with all of our submissions.  Nothing.

UPDATE Saturday, March 29, 2014: Stephen Kish and Lynne Swanson remain in contact with Joe Arvay, including this weekend.   He continues working on our case and has assured us that he wants to get this right for us.

One more lawyer told us this week that Joe is the best Charter lawyer in the country. We respect that view.

We understand that people are anxious, especially with the omnibus move by the government yesterday.However, we encourage you to be patient.

Mr. Arvay hopes to have the full legal opinion in April, but there is a possibility it could be later than that. As we mentioned in our fundraising through C3f, we will provide you with what information we can while protecting our case to the best of our abilities.

May 2 2014 ACA-Sponsored Toronto Forum/Debate on Citizenship-Based Taxation vs. Residence-Based Taxation

The American Citizens Abroad Global Foundation has just launched its educational program with a forum/debate on the merits of Citizenship-based taxation vs. Residence-based taxation.

This is a full day event, sponsored and organized by the ACA, that will be held at the University of Toronto on May 2.

To my knowledge, this is the first public debate — worldwide — devoted to this important topic.

The speakers will include academic tax specialists Bernard Schneider and Michael Kirsh, who have different approaches to the taxation of US citizens abroad, with the program moderated by Toronto lawyer John Richardson.

Dr. Stephen Kish, who co-authored with Mr. Richardson a submission to the U.S. Senate Finance Committee (see below), will be the academic host.

Bernard Schneider:

The End of Taxation Without End: A New Tax Regime for U.S. Expatriates, Virginia Tax Review, Vol. 32, No. 1, 2012, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2186076

Michael Kirsch:

Revisiting the Tax Treatment of Citizens Abroad: Reconciling Principle and Practice, October 23, 2013, Florida Tax Review, (Forthcoming), Notre Dame Legal Studies Paper No. 1457, http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2346458

Richardson/Kish:

John Richardson, Willard Yates, Stephen Kish, Request for Tax Rules Changes for U.S. Citizens Overseas: Submission to the Senate Finance Committee, January 2014, http://citizenshipsolutions.ca/wp-content/uploads/2014/01/RichardsonYatesKishJan232014SFCSubmission.pdf

For registration and information see: http://www.acaglobalfoundation.org/events?eventId=865796&EventViewMode=EventDetails