All posts by Blaze

IRS Tightens Noose. CRA Kicks Stool.

Here’s a Canadian tax lawyer who gets it.  In Financial Post article U.S. Steps Up Tax Enforcement Beyond It Borders, Vern Krishna says:

As of July 1, the United States will tighten the tax noose around the necks of Canadian citizens living in Canada and anyone else whom it considers to be “U.S. persons” for tax purposes. The Canada Revenue Agency will assist the U.S. by kicking away the stool on which they stand. All of this intrusion into our sovereignty is in the name of curtailing so-called “aggressive tax avoidance.”
 

 
 

IRS Admits It Can't Handle FATCA!

Steven Mopsick predicted it two years ago.  The 30 year IRS year IRS lawyer who now has a private tax law practice said it would “blow a fuse” when all the FATCA data began to arrive at IRS.
Now, the IRS itself is admitting their circuits can’t handle the data. In IRS Budget Crunch Limiting Use of Foreign Government Data:

“One of our biggest challenges lies in having the resources to build and maintain systems that can effectively use all of the incoming data,” Koskinen said today at the Tax Executives Institute conference in Washington. “As with any major new initiative, we expect a learning curve — for the IRS as well as for everyone affected.”

Hmm. So tell me what this information is REALLY going to be used for
Thanks to Hazy for posting this under What’s New.
 
 
 
 
 
Data:
 
 
 
 

Letter from Elizabeth May

I just received this letter via e-mail from Elizabeth May. It includes a link to an article she had published in a BC newspaper. Microsoft Partners in Learning

Dear Ms. Swanson,
Thank you for your message regarding the US Foreign Account Tax Compliancy Act (FATCA) and what it means for Canadians. I share your concerns on this urgent matter, and I will continue to work to ensure that Canadians do not suffer financial penalties as a result of this legislation.
As you are likely aware, on February 5 Finance Minister Jim Flaherty announced that an inter-governmental agreement with US officials to implement FATCA had been reached. Although Minister Flaherty claimed to have negotiated hard-won concessions from the US, the reality is that this agreement remains largely unchanged from when it was first announced.
Under FATCA, Canadian banks will soon be required to search their account records for the personal information of US citizens, their children, and all those who through some accident of family or work history acquired some characteristic of interest to the IRS, and report the findings to the Canada Revenue Agency, who will then provide the information to US officials.
This legislation is slated to come into effect globally on July 1, 2014, and thus it is imperative that Canadians with US citizenship or legal status take steps to educate themselves about what these changes mean for them.
More detailed information about the agreement is available in a recent column I wrote for a BC newspaper:
http://elizabethmaymp.ca/news/publications/island-tides/2014/03/20/whats-up-with-fatca-an-issue-that-should-concern-more-than-those-canadians-with-ties-to-the-us/
It is also important to bear in mind that although it may seem that FATCA is a done deal, it is possible that the agreement would not survive a constitutional challenge.
Peter Hogg, former Dean of Osgoode Hall Law School and one of Canada’s foremost constitutional experts, has rightly pointed out that in addition to being a significant privacy concern, FATCA would likely be a violation of Section 15 of the Canadian Charter of Rights and Freedoms, which forbids discrimination based on “national or ethnic origin.”
I will do everything I can to ensure that Canadians remain up to date on any and all future developments in terms of legal challenges to FATCA. In the meantime, I urge you to write to your Member of Parliament, write letters to the editor of your local newspaper, talk to your friends and neighbours, and continue to stay informed about this alarming change to our country’s financial landscape.
Thank you again for taking the time to write to me, and for your engagement with this critically important issue.
Respectfully,
Elizabeth May, O.C., M.P.
Member of Parliament for Saanich-Gulf Islands
Leader of the Green Party of Canada
 

The link she gave to her article does not take you directly to it, so here is What’s Up With FATCA? An Issue That Should concern more than those Canadians with ties to the U.S.

FATCA "Is Going To Be A Train Wreck"

Ever since we were told by Steven Mopsick and others that the FATCA train has left the train wreckstation, we have been insisting it will derail and become a huge train wreck.
Now, one expert is agreeing with us.  In Get Ready For The Train Wreck, a former IRS Deputy Commissioner and Department of Justice Prosecutor says:

It’s going to be a train wreck.

He also says:
We’re going to see some bad results this summer.
He points out there are about 20 million tax cheats in the U.S. He says small businesses are the biggest violators, pocketing about 52% of profits without reporting them.
He predicts:

Treasury is going to lose money on this legislation.

I don’t feel vindicated. It just makes me angrier that the train is proceeding full steam ahead with no regard for the consequences.

B.C. Freedom of Information and Privacy Association Speaks Out Against FATCA

“We oppose (the FATCA IGA) on a number of grounds, but we will restrict our comments to the large scale infringement of privacy rights.”
 

That is the beginning of a four page Submission by the B.C. Freedom of Information and Privacy Association to Finance Canada.
BCFIPA challenge several aspects of the IGA as well as question the jurisdiction of the federal government to regulate credit unions which fall under provincial jurisdiction.
They also state clearly their agreement with Peter Hogg.
BCFIPA Concludes:

There are considerable difficulties involved in any attempt to implement a FATCA IGA in this country and those will almost certainly result in extensive litigation and damage to people and institutions which are in no way connected to tax evasion in this country or in the United States.
Therefore, we urge you not to proceed with this wholesale infringement of the constitutionally guaranteed privacy rights of Canadians.

Thanks to privacy lawyer Michael Power who e-mailed me BCFIPA Calls For Halt to FATCA with the link to the actual submission.
 
 

Submission to Finance Canada From Allison Christians and Arthur Cockfield

McGilll University Professor Allison Christians and Queen’s University Professor Arthur Cockfield have made a Joint Submission on the FATCA IGA to Finance Canada.
I admit I’ve only read the beginning. My energy is crashing so I can’t read anymore tonight, but I’m posting it here so others can see it.
There is a link there to download the full paper.
In addition, Allison has posted it at her own blog Christians & Cockfield: Submission to Finance Dept on FATCA in Canada
 
 
 

John Richardson and Dr. Stephen Kish Proposal to Revise Canada-US IGA

It is astonishing that a country with a proud history as Canada would yield to these extraterritorial demands. But what is most disappointing of all is the fact that Canada is uniquely positioned to repel this obnoxious law and send a statement to the United States that imperialistic actions against the rest of the world, under threat of economic sanctions, will not be tolerated.

That, my friends, can be found on Page 2 of the 69 page Richardson-Kish Submission to Finance Canada on the FATCA IGA and proposed legislation.
Plus:

It is not too late. On behalf of the citizens of every sovereign nation outside of the United States, I urge you to reject the enabling legislation. Do the right thing.
REJECT THE IMPOSITION OF FOREIGN LAWS ON YOUR OWN COUNTRY.

I’m only at the beginning, but if this in any indication, I think this is a hard-hitting submission.
 

Do You Have Ideas For Legal Opinion?

As you know, with the funds you contributed, Stephen Kish and Lynne Swanson have retained constitutional lawyer Joe Arvay to provide a legal opinion on the proposed legislation for FATCA and the Charter of Rights and Freedoms.
Mr. Arvay has been gathering information from many sources for several months.  We are confident in his abilities to give us a professional legal opinion.
There have been some suggestions made here and at Sandbox that Mr. Arvay may find helpful.  At Brock, George suggested we establish a thread for people to provide their ideas.

If you make your suggestions by March 11, Lynne will coordinate and synthesize them and forward them to Mr. Arvay.

FATCA Threat to Canadian Rights and Sovereignty: Elizabeth May

The Green Party says FATCA Is  A Threat to Canadian Rights and Sovereignty
In a news release today, Elizabeth May said:

“Although it contains certain exemptions, the agreement negotiated by Minister Flaherty fails to address the most significant threats that FATCA poses to Canadian privacy and human rights.”

She also wants more time for people to provide input

“This deadline should be extended to provide greater opportunities for the public to offer comments on the proposal – There is no reason why public input needs to be rushed on this issue.”

The press release also provides information about possible Charter violations, citing the opinion of Peter Hogg.
To my knowledge, she is the first politician or leader of a political party to issue a formal statement since the IGA was announced.