Category Archives: Taxes

FATCA Fact Finding Forum Report – Part II

Part II
We then started with this video:
The emphasis on how bizarrely the indicia rules could be interpreted began to be a framework of the discussion.
We then heard from Professor Allison Christians. She studied tax law in the US and has an LLM from New York City University. Point was made that this university has some sort of monopoly on producing international tax lawyers.
*At first, FATCA seemed like a reasonable proposal to deal with tax evasion as the US, along with other major European countries, were experiencing a disappearing tax base with the upper tier of taxpapers escaping their obligations.
*10 years ago, OECD began to promote state-to-state cooperation, which again, seemed a “reasonable” reaction to this situation
**Govts don’t want to hit the middle class “coming and going;” i.e., taxing them on their income and then taxing them again on what they spend on consumption. VAT-GST-HST, etc. The upper tier evades and the lower tier has nothing to pay.
* Law pulls everything into it’s lane – i.e., not just the top tier/tax evaders but also everything “foreign”
*PFFI has two choices:
1) seek waivers which results in giving whatever info the bank asks with consent to disclose to the IRS OR
2) close the accounts
*Important to note – this is NOT a CLOSED agreement; the IRS/US has carte blanche to ask WHATEVER  they want WHENEVER they want (later)
*A recalcitrant PFFI will have 30% withholding on it’s US source cash flow; interest, dividends and property; property worth $1000 sold for a loss at $800; however, FATCA will withhold 30% of that $800.
*at all levels/pass-through-pmts i.e., not just the PFFI of the US Person but the FFI that sends to the PFFI, etc.  Building in a withholding succession.
*The “get out of jail free card” is the IGA
*packaged as information exchange, the current Treaty already covers this; we have low financial privacy with regard to CRA who also has restrictions with what it can and cannot do with our information; we should have a HIGHER right with respect to a 3rd party
*with US and Mexico already having IGA, 2/3 NAFTA is already signed on and danger of Canada being swept in
*We MUST recognize/emphasize that FATCA is INCONSISTENT with our domestic law
*It violates Canadian Autonomy (as opposed to sovereignty); sovereignty is a problematic, binary concept, law of contestation.   Use AUTONOMY instead
*it violates a USC’s mobility
*Canadian citizens are not given a choice since the FFI’s have already chosen for us
*THIS IS EXTREMELY IMPORTANT-just like in litigation, the goal is not necessarily to win; we must do what we need to do to ‘WIN THE PUBLIC RHETORIC”  i.e., get attention in the PUBLIC COURT
*Revenue Code – can elect to be treated as a US company (or taxpayer); parity
*there is no parity between a dual in Canada and a dual in the US
*Case studies where a statute may look facially neutral but challenged by “intl” law
*?  USC violated via Constitution with restriction on leaving?
*who is already over-reacting to IRC-US conservatives
*4 things we can do
1) FATCA = a US treaty override
     similar to 1986 Branch Profits Tax
“later in time law”  concessions where legislation will trump Treaty
2) doing it now with FATCA statute; PFFI has to waive any rights under ANY Treaty;  ex subsidy claim under WTO or NAFTA or FTAA; not just the double-tax treaty
*an attempt to get USC’s abroad to relocate
*an IGA acknowledges the need to waive rights under all treaties; no competent govt would agree to such; FATCA does override the double-tax treaty
2) Possible violation via NAFTA (but trumped by IGA?)
3)   NB  US has at least 20 FTA’s which amount to defacto subsidies for US institutions
4) International law – customary laws being violated; a sovereign nation has the right to regulate in it’s territory and the power to protect the privacy of it’s own people
*Avoid use of the term citizenship-based taxation; all countries do this with tie-breakers in their treaties; point out US is doing something OTHER than citizenship taxation
*re-think the charade of cooperation; Canada gets nothing, the PFFI gets nothing; pure extraction, no quid pro quo
*under no circumstances should Canada sign an IGA; PFFI challenge any bank signing away their rights who then, sign away yours
*there will be an ongoing cost to saying “NO”
*problem with arguing FATCA  violates NAFTA is treaty override-SAY IT IS and DEMAND the government (Canada) to say IT’S NOT
IT IS a tax treaty override and it IS a privacy override-which are we to give up?
*discussion of 6 indicia and truly bizarre ways in which can be interpreted (too long to go into here but Allison did a superb job of showing these, which will be on the video)

FATCA Fact-Finding Forum Report – Part 1

I’ve just returned from the program. I’m not sure I can really catch all of the most important aspects but the good news is, there were two people recording the proceedings and one plan is to post on YouTube, so you all will be able to hear the presentations as well as capture the spirit and intensity of the meeting. I was quite struck by the difference in how it feels to connect with others about this in the way we are accustomed to; i.e., in the sort of impersonal, anonymous feel to posts on the internet and how much stronger the impact of peoples’ words are, when you are actually experiencing them, face-to-face. Hopefully, this will be the first of many, many more meetings for those of us trying to get FATCA repealed.Please note that I am trying to paraphrase what was said and any mistakes or wrong impressions given are due to my failings. It is impossible to correctly quote everything that was said. I am refraining from mentioning any personal information that was given, though awareness of this during the meeting strongly influenced the impact each speaker had.
Victoria College is a beautiful old building with huge spaces, wooden staircases and a wonderful sense of history. I arrived just a bit after 11 and fortunately, they had not started yet. Things got underway just before 11:30. Mr. Al Gullon (of the PC Party)opened the meeting and introduced the Honorable Sinclair Stevens, who is head of the Progressive Canadian Party. He outlined the history of the Party, which I was completely unfamiliar with and further undermined my perception of Stephen Harper. He then emphasized that the rights and protections of the Canadian Charter  applied to permanent residents of Canada and that individuals in Canada are all equal and under the protection and benefits of that Charter regardless of race, nationality, ethnic origin, etc. He state unequivocably that Canada MUST obey the Charter (which would never allow for FATCA’s discriminatory parameters). He is a very well-spoken and articulate man and I was very impressed with his strong words and message about the importance of the Charter.
The next speaker was Jon Richardson, who was the organizer for this meeting. He is a very strong personality and obviously is passionate and antagonized by all that FATs.CA represents. He reminded that the Charter came to be with great difficulty, especially those articles in section one. I am not familiar with this so cannot clarify. He gave a very good description of the main facets of FATCA; what constitutes “US Persons,” etc. He mentioned that US citizenship taxation should really be called US PERSON taxation and that only the US and Eritrea practiced non-resident taxation. He stated that all US Persons abroad are treated the same as US residents with one exception; that is that foreign = penalty. He spoke of the complexity of information returns, especially 3520 and the penalties that could ensue, not just for the filer but against the institutions not submitting 3520A. He delighted with the statement that the IRS equals the “Tax & Penalty Club.”
He then showed a video from YouTube, which has been posted on IBS but I am unsure where. Obama is speaking in 2009 about the efforts to stop offshore tax evasion; Jon emphasized that there is no other way to view this clip than to realize ALL overseas accounts are being targeted; i.e., not just Homelanders with overseas accounts. He feels that most in Congress had no idea what was in the HIRE Act and did not read the legislation.
Other interesting phrases he used:
*the US is applying it’s laws extra-territorially and basically telling CDN FFI’s that they must use the US’s definition of “US Person” and they must implement this at their own expense.
*the US has it’s “War on Terror,” it’s “War on Drugs,” and now, it’s “War on Tax Evaders.”
*the FATCA form 8938 is designed to register assets and almost certainly could result in confiscation
*FATCA affects far more than the 1 million USPs in Canada; it also affects their non-US spouses and families and takes money away from Canada. He asked what it is called to take money not earned and no one voiced his idea – that that was THEFT.
We then heard from Abby Deshman of CCLA. She described having been contacted  about “what was CCLA doing about FATCA?” I presume this is our dear Blaze! She went to UofT in law and did an LLM at New York City University. She mentioned that in the history of CCLA, beginning in 1964, this was the first time a tax issue had come up. She stated that FATCA most definitely raised not only Privacy issues but also Equality Issues as covered by CCLA. Her area is more related to Privacy, so she focussed on these. Main points:
*(banks) are allowed to collect personal information that is necessary for their purposes but not beyond that
*information-sharing across borders results in the loss of privay protections; example, the Mehar Arar situation where CDN officials most definitely abused Mr. Arar’s rights resulting in extradition and torture
*Bill C-30 and why the CDN government would consider this legislation; since the US has it (i.e., the capacity to collect and amass large amounts of personal information about anyone), we also should ask for it
*There is no good reason to collect the level of this information
*CCLA has many cases where legal battles are based upon the waiver of privacy rights vs consent   (This point is CRUCIAL and more on it a bit later).
*Other examples Biometrics, Beyond the Border, Security Perimeter, all of this decided by executives i.e., OUTSIDE of PARLIAMENT
*CCLA litigated in the 1990’s cases of drug tests in the workplace; US insists upon this there so now, CDN drivers who travel in the US must also take these tests. A driver does not really give his “consent” but is forced to waive privacy rights in order to take the job
*for jobs involving international contracts, often military procurements for helicopters, tanks, etc a specialized security search must be done based solely upon WHERE YOU WERE BORN, regardless of other mitigating factors; this must be done each and every time a new contract is signed
*the Downgrading of our protections occurs when the US does not have the same, esp for non-Americans
*she read the CCLA letter submitted to Finance that has been posted here previously a
At this point, people from the audience began to comment and/or ask questions. Mr Gullon told a story throwing rocks, which I cannot recreate and Prof Allison Christians came forward with throw the strongest one which is to Reject the IGA under consideration, let the PFFI go ahead and do the withholding and then time for the lawsuits.  Others said we must DEMAND that the IGA be rejected. A question was asked concerning “How can they find me,?” which lead to an outline of KYC and AML procedures.
*PIPEDA is our protection from banks asking for more information than they need; reasonable to ask name, SIN, acct #, amts in account, etc. They may NOT share this information with anyone other than CRA.
*FATCA involves indicia that leads to either giving consent (which is not truly voluntary) and if not, closing the account
*Jon Richardson mentioned a book where the phenomena of major changes have effects which are not recognized for as long as 200 years later and that FATCA was this level of history-changing in our time
*getting around privacy laws by forcing “consent” demonstrates that the one forcing recognizes what they are asking for is a violation   Thus, this is unequal to consent.
*Allison Christians asked if there was any case law concerning constitutional or charter right to having a bank account; no one thought that technically, one had a right to a banking account but that it would be viewed as a privilege, even though it obviously is a necessity.
*Abby Deshman spoke of something that occurs in law/legislation which is called “Charter-Proofing,” which if I understood correctly amounts to legislators changing the law in order to get around the Charter.
*issues arising from indicia being shared CANNOT BE FIXED; think the US No-Fly-List. Black Box.
*Jon Richardson brought up the relinquishers during the 1970’s and how SCOTUS ruled that no one could be stripped of their citizenship without their consent and that in 1986, the opportunity was given to either accept or reject loss of USC due to expatriating act (CDN citizenship).
We then had our first break. There were roughly 30-35 people present.

CCLA Registers FATCA Privacy Concerns

Finally, Canadian Civil Liberties Association has sent an Open Letter To Ministry of Finance
I’m happy CCLA has registered their concerns.   I would have preferred for the concerns to have been addressed more strongly and more thoroughly, but at least CCLA has made a public statement on this.
When I say I would have preferred the concerns to be more thoroughly addressed, I am referring to the fact the letter addresses primarily privacy concerns, but equality, human rights and Charter issues seem less strongly expressed.
I like statements at the end of the letter:  In relation to the Finance Minister’s own earlier comments, CCLA says:

This should be the Canadian government’s starting and end point.  Privacy-invasive collection and disclosure of personal information should only be done when necessary.  Under the Canadian government’s own assessment, that threshold has not been met in this case.

They also encourage the government to do exactly what it should be doing:

The CCLA therefore urges the Canadian government to stand up for its citizens and residents and resist invasive, unnecessary foreign-imposed violations of individual privacy.

CCLA has also posted an E-Bulletin on CCLA Website.



The Economic Impact of FATCA and FBAR Terrorization

Why aren’t our governments more concerned about what the US is doing? Ignoring, for the moment, the legality, or lack thereof, why don’t the governments of our countries recognize that the terrorization of their citizens by the US has a far greater effect than just the immediate financial impact on an individual? Continue reading The Economic Impact of FATCA and FBAR Terrorization

Americans in Switzerland Letter to Congress

Americans living in Switzerland seem to have been hit the hardest of any with reports of banks there closing accounts of US-born Swiss residents and even refusing to renew mortgages because of IRS efforts.
An Americans in Switzerland Letter has been sent to Congress.   Will it make a difference?  It doesn’t seem much will budge Congress or IRS, especially when you consider Senate Majority Whip Dick Durbin said in July:

“You either get a Swiss bank account to conceal what you’re doing, or you believe the Swiss franc is stronger than the American dollar.”

Then, of course, Obama’s former press secretary Robert Gibbs said;

“I pick a bank because there’s an ATM near my home. Romney had a bank account in Switzerland.”

Well, guess what?  People living in Switzerland get bank accounts with ATMs near their homes too.  It’s not convenient to get on a plane, fly across the ocean, use an ATM in Washington (which IRS considers the official residence of Americans living outside US), take out US dollars, fly home to Switzerland and convert the money into Swiss francs to spend where you live.
And, Senator Durbin, there is a third reason for Swiss bank accounts.  People living in Switzerland need them for normal everyday banking–like deposits of employment income, payment of bills and mortgages and saving for children’s education and retirement.
Those are also the reasons people living in Brazil, China, India, Mexico, Canada and elsewhere have bank accounts in the countries where they live (and where many of us are citizens).
Go after the real tax cheats.  Certainly find out why Romney and others living in US have Swiss or Cayman Island accounts. Make them file FBARs.   Leave the rest of us alone to pursue our normal, honest, law-abiding tax-paying lives in other countries.
Democratic Swissophobia is hurting “US persons” throughout the world.  The witch hunt is causing Amerophobia around the globe.  .

Will the Harper Government sell us out?

There have been very few comments from Jim Flaherty or the Canadian Government, in general, for many months regarding FATCA or the situation of so called USPs in Canada.
Mr Flaherty’s comments last Fall were quite strong. As you all likely know, he made it clear that FBAR penalties would not be collected in Canada and that Canada was not a tax haven. He seemed to be strongly backing USPs in Canada. His comments were very reassuring.
There have been some hints that an IGA ( Intergovernmental Agreement) over FATCA is being negotiated, but nothing concrete has been said, to my knowledge.
Often, the Canadian government gives in to the elephant  next door. Just look at what has been done to satisfy the U. S.over border security issues. However, there have been other issues such as softwood lumber where Canada has stood its ground.
My question is- will the Harper government  give in to the Americans or will it vigorously protect the rights of its citizens?

IRS Targets Yanks In Canada: The Sun

According to The Sun, IRS Targets Yanks In Canada.
I think this relates to the regs which were just released.  Are these the ones Flaherty said he was “happy” with?  I haven’t seen the regs yet, but I wanted to post this.
Despite the Sun headline, it is my understanding this does not just apply to Canada, but is, of course, worldwide.
Before anyone panics, remember, CRA will not collect any penalties for IRS for failure to file a report with IRS. CRA will not collect any tax liability on any Canadian citizen even if that person was also a US citizen at the same time.
Also remember what Steven Mopsick said.  IRS is unlikely to pursue those of us who have been citizens elsewhere for years or decades.  Michael J Miller  said those of us who expatriated before 2004 were not required to advise DOS.
Calgary411 has posted a Moody’s Announcement at Brock. There is discussion going on there.  Calgary’s conclusion is “Good luck roping more in.
For those of us who have been around, this is really nothing new. More scare tactics.  It’s going to do exactly that for those who are first learning of it.
This is going to cause a stressful long weekend for a lot of people.  If they find their way here, we need to reassure them. Don’t Wake The Sleeping Bear.

Wish list for next tax treaty

Countries on an irregular basis establish or amend  tax treaties with other countries. The Canada US treaty is now in its fifth protocol.
Although I’ll mention a few items for the Canada US treaty, the discussion is open worldwide to treaties between the US and the country of your residence.
For the moment, I’ll assume the US refuses to budge on citizenship based taxation.
For the Canada US treaty, I’d like to see an exemption for Registered Disability Savings Plans ( RDSP), Registered Educational Savings Plans (RESP) and Tax Free Savings Plans (TFSA).
Of course, the IRS would likely develop long and complicated forms for reporting each of these items, but at least there would be a way to exempt them from the US taxman.


What is a US person and who must file income taxes and financial account reports?

What accounts have to be reported on for FBAR?
“If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR).”,,id=148849,00.html Continue reading FAQ