# Effects of FATCA on average Canadians



## Guest

I went to the bank today. I spoke with an officer of the bank as my husband opened a new account. He was completely familiar with FATCA. All of this came in a conversational way; I believe the questions are obvious:

Yes, the bank will be issuing W8BEN's and W9's to all customers; new and existing.

The bank will begin to notify customers soon; once it is clear that FATCA has been accepted by the CDN govt.

No, no reasonable chance of FATCA being repealed.

It is true, the bank cannot refuse to sign on as it is too heavily involved in US instruments (bonds, investments, trading, etc.).

Yes, the *costs for implementing FATCA *will be paid for by *CUSTOMERS*. And it didn't need saying that the majority of the customers are *CANADIAN*.  :mad2:


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## quincy

nobledreamer said:


> I went to the bank today. I spoke with an officer of the bank as my husband opened a new account. He was completely familiar with FATCA. All of this came in a conversational way; I believe the questions are obvious:
> 
> Yes, the bank will be issuing W8BEN's and W9's to all customers; new and existing.
> 
> The bank will begin to notify customers soon; once it is clear that FATCA has been accepted by the CDN govt.
> 
> No, no reasonable chance of FATCA being repealed.
> 
> It is true, the bank cannot refuse to sign on as it is too heavily involved in US instruments (bonds, investments, trading, etc.).
> 
> Yes, the *costs for implementing FATCA *will be paid for by *CUSTOMERS*. And it didn't need saying that the majority of the customers are *CANADIAN*.  :mad2:


Thanks for that info. Was this Bank of Nova Scotia? Did they say they would ask for birth certificates or passports to prove where the clients are born?


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## pwdunn

This is depressing. Did you mention that they are not allowed to discriminate against their customers based on citizenship, nationality, race or place of birth?


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## Deckard1138

I have recently been to three separate TD branches in Ottawa and, just for fun, asked each of their receptionist/information thingie people, as well as a few frontline tellers, about the bank's FATCA policies. Deer in the headlights - every single one. I then took some mildly perverse delight in telling them that they WILL hear more about it and that they heard it here it first. They all jotted-down the word FATCA and said they were going to ask their supervisors about it.

Seems to me that our banks are trying to keep a lid on this as long as they can, to the extent that they aren't even telling their own employees about it except, apparently, on some Manhattan Project, compartmentalized, need-to-know basis.

Can't wait to see what happens when the cards and letters finally start going out to every retail account holder in the land.


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## Ladyhawk

nobledreamer said:


> I went to the bank today. I spoke with an officer of the bank as my husband opened a new account. He was completely familiar with FATCA. All of this came in a conversational way; I believe the questions are obvious:
> 
> Yes, the bank will be issuing W8BEN's and W9's to all customers; new and existing.
> 
> The bank will begin to notify customers soon; once it is clear that FATCA has been accepted by the CDN govt.
> 
> No, no reasonable chance of FATCA being repealed.
> 
> It is true, the bank cannot refuse to sign on as it is too heavily involved in US instruments (bonds, investments, trading, etc.).
> 
> Yes, the *costs for implementing FATCA *will be paid for by *CUSTOMERS*. And it didn't need saying that the majority of the customers are *CANADIAN*.  :mad2:



OK, THAT is worth going to the press about, immediately (if not sooner!) 
With banks claiming that compliance with FATCA will cost hundreds of millions of dollars, can you imagine how much the customers will have to pay to give them that money? Here's a few issues:
1) If they try to make only USC's pay, that is discrimination on the basis of citizenship.
2) If they try to make everyone pay, that will enrage Canadians who are non-US citizens; this could get really ugly if non-US Canadians insist that only the US Cdns should be forced to pay for the cost of this legislation.
3) What will the Cdn government do about this? Side with the banks against all Canadians and claim it can't do anything about FATCA? ? Or side with the non-US Canadians against the smaller number of totally captive duals (captive because no Cdn banking institution is prepared to flout FATCA)?
4) How will Canadians react to having the entire population required to declare their citizenship, which I assume is the point of these W8BENs and W9s?

This should be brought to public attention as soon as possible, so the public can be made to understand that *this is an all-Canadian issue *and more people will start pressing the government to grow a spine and a couple other relevant bits of anatomy.
Honestly, this is going to tell me what I've always wanted to know about Canadians and their relationship to their government - just how much will you let your government shove you around? Yes, it's the banks who are choosing to comply with FATCA and carry out all this questioning and fee-charging, but it's the government that will have to decide whether FATCA is a challenge to Canadian sovereignty and an assault on Canadian consumers, or whether they'll go along with the IRS and tell the population that we have to comply.


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## Guest

I agree with Deckard 1138 on this one...I too have been asking question after question and arranged a meeting with my RBC financial advisor....giving her a weeks notice that I wanted some information on FATCA and more importantly what the banks are going to do when it arrives.

When I showed up (Dec 2) she pushed a paper in front of me with an air of confidence. To my surprise it was an outdated writeup on the OVDI program that ended in September 11. 

To say the least I was not impressed. When I got home I emailed the VP of RBC NS and received a call that nite from someone 'in the know'.

At least they knew the outline of FATCA and told me they have people on this to try and modify it or at least delay it...hoping for a diplomatic solution to the whole thing...


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## KalC

Mach7 said:


> I agree with Deckard 1138 on this one...I too have been asking question after question and arranged a meeting with my RBC financial advisor....giving her a weeks notice that I wanted some information on FATCA and more importantly what the banks are going to do when it arrives.
> 
> When I showed up (Dec 2) she pushed a paper in front of me with an air of confidence. To my surprise it was an outdated writeup on the OVDI program that ended in September 11.
> 
> To say the least I was not impressed. When I got home I emailed the VP of RBC NS and received a call that nite from someone 'in the know'.
> 
> At least they knew the outline of FATCA and told me they have people on this to try and modify it or at least delay it...hoping for a diplomatic solution to the whole thing...


I opened an account at RBC 2 weeks ago. Their man, a fairly senior investment advisor, claimed they had no idea what they planned. He asked for my driver's licence for ID and didn't ask my citizenship. Scotia McLeod has a check box for citizenship Canadian? American? I would simply have checked Canadian only.


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## Guest

quincy said:


> Thanks for that info. Was this Bank of Nova Scotia? Did they say they would ask for birth certificates or passports to prove where the clients are born?


Yes, Bank of Nova Scotia. He didn't mention it and I didn't ask. I was interjecting all this as he and my husband did the other business. I didn't think of everything as I had not expected any of the staff there to know what I was talking about. 

I did ask though, if I provided a CLN as proof of renouncement, would it be enough to "let me off the hook" and he said "Yes." I was impressed that he even knew what it was.


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## Guest

Ladyhawk said:


> OK, THAT is worth going to the press about, immediately (if not sooner!)
> With banks claiming that compliance with FATCA will cost hundreds of millions of dollars, can you imagine how much the customers will have to pay to give them that money? Here's a few issues:
> 1) If they try to make only USC's pay, that is discrimination on the basis of citizenship.
> 2) If they try to make everyone pay, that will enrage Canadians who are non-US citizens; this could get really ugly if non-US Canadians insist that only the US Cdns should be forced to pay for the cost of this legislation.
> 3) What will the Cdn government do about this? Side with the banks against all Canadians and claim it can't do anything about FATCA? ? Or side with the non-US Canadians against the smaller number of totally captive duals (captive because no Cdn banking institution is prepared to flout FATCA)?
> 4) How will Canadians react to having the entire population required to declare their citizenship, which I assume is the point of these W8BENs and W9s?
> 
> This should be brought to public attention as soon as possible, so the public can be made to understand that *this is an all-Canadian issue *and more people will start pressing the government to grow a spine and a couple other relevant bits of anatomy.
> Honestly, this is going to tell me what I've always wanted to know about Canadians and their relationship to their government - just how much will you let your government shove you around? Yes, it's the banks who are choosing to comply with FATCA and carry out all this questioning and fee-charging, but it's the government that will have to decide whether FATCA is a challenge to Canadian sovereignty and an assault on Canadian consumers, or whether they'll go along with the IRS and tell the population that we have to comply.


I automatically assumed 2) and 4), though I had not even come to the idea that it could get ugly....

My guess is the government already knows they're going to comply. Somehow I cannot picture Stevie saying something as gutsy as Pierre's "Just watch me." Not that I agreed with his position on the FLQ but I admired his attitude. 

The fellow I spoke with would not be a senior officer of the whole bank, so it may/may not make a difference as being an "official" position. If not, I'm not sure if a reporter/paper would run with it. Though I agree, it is HUGE. That's why I nearly died when I got home and realized all hell may be about to break loose, up here.


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## Guest

PetrosResearch said:


> This is depressing. Did you mention that they are not allowed to discriminate against their customers based on citizenship, nationality, race or place of birth?


I agree. Totally depressing.

No, I just wasn't quick enough to think of it....It was sort of rude for me to keep interjecting it into the other conversation and if I don't go with a plan prepared, I'm not clear-headed enough to think of all that should be there. I just go with whatever comes out.

I just wanted to get it posted before I forgot any of it as I figure everyone would be interested in this..........


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## Bevdeforges

Let me just interject a note here for your consideration. There are two sides to FATCA - the bank reporting side (which is governed by international agreements) and the individual side (which is where those who are US citizens are subject to US tax law).

For more information about the banks' side of things, take a look at the OECD website - they have a large "issue" section on fighting tax evasion, especially the section on "Exchange of Information". Fighting tax evasion This gives you a bit of background on the position of the banks in Canada and elsewhere. (And on some of the privacy policies that are supposed to be invoked when exchanging this kind of information.)

On the personal side of things, each US taxpayer has to decide for themselves how likely it is that the IRS is going to pursue them as an individual should their name turn up on a foreign bank's list of customers. 

I've reported my foreign (to the US) accounts for years on the FBAR forms and the interest income from those accounts on my income tax forms. It has never generated any taxes due (and with interest rates as feeble as they are these days, are unlikely to do so in the foreseeable future). I also report my foreign (to France) accounts to the French fisc every year, to whom I pay a small (a couple euros) tax on interest from an account in the UK. 

As far as all those other forms are concerned, I don't believe they apply to me at the moment - or if they do, I don't believe the IRS has access to any sources of information that would lead them to draw the conclusion that they do. (And no, I'm not going to explain that remark.) 

You plays the game and you takes your chances. But as far as "fighting" the FATCA rules and forms is concerned, you'll have more of a chance of changing the personal reporting rules and forms than you will butting your heads against the international agreements that affect the banks. The banks are covering their own butts (and those of your national government, which is a party to the OECD agreements and treaties). 
Cheers,
Bev


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## eucitizen

*not all canadian, but worldwide!*



Ladyhawk said:


> This should be brought to public attention as soon as possible, so the public can be made to understand that *this is an all-Canadian issue `*


*


First of all, you are completely right it is the BANKS that want to comply because they cannot survive (yet) without the US market, US funding, etc.

The BANKS don't give a hoot about local laws they are more interested in complying with the IRS so that they don't have any problems with their US investments and financing.

Second, I just wish people would stop calling this a "CANADIAN" issue. It is a WORLD WIDE ISSUE.

Banks in EVERY country of the world will be doing the same thing. In many countries the proportion of US persons is much smaller than Canada and banks will still be doing it!

I wish we could get a worldwide forum or group of citizens going together to help everyone, everywhere in the world.*


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## eucitizen

*fatca is not OECD*



Bevdeforges said:


> For more information about the banks' side of things, take a look at the OECD website - they have a large "issue" section on fighting tax evasion, especially the section on "Exchange of Information". Fighting tax evasion ...
> 
> The banks are covering their own butts (and those of your national government, which is a party to the OECD agreements and treaties).
> Cheers,
> Bev


Not sure why you keep citing the OECD rules.

Yes tax evasion and sharing of information are promoted by the OECD and that is what the 2007 tax treaties achieved in large part.

But as I said elsewhere the OECD recommendation is for sharing info ON REQUEST, which means, if the US has suspicions on a person they can ask, ad-hoc, for information on that person to other countries on a case by case basis.

FATCA was not created by the OECD but by the USA, in a knee jerk reaction after the swiss bank scandal of 2008. It imposes, continual and extensive reporting on every single account balance, debit, credit, sale and purchase of any kind of security, on all US person customers everywhere in the world, sending all the data to the IRS with no reciprocity.

If you live in the USA, the IRS will know LESS about you than if you live abroad.

US banks have to send a one-line annual report to the IRS with interest paid; under FATCA foreign banks must send your entire account statement with all your debits and credits to the IRS.

The IRS will know where you go for entertainment, what time you had your hairdresser appointment, where you shop, whether you drink alcohol, what you read, what clubs you belong to, what charities you support, how much you spend on vacation, where you go on vacation, basically, every single thing about you and your family.

What if you took a trip to Egypt on vacation, and some of your other data correlates in their database to make you look suspicious? You could end up on their no-fly list, or worse on their presidential assassination black list and be executed with no due process. I know I'm exaggerating here but it is the truth.

This is not at all what the OECD had in mind.


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## eucitizen

*paranoid*



PetrosResearch said:


> This is depressing. Did you mention that they are not allowed to discriminate against their customers based on citizenship, nationality, race or place of birth?


Yes Petros this confirms what I was saying, unfortunately I don't think I am paranoid. All my contacts at banks said exactly the same thing.

Also see: Beyond The Border: Harper, Obama Announce Deal To Bolster Security, Reduce Trade Barriers

Yes, *Canada will protect her citizens in general but no, Canada will not protect each and every citizen. * Canada has already made huge concessions to her own privacy rights in order to keep the US border open and fluid, in the interest of everyone's economic well being.

The border agreements with the USA have already resulted in Canadian citizens being deported when stopped in the USA when otherwise they would not have been, and Canadian citizens being put on no-fly lists, etc...


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## Bevdeforges

> under FATCA foreign banks must send your entire account statement with all your debits and credits to the IRS.
> 
> The IRS will know where you go for entertainment, what time you had your hairdresser appointment, where you shop, whether you drink alcohol, what you read, what clubs you belong to, what charities you support, how much you spend on vacation, where you go on vacation, basically, every single thing about you and your family.


I don't see where you're getting this from. The reporting requirements for financial institutions on the IRS website say that foreign financial institutions will have to identify US individuals who hold certain types of accounts - and then withhold 30% "of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income." That's not turning over all ins and outs of the account, nor turning over credit card records, as you seem to think will be required.

My point in raising the OECD issue is that, as far as the exchange of information among banks and tax authorities, you're not likely to be able to have much influence. FATCA is, as you say, a US law and its biggest encumbrance/inconvenience is for US citizens living abroad who are subject to US taxation. ACA and AARO and probably some other expat groups have been working this issue for decades now, with little or no result. (Heck, most US Congresscritters have no idea that they have "constituents" who live outside the US.) 

But your best course of action is to address the law itself and attempt to get that changed (which can't be done by non-citizens or ex-citizens so in some sense, encouraging folks to renounce their US citizenship can be seen as playing into the hands of those who stand to benefit by this law).

The idea of an international organization is a good one - though it has to be an international organization packed with US citizens (and even better, voters). Until that starts to exert its influence, there's always various levels of civil disobedience - from "minimal compliance" to out and out non-compliance. When and if such a case is actually prosecuted, then the "legality" of the law can be forced into the discussion. But so far, I haven't heard of any cases of non-compliance that have come to that point.
Cheers,
Bev


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## eucitizen

*you are right*



Bevdeforges said:


> I don't see where you're getting this from. The reporting requirements for financial institutions on the IRS website say that foreign financial institutions will have to identify US individuals who hold certain types of accounts - and then withhold 30% "of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate U.S. source income."
> Bev



In the initial provisions for FATCA the IRS did request entire details of every account, every debit, every credit.

As a compromise, after discussions with financial institutions, in a later version of the rules (April 2011), they have toned it down to include only account balances and interest paid etc.

Mea culpa sorry about that


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## Guest

Ok...now that we have some banter on FATCA.

Can anyone tell me, when implemented, will FATCA start with a 6 year audit of everyones acount...or will they begin looking at accounts going forward from 2013(unless there is reasonable cause to back of course).


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## pwdunn

Mach7 said:


> Ok...now that we have some banter on FATCA.
> 
> Can anyone tell me, when implemented, will FATCA start with a 6 year audit of everyones acount...or will they begin looking at accounts going forward from 2013(unless there is reasonable cause to back of course).


The FATCA legislation will require reporting for the year itself (not six years back), names, account numbers, balances of US persons who are also natural persons (i.e., humans not corporations) who have balances exceeding $50,000.

Once the IRS has this information, they can do what ever they want, meaning going after you for 6 years worth of FBAR.


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## Bevdeforges

Mach7 said:


> Ok...now that we have some banter on FATCA.
> 
> Can anyone tell me, when implemented, will FATCA start with a 6 year audit of everyones acount...or will they begin looking at accounts going forward from 2013(unless there is reasonable cause to back of course).


The IRS has never been in a position to audit "everyone's" accounts. Audit resources are limited so the information received from the banks (or anywhere else) will be used to determine which returns show evidence of being "incomplete" or "inconsistent" (in which case they will contact the taxpayer to request further information).

This is more or less what they do with the various 1099's and W-2's the IRS receives from banks, investment houses and employers in the US - they run the information against what you've reported on your income tax returns to make sure the returns are complete and consistent. 

If everything lines up, chances are you won't hear anything further from the IRS.
Cheers,
Bev


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## pwdunn

Bevdeforges said:


> The IRS has never been in a position to audit "everyone's" accounts. Audit resources are limited so the information received from the banks (or anywhere else) will be used to determine which returns show evidence of being "incomplete" or "inconsistent" (in which case they will contact the taxpayer to request further information).
> 
> This is more or less what they do with the various 1099's and W-2's the IRS receives from banks, investment houses and employers in the US - they run the information against what you've reported on your income tax returns to make sure the returns are complete and consistent.
> 
> If everything lines up, chances are you won't hear anything further from the IRS.
> Cheers,
> Bev


The request for further documentation is considered an audit in Canada. For example, see regarding business audits: How we conduct audits


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## Guest

For those of us who are rushing against the clock...

that is to attain Canadian citizenship...get the Canadian Passport...then renounce the US citizenship...

FATCA, (IMHO), could stall or stop this process. Would it not be in the United States best interest to have you 'hang around' until they wade through your paperwork...god knows thay have made us create a lot of it....even if you don't have anything to hide.

I would think a small snag like the question of an account balance being a couple of hundred dollars out would be enough to keep you cycled in the 'system' thereby forcing your nose to the US citizenship gridstone until such time they let you go (audit over). and you are finally 'compliant'.

I know....I know...FATCA is about tax compliance...however I don't think anyone really believes that do they???

Anyway, I have reported everything I know about, all my tax is paid, but anyone...and I mean ANYONE can put holes in any persons paperwork if they want to ...especially when you have FBAR, 8938, and now you have to rely on a complinance officer to interpret and report back to the IRS???

This is just a math tabulation error waiting to happen....so no...I think FATCA is the grease that will feed the machine.


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## eucitizen

*lets not get too paraonoid*



Mach7 said:


> For those of us who are rushing against the clock...
> 
> that is to attain Canadian citizenship...get the Canadian Passport...then renounce the US citizenship...
> 
> FATCA, (IMHO), could stall or stop this process. Would it not be in the United States best interest to have you 'hang around' until they wade through your paperwork...god knows thay have made us create a lot of it....even if you don't have anything to hide.
> 
> I would think a small snag like the question of an account balance being a couple of hundred dollars out would be enough to keep you cycled in the 'system' thereby forcing your nose to the US citizenship gridstone until such time they let you go (audit over). and you are finally 'compliant'.
> 
> I know....I know...FATCA is about tax compliance...however I don't think anyone really believes that do they???
> 
> Anyway, I have reported everything I know about, all my tax is paid, but anyone...and I mean ANYONE can put holes in any persons paperwork if they want to ...especially when you have FBAR, 8938, and now you have to rely on a complinance officer to interpret and report back to the IRS???
> 
> This is just a math tabulation error waiting to happen....so no...I think FATCA is the grease that will feed the machine.


(1) First of all, the renunciation process is a civil process and completely independant from the fiscal process: see my post under "renunciation myths" thread on this.

There is no "audit" before you leave. You just leave, and hope they do not do an audit on you. (Even if you have done nothing wrong, a questionnaire from the IRS wll always cost you a lot in legal fees etc...)

Even if your taxes are not in order, you can still renounce, no problem.

They will check up your file afterwards.

The FOLLOWING year, you must file form 8854 and if your taxes are not in order then, you will have a problem with the IRS but not with the state department. 

So if you renounce in January 2012, you have until april 2013 to get your taxes in order and file form 8854. Of course that would mean renouncing as a "non-filer" which I would not recommend.

Much better to file past taxes first, wait a few months for them to record it (or use Efile then recording is immediate) (this can be done by yourself in 1 weekend if your situation is easy, may take 3 weeks or more + legal help if situation complex!) 

I have no knowledge of anyone being refused a CLN because the taxes are not in order, I believe that would be a very big affront to international law (although the US does not care too much about that I agree).​
(2) I don't think they will be sabotaging peoples paperwork; file using a certified CPA if you are worried, that way you have a witness... or Efile then you have a clear receipt...

(3) In any case, they do not have to keep you a US citizen, to persecute you for US tax. They can still claim US penalties and tax from you if you are no longer American. You can try to refuse to pay them (if you have no assets in the US) and hope that Canada will not cooperate with the IRS on collection, as they have said. Then I guess you just don't ever go back to the states and make sure you never get an inheritance from a US person or anything.

(4) They also have no incentive to "slow things down" since, if you live out of the country, there is no statute of limitations so they can come after you for the rest of your life whenever they want.


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