# FATCA grief from Canadian financial institution (RBC)



## Nononymous

A long-dormant conversation resumed today when I received an e-mail from the family broker at RBC Dominion Securities:



> Sorry to be a bee in your bonnet on this, but RBC will need to flag this account by the end of March as a US account. To avoid account restrictions, we will need a SSN.


I have neither confirmed nor denied US citizenship, but due to information likely passed on by my parents, they know about my dual status.

My reply:



> I’m a little confused here.
> 
> If RRSPs are not reported under FATCA, is this just for the bank’s internal compliance policies? As I understand FATCA, RBC should not be reporting anything whatsoever to the US about anyone's RRSPs, according to the terms of the IGA. (Or does RBC report everything to CRA and then rely on CRA to exclude non-reportable accounts in whatever they send on to the US?) I’m concerned that financial institutions will just dump all this information rather than figure out what’s required, whether because it’s easier and cheaper or to minimize risk - rather like the European banks that are simply refusing any US-citizen customers.
> 
> Seems to me I’ve got a few options:
> 
> 1. Try to find my old SSN from the early 90s [I know it, I'm just playing for time] and trust RBC not to violate my privacy by sharing data that they are not required to share. For this I’d require an assurance that zero personal information will ever leave Canada for any type of FATCA-exempt account (RRSP, TFSA, the works).
> 
> 2. Not find the old SSN and deal with the consequences - which may include being reported to the US as “recalcitrant”. What are the account restrictions?
> 
> 3. Move the accounts to a VanCity-type institution [local credit union] that is exempt from FATCA for any account holders who are Canadian residents.
> 
> 4. Provide RBC with proof of non-US-personhood - what would that entail? [Deceit and forgery, in my case!]
> 
> If you could provide answers for 1, 2 and 4 I’ll decide how to proceed.


I'll post further updates.

I have nothing against the broker, perfectly decent guy, but I'm going to make life as difficult as possible for them because the bank has no business collecting citizenship information for non-reportable accounts, in my view.


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## Nononymous

Background, since I was too lazy to look up an older thread:

I have RRSP accounts only with RBC Dominion Securities. I have been asked to confirm US citizenship and provide an SSN, despite registered accounts being exempt from FATCA reporting.


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## Nononymous

A fairly noncommittal reply from the broker, and my response:



> Thanks. I will mull over the options. What I understand is as follows:
> 
> 1. If I provide an SSN, nothing should be reported for RRSP accounts. Is that RBC not passing the information to CRA, or CRA not passing the information to the US? It wasn’t totally clear to me from your answer. Either way, it requires a measure of trust that the information will remain private. [No change here. I just want it in writing that nothing will ever be sent to the US for a registered account.]
> 
> 2. A hold on trading isn’t too painful at the present time. Being reported to the US as a “recalcitrant account-holder” is potentially more painful. Can you assure me that it’s only the former, not also the latter? [If I ignore this, the account just sits. But since I do nothing with it anyway, no big deal.]
> 
> 4. I sign a W-8 and send you proof of Canadian citizenship and we’re good? I have no US income or assets, obviously, it’s simply for reporting purposes. [He said I can just tell him I'm not a US citizen. This requires me to perjure myself as far as the US government is concerned, but if the W-8 never leaves the bank, that might not be too huge an issue. If I go this route I would apply for and send them a copy of the new citizenship certificate, which does not show place of birth, rather than send them a copy of my passport, which does.]


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## BBCWatcher

Nononymous said:


> He said I can just tell him I'm not a US citizen.


He's...brave and/or foolish, take your pick. "Aiding and abetting" are illegal, as it happens.

Maybe we'll see RBC in the newspapers soon?


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## Nononymous

BBCWatcher said:


> He's...brave and/or foolish, take your pick. "Aiding and abetting" are illegal, as it happens.
> 
> Maybe we'll see RBC in the newspapers soon?


Either he genuinely thinks it isn't a big deal for accounts that are non-reportable anyway - what exactly is being aided and abetted in this case? - or the bank figures that I assume the responsibility once I perjure myself by signing the W-8. I can't see any point to the W-8 other than ass-covering; there's no reason for sending it to the IRS because I have no US income or assets. 

However, I suspect that this scheme wouldn't make it past the compliance department.


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## BBCWatcher

Nononymous said:


> However, I suspect that this scheme wouldn't make it past the compliance department.


Oh, I don't know. If it were like HSBC's compliance department, maybe.


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## Nononymous

BBCWatcher said:


> Oh, I don't know. If it were like HSBC's compliance department, maybe.


There's a branch down the street, perhaps I can move my accounts.


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## Bevdeforges

As you say, it's most likely an ass-covering thing for the bank. But, with a US birthplace, you may be kind of trapped.

If you're going to lie, I would think you might prefer to simply say you have no SSN. (IIRC there is/was that option on the W-9 form.) 

But it does certainly appear that the banks are planning on doing a simple data dump to fulfill their obligation. OTOH, yet another option would be to file an FBAR (if your accounts add up to $10,000 or more) and leave it at that. It's entirely conceivable that you would have bank accounts that don't yield enough income for you to have to file income tax returns.

But you have to do what you feel is right. Or what helps you sleep at night. Keep us posted.
Cheers,
Bev


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## Nononymous

Bevdeforges said:


> As you say, it's most likely an ass-covering thing for the bank. But, with a US birthplace, you may be kind of trapped.


The Canadian citizenship certificate, as opposed to passport, shows no place of birth. So I can easily use that with the W-8 to "prove" non-US status to the bank.

I actually think all of the options would be okay if information never leaves the bank, which it should not if I only have registered accounts. I'm being a pain and pushing them because I want to know exactly what their policies are. I think of this as an information-gathering exercise from which others might benefit.

In theory this should not be an issue - the accounts are not FATCA-reportable - so I'm not pleased with the bank. But they may also be protecting themselves against the possible future date when, assuming nature takes its course, a substantial and reportable sum suddenly arrives.


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## Bevdeforges

You "inspired" me to check the FATCA notice on my bank's website. Kind of interesting.

AFAICT, the bank I use should be exempt from FATCA reporting altogether, but what they say on their site is:
1. that they will report information to the Banque de France starting this year (2015) and that the Banque de France will then pass along the information required by the agreement to the IRS.
2. that they are "identifying" new accounts opened by US persons starting in July, 2014. (I note that the agreement between France and the US on this specifically excludes existing accounts under certain balances as of July 1st 2014.)

Whew, I opened a new savings account with them in January, 2014. And still no comment from them, nor request for a W-9 or W-8. (I report my accounts anyhow, since I have to report my US accounts to the French government as part of our tax forms.)
Cheers,
Bev


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## Nononymous

It's pretty annoying when banks exceed the reporting requirements under the IGA, whether out of caution or laziness. 

I know of one example here, a large credit union in Vancouver, which makes a point of advertizing the fact that it opposed FATCA and is a "local client base" institution with zero reporting requirements for Canadian residents of any citizenship.


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## Bevdeforges

The credit unions are in a somewhat unique situation, I think. (We don't have credit unions here in France, but what I remember of them from the US, I believe they don't report in to the same banking authorities as the banks do.) And, of course, we have no guarantees as to what the Banque de France will or won't "share" with their "buddies" at the IRS. 

It will be interesting to see what your banker has to say.
Cheers,
Bev


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## maz57

A tip of the hat to you Nononymous for stirring things up at RBC. TD had their FATCA propaganda campaign a while back in which they claimed TD was going to make the FATCA experience "as comfortable as possible" for their customers (while conveniently not mentioning they'd be simultaneously ratting them out to the IRS). What a pathetic joke. We, their customers, have absolutely no obligation to make things comfortable for these banks.

They need to know that this FATCA insanity pisses their customers off and will ultimately cost them business. These banks have no business asking ANY questions about US citizenship or place of birth; this is spelled out quite clearly in the IGA. It is outrageous that RBC is hassling you about an account that isn't even FATCA reportable. They need to decide quickly whether they are a Canadian bank or a US bank.

Personally, I haven't yet had any B.S. from my bank, but if it happens I plan to fight it every inch of the way, meanwhile screaming bloody murder to the media, my MP, and anyone else who will listen. This whole stinking pile of dung was intentionally buried in last year's omnibus budget bill for the express purpose of ambushing innocent Canadians. The banks whined to the government about how FATCA was putting them between a rock and a hard spot; the IGA was the result. Now, as they start to lose their longtime good customers, let them go and whine some more.

I donate regularly to the lawsuit to strike down the IGA. It has a very good chance of succeeding. Keep us posted here and I'll do the same if I hear anything on the FATCA front from my bank.


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## Nononymous

I suppose I could send copies of the e-mails to my MP, but she's a conservative so it would likely go straight to the shredder.

My current (irresponsible) preference is to have the account flagged while I wait for a citizenship certificate (I need one anyway to replace the outdated "registration of birth abroad" card) then I'll just sign the W-8 and see what happens. Since the broker "knows" I'm dual that will put them in a bit of a bind. At the very least it will create more work for them.

My little act of protest is to be as big a pain as possible because they really aren't looking out for their customers on this one. If he has to fire me, so be it.

TD advertizes cross-border banking as a selling point so it's no surprise that they are leading the charge with FATCA compliance.


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## maz57

Nononymous said:


> I'll just sign the W-8 and see what happens.


Personally, I would refuse to fill out a W-8 if they shoved one in front of me. Why should I sign one? The W-8 is a form from a foreign government tax authority with which I have no relationship and which has no jurisdiction in Canada. What's next? A form from Japan or France?

If my bank wants to invent their own form (or the CRA comes up with one) so I can certify I am not a "US taxable person" then I might sign that. I intend to throw wrenches in the gears at every opportunity.


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## Nononymous

Good point. I'll send them a copy of my certificate of citizenship (from which place of birth is absent) and state that I have no reason to sign forms from a government whose authority I don't recognize on Canadian soil, particularly for accounts that are not reportable. (Added bonus, less likely I'll be jailed for perjury when my plane makes a forced landing in the US.)

If that means they lock the accounts, so be it - no more trading commissions for them. If that means they threaten to identify me to the US as recalcitrant - for non-reportable accounts! - I "go public" with a complaint and take my business elsewhere.

The reason I liked the W-8 approach was that it would force them to deal with the fact that I was rather openly lying. Maybe they'd have to waste all kinds of time and money talking to their own legal department.


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## Nononymous

24 hours and no response. In the meantime (with thanks to Maz for some ideas) here is the first draft of the rant/reply if I don't get a satisfactory answer. It was a quiet afternoon, I enjoyed writing this.

As I understand the IGA, registered accounts such as RRSPs are not reportable to the US under FATCA. I cannot imagine why RBC thinks it necessary to ask the holders of registered accounts any questions about their citizenship.

My cooperation will only extend as far as confirming that I am a Canadian citizen and a Canadian resident. As soon as it arrives in the mail, I will provide a copy of my citizenship certificate as proof. 

I am willing to state that I am not an American citizen. I will not sign any US government forms to this effect (i.e. W-8) because I do not recognize their authority in Canada. For that matter, I will also refuse to sign forms provided to RBC by the French, German, Irish, Estonian, Japanese or Uruguayan governments certifying that I am not a citizen of France, Germany, Ireland, Estonia, Japan or Uruguay. 

If this is not sufficient for the RBC compliance department, then I’m afraid I’ll have to take my business elsewhere. I would prefer to work with a financial institution that values and protects the rights of Canadians.​


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## BBCWatcher

Nononymous said:


> My cooperation will only extend as far as confirming that I am a Canadian citizen and a Canadian resident.


This isn't actually true as written. You're also willing (I presume) to provide change of address notices, update beneficiaries (if applicable), and assist with many other forms of routine account maintenance in your mutual interest. I would strike the whole beginning of that sentence and say "I confirm that I am...."



> I am willing to state that I am not an American citizen.


How about replacing "an American citizen" with "a U.S. national"? Very technically, assuming you're not American Samoan or a Swains Islander, that would be truthful (albeit evasive, but that's what you're trying to do).

Look, your bank (your car mechanic, your favorite restaurant, your barber) isn't required to do business with an a**hole. I'd keep your reply entirely businesslike. The whole last paragraph is ridiculous. "I hope this reply satisfies your compliance department" is fine. Leave it at that. "RBC closes account of American a**hole" doesn't actually help anyone. "RBC closes account of Canadian who tried to cooperate" might.

This is broadly related to the argument I make from time to time that if you want to win (or at least work toward winning) a political argument then start with being _reasonable_. You certainly can be here. You received a request for information, so reply very matter-of-factly with a businesslike tone. RBC doesn't actually care about your politics, and why should they (most reasonable people would feel)? So don't come right out of the gate with a political diatribe or anything that seems like it. Write them a business reply.


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## Nononymous

Those are reasonable suggestions. Thank you. I do want to keep the random list of countries though, I think that's a nice touch.

If this does not satisfy the compliance department, they can close or freeze my account and I'll send the entire correspondence off into the big wide world.

PS The "US national" idea is very slippery. Nice.


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## maz57

To the best of my knowledge a person does not have to be a Canadian citizen to open a bank account at any bank in Canada. Any old citizenship will do as long as its not US.

I fully expect that Canadian banks one by one will refuse to open accounts for US citizens. Like the Europeans, they are concluding that it just isn't worth the hassle and risk for their bank. They are however, stuck with ferreting out the US citizens in their existing clientele, and that's a big problem for them; they tend to look just like everyone else. Now if they only had to look for Eritreans......nah, that would never happen. Eritrea doesn't care if its expats have foreign accounts; all they care about is collecting some tax.

Just for the heck of it I hit on the online account opening form for one of my banks. Sure enough... Are you a US citizen? And... "We are sorry but we can not open an account if you are a US citizen. So far they haven't contacted me.


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## Nononymous

maz57 said:


> Just for the heck of it I hit on the online account opening form for one of my banks. Sure enough... Are you a US citizen? And... "We are sorry but we can not open an account if you are a US citizen. So far they haven't contacted me.


They're already turning away US citizens! Which bank is this?


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## maz57

Canadian Direct Financial. I haven't got around to checking out any of the others, but I bet its not the only one that won't take a US citizen as a new customer. To them it would be like offering banking services to a known criminal. Why would they want to go there?


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## BBCWatcher

Nononymous said:


> PS The "US national" idea is very slippery. Nice.


....And it won't work, now that I look more carefully. All U.S. citizens are U.S. nationals (8 U.S. Code § 1401), but not all U.S. nationals (American Samoa, Swains Island) are U.S. citizens.

Not slippery enough, sorry.


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## maz57

Curiously, US nationals enjoy most of the same perks that US citizens enjoy (US passport, guaranteed entry, reside and/or work in the US anytime, etc.) but don't have to pay US tax on worldwide income unless they actually live in the US. Go figure.


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## BBCWatcher

But must they file tax returns with the American Samoa Tax Office? Wikipedia suggests not, but Wikipedia's assertion isn't cited properly.

It may be moot in a couple years, though. There's a fascinating lawsuit working its way through U.S. federal court, Tuaua v. United States. The plaintiffs assert that the 14th Amendment to the U.S. Constitution demands that individuals born in American Samoa (and Swains Island) must also be full U.S. citizens, from birth. I'm skimming through the legal briefs now, and though I'm not a lawyer I think they've got a damn good argument which boils down to: "The words are clear." American Samoa and Swains Island are part of the United States, and the Citizenship Clause says "United States." Elsewhere, right in the 14th Amendment itself, the drafters used different language ("the States") when they wanted to mean something else less than "the United States." There's longstanding legal precedent, both before and after the 14th Amendment, that "the United States" includes its territories and the District of Columbia. You can read their latest reply brief here.


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## maz57

Forgive them; they know not what they are asking for!


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## Nononymous

maz57 said:


> Canadian Direct Financial. I haven't got around to checking out any of the others, but I bet its not the only one that won't take a US citizen as a new customer. To them it would be like offering banking services to a known criminal. Why would they want to go there?


I looked, indeed you're right. 

It's only a simple yes/no on the application form. I expect there's no follow-up, they've put it there for ass-covering reasons, so one may simply lie and continue. But still.


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## Snooz13

RBC seems to be on a track of its own — maybe it wants to look squeaky clean to the IRS. I opened a TFSA in January 2012 — 2 years before the IGA was finalized — and on page 1 of the application:— "Are you a US Citizen"? Of course the choices were "yes" or 'no'.


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## maz57

If they are going to ask questions like that they are going to get a lot of "inaccurate" information. You can't blame the banks. The real blame lies with the Canadian government that signed that IGA. The real effect is that now one has to lie to get a bank account in Canada. Let the fun begin.


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## Snooz13

The funny part is it was an account manager at a RBC branch that was filling out the application and he ticked "no" without even asking.


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## maz57

Well that's good. They don't have to wonder if you are a US person or not; you are permanently on record as definitely NOT a US person. You didn't even have to lie!


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## Nononymous

After a quiet week I had another reply from the broker. I know a little bit more about how RBC Dominion Securities is handling this. I will paraphrase his response.

1. RBC reports US citizen information to CRA (presumably account types, numbers and balances, account-holder name, address and SSN). CRA then presumably does not report anything to the US for FATCA-exempt registered accounts. I don't know if RBC is required to do this under the IGA, or if it just ships everyone's data because they are too lazy/cautious to screen by account type, and would rather let CRA do the work. 

(Added on edit - one very good reason to NOT to confirm my US citizenship and provide an SSN is that even if I'm protected from having my RRSPs with RBC Dominion Securities reported under FATCA, the regular banking side of RBC could cross-reference the data and begin reporting my regular accounts. Not sure what the threshold is but last year the checking account did spike over $100k during a mortgage refinance.)

2. RBC requires US citizens to sign a W9, but with a "specific notation that the form goes to RBC, and not directly to the IRS" - I take this to mean the bank wants it on file for ass-covering purposes.

3. Refusing to cooperate is safer than I thought: "Your account becomes restricted when we have outstanding documentation. No reporting occurs outside the firm. A trading hold is imposed, so that will impact performance over time." So no risk of being reported to the IRS as "recalcitrant".

Still considering my reply, need a cup of coffee first. But probably this:

It's not clear to me whether RBC is required by the IGA to transmit citizenship information to CRA for all holders of FATCA-exempt registered accounts, or whether it is the bank's own policy decision. In any case, I disagree with this approach.

I will confirm that I am a Canadian citizen and a resident of Canada. As soon as it arrives, I will provide a copy of my citizenship certificate as proof. 

I am willing to state that I am not a US citizen, but I will not sign any US government forms (W8) to this effect, because I do not recognize their authority on Canadian soil. For that matter, I will also refuse to sign forms provided to RBC by the French, German, Irish, Estonian, Japanese or Uruguayan governments certifying that I am not a citizen of France, Germany, Ireland, Estonia, Japan or Uruguay. 

I trust that this reply will satisfy your compliance department.​
Stay tuned.


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## maz57

It seems as though FATCA has driven RBC foaming-at-the-mouth mad. You could point out to your broker that you do not have a SSN and therefore can't be a US citizen. Even if RBC and CRA send off your info to the IRS it will be meaningless to them without that number. You could also point out to him that the IRS doesn't have a Dept. of Foreign Bank Compliance that is going to station an IRS agent in every non-US bank in the world to make they are following all the rules. 

Here's the thing: Canadian bank employees are just not qualified to determine if a person is a US citizen or not. The rules are complicated and basically they are going to have to take the customer's word for it. Even the worst case scenario, a US birthplace, does not guarantee that a person is a US citizen.

I sort of feel sorry for the poor guy; he is caught in the middle of a totally stupid situation.


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## Nononymous

I do feel sorry for the guy. I'm making his life difficult. 

I think you can fill out a W9 and identify yourself as a US citizen without having an SSN. (A dumb self-destructive thing to do, but bureaucratically possible.)

Here is my reply, for posterity's sake. I expect he'll just freeze the account and that'll be the end of it.

Thanks for the clarification, particularly with respect to point #2.

It's not clear to me whether RBC is required by the IGA to transmit citizenship information to CRA for holders of FATCA-exempt registered accounts, or whether it is the bank's own internal policy. Either way, I disagree with this approach.

I will confirm that I am a Canadian citizen and resident. As soon as it arrives, I will provide a copy of my citizenship certificate as proof. 

I am willing to state that I am not a US citizen, but I will not sign any US government documents to this effect, as I do not recognize their authority in Canada. Similarly, I would also refuse to sign forms provided to RBC by the French, German, Irish, Estonian, Japanese or Uruguayan governments certifying that I am not a citizen of France, Germany, Ireland, Estonia, Japan or Uruguay - where would it end?

I trust that this reply will satisfy your compliance department.​
At some point soon I'll post a summary of this to the Isaac Brock site, as they are keeping track of Canadian bank (mis)behaviour.


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## maz57

Good for you for throwing a wrench into the gears. Considering how many people around the world absolutely hate this FATCA crap and how many are actively figuring out ways to stall, circumvent, confuse, and derail it as we speak, it is doomed to fail.

Successful enforcement of laws depend on the consent of the majority of the governed and in the case of FATCA there is no consent. Everybody hates it. If each of us does our own little part, together we can stick this pig.


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## Nononymous

maz57 said:


> Successful enforcement of laws depend on the consent of the majority of the governed and in the case of FATCA there is no consent. Everybody hates it. If each of us does our own little part, together we can stick this pig.


It would be enough for me to throw my liberal principles out the window and vote Republican, except that I don't trust them to follow through on their promise to abolish FATCA.


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## diharv

Nononymous said:


> It would be enough for me to throw my liberal principles out the window and vote Republican, except that I don't trust them to follow through on their promise to abolish FATCA.


If I was dual (not a US citizen anymore) I would vote Republican in th US and anything but Harper up here in Canada . The IGA has lost the Cons my vote here in Canada forever.


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## Nononymous

Late-breaking news, a story about Canadian Direct Financial just turned up in the Globe & Mail:

Alberta online bank first in Canada to shun U.S. clients amid tax rules - The Globe and Mail

It would have been nice if the reporter had given a bit more emphasis early-on to dual citizenship issues, but still, nice to see.


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## BBCWatcher

FATCA passed with many Republican Party votes. For the major vote on November 5, 2009, in the Senate, 71 senators voted for passage including 14 Republicans. Do the simple math and you see that the bill couldn't have been passed without Republican Party support -- and they provided much more support than was required. There were enough Democrats voting against the bill that a filibuster would have been successful, and goodness knows the Republicans in the Senate did not show any hesitation to filibuster something they didn't want.

You're both quite naive, I'm afraid. Of course the Republican Party would like to have it both ways, now.

Contrast bipartisan support for FATCA with the Patient Protection and Affordable Care Act ("Obamacare"). Not a single Republican voted for the PPACA. So if you believe that Americans ought not have access to decent, quality, affordable healthcare at lower costs (including government costs) -- at least better than what they had -- there's your party line issue.


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## diharv

I'm not naive , I just don't care about the detailed minutia behind all the petty partisan bickering south of the line. If it affects us up here, then I am concerned. However I do believe I am not wrong in that the Cons up here snuck the IGA in hidden in a much larger piece of legislation. That in addition to a couple other issues changed how I feel about them and how I will vote the next election. I suppose one could feel quite the opposite and admire how they pulled a fast one on us.I can't feel that way however.


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## Nononymous

I'm not naive on that one either. Of course nothing would change under the Republicans. It was more of a rhetorical point about how low I'd be willing to sink in order to make this go away.


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## Bevdeforges

Just a couple of remarks/questions....

First of all, there are LOADS of US citizens out here in the wide world without US SSNs. I suspect that's why it states in the instructions for the W9 what to do if you are a US citizen but don't have an SSN. Usually an "accidental" American - born overseas and not reported to the consulate at the time. But also I think it was the 1970s or 80s before they started issuing SSNs to kids at birth in the US. Before that, you applied for your first SSN when you got your first job.

But agreed, someone could easily submit a W-9 indicating that they have no SSN and I'm not sure much would happen.

Secondly, do you have any idea how much information your bank currently turns over to the CRA? I only ask because here in France, the banks report all sorts of information about bank accounts to the Banque de France already, including specific transaction information. (That's why I get phone calls from my bank "counsellor" when s/he notices "odd" transactions in or out of my account.) At least here, all that FATCA does is add the SSN to an American's information - and I suppose it's up to the Banque de France to decide how much information to share with the IRS and how to strip it off their master records. (Though I do get a chuckle out of thinking that the Banque de France could theoretically just provide a full "data dump" of all their banking information, allowing the IRS to try and pick out what they want...)

To be honest, they aren't looking for accounts in the $100,000 range. They're looking for those in the multi-million ranges, cause as the bank robber used to say, "that's where the money is" at least for the IRS.
Cheers,
Bev


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## maz57

Most of the idiots in Congress, regardless of political affiliation, had no clue they were even voting for FATCA. That's because it was tucked into the back end of a bill intended to assist veterans to find post military service employment, something everybody could agree on. If FATCA had been introduced as a stand-alone bill and been properly debated out in the open, chances are it would never have been passed. So while it is true that FATCA got votes from both sides, it was the brain child of a small group of Democrats who figured out a stealthy way to pull a fast one on their colleagues. That's why it was known as the "worst bill no one has ever heard of".

Similarly, in Canada, the implementing legislation for the IGA was buried in the back of the omnibus budget bill so as to minimize debate and public scrutiny. Because the Conservatives have a majority it was a foregone conclusion that it was going to pass, but the way they choked off any meaningful debate was downright undemocratic. Harper was keen to curry favor with Obama so as to get his pet project, Keystone XL, approved. Harper therefore obligingly bought the whole stinking FATCA pile without a whimper. Now, as of today, we in Canada certainly have our stinking pile of dung but Obama (as expected) vetoed Keystone. That's how it goes when dealing with the US government.

Very few of the current crop of politicians in either country have any understanding of the fundamental disaster they have created with the combination of CBT, FATCA, and the IGAs. In a few years the full extent of the catastrophe will be revealed but these politicians will have by then retired to their villas and someone else will be dealing with the mess. Do I sound just a little cynical?


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## BBCWatcher

You would come across to most Americans as a little nutty. 

Start with first principles. Most Americans, it's safe to say, think everybody ought to pay the taxes they owe. Most do.

I've asked before if you (or anybody else) has a better idea than FATCA on how to accomplish its core objectives, one of which is tax compliance. Here's your chance, again. Don't like FATCA? OK, how about if Canada and the U.S. just share financial data more freely and more broadly, without requiring individuals to file reports? Would you prefer that approach?


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## ForeignBody

BBCWatcher said:


> You would come across to most Americans as a little nutty.
> 
> Start with first principles. Most Americans, it's safe to say, think everybody ought to pay the taxes they owe. Most do.
> 
> I've asked before if you (or anybody else) has a better idea than FATCA on how to accomplish its core objectives, one of which is tax compliance. Here's your chance, again. Don't like FATCA? OK, how about if Canada and the U.S. just share financial data more freely and more broadly, without requiring individuals to file reports? Would you prefer that approach?


Thank you for continually bringing a degree of sanity to these discussions.


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## Nononymous

BBCWatcher said:


> I've asked before if you (or anybody else) has a better idea than FATCA on how to accomplish its core objectives, one of which is tax compliance. Here's your chance, again. Don't like FATCA? OK, how about if Canada and the U.S. just share financial data more freely and more broadly, without requiring individuals to file reports? Would you prefer that approach?


For the umpteenth time, the issue isn't FATCA per se, but rather CBT and the combination of the two. 

To take a recent example on this forum, in what possible universe does it make sense for a person born in Ireland, who spends his working life in the UK, to report his financial information to the US government, and under certain circumstances pay tax to the US? Remind me again how exactly bank reporting in this case helps combat money laundering and terrorism?

I'm all in favour of something FATCA-like to report overseas accounts to the country of residence; this is something entirely different.


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## maz57

BBCWatcher said:


> You would come across to most Americans as a little nutty.
> 
> Start with first principles. Most Americans, it's safe to say, think everybody ought to pay the taxes they owe. Most do.
> 
> I've asked before if you (or anybody else) has a better idea than FATCA on how to accomplish its core objectives, one of which is tax compliance. Here's your chance, again. Don't like FATCA? OK, how about if Canada and the U.S. just share financial data more freely and more broadly, without requiring individuals to file reports? Would you prefer that approach?


Here's my idea (but you won't like it). How about the US comes to its senses and switches to RBT like the rest of the civilized world? When told about US CBT, I can assure you most people in the rest of the world think America itself is way more than just a little nutty with it's CBT. (Even The Economist magazine described America's CBT as "loopy".) Other credible media have described it far more harshly.

Most people outside of the US are at first incredulous, and then shake their head muttering it makes absolutely no sense. When you have a law that is largely ignored and unenforced don't you think it is time to maybe wonder if there isn't a problem with the law itself? What benefit is it to the US to saddle its expats with all the complex and punitive (read expensive) reporting only to result in no tax owing? What benefit accrues to the US by severely restricting the retirement options of its expats? The media these days is awash with articles describing America's CBT, FATCA, and the harm being inflicted around the world. Are you saying all these journalists (and the people who comment) are nutty? 

The second idea is simple enough; use the occasion of switching to RBT to reform the entire tax code. Most Americans would agree to that reform and it would be the perfect opportunity to eliminate all those loopholes that the wealthy just love to legally dodge what they rightly owe. You might actually like that one.


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## jbr439

BBCWatcher said:


> ...
> 
> Start with first principles. Most Americans, it's safe to say, think everybody ought to pay the taxes they owe. Most do.
> 
> I've asked before if you (or anybody else) has a better idea than FATCA on how to accomplish its core objectives, one of which is tax compliance. Here's your chance, again. Don't like FATCA? OK, how about if Canada and the U.S. just share financial data more freely and more broadly, without requiring individuals to file reports? Would you prefer that approach?


I personally believe that something like the CRS is reasonable *in principle*, and will inevitably become almost global in nature (US excepted). My main issue is with FATCA and the fact that the US does not play by the same rules it expects everyone else to play by. And by that I mean that the various IGAs do not require true reciprocal reporting by US institutions. 

As an example, see Table Two (page 15) of this paper by 2 Canadian tax law professors concerning the Canadian IGA: Submission to Finance Department on Implementation of FATCA in Canada by Allison Christians, Arthur J. Cockfield :: SSRN .

The table clearly shows that the US demands *much* more from IGA partners than it is itself willing to provide. Couple this with the fact that FATCA was for all intents and purposes forced upon IGA partners using the threat of 30% withholding, and you have a recipe for significant dissatisfaction.

So, here's my idea: the US implement true reciprocity with IGA partners, and the US sign on with the OECD's CRS. By not doing either one, the US signals that it intends to continue having Delaware, Wyoming, Nevada, Florida, and Texas reap the benefits of financial opaqueness, all the while insisting under threat of economic sanction that other countries expend significant resources to satisfy FATCA requirements.


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## Nononymous

Bevdeforges said:


> Secondly, do you have any idea how much information your bank currently turns over to the CRA?


That's not really the issue. My Canadian bank can give CRA every piece of data it has on me. Pas de problem. I just don't want that information crossing the border to a country in which I am not a resident.


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## BBCWatcher

Nononymous said:


> I just don't want that information crossing the border to a country in which I am not a resident.


I can understand _your_ desires. Set aside taxes for a moment, though. What if you committed a heinous crime with a financial dimension?

Zero data sharing obviously isn't the right answer. Every reasonable person can imagine circumstances in which governments should, must share financial data.

As for CBT v. RBT, the current trend around the world is for "R" to get increasingly "stickier." Or, more simply, for some notable RBT countries to get more CBT-like. A lot of you seem to be operating under the misassumption these are two clearly separated categories, black and white. Not actually.


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## maz57

Long before FATCA, the US and Canada had an agreement to share data. The rules were simple enough: you tell us what you info you want, what person. why, and we will send you what we have if we determine your request is reasonable. (Believe it or not this went both ways.)

Worked just fine for years.


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## maz57

BBCWatcher said:


> As for CBT v. RBT, the current trend around the world is for "R" to get increasingly "stickier." Or, more simply, for some notable RBT countries to get more CBT-like. A lot of you seem to be operating under the misassumption these are two clearly separated categories, black and white. Not actually.


The Philipines and Mexico got rid of their CBT relatively recently. (Too lazy to look it up, but say in the last 25 years.) The reason? It was unenforceable. The Philipines (being a former US protectorate) modeled their tax code after the US but gave up CBT because it just didn't work.

Its not working for the US either, but instead of fixing it, they doubled down and came up with FATCA to force everyone else to help them. Trying to link taxation with citizenship is a ridiculous concept. The US will eventually get rid of it too but not before they make the maximun possible mess of things. The CRS is something many countries want but it can't work with a major country like the US out of wack on their CBT tangent.


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## Nononymous

So, 48+ hours and there's been no response from the broker. Either the message is moving its way up the food chain or he's just binned it and my account will be suspended next month.

Meanwhile I've discovered that various local credit unions are getting up to speed on this and now claim "local client base" status, so are fully FATCA-free for Canadian residents of any and all nationalities. I've opened a no-fee account at one of the larger establishments, will give it a test drive and likely move our day-to-day banking over from RBC.


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## maz57

The natural desire for freedom will never die in the human heart! Happy moving. Just think what a business opportunity this is for institutions who stay off the FATCA bandwagon.


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## BBCWatcher

maz57 said:


> Its not working for the US either....


What do you mean by "not working"? The U.S. may have the highest rate of tax compliance in the world (voluntary and total). It's much higher than Canada's according to the data I can find.


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## jbr439

Nononymous said:


> ...
> Meanwhile I've discovered that various local credit unions are getting up to speed on this and now claim "local client base" status, so are fully FATCA-free for Canadian residents of any and all nationalities. I've opened a no-fee account at one of the larger establishments, will give it a test drive and likely move our day-to-day banking over from RBC.


That takes care of banking, but what about investing? Credit unions themselves don't offer investment accounts, do they?


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## Nononymous

jbr439 said:


> That takes care of banking, but what about investing? Credit unions themselves don't offer investment accounts, do they?


I'm going to explore that soon. The credit union offers the full range of registered savings accounts, but I think the only investment products available are relatively simple term deposits. I might go that route anyway, as I'm generally bored to tears by the idea of shopping for mutual funds and don't care much about the return. For anything more complicated - stock trading, mutual funds, etc. - the credit unions have a deal with Qtrade or similar companies.

Qtrade and its ilk would certainly be subject to the same FATCA reporting requirements as a regular bank. However, if they were relatively lax with their account opening procedures , a good old lie should still suffice. Say no if you are asked about US personhood, online or in person, and don't present ID that shows place of birth. 

I suspect that the reason I'm having problems with RBC DS is twofold: they knew all along (thanks, mom) and since they typically deal with far vaster piles of loot than mine, they might have more stringent compliance policies than just the bank. I do hope I'm making a small amount of trouble for them though. I've got enough respect for the broker that I won't directly lie to him, but rather using constructions like "I'm willing to state that I am not a US citizen" that make it perfectly clear what's going on.


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## BBCWatcher

Of course RBC (or any other investment firm) could hold your money and report you as they see fit, meeting or exceeding their minimum legal requirements. Which would probably be their best business strategy of all though presumably not in your interests.

I think jbr439's question requires a little more thought.


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## Bevdeforges

Nononymous said:


> I suspect that the reason I'm having problems with RBC DS is twofold: they knew all along (thanks, mom) and since they typically deal with far vaster piles of loot than mine, they might have more stringent compliance policies than just the bank. I do hope I'm making a small amount of trouble for them though.


I'm going out on a limb here <g> but what I suspect is happening here is that they're just putting into place a single, dead-easy (for them) compliance process and applying it across the board in order to leave the "sharing of information" issue to the CRA. 

Just took a look at the FATCA info page for my bank here in France. A couple of "interesting" observations:
First of all, they make a big deal out of the fact that they "are required" to share certain information with the Banque de France, NOT directly with the IRS. (That's their notation, not mine.)

Then, they mention that they will apply the new request for information (which means, I think, SS numbers) to all new accounts as of 1 July 2014. (Whew, opened my last new account with them in January last year!)

And thirdly, they state that they will start reporting in 2015 to the Banque de France. Which is bizarre, because they would seem to be precisely the sort of bank that is specifically excluded from reporting under the IGA. (Hence my theory about finding a simple and dead-easy procedure and just applying it to everyone. "Egalité" is real big here in France.)

It remains to be seen when and if I'll get a request for a W9 from them. They have my birthplace, so no excuses, I guess.

Time will tell.
Cheers,
Bev


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## Nononymous

BBCWatcher said:


> Of course RBC (or any other investment firm) could hold your money and report you as they see fit, meeting or exceeding their minimum legal requirements. Which would probably be their best business strategy of all though presumably not in your interests.


Report to whom? CRA or the US directly? If the former, "extra" reporting might not be passed along to the latter.

In any case, the communication I had from RBC stated that they suspend trading privileges for accounts with "incomplete documentation" but nothing is reported outside of the firm. Furthermore, though I can't remember where I saw this, I do recall reading something about the IGA also softening the provisions for automatic reporting of "recalcitrant" account-holders and "suspicious" account closures.

The ultimate goal is to leave RBC, both bank and investment arm. If I wished to continue with investments more sophisticated than a GIC, that may require opening a new account somewhere that's clean of any US indicia such as birthplace or chatty parents. (On that note, I suspect that my folks raised the issue in the context of estate planning, it's not as though they spilled beans that didn't need spilling.)


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## Nononymous

BBCWatcher said:


> I think jbr439's question requires a little more thought.


Out of curiosity I looked at the application form for Qtrade, as an example of what a typical Canadian investment firm might currently require.

In the application you are asked to list your citizenships, plus the usual yes or no checkbox for US personhood. However, the ID requirements to open an new account are a passport OR drivers' license or other government ID. They do not require ID that would reveal place of birth.

For a dual who wanted to stay off the FATCA radar, you'd still need to lie on the application, and I'm sure would be fired as a client if this were detected (plus other nastier punishments listed in the fine print of the terms & conditions that no sane person bothers to read). Nevertheless, they can't be too interested in verifying this information if they will take a drivers' license as ID.


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## Nononymous

A week later, I heard back from the broker at RBC DS. A minor victory!



> FYI, it appears that the W-8 and W-9 are only required for taxable accounts and those not recognized as tax-exempt by the US i.e. TFSA
> 
> As such, no IRS forms will need to be signed or submitted due to your RSP here.
> 
> To update and ensure we have accurate account information, kindly confirm the following, and we will be able to continue managing the account on your behalf into the future.
> 
> I am not a US citizen
> 
> I am a Canadian citizen.


So I thanked him for helping me push back on this; hopefully they can clarify their policy for other customers. I think it's pretty important to establish that you are not required to fork over an SSN or sign IRS forms for a non-reportable RSP account.

As for the last bit, I just said "PS Yes I do confirm the following". That is a bald-faced lie, of course, but if it makes this go away, whatever. I no longer consider myself a US citizen, a little fib won't keep me awake nights.


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## maz57

Nononymous said:


> As for the last bit, I just said "PS Yes I do confirm the following". That is a bald-faced lie, of course, but if it makes this go away, whatever. I no longer consider myself a US citizen, a little fib won't keep me awake nights.


Well, at least it's 50% true! Add a little of your "I don't want to be a US citizen and you can't make me" and it's all true. Sounds like RBC doesn't really care; they just want to make sure their ass is covered.


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## Nononymous

maz57 said:


> Well, at least it's 50% true! Add a little of your "I don't want to be a US citizen and you can't make me" and it's all true. Sounds like RBC doesn't really care; they just want to make sure their ass is covered.


We'll see if he comes back with "are you sure?" or just forgets about it.


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## maz57

I'll put my money on your guy letting it go. He now has the answer he needs. Why would he even ask a question for which he already knows the answer unless he just wanted to officially hear the "correct" answer from you? 

Why should he care? I'm sure he knows its the US government that is the cause of all the problems. In his mind: not his government=not his problem. We all live in Canada.


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## BBCWatcher

BBCWatcher said:


> There's a fascinating lawsuit working its way through U.S. federal court, Tuaua v. United States.


I've been following this case. Here's a quick update.

Oral arguments were heard in front of a three judge panel in the U.S. Court of Appeals (D.C. Circuit). The plaintiffs drew probably the worst three judges (for their case) they possibly could have drawn. If the oral argument transcript is suggestive, I think the plaintiffs are probably going to get an adverse ruling on this occasion, though they have a shot at getting at least two of the judges to agree to remand the case back to trial court for an Insular Cases-style evidentiary hearing. (Which might not necessarily be a good outcome, even if it would be a technical "win" for the plaintiffs.)

Unfortunately for the plaintiffs at least a couple of the judges who heard their case betrayed a lack of knowledge about some very basic facts that are not in dispute. (The defense side occasionally exploited that.) That's not encouraging. Hopefully the judges realized they weren't as well prepared as they could have been and will take extra care, and pull in their clerks to work some overtime, to make sure they're factually well grounded in their ruling.

In the medium to long term, though, I think this case is headed to the U.S. Supreme Court. The Insular Cases (1901), on which the government is relying heavily, are hugely problematic as precedent. They read like something you might find in white supremacy literature because, well, they are. It was a different era, the Plessy v. Ferguson era with the same cast. Even so, the plaintiffs argue that the Insular Cases never ruled on this _particular_ jurisprudential question, and they appear to be absolutely correct. (A well-written amicus brief made the same point.) Also, it's pretty clear the federal government doesn't want to defend against this case, especially when they've got to rely heavily on what's probably the most racist surviving Supreme Court precedent. The U.S. Justice Department is sitting this one out, leaving it to the U.S. Attorney's Office in D.C. to handle the case. That's unusual.

One of the toughest problems the plaintiffs have is the "What about the Philippines?" question. The Philippines were a territory of the United States for several years in the early 20th century. According to the plain meaning of the 14th Amendment, individuals born in the Philippines while the islands were a part of the United States and under U.S. jurisdiction would (probably) have been born U.S. citizens, and I lack the imagination to think of why such elderly surviving individuals wouldn't still be U.S. citizens. The judges seemed spooked about that possible secondary legal consequence if they were to rule in favor of the plaintiffs. The plaintiffs seem to be arguing that since the Philippines are no longer part of the United States and haven't been for several decades that that potential legal issue is now well in America's rear view mirror, but I think they're still struggling with how to answer that question, why American Samoa and the Philippines are different for purposes of this case. Even though they could be quite correct on the law, courts are still political creatures to some extent, even ones with prejudices. The idea that a shrinking cohort of elderly Filipinos might have legitimate claims to U.S. citizenship is hard for these three judges to process. (Did I mention racism? There might be some of it still lingering, I'm afraid.)


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## Immigpat

BBCWatcher said:


> I can understand _your_ desires. Set aside taxes for a moment, though. What if you committed a heinous crime with a financial dimension?


This is like saying, if you live in a neighborhood where a crime had taken place last week, and you see a stranger walking down your street, do you immediately assume he is a very likely a criminal and pat-down search him and grill him with your gun pressed to his head to find out his bona fides for being there?


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## Vangrrl

Definitely a victory - good for you!

I'm compliant on my FBARs (well, mostly compliant) and so I disclose my accounts to Dept. of Treasury. And yet, I've never been contacted by Scotiabank regarding my existing accounts and RRSPs. I cannot remember what ID I presented to open my account but it seems like there is no evidence of US citizenship in their records. I know that opening a new account requires form filling (my husband has had to do that) but I assumed all current account holders were being asked to confirm or deny US citizenship. 

I do not trust that Canadian bank won't over-report accounts to cover their asses and for that reason even though I file/submit my tax returns/fbars, I'm still very leery of openly disclosing my US citizenship to the bank. I prefer to manage my own relationship with the US as much as I can.


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## maz57

Vangrrl said:


> I prefer to manage my own relationship with the US as much as I can.


Well put. Personally I don't want to have any relationship with the US government. So far, not a peep from any of the several Canadian institutions I do business with. (One of which flatly refuses accounts for US citizens.)


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## BBCWatcher

BBCWatcher said:


> There's a fascinating lawsuit working its way through U.S. federal court, Tuaua v. United States.


Here's a quick update. The plaintiffs lost at the U.S. Appeals Court level. They drew a terrible trio of judges for their case, and unfortunately the decision they got was riddled with factual errors. They were then denied a rehearing _en banc_, and finally, earlier this month (June, 2016), the Supreme Court denied review. American Samoans (including Swains Islanders) are born U.S. nationals but not U.S. citizens. The status quo is that the Fourteenth Amendment effectively does not apply to those born in U.S. territories.

The governments of all of the U.S. territories (except American Samoa -- its government fought against the plaintiffs) remain quite concerned about this status quo. What they thought was a constitutional right isn't, at least not yet. Congress could pass a law denying those born in Puerto Rico of U.S. citizenship -- and one could imagine scenarios involving Puerto Rico's bankruptcy that might trigger Congressional action along those lines. The disposition of this case suggests the courts might not object to Congress doing that.


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