# TSFAs



## byline

Prior to last year, the U.S. considered non-U.S. tax-free savings accounts to be foreign trusts, which meant that I had to fill out reams of paperwork for Form 3520, only to declare zero taxes owed.

However, my understanding is that last year, tax-free savings accounts were no longer considered foreign trusts, and so we are no longer required to report them on Form 3520. Am I remembering that correctly? It would make life a lot simpler, from a money-management perspective, if I could start up a TFSA again (we emptied out the old one, when it became clear that reporting would be so onerous).


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## BBCWatcher

You may be thinking of RRSPs.

To my knowledge there is no change in the status of TFSAs from a U.S. tax point of view. Whether they are a foreign trust or not, or whether they are PFICs or not, simply depends on their construction and holdings. From the U.S. point of view they're "just another foreign account," and the usual rules apply. For example, a TFSA holding cash (a deposit TFSA) at a bank or credit union is probably just like an ordinary foreign savings account from the U.S. point of view. It's also probably not the most _interesting_ TFSA, but sometimes boring is good.


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## Bevdeforges

Maybe Canada is different, but here in France, tax-free bank savings accounts are not considered TFSAs and they are specifically exempt from reporting by the banks under FATCA by the bi-lateral agreement. Granted, you have to report the "tax-free" interest on your US forms, but for those of us with modest incomes, this doesn't normally result in any income tax liability generated.

Of course if your tax free savings account includes stocks and other investment instruments, then "never mind."
Cheers,
Bev


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## MK15

In the Canada-US bilateral FATCA agreement, the only mention of TFSAs is that they're exempt from being considered a reportable "financial account." So I'm treating that as not a foreign trust and not something I need to report. Opinions may vary.



> Accounts Excluded from Financial Accounts
> The following accounts and products established in Canada and maintained by a
> Canadian Financial Institution shall be treated as excluded from the definition of
> Financial Accounts, and therefore shall not be treated as U.S. Reportable Accounts under
> the Agreement:
> 
> E. Tax-Free Savings Accounts (TFSAs) – as defined in subsection 146.2(1) of the
> Income Tax Act.


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## maz57

To the best of my knowledge, the US (IRS) doesn't consider the Canadian TFSA to be anything at all because the IRS has never issued word one on the subject. This is not unusual because only a handful of foreign tax-advantaged accounts have ever been specifically addressed by the IRS.

As BBC mentioned, the exact nature of the account and its holdings may have some bearing on the answer. One thing to remember is that the IRS pretty well has to take an expat's word for it because the IRS doesn't have a clue about these things and gets no information slip. They will know only what you choose to tell them. Back when I was dealing with this I just reported the income without further elaboration, figuring at least there was no failure to declare income and the IRS would get back if they wanted more. They never did.

Phil Hodgen had a discussion on his blog a while back in which he argued that a TFSA was not a trust (and therefore not subject to 3520, etc.) according to the IRS' own definitions. He convinced me.


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## jbr439

Phil Hodgen had a recent article on this. Bottom line: it depends on the type of account and on how lucky you feel.
See: Canadian TFSAs and the Certification Test

Personally, it doesn't make sense to me that a TFSA should be a 'foreign trust', but IANAL and I am not the IRS. And, I'll note that a lot of tax professionals will err on the side of caution and treat them as such.


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## BBCWatcher

Please ignore the FATCA comments above. They have nothing whatsoever to do with what your personal tax and financial reporting obligations actually are. (They are data sharing agreements between governments, not anything you are party to.)


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## byline

BBCWatcher said:


> You may be thinking of RRSPs.
> 
> To my knowledge there is no change in the status of TFSAs from a U.S. tax point of view. Whether they are a foreign trust or not, or whether they are PFICs or not, simply depends on their construction and holdings. From the U.S. point of view they're "just another foreign account," and the usual rules apply. For example, a TFSA holding cash (a deposit TFSA) at a bank or credit union is probably just like an ordinary foreign savings account from the U.S. point of view. It's also probably not the most _interesting_ TFSA, but sometimes boring is good.


All I can tell you is that prior to last year, my previous tax preparer insisted that TFSAs were considered foreign trusts, and therefore I had to fill out Forms 1041 and 3520. Here's the information I received in February 2012: "If you own a tax-free savings account (TFSA) or a registered education savings account (RESP), you are now required to file a 3520 (annual return to report transaction with a foreign trust). This is a catch-up year. To do this, each TFSA or RESP requires an employer identification number, Form SS-4. After the first year you start your TFSA or RESP, you are required to file a yearly report, due March 15 of each year." My tax preparer then mentioned Form 8938, Statement of Specified Foreign Assets, which was a completely separate issue (I don't have to file as I am well below that reporting threshold).

My understanding was that as of last year, TFSAs and RRSPs no longer had to be reported on tax returns (though of course they still must be reported on FBARs).


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## BBCWatcher

Again, as far as I know there has been no change with respect to TFSAs. If your tax preparer thought your TFSA was a foreign trust per IRS definitions, it probably was. Whether your particular TFSA is a foreign trust or not depends on its construction and holdings. If it's a depository TFSA held at a bank or credit union containing only cash it probably isn't. Otherwise it could be. It solely depends on the IRS's rules and definitions. Here's one tax advisor's point of view. I personally sit firmly on the fence: a TFSA may or may not be a foreign trust depending on its construction and holdings.

RRSPs (and RRIFs) did change. There used to be a special IRS form for RRSPs and RRIFs (IRS Form 8891). No longer. That changed for tax year 2014 and with retroactive effect (if you were late filing prior tax years).


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## byline

I don't speak in present tense about the TFSA because I haven't had it for several years. When the reporting became so onerous, and all for a small amount of interest ($100 to $200) that did not generate any owed tax, we depleted the TFSA, then closed it so that I wouldn't have to waste so many hours on paperwork I barely understood.

As you can see from the text I posted above, the letter I got from my tax preparer did not distinguish between types of TFSAs. This was a general form letter to all her clients in which she insisted that all TFSAs were subject to this filing requirement. As for my particular TFSA, there was nothing really complicated about it. It was an account in which we deposited cash and were paid interest.

I assume that on a U.S. tax return, I would simply declare the interest paid and nothing more. If that's all it ever was, then I guess I and many others were given inaccurate advice by our tax preparer back in 2012.


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## Bevdeforges

Declare the interest - and, if your "foreign" accounts total $10,000 or more, include the account on your FBAR filing. But if it's a simple bank account, then list it on the FBAR as that.
Cheers,
Bev


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## byline

Thanks, Bev! It would likely be a Tangerine TFSA, same as what I had before. Oddly enough, in 2011 my tax preparer prior to this last one suggested that I report my joint savings account (not tax-free) as securities on my FBAR, and so I've been doing it that way ever since. Now I'm not sure why, as I'm pretty sure all deposits and withdrawals have been cash. FBAR is already filed for 2015, so I guess I will have to wait till next year to report it correctly.

Back in 2011, when I first discovered all of the tax return and FBAR filing requirements (and was scared to death, as most folks are when the "bombshell" hits), I found all of this jargon to be quite overwhelming. And so when professionals give me information, I take it as being accurate because I figure they have been at this a lot longer than I have, and are paid to know the correct answers. I guess that's not always the case.


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## iota2014

> ...when professionals give me information, I take it as being accurate because I figure they have been at this a lot longer than I have, and are paid to know the correct answers. I guess that's not always the case.


Sadly not.



> GAO analysis of NRP data from tax years 2006 through 2009 showed that both individuals and preparers make errors on tax returns. Errors are estimated based on a sample of returns, which IRS audits to identify misreporting on tax returns. Tax returns prepared by preparers had a higher estimated percent of errors—60 percent—than self-prepared returns—50 percent.


http://www.gao.gov/assets/670/662356.pdf


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## maz57

byline said:


> All I can tell you is that prior to last year, my previous tax preparer insisted that TFSAs were considered foreign trusts, and therefore I had to fill out Forms 1041 and 3520. Here's the information I received in February 2012: "If you own a tax-free savings account (TFSA) or a registered education savings account (RESP), you are now required to file a 3520 (annual return to report transaction with a foreign trust). This is a catch-up year. To do this, each TFSA or RESP requires an employer identification number, Form SS-4. After the first year you start your TFSA or RESP, you are required to file a yearly report, due March 15 of each year."


Good thing that person is your "previous" tax preparer. That is just plain wrong for several reasons. An Employer Identification Number (EIN) is the equivalent of a SSN, but for an entity rather than an individual. Obtaining an EIN is required for an entity to file a Form 1041 tax return.

Whatever a TFSA might be in the eyes of the IRS, it is a 100% Canadian entity and is not required to file an annual tax return with the IRS. Normally the Trustee of a US trust would obtain the EIN (via Form SS-4) and be responsible for filing the 1041 return. You are not the trustee; you are the beneficiary. Your tax preparer is also not the trustee. In fact neither you nor your tax preparer are likely to even have all the information to properly file a 1041 trust tax return. The Canadian financial institution is the trustee and I can assure you the Canadian trustee of a Canadian TFSA is not required and is not about to file a 1041 return with the IRS. Where your lame-brain tax preparer got that idea is beyond me. I hope it didn't cost you a lot of money for such totally wrong advice.

I think what is going on here is that because to date the IRS has offered zero guidance on these things, the vacuum is being filled with rampant speculation and guesswork on the part of some tax preparers. (And, of course, they can then justify their hefty fees.)


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## byline

maz57 said:


> I hope it didn't cost you a lot of money for such totally wrong advice.


Actually, no, it was a reasonable price, only a couple hundred dollars (compared with my previous tax preparer who largely gave me good advice, but also charged several thousands of dollars). But, given that this was incorrect advice, it still was not worth it.

However, it was I (not my tax preparer) who had to prepare several years worth of forms, including back-filing. So for me it was just one big headache. It cost me in time, but not money. It's a relief to go forward now having that shadow of doubt removed from my mind. It also makes more sense for us, from a Canadian financial planning perspective, to be able to do some income-splitting this way, as I am the one with far less income. Not being able to do it for several years now has created a larger tax burden for my husband. But I think we can fix this now.

You know, I think my confusion over changes in reporting for RRSPs and TSFAs do indeed come from the FATCA reporting angle. I keep confusing what financial institutions are required to report, versus what individuals are required to report.


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## jbr439

From the SKL article:


> Unlike for the RRSP, there is no official IRS guidance on the TFSA and the IRS has not responded to requests for clarification on proper reporting procedures for TFSAs; other advisors indicate that the IRS will not issue a private letter ruling on the matter.


So typical, if correct. The US insists on CBT, but does not require the IRS to provide guidance on specific rules surrounding said CBT, even when the taxpayer is willing to pay the IRS for that guidance in the form of a fee for a private letter ruling.


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## maz57

Just to be crystal clear, the Canada/US IGA specifically exempts all of the Canadian government registered accounts from the FATCA reporting regime. The financial institution won't report them to the CRA and the CRA won't report them to the IRS. It was argued at the time, and rightly so, that the Canadian registered accounts were unlikely to be used to hide assets and income from the US tax authorities. This is what BBC was referring to in his post yesterday at 4:36.

However, that doesn't mean that the individual taxpayer doesn't have to report them. All of the Canadian registered accounts are both US reportable and taxable if you are unlucky enough to be a US taxable person. Of those accounts, only the RRSP has a special dispensation under IRS rules to defer tax until there is an actual distribution. If you own any of the others you must declare the income and pay the tax each and every year, whether or not there is a distribution. Depending on your individual circumstances, this may render them totally useless for their intended purpose. 

However, if you "forgot" to report them on your US return or FBAR it is unlikely the IRS would notice because Canada won't be reporting anything to the IRS under the FATCA regime. (But then, forgetting that would be illegal!)


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## Nononymous

I'm planning to go open a small TFSA, just $500 to sit there earning next to no interest, because in so doing I've added one more "product" at the bank and I'll greatly reduce my monthly fees. I'm curious to see if there are any US-personhood questions in the application process - I shall report back. I also quite like the idea of breaking yet another US law.


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## maz57

Nononymous said:


> I'm planning to go open a small TFSA, just $500 to sit there earning next to no interest, because in so doing I've added one more "product" at the bank and I'll greatly reduce my monthly fees. I'm curious to see if there are any US-personhood questions in the application process - I shall report back. I also quite like the idea of breaking yet another US law.


So do I; I do it every chance I get. In actual fact what should be illegal is to be a US person anywhere but inside the US. If our stupid Canadian government ever realizes how the US has effectively managed to claim a portion of Canada's tax base via CBT/FATCA, maybe our government will make it illegal to be a US person in Canada. (Or at least to admit to it.)


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## byline

Oh right, the nationality question. I'll bet it will come up when I apply for a TFSA. *sigh*


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## maz57

byline said:


> Oh right, the nationality question. I'll bet it will come up when I apply for a TFSA. *sigh*


Well, you know what the correct answer to such a question should be.


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## byline

maz57 said:


> Well, you know what the correct answer to such a question should be.


The legal one? Actually, I'm a dual citizen, so surely I can put Canadian.


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## maz57

Yes, a classic case of "telling 'em what they want to hear". Everybody's happy; you get your TFSA...the bank has done their FATCA due diligence and gets a new customer.


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## BBCWatcher

What's the question?

Caution: Lying to your Canadian bank could well be a criminal offense under domestic Canadian law.


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## BBCWatcher

Following up on that, Part IX Sections 361 and 362 of Canada's Criminal Code look like they could apply to making a false statement (or "false pretence") to your bank. Up to 10 years of prison time is possible under those sections.

There may be other sections that apply.


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## Bevdeforges

maz57 said:


> Yes, a classic case of "telling 'em what they want to hear". Everybody's happy; you get your TFSA...the bank has done their FATCA due diligence and gets a new customer.


One small caveat is what information the banks there require in order to open an account. In some countries (such as France), they ask for i.d. that includes your place of birth (considered part of your i.d. here). If that information goes into their records, and you were born in the US, they may get fussed. Up to you how to handle that. But if they say nothing, and put your nationality in as Canadian, then the ball is in their court.
Cheers,
Bev


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## maz57

BBCWatcher said:


> Following up on that, Part IX Sections 361 and 362 of Canada's Criminal Code look like they could apply to making a false statement (or "false pretence") to your bank. Up to 10 years of prison time is possible under those sections.


I can imagine no scenario in which a Canadian judge in a Canadian court would find guilt, let alone send somebody to jail for innocently lying to ensure they have the same right to open a Canadian government registered account that any other Canadian has. In fact, such a case would expose the government and the bank to the very real possibility of a Charter challenge. Neither the government nor the banks want any of this FATCA travesty inflicted upon us to be exposed to public scrutiny. This will never happen. By the way BBC, unlike the US, Canada is not in the habit of imprisoning people for minor footfaults.


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## maz57

Bevdeforges said:


> One small caveat is what information the banks there require in order to open an account. In some countries (such as France), they ask for i.d. that includes your place of birth (considered part of your i.d. here). If that information goes into their records, and you were born in the US, they may get fussed. Up to you how to handle that. But if they say nothing, and put your nationality in as Canadian, then the ball is in their court.


To open an account in Canada, one must produce some ID proving residence. No ethnic origin, no citizenship, no birthplace. Generally, one must also give the bank one's SIN (Social Insurance Number, the Canadian equivalent of a US SSN). Nowadays, only a very uninformed US person would use their passport as ID to open a bank account.


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## maz57

I haven't had the opportunity, because I haven't had the need to open any new accounts lately, but I think the proper response to offensive questions should be N/A (for Not Askable).


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## Bevdeforges

maz57 said:


> To open an account in Canada, one must produce some ID proving residence. No ethnic origin, no citizenship, no birthplace. Generally, one must also give the bank one's SIN (Social Insurance Number, the Canadian equivalent of a US SSN). Nowadays, only a very uninformed US person would use their passport as ID to open a bank account.


Here, your date and place of birth are part of your identity, and go into most identity documents. However, as I have said before, I asked my bank counselor to remove my American nationality from my bank record when I got my French nationality. He did so, and while my US place of birth is still there, I don't believe that most banks here will bother to run their customer files for anything other than the nationality field when compiling the data they send in for FATCA. As it turns out, my bank is one of those specifically exempted from reporting (due to no US or international presence or marketing) but hey, that's their call. I've opened a couple of new accounts since having my nationality adjusted in the files and given that I'm a long-time customer, there is no question or hassle.
Cheers,
Bev


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## byline

maz57 said:


> Yes, a classic case of "telling 'em what they want to hear". Everybody's happy; you get your TFSA...the bank has done their FATCA due diligence and gets a new customer.


Actually, I am a current customer, but with other accounts. Still, I suspect the question will come up because they are now required to ask, whereas when we previously opened accounts it was not a requirement. It will be interesting to see!


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## maz57

I'm guessing the question won't even come up for 2 reasons:

1. You are an existing customer, presumably with no US indicia in your existing personal profile. The default assumption will be an untainted "pure" Canadian unless they have somehow gotten info that leads them to suspect otherwise. (Often you can go to your bank's website, login, and check your personal profile to see what they have on file for you.) They might ask if any of your customer information has changed at which point you shrug and say, "nope, its all the same", which, of course, would be a true statement.

2. TFSAs are exempt from FATCA reporting so its not even a relevant question when opening one. Even if they knew you were US tainted, it doesn't really matter because they will not be reporting it to the CRA so they are off the hook.

Having said all that, just out of curiosity, I went to the online account opening page (savings/chequing) of one of my institutions a while back and not only did they ask the question, but they flatly stated that they would refuse to open any account if I answer the US question affirmatively. "Sorry, we are unable to accept any US customers at this time." That's illegal, too, and they're not getting thrown in jail for 10 years. 

Needless to say, I haven't bothered to update my personal profile. But that's for new customers. As an existing customer I'm confident I could open an additional account with no hassle.


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## byline

Thanks for that, maz57! I often log in to my profile to check on my accounts. For example, I recently did it to print off my account balances for my 2015 FBAR. I've never received any prompts to update my personal information, so that's good.


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## byline

Bevdeforges said:


> Declare the interest - and, if your "foreign" accounts total $10,000 or more, include the account on your FBAR filing. But if it's a simple bank account, then list it on the FBAR as that.


Question: Is the line on which to declare taxable interest from savings accounts or Canadian TFSAs Line 8a on Form 1040? Or would a Canadian TFSA be listed under Line 8b?


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## BBCWatcher

maz57 said:


> I can imagine no scenario in which a Canadian judge in a Canadian court would find guilt, let alone send somebody to jail for innocently lying to ensure they have the same right to open a Canadian government registered account that any other Canadian has.


Hey, don't shoot the messenger.

But your description is simply not correct. You can open any account in Canada you wish without lying to your bank.

My recommendation is not to violate the law. And you don't have to. Either tell the truth or decline to answer a question you don't want to answer. But don't lie. That's criminal, in Canada, under Canadian domestic law. (In most countries, actually.)


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## maz57

BBCWatcher said:


> You can open any account in Canada you wish without lying to your bank.


That's dead wrong. One of the institutions where I personally do business states unequivocally that they will not open an account if the applicant is a US person. There may well be others; I haven't checked. Its obvious you didn't read my post at 11:45 above.

I'm also pretty sure they would give me the boot if they ever found out about me because this particular institution made the business decision to not pursue FATCA compliance because it simply wasn't worthwhile.

If they ever asked I would have no problem at all lying to them and would sleep well at night. At least Canada doesn't preface everything with "I swear, under penalty of perjury......".


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## BBCWatcher

maz57 said:


> One of the institutions where I personally do business states unequivocally that they will not open an account if the applicant is a US person.


Then you might have a private cause of action under Canadian law. (Perhaps such a lawsuit is pending.) But Canadian criminal law doesn't provide a lying exception of that kind.

My recommendation is you either decline to answer a question you don't want to answer or answer the question truthfully. "Because my bank is awful" isn't a valid defence under Canadian criminal law.


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## Bevdeforges

byline said:


> Question: Is the line on which to declare taxable interest from savings accounts or Canadian TFSAs Line 8a on Form 1040? Or would a Canadian TFSA be listed under Line 8b?


It would be line 8a. Canadian TFSA's aren't "tax exempt" in the US as far as I know. We have tax-free savings accounts here in France, and the interest paid goes on line 8a. (I usually list it by bank on a Schedule B since I have to fill out the bottom part of the Schedule B anyhow.)
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> Canadian TFSA's aren't "tax exempt" in the US as far as I know.


I agree.

_Highly theoretically_, if Canada's TFSA rules permit it, a TFSA that invested in direct holding of U.S. tax free municipal bonds, or of a U.S. domiciled/traded tax free municipal bond mutual fund or ETF, could end up with a different result across these two lines. That might be clever if allowed since there'd be tax advantages on both sides of the border. But I'm only speculating.

Here's how I'd put the question: can you buy ticker symbol VTEB, traded on the New York Stock Exchange, directly within a Canadian TFSA?


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## iota2014

maz57 said:


> That's dead wrong. One of the institutions where I personally do business states unequivocally that they will not open an account if the applicant is a US person. There may well be others; I haven't checked. Its obvious you didn't read my post at 11:45 above.
> 
> I'm also pretty sure they would give me the boot if they ever found out about me because this particular institution made the business decision to not pursue FATCA compliance because it simply wasn't worthwhile.
> 
> If they ever asked I would have no problem at all lying to them and would sleep well at night. At least Canada doesn't preface everything with "I swear, under penalty of perjury......".


The "penalty of perjury" jurat specified by the FATCA self-certiification requirements is the final FATCA "gotcha" for former citizens with a US place of birth.

I would be glad to hear that I'm wrong, but as far as I can see there simply is no sure "cure" for unchangeable US indicia such as place of birth if you're not prepared to sign the IRS jurat (and also aren't willing to be forced into a lie). 

An FI _may_ use a non-IRS form for the due diligence procedure, under the IGA, but if the FI chooses to follow the IRS's wishes and treat accountholders suspected of USness as "recalcitrant" if they won't sign the IRS form, they can.

Faced with such a situation, a US-born former US citizen has to choose between signing the IRS form, lying, or closing the account.

A minor, first-world problem, but annoying because there's no satisfactory solution.


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## byline

Having never yet had to sign one of these forms, I'd say it's a question of how it's worded. If it's asking your citizenship, I think in any real-world scenario, for someone with a dual citizenship, and given only one choice, one would choose the citizenship that aligns with one's current residency. If the form asks for a person's country of birth, then of course that person would have to answer honestly.


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## maz57

iota2014 said:


> Faced with such a situation, a US-born former US citizen has to choose between signing the IRS form, lying, or closing the account.


In my humble opinion, lying wins, hands down. In BBC's world, America would still be a British possession and Rosa Parks would still be sitting at the back of the bus. Sometimes it is necessary, even imperative, to do something "illegal" to fight for what's right. 

Nobody's going to go to jail for circumventing an oppressive system which deprives them of their rights.


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## iota2014

byline said:


> Having never yet had to sign one of these forms, I'd say it's a question of how it's worded. If it's asking your citizenship, I think in any real-world scenario, for someone with a dual citizenship, and given only one choice, one would choose the citizenship that aligns with one's current residency. If the form asks for a person's country of birth, then of course that person would have to answer honestly.


It's not the questions I object to, it's signing an IRS form "under penalty of perjury". I'm no longer a US citizen, and happy to show banks the proof. I'm just not prepared to sign any more IRS "penalty of perjury" forms, having paid thousands of dollars and jumped through numerous pointless hoops to shed US citizenship.


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## iota2014

maz57 said:


> In my humble opinion, lying wins, hands down. In BBC's world, America would still be a British possession and Rosa Parks would still be sitting at the back of the bus. Sometimes it is necessary, even imperative, to do something "illegal" to fight for what's right.
> 
> Nobody's going to go to jail for circumventing an oppressive system which deprives them of their rights.


I agree lying is very understandable, under the circumstances, and not likely to lead to jail. But also not likely to lead to change. And it would make me feel like I was still accepting IRS "rules" about my finances. 

I'll just have to close the account, if the question gets asked. Not satisfactory, but for me, the least bad option.


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## Nononymous

iota2014 said:


> An FI _may_ use a non-IRS form for the due diligence procedure, under the IGA, but if the FI chooses to follow the IRS's wishes and treat accountholders suspected of USness as "recalcitrant" if they won't sign the IRS form, they can.
> 
> Faced with such a situation, a US-born former US citizen has to choose between signing the IRS form, lying, or closing the account.
> 
> A minor, first-world problem, but annoying because there's no satisfactory solution.


From what I understand of the IGA, an FI is obliged (or simply encouraged?) to report any "suspicious" account closures. As in, you are asked about citizenship, you refuse to sign a W-8 or whatever it's called, and you immediately close your accounts in the six figures - that probably gets reported to CRA, who in turn report it to IRS.

I'm planning to pop round to the Royal Bank this week and open a TFSA under false pretenses. I'll report back.


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## iota2014

Nononymous said:


> From what I understand of the IGA, an FI is obliged (or simply encourage?) to report any "suspicious" account closures. As in, you are asked about citizenship, you refuse to sign a W-8 or whatever it's called, and you immediately close your accounts in the six figures - that probably gets reported to CRA, who in turn report it to IRS.


And?

In my case that won't happen, since HMRC knows me of old, but even if the closure of my (far-from-six-figures) account were to be reported to the IRS, what could they possibly do about it, and why would they even be interested?


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## maz57

iota2014 said:


> In my case that won't happen, since HMRC knows me of old, but even if the closure of my (far-from-six-figures) account were to be reported to the IRS, what could they possibly do about it, and why would they even be interested?


They wouldn't be interested and even if they were they couldn't do anything about it. But that's the boondoggle that is FATCA. The US government, in its (lack of) wisdom decided to inundate the IRS with a blizzard of useless information about 3 and 4 figure accounts in a futile attempt to net a very few big whales who have already migrated to another ocean. But then, that's what big government does; create more and larger bureaucracy and accomplish nothing. The US government has CBT and FATCA but what it doesn't have is an enforcement mechanism.

I, like you, am not terribly worried that I might be outed under FATCA. I protest more because I believe its the right thing to do and I don't want to make it easy for our chickens..t banks and governments.


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## iota2014

maz57 said:


> They wouldn't be interested and even if they were they couldn't do anything about it. But that's the boondoggle that is FATCA. The US government, in its (lack of) wisdom decided to inundate the IRS with a blizzard of useless information about 3 and 4 figure accounts in a futile attempt to net a very few big whales who have already migrated to another ocean.


Yes, there's more than a touch of irony hovering over the IRS these days. 



> The US government has CBT and FATCA but what it doesn't have is an enforcement mechanism.


They seem to be caught up in a Moëbius loop. FATCA was supposed to help enforce CBT, but then it turned out CBT was necessary to enable FATCA. Now neither can function without the other and nobody's happy about either.


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## maz57

Some tax professionals seem to be pretty happy about it!


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## Nononymous

I assume this isn't an issue at all for anyone who's renounced. Show the bank your CLN and that's the end of it. And even if you are "incorrectly" reported, you're out of the US tax system so who cares?

It's a bit more of an issue for non-compliant dual citizens such as myself. My approach is pretty simple. Don't be reported if I can avoid it - by lying to banks whenever necessary. Don't lose sleep - because in Canada at least, in the unlikely event that I'm reported, and the even less likely event that the US does anything with the information, under current law I'm perfectly safe because I don't have US income or assets.


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## iota2014

Nononymous said:


> I assume this isn't an issue at all for anyone who's renounced. Show the bank your CLN and that's the end of it.


You'd think. But FATCA requires a W-8 form as well - purely for the jurat, I assume.



> And even if you are "incorrectly" reported, you're out of the US tax system so who cares?


Me. It's signing a foreign country's "penalty of perjury" tax form I object to.


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## maz57

Nononymous said:


> Show the bank your CLN and that's the end of it.


If you have a CLN. It now is taking well over a year and in excess of CDN$3000 to get one.


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## iota2014

maz57 said:


> If you have a CLN. It now is taking well over a year and in excess of CDN$3000 to get one.


I was (comparatively) lucky - it took four months.


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## maz57

How long did it take to get the appointment? Last time I checked, my nearest Consulate was booking in early 2017.


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## JustLurking

iota2014 said:


> It's signing a foreign country's "penalty of perjury" tax form I object to.


How about signing the W-8BEN but crossing out the "penalty of perjury" clause first?

The form is lodged with your bank and (virtually) never reaches the IRS. It seems _extremely_ unlikely that a non-US bank would reject it based on that small amendment.


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## maz57

iota2014 said:


> Me. It's signing a foreign country's "penalty of perjury" tax form I object to.


Its the signing of a foreign country's anything that I object to. I no longer have a relationship with the US government. I live in Canada. If a Canadian bank wants me to sign a paper claiming that I'm not something and haven't been for quite a while, fine. But forget the "penalty of perjury" crap. The lazy *******s can create their own bank form for God's sake. Don't shove an IRS form in my face. How ridiculous is this going to get?


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## iota2014

maz57 said:


> How long did it take to get the appointment? Last time I checked, my nearest Consulate was booking in early 2017.


Four weeks. This was in Europe (Amsterdam). Canada does seem to have much longer wait times - maybe because there are more renunciants? No use hoping the US would use some of the revenue from renunciation fees to hire extra staff to do whatever mysterious thing it is they do in order to "approve" a CLN.

I will say, I had a pleasant experience, and the Consulate staff were as nice as could be.


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## iota2014

JustLurking said:


> How about signing the W-8BEN but crossing out the "penalty of perjury" clause first?
> 
> The form is lodged with your bank and (virtually) never reaches the IRS. It seems _extremely_ unlikely that a non-US bank would reject it based on that small amendment.


No, I'll just close the account. That would be annoying, but letting the IRS continue to dictate terms to me would be much much worse than annoying. I'm done with America.


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## Nononymous

Well that was anticlimactic. RBC let me open a TFSA online, took about 30 seconds, no citizenship questions asked because I'm already a customer. So I didn't get to lie. Oh well.


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## maz57

Rats, I was looking forward to getting revved up into a good rant when your report came in. Now I guess I'll just have to grab a beer and chill.


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## BBCWatcher

iota2014 said:


> In my case that won't happen, since HMRC knows me of old, but even if the closure of my (far-from-six-figures) account were to be reported to the IRS, what could they possibly do about it, and why would they even be interested?


So if _that's_ true, then why would you risk violating Canadian (or other domestic) criminal law by lying? (Not you, personally -- you have a CLN -- but I'm asking generically.)

Most governments don't like lying, as a purely domestic matter.

Anybody else figured this out yet? I did, a long time ago.


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## iota2014

BBCWatcher said:


> So if _that's_ true, then why would you risk violating Canadian (or other domestic) criminal law by lying? (Not you, personally -- you have a CLN -- but I'm asking generically.)


Eh?

I'm not Canadian. And not lying. And not generic.


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## maz57

BBCWatcher said:


> Most governments don't like lying, as a purely domestic matter.


Not true. Actually, governments love to lie; they just like to reserve it exclusively for themselves and get all huffy when one of us peons does it.


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## iota2014

maz57 said:


> Not true. Actually, governments love to lie; they just like to reserve it exclusively for themselves and get all huffy when one of us peons does it.


Except the US, which gets huffy when citizens claim not to be lying.


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## maz57

The US seems to be in a perpetual state of huffy about everything nowadays. Maybe they need to collectively grab a beer and chill as well.


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## BBCWatcher

maz57 said:


> Not true. Actually, governments love to lie; they just like to reserve it exclusively for themselves and get all huffy when one of us peons does it.


And how does that pithy observation contradict what I wrote?


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## Stargazer

US Relief Sought For Canadian Tax-Exempt Savings


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## iota2014

Also:

AICPA Recommends Changes in IRS Offshore Voluntary Disclosure Program | Accounting Today News



> The American Institute of CPAs recommended the Treasury Department and the Internal Revenue Service make a number of changes to improve the Offshore Voluntary Disclosure Program and the Streamlined Filing Compliance Procedures that allow U.S. taxpayers to voluntarily disclose previously unreported offshore assets and comply with U.S. tax laws.


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## byline

iota2014 said:


> Also:
> 
> AICPA Recommends Changes in IRS Offshore Voluntary Disclosure Program | Accounting Today News


Love the comments section of this one!


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