Tag Archives: FATCA IGA

Part 12: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Including US residents who are citizens of France and other nations!

Introduction – FATCA and U.S. residents

In Part 10 of this series of FATCA posts, I discussed the meaning of “U.S. Person”. The vast majority of people affected by FATCA are non-U.S. residents. That said, FATCA can affect U.S. residents who are citizens of other nations and have bank accounts in the United States. In some cases, the “due diligence” rules under the FATCA IGAs are making it difficult for citizens of other nations to keep access financial services (including bank accounts) in their country of citizenship. This topic is sure to gain more and more attention.

FATCA and Swiss citizens who are resident in Switzerland

 

FATCA and French citizens resident in the USA

 

The above tweet references a post at Frenchmorning.com which I was alerted on Keith Redmond’s AmericanExpatriates Facebook group. Although the post is in French you can get a rough translation with Google Translate*.

I was first alerted (in hindsight very obvious problem) by a French politician.

Here is the problem:

  1. FATCA forces French banks to hunt for customers with U.S. indicia.
  2. French citizen (and likely permanent resident of France) is living in the United States. He could be living in the United States under a number of different visas, including a “Green Card” (permanent resident visa). In addition, he might be a France/USA dual citizen.
  3. Because of a U.S. address or phone number, he washes up the shores of the “FATCA inquisition”.
  4. He is threatened with account closures and all the other disabilities that are common in Europe.
  5. He may not be able to pay his bills because of the FATCA related bank account problems.
  6. He may or may not be required to file U.S. taxes.
  7. If he is required to file U.S. taxes, he may or not be filing U.S. taxes.
  8. Either way he has a problem with his French bank.
  9. If he has a Green Card and attempts to move back to France, he may be subject to the S. 877A “Exit Tax”.
  10. Which is why the French Politician commented that “Many of our French citizens are currently “in prison in America”.

The time has come for Governments around the world to protect their citizens from the United States of America. Fortunately, France has recently taken the lead. To be specific: France has established an inquiry into how U.S. extra-territorial legislation affects the sovereignty of France.

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* Here is the current attempt by Google to translate the French article:
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Part 10: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – But only those “Born In The USA”

The purpose of this post is to highlight:

  • who are the targets of the “FATCA inquisition” under the FATCA IGA; and
  • who will not turn up in the “FATCA inquisition” under the FATCA IGA.

There are four parts to this post:

Part A – Who is a “U.S. Person” and how are they defined?

Part B – The FATCA IGA doesn’t hunt ALL U.S. persons. It is designed to hunt primarily for people who were “Born In The USA”

Part C – But, those “Born In The USA” may not actually be U.S. citizens or may have NO connection to the United States – Meet Tina

Part D – The FATCA IGA has been interpreted by the Canada Revenue Agency to NOT hunt “Green Card Holders” resident in Canada

Part A – Who is a “U.S. Person” and how are they defined?

If the purpose of FATCA is to hunt for “U.S. Persons”, “U.S. person” includes “U.S. citizen”, and the FATCA IGA’s state that “U.S. Citizen” is defined under the Internal Revenue Code, we must ask:

Who does the Internal Revenue Code define as a “U.S. Person”. The definitions are found in S. 7701 of the Internal Revenue Code.

S. 7701

(a) When used in this title, where not otherwise distinctly expressed or manifestly incompatible with the intent thereof—

(1) Person

The term “person” shall be construed to mean and include an individual, a trust, estate, partnership, association, company or corporation.

(30) United States person The term “United States person” means—
(A) a citizen or resident of the United States,
(B) a domestic partnership,
(C) a domestic corporation,
(D) any estate (other than a foreign estate, within the meaning of paragraph (31)), and
(E) any trust if—
(i) a court within the United States is able to exercise primary supervision over the administration of the trust, and
(ii) one or more United States persons have the authority to control all substantial decisions of the trust.

(50) Termination of United States citizenship
(A) In general

An individual shall not cease to be treated as a United States citizen before the date on which the individual’s citizenship is treated as relinquished under section 877A(g)(4).

(B) Dual citizens

Under regulations prescribed by the Secretary, subparagraph (A) shall not apply to an individual who became at birth a citizen of the United States and a citizen of another country.

(b) Definition of resident alien and nonresident alien
(1) In general For purposes of this title (other than subtitle B)—
(A) Resident alien An alien individual shall be treated as a resident of the United States with respect to any calendar year if (and only if) such individual meets the requirements of clause (i), (ii), or (iii):
(i) Lawfully admitted for permanent residence

Such individual is a lawful permanent resident of the United States at any time during such calendar year.
(ii) Substantial presence test

Such individual meets the substantial presence test of paragraph (3).
(iii) First year election

Such individual makes the election provided in paragraph (4).
(B) Nonresident alien

An individual is a nonresident alien if such individual is neither a citizen of the United States nor a resident of the United States (within the meaning of subparagraph (A)).

(3) Substantial presence test
(A) In general Except as otherwise provided in this paragraph, an individual meets the substantial presence test of this paragraph with respect to any calendar year (hereinafter in this subsection referred to as the “current year”) if—
(i) such individual was present in the United States on at least 31 days during the calendar year, and
(ii) the sum of the number of days on which such individual was present in the United States during the current year and the 2 preceding calendar years (when multiplied by the applicable multiplier determined under the following table) equals or exceeds 183 days:

In the case of days in: The applicable multiplier is:
Current year 1

1st preceding year 1/3

2nd preceding year 1/6

(B) Exception where individual is present in the United States during less than one-half of current year and closer connection to foreign country is established An individual shall not be treated as meeting the substantial presence test of this paragraph with respect to any current year if—
(i) such individual is present in the United States on fewer than 183 days during the current year, and
(ii) it is established that for the current year such individual has a tax home (as defined in section 911(d)(3) without regard to the second sentence thereof) in a foreign country and has a closer connection to such foreign country than to the United States.

(6) Lawful permanent resident For purposes of this subsection, an individual is a lawful permanent resident of the United States at any time if—
(A) such individual has the status of having been lawfully accorded the privilege of residing permanently in the United States as an immigrant in accordance with the immigration laws, and
(B) such status has not been revoked (and has not been administratively or judicially determined to have been abandoned).

An individual shall cease to be treated as a lawful permanent resident of the United States if such individual commences to be treated as a resident of a foreign country under the provisions of a tax treaty between the United States and the foreign country, does not waive the benefits of such treaty applicable to residents of the foreign country, and notifies the Secretary of the commencement of such treatment.

The Internal Revenue Code mandates that “U.S. Persons” are subject to U.S. taxation. “U.S. Persons” include both individuals and entities.

Individuals – include U.S. Citizens, Green Card Holders and those who meet the “substantial presence” test.

Entities – include a trust, estate, partnership, association, company or corporation.

Part B – FATCA doesn’t hunt ALL U.S. persons. It is designed to hunt primarily for people who were “Born In The USA”

Here is why …

In a recent paper McGill Professor Allison Christians notes that:

Perhaps surprisingly, FATCA’s identification method does not align with the statutory construction of the US Person population described above/ The misalignment is evident when comparing the three US Person categories to the FATCA indicia meant to alert financial institutions to the possible existence of a US Person. The misalignment continues to the verification phase, where taxpayers are asked to furnish various negative proofs of their status as US Persons, as Tina was asked to do. By examining the identification and verification processes, we begin to get a sense of the population actually being targeted by FATCA to enforce US taxation and financial reporting requirements on nonresidents.

FATCA has financial institutions searching for US Persons by looking for the following “indicia” of status:

1. account holder is identified as a US citizen or resident;
2. birthplace in the United States;
3. a US telephone number;
4. a US residence or mailing address;
5. standing instructions to transfer funds to a US based
account;
6. Indications of a power of attorney over the account to a
person with a US address;
7. a “care of” or hold mail address as the sole address.

In addition, where indicia are not present, a “responsible officer” must certify as to any knowledge of an account holder’s status as a US Person, and must monitor its accountholders for possible changes in circumstances.38 Other than the first factor on the list, the FATCA indicia do not align with the three categories of US Person as defined by § 7701.

2. Citizenship

“Citizens” are the second category of US Person described above. Only two of the indicia have any direct bearing on one’s status as a citizen, namely, the account holder’s identification as such, and her birthplace in the United States. The first of these indicia confirms the voluntary nature of the nonresident citizen’s acquiescence to her status. Announcing oneself as a US citizen to a non-US bank seems to be the clearest indication that the account holder is in fact a US citizen and therefore a US Person for tax purposes.44

Birthplace in the United States, however, highlights a major difficulty in imposing citizenship taxation. A person born within the territory of the United States is usually entitled to birthright citizenship, with few exceptions. 45 That is why Tina is automatically a citizen, without any independent action on her part or that of her parents. However, the definition of a citizen in US law is complex and is subject to widespread misunderstanding by those who receive the status by birthright but have never lived permanently in the country. 46 Moreover, citizenship can be changed by the individual through relinquishment 47 or renunciation.48 In the past, it was possible for a person to relinquish her citizenship automatically upon naturalization in another country.49 However, the US Supreme Court rejected this position and reinstated citizenship once thought lost.50 Today, the individual must display intent in order to lose citizenship status.51

The interplay of these immigration rules with taxation on the basis of citizenship is subject to intense debate and certainly exceeds any scope of common wisdom.52 In the past, expatriation would have automatically negated a person’s citizenship status for tax purposes; at present, it does not.53 Indeed, the definition of citizen for tax purposes is potentially circular in the application.54 These complications attending to birthright citizenship are sufficiently detailed and specific to the individual that they create legal uncertainty that is not answered in the tax law, let alone in FATCA indicia.

pages 15 – 17

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Part C – But, those “Born In The USA” may not actually be U.S. citizens or may have NO connection to the United States – Meet Tina

Allison Christians is the H. Heward Stikeman Chair in Tax Law at McGill University in Montreal, where she writes and teaches in the area of national and international tax law and policy. You can follow her on the Tax, Society & Culture blog at taxpol.blogspot.com or on Twitter (@taxpolblog). She delivered the following speech at the International Conference on Taxpayer Rights in Washington on November 18.

* * * * *

I would like to tell you a story about the taxpayer’s right to know what the law requires of her and to have the law administered fairly. This is just one story based on things happening now, but it is a common story. I’m telling this story instead of giving an exposition on the underlying legal texts because sometimes the rules are too complicated and too technical for anyone to really understand, even tax lawyers. Moreover, reading the law itself doesn’t explain what isn’t written on the books, which can matter more in how things play out in human terms. As you will see, the implementation of the law gives rise to a taxpayers’ rights issue — one that wouldn’t be clear from reciting the law alone.

The story I am going to tell you is about a woman named Tina. She’s Canadian. She is 62. Tina is nearing retirement age and has been a cautious and diligent person all her life, carefully saving for her old age following the textbook investment advice that tells us we should invest in low-load pooled investment vehicles — mutual funds — and hang onto them for the long term.

Tina isn’t buying and selling investments, following market trends, or taking risks. She doesn’t have time for that. Tina is married with two kids and lives in the family home she bought with her husband some 30 years ago. She’s hanging in for slow and steady, reliable, low-risk growth, planning for retirement in Canada. As a child, Tina occasionally took a trip down to the United States. Visiting Florida in February is still a tempting prospect, given the harshness of Canadian winters, but Tina has only dreamed of that kind of vacation so far. She is careful with her money, plans to live on her savings, and doesn’t want to burden her kids.

One day, Tina finds the following letter in her mailbox. It’s from her neighborhood bank where she has been banking all her adult life, where she has her checking and savings accounts.

Read Tina’s story and the story of all Tina’s at Tax Analysts.

 

Part D – The FATCA IGA has been interpreted by the Canada Revenue Agency to NOT hunt “Green Card Holders” resident in Canada

See the post referenced in the above tweet.

 

Part 9: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – “Place of birth”, the Canadian teenager and the new account

The above tweet references the following interesting comment on the Isaac Brock Society.

I think you’ll appreciate this. One of my minor children has some money saved up from baby sitting and odd jobs. The amount is now large enough that she asked me to help her invest the sum for down the road. So off we go to my favourite discount brokerage, RBC Direct Investments to open an investment account for her. Because she’s a minor, the account has to be opened as “BC_Doc In Trust For Canadian Born Teenage Daughter.”

So we get logged in to the RBC website and proceed to the application screen. So far so good. Then the Unaskable Questions start getting asked:

1) Trustee– Are you a U.S. Citizen or a U.S. resident for tax purposes?
a) Dare to click “Yes” and up pops a notice, “To comply with regulations, you will be presented with a W9 form with your application package.”
b) Social Security Number (SSN)– Write it down heren Now consider yourself officially marked and packaged for the IRS. Good luck sucker.

2) Is the Beneficiary a U.S. Citizen or a U.S. resident for tax purposes?
a) Go ahead, I dare you– click “Yes”– Guess what, you’re going to receive another one of those tasty W9 forms so we can serve your minor up to Uncle Sam as a tasty treat.
b) Social Security Number (SSN)– welcome to our data base kid. If you’re lucky, in a few years, we’ll draft you and send you off to some country whose name you can’t pronounce to die so that a bunch of Homelanders can get fat sitting on their couches while they watch Netflix and oil their guns.

3) How many countries is the beneficiary a resident of for tax purposes?
Reason– You may have told us you’re only Canadian but it really doesn’t matter what you think kid– if the U.S. says you’re American, then by God, “Congress has spoken.”
a) Beneficiary’s country of residence for tax purposes?

4) Beneficiary’s country of birth?
a) Select your country of birth– by now, you know where this is headed. It’s part of a new U.S. policy called, “Leave no (ex-pat) American behind.” Even if they don’t want to be American. Or consider themself to be American. Or didn’t even know they were American.

The appropriateness of the “place of birth question” …

Here is the part of the FATCA IGA that governs “due diligence” requirements for new account openings – (Annex I – Part III – Starting on page 26).

III. New Individual Accounts

The following rules and procedures apply for purposes of identifying U.S. Reportable Accounts among Financial Accounts held by individuals and opened on or after July 1, 2014 “New Individual Accounts”.

A. Accounts Not Required to Be Reviewed, Identified, or Reported

Unless the Reporting Canadian Financial Institution elects otherwise,either with respect to all New Individual Accounts or, separately, with respect to any clearly identified group of such accounts, where the implementing rules in Canada provide for such an election, the following New Individual Accounts are not required to be reviewed, identified, or reported as U.S. Reportable Accounts:

  1. A Depository Account unless the account balance exceeds $50,000 at the end of any calendar year or other appropriate reporting period.

2. A Cash Value Insurance Contract unless the Cash Value exceeds $50,000 at the end of any calendar year or other appropriate reporting period.

B. Other New Individual Accounts.

1. With respect to New Individual Accounts not described in paragraph A of this section, upon account opening (or within 90days after the end of the calendar year in which the account ceases to be described in paragraph A of this section), the Reporting Canadian Financial Institution must obtain a self-certification, which may be part of the account opening documentation, that allows the Reporting Canadian Financial Institution to determine whether the Account Holder is resident in the United States for tax purposes (for this purpose, a U.S. citizen is considered to be resident in the United States for tax purposes, even if the Account Holder is also a tax resident of another jurisdiction) and confirm the reasonableness of such self-certification based on the information obtained by the Reporting Canadian Financial Institution in connection with the opening of the account, including any documentation collected pursuant to AML/KYC Procedures.

2. If the self-certification establishes that the Account Holder is resident in the United States for tax purposes, the Reporting Canadian Financial Institution must treat the account as a U.S. Reportable Account and obtain a self-certification that includes the Account Holder’s U.S. TIN (which may be an IRS Form W-9 or other similar agreed form).

3. If there is a change of circumstances with respect to a New Individual Account that causes the Reporting Canadian Financial Institution to know, or have reason to know, that the original self-certification is incorrect or unreliable, the Reporting Canadian Financial Institution cannot rely on the original self-certification and must obtain a valid self-certification that establishes whether the Account Holder is a U.S. citizen or resident for U.S. tax purposes. If the Reporting Canadian Financial Institution is unable to obtain a valid self-certification, the Reporting Canadian Financial Institution must treat the account as a U.S. Reportable Account.

It has been confirmed that TD Canada Trust has sent a “FATCA Letter” to an 8 month old baby!

Screen shot 2016-04-20 at 7.12.33 AM

For comments on the above “TD Green Chair” see the following post at the Isaac Brock Society.

 

#youcantmakethisup

 

 

Part 15: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – @RepealFATCA on: Why the Canadian banks supported the #FATCA IGA

Jim Jatras of RepealFATCA.com has been a long time opponent of FATCA. He has also been one of the best (if not the best) educators on what FATCA is really about. He spoke at the original “FATCA Forum“, (organized and sponsored by Canada’s Progressive Canadian Party) in 2012. He recently granted an extensive FATCA interview with U.S. tax law firm IRSMedic. Mr. Jatras has an unusually broad understand of FATCA, the American political process and how FATCA could ultimately be defeated.


The above tweet references a letter to the Toronto Star that includes:

Canada’s capitulation to this expensive, invasive and anti-sovereign demand is unnecessary. Canada has many tools to resist FATCA, from World Trade Organization and legal challenges to reciprocal, dollar-for-dollar withholding of payments to U.S. institutions. A “no” from Canada could itself doom FATCA in light of growing U.S. domestic opposition. A FATCA repeal bill has been introduced by Senator Rand Paul, a leading 2016 presidential prospect. The Republican Party, which recently approved a resolution advocating FATCA repeal, will continue to control the House and likely will capture the Senate this year.

What follows are two of his best interviews.

Jim Jatras – 2016

Jim Jatras – 2012

 

 

Part 11: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – But reciprocity?

Introduction and Synopsis …

The United States has entered into FATCA IGAs with a number of countries (including Canada). Regardless of what Government Officials say (and what the IGAs say) about “Review, Identify and Report”, there is NO meaningful “reciprocity” in the FATCA IGAs. The degree of “reciprocity” was discussed was recently discussed in the following post at Forbes (providing an unusally frank evaluation):

There are at least six different aspects of the IGAs that demonstrate a lack of reciprocity.

They include:

1. Human Targets – The United States defines “US Persons” in a far broader way than other countries define their “tax residents”. This is largely the result of U.S. “citizenship-based taxation”. Only the United States claims the right to impose taxation on (1) residents of other nations and (2) on income earned in those other nations.

2. The nature of the information exchanged
– The United States wants far more information (everything) than it is obligated to provide (nothing) under the FATCA IGAs.

3. Due Diligence – The U.S is not required to actively search for the tax residents of other nations. Other nations are required to actively search for “U.S. persons”. But, it is far more than seeking evidence of “USness” in individuals (“Are you or have you even been an American citizen?). Other nations are also required to search for evidence of “USness” in entities (see point 5 below).

4. Penalties – Other nations are subject to penalties for failure to comply with the (“Review, Identify and Report”) provisions of the IGA. The United States is NOT subject to penalties. (If you don’t comply, you are subject to penalties. If we don’t comply: “Too Bad”.)

5. The FATCA Entity Hunt – The United States does NOT and WILL NOT provide information on the beneficial ownership of “entities” (Delaware, Wyoming and Nevada are in the business of providing the secrecy that enables tax evasion). Other countries are required to search for evidence of “USness” in the ownership of entities created under the laws of their countries.

6. The requirement to change domestic laws – The United States is requiring other nations to change their domestic laws to “hunt” for people based “citizenship, national origin” and “place of birth”. The U.S. Treasury may not have the jurisdiction to order state banks to provide information about “foreign accounts”. In other words: You do what we cannot do! As might be expected, the question of jurisdiction is the subject of a lawsuit in the United States courts. In fairness, it is important to note that the “Alliance For The Defence Of Canadian Sovereignty” has brought a lawsuit against the Government of Canada, questioning whether the FATCA IGA is legal under Canada’s Constitution.

That’s the gist of it. If you want to understand why, I invite you to read on.

It’s about reciprocity …

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Part 2: “What God Hath Wrought” – Interpreting the IGA: Definitions incorporated by reference reveal the true intent of the FATCA IGA

Introduction – Updated April 4, 2016

The above tweet references a comment posted at iPolitics.ca

Thanks to Elizabeth Thompson for her continued coverage of the FATCA Chronicles.

Her article contains the following statement from the Minister of National Revenue:

“Minister Lebouthillier wants to reassure Canadians that all exchanges of information are subject to strict confidentiality rules,” reads the e-mail sent by Lebouthillier’s office.

“The CRA ensures that tax cooperation with its foreign partners is done in a manner fully consistent with privacy rights in Canada. It is important to note that Canada and the United States have a long history of exchanging tax information in a fair and responsible manner, going back to 1942.”

Whether the Minister believes what she says or not, FATCA supporters in the United States have made it clear that the use of information obtained pursuant to FATCA, should NOT to be used only for tax purposes. Since this post references, Liberal Leader Justin Trudeau’s letter to Lynne Swanson, I will reference you to a blog post written by Lynne Swanson which appears on her Maplesandbox.ca blog at:

http://maplesandbox.ca/2013/ca…

Ms. Swanson’s post references a 2012 letter written by the then U.S. Senator Carl Levin.

The letter from Senator Levin includes:

“Although FATCA is structured to address offshore tax abuse, offshore account information has significance far beyond the tax context, affecting cases involving money laundering, drug trafficking, terrorist financing, acts of corruption, financial fraud, and many other legal violations and crimes. Given the importance of offshore account disclosures, FATCA guidance and implementing rule should create account FATCA forms that are not designated as tax return information but, like FBARs, may be provided to law enforcement, regulatory, and national security communities upon request. FFIs are not, after all, U.S. taxpayers, and will not be supplying tax information on behalf of their U.S. clients; they will instead be providing information about accounts opened by U.S. persons. The U.S. Supreme Court has long held that bank account information is not inherently confidential but is subject to inspection by law enforcement and others in appropriate circumstances. Foreign account information is too important to a wide range of civil and criminal law enforcement and national security efforts to be designated as tax return information bound by Section 6103’s severe restrictions on access.”

You can read the letter yourself here:

http://bsmlegal.com/PDFs/CarlL…

Ms. Swanson concludes her post by asking the obvious question:

“Why bother with a warrant or surveillance when you can simply declare someone a “US person” and FATCA them?!?”

In Part 1 I described how the FATCA IGA is being applied to a U.K. PTA. My next post will continue the discussion of “Entities”. That said, this series of posts is about how the FATCA IGA works and how it may be interpreted. This post will focus on how some of the definitions in the FATCA IGA are found NOT in the IGA but in other sources.

This post will also explain how the clear definitions  in the IGA (incorporation by reference from other sources) makes it clear that the purpose of the IGA is to extend beyond taxation. The IGA is supposedly justified as an extension to the Canada U.S. Tax Treaty which is found here.

Article XXVII of the Treaty reads as follows:

Article XXVII

Exchange of Information

1. The competent authorities of the Contracting States shall exchange such information as is relevant for carrying out the provisions of this Convention or of the domestic laws of the Contracting States concerning taxes to which the Convention applies insofar as the taxation thereunder is not contrary to the Convention. The exchange of information is not restricted by Article I (Personal Scope). Any information received by a Contracting State shall be treated as secret in the same manner as information obtained under the taxation laws of that State and shall be disclosed only to persons or authorities (including courts and administrative bodies) involved in the assessment or collection of, the administration and enforcement in respect of, or the determination of appeals in relation to the taxes to which the Convention applies or, notwithstanding paragraph 4, in relation to taxes imposed by a political subdivision or local authority of a Contracting State that are substantially similar to the taxes covered by the Convention under Article II (Taxes Covered). Such persons or authorities shall use the information only for such purposes. They may disclose the information in public court proceedings or in judicial decisions. The competent authorities may release to an arbitration board established pursuant to paragraph 6 of Article XXVI (Mutual Agreement Procedure) such information as is necessary for carrying out the arbitration procedure; the members of the arbitration board shall be subject to the limitations on disclosure described in this Article.

To put it simply:

  1. The clear terms of the U.S. Canada Tax Treaty make it clear that the treaty is about taxation.
  2. The clear terms of the U.S. Canada IGA make it clear that it is about much more than taxation.

Yet, the Governments of both Canada and the United States claim that the IGA is justified as an extension of the tax treaty.

Introduction …

So much has been written about FATCA IGAs that few people consider the original FATCA legislation. The IGAs seem to have taken on a life of their own. As a reminder, the original FATCA legislation may be found in S. 1471 to S. 1474 of the Internal Revenue Code.

The title is: “TAXES TO ENFORCE REPORTING ON CERTAIN FOREIGN ACCOUNTS”.

Much has written about the reason for the FATCA IGAs. Much has written about the role that the Canadian banks played in lobbying for the FATCA IGAs. Much has written about the Canadian laws that have been changed to comply with the FATCA IGAs.

Very little has been written about how to interpret the IGAs. It is assumed that the FATCA IGAs are to facilitate the intent of FATCA as expressed in S. 1471 to S. 1474 of the Internal Revenue Code. A perusal of the definitions section of the Canada U.S. FATCA IGA suggests that this may not be true.

This post is to highlight certain definitions found in the IGA that are incorporated by reference from other sources. I believe that the passage of time will demonstrate how important these “incorporations by reference” are.

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Part 1: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – “Entity Edition”

Prologue – All non-U.S. “Entities are subject to the FATCA inquisition” …

 

How the U.K. IGA affects the U.K. PTA …

The online discussion referenced in the above tweet is about a U.K. PTA account. How can FATCA, (like the recent passport revocation bill which is one of the many “Revenue Offshore Provisions” used to target Americans abroad), included to finance the costs of the 2010 HIRE Act, possibly intrude into a U.K. PTA? To be clear, a U.K. PTA is similar to a U.S. PTA. Full details on a UK PTA are here. The information (maybe U.S. Treasury doesn’t believe it) is that a U.K. PTA is a charity and is described as:

A PTA is an excellent way to bring together parents, teachers and your local community to raise money and to support the school. It provides an opportunity for everyone to work together towards a common goal. All parents, teachers and school staff can get involved even if they only have a small amount of time available. Whatever type of association you decide to form, your school will benefit from the additional funds it will raise and the increased opportunity for parents to be more involved in school life.

 

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Reagan: #FATCA “Facts are stubborn things” – Kennedy: “Opposite of the truth is the myth”

The U.S. Treasury has been working overtime to:

1. Persuade the world’s sovereign countries to cede their sovereignty to and “Pledge FATCA obedience” to the U.S.

2. “Make the world believe” that Treasury has been and will continue to be successful.

In order to achieve this, Treasury has created what I call “the pretend IGA”. A “pretend IGA” is where a country has NOT signed an IGA, but it is anticipated (presumably by Treasury) that an IGA will be signed. That is to say, that an IGA is a “done deal”.

The tax compliance complex has (for the most part) joined the Treasury Chorus to sing to the tune of:

It’s a small (FATCA) world after all“.

The problem is that neither Treasury nor the FATCA Compliance Complex deal in facts. They deal in “myths”.

Facts are stubborn things

An interesting post appears on U.S. tax lawyer Virginia La Torre Jeker‘s blog which considers the “FATCA of the matter”.
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