Post From KTFA By NOVA » February 18th, 2014,
If I Were To Make A List Of Things To Understand Pre & Post RV, THIS ONE IS AT THE TOP!!
The Changes That Have Happened And Are Happening WIll Have More Impact On Our Lives Than The Repricing Of The Dinar.
And Yes I Know That Is A Big Statement, Because The Repricing Of The Dinar Is A Life Changing Event!
Well Done Brother!!!!
Memphis wrote on February 18th, 2014, 5:02 am: FATCA - revisited
After making a post yesterday titled "Behind the Curtain" it dawned on me that all of my posts lately could be called that. :popcorn:
Memphis Continues: I am decidedly not a research guy. Ask me if I have read the entirety of FATCA and all of it's provisions? I would just chuckle and smile...
I plan to have a staff of people devoted to simply doing research and bringing stuff to me. I enjoy taking a thing and finding it's value, it's worth. The sad reality today is that there are multiple streams of value to follow and nearly all of them reside ( you guessed it) out of plain sight...behind the curtain.
On December 26th we had the opportunity to have a two hour CC where the topics were picked by YOU and we got to then reply and offer our opinions. I liked that.
One comment that I clearly remember making was that FATCA is among the most invasive legislation to ever hit the planet. I was trying to get people's attention....
There is so much said about FATCA these days that no one would care to read it all but I have concern that many of us still do not recognize the extent to which all governments (and especially ours) have gone to lock down our money.
Thus I am offering up the following blog from a recent email to once again point...
The grab by all gov't is a simple manifestation of the extreme levels of debt. It is EVIDENCE of the last stage in a cycle that has repeated throughout history and the play book is being followed to perfection.
Because of this we can predict with confidence (in broad terms) the way things will unfold. Our gov't will tax all that they can and then take what we will allow. It is already happening.
FATCA is just one of the big chess pieces being used in this game but it's reach is so broad and it's tentacles run so deep that many foreign banks will no longer accept business from a US citizen. The cost of compliance added to the potential liability leaves them no incentive to even consider it.
Like most of my posts lately, this one is not a destination, a stopping off point in the discussion of FATCA. This is at best only a small glimpse into a deep, dark hole!
haha, now you see why Nova calls me "sunshine"? j/k (not really)
This blog from last week is kinda a story and like most stories it L@@Ks best standing all alone. So enjoy, as this one has no added commentary from me. :thug: Blessings, Memphis
This Could Destroy the Lives of Millions
Gwen is a dual American-Canadian citizen who has found herself in a serious bind due to FATCA, which has been dubbed “the worst law that Americans have never heard of.”
Her situation is far from unique and contains valuable lessons.
In case you’re new to FATCA, see this article.(below)*
Nick Giambruno: I recently heard your story on Canadian news and thought it was one that had to be told to our readers. Why don’t you tell us the basics of how you got caught up in this mess?
Gwen: I’m a Canadian from birth, and I’m also a US citizen from birth because I was born to a Canadian father and an American mother in the US. I have basically never had anything much to do with the US besides living there as a child.
I left very early, at the age of five, and lived the rest of my life as a Canadian. I knew that I was a dual citizen, but it really didn’t mean anything to me.
I really had no idea that the US bases their taxation on citizenship and not on residency, so to find that out now is a big shock for me and many, many other people like me. It’s estimated that there are a million dual American-Canadian citizens in Canada.
But I think there are actually many more than that, because they wouldn’t have counted somebody like me since I’m not in their system, and there are many more people like me who aren’t in their system—people who were born in Canada, from US parents, for example.
They are considered US persons for tax purposes. If you consider the people like spouses and children of people like me, I would say that maybe close to 10% of the Canadian population is directly affected.
The rest of the Canadian population is indirectly affected by having the cost of compliance that the banks are incurring foisted on them as raised fees, not to mention a general drain on our economy.
Nick Giambruno: Canada, in many cases, has higher taxes than the US, so you end up owing no taxes to the US. Even in this scenario, you are having issues?
Gwen: Yes, because there are still filing requirements even if you don’t owe any US taxes. And since I—and most others—didn’t have a clue about these requirements, I haven’t filed anything.
The main problem is with the FBAR forms—the forms where you are supposed to report foreign bank accounts. They come with enormous penalties.
Editor’s Note: See this article for more information on the FBAR form. (below)**
These forms were originally developed to try to catch US citizens who lived in the US and had money and unreported earnings in hidden offshore accounts. It was never meant to be for somebody like me, a dual citizen who permanently lives in a different country.
I consider these my domestic day-to-day savings, checking, etc. accounts that I have used for over 25 years. And they don’t really care whether or not the money in the account was yours or not.
For instance, if you have a mortgage, that’s considered your balance. But the US government considers me to be a citizen and that these are foreign accounts, and I am supposed to report them annually to the IRS under the threat of absolutely ridiculous penalties.
The American government is saying that I am a criminal unless I prove otherwise. They are trying to go after people with big money and they are actually catching little minnows like me.
Nick Giambruno: Even though you haven’t lived in the US since you were five years old, you are subject to US taxes and tax reporting.
That’s the same for any American, even if they have never set foot in the US, like an American who was born in China and lived there for their entire life. I would imagine that many of these people have no idea of the liabilities and unusually severe penalties hanging over their heads.
Gwen: They have no idea at all. Anybody I’ve explained this to doesn’t believe it, because they think it can’t be possible, it so obviously doesn’t make any sense.
Who in their right mind would think that this would make sense? So, yeah, it’s been almost impossible for me to get others to understand. A lot of people want to be in denial.
They don’t want to believe it’s true, so they are going to kind of wander along and hope that it goes away. I am just at a loss really at how to get people to really rally and understand that this is something that we have to stand up against.
Nick Giambruno: So why is this all of a sudden such an immediate problem? You’ve lived in Canada all your life. Why is this now so urgent?
Gwen: It’s because of FATCA, otherwise known as “the worst law that most Americans have never even heard of.”
Normally I would have said, “Well, I don’t care because I live in Canada, so I’m not going to follow your stupid law.” But it just doesn’t work that way.
FATCA is truly an extraterritorial law in that it forces every foreign financial institution in the entire world to provide the IRS with information on their American clients. So FATCA is forcing my banks to rat me out, and Americans like me.
I don’t think anybody or any company is going to want to have to deal with US persons because of all of this extra reporting. They don’t want to have US persons on their boards and whatnot, because then they are subject to extra regulatory burdens.
So that’s going to really hurt US citizens who want to work abroad. Even if they don’t live abroad, they can actually be hurt by being rejected as a business partner.
Nick Giambruno: Aren’t there less harsh penalties for non-willful violations? How is it determined if a violation is willful or not? It seems like a pretty grey area.
Gwen: It’s totally a grey area, and it is totally up to the discretion of the IRS to make that decision. I have no idea how they make that distinction. That’s why it’s so scary for people like me.
And if you make your case to them that your violation was non-willful and they don’t believe you, then too bad for you. There is no recourse.
Many people got lured in thinking they would get lighter penalties by claiming their violations were non-willful. But then the IRS can—and often does—turn around and say, “We changed our minds; we think you are willful, so we are going to charge you the maximum penalty.”
And it’s happened to people like old grandmothers, who got scared into coming forward because they wanted to be compliant. They have been married to a Canadian for over 50 years, and some are little widows living on their small amount of savings, and they can end up getting wiped out.
And it isn’t just the prospect of losing all of your savings, and potentially more. If your offense is deemed willful you could also face many years in prison.
Nick Giambruno: So you’re facing the prospect of years in prison and being wiped out of every single penny that you have saved if you ever return to the US. Are you afraid the US could do anything to you while you are in Canada, such as extradite you?
Gwen: No, they can’t really do anything like that. Canada has said that they will not impose the taxes or penalties from another foreign government onto their citizens.
So the US government can say that I owe many millions of dollars, but the Canadian government is not going to make me pay it and neither is my Canadian Revenue Agency.
They said they are not in the business of enforcing other peoples’ laws. But the problem is that my banks will discriminate against me regardless of any of those things.
As we mentioned before, increasingly nobody wants anything to do with US persons. I’m afraid my banks will close my accounts. If that happens, I’m going to have to come up with some kind of alternative.
Am I going to have to run a cash-only business? Am I going to pay cash and put all my money under my mattress? It’s a really hard thing to imagine.
Nick Giambruno: Is it any surprise, then, that a record number of Americans have been renouncing their citizenship? Does this trend seem logical to you?
Gwen: Absolutely; who would want to have this type of cloud hanging over them for the rest of their lives? It’s bad enough to have to file your taxes every year to a second country—even if no taxes are owed in the first place—and to see the costs that it entails to tax-filing professionals.
But to have the draconian penalties hanging over you for the rest of your life makes it just not worth it to retain US citizenship, in my view.
Nick Giambruno: Are Canadians aware of FATCA and the US system of citizenship-based taxation? What is the general awareness of these issues?
Gwen: It’s pretty low. I don’t think anybody really knows this, and even if they are told it, they don’t believe, because no other country in the world does it. So they think that’s not possible.
I don’t think our government wants Canadians in general to know about this, because they want to sign a FATCA deal by signing an Intergovernmental Agreement (IGA) allowing FATCA to take effect in Canada, very quietly under the table and pretty much spring it on us, and then say it’s a done deal.
Nick Giambruno: The penalty for a foreign financial institution that doesn’t comply with FATCA is a 30% withholding on all US transactions. Is Canada realistically going to be willing to suffer this penalty in order to resist FATCA?
Gwen: I can’t imagine that the US would actually cripple their largest trading partner to such a degree that we can’t do business with them anymore.
I mean that’s just ridiculous, and I don’t know how they are going to possibly enforce it. Who plans to hold this 30%, and who is going to take it?
Are people going to be able to ask for their 30% back if they don’t think it’s right—is there recourse? Where is all money from FATCA noncompliance penalties going to be put, and who is going to be in charge of administering it? The IRS?
Are they really going to be overseeing every single bank transaction and determining that this 30% has to be withheld? That’s millions and millions of transactions per day around the world—it’s mind boggling.
Nick Giambruno: Gwen, thank you for taking the time to share your story. I wish you the best in resolving your problems and driving awareness of this critical issue in Canada.
Gwen: Thank you.
Editor's Note: Canada has now signed a FATCA agreement with the US. See here for more details. (below)***
note: for those with interest, links to extra reading can be found in SC think tank posting. :handshake2:
User avatar NOVA
What is FATCA?
FATCA stands for The Foreign Account Tax Compliance Act (FATCA) which was enacted as part of the Hiring Incentives to Restore Employment (HIRE) Act on March 18, 2010.
FATCA creates a new information reporting and withholding regime for payments made to certain foreign financial institutions and other foreign entities.
The FATCA rules generally become effective with respect to certain payments made on or after January 1, 2014