RE: FATCA (Foreign Attack To Control All)

It seems strange to be writing to American government officials. The last time I did that was when I wrote to President Richard Nixon in 1970 when I was nineteen. That letter was related to my distress at the Vietnam war and the killing of four students by the National Guard at Kent State.

As a Canadian citizen for the past 40 years, it never occurred to me I would one day again write to a US President and other U.S. officials.

I am doing so because you are now attempting to reclaim me and my finances as your own.

BECOMING CANADIAN:

I moved to Canada as a spiritual draft dodger and a young bride (long since divorced) in 1971.

Internal Revenue Service didn’t care about me then. I didn’t have any money. I was young. Copies of my records from Citizenship and Immigration Canada (CIC) confirm I immigrated to Canada with the grand sum of $200.

I applied for Canadian citizenship two days after I was eligible in 1972 (I was able to fast track because I was married to a Canadian). On April 27, 1973, I became a proud Canadian citizen.

I have voted in every federal, provincial and municipal election in Canada since then. I worked for a Canadian provincial government for decades.

You may wonder why I’m telling you all this. I’m doing that because at the time, becoming a citizen of another country, working for a foreign government and voting in a foreign election meant “permanent and irrevocable” loss of U.S. citizenship.

I had no idea until 2004 that U.S. Supreme Court reinstated my citizenship in 1986 without my knowledge or consent (and that of many others around the world) by ruling that criteria for loss of citizenship was unconstitutional.

This may be difficult for you to understand, but I do not follow either the decisions of a foreign Supreme Court or your country’s tax laws. Why would I? I pay taxes to my country of citizenship where I worked, earned an income, saved and invested.

Even learning of the Supreme Court decision nearly 10 years ago, I thought the choice was I could have my U.S. citizenship reinstated. I had no idea I was forced to resume U.S. citizenship.

I now realize United States used to punish people who became citizens of other countries by stripping them of U.S. citizenship. Now you do it by trying to force U.S. citizenship on them.

Why Do You Want to FATCA Me?

I have two questions for you: Why do you want to FATCA me? What right do you have to now reclaim me as a “US person” to scoop up information about my finances?

Myths vs FATCA is wrong.  I am not a myth. I am not a tax cheat. 

I am a sixty-two year old Canadian woman. I am retired after careers in Canada in social services, human resources management and in part-time freelance writing and broadcasting. I have had multiple sclerosis for 29 years. I have always been fully compliant with my Canadian taxes (and US taxes before I immigrated to Canada).

I have no economic connection to United States. Over four decades I have lived in Canada, I have enjoyed visits back to Pennsylvania to visit family and friends. I spent money in stores, restaurants and hotels and on entertainment during those visits.

My grandparents, father and stepfather are all gone. My most recent trip was to see my mother for her 90th birthday. I will visit again next week to see her and to try to give my sister and her partner a bit of a break for Mom’s caregiving.

After my mother’s death, I plan to never visit U.S. again. I fail to see how that will help your economy. That’s not my problem.

My problem is FATCA. You call this Foreign Account Tax Compliance Act (FATCA). I call it Foreign Attack to Control All.

Read more.

So what on earth is FBAR and FATCA, and why should particularly any American person residing overseas care?

Well both of these financial information forms may be required annual filings.  IRS wants to know how much you have squirreled away in foreign accounts. 

If you are an American citizen or resident with financial accounts or assets outside the US, whose aggregate values exceed $10,000 (FBAR) or $50,000 (FATCA) respectively, you need to know the acronyms FBAR and FATCA.  FBAR stands for the Report of Foreign Bank and Financial Accounts act and FATCA stands for the Foreign Account Tax Compliance Act.

Congress enacted these laws to address what they perceived as tax abuse by US persons through the use of offshore accounts. The laws require individual taxpayers and foreign financial institutions (FFIs) to report to the IRS bank account information, including the name, address, taxpayer ID number, account number, and account balance (or value).

FBAR requires individuals to report accounts whose aggregate value exceeds $10,000 at any time during the calendar year.  FATCA requires individuals and FFIs to report similarly, but the value threshold is triggered when the aggregate value of a person’s assets exceeds $50,000. 

While the reporting regimes for individuals under FBAR and FATCA were already in place, the regime for FFIs was scheduled to become effective January 1, 2013 by which time the IRS would have data on file for large foreign asset holders to compare with information reported by taxpayers.  Shades of George Orwell.

FBAR reporting is due June 30th of the year following the year the account holder meets the $10,000 threshold.  The information is reported via Form TD F 90-22.1.  It is an information return filing, and not an income tax filing.  Nonetheless, the penalties for failure to report are heavy-handed: Non-willful failure to file is $10,000; willful failure to file is the greater of $100,000 or 50% of the value of the foreign accounts. Orwellian and confiscatory.  No penalty is assessed if the IRS determines a late filing was due to reasonable cause.

FATCA reporting by taxpayers begins in 2012 for assets held in taxable years beginning on or after January 1, 2011.  Like FBAR, it is an information return filing.  Taxpayers are required to file Form 8938, which must accompany their tax return.  Failure to report will result in a penalty of $10,000.  A penalty of up to $50,000 is assessed for continued failure to report after IRS notification.  Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of forty (40%) percent.