Monthly Archives: August 2018

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Identity theft in a #FATCA and #CRS World: The Role Of the U.S. Social Security Number

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Introduction

Her thoughtful post includes:

FATCA Security Risks with Sensitive Data
The Foreign Account Tax Compliance Act, commonly called “FATCA” has caused Americans abroad to be fearful of security risks when their personal financial information is reported by non-US financial institutions or foreign government agencies to the IRS. FATCA reporting will include the name, address and taxpayer identification number of each US account holder at the financial institution; the account number; account balance and value; the account’s gross receipts and gross withdrawals or payments; and other account related information requested by the Internal Revenue Service (IRS). The Treasury Inspector General for Tax Administration has expressed concerns with the security of data transmission as mandated by FATCA.  In September of 2014 the IRS issued a fraud alert to all international financial institutions that are complying with FATCA. Scam artists posing as the IRS have fraudulently solicited financial institutions seeking account holder identities as well as financial account information.  Financial institutions directly registered to comply with FATCA, and those in jurisdictions that are treated as having an IGA in effect to implement the FATCA provisions through their home governments, have already been approached by parties impersonating themselves as the IRS. The IRS now has reports of incidents from various countries and continents.

The most significant piece of information that a U.S. citizen discloses to a “Foreign Financial Institution” under the FATCA IGAs is his/her TIN (“Taxpayer Identification Number”) AKA his “Social Security Number”.

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As Sir John Templeton said: The best time to invest is when you have the money – The 7 Habits Of Highly Effective #Americansabroad

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The late Sir John Templeton pioneered the concept of “international” investing. Of course, by the standards of today, this would be considered “offshore investing”. He also pioneered the concept of “renouncing U.S. citizenship“. It is clear that Sir John’s renunciation of U.S. citizenship was the best investment decision he ever made. Like many Americans who are forced to renounce U.S. citizenship to create business opportunities, Sir John likely renounced to save his mutual fund business.

Sir John was fond of saying:

“The best time to invest is when you have money.”

Of course, that is a more difficult concept for Americans abroad. (The problem is particularly acute in Australia where it is believed that the Australian Superannuation may be subject to U.S. taxation.) Time after time, in country after country, I speak with people who avoid investing because they are Americans abroad. This is a great mistake.

It’s important for Americans abroad to heed the teaching of Sir John Templeton. They must (1) learn to invest when they have the money and (2) discipline themselves to acquire the money to invest!

One of my most consistently read posts is “The biggest cost of being a “dual Canada/U.S. tax filer” is the “lost opportunity” available to pure Canadians“.

I have been meaning to write a “follow up” post for a long time. Perhaps, the message was too simple. Perhaps it is only worth a tweet. Perhaps it’s dangerous to expand such a simple thought into multiple paragraphs, but here goes …

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The possible end of U.S. "citizenship-based taxation: Two Programs with @SolomonYue -Toronto August 12 & August 16, 2018

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In addition to the meeting organized by the American Chamber of Commerce described below (August 16), there will be a second, more informal program for individuals affected, expats, their families and friends. This format would be a more intimate question and answer which will be focused on individuals subject to the U.S. CBT regime. This second event will take place on Sunday, August 12, from 2:00 – 4:00 pm on the U of T campus. Pre-registration is requred. If you are interested, please email nobledreamer16 at gmail dot com Cost: $20
 
AMChamCanada logoDO_NOT_DELETE_AmCham_Canada_generic_event_image
 
Many of you reading this post will NOT be in the Toronto area! This are important events! Please actively share this information with all people who you believe would be interested or affected by this!
 
 
A LIGHT AT THE END OF THE TUNNEL OR ANOTHER ONCOMING TRAIN: THE POSSIBLE END OF U.S. CITIZENSHIP-BASED TAXATION
If you are an American citizen residing and doing business in Canada, you bear the pain of the heavy tax burden endured by all U.S. citizens due to the fact that the U.S. is the only major country that imposes worldwide taxation on its citizens no matter whether they live in the U.S. or in another country. In addition, the U.S. imposes significant penalty laden reporting requirements on U.S. citizens living in Canada and abroad.
Change is a possibility.
Did you know that there is a possibility that the U.S. Congress may introduce, debate and vote upon a bill that may ease this worldwide taxation burden on U.S. citizens living and working in Canada? This bill would enact ‘Territorial Taxation for Individuals (TTFI)’. It is a tax cut for 9 million overseas Americans by ending double taxation.
 
Solomon Yue headshot(1)Solomon Yue, CEO of Republicans Overseas has been involved with drafting the TTFI bill. Mr. Yue, who is currently working with AmChams throughout the world, will present publicly shareable information about the TTFI bill, and discuss its progress as it journeys through the legislative process. He will be encouraging AmCham Canada to lend its support in the global effort to encourage Congress to move forward with this legislation.
 
Elena Hanson headshot 2(1) Elena Hanson, Managing Director of Hanson Crossborder Tax Inc. and a member of Democrats Abroad. Elena will be speaking on the logistics and burden of U.S. tax filing obligations as an American in Canada.
 
John Richardson headshot(1) John Richardson, a Toronto Lawyer of Citizenship Solutions, will also be joining Elena and Solomon to speak on the lost opportunity cost of being a dual U.S.-Canadian tax filer: Canadian residents who are subject to the U.S. tax system do not have the same financial planning and other opportunities that non-U.S. citizens have..
 
 
Date: Thursday, August 16, 2018
Time: 6:15pm to 9:00pm
Place: St. Michael’s College, Alumni Hall, Room 400; 121 St. Joseph Street, Toronto (paid parking near building; nearest subway station is Museum) MAP
Cost: $20 +tax (AmCham members); $35 +tax (non-members).
Pre-registration is required. Registrations due August 13.
Register
Info: AmCham Toronto TTFI Event
 

So, you have received bank letter asking about your tax residence for CRS or FATCA – A @taxresidency primer

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Prologue: In the 21st Century, The Most Interesting Thing About A Person Is His/Her Tax Residency

Introduction – So, what’s this “tax residence” stuff about? What does “tax residence” mean?

In 2014, as people started to receive “FATCA letters” I wrote a lengthy post describing “What to do if you receive a FATCA letter“. Information exchange under the Common Reporting Standard “CRS” has begun in 2018. As a result, I am writing this post which is to explain what the CRS is and how it relates to the FATCA letter. It is important to understand that the “CRS letter is actually a combined “CRS/FATCA” letter which is more likely to be received than the original FATCA letter. I urge that those who have received a letter of this type to read this post PRIOR to seeking professional advice!!!

You are reading this post because you have received a letter from your bank that is asking you to identify the countries where you are a “tax resident” and/or whether you are a “U.S. Person”.

The purpose of this post is to help you understand:

– why you are receiving the letter
– what the letter means
– what is the meaning of “tax resident”, “tax residence” and “tax residency” (terms which are used interchangeably)
– why “tax residency” is important to you
– the significance of being a U.S. citizen or Green Card holder
– how to identify where you may be a “tax resident”

Why are you receiving this letter?

The letter is intended to fulfill the bank’s due diligence obligations under both the OECD Common Reporting Standard (all countries of “tax residence” except the United States) and FATCA (whether you are a “tax resident” of the United States).

In other words, the letter is for the purpose of satisfying bank “due diligence” under two separate reporting regimes – FATCA and the OECD Common Reporting Standard “CRS”

This is long post which is broken into the following parts:

Part A – How does FATCA differ from the “CRS”?

Part B – The Combined FATCA/CRS Letter

Part C – “Tax Residency 101”: It’s about where you should be paying your taxes

Part D – Different definitions of “tax residence” – Not all countries define “tax residence” in the same way

Part E – Oh My God! I think I might be a “tax resident” of two countries – What is a “tax treaty tie breaker”? How does a “tax treaty” tie breaker work?

Part F – A “U.S. citizen” cannot use a “tax treaty tie breaker” to break U.S. “tax residence”. How then does a “U.S. citizen” cease to be a “U.S. tax resident”?

Part G – How a “permanent resident” of the U.S. – AKA “Green Card Holder” – ceases to be a U.S. tax resident

Part H – Are you, or have you ever been a U.S. citizen or Green card holder? Sometimes it’s not what it seems.

Part I – “Relinquishments of U.S. citizenship and loss of U.S. citizenship for tax purposes

Part J – Beware! You don’t sever “Tax Residency” From Canada or the United States without being subject to massive “Exit/Departure Taxes!” – You may have to buy your freedom!

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