This US law, whose staggered regime is set to come into effect through 2013 and 2014, demands Canadian financial institutions report to the United States’ Internal Revenue Service (IRS) the confidential account information of a large number of Canadian residents regarded as “US persons” under American regulations, most of whom are Canadian citizens. The Department of Finance gave notice in November that an Inter-Governmental Agreement (IGA) on FATCA was being negotiated, and the proposed terms have not been made public. The IRS has only recently issued the final FATCA regulations on 17 January 2013.

“This is not acceptable. These US laws intended to combat tax evasion by their residents sheltering wealth abroad, should not penalize Canadians who are complying with tax laws where they live,” said Erich Jacoby-Hawkins, the Green Party of Canada’s National Revenue critic.

“It would be a clear violation of our Charter of Rights and Freedoms to have Canadian banks, under the direction of the IRS, violate the privacy rights of some Canadian citizens or residents based on their current or former ties to another country, namely the United States,” added Jacoby-Hawkins.

“We must not permit Canadian financial institutions to comply with FATCA in violation of our own privacy laws, and if the US attempts to enforce FATCA against them, we must vigorously respond and seek legal remedy as is our right,” concluded Green Leader Elizabeth May, Member of Parliament for Saanich-Gulf Islands.

Note: The Green Party of Canada’s backgrounder on FATCA

The post IRS Tax Collection: Evasion of the US or Invasion of Canada? appeared first on Elizabeth May.

The Green Party of Canada is calling on the government of Canada to stand on guard against the demands of the United States (US) for extraterritorial enforcement of an American law: the Foreign Account Tax Compliance Act (FATCA). The Government of Canada must protect our citizens and residents from FATCA’s invasive violations of individual privacy, and refuse to make Canadian consumers and taxpayers pay the significant costs to enforce a unilateral American mandate that does not benefit Canada in any way.

This US law, whose staggered regime is set to come into effect through 2013 and 2014, demands Canadian financial institutions report to the United States’ Internal Revenue Service (IRS) the confidential account information of a large number of Canadian residents regarded as “US persons” under American regulations, most of whom are Canadian citizens. The Department of Finance gave notice in November that an Inter-Governmental Agreement (IGA) on FATCA was being negotiated, and the proposed terms have not been made public. The IRS has only recently issued the final FATCA regulations on 17 January 2013.

The United States government wishes to ignore the fact of Canadian citizenship in pursuing people who were born in the US or to an American parent but who are Canadian citizens, as well as others with US “indicia” (Canadians with an American spouse or other family member, with whom they may hold assets jointly; Canadians who may have lived or worked in the US and acquired a Social Security Number, and so forth).

For example, the US recently required such Canadians to file with the IRS annual federal income tax returns on their financial accounts in Canada, including TFSAs, RESPs, and RDSPs, which are considered foreign trustsunder US law. They face exorbitant penalties for failing to report the balances of these accounts even if they have no tax owing.

While no one disputes the need to combat international tax evasion, serious concerns have been raised by the Canadian Civil Liberties Association and others about FATCA’s impact on the rights of Canadian citizens and residents. There are also concerns about the costs FATCA would impose on Canadian institutions and consumers, as well as about the bigger question of why a US law should be enforced in Canada at all.

There are major concerns about the legality of changing the terms of the US-Canada tax treaty without legislative amendment and attendant public and parliamentary review, with the potential for major ramifications for Canada’s sovereignty.

The Government must not rush into signing an IGA with the US until public comments have been thoroughly evaluated and Parliament has had a chance to examine and debate whether an IGA and FATCA are in Canada’s interest.

As Finance Minister Jim Flaherty himself noted in 2011 “Frankly, Canada is not a tax haven. People do not flock to Canada to avoid paying taxes.  We have existing ways of addressing these issues with the United States through our Bilateral Tax Information Exchange Agreement. We share the same goal of fighting tax evasion and we already have a system that works.”

The federal government must refuse to sign the Inter-Governmental Agreement to implement FATCA and instead advise their US counterparts that these policies are an unacceptable intrusion into Canadian sovereignty, and work to develop an arrangement that would mitigate the effects of current US tax laws that unjustly target honest Canadian citizens. These measures should be examined by the appropriate House of Commons committees, in consultation with the Privacy Commissioner of Canada.

We must not permit Canadian financial institutions to comply with FATCA in violation of our own privacy laws, and if the US attempts to enforce FATCA against them, we must vigorously respond and seek legal remedy as is our right.

If the US feels the existing Canada-United States Convention with Respect to Taxes is not working, they should provide specific details and suggestions on how to improve it through legislative amendment without sacrificing the rights of Canadians to foreign interests.

The post Backgrounder : Canada and FATCA appeared first on Elizabeth May.

What I had not been expecting was the callous, Kafka-esque nature of recent immigration decisions.   Here are a few examples of cases we are working on at the moment. (Names and nationalities removed to respect privacy).

• A young pregnant woman applied to come to Canada, sponsored by other relatives from her country of origin.  At the time, she was told she could not apply for an unborn child.  When the child was three, her immigration approval came through, but then she was told she had not applied for the child so could not bring him. She headed to Canada, leaving the boy with relatives, under the belief she could sponsor her child once she established residency.  Two years later, Immigration officials have rejected the application to allow her 5 year old son to join her, and have written him:   “Dear Mr. XX…. You do not fit any acceptable classification of sponsored person…” – as if he could read.  Maybe it is just as well he cannot.
• A Canadian citizen has had her 97 year old mother living with her from the UK while her mother applies for permanent residency, which has been in process since 2008. The mother has no living relatives in the UK anymore, and the family expends enormous sums for health care insurance.  The most recent letter from Immigration Canada has told her the process to determine whether her 97 year old mother can stay will take another 47 months.
• A refugee from political strife who, at the tender age of six, had seen his entire family slaughtered in his country of origin has applied to come to Canada.  He is being sponsored by a Canadian citizen, another refugee from the same turmoil, whose family adopted the younger boy in the refugee camp.  The sponsor, his older brother, is now in our military and has served overseas.  He started the sponsorship process seven years ago.   Immigration Canada has told the younger brother, now in his twenties, that his country of origin is fine and he should go back.

I could go on and on.  There are married couples who cannot reunite as the Immigration process drags on.  There are family members who only want a visa to make a short visit to see sisters, parents, etc, who are refused.  There are heart-wrenching compassionate grounds that are ignored.  The individual heartbreaks should be no surprise.  Here are some statistics on the Harper government’s immigration record:

Since the Conservative Party took power, the processing time of visa applications for parents and grandparents has increased dramatically.  The number of parent and grandparent visas issued in 2006, based on the 2005 targets, was 20,005. The number of visas for parents and grandparents that will be issued this year is 11,200, a reduction of almost 9,000 or close to 44 per cent. 

The total processing time of a sponsorship of a parent application including the time for the processing of the sponsorship in Canada and the processing of the application overseas has increased between nine and thirty months depending on the visa post.

Moreover, given that the number of visas issued is being reduced, the backlogs will increase and the processing times will increase. The failure of the government to address this issue is creating immense hardship on immigrant families.

(April 20, 2011 press release from Lawyers practicing Immigration Law)

In the House in June, Bob Rae, interim leader of the Liberal Party, read the text of an email from an immigration official to one of the Liberal caucus to the effect that they were under political orders that family reunification was not a priority.  Should instructions change, the email concluded, the process would be improved.

There are legitimate debates to be had about immigration policy.  Some environmentalists believe Canada should reduce immigration on ecological grounds.  But this government is bringing in immigrants with marketable skills, while leaving families in desperate emotional turmoil.  The basic principles of family reunification are being thwarted by stealth; not by principle.

Meanwhile, the so-called Human Smuggling Bill will be re-introduced.  This bill panders to xenophobia prompted by the sight of boatloads of refugees on our shores.  Of course, we wish we had accepted boatloads of Jewish refugees from Nazi Germany, but we didn’t.  Strangely, this bill, marketed as a way to prevent the unscrupulous from preying on the desperate, will target people arriving by boat for special treatment.  Those refugee applicants will be placed under mandatory arrest and detention for one year.  This applies to men, women and children who arrive by boat.  Most refugee claimants in Canada arrive at our airports.  When I asked Immigration Minister Jason Kenney about this discrepancy, he told me he can designate entry anywhere to meet the terms of this act.  I pointed out to him that it was wrong to talk about refugees “jumping the queue,” as political refugees, by definition, are not able, due to fear of persecution or death, to stay in their country of origin to apply to leave.  Mr. Kenney says the queue is to go to a U.N. refugee camp and wait there. 

Canada’s policy toward immigration and refugees has changed dramatically while the Conservatives had a minority government.   We need to discuss these issues and protect human rights now that Mr. Harper has his majority.

[NOTE to Canadian citizens born in the U.S.:  My office is working hard to sort out what is and is not required for IRS filings.  I have written the PM on this issue and am meeting soon with the U.S. Ambassador to Canada.  If this applies to you, please contact my Constituency office to be placed on an information update list so I can keep you informed. 250-657-2000].

The post Will government create further hardship for families, immigrants and refugees? appeared first on Elizabeth May.

September 12, 2011

Dear Prime Minister,

I am writing to express my concern about current U.S. tax and foreign bank account laws and the recent ‘tax crackdown’ by the Internal Revenue Service as it applies to Canadian citizens born in the U.S.

It is my understanding that the United States government wishes to ignore the fact of Canadian citizenship in pursuing naturalized Canadian citizens who were born in the U.S. Recently, the U.S. has required Canadians born in the U.S. to file annual federal income tax returns on their financial accounts in Canada, which are considered offshore accounts under the Bank Secrecy Act. I also understand that they face exorbitant penalties for failing to report the balances of these accounts even if they have no income tax owing to the IRS.

The Canadian oath of citizenship does not require renunciation of previous citizenships. If it did, many, if not most, naturalized Canadians would have renounced U.S. citizenship.  In my own case, for example, I have lived my entire adult life in Canada.  I would have taken any citizenship oath to be fully engaged in the life of my country of choice.

Clearly, any Canadian born in the U.S. with earnings in the U.S. or living part time in the US should file tax returns and pay U.S. taxes.  However, as our Prime Minister, I hope you will stand up for Canadian citizens who are neither working nor representing any burden to the US governmental system.

Many of my constituents have written to me to express their concerns about the penalties levied by the IRS for non-compliance in this matter. They also express their outrage about the changes contained in the Foreign Account Tax Compliance Act (FATCA), set to come into effect in 2013, which would see Canadian financial institutions required to divulge the confidential account information of dual Canadian-U.S. citizens to the IRS. The majority of these people have spent their lives working and paying taxes in Canada, and were unaware that these laws

applied to them.  Many are faced with the loss of substantial life savings due to the fines being levied against them and claim that they cannot avoid the penalties by retroactively filing tax returns. If this were not enough, they are now faced with the prospect of further intrusion into their lives as represented by FATCA.

This is not acceptable. Given that these U.S. laws were intended to combat tax evasion by those sheltering wealth abroad, it is imperative that we make distinctions for hardworking Canadians. If we are interested in the equality rights of all Canadian citizens, we ought to inform U.S. authorities of the wrongheadedness of these policies. FATCA takes everything that is wrong with the current laws and deepens the hardships they impose on those Canadian citizens who are adversely affected.  The impact of the draconian moves by the U.S. government could significantly impact the Canadian economy by driving thousands of Canadians, who happened to have been born in the U.S., into bankruptcy.  These moves are in no one’s interest.

On behalf of my constituents, I respectfully request that the federal government advise their U.S. counterparts that these policies are an unacceptable intrusion into Canadian sovereignty, and work to develop an arrangement that would mitigate the effects of current U.S. tax laws that unjustly target honest Canadian citizens.

I look forward to hearing from you on this matter.

Sincerely,

Elizabeth May, O.C., M.P.
Member of Parliament for Saanich – Gulf Islands

cc: Hon. Jim Flaherty and Hon. John Baird

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