It is estimated that the five largest banks in Canada have already spent about C $ 750 million (or US $ 693.5 million). This amount does not include the ongoing costs of compliance -only expenses related to the initial launch for FATCA reporting.
The cost of FATCA
FATCA took effect on 1 July 2014 and is an effort of the United States to discover taxpayers with offshore accounts. The United States believes lose about $ 100 billion a year in tax losses of tax evasion and launched a global effort to recover those lost dollars. Countries around the world sign agreements whereby they report to the United States on the accounts of US customers. In addition to FATCA, some countries have signed reciprocal agreements, so that the United States also report the accounts of their taxpayers with accounts in the United States.
Canadian banks have not been able to quantify the costs of ongoing compliance. But there could be many, the staff will be required to answer questions, provide additional data to US government reports and training of additional employees may be expected to increase sales amid strict reporting requirements. All under FATCA reporting.
The IGA signed FATCA agreement between Canada and the United States in February 2014 requires that banks will report the activities of their US accounts to the Canada Revenue Agency, the country’s tax collector. The CRA then share the necessary information with the IRS.
There are about one million US citizens living in Canada, which is one of the largest populations of American expatriates in the world. And they are not happy that the long reach of Uncle Sam has extended to Canada. In fact, according to a Wall Street Journal, some dual citizens are now considering a constitutional challenge in the Canadian legal system. The Alliance for the defense of Canadian sovereignty is trying to raise $ 1.5 million to pursue a lawsuit.
“I do not like the fact that the Canadian government will turn the power on my information. It is a violation of my privacy,” said President Stephen Kish. “Canada has decided to cede control of its ability to legislate in the US”
Kish acknowledges that US citizens have always had a requirement to file tax returns, but it was not well known. He recovered to produce his tax returns there 10 years, but up to FATCA, the IRS did not push hard for American expatriates to cooperate.
Kish is not the only spearheaded efforts against back against FATCA there are allies in the fight: Republican Senator Rand Paul of Kentucky introduced a bill to repeal the FATCA, the National Committee Republican adopted a resolution calling for its repeal and Republicans overseas reported their own legal challenges, both citing the invasion of privacy as the main reason for its unconstitutionality.
But it’s certainly an uphill battle, as this article claims that there bipartisan support for such measures as denying passports to those due to over $ 50,000 in back taxes, a more intrusive look at the size of the mortgages (to determine those eligible for the mortgage interest deduction), the penalties on tax preparers that allow customers to place undue claim expenses, outsourcing collection for collectors of private debt, even grasp payments Medicare doctors.
There are hundreds of thousands of Americans living in Canada who are completely unaware they are affected by FATCA. It is the US and Canadian governments to provide them with the information they need to stay in compliance and avoid penalties and possible criminal charges that may occur if FATCA reporting rules are not followed.