"The CBA and banks in Canada have been standing up for bank customers and voicing concerns with FATCA for a number of years. . . . We also went to Washington to meet with IRS and U.S. Treasury officials and Canadian Embassy officials. Last year, the CBA also made a presentation in Washington at public hearings before Treasury and the IRS and our president spoke out against FATCA in speeches in Calgary and Vancouver as well.
"We submitted an opinion piece with our concerns about FATCA to the Washington Post and the Wall Street Journal. It did not get published.
"Unfortunately and despite worldwide efforts, U.S. officials have no intention of repealing FATCA. So, governments around the world have decided that developing bilateral intergovernmental agreements (IGAs) with the U.S. is the best way to ensure that the domestic rights of their citizens are respected while still sharing relevant taxpayer information bilaterally. Once the Canada/U.S. IGA is finalized, it will be reflected in Canadian tax law and financial institutions will have to abide by these requirements.
"We believe this is the best approach and support the government's actions because the alternative would potentially expose Canadians to punitive U.S. withholding taxes on income from their investments, including retirement income."
From the October 19 posting on IBS:
"We agree with your opposition to FATCA as we have said all along. We have raised those concerns on numerous occasions with the U.S. Treasury, the IRS and other U.S. officials in both public and private meetings.
"The U.S. government is not going to repeal FATCA and the Canadian government is negotiating an IGA with the U.S.
"We have made our concerns about FATCA known to the Canadian government, but it is now up to them to negotiate an IGA that will hopefully address your concerns and ours and balance out Canadian law and rights with the requirements of FATCA. We have no control over the negotiations or the content of the IGA and neither do the banks or other financial institutions.
"[T]he financial services industry has not capitulated and we are not enthusiastic about an IGA. Our concerns about FATCA have not changed but the reality is that an IGA is coming."
In view of those statements, we believe the following three points summarize the CBA's position on an IGA:
- FATCA repeal is impossible: The CBA claims that it as well as others in the financial services industry have exhausted all options to get rid of FATCA. Therefore, compliance with FATCA is unavoidable.
- An IGA is inevitable: Because of FATCA's inevitability, an IGA to impose FATCA on Canada is considered by the CBA to be the "least bad" option. The IGA is being negotiated between the Canadian Government and the U.S. Treasury Department, and also can be considered inevitable.
- An IGA is acceptable to Canadians: The CBA considers an IGA to be the best option to protect Canadian citizens and residents ("balance out Canadian law and rights with the requirements of FATCA").
There is no foundation to any of these positions, as we outline below:
1. FATCA repeal is impossible:
It is not!
The United States does not have a parliamentary system of government. "U.S. officials" at IRS and the Treasury Department (i.e., the Executive Branch) are mandated to implement and enforce legislation passed by Congress. They can't repeal it. Nonetheless, as the CBA stated:
"We also went to Washington to meet with IRS and U.S. Treasury officials and Canadian Embassy officials. Last year, the CBA also made a presentation in Washington at public hearings before Treasury and the IRS."
Beseeching the "enforcers' of legislation is not the way you get changes from the "creators' of the legislation. Meetings with these officials are not just useless, they may be counter-productive. We understand representatives of the CBA have made limited efforts to convince some U.S. Senators and Congressmen of Canadian banks' concerns. U.S. legislators, unfortunately, care about their own constituents, not foreign banks' headaches (even if they are caused by a U.S. law).