Sun Life prepares to turn clients over to IRS for processing – bitter end to a company with a proud history




Once upon a time there was a Canadian life insurance company. It’s name was Sun Life. Sun Life was founded  in 1865 in Montreal (predating Confederation by two years). It was a proud Canadian institution. It was in the business of protecting families. The story of Sun Life parallels the history of the world since 1865. It is an international company with a presence in most of the developed world. It saw itself as a “good corporate citizen”. During World War II the wealth of Great Britain was stored in the Sun Life building in Montreal. During World War II the company provided entertainment for Canadian troops abroad. After World War II it helped “protect” the middle class of North America. The name “Sun Life” meant “trust”. If you want to learn about Sun Life, review a bit of history and understand Sun Life’s important role in Canadian history, I urge you to watch the video history of Sun Life financial.

No company that has been in business as long as Sun Life could be “mistake free”. But, businesses should never be judged by their mistakes (we all make them). Companies should be judged by how they remedy their mistakes. Like many insurance companies, Sun Life participated in selling the “vanishing premium” whole life policies of the 1980s. (The basic theory was that premiums contained a “built in” extra amount that was to be invested to earn the money to make the payments after a projected number of years. The problem was that the calculations assumed a level of interest rates that was unsustainable. The policies themselves required the annual payments for the life of the policy. You get the idea …) In any event, Sun Life was one of the first companies to settle a “class action” lawsuit. The lawsuit was settled on the basis that the affected clients would not have to pay premiums beyond the premium offset date. This is what clients believed they were getting. Once again Sun Life proved that it was a great institution that could be trusted! Although it was not a perfect solution. Sun Life agreed to NOT require that affected customers to pay any more premiums.

Sun Life has a big legal department and knows that many of its clients are U.S. persons

Sun Life failed to tell its customers who were U.S. persons in Canada that many of their life insurance offerings would lead to tax and reporting problems for U.S. persons! Did they misrepresent the policies? Will they be forced to defend a class action over this lack of disclosure? Time will tell. Hopefully Sun Life will continue its history of being reliable and protecting its customers. After all, the only thing a Life Insurance company has its reputation for protecting its customers. That’s what insurance is for. That’s what Sun Life is all about!

Sun Life Clients need “Sun Life Protection” more then every before!

On December 3, 2012 an announcement on the Sun Life site informed the world that rather than provide protection for its customers, that Sun Life was planing to assist the IRS in locating and identifying U.S. persons (which include Canadian citizens). To ensure no mistakes, here is the announcement on the Sun Life site as it appeared on December 17, 2012.  This is shameful, extraordinary, shocking and a complete betrayal of what SUN LIFE  STANDS FOR!

The U.S. Foreign Accounts Tax Compliance Act (FATCA) and your group retirement plan

December 3, 2012

In March 2010, the U.S. federal government passed the Foreign Accounts Tax Compliance Act (FATCA).

The Act increases the ability of the U.S. Internal Revenue Service (IRS) to detect tax evasion by U.S. persons who hold financial accounts at foreign financial institutions. This includes U.S. persons who hold a group retirement plan account administered by Sun Life Financial and other Canadian financial institutions.

What this means to you

According to the latest information beginning January 1, 2014, FATCA will require Sun Life Financial to collect and report certain information on accounts held by U.S. persons to the IRS.

This means that we may require plan sponsors or plan members to provide us with information or documentation to determine if a plan member is, or is not, a U.S. person (a term that refers generally to a U.S. citizen or U.S. resident in this context). It should be noted that the term “accounts” includes life insurance policies with a cash value and annuities.

It also means that we may have to report certain personal and account information to the IRS or the Canada Revenue Agency if a plan member is identified as a U.S. person.

At this time, we do not have the specific details relating to these requirements. There are two reasons for this:

  1. Regulations are not finalized: The final regulations that will outline the detailed requirements of FATCA have not been released. We understand the IRS may release these before the end of 2012.
  1. Intergovernmental agreements are being negotiated: The U.S. is in the process of negotiating intergovernmental agreements with Canada and other countries with the goal of reducing the scope of FATCA’s compliance requirements for financial institutions in those countries. If Canada enters into such an agreement, it may allow us to report U.S. person account information to the Canada Revenue Agency instead of to the IRS directly. The Canada Revenue Agency would then be responsible for reporting the information to the IRS.

We’ll keep you informed

Sun Life Financial is currently participating in various FATCA industry working groups in Canada, U.S., and Hong Kong to address issues related to the implementation of FATCA. We’ll continue to monitor and track FATCA developments and keep you up-to-date on any changes that could affect you or your plan members.


Please contact your Sun Life Financial Group Retirement Services representative.

It is clear from the Sun Life announcement that:

1. Sun Life is simply prepared to follow a U.S. law and  actively seek out and identify its customers who the U.S. defines as “U.S. persons” even though they are Canadian citizens living and working in Canada.

2. Identify them as being members of certain retirements plans (which may well be PFICs under U.S. law).

3. Identify their clients who own life insurance policies with “cash value” (many investments are prohibited to U.S. persons and no U.S. person can have anything but “term insurance”).

This is a shocking betrayal of its clients. It is estimated that approximately one million Canadians are considered by the IRS to be “US persons”. They are your friends, your neighbours and their families. These people are being subjected to an IRS campaign to identify them. (Many of these people don’t even know they are U.S. persons.)

Sun Life built its business on protecting its customers. Instead Sun Life is doing the exact opposite. Sun Life is doing two things:

1. It is failing to provide protection by considering complying with the demands of a foreign government.

2. It is going much further than failing to provide protection. Sun Life is specifically cooperating with the IRS by turning over the names of it client to the IRS and sending them off to IRS processing. Sun Life is actively assisting the IRS.
How can a company that built it business by selling protection for its clients participate in such immoral and outrageous behavior? Sun Life has only its “moral capital”. This is not a question of obeying Canadian law in Canada (which one would expect). This is a question of of obeying the law of a foreign country.  FATCA  is specifically designed to loot the Canadian Treasury.

What should Sun Life Do?

Sun Life has a long history of providing protection for its clients. To provide protection is the very reason it exists! I call upon Sun Life to evaluate its conduct. I call upon Sun Life to consider whether to comply with a U.S. law and apply that law to Canadians in Canada. I call upon Sun Life  to live up to its promise to provide protection.

If Sun Life fails to protect it clients, it has repudiated its very reason for existing! By seeking out U.S. persons and turning them over to the IRS for processing Sun Life would betray its clients. It would also betray itself. It would have betrayed its very reason for being – a bitter end to a company with a proud history!

Sun Life still has time to honour its traditions. Sun Life still has a chance to do the right thing and the moral thing!

What can you do?

If you agree with these sentiments, then you get the word out. If you are a Sun Life customer let them know how you feel. Sun Life has is in the process of betraying the trust of its customers Under no circumstances should you do business with Sun Life of Canada!

While you are at it, get the word out that the world must:

Stop citizenship-based taxation – Repeal FATCA!

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