TD Ameritrade (TDA) should indeed merge with E*Trade if only to obtain some useful California mortgage exposure. Shoot, the bad taste of the $111m in bad loans E*Trade reported last time around can only fade with time - just lie back and think of the revenue diversification. Jana Partners and SAC Capital know a good thing when they see it; and what's good for them is surely good for shareholders.

However, as a mere holder of a United States TDA account the scribe has more prosaic concerns about its mastery of core operations than with whom it jumps into bed next. Premium discount brokers must be more than mere cheap fillers. Their service must be sound; and client accounting bullet proof.

Yet consider these gems in reply to why TDA chose to ignore a double taxation agreement contrary to its previous practice and to the detriment of the scribe:
"Our system shows that we do not have a W-8BEN on file for you, which is why you see the foreign tax withholding posted to your account. The W-8BEN is an IRS form that is required for Foreign Tax Status customers."
Ouch. The reflexive get-a-grip-of-your-paperwork-Sir approach. One email reply later:
“We apologize for the confusion. We do have a valid Form W-8BEN on file for your account.

The dividend payment you are inquiring about was paid from a foreign company located outside of the US. As such, any dividends it pays to shareholders outside of that country are subject to that countries' foreign tax rate. This rate of taxation is determined by that country and the withholding is done at the source of the dividend payment, not by TD AMERITRADE. We are simply reporting in your account the amount that you received and the amount that was withheld from the payment.”
Polite, simple, classic and disingenuous. The I-wasn’t-even-there-Guv defence with a touch of assertiveness tossed in for good measure. Pressed again this was dispatched by the broker:
“When reviewing your account I am showing that France has a reduced tax treaty with the United States. This reduced rate has been applied to your account, however the security in question is a Canadian security. The reduced tax treaty does not apply to two foreign countries. The withholding amount in your account was done correctly.”
Not bad. The misdirection-and-not-made-here gambit with a maintained level of assertion. But would they manage to go a logical step further and simply deny the appropriateness of the applicable treaty? Full of hope, the scribe pushed back and got this beauty:
“The treaty between Canada and France does not apply to your TD AMERITRADE account because the dividends in question were paid from a Canadian company to a US brokerage account. Therefore, it would be the US and Canada treaty that would be applicable. However, because you are not a US citizen, this treaty rate does not apply. The withholding in your account on the Canadian securities is correct.”
Brilliant, conceptually intriguing but perhaps betraying some irritation. It was at this point suggested to TDA that the day the location of the holdings rather than the residency of the beneficial holder was the basis for the taxation of dividends would be the day that tax shelter specialists around the globe became a redundant species. After a longer pause than usual came this:
“I have spoken with our dividend department about your May payment…and they found that the dividend was withheld on incorrectly for all payments. They will have it corrected and reduced to the 15% withholding rate. Thank you for bringing this matter to our attention and I apologize for any inconvenience this may have caused you.”
TDA are the third largest US broker with, presumably, the third highest number of foreigner-owned accounts. Think this client subset ought to be worried about TDA's tax knowledge?

Good luck to Jana and SAC: the scribe is already considering other brokers (suggestions welcome) as he expects the hedgies, whatever the outcome of their current campaign, are too.

Si, Barone.

UPDATE: TDA have written since this post asking what can be done to keep the scribe put.

Bookmark and Share


  1. Cassandra // 6/12/2007 02:25:00 AM

    "Phwoor DM....", Are you a Danger Mouse fan too?

  2. Anonymous // 6/16/2007 01:14:00 PM

    "Da da da da da da da - he's the best..."


Related Posts with Thumbnails