Soon after I finished my PhD, I had the experience of teaching as an adjunct professor in Ontario. Eventually, I quit because I felt that the working conditions for contingent labor in higher education sucked–and they do: just google the terms “adjunct hell”. Then, I worked another job which I soon quit. But to damage my reputation after I quit, one of the people from the second job asked for a reference via e-mail from the first employer and soon a flurry of e-mails had damaged my reputation among about a couple dozen people. The first employer had even gone so far as to accuse me of “unpleasant breaches of trust”, not realizing that the term “breach of trust” is legaleze, usually for criminal behaviour related to money or the virtue of young women. Later, the man apologized to me, saying that what he meant is that I had let them down.
This whole incident made me look into privacy laws in Ontario, and soon I found that I could have sued my first employer for defamation of character and the improper divulging of private information with malice. Employers must be circumspect about information: about what information they share with outsiders; about the recipients of the information; and about who within the company gives out the information. Since the recipient of the information was no longer my employer, it no longer served any purpose as a reference. Since the person who wrote the damaging reference evidently felt malice towards me, he should have found someone else to write the reference. Since the information could potentially damage my reputation, the first employer should have made sure that they followed proper protocols as an institution in order to avoid a defamation or privacy of information lawsuit. The guiding principle is: Information is on a need to know basis. Never divulge private information to someone who is not in the need to know.
This is the curious thing about FATCA. The Canadian government has announced that it has serious concerns about FATCA. Furthermore, Finance Minister Flaherty has insisted to the Americans that Canada is not a tax haven, and therefore there is little likelihood that the IRS will glean information through FATCA that will help with tax enforcement.
So if FATCA isn’t about tax enforcement, what then? Well, as our own renounceuscitizenship has so adeptly pointed out, the most valuable FBAR to the IRS is an unfiled FBAR.
I believe that this is all part of a master plan: The first part of the plan is to saturate the media with the OVD offer. Then, those who still remain can no longer use the excuse of ignorance; the IRS will say, “Where the hell were you, in Timbuktu, that you didn’t hear about FBAR and OVD programs?” So any remaining undeclared accounts that they find will now be subject to wilful penalties up to 50% of the contents of the account. But the perennial problem of FBAR is this: since the account is in a foreign country, the only way that the US government can learn about it is if you tell them. So if you don’t tell them they won’t know.
So the second part of the master plan is FATCA: they will force your bank to rat on you.
Now the Canadian government has said that it will not collect FBAR fines. So if you don’t have to pay the fines, and the information is useless for tax enforcement, why then does the IRS need the account information? In other words, the basic test for divulging private information is not satisfied: the IRS is not in the need to know because the information should be useless to them.
But it won’t be useless to the IRS, because the third part of the master plan is this: the IRS will start sending fines to Canadian residents, based on the FATCA information that the Banks have sent them. These fines will consist of 50% of your account balance, for wilful failure to file FBARs (this is implied by what the IRS has official stated). Even though the Canadian government has said they won’t collect these fines, the IRS is hoping that there will be some very frightened people who will nevertheless pay the fines to them directly, either the full amount or a settlement of a portion of the extortion.
Thus, the banks are preparing to divulge information to the IRS that the Canadian government has said is unnecessary since Canada is not a tax haven. Not only so, but that information can do great damage to many Canadians residents who have undisclosed accounts. This is a disaster and this is why we must stop the Canadian banks from implementing FATCA and giving millions of account numbers with names and addresses to the United States. We must plead with the Canadian government to stop them. If that doesn’t work, we need to begin protests and other actions against the major banks.
@Petros
We were just talking about it only like four days ago unfortunately its tough with WordPress to go back chronologically in terms of thread postings. When I get a chance I’ll try to look for it again. It was in like 1988 or 1989,
@Tim: Van deMark v. Toronto-Dominion Bank, http://uniset.ca/other/cs6/68OR2d379.html
The case may be limited to its facts. Those who argue for dealing only with a bank having no branch in the USA ignore the issue of correspondent banking and US assets. For that reason using a Postbank (won’t help in Canada) that has sovereign immunity may be a better bet. I recall Swiss private bankers (Pictet comes to mind, but also some of the cantonal banks) vaunting their lack of US branches. But that hasn’t helped in certain cases; think Wegelin & Co. http://www.mi2g.com/cgi/mi2g/press/010212.php And Forbes thinks they are now Swiss cheese: http://www.forbes.com/sites/robertwood/2012/01/09/irs-makes-swiss-cheese-of-swiss-banks/
Extraterritorial taxation by US, and FATCA called ‘Imperial Overreach’:
see;
http://www.bloomberg.com/news/2012-05-01/wealthy-americans-queue-to-give-up-passports-in-swiss-capital.html
“Imperial Overreach”
……..
“There is incredible frustration at the audacity and imperial overreach of this law,” said David Kuenzi, a tax adviser at Thun Financial Advisors in Madison, Wisconsin, referring to Fatca.
Failure to file the 8938 form can result in a fine of as much as $50,000. Clients can also be penalized half the amount in an undeclared foreign bank account under the Banks Secrecy Act of 1970.
“It’s a big brother concept,” said Brent Lipschultz, a partner at New York-based accounting firm EisnerAmper………..
“The additional compliance costs for companies to ensure that Americans they hire are filing the correct U.S. tax returns and asset-declaration forms are at least $5,000 per person, said Ledvina. Where individuals are getting their returns prepared, the expense may amount to $1,500 to $2,000, which is pushing expatriates to consider giving up citizenship.”………
“The compliance costs are high and they’re getting worse,” Ledvina said. “It’s hard to serve two authorities and the problem for Americans abroad is that the IRS doesn’t care.”
To contact the reporter on this story: Giles Broom in Geneva at gbroom@bloomberg.net
To contact the editor responsible for this story: Frank Connelly at fconnelly@bloomberg.ne
Here’s another story citing the Reuters one by Atossa Araxia Abrahamian, but with additional content re FATCA – and it is very critical of the burden on those the US deems taxable ‘persons’/citizens living outside the US.
http://amyalkon.mensnewsdaily.com/2012/04/17/the-irs-turns-being-an-american-expat-into-a-nightmare/
“The IRS Turns Being An American Expat Into A Nightmare
April 17, 2012
By Amy Alkon ”
“Preposterous Foreign-Income Disclosure Rules”
…..
….”Let’s see, what do you suppose might happen when Washington makes life a living hell for every foreign bank that dares do business with Americans?”…
and,
It also has a link to this story:
http://reason.com/archives/2012/04/16/top-5-new-ways-the-irs-is-screwing-ameri/singlepage
“5 New Ways the IRS Is Screwing America
Dumb disclosure laws, xenophobic banking regs, and worse” by Matt Welch | April 16, 2012″
…..”the immovable object of a debt-financed $3.8 trillion federal budget is incentivizing the irresistible force of rapacious government to scrounge for any and all spare change in the country’s cushions.
Some of these desperate collection measures are new, internationally unprecedented, and already damaging to innocent individuals and institutions. Others are mere proposals so far, or accumulations of water torture-style outrages that comparatively tax-compliant Americans have tolerated for too long. What they have in common is an utter lack of demonstrated concern for the time, privacy, and freedom of U.S. residents.”………
@badger
Thanks for that link to Men’s News Daily above. I went an posted a quick simple comment…
@Just Me, thanks. Enjoyed both the phrasing in the article, and your response.
@Steven Mopsick, Michael J. Miller, and RoyBerg:
Would you any of you weigh in on the following from the link that punktlich11 provided? Specifically regarding the possibility that the lawyer with POA, representing an individual in a dispute with the IRS, could be turned into an agent to serve notices etc. on it’s behalf. See excerpt, but have to read the full text at
http://newsgroups.derkeiler.com/Archive/Alt/alt.politics.bush/2010-03/msg00155.html
@punktlich11
re: April 29, 2012 at 10:45 am “on IRS powers to litigate and collect claims when the (non-)taxpayer remains abroad with his/her assets:”
http://newsgroups.derkeiler.com/Archive/Alt/alt.politics.bush/2010-03/msg00155.html
If I read one portion correctly, then it is very disturbing if the US can use the individuals’ attorney (once they have a power of attorney to represent them in dealings with the IRS) to serve notices on the individual in order to collect IRS judgements ‘abroad’.
see extract below:
“If the taxpayer is out of the country, Rule 4(f) of the Federal Rules of Civil Procedure governs service of process. 9 When the usual methods
of service are unsuccessful, the U.S. Government may fall back on a “catch-all” provision. Rule 4(f)(3) allows service in any manner directed by the court that does not violate an “international agreement.” Under this provision, the U.S. Government may obtain
jurisdiction over a taxpayer outside the country by having the court approve service on an agent in the U.S. 10
(my emphasis ***********) An individual who submitted
a *power of attorney to the IRS for the taxpayer during the administrative proceeding where the taxpayer was contesting the merits of the tax liability or an *attorney who represents the taxpayer in a related, or unrelated, criminal investigation or proceeding are *likely
agents. In this way, the U.S. Government can *obtain jurisdiction over the taxpayer without actually locating and serving the individual
abroad.”
http://taxpol.blogspot.ca/2012/05/beyond-fatca.html
Sunday, May 6, 2012
“Beyond FATCA” by Allison Christians
…………………………..
……….”Grinberg includes a discussion about how compliance with FATCA may require financial institutions to violate laws in their home countries, citing remarks by Acting Assistant Secretary Emily McMahon that acknowledge the difficulty and suggest the US is working hard to make this a bilateral or multilateral matter rather than a unilateral one.
This makes me think that FATCA could be to information sharing what 30% flat rate withholding on passive income is to tax treaties: a blunt force object meant to induce other countries to try to negotiate a better deal.
If that’s so, then it may be only a matter of time until Canada, the main victim of FATCA, gets a favorable resolution. But the arm-twisting effect seems to make FATCA even more pernicious from a sovereignty/democracy/diplomacy point of view. “
This is a recent page with a link to a very well written analysis of many of the points made against FATCA. It also touches on expatriation rates and the reporting burden. It underscores that the US is not ready for reciprocation, and may never reciprocate. Delaware and other tax havens INSIDE the US is also mentioned, as well as other serious flaws with the goals and design of FATCA, and the threat of increasing de-investment in the US.
http://www.eduardomorgan.com/blog/?p=1989
The link at the bottom (in tiny font size) leads to the fulltext article from International Tax Notes.
“U.S. Senate’s Passage of Anti-Tax-Haven Provisions Would Be Counterproductive”
Reprinted from Tax Notes Int´l, April 9, 2012, p. 139
By Bruce Zagaris http://www.eduardomorgan.com/blog/wp-content/uploads/2012/04/LevinAntiTaxHavenBillCounterproductive.pdf
Petros or site administrator – please repost this elsewhere if it would be better placed on another thread?
@badger
I think the article you mentioned makes a good point about recipriciocity. I personally don’t think Canada could go along with FATCA for example without true recipriciocity in the current political climate some of which is created by those of US here at IBS. So when you here about intergovernmental “discussions” between Ottawa and Washington I would continue to view them with some sceptism.
Here is what I thought was the key text
Except for the proposed regulation on extending
reporting of interest earned on U.S. bank deposits and
the Financial Crimes Enforcement Network’s advance
notice of proposed rulemaking on customer due diligence
issued on February 23, 2012,16 the U.S. Treasury
may not yet have taken all the necessary steps to reciprocate,
and it remains to be seen whether it will be able
to do so, especially without action from the U.S. Congress.
However, on March 6, 2012, Treasury International
Tax Counsel Michael Caballero said the FATCA
information sharing agreements would reflect ‘‘a commitment
to provide some similarity of information.’’
He explained that automatic exchange of information
is never the same information going both ways
http://www.tax-news.com/news/IRS_Told_To_Improve_FATCA_Plans____55507.html
“..the GAO has found out that the IRS plans to compare multiple sources of information to identify US taxpayers and FFIs failing to comply with the FATCA requirements and, more broadly, taxpayers failing to report their overseas income. However, while the IRS has begun to discuss how it will use information to improve compliance, it has not yet completed or fully documented a broader strategy for doing so…”
…”Nor, it is said, has the IRS developed a comprehensive resource estimate for FATCA implementation. Without a timeline to develop the estimate, the GAO concludes, the IRS may not be able to develop a reliable cost estimate and therefore risks not communicating key cost information to Congress and IRS management in time for them to make decisions affecting the implementation of FATCA.”
Does the US want to be compared to Rome, with the IRS a modern day Roman tax collector?
“FATCA akin to Roman tax”
http://cnsbusiness.com/content/fatca-akin-roman-tax
Posted on Wed, 05/23/2012 – 10:26
(CNS Business): “The Foreign Account Tax Compliant Act is a tax information collecting measure the likes of which has not been seen since imperial Roman times, according to Andrew Miller, partner with Walkers.”…………..
Pingback: The Isaac Brock Society - Foreign Financial Institutions could recover some of their costs for implementing FATCA
Here is a good article from executive magazine that details the impact of FACTA in Lebanon
http://www.executive-magazine.com/getarticle.php?article=15512
@christophe;
Interesting article, and this excerpt (among others) stood out:
‘The long arm of Uncle Sam’ by Paul Cochrane on June 14, 2012
‘America throws its weight around in Lebanon’
“With the United
States’ debt having surpassed 100 percent of gross domestic product, at
over $15.7 trillion, the Internal Revenue Service (IRS) has launched an
aggressive worldwide campaign to try and curb the deficit by bringing in
tax revenues from US citizens abroad”……
……”In Washington DC, a new
building is under construction that will be devoted to handling FATCA
files alone, given there are an estimated 117 million Americans abroad —
including Green Card holders — and that the IRS *assumes it may be able
to repatriate upwards of $100 billion in taxes.”
(Note: emphasis on the word *’ASSUMES’ is mine).
I thought this might be a good place to pose my question.
And my question is… “Why FATCA?” Really. Why? Why was this allowed to happen? What is the history behind the idea of FATCA? What inspired Senator Levin (D-MI) to tack this on to the hire bill? I can’t imagine for a moment that he created this beast in a vacuum. It came from somewhere. Where? Why are financial institutions allowing it to happen at all? I thought the financial world not only had a monumental lobby in Washington, I thought they owned Washington for the most part. So what’s in this for them?
I want to do some research on this, because I believe when you understand something, it makes it easier to fight it. And I don’t understand this at all. There is no benefit to anyone. It’s not going to create huge tax revenues that are going to wipe out the federal deficit, and it’s costing financial institutions across the globe billions of dollars/pounds/whatever.
I’ve only been researching this for a couple of weeks, and the only sort of ‘background’ I’ve found so far is this paper written by Itea Grinberg at Georgetown Law School where he is given as:
“Associate Professor, Georgetown University Law Center. Until the summer of 2011, the author served in the Office of International Tax Counsel at the United States Department of the Treasury. In that capacity he was substantially involved in FATCA from its inception, and also represented the United States at the OECD and at the Global Forum on Transparency and Exchange of Information for Tax Purposes.”
The link is here for those who are interested: http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=1162&context=fwps_papers
I’m trying to read my way through it, but it’s about as interesting as watching paint dry. I just wondered if anyone else has any insight to the reasoning behind FATCA and from what rock it crawled out from under?
Below excerpt on FATCA from an interview by the Swiss “Handelszeitung” with David Rosenbloom, a partner with the Washington law firm, Caplin & Drysdale. It appeared in the issue of 28 June 2012 (translated):
HZ: Next year comes the American FATCA rules in force. This gives U.S. authorities more power.
Rosenbloom: FATCA is difficult. I think it is also not an ideal solution.
HZ: Why not?
Rosenbloom: A huge mass of information will arrive in the U.S. – who will analyze it? Most U.S. citizens with offshore accounts are like Mom and Pop Jones over in Toronto, with a savings account and a small pension. The cost is huge for a very low volume of revenue. The system is inefficient.
HZ: But it is a done deal. Or?
Rosenbloom: It is constantly evolving. I do not think FATCA is the standard. But that various governments around the world will exchange information automatically will be determined. Even the United States.
HZ: The U.S. has blocked that. Now is this the global standard for information exchange?
Rosenbloom: Yes. Between governments that are concerned about tax issues. The U.S. is concerned, the UK, Germany, France, Australia. They are all very worried. Either you will find a solution, that information can pass from country to country, or go directly from the individual institutions to the government.
A law firm, Burt, Staples and Maner, distributed a client letter that summarizes the “major themes” from the FATCA hearings on 16 May 2012. It might be worth reading:
http://www.bsmlegal.com/cl_05_16_2012.asp
Also on this web site is a long list of FATCA comments submitted to the IRS and Congress by interested parties. Pls see attached link:
http://www.bsmlegal.com/fatca-comments.asp
I apologize if it’s already been posted. I found a couple interesting articles on Business Finance Magazine about how likely the banks will commicate with their customer about FACTA:
http://businessfinancemag.com/article/managing-fatca-client-communications-move-quickly-carefully-0709
http://businessfinancemag.com/article/complying-fatca-start-client-data-0314
http://businessfinancemag.com/article/separating-fact-fiction-fatca-0928
http://dataguidance.com/news.asp?id=1812
05/07/2012
Switzerland: FDPIC: FATCA incompatible with privacy law
………..”A representative for the FDPIC told DataGuidance: ‘FATCA is still being
analysed and an implementing law will need to be passed by the Swiss Parliament. Our main reservation concerns the level of data protection in the USA, which is not equal to the one in Europe and Switzerland. The IRS would process a lot of personal data of bank customers and would not be bound by law to keep the data secret and to itself. Also, Swiss
authorities would not have the same access to data in America. The amount of data to be revealed to the USA is likely to compromise transborder business activities and business secrets. It is important to note that if the data is subject to secrecy laws, it must by definition
be permitted by the Federal Council. Otherwise, it is an infringement of the Swiss Penal Code. Other reservations include doubts about the validity of the consent of the people concerned, the large volume and content of data required and the proportionality of who is considered to be an American taxpayer.‘”……….
Youtube link to IRS counsel explaining – dispassionately, the ways in which FFIs should be hunting down those deemed to be ‘US taxable persons’.
“Withholding Tax Congress on US-sourced Income in London – February 2012”
http://www.withholdingtaxcongress.com/
“Special Address by the IRS: FATCA Regulations: Insight from the IRS’ Perspective
Delivered by: Danielle Nishida, Attorney, Office of Chief Counsel, International, Internal Revenue Service”
I don’t think I’m going to be able to wait for the relinquishment option. I *REFUSE* to sign a W-8 form when I don’t live in the US or receive 1 penny from that place.
A FATCA article in yesterday’s WSJ on how the Big 4 are selling compliance services:
http://blogs.wsj.com/corruption-currents/2012/08/16/lawyers-consultants-software-maker-team-up-on-fatca-compliance/