The Isaac Brock Society

Some of you may be aware that I have been talking to John Weston re matters affecting US persons resident in Canada. He’s been designated the federal government’s go-to man on these issues and has used my circumstances as his exhibit in a letter he wrote to Minister Flaherty. I wrote to him yesterday complaining about the deafening silence from our government on FATCA (other than by the official opposition party), FATCA as it affects my children, updating him on our OVDI submission, and asking him if he can give me more information on his earlier suggestion that we may be able to have the capital gains tax on the sale of our home in Canada eliminated through Article 25 of the tax treaty. I received a response from his office today. It’s the usual short and sweet, but some of you may be interested in following up with Mr Weston because of the following: 

“Pls thank (Bubblebustin) for the letter; advise her we have passed her concerns to the Minister and sought a response; and that I have personally invited a top US tax attorney, the former Dep. Commissioner of the IRS to Ottawa”

I am watching the Public Broadcasting, NewsHour show, and they are going to have a segment on the U.S. lecturing China about what it says are its Human Rights violations. Now to me it seems most ironic that the U.S. on the one hand tells the other nations of the world that they do not have the right to tell the U.S. how to treat it’s citizens but yet the U.S. is always lecturing other nations on how to treat their citizens.

Those of you who, as I did, may have received a letter from Canada’s Minister of Finance, the Honorable J. Flaherty, will remember that inside the body of the letter that the minister’s way of distancing Canada from the IRS problem, was that Canada will not tell the U.S. how to tax its citizens. Well as far as I am concerned that hands off position is a bunch of crap. Canada has good legal grounds upon which to oppose the U.S. practise of citizenship based taxation. I believe that it has at least the law of “precedent” on its side because the U.S. has for so long ignored enforcement of this law and enforcement of FBAR filings. Certainly those who renounced before 1986 have a legitimate Human Rights complaint and Canada, as their representative, needs to take their case to the U.N. or the World Court.

Let the unjust U.S. laws see the light of day!

I wanted to post an interesting FATCA comment letter below that deals with many of the issues we discuss here.

http://bsmlegal.com/PDFs/vonKoppenfels.pdf

There is additional letter to from ACA. In it they acknowledge the IRS has told them that to exempt accounts of US Person’s in their countries of residence if effectively to defeat the purpose of FATCA as passed by Congress. So in some sense I don’t know where this will go. Still no comment letter yet from the Canadian Bankers Association. I get the gist though overall that FATCA will be delayed by one year (If for anything do to issues on the US side of things) and the ability to be a “recalcitrant” account holder as permitted by local law will be allowed for a significant period of time.

All I need to say is compliance with FATCA is basically impossible under Brazil’s constitution according to the Brazilian Bankers Association. The proposed solution is again intergovernment agreement but I wonder how that will play in Brazil’s fairly nationalistic politics.

http://bsmlegal.com/PDFs/Federation%20of%20Brazilian%20Banks.pdf

Public hearings on FATCA are taking place in Washington on May 15?

http://www.ft.com/intl/cms/s/0/8431a6d0-8d5d-11e1-9798-00144feab49a.html#axzz1taOxefA6

So the U.S. wants to impose a 30% withholding penalty on the U.S. source payments of; interest, dividends and securities transactions that are conducted by non FATCA compliant Foreign Financial Institutions and recalcitrant account holders. Now of course the question is, what happens if there is a mistake that is made by the U.S.? Will you get your money back? I believe that the short answer to that question is, no one knows. What the U.S. may promise to do and what it ends up doing are often two different things. From what I have observed of U.S. policy is that when it comes to returning ill-gotten gains the U.S. doesn’t give everything back. A case in point is the softwood lumber dispute.

In the softwood lumber agreement that was reached between Canada and the U.S. the U.S. only agreed to give back 80% of what it had collected. Now why would you as an investor take a chance that 30% of your rightful financial property could be withheld? What would it cost you in time and effort to get the money that is rightfully yours? What is to stop the U.S. from using this 30% withholding requirement as a means to fund its failed government fiscal policies?

http://www.cbc.ca/news/background/softwood_lumber/

As a person who is not a U.S. citizen this whole legislation introduces a new degree of risk without any financial return possible so why would you expose your precious capital to such a ruinous outcome? With FATCA and of citizenship based taxation the U.S. has just found another way to cripple world capital markets by introducing more regulation and risk. Neither of which will generate a dollar in wealth.

www.cbc.ca/video/

So now we know that Canadian banks not only received bailout funds (in other words taxpayer money) from Canada but also the US.

Let’s do a thought experiment. What are the implications of this? The loans were repaid, but what if another financial crisis arises and banks have to go begging for money again? Could the US government use it as leverage to force Canadian FIs to comply with not only FATCA but who knows what other crazy laws they come up with?

Thoughts?

Fox news reports that the EPA’s Al Armendariz, after coming under scrutiny for a comment that he made in 2010:

Armendariz made the original remarks at a local Texas government meeting in 2010. He relayed to the audience what he described as a “crude” analogy he once told his staff about his “philosophy of enforcement.” Continue reading →