Unfortionately I don’t know if there will be any way to see the event afterwards but here are the details:
Event in Geneva:
http://www.aca.ch/SCFAS_Fatca_2012_Invite_GE_Final.pdf
Event in Zurich
Debate: FATCA- The worldwide end of Bank Secrecy?
Anyone in Switzerland planning to attend and report back to IBS?
@ Expat in the UK
I too felt depressed and angry during and after the meeting. It took me a while to compose my thoughts on the matter. Admittedly FATCA is not Dick’s fault. As they say, you pick the right tool for the job, and someone needed a person with his characteristics to compose the regulations.
Interestingly, during the meeting, Jacqueline kept referring to the unreasonableness of citizenship-based taxation. I am sure that you and I would use that term. However, Dick never once used the term in his replies, replacing it with “worldwide taxation.” Now for sure he is a tax scholar, but for me the term “worldwide taxation” just doesn’t cover what the other term means. As a resident of Switzerland, I am taxed on my worldwide income – as long as I am resident here. Switzerland has a policy of worldwide taxation of income…. of residents. I can’t figure out his choice of words. Could it be that he views the term citizenship-based taxation as politically based?
@Expat in UK…
The interesting thing to be about the apologists for FATCA, is how much they talk about transparency, and the need to be sure that banking and Tax compliance is transparent around the world. Of course, their vision of transparency only goes one direction. I, as an individual, have to be transparent, but they as a Government can continue to hide, obfuscate, and even shut down whistleblowers that try to pry back the curtain. It is one rule for us, and one for them!
Here are some additional anonymous comments from someone who was also at the debate. This might add to the flavor of the debate…
It was most interesting to listen to Dick Harvey defend FATCA. He claims to be one of the authors of it. He was facing very hostile audiences, and handled it well. I think that he also learned something from us. We talked a lot about the ACA residency tax reform proposal. He indicated what I have heard now from several sources. It will have to have a serious anti-abuse measures included, which will probably have to be another exit tax modeled on the one for renunciation of citizenship. Note: That won’t be popular with Expats:
If it does, exclusions would be important. It should exclude the value of one’s house in the U.S. in the calculation for unrealized gains. The U.S. should encourage Americans abroad to maintain ties with the U.S. and owning a home or a vacation home in the U.S. is certainly a way to encourage this. Also, if the house is sold in the future, the individual would be taxed on capital gains like under residency-based taxation.
Question: Do you think that he was disturbed by what he heard in Geneva , or was his attitude that of “it serves them right” for having the audacity of living outside the US ? Does he now have any influence over FATCA now that it is the law of the land?
I’m not sure what he felt. He played it very cool, very polite, even joking. I suspect that he realized that the unintended consequences had real people involved, which is quite different from working on an issue from a theoretical point of view. He did say in diplomatic terms that he felt the U.S. had the right to go after tax evaders in Swizterland, but he also recognized the right of Switzerland to have confidentiality.
He obviously knows everyone in Treasury, as he left only a little while ago. He did make one comment. He had retired from Price Waterhouse and went to Treasury with the notion that he could help with basic tax reform. He realized after two years that it was not coming very quickly and went to Villanova. He was involved in the 1986 tax reform. If reform gets back on the front burner, he might get involved (my guess, not a comment from him).
It is clear that Treasury if evolving its position on FATCA, working through the government to government agreements.
One Additional comment:
He took notes of what was said through out the sessions, particularly of Jürg Egli, the tax specialist at Pictet and Cie, the largest private bank in Geneva . Jürg came down hard on the extreme complexity of the Treasury regulations for FFIs and the many problems of FATCA.
Concerning Americans abroad and bank access, Harvey still thinks that there will be banks who will take Americans, but the audience thinks he is wrong. However, I think he learned a few things. In any case he is now aware of how angry people are. He is also aware that the reporting requirements that the IRS has created are phased in and get increasingly complicated.
The fellow from Pictet said that they are struggling to get the implementation in place – no vacation this summer for all concerned. He said that small institutions do not have the resources to put it in place. Pictet takes clients with a minimum of $1 million – probably $2 million.
In Zurich , one funny note, because after his speech no one applauded. Jackie followed him and people applauded very loudly. That describes the tone.
Side Note:
I have asked ACA if Jackies Speech will be available on the Web Site. I think it will be, and also there was a recording that “might” be available from another source. Will watch out for it.
@JustMe
Very good info. I am assumming this was from the second Geneva meeting. I am of the opinion that ACA needs to focus themselves on proposing anti abuse provisions rather than relying the Congressional Committees, JCT, US Treasury etc. Just to start with the links below are the information albeit voluntary filing requirements for departing Canadian tax residents. These are not at all easy forms to fill out and their invasive to boot. Don’t kid yourself there is no way the IRS under a residency based system will ever have filing requirements less if not more invasive than these forms.
http://www.cra-arc.gc.ca/E/pbg/tf/nr73/nr73-11e.pdf
@JustMe
Also take a look at T1161 and T1243.
http://www.cra-arc.gc.ca/E/pbg/tf/t1161/t1161-11e.pdf
http://www.cra-arc.gc.ca/E/pbg/tf/t1243/t1243-11e.pdf
Again these forms rank up with Form 8854 in their complexity.
*Not even close. Canada instituted an exit tax on deemed capital gains largely in response to the Bromfman and a few other zillionaire families moving their family trusts offshore to escape capital gains taxes. The filing requirements are benign compared to the US.
Thanks Tim…
I just heard this afternoon that the recording of these ‘debates’ is ready. I am now just waiting for the link to be made available, and I will post it.
@Cornwalliscal
I was making more a direct comparision between the actually act of expatriating for US tax purposes(i.e. Form 8854) and the process of going through claiming non resident status from CRA not the ongoing US tax filing requirements for non resident US citizens. I will add for whatever its worth that filing form NR73 is only “voluntary.”
The real “test”of residency is typically found in the tie breaker clauses of most OECD based tax treaties. Here is what the Canada Brazil Tax treaty states:
1. For the purposes of this Convention, the term “resident of a Contracting State” means any person who, under the law of that State, is liable to taxation therein by reason of his domicile, residence, place of management or any other criterion of a similar nature.
2. Where by reason of the provisions of paragraph 1 an individual is a resident of both Contracting States, then his status shall be determined as follows:
This is the official OECD commentary on the above language:
If the individual has a permanent home in both Contracting States, it is necessary to
look at the facts in order to ascertain with which of the two States his personal and
economic relations are closer. Thus, regard will be had to his family and social relations, his
occupations, his political, cultural or other activities, his place of business, the place from
which he administers his property, etc. The circumstances must be examined as a whole,
but it is nevertheless obvious that considerations based on the personal acts of the
individual must receive special attention. If a person who has a home in one State sets up a
second in the other State while retaining the first, the fact that he retains the first in the
environment where he has always lived, where he has worked, and where he has his family
and possessions, can, together with other elements, go to demonstrate that he has retained
his centre of vital interests in the first State.
Jackie Bugnion’s Opening speech in the FATCA debate is now available at the ACA website.
Those defending FATCA believe that it is the ultimate tool to prevent tax evasion, to end bank secrecy and to provide a stepping stone for worldwide automatic information exchange. In fact, this is a George Orwell, 1984 world!
ACA fully agrees that the U.S. should pursue tax evaders, but ACA is convinced that FATCA is the wrong approach. It uses a bulldozer to go after ants. It imposes a unilateral approach to international tax evasion, benefiting only the U.S. The benefit-to-cost ratio is negative. It is creating a costly worldwide reporting net and yet will bring in little additional tax revenue, just $880 million a year according to a Joint Committee on Taxation.
The U.S. does not need FATCA. It has already had major success in tracking down tax evaders without FATCA, using the multiple tools available to the IRS.
Read more here:
“Why FATCA should be repealed”
Tim just alerted me to this follow up article that Dick Harvey wrote about his debate experience…
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2122491
As he says….and I quote “he admitted basically without major changes FATCA is in big trouble. The problem is there is no way to create a multilateral agreement as he suggest in time basically without re-opening the entire legislation.”
@Just Me/ Tim:
Thank you for posting the link to the Richard Harvey article in Tax Notes. The entire article is worth reading but I would like to mention footnote 10, which I initially missed. It seems to indicate that a delay in the FATCA roll-out might be necessary, although possibly for an insidious reason – to allow time for the roll-out of the first phase of GATCA:
“10 Some, such as the group American Citizens Abroad, argue
that FATCA should be repealed. Although I believe American
citizens residing abroad have a legitimate concern, it does not
justify throwing the baby out with the bath water — FATCA
should not be repealed. At most, it could be delayed while
governments work out a multilateral system that would require
reporting for customers of many different countries.“
Pingback: The Isaac Brock Society - President Obama closes DIALOGUE with U.S. citizens abroad – comes full circle
*I’ll say a couple of things:
1. Harvey was Shulman’s senior advisor during the drafting of FATCA so the fact he is even mentioning the word repeal even to say he doesn’t support it is significant.
2. Harvey has been pushing a multilateral solution for a long time even above and beyond the EU5 Agreement which if you read any of the FCC(Fatca Compliance Complex) commentary from the likes of Jim Calvin is hardly getting an enthusiastic reception. Which means the hopes that the like of Russia and China would sign on have to have been dimmed for the moment
3. Almost all of the people involved in drafting the legislation but now no longer in government such as Itai Greenberg, Harvey, even Mary Burke Baker have said it is in trouble without some type of multilateral agreement.
4. Multilataral agreement is FAR more difficult than anyone thinks. A lot of countries Canada included simply I don’t think have the inclinations to jump off the deep end of the swimming pool in this area.
IRS Director Shulman expected to abandon ship in November:
http://www.reuters.com/article/2012/08/02/us-usa-tax-irs-idUSBRE8711U620120802?feedType=RSS&feedName=everything&virtualBrandChannel=11563
@innocente…
Maybe I should copy and paste one of the many comments you see in popular media about Renouncers… “I.E., “don’t let the door… etc”
I will wait for his final recollections of his wide successes including stopping the tax evasion and fraud in the homeland… Oh, no improvement there. Sorry, he was too busy offshore!
Wonder what plumb consulting or attorney job he will get helping the victims of his previous 5 year tenure? Probably just like Jeffery Neiman, the DOJ UBS prosecutor.
Maybe Shulman can just ‘copy and paste’ some of this language for his new practice!
@all
Dick Harvey left his email contact on his paper
rharvey@law.villa nova.edu
@JustMe, and@Tim, thank you for alerting us to the Harvey update. @Innocente, thanks for the info on that footnote. I am going to try to get the fulltext of the article. Particularly interested in the the abstract which acknowledges the barriers to ordinary banking being experienced by expats abroad as a result of US actions. Since abstracts by their very nature contain only the most salient summary information distilled from the fulltext, the inclusion of that acknowledgement is significant.
@Tim:
Further to your input:
1) The architects of FATCA knew that it was not implementable in its existing form.
2) To be implementable, it needs to follow a multi-lateral approach which has yet to be designed.
3) The deadline for FATCA implementation is 1 January 2013 or, at latest, 1 July 2013.
4) Bilateral agreements have been reached with five countries and two countries have agreed on preliminary outline agreements. (There are between 194 and 207 countries in the world, depending on how they are counted).
5) Only one country, Switzerland, appears to be doing the necessary legwork to implement it on time. The other six countries, I believe, have considerable work ahead of them.
6) Based on a flawed design and the failure to sign up more than a handful of countries to-date, I would conclude that the FATCA roll-out is troubled and may be up and running by January 2013/ July 2013 in only one country, Switzerland.
7) A thought: the Swiss implementation will be implemented on time, considered a “pilot” and praised as a success for cracking the Swiss customer privacy law. A new implementation plan will be presented under Shulman’s successor possibly with a new design. Planned implementation dates will be 2014 and beyond. Then again, phase II could be postponed indefinitely with the only the Phase I implementation in Switzerland to show for the efforts.
@badger: be warned, Harvey’s paper is nowhere nearly as sane as the abstract makes it out to be. He says Swiss banks are engaged in a conspiracy to screw US Persons living in Switzerland, runs the whole Andrew Leonard “what could you possibly be doing with $50,000 in your bank account” line of questioning, and doesn’t mention citizenship-based taxation once but sets up a straw man argument about Swiss national sovereignty which he knocks down by screaming about “tax evaders” again. Oh yeah and for the coup de grace he jokes that someone may try to poison him — sorry, remind me how many assassinations Switzerland and the U.S. respectively conducted these past few decades, Dick?
@Tim: wow, I had no idea Grinberg was involved in drafting FATCA. Guess that explains that godawful paper of his from back in February: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1996752
@badger:
To obtain the full Tax Notes article:
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2122491
Then click on “Download This Paper”
@badger
Harvey attempts to spin what is a lack of consideration of the unintended consequences of FATCA into a discrimination issue by foreign banks. He claims that foreign entities are free to choose whether they wish to comply with FATCA, but is quick to condemn them for taking defensive action. Who would he blame the renunciations on, I wonder? Deflect and blame, Mr Harvey, to take the heat off yourself for the huge blunder called FATCA. Will someone finally step up to put a stake through its heart?
@Innocente; re the download, I seem to only ever get the abstract – and have tried before with similar articles from that site.
@Eric, bubblebustin, intriguing. Makes me wonder what the acceptance criteria are for that journal.
*Eric
Itai Grinberg’s Paper does have an important footnote that is hard to find and says to following: (Footnote 210)
An eventual multilateral system would be unlikely to retain FATCA’s concern with identifying nonresident
citizens. The United States is almost alone globally in taxing bona fide non-resident citizens as if
they were residents. Indeed, bona fide nonresident citizens of the United States working outside the United
States have in some instances encountered serious difficulties banking in the countries in which reside as a
result of FATCA. Such persons rightfully note that their bank accounts in the country where they reside
are not “offshore accounts” and that it is inappropriate for regulatory rules to make it difficult for them to
maintain residence country financial accounts.
*Innocente
In fact from all apperances the deadline has already been moved back to January 1 2014 and if you read Jeff Mukadi(of Peterborough ON)on Linkedin he made a note this morning that the pre existing account electronic “screen” has been delayed to September 1 2015.