Wow. No known video exists but supposedly a symposium was held at George Mason University on Monday. I am little bit stunned to see these three on stage together. I would think Harvey and Eggert would think of James Jatras as a flake(although Jatras has been around Washington for a long time in different roles). Additionally a fourth panel member attended from the German Embassy in Washington DC. I have to say while if I had known about I wasn’t going to fly down to Washington, DC to attend on the otherhand I would pay big money to see this on Pay Per View.
*This sounds like dinamite! Is there any transcript anywhere of what transpired at this conference?
*Not that I can tell. From my understanding Jatras is a former State Department official. I actually found an appearance he made recently discussing the situation in Syria. I also noted Jatras is a big critic of Egyptian President Morsi.
*From watching the interview more it says he used to work at the US Embassy to the Soviet Union in Moscow back during the Cold War.
By looking at the bios, it is obvious that Jatras http://www.squiresanders.com/james_jatras/ has actual international experience, while Harvey does not http://www.law.villanova.edu/Our%20Faculty/Faculty%20Profiles/J%20Richard%20Harvey.aspx . Hope Harvey is confronted with the damage that his advice and policies are doing to ordinary US persons living, working and born abroad. Where are all his millionaires and billionaires hiding assets in tax havens? Obviously not in Canada – registering TFSAs with the Canadian Revenue Agency, or trying to get an ordinary mortgage or chequing account in Europe. They’re all US residents, and US corporations keeping their operations outside the US, hiring people like Harvey to advise them on how best to advocate for and exploit the loopholes that already exist for those who can afford to pay for expert advice – INSIDE the US. Perhaps after stepping down, Shulman and Geithner can now advise those US banks ‘too big to fail’, and all those Fortune 500 companies registered in Delaware, or assist GE. Or follow the career path of Harvey “In his role at PricewaterhouseCoopers, Professor Harvey was the US
Banking and Capital Markets Tax Leader and provided CEOs, CFOs, and Tax
Directors of the largest multi-national financial institutions with
guidance and counsel regarding the leading tax and accounting issues.
He is a nationally recognized expert in the financial accounting for
income taxes (e.g., FAS 109, FIN 48, and IFRS). In addition, Professor
Harvey provided extensive tax consulting advice to companies around the
world on various technical tax issues.”
Who better to give US corporations advice on how to ‘game the system’ – while stiffing the everyday US person living ‘abroad’ and generating revenues for the US deficit by confiscating the legal posttax savings of ordinary dual citizens and their families who are ‘guilty’ of *’choosing’ to live outside the US (* as FINCEN said when dismissing the comments of citizens on the needless complexities and pitfalls posed by the enhanced FBAR).
Shulman gives a long speech at Harvard http://www.accountingtoday.com/news/IRS-Commissioner-Wants-Simpler-Tax-Code-60836-1.html about the dangers the increasingly complex US tax code holds for the ordinary US taxpayer living in the US – but denies the existence of the heightened pitfalls and unbearable burdens of that complexity for those already reporting and paying taxes to the non-US country where they live, work and were born – even while being forced to comply with the even more incomprehensible and labyrinthine US tax laws imposed by Congress, the IRS and Treasury on those living ‘abroad’ – who face layers of draconian penalties for even small inadvertent errors – even when zero US tax is owed, and when their assets and accounts are entirely legal and transparent in the countries where they were created and are held.
To Tim, Petros et al. at IBS:
The organizers at George Mason Law School inform me that the video of the event will be posted in a few weeks. Yes, it was great to have a chance to offer a few points directly to Prof. Harvey and Jesse Eggert at Treasury. Once the video is up, we can let viewers to decide who might be a flake and who is not.
Bottom line from the event is that it confirmed my sense going in of FATCA’s extreme political vulnerability and ripeness for repeal — if financial institutions (both US and non-US) and foreign governments would stop acting as, in effect, FATCA enablers. Most significant: Prof. Harvey, Mr. Eggert, and pretty much everyone admitted in substance that FATCA as written can’t be enforced. IGAs (intergovernmental agreements) are essential for the US to implement what would otherwise be an unenforceable regime. No one pretended that FATCA could be successfully enforced solely as a unlilateral and direct U.S. imposition. Either Washington will be successful in pressuring or tricking other countries into enforcing FATCA on themselves, or the whole scheme collapses.
As such, IGAs – such as the one finalized with the UK (though Parliament still needs approve it) and being negotiated with many other governments – are positively counterproductive for foreign firms and governments. They have the effect of rescuing FATCA.
But as I pointed out — and no one disputed — IGAs have another, unintended consequence: they repatriate FATCA’s costs to U.S. Under “original FATCA,” as enacted, American firms’ costs were relatively minimal, basically as a withholding agent for “recalcitrant” foreign firms, which would bear the vast bulk of the costs. But under the IGAs, similar obligations would be imposed on US domestic firms for reporting non-US residents’ data to the IRS, for transfer to foreign governments. (Indeed, under Article 6 of the “reciprocal” version of the IGA, the U.S. commits to achieving full reciprocity in data exchange with the “partner” country.) These costs – which would be passed on to American consumers – could be massive, since US firms will have to report on multiple countries, not just one. Not only will this be quite costly and invasive for American domestic institutions, it would be especially problematic for non-bank institutions (e.g., insurance companies, pension funds) that don’t routinely collect the kind of anti-money-laundering and “know your client” information banks do.
So Treasury faces a conundrum. On the one hand, FATCA can’t succeed without going down the IGA road. On the other hand, IGAs mean that FATCA costs that originally would be carried almost entirely by FFIs are now to be imposed here in the U.S. That changes the political landscape to FATCA’s detriment.
As IBS participants are aware, very little about any of this has appeared in the U.S. media. (And most of what has appeared are thinly veiled ads by compliance vendors – tax lawyers, accountants, etc. – who expect to educate their kids and retire on FATCA.) Americans only dimly perceive the looming threat to their privacy, pocket books and personal freedom. But if this were well-publicized through an active media campaign, that could change – and help set the stage for FATCA’s demise. But because U.S. interests are not (yet) sufficiently alerted to the this danger, I believe it is vital that non-US financial interests provide the catalytic initial support. Unfortunately, that has not yet happened. Instead (perhaps not fully appreciating that ours is not a parliamentary system) foreign firms are still begging their governments to negotiate with the Americans for relief — leading to the counterproductive IGAs.
As indicated on my site http://www.repealfatca.com, a place-holder for a campaign aimed at arousing U.S., there has only begun some pushback on FATCA based on repatriation of the outrageous costs FATCA would impose. IBS readers are of course familiar with the July 25 letter to Secretary Timothy Geithner from Rand Paul (R-KY) and three colleagues, just prior to the release of the “model” agreements. (Also, I thank IBS for bringing to my attention the letter from Rep Dave Reichert, with whom I plan to follow up, along with other Ways and Means Committee offices with whom I’m in contact.). Treasury’s answer to Rand Paul and his colleagues earlier this month is entirely inadequate and ignores entirely the Senators’ questions about costs, and other touchy issues. (At the George Mason event I argued about this with Mr. Eggert.) Treasury’s avoidance of talking about domestic costs is significant, as it flags a key, possibly fatal FATCA vulnerability.
The kind of pressure evidenced by the Paul-plus-three and Reichert letters could increase dramatically and be combined with legislative initiatives to stymie FATCA’s enforcement and help lead to its repeal. (Also, remember that we’re about to have an election, which also could change the landscape with respect to FATCA.) There is a standard panoply of techniques used in concert with lobbying Congress to achieve the passage – or repeal – of legislation. These include hearings, ordering cost/benefit studies (which never was done for FATCA), withholding enforcement funding, freezing Executive Branch nominations, and perhaps most importantly, blocking implementation of the IGAs as the “weak link” in the FATCA enforcement plan, combined with a vigorous PR campaign to “brand” FATCA as (this is only slightly hyperbolic) the worst law ever. But this requires a serious, sustained – and funded – on-the-ground Congressional lobbying and media effort. Simply writing letters to Congress explaining why FATCA is bad cannot accomplish the needed task, especially if they represent only the concerns of foreign (or for that matter, expat) interests.
We hear all the time that “FATCA is here to stay” – mostly, as I say, from practitioners with a pecuniary interest in a very expensive FATCA regime, many of them non-Americans with no experience with the US political system. But based on my experience, I am convinced repeal is a realistic outcome – if there is launched a campaign comparable to other projects for the passage or repeal of legislation. Unfortunately, while impacted firms (mainly foreign ones, but American too) have already spent millions sending pointless comment letters to Treasury and gearing up for compliance to the tune of untold billions of dollars in the aggregate, and millions per institutions, none has yet seen fit to commit a small fraction of this to exploiting FATCA’s manifest vulnerabilities.
Indeed, by point of comparison, there are significant examples of the sudden house-of-cards collapse of what had been considered unassailable initiatives, once an intelligent and active campaign to that end was launched:
a. The Medicare Catastrophic Coverage Act of 1988-89 (“Rarely has a Government program that promised so much to so many fallen apart so fast.” Unlike FATCA, the Catastrophic Coverage Act – which was repealed 17 months after it was enacted – had a clear and identifiable set of beneficiaries.
b. Dubai Ports World debacle of 2005-2006. (As it happens, I had a hand in killing the Dubai Ports World deal, despite the solid support for it from the White House of George W. Bush, Congressional majorities in both the Senate and House and Republicans and Democrats alike, and editorial support from publications including the Financial Times, the Wall Street Journal, the Los Angeles Times, the Washington Post, The Economist, and top commentators including Tony Snow, Thomas Friedman, Rush Limbaugh, former president Jimmy Carter, Senator John Warner, and Bill O’Reilly. In addition Senator John McCain stated he believed Americans “should trust the President on this issue.” In the end, they didn’t.)
Dramatic turnarounds of this sort aren’t automatic or easy. Nor is the outcome certain. But what is certain now, is that if a repeal campaign is not launched, Treasury will continue with its methodical campaign to pull country after country into IGAs and eventually solidify a “global FATCA” – an outcome that might have been averted with some active and intelligent opposition in the US.
That said, based on the observations above, there is enough reason to suggest that that in addition to spending huge sums of money on FATCA compliance – already described as a practitioners’ “gold rush,” especially for tax lawyers – devoting a comparatively small amount to seeing if this costly nightmare can be averted altogether. For large firm the difference between compliance and supporting a repeal effort could be one between hundreds of millions of dollars versus tens of thousands of dollars.
My guess is that FATCA could probably be repealed in about a year – before the most draconian regulations go into force – with an effort costing between $50 and $100 thousand per month. Obviously, the more money devoted to the effort, the greater the likelihood and speed of success. Even if a foreign interest takes the lead in launching the effort, a coalition of interests – including domestic American ones – is important. To put it bluntly, Congress will respond to concerns of costs inflicted on U.S. domestic interests, they are far less concerned about costs imposed on foreign interests.
This also relates to some criticism I’ve seen on IBS and elsewhere regarding my focus on costs to firms and not, specifically, the unfair costs FATCA imposes on (for example) expats and dual nationals in Canada and elsewhere, not to mention related issues stemming from American worldwide taxation. Short answer: I am interested in solving this problem. Like it or not, the fact is that the legitimate complaints expats have about FATCA and related impositions cannot get FATCA repealed – but the ones I have pointed to have that potential. Moreover, unlike individual expats, the impacted financial interests have the resources to support the kind of effort needed at cost far less than they are facing to comply with FATCA. To put it another way: if you are an expat or dual national in Canada or somewhere else, focusing on how FATCA unfairly injures you is not going to relieve you of that injury. Instead, you need to think of who you know in the banking, insurance, pension, investment, etc., industry, either in the U.S. or abroad, and suggest that they would be protecting their own interests (not to mention yours) by jumping off the IGA and compliance hamster-wheel and freeing up some resources to bringing FATCA down.
Two closing thoughts:
First: No doubt some will read this and say, “Sure, he tags tax lawyers, accountants, and so forth with lucrative motives, but isn’t he also just trying to drum up business?” Of course. But let me note that not only is what I am proposing far less costly than the truly obscene amounts that would be spent on compliance, the purpose would be to relieve what I sincerely believe to be a tragic mistake. One of the lawyers at the George Mason event, at the opening of the second panel, posed the relative costs of FATCA as a projected $1 trillion worldwide versus a projected recovery of lost taxes at less than $1 billion a year. It doesn’t take a math genius to figure out this is a bad exchange, since that $1 trillion will be spent on an activity that contributes absolutely nothing to the American or global economy other than compliance with the FATCA edict itself. In comparison, I would not be continually beating this drum (at the risk of “flake” characterizations) unless I believed I was offering the “right” product to the marketplace, not only from a business perspective but morally.
Second: As I mentioned in closing at the George Mason event, a few months ago a U.S. financial industry lobbyist in Washington told me that he thought FATCA would be repealed in the end, but it would follow the trajectory of the Catastrophic Coverage Act. That is, it would be pulled back after it had turned into a horrendously expensive global train wreck. My thought is, wouldn’t it be better to save the time and cost – not to mention the economic wellbeing of who knows how many individual persons – by undertaking that now, and not waiting until today’s foolhardiness had matured into tomorrow’s catastrophe?
@Jim Jatras:
Thank you for your valuable insights, especially the perils of entering into IGA’s. Neither Canada or Mexico have done so yet. I’m going to forward your comment onto my MP John Weston who’s been the Canadian federal government’s point man on issues effecting US persons in Canada. What has been your involvement with the Canadian government so far? At one point I thought you may have been lobbying for the Canadian Bankers Assn.
@bubblebustin
Thank you for your comment, and for passing on the your MP. Re Canadian representation, maybe better to talk about one-to-one.
*Mr. Jatras,
Thank you for taking the time to respond to this thread. I shall be contacting my MP as well and quoting you directly…
Pingback: The Isaac Brock Society - Jim Jatras responds to Isaac Brock Society on FATCA
message sent via FB to Jim Flaherty telling him to take note of James Jatras’ comments regarding “enabling by compliance”. That’s what I’ve been telling everybody to do. Canada as a country has privacy laws that govern our jurisdiction. We need to start laying criminal charges against those in the banks who want to roll-over and be complicit with the IRS in undermining our legal jurisdiction over our own sovereign soil. With the 30% withholding on US source income to the foreign financial institutions if the banks do not comply: the United States is essentially committing extortion – which is an indictable offense if you are an individual. It should be the same for countries as well. The “extortion of income” is the main reason why the banks are rolling over themselves to comply. This is what is known as “mob tactics” or “asking for ‘protection money’ – “Cough up your info on your US citizens or we’ll punish you by taking away 30% of your US source income.”
@jim jatras
Of course. To note, there are at least 3 entities I know of that are pushing the Canadian government to make FATCA a budget issue for 2013:
The Canadian Bankers Assn:
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5709773/411_FINA_PBC2012_Briefs/CanadianBankersAssociationE.pdf
The Investment Funds Institute of Canada:
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5709773/411_FINA_PBC2012_Briefs/InvestmentFundsInstituteofCanadaE.pdf
The Canadian Life and Health Insurance Assn Inc:
http://www.parl.gc.ca/Content/HOC/Committee/411/FINA/WebDoc/WD5709773/411_FINA_PBC2012_Briefs/CanadianLifeandHealthInsuranceAssociationIncE.pdf
Thanks to all for your comments and for bringing this to the attention of your MPs.
Bubblebustin, first, re “there are at least 3 entities I know of that are pushing the Canadian government to make FATCA a budget issue for 2013.” What does it mean “make it a budget issue”? That Ottawa would include some money (what we would call here a “budget line item”) in its 2013 spending plan?
Also, thanks for the links to the various associations. Maybe I’m missing something, but I didn’t see the recommendation about FATCA in the CBA submission. But with respect to IFIC and CLHIA, you see the problem: “IFIC is asking that the Canadian government actively engage their U.S. counterparts to come to an agreement on FATCA that strikes a better balance between preventing tax fraud in the U.S. and imposing additional costs and administrative burdens on Canadian investors and financial institutions.” “On both FATCA and the ruling that Canadian mutual funds are PFICs, it is critical that the Canadian government work with the U.S. to protect our investors and the ability of Canadian companies to raise capital.” “We appreciate the efforts of the Minister of Finance and Finance Canada to raise the industry’s concerns with the U.S. government and encourage their continued efforts to develop a bilateral (or multilateral) solution, utilizing the tax information sharing provisions under the Canada-U.S. Income Tax Treaty.”
No, this is exactly what Canadian industry should not be encouraging Ottawa to do. These recommendations simply steer the matter back to an IGA with the U.S and, in effect, Canadian capitulation to FATCA in exchange for minor concessions (if that). And even worse, an Ottawa-Washington IGA would help save FATCA when Canada’s opposition – given the close economic and financial interrelatedness of our two countries – could be crucial to which way this falls in the end. (Incidentally, with respect to any concessions Canadian industry can expect in an IGA once your government, like any government, engages with the U.S. and tries to negotiate a solution: at the George Mason seminar one of the other presenters (I don’t remember which) stated, with no contradiction, that the text of the model “partnership” agreement, the draft of which was released in July, is nonnegotiable. The only changes the U.S. will accept are to the annexes, which can be structured to meet the specific legal context of the complying “partner” country. I have not yet gone through the US-UK agreement word for word to see if there is any departure from the July model, but I have not yet seen any other than insertion of the name “United Kingdom of Great Britain and Northern Ireland.” I don’t think Isaac Brock would be amused.)
At the risk of sounding like a broken record, at a small fraction of what members of CBA, IFIC, and CLHIA are already spending and would end up spending to comply with FATCA even under the most optimistically obtainable concessions in an IGA (concessions, by the way, that would be unlikely to provide much relief for individual expats and dual nationals in Canada), they could be helping to launch an anti-FATCA drive in the U.S. and enlist American allies. With respect to national policy, instead of encouraging Ottawa to “work with the U.S.,” these associations should be asking your government (1) to tell Washington that Canada’s answer on FATCA, as an extraterritorial imposition, is just plain No, and (2) to start considering a range of bilateral responses Washington can expect if Treasury attempts to penalize Canadian firms for obeying Canadian, not American, law.
@Jim Jatras
As I told calgary411 prior and bubblebustin’ now. I 100% agree with the “non-compliance” stance that should be taken. There is no reason why Canada should “roll over and comply” but unfortunately, that’s the stance that Canada has always taken every time the US and Canada butt heads.
As a Canadian citizen, I’m very nationalistic; and unfortunately I do have a dog in this fight.
My hope would be for the government to do the following:
The simple fact is that “compliance is tantamount to planting a U.S. flag on our sovereign soil”. The CBA is committing a crime in complying to the wishes of a foreign taxation entity. The right thing to do would be
a) as Singapore’s bank did – tell the United States to take a flying leap with FATCA and stick it where the sun don’t shine.
b) level criminal charges against those who would be complicit with the IRS and flout Canadian Banking Privacy laws.
That is all that needs to be done and every other country needs to follow that lead.
The US is just behaving like an 800lb toddler throwing a temper-tantrum and hoping that it’s aggressive, belligerent posturing will get it what it wants. Repeal of FATCA is possible, but only if the world’s biggest trading partner with the US stands up for its territorial sovereignty. Unfortunately, Canada has had a very bad track record of rolling over and doing whatever the “800 lb toddler” wants done.
I have sent your recommendations to Jim Flaherty (Canada’s Finance Minister).
After passing along those recommendations, I concluded with the following statement: “Mr. Flaherty, we should not be “negotiating with Washington; we should be telling them “NO!” outright and emphatically. Criminalize those banking institutions who would act complicit with a foreign taxation entity and level charges against the CBA.
The upshot of this whole message is: Are we Canadians or the 51st State in the Union? If we are a sovereign country, it is time we started acting like it.”
@The_Animal
Q: Why is the Canadian embassy in Washington located at the foot of Capitol Hill?
A: So it can be close to where Canada’s laws are made.
Yes, I know, it’s offensive and not funny. And not entirely true. Let’s try to ensure it won’t be true on this.
Thanks for bringing this to the attention of Minister Flaherty. I’d be happy to talk with anyone in his office.
@Jim Jatras
To answer your question, ‘That Ottawa would include some money (what we would call here a “budget line item”) in its 2013 spending plan?’ I’m assuming that is what John Weston was suggesting when he encouraged me to make a pre-2013 budget submission to the Finance Committee as an individual when he wrote: ‘As mentioned in our call (bubblebusin’s husband), IRS is a budget issue, given the large amount of funds potentially payable to the US Government by Canadians; the effect on many self-employed people and entrepreneurs of compliance with these rules; and the damage to bilateral trade and commerce should the Americans make FBAR compliance and issue relevant to trans-border activity.’
Although he was being specific to tax issues concerning US citizens in Canada, it would appear that there are those who would like to make FATCA a budget issue.
Regarding the CBA, Brock society has a conversation going with Maura Drew-Lytle of the CBA you may want to have a look at.
http://isaacbrocksociety.ca/2012/07/16/canadian-bankers-association-maura-drew-lytle-responds-to-the-isaac-brock-society/
She may respond to you if she is still following. The budget submission from the CBA does not address FATCA directly, but under “job creation”, I believe they make reference to it: “While pursuing these trade negotiations in the future, the CBA encourages the federal government to consider including measures that would prevent the extraterritorial application of foreign laws to Canadian financial institutions and accountholders”.
@bubblebustin
Thanks for the clarification.
Yes, I did see the exchange with Ms. Drew-Lytle. As above, with respect to my direct contact with CBA, I’d prefer to communcate about that offline. My direct contact information is available here: http://sspa.squiresanders.com/professionals/professionals_detail.aspx?attorney=6014 . Feel free to drop me a note (that goes for others on IBS) and I’m available via email or phone.
@Jim Jatras, thank you so much for your long and valuable comment.
In his response to Rand Paul, Treasury said that the “scope of what US shares versus what other countries share is different. Equivalent levels of reciprocity in the future. For now, no additional obligations will be imposed on U.S. financial institutions unless and until additional laws or regulations are adopted in the United States.“
It basically says that at least in the beginning, there will only be reciprocity on whatever information US financial institutions are currently providing to the US government, and that no additional cost will be beared by US financial institutions. If it is the message that is sent to financial institutions, how can we better influence them that this law is not in their interest?
This is a response from Treasury to a US senator. Can that response be shared with the rest of the world to show what the US really has in mind and is not serious about reciprocity?
This article, where you’re quoted, mentions that Germany is the only country that has expressed interest, mainly as a matter of principle, to reciprocity. It is extremely surprising that other countries are not stating the same.
What else can we do, as individuals, to help bring awareness of this issue, that can ultimately lead to a repeal of the law? A lot of people I’ve talked to don’t see its negative consequences and tell me I am paranoid.
Now, and this might confirm that I am paranoid… or realistic: with a reporting threshold of just $50k, I don’t think tax evasion is the primary goal of the law. If they wanted to catch tax evaders, the threshold would be much higher. They might have enacted it for a different purpose that they don’t want the rest of us to know.
@
Jim Jatras,
Keep up the good work – and focus on conflict of laws in Canada…
Canada
is a bell-weather jurisdiction for FATCA. It has the largest
population of US-born people of any country, many of whom consider themselves
to be essentially Canadian, and don’t self-identify as US nationals. Canada is also where FATCA is
especially vulnerable to conflict of law, especially in terms of discrimination
by nationality.
Many
so-called “US persons” in Canada are in reality long-term Canadian citizens, with significant amounts simply born in the US while their parents were visiting, or due
to cross-border maternity arrangements. Many have no economic nexus with the
US, or any connection except place of birth or family relationship.
Because
Canada was built as a nation of immigrants, there is high sensitivity regarding
discrimination based upon nationality place of origin. The idea of Canadian banks – or any
other institution – singling out certain Canadians based upon their place of
birth – is a discrimination by nationality violation of the substantive equity guaranteed by
Canada’s Charter of Rights and Freedoms.
The
possibility that a Canadian bank would ask their Canadian citizen customer if they are a
“Chinese person” or a “Pakistani person”, and then subject
this person to privacy violations or account closure based upon their nationality, is highly repugnant and utterly
illegal in Canada. The concept of “US person” has no legal standing in Canadian
law. And Canadian banks generally have no record of their customers’
nationality.
With
FATCA, the US has unwittingly unleashed a trade war upon the world’s financial institutions.
Many in Europe are already embargoing any person with a US connection. That
is likely an opening salvo; expect embargos and boycotts and other retaliatory
measures.
and
Both Obama and Romney, and Canada as well, have been instructed that there will be capital controls put on American wealth. Perhaps there will be a partial rewrite of FATCA, or perhaps whoever is paying Mr. Jatras’s legal fees will manage to get enforcement ignored for certain large Corporatist financial institutions and even nations that they own. But in the end it will be the expats who will be thrown under the bus, as they already have been. Even a complete repeal of FATCA will not get Swiss and Canadian banks to allow US persons to open bank accounts and take out mortgages.
@Wondering: With FATCA, the US has unwittingly unleashed a trade war upon the world’s financial institutions.
Unwittingly?
@ Wondering:
Like Canada, other countries have strong anti-discrimination laws, including Germany. Following is an excerpt from a discussion with a German attorney on whether German banks might be (criminally) charged with discrimination if they refused to allow US citizens to open accounts, which might be relevant:
“If I remember correctly, nobody is supposed to be disadvantaged by one’s origin in Germany. So, isn’t this action of a bank, i.e. turning down an American, just because he/she is an American, something illegal?
Yes, this sounds like an infringement of antidiscrimination rules. This will be very complicated to prove because most companies have become very sensitive to personal denials. When “bank services” can be understood as “bulk business” then denying you such business because you are an American infringes §19 AGG.
(§§§§–This is very complicated, legally)
Do bank services qualify as “bulk services”?
This can be answered with a clear “yes” or a clear “no.” It depends on what service was tendered and if an identity played a significant role. This will ways be the case when opening an account without any credit function. The opposite, i.e. absolutely personal service, would be, for example, a personal saving strategy. Any bank product that is to meet your personal needs does not qualify as a bulk service. As of now, there is no precedent to determine whether or not small loans to (American)
customers (often advertised as “spring loan or similar”) or other non-individual loans still qualify as a bulk service. In such cases, typically no personal consultation is needed or offered – sort of like an over-the-counter loan. When you, as an American, are refused such a loan or an account because you are an American then that is illegal. ( §§§–This is relatively complicated, legally)”
http://americansabroad.org/issues/fatca/fatca-and-german-banks/
In Switzerland, in an apparent attempt to skirt the country’s anti-discrimination laws, some banks are using the the term “persons with US tax filing requirements” (US Steuerpflichtige Personen) to exclude US Persons.
As an additional comment, the US IRS employs a disproportionate number of blacks (24.4% of IRS workforce vs. 10.5% blacks in civilian workforce*). Given their history and long struggle for equal rights in America, it would seem that the IRS might be more sensitive to discrimination than others. There is no sign that this sensitivity is having any effect on the overt discrimination against Americans by banks in some European countries, caused by the IRS.
*-2011 IRS Databook
@ Innocente
If the identification of “persons with US tax reporting requirements” is based solely on place of birth, it could be considered “fruit of a poison tree”. Because its based on nationality not actual economic activity. Someone should make a lawsuit, especially if their situation is really egregious – such as an child of Swiss citizens who was born during a US holiday, with no other connection.
@watcher
Yr right, “unwittingly” is too forgiving!
“Arrogant ignorance devoid of foresight” is more like it.
@jim jatras
Interestingly, the three ‘entities’ I referred to that took part to the pre-2013 budget submission process (two of which you said are suggesting the wrong approach), have banded together on the CBA’s FATCA information web page for banking customers.
‘Developed by the Canadian Bankers Association, the Canadian Life and Health Insurance Association, the Investment Funds Institute of Canada and the Investment Industry Association of Canada, the following information is for clients of Canadian financial institutions to help them understand how FATCA might affect them. If you have further questions, please contact your financial institution or tax advisor.’
http://www.cba.ca/en/consumer-information/40-banking-basics/597-us-foreign-account-tax-compliance-act-fatca-information-for-clients
Just coming back to this debate…
Jim mentioned that video was going to be made available. Has anyone seen it or know if there is a link available..
Thnx