When you can’t make them see the light, make them feel the heat. – Ronald Reagan
The Canadian “firewall” is important to prevent or mitigate the effects of FATCA around the world. If the “FATCA decision” is left solely in the hands of the banks and politicians I fear that FATCA (in some form) will be implemented in Canada.
Public opinion is important in influencing politicians. After all, no party (especially on the 200th anniversary of the war of 1812) wants to be seen as doing he bidding of the Americans.
Ronald Reagan used to say that if you couldn’t make the politicians see the light, you would take the case to their constituents, who would then make the politicians feel the heat. In other words, “Everyday Canadians” need to understand how FATCA will affect them. How it will affect them regardless of their citizenship. The politicians need to be reminded that Canada is a democracy and handing the country over to the IRS will have implications for their political futures.
People have short attention span. How would you explain the effects of FATCA to an “Everyday Canadian”? How would you explain now it is bad for Canada? How would you explain why citizenship-based taxation hurts ALL Canadians and NOT just “US persons”?
I couldn’t agree more. If this isn’t a time for Canadian citizens and Canadian politicians to “Stand on guard for thee,” they might as well take the words out.
I have a second here, so let me post this from Jim Jatras. It needs a separate post, but no time..
Intergovernmental agreements make-or-break for FATCA; ACA statement of resistance; Congress blindsided; Canada crucial
The recent announcement by outgoing Secretary Timothy Geithner’s Treasury Department that it is in the process of negotiating intergovernmental agreements (IGAs) to implement FATCA (“Foreign Account Tax Compliance Act”) with some 50-odd countries means both less and more than meets the eye. It is less, because Treasury is far shorter along the road to achieving such agreements than they would like everyone to believe. It is more, because creating the impression that the world is flocking to comply with FATCA (via IGAs) is essential to saving an otherwise unenforceable law – a ploy that might work, though, if they are allowed to get away with it. (More on this below.)
Of particular note is this clear-eyed and courageous statement from American Citizens Abroad (ACA) in opposition to IGAs to implement FATCA:
Resistance to Agreements on FATCA
The US government announced in November 2012 that it is negotiating with some 50 countries Intergovernmental Agreements (IGA) concerning the FATCA legislation. These agreements are modeled on the IGAs announced earlier this year with Great Britain, France, Germany, Italy and Spain. Under these agreements, the foreign financial institutions would report the bank accounts of American citizens to their own governments, which would then exchange information with the US. These agreements are intended to circumvent the legal impossibility of carrying out the initial FATCA legislation since privacy laws in countries throughout the world make it illegal to report client information to third parties, in particular to foreign nations. The IGA agreements include some element of promised reciprocity on the part of the United States, an element totally missing in the initial FATCA legislation, and may alleviate certain reporting requirements of FATCA legislation for certain types of foreign financial institutions and some of the pass-through withholding requirements.
Nevertheless, the IGAs add a new element of complexity into FATCA compliance and carry an enormous burden for the international world of finance. To understand what is at stake with the IGAs, ACA recommends reading a well-informed letter written by a New Zealander to the Australian government warning against the dangers of entering into an IGA with the United States.
Voices in the United States are also denouncing FATCA and the IGA agreements, including US Congressmen and Senators, the Florida banking association, the Center for Prosperity and Freedom and a new website focused on repealing FATCA, http://www.repealfatca.com, headed up by James Jatras, principal of Squire Sanders Public Advocacy, a Washington-based government relations firm. These voices anticipate the negative impact of the FATCA on the United States through reduced foreign investment in the United States and heavy administrative costs for US financial institutions, responsible for identifying FATCA complying and non-complying foreign financial institutions correctly, withholding taxes if necessary and, more significantly, identifying foreign owned client accounts in the United States if reciprocity is required due to the IGA. While financial institutions in each foreign country are only concerned about reporting on American clients, US financial institutions will have to identify and deal with foreign owned accounts of citizens from countries all around the world. Political pressure is building.
(Updated Nov. 2012)
As has become increasingly evident in recent weeks, Treasury knows it cannot make FATCA work without the IGAs, but foreign financial firms that stand to be hit with crushing compliance costs under unilateral (non-IGA) FATCA enforcement have been approaching their governments to negotiate IGAs with Washington in the hopes of some modest relief. Even though it is Treasury that is in a race against time to sew up enough IGAs before they would have to take the plunge on a predictably disastrous attempt at unilateral enforcement, foreign firms (and in turn, governments) seem to be falling for it, though not at the pace Treasury would like.
Just from a cost point of view (leave aside for the moment trivia like national sovereignty), it’s hard to overstate how counterproductive this is from the point of view of the institutions themselves. Take a look at what they will be saddled with (under Art. 2(a) of the IGA, just mentally substituting “Country X” for “the United Kingdom”). Granted, the list of exempt institutions found in Annex II (the annexes are the only negotiable part of the IGA, the rest of the agreement is not!) would provide relief for certain firms. But for most, their burdens would be very close – and hardly less expensive – than what foreign institutions would face under unilateral FATCA enforcement by the U.S. The main difference is that the mandates would be imposed under their own domestic law (which actually would allow individual firms less flexibility) and perhaps some degree of administrative streamlining, with the foreign government acting as the IRS’s deputy.
Keeping Congress Out of the Loop
The other time-sensitive vulnerability for the soon-to-depart Mr. Geithner is to reach a critical mass of IGAs before U.S. domestic industry and Congress mobilize in earnest against FATCA. While the euphemistically dubbed foreign “partner” under an IGA may consider the agreement a treaty under its own laws, or may require passage of domestic legislations to implement it, the Treasury Department has carefully crafted the IGA so as not to give Congress a voice on imposition of burdensome and invasive mandates on domestic industry under these agreements – mandates not found anywhere in the FATCA law itself. As recently confirmed to me directly by a Treasury official, on the U.S. side these IGAs are Executive Agreements.
This means, first, that the IGAs will not be subject to the advice and consent of the Senate. Second, it means that Treasury plans to issue regulations on U.S. domestic institutions under Art. 2(b) under what it claims is existing legal authority. They would only come back to Congress if and when they planned to expand the scope of those obligations – as indeed they already have promised to do under Art. 6 of the very same IGAs:
“The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchangewith the United Kingdom. The Government of the United States is committed to further improve transparency and enhance the exchange relationship with the United Kingdom by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic exchange.” (emphasis added)
This means that Treasury has already “committed” to foreign governments a far more burdensome and expensive regime, one that would approach those FATCA imposes on foreign institutions at costs estimated in the tens of millions of dollars per institution, untold billions in aggregate. Indeed, foreign “partners” are being asked to sign IGAs on Treasury’s solemn commitment to “achieve” such equivalent exchange via new legislation.
At this juncture, it is imperative that –
FATCA advocates have been able to scare away serious resistance to date by implying that an opposition to FATCA means fronting for “tax cheats.” (That’s comparable to saying Prohibition shouldn’t have been repealed in light of its massive, unintended harmful effects because that might look like an endorsement of alcoholism.) In fact, FATCA does nothing to target directly real, live tax evaders – people who already are consciously engaging in criminal activity – and instead imposes costs on anybody and everybody else: foreign financial institutions (who are presumed to be bad actors helping tax cheats), Americans abroad, U.S. financial institutions (who would be hit with heavy costs to make a show of “reciprocity,” even though in many cases the information they would expensively collect and provide may be of little use to the foreign “partner” and of zero benefit to the U.S.), and Americans generally (who would be hurt from withdrawal of foreign investment from the U.S. and consequent job loss and higher banking, insurance, and other fees due to passed-on costs). The hope that real tax evaders, who are notoriously good at hiding their tracks, would be netted in the process is nothing more than an improbable conjecture.
Consistent with the thoughts contained in the ACA statement, activists in Canada and other countries are sounding the alarm to the injury their governments inadvertently may cause by signing onto an IGA with the U.S. It’s important that that resistance spread to other countries, and especially that Americans wake up to the impending danger.
*Do we have a form letter we can send to our MP’s and MPP’s?
*When you have Canadian MPs and MPPs openly endorsing Obama for a 2nd term, do you honestly feel that you’re going to be heard or is your “form letter” is just going to go in “file 13” or the “circular file”?
I suspect that the latter will be what happens to any letters like that. Don’t count on ANY support!
Short of self-immolation on Capitol Hill or spending a gazillion dollars on a lobbying effort, what would you suggest as an effective course of action for us other than letter writing? Right now I’m on a letter writing campaign trying to get those who have pockets deep enough to try another course of action other than IGA’s, as per James Jatras’s suggestion.
*What I’ve been trying to tell you is the only way this thing is going to work is a “WORLD WIDE TAX REVOLT!” This is a schoolyard fight. OK? You don’t negotiate with a bully. Was talking things out with a schoolyard bully back when you were in school going to work? NO. What it means if you want total freedom from the IRS is having a world-wide tax revolt by dual and US citizens abroad. Are they going to be able to come arrest all 1 million Canadian/US citizens in Canada? They did the Boston Tea Party against King George in the War of Independence. We’re going to have to do a “tea party” of our own, since our respective governments don’t have the BALLS to stand up to a “schoolyard bully”. I hope you and everyone else wake up in time. Our sovereignty is at stake.
Sometimes the only logical response to a bully is “BY FORCE”!!!
Martin Niemöller said it clearest: When the Nazis came for the communists,
I remained silent;
I was not a communist.
When they locked up the social democrats,
I remained silent;
I was not a social democrat.
When they came for the trade unionists,
I did not speak out;
I was not a trade unionist.
When they came for the Jews,
I remained silent;
I wasn’t a Jew.
When they came for me,
there was no one left to speak out.
The time for Open Rebellion is now!
In light of the fact that most USP’s in the world already DON’T file taxes how do you propose we conduct this revolt? Get them to send a blank 1040 to the IRS? Good luck with that since most are hiding.
*Yeah, you hide like rats and then wait for the IRS to come find you “ONE BY ONE!” So how’s that tactic been working for you? You’ve heard what the response of 95% of the Canadian citizens (and you can pretty much figure that’s about the percentage of the people who don’t give a shit about you guys world wide) think about you. You end up going into compliance and get financially “raped”! You scream at the government and try to get them to listen – DEAFENING SILENCE! You say “Good luck with that…” Well…I’m not going to let my family go down the financial tubes just because my wife is an American citizen. There’s a hell of a lot riding on this. You’ve got the ear of one Canadian citizen who’s been yelling up a stink at the Ministers and Jim Flaherty. You can keep trying to get the ear of a populace that isn’t going to listen; you can keep trying to keep getting the attention of MPs who could care less about your situation and openly cheer for Obama who is trying to get your money or you can band together and REVOLT. Send a letter with signatures saying that you’re not paying penalties and essentially tell the IRS to go **** themselves. And if you haven’t renounced. Get a barrel, take it down to your local US consulate, and burn your US Passport in it. Get a group of people who are willing to burn their passports. Make a freakin’ scene. Make the Canadian media give a **** about it by making it a scene. You wanna be sarcastic. Be my guest. But I’ll guarantee you that letter-writing is just a waste of trees. Mark my words. Do nothing and reap the consequences. And letter-writing with repeated “no responses” is equivalent to DOING NOTHING!!!
I am that mad too. Most of us seethe constantly. When I renounce, it won’t be by burning my passport, it will be a legitimate not symbolic renunciation. You want to meet me down at the US consulate in Vancouver sometime with a placard for a warm up? I’m outraged enough to do it, believe me.
*Damn, rights. Let’s do it? Gather up another group of US citizens/duals and their spouses. I’ll be glad to be there. Ain’t nothing the US can do to me as a Canadian citizen except put me on a “no fly list” and or “known anti-US person” who is barred entry to the United States. No loss there. And I stand beside my US dual-citizen expat friends. I’m angry because my wife can’t afford to pay a tax preparer to do her taxes for her and end up running the gauntlet of FBAR fines. We don’t have any investments (why?) for fear of the US turning around and trying to tax those and penalize her for “failure to file FBARs”. And after hearing Lioness’ troubles with the IRS. I’m ENRAGED…actually enraged isn’t the proper word for it. LETHALLY ENRAGED comes more close to it.
Теперь, когда выборы закончились, мы можем быть более гибкими
*Yeah…you can say that again. I said before. Obama is doing everything he can to undermine the United States and the global economy.
Does anyone want to organize a protest at Parliament Hill?
@Mark Twain, the Animal
Je concur, thanks be that the election is over. We have to give it another week or so to see if the Canadian media is going to pick up on any of this again. I’m not giving up on a non-lethal course of action, and a peaceful protest somewhere is not off the table if that’s what it escalates to. I have empathy with the many of those who don’t want to stand up to be shot a la Monty Python style, so I would understand why your wife would not want to participate. We’re not quite there yet, though.
I got no problem in “staring down” a US consulate official or an IRS agent. They have no right to be on Canadian territory. Contrary to popular belief. A US consulate is not “US territory”. They are on Canadian territory subject to Canadian laws. “Contrary to popular belief, diplomatic missions do not enjoy full extraterritorial status and are not sovereign territory of the represented state. Rather, the premises of diplomatic missions remain under the jurisdiction of the host state while being afforded special privileges (such as immunity from most local laws) by the Vienna Convention on Diplomatic Relations. Diplomats themselves still retain full diplomatic immunity, and (as an adherent to the Vienna Convention) the host country may not enter the premises of the mission without permission of the represented country. The term “extraterritoriality” is often applied to diplomatic missions, but only in this broader sense.”
If they try to arrest me in front of the US consulate, then guess what…they will be charged with “false imprisonment” and sued beyond an inch of their life. I have no problem with peaceful protest. But if anyone gets in my face, I will eye-ball to eyeball intimidate.
*I can try to find you the home address of the IRS Criminal Investigations Attache in Ottawa. I might not be sucessful but I will start looking.
There is a solid option to protest without being identifiable, face covered. Not illegal for standard sidewalk picket with signage on commercial street, dramatic, makes the additional point of fear. With press release and attempt to stir media interest, important to have one “exposed” spokesperson. Planning and timing crucial.
Thousands of banks may disappear
This is where Dodd-Frank meets FATCA. The consolidation of the US banking system into an ever smaller group of too-big-to-fails is not a side effect of FATCA, it is one of the payoffs to the power elites.
If you think GS, JPM, MS, BofA, WF, etc are going to stop FATCA when it is going to force all the remaining wealth from the local country banks and credit unions into their hands you are whistling dixie.
Animal, I appreciate your enthusiam, but isn’t it just easier to renounce and be free?
Do the math = Running the gauntlet, filing the forms and running the risk of getting fined what Lioness gets hit with. with an income of $36,000/yr and no savings. versus:
Getting angry and protesting outside the consulate office and hopefully managing to generate enough public awareness that public outrage takes over and causes the United States to back down on FATCA and their fines to give my wife enough time to get in compliance with her United States filing (she has paid all her Canadian taxes – every year).
Besides, what can they do to me. I’m a Canadian citizen (born and raised here…no ties other than by marriage to the United States), they touch me…they’re going to be in so much shit…they’re going to wish they never heard of FATCA.