Received via email from ACA:
American Citizens Abroad (ACA) Welcomes Treasury Department’s Latest Step on FATCA
In its ongoing efforts to implement the Foreign Account Tax Compliance Act (FATCA), the U.S. Treasury Department has just released an updated version of the Model Intergovernmental Agreement (IGA), on November 14th. FATCA requires foreign financial institutions to report the accounts of American citizens and those considered US persons, to the U.S. government, or risk incurring a withholding tax of 30% on all U.S. transactions. This new version of the Intergovernmental Agreement contains provisions that require a Foreign Financial Institution (FFI) that wishes to take advantage of certain favorable provisions to avoid policies or practices that discriminate against opening or maintaining accounts for Americans residing in the foreign country covered by the IGA. This “loosener” is aimed at small financial institutions with essentially a local client base.
Although American Citizens Abroad (ACA) continues to have many concerns about the negative consequence of the FATCA legislation for the US economy, the organization welcomes this step addressing the problem of Americans living abroad being denied banking services because of FATCA. This is a clear indication that ACA advocacy, along with that of other overseas organizations, is having an effect, and the concerns of ACA’s members are being addressed. ACA will continue to work with the Treasury Department and the IRS to develop a range of practical solutions.
“Americans abroad have been seriously disadvantaged by the implementation of the new FATCA rules, even before they go into effect, because banks all over the world now perceive American clients as too risky,” said MaryLouise Serrato, Executive Director of ACA. “Foreign banks have been closing Americans’ accounts and turning away Americans wanting to open a new account. We want to do everything possible to avoid this happening, and these new provisions are a step in the right direction,” she continued.
ACA is a non-profit, non-partisan, volunteer association whose mission is to defend the rights of Americans living overseas.
Contact:
Marylouise Serrato
Washington, DC
202 322 8441
If the US thinks this proves that they have ‘listened’ to us, or that FATCA can be made palatable, or that it will stop the renunciations, they can think again.
Just the fact that they do any one of the myriad of punitive and arrogant things we’ve been discovering and discussing here makes being deemed a US citizen something I’m not prepared to be for any second longer than I am forced to. I feel that it is a noose and slave collar around my neck, and it is choking me.
I feel so much safer now, that my USA government has made a regulation that the USA regulations upon foreign governments that their business institutions won’t discriminate against me while they are discriminating against me because I am a US citizen.
@whoaitssteve- what these regulations really do is to allow the U.S. to determine the corporate charter for a foreign entity. Since these rules are directed at U.S. persons all that they are is an indirect way of restricting the options that U.S. persons have for accessing financial services in their country of residence.
Basically any of these financial institutions that start out serving U.S. persons as the time that FATCA is implemented will have their growth options severly limited. This means that the share holders of this financial institutions will not be able to fully exercise their property rights in the company. If a company can’t grow then its investment returns will be severely curtailed.
I can give you one example that I know of personally of how an American who is restricted to being served by lesser financial institutions can be discriminated against. As you probably already know, there is in Canada an investment vehicle called the, Registered Disability Savings Plan. As good as this plan is the reality is that not every financial institution in Canada has the size to make offering this plan worthwhile. I know this because I have spoken with our local credit union and they do not currently offer this savings option because for them it isn’t economical. You can only invest in this plan through the bigger banks who also just happen to have international opertations.
In the end there is no way to fix a regulation that starts out based on faulty premises.
@Mark,
!!!!!!!!!!!!!!!
@badger, mark twain
Is it really discrimination when the US enforces the same law on all its citizens regardless of where they live? It is clearly the lack of distinction between us and them that’s the problem, yet the fact that bilateral tax treaties exist is acknowledgement that concessions need to be made for US persons living abroad.
@bubblebustin,
Good point
— and probably just what they will point out to us?
@bubblebustin – since we see that there is discrimination in actual effect or result of citizenship-based extraterritorial taxation and reporting obligations and penalty structures, it does not just have to be enshrined or codified in law. A law or policy or government actions can be worded as if it applies equally to all, but is still discriminatory in the actual harmful results, impact, method of application and outcomes for different groups or classes.
@calgary411, you’re probably right that the US will argue that. But, if we can then hone our counterarguments – and if the concrete real-life ‘effects’ can be identified and documented, then that is a powerful counter to their offering of some merely theoretical equality.
Equality in word is not the same as equality in deed.
For example:
http://www.manitobahumanrights.ca/aboutus.html
….”Anyone, including a group or organization, can file a complaint
if it is believed that a practice or policy results in unreasonable
discrimination. In determining whether discrimination has occurred, it
is the effect, not the intention that counts.“…..
Thanks, badger. We do need to think ahead / counter-arguments!
I have been trying to discuss this with a Constitutional law professor, but the guy is just never in his office. I had previously contacted a large firm that deals with class action discrimination cases, but he regretted that they couldn’t do anything for our sh_tty situation.
@badger
Great points, thank you. Any law or act that does not discriminate but results in discrimination can be considered discriminatory. Citizenship based taxation results in the same rights enjoyed by US persons within the US to be withheld to same citizens living abroad.
garbo999 wrote this on the
US and Denmark sign IGA
thread: “Under the present law obliging financial service providers to discriminate against American persons, discrimination against American persons is hereby prohibited.”
Precious.
*
bubblebustin, I agree with badger too. US policy causes Americans living abroad to be discriminated against in the nations where they reside.
*Mark Twain, that’s good to hear since it further demonstrates that I made the correct decision. Thanks for making the effort to confirm with a large firm what I had assumed. I always enjoy it when my assumptions turn out to be true!
@swisspinoy
I agree too.
@Badger, is it true then:
Any law, act or policy that does not in itself discriminate, but as a result of being non-discriminatory results in discrimination, may itself be considered discriminatory?
@bubblebustin, swisspinoy, badger.
It’s making me dizzy.
Another way to put it is: “I am (until I receive my Certificate of Loss of US Nationality) a second-class citizen in Canada by virtue of my extraneous US citizenship.” And, those like my son who are trapped into retaining US citizenship are especially affected.
*WhoaIt’sSteve, wanting banks to not discriminate against Americans based upon their citizenship or US tax status is certainly a good thing, even though the discrimination is a direct result of US policy. If the US had held this position from the very beginning, then I wouldn’t have renounced US citizenship as a result of such. This proposal would also exclude insurances, investment funds and and pension plans from FATCA. However, it is still going to be extremely difficult for banks to discover US persons and this still creates more problems for Americans living abroad without solving any of the existing problems.
*We really dont need the anti-discrimination text in the IGA. It already exists in numerous places. In the EU, its right there in the European Convention on Human Rights. It also specifically states that discrimination shall not be on the basis on wealth. So these inane threshold for reporting (50k? 250k? any time during the year?), are also in violation.
@bubblebustin, I’m with @calgary411, it makes me dizzy too. I’m not sure whether we could say that “Any law, act or policy that does not in itself discriminate, but as a
result of being non-discriminatory results in discrimination, may itself
be considered discriminatory?”
The key may lie in whether the discrimination results in a disadvantage. Or , when the failure to make a meaningful distinction results in discrimination and disadvantage. Thus the US defends what is discriminatory in result re those abroad, by refusing to make meaningful distinctions in the framing and application of the FBAR law, where failing to make those meaningful distinctions imposes a significant disadvantage for us. For example calling ALL accounts held outside the US ‘foreign’, when by definition our ‘local’ accounts are and must be outside the US, results in all of our accounts being designated ‘foreign’ – and thus triggers the application of disadvantageous confiscatory and draconian rules and penalties which US residents can easily choose to avoid being exposed to – even if they would equally be required to report on non-US accounts. Thus the actual result is discriminatory because the result is to disadvantage us and burden our ‘local’ accounts and expose them to great potential jeopardy and complex reporting, though we have no choice but to open them where we live – which is outside the US.
Another way to look at it might be that you could treat classes or groups differently as long as the difference in treatment doesn’t result in a disadvantage for anyone? It wouldn’t disadvantage those inside the US if like theirs, our accounts were effectively exempted on the basis of being ‘local’ – i.e. located where we live (except for those in the EU with more fluid movement between countries, and more economic integration by region).
Or if defining ‘local’ vs. ‘foreign’ accounts referred to where they were located vis a vis the US taxable person-owner of the account rather than in relation to the physical geographic location of the account itself – in or outside of the US.
The fact is that there are numerous ways in which the US, IRS and Treasury could either exempt us, exempt our ‘local’ accounts, define ‘foreign’ differently, define ‘taxable’ persons differently, etc. But they have adamantly refused to remedy the situation at all, refuse to make meaningful distinctions, refuse to acknowledge the problem or admit the discriminatory and punitive real life results. There is obviously no will to do anything about the burden – and so I must conclude that they are happy with the results.
@badger, calgary @all
I can’t tell you how much I appreciate how much you give of yourselves here!
It’s very hard to whimsical with this kind of subject matter.
@Bubblebustin
“The law in its majesty prohibits both the rich and the poor from sleeping on he park bench.”
Obviously this is a law that affects only the poor and would be discriminatory because of its effects on the poor. I think the discrimination argument may be difficult.
I am increasingly of the opinion that the specific way that the US imposes citizenship-based taxation, may create constitutional problems. The fact is that US citizens are prohibited by US legislation from not being able to live normal lives. Some examples:
– retirement planning impossible
– limited access to employment and business arrangements
– as these issues become more well known, US citizens will be unable to find marriage partners
– we have seen Canadian adoption agencies warning about the risks of adopting US citizens
– the unfairness of inflicting US citizenship on children born outside the US to parents who are US citizens
To put it simply: US citizens abroad are disabled by the US government from living a normal happy life.
Rather than just accept that because the US Supreme Court (a very long time ago) ruled that citizenship-based taxation is constitutional, one should begin to construct arguments for why the specific application of citizenship-based taxation is not constitutional.
@Badger
You would of course want to confirm what I am about to say but:
You do NOT need to show five years of tax compliance to actually renounce. Go ahead and renounce. The inability to show five years of tax compliance (which does NOT include FBAR compliance – Title 26 means Title 26) means only that you become a “covered expatriate”. So, what does that mean? Well it means two things:
1. You are potentially subject to the Exit Tax. My guess is that most Americans Abroad (considering the exclusion) will not end up having to pay very much (if anything);
2. As a “covered expatriate” you cannot make gifts to US persons, the donees would have to pay a tax (going up to 55%) on the gift. So, if you want to make gifts, make them before you renounce.
What will the IRS do if you cannot show five years of tax compliance? Who knows?
The US government is so incredibly abUSive (thanks for that one USXCANADA) that it might be worth just cutting the cord.
But, hey what do I know?
@renounceuscitizenship
I find it incredible that there isn’t a constitutional lawyer who is a USP, who happens to live abroad who hasn’t taken this up yet.
Thank you for the thoughts @renounce. I’ve wondered myself re
“What will the IRS do if you cannot show five years of tax compliance? Who knows?”. The lack of transparency only helps them to hide their dirty deeds and keep us intimidated. Similar to cloaking the information about FBAR penalties actually assessed, or not, on minnows and krill.
Acting in bad faith, sowing fear and confusion, refusing to clarify or provide firm clear information – consistently choosing abusive methods as a preferred modus operandi. Something for the US to be proud of. And something that will taint Canada by association via FATCA.
Two things…
One: I see that Genevalunch as commented on the slightly eased FATCA regulation for small local banks.
http://genevalunch.com/blog/2012/11/21/us-fatca-legislation-eased-slightly-for-small-local-foreign-banks/
The other, was a comment I saw that here
FATCA refugees seek friendly private banks.
Americans Living and Working Abroad should be treated the same as Americans Living and Working in the mainland. The penalties should be the sme. The statute of limitation too. No need to report FBARS. No double taxation of any form. No diferent rules depending on what Country the American is Livinf and Working. For instance Americans living in France do not pay US Taxes on their Frencj pensions. The ones living in Brazil do. They are both Americans. And so on.
@markpinetree, glad to see you posting, had missed seeing you here!