Live webcast available.
Familar names attending:
Business/International Tax #2
Moderator: Khrista McCarden (Pepperdine)
Papers: Reuven Avi-Yonah (Michigan), Corporate and International Tax Reform: Proposals for the Second Obama Administration
Allison Christians (McGill), Putting the Reign Back in Sovereign: Advice for the Second Obama Administration
Susan Morse (UC-Hastings), The Transfer Pricing Regs Need a Good Edit
Commentary: Robert Goulder (Tax Analysts)
I am not sure what time they will get to this last segment. Probably in the afternoon for those of you in the Eastern Time Zone
I could be wrong but I think Prof. Christians is thinking that if the USA gets flooded with true reciprocity demanding IGAs from every country in the world then FATCA will collapse … and that’s a good thing. I really didn’t get the impression from the Toronto forum that she thinks FATCA is a great idea but threatening to make the homeland financial institutions prepare countless, complex reports to be disbursed to every country in the world might be a viable strategy to make Uncle Sam cry “Uncle!” Did anyone else take things this way? Maybe I was misunderstanding her.
The USA seems to prefer to arrive at more or less right positions by taking the most convoluted path possible so if it takes tripping over a tangle of IGAs then that’s how it will have to be. I don’t think the USA will ever appreciate the simplicity and fairness of repealing FATCA at this point — unless it goes through the brain damage of nearly 200 ridiculous IGAs. Prof. Christians was saying, FATCA: either fix it or get rid of it. I say, FATCA: you cannot fix it so you must deep six it.
@Em, re; “but threatening to make the homeland financial institutions prepare
countless, complex reports to be disbursed to every country in the world
might be a viable strategy to make Uncle Sam cry “Uncle!””
I think you’re right. If I understood how this developed, the US was NOT even offering any mention of reciprocity.( I didn’t understand it until Just Me started telling us about ‘DATCA’ and described the connections, here at IBS).
Until there were no takers signing on, and other countries said – wait, what’s in it for us, what about some reciprocity?
And the US started saying ok, they’re on to us, we need to promise something in exchange – otherwise it looks as if we’re hypocrites – which we truly are (but how rude to bring it up).
But then the US banks and financial institutions in Florida and Nevada and Texas, etc. and the whole Florida caucus said ‘whoa there’, you mean we’ll have to turn in information on our money laundering foreign non-resident accounts? No way, no fair, if we do, we’ll lose all our depositors and go bust. And it’ll cost us. And so the US said – you’ve got a point, we want to keep all the chips we already have in the game – okay, I know, we’ll just pretend that this offers some benefit to other countries, and offer a sort of, kind of, maybe not-exactly-reciprocal-reciprocity. We’ll hedge and say we’re not promising anything exactly ‘reciprocal’, and we won’t define it, and we’ll say we won’t offer it to the countries that we know won’t sign on anyway (Venezuela, we’re talking about you). And, we’ll make it contingent on a future event that probably won’t happen – like US unemployment falling to some currently totally unlikely figure. And if that contingent event does happen, we’ll just put it off some other way, lots of time to deal with that when it happens – if it ever does.
And we’ll pursue an IGA with Canada, even though we already have the most extensive tax treaty in the world with them – that we (as is our way) reserve the right not to honor, and to change anytime and overrule it with new laws from home. So why do we need an IGA with Canada then? Because otherwise everybody would be coming around asking for an exception, and because when they see that we’re not even cutting our closest neighbour and important best tarsands buddy and NAFTA trading pal some slack, it’ll frighten the bejeebers out of those recalcitrant others; seeing us make Canada fall into line will push all the other holdouts into the palm of our greedy grasping talons.
You have it right. She is just pointing out the hypocrisy of current form of FATCA. If you are serious then do a full blown DATCA, is basically the message. Of course we know from Article 6 of model one, that is what the FATCAnatics of Treasury want, but politically it might not be possible…
1. Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with 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.
@badger Re ur: January 24, 2013 at 2:19 pm comment
That’s it! And you expressed it in as tidy a nutshell as is possible for such a convoluted, ill-reputed mess. DATCA and IGAs could bring FATCA down better than any of our pleas for reason and fairness — unless GATCA is so important to the NWO that it will keep on pressing on no matter what the consequences. The US government will gladly threaten “overseas” US citizens and “overseas” FIs but woe betide its sorry hide if homeland FIs are inconvenienced or their status of “best tax haven in the world” is in jeopardy.
There is a special problem for third world countries without adequate bureaucracies and financial systems. Since the US dollar is the currency of world trade, these countries are inevitably going to fall foul of FATCA. Do you think a country like Somalia can cope with it? The US will start withholding 30% from transactions because they won’t be compliant. All this on top of one of the least generous aid programs per GDP for industrialised nations (when you take out the military component) and wingnut blocking of UN programs. Way to go USA!
at TaxProf blog
Finally, Professor Allison Christians (McGill University) spoke of recent seismic shifts in international taxation [Putting the Reign Back in Sovereign: Advice for the Second Obama Administration
]. As she sees it, the onset of FATCA (the Foreign Account Tax
Compliance Act) and EITI (the Extractive Industries Transparency
Initiative) reflect the mercenary tendencies of the nation state to
assert jurisdiction in ways formerly thought untenable. Christians
embraces the notion of information exchange, in theory, but questions
whether the compliance burdens are reasonable. Reciprocity remains a
legitimate issue. It can be argued that dual-resident Canadian nationals
are hard done by FATCA.
Personally, I consider her discussion of EITI as the revelation of the
conference. Few tax professionals are even aware of the regime’s
existence. Bravo to Professor Christians for highlighting the issue and
framing the issue in such an insightful manner. “….
You are right. That EITI was a revelation to me too…
A new paper by the panel member Susan C. Morse on the FATCA IGAs http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2252843
‘Why FATCA Intergovermental Agreements Bind the U.S. Government’
Susan C. Morse
University of California Hastings College of the Law
April 15, 2013
Tax Notes International, Vol. 70, No. 3, 2013
“Bilateral intergovernmental agreements (IGAs) relating to the Foreign Account Tax Compliance Act (FATCA) and entered into by the U.S. government reduce the reach of FATCA’s withholding tax regime, including the reach of that regime as applied to non-U.S. taxpayers. The validity of these IGAs has been questioned. Yet IGAs have a strong case for binding status as valid congressional-executive agreements or treaty-based agreements. In addition, regardless of IGAs’ status as international agreements, they should bind the U.S. government as valid administrative guidance. ”
I haven’t read it yet. Invaluable to see what Prof. Allison Christians will say about it.