Patrick W. Martin, Partner – Procopio, Cory, Hargreaves & Savitch, LLP
Lara Banjanin, Attorney Advisor – Office of Associate Chief Counsel – International (IRS)
Michael Welters, Partner – Bull, Housser & Tupper
Lara Banjamin is like ice woman however it is interesting to the Canadian lawyer next to see her discuss the legal obligations or lack thereof a Canadian lawyer has to the IRS. In Michael Welters seems to imply that under Canadian law a lawyer who happens to practice under circular 230 should recuse him or herself under certain circumstances
Mark Mathews, Steve Toscher, and Richard Harvey talk OVDI in second video below.(Two different videos)
Must watch, Must Watch, Must Watch
Lots of Circular 230 discussion. Interesting interview with a Canadian tax lawyer who is not registered the IRS and thus has no obligation to help the IRS.
Amb Jacobson is complete liar too according to one of the panelists. Must watch must watch.
Tim…
I think you have the speakers wrong….
The video says…
Speakers:
Patrick W. Martin, Partner – Procopio, Cory, Hargreaves & Savitch, LLP
Lara Banjanin, Attorney Advisor – Office of Associate Chief Counsel – International (IRS)
Michael Welters, Partner – Bull, Housser & Tupper
@Tim
Thank you for bringing this to our attention. It seems to break off in mid-sentence. Is there a continuation somewhere? I didn’t notice anything on the Youtube site.
@ Just Me
I think Tim is referring to the speakers in the second video.
I watched most of it but skipped the parts about Mexican tax investigations. I thought the UBS, Birkenfeld and OVDI discussions were interesting. I thought the most interesting comments were about the 4,450 names from the UBS list. There’s an admission that the USG was expecting them all to be incredibly bad actors and while there were a few of those (probably about 100-150 or the number that have been prosecuted) the majority were largely benign. I also thought it was interesting that Patrick Martin, the moderator, had made an FOIA request for the breakdown of the $5 billion into taxes and fines. Unsurprisingly, he hasn’t received an answer.
There were also some revealing comments about USG tactics vis a vis non-citizen US residents. The comments suggest that the US government threatens a tax evasion trial which if convicted results in deportation or, of course, you can always pay a 50% FBAR fine instead. Even if you are completely innocent you would have to think very seriously about paying the fine instead. Given that US citizens are not eligible for bail, you would spend your time awaiting trial in jail and no doubt the government would delay your trial for years. Why bother with the taxes rightfully owed to the government when you can collect 20x-50x more through FBAR fines? Guilty until proven innocent.
I watched the first video. The first thing that struck me was the excellent command of the facts from all three. The IRS woman was particularly on-the-ball. I noticed only one possible slip-up, relating to green card holders.
The second thing that struck me was the dispassionate manner in which the participants discussed things that have life-altering consequences. None was gleeful — not even close. But nor did any of them seem to really understand, in a visceral way, the outrage that ‘accidental Americans’ and other expats feel when the US presumes to claim a share of what is after all none of their business (literally). There was a mention of FBAR perhaps being unconstitutional, but nobody seemed really bothered by that. It was just another fact, alongside all the other injustices. Everything seemed abstract. Technical. Details, nothing more.
The Canadian on the panel suggested accidentals with assets might be interested in renouncing citizenship, but often backed off when they found out the exit tax cost. I doubt it is as true as he thinks. But where it is true, it creates a class of disgruntled and disaffected but ‘captive’ US citizens who will go out of their way in future to ensure that they never pay the US a penny in tax. This benefits neither side. Lose-lose. No recognition of that anywhere.
I couldn’t watch the second because Dick Harvey was on the panel, and I can’t stand him. As the architect of the ‘worst law ever’ you’d think he’d adopt some humility, yet he becomes ever more smug and unapologetic with each appearance. Every time I hear him speak, or read something he’s written, I want to throttle him.
Thanks very much for posting these, Tim.
Accidental Americans : http://isaacbrocksociety.ca/2013/03/22/when-law-becomes-a-substitute-for-morality/
@Edelweiss, regarding “There were also some revealing comments about USG tactics vis a vis non-citizen US residents. The comments suggest that the US government threatens a tax evasion trial which if convicted results in deportation or, of course, you can always pay a 50% FBAR fine instead.”
I hope they were talking about bad cases, and not minnows. This sounds like extortion, pure and simple. “Pay up huge fine or leave”.
@Watcher, can you elaborate on “I noticed only one possible slip-up, relating to green card holders.”?
Thanks.
@Chris, at 41:48. I reviewed, and it turns out on paying careful attention that I misheard an unclear “eight years” as “a year”. No slip-up after all, then. Sorry for any confusion.
The IRS expert wasn’t too good at her sums when she had trouble taking 35% of $10 million. I watched both videos despite my not so gracious feelings towards Richard Harvey. He certainly remembered his Swiss panel experience when he wondered if they had arranged protection for him. I found myself wondering where they all kept their emotions or if indeed they had any at all. There’s another in that series which I also watched which went into the history of FATCA and yes it had Richard Harvey in it too. (Skip the first 7 minutes if you watch it.)
https://www.youtube.com/watch?v=CPkv4OAHjPg
Topic: FATCA’s Impact on Local Financial Institutions in the Americas
Speakers:
Patrick W. Martin, Partner – Procopio, Cory, Hargreaves & Savitch, LLP
Richard Kando, Partner – Navigant
Professor Richard Harvey – Villanova School of Law
These are interesting videos. It is worth remembering that these were made in the fall of 2011 and the speakers must be interpreted in that context.
First one with Mark Matthews:
Lots of interesting comments on the original purpose of the OVDI program. Even in 2011 it was very clear that OVDI was designed for criminals (and by that I mean in a moral sense). It seems clear that a large number of people who entered OVDI did so on the advice – bad advice – of lawyers. Matthews comments reinforce to me that OVDI was NOT intended for minnows or anybody but criminals. Remember that this is evident from 2011. Yet in 2012 the IRS reactivated the program knowing both that:
– it was designed for criminals; and
– a large number of people entering the program were NOT criminals
Matthews also makes the interesting comment that less than 1% of U.S. citizens abroad were filing FBARs. If this is true, then the IRS seeking FBAR penalties on U.S. citizens abroad was nothing more than an “opportunistic shakedown” – let’s take advantage of an unknown law. We will then terrorize, penalize and destroy those people!
This is unbelievably immoral behavior on the part of the IRS and all the lawyers who encouraged people to enter OVDI. In the US of today there is no relationship whatsoever between law and morality. It’s also clear from the comments of Harvey and Matthews that OVDI was designed with the presumption that people with accounts outside the U.S. were tax cheats. Anyway, even if the lawyers and IRS (business partners) are cut some slack, the “smoking gun” is the reintroduction of OVDP in 2012 when they knew that the program was NOT appropriate for many entering it.
One question in my mind continues to be: how could the lawyers, who are supposed to be representing the interests of their clients go along with this? Which brings me to a discussion of the second video.
Second video: This is interesting because of the presence of the non-U.S. lawyer. What the interview made clear is that U.S. lawyers, CPAs and EAs are bound by Circular 230. This means that the IRS defines the standards of “ethics” and imposes them on the lawyer. I have always believed and continue to believe that this makes it difficult for them to properly represent their clients. If the lawyer doesn’t do what the IRS wants then that lawyer will be out of business.
The non-U.S. lawyer made the point that he was NOT bound by Circular 230. That does not mean that he can counsel breaking any laws, but it does mean that he is not directly answerable to the IRS in giving advice.
See a post specifically on this problem “The Conscience of a lawyer and the FBAR Fundraiser”.
http://isaacbrocksociety.ca/2012/05/31/the-conscience-of-a-lawyer-and-the-fbar-fundraiser/
Once again, I am left with the strong sense U.S. professionals are dangerous!!
Finally, my sense of looking at both videos. These people are clearly from another planet! They are from a world where (as I have suggested before) law is morality. As a previous commenter noted there is no feeling. There is no empathy. There is no acknowledgement of what is clearly inappropriate use of Mr. FBAR. There is neither a recognition nor understanding of how they have destroyed the lives of who are on the whole “hard working, honest, patriotic Americans”.
But the strongest feeling I am left with after watching this:
Stay away from the U.S.
Renounce as quickly as possible.
Spread the word to as many people as possible.
The place is morally, spiritually and financially bankrupt.
@ USCitizenAbroad
Great comment! The panel members definitely seemed to lack empathy. Kind of like stepping over the bodies of their own countrymen lying on a battlefield and the only thing registering in their minds is the sight of the foreigners retreating.
Had another thought about what Matthews said in the first video. Again, bear in mind that this is in late 2011. When discussing the advice he would give to clients he talked about the whole “whistleblower issue” (offering this as an argument to be in tax compliance). He used the example of your bank data being easily visible, recoverable, and indentifiable by someone in an IT department. He used the specific example of a “24 year old IT” person. He then made the point that Birkenfeld may have served some jail time but Birkenfeld was very very well paid for each day he was in jail. (I think I remembered a figure of something like $100,000 a day in jail plus “free room and board”.) At this point Professor Harvey enthusiastically “jumped in” suggesting that he had checked with his students and many of them said they would be happy to spend some time in jail for that kind of money. (Makes good financial sense for a 24 year old.) I am not making this up – watch the video.
A recent post on this site was titled: Salvation lies in becoming a “Whistle Blower”
http://isaacbrocksociety.ca/2013/03/31/salvation-lies-in-becoming-a-whistleblower/
I got thinking about how all this relates to the privacy concerns of account disclosure (not closure) under FATCA. You may recall the post by Michael Young (Twitter handle @beirutcalling) where he talked about the problem of FATCA publicizing too much information about the finances of U.S. citizens available to anyone. He talked (I think) about the problems of kidnapping and holding U.S. citizens for ransom. Kidnapping and ransom is only one way to cash in the information. The bank account information would be of obvious interest to those seeking their salvation in becoming “Whistle blowers”.
Imagine this: FATCA forces banks to search through accounts identifying U.S. persons. Once identified, wouldn’t there be incentives for the bank employee making the discovery to turn the account over to the IRS outside the formal FATCA exchange? Of course there would be.
In the spirit of creating new industries, “Form Nation”, FATCA, and the culture of encouraging Whistle Blowers has accelerated a new and growing U.S. industry.
The great American “FATCA Hunt”
This is an industry where people will “blow their whistle” when they find a U.S. person with a bank account. As a recent blog post said:
“You, yes You could easily be someone’s retirement plan!”
Perhaps the title to the post:
“Salvation lies in becoming a whistle blower”
should be changed to:
“Your retirement will be ensured by becoming a Whistle Blower: FATCA Edition!”
This is inevitable. As Phil Hodgen said:
“Get out while the getting out is semi-good!”
http://isaacbrocksociety.ca/2012/06/07/phil-hodgen-why-people-expatriate-a-comment-on-his-post-what-about-those-who-cannot-certify-5-years-of-tax-compliance/
Perhaps you should take protective steps by simply closing your own bank account. (Half serious) There is no law requiring you to use one. Yet!
Also, for the record, I think these concerns are valid whether you are tax compliant or not. I know it’s hard for the Obamas, Levins, IRS and cross-border professionals to understand but:
Financial information has been traditionally been private and it should stay that way. Facebook and Social Media have conditioned us to a world where nothing is private. Funny, wasn’t there some discussion this week about the IRS using Social Media to investigate taxpayers?
Final thought aimed at those of you who value your U.S. citizenship and want to keep it.
Get a second citizenship anyway and hold yourself out ONLY as a citizen of that other country. U.S. citizenship will make you a target.
“Second citizenship! Don’t leave home without it!”
@USCitizenabroad…
The article you talk about from @Beriutcalling, is one I refer back to constantly…
I have called it FATCAs FATAL Security Flaw. For those that don’t recall or missed reading it, here it is…
http://bit.ly/X1J8ES
Em and USCitizenAbroad, yes, to me the most disturbing aspect of the video (I only watched the first one) was how clinically detached the lawyers were — like doctors performing autopsies or discussing patients with terminal illnesses. And of course the attitude of the IRS and US politicians is no better — “What’s the problem? Just fill the forms, pay the penalties, get into compliance and all will be well.” — like the offer of a medieval surgeon to cure one’s ills.
I echo USCitizenAbroad’s advice:
“Stay away from the U.S.
Renounce as quickly as possible.
Spread the word to as many people as possible.
The place is morally, spiritually and financially bankrupt.”
All,
I have been travelling for this last few days so am I just catching up on the previous. I think one thing that came to my mind is while they didn’t realize it all of the assembled lawyers are officers of courts of “equity” not just officers of courts of “law.” Its obvious that even if you believe that the law is the law clearly the intention of legislature in drafting “the law” did intend to cover the aforementioned circumstances thus principles of “equity” should apply in lieu of principles of “law.”
Well worth watching these videos. Much thanks to Tim for finding, previewing and posting them.
So very ironic and twisted; that the IRS will invest in heavy handed ‘compliance’, pay their counsel to attend panels like these describing in detail just how complex ‘compliance’ is for those living abroad, and fly high salaried Treasury and IRS staff all around the world to present at FATCA sessions, and negotiate IGAs, and answer questions from professionals, but will invest NOTHING in holding ‘taxpayer’ information and assistance sessions in Canada and Mexico – where the majority of those duals, and those deemed ‘taxable persons’ are actually located. So obviously evidence of where the US IRS and Treasury have decided to spend US tax money: a travesty, since both countries – with our long shared borders, are within easy and inexpensive travel and reach of IRS personnel – and much cheaper to visit than the rest of the globe – where fewer US persons are located.
Not for us mere ‘international taxpayers’ any useful in person information, or explanations. Merely dictat from on high backed by extortionate threats and penalty webs. Merely the arrogant statements of US claim to our non-US assets. And the rare sessions offered in Europe – botched by overt punitive enforcement overtones – like the one reported on the IBS about the Norwegian embassy http://isaacbrocksociety.ca/2013/02/09/what-are-you-hiding-just-file-it-a-personal-account-of-a-norwegian-tax-seminar-hosted-by-the-u-s-embassy/
assets.
I’d love to see a panel convened where some of the points raised in these videos were fleshed out. Like what is ethical or moral about the US claims on duals born and living only outside the US, with no other US connection other than a US parent, or how the draconian information reporting regimes are in any way justifiable – in the absence of any evidence of wrong-doing. The participants touch on these issues, but don’t explore them further.
Very interesting that the possible unconstitutionality of the FBAR (
and perhaps some of the other ‘information’ reporting penalty structures?) came up.
And likewise, the differences between the Canadian lawyer and the US lawyer in terms of their duty to client vs. duty to the US state. Unfortunate that several of the lawyers in Canada with the requisite US tax training are US citizens. Some haven’t been here in Canada for very long, (as can be seen in their bios on their firm’s website) and may intend to go back sooner rather than later. Or whose firm has a US branch. So, divided loyalties – and hence unable to serve their clients best interests as well? In this arena, the client is at a disadvantage vis a vis the IRS and their own ‘professional’ counsel. At least the enrolled agents are more upfront about this, and offer no attorney-client privilege, so the nature of the relationship is more clear.
I have to wonder how (as has been raised on other IBS threads and those on other blogs) what people have experienced in their dealings with US crossborder tax counsel here in Canada, and other places outside the US has been shaped (distorted?) by that Circular 230 and other liability fears. Certainly when a person is perfectly ‘in compliance’, but wants to renounce or relinquish, they will be asking for assistance in doing so. But, at what point does Circular 230 interfere with getting the fullest and most useful advice and assistance from their legal counsel? Particularly re the issue of not raising the issue of being deemed to have renounced for the purposes of ‘avoiding’ US taxes. Not ‘evading’, but merely ‘avoiding’. Well, if I don’t believe that this US tax regime as imposed on us living as duals outside the US is legitimate, or ethical, and I choose to renounce, then am I ‘evading’ for tax purposes? And if we say to our legal counsel, who is a US citizen – who is likely protective of their own interests that we refuse to continue to countenance ANY continued relationship with the US – including a? Even those with no current US tax liability may potentially have some in the future – via the sale of our principle residence in Canada, or estate issues, or the ever present threat of US elimination of the FEIE, or conflicts between our home country tax and legal system, and that of the US.
In my comments above, the second to last sentence was incomplete, and should read; “And if we say to our legal counsel, who is a US citizen – who is likely protective of their own interests, that we refuse to continue to countenance ANY continued relationship with the US – including ANY FUTURE tax or information claims imposed or created by the US (ex. the newly invented Obamacare tax)?” Is that AVOIDANCE? And if it is, then what is wrong with ‘avoiding’ unjust punitive double taxation and unjust potential penalties or confiscation of our legal post-tax assets?
My point is that as the IRS counsel in the video explains – re the categories of those deemed to be ‘covered expatriates’; for the US to say that they can/will punish those who are deemed to have renounced for the purposes of ‘avoiding’ US taxes is telling us that they reserve the right to include those who rightfully and legally choose NOT to continue to remain in this one-sided, open-ended, oppressive situation, where to remain a deemed US citizen (= ‘taxable person’) is to be agreeing to ANY and ALL current and FUTURE terms the US chooses to impose. And the future in that respect seems bleak given all we’ve learned about the past history of the US treatment of its citizens born and/or living outside the US, the punitive treatment of expired greencard holders, and all the recent and proposed actions in the exact same – or even more threatening and punishing vein.
This is NOT a valid social contract. This is the dictatorship of a powerful state controlling the legal assets of people with NO economic or other significant relationship to the US. This is the US stating that it owns our persons, our non-US assets, our offspring, and may change the terms at any time – without our consent, without any democratic representation, without any ethical or moral framework.
The placid and dispassionate, matter-of-fact way in which the IRS legal counsel in the first video describes the intricate framework of the burdens that the IRS enforces on those abroad is disturbing. She knows full well and understands in depth (as evidenced by her area of expertise – ‘international’, and expatriation) just how many scenarios involve people who do not live in the US, have never even set foot in the US, may speak no English, have no US relationship, yet have the full burden – just the same as if they were living in the US. And she knows full well just how complex every part of our ordinary lives has been made by the US. The fact that she is necessary on a panel where her purpose is to describe the complexities of the burden is evidence that it is not well understood by many ‘professionals’, much less the average ordinary US citizens inside OR outside the US.
The mention of the FEIE and the Foreign tax credits are often offered up as if it solves all or most ‘compliance’ problems for those abroad, when of course that does not recognize all the income or taxes that those in other countries may pay, and does not prevent several common double taxation scenarios (ex. residing in a ‘low tax’ or very different tax jurisdiction, the self employed, investment and savings income, sale of our principle residence, ordinary savings like RESPs, RDSPs and TFSAs deemed to be ‘foreign trusts’ etc.). For us, it bolsters the argument that we are not ‘tax evaders’ – but the FEIE and foreign tax credits thinly paper over the cracks – and though they assist many to ‘owe’ no US tax, yet it disguises the fatal flaws and other pitfalls – like the fact that in the cases mentioned, it is the penalties for the FBAR and information reporting on our post-tax, legal savings that are a serious and everpresent threat to us – even though we owe the US NO actual taxes.
It was very interesting that one panel member repeatedly mentioned the Taxpayer Advocate Nina Olson and looked for her in the room. It would have been great to see a video of her speaking or her input on this or other panels. She best knows how this is playing out, and has a direct advocacy role and mandate to point out where this is harming those abroad.