H.R. 2299 “To prevent the Secretary of the Treasury from expanding United States bank reporting requirements with respect to interest on deposits paid to nonresident aliens.”
In the last Congressional Session, Representative Bill Posey proposed 3 amendments to H.R. 4078, “The Red Tape Reduction Act”, which was passed by the House, but died in the Senate.
Posey’s third Amendment, was of interest to us. It specifically was calling for a withdrawal of IRS bulletin 20-2012 . This is an important reciprocity tool that Treasury is promising the world’s governments in their FATCA IGAs as a first step along the way to imposing a full blown domestic equivalent of FATCA (which we call DATCA).
…… to stop the IRS from implementing new misguided regulations expected to lead to billions of dollars of capital flight from U.S. banks to foreign institutions. Despite strong bipartisan requests in both chambers of Congress, the Treasury Department has refused to withdraw the rule, or at a minimum, conduct an economic impact analysis on how the regulation would affect the banks and the economy.
Representative Bill Posey is no ‘Johnny come lately’ to the fight against the FATCAnatics in Treasury. Back in March of 2011, he wrote the White House a letter, signed by the entire Florida delegation, demanding that the proposed IRS regulations requiring reporting of Non Resident Alien Deposit Interest be withdrawn.
It is good to see, that with this new bill, Rep Posey can be just as persistent on the right side of the equation as the misguided Senator Jack Reed is on the left, who thinks emigrants (deemed ‘covered Expats’) shouldn’t be able to return once they renounce or relinquish citizenship.
I think this is a bill we can and should support. I still feel the reciprocity issue is the Achilles heel of FATCA. If this reciprocity tool is totally removed, the governments of the world can no long hide behind the charade that they are signing IGAs to get something back in return.
Of course, I could be wrong, and probably am. That said, I thought I would take this opportunity to move forward and update the history of DATCA events with this post. I have been tracking it here, here, here, here, here, here and here since it first became obvious to me what Treasury was doing .
Recap the DATCA story…. (as much for me as for anyone who happens to bother reading this.) I continue to add to it over time. I have been trying to keep all articles relevant to the FATCA reciprocal information sharing subject as I found them. I coined the term DATCA to reference it, as it is the domestic version of FATCA.
Let’s review. This is somewhat an arbitrary start date for a timeline. If anyone sees any story or discussion earlier than this, that I may have missed, which adds significantly to the DATCA narrative, please let me know.
March 18, 2010 – Hire Act H.R. 2847, signed into law. Hat tip to Mark Twain who provided me with the Money Trail on those that voted for this.
February 22, 2011 – IRS Bulletin: 2011-8 REG-146097-09 was issued: It was a Notice of Proposed Rulemaking; Notice of Public Hearing; and Withdrawal of Previously Proposed Rule making Guidance on Reporting Interest Paid to Nonresident Aliens
March 11, 2011 – A bi partisan letter from the entire Florida delegation, comprised of Reps and Dems was written to Obama to complain about regulations that the IRS was unilaterally imposing on US banks as part of the FATCA rollout effort. However, they did not identify or maybe even understand that one was part of the other.
Another link for this letter.
July 15, 2011 – H.R. 2568 (112th Congress): To prevent the Secretary of the Treasury from expanding United States bank reporting requirements with respect to interest on deposits paid to nonresident aliens. (Thanks to Mark Twain for calling this one to my attention in the comments below.)
September 22, 2011 – There was Ron Paul’s letter to Tim Geithner about FATCA I was not aware of it until posted by recalcitrantexpat on Feb 8, 2012.
September 27, 2011 – The first story that begin to register for me that there was opposition to actions that the IRS was taking. It was in an Accounting Today story six months later: Congressman Tells IRS to Back off on Bank Disclosure
The chairman of the House Ways and Means Oversight Subcommittee demanded Tuesday that the Internal Revenue Service suspend a proposed regulation that would require banks to disclose the amount of interest paid to nonresident aliens.Rep. Charles Boustany, R-La., wrote a letter to Treasury Secretary Timothy Geithner and IRS Commissioner Doug Shulman saying the proposed regulation could potentially drive foreign investment out of the U.S. economy and harm individuals and small businesses by reducing access to capital. He called on the Treasury to provide a cost-benefit analysis detailing the administrative burdens of the regulation before it is approved by the IRS.This is not the first time the IRS has attempted to issue this regulation,” said Boustany. “At the close of the Clinton Administration, the IRS tried to put in place similar reporting requirements. However, after members of Congress, the Federal Deposit Insurance Corporation, and the U.S. Small Business Administration raised strong concerns, the proposal was eventually withdrawn. It is disappointing to see the IRS once again try to impose unnecessary regulations and costs on U.S. banks.
This story also got a mention out of Rosa Eckstein Schechter of Florida here: Congressional Challenge to FATCA Brewing Out of Louisiana Congressman’s Letter to Treasury Secretary Geithner
October 27, 2011 – There was a Hearing held by the subcommittee of Financial Institutions of the Committee of Financial Services about “PROPOSED REGULATIONS TO REQUIRE REPORTING OF NONRESIDENT ALIEN DEPOSIT INTEREST INCOME”
Hat tip to Badger who dug this out here.
January 24, 2012 – Remarks by Emily S. McMahon, Treasuries Acting Assistant Secretary for Tax Policy at New York State Bar Association Tax Section Annual Meeting outlining FATCA reciprocity plans…
…”we see no principled basis on which to require that financial institutions based in other countries collect and provide us with information on U.S. taxpayers, if we take the position that our own institutions should be exempt from similar requirements. To the contrary, we believe that it will be critical to the success of our efforts to implement FATCA that we are able to reciprocate….”
Another Hat tip to Badger who posted these remarks here
February 2, of 2012 – There was a US Treasury Department release of a JOINT STATEMENT FROM THE UNITED STATES, FRANCE, GERMANY, ITALY, SPAIN AND THE UNITED KINGDOM REGARDING AN INTERGOVERNMENTAL APPROACH (IGA)TO IMPROVING INTERNATIONAL TAX COMPLIANCE AND IMPLEMENTING FATCAGeneral Consideration 5 laid out a vision of reciprocity (A DATCA?) that said:
In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom. The approach under discussion, therefore, would enhance compliance and facilitate enforcement to the benefit of all parties.
February 8th, 2012 – This was my first use of the term DATCA related to the IR-2012-15: Treasury, IRS Issue Proposed Regulations for FATCA Implementation. It was here I begin to identify that some form of a DATCA was going to be a part of FATCA implementation.
April 17, 2012 – It was was reported in Accounting Today that IRS Issues FATCA Guidance on Reporting Interest Paid to Nonresident Aliens
The IRS noted that the regulations would facilitate intergovernmental cooperation on FATCA implementation by better enabling the agency, in appropriate circumstances, to reciprocate by exchanging information with foreign governments for tax administration purposes
May 11, 2012 – Another story surfaced on Accounting Today basically expressing dissatisfaction with what the IRS was doing, and asking again for information.Congress Probes IRS FATCA Interest Regulations
The chairman of an influential congressional subcommittee is demanding information from the Treasury Department on a recent Internal Revenue Service regulation requiring banks to disclose the interest they pay to nonresident aliensCongressman Charles Boustany Jr., R-La., who chairs the House Ways and Means Oversight Subcommittee, has written a letter to Treasury Secretary Tim Geithner asking for more information about the regulation.However, Boustany finds the regulations troubling.
He had written to Geithner last September after the IRS issued a Notice of Proposed Rulemaking and received information in December. However, he said in his new letter that while Geithner’s initial response was helpful, it did not provide all of the information requested.“This regulation could drive foreign investment out of our economy and burden banks with unnecessary reporting requirements, in turn hurting individuals and small businesses,” Boustany said.
In a new letter that he sent Friday, Boustany called on the Treasury Department to provide correspondence and other documents relating to the formation of the opinion that the proposed regulation is not a “significant regulatory action,” as well as other information requested in Boustany’s earlier letter.
May 14, 2012 – The IRS went ahead with their final reg, IRS bulletin 2012-20 which was the first step in meeting the “Joint Statement” agreement of February 2, 2012 and ignoring Boustany’s letter above just days before. It officially created the reciprocal provisions (DATCA lite) in the Model Agreement 1 which was to follow.
26 July 2012 – The US Treasury Department issued the first FATCA model 1 Inter-government reciprocal agreement, (IGA) that contained article 6, promising to provide reciprocity (as in IRS bulletin 2012-20) to countries that signed the agreement. The Actual language said:
United States is committed to further improve transparency and enhance the exchange relationship with[FATCA Partner] by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic exchange.
July 26th of 2012 – The Posey Legislation and amendment 3, which was passed by the House but went nowhere in the Senate. In this legislation they tried to reign the IRS in.
Posey’s third Amendment, which is based on bipartisan, bicameral legislation he introduced with Congressman Gregory Meeks (D-NY) to stop the IRS from implementing new misguided regulations expected to lead to billions of dollars of capital flight from U.S. banks to foreign institutions. Despite strong bipartisan requests in both chambers of Congress, the Treasury Department has refused to withdraw the rule, or at a minimum, conduct an economic impact analysis on how the regulation would affect the banks and the economy.
According to Florida’s office of financial regulation, the regulation could lead to tens of billions of dollars being withdrawn from Florida banks and moved to overseas accounts. Posey said his Amendment would delay the IRS rule until unemployment drops to 6 percent. The House approved this Amendment with a bipartisan vote of 251-165.
Obviously at this point it was clear that FATCAnatics were marching onward with their FATCA IGA reciprocal mission and a larger global GATCA in mind. 
They seem determined to ignore Congress as they went! Their intention or interest mattered not!
Oct 17, 2012 – There was the letter by Congressman Reichart imploring Shulman to answer him about what they were up to. No response that I know of.
January 28, 2013 – The final FATCA fatwa regs are released effective January 28th, and countries are being pressured to sign FATCA IGAs with some measure of reciprocity rather than be subjected to the onerous FATCA Portal of Mordor as released in the 544 pages of regulations.
April 14, 2013 – Obama’s budget released and calls for FATCA reciprocity This is the domestic full blown DATCA they have desired to be imposed on the USFIs. See page 202. It was posted on IBS with additional comments Here Comes DATCA.
April 19, 2013 – Banker Groups Sue Treasury, IRS Over Account Reporting Rule Story from Bloomberg about the attempt to stop DATCA lite without a mention of FATCA. We blogged about what this all means here.
May 23, 2013 – There was an EU Parliament public hearing on FATCA that featured presentation and answers to questions by Treasuries Robert Stack. His answers on FATCA reciprocity were videoed and loaded on You tube here, and his transcript is loaded here. In his answers, he has explained that reciprocity (DATCA) is in the Obama budget, and what that would mean for Delaware Corporate beneficial ownership transparency.
Jun 06, 2013 – Representative Bill Posey introduces legislation H.R. 2299: To prevent the Secretary of the Treasury from expanding United States bank reporting requirements with respect to interest on deposits paid to nonresident aliens
July 1, 2013 – (Update) Representative Bill Posey writes a letter to Secretary Jack Lew calling for a moratorium on FATCA. Here is a download link to the letter, and it was announced and discussed here on ISB
July 19th, 2013 (Update July 28th) Janet Novak at Forbes reports here that the IRS has been quietly filing John Doe requests to USFIs on behalf of Norway which recently signed an FATCA IGA. So, is this the quid pro quo for reciprocity demands? Is this DATCA by another means. See my comment on the story. Further conversations with Janet, confirm, that the DOJ has stated this is the first time they have EVER done this?
January 13, 2014 US DOJ: Court Rejects Banking Associations’ Challenge to Regulations Addressing Offshore Tax Avoidance. Added this comment here. So, DATCA lite looks to be a reality. However, note that reporting on this says….
“The IRS is starting to require the information to comply with international treaties requiring foreign banks to provide similar information about overseas accounts of U.S. taxpayers.”
But of course, all readers at ISB know these are NOT a treaty. They are an Executive or Competent Authority agreement, and if you don’t understand the difference and dubious legal basis for these agreements, the article by Allison Christians is must reading…
Feb 5th, 2014 Reuters reports that the Banking association has appealed the dismissal of the case above. So the fight against ‘DATCA lite’ lives on.
…and that is the End of the of the brief history of DATCA as I have watched develop and recorded it. It is interesting to look back and remind myself how long Treasury has been marching to their own drummer and have been ignoring Congress.
No Way was a domestic reciprocal FATCA (DATCA) ever part of any intention of Congress when this was passed it, assuming they even knew it was in the Hire Act in the first place.
There is nothing in the 2009 Press Release that heralded its coming. If reciprocity had been part of the intention, why wouldn’t they have just created the authority for FATCA IGAs when they wrote FATCA in the first place?
They didn’t provide for it, comment on it or write it into the legislation, because they were only focused offshore and few knew that the Treasury FATCAnatics were about to hijack the mission. I do speculate that a DATCA certainly must have been part of a secret goal of some of the sponsors, as America is the BIGGEST tax haven in the world and the resting place for trillions of dollars undeclared around the world. They wanted to stop that.
Switzerland is a piker by contrast.
This comment by @Badger on another thread is worth repeating:
The IRS has not charged any actual bankster executives when illicit money owned by foreign non-resident depositors is discovered hidden in US bank accounts on a large scale, and it appears that none of these investigations even went to trial. The banks settled, but still made a profit.
“We’re the biggest tax haven in the world,” says Robert Goulder, editor-in-chief of U.S.-based Tax Notes International. “People joke about the Cayman Islands. The biggest haven is an island, all right. It’s either Manhattan or Great Britain.”
Jack Blum, a former U.S. Senate investigator and an authority on offshore tax shelters, says U.S. bankers “sell tax evasion to citizens of Central America, the Caribbean, all over Latin America.” The U.S. government hasn’t put a stop to it, Blum says, because bankers and politicians don’t want to stop the flow of foreign cash into the United States.”
also:
The Global Intelligence Files: Re: US Bank – Dirty Money
WACHOVIA ENTERS INTO DEFERRED PROSECUTION AGREEMENT
How a big US bank laundered billions from Mexico’s murderous drug gangs
So, therein will be the future battle lines be drawn as they progress towards a full FATCA implementation globally. Full Reciprocity is not there yet, but an IRS spokesman said recently, reciprocity is a work in progress, and of course Robert Stack made those public reciprocity statements at the EU Parliament FATCA Hearing. The last blog entry on that hearing is here. Make no mistake about it, that is where the ideologues of Treasury are heading. And frankly, if America is not going to be so hypocritical in its approach to financial transparency, it has to begin at home.
Will they get there? Will they actually pass a DATCA? It all depends if Congress has a spine and resists, or if gridlock effectively stops the Obama! However, I think we underestimate how much our banking system has relied on illicit and ‘dark money’ for liquidity. Are we willing to give it up in an ideological pursuit of Global financial transparency, or GATCA is you wish? What will be the impacts on the US homeland for capital flight if we do? Will your loan not be approved because reserve levels of your local bank are too low, and the DATCA money is no longer resting in your bank? How pure and idealistic do we want to be in our global efforts at fighting tax avoidance and evasion?
Just an aside: If you haven’t read that IRS bulletin 2012-20 that I have linked here, you really should.
It is as much a mission statement of the FATCAnatics as those the NeoCons issued with their Project for a New American Century years ago that laid out their vision prior to our war of preemption on Iraq.
The FATCAnatics of the left are the ideological mirror image of the NeoCons of the Right. The War is just different, but mission the same. Pre-emption in pursuit of ideological certainty. Unintended consequences of unknown unknowns, be damned!
Read this letter. Look at those signatures and compare it to the officials in the first administration of W, and then tell me why you were surprised at our Iraqi invasion!
To me, the FATCAnatics have laid out their mission just as forthrightly as the NeoCons did. There should be no surprises about where they are heading. Yet the media chooses not to read or report on it. I don’t know why they ignore it, but it is what it is I guess!
The Mission Marches on…Others are beginning to wake up to what is happening, but not in the Mainstream media yet…..and now you are up to date for the moment, if you could bring yourself to read this far!
Norway Gets U.S. Help Chasing Citizens Dodging Income Law: Taxes
The U.S. Foreign Account Tax Compliance Act, known as Fatca, may lead to dozens of agreements between countries to exchange information on bank accounts. The law requires foreign banks to turn over information to the The Internal Revenue Service (IRS) about their U.S.-owned accounts or potentially face withholding taxes.
This reporter is understanding the connection to FATCA reciprocity right away… John Doe = DATCA by another name
Pingback: The Isaac Brock Society
I just got a heartening letter back from Enzi
”
I’ve heard from many folks concerned about the United States taxing its citizens living abroad and the Foreign Account Tax Compliance Act (FATCA) rules in particular. As the tax reform process moves ahead, my colleagues and I will carefully look at these provisions and work toward crafting tax rules that work for all Americans, including those like you living outside the United States. I know that you speak with my staff and communicate with them on these issues. They share that information with me. It’s important that we address these international tax issues so that we make the tax code simpler and fairer for all Americans. ”
I am really happy to have moved my state residency over to a state with barely enough residents to qualify for statehood.
@Just Me
A belated thanks for organizing and updating this very important post. You write:
And the mission statement for the FATCANatics is:
Thanks to Swisspinoy for posting this latest development of the DATCA story…
http://isaacbrocksociety.ca/2013/10/06/datca-america-is-throwing-the-little-fish-out-of-its-banks/
US banking lobby urges Congress to challenge FATCA IGAs
For those outside the US, the irony of America being a world leader in offshore banking at the same time it has been waging war against the rest of the world’s offshore banking industry since 2010 – when FATCA was signed into law – is not new.
FATCA is new, though, to many US bankers – and they are not at all pleased.
FATCA, of course, is a complex law of breathtaking, imperial scope that compels virtually every financial institution outside the United States to ferret out US taxable persons, and report on their assets directly to the IRS. After having been postponed twice, it is due to take effect in January 2014, though some key provisions come into force in July.
The benign intent of the law’s authors was to enforce greater compliance with US tax rules by those with US tax obligations, whether they live inside or outside the US.
The law‘s unintended consequences, and its unintended victims, however, are numerous, and many of those who will be significantly affected by it are only just now finding out about it.
@Just Me
That’s a good article that would lead you to believe that the US is damned either way. Damned are the US banks if they do FATCA, damned is the US’s war on offshore tax evasion if they don’t. The effects of FATCA on US persons abroad is still only anecdotal, I’m afraid.
Let’s not kid ourselves, it’s reciprocity that’s made this medicine hard for the US to swallow. Is there a possibility that Treasury would again try to cram FATCA down without it?
@Just Me
Great article to share widely. Also good that awareness of and resistance to FATCA has reached the great state of Wisconsin! Also known as the “Badger State” 🙂
I’ve never for a moment thought that Bill Posey was against FATCA per se. As my representative, I’ve written to him several times about the effect FATCA and citizenship based taxation has on US citizens living abroad and have never received a response other than when his office told they were forwarding my letters to his office in DC. I don’t know how he’d feel about FATCA if the reciprocity element hadn’t been introduced, and with the absence of evidence to the contrary I have to assume “the innocent” he refers to in his letter to Sec Lew are nonresidents aliens who keep their money in US banks, not US persons living abroad.
http://freedomandprosperity.org/files/fatca/07-2013_PoseyFATCAltrLew.pdf
@all . regarding what I saw on Brock today. http://www.international-adviser.com/profiles-and-analysis/analysis/us-banking-lobby-urges-congress-to-challenge
from @Just Me
I was so impressed with the link that I wrote the usual Canadian politicians, my NDP MP, Conservatives Schoom and Flaherty and Trudeau and May…
Here is what I wrote..
“http://www.international-adviser.com/profiles-and-analysis/analysis/us-banking-lobby-urges-congress-to-challenge
CANADA needs to not sign up to FATCA. There is no benefits for Canada. A 2nd tier of Canadian citizens will be made like the Jewish people were kept apart and restricted in Europe in the 30s and 40s.
If US banks will not reciprocate why are we doing this?
I have my RRSPS to live on beside my CPP. There is no American earned income, assets or investments. Why should I pay any high priced US tax specialist to charged me thousands of dollars to report I owe NOTHING!
I became a citizen in 1993. I have gone to the US counsel in July to request a written CLN, backdated to 1993. I want to be Canadian only. There is no advantage for me to be a US citizen as I have not lived in the USA since 1969. I have no desire to ever visit it again with all the craziness now happening there.
FATCA is very detrimental to Canada. WHY are we negotiating with a country that has a congress ready to default on it’s debts? Why are we negotiating with a government who have insane people in their congress?
It is time for Canada to take the lead and say no to the USA in controlling our affairs.”
I just got a reply from Ms. Elizabeth May…I will share it with you.
“Dear Ms. ****,
Thank you for contacting me about the ongoing situation regarding the potential for Canadian citizens born in the United States to be pursued for US income tax by the IRS.
As you know, the situation is complicated and the legal status of Canadians born in the US, the threat of IRS action, and the possibility of real punitive action is still unclear. As a Canadian citizen born in the US, I can assure you that I share your concerns and am dedicated to defending the equality rights of all affected citizens.
I am dedicated to taking action on your behalf. I have sent correspondence to the Prime Minister on the issue. The government has taken the position I urged and is forcefully advocating that the US stop targeting law-abiding Canadians in pursuit of those US citizens hiding in the Cayman Islands.
In addition, I recently met with the US Ambassador to Canada, David Jacobson. He is also very much absorbed by the controversy. His main message to me was that I should share with my constituents his wish that we “stay calm.” He indicated to me that he understands the issues and is working closely with officials at all levels of government in the US and Canada to find a pragmatic solution to this problem.
You are not alone in this situation. Many are seeking a solution to the problem. I will keep you posted as I work to find a sensible approach. In the meantime, please keep me posted through my constituency office of any changes in your situation.
Sincerely,
Elizabeth May, O.C., M.P.
Member of Parliament for Saanich-Gulf Islands
Leader of the Green Party of Canada
I am awestruck at her quick response from my email of today and also what was in this email.
“The government has taken the position I urged and is forcefully advocating that the US stop targeting law-abiding Canadians in pursuit of those US citizens hiding in the Cayman Islands
@ northernstar
That’s a good letter you sent out. Ms. May is indeed an excellent communicator (best of the bunch I’d say). David Jacobson will soon be replaced with Bruce Heyman whose only “qualifications” are being a fundraiser for the Dems and a former Goldman Sachs man. I’m afraid talking to ambassadors is like beating a dead horse. They are simply neither here nor there to advocate for outlanders. Their primary purpose is to catapult the USG propaganda and guard the interests of US corporations (plus do some hobnobbing, usually with the rich and powerful). That way at the end of their appointment they can swing on through the revolving door to either a cushy government job or a plushy corporate job.
@Northenstar,
That was a wonderful, heartfelt letter! I am so happy that Elizabeth responded as quickly and sincerely as she did.
@Northernstar…
Well done. You never know what article will resonant or create a response. Thanks for taking the initiative. It just goes to show shows it behooves all of us to use every opportunity we have to communicate to our Legislators the consequences of FATCA…
This same article posted above.inspired another person that I correspond with via Email to also write his Congressman on the U.S, side of the border. Below is what he said.. (bolding is mine…)
RE: SHORT-SIGHTEDNESS ON FATCA
Dear Congressman Himes,
When we spoke in August about FATCA, you will recall that one of the major problems with this law is it overlooks that the USA is actually one of the biggest “tax havens” in the world! We are risking far more than we will ever gain by trying to impose the IRS’ “fiscal imperialism” on the rest of the world.
Indeed, when the Joint Committee on Taxation “scored” FATCA in Dec 2010, it estimated that it would only add $800 million per year ($8 billion in 10-years) to revenue. Congress and the IRS “conveniently” have NOT heeded the Presidents Executive Order 12866 requiring a comprehensive cost-benefit analysis of FATCA regulations; it merely (and neatly) dismissed it as “unnecessary”.
Here is what we know so far about this “minor oversight”: It is estimated that overseas banks will spend $25-30 billion to comply with this monstrosity that will only yield $8 billion. There is absolutely NO estimate of INTERNAL costs at the IRS for managing the entire process; if it costs less than the annual yield of $800 million I’ll be a monkey’s uncle.
Furthermore, in their zeal to sign pseudo treaties, IGAs (Intergovernmental Agreements) with other countries, the IRS is promising “reciprocity” in data exchange for FATCA compliance with these countries. First, there is absolutely NO legislative authorization giving the IRS the power to provide tax and comprehensive financial and asset data of US citizens/residents/Persons to foreign governments at all. This is well beyond the power and right of the IRS. It rests entirely in the hands of Congress which has never given this power to the IRS, not even in the FATCA legislation. IGAs were NEVER contemplated in the Hire Act which birthed FATCA by stealth.
Second, as you will see from the article below, doing so puts over $3 trillion of bank assets from foreigners who use banks in the USA to preserve their capital at risk of flight. There is NO WAY FATCA will EVER make up this loss!! As a foreign investment banker covering Latin America, you know specifically what a disaster this would be to America , particularly when you factor in the gearing aspect of these deposits.
Look at it this way: Sen. Levin continually spouts about a totally fictitious $100 billion in tax revenue that supposedly is “lost” through tax havens (he has absolutely no justification for this figure), but let’s assume this is correct. Now think of just the $3 trillion in bank assets from overseas depositors (which has been identified). Do the math and that $100 billion is a puny 3% of deposits; geared at a conservative 10:1 and we are looking at a mere 30 basis points on the capital amount. The lost fees to the banks who hold those deposits is WAY bigger than that fictitious $100 billion that Sen. Levin and his cohorts are using to try to ram this fiscal imperialist regime onto the global capital markets.
And this is before factoring in the difficulties it is imposing FATCA on the 6-7 million overseas Americans, our ability to compete on trade (where we have a $715 billion deficit already!), and any chance of actually competing in the new global economy.
(Besides that…). In short, FATCA is bad tax policy, bad trade policy, bad international relations policy, bad citizenship policy, bad revenue policy, bad legislation, bad regulation, bad cost-benefits, and bad human rights policy.
Indeed, the more this can of worms is opened up the more these worms are turning into termites and destroying the house it supposedly is meant to save.
For all of the hullabaloo that its defenders use in terms of “stopping tax evasion” etc., it will do none of that. The USA will LOSE far more than it will EVER gain in every way possible and it should be stopped before it causes the serious, permanent, and long-term economic, financial, and political damage that is now inevitable.
I urge you to inject common sense and your experience internationally in the global capital markets to stop this steamroller from destroying so much. Thank you for your continued consideration.
Kind regards,
In another letter sent to a U.S legislator, these points were included…
In my Open Letter, I suggested they clean up their own back yard first–including :
Garnishee wages of 311,566 federal employees (including in the White House, Congress, Treasury and IRS) who owe $3.5 billion;
Stop fraudulent refunds to prisons ($757 million in one year):
Stop ID theft ($5.1 billion in 2011)
Charge Secretary of Commerce Penny Priztker a penalty for failure to report $80 million in income due to a “clerical error.”
http://themoneyguide.ca/open-letter-president-obama-us-treasury-secretary-jack-lew-irs-acting-commissioner-daniel-werfel-senator-carl-levin/
I have no confidence they will look close to home. It’s easier and creates more jobs to chase myths around the world.
badger says
October 16, 2013 at 12:32 pm
http://isaacbrocksociety.ca/2013/01/30/irs-admits-fatca-reciprocity-is-joke/comment-page-1/#comment-584654
Came across this great quote by Emily McMahon of Treasury – and wanted to highlight it somewhere at IBS.
…”we see no principled basis on which to require that financial institutions based in other countries collect and provide us with information on U.S. taxpayers, if we take the position that our own institutions should be exempt from similar requirements. To the contrary, we believe that it will be critical to the success of our efforts to implement FATCA that we are able to reciprocate….”
Remarks by Acting Assistant Secretary Emily McMahon at the NY State Bar Association Annual Meeting
1/25/2012
Remarks by Emily S. McMahon, Acting Assistant Secretary for Tax Policy
New York State Bar Association Tax Section Annual Meeting
Tuesday, January 24, 2012
As Delivered
http://www.treasury.gov/press-center/press-releases/Pages/tg1399.aspx
I have updated timeline in body of this post to add this statement. I see it came 9 days before the Joint announcement on FATCA partnerships
@Just Me,
That is such an unequivocal statement McMahon made then. Versus the equivocating faux ‘reciprocity’ described here http://about.bloomberglaw.com/law-reports/full-reciprocity-under-fatca-is-a-work-in-progress-irs-official-says/ . It will be very interesting to see what comes out during the lawsuit brought by the Florida and Texas bankers http://www.repealfatca.com/downloads/FIBA_and_TX_complaint_.304.pdf http://www.reuters.com/article/2013/04/19/us-usa-tax-lawsuit-idUSBRE93I02D20130419 and any attempt in 2014 to get that Congressional authority to force US banks to report on all their accountholders http://www.reuters.com/article/2013/02/04/us-usa-tax-fatca-idUSBRE91312W20130204
http://thefranco-americanflophouse.blogspot.ca/2013/07/the-us-congress-and-fatca-reciprocity.html
I also look forward to more from Prof. Allison Christians on the issue of ”
The Dubious Legal Pedigree of IGAs (and Why it Matters)
McGill University – Faculty of Law
February 11, 2013
Tax Notes International, Vol. 69, No. 6, 2013 http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2280508
And, I look forward to the Obama administration’s efforts re page 202 of http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/spec.pdf as noted by James Jatras http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=125
You’ve prepared a number of discussions showing where the IGA over-rides any country’s previous tax treaties. Can you easily copy-paste that from anyplace in your memory? You often wrote about it in linked in over the early summer and spring.
(I Think it is important to get that info and the info about the 3 year USA jail sentences for compliance officers in banks who work in Germany or UK or Sweden or France. When they sign their IGA’s they open up a huge window of US laws to be applied upon themselves.
@Mark Twain
Copy paste from my brain… ?? LOL… No, probably not, but could find again I suppose…
Regarding that 3 year USA jail sentences. I remember seeing you post that somewhere on Linkedin. Would you send that to me as an email, as that is something that deserves some thought and a post…
@Mark Twain, don’t know if you’re asking me, but here are a few things:
http://www.lexisnexis.com/legalnewsroom/tax-law/b/fatcacentral/archive/2013/01/21/why-fatca-is-a-tax-treaty-override.aspx
01-21-2013 | 10:33 AM
Author: Allison Christians
‘Why FATCA Is A Tax Treaty Override’
….”US and Canada have an existing tax treaty that imposes specific rates for investment income earned by Canadian residents from US sources.
FATCA places a new condition on receiving those rates.
This restricts the benefits of the treaty, which is treated as a treaty override by the terms of the treaty itself.
The treaty provides that the remedy for such an override is a change to the terms of the treaty.
the IGAs do not change the terms of the treaty but purport to interpret it to allow a different new condition (which condition is itself an override of the domestic FATCA statute) to take effect immediately. …”
http://www.deloitte.com/assets/dcom-unitedstates/local%20assets/documents/tax/us_tax_fatca_faqs_061711.pdf
FATCA FATQs
“13. My country already has a tax treaty with the U.S. Does that mean we are exempted from
FATCA? If not, how do these regimes work together? The fact that a country has
entered into a double taxation relief treaty or an exchange of information treaty with the U.S. Government does not exempt individuals or entities located in that jurisdiction from having to comply with the FATCA provisions. Individuals or entities must be
in compliance with the FATCA provisions for them or their clients to be entitled to treaty benefits.
Exchange of Information treaties are used when the governments are seeking information about
specific taxpayers”
http://www.ibfd.org/IBFD-Products/Journal-Articles/European-Taxation/collections/et/html/et_2013_09_int_6.html no fulltext, but treaty override mentioned in abstract.
Try https://www.google.ca/search?q=fatca+AND+override+AND+tax+treaties&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=YMpeUrTaAoOcyQGbmIFg#q=fatca+AND+override+AND+%28tax+treat*%29&rls=org.mozilla:en-US%3Aofficial and reorder to sort out results only by last year or month, etc. if
you wish.
Then there is the as yet less explored references to the conflict between FATCA and NAFTA
https://www.google.ca/search?q=fatca+AND+override+AND+tax+treaties&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=YMpeUrTaAoOcyQGbmIFg#q=fatca+AND+nafta+AND+override+AND+tax+AND+treaty+OR+treaties&rls=org.mozilla:en-US:official&tbas=0
or with WTO
https://www.google.ca/search?q=fatca+AND+override+AND+tax+treaties&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=YMpeUrTaAoOcyQGbmIFg#q=fatca+AND+wto+AND+override+AND+tax+AND+treaty+OR+treaties&rls=org.mozilla:en-US%3Aofficial
http://businessmirror.com.ph/index.php/en/business/banking-finance/11558-2013-04-03-12-06-02
Read the whole article, but here is a sample;
“…Will the US nonetheless insist on applying the last-in-time rule to conflicts between Fatca and US tax treaties? Its “intergovernmental approach” to Fatca enforcement probably indicates that it is so inclined. This strategy may be animated by the idea that when national governments accede to bilateral agreements to implement Fatca, they also thereby agree to supersede existing tax treaties with the US. If this is the case, a corollary issue would then be whether a bilateral agreement not ratified by the Philippine Senate can supersede a treaty…”
See page 1703
…”B. Conflict of Laws: Tax Treaties and Banking Secrecy
A second issue raised by FATCA is that it overrides any
conflicting provisions contained in current income tax treaties.
108
The United States’ policy concerning treaty override provides
that “the treaty is superior if it is implemented after a law, but
the law is superior if it is implemented after the treaty.”
footnotes “108. See FATCA Hearing, supra
note 10, at 62 (“Treaty overrides adversely
affect the treaty-making process and historically have been avoided unless
essential to the ends sought by the legislation.”).
109. Reuven S. Avi-Yonah,
Double Tax Treaties: An Introduction ,in THE EFFECT OF TREATIES ON FOREIGN DIRECT INVESTMENT
105 (Karl P. Sauvant &
Lisa E. Sachs eds., 2009). This is generally referred to as the “later in time” rule.
See Whitney v. Robertson, 124 U.S. 190, 194 (1888) (stating that if a treaty and
congressional law conflict, the treaty dated more recently controls).
110. Compare supra
note 89 and accompanying text (detailing
109FATCA requires greater information reporting than current tax
treaties.”
110…”
from ‘Washington and Lee Law Review Volume 69| Issue 3Article 76-1-2012 ‘FATCA: Toward a Multilateral Automatic Information Reporting Regime’ by Joanna Heiberg
http://scholarlycommons.law.wlu.edu/cgi/viewcontent.cgi?article=4293&context=wlulr
and,
https://www.google.ca/search?q=fatca+AND+override+AND+tax+treaties&ie=utf-8&oe=utf-8&rls=org.mozilla:en-US:official&client=firefox-a&gws_rd=cr&ei=YMpeUrTaAoOcyQGbmIFg#q=fatca+AND+override+AND+tax+AND+treaty+OR+treaties+AND+conflict&rls=org.mozilla:en-US%3Aofficial
I Think Badger has given a lot to forward to Anders the Borg.
http://www.fsitaxposts.com/2012/09/03/faq-responsible-officer-certifications-fatca/#!
What could be the consequences to a Responsible Officer making a false certification under FATCA?
It is expected that participating FFIs will be required to identify a Responsible Officer who will be required to certify, under penalty of perjury, as to compliance with FATCA (Chapter 4 of the Internal Revenue Code). The proposed regulations describe several certifications by Responsible Officers and by others. Implementation will likely require that subordinate certifications and documentation from other persons will be required to support the certification made by the Responsible Officer.
The Internal Revenue Service (IRS) may criminally prosecute a false document case under more than one statute. Only one of those possibilities is discussed below – that is, section 7206 of the Internal Revenue Code – because it is the one most likely to be invoked, and, in fact, it is the most frequently charged criminal tax violation. It applies where a “return, statement or other document…contains or is verified by a written declaration that it is made under penalties of perjury.” In addition, civil sanction may, and almost always does, follow a criminal investigation.
And a Lunked In FATCAcanatic replied to a question
In the UK under the FATCA IGA I don’t think the FATCA Responsible Officer can be held responsible, the FFI as an institution will get any penalties and own any liability, might be that the CF10 will get hit as well.
I can’t remember if the legislation says so specifically, the only transfer of liability I remember being discussed is if you outsource compliance to FATCA, in which case it states that the liability is still held by the FFI in the guidelines. But without a photographic memory I admit that I may have forgotten a footnote or two. ”
Whether the Lunked In Fatcanatic is right or not still Points out that the United Codependent Countries of FATCA all need to read through each and every document of US tax law, and compare it to their IGA’s and treaties and find out how much of USA law they are taking in. Add to it that the IGAs & treaties are accepting the US law as it is interpreted both today and tomorrow both in judicial judgments and also open to new Changes. The countries allowing it are guilty of treason.
“
@Mark Twain,
Forgot this one too:
http://www.lexisnexis.com/legalnewsroom/tax-law/b/fatcacentral/archive/2013/03/05/irs-brushes-aside-the-constitution-to-make-way-for-fatca.aspx
03-05-2013 | 08:25 AM
Author: Allison Christians
‘IRS Brushes Aside the Constitution to Make Way for FATCA’
and
http://isaacbrocksociety.ca/2012/12/31/fatca-fact-finding-forum-part-5-of-9-allison-christians-fatca-and-international-tax-law/