Rolled Back Deadline of FATCA Gives Critics Hope
Once again James Jatras of RepealFatca.com offers-up another succinct and pithy interview, this time to iExpats.
As Blaze over at Maple Sandbox commented, here’s the article’s takeaway quote about FATCA:
“There’s no way anyone can put enough lipstick on this pig to make it kissable.”
This is what still eludes me. Why don’t the other govts know yet know that the Treasury is blowing smoke up their asses and that they have been told “no way” by Congress on the give/take of info?
Of course, this is what the US does so well – play political theatre, Obama performed the opening act of the Debt Ceiling Circus yesterday. That should run through the end of the summer, reaching some sort of thunderous coming apocalypse climax as September looms. Not a shred of truth or reality anywhere in the performance. Much like the FATCA threatening about phantom tax evaders and dire withholding punishments for those who realize that resistance isn’t as futile as the Treasury would like everyone to believe.
If a bunch of non-wonk expats on an blog can figure out that the US isn’t able to pull off FATCA and that their co-opting of the citizens of other countries for use as their debt slaves likely has no great legal legs to stand on – why can’t our elected official?
It really makes a person wonder just how intellectually mediocre our own pols are and who votes for these nimrods?
@YogaGirl
I can’t understand it either, especially coming from countries like the UK, which should know better. I guess MI6 doesn’t bother gathering useful intelligence on boring subjects like international tax policy – they’re too busy trying to keep up with their fantasy world James Bond image. Then, of course, it could be the fact that the UK simply hasn’t refused America’s unwanted advances for years now, beginning with the Gulf War, through the Iraq debacle and Afghanistan to present day. Sad how the colonizer became the colony.
@YogaGirl,
It eludes me as well. Though I think of the response as one of fear and submission since the US is wielding that huge stick of 30% withholding. I know at first, I thought that referred to the account amount of an individual account holder but was shocked to realize it meant on all monies held by that particular FFI.
“In fact, I have first-hand knowledge of at least one government that specifically indicated to Treasury they would consider an IGA only if it took the form of a treaty protocol, with Senate approval, so they could be sure it would bind the US as well. Treasury flatly refused: an IGA they know to have no binding US legal status is all they would offer.”
I am most curious which country this is referring to and whether they would just drop US account holders in order to protect against that 30% or if there is some other particular aspect of their situation which gives them the guts to say no without a receiprocal IGA?
Why would any politician want to turn the spotlight on any of their brethren’s incompetence? It makes them all look bad and may just bring their own competence into question.
@NobleDreamer…
He was referring to the Philippines. You have to hand it to George, he is brutally honest about the lobbying process to kill the bill.
BTW, did you catch the issue of Clause 222. Does that remind you of Catch 22…
Also, this process of “Laying” the UK bill was discussed on Linkedin. It is a protected group, so can not send you a link…. Here was the quote I copied..
Mark State • Small misconception, what the Finance Bill does is allow legislation (called Statutory Instruments or Regulations) to be introduced to implement any FATCA style agreements into UK law. It is worth noting that the one for the US / UK agreement has not been filed into the regulatory process (quaint custom called laying where a copy is posted in the House of Commons library for 21 days to allow members to object). Only when that happens will FATCA become law in the UK, it was supposed to be “laided” on 18 July but has not been, delay is believed to have been caused by recent US announcement.
Nobledreamer – I think the country referred to is Taiwan, and post that statement by Taiwan there was some backtracking by that country. The fact is that if major countries do not play ball, and local laws preclude an FFI from complying, the US would be forced into a corner to impose the 30% withholding tax. Just imagine the political fallout in cutting its own throat as the world just ‘said No’.
As an additional comment this morning (in Asia) before facing the horrid traffic – Canada, as we all know is a key country. The UK rolled over and threw its dual UK/US citizens under the bus without looking back. If Canada’s government does the same and signs an IGA I would implore Canadian citizens via IBS, Maplebox and public interest NGOs to then immediately take any and all legal steps (via class actions lawsuits, Charter Rights violations) to bring these critical issues to the Canadian courts to stop the government from implementing the IGA. The UK rolled over, but Canada has even more to lose and is, because of its strong legal systems – Canadians have the opportunity to challenge the government’s actions more so than many other countries.
One final morning thought – has anyone noticed that despite all of the talk by the EU about data protection/privacy rights et al (e.g. post Snowden) that it is the EU countries that are buying into FATCA and throwing their dual EU/US citizens and residents under the bus as well. Amazingly, when it comes to talk about banking privacy/data protection/privacy rights that does not seem to apply to FATCA compliance.
Onward to face the traffic…..
Steve Klaus, I agree with your assessment of Canada as probably one of the best battle grounds for a challenge should they roll over but if the sitting govt here is rolling over, they are doing it in a very slow and deliberate manner b/c as the article noted – it’s been 8 months since the signing for the Canadian IGA was “imminent”.
So, how do we go about informing our govts of the fact that the US Congress has basically forbidden reciprocity? My gut feeling is that this is not a secret to some key people but to the larger body politic ie: elected representatives.
@Steve Klaus,
“Just imagine the political fallout in cutting its own throat as the world just ‘said No’.”
Exactly.
YogaGirl – I would suggest a multiple approach to getting the word out that there will be no reciprocity – via IBS members emailing and writing their representatives and the PM, via articles from academics and journalists and reaching out to journalists. What concerns me (and others) is that the accounting firms and the banks are pushing for an IGA and the Compliance Industry has everything to gain by getting an IGA in place. There is so much money at their disposal. A PWC partner in Asia said that banks are spending huge amounts of money with PWC to ‘get compliant’ and that FATCA is inevitable and you can’t fight the USA. This is a key issue for those who want to resist FATCA’s rollout and support repeal.
@Steve,
Yep, we are all just waiting for the trigger to be pulled by the CG. All that pent up energy for months and months – can hardly wait. BRING IT ON!
@YogaGirl,
CG doesn’t care about reciprocity. That is what makes Canada such a wimp. We have NOTHING to gain by going along with the whole charade! At least UK can pretend it has something to get out of FATCA.
Isaac Brock would be so disappointed 🙁
I am ready to join a class suit, go to another meeting with IBS. I have been writing to the politicians. Shoom writes me he can not comment while negotiations are ongoing. My MP says the same. I have written Trudeau and he has not written back. He is not like his father sadly.
@Notthernstar,
Do not despair. We are in this together(and chomping at the bit to join any class action suit) The joke is on the CG because there are SO MANY OF US(Canadian US persons and friends) – the majority of whom have no clue what we are even talking about right now. Just wait until the nice lady at the bank asks them where they were born, Can you just see the ‘deer in the headlights look’?
It is ALMOST unbelievable that the CG could throw us all under the bus like they are obviously trying to do.
WOW, they SO underestimate us! And so OVERESTIMATE US!
@NorthernStar,
Shoom says nothing to me either, Trudeau never replies, my MP never replies… They are all in for a big surprise when we DO NOT VOTE PC or LIBERAL or CONSERVATIVE. That is the ONLY thing they hear.
The entire EU is run by USA. Don’t remember if I mentioned it, but the guy seen scratching his head in the video at 32 secs in to the 1st video of the EU parliament meeting is an American. He displaced a European at a seat at the entry aisle where all MEPs passed. He was on the center of the floor of the EU during the course of the meeting. He talked (loudly) with MEPs on the floor while the speakers were speaking. He walked freely to the front table and whispered in the ear of nonpolitical secretary (British) sitting to the right at the head speaker table. His at-ease-with-arms-folded stance during the meeting was as if whatever was being said was being monitored, or more as if the participants were to present as ordered. You will also notice in the video that a number of presenters stopped before they said something (Svein was going to say something about the AUstrian and Luxembourghs giving up their votes and the head table stymied Sophie’s discussions by rightly saying he had no competence).
After Sophie’s last speech, you can see this guy whispering in the Brit’s ear at the head table, after he had gotten into the guys face in the audience. No doubt he was telling the guy that there would absolutely be no comments or questions from the public.
I have little doubt that that guy in the audience had his name recorded by that American.
After seeing this it was obvious that US is running the EU.
Thanks so much for posting this (here and at Maple). Excellent article. At this point, I’m speechless. The mind is so beyond boggling…
I ran across this document yesterday (http://www.hmrc.gov.uk/fatca/itc-regs-2013.pdf). It suggests that the cost of implementing FATCA for the UK without an IGA would have been one-off costs of £2-3 billion and ongoing costs of £100-170m with approximately 300,000 UK businesses impacted. The cost of implementing FATCA with the IGA are estimated at £0.9-£1.6 billion with ongoing costs of £50-90m per year with approximately 30,000 UK businesses impacted. That’s $1.35-2.4 billion up front and $75m to $135 each an every year to produce a small portion of the net benefit to the US of about $900m per year. Rather than focusing on the staggering total cost of implementation, the UK government has the gall to pat itself on the back for having reduced the total cost. “Had the Government not taken action then business would have occurred large additional one off and on going costs to comply with the US legislation. The steps taken by the Government have therefore produced a significant, comparative, reduction in costs.” And let’s not forget that the UK government is funding a portion of these costs itself because the costs of implementation will reduce the profitability of the companies implementing FATCA and the UK will suffer reduced tax income as a result.
We’ve seen time and again that the USG likes to threaten the death penalty so that life in prison can be declared as a “win”. When the US asked for all the data on intra-European flights, they threatened suspension of the visa waiver program for EU countries if the EU didn’t provide it. This get spun as “EU officials rescue visa waiver program.”
I don’t normally wear my tinfoil hat, but when I do… My theory on why the UK and other governments have rolled is that this is all inter-linked with access to PRISM. I am betting that the European governments got addicted to the ability to spy on their own citizens (and other people’s citizens) that access to the PRISM database provides. I’d be willing to wager that the US threatened to disconnect them from PRISM unless they signed IGAs. It’s about the only rational explanation I can come up with for why any country would bring such staggering costs on itself for the sole benefit of the US. Either that or UK politicians just really are monumentally stupid.
I don’t think UK politicians are stupid. It seems clear that the UK receives services from the USA that it regards as so valuable that it is willing to do pretty much whatever the USA wants. It is only when it is publicly embarrassed by the one-sided nature of such agreements (such as the extradition treaty) that it feels obliged to make a show of independence.
http://en.wikipedia.org/wiki/51st_state#United_Kingdom
@All
A lot of great comments here!
Re why foreign governments, like the UK — and frankly, almost all of them — are so supine in the face of the Treasury Department’s demands, some theories:
* A combination of fear and confusion, plus perhaps an insufficient regard for their own law and sovereignty when confronted by the U.S. – for a “good reason,” of course, fighting tax evasion supposedly. A lot countries, especially in Europe, are allergic to saying No to the US to something “we” appear to be adamant about. (The reason for the quotation remarks, is that “we” Americans have never heard of FATCA. There’s no American determination of the sort.)
* Because we have the power to punish (the 30% sanction), that makes this a “law” that must be followed, despite lack of American jurisdiction over FFIs – which is a fancy way to say might makes right. In addition, terrified FFIs, convinced they “have no choice” but to comply (“[Canadian Bank Association President Terry] Campbell said [Canadian] financial institutions have no choice but to comply with U.S. law because the penalties can be onerous . . . “ ), come clamoring to their governments to save them from FATCA via an IGA. So the governments are subject to domestic pressure to facilitate compliance with FATCA, even at the cost of abrogating their own legal and constitutional protections (human rights, data protection, etc.), but no domestic pressure from the large majority of citizens who will pay for FATCA compliance as taxpayers and consumers (or the minority who will have their private information sent to the IRS because the US considers them “US Persons”).
* In addition, not only does Treasury hide from both FFIs and foreign governments alike their lack of legal authority for these agreements, which in fact provide no reliable protections against FATCA costs (but rather locks them on via domestic law), they make what they know are false promises of reciprocity, which allows foreign governments to delude themselves that this is a mutual, cooperative arrangement, not a one-way diktat by a foreign power.
* Finally, seeing FATCA for the threat it is would entail governments’ having to figure out how oppose it and respond, which would then require determination and thought, both of which are in short supply it seems.
@Jim
Right! Who would want to stand up in opposition if they feel they are powerless in stopping FATCA anyway? Better to mitigate its effects with an IGA, yet IGA’s are the only way to facilitate FATCA. Catch 22 indeed. So instead of governments exposing themselves as the wimps they really are in not wanting to stand up to the US, they chime in in support of FATCA as a panacea for offshore tax evasion. Plus, if they spin it right, the public will NEVER KNOW how they betrayed their electorate and caved in to the extortionist. This is the conspiracy to hide their ineptitude that I alluded to earlier in this thread.
@NorthernStar, ooops, meant to say I won’t be voting PC or Liberal or NDP. I sure do miss not having an edit function here.
@bubblebustin
Exactly right. The real sad part of the wimpiness of “not wanting to stand up to the US” is that Treasury does not equal “the US.” They are grossly exceeding their legal authority and counting on foreign governments not to know it or to care long enough to lock in enough IGAs before it’s obvious they’ve been writing the political equivalent of bad checks. If any of us handled our tax payments like that, we’d be in prison.