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.”
@Jim Jatras, I’ve read somewhere (can’t find the article) that treasury claim these IGAs are indeed extensions of existing treaties (for those signed with the countries with which the US already has tax treaties), and that they just need to be ratified by the Senate. Hence the news a couple months ago that Rand Paul was blocking those treaties and delaying that. Can you comment on that?
Maybe we’ll know more if and when treasury answers the Senator who asked for a moratorium on IGAs.
In your last interview, you mentioned you were in touch with senators of countries like the UK and Switzerland to open their eyes about that. Have you tried to contact some of other countries that are about to sign (such as France). Us small people tried, but it seems to fall in death ears. Decisions are being made and they don’t care about the point of views of the small number of people who raise concern.
Maybe someone with more influence like you would be more successful.
I agree with most comments here: foreign countries think they have much to loose, both from a penalty point of view and from services/information they might not have access anymore from the US, and they don’t have the choice.
But some countries like China or Canada could reply to the US financial threats with other financial threats, instead of rolling over.
Tax base erosion is a real problem that need to be solved. FATCA wouldn’t be so bad, if the US didn’t have citizenship based taxation and if the US was not imposing it to other countries with threats, resulting in discrimination of US persons abroad. Unfortunately, discrimination issues will have to be dealt with by expats in the countries where they live, and they may have to sue to gain access to services.
But the US should do its part and switch to RBT. As Allison Christians said, the unilateral aspect of this law is the main problem.
http://www.fin.gc.ca/treaties-conventions/notices/unitedstates-etatsunis-eng.asp
The Canadian government wants your input. Lets give it to them!
@ dualcitizen
Most of us have already inputted Kevin Shoom, Flaherty and our MPs to death by now. The IGA negotiations are secret (except for the heads up they give financial institutions and the CRA) so we, mere mortal individuals with the most to lose, have no idea if our inputting has made any difference whatsoever.
@Em
Below is the reply I got from Kevin Shoom when I gave him a copy of my story from birth to retirement and the shock I got from TD Waterhouse: (apparently it was forwarded to CRA)
This is an excerpt from my submission
Dear Mr. “insert – Benedict Arnold be me”
Thank you for this. Would it be okay if I share your e-mail with my colleagues at the CRA? It would go no further. If you like, I can delete your name in order to protect your confidentiality.
Regards,
Kevin Shoom
@Benedict Arnold be me
That is good reply from Shoom, better than his form letter reply that he can’t reply because of negotiations. I just sent off another email to Shoom and Trudeau and My MP…
I poured my heart out. will see what I get.
Even If I get my CLN I am standing on with IBS till the bitter end. We are all in this boat together.
I love you all.
@Chris
I’m not an expert in this area, but I rely on the analysis of Allison Christians, according to whom ( http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2280508 ) the IGAs are not simple treaty-based “interpretive” agreements, like TIEAs or “competent authority” agreements. They are certainly not “interpretive” of anything but create new obligations. Everything about them — including the fact that they are signed on the US side by the US Ambassador (in London, Berlin, etc.), a State Department not Treasury official — screams out that they ARE treaties but Treasury is pretending they are not.
In a recent media comment, (http://www.accountingtoday.com/news/Treasury-Delays-FATCA-Withholding-Requirement-67404-1.html ) note:
<>
I see why he wants to be anonymous — this is pure rubbish. As I am quoted in the same article, to start with, if the Secretary wants to use his “deemed compliant” authority, he can just do it. He doesn’t need IGAs. Second, re “Treasury only needs to submit such agreements to the Senate for ratification if they override an existing domestic law.” — well, by that theory, an honest to God no-foolin’ treaty like, say, a US-Russia arms control agreement doesn’t need to go to the Senate either, since it doesn’t “override an existing domestic law.” Nonsense.
Rather, just like treaties, the IGA purport to create new, mutual obligations between states. The one side (non-US) will lock itself in via domestic law. The US side will do — nothing. Treasury will NOT take these to the Senate, because they know they would never received advice and consent.
As I mentioned in the interview, one country of which I’m aware (and I can’t believe it’s the only one) specifically asked for a treaty protocol (essentially, an amendment) that would have to go through the Senate. They were told, nope, the IGA (not subject to amendment, either) is all you get: take it or leave it. But if you leave it, enjoy the 544 pages of FATCA regs.
That’s odd, the anonymous Treasury official’s statement didn’t post. Trying again:
A senior Treasury official who requested anonymity was asked by Accounting Today in a conference call with reporters Friday about the legality of the IGAs, but insisted the Treasury is confident that the IGAs are legal extensions of the existing international tax treaties and protocols. According to the official, the Treasury only needs to submit such agreements to the Senate for ratification if they override an existing domestic law. Under the FATCA statute, the Treasury argues, it has discretion to deem financial institutions to be compliant in low-risk circumstances, and the IGAs essentially exercise that discretion. The official said the Treasury already has the authority under its existing tax information agreements in certain circumstances for the U.S. to send information, including sending information on an automatic basis, but it only does that where it has assurance it has pre-existing agreements in place.
Latest Delay Exposes FATCA’s Fatal Flaws
http://freedomandprosperity.org/2013/blog/latest-delay-exposes-fatcas-fatal-flaws/
Taking your money and your life
https://now.mmedia.me/lb/en/commentaryanalysis/taking-your-money-and-your-life
I’m still hoping that our letters, e-mails, phonecalls and face-to-face meetings will make a difference but we simply don’t know yet if our efforts will work. Will FATCA flourish or go down in flames? THEY probably know already but we don’t know. Who are THEY anyway? I think of them as a granite block of dunderheads. There’s a string attached to that block. Are we pushing on that string trying to make it move in the desired direction (won’t work) or are we pulling ever so gently with the hope that string won’t snap (might work)? At least the string is a line of communication. It’s really all we’ve got other than the moral high ground which seems to count for diddly-squat these days. What I do know is that we have to make an effort and that I’m grateful that we have some very talented and dedicated people on our end of the string.
Well said, Em. And to think they’re supposed to be serving us is a joke.
@Just Me
That Michael Young article has two direct links to Isaac Brock Society.
Ok, this must be some kind of a Friday joke:
Destinations for US expats avoiding FATCA are shrinking fast
Panting? Really?
@Deckard1138
Must have gotten the Stack-o-lies press release.
I think that is the worst piece of FATCA related journalism I’ve ever seen.
@ James Jatras:
Canada might have a unique problem in signing a FATCA IGA and changing Canadian laws to match. That is regarding the unique position of the province of Quebec and French-Canadian sovereignty within Canada. I have raised this before here, but as I don’t really know the context or the related issues, I haven’t gotten any further with it. Perhaps those with MPs in Quebec would know, but we don’t seem to have any regular participants at IBS who might know. It may require someone bilingual to find and analyze the relevant materials and sources.
In your lobbying, it is perhaps worth getting some more knowlegeable insight into whether Quebec could block a FATCA IGA on its own – which could be a useful delaying tactic, or an important lever.
If this is an important Charter or constitutional issue, it would also be interesting to see whether the Federal government can speak for Quebec on FATCA, or whether it would have to get explicit agreement in order to bind Quebec to FATCA as well as the rest of Canada.
I don’t know what mechanisms are in play when international treaties are signed by Canada, OR, when existing treaties are amended – in terms of whatever existing sovereignty rights Quebec enjoys vis a vis taxation.
See below:
http://www.revenuquebec.ca/en/citoyen/situation/nouvel-arrivant/declaration-de-revenus/conventions-fiscales.aspx
“International Tax Treaties
Tax treaties exist between Québec and France, as well as between Canada and several other countries. The purpose of such treaties is to ensure that people do not pay income tax on the same income in two different countries. Although Québec is not a party to the tax treaties signed by Canada, certain provisions of these treaties are taken into account in Québec’s tax legislation.
The Canada Revenue Agency’s International Tax Services Office can provide additional information on such treaties and agreements. “….
I tried to get some insight into this and found page 131 of the Oxford Book of Treaties, which described Quebec’s Social Security agreement of the early ’80s with the US, due to Quebec’s ‘distinct’ provincial pension plan. Because the definition of assets and ‘foreign financial institutions’ under FATCA is so broad, there may be some other areas of conflict with Quebec’s unique jurisdiction and powers that might require its explicit agreement by the Canadian government in order to encompass all ‘US taxable persons’ in ALL of Canada. It would be interesting to see the US confront a situation where the Canadian federal government could not deliver Quebec’s consent to FATCA. (Also, see page 130 of the book “The Oxford Guide to Treaties edited by Duncan B. Hollis” wherein is described limitations on US treaty and treaty like agreements.).
The Oxford Book of Treaty excerpts are here:
http://books.google.ca/books?id=PX7YJsjQBAYC&pg=PA131&dq=quebec+AND+%22international+relations%22+AND+treaties&hl=en&sa=X&ei=7wDzUeaeLIWIqQGei4DoAg&ved=0CDwQ6AEwAw#v=onepage&q=quebec%20AND%20%22international%20relations%22%20AND%20treaties&f=false
http://books.google.ca/books?id=PX7YJsjQBAYC&pg=PA131&dq=quebec+AND+%22international+relations%22+AND+treaties&hl=en&sa=X&ei=7wDzUeaeLIWIqQGei4DoAg&ved=0CDwQ6AEwAw#v=onepage&q=quebec%20AND%20%22international%20relations%22%20AND%20treaties&f=false
Further to my comments about Quebec, here is an article that describes the size of the historic movement of citizens of Quebec back and forth across the Canada/US border. http://www.nytimes.com/2013/07/24/opinion/bonjour-america.html?_r=0
There may be many with ‘US taxable status’ in Quebec.
See:
…………”….. Exactly how many French Canadians made the trek is difficult to calculate, because before 1895 no federal immigration officials monitored the northern land border. Neither Canada nor the United States had seen the free movement of people across their common border as a problem seeking a solution.
Even when the United States finally built land border posts in the late 1800s and early 1900s, they were aimed primarily at Eastern and Southern Europeans who were using Canada to sidestep immigration screenings at seaports like New York and Boston.
Canadian migrants, despite their huge numbers — by 1900 the number of Canadian-born United States residents equaled an astounding 22 percent of Canada’s entire population — continued to receive special treatment.
They did not have to pay the head tax imposed on other foreigners, and no records were kept of their entry until the Naturalization Act of 1906. And it wasn’t until 1926 that they had to get a visa to move permanently to the United States. …” from ‘Bonjour, America!’
By STEPHEN R. KELLY
Published: July 23, 2013
http://www.nytimes.com/2013/07/24/opinion/bonjour-america.html?_r=0
Here is a previous post I made re Quebec, FATCA, and sovereignty:
http://isaacbrocksociety.ca/fatca/comment-page-29/#comment-419533
which includes a bit more information that I had found as a possible lead.
Kevin Shoom’s response to Benedict Arnold be me worries me. What happened to this fellow Brocker is exactly what the media, Canadian Bankers’s Assoc, banks, etc. tells us will happen post IGA. Why is Kevin Shoom surprised by this??? It makes me think that the Ministry of Finance here in Canada is not fully aware of the implications of an IGA. Did they consider any of the issues outlined in the letters we sent them??
@Marie
Why do I have the feeling that all of our letters just end up in the circular filing cabinet?
@Deckard1138
Don’t think I will tweet that one. “panting” eh? Must have been written by Robert Stack from Treasury.
@bubblebustin
Thanks for pointing that out. I had not checked his links when I was reading, but he and I exchange tweets occasionally, and we follow each other, so I guess it doesn’t surprise me that he would pick those up. This is good!
@Marie
@Benedict Arnold
I am convinced that the Department of Finance does not understand the implications of U.S. citizenship-based taxation and how it will result in the confiscation of the retirment assets of Canadian citizens. It is impossible that they could understand the consequences of U.S. tax compliance for Canadians. (This is also true of the governments of other countries.) I would add that I am not convinced that even the IRS fully understands how this will unfold. But, make no mistake, as sure as the sun will rise tomorrow, the cross-border professionals will assist the IRS in confiscating the assets of Canadians who were born in the U.S.
At the risk of oversimplification, the reason is as follows:
U.S. tax laws are designed to punish tax deferral. Canadian tax laws reward tax deferral. It’s that simple.
The only people who understand this are the people who have been directly affected by it. For many Canadians to become tax U.S. tax compliant, will mean the depletion of their retirement assets. I am talking years and years of savings and responsible financial planning being turned over to the IRS. Yet the Department of Finance is poised to collaborate with the U.S. to do exactly that.
For Canadian citizens, U.S. tax compliance means one of two things:
1. Those without retirement assets are forever disabled from any kind of meaningful retirement and financial planning.
2. Those who have attempted retirement planning and (by Canadian standards) have been successful will have their assets confiscated if they come into U.S. tax compliance.
It’s that simple. I invite somebody to refute the logic go this.
Go ahead – make my day!
Here’s a new article from Hong Kong Business:
The crucial implications of FATCA for U.S. Citizens in Hong Kong
@USCitizenAbroad,
Someone needs to explain it to them then, and soon while we still have time.
@Deckard1138
The article you cite from Hong Kong is of great significance. The author is Scott Michel of Caplin Drysdale and OVDI fame. He identifies a number of compliance options, including compliance on a going forward basis. Equally signifantly the whole article assumes that OVDP is just one of a number of options.
Mr. Michel (like all card carrying members of the FATCA Compliance Complex) assumes that FATCA will unfold as Treasury predicts. The longer this takes (at it is bogged down) the less certain FATCA will be.
If I were a betting person (and I am not because my winnnigs would be taken by the IRS), I would bet that it will NOT happen.
That said, anybody who is not a covered expat needs to renounce ASAP. Those who are covered will have to create and exercise the best option available to them.