Shadow Raider (and others like NotThatTara, badger, bubblebustin, Em, NotThatLisa) have referenced the US National Taxpayer Advocate Report to Congress, so here is my slow uptake to posting for IBS. IRSCompliant has posted at Maple Sandbox: Maple Sandbox re US Taxpayer Advocate Report to US Congress — with reference to NDP Murray Rankin Letter to Finance Minister James Flaherty
From Shadow Raider:
National Taxpayer Advocate Nina Olson released her 2013 Report to Congress yesterday. As always, she included sections on international taxpayers and OVDP, and this time also one on FATCA.
As a bonus, Schubert posted there re US Chamber of Commerce, January 9, 2014: The Next Obamacare? FATCA Roll Out Flounders: US Chamber of Commerce Joins TAS in Dumping on FATCA
I quote from Schubert:
Unless our Finance Minister has taken leave of his senses, which I think extremely unlikely, I no longer think we’ll see a Canada-US IGA any time soon, if ever. With heavy-hitters like these in the US saying “wait a minute, what the hell are you doing and why?” why should Canada or any other country leap into an IGA with the US to sign onto something that seems to look like might actually get derailed or gutted PDQ.
Remember that previous US ambassador to Canada who, back in the Fall of 2011, advised everyone to “sit tight?” That’s starting to look like supremely good advice for many so-called US persons, especially “accidental” (I prefer “inadvertent” or “unwilling”) so-called Americans living in Canada (the parallels to Ted Cruz aka “border babies”). Let’s just wait and see how this train wreck is going to unfold now.
If I were one of that handful of countries that leapt into bed with the IRS via an IGA, or an FFI that has spent hundreds of millions of dollars on compliance mechanisms, I think I’d start to feel a bit foolish (and very hard-done-by) right about now. And if I were a compliance maven with visions of fat fees from terrified offshore alleged Americans dancing in his/her head, I think I’d see those visions turning to mush.
We don’t want to count our chickens before they’re hatched, but maybe it’s time to take a deep breath, ignore the Chicken Littles in the compliance industry, “sit tight” and watch with fascination what seems more and more like a FATCA train wreck.
Nice news for a wintery Friday, anyway. Happy New Year, everyone.
May it be a happier New Year as we see more awareness of the disaster that FATCA will be, combined with US citizenship-based taxation. Let’s hope for change of the false equation being used to apprehend real tax evaders on the backs of all those who will be collateral damage, ruining so many non-aware families and individuals, leeching money from other sovereign country economies and not at all conducive to paying down US debt or enhancing how the US is seen by the rest of the world.
Great buzzwork, mosquitoes!
I’ve emailed links both to the Chamber of Commerce article and the TAS Report chapter on FATCA, to Harper, Flaherty, Baird, Mulcair, Rankin, Dewar, May, and Trudeau. I’ve suggested in my email that it would be really stupid for Canada (or any other country) to leap into an IGA with the Americans when so many heavy-hitters in the US, not just the Republicans but also the Chamber of Commerce and even an arm’s-length part of the IRS, are dumping all over FATCA. For the first time, I’m actually starting to believe FATCA may be repealed or gutted. I think any country that leapt into an IGA, or any FFI that has spent hundreds of millions in compliance mechanisms, must be feeling really foolish and hard-done-by about now.
Sit tight and watch the electoral fireworks over this in the next twelve months in Washington. FATCA is unravelling before our eyes.
Keep the pressure on this issue with your elected political representatives in whatever country and jurisdiction you live. Tell them about these two latest blows to FATCA in the US, and ask them why on earth would they want to negotiate a “deal” with an administration that is so incompetent and so contrary to its country’s own constitution, never mind everyone else’s national sovereignty and rights?
Great, schubert. I’ve also emailed my Canadian Government representatives and other relevant MPs.
May awareness grow and sanity prevail in Canada — and all other countries.
I sent a letter to Kevin Shoom. I’m reposting the link that Canada’s Department of Finance provided for FATCA input again, for those who may not be aware of it. The link provides a phone number for Mr Shoom, but no email. Here’s his email: Kevin.Shoom@fin.gc.ca
http://www.fin.gc.ca/treaties-conventions/notices/unitedstates-etatsunis-eng.asp
I agree with Schubert and have been feeling this way for a while. I don’t think FATCA is going to be implemented.
That’s not to say that the world’s govts aren’t going to try something else to share info with each other – though it’s hard to see how Canada could share more tax/banking info with the US than it does already with the existing treaty – but the US bungled and there power is not as far reaching as they think.
For we Canadians, I think the more immediate threat is what is going on via the info sharing in terms of our border.
Great news. May sanity prevail in the USA, and all other countries!
I can only hope that sanity prevails in the end. Meanwhile, I’m still scratching my head and wondering why my bank hasn’t asked me to sign my rights away for FATCA yet.
The NTA has done a remarkable job in her report, but she constantly sidesteps CBT as the cause of most these problems and seems to truly believe that education is key to compliance when it comes to taxpayers residing outside the US. All education will do is to make people aware of the shackles they’ve always had around their ankles, but were previously unaware of. Any increase in education will have a direct bearing on the number of renunciations, just as the unintended education outreach programs FATCA and OVDI have done. It’s like she is saying that if we were just nicer prison keepers, they would stay.
She also mentioned that without the proper mechanisms to disseminate and respond to all the data FATCA provides, the IRS may be forced to just ignore a lot information it receives about offshore bank accounts.
I’m heartened somewhat by the optimism being shown here about FATCA’s demise BUT that was one huge destroyer the USA launched against the world and I do not see it turning around yet. I’d like to see the damn ship wreck completely but it will likely morph into something which looks (on the surface) to be more global, less American, thereby eventually gaining its docking privileges outside the USA. Meanwhile, beneath the waves there still lurks that aging, out-dated, over-weight but still diabolically operable submarine called the USS CBT. The existence of that underwater menace has been well hidden until now. It would be wonderful if the FATCA destroyer floundered and sunk but what is really needed is for all the world to find that CBT submarine on radar, force it to the surface and then shame the USA into sending it into the watery grave it deserves. FATCA is an undeniable threat to “overseas” Americans but it is CBT that amplifies its destructive powers to such a dangerous degree.
@Em
I like your analogy. Speaking of those, I have to apologize to you for not remembering at the time that you had used the boa constrictor one before me. Anyway, I thought of it today, as today’s news allowed me to breathe a little deeper…
…still not out of the jungle, though. Not even near so.
We can always hope that with the scandal and their tax reform efforts, congress might be interested in taking a closer look at the NTA’s report and acting on her recommendations.
Hoping.
@ bubblebustin
Every time I think about you in OVDI/P limbo I find myself making a fist and getting an urge to bop one of those procrastinating bureaucrats. Lucky for them I will never cross the border into Mordor. Anyway, glad you got to take a tiny breath in today. There are days when I think we are all gasping and right now we, the FATCA aware and FATCA afflicted in Canada, are almost holding our breaths in anticipation of the return of the MPs to “the hill” and what that could mean. Time for a prognostication from Tim I think.
How much easier, less complex and less costly for the US IRS it would be if Nina Olson would recommend the move to Residence Based Taxation as that as the rest of the world. Would that not be the means of solving most of those pesky “US Persons Abroad’ problems she reiterates each year — to no or at least very little avail? If they are going to ignore a lot of the vast information they will receive about offshore bank accounts (most not from tax evasion), won’t the IRS only be cherry-picking what they want — while still invoking the fear of the IRS into all those still leashed and wayward citizens who have left the homeland?
So the question remains, which monstrosity will the Uncle Sam get off his duff and do the right thing about first, GITMO or CBT?
That is, if Uncle Sam has the capacity to figure out what the right thing is in the first place.
In a perverse sort of way, FATCA might do some good because it will shine the light of day on CBT. Before FATCA, CBT was a only a problem for expats. Now CBT (amplified by FATCA) has become a problem for every bank and every government around the world.
I’m hopeful that once the world figures out it’s the US’s attempt to carve out a portion of the tax base of every non-US country, they will reject this unilateral tax grab and send ’em packing.
@Em
I’m starting to think we’ll never hear from them. Did you see the table the NTA had of the the opt out’s and closed cases from 2009 OVDP, 2011 OVDI, and the current OVDP? Out of the nearly 12,000 applicants to OVDI, not even 1,500 have been closed, with none of the current program’s cases having closed yet. Now what I can’t understand is how they are classifying those they’ve moved to Streamlined. My lawyer said of the 70 or so OVDI participants of his, about 25% have been moved to Streamlined – which would be about 18 people. Surely one lawyer wouldn’t have 18 of the 30 opt-outs in the world, so they must be still considered within OVDI. So who do the opt-outs consist of? Page 138
http://www.taxpayeradvocate.irs.gov/userfiles/file/Full-Report/Most-Serious-Problems-IRS-Offshore-Voluntary-Disclosure-Programs.pdf
As revealed by the NTA and others, the IRS is grossly underfunded and frankly, on the verge of imploding.
Italy capitulates to FATCA:
http://www.fsitaxposts.com/2014/01/11/italy-signs-iga-u-s/
The whole issue of Fatca and the concerns it has opened up did tell US persons abroad about reporting income to Uncle Sam. Many, (my wife included) have never known of filing US tax returns or FBAR forms. For us and likely most others in our position, renouncing is still a no brainer. If the US adopts a RBT the renouncing will likely stop. Hopefully they will make the right choice for their own people….
Hate the headline when referring to Expats…
IRS top cop says the agency is too hard on offshore tax dodgers
Probably the editor, as Lynne Browning knows better.
http://finance.fortune.cnn.com/2014/01/09/irs-offshore-accounts/?goback=%2Egmr_3694878#%21
but this reads better below the headline…
For those who think they got “screwed over” under OVDP and OVDi, you can apply for the great screw over restitution program:
“If I qualify for the Streamlined Procedures, but I previously participated in one of the offshore voluntary disclosure programs and entered into a closing agreement, can I now have my case reconsidered under the Streamlined Procedures?
Taxpayers who participated in one of the offshore voluntary disclosure programs whose cases have been resolved and closed with a Form 906 closing agreement and who believe the facts of their case qualify them for the Streamlined Procedures should provide a statement to this effect, including all pertinent contact information (name, address, SSN, home/cell phone numbers), the name of the Revenue Agent assigned to their case, and a copy of their closing agreement. This information should be sent to:
Internal Revenue Service
3651 S. I H 35 Stop 4301 AUSC
Austin, TX 78741
Attn: Streamlined Redetermination
Upon receipt of this information, the case will be assigned to an examiner to review and make a determination whether the case should be reconsidered, based on all the facts and circumstances.”
bubblebustin, !!!!!!!!!!!!
@just me
My comment (I’m in a particularly sassy mood this evening):
There’s so much about this article that annoys me. First of all, the headline should be “IRS top cops says the agency is too hard on benign actors”. The point is, if these people being affected by these policies were guilty of tax evasion, they would deserve this kind of treatment. The US is the only nation in the world (except tinpot Eritrea) tax their citizens this way, and because the US has been so poor at it’s educational outreach program, no reasonable person could have imagined a civilized country taxing its people this way. It’s nothing less than slavery based on citizenship.
Second of all, the people that have entered these programs are now (now that the IRS has realized its folly) opting out of the draconian penalty structured OVD programs and now having penalties abated, making the estimates of how much revenue the IRS has taken in by these programs so far a bit fudgy.
Thirdly, the estimated 7 million US citizens living abroad is just a guess, as there’s never been a census taken. To say that every man, woman or child who’s a US citizen who make up this estimate should be filing an FBAR is ridiculous. You need $10K in your bank accounts to have to file an FBAR, and many US persons who live abroad would not meet this threshold.
Here’s what’s really pathetic. Under their programs, the IRS offers a reduced penalty for those who didn’t know they were US citizens.
I moved to Canada at 12 and when I found out about the US’s requirement to file US taxes, I did not attempt to “fly under the radar”. Instead, I paid a significant part of my retirement savings on tax owed to the US government on the sale of my home in Canada that I’d sold 3 years before learning about my tax filing obligations.
I hope Americans in the US enjoy the infrastructure I helped pay for, but don’t myself enjoy! Don’t bother wasting my time pitching me on the benefits of US citizenship, I don’t want to embarrass you with my response.
Renunciations are in record numbers, expect them to rise when America’s dirty secret – Citizenship Based Taxation – becomes more widely known. This is the end of American global migration.
IF FATCA (or better yet CBT) is repealed –
Will people here who have relinquished / renounced regret their decision, or will they be happy to be free of the US connection?
@bubblebustin
Very good comment….I haven’t had time to do one.
@shunrata
I was alienated from the post-9/11 USA long before FATCA, for a number of reasons, some of them just cultural or personal. Relinquishing any residual (but still legally binding obligation of) allegiance to that country helped me feel even more Canadian than the citizenship ceremony a few years back.
FATCA was an added spur, but I really was already thinking of doing it beforehand, just because I already knew of the international legal principle of nationality which recognizes that States can subject their nationals to their jurisdiction abroad in some instances. (e.g. Americans and Canadians can both be prosecuted at home for corrupting foreign officials, or for sexual tourism abroad involving minors).
And given the already convoluted legal code in the US, and the ultra-aggressive and careerist nature of many of their prosecutors, and their tendency to want to maximize jurisdiction over their citizens abroad whenever possible, and the increasingly crazy political atmosphere there–well, who knows what goofy extraterritorial laws they will pass in future?
Better to relinquish and not be subject to this State anymore. I actually feel safer (and freer) as Her Majesty’s loyal subject than one of its citizens. I suppose now I finally know what the original Loyalists must have felt…
@bubblebustin – you appear to be looking at the 2012 NTA ARC. Look at the 2013 ARC, especially Footnote 24.
http://www.taxpayeradvocate.irs.gov/userfiles/file/2013FullReport/OFFSHORE-VOLUNTARY-DISCLOSURE-The-IRS-Offshore-Voluntary-Disclosure-Program-Disproportionately-Burdens-Those-Who-Make-Honest-Mistakes.pdf
From my experience, the opt out closing time is only the time that it took the agent to close the case once it was assigned to them. Non-inclusion of the long waiting period is even referred to in another footnote.
If I had not been unable to stop the Collections that had started against me, I might still be waiting as the IRS had told the TAS that my case would likely be waiting another year, which would have been 3 years for me. Nina points out on page 233 that not only did big fish tax cheats get a better penalty deal, but they got better customer service.