In the early 1900’s, the Black Hand was a type of extortion racket that involved sending a threatening letter to a victim and demanding a specified amount of money to prevent the threats from being carried out. According to an article published in the New York Times on March 26, 1910, famous tenor Enrico Caruso paid $1500 – $2000 to the Black Hand to “purchase peace for himself”. Despite the payment, Caruso continued to receive letters in which he was threatened with every conceivable kind of bodily harm unless he promptly paid more. That is the problem with acquiescing to the demands of an extortionist, you are identified as an “easy mark” and leave yourself susceptible to future acts of extortion.
The Criminal Code of Canada states in section 346(1): Every one commits extortion who, without reasonable justification or excuse and with intent to obtain anything, by threats, accusations, menaces or violence induces or attempts to induce any person, whether or not he is the person threatened, accused or menaced or to whom violence is shown, to do anything or cause anything to be done.
Recently, the government of the US committed extortion with intent to obtain Canadian banking records. They threatened the Canadian government with crippling economic sanctions to induce the Canadian government to provide those records in violation of numerous Canadian laws. The Canadian government stood to gain NOTHING in these negotiations, only to maintain the status quo (and avoid the threatened crippling economic sanctions). There is no reciprocity in the IGA, and it appears that the US will never be able to provide Canada with the same information that they are demanding from Canada.
Canada would do well to learn from the experiences of Enrico Caruso. Once they officially pass this travesty, they will confirm that Canada is an easy mark which can be bullied at will. Undoubtedly, there will be demands to provide more in the future. This will be a sad day in our once great country – the day we gave in to the demands of an extortionist and sacrificed our sovereignty because our current government does not have the confidence or the intestinal fortitude to stand up for itself. In order to prevent Canadian citizens who the US deems “US persons” from having the protections afforded all other Canadians, the Canadian government will make this IGA supersede all other Canadian laws except the Charter. It appears our laws now come straight from the extortionists in Washington and are rubber stamped by the easy mark in Ottawa.
Extortion rackets are common in US politics. On October 21, 2013, Peter Schweizer wrote an editorial in the New York Times titled “Politicians’ Extortion Racket” that describes how these rackets work.
As a conservative and former supporter of the current Canadian government, I am particularly appalled by their actions. In my lifetime, I cannot recall ever before experiencing such a profound sense of disgust, disappointment and betrayal at the hands of a Canadian government. If the Harper government had any interest in doing what is right, they would stand up to the extortionist. Should the US impose the threatened sanctions, it might even have political benefits, as no one likes a bully and Canadians of all political stripes might rally together against the extortionists in Washington.
“Recently, the government of the US committed extortion with intent to obtain Canadian banking records. ”
I know of 2 Caribbean countries who think the US are extortionists and thugs. Don’t worry people, the US isn’t going to take over the world, China is and what we are seeing is the last dying breath of a very very corrupt empire that thinks might makes right. The US is definitely panicking and lashing out everywhere. All it is going to take is for a few countries to say enough is enough and send their Ambassador packing and many others will follow and desert the US. It is a physical impossibility for the USA to pull this off as they are stepping on way too many toes. As soon as governments realize that this is a bluff and it needs lousy poker faces to accept this kind of abuse it will all come crashing down.
gold down 7.00 today
There’s a joke in the US that goes:
– How do you get a Canadian off his land?
– Ask him to leave.
Thank you for explaining what is being done to us by the Canadian government, citing the Canadian Criminal Code, Canadian Cop. Seems clear to me.
And, as so many think that Canada brokered a good deal for US Persons in Canada by “exemption of Canadian registered accounts”. This answer received today regarding http://taxconnections.com/taxblog/home-sweet-home-for-international-tax-collection/#.UwK6B86mXqq:
Thank you Canadian Cop. I presented this view, but not nearly as eloquently as you, in my Finance Canada submission. I simply stated at the end: FATCA equals EXTORTION and the IGA equals CAPITULATION to EXTORTION. I preceded that with nearly 2000 words which they will skim through and register as “blah, blah, blah” but I hope that single point gets through to them.
Extortion is not even a metaphor here. FATCA simply is extortion. You’ve hit the nail on the head.
@Canadian Cop, Thanks for this very interesting post. I see another angle on this each day: the IRS extortion of taxes from Canadians living in Canada through threats of total wealth confiscation. Of course, the IRS doesn’t have the power to steal wealth of Canadian citizens, not yet. Then, the cross-border compliance industry uses these threats to beat innocent sheep over the head so that they pay extortion fees to file their IRS tax and information returns. The compliance industry gurus then pay a percentage to the IRS in the form of personal taxes. It is a big racket of organized crime.
We need a new kind of leader in Canada now. And no, Justin Trudeau is not up to the job. We have enough Neville Chamberlains. We need someone who stand up and say, no f-ing way are we going to let the USA tax our residents and citizens.
Canadian Cop, I sincerely hope that you have sent this eloquent statement as a submission to the Department of Finance. The Canadian government needs to hear every word of what you have so powerfully written. Thank you!
Great post, Canadian Cop. I hope it inspires those who are running off to lawyers and accountants, to harness their fear into anger, and do something to fight back. Bullies stay bullies, because we allow them to.
I’ve always thought of what the IRS is doing as being analogous to the copyright trolling scam that has been very popular in the USA and is replicated all over Europe (it won’t take off in Canada because of some smart new laws in Canada that are designed to discourage it).
What happens is that Internet provider companies are forced to give up the info on subscribers whose IP addresses have been collected from file sharing software, and then those people receive letters in the mail demanding a few thousand dollars to ‘settle’ or they are threatened with a lawsuit.
Of course, the people sending the letters have no intention of suing everyone, but they make enough money by scaring people to not need to. People don’t know how dubious the whole thing is, and they don’t know the law or their rights and they get a letter and freak and send money.
In both cases, the law is technically on the side of the ‘extortionist’, but morally not so much, which is why it’s still a racket even though not legally extortion.
Hits the mark. Well written and argued. Very useful. Many thanks.
Calgary411
The stuff from tax connector is nonsense
“(2) Levying financial institutions: The IRS can levy on the assets of a taxpayer that are held in a foreign bank so long as the foreign bank has branches in the United States. Similarly, the IRS can levy on a taxpayer’s wages from a foreign corporation so long as the foreign corporation has branches in the United States.”
The Van Mark decision killed that
http://uniset.ca/other/cs6/68OR2d379.html
“(3) Requesting assistance under a tax treaty: The IRS can seize property in any country that the United States has a treaty with so long as the treaty contains a Mutual Collection Assistance Requests Clause (MCAR). What does this mean? Very simply that anyone living in a country that has an MCAR with the U.S. might as well be living in the United States. Why? Because the person’s assets could be seized just as easily as if he or she was living in the United States. Currently, there are five such countries. The treaty partners and types of taxes that can be collected include the following:
a. Canada: All taxes.”
I received in this afternoon’s post a personally-signed reply from Minister Flaherty, dated February 10, 2012. He says point-blank, the apparent inconsistency “is not the case.” He continues, “It is intended that, at the time of the deposit of Canada’s instrument of ratification of the Convention with the Secretary General of the (OECD), Canada will reserve against Articles 11 to 16 of the Convention and consequently, will not be bound by the Convention’s provisions in respect of the assistance in the recovery of tax claims. The Convention therefore does not alter the current application of Article XXVI A of the Tax Convention, which provides for assistance for the collection of taxes between the tax authorities of Canada and the US.” The full text of my November 28 email to Minister Flaherty, and a photograph of the letter I received in reply to my email, appear in the attached PDF file at the bottom of this post.
The “current application” is, as Flaherty has said in writing to at least one MP and to several persons who have posted on this website, that Canada will NOT collect any taxes or penalties claimed by the IRS against anyone in Canada who was a Canadian citizen at the time these alleged liabilities were incurred. FLAHERTY HAS SPECIFICALLY STATED THIS APPLIES REGARDLESS OF WHETHER THE CANADIAN CITIZEN HOLDS DUAL US CITIZENSHIP. (For now, I’ll leave aside the issue of the US claiming you’re a dual citizen when you are certain in your own mind that you are NOT and that any such claim by the US is absurd.)
https://isaacbrocksociety.wordpress.com/2012/02/13/3200/
Please note that in Schubert explanation the 30% withholding on USA assets was not implemented on Canadian FATCA so you do not have to get rid of the US assets.
If you can not beat the system. which is not that hard if you are not affluent, or explain that you relinquish a long time ago to the banks. The most that can happen is IRS send you nasty letters to you in Canada and unless you cross the border they should not effect you. Even without FATCA the US border patrol will probably in the future demand CLN and then check through their computer screen if you are tax compliant.
Thanks, George III, and for the current info you received from Flaherty.
Discussion starting at http://isaacbrocksociety.ca/2014/01/14/solving-the-problems-of-u-s-citizenship-information-sessions/comment-page-21/#comment-1122516 and other applies.
@Canadiancop The extortion tactic noted in the New York Times article also seems to have been at play at the time FATCA was passed. If you look at who was giving to Rangel, Ways and Means chairman at the time, Credit Suisse and Metlife were both quite high up on the list and both were clearly hoping to reduce the damage to their international businesses. There is a reason why the IGAs are always written from the banks’ perspective.
The basic problem is a political one: Congress feels that they can disrespect us and get away with it. Could you imagine any U.S. politician writing a piece of gun-control legislation and giving it the name GUNNUT, not matter how left-wing they were? The NRA would have their head. And yet they can call us ‘FATCA’ts with impunity (while giving big tax breaks to companies like GE). Those of us who are not renouncing anytime soon need to start voting and we also probably need to start funding the opponents of politicians who hurt us (legally only U.S. citizens and Green card holders ‘legal permanent residents’ can contribute). If Rangel had done to AARP, AIPAC or the NRA what he has done to us, he would be relaxing on a beach somewhere now, not serving as #2 on Ways and Means (just a heartbeat away from the chairmanship and the chair is also 83). Rangel is weak (partly due to tax violations!) and faces serious primary challengers, but all the better: one of the tricks of successful groups is they pile onto someone who is in trouble and claim the victory. The guy who fought him last time in the primaries looks like more of a break, but I need to give this some more thought.
It should be noted that unless you are not certain of getting a pre 1995 or (2004 in certain circumstances) CLN you will get on the IRS radar. Explanation of why you relinquish to CRA may be a better way to go.
People who do want to cross the USA border or may have assets after June 2014 in USA are the one who are the ones who really should be considered going the tax route.
We do not have a European, Mexican, Japanese FATCA. The banks can not shut down recalcitrant accounts. At most for an account identified as a USA account they may send your birth date to IRS if you refuse to submit SSN.
“The United States shall not require a Reporting Canadian Financial Institution to withhold tax under section 1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a recalcitrant account holder (as defined in section 1471 (d)(6)of the U.S. Internal Revenue Code), or to close such account, if the U.S.Competent Authority receives the information set forth in sub paragraph 2(a) of Article 2 of this Agreement, subject to the provisions of Article 3
of this Agreement, with respect to such account”
page 14 http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
Existing account holder do no need to supply SSN
4) Notwithstanding paragraph 3 of this Article, with respect to each Reportable Account that is maintained by a Reporting Financial Institution as of June 30, 2014,and subject to paragraph 4 of Article 6 of this Agreement, the Parties are not required to obtain and include in the exchanged information the
4. Canadian TIN or the U.S. TIN, as applicable, of any relevant person if such taxpayer identifying number is not in the records of the Reporting Financial Institution. In such a case, the Parties shall obtain and include in the exchanged information the date of birth of the relevant person, if the Reporting Financial Institution has such date of birth in its records
page 12 of Canada FATCA http://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
@Publius
Rangel was also the chief proponent of HEART. This odious and repulsive congresscritter is the main reason why I and my family had to uproot our entire lives on a sixpence and leave the US unplanned and with some urgency a few years ago. I have few regrets in life, but one of them is that my refusal to now even visit the US denies me a future in which I dance a happy little jig on his grave.
Expat trolling.
Thanks for a great post.
If the extortion involved two individuals or an individual and a company or institution in Canada, there are courts where the dispute can be adjudicated.
But where the extorted and the extorter are countries, there is diplomacy or war, or the extorted can pay up, as Caruso did, or take the consequences. Is there a way to adjudicate the dispute? NAFTA? A supranational entity such as the WTO or the World Court? (The U.S. doesn’t have much good to say about supranational entities.)
Here’s one way to characterize the problem we face. On the pretext of cracking down on tax evasion, the U.S. comes up with FATCA, then IGAs, to extort money from so-called tax-evading individuals, then so-called tax-evading institutions. Maybe the real asset targets are asset-rich individuals and asset-institutions, such as the Swiss banks and J.P. Morgan Chase. J.P., the largest U.S. bank, has been taken so far for $27 billion, according to Just Me’s recent calculation.
Here in Canada we have a government that seems ready to cave in to U.S. extortion. Does anyone know what can be done lawfully to challenge U.S. extortion? Who can do it?
In the post Can Canada’s Foreign Extraterritorial Measures Act (R.S.C.,1985, c.F-29) Fend Off FATCA?, March 18, 2013, Nobledreamer was in touch with Jeff Mukadi, a Toronto tax law and compliance professional, who suggested that that FATCA could not be implemented in Canada not only because of our privacy laws but, more importantly, because of the Foreign Extraterritorial Measures Act (R.S.C., 1985, c.F-29). This Act was designed specifically to “deny effect to extraterritorial Acts of foreign governments violating Canadian sovereignty.”
See Mukadi’s article “FATCA Getting Rid of U.S. Clients Will Not Get You Off the Grid” in the November, 2012, issue of the Journal of International Taxation. In this article he suggests that in failing to protect its citizens against FATCA/IGA, Canada hands over a portion of its sovereignty to a foreign power and therefore its citizens should take their government to court through class actions seeking the invalidation of FATCA IGAs as unconstitutional.
@ GeorgeIII
I received in this afternoon’s post a personally-signed reply from Minister Flaherty, dated February 10, 2012.
And here in February 2014 this still applies right? The wording about the CRA not collecting from Canadians is very similar in the IGA I believe. This is good to know but I still want FATCA repealed in the USA and rejected by the Canadian parliament when the enabling legislation comes up. It’s trash law and belongs in the dustbin.
The Boston Globe has published an article by Michael Kranish Feb 17/14.
“The IRS is America’s feared and failing Agency”.
Looks like they won’t be ready for the onslaught of world wide expats diligently filing their
taxes. What a scramble this appears to be! Just another note to add to the craziness of this
whole exercise.
Thanks Ann and here’s the link …
http://www.bostonglobe.com/news/nation/2014/02/17/internal-revenue-service-institution-crisis-but-congress-fails-fix-many-problems/DxEQr3H6nEQndmbpHUtl0O/story.html
@GeorgeIII
awesome research re: Van deMark ruling! But will it stand today?
If the IRS bully makes good on his threat, TD and the rest of the BIG banks should take the 30% hit if they want to play with the big boys on Wall Street. No sympathy here. Health repercussions caused by the stress of this extortion and witchhunt are still outstanding.
@always, don’t forget that TD figures significantly in the investment portfolio of Canadian pensions and RRSPs. Robbery of TD’s American assets is still robbery of Canadians.
Still it is wrong for the CDN government to protect the banks and throw alleged US persons, most of whom are Canadian citizens, under the bus.
I am posting this here because the thread for posting articles is stuck in vertical mode.
The author, Hrafnkell Haraldsson, is quite the expat basher.
Should We Worry About 3,000 Americans Turning in Their Passports Because of Tax Law?
http://www.politicususa.com/2014/02/18/worry-3000-americans-turning-passports-tax-law.html
“I guess we are supposed to feel sorry for them, those 3,000 Americans who have turned in their passports this year because American tax laws have just become too darned complicated.”
“…we’re losing a few thousand people who were not only not contributing to the American economy, but who weren’t paying taxes in the first place.”
“So weep for the 3,000?… These Americans rightly want the same rights as the rest of us living in the United States. They want to vote. Fair enough. But we have these rights because we pay for them – through taxation.”
@ FromTheWilderness
Oh thanks for mentioning that about the article posting thread. I thought it was something amiss in my browser. The comments are interesting at politicususa.com. but we got the last word in … eventually.
Thanks for noticing the page display on the “Current Articles” thread is messed up, From the Wilderness. I’ll fix it asap (but might take a little while to figure out how).