On March 10 2014 a small group of Canadians (with supporters in other countries) took a gamble and donated money they could not afford to try to bring down FATCA using a legal challenge approach.
What if similar groups in other countries took their governments to court over this?
One Brocker, upset that the Swiss referendum did not obtain enough signatures, already told us that:
“[The Swiss Federal] Constitution undisputably mandates guarantees of nondiscrimination and liberty of economic opportunity, as well as the right to a family and the protection of privacy, among many other things. Here at IBS, we all know that FATCA violates such guarantees, as expressed in the UDHR, as well as many constitutions around the world”.
Here is a list of countries with constitutions. How many of these constitutions guarantee fundamental rights that are violated by FATCA?:
http://en.wikipedia.org/wiki/List_of_national_constitutions
Are there any Brockers/Sandboxers or their sympathizers in these countries who could lead anti-FATCA constitutional challenges?
See today’s new post on the Republicans Overseas website asking that this happens:
Canadians Ask “US Persons” World-Wide To Challenge Legality of FATCA
In only six days Canadians Dr. Stephen Kish and Lynne Swanson received sufficient donations from Canadians and those in other countries to retain a constitutional expert attorney. The attorney will examine the constitutionality of the proposed IGA (Intergovernmental Agreement) between the United States and Canada to implement FATCA.
They and other Canadians believe strongly that the IGA will violate Canada’s Charter of Rights and Freedoms.
Kish and Swanson ask concerned peoples in all countries affected by FATCA (i.e., ALL countries worldwide) to begin similar efforts to bring down the FATCA beast.
See the press release for the Canadian Charter Challenge Fund: http://maplesandbox.ca/wp-content/uploads/2014/03/News-Release-First-Legal-Step-To-Stop-FATCA.pdf
I think it would be interesting to see any level of challenge come from as many nations as possible. Perhaps Canada is first only because there are so many of us in touch due to IBS, MSB, etc. Switzerland may not have obtained the requisite number of signatures for the referendum but, if those involved got together and used the momentum they had to explore other options, I’ll bet it would inspire others in EU to do the same. Perhaps the meetings done by John Richardson in various cities there could be a starting point for getting in contact and moving forward. The first of these is Munich and others are in the works. Please see:
http://www.meetup.com/American-US-Expats-Abroad/events/166900682/
a poster called “don” actually said he wants to start a fund to go to the european human rights court.
that is a great idea cause it binds for all EU countries
i will immediatly donate my share also to that challenge
Calgary 411 and I have just left a Liberal function in downtown Calgary. We were able to corner Ralph Goodale following his speech. We barraged him with questions. He was in complete agreement that the Conservatives had signed a bad law and that we should fight it. We spoke with as many Liberal representatives as we could. Many of them had a very limited understanding of FATCA and the negative consequences for those affected.
Maybe a nicely designed hard copy information 70 page pamphlet in large font of the latest submission to Ministry of Finance?
I can tell you that they don’t generally go on the net and so something they can carry to Parliament and other places with them would be great.
Maybe a thousand copies and someone to mail them? I have a copy center run my heavily discount oriented Chinese here in Vancouver. I have used them for years and their prices are great and not easily matched in this area.
Where is the much needed war chest? IMO there needs to be a general fund for the many many projects we could be doing, and volunteers as well. We need wealthy donors. Even if we found just one or two multi-millionaires to back us. Mystery to me why they haven’t come forward. How about someone ask the King of Thailand?
http://en.wikipedia.org/wiki/Bhumibol_Adulyadej
Anybody out there?
EU is a better idea. Too few people in each country are aware
Is anyone considering challenging the constitutionality of CBT/FATCA in the US courts?
Sen. Paul Introduces Bill to Repeal Anti-Privacy Provisions in FATCA
May 8, 2013
WASHINGTON, D.C. – Yesterday, Sen. Rand Paul introduced a bill to repeal anti-privacy provisions of the Foreign Account Tax Compliance Act (FATCA) and put an end to a defective bill that does not accomplish its objective of ending tax evasion. FATCA infringes upon basic constitutional rights, for under FATCA, private data of anyone considered a “U.S. Person” would have details of their financial assets provided to the IRS without a warrant requirement, suspicious activity report (SAR), or any allegation of wrongdoing at all. Stated in its simplest form, FATCA would require every non-American financial institution (such as banks, credit unions, pension funds, stock and investment firms, etc.) to register directly with the IRS and agree to provide specified financial data on the accounts of any “U.S. Person.” Perhaps even more troubling, the implementation of FATCA has allowed the Treasury Department to make independent decisions with respect to the sovereignty of foreign nations and the privacy of United States citizens. In order to implement this law, Treasury has initiated intergovernmental agreements (IGAs), citing the intent to engage in reciprocal information sharing with other nations. In other words, the Treasury Department, without the consent and authority of Congress, will force U.S. financial institutions to provide the bank account information of private customers to foreign nations.
“FATCA is a textbook example of a bad law that doesn’t achieve its stated purpose but does manage to unleash a host of unanticipated destructive consequences,” Sen. Paul said. “FATCA’s harmful impacts cover the spectrum. It is a violation of Americans’ constitutional protections, oversteps the limits of Executive power, disregards the mutual respect of sovereignty among nations and drains money from the federal treasury under the guise of replenishing it, and discourages overseas investment in the United States.”
“Tax evasion is a problem that should be addressed, but not in such an egregious way. FATCA violates important privacy protections, disregards the sovereign laws of other nations and will cost the U.S. economy hundreds of billions of dollars in compliance costs,” he continued. “FATCA should be repealed, and Congress should consider less onerous means of enforcing tax laws.”
http://www.paul.senate.gov/?p=press_release&id=793
@Don, @Billy- I am already budgeting to contribute to any challenge in the British courts/ECHR as well as continuing support for C3F. anybody who launches this European action will command my full and unqualified support.
I have set aside funds for the next steps in our charter challenge as well. I wonder if the UN will look into the human rights issues with Fatca with some sort of campaign.
@Crystal London – I’m not a barrister, however, I believe the process would follow this route. A Constitutional challenge would have to be made in an EU member state and in the event the court in the EU upholds the IGA then it gets referred to the ECHR.
Other questions for the UK are its use of an ‘unwritten constitution,’ how would that effect a challenge. Would it be more powerful to challenge a written constitution with the words ‘equality’ actually written down?
Ireland has a written constitution that has clauses in it such as the Irish Government can not award someone titles of nobility for example. Its Constitution has been written definitely to stop the English getting their hooks into the country again.
However, that’s getting off the main topic. Ireland does have a clause relating to ‘equality,’ and I can’t see how FATCA doesn’t break that concept.
Yes setting up a fund along the same lines, transparency, etc with the view to get ‘ALL’ EU IGAs struck down in one swoop would be the goal and send the issue back to individual EU parliaments to go away and get it right next time.
For the EU, we would need to set up something separate to the ACA because their own charter prevents them (at least publicly) to take sides.
As a first step we need to find an EU rights solicitor / and academics to form the group. For example in Ireland, I contacted one taxation academic who was actually in favour of CBT as a way to right the wrongs of a couple of well off Irish who change their residency to avoid Irish tax.
So it’s a case of finding ‘like minded’ people for sure to progress this issue along. The comments in another post about the Canadian Embassy is Washington is in plain sight of the capitol building, well when the new US Embassy opens near Vauxhall, the US Embassy will be able to observe his/her UK Parliament is their sight as well and pat themselves on the back with their perceived expanding influence from their office.
Before donations can take place perhaps someone could set up an EU version of Isaac Brock to focus on the EU with close collaboration with UBS Canada.
I’m not a US person anymore, but if we have someone in the UK who is a US person I would suggest that they get in touch with Bindmans, a firm of solicitors. They represented David Miranda (Glenn Greenwald’s partner) in his challenge that he was improperly detained at Heathrow Airport. (http://www.bindmans.com/what-we-do/view/discrimination-and-equality-law) You can click through to submit a general enquiry and they try to get back in touch within 24 hours.
Ask them if clause 26.1 of the Santander Share Dealing customer terms and conditions represents national origin discrimination in the provision of financial services. (http://www.santandersharedealing.co.uk/content/terms.aspx).
Ask them if the result of entering country of birth = United States or nationality = United States at Interactive Investor (https://trading.iii.co.uk/registration/index/s/1-2) which results in this message “You have entered details which would classify you as a US Person. Unfortunately, our service does not extend to US Persons. We regret that we are unable to accept your application” is national origin discrimination in the provision of ISAs. ISAs are, incidentally, by law available to ALL UK residents and are not FATCA reportable accounts.
Interestingly, the EU Parliament is concerned that EU citizens could be discriminated against by other EU countries by the tax system in their resident country when not a citizen of that country. (http://euobserver.com/news/122796#) “The commission investigations will focus on tax rules on income, as well as levies on capital gains and other investments, and pension provisions. Governments found to have discriminatory tax systems will be told to bring their tax codes into line with EU law or face infringement proceedings.” The treatment of EU citizens by the US is almost inevitably out of scope but it might be interesting if we have an EU/US dual who could bring this to their attention. Perhaps they would be interested to hear about PFIC. The spokesperson quoted by name in the article has contact details to be found on this page (http://ec.europa.eu/commission_2010-2014/semeta/about/team/index_en.htm).
@Edelweiss
I suppose banks and governments will argue that “US Person” status is not national origin discrimination, since it may apply to those who are not US citizens/nationals, e.g. snow-birds or business people who’ve spent a day too long in the USA, green card holders, etc. It’s a dirty trick, of course, and I don’t know whether it would hold up in court, but I wouldn’t be surprised if they argued on those grounds. Arguably the banks should be asking if people are taxable in the USA, not if they were born there or have US citizenship.
Banks shouldn’t be asking anyone, anything about their tax situation. They don’t do it for others of any nationality except the U.S. What they are doing is altering services based on place of birth. They are treating one group of people differently than any other and in some cases closing accounts if the person refuses to have their banking data shared around.
I do think each country should look at this and should take some action. The U.N. perhaps needs to take a closer look at FATCA and all that it implies. The U.S. is constantly breaking international norms then turns round and cries about other countries when they do it.
@notamused
Some of the terms and conditions for share accounts and for stocks and shares ISAs refer to US Person and some refer to US citizen /orand US resident. I think the Interactive Investor example is interesting because it involves a FATCA non-reportable account type and entering EITHER place of birth = US or entering citizenship = US denies you the account. This suggests that at least Interactive Investor takes the input of place of birth or nationality and automatically concludes that you therefore must be a US person. As we all know, you can be born in the US and not be a US person although not in the eyes of Interactive Investor.
I agree that suggesting that US Person refers to a tax status (not a protected class) and not nationality is sneaky.
@Edelweiss
Interesting. Indeed, whatever they ask for, they’re bound to get it wrong. Of course as AtticusinCanada says, they shouldn’t be asking anything at all…
@ChearsBigEars
I don’t think that purposal went anywhere… Info I got about the status was this:
**Read twice and referred to the Committee on Finance**
There are no co-sponsors to it.
Since I don’t really understand the process of American law… it looks he purposed the bill… then it was passed off… so assume it is dead?
I suspect there are ‘angry people’ in various countries watching to see if a court challenge in Canada goes anywhere (perhaps an injunction?) and if so, maybe some dominoes will start to fall elsewhere. It would be nice to see multiple fronts opened up.
@Edelweiss
The difficulty on this issue in the UK as I see it is that there is very poor awareness. Coverage highlighting the issue of Americans overseas has been poor except in the business press and, oddly, a few articles in the more conservative tabloids. I suspect that this issue is going to really hurt the Democrats in the U.K. when it gets out, since people who lean Democrat probably aren’t reading the Telegraph, Daily Mail and Economist. About 20% of American-born residents of the U.K. were educators in 2006 and if they followed the stereotype and read the Guardian, they won’t realize at all that FATCA affects them, since the coverage has focused entirely on FATCA and the fight against tax havens (which Britain is certainly not for these people, many of whom are in the 40% income tax bracket).
I wonder if some of what is going on with brokers turning down U.S. clients is partly that they are worried about misselling. Banks have been shelling out loads of money for having sold payment protection to customers when it was unsuitable. Compliance with FATCA in the U.K. is diabolically complicated. I have given up on stocks and shares ISAs because it impossible to be sure of investing compliantly in a U.K. stocks and shares ISA without really expensive expert advice.
A number of European countries don’t have pure RBT and would resist any push to pure CBT. U.S. taxation differs from other countries in taxing people who have never resided in the country and have no ties to it (such as Carol’s son), taxing people who don’t live in tax havens or countries that have not signed a tax treaty, taxing such people indefinitely and taxing most categories of their income the same as they are taxed for residents.
@Publius
There has long been a clause in all UK fund prospectuses that says they can’t be sold to US persons. It is SEC regulation rather than anything specific to FATCA. It has also long been ignored by every US citizen who lives in the UK and has a UK pension plan. Perhaps FATCA and the IGA have awakened brokers to this well-buried information.
@Edelweiss
Because my UK MP has not heard from me over the FATCA IGA for some months, I passed the specific example of Interactive Investor to him as an indication of explicit damage caused by the IGA to UK citizens who are provably not US persons. He has passed it on to Treasury.
All well and good, but on past form David Gauke has behaved as if coated in teflon with respect to FATCA. He has already said that “it is a matter for America how they tax their citizens“, completely sidestepping that America also taxes dual citizens, accidental citizens with no real US connections, and green card holders and others who stay too long in the US but who are not US citizens at all.
Will we get “it is a matter for UK pension companies who they choose to reject as customers,” at which point the UK govt’s abdication of responsibility to its own citizens and surrender of sovereignty to the US in this area will be complete? We’ll see…
@Publius
I don’t think the new found desire to avoid “US persons” on the part of investment account providers has anything to do with misselling. Many of these account providers are execution only and don’t provide any investment advice.
Having a “US compliant” investment portfolio is not as difficult as it sounds. You just have to invest in individual shares and avoid like the plague anything that is a collective investment vehicle (unit trusts, OEICs, ETFs, venture capital trusts, etc.). Investing in individual shares gets better US tax treatment than either a PFIC or a US mutual fund where you would pay capital gains tax on the underlying gains in the fund managers portfolio and where the dividends would be treated as ordinary as opposed to qualified if you hold the individual shares. You still have the phantom gain issue from conversion to US$ but that could potentially be mitigated by the timing of exit.
You can construct a reasonably well diversified portfolio with a relatively small number of shares. For example, the top 10 FTSE 100 shares represent 40% of the value of the index and the top 20 represent about 60%. If you held the top 10 or top 20 in proportion to their index weighting you could probably get long-term performance not dissimilar from the FTSE 100. Given that 2/3 of long-term investment returns come from the reinvestment of dividends, minimising tax leakage on dividends (qualified as opposed to ordinary) can really help in the long run as can deferring capital gains tax until the actual sale (ie avoiding US mutual funds).
@Watcher
I had written to your MP some months ago with a number of examples of discriminatory language in customer terms and conditions. His assistant told me he was not permitted to reply because I didn’t live in his area. I hope you fare better.
@Edelweiss, @Publius
Some dozen or so Vanguard US ETFs have UK ‘reporting status’, so a US person living in the UK can hold them yet sidestep both PFIC and its (far less destructive) UK counterpart. The list is here. It’s a bit of a fiddle to tease out the ETFs included from their CUSIP number, but it can be done. At a quick glance I found both VTI and VOO. This would be a decent way to hold collectives without running afoul of either US or UK ‘offshore’ issues.
Okay for an unwrapped trading account then (though I shudder to try and work out what happens with UK tax when one of these US ETFs throws out a capital gains distribution!). Unfortunately an ISA is still a dead duck for US persons. What the UK doesn’t take in dividend or capital gains tax, the US will.
Would anyone be interested in ringing up Birdman’s and get a quote for a legal opinion on the IGA? Duplicate what’s been done in Canada. If all 500,000 ‘US persons’ donated just 20 you could amass a fund of £10M for legal action, promotion / lobbying efforts.
First order of business we need to get all UK ‘US persons’ together on the Internet and start moving forward. What hacks me off the most, I can vote in the UK, but I’m still under the IRS’ thumb.
Something has got to change.
Like I’ve said in the past, nothing posses people off more than another country wanting to tax you and get nothing in return. The USG is mad that this won’t ultimately backfire.
Alternatively, make a duplicate passport or ID, just good enough for some wet behind the ears bank clerk with a different place of birth and have you put down on the bank’s database as a ‘non-US person.’ Once done that would roll on for years.
I’m not talking about bad quality, high quality that could get by police scrutiny with your real details just a different place of birth.
@Watcher – Read the UK IGA, I believe ISAs are exempt from FATCA at least for now.
@Don, under the IGA banks and brokers are exempt from FATCA reporting on ISAs. But the ISAs themselves are not exempt from US tax, and still need to be reported as income by US persons that hold them, as well as on FBAR and FATCA form 8938. ISAs are as useless to US persons in the UK as RDSPs, RESPs, TFSAs and so on are to US persons in Canada. Identical problem.
@Watcher – I agree, but if the IRS doesn’t get the data, then its debatable to report, unless you’re in the 10% of Americans Abroad that actually do file.
The real issue here is ‘US persons’ leaving the US and being allowed total financial freedom and not being under the thumb of the IRS.
The US is simply at war with its own citizens abroad, there’s no other way to put it. As always we are not important to Homelanders and often viewed as traitors being as that stupid question by Homelanders ‘ Did you have to give up your US citizenship?’. They’re the ones that need the lesson not us. We had the nonce to pack our bags to leave.