Levin, McCain call for U.S. to refrain from FATCA negotiations with Russia
Without agreement, Russian banks face 30 percent tax on U.S. investments
Tuesday, April 29, 2014
WASHINGTON – Sens. Carl Levin, D-Mich., and John McCain, R-Ariz., today urged the Obama administration to continue to refrain from further negotiations with Russia on compliance with the Foreign Account Tax Compliance Act until Russia ends its aggressive and destabilizing actions toward Ukraine.
Russia is among nations that have not yet reached FATCA compliance agreements with the United States. Banks that fail to comply with FATCA are subject to a 30 percent withholding tax on U.S. investment income, including earnings on U.S. Treasury securities that are an integral part of the global financial system. Senators McCain and Levin believe that at this time of mounting tension in Ukraine, the U.S. should use more tools in its tool kit – including FATCA – to further deter Russian aggression.
“We should not be negotiating with the Russians to help them avoid FATCA’s sanctions at a time when Russian forces are threatening and continuing to destabilize Ukraine,” Levin and McCain write in a letter to Treasury Secretary Jack Lew. Refraining from negotiations for Russian banks to avoid the 30 percent FATCA penalty “would place financial pressure upon Russia, and help reinforce diplomatic efforts to avoid military action.”
Levin is chairman of the Senate Armed Services Committee and of the Permanent Subcommittee on Investigations, which has extensively explored the use of offshore banks in avoiding U.S. tax compliance. McCain is ranking member of the Permanent Subcommittee on Investigations and a member of the Armed Services and Foreign Relations committees.
The text of their letter follows:
April 29, 2014
The Honorable Jacob Lew
Secretary
U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW
Washington, DC 20220
Dear Mr. Secretary:
The purpose of this letter is to urge the U.S. Department of the Treasury to continue to refrain from negotiating with either the Government of Russia or certain Russian banks regarding compliance with the Foreign Account Tax Compliance Act (FATCA), until the Russian Government honors its diplomatic obligations and takes steps to diffuse tensions in the Crimea and Ukraine, including by withdrawing Russian troops from the border region.
According to recent press reports, the Treasury Department recently suspended negotiations with the Russian Government over how Russia’s more than 800 banks, as well as its other financial institutions, will comply with FATCA’s disclosure obligations. If those financial institutions fail to register with the Internal Revenue Service and obtain a Global Intermediary Identification Number (GIIN) by July 1, 2014, they will be out of compliance with FATCA, and will become subject to a 30 percent withholding tax on any U.S. investment earnings.
We should not be negotiating with the Russians to help them avoid FATCA’s sanctions at a time when Russian forces are threatening and continuing to destabilize Ukraine. Declining to negotiate GIIN assignments needed to avoid imposition of a 30 percent tax on U.S. investment income paid to Russia’s financial institutions would place financial pressure upon Russia, and help reinforce diplomatic efforts to avoid military action. If we do choose to negotiate, we should at least ensure that negotiations do not benefit those Russian financial institutions that have substantial Russian government funds, or have Russian government officials on their boards or in their leadership, or otherwise help support disruptive activities in the Crimea or Ukraine.
FATCA sanctions provide a powerful, nonmilitary option that, when added to the other financial sanctions already imposed, could help deter Russia from continuing its threatening actions against Ukraine.
Thanks for your consideration.
Sincerely,
Carl Levin John McCain
Mr Levin and Mr. McCain are NOT to be trusted.Nor is Jack Lew for that matter.
Dinosaurs.
I’m actually scared for the entire world economy as I read this. It’s really quite unbelievable that this world’s greatest debtor nation is now actually threatening to withhold interest payments on it’s debt????? And they think that they’re the ones with the power here? I’m starting to see the world more from the perspective of “Chears Big Ears” and gold looks better all the time.
So FATCA itself is no longer exciting enough for Msrs. Levin and McCain? Now they want to use it to trigger an uncontrollable global economic crisis, and perhaps WWIII?
Why, I do believe that the United States has gone stark raving mad, even before FATCA is fully implemented. For the world’s sake, I honestly hope that Putin’s rusty ICBM’s can still find their way to their original targets south of the 49th. Good gawd, are there ANY adults left in the room anymore?
This is what John Richardson said in one of the information sessions. “What debtor in any situation thinks that they are in a position to dictate the terms of their debt repayment to their creditors? Yet that is what the US has the gall to be doing here and thinking they can get away with.”
Wasn’t this supposed to be about catching tax cheats? I also observe the first official usage of the word “sanction” rather than “withholding tax”.
A scary escalation and obvious “mission creep”.
The cat is out of the bag, if it was not already. Putin is not amused nor is he bullied. It is a sad day when Putin looks better than the leaders of the Western nations. He is tough and he will not put up with this open aggression by the West, Obama in particular. He already has a pact with China and the US OWES China big. Really big.
Thank you for your honesty, Mr. Levin. We never really believed that FATCA was just about taxes, or even just information. It is clearly all about COERCION and CONTROL. Thanks for finally cutting the crap and revealing the truth. I’m sure any day now you’ll have Russia on the run.
And here is an article about the significance of it all:
http://www.newswithviews.com/McGuire/paul210.htm
From The Article:
“I believe that banking institutions are more dangerous to our liberties than standing armies. Already they have raised up a monied aristocracy that has set the government at defiance. The issuing power (of money) should be taken away from the banks and restored to the people to whom it properly belongs.” -Thomas Jefferson, U.S. President.
“If Congress has the right [it doesn’t] to issue paper money [currency], it was given to them to be used by…[the government] and not to be delegated to individuals or corporations.” -President Andrew Jackson, who Vetoed the Bank Bill of 1836.
“History records that the money changers have used every form of abuse, intrigue, deceit, and violent means possible to maintain their control over governments by controlling money and its issuance.” -James Madison
To expose a 15 Trillion dollar ripoff of the American people by the stockholders of the 1000 largest corporations over the last 100 years will be a tall order of business.” -Buckminster Fuller, the creator of Spaceship Earth
“Every Congressman, every Senator knows precisely what causes inflation…but can’t, [won’t] support the drastic reforms to stop it [repeal of the Federal Reserve Act] because it could cost him his job.” -Robert A. Heinlein, Expanded Universe
“It is well that the people of the nation do not understand our banking and monetary system, for if they did, I believe there would be a revolution before tomorrow morning.” -Henry Ford”
With Putin defying the West , the US and EU and having agreed on a pact with China to buy and sell in Rubles and Yuan he is doing an end run around the Petro Dollar.
Make no mistake, Putin is not to be taken lightly and the US and EU poke the Russian bear at it’s peril.
And This article is only too prescient:
http://www.wnd.com/2014/04/big-brother-goes-global/
@Osgood, “Wasn’t this supposed to be about catching tax cheats? I also observe the first official usage of the word “sanction” rather than “withholding tax A scary escalation and obvious “mission creep”.
It is about punishment.
What will be the next mission creep for expats?
What will be the next mission creep for CLN holders?
Never thought I’d see the day when my sentiments would be with Putin.
Seriously bizarre and frightening behaviour on the part of the US.
They seem to have forgotten (or maybe those 2 never understood) that the IGA’s were a means to try to make an otherwise unworkable system work for the US. Clearly their sense of power has put them out of touch with reality, and I can only hope that saner heads, if there are such things in the US government these days, will prevail.
The stunning admission on the part of bi-partisan senators McCain and Levin is that FATCA withholdings are sanctions.
Allison Christians said this in the FATCA forum in December 2012. So this is what the US does to its allies. It threatens sanctions against them and forces them to sign IGAs. With enemies like Russia it withholds the IGA so that it can happily impose the sanctions. Who is the state-sponsored criminal in this case?
The silver lining is that other countries like China will take notice of this action against Russia…
It’s quite astonishing that they outright admit that FATCA is about imposing sanctions. (I really wonder if they’re aware of the import of what they’ve stated.).
Perhaps they’ll soon admit that what they’re imposing on expats is nothing less than extortion and has nothing to do with tax evasion.
The United States sanctions against Russian private individuals will likely backfire against USA companies like Exxon and Pepsi Cola, and will thus be yet another hit against pension programs that have already been absolutely decimated by ZIRP (Zero Interest Rate Policy) since 2008. This is what being a bad neighbor is all about. Imagine the same scenario if Canada had not signed the IGA with the USA. The US imposes 30% withholdings against transfer payments to Canada; Canada stops transfering oil, gas and electricity to the US. The US seizes Tim Hortons. Canada seizes Walmart, Costco, Target, Sears, Nordstroms, and Best Buy. Um, who is getting hurt? Ultimately such economic wars end in real wars. This is not a game the US should be playing but 1.5 trillion deficits per year has the US in quite a pickle.
http://www.bloomberg.com/news/2014-04-30/putin-threat-to-retaliate-for-sanctions-carries-risks.html
I hope this doesn’t wind up being another “Bay of Pigs” story. Does history really repeat itself? Stupid decisions that continue to be made by crazy government officials seem to be rearing their ugly heads once again. Oh yes, and 1939 a world take over was tried and it didn’t work. Power and money it seems is still the root of all evil. I hope somebody is listening!
I preface my comments below by saying that I am not commenting on the current issue of Russian and the Ukraine one way or the other, or what the solution is. I am merely pointing to the interesting use of FATCA as a foreign relations sanction wherein the US states that all countries must accede to FATCA, and urges them to sign IGAs, but is using its refusal to meet with Russia to work out a FATCA IGA as a weapon to justify levying the 30% withholding.
So FATCA is exposed in that letter as what it is – extortion and a weapon of economic destruction. Levin refers to FATCA’s “SANCTIONS”. This is not a voluntary multilateral or bilateral mutual exchange of tax related information as the US deliberately pretends. FATCA = SANCTIONS. FATCA = an economic weapon. For Levin to deliberately and frankly mix US extraterritorial tax policy with foreign affairs demonstrates that. If it weren’t for the ‘quaint’ ‘peculiar’ institution of US CBT, FATCA wouldn’t work at all, and they’d have to rig some other kind of sanction.
One wonders how this could possibly be in line with trade agreements and treaties that the US has with other countries? In Canada they’re trying to sell it as an adjunct to the existing ‘bilateral’ Canada/US tax treaty. Does the FATCA law as written by Congress have provisions that state that the FATCA IGA and our tax treaty is contingent on Canada obeying the US in other non-tax realms? Or that Congress intended FATCA to be used in any and all situations where the US wants to achieve some other unrelated political aim?
How the rest of the globe doesn’t raise the issues of FATCA as a deliberate way to tip the scales to giving US FIs and nonFI’s an advantage while burdening everyone else, plus making all the worlds’ taxpayers pay the implementation and maintenance costs, and holding us all for ransom is becoming increasingly absurd.
Will no-one point out that the US is naked? That with this letter laying FATCA bare as the all purpose non-voluntary coercive club that it is, the Emperor’s FATCA robes are non-existent – increasingly showing the dirty backside of the US turned to the rest of the world?
And, this makes very clear that when FATCA is on the table, other NON-tax related issues can be on the table too.
FATCA is morphing beyond the initial item that Congress passed – slipped into an unrelated omnibill. Did they contemplate Levin’s current use of it? Would they have voted for that if they had?
What does the OECD think about the pretense that FATCA is a ‘war’ on money laundering, etc. when the US uses it this way – and purports that it is a desirable basis for their Common Reporting aspirations? When the US is using FATCA as a threat to impose sanctions on countries who don’t participate to sign an IGA, as well as ones like Russian who say they may? And, since Russia has floated the issue of real reciprocity – is that part of the problem too?
Which makes me ask again; what else was on the table for Canada when the Harper government signed us and the Charter and our Constitution away via the FATCA IGA?
We know that since FATCA is a US domestic law, and that they insist on the later-in-time rule anyway, that the US can change the terms at any time. A FATCA IGA is not a certainty anyway. The US could decide to add more punitive terms as it likes.
The US cannot be trusted. And this demonstrates their willingness yet again, to use unilateral might to solve complicated problems. Does Levin have the assent of the White House to be issuing letters like this one? Connecting the pet project of the White House to some unconnected diplomatic and foreign affairs crisis? We read that FATCA will go ahead no matter what because it is important to the White House – and therefore to Obama ( ex. “……. A source familiar with the Obama administration’s position on FATCA said the White House will not allow another delay.” http://www.reuters.com/article/2014/01/31/us-usa-tax-fatca-idUSBREA0U1XK20140131 ).
So are Levin and the US also hoping to scare other countries by showing them how they could use FATCA as a WeaponofEconomicDestruction – with or without an IGA?
Also on the topic of the US and Russia,
Look into the Jackson-Vanik amendment http://en.wikipedia.org/wiki/Jackson%E2%80%93Vanik_amendment , and then its repeal.
Have a look at this;
‘RUSSIA AND MOLDOVA JACKSON-VANIK
REPEAL AND SERGEI MAGNITSKY RULE OF
LAW ACCOUNTABILITY ACT OF 2012’
http://www.treasury.gov/resource-center/sanctions/Programs/Documents/pl112_208.pdf
and look at this statement by the US:
“TITLE I—PERMANENT NORMAL TRADE
RELATIONS FOR THE RUSSIAN FEDERATION
SEC. 101. FINDINGS.
Congress finds the following:
(1) The Russian Federation allows its citizens the right
and opportunity to emigrate, free of any heavy tax on emigra-
tion or on the visas or other documents required for emigration
and free of any tax, levy, fine, fee, or other charge on any
citizens as a consequence of the desire of those citizens to
emigrate to the country of their choice. ”
Now,
Consider the US Exit tax regime, and the continued attempts by US elected officials to enact/enable laws to punish those who expatriate, and to ban renunciants/relinquishers from entering the US ever again http://blogs.angloinfo.com/us-tax/2013/06/23/1243/ , or to make the current Exit tax regime even more punitive, and the ‘covered expatriate’ sanctions if we do not ‘exit’ the US formally, with the paperwork exactly as they demand – even if we were born abroad, or were merely accidental USPs, or have already expatriated, or were told we were stripped of US status through naturalizing elsewhere decades ago (before the US changed the law) –
Ask yourself if the US “allows its citizens the right
and opportunity to emigrate, free of any heavy tax on emigra-
tion or on the visas or other documents required for emigration
and free of any tax, levy, fine, fee, or other charge on any
citizens as a consequence of the desire of those citizens to
emigrate to the country of their choice” ?
badger and others,
You pose important questions that need to be answered by our Canadian government — and by the OCED.
Is the U.S. to be allowed to use FATCA as a weapon held over other countries’ heads so they stay in line with what the U.S. wants, including whatever the U.S. wants / needs from the Canadian government?
Who is to stop U.S. ‘added benefits of sanctions by FATCA’ even before implementation of IGA’s around the world? The complicity by the governments of countries in signing away rights of their US Persons in IGAs, as a bonus, can make their very countries victims of U.S. FATCA sanctions. McCain and Levin reflect the punitive and fear-mongering policies of the USA.
Wouldn’t it be funny if it was Canada and Russia who put the US in it’s place over Fatca? What is going to happen with currencies and trade might change forever when trust is lost..
Is this a sanction, or out and out seizure?
” I’m starting to see the world more from the perspective of “Chears Big Ears” and gold looks better all the time.”
Thanks Pierre. I am 100% positive that I’m right. We live in an increasingly unstable lawless world that the most lawless country in the world is trying to maintain control of and I can’t for the life of me understand why people here want to do things legally when their laws are trying to kill us.
My accountant told me that he did the capital gains estate tax for a woman in Vancouver, gave it to her to sign and mail and ‘doesn’t know if she filed it after all’ 😉 Although he has made sure I have always been compliant (against my wishes lol) he says all the accountants he knows are fed up with the Americans and even suggested not bothering filing going forward because our information is now web based online and easy to hack.
I’m seriously thinking about dropping out and breaking all my remaining ties, anything that keeps me from just jumping in my car and disappearing, maybe even buying an RV and moving around. I’m also thinking of moving to Russia and the more the war heats up the more this looks appealing to me. Long live Putin
Even at the risk of problems down the road people here should relax and basically ignore the IRS in my opinion because it’s only a matter of a short period of time before the USA descends into civil war and chaos. Without fear as their weapon they are nothing. As sure as I’m talking, there WILL be a violent rebellion against the IRS and many will get killed on all sides. They are in every sense of the word the enemy, one of the worst enemies known to mankind. So why do people here fuss about every little detail? We are not tax experts nor should we expected to be. We have lives to live. So, leave the banks and go for the pillow. Get gold. Those who don’t have some gold in different places are simply foolish and I would never ever take financial advice from them. Same for people who aren’t in credit unions (who want you as a customer) rather than the banks.
I make no bones about it. I now consider myself a fan of Putin and am going to continue to sit a and laugh when our system, that I despise so much, falls apart. I laughed when the CRA was attacked by Heartbleed, Target hacked, Internet Explorer out of commission till mid May, riots against the USA in places like Philippines where they just burnt Obama in effigy. The list goes on and on. I don’t believe that half the countries who signed on will actually, at the street level, enforce laws from dictators. I’m convinced that the 2 bankers murdered in Europe last week had something to do with FATCA as the bankers had arguments with foreign customers. In my opinion more bankers need to be murdered in order to put the fear of God in them. In fact I’m quite surprised no one has published ALL the personal private information on every bank manager in Canada online. I’m sure that if they knew that their information was out there they would live in fear the way we do and that would be a big disincentive for them to harass their clients. I noticed that Linkedin has some personal information on about 350 TD bankers so it must be legal to post some info on them. Example: http://ca.linkedin.com/pub/jimmy-wang/8/b19/749 So all that is needed is for someone (no idea how to do this) to compile a database of dossiers on all branch managers in Canada and make sure that their information is as detailed as what they have on each of us as individuals and then create a web page and publish whatever legal information is allowed. Put them on the defensive so as to serve notice that if they participate in breaking the law and spirit of our Charter of Rights then they will also subject themselves to ……………..sorry must go, phone call.
The USA is a paper tiger, irrelevant and sinking as fast as a meteor falling to Earth
I agree with Badger and Calgary411 about what is going on. And with Osgood that it is mission creep of a profoundly worrying nature.
Senators Levin and McCain seem to be saying that now that the US has in place the mechanisms to impose a 30% withholding sanction on foreign financial institutions that either are not covered by an IGA and not registered with a GIIN (and so not committed to disclose US account holders), the US can arbitrarily refuse to negotiate such an IGA and/or refuse to allocate GIINs as a means of forcing another government to accede to US policy on totally unrelated matters, or to apply pressure on FFIs to lobby their government to accede to US policy on unrelated matters. ( And at least in the case of an existing IGA such as the one with the UK, it seems also that the US can terminate it on 12 months’ notice for no reason.)
A sanction of 30% withholding on all US-source income in the context of possible tax evasion by a few citizens and residents of other countries was a sledgehammer to crack a nut. If the US uses a sanction as powerful as this for poorly articulated political reasons (whatever the rights or wrongs, as Badger notes), it could be deeply destabilizing for the US economy and other economies around the world. If the Levin McCain proposal gets any traction, the lunatics really will be in charge of the asylum.