70 thoughts on “Republicans Overseas Will Be Launching Legal Challenge to FATCA”
Good for them, but I wonder how successful they can be given that as expats, we have precious few rights while outside the American city limits in comparison to our obligations.
The irony is that the greatest non-partisan effort being made by any group of Americans will be from abroad.
http://www.republicans-abroad.org/fatca/ “Michael George DeSombre was elected Chairman of Republicans Abroad Hong Kong in December 2012 after serving on the board as vice-Chairman since 2008. Mr. DeSombre is a partner of Sullivan & Cromwell, a global law firm headquartered in New York, and has been resident in Hong Kong since 1997.”
RO should launch a legal challenge for CBT and FBAR as well. The toxic trio (CBT, FATCA and FBAR) amounts to nothing short of a financial death penalty for expats.
The Democrats continued support of FATCA and CBT is proof they are communists in all but name.
I’ve been around politics for many decades now and feel I can read the tea leaves. Ignore the propaganda, FATCA is dead. Only 30 +/- consignees and most are secretly now wishing for the destruction of America, MAKE NO MISTAKE. Those who think the Repugnicans are concerned just about overseas ‘citizens’ are myopic in their understanding of the overall damage this is already doing to America overseas. They have other reasons for wanting IRS reform.
BTW if anyone has any connections in Belgium or the area I am trying, without success so far, to find out the nationality of the banker murderer to see if there is any connection to bank account closures. The Lichtenstein murderer is from Lichtenstein sadly. I’m appealing to our friends in Europe to do some investigations in order to get more details.
For those who might get locked in battle with the IRS some day this is the lawyer you want to talk to
Donald L. Korb
Washington, D.C.
+1-202-956-7500 +1-202-293-6330
New York
+1-212-558-4000 +1-212-558-3588 korbd@sullcrom.com Vcard
He is a partner in Sullivan and Cromwell where Michael DeSombre works
“Sullivan & Cromwell’s Tax Group works with clients on all aspects of their tax controversies, from the audit level, to the administrative appeals level, to litigation in court.
The Group seeks to manage and resolve tax disputes for its clients without resorting to costly and time-consuming litigation. S&C believes that it is far better to approach tax controversies with a view toward resolving the matters at the earliest possible stage of the process and at the lowest possible cost to the client, both in terms of any payment to the Internal Revenue Service and the expense of achieving such results. The ultimate goal is to eliminate entirely any proposed adjustment, a result the Firm has often achieved for its clients.
The Firm’s work draws upon two particular strengths:
The Tax Group consists of lawyers who have extensive knowledge of the tax law as well as the workings of the IRS, including a former chief counsel for the agency.
The Litigation Group brings its advanced and effective approach to corporate litigation to help the Tax Group lawyers develop the most effective way to resolve their cases.
Clients benefit from a team of knowledgeable tax lawyers and accomplished litigators working in close cooperation—the best of both skill sets and the most effective response to increasingly sophisticated and confrontational IRS challenges. ” http://www.sullcrom.biz/Tax-Controversy-Practices
He just might be a key person preventing HK from doing an IGA
” Despite several nations’ embrace of the FATCA, China has continued to delay negotiations with the U.S. Treasury over whether or not to allow Chinese financial institutions to report U.S. taxpayer or U.S. firm information to the United States Government. – See more at:
Have yet to be able to find direct information about this. No link on the tweet. Nor anything on a general search. Guess we have to wait.
Unless the US president personally posts here to apologize, I’ll remain convinced that America is intentionally racist against the American diaspora.
Well, at least he is a lawyer…..
They communicate on facebook. There is an email there to talk with them directly. That tweet came out last night and their site is not updated upon it yet.
The effort is real and participatory as is the fundraising for that challenge.
The organization of their opposition, Democrats Abroad, is an entirely different structure, where Democrats abroad is baked into the entire Democratic party structure. Republicans Overseas is not structured that way.
See No Evil? MSM uncertain who’s behind Odessa inferno
The world is hours from exploding into another world war and Putin doesn’t want it but the Levins and McCains (hillbillies lol) are pushing the buttons
Reason I post this is because this day marks the start of WW4
Ukraine Crisis – What You’re Not Being Told
Shocking US Collusion with Svoboda—-More than they Bargained for
Now watch the mainstream media pile in to toe the party line and attack this effort.
One has to ask if FATCA can pass US Constitutional muster?
You are treating two types of Americans differently. If they had imposed the Form 1099 regime on foreign institutions mirroring what happens in the USA maybe it would have worked.
But instead of asking for capital gains, dividend and interest payments they are asking for account balance information. What they are asking for does not help determine accurate tax liability.
I would suspect homelanders would yell loudly if account balance information was handed over.
They want account balance info for FBAR confiscations. FATCA violates the 4th amendment and FBAR violates the 8th amendment.
The problem however is that very few people in the US give a rats ass about the constitution.
Its all about how much money can be grabbed on behalf of one constituency or another.
@FromTheWilderness, yes you have pointed out the elephant in the room.
I have been thinking if FATCA would encourage compliance or discourage compliance. Unlike compliance measures taken elsewhere which provide amnesty from penalty, I think more people will be driven away. Like you, I scratched my head saying this is a FBAR penalty generator.
I think there will be a wave of people getting their CLN and saying they are done, no more forms and no travel to the USA. They will say they are middle class, little gain for the homeland but big expense to collect.
I think there will be a wave of “undocumented relinquishers” who do not even want CLN exposure. They will relinquish and say they are done, no more US passport, self imposed exile from the USA.
US Citizen permanent resident ex-pats are going to be hit by a pile of bricks after the deer in the headlight moment. They will be terrified of renewing their little blue book.
As far as a political/legal success in the USA, we are probably limited to some Senator inserting language in the middle of a 5,000 page bill that says, “For purposes of Fatca and FBAR, foreign financial account is defined as a financial account not in your country of residence.”
@George
You wrote:
“As far as a political/legal success in the USA, we are probably limited to some Senator inserting language in the middle of a 5,000 page bill that says, “For purposes of Fatca and FBAR, foreign financial account is defined as a financial account not in your country of residence.”
That means expats living in places like Ukraine, Egypt, Venezuela, South Sudan, or any other frontier country will still be screwed if they keep their earnings in the nearest neighbouring stable jurisdiction.
Expats do in fact live and work in such places.
I wonder on what grounds they intend to challenge FATCA. My own guesses would be mere speculation.
@FromtheWilderness, “That means expats living in places like Ukraine, Egypt, Venezuela, South Sudan, or any other frontier country will still be screwed if they keep their earnings in the nearest neighbouring stable jurisdiction. ”
Yep. To craft some simple language to bury in a bill I think is not possible to cover that contingency.
Just like in the Charter Challenge in Canada, I think that Canadian Citizens can be protected but in the end permanent residents I think going are under the bus.
But just because I think the above is the path, does not mean I like it.
@NorthernShrike, give us your guess. 🙂
If this fellow from Republicans Abroad is serious (and he certainly appears to come from a serious firm), he should go after the whole rotten edifice and not merely its most recent excresence.
If the US were serious about attempting to apply CBT world-wide, then it would be incumbent upon them to make a serious effort to apply it in such a way as not to discriminate unduly. A very short survey of the reporting requirements, investment prohibitions etc. that serve to make it virtually impossible to live outside the US and be in compliance without suffering massive inconvenience and detriment relative to similarly situate homelanders ought to make a compelling case that THIS CBT edifice does not pass constitutional muster has affording expats equal protection of the law. There are lots of people on this Board that could put together a list of such unfair impositions in their sleep. Homelanders are not required to report on all of their financial assets including routine chequing accounts where they live. Homelanders are not required to pass along their employer’s financial data to a foreign government if they happen to be a signing officer at the bank. Homelanders are allowed to save for their retirement, obtain significant tax benefits on the purchase of a home (if not its sale as in Canada), save for retirement, belong to their employer’s pension plans, save for their children’s education etc and are not subject to crippling threats of penalties for failing making mistakes in filing returns. Homelanders are not required to conceal their nationality if they go into business with a neighbour lest their partner eject them from the business for sending the businesses’ financial data abroad and making it subject to discriminatory restrictions and risk. Even a cursory run through the minefield of IRS and Treasury reporting and filing obligations associated with an AVERAGE life outside the United States ought to satisfy even the most blinkered Homeland judge that the rules and regulations applicable to those living outside the US trying to live a normal, average life are vastly more oppressive, intrusive and restrictive than those applicable to a similarly situated homelander. When the US determines to apply its laws extraterritorially to its own citizens, it must be mindful of the Afroyim injunction that Congress can make no law stripping an American of citizenship against his or her will (derived from the 14th Amendment),. 4th Amendment rights to be secure against unreasonable search and seizure (mandatory disclosure of shareholdings and accounts in one’s own hometown without reasonable cause or connection to a harm – homelanders don’t do so and are not presumed guilty of tax evasion just for opening a bank account, setting up a routine estate planning trust or going into business as an entrepreneur), the 8th Amendment rights to be secure from cruel and unusual penalties (again – non-disclosure penalties that are potentially multiples of asset values without regard to any actual tax owing or evaded) and of course the equal protection of the laws (14th) since the whole tax edifice protects the reasonable right of homelanders to earn a living and make provision for their families while imposing very serious limitations and restrictions on that basic right to the means by which US citizens residing outside the US are able to do that same thing. If taxation is justified based on citizenship, then the tax edifice should make no distinctions other than as are strictly necessary based on residency. This entire edifice has clearly been established with a presumption that non-resident citizens are guilty of something – if not treason, than money laundering) – and need to be strictly controlled in a manner that is a quantum leap more restrictive and oppressive than the impositions society makes upon homelanders. That is BEFORE one even begins to assess the fact that the edifice of laws and programs FUNDED by those taxes is almost universally residence based (from food stamps to medicare to roads and bridges).
FATCA is just the straw that broke the camel’s back. The fact that thousands of Americans are renouncing and the quasi-totality of Americans living abroad are engaged in civil disobedience (if you consider the US has jurisdiction in the first place) is pretty convincing evidence that the US has utterly failed in meeting the constitutional prerequisites for assuming jurisdiction to tax non-resident citizens. My “civil disobedience” statement is based on the fact that the US only receives “international” tax returns or forms claiming the foreign tax credit or earned income exclusion from about 250,000 tax payers – a number which is a tiny fraction of the 7 or more million potential taxpayers whom the US should in theory be hearing from each year.
Cook v Tait refers to bi-lateral obligations. I think people have mistakenly assumed that they have to measure benefits- bridges, roads etc as a basis for taxation. I think it can be argued the MINIMAL obligation of the US if it wishes to assume the right to tax non-resident citizens, it must assume the burden of doing so in a manner which is not an indirect attempt to force them into relinquishment and a tapestry of regulations the aggregate impact of which is to deny them equal protection.
One could have more fun with the arguments in looking at the destination of income tax revenues. Why should entitlement to Obamacare, foodstamps, Medicare and the like be based on residence if non-residents and residents are intended to contribute on an equal footing? I dare say that one would be hard pressed to find an instance of even a dollar of expenditure unambiguously allocated to provide services to US citizens resident abroad. Consular services are primarily intended to assist VISITORS and not residents (as well as to promote American business interests). If they happen to have the odd bit of utility to resident citizens, it is an accident not by design.
If the fellow is going to make a serious stab at FATCA because it is causing Americans abroad to be turfed by their bankers and brokers, he should take a stab at the disease, not merely its most recent symptom.
I wish the fellow the best of luck, but I am not holding my breath!
Good for them, but I wonder how successful they can be given that as expats, we have precious few rights while outside the American city limits in comparison to our obligations.
The irony is that the greatest non-partisan effort being made by any group of Americans will be from abroad.
I wasn’t sure who Michael DeSombre is but this explained it:
https://www.abolishfatca.com/live/NRSC_Portman_Letter.pdf
http://www.republicans-abroad.org/fatca/
“Michael George DeSombre was elected Chairman of Republicans Abroad Hong Kong in December 2012 after serving on the board as vice-Chairman since 2008. Mr. DeSombre is a partner of Sullivan & Cromwell, a global law firm headquartered in New York, and has been resident in Hong Kong since 1997.”
Additionally, http://www.sullcrom.biz/lawyers/MichaelG-DeSombre/.
RO should launch a legal challenge for CBT and FBAR as well. The toxic trio (CBT, FATCA and FBAR) amounts to nothing short of a financial death penalty for expats.
The Democrats continued support of FATCA and CBT is proof they are communists in all but name.
I’ve been around politics for many decades now and feel I can read the tea leaves. Ignore the propaganda, FATCA is dead. Only 30 +/- consignees and most are secretly now wishing for the destruction of America, MAKE NO MISTAKE. Those who think the Repugnicans are concerned just about overseas ‘citizens’ are myopic in their understanding of the overall damage this is already doing to America overseas. They have other reasons for wanting IRS reform.
BTW if anyone has any connections in Belgium or the area I am trying, without success so far, to find out the nationality of the banker murderer to see if there is any connection to bank account closures. The Lichtenstein murderer is from Lichtenstein sadly. I’m appealing to our friends in Europe to do some investigations in order to get more details.
For those who might get locked in battle with the IRS some day this is the lawyer you want to talk to
Donald L. Korb
Washington, D.C.
+1-202-956-7500 +1-202-293-6330
New York
+1-212-558-4000 +1-212-558-3588 korbd@sullcrom.com Vcard
He is a partner in Sullivan and Cromwell where Michael DeSombre works
“Sullivan & Cromwell’s Tax Group works with clients on all aspects of their tax controversies, from the audit level, to the administrative appeals level, to litigation in court.
The Group seeks to manage and resolve tax disputes for its clients without resorting to costly and time-consuming litigation. S&C believes that it is far better to approach tax controversies with a view toward resolving the matters at the earliest possible stage of the process and at the lowest possible cost to the client, both in terms of any payment to the Internal Revenue Service and the expense of achieving such results. The ultimate goal is to eliminate entirely any proposed adjustment, a result the Firm has often achieved for its clients.
The Firm’s work draws upon two particular strengths:
The Tax Group consists of lawyers who have extensive knowledge of the tax law as well as the workings of the IRS, including a former chief counsel for the agency.
The Litigation Group brings its advanced and effective approach to corporate litigation to help the Tax Group lawyers develop the most effective way to resolve their cases.
Clients benefit from a team of knowledgeable tax lawyers and accomplished litigators working in close cooperation—the best of both skill sets and the most effective response to increasingly sophisticated and confrontational IRS challenges. ”
http://www.sullcrom.biz/Tax-Controversy-Practices
Last resort? Keep it in mind.
Michael deSombre = “Michael DeSombre is a major Hong Kong name.”
http://www.sullcrom.biz/lawyers/MichaelG-DeSombre
He just might be a key person preventing HK from doing an IGA
” Despite several nations’ embrace of the FATCA, China has continued to delay negotiations with the U.S. Treasury over whether or not to allow Chinese financial institutions to report U.S. taxpayer or U.S. firm information to the United States Government. – See more at:
Business Intelligence from Dezan Shira & Associates – http://www.china-briefing.com/news/2014/02/05/china-and-the-u-s-foreign-account-tax-compliance-act.html
Have yet to be able to find direct information about this. No link on the tweet. Nor anything on a general search. Guess we have to wait.
Unless the US president personally posts here to apologize, I’ll remain convinced that America is intentionally racist against the American diaspora.
Well, at least he is a lawyer…..
They communicate on facebook. There is an email there to talk with them directly. That tweet came out last night and their site is not updated upon it yet.
The organization is quite modest.
https://www.facebook.com/republicansoverseas
The effort is real and participatory as is the fundraising for that challenge.
The organization of their opposition, Democrats Abroad, is an entirely different structure, where Democrats abroad is baked into the entire Democratic party structure. Republicans Overseas is not structured that way.
See No Evil? MSM uncertain who’s behind Odessa inferno
‘Get out, fascists!’ Angry Kramatorsk citizens drive Kiev forces away
The world is hours from exploding into another world war and Putin doesn’t want it but the Levins and McCains (hillbillies lol) are pushing the buttons
Reason I post this is because this day marks the start of WW4
Ukraine Crisis – What You’re Not Being Told
Shocking US Collusion with Svoboda—-More than they Bargained for
Now watch the mainstream media pile in to toe the party line and attack this effort.
One has to ask if FATCA can pass US Constitutional muster?
You are treating two types of Americans differently. If they had imposed the Form 1099 regime on foreign institutions mirroring what happens in the USA maybe it would have worked.
But instead of asking for capital gains, dividend and interest payments they are asking for account balance information. What they are asking for does not help determine accurate tax liability.
I would suspect homelanders would yell loudly if account balance information was handed over.
They want account balance info for FBAR confiscations. FATCA violates the 4th amendment and FBAR violates the 8th amendment.
The problem however is that very few people in the US give a rats ass about the constitution.
Its all about how much money can be grabbed on behalf of one constituency or another.
@FromTheWilderness, yes you have pointed out the elephant in the room.
I have been thinking if FATCA would encourage compliance or discourage compliance. Unlike compliance measures taken elsewhere which provide amnesty from penalty, I think more people will be driven away. Like you, I scratched my head saying this is a FBAR penalty generator.
I think there will be a wave of people getting their CLN and saying they are done, no more forms and no travel to the USA. They will say they are middle class, little gain for the homeland but big expense to collect.
I think there will be a wave of “undocumented relinquishers” who do not even want CLN exposure. They will relinquish and say they are done, no more US passport, self imposed exile from the USA.
US Citizen permanent resident ex-pats are going to be hit by a pile of bricks after the deer in the headlight moment. They will be terrified of renewing their little blue book.
As far as a political/legal success in the USA, we are probably limited to some Senator inserting language in the middle of a 5,000 page bill that says, “For purposes of Fatca and FBAR, foreign financial account is defined as a financial account not in your country of residence.”
@George
You wrote:
“As far as a political/legal success in the USA, we are probably limited to some Senator inserting language in the middle of a 5,000 page bill that says, “For purposes of Fatca and FBAR, foreign financial account is defined as a financial account not in your country of residence.”
That means expats living in places like Ukraine, Egypt, Venezuela, South Sudan, or any other frontier country will still be screwed if they keep their earnings in the nearest neighbouring stable jurisdiction.
Expats do in fact live and work in such places.
I wonder on what grounds they intend to challenge FATCA. My own guesses would be mere speculation.
@FromtheWilderness, “That means expats living in places like Ukraine, Egypt, Venezuela, South Sudan, or any other frontier country will still be screwed if they keep their earnings in the nearest neighbouring stable jurisdiction. ”
Yep. To craft some simple language to bury in a bill I think is not possible to cover that contingency.
Just like in the Charter Challenge in Canada, I think that Canadian Citizens can be protected but in the end permanent residents I think going are under the bus.
But just because I think the above is the path, does not mean I like it.
@NorthernShrike, give us your guess. 🙂
If this fellow from Republicans Abroad is serious (and he certainly appears to come from a serious firm), he should go after the whole rotten edifice and not merely its most recent excresence.
If the US were serious about attempting to apply CBT world-wide, then it would be incumbent upon them to make a serious effort to apply it in such a way as not to discriminate unduly. A very short survey of the reporting requirements, investment prohibitions etc. that serve to make it virtually impossible to live outside the US and be in compliance without suffering massive inconvenience and detriment relative to similarly situate homelanders ought to make a compelling case that THIS CBT edifice does not pass constitutional muster has affording expats equal protection of the law. There are lots of people on this Board that could put together a list of such unfair impositions in their sleep. Homelanders are not required to report on all of their financial assets including routine chequing accounts where they live. Homelanders are not required to pass along their employer’s financial data to a foreign government if they happen to be a signing officer at the bank. Homelanders are allowed to save for their retirement, obtain significant tax benefits on the purchase of a home (if not its sale as in Canada), save for retirement, belong to their employer’s pension plans, save for their children’s education etc and are not subject to crippling threats of penalties for failing making mistakes in filing returns. Homelanders are not required to conceal their nationality if they go into business with a neighbour lest their partner eject them from the business for sending the businesses’ financial data abroad and making it subject to discriminatory restrictions and risk. Even a cursory run through the minefield of IRS and Treasury reporting and filing obligations associated with an AVERAGE life outside the United States ought to satisfy even the most blinkered Homeland judge that the rules and regulations applicable to those living outside the US trying to live a normal, average life are vastly more oppressive, intrusive and restrictive than those applicable to a similarly situated homelander. When the US determines to apply its laws extraterritorially to its own citizens, it must be mindful of the Afroyim injunction that Congress can make no law stripping an American of citizenship against his or her will (derived from the 14th Amendment),. 4th Amendment rights to be secure against unreasonable search and seizure (mandatory disclosure of shareholdings and accounts in one’s own hometown without reasonable cause or connection to a harm – homelanders don’t do so and are not presumed guilty of tax evasion just for opening a bank account, setting up a routine estate planning trust or going into business as an entrepreneur), the 8th Amendment rights to be secure from cruel and unusual penalties (again – non-disclosure penalties that are potentially multiples of asset values without regard to any actual tax owing or evaded) and of course the equal protection of the laws (14th) since the whole tax edifice protects the reasonable right of homelanders to earn a living and make provision for their families while imposing very serious limitations and restrictions on that basic right to the means by which US citizens residing outside the US are able to do that same thing. If taxation is justified based on citizenship, then the tax edifice should make no distinctions other than as are strictly necessary based on residency. This entire edifice has clearly been established with a presumption that non-resident citizens are guilty of something – if not treason, than money laundering) – and need to be strictly controlled in a manner that is a quantum leap more restrictive and oppressive than the impositions society makes upon homelanders. That is BEFORE one even begins to assess the fact that the edifice of laws and programs FUNDED by those taxes is almost universally residence based (from food stamps to medicare to roads and bridges).
FATCA is just the straw that broke the camel’s back. The fact that thousands of Americans are renouncing and the quasi-totality of Americans living abroad are engaged in civil disobedience (if you consider the US has jurisdiction in the first place) is pretty convincing evidence that the US has utterly failed in meeting the constitutional prerequisites for assuming jurisdiction to tax non-resident citizens. My “civil disobedience” statement is based on the fact that the US only receives “international” tax returns or forms claiming the foreign tax credit or earned income exclusion from about 250,000 tax payers – a number which is a tiny fraction of the 7 or more million potential taxpayers whom the US should in theory be hearing from each year.
Cook v Tait refers to bi-lateral obligations. I think people have mistakenly assumed that they have to measure benefits- bridges, roads etc as a basis for taxation. I think it can be argued the MINIMAL obligation of the US if it wishes to assume the right to tax non-resident citizens, it must assume the burden of doing so in a manner which is not an indirect attempt to force them into relinquishment and a tapestry of regulations the aggregate impact of which is to deny them equal protection.
One could have more fun with the arguments in looking at the destination of income tax revenues. Why should entitlement to Obamacare, foodstamps, Medicare and the like be based on residence if non-residents and residents are intended to contribute on an equal footing? I dare say that one would be hard pressed to find an instance of even a dollar of expenditure unambiguously allocated to provide services to US citizens resident abroad. Consular services are primarily intended to assist VISITORS and not residents (as well as to promote American business interests). If they happen to have the odd bit of utility to resident citizens, it is an accident not by design.
If the fellow is going to make a serious stab at FATCA because it is causing Americans abroad to be turfed by their bankers and brokers, he should take a stab at the disease, not merely its most recent symptom.
I wish the fellow the best of luck, but I am not holding my breath!