James George Jatras details the complete absence of legal authorization for FATCA Intergovernmental Agreements in a new opinion piece for Forbes, as well as on his own blog site, repealfatca.com. As willfully ignorant countries around the world line-up to needlessly sign-away their sovereignty and privacy rights, it is important to remember that all FATCA IGA’s are mere pseudo-treaties, built on a legal foundation of quicksand. Only Congress has the constitutional authority to enact international treaties, not the executive branch – not Treasury, not the IRS and certainly not Obama, no matter how many executive orders he may sign with a Louis XIV-like flourish.
‘Unauthorized FATCA “Intergovernmental Agreements” Are Part of Obama’s Executive Overreach’
Why would any country that’s going to the effort it is to implement a program to expose the many means by which a taxpayer can hide money offshore allow certain types of bank accounts to go unreported under FATCA, especially ones that are likely to generate tax revenue such as through Canadian TFSA’s, RDSP’s and RESP’s? Were these carve-outs really such a hard fought concession by the Canadian government, or is the Treasury Department softening it’s stance by not going after the retirement savings of its own citizens living in other countries? It’s perplexing to say the least!
This Forbes article has comments kind of hidden. You need to first click on “+Comment now” Then under “Post Your Comments” and “Comments” you need to click on “expand all comments.” Repealfatca.com does not allow comments.
All sounds like a really good article – I hope the reach is good.
@Bubblebustin. RE: not requiring FATCA reporting of retirement accounts. That is not a special Canadian concession but applied globally. It is part of the “smoke and mirrors of it.” Some government officials thought that removing retirement accounts from FATCA FFI reporting that this would remove the requirement of USP to report on retirement accounts and paying double tax on them. There is some confusion out there. This “fake” kind of worked. Depending on the country there are a few reporting forms and tax to pay, else risk major compliance penalties (but at least now no FATCA 30% witholding penalty risk). Now perhaps the annual gain in the retirement account will be put on top of earnings to help reach the Obamacare investment tax thresholds that act to put married people filling separately into the lowest threshold (as in you have a foreign spouse).
Perhaps the USG figured that the local government have locks and lots of restrictions on these accounts so less likely to be used by tax cheats based in the U.S.
Reporting and taxation of retirement accounts need to be explicitly covered and excluded in the Canadian-US tax treaty – then that would represent a “concession.”
@bubblebustin, perhaps the faux reporting only ‘carve-out’ for the registered accts allowed the Canadian government to appear to save some face, while the US knows it can still track down USPs via their other principle chequing and other operating accounts that everyone needs in order to receive wages, and pay for expenses – and then inquire further if they choose to? Because registered accts and savings eventually end up in chequing and daily savings accts when they are cashed in. And, as a bonus, IF the FFIs don’t choose to report them (since the wording does not forbid it, it just doesn’t require it?) and the individual doesn’t either, the US can try to extort some penalty revenues later for non-reporting? Did the US just let this one go and deem the IGA sufficient because it needed Canada as a domino to make others fall in line faster before the July 1st deadline?
We don’t know, but seems to me there is definitely a story behind this, but neither the Harper lackeys in charge of implementing this at the CRA and Finance nor Con MPs are telling.
In terms of implementation since July 1st, I have seen banks requiring existing customers to fill out a FATCA questionnaire (e.g. place of birth, citizenships you hold, green card, etc) when the existing customer wants to open a new fixed deposit account. HSBC actually has the FATCA questions on it’s on line system when an existing customer wants to open a time deposit using funds from his/her existing account.
Has anyone seen the situation where a FATCA questionnaire must be filled out to close an account? I have not, but I don’t see anything that would stop a bank from doing that…..
@bubblebustin Those carve outs were typical in the IGAs according to govts responses that these could not be tax evasions. For all countries IGA negotiations, the Treasury succeeded with their divide and conquer strategy upon each country. The Treasury persuaded (threatened & bamboozled) all countries that the FATCA transfer was a govt to govt issue. Then they persuaded the govts that what USA did with its own citizens (persons) was not of any country’s concern, and pointed to all the dual-tax treaties each had signed under the Clinton era which solidified US’ right to shake down its own citizens where-ever they are in the Milky Way. As a result of that dividing tactic, no governments have acknowledged any effects which occur after the FATCA reporting is performed. Each govt states the talking point that it is strictly a matter between USA and its citizens (despite that “persons” are not citizens). This method was thought through under the Dick Harvey (FATCA papa) and was implemented in the program worldwide.
@Steve…. https://www.mscu.com/Banking/FATCAMemberInformation/ This is the Mennonite credit union referring to Nazi questions. It sounds like the Green Police coming after us, separating us then prosecuting us fully……
Steve; “Has anyone seen the situation where a FATCA questionnaire must be filled out to close an account?”
Give the compliance jackals some more time on that one. Actually it does represent a change in circumstances so in the “spirit” of FATCA IGA, why not……
Also, if a FI can ask your place of birth which smells of discrimination, if that is fine, then asking parents of birth is equally fine.
They justify asking place of birth to determine citizenship but that goes back another step and asking parents place of birth is also equal.
Possibly the only lawful questions could be……
Your Nationality (list all)?
Where are you tax resident (list all)?
and/or
Are you a US Citizen? yes/no
If yes, did you relinquish your US Citizenship?
—
I have yet to find a single FI that has an account application in paper or online that asks if you relinquished.
@NativeCanadian, this has been a long time coming but from this side of the ocean, thank you for all your hard work in support of Brock, ADCS and everything else.
I was asked questions yesterday on opening a new account with First Direct (an HSBC subsidiary). They asked what nationality I was and whether I hold any other nationalities. It was done over the phone. They didn’t ask place of birth or I would yet again have had to spend £5-10 getting a copy of my CLN certified.
How about basics? It’s my understanding the Canadian Government doesn’t require ‘place of birth’ for Know Your Customer (KYC) rules (to stop money laundering) so is the bank allowed to asked more than KYC requires?
Is there a law requiring the bank to provide at least some level of financial services?
If KYC doesn’t require place of birth and you don’t answer it, can the bank deny you financial services legally?
Also is FATCA perhaps a profit opportunity? If the bank denies you financial services can you sue them on discrimination grounds asking for compensation?
Until FATCA goes to the Supreme Court, there must be a way to punish the banks financially for FATCA.
When I go back abroad in the next couple of months I’m going to look into this. Walk into a FFI, try to open an account, refuse to answer place of birth, and if they deny me services, what is the local law concerning providing services then either go to small claims court or the ombudsman.
If there’s compensation available, then visit every bank under the sun and mount up the cases and see what happens.
Wouldn’t it be nice to get £1000 or more off each bank?
It’s not a long term answer for FATCA, but if there’s a few quid in it today why not?
@Edelweiss – You’ve done the questions on the phone, but are they going to be asked to walk into a HSBC branch to do the Know Your Customer (KYC) procedures?
When you show your passport or driver’s licence that’s when the place of birth will become known. So will the person at the branch then have a separate secret screen to enter that information?
Remember you’ve voluntarily given them your passport etc to look at and if they can see your place of birth they can probably legally skirt the issue without asking you the FATCA question.
If you have a British Passport with an American place of birth, go into the branch with the place of birth redacted and see how they react.
Would they then be put into the position that UK KYC regulations don’t require place of birth and refusing you financial services is also breaking the regulations?
At that point you may want to insist that KYC rules do not require your place of birth and the bank is breaking the law by not offering you financial services and see what happens.
If you give them a valid ID (even redacted) and the KYC regulations don’t require place of birth the bank may have a problem.
@Edelweise – Here’s what UK banks require for identification to open a UK account –
http://www.pwc.com/en_gx/gx/financial-services/assets/pwc-kyc-anti-money-laundering-guide-2013.pdf
Scroll down to page 143 for the UK.
It looks like the UK, KYC rules only requires full name, address, and date of birth, not place of birth.
@JC, badger, Mark Twain
I’m going to stick to my original theory that Canadian banks pushed for the exemptions so they could still profit from the sale of these financial products to USP’s, and that the US only agreed to it so they can tax us on them later. By acting as middle man and continuing to obfuscate the facts, while at the same time neglecting to address these so-called ‘safe’ investments in the treaty, I’d even go so far as to say that the Canadian government is complicit in this fleecing.
@Deckard1138
Thanks for posting. Of course, the real debunking was by Allison Christians. I am just trying to package it for DC consumption, hopefully get some action to nullify the IGAs (including the one with Canada, of course). If the IGAs go, FATCA is history. Please also note on my posting of the Forbes item at http://www.repealfatca.com my plug for the lawsuit in Canada.
@Jim Jatras, do you have any update on the article we saw in the Wall Street Journal about the Jim Bopp lawsuit to nullify the IGAs (and prove FBAR and the amount of info FATCA is required to gather unconstitutional).
So far, it looks like he only provided his legal opinion. When can we expect the lawsuit to start in the US. So far, the only lawsuit we heard about that are about to start might be about the IRS allowing people getting Obamacare through Federal Exchange to get subsidies, when the law explicitly said that subsidies were for state exchanges. It is surprising not to have heard of even fundraising from Solomon Hue to help pay for the FATCA lawsuit.
@noone
Short answer is, I don’t know. As you say, last I heard they were looking for funding for their legal action. I don’t have any details on that, though.
@noone
The only place where I’ve seen something related to the timing of the Bopp action is in an interview posted on the Republicans Overseas facebook page: https://www.facebook.com/republicansoverseas
Scroll down to the May 27 posting of Nicolette de Joncaire’s interview of Edward Karr, Chairman of Republicans Overseas Switzerland. (There are two interviews. It’s the top one on Fatca). Or go here: https://www.youtube.com/watch?v=64ZljJjWvEU (Edward Karr on Fatca)
Around 5:05 of the interview, Ms. Joncaire queries Karr about the timing and duration of the lawsuit. He notes that it will take a couple years because the case has to make its way to the Supreme Court.
@ George. Thank you. I think anyone who truly cares about their spouse, family and their well being would work hard to stop the terrorism and destruction of innocent people. Lets be clear, the USA government knows what this is doing, they know dam well who it really is targeting. They have bigger guns than anyone and they are using them against the world and feel the world cannot stop them. The people’s fight is just a beginning. For us here, our life has been adjusted to accept panic attacks, anger outbursts feelings of total deception, complete and utter failure of a government to protect Canadians rights etc etc. Someone has to pay for this through court. I hope the USA gets nailed in international court just as the Canadian scoundrels who committed TREASON get their just deserts here too. On with the challenges!!
@Sally, Jim Bopp update. See post by Charl at 10.58 pm today on the lead story of this website.
@Native perhaps a bit too forceful language. Note Jim Jatras comment about ‘packaging for DC consumption’ which would probably involve a bit easier language that would not cause those you wish to impress/convince to immediately put their “shields up.”
This is what I believe really happened with CBT and FATCA – those designing these did not bother to consider impacts beyond the boarders of their United States. Kind of out of sight out of mind. The key focus was on US citizens resident in the US with maybe an account or two overseas. Not really thinking/caring about the case of Americans resident overseas.
Same with the Canadian government tax treaty giving in to CBT – not really intentional discrimination. It needs to be clearly pointed out to them.
For many tax is kind of tough to comprehend, then the interrelation of two tax jurisdictions make it more of a challenge, especially if there is a tax treaty in between that according to US language – ‘prevents double taxation.’ Where those impacted know these words are doublespeak and faux.
However, your sentiment may apply particularly to this FATCA where it appears those architects were very cleaver and knew what they were doing in regards to Americans abroad. There was not good process: the FATCA legislation got tacked onto another bill without any debate yet with very significant global implications. Then the IGAs werenegotiated by the Obama administration without review by the Senate, who by law needs to review and approve international treaties. Also that FATCA has very harsh penalties for not filling out a sheet of paper and in no relation to any tax debt owed, potentially violating the bill of rights. Then there is also the unreasonable Search and Seizure without warrant of people’s money any private information. Those involved should be held to account.
@Bubblebustin The Canadian banks and government had ‘a gun pointed at their heads’ by the US with short time frame to agree. I think that there should be some understanding of this. It is not just Canada that caved but most all governments. However, I believe the Canadian government needs to atone, especially as they tried to hide it all and hope it would go away when if they were a proper government they should have warned all those Canadians that would be impacted. Perhaps they were too embarrassed or lazy to do this as it would raise questions.
And in terms of the Canadian banks as their customers are here in Canada who do you think that they would naturally side with the Canadian People or the American People? They would go with the Canadians. It is my belief that we need to be open to the Canadian Financial institutions and try to get them to contribute to ADCS.
@JC
I guess we’ll see how willing the Canadian government is to ‘atone’ when they are the defendants in a lawsuit against them.
@Bubblebustin The Canadian government will be forced to atone when they lose the lawsuit, hopefully earlier when some pressure mounts such as from the Human Rights Complaint. We may only hope.
@Don and @Edelwiss, remember most FIs in the list of acceptable identity documents let you use documents other than a passport or drivers license. Also, if you apply online your identity will be verified electronically.
Post 1 July, I opened a new savings account at a FI I had never dealt with. The application had place of birth, so I stated “that sounds and looks discriminatory under EU rules, someone will end up in court”, the person quickly said “we have to ask nationalities but place of birth is only voluntarily.” They then drew a line through it.
The clarity in all this is that a US Citizen who is an overseas permanent resident, is stuffed.
If someone has relinquished and does not have a valid US Passport, they can navigate the currents.
@Bubbles, “I’m going to stick to my original theory that Canadian banks pushed for the exemptions so they could still profit from the sale of these financial products to USP’s, and that the US only agreed to ”
The exemptions were in the boiler plate US Document that was on offer to every country on earth. There was nothing to push for, it was already in the template.
George,
Exploitation at its finest.