[We now have a NEW POST taking us up to February 1, 2015. This post will be retired from service.]
THE AUTUMN 2014 UPDATE
Dear Donors,
Together, we reached our goal of $100,000 to pay the November 1 legal bill 11 days ahead of schedule!
Thank you Canadian donors from coast to coast and our friends from around the world for your generosity, support and determination — and especially for not being afraid.
The name of our non-profit corporation is the “Alliance for the Defence of Canadian Sovereignty.”
We were very deliberate in including in our name the word “sovereignty”, which forms a cornerstone of our Claims against the Government of Canada.
Canada and dozens of other countries throughout the world gave into a bully because their “leaders” were afraid of harm caused by a trading “partner” — and they gave their sovereignties away.
Help us convince by example the Leaders and Governments of all countries worldwide that they should return their sovereignties back to their Peoples.
Please continue to support our lawsuit.
“Alone we can do so little. Together we can do so much.” (Helen Keller)
— Plaintiffs Ginny and Gwen, and the ADCS-ADSC team
Chers donateurs,
Ensemble, nous avons atteint notre but d’amasser 100 000 $ pour payer notre facture légale du 1er novembre 11 jours d’avance !
Un gros merci à vous, donateurs canadiens, et à nos amis de tous les coins du monde pour votre grande générosité, soutien et détermination. Et surtout pour votre courage.
Le nom de notre organisme sans but lucratif est « l’Alliance pour la défense de la souveraineté canadienne ».
Nous avons choisi délibérément le mot « souveraineté » puisqu’il constitue la base fondamentale de nos revendications envers le gouvernement du Canada.
Le Canada et des dizaines d’autres pays se sont pliés devant l’intimidation des États-Unis parce que leurs « leaders » ont eu peur des menaces de notre « partenaire » commercial. Ils ont donc vendu leur souveraineté à rabais.
Aidez-nous à convaincre les dirigeants et les gouvernements de tous ces pays qu’ils se doivent de remettre leur souveraineté à leurs peuples.
S’il vous plaît, continuez à soutenir notre cause.
« Seuls, nous pouvons faire si peu. Ensemble, nous pouvons faire beaucoup. » (Helen Keller)
— Ginny, Gwen et toute l’équipe de l’ADCS-ADSC
DONATE to www.adcs-adsc.ca (ADSC en français).
@Only a Canadian. Quoting from your previous comment:
“You bring some interesting points. However, I think the wholesale search and seizure of banking records based on citizenship, national origin, suspected or real PR status, possible overstay in the US, or other ‘indicia’ etc. without a warrant or probable cause or any evidence of wrongdoing is something else entirely.
Also, to be able to do such without notifying the account holders and not be accountable for errors unintended or otherwise strikes me as another big violation.”
I used to believe that the FATCA regulations would violate the rights and protections of multiple jurisdictions for the reasons you mention. Recently I posted a comment on another thread regarding the Australians’ examination of the rights issues in the IGA. In that comment I argued that exchanging information based on the presence of one or more US indicia is not the same as handing over the information of a US taxpayer, and therefore a violation of the rights of those erroneously identified. Since then, I have examined more closely the FATCA/IGA regulations and must admit that my reasoning was flawed.
The IGA permits Canadian banks (all FFIs) to treat accounts with US indicia as reportable, but it also offers them the opportunity to undertake further due diligence to establish whether the account does indeed belong to a US person. In most cases the account holder merely needs to tell the bank that she is not a US person, produce a piece of Canadian ID and sign an IRS form W8; in the case of a US birthplace indicium, a CLN is required, or a statement from the accountholder explaining why she is not a US citizen.
This is the point where privacy laws kick in. Privacy regulations (whether under a general right to privacy in a constitution, PIPEDA in Canada, POPI in South Africa etc.) will generally require the bank to protect the information unless specifically required to hand it over by law. So where the IGAs permit the bank to hand over account info with US indicia, the privacy laws will compel the banks to undertake the further due diligence requirements mentioned above. The same is true for low value accounts (<$50 000). Many may be concerned that their low value account information might be handed over to the IRS, as the banks will likely act with an abundance of caution to avoid 30% withholding and err on the side of over reporting. However privacy laws will constrain the banks in this regard.
So your objection to “the wholesale search and seizure of banking records” is probably unfounded; at least as far as seizure is concerned. Also it appears that the banks will not “be able to do such without notifying the account holders” and will be “accountable for errors unintended or otherwise” in accordance with each country’s privacy laws.
The statutory provisions against unreasonable search generally refer to physical searches and require just cause, search warrants etc. There is nothing to stop a bank from mining its own data, whether on a discriminatory basis or otherwise. I don’t think there would be an outcry if a bank released data showing, for example, the relative savings rates of whites, Latinos and African Americans. There would, of course, be a huge outcry if the account details of all black Canadians were identified and handed over to the IRS. What possible justification could there be for that?
I mentioned in my previous post that in the US, citizenship (or perhaps national origin more generally) is considered second only to race as objectionable in terms of discrimination. However, these rights are subject to limitation. Is the purpose of such discrimination legitimate, and is the magnitude of such discrimination proportionate to such legitimacy? For example, the identification of Japanese Americans as a potential threat by the US government during WW2 might be a legitimate form of discrimination when the country is at war with Japan, but the internment of that entire population in camps was certainly not proportionate.
The right of a state to collect its own taxes is sacrosanct in the sovereign community, and would almost certainly provide the required legitimacy criterion in all but the most egregious cases of discrimination (e.g. taxing only black people). Citizenship based taxation has a long history, even if it is confined to only two countries presently. Sovereign nations respect the right of others to formulate their own tax policy, so far without objection in the arena of international law. It seems likely that attempting to identify US persons under the IGA would pass the legitimacy test. As for proportionate, a bank searching its own records, and the ability of an account holder with US indicia to certify (under penalty of perjury) that they are not a US person, would seem to easily satisfy the proportionate criterion.
A few disclaimers: I’m not a lawyer, and my grasp of these nuanced legal points might well contain glaring flaws; also, I’m in the same boat as all of you guys (I’m an accidental American subject to CBT). I want these laws to be struck down as much as you do. Do not perceive my legal opinions here as in any way trying to undermine the enthusiasm that us Brockers are experiencing now that our complaints have found their way into the courts. I don’t represent the compliance industry; nor am I playing devil’s advocate. I am trying to shine a light on what are likely to be the actual legal arguments that will be debated in court. It might seem all doom and gloom from me so far, but there are other issues in our favour which I will try to address in future comments when I have time.
@George
“To be blunt, if the USA attempted to withold 30% of any countries FIs a trade war would break out.”
FATCA has already launched a trade war. Admittedly it is a trade war launched unwittingly. It is trade war launched by folly: without strategy or thought for consequence, and without measurable objectives, or any notion of what “winning” might look like. It is largely unreported but its effects are real and growing.
One of the principle weapons in a trade war is the embargo. In my opinion the world’s financial institutions are embargoing US persons not simply out of caution, but as a retaliatory measure.
@Domino….. A couple other concepts to scratch around……
1.) The FATCA IGA requires a search for US Place of Birth. Most FIs worldwide never asked place of birth, likely fearing discrimination. A person with a US Place of birth is as equal a US Citizen as two parents with a US Place of birth or two parents who are simply US Citizens.
If I wanted to create a non-discriminatory IGA, I would require a due diligence that asks the account holders place of birth, plus parents place of birth and citizenship, all part of the KYC rules.
I suspect that line of thought was circulated at Treasury but was knocked down as the bridge too far. Think of the uproar!!
2.) Think of the “CONVENTION ON CERTAIN QUESTIONS RELATING TO THE CONFLICT OF NATIONALITY LAWS THE HAGUE – 12 APRIL 1930.”
A Canadian in Canada with clinging US nationality, under the Law of Canada can only be one thing and that is Canadian. The closest to dual nationality is that a Canadian is also a Commonwealth Citizen under Canadian Law.
Under Canadian Law you are either Canadian or an Alien.
Dual Citizenship is not something that exists in law. Canada does not recognize the US Citizenship that a foreign power bestowed on its own Canadian Citizens inside the territory of Canada.
@Domino, something else to chew on.
Next month Scotland will vote on a referendum to leave the United Kingdom. Lets assume they do.
The draft Constitution provides that anyone who was born in Scotland shall automatically be a Scottish Citizen.
There are people who were born in Scotland who have emigrated to Canada and taken on Canadian Citizenship. Some may have even renounced their British Citizenship (by mail).
Does the imposition of Scottish Citizenship on a Canadian Citizen who simply happened to have been born a British Citizen in Scotland, have any legal bearing outside the territory of Scotland? I have to say NO, it has no legal bearing or effect under the law of Canada or by any international norms.
I was unfortunately born in the USA not by choice. You who are agreeing with the IRS money grab explain how the USA has the right to force me to file US taxes. I am a Canadian citizen. I work here pay Canadian taxes and live by Canadian law. I do not ever plan to set foot or fly over American soil. When the US government will not raise taxes on the richest Americans who can afford to pay, why should I???
A few comments:
@Polly – ability to pay for oil is not a material factor in projecting a post-Court Challenge victory world. Even if Canada were a net importer of oil (it is not), oil can readily be imported against payment in any tradeable thing, be it Euros or bushels of wheat. It may be priced in USD (for now), but it can be paid for in any tradeable thing the parties agree to or, failing agreement with the seller, a middleman for a small fee would insert himself into the transaction (pay the producer in USD, receive C$ from the buyer and work the exchange himself). As I noted above, the Bank of Canada could readily establish a FATCA-exempt Crown Agency to act as a middeleman on foreign exchange transactions for a small break-even fee but any private sector entity that is FATCA compliant (because not having depositors, for example…) would do the trick. The logistics might be annoying, but they are by no means difficult.
Canada does in fact import some oil products (especially refined products in markets where there are no refineries) and exports lots more. On balance, we are a net exporter. A no-IGA world would certainly create disturbances in the US-Canada trade relationship and be damaging to BOTH sides. I wouldn`t venture to guess who would lose more, but I certainly don`t assume it would be Canada given the high level of US direct investment here which is as susceptible to retaliatory sanctions as Canada`s banks would be in NY.
The point is it is a no-win and very expensive game to defend a point the US never wanted to defend in the first place. The selling point for FATCA was always catching billionaires from the Hamptons hiding money in Switzerland, not pensioners in Lethbridge whose mother happened to be studying in the US at the time of their birth. The US tax treaty already recognizes they can`t go after Canadian citizens (I think the Charter would very likely compel the extension of that protection to legal residents as well, but that is for another day). The US has already accepted that there are limits to their extraterritorial enforcement of CBT. FATCA was almost an accidental long-arm statute passed with little to no analysis. If our constitution prohibits them from doing what they are seeking to do in terms of violating privacy and anti-discrimination rights in Canada – rights which the US Bill of Rights also guarantees to Homelanders – it is impossible to imagine that they would ignite a fire to defend a principle they don`t actually believe in. Fig trees have many leaves – one will be found to their liking.
I need to emphasize over and over and over: the 30% sanction will NEVER be applied anywhere ever except by accident. I certainly don`t discount people entering into transactions they feel are not subject to it and then being arbitrarily hit with it after the fact. Anybody having a transaction that they KNOW is going to be subject to the 30% will so arrange their affairs as to not be subject to it and there are hundreds of quite legitimate ways to do so. They are not without cost, but the cost will be tiny compared to 30%. The real point of the 30% is the threat of a) having that permanent transaction cost acting as a fiscal drag; and b) being frozen out of ability to participate in and profit from the US market.
Commercial players don`t want to choose or, to be more precise, choose to pay the compliance costs rather than face the permanent transaction fees and exclusion from profit opportunities. If they didn’t, they wouldn’t have lobbied for the IGA but would have simply not registered. I never expected them to defend my rights and I don’t blame them for the choice they made ultimately in their own interest (Jim Jatras may accuse them of lack of imagination and intelligence for having failed to fight FATCA in the US with K-Street lobbyists, but not our issue here either).
However, let’s play forward the post-Court Challenge tape a frame or two. Bank of Canada sets up Bank of Canada Clearing Bank and acts as an intermediary clearing all US dollar transactions that our chartered banks currently handle. That is hundreds of billions of dollars per year. The cost will be a few basis points as I noted (far less than 1%). Retail customers, who are already being gouged to the tune of 4-5% on FX transactions at their banks would not notice, but the price would likely go up somewhat there as well. Canadian banks will have been given a year to unload their US operations at a loss and will sue the USG under NAFTA (wait 20 years for judgment).
Forward another frame. Over time, Canadians with market power start to tell their US customers: pay in C$ please, your laws are too difficult. Before, it was no problem and people readily agreed to price in US$ because it was easy and convenient. Now, not so much. As US customers develop expertise in doing this, more and more Canadians are able to demand the same because now more business is done in C$ anyway. A higher and higher percentage of transactions formerly conducted in USD by default is now in C$ because there is a REASON to do the transactions in C$ (formerly there was not and the USD won by default). Canada`s trade with the rest of the world – not insignificant – now gets priced in C$, Euros, Renminbi, etc as well by precisely the same process (USD will still be used, but remember, higher transaction costs…). Canadians will stop buying US denominated debt (sorry US Treasury, sell your debt to China and see how much more of it they will accept…). Canadians can still access the US debt market to ISSUE debt but that market would likely atrophy some. US loses out on source of higher yield and the debt market becomes even more US-centred and less diversified as a result. US Banks, who are already the 2nd largest purveyor of “Asset Based Lending” in Canada (B of A, Wells and Comerica have big presences here) will lose their business overnight and Canadian banks will pick that up in partial compensation for what they will have lost in opportunities in NY.
In short, the consequence of pushing an OECD country with material international trade out the door to defend FATCA will be a) sanctions against US banks and companies who are heavily invested in Canada; b) acceleration of the decline of the USD worldwide ; c) unknowable consequences in terms of poisoning the relationship with an otherwise trouble-free border country for the past 200 years. Upside? Even the US knows that it has a thin hand to play in trying to FORCE extraterritorial compliance. Meanwhile, GATCA will be perking along offering similar co-operation without extortionate pressure predicated on residence. It would never be worth the candle to the US who would absolutely accept any reasonable fig leaf that gave them something rather than nothing – they never expected FATCA to deliver any revenue from Canada in the first place after all!
All of the above is to say that alarmists paint a one-dimensional and ill-thought out worst case scenario. While I believe that the Emperor is largely naked on this, it is not our job in asserting a fundamental right to game out all of the possible scenarios for how the world might look were our fundamental rights to be respected. We are entitled to them because they are ours. The world will adjust, Our courts will assume reasonable, rational behaviour in reaction to court rulings on Charter issues as opposed to emotional and irrational behaviour. There is simply no reason to expect anything other than a rational, measured response that is respectful of the court’s findings. There are plenty of ways the US can get what they claim they are looking for without violating Charter rights. The sun will rise in the East and life will go on.
Well these guys think the lawsuit is going to make things a whole lot worse:
http://www.mondaq.com/canada/x/335598/Income+Tax/Is+the+Canadian+FATCA+lawsuit+a+Pyrrhic+War
Luckily I don’t live in Canada :-). If FATCA and CBT ‘is what it is’ then the lawsuit ‘is what it is’.
@George
I really like your term “clever by half”, as I’ve always felt that FATCA’s fatal flaw – by design or oversight – is that it’s incapable of catching all USP’s.
The IRS is so badly underfunded that they probably don’t even really want our info knowing that with our various exemptions we won’t net them much anyway, but for their war on offshore tax evasion won’t exempt us from reporting. I envision accounts under a specific value ($1M perhaps) will just sit there until they can get to them at some point in the future.
That said, it wouldn’t cost the IRS too much to send out inquisitive and demanding letters to ALL account holders they get info on, in an attempt to shake the bushes of loose and low hanging fruit.
Connie,
Welcome to Isaac Brock and the discussion going on here. You won’t find many HERE who are agreeing with the IRS money grab!
I agree with you in that I too am a Canadian citizen (and have renounced to further prove that so I have a CLN to show my Canadian “foreign financial institution” – only if I have to) and work here (or did work here so my income was Canadian earned and taxed / am now retired and it is my solely Canadian-earned retirement savings that would be at risk). You’re right — we in Canada follow the laws of Canada. Common sense and Canadian law, I’d say.
I hope you are joining our fight that Canadian rights are upheld by donating to http://www.adcs-adsc.ca/. Our fight is for you and your family too.
(I’ve removed your last name from your comment as its not necessary and could open you up to some US abuse. Let me know if you DO want it to appear.)
@Anne Frank, I wonder how much of the financial tricks you describes of other countries trying to get out of the $US have already been implemented. I’ve read anecdotal articles that this is already happening.
FATCA is not the only catalyst. Banks are starting to want to avoid the risks of getting fined billions of dollars for not breaking laws in their own countries and stop taking risks of transacting in $US when not necessary.
This might be an even bigger incentive than FATCA.
I wonder when the US will start feeling the pain when enough of these schemes are in place and what they’re going to do about it.
@Anne Frank:
Thank you for another rational analysis. Our views seem to coincide.
@Bubblebustin:
Of course expressions vary from culture to culture however in my experience the expression is “TOO clever by half” … ie that one tries to be so super clever (devious) that one ends up snookering oneself / causing the targets to head for the hills.
@George:
I love the analogy with Scotland …. of course there are many Scots and their descendents in the US as well … Maybe Scotland (if she gains Independence) should levy a corresponding tax on her diaspora in the US. The Scottish analogy is also a good one in that many Scots were forced to leave Scotland due to political and economic pressures …. a good number ending up in what is now the US and elsewhere in the “remoteness” of the former British Empire … just as many are relocating from the US …. whether for political reasons such as being objectors to the Vietnam War or for employment and business opportunities elsewhere or for romantic reasons in finding spouses elsewhere in the remoteness of the world at large … or simply seeking freedom from Tyranny.
@Connie,
While I think it unjust you should pay anything to the IRS I want to put you straight here:
>When the US government will not raise taxes on the richest Americans who can afford to pay, why should I???
Close to half the US population pays no income tax. They pay only social security and medicare and those programs pay out more than you pay in for lower income workers.
Obama took our top marginal tax rate from 35% to 39.6%. He added 0.9% on top of that as a medicare surtax giving us 40.5%.
He took our dividends from 15% to 20% and added on a medicare surtax of 3.8% giving us a dividend tax rate of 23.8%. For a dividend from a REIT we will be paying 39.6 + 3.8% = 43.4%.
He phased out our standard deduction up to 80%. He phased out our personal exception completely.
If he got the chance he would add a whole bunch more.
It would seem you don’t know what your talking about.
@Bubbles.. “That said, it wouldn’t cost the IRS too much to send out inquisitive and demanding letters to ALL account holders ”
I always thought it was a political mistake by Canadas MPs to agree that the information exchange included Canadian resident addresses.
Should form letters start arriving from the South, MPs are going to hear an earful!!
I thought it would have been best that the US after having received data would then have to request CRA for further assistance which CRA could have declined.
@Domino
I will respond to some of your comments below not because I wish to engage in a protracted debate, but because I am concerned your comments as they stand alone might be a bit discouraging to potential Charter Challenge supporters. At least, at 1st brush, that was my initial reaction. Having said that, I don’t wish to try to discourage healthy debate even though I am out of time to continue this one:
“The IGA permits Canadian banks (all FFIs) to treat accounts with US indicia as reportable, but it also offers them the opportunity to undertake further due diligence to establish whether the account does indeed belong to a US person.”
The IGA does indeed ‘offer’ the opportunity to undertake further due diligence. The question is, does the IGA or the enabling legislation actually REQUIRE that due diligence. I will acknowledge that it will likely be a common or ‘best’ practice for FIs to undertake that due diligence, but to me, it should be a minimum requirement.
“This is the point where privacy laws kick in. Privacy regulations (whether under a general right to privacy in a constitution, PIPEDA in Canada, POPI in South Africa etc.) will generally require the bank to protect the information unless specifically required to hand it over by law. So where the IGAs permit the bank to hand over account info with US indicia, the privacy laws will compel the banks to undertake the further due diligence requirements mentioned above.”
I will quote below a couple of excerpts from the enabling legislation:
” WHEREAS, FATCA has raised a number of issues, including that Canadian financial institutions may not be able to comply with certain aspects of FATCA due to domestic legal impediments;” – Page 313
“Subject to subsection (2), in the event of any inconsistency between the provisions of
this Act or the Agreement and the provisions of any other law (other than Part XVIII of the Income Tax Act), the provisions of this Act and the Agreement prevail to the extent of the inconsistency.” – Page 73
I also consider the opinions of Professors Christians & Cockfield as enumerated in their submission to the government entitled “Submission on Legislative Proposals Relating to the Canada-United States Tax Information Exchange Agreement” . In their submission they suggest that the privacy laws that you suggest would kick in are in fact subject to violation by the agreement. Indeed, it seems a fundamental purpose of the IGA and enabling legislation is to sweep aside those privacy laws which is why there is a CONSTITUTIONAL challenge.
I don’t see how privacy laws constrain the banks as you suggest because “…any other law…” is overruled by this legislation.
Christians & Cockfield also suggest FATCA is “…mass, fishing expedition surveillance…” and also state ” Similarly, American tax policy observers and lawmakers have already noted that even the expansive surveillance set up under FATCA will be insufficient to catch tax evaders.” They go on to opine that… This is leading not to sensible discussion about how to focus efforts on likely tax evaders, but rather how to cast the net even wider, at greater cost to Canada and the rest of the world, without in any way solving the problem created by flooding the system with irrelevant information.” page 23 of the submission.
I think the professors’ remarks might also shine an entirely different light on your views regarding unreasonable search and proportionality.
You can find the paper to which I refer here: http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2407264
One final point. I know CBT has been around for a long time in both the US and Eritrea, but that does not validate it, particularly since the U.S. lead the charge for a UN resolution, through their ambassador Susan Rice, condemning Eritrea for its ‘Diaspora Tax’.
Having said all this, I, like you am not a lawyer. I am also not a US Person and have not been one for nearly 4 decades, but I am fairly outraged by this whole mess and therefore support this Charter Challenge.
Another volley of self serving propaganda, and in deliberate service of the US in the guise of marketing, and in the guise of concern for Canada;
http://www.mondaq.com/canada/x/335598/Income+Tax/Is+the+Canadian+FATCA+lawsuit+a+Pyrrhic+War
They cleverly never address the fact that their preferred result rests on a profound and clear violation of our rights – which the challenge seeks to have that formally recognized. Would Berg argue that the violation of Canadian rights and Constitutional principles is a desirable or acceptable result? Is he saying that seeking ones legal, human, civil and constitutional rights should be subordinate to commercial interests and subordinate to threat that the US should never have posed to begin with? Would he argue in the US that US laws should never be tested for their constitutionality just in case the outcome is inconvenient? And if the EU or other countries should mount similar challenges, would he argue that they too should accept a foreign US law over the fundamental rights and values their societies are founded on?
It continues to be interesting that the implication is that even though one co-author is a US lawyer applying to practice law in Canada, and thus must at least profess superficial respect for the law, Berg never addresses what happens when some laws – particularly an extraterritorial US one enabled by the Canadian Conservatives – are in conflict with the HIGHEST laws and values of our home land of Canada, and the foundational documents such as the Charter of Rights and the Canadian Constitution.
Would it not be ethically and morally and professionally wrong of a lawyer in Canada to argue in favour of allowing an unlawful law to stand in Canada, no matter how it might benefit him personally, his firm, and the interests of the US?
If the FATCA IGA is demonstrably illegal and unconstitutional, and the challenge wins, then what Berg and Moody are saying is that we are wrong to even test it and wrong to question and challenge it, and wrong to RESPECT and value the rule of CANADIAN law and sovereignty over the extraterritorial application of foreign law. They are saying that to achieve the result they prefer, that they would agree to let an unlawful ‘law’ stand in Canada, at the behest and at the point of the FATCA gun pointed at Canada and all other countries around the globe – no matter if it destroys the lives of Canadian citizens, residents, their families and their businesses. And since Berg and Moody don’t explore any of the other consequences and results of letting the FATCA IGA and legislation stand unchallenged, their argument is deliberately disingenuous.
Interesting conclusion of Berg and Moody:
That allowing an unlawful law to stand is the most desirable result and is their prescription for Canada vis a vis the US extraterritorial and global extortion that is FATCA.
@George
The Canadian government signing the FATCA IGA contingent on the IRS agreeing to refrain from sending letters directly to US subjects in Canada? If Canada had any kind of cajones, we would look more like Serbian pit-bulls than Uncle Sam’s poodle (hat tip to Mark Twain)
http://www.tax-news.com/news/Serbia_To_Protect_Taxpayers_Rights_Under_FATCA____65575.html
@Badger
Well said. An opportunistic interloper with no allegiance to Canadian law, and no love for Canada. Petros is right. They should be run out of town.
Oh, and thanks to the many who’ve argued that the reference to Pyrrhic War is somewhat “hyperbolic” 🙂
@Domino, a statement like “The right of a state to collect its own taxes is sacrosanct in the sovereign community…” has no meaning. Some of us have worked hard to learn about applicable laws, and we don’t have time for this.
On a related note, after reading the really weird National Post article by Julius Melnitzer published on 19 Aug, I wonder if there’s not a campaign of “confusion” or FUD being waged against Brock Society. Perhaps some people are genuinely worried about the lawsuit.
Another reason to donate NOW to the ADCS legal challenge:
The IRS is NOT able or motivated to protect the data it collects, and it has repeatedly been put on notice for doing so:
http://www.washingtonpost.com/blogs/federal-eye/wp/2014/08/14/irs-handed-taxpayer-information-to-contractor-without-background-checks/
“The Internal Revenue Service exposed more than 1 million taxpayers to “increased risk of fraud and identity theft” by giving their private information to contractors without background checks, according to a federal audit.
The Treasury Inspector General for Tax Administration said in a report released Thursday that the IRS handed over a disc containing sensitive data on about 1.4 million taxpayers to a printing firm without any of the company’s employees being subjected to screenings………”……..
@George
As with so many issues, what might seem to be the intention of a law or treaty, and its application in the courts, often seem to be at odds. While most bank accounts do not require disclosure of one’s place of birth as a requirement, many forms of ID provide it anyway, so to the extent that it is already in the bank’s database, the IGA asks that it be identified. This is more likely to be an issue for high value accounts where a bank is required to do a manual search of its master file, which will include a photocopy of the account holder’s ID document. A requirement to either search for or demand proof of an applicant’s parents’ places of birth reaches far beyond the existing KYC requirements of the financial industry, and would open the IGA to repudiation on the merits of proportionality mentioned before. Many people have no idea where their parents were born, nor would they have the ability to reasonably furnish such proof. Furthermore, US nationality law makes all sorts of provisions for married, unmarried, single, father and mother parents as well as differing required periods of US residence in the various circumstances. There is no viable way to include such criteria within banking regulations, so the US wisely left such requirements out of the IGAs. This does not violate anti-discrimination laws as the US would argue, as it does similarly in its tax treaty explanations, that persons born in the US are not similarly situated to those born abroad to US parents. Think of it this way, if the police review video of two individuals robbing a bank, and recognize one of the robbers, it isn’t discrimination to enforce the law against that individual just because they are unable to identify the other one.
The 1930 nationality convention signed at The Hague was only ever ratified by 13 countries. Canada was one, but subsequently denounced it. Neither the US nor Canada are bound by the Convention, but it is instructive as regards dual nationalities. It states in the preamble that every person “should have one nationality only”, but Article 1 states:
“It is for each State to determine under its own law who are its nationals. This law shall be recognised by other States in so far as it is consistent with international conventions, international custom, and the principles of law generally recognised with regard to nationality.”
Interestingly, Article 5 states:
“Within a third State, a person having more than one nationality shall be treated as if he had only one. Without prejudice to the application of its law in matters of personal status and of any conventions in force, a third State shall, of the nationalities which any such person possesses, recognise exclusively in its territory either the nationality of the country in which he is habitually and principally resident, or the nationality of the country with which in the circumstances he appears to be in fact most closely connected.”
So a Canadian with unwanted US nationality could (in theory) move to a third country that ratified the treaty, and claim principal residence in Canada, thereby precluding that country from recognizing his US status for FATCA reporting. It also states “Without prejudice to the application … of any conventions in force” so that country might have to be one without a bilateral tax or information sharing treaty with the US. Those countries would appear to be Brazil, Burma & Monaco (I’m surprised that Brazil is in that list). By way of qualification, you may not need to move to that country, the wording of the treaty would suggest that you might just need to move your finances there. Of course, the reality is that no country will invoke that article against FATCA otherwise they’d be subject to 30% withholding.
Regarding your comments about Scotland, as long as Scotland doesn’t impose CBT or mandatory military service on all citizens, then the automatic acquisition of Scottish citizenship would only confer rights, not obligations. Presumably anyone who objected to the acquisition of Scottish citizenship could renounce it without penalty.
This issue does raise the broader issue of citizenship in international law. Unfortunately international law has largely concerned itself only with rights in regard to nationality laws; promoting the obligations of states to grant citizenship to stateless people. The one area where there has been consideration of the obligations is in regard to military duty, and a Protocol was signed in that regard also at the 1930 Hague Convention. The US signed and ratified that protocol, which exempts the individual from such duty in the country to which he has fewer ties.
International law hasn’t really addressed our situation, I expect for the following reasons. Firstly, the right to formulate and levy one’s own taxes is so treasured by nations, that they are unlikely to ever agree to a multilateral treaty in that regard. Secondly, the ability to enforce extraterritorial taxation hasn’t been a reality with which international law has had to deal; until now. With the specter of GATCA looming, I wouldn’t be surprised to see many nations embracing CBT, so there might be many more victims CBT of injustices in the future. We are the vanguard of the movement to raise consciousness about the inequities of CBT. If we shout loudly enough, we will be heard and that is starting already. The wheels of international law move far too slowly to protect us from the injustices of CBT and FATCA, but our stories might be the impetus for reform at the UN, EU and other intergovernmental bodies.
@ Asymmetry says :
I suspect that there is a FUD campaign. I suspect that there is genuine worry in certain quarters that ordinary people might actually require their Government to observe their Constitution. I suspect that there are also many others around the world cheering on the Brockers and friends in the Challenge. I suspect that many people in small countries are anxious to see the Canadian Challenge bring FATCA and extraterritorial-ism to its knees. Not that people hate the US people …. just that people do not want to be subject to financial shackles imposed by a new “bucky master”. Slavery, enforced by financial sanctions or otherwise, must be rejected … it takes the brave to stand up to the slave master however.
On another angle …. Given what has just happened to the journalist murdered by the Islamic State … just how dumb is it to gather such information of US Taint in banks and Governments around the world ?
@Only a Canadian
Bill C-31 part XVII 265.5 replaces a key paragraph of the fatca agreement with a new one, the published versions dont have this revision, you need to look at Bill C31 to see it. The revised paragraph reads:
This change is very significant. Paragraph B(4) is where they ask for a self-certification, a CLN or a reasonable explanation.
In other words the BANKS MUST CONTACT YOU before turning your financial information over. This won’t help anybody that doesnt have a CLN or similar, but you will know before hand if your information is going to be turned over.
@nervousinvestor, Having any indica on documents that points to the USA is dangerous and a threat to ones life.
Putting names, address……..in a single file? Sitting targets.
This is a completely legitimate reason if ones country lists country of birth on a drivers license or passport to have only a city or town listed.