Telling your Congressman or your media contact that you are “Collateral Damage” has no effect. Your Congressman doesn’t give a sh_t—because you are not collateral damage—you are the target.
This article is a cross post from: http://samuelclemmons.wordpress.com/2014/10/27/the-real-intent-of-fatca-you-are-not-collateral-damage-you-are-the-target/
The term “collateral damage” shows up in all the articles, all the pleas to Congress, and in the Talking Points of Lemmings Abroad. It’s not really a damaging label—unless you believe it to be true and don’t plan otherwise.
Let’s stop talking about FATCA’s “collateral damage” and start discussing real intent. FATCA is the enforcement tool to collect IRS taxes and penalties from non US residents receiving no standard government services (schools, roads, education, or social welfare). FATCA talking points contradict the administration’s own statements upon FATCA intentions.
FATCA funded the 2010 Jobs for Mainstreet Act–a domestic jobs bill. It purports to collect $8.5-$8.9 billion of tax and penalties over ten years, by identifying previously-undertaxed US citizens overseas. It demands the world’s banks to aggressively identify their residents who are US citizens, forwarding their identities to the IRS for taxation and penalties.
FATCA aggressively enforces the US’ globally-unique taxation system, which uniquely taxes-up its non-resident US citizens to the highest of the tax rates of their residence country or US. This includes any previously under-taxed non-US retirement products, unemployment benefits, home sale gains, and anything above $95,000 earned in countries like UAE (UAE’s high corporate tax eliminates personal tax).
Few of the 7.6 million US citizens overseas have known of their IRS filing obligations. FATCA’s draftees knew from a 1998 GAO report that only 380,000 had filed from overseas. FATCA’s revenue gain depends upon locating the remainder whom are targeted for retroactive taxation and penalties.
Who are they looking for? In the case of Sweden they are looking for people suspected to be:
Swedish citizens living in Sweden whose parents birthed them in that country.
Swedish citizens living in Sweden with one parent who is a citizen of that country.
Swedish citizens living in Sweden who have a visa to that country, who have not filled out the form I-407 to cancel that visa.
Swedish citizens living in Sweden who are citizens of that country
Swedish residents having lived many years in Sweden who are citizens of that country
Swedish citizens living in that country who still have bank accounts in Sweden to support their summer houses and rented homes in Sweden (like Erin Woods)
But, there are no persons in that country who have sent their money to SWeden to avoid taxation—-that is ludicrous.
A larger percentage of FATCA’s gain is expected not from taxes and penalties, rather from gains from draconian penalties for the obscure Foreign Bank Account Report FBAR form. This is a unique form outside the IRS tax system, requiring US persons overseas to electronically declare overseas assets to the Financial Crimes Enforcement Network (FINCEN) by June of each year. Those expats identified to have not yearly reporting themselves to this crime-website may receive yearly fines up to the greater of $100,000 or 50% of their asset values.
What Americans might believe that he is required to report yearly to a crime unit? Even fewer than those filing with the IRS. In fact, neither were there FBAR instructions in IRS pub 54 for expats during the period 2004-2008.
The FBAR form was initiated in 1970 to locate bad guys in USA avoiding taxation by sending illicit money to some mysterious country—perhaps via diamonds in toothpaste tubes. Robert Stack’s mythical Untouchables character (Elliot Ness) would have been thrilled with FBARs. Even without evidence of wrong doing, draconian FINCEN penalties are available to bankrupt or imprison badguys.—the ones the talking points call “FATCATs”.
In 2001, 5% of legal reporting of US residents filing foreign income were residents of USA 1. . It’s impossible to estimate the number of US residents illegally nonfiling—the ones that FBAR and FATCA should be after. There are certainly far less FATCATs than the existing prison population and far fewer than the 7 million unknowing US citizens overseas.
With greater faith in the inherent honesty of Americans than of talking points, you will find that the real FATCA revenue target is US citizens overseas. Most of these have simply been unaware of these obtuse IRS policies and FINCEN crime regulations. FATCA is actually a direct outcome of a 1998 GAO report to Congress, finding that less than 400,000 tax returns were filed overseas, and implying that further enforcement would create new revenue.
With less faith in talking points, you will see that FATCA and FBAR are not police tools for specific investigations in specific countries. You will see FATCA as a blanket suspect tool forced upon all honest countries. Should the public believe that criminals inside USA are sending their money to Finland, Sweden, or Australia in order to avoid taxation?
Let’s look into statements made by FATCA implementer former Treasury Secretary Gheitner “We are working very closely to try to meet the ‘Congressional intent’ (of FATCA) to make it harder for American Citizens overseas to avoid U.S taxes without putting undue burdens…..” 3 Treasury official Mark Mazur’s says: “It is also important to note that FATCA’s requirements are the same for all American taxpayers—expats are treated no differently. All citizens are required to comply with United States’ tax laws and FATCA is a tool to enforce them….” 4
Looking at the statistics and statements, it becomes obvious that “FATCAt” is a talking point used for labeling US citizens overseas as cheaters (guilty til proven innocent). Whereas these humans are actually unknowing of the IRS’ bizarre taxing-up concept of its own productive citizens far away from government services.
The next question the 2010 Congress asked was “Does it matter?” They answered that although this citizenship-based taxing-up is an international anomaly; laws are still a laws even if they are not known, not followed, not explained, have draconian punishments, and are not fair. FATCA was then passed with talking points directed towards FATCAts assumed to be domestic tax cheats.
The Talking Point “Collateral Damage” has been used for four years now. And it has done nothing to improve your situation.
Allowing the media and Congress to get off with the “collateral damage” talking point will not further the objective of getting the US government out of your family finances. You need to think higher and smarter. Formulate your argument on a higher plane. Acknowledge that Carl Levin, Chuck Schumer, Nancy Pelosi, Bill Nelson, Chuck Grassley, and the Junior Senator Obama Barack have made you their target for funding their jihad on your family finances.
You can’t vote against those people. However, they can take your family finances away from you. They can call you a Tax Evader, a Traitor,, and a FATCAT—this increases their election chances with their Homeland voters. It has the potential to use your finances to subsize their Jobs for their Mainstreet–for about another 9 hours.
Let’s be honest. FATCA’s intent is to tax-up US citizens living outside USA. You are its target. When you accept this truth, you can better formulate your forward strategy.
This article is a collaboration.
I don’t think this rings true. I think the target was anybody with a foreign account. Let’s face it as far as Chuck Schumer and his buddies are concerned having a foreign account means you’re rich and your doing something wrong. At the very least you are unpatriotic.
They realized massive numbers of people are non-compliant with the existing laws and they want the money. I have said a number of times before that Obama said I should pay a little bit more and OVDP etc was just one bit of it. It wasn’t a little bit more though. Remember immigrants got hosed to.
When a politician says a tax on smoking is to stop people smoking they are lying. As soon as e-cigarettes came about they panicked about the revenue going away and taxed them even though they may be much more healthy. This is because it’s all about the money and anything else they say is rubbish.
This is why I think it’s foolish for you canucks to align yourself with the liberals. They think your money is theirs and will do this same sort of thing to you. Unless you are a salt of the earth low income type preferably on some kind of welfare.
http://www.forbes.com/sites/robertwood/2014/10/27/5-5-million-americans-eye-giving-up-u-s-citizenship-survey-reveals/
@Neill
If expats are not the target or a major part of the FATCA target portfolio, then why are the Democrats so stubbornly clinging on to CBT?
@John Smith,
I am saying they didn’t target expats. Instead they targeted people with foreign accounts. Expats just happen to have them as do immigrants and tax cheats and people with foreign account who don’t cheat.
I think this rings absolutely true. Shocking but true. The injustice of it all is blatant to everyone and Nina Olsen has said so to the people in charge and still only minor and questionable alterations are done to change matters. The scare tactics are still used and nobody feels safe, cared for by their government, or understood. Even those who have actually not known they had their US citizenship reinstated are exploited and face draconian fines. Actual foreigners are considered US persons. Its all a scam, but it is a scam that homelanders are loving, and their irrationality on the subject is clear every time they yell “pay your fair share”. If they had to face similar injustice they would march on Washington.
Where does that leave us though? Who is going to help? The question of creating jobs is HUGE. “Jobs for Mainstream” is worth everything to homelanders because many are starving on foodstamps. They all dont give a damn who pays for it. Basically if they had taken the money earned by all the lawyers and the tax accountants and the monies paid by the banks to install FATCA they`d have “Mainstream Jobs” funded for decades already. But they can’t “sell” it like that. They can’t make it look like charity either- it has to be “justified”- another word for “rationalization”. They have to find a scapegoat and expats are it.
So you all tell me: who is supposed to help us? When are the law cases going to court? When do we see Bopp in action? Because in the meantime, nothing is happening as the FATCA train keeps rolling on and their targets are still being attacked.
Nice post. I agree, this does ring true. The US Government is really targeting anyone who will find it difficult to fight back. It’s that simple. They will extort whatever they think they can get away with and claim they are doing it for some moral cause. Unless people fight back, this will get worse and worse. That should be clear from the recent articles on IRS seizures (NY Times) and the police seizures (Washington Post).
Many years ago this (extortion) mentality seemed (at least from what I saw) to be limited to the police giving people speeding tickets and parking tickets they didn’t really deserve to raise revenue. The stakes are now much higher and the wrongful damage they are knowingly willing to inflict on innocent, law-abiding citizens is mind-blowing.
Thanks, Isaac Brock Society.
Both Geithner and Obama said that FATCA was going after Offshore Americans.
Mark Mazur, Asst Treasury Secretary, also indicated this in a letter to The Economist on 26 July 2014. See his remarks in the second paragraph:
“FATCA and tax evaders
SIR – In response to your broadside against the Foreign Account Tax Compliance Act (FATCA), I would like to point out that the American Treasury has tailored the rules to minimise burdens and costs and has considered hundreds of comments from financial institutions and foreign governments (“Dropping the bomb”, June 28th). As a consequence, many low-risk entities, accounts and payments are exempt from FATCA altogether.
It is also important to note that FATCA’s requirements are the same for all American taxpayers—expats are treated no differently. All citizens are required to comply with United States’ tax laws and FATCA is a tool to enforce them. Tax evaders should rightly worry that FATCA will reveal their illicit activities.
The work by the G20 and OECD on the common reporting standard for tax evasion draws extensively on FATCA’s intergovernmental approach. With more than 80,000 foreign financial institutions registered to comply, the worldwide effort to thwart tax evasion is going well.
Mark J. Mazur
Assistant secretary for tax policy
Treasury Department
Washington, DC”
Go to FairTax.com and sign up as a member for $5.00. We are on a crusade to rid the world of the IRS and make taxation a sales tax on goods sold within the U.S. borders and will have the side effect of solving the expat problem. (My interest is for my descendants. I am too old for it to matter to me) I have a grandson who is working overseas.
I still don’t understand why other governments put up with this U.S. CBT drain on their economies, including the revenue poaching itself plus the costs of compliance with FATCA. Can anyone explain it? Why don’t they demand that the U.S. restrict its taxation to its own territory?
@Innocente
Mark Mazer: “….expats are treated no differently.”
But expats are treated very differently when it comes to having representation in the legislature and access to US public goods and services. Expats do NOT enjoy the same benefits and protections as citizens living in the homeland.
Mazer et al need to be called out on their ignorant one-sided “fair share” fallacies.
Re: Mark Mazur, “expats are treated no differently”. What a load of crap!
1. We are attacked for having savings and chequing accounts. (FBAR) No problem for homelanders.
2. We are attacked for having ordinary mutual funds. (PFIC rules) No problem for homelanders.
3. We are attacked for having tax-advantaged retirement savings. (Foreign trust rules) No problem for homelanders.
$. Our accounts are being closed, our loans recalled, our banks and tax authorities are being subverted to rat us out to a foreign government, and the media itself is encouraged to portray expats as “tax cheats” who need to “come clean”. Not a problem for homelanders.
He actually describes living outside of the US and having a life as “illicit activity”. In a previous article (sorry, don’t have a link) The Economist criticized the US for it’s “loopy tax rules”. Then this moron takes The Economist to task for calling a spade a spade. He’s in the same league of liars as Robert Stack.
anon anon. Bill Clinton made the rounds in 1996, getting all the countries to sign taxation treaties for taxing Americans wherever they are in the Milky Way.
Paper smothers Rock. Treaty smothers local law.
The deal was closed in 1996.
In 2010-2014, the same group of criminals (the ones IN the govt) went around and told the puppet govts shall do what they say because they already signed themselves away in 1996 to the Executive BJ receiver.
@maz57:
Thanks for your list of differences. Possibly a Stanford PhD like Mark Mazur could understand that, but I doubt he wishes to.
For the record, Robert Stack, Deputy Asst Treasury Secretary, International Tax Affairs, reports to Mark Mazur, Asst Treasury Secretary, Tax Policy.
At least for purposes of The Economist letter, Mark Mazur became the front man for Fatca instead of Robert Stack. Both are propagandists.
A comment by Joe Kristan, Roth CPAs, seems appropriate: “You really think 25%-300% penalties might not be appropriate for the crime of committing personal finance while living abroad? What could possibly have given him that idea?”
For those in doubt of expats being primary (not accidental) targets of FATCA:
Saudi Gazette: 200,000 Saudis affected by new US tax law
https://en-maktoob.news.yahoo.com/200-000-saudis-affected-us-tax-law-065624626.html
Lots of potential FBAR fund raising there — enough to give Mazar a woody.
This may deserve a separate post of its own, but Democrats Abroad has compiled a list of quotes from their FATCA survey. They say:
https://www.democratsabroad.org/group/fbarfatca/2014-fatca-research-stories-fatca-affecting-everyday-americans-every-day
https://www.democratsabroad.org/sites/default/files/2014%20FATCA%20Research%20%20Stories%20of%20FATCA%20-%20Affecting%20Everyday%20Americans%20Every%20Day.pdf
Compelling reading. A couple of times I thought, “hey, they used my statement!”, only to discover that it was from someone else in a different country.
Now, will anyone in power listen?
Ok, let’s get down to a little bit of facts and history to better understand what’s at stake.
First of all, why did the 13 first colonies in America go to revolution against the english empire. Yup, you bet, the main reason was taxes. The main reason the colonies started rebelling against ‘mother England’ was the taxation issue. The colonies debated England’s legal power to tax them and, furthermore, did not wish to be taxed without representation. This was one of the main causes of the Revolutionary War. Now how about that one for greedy little congressmen.
Read on further : http://www.history.com/this-day-in-history/american-colonies-declare-independence
Second of all, the origin of citizen based taxation was the civil war. Yup again. To discourage soldiers from leaving the states they created citizen based taxes, just like the english they fought for independance did. Read on further : http://tax-expatriation.com/2014/04/01/the-u-s-civil-war-is-the-origin-of-u-s-citizenship-based-taxation-on-worldwide-incomes-for-persons-living-outside-the-u-s-does-it-still-make-sense/
So the real question is : Is this taxation rule still relevant in the 21st century ?
Not only is it very descriminating for US citizens like you and me abroad, but FATCA also creates serious damage to the United States and its economy!!!
Over here in France the AXA bank has thrown out all it’s US citizenship customers and I have received a FATCA form from my bank. As I arived in France in 1975 at the age of 9 years old, I’m going to get naturalized French sooner than I thought and give up my american passeport and nationality if I have to. On top of that, my mother is Dutch so heck, I don’t care. Thanks dad for bringing me to this lovely country. But it’s something that american citizens working for a couple of years abroad aiming to go back to the states will probably not do. And that’s where the economic factor comes in.
Most americans that are sent to work abroad are important people. Now, major companies don’t want to hire americans anymore, nore have them participate in their actions. You can easeliy mesure the negative impact on the US economy. read on : http://www.repealfatca.com/index.asp?idmenu=4&idsubmenu=121&title=News
and
http://www.thenewamerican.com/usnews/congress/item/17273-new-u-s-tax-regime-is-devastating-experts-say
The only thing that will stop citizen based taxation is when the congress wakes up and realizes the harm it’s doing to the US economy, wich will come in the near futur.
Could I ask one technical question here? Where is the US government going to find the money to build all those jails to house the millions of “US persons” who have not been tax compliant to a country they do not live in?
@EllenFromDownUnder
Answer: with the money it steals from ‘US persons’.
@EllenDownunder:
In a letter to The Economist, a Brit abroad expressed a somewhat similar concern about Britons returning to the UK should it pull out of the EU. He thought that preparations should be made for this eventuality:
“Britons abroad
SIR – That 9% of British nationals live abroad is not in itself surprising (“And don’t come back”, August 9th). What is surprising is that a pragmatic people like the British adopt the kind of negative attitude towards their own expats that an incompetent shopkeeper might take towards his customers, mistakenly believing that as soon as they have left his shop they cannot possibly be of any further interest.
Britain is often uncomfortable with its own constitutional matters, and seems particularly inept where British nationality is concerned. In the case of British expats, all have the right to return, and many do, even after 30 or 40 years, despite having been stripped of the vote for much of their time abroad. If Britain were to leave the European Union perhaps as many as a million expats might come home. As well as maintaining relations with expats today, the government would be wise to plan for their return in the future.
(Name)
Former chairman
British Community Committee of France
Paris”
http://www.economist.com/news/letters/21613153-letters-editor
Yes as Petros says targets.
Yet there are these two aspects of it.
1)America more than other nations are more self sufficient and need less interaction with the world because of the size of the economy. It is quite noticeable when you try to buy something from a US website and you can’t get by putting in your address because the pretence is that customers only live within the 50 US states and territories and you can not buy unless you do so.
I am reminded of these geographical paintings, this one of New York: http://en.wikipedia.org/wiki/View_of_the_World_from_9th_Avenue . View from 9th avenue, the close by buildings and streets very large, Hudson River there, New Jersey a strip, then a space for the US and Pacific Ocean with dots for cities such as Chicago, and that is it. The Americans and American policy suffer from this nearsightedness.
2) In the comments to articles there is a recurrent theme that many Americans can not fathom that if you live in another country that you pay taxes and get services there. They think that you as an American in another country don’t pay taxes and get a break/escape US taxes. And there is difficulty in fathoming that you don’t get any US services for your taxes if you live overseas.
So yes a target, but the policy is also one of nearsigted perspective and can’t figure that you already pay taxes and are bound by tax and compliance laws there for services that you get in another country / that you don’t get any services from the US. So somehow when they think that of the 7 million abroad they only get 450,000 returns they are thinking that somehow lots/all of these people are US residents.
While trying to figure some of the psychology of it all – onward legal action.
@JC
I think another major blind,spot is the assumption that our money somehow really comes from U.S. sources. That it really isn’t foreign source income somehow. Even Congress has a problem with this concept.
@JC:
Especially infuriating when it is one’s supposed representative in Congress whose web site will only recognize Stateside addresses. Taxation without representation, with a side of “F you.”
I think it’s much broader than just attacking expats. Look at the resources that get sucked out of the US every day. All of the illegals (and legals) that send money back home to their families. The US has defied economics for many years in this regard. And I think it’s just a money grab in general. My dad’s generation had good jobs in manufacturing. He paid a lot more in taxes than I’ll ever pay. When I went back there, I was amazed to see all of the mootches living off the system. Who has money pays. Who doesn’t, gets everything for free. I think they are desperate and the US is living on borrowed time. The problem is with the size of the US economy. If they implode, they are taking Canada and most of the world with them.
As far as I’m concerned, the US did me a favor. My naturalization where I live has already been approved, where I live, and I’m going to one in Europe too. I left during the zenith of the “terror scare”. I had had enough. Now they harass me even when I don’t live there. I want out the US Passport club.
Regardless of intent, FATCAs message to American expats is very clear:
“We don’t like you, we don’t trust you, and we don’t want you. You are not real Americans because if you were you would live in America like the rest of us. We will continue to punish you severely for choosing to live abroad, in fact we promise to increase the punishment as and when we see fit.
If you don’t like it, you can either return to the US or renounce your citizenship; we don’t care. If you choose to renounce, we will punish you even more for making the wrong choice. We have no respect for the laws of the country you live in and believe it is our right coerce your governments to assist us in punishing you.”