UPDATED SAT 28 FEB 2015
Everyone should stand up and take notice that WE are having an effect on all things FACTA-oid. First it was only tax geeks and compliance condors. Now the scholars are chiming in. Funny how most simply are oblivious of the fact that the US overreach is the number one indication that the whole thing is simply flawed.
As John Richardson points out in the following repost from The ADCS blog, WE are making a difference. We haven’t been deterred by obnoxious comments from the public, the Canadian Conservative government, nor the compliance condors. One thing they don’t seem to get, is that nothing in life is fixed and immovable. Change is the only thing that one can count on. So while they all sit on the pedestal of “no one can fight this’ and “it’s US law,” let’s enjoy the fact that regardless of how difficult this has been, we have risen to the challenge and are worthy of respect; not just from them, but from ourselves.
Forbes had a nice quote the other day which reflects well upon our situation:
“Whenever you find yourself on the side of the majority, it is time to pause and reflect.”
Mark Twain
@ADCSovereignty #FATCA IGA lawsuit continues to be newsworthy and provides education and leadership to the world https://t.co/0K9zKqTBvt
— Citizenship Lawyer (@ExpatriationLaw) February 28, 2015
The lawsuit launched against Canada’s FATCA IGA will be remembered as part of the history of FATCA. As the Obama administration “boldly goes” to impose it’s will on the world, Canada’s FATCA lawsuit reminds both Homelander academics and International Compliance Condors that there is a world outside the United States.
Win, lose or draw, the FATCA lawsuit prosecuted by the Alliance For The Defence of Canadian Sovereignty is:
A. Reminding the United States that there is a world outside the United States;
B. Demonstrating that there are people who resent the attempts of the United States to impose its laws on the rest of the world;
C. Illuminating the immorality of (during a time when the U.S. Senate Finance Committee is considering tax reform) U.S. extra-territorial taxation.
Extra-territorial taxation is the U.S. practice of attempting to levy taxes on people who (1) do NOT reside in the United States and (2) on income and property not associated with the United States.
What the United States proudly calls “citizenship based taxation” is primarily an attempt to levy taxes on people based on a U.S. place of birth or because their parents had a U.S. place of birth.
We can’t choose where we were born. We can’t choose our parents. Yes, to be be sure:
“It’s unjust. It’s inhumane. People don’t choose where they were born.”
So, yes your FATCA lawsuit is making a difference. Yes, your FATCA lawsuit is continuing to make a difference. Yes, by all means do continue this generous and important initiative!
How FATCA Works
I recently attended a meeting which focused on the U.S. taxation of people who don’t reside in the U.S. There was a presentation on FATCA. The presenter, an accomplished “U.S. Form Compliance Professional”, provided the usual powerpoint presentation, which was designed to explain how FATCA works. I was interested to see that on one of the slides she noted the existence of your FATCA lawsuit. The presenter then asked:
“Who in the room had NOT heard of the FATCA lawsuit”?
It was clear that all attendees were aware of Gwen Deegan and Ginny Hillis.
The presenter then wondered:
“What possible benefit could the lawsuit be? After all, even if you win, a Canadian court can’t strike down FATCA? Right?”
It occurs to me that:
The failure to imagine a world without #FATCA is a true failure of imagination. https://t.co/y0Ad9yatPB
— Citizenship Lawyer (@ExpatriationLaw) February 28, 2015
It is true that a Canadian court can’t strike down FATCA. But a Canadian court can strike down the FATCA IGA/ The FATCA IGA is the primary enforcement mechanism for FATCA.
That said, to focus on “How FATCA Works” (The battle cry of the compliance industry) is to ignore the question of:
What FATCA Really Is
To put it simply:
FATCA is an attempt by the United States Government to enforce the immorality of “place of birth taxation” on those who do NOT live in the United States. FATCA working as intended will operate to impose a “capital tax” on any country that has a “U.S. person resident there”. Don’t forget that the United States, and the United States alone, decides who is a U.S. person. This allows the United States to unilaterally expand its tax base outside the United States.
FATCA IGAs are an attempt by the United States Government to override the constitutions, privacy laws and “human rights” of the citizens of other nations. In other words, a clearly stated purpose of a FATCA IGA is to lower the standards of human rights that residents OUTSIDE the United States enjoy! A simple example is the override of local privacy rights.
Therefore both the FATCA legislation and the FATCA IGAs must be attacked.
Two lawsuits – Two Attacks – Two Purposes
The Attack on FATCA – The Republicans Overseas Lawsuit
All indications are that (what is referred to as the Jim Bopp lawsuit) is imminent. The purpose of this lawsuit is to attack FATCA directly.
Information may be found at:
http://www.FATCALegalAction.com
The Bopp/Republican Overseas lawsuit is an attack on FATCA itself.
The Attack on the Canadian FATCA IGA – The Alliance For The Defence of Canadian Sovereignty Lawsuit
This one you know better. It’s at:
Why the Canadian lawsuit is vitally important
The Canadian lawsuit is important for both legal reasons and for human reasons.
The “legal significance” of the Canadian lawsuit
FATCA IGAs are NOT authorized by the existing FATCA legislation. FATCA IGAs may be contextually related to FATCA. FATCA IGAs may be the result of FATCA.
However:
Because FATCA IGAs are NOT authorized by the FATCA legislation, the success of the Bopp lawsuit does NOT mean the end of the FATCA IGAs. The FATCA IGAs are not dependent on the continued existence of FATCA as existing U.S. legislation. The FATCA IGA is an independent agreement that will continue with or without FATCA. Those who doubt this need only read the Model 1 IGA.
Therefore, Canada’s FATCA IGA must be stopped regardless of the success of the Bopp lawsuit.
The “historical” and “moral” significance of the Canadian lawsuit – “The price of freedom is eternal vigilance.”
Most people don’t care about laws. Most people view themselves as the subjects of the state. Most people feel no obligation to work towards a world that respects the rights of individuals. Most people don’t even care whether individuals matter.
Most people are willing to accept a situation where the Canadian banks can successfully lobby the Canadian Government to require them to override Canada’s privacy laws and the constitutional rights of individuals. (It has been reported that the banks were the biggest lobbyists for the FATCA IGAs.)
Your FATCA lawsuit demonstrates that you do care and that you are NOT willing to tolerate the legislative and moral principles that FATCA and FATCA IGAs represent. As I have written before:
When it comes to opposing injustice, the simple truth is that:
Some people make things happen.
Some people watch things happen.
Some people ask “What happened”?
FATCA must be stopped. FATCA must be stopped because it’s plainly and simply wrong! Let’s continue working to make Canada a “FATCA Free Zone“.
FATCA – A view from the Homeland
The following paper on FATCA was just released by U.S. academics Bruce L. Bean and Abbey L. Wright.
The U.S. Foreign Account Tax Compliance Act: American Legal Imperialism?
The paper concludes with:
The U.S. Government has taken a bold step with FATCA. The legislation is by far the most egregious example of extraterritorial overreach in history and has been harshly criticized by individuals and entities alike. Yet, the initial anger expressed by liable taxpayers and financial institutions throughout the world has resulted largely in submission to regulation, even absent jurisdictional authority. While the goal of FATCA is to increase tax compliance among American foreign account holders, its effects have been, and will continue to be, felt on a global level. As evidenced by the emergence of several copycat initiatives, FATCA’s impact on global information exchange has the potential to foster international collaboration on tax matters and substantially reduce tax evasion. Offshore accounts have long been a thorn in the side for the IRS and other tax authorities that fear they are missing out on billions, and FATCA may in fact be one answer to their problems.
The acknowledgement of your FATCA lawsuit includes:
There are many Americans, or “U.S. persons” for IRS purposes, living in Canada. Focusing on FATCA in Canada is useful because two Canadians have filed a claim against the Canadian government asserting that the IGA entered into by the United States and Canada165 to implement FATCA violates several provisions of the Constitution of Canada,166 including Canada’s Charter of Rights and Freedoms,167 the Income Tax Act of Canada,168 and the Canada-U.S. Tax Treaty.169 The agreement requires Canadian FFIs to hand over information on qualifying accounts to Canadian tax authorities, who will in turn submit the information to the IRS.170
This litigation is being crowd funded by the “Alliance for the Defence of Canadian Sovereignty.”171 In a press release the group asserts that “[FATCA] . . . makes it mandatory for the Government of Canada to discriminate against Canadian citizens and residents, whom the U.S. deems to be ‘U.S. persons’, by turning over their private bank account information to the U.S. IRS.”172 The two plaintiffs were born in the United States.173 Each left the United States at the age of five and neither has returned since.174 Neither has a U.S. passport and neither has ever filed a tax return with the IRS.175 One of the plaintiffs was born in the United States but is a Canadian resident.176The other was married to a Canadian citizen and owned a graphic design company in Canada.177
One of the plaintiffs states she has no accounts in a Canadian financial institution in excess of $50,000, (“Low Value Account” under FATCA). 178 The other has at least one account that exceeds $50,000 but is less than $1,000,000 (a “Lower Value Account” under FATCA).179 The claim states that by agreeing with the United States in its Model 1 IGA to collect and report to the IRS personal and financial information on Canadian account holders, Canada has violated Canadian law.180
Specifically, the claim asserts that the Model 1 IGA entered into by Canada and the United States violates the Canadian Charter of Rights and Freedoms, a document akin to the Fourth and Fifth Amendments of the U.S. Constitution, which grants the “right to life, liberty, security of person; security against unreasonable search and seizure; [and] equal protection of law without discrimination.”181 Additionally, there is concern that the agreement disregards the principle of maintaining sovereignty.182 The claimants and many other Americans living in Canada feel “entrapped in U.S. citizenship” and that their rights are being violated as they are “branded” potential tax evaders.183
While the claimants are being applauded and supported by their fellow Canadian-American FATCA haters, there may very well be a harsh reality waiting on the other side of the lawsuit. A successful lawsuit will not make FATCA go away. It will not make the fact that these Canadian-Americans have U.S. tax liability go away.184 And it will not return them to the blissful ignorance of a “pre-FATCA world.”185 The U.S.-Canadian IGA, in actuality, protects the plaintiffs and others from the full effects of FATCA.186
If found invalid under the Canadian Constitution, the IGA will disappear, but Canadian financial institutions are not about to ignore FATCA and miss out on U.S. capital markets; most will likely turn around and hand the information directly to the IRS, rather than through the Canadian Government.
187 So while the plaintiffs can refuse to sign a waiver allowing release of their information, they will probably find themselves without a bank willing to work with “recalcitrant” account holders.188
In order to ensure that this important piece of scholarship is not lost, I include it here:
FATCA Article Bean Wright SSRN-id2570015 (1)
I welcome your comments on the Bean Wright article.
@Dash1729 re: Canadian Citizens. Through this omission the impression in the US homeland may be upheld of US tax cheats having escaped to Canada.
@JC
“Through this omission the impression in the US homeland may be upheld of US tax cheats having escaped to Canada.”
That is hard for me to believe, actually, given that the article also made note of the fact that neither plaintiff has lived in the USA since the age of five.
If people reading the article are so unreasonable as to believe that five year olds intentionally leave the USA to live the rest of their lives in Canada as tax cheats, then I doubt throwing in the fact of Canadian citizenship will help matters.
@JC
Also it looks like it is intended to be a scholarly journal, which means that it was reasonable for the authors to assume a certain level of intelligence on the part of its readers.
@Dash1729 The education process continues. I see it only fair to emphasize two Canadian citizens who have lived all their life except for the first few in Canada – as proper representation.
@Dash,
The salient citizenship of a Canadian citizen living within Canadian sovereign autonomous borders, who is engaged in formally appealing to Canadian law and Canadian courts – is their Canadian status, not the one the US chooses as relevant. If one is a dual from birth, residing inside Canada since the age of 5, then which citizenship is most salient? What law is the law of the land for someone residing in Canada? Who governs a Canadian citizen residing on Canadian soil?
That is why it is an important omission from the authors of the paper in their description of the plaintiffs.
@JC
I totally agree with getting the word out that both plaintiffs are Canadian citizens.
I’m a tad less comfortable with trashing the paper authors for missing this fact when they got so much else right.
@badger
If one is arguing for RBT and not CBT it makes sense to talk up residency and downplay citizenship.
@Dash : “Also it looks like it is intended to be a scholarly journal, which means that it was reasonable for the authors to assume a certain level of intelligence on the part of its readers.” Really ?
@Dash
I do not believe I “trashed” the article nor the writer. I stated my reaction to the description of the plaintiffs. The underlying assumption seeming to be the unquestionable fact that birth in the USA supercedes all the other factors. There is nuance and bias involved in writing. No one composes without such conditions influencing the “facts.” I don’t know a better way to say it other than there is a suggestion that being a full blown Canadian, i.e, a citizen, is not enough to clearly demonstrate that there is no right to tax people such as the plaintiffs in this case. It is a very important fact that these people are Canadian citizens.
@JC
Thanks for your kind comments about the Canada AM program. I do appreciate them.
What makes you think they wouldn’t stop me at the border? LOL!
@Tricia Moon
“I stated my reaction to the description of the plaintiffs.”
But the description of the plaintiffs provided by Prof Bean seems to be taken directly from the plaintiffs’/Arvay’s own Statement of Claims! I’m having a really hard time understanding how Prof Bean can be faulted for this–although I can understand that other parts of the article are fair game for criticism.
The Statement of Claims in their description of the plaintiffs Ginny and Gwen on pages 14-15 are silent on the subject of whether the plaintiffs are Canadian citizens. The Canadian citizenship of their parents and their spouses is mentioned, but nowhere do the claims actually come right out and say that Gwen and Ginny are Canadian citizens. The closest they come is when Gwen is quoted as saying “because I am a Canadian” but this is an informal statement that doesn’t mention citizenship or residency. We are told they have crossed the border into the US and been questioned, but the time when this happened is not made clear–it could have been many years ago, pre 9/11, when it was often a very informal process.
The Statement of Claims are very specific on the citizenship status of Gwen and Ginny’s parents and their spouses but strangely silent on the citizenship status of Gwen and Ginny themselves. I assume Arvay has a strategic reason for approaching it this way and won’t ask the reasons at this time.
But I do think it is really unfair to criticize someone for providing a description of the plaintiffs that very closely mirrors the description the plaintiffs themselves have provided. If we aren’t fair to those who are trying to be fair to us–and I do think that Prof Bean has at least tried to present all sides of the issue–I don’t see how we can win.
@Dash
I really do not have the energy to do this but I wanted to respond. The description of the plaintiffs lacks any sense of personal-ness, as if the plaintiffs were objects. Please take a look at the description of them on pages 13-14 at this link.There is a distinct difference. In particular you will notice Gwen refers to herself as a Canadian.
Honestly I fail to see how a reasonable and respectful disagreement with a description will lead to the conclusion that we will not win. Sorry, I simply do not understand where you are coming from on this.
https://adcsovereignty.files.wordpress.com/2014/10/hillis-filed-amended-statement-of-claim-to-the-defendants.pdf
p 14 amended statement of claims
72. Gwen has never held a United States passport. She has travelled to the United States in the past and has been questioned by a border officer as to why she, a person with a United States birthplace, does not have a United States passport to travel into and out of the United States, to which she always replies: “because I am a Canadian.”
@Tricia Moon
My email address is . Would it be asking too much for you, @Stephen Kish, and I to discuss this disagreement privately in email?
I am happy to discuss anything you like.
I have removed your email address from public view.
Will send you mine.
I don’t see this as a huge disagreement.