UPDATE: The initial story by Ralph Z. Hallow, chief political writer at The Washington Times, has been revised and greatly expanded at the same previous link:
http://www.washingtontimes.com/news/2015/jun/24/sen-rand-paul-sue-irs-us-treasury/
This is stop-the-presses news: Rand Paul has joined forces with Jim Bopp, Solomon Yue and Republicans Overseas and will be one of seven plaintiffs in the upcoming lawsuit against the IRS and the US Treasury Department. The suit will be filed by a new composite organization called Republicans Overseas Action.
Some crucial highlights:
Sen. Rand Paul to sue IRS, U.S. Treasury
Rand Paul is poised to become the first major presidential candidate in memory to sue the government he seeks to lead as president.
The Kentucky senator will take legal action against the U.S. Treasury and the Internal Revenue Service for what he says is the denial of his constitutional right to vote on more than 100 tax-information treaties that the Obama administration unilaterally negotiated with foreign governments, The Washington Times has learned.
In what the suit says is a violation of Article II, Section 2 of the Constitution, President Obama has not consulted the U.S. Senate about the treaties nor given the Senate an opportunity to approve or disapprove of the treaties. The administration calls them “intergovernmental agreements.” They require foreign banks to gather and share private financial information about millions of Americans living and working outside the U.S. — information they would not have to disclose to the U.S. government if they lived and worked in the U.S.
The treaties or agreements are the enforcement mechanisms of the Obama administration’s Foreign Account Tax Compliance Act (FATCA), enacted by a Democratic-controlled Congress in 2010.
The act is despised by many of the estimated 8.7 million Americans living overseas, a record number of whom have — with great anger and reluctance, according to those who have spoken to the foreign and U.S. press — renounced their U.S. citizenship rather than attempt to comply with FATCA.
Mr. Paul, a Republican who announced his presidential bid in early April, will join six other plaintiffs in the suit that a new organization called “Republicans Overseas Action” expects to file in a southern Ohio federal district court the week of June 29. The court’s Republican makeup is considered at least open to the constitutional arguments that the plaintiffs lay out.
The other plaintiffs in the suit Mr. Paul has joined say they have been denied banking and financial services in the foreign countries where they live and work. The foreign banks don’t want to be burdened with the expense and paperwork to comply with FATCA and therefore simply refuse to accept Americans as clients.
The Republican National Committee and the recently formed Republican Overseas Action aim to get as many of those Americans living or working outside their country to register in one or another of the swing states that decide the presidency in close elections. Republicans Overseas Action is paying for the lawsuit Mr. Paul has joined as plaintiff.
The driving force behind the suit is a longtime conservative activist on the Republican National Committee, Solomon Yue of Oregon.
“The best way to defend 8.7 million overseas Americans’ right to privacy and constitutional protections is to cripple the IRS, FATCA and enforcement tools through legal action on constitutional grounds all the way to the U.S. Supreme Court,” said Mr. Yue, founder and vice chairman of Republicans Overseas Action Inc
For reference, here was our initial coverage today:
A very significant announcement from Rand Paul today, as reported by The Washington Times:
Sen. Rand Paul to sue IRS, U.S. Treasury
Kentucky Sen. Rand Paul will sue the U.S. Treasury and the Internal Revenue Service for denying his constitutional right to vote on treaties that the Obama administration unilaterally negotiated with dozens of foreign governments, The Washington Times has learned.
The treaties, which the administration calls “intergovernmental agreements,” require foreign banks to gather and share private financial information about millions of Americans living and working outside the U.S. – information they would not have to disclose to the U.S. government if they lived and worked in the U.S.
Photo credit: Associated Press
@Jefferson
With emphasis on “cannot collect”. There are many countries which WILL collect for the IRS. I think we really have to discern who we are talking with here when giving advice. Not everybody is as protected as those in Canada. And even there- what do people do who were American and just recently renounced to become Canadian? The Canadian government offers no protection for those as far as I have understood it. I think England and Germany WILL collect for USA. Switzerland will not.
@ Jefferson D Tomas
An injunction would do no such thing as there is no mechanism to enforce it outside the US. Banks will either continue as if there is no injunction fearing that they will penalized if they don’t and the injunction comes to an end or join the other FFIs who have already decided that we are too toxic and shut us out.
@Japan T
“After reading them I again began to consider becoming Japanese but as the remarks above show, a CLN is not even being asked for by FIs, only US POB. We are caught. Even naturalizing does not protect us from having our info sent to the U.S. to be left unsecured, perhaps sold to the highest bidder.”
Under that reasoning, we are ALL essentially caught anyway, so I may as well just lie on the forms.
Born in the USA? Nope! Not me! I was born in Canada. (wink wink)
@ mjh
Born in the USA? Nope! Not me! I was born in Canada. (wink wink)
I am happy for you and all others who can. There is no way I can pull that off where I live.
@Japan T
It would be my luck to get caught lying on the forms, but nevertheless, I am not motivated to be honest within a system that is completely dishonest.
@Jefferson D Tomas
I believe Atticus has a mortgage renewal story similar to that.
I have an idea I’d like to float out here, and I think that it’s the right place to do it. It’s percolated out of the Irish government’s recognition that some Irish banking customers may not be in possession of a CLN because none existed when they relinquished. The CRA allows for a “reasonable explanation” as to why a Canadian banking customer wouldn’t be in possession of a CLN, but unlike Ireland, offers no guidance at all as to what that is, leaving it up to the discretion of each bank and individual employees who presumably have little knowledge in this area.
Now as much as I’d like to think that Canadian bank employees might be sympathetic to “the dog ate my CLN” excuse, I think it’s more likely that they’ll want to cover their a$$es and err on the side of caution. In a heightened state of paranoia and no guidelines for a reasonable explanation in place, how can banking customers expect any consistency in treatment (unless it’s consistently bad)?
Should the CRA do some research (as perhaps the Irish government did) and create guidelines for a “reasonable explanation” as to why someone may not have a CLN for the Canadian banking industry to follow? What would those guidelines look like?
@Polly
Canada is saying they won’t collect… I don’t trust them… what can be true today may not be true tomorrow… so we need to do what we can to protect ourselves
@Bubblebustin
I don’t think CRA will spend any of their budget money to do so… @George mentioned yesterday… bank will report on all US persons if any indice is found… CLN or not…. I have a funny feeling the banks will do the same thing in Canada… US date of birth… send…. Ohh… US addy or phone number from before or now… send… any trace… Getting checks from the US may even flag u… if it happens more then once…
@Japan T
Injunction will probably suspend further talks with other countries but with the current IGAs in place… Foreign countries will send all info… since they have no injunction stopping them from sending it…
@MuzzledNoMore
RE: “On the RBC Direct Investing application form there is the birthplace question but *no* question regarding whether or not one has a CLN. Nothing. So, if you write down “United States” you’re screwed. Period.”
I had a feeling this day would come. Absolutely sickening! There will be a lot more OMG moments for many out there. I think we need to do more research on FATCA exempt credit unions and especially look into investment options. It is shocking that even if one has renounced/relinquished and has a CLN, their information could still get sent to the IRS. Personally, I will never do business with the big banks again.
Whatever happens, it’s becoming crystal clear that this is going to be a HUGE mess. We truly ain’t seen nuthin’ yet.
@Deckard1138
U got that right… if u have any US indice… no matter why & U are not a US person… chances are.. they will send out info… No way u will know… Also… hacking of US Fed employee info will be nothing compared to when… not if… hacking on either end for this info… then we will have no one to help us clear up that mess…
@Jefferson
Do you think we will really see the filing in one week?
No idea whether it will happen in exactly one week but I do in fact feel that the filing is getting close. One reason is that this is now getting US media attention from news sources besides just the Washington Times. The Washington Times has often been just about the only news outlet in the US to cover FATCA related matters. However, this lawsuit is now gaining attention from a wider range of US media, suggesting a definitely increased buzz.
@US-foreign-person
Yes- we have no idea what the future will bring: more blackmail or legal success.
@ George
I get where you are coming from as we share a common bond as some do at IBS.
I remain convinced of “I think it is reasonable to ask “Citizenship:___________”
President Grant, in his memoirs, wrote that the quickest way to have a bad law repealed is to enforce it fully. I agree, however, I do not care one way or the other about FATCA, whether it stands or not, it is the EFFECTS of this stupid law that I am concerned with. The effects will remain even after the law is repealed. Once my citizenship is paired with my financial data, then I am a easily discoverable target.
Here in Japan, all our bills are paid via automatic withdrawal. All it takes is just one individual in any of the multiple banks that I am required to have to receive my pay from my various employers to hand over the list of all U.S. person account holders for the bad guys to know where I live, where my spouse and I work, where our children go to nursery school, how much my spouse and I earn, when we vacation. In short, everything. That information will not go “poof!” and disappear from the hands of the bad guys once the law is repealed.
I know of this monstrosity and am doing everything my meager abilities allow to overturn this before it effects my family. Once my family begin to feel the effects, the damage is done and it will be unrepairable.
So no. They should not be asking for citizenship. There are reasons why doing so is illegal and rewriting local laws does not make these reasons go away.
“The Washington Times has often been just about the only news outlet in the US to cover FATCA related matters.”
Forbes has been covering it too. I never actually bought Forbes magazine because I’m out of their league (maybe I’m about 20,000 leagues below them, being lower middle class). But much to their credit, Forbes postings on FATCA have covered the 99% along with the 1%.
Japan T says:
“All it takes is just one individual in any of the multiple banks that I am required to have to receive my pay from my various employers to hand over the list of all U.S. person account holders for the bad guys to know where I live, where my spouse and I work, where our children go to nursery school, how much my spouse and I earn, when we vacation.”
When you give employers details of the bank account to send payments to, one of the details is the name of the account holder. I think that can be the name of your spouse. Sure that means your spouse has to open accounts at all those banks, but that’s not too hard. I think you can survive without having a bank account yourself.
@ Norman,
I have checked. My employers said no, they can not (will not?) deposit into an account with a name different than the employee’s. Company policy, statutory law or just common practice, I do not know. All I know is that my employers will not, which means I will be out of work if/when my accounts are closed.
Also, I was about to hunt you up on the other thread. The remarks above on banks only asking about place of birth and ignoring the CLN is one of the situations I meant by saying that banks are not compelled to accept a CLN.
@Polly and @US-foreign-person
Yes- we have no idea what the future will bring: more blackmail or legal success.
Yes we do. Legal success may end blackmail by the U.S. Gov. but will not from whomever got our financial info before said legal success. Once that information is out there, there is not bringing it back into secrecy.
@mjh
@Japan T
It would be my luck to get caught lying on the forms, but nevertheless, I am not motivated to be honest within a system that is completely dishonest.
Sounds like Mr. Murphy has an unnatural interest in you as well! But I too share your lack of motivation to be honest to a dishonest system.
@ US Foreign Person
Injunction will probably suspend further talks with other countries but with the current IGAs in place… Foreign countries will send all info… since they have no injunction stopping them from sending.
A baby step in the right direction but a step all the same. Not much help for those of us living in countries that have already been bamboozled into signing the IGAs. And the current administration has a history of ignoring injunctions, so….
@Polly You do have a point, unfortunately Canada is one of them but there are not many countries that will collect due to specific language in their trieaties:
“… Canada, France, Holland, Denmark and Sweden. The treaties containing this language were written long ago and the U.S. has not sought to insert this language into treaties in the recent past ” see http://www.procedurallytaxing.com/international-collection-efforts-by-the-irs-expanding-the-number-of-treaties-in-which-we-have-collection-language/
This having been said, the timing of the Bopp / Rand lawsuit, if it does get filed in the next few days, would be ideal if an injunction could come in July or before the “summary trial” of the ADCS lawsuit in August. If there is such an injunction, one may have to seek local injunctions in every other IGA country. If the judge that give the injunction makes a motivated decision citing constitutional violations, these could be cited. In Switzerland and other countries it is possible to establish the content of a foreign law and have the judge apply it in some cases; see this article “Establishing the Content of Foreign Law: A Comparative Study” ( http://www.maastrichtjournal.eu/pdf_file/its/mj_20_01_0075.pdf )
Would it be possible then to rebuild any injunction manually, if you will, in each country?
Maybe for Switzerland, the answer lies here: Swiss Institute of Comparative Law. http://www.isdc.ch/default_en.asp
@US-foreign-person I think that Canada will collect Taxes according to the treaty, but not fines for not filling out Treasury forms (e.g. FBAR) but I don’t know about FATCA nonfiling fines.
See http://business.financialpost.com/legal-post/cra-will-not-assist-irs-in-collecting-penalties-against-dual-citizens-subject-to-fatca “Canada Revenue Agency has confirmed that it will not help the U.S. Internal Revenue Service collect penalties imposed against dual citizens (or any Canadian citizens) for failing to meet financial information filing requirements under U.S. tax laws.” Here is an IBS article on the same issue: http://isaacbrocksociety.ca/2012/08/22/roy-berg-did-the-irs-really-concede-that-fbar-penalities-are-not-collectible-under-the-united-statescanada-tax-convention/
@Jefferson D Tomas
Once they have a road map of all u have… they can pretty much do what they want… with the help of the canadian gov’t & the banks…
I recall an article… I think last yr… some sort of tax issue a man had and I think it was TD who froze the man’s account in Canada… not sure if they forwarded the money to the US or not… man sued & won his case against the bank…
Problem about lawsuits… even for an injunction… it requires $$… unless u have a nice bank roll… its not possible for the average person to do nor do I think any lawyer will do the work for pro-bono & person foots the court expenses… because if it was possible… plenty of people would make this move to stop this nonsense… biggest problem is… not alot of people even knows about this crap…
@US_Foreign_Person
Ok, I propose that we work to get some facts. Let’s contact authorities using our Nom de Plume email addresses and ask them:
1. Is there a procedure for collecting IRS taxes, and what about FBAR and FATCA penalties that are not taxes.
2. Is a bank allowed to freeze the current account of a non-compliant person that they need to collect their salary and pay bills as well as local taxes?
3. What should one due if they are unable to open even a basic bank account?
I’m not sure which country you’re in, but I can make inquiries French-speaking CH and will post any response I might get to my email here. If we get enough data, we can open a separate thread about this.
Are you game? Anybody else want to help?
@Jefferson D Tomas
I know people who work for revenue in Canada … been kind of asking without fessing up anything… they are not sure what is going to be done… being a US person is a secret my family shares with no one… we are a mix of US citizens… Green Card… Visa… been talking to some in the gov’t… not getting a straight answer… seems that the right hand does not know what the left is doing… There maybe laws in place but the banks will do what it wants to do with the blessing of the gov’t… no matter what any so called US persons protests about… only thing that can be done is what is being done now… lawsuit… US persons are being robbed of any way to secure ones future in terms of savings, investments, & even business opportunities… Opportunies that was open before to make a living… the door is now slammed shut in our faces… once anyone finds out about US person