Cross posted from: https://adcsovereignty.wordpress.com/2015/07/08/cbtlawsuit-first-report-of-senate-finance-committee-brings-citizenship-taxation-lawsuit-one-step-closer/
***************
#CBTLawsuit – First report of Senate Finance Committee brings citizenship taxation lawsuit one step closer
As reported at the Isaac Brock Society, the “International Taxation Committee” has released it’s report on tax reform. In spite of the fact that more than 3/4 of the submissions were from Overseas Americans, the committee, acknowledged, but failed to address the intolerable treatment of Americans abroad.
As barely, a footnote, the Committee ended with:
F. Overseas Americans
According to working group submissions, there are currently 7.6 million American citizens living outside of the United States. Of the 347 submissions made to the international working group, nearly three-quarters dealt with the international taxation of individuals, mainly focusing on citizenship-based taxation, the Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign Bank and Financial Accounts (FBAR).
While the co-chairs were not able to produce a comprehensive plan to overhaul the taxation of individual Americans living overseas within the time-constraints placed on the working group, the co-chairs urge the Chairman and Ranking Member to carefully consider the concerns articulated in the submissions moving forward.
What does this mean?
At a bare minimum it means that:
1. The “International Committee” views its purpose as dealing with “corporate interests” and not “individual interests”.
2. The “International Committee” views DNA Americans as less important than “Corporate Americans”.
3. The “International Committee” has acknowledged the urgency of the situation “for the international taxation of individuals, mainly focusing on citizenship-based taxation, the Foreign Account Tax Compliance Act (FATCA), and the Report of Foreign Bank and Financial Accounts (FBAR).”
Remember that many of the same submissions that were sent to the “International Committee” were also sent to the committee focusing on “Taxation of Individuals”. It’s difficult to see how this could not be addressed further by that Committee.
In terms of where to go from here …
1. There will (in the very near future) be a lawsuit launched in the United States against the most egregious aspects of U.S. TAX policy, as they relate to ALL PEOPLE deemed to be “U.S. persons” who reside outside the United States.
2. The lawsuit is likely to, in addition to issues of taxation, include issues related to the “forced imposition of U.S. citizenship” on people who do NOT regard themselves as U.S. citizens or “U.S. persons”. Can the United States deem people to be “U.S. persons” when they believe that they are not?
3. The lawsuit will NOT be run by or through the “Alliance For The Defence of Canadian Sovereignty” (which will “stay at home” dealing with our FATCA lawsuit). It will be run by and funded by a different organization.
4. We hope for the support of all the various groups deemed by the U.S. Government to be “Americans abroad”. “If Americans abroad do NOT hang together, they will hang separately“.
Evaluating your personal situations …
It’s obvious that “U.S. citizenship abroad” lies somewhere between “difficult and impossible” (depending on your personal circumstances). The report from the “International Committee” suggests that the “plight of Americans abroad” is NOT likely to get better soon. This reality raises the obvious question of whether it’s safe to retain U.S. citizenship in a FATCA and FBAR world.
Stay tuned.
John Richardson
P.S. Here is the report from the International Committee.
@ShadowRaider “Regarding “accidentals”:
“Can the United States deem people to be ‘U.S. persons’ when they believe that they are not?” Yes, it can.”
No, it can not.
PARTIAL DISAGREEMENT.
The USA can NOT deem a person resident in Canada who is a passport carrying Canadian Citizen to be a US Citizen whilst that person is in Canada.
The USA can ONLY deem and enforce such status is if that person has entered US Territory.
My understanding is that you have to claim US citizenship if born abroad (i.e. the parents claim it). If you are born abroad and want a US passport you have to submit documentation showing that you meet the requirements. If you don’t file them, how could they think you are a US person?
What lawsuit are we speaking about? Who launched it? Are we talking about Jim Bopp?
Marie,
No, the litigation to be launched in the near future is not the Jim Bopp litigation. From the post at https://adcsovereignty.wordpress.com/2015/07/08/cbtlawsuit-first-report-of-senate-finance-committee-brings-citizenship-taxation-lawsuit-one-step-closer/…
If this is not the Jim Bopp suit – I am very confused…..???
Yeah- I thought it was the Bopp suit too. So where did this pop up from? Is it some sort of secret? And if so- how did they fund it?
???
@JC I would love to see a lawsuit like you mentioned filed by the non US family members. It would make my day, BUT only after we have invested our money and energy in successfully repealing CBT. While I am NOT interested in reclaiming US citizenship (I DO NOT BELIEVE THAT I AM ONE), I certainly would like to be compensated. I think that those individuals who were told early on that they had to go into the early programs, were low risk, were fined, they should have their money returned!
The Bopp lawsuit is aimed at FATCA.
The lawsuit mentioned above is aimed at CBT.
There shouldn’t be any confusion. As of now there are:
1) The ADCS lawsuit in Canada that we have all been contributing to for a while and goes to court August 4th in Vancouver.
2) A long awaited FATCA law suit inside the USA by Jim Bopp and Senator Rand Paul that should be filed shortly.This deals with FATCA only.
In other news:
***It was announced yesterday that there will soon be a CBT law suit (different then Bopp’s FATCA suit) filed inside the USA that will attack the root of our problem, CBT. This was just announced yesterday. This is very good news as even if the two FATCA law suits were successful, we would still be expected to file and pay taxes in the USA. Going after CBT and winning could potentially rid us of that.*****
It is important to note that the new CBT law suit that will soon be filed is not affiliated with the ADCS. The ADCS will continue to work on the FATCA law suit in Canada. This is great news because we need to attack this on multiple fronts as one or more of the suits may not be successful.
@ERIC,
In my opinion, yes, you should donate when we are able to. Since the upcoming CBT law suit was just announced yesterday, we have not been asked to donate to it yet as there is little information at this time.
Phil – I hope that the group (whoever they are) carefully considers the basis for the suit, picks the right plaintiffs, and is ready to go all the way to the US Supreme Court. If they are not fully prepared, a negative decision by a US federal court supporting CBT would be a disaster for us. IF they are reputable, fully prepared and ready to go the distance I am all for it.
@George. “The USA can NOT deem a person resident in Canada who is a passport carrying Canadian Citizen to be a US Citizen whilst that person is in Canada.”
This is not true.
http://www.treasury.gov/resource-center/faqs/Sanctions/Pages/faq_general.aspx
“11. Who must comply with OFAC regulations?
U.S. persons must comply with OFAC regulations, including all U.S. citizens and permanent resident aliens regardless of where they are located…”
I wonder what the basis is for the lawsuit against CBT. Because honestly- I know of no country in history that gave up a source of revenue without a fight – ESPECIALLY when homelanders are all for it.
@Walt The Bopp suit is also against unreasonable FBAR penalties.
Dax
You quote Usa law
Usa law stops at the Usa border along with Usa citizenship
Does Saudi law affect Saudi female persons in canada
I don’t understand why people seem to think that getting rid of citizenship based taxation also means FBARs and FATCA will go away for US citizens living outside USA. If I was the broke USA, even if CBT was deemed unconstitutional in a court of law and I had no choice but to stop compelling non-resident US citizens to file tax returns, I still would want to know what ALL my citizens(not just the US resident ones) had in the banks in other countries. It would just make sense for the master to want to keep both FATCA and FBARS, as we know the master is not kind and does not give liberties unless forced to.
In other words, I am worried that we are all thinking that if CBT is deemed unconstitutional that our FATCA, FBAR problems all go away. But do they? It sure would be disappointing after years of waiting for a CBT lawsuit to conclude, that we end up finding out that we are still subject to FATCA and FBARs(and all the associated penalties, privacy issues, and lord knows what else to be dreamed up by USA) even though we no longer have to file US tax returns and are no longer taxed on our non-US income.
Be nice people. I am not trying to shit-disturb. I just am not seeing how getting rid of CBT solves the FATCA and FBAR problems in one foul swoop for US citizens living outside USA which is the impression that some Brockers, like Phil for example, seem to have.
Can anyone clarify for me? I am either missing something, or others are missing something.
@Polly
Maybe it would help to look at some of the arguments that other nations had when going from CBT to RBT over the years. No other nation on the planet has chosen to continue taxing it’s non-resident citizens on their world-wide income when undergoing comprehensive tax reform, and have instead chosen to “abolish” the practice:
Mexico used to tax its citizens in the same manner as residents, on worldwide income. A new income tax law, passed in 1980 and effective 1981, determined only residence as the basis for taxation of worldwide income.[127]
The Soviet Union used to tax its citizens on worldwide income regardless of where they resided.[128] After the country was dissolved in 1991, none of its successor states kept taxation based on citizenship, using instead residence as the basis for taxation of worldwide income, or taxing only local income.
Bulgaria used to tax its citizens on worldwide income regardless of where they resided.[129] A new income tax law, passed in 1997 and effective 1998, determined residence as the basis for taxation of worldwide income.[130]
The Philippines used to tax the foreign income of nonresident citizens at reduced rates of 1 to 3% (income tax rates for residents were 1 to 35% at the time).[131] It abolished this practice in a new revenue code in 1997, effective 1998.[132]
Vietnam used to tax its citizens in the same manner as residents, on worldwide income. The country passed a personal income tax law in 2007, effective 2009, removing citizenship as a criterion to determine residence.[133]
Myanmar used to tax the foreign income of its nonresident citizens at a flat rate of 10% (income tax rates for residents range from 3 to 40%). As part of a series of reforms, the country abolished this practice in 2011, effective 2012.[134]
https://en.m.wikipedia.org/wiki/International_taxation
@WhiteKat I see what you are getting at. (You have made my head hurt even more, if possible). One just ASSUMES that if the US moved to RBT the word “foreign” would no longer have meaning in the tax code. It might have to be made absolutely clear in the suit that anything “foreign” is not the business of the US/IRS/DOJ unless it involves US residents.
(Obviously the US does NOT understand this. The recent fines imposed on foreign banks for behaving in a way the US did not approve of, even though they did not violate their own laws, pitted against their never taking to task the US banksters despite massive evidence of criminal wrongdoing regarding the 2008 Wall Street crash leaves one terrified as to how they are quite able to live with unmitigated hypocrisy and outside of the boundaries of anything ASSUMED to be fair, just and within accepted norms).
I would think any suit regarding how the tax code would look under residency based taxation must make sure they dot all of the lower case j’s. One can never be to careful when dancing with the devil.
@Charl,
As long as we are US citizens, we are at risk of being subjected to immoral US laws, particularly since our wimpy governments (of the countries we actually live in) have already shown that they won’t protect us.
For those that are COMPLIANT already, they can afford to wait around to see if and how RBT will be adopted. For the rest of us, with FATCA breathing down our necks, it may well be too late by the time a CBT lawsuit concludes.
Unless this new lawsuit is heavy on helping US citizens renounce, in my opinion, if one had to choose between which lawsuits to support (speaking to those US persons who are NON-COMPLIANT here), the FATCA lawsuits are a better bang for your buck. You cannot bring that information back once it is sent to the USA.
On the other hand, compliant US persons have more reason to support a CBT lawsuit over a FATCA lawsuit imo.
@Charl
Of course any switch to RBT would only be acceptable if it were thorough, but if you believe that a government can have a personality disorder only associated with human beings, then I suppose we could have something to worry about, howeverr, unlike human beings, if the behavior of a government (laws) can be modified by the courts and the will of the people, governments can change.
@WhiteKat, According to judicial precedence, taxation is deprivation of property and therefore requires due process and equal protection, which prohibit discrimination based on a classification that is not rationally related to a legitimate purpose. My argument is that CBT is unconstitutional because citizenship has no relation to the purpose of taxation.
Monetary penalties are also deprivation of property, so the same argument applies. In that case, the US government could still demand the information on tax returns, FATCA and FBAR, but not enforce it with penalties on nonresident citizens.
Well, the way I see it: we have the IGA lawsuit right now, the FATCA lawsuit filed next Tuesday (according to the RO Facebook page), and then if we can get the CBT lawsuit up and running soon, then the enemy (the US government) is being attacked on three fronts at the same time (even if the ADCS lawsuit is against the Canadian government, it’s an assault on a US law). I say hooray to this, better than these things happening separately.
As a Canadian, I support the ADCS lawsuit. As an American, I support the fight for RBT. The former has nothing to do with my being compliant, the latter – everything. At least that’s how it is for me.
@Bubblebustin
I never knew that. I had heard that the Philippines were the last to go and thinking it was in the 50s or something – but I never knew that CBT was not only so widely spread, but so recent. So now that they are listed- what was their reason for abandoning that system? Was it because it was impossible to enforce? Because if that was the case, then times have changed and America can obviously now enforce CBT. Or was it perhaps bad for business?
@Polly, It was not widespread, these were the only countries that ever used CBT. The Soviet Union, Bulgaria and Myanmar abolished CBT as part of the transition to democracy. The Philippines had various problems with CBT over the years, you can read more about it here (starting on page 43).
@Polly
I’d like to know the answers to those questions too – and read WHY these nations chose to go to RBT, but can’t find much in the way for info on that yet. I’ll keep looking, but this could be a job for some of our more enterprising researchers – or maybe a topic for a new post to get more involved in the research (unless it’s been covered already and I missed it).