cross posted from the ADCSovereignty Blog
FATCA Update: Treasury Relaxes September 30 Deadline for Model 1 IGA Jurisdictions to Exchange Ta… http://t.co/wocIyAGoPr via @BlankRomeLLP
— Citizenship Lawyer (@ExpatriationLaw) September 19, 2015
Well, it’s been quite a week. At approximately 4:45 p.m. today the IRS issued a notice confirming that the FATCA implementation date will be extended to September 30, 2016. As you know Canada has a Model 1 IGA. Assuming the correctness of the post in the above tweet:
Model 1 IGA Jurisdictions for Which the Obligation to Exchange Is In Effect
For those Model 1 IGA jurisdictions where the obligation to exchange is in effect now, Notice 2015-66 provides that FFIs in that country will be treated as FATCA compliant, and not subject to withholding, so long as the partner jurisdiction notifies the U.S. before September 30 that it requires more time, and “provides assurance that the jurisdiction is making good faith efforts to exchange the information as soon as possible.” Notice 2015-66 does not, however, change the deadline for FFIs to report information to their local tax authority, which remains governed by law of that country.
We have instructed our legal counsel to notify the Government of Canada (and they have) of this development and request that the Government of Canada NOT disclose your banking information to the IRS.
It’s been quite a week. We will keep you posted.
I just read something that I hadn’t heard before, or thought through.
http://taxcontroversywatch.com/2015/09/18/fatca-update-treasury-relaxes-september-30-deadline-for-model-1-iga-jurisdictions-to-exchange-tax-information/
Wow!!! Are they feeling the heat? Thank goodness for those who were going to be on the first data run.
You think Canada will ask for more time? They seem so raring to go. Having jumped on the IGA bandwagon ahead of the pack, you’d think they’d be ready by now. Or maybe the IRS just needs more time and wants to sound accommodating.
“and will be subject to audit or, worse, a criminal investigation. ”
Interesting as the IRS don’t even have enough staff to answer phones now:
“Workers also talked about having to do more with less; a challenge they say they have been facing for years.
“I’m quite sure morale is not what any of us would like it to be,” Stephen Miller told legislators during a hearing earlier in the month.
On May 8, the then acting IRS Tax Commissioner touched on the impact of budget cuts on employees during a Senate Appropriations Committee hearing.
Miller testified the total cuts including the sequester impacts totaled $618 million.
“We’ve trimmed so much and so many areas that I would think while being clever managers and efficient people will get us part of the way it won’t get us all the way,” Miller said.
A former IRS worker says limited resources are nothing new for the agency.
“The IRS is really underfunded, understaffed for what their expected to do,”
That was in 2013 and apparently things are far worse now. So who will be auditing and criminally investigating all of the 100,000’s of accidental US minnows living overseas? They can’t even answer phones or go after big fish living IN the USA.
Also, what is it really going to look like overseas if the IRS sends out storm troopers around the world to hassle ex-americans or accidental americans? Take me for example.. I’m fairly broke, not well off guy been in NZ for 15+ yrs. I have 100’s of close friends and family here, I am an upstanding citizen, active in the community. What happens when people like me are drug through the mud because we once lived in the US eons ago? I know 100’s of people here would be outraged and consider it my human rights being violated. It would be in the news. Multiply this by 10,000’s of people around the world. Headlines would be a PR disaster for the USA. Good, honest, law abiding citizens of their current country of residence wrongly violated by a foreign power for all to see. Headlines showing a foreign power destroying local families for no reasons. Will locals, family, friends take this lying down? Hardly. None of this IRS crap makes sense and I can’t see their ambitions gaining traction overseas, in which case the entire scenario has been a complete waste of time and resources the IRS doesn’t even have. Abolish CBT and get on with it.
@Bubblebustin Or maybe the IRS just needs more time and wants to sound accommodating.
BINGO. Just this year they announced major cut backs in their call centres. They are massively understaffed and under resourced. I am certain they are putting things off because who is going to manage all of this when their local operations are in shambles?
Govt has NOTHING to gain by turning over the information. Plus it would ruin their main defence – there’s nothing they can do, they’re being forced….and just think, we still have an announcement coming on Sept 30! Today is the best day ever!! ;-P
@pukekonz
How much can it cost though, to send out thousands, if not millions, of computer generated letters to shake the trees for loose or low hanging fruit? I guess you still have to have the systems in place to deal with even those I suppose.
@Trish
Almost as good as an injunction! I still don’t trust our government though. An announcement September 30th? Let me guess…
What an emotion roller coaster ride it’s already been this month!
Late to it as usual. Thanks all — this extra time (and it better be!) feels very good.
As John has reported, this has been a very hectic 48 hours since receiving the Martineau decision . Gwen,and the committee and I are reading all your comments and appreciate your support while noting your concerns.
Every decision we have had to make, notwithstanding the very tight time constraints we have recently experienced, are always with the focus on all of us so affected, wherever we live.
Things may seem to some to be slow in progression, but as John has posted, other things are changing rapidly. We are up against a moving target.
(As an aside, I don’t think even in my legal practice I have ever been through a situation such as the last 48 hours.
@George: your very kind comments arrived at a perfect time. Thank you for your confidence and support.)
As most of you have understood, this is just the beginning, and the road is long. Litigation is expensive. It’s difficult to fund but I do know two things: our supporters are dedicated and determined, and the government is hoping we will give up due to lack of finances, because they hold the big bucks. Which is tax payers’ money of course. That’s their goal and wish.
My wish is to see this to the end, with your support and encouragement. I couldn’t do it without you. And I am not as brave as you credit me. But thanks for that confidence too. It helps when I cannot sleep at 3 a.m. knowing you are supporting this and trusting that we will continue forward in your name and with your best interests in mind in every decision we make.
CNN: IRS too broke to protect your data.
http://money.cnn.com/2015/05/29/technology/irs-not-protecting-data/
Seems like this should be a huge question raised by governments expected to entrust their citizens data to them. They still run Windows XP!? Maybe Canada should demand a security audit of IRS systems and when it fails, sorry, not turning over data.
I agree, pukekonz — lets get to the abolishment of CBT and get on with our lives.
How much of our time could be put to such better use (in our countries of residence and citizenship) but has instead been wasted in this morass since 2011?
I wonder if the hope is to get “reciprocity” (such as it may be) passed by then.
I suspect some countries will be quite angry if they don’t get it (China and Germany, for example).
Reciprocity..what a nitemare that would be for Merika. Every other country has to gather info only on People with US stigma…but Merika has to gather info on anyone who is a citizen of every country who signed the IGAs..and sort this out and get it sent to the proper country..lol
Three things obvious from this announcement …
1) The IRS does not have the resources to manage the massive input data and administer FATCA. They are underfunded and demoralized. They are unable to provide telephone support to US resident taxpayers. They are beset by allegations and evidence of fraud and incompetence. Meanwhile, they are charged with administrating Obamacare, a dysfunctional and complex undertaking. Senior staff are leaving thru attrition and not being replaced. And the ascendent Republican majority in Congress has the IRS in its cross-hairs.
2) This does not stop US Treasury from inventing or changing the so-called FATCA “rules” in an arbitrary and capricious manner. Let’s face it, at this point they are just making this shit up as they go along. What is especially shameful is the way the rest of the world – including nations such as Canada, Sweden, Norway that are far more functional than the US – continue to just lap it up and say “Please sir, may I have more.”
3) The Emperor has no clothes.
Bubblebustin says
September 18, 2015 at 9:06 pm
You think Canada will ask for more time? They seem so raring to go. Having jumped on the IGA bandwagon ahead of the pack, you’d think they’d be ready by now. Or maybe the IRS just needs more time and wants to sound accommodating.
Canada was last of G-7 to sign on. It also did not have the US person for tax purposes (need exit taxes) and no 30% withholding for American citizen holding US $ assets.
“Canada is the last G7 country to sign an agreement with the U.S. to implement FATCA, in part because government officials say they spent a long time negotiating exemptions for Canada.”
http://www.cbc.ca/news/politics/fatca-tax-deal-with-u-s-takes-some-heat-off-canadian-banks-1.2524444
While Canada may have more dual citizen than other countries, it economy is more dependent on US economy. We export hard to move commodities, Obama would love to stop Canada oil production. Without keystone they still export through rail but the 30% withholding would kill or damage severely all our exporting businesses, They export I phones financial products. This is the biggest reason why any Canadian Government will apply the non withstanding clause to a successful Supreme Court Challenge.
Think also all the single citizen Canadian who travel to USA and invest in USA stock. They will have no sympathy for American who will not renounce. If you people ever read through the guidelines for financial institution you would see that there would not be hundred of thousand of American caught.
The 2 plaintiff in lawsuit were not caught.
Unless they delay everything by 1 year it sound like this is a computer problems. Similar to Obama care roll-out. It will be interesting to see if BOP lawsuit ask for an injunction.
Model 2 IGA and Russia have always reported. Germany was no problem for USA FATCA agreement. The Chinese would probably like to have CBT eventually.
They just are pushing USA to collect data on all Chinesse citizen,
Last two days have been quite the roller coaster ride.
Interesting. They couldn’t possibly not wish to supply proof of IRS harassment before the Charter portion of the Cdn lawsuit, right? It’s not like they had anyone at the summary trial, right?
So why is it only Model 1s?
“and will be subject to audit or, worse, a criminal investigation.”
In 2006 and 2007 the IRS threatened to audit me. I invited them to do so, though I doubted that they had legal authority. They refused to do so. They threatened to contact payers. I gave them documents to contact a payer. They refused to do so.
In 2006 the IRS threatened criminal prosecution. I was a bit too scared at the time so I didn’t invite them, but I asked what they were on about. They refused to answer.
As information gradually leaked out from 2011 to 2014, I filed court motions trying to compel the IRS to audit me, and later trying to compel the IRS to prosecute me criminally. Since courts wouldn’t let me obtain discovery of documents in civil cases, I need to be a defendant in a criminal case in order to obtain discovery. Also by now I have figured out why IRS employees framed me. So courts deny my motions too. No audit, no prosecution, and no refund of the loot taken by stolen identify refund fraud.
However, let’s suppose hypothetically that the IRS would audit and prosecute…
“I have 100′s of close friends and family here, I am an upstanding citizen, active in the community. What happens when people like me are drug through the mud because we once lived in the US eons ago? I know 100′s of people here would be outraged and consider it my human rights being violated.”
Nope. You have 100’s of close friends and family who are going to think you’re a tax evader, they’re going to think you conned them into believing that you’re an upstanding citizen, and they’re never going to believe you.
“It would be in the news. Multiply this by 10,000′s of people around the world. Headlines would be a PR disaster for the USA.”
The IRS already had their PR disaster in the 1990’s when they abused homelanders. Somehow they recovered, and now they know to abuse a different set of victims who are even less capable of fighting back. America’s diaspora are all tax evaders, and the IRS benefits from the news.
“They still run Windows XP!?”
It might not be that bad. Microsoft says they stopped releasing security patches, but they continue actually. I think some customers contracted for 5 additional years. I experimented for a few months with a technique that was described in a Forbes article, and I got some of those patches too.
“Maybe Canada should demand a security audit of IRS systems and when it fails, sorry, not turning over data.”
Good idea. Though CRA released some data to hackers a couple of years ago too, so this would almost be the pot calling the kettle black. CRA seems to make a more serious effort than the IRS though.
Goerge 3rd, Canada had the luxury of taking more time as recommended to them during the Standing Committee on Finance’s hearings. Up until a few days ago there were still countries, namely the Philippines, who were being given additional time to have their governments ratify the necessary legislation. And now this. Canada could have done better. They just didn’t try hard enough. Now it’s cost them taxpayers money that they wouldn’t have had to spend it they ragged this out as long as they could have. This was not the time for them to be early adopters, regardless of how may G7 countries signed before them.
Yes, The Mom, I would think the Charter Challenge is a lot stronger if they can prove harm en masse, but I don’t think that the IRS is thinking about this at all when they themselves are on the verge of collapse.
Reading this recent news makes you see why FATCA is now on the back burner…
——————-
“During his keynote speech at the 69th Annual Meeting of the National Society of Accountants (NSA) in Baltimore on August 21, IRS Commissioner John Koskinen said the biggest challenge facing the IRS is trying to implement tax provisions of the Affordable Care Act while the agency’s budget for fiscal year 2014 was slashed by 7 percent.
“As I tell people on Capitol Hill, we are the only agency still operating at the post-sequester level,” Koskinen said, according to an article posted on the NSA website.
In her annual report to Congress earlier this year, National Taxpayer Advocate Nina Olson said budget reductions have significantly hampered the IRS’s ability to provide “top-quality service” and “maintain effective enforcement programs that minimize noncompliance.”
For example, only 61 percent of the more than 100 million customer service phone calls made to the IRS last year were answered, according to the report.
Koskinen said his agency was forced to cut 5,200 call center employees because of budget cuts
“Congress cannot continue to reduce our resources and ask us to do more things,” Koskinen added
———————–
Could you imagine working there? “Hey Fred, we’re pulling you into the FATCA team, we gotta get this going stat!” “What!? What!? No way Jim NO F%$#!! WAY I got over 3,000 outstanding ticket requests growing by 75 new ones a day! Not to mention a backlog of Affordable Care Act work that I can’t even get to!” “Fred, I don’t have time to get into this, meeting is at 2pm I suggest you be there because you’re taking on 3 new departments!” “Oh Goddddddddddd!!!!”
Aren’t they so kind, as to let their extraterritorial law masquerade as local law for the purpose of local FFI’s having the timing of their reporting governed by “their” local tax authority. A local tax authority that is now almost in whole governed by the IRS.
I guess that must be the last shred of self respect that the U.S. has allowed other countries to have.
Perhaps the IRS discovered that the US just doesn’t have the prisons to throw the 7-8 million tax evading “US persons” into.
@TheMom
Model 2’s report in March
“Could you imagine working there?”
https://www.youtube.com/watch?v=Nn_Zln_4pA8
(John Oliver)