“DOING NOTHING” WAS NEVER AN OPTION. TODAY THIS POEM OF DRYDEN COMES TO MIND:
“Fight on, my men,” says Sir Andrew Barton,
“I am hurt, but I am not slain;
I’ll lay me down and bleed a while,
And then I’ll rise and fight again…”“Fight on my men,” says Sir Andrew Barton,
“These [English dogs] they bite so low;
Fight on for Scotland and Saint Andrew
Till you hear my whistle blow!”
[Republican Overseas motion for preliminary FATCA injunction denied (September 29) by Thomas Rose, U.S. District Court Judge in Ohio. Here is the link to the decision.
— Win or lose our Canadian injunction, we will do as George says: “…get straight on to the Charter challenge.”]
This is the affidavit of Sue Murray, which is part of the submission of Government of Canada in response to our request for a delay in the banking information turnover. Go to this link which contains this and other affidavits.
Canada claims that a delay is not possible given the specifics of the IRS regulation.
Also, it appears that about 155,000 bits of private banking information are waiting to be turned over to a foreign country.
Here is her affidavit:
I, Sue Murray, of the City of Ottawa, in the Province of Ontario, SWEAR THAT:
1. I am the Director, Competent Authority Services Division, International and Large Business Directorate, Compliance Programs Brancl1 (“CPB”), Canada Revenue Agency (“CRA”), and as such have personal knowledge of the matters deposed to in this affidavit, except where they are stated to be based on information and belief, in which case I believe them to be true.
Discussions with the IRS
2. Subsequent to the hearing of the summary trial (which took place August 4-5, 2015), on August 27, 2015 there was a call between representatives of the CRA (myself, Richard Montroy, Assistant Commissioner, CPB, and Ted Gallivan, Deputy 000059 2- Assistant Commissioner, CPB) and Douglas O’Donnell, Commissioner-Large Business and International Division, of the US Internal Revenue Service (“JRS”).
During that call the issue of a possible injunction application in this case was raised with Mr. 0′ Donnell. There was general discussion ·of the impacts of such an injunction. Although no definitive answer was provided, it appeared that it would be very unlikely that the IRS would be willing to grant Canada an extension of time to provide information to the IRS in order to avoid an injunction application.
3. On the afternoon of September 18, 2015, the IRS issued a notice, attached as 1::-;hibit ‘ A’ (the «Notice”), in which they indicated on pages 18 and 19 that they would consider granting extensions of time to certain jurisdictions to comply with reporting requirements under an intergovernmental agreement (IGA) related the US FATCA provisions. Specifically, the portion of the Notice that could be applicable to Canada is that pertaining to B. Model 1 IGAs for which the Obligation to Exchange is
in Effect.
4. Mr. Montroy again requested a call with Mr. O’Donnell. When the call occurred, on September 21, 2015, after the appellants had withdrawn their request for an injunction hearing, Mr. Montroy was not available, but a number of CRA representatives, including me and Lisa Anawati, Director General, International and Large Business Directorate (ILBD), CPB participated in the call. The CRA representatives informed Mr. O’Donnell of the outcome of the summary trial application in this case, and that an appeal would be filed, and sought clarification from Mr. O’Donnell on the application oftbe Notice to Canada. Mr. O’Donnell made clear that the Notice did not pertain to Canada’s circumstances and that the U.S. continued to expect that Canada would comply with its obligation to provide its information by September 30,2015.
5. On September 23, 20J 5, after the appellants indicated that they would once again be moving forward with an injunction application, [sought clarification from the IRS 000060 – 3 – regarding whether they would grant an extension of time to provide the information if the appellants were successful in obtaining an injunction.
6. On September 24, 2015, there was a call between representatives of the CRA (myself, Mr. Montroy and Ms. Anawati) and Mr. O’Donnell. During that call it was confirmed that the US was not prepared to grant an extension because the Canadian situation is not covered by the Notice criteria, as the legislation and systems are in place to be able to effect exchange. Given that the Notice does not contemplate such an exception, this was the US position even if Canada is subject to a Court ordered injunction. In addition, Mr. O’Donnell confirmed that the exchange is anticipated to be reciprocal [!] and should Canada be prohibited from delivering its information, the US would not provide theirs.
Change in transmission date 7.
Under the IGA there is an obligation to exchange information by September 30, 2015. Leading up to the summary trial hearing we were asked to advise when the transmission would actually take place and we estimated that it would occur sometime within the September 15 – 30, 2015 time period, in order to allow for technical difficulties that may arise once transmissions began. When, after the hearing of the summary trial, we were asked to advise the court exactly when transmission would start, we determined that September 23, 2015 would be the probable date. However, just prior to September 23, 2015 we realized that we would need more time to make the appropriate arrangements for transmission. In recognition of the need to again provide a date before the September 30, 2015 deadline, and to avoid having to change the date again, we decided that transmission will not take place before September 29, 20:15 and will instead take place either the 29th or 30th of September. 00061
-4 –
Information to be sent to the IRS
8. I have reviewed tbe information which has been provided by Canadian financial institutions and is to be sent to the IRS. The package consists of approximately 155,000 information slips. Each slip represents one account and one account holder.An account holder can be either an individual or a corporate entity. There are instances where a single individual or entity holds multiple accounts. Allbaugh unable to provide a precise number, I can say that the number of individuals represented by the 155,000 information slips is less than 155,000.
lJ. Based on my review of the information slips I can confirm that there are no information slips in relation to either of the appellants in this proceeding. I have reviewed the appellants’ notice of application and note that the injunction they seek in paragraph 1 applies to any information to be sent under the Canada-United States 1:·11/wnced Tax !Hformation Exchange Agreement Implementation ct, being s.99 and Schedule 3 of the Economic Action Plan 2014 Act~ S.C. 2014, c.20. However they also state in their notice of application that they are only seeking an injunction in relation to a “subclass” of information. I have reviewed the remedy sought by the appellants’ in their summary trial application, on the assumption that this is the relief being sought in paragraph 68 of their notice of application, and note that the CRA is not generally in possession of information which would permit it to sort the information slips provided by financial institutions to narrow them to a subclass of information.
Impacts of an Injunction
W. If the CRA is unable, due to an injunction, to transmit the required information to the IRS, and no extension of time is granted by the IRS, Canadian financial institutions will risk losing the benefit of the deemed FATCA compliance that they would otherwise obtain through the IGA. ln particular, as of October 1, 2015, if the 000062 – 5 – ·000063 information has not been received by the IRS and no extension of lime has bct.:n granted, it is possible that the Canadian Financial Institutions could be considered noncompliant.
II . The lGA not only requires the CRA to provide information to the IRS , but for the JRS to provide information to the CRA If an injunction is granted and the CRA is not able to meet its commitments under the lOA, the IRS will not provide CRA with the information it has committed to provide. This would have a detrimental impact on CRA ‘s tax compliance work. The information to be provided by the IRS is helpful to tax compliance work in Canada because it would quickly and easily permit the CRA to match financial holdings in the US to specific taxpayers in Canada to, in a timely way, assess their compliance and if necessary commence audit action. As with other information obtained by the CRA, it is compared to that reported on tax returns and where inconsistencies are identified. compliance actions are undertaken and reassessments made.
12. Canada has a long-standing history of exchange of information with many countries, particularly the United Stales and non-compliance with the lGA would have a detrimental effect on our international reputation in this regard.
SWORN before me at the City of Ottawa,
in the Province of Ontario, this 25th clay of
September, 2() IS .
Commissioner
Tricia
Good morning and thank you
What you are doing is far more important than what I have done
@George
Good morning to you too. Or rather, on my end it is good night.
That is not true. It takes a combination of things, each of which depends upon the other. Besides, I always so enjoy your notes!
‘Unfortunately by requesting the information you’re basically identifying yourself as as “US Person” to the CRA.’
Even if that’s true, it might be a good thing to do. Suppose 1 million duals and 2 million singles request information from the CRA. Let the CRA send 3 million requests to every Canadian financial institution to find out if every financial institution knows which 1 million out of those 3 million are “US Persons.” Let the financial institutions be so glad they kissed fatcasses.
‘It’s like calling the FBI and asking if you’re on one of their most wanted lists.’
In which case that might be a good thing to do too. In 2005 I gave an FBI agent some documents indicating suspicious actions by IRS employees. I asked for a police report but the FBI doesn’t issue such things; the agent suggested I submit an FOIA request to the DOJ in Washington to prove that I had submitted documents to the FBI. The DOJ answered that documents relevant to my FOIA request had been destroyed in 1990. Spoliation of evidence is bad enough, but how did the DOJ manage to destroy documents in 1990 when the documents were created from years 2003 to 2005?
(In 2012 the Treasury Inspector General for Tax Administration reported to Congress that IRS employees particpate in identity theft. Maybe the thieves could have been caught earlier if the DOJ hadn’t destroyed my documents in 1990.)
(By the way the IRS also destroys records when the they discover that records prove where guilty parties were really operating.)
“Of course the 30% withholding on USA transaction does not exist.”
Eh? That 30% is what Monica Hernandez was embezzling.
“Question I have is whether corporations in America have similar power over the US government”
Yes they do.
“and whether that gives a little power to us as consumers.”
No it doesn’t. As long as consumers give less campaign donations than corporations do, consumers will not have power.
A great lie of the 20th century:
“No one intends to build a wall.” Walter Ulbricht, East German Head of State, 1961.
A great lie of the 21st century:
“We are going to work together to see if we can’t find a way to accommodate grandma — and others — here in Canada. But we have to figure out a way to do it without letting the person who is trying to evade taxes in the Cayman Islands off the hook.
My message on this one is to sit tight. We are not unreasonable. We are not unsympathetic. We are not irresponsible.” US Ambassador to Canada, David Jacobson, 2011.
The Berlin wall was built and Canadian grannies were thrown under the bus.
I was under the impression, given my experience in Europe, that banks identified US person indicia, contacted these account holders to know if they were either US persons or not (proof required), and asked for W8-W9 forms. In this situation, everybody would know if they were identified and therefore would suspect that their info had been transmitted to the government in view of a transfer to the IRS.
If this reasoning is correct and holds true in Canada, then the 155000 “slips” transferred by the CRA concern US persons who know (or at least suspect strongly) that their info has been transferred.
Is there a situation where people might have had their info transferred without their knowledge?
@Fred, Good morning…..
I am glad you put “slips” in quotes as it evoked a historic footnote in my mind.
155,000 slips are not going to be handed over. 155,000 human beings are going to be handed over.
The term “slip” is being used so that the programmers and CRA Officers can do their work in a sanitized manner without emotion.
In the concentration camps, human beings were numbered, they were stripped of their name.
In the Vietnam Conflict, you pulled the trigger on slopes.
Today, the CRA is handing over “slips”..slips of paper. Whats so harmful in handing over slips of paper?
You ask “Is there a situation where people might have had their info transferred without their knowledge?”
The answer is absolutely.
The corrective notification you refer to is optional as the IGA uses the word “may” and not “shall.”
With these 155,000 “slips” handed over, I think it might be right for the opposition parties in Canada to be pressured into attempting passing a law that requires CRA to notify each of the “slips” that their information has been handed over to a foreign government.
The cost of the government to make a copy of each “slip” and to post it would be less than $250,000 per year.
But yes right now, “slips” will possibly receive notices in the post from a foreign power in a year.
@ADCS…..there may be a seed germinating on this board.
It is clearly in my mind discriminatory to treat two Canadian Citizens differently solely because of place of birth which might have meant one mile of difference.
But this lack of notification to those that have had their information handed over to a foreign power.
Prior to the IGA it was unlawful to gather this information and notification is required. A private business can not hand your details to another business without telling you at least.
The IGA is allowing the hand over of private information to a foreign government and it is being handed over without you even knowing it was handed over!!!! That is indefensible.
Should there not have been some obligation, moral if not legal, to notify these people? I would like to hear Harper and the cons defend that!!
@ADCS, I would love Arvey to ask the following of CRA?
“Should an injunction be issued by the Court, will CRA adhere and follow the injunction or will CRA adhere to the US IRS notice?”
To be honest, we need to know if the IGA not only has supremecy over all Canadian Law but if it has supremecy over Canadian Courts.
@George, Good morning to you!
The news is quite depressing (for the short term at least).
It would seem common decency and vital for accuracy and privacy purposes that banks at least attempt to contact customers before sending information. I know this to be the case for 2 or 3 banks here in Belgium (i.e. they make serious and repeated attempts to obtain either W8 or W9). I wonder what was the case in Australia.
I think that the discrimatory aspect is essential. Your other question is vital too: the IRS clearly expects Canada to ignore potential court rulings.
“Slips” indeed. Slippery slope. In a way, the next couple of years will be interesting because it is possible that the s… will hit the fan when the IRS starts contacting “willful” evaders who have no idea what’s coming, having been up till then blissfully unaware. In a way one could hope that they over-overreach (they already do, will they do it more?), and create a huge backlash.
Cheers.
@Fred, I actually preferred the original IRS FATCA language which required a FI to close an account that it could not confirm status with. I believe that was part of the Bopp suit and how the IGA deviated from the will of Congress.
To be honest it was IMO better when the bank was forced to go to people and say confirm this or we close the account. At least you had some sense of control.
I’ve just read the Judge’s decision in the US case and it reveals, to me anyway, the consummately evil genius behind FATCA. The authors of the monstrosity crafted a system by which it made itself unassailable by diverting legal attention away from itself and onto the “third parties” that it has co-opted to do its dirty work. FATCA informs its judges that “it’s the other guy’s fault” and it’s the “other guys” that the plaintiffs should be suing. If a bank in Switzerland refuses service to a Swiss resident, well, take it up with the Swiss bank! Never mind that the Swiss bank had no problem serving the Swiss resident *before* FATCA changed all the rules! Welcome to the Orwellian world.
The judgment denies the injunction but it also sounds fearfully like it also made hash out of the constitutional matters. Can someone with better knowledge of how the US courts work help me better understand whether or not this judgment allows the Bopp case to proceed on the constitutional questions?
It doesn’t matter if the Bopp case will proceed on the constitutional questions. The answer will be that the modern legal framework makes it illegal to obey a constitution.
@Norman Diamond: You say: “No it doesn’t. As long as consumers give less campaign donations than corporations do, consumers will not have power”
My point is that, rather than go directly for government, could consumers not put pressure on corporations to then put pressure on government? If large number of people start boycotting Starbucks, for example, and letting them know they are boycotting them and why, would that not encourage said corporation to put the sort of pressure on the government that individuals can’t?
What’s the likelihood that 155K slips belong to US residents?
@Bubbles, “What’s the likelihood that 155K slips belong to US residents?”
There just might be a large number of Canadian Citizens who live in the USA who have a Canadian account.
On the one hand that makes me happy because I worry about older persons getting caught in this. So a lot of fish may be escaping the net.
The bad news is that Congress might start thinking there are a million American persons in Canada and why do we have so few “slips?”
Regardless, your observation made me smile that the effort the next year IS worthwhile!!!!
The number of dolphins not caught in the tuna net is measured in the 100s of thousands. So in that regard I tend to agree more with the govt lawyers who say the case remains very much alive versus Arvey who say it is moot on Thursday.
Bubblebustin: crucial question, since FATCA was arguably aimed at homelanders. Which leads one to wonder if the IRS will treat people differently according to their personal context, meaning will a dual citizen living abroad a long time be looked upon with more understanding than a US resident failing to report an “offshore” account.
@Bubbles…..some people will be in the net and will have an OMG moment. For that I am sorry and there is NOTHING that can be done to help them. The best thing now is that having been caught in the net, the USA puts them under their pressure cooker sooner rather than later.
This turnover of up to 155,000 Canadian border babies needs to be on CBC news.
@Fred….you used that bad word….Dual….its clinging……not Dual…..
I think you are mistaken because “the law is the law.”
Besides, under US Law there is NO recognition of any other citizenship, you are a USA Citizen end of story.
@Fred, “since FATCA was arguably aimed at homelanders.”
I disagree.
If it was aimed at homelanders, then the place of birth nonsense would not have been in the IGA. That was the snare for expats, a deliberate and intentional snare.
@Fred @George
Unfortunately the IRS is programmed to treat tax-delinquent grannies with undeclared accounts in Canada the same as tax-delinquent US residents with undeclared accounts in the Caymen Islands. It doesn’t matter to them where you live, only that you should be brought into compliance and punished in some minimum way for your non-compliance.
Unfortunately should the IRS get to you first, your options decrease greatly. What’s worse than OVDI or Streamlined? The unavailability of either.
Calling the US’ bluff is not a risk. The US will grant Canada an extension to save face. If the US starts applying the 30% withholding, it unknown territory. How will other jurisdictions react to Canada’s problem? How will Canada react? Could using the 30% stick prove to be more counter productive for the US at this point while trying to make FATCA stick throughout the world?
Grant the injunction and see how the chips fall is the best thing to do at this point.
If the Canadian Government believes those 155,000 are irrelevant, why don’t they disclose without names and bank account numbers the data and let IBS and other decide?
@Tricia Moon @Marie
It simply isn’t productive to second guess Republican Abroad’s motives.
After reading the judgement (https://adcsovereignty.files.wordpress.com/2015/09/rojimboppinjunctiondenied.pdf ), it strikes me that the suit was filed too early. This is not surprising, since the U.S. courts are real sticklers for standing. Basically, if someone is ruined by the FATCA fines, and some poor schlub will be, then they might have standing, but not before. I suppose there weren’t that many people willing to come forward for the RO suit, but once the actual FATCA fines start being levied, more people are likely to have standing and maybe someone who is the perfect test case. And I pity them already, because they will have to be a highly likable person who has been ruined.
I just shook my head when I read “The relief for any wrong here [Kuettel’s concerns about his daughter] is either for Kuettel’s daughter to sue her Swiss bank for disparate treatment, if Swiss law provides such protection, or to seek recourse in the power of the market moving her accounts to an institution that wishes to compete for her business.”