cross-posted from the ADCSovereignty WordPress Blog
What follows is the announcement from the Republicans Overseas Facebook page and comments. What follows is Judge Rose’s decision which I will comment on in more detail when I have had time to read and consider it. You will find Judge Rose’s decision here.
That said, I would like to make some initial comments about why Judge Rose approached the “equal protection” claim. You will see that on pages 25 – 38 of the lawsuit. I strongly encourage you to read these pages in particular.
You may recall the wisdom from 17th Century France (I wasn’t there) …
“The law in its majesty equality prohibits both the rich and the poor from sleeping on the park bench.”
Which Judge Rose carried forward into 21st Century America (I am here) …
FATCA in its majestic equality requires both Homelanders and Americans abroad to report their “foreign” bank accounts.
In the same way that the practical impact of the “park bench” law is to apply only to the poor, the FATCA reporting requirements apply only to Americans abroad.
In other words, Judge Rose is NOT looking to the effect of the law to consider a denial of equal protection.
He then suggests, in any event, that the classification of “Americans abroad” as a group is NOT a classification recognized by the law of equal protection.
Plaintiffs’ equal protection claims fail because the statutes, regulations and executive agreements that they challenge simply do not make the classification they assert. None of the challenged provisions single out U.S. citizens living abroad.
Instead, all Americans with specified foreign bank accounts or assets are subject to reporting requirements, no matter where they happen to live. The provisions Plaintiffs contend discriminate against “U.S. citizens living abroad” actually apply to all U.S.
taxpayers, no matter their residence. Plaintiffs argue that “[i]n practice, the increased reporting requirements for foreign financial accounts discriminate against
U.S. citizens living abroad,” see Doc. No. 8-1 at 22 (PageID 160), suggesting a claim of discrimination based on disparate impact. But it is well-settled that “mere disparate impact is insufficient to demonstrate an equal protection violation.” Copeland v. Machulis, 57 F.3d 476, 481 (6th Cir. 1995); see also Washington v. Davis, 426 U.S. 229, 244-45 (1976).
And then later:
Plaintiffs have not correctly identified the classification made by these laws. The most basic element of an equal protection claim is the existence of at least two classifications of persons treated differently under the law. See Silver v. Franklin Twp. Bd. of Zoning Appeals, 966 F.2d 1031, 1036 (6th Cir. 1992). But Plaintiffs fail to recognize that similarly situated persons to themselves—U.S. taxpayers living in the United States who hold foreign accounts—are not treated differently. In fact, for U.S. citizens living abroad, the regulations under 26 C.F.R. § 1.6038D-2 do not kick in until higher reporting thresholds are reached, as the regulations recognize that such individuals are likely to have significant foreign accounts in the ordinary course of their lives. For married individuals filing jointly, the filing threshold goes from $50,000 for U.S. residents to $150,000 for non-U.S. residents. To the extent that the law treats U.S. citizens living abroad unequally, it is in their favor insofar as the reporting requirements for foreign accounts are actually less onerous.
What we have learned from Judge Rose’s decision and the arguments advanced in the lawsuits …
As I read Judge Rose’s decision, it’s clear that he does NOT understand, that when it comes to FATCA, CBT, FBAR and whole “Alphabet Soup” disabilities inflicted on Americans abroad, that:
The claim is NOT (in practical impact) that Americans abroad are subjected to these rules and Homelanders are (in practical impact) not. The claim which must be articulated (and has not been properly articulated) is that:
Although both Americans Abroad and Homelanders are subjected to the same rules, the effect of these rules is that the lives of Americans abroad are being destroyed and that they are forced to renounce U.S. citizenship while Homelanders just keep on truckin! This is the message that must be better explained and articulated!
This is the claim that must be advanced and articulated. It’s clear that neither the ADCS lawsuit nor the Republicans Overseas lawsuit have effectively articulated this reality.
Tentative conclusion …
My advice to any American abroad is to either move to the United States or renounce U.S. citizenship immediately. You have NO chance of surviving outside the United States in a FATCA and FBAR world. No chance. Homelanders simply do not and cannot understand this. People can understand only what they can conceptualize. As is well known in the United States, there is no world outside the United States.
It would be truly hilarious to see the likes of these Homelander judges and politicians attempt to live outside the United States as proud and patriotic “U.S. Tax Compliant Persons”. I bet they would complain that their “rights” (attributes of American citizenship NOT) were being violated.
Onward and upward!
Is there any part of FATCA that’s less onerous for resident Americans and GC holders with offshore accounts?
Something that is less onerous for resident Americans in general is that they likely have 0 offshore accounts containing a total of $0.00. This is less likely to happen for GC holders.
For resident Americans and GC holders who do have offshore accounts, well remember that their accounts actually are offshore and maybe they shouldn’t be surprised; RBT would require them to report too. They’re not likely to need mortgages though, and aren’t likely to suffer unduly if their FIs close their accounts.
Impacts may be considered an “excessive fine” in view of tax owed.
The fine is for violating something other than a tax law. The amount of tax owed is irrelevant.
I thought that “uttering a threat” was a crime. The plaintiffs in this case (and everyone they represent) have all (except Rand Paul) suffered for several years now from the *threat* of having their private financial information sent to a foreign government which could result in the eventual confiscation of a significant portion of their life’s savings.
There is very real harm done to people who are living under threat. Living in fear causes health and emotional problems. It causes relationship problems. Being preoccupied with worries causes lack of focus at work and impairs one’s family interactions. The problem from a legal perspective is that none of these things can be measured in any tangible way. But even the law is known to award damages for pain and suffering.
I have no doubt in my mind that harm has been done to most of the plaintiffs in this case. I’m not a plaintiff in the legal sense but they stand in my shoes and represent me and millions of others. Harm has certainly been done to me so I am certain it has been done to them.
Some more coverage of the verdict here:
Judge Rose lied:
“The distinction that the regulations do make is rationally related to a legitimate government interest. The U.S. tax system is based in large part on voluntary compliance: taxpayers are expected to disclose their sources of income annually on their federal tax returns.”
The IRS Tax Crimes Handbook cites US Supreme Court rulings in US v. Sullivan and Garner v. US that TAXPAYERS ARE NOT EXPECTED TO DISCLOSE SOURCES and answers to particular questions when that information is privileged by the Fifth Amendment. Taxpayers have to file returns and disclose AMOUNTS of income.
Where circuit courts have overruled the US Supreme Court and Fifth Amendment, they did it to uphold unconstitutional laws of some kind which are NOT tax laws.
Attorney Predicts ‘Long Fight’ After Effort to Block FATCA Is Rejected
October 1, 2015
This is the first I have heard of this? No Tweets about it, only SCE.
Katie Solon, international chair for Democrats Abroad, said her group will continue to press for residency-based taxation
Perhaps wishful thinking we may use this angle: ?
Definition of “foreign.” Rules impact foreign accounts. Yet if you live in another country local accounts not “foreign” to you. Therefore, impacts on local accounts unequal for persons living in the US and those living in other countries. Think FBAR requirement of reporting employer accounts if you have signature authority. Now just need to get plaintiff with standing. I think Bopp will figure it out now that the Bopp legend has been challenged.