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!
>Homelanders just keep on truckin!
I take issue with this. Part of my truckin is paying large fines and having to file 50+ page tax returns each year. I can’t close my foreign pensions till I am 55.
Judge Rose has written his conclusion from a solely US centric point of view.
For example, he makes a point that a man’s juvenile daughter in Switzerland is not being harmed by FATCA because her kiddy bank account’s details are being sent to the IRS. The judge blames the Swiss bank and recommends for the kid to do business with another Swiss bank if they don’t like their bank complying with FATCA.
The judge fails to mention any other Swiss bank the kid goes to will be complying with FATCA as well. So that choice doesn’t exist.
However, where I do agree with the judge is the plaintiffs need to take on their local governments direct legally. US biased courts or any other branch of the US government won’t help.
I would still like to ACA drop its Second Country Exemption dream and start using its European contacts to organise an IBS style lawsuit in the EU.
Even Judge Rose would agree.
FATCA in its majestic equality requires both Homelanders and Americans abroad to report their “foreign” bank accounts.
I do agree with this in a sense: I do think that Homelanders and Americans abroad should be treated equally. It is just that I think that neither group should have their bank balances reported whereas Judge Rose thinks everyone should have their bank balances reported. Neither country taxes anyone (whether citizens, residents, or non-residents) on assets so there is no excuse for bank balances to be reported for anyone at all.
And why are we required to report bank balances, Dash1729? Because it’s assumed that we have “foreign” accounts for the purpose of hiding money from the IRS – in the absence of any evidence, and instead placing the burden of proof on the citizen to prove at great expense that they aren’t hiding anything (just like the homelanders would do).
Shoot them all and let God sort them out.
Two quick thoughts on a quick read:
So, the U.S. judge says to deal with local government. And the local judge says to deal with the U.S. government. Reminds me of the song from the movie “West Side Story” where the “ju-ven-oil dah-linquent” gets tossed around the system: “The trouble is he’s crazy, the trouble is he drinks, the trouble is he’s lazy, the trouble is he stinks…” The final chorus: Gee, Officer Krupke, We’re down on our knees, ‘Cause no one wants a fellow with a social [U.S.] disease. Gee, Officer Krupke, What are we to do? Gee, Officer Krupke, krup you!” This entire thing is insanity.
As to:
I disagree. “Foreign” banks are applying the threshold of $50,000 for reporting. And the discrimination can start with amounts even lower.
Do not lose hope. This is a refusal of injunction, there is still the whole trial to go. Even if the case is dismissed, it can be refiled with new plaintiffs and more evidence now that data is being transmitted.
In any event, these issues will be appealed, whoever wins.
Jack Townsend is not impressed!
and
Just got back from away and read all this negative stuff. Saddens me.
If it isn’t already clear, this is just further confirmation that the US government and presumably most of the US population have no sympathy with US citizens who live outside their country. I have to agree with John Richardson’s “Tentative conclusion … ” in this post. The problem is, US citizens who want to leave are being held for a ransom of at least US$2350. Shame on the US government for that!
I’m so glad I’m free of it.
@Duke of Devon
I put Mr Townsend in the same arena as the rest of the vultures who are making money off the backs of victims trying to find help and answers on what to do…. Its bad enough we are all victims…. we have these people doing whatever they can to scare & pooh-pooh away any solution that would cut off their money supply.
Instead of saving for our next generations’ education…. money will have to be used for them to get rid of their toxic US citizenship. Never thought a US citizenship would be a noose rather then a help in ones future. Immigrants with any skill set must ensure that they don’t keep their GC for more then 7 yrs & ensure they formally give it up… otherwise… they will be screwed with no voice in the US… better to be an illegal then a legal visitor…. illegals have more voice and rights then legals….
Perhaps the thinking for ex-pats should be this, for example, as resident citizens of the EU we demand the same taxation and tax reporting by banks to along us the same responsibilities and opportunities as fellow resident EU citizens.
Judge Rose seems to forget there are ex-pats hold other passports and our rights while residing overseas should not be impinged by the US government based on facts beyond our control such as place of birth.
Don: I do think the discrimination part may be an angle of attack within the EU. I was thinking of writing an op ed locally starting with something like “in the EU today, some EU citizens do not have the same rights as others, based on their place of birth or origin”.
@Don “Judge Rose seems to forget there are ex-pats hold other passports and our rights while residing overseas should not be impinged by the US government based on facts beyond our control such as place of birth.”
What is equally, if not more disgusting is that many people who were not born in or maybe have ever visited America are automatically considered US citizens by reason of their parent’s birth. Many have never been aware that they were considered a US citizen, do not consider themselves American in any way and hate the fact that some people would force it on them. The arrogance of the US of A is disgusting and makes my blood boil!
New TIGTA report says IRS needs to get more serious about collecting taxes from taxpayers living abroad:
http://tax-expatriation.com/2015/09/30/part-i-new-tigta-report-to-congress-sept-30-has-international-emphasis-on-collecting-taxes-owed-by-international-taxpayers-treasury-inspector-general-for-tax-administration-tigta/
Re Tigta report: if this Fatca-Fbar-IGA-exit tax-form fever crap is still not enough, I say just drop the whole farce. Drop CBT and adopt a simple tax code for US residents. Save a lot of money and grief.
@Bubblebustin – Whichever way you cut the cake, a tax needs to be easy to collect.
Apart from throwing resources at billionaires, the IRS will never make collecting tax from foreign countries as efficient as collecting domestic US taxes.
The US should concentrate on putting its financial house in order with domestic taxes before putting faith under the sofa cushions the ex-pat community may make.
Ex-pat money will be expensive, long winded, and simply not enough out there to impact the Federal deficient. Also you will have ex-pats fighting tooth and nail not to pay.
So countries around the world are going to have to decide whether it’s in their best interest to help Uncle Sam or not. I know one thing though, world 2015 will not be the same as world 2020 or 2025. Countries may have a choice whether to use the US dollar or not to purchase commodities for their economy.
That’s when post WWII dollar world comes to an end.
Mass Renunciations — Full Speed Ahead!
“In other words, Judge Rose is NOT looking to the effect of the law to consider a denial of equal protection.”
If I’m not mistaken, Judge Rose didn’t even have to proceed to the lies that he told after that. If I understand correctly, the US constitution requires each state to provide equal protection but doesn’t require the federal government to do so.
Also there are some statutes, 42 USC 1985 and in that vicinity, with more weird effects. If two DOJ lawyers in the same state gang up to violate someone’s civil rights then they can be charged, but if two DOJ lawyers in two separate states do the same then they get off scott free. Also even if the two are in the same local jurisdiction, sometimes it doesn’t count because DC isn’t a state. DC is included in some of those statues but not others.
Did you notice that the judge’s statement is only true in a narrow, technical sense but not broadly in a real-world sense:
The provisions Plaintiffs contend discriminate against “U.S. citizens living abroad” actually apply to all U.S. taxpayers, no matter their residence.”
Okay, technically, all U.S. taxpayers, no matter what their residence, with “foreign” accounts are all subject to the IRS reporting regime. That is where the equality among U.S. taxpayers ends.
U.S. taxpayers who live IN the U.S. have the option of financing their homes, education, etc. in a non-foreign financial institution (FI); they have the option of investing in non-foreign mutual funds; they have the option of saving for retirement in tax-free accounts, and the list goes on. The U.S. taxpayers who live abroad in the real world do NOT have those options!! We are stuck with “foreign” FIs! Now that FATCA imposes reporting requirements on foreign FIs that come attached with the 30% withholding penalty, we Canadians and foreigners can no longer open a local bank account without questions about our nationality, which is determined by our place of birth and over-rides Canadian citizenship and privacy under our own constitution! Never mind how the American constitution is also ignored.
The IRS understands what the judge pretended not to understand.
http://www.taxpayeradvocate.irs.gov/userfiles/file/2013FullReport/REPORTING-REQUIREMENTS-The-Foreign-Account-Tax-Compliance-Act-Has-the-Potential-to-Be-Burdensome%2C-Overly-Broad%2C-and-Detrimental-to-Taxpayer-Rights.pdf
At least Nina Olson, from the Taxpayer Advocate Service part of the IRS understands it, Norman Diamond. Right on.
Jack Townsend (Kingpin Compliance Condor) just wrote this on his blog about the RO lawsuit:
” The case is not particularly noteworthy from a legal perspective. It just denied a preliminary injunction. The likelihood of getting any ultimate relief in the case, preliminary or otherwise, is minimal. (The pursuit of the case is more a way to make a statement and perhaps encourage those who can be encouraged by such futile statements to make contributions to the people and organizations and pursue such futile statements.)”
and this
“Rand Paul’s appearance in this futile case is just another instance of congressmen posturing for their base rather than really trying to solve problems.”
Jack Townsend is a dirty old tyrant. And a very dirty one at that.
I don’t know why it is so difficult to argue that Americans abroad are discriminated against with regards to the benefits that they do not and cannot receive vs the benefits that homelanders can and do receive.
Homelanders have taxation and reporting and benefit from US public goods and government services.
Non-resident Americans have taxation and reporting but do NOT benefit from US public goods and government services.
But perhaps this argument needs to be made in a case against CBT rather than a case against FATCA.
Homelanders benefit from the taxes collected whereas expats do not.
A very straight forward argument.