Badger
Submitted on 2016/03/17 at 1:07 pm
IRS commissioner Koskinen: Congress approval needed for CRS
By: Helen Burggraf | 16 Mar 2016
..”.Koskinen was quoted by various tax industry journals as saying that the reason the US hasn’t signed up to the CRS was because “we [the IRS] don’t have the legal authority to provide – on a reciprocal basis – the range of information the other countries are prepared to share with each other and with us..”…..
…
“…….According to LexisNexis.com, one of the publications to cover Koskinen’s remarks, there are “questions…about how much data the IRS can share about individual taxpayers under the existing statutory framework”.But Koskinen insisted that the IRS was engaging in the OECD’s efforts to establish the reporting system, in spite of the fact that for now, it is not a signatory, nor likely to be for the foreseeable future…..”…….
..”.Some observers have suggested that the US, by remaining outside the CRS, would become a de facto tax haven, by virtue of the fact that its bilateral FATCA agreements don’t cover as many areas of information as the CRS will…”…..
…..”…the legislation that eventually became FATCA failed several times to make it through Congress, and, some critics say, might not have in 2010, had it not been buried inside a domestic jobs bill, the HIRE Act, and thus received little attention.”
AND, following this advice to post…
Deckard1138
Submitted on 2016/03/17 at 1:48 pmThis is a stunning admission by IRS commissioner Koskinen which has huge legal and diplomatic implications:
“…Koskinen was quoted by various tax industry journals as saying that the reason the US hasn’t signed up to the CRS was because “we [the IRS] don’t have the legal authority to provide – on a reciprocal basis – the range of information the other countries are prepared to share with each other and with us”…
I can’t wait to see the reaction from various IGA signatories, especially countries like India, which bet the farm – and their government’s entire reputations – on false FATCA reciprocity with the intent to recover “black money”. As we knew all along, they’ve been duped – and the IRS emperor has no clothes.
I put this in the media with comments section two days ago:
Surprised nobody mentioned this. IRS wants to go with the CRS:
http://federaltaxcrimes.blogspot.com/2016/03/commissioner-koskinen-calls-on-congress.html
Republicans won’t go for this. Obama of course wants to live in a world with tax rates set high for the rich everywhere and CRS is a stepping stone to that. When your a rich parasite on the productive you don’t think you should be subject to it for some reason.
Yes, you did. Apologies and thanks to you as well, Neill, for initially identifying this. (It has been a busy couple of days or so here at Brock — and off at iPolitics.ca.)
@Neill, didn’t see it, sorry. Having trouble keeping up….
This is going to be A-MAZ-ING!!!
@Neill
You do indeed deserve the credit for first posting this link. With so many new entries to the media thread, it sometimes takes a little while for the really important stories to be noticed and moved to the front. Thanks again for the find!
I was just surprised people didn’t think it a surprising as I did.
I think it’s a mistake for many of the reasons FATCA is a mistake. High cost, privacy, security etc.
I think you can encourage tax compliance by not having crazy rates on the high end and loads of complexity. They should recognize they really have no moral right to tax income earned abroad even by their own residents.
As right as you are, this points out the faux reciprocity promise by the US, Neill. It is a vivid illustration of that.
So, if I understand this correctly, the IRS is saying that they don’t have the legal authority to exchange the exact same type of information that other countries who signed FATCA IGAs are presently being coerced to hand over to the IRS?
None of the tax authorities of those other countries had any legal right to exchange that information either until their governments were forced (via the threat of extortionate sanctions) by FATCA to actually change their own laws to make it legal. I hate those hypocritical bastards and hope their economy eventually collapses. Meanwhile JT is in and out of the US busy kissing their asses. Unbelievable!
I noted and responded, Neill! 🙂
Koskinen wants to trade FATCA for CRS? The IRS isn’t known to concede anything unless they absolutely have to…
I don’t think the IRS is conceding anything here. CRS allows countries to define what they consider “reportable persons”. The US will just define US “reportable persons” as including citizens, residents, and LPRs. FATCA is still on the books, so they still have that threat to hold over all FFIs on the planet. All this allows them to do is reciprocate.
You’re probably right, Karen.
Here’s Neill’s original post on the subject, from Federal Tax Crimes:
http://federaltaxcrimes.blogspot.ca/2016/03/commissioner-koskinen-calls-on-congress.html
In it it’s reported that Koskinen “called for Congress to approve the U.S. use of the Common Reporting Standard (“CRS”) to replace reporting under FATCA.”
The hypocrisy is indeed remarkable to say the least. Koskinen tells the OECD why the US must be excused from the CRS for the moment whilst heading the arrogant agency that, under strict deadlines and the pain of massive penalties, has forced the rest of the world to abandon long-held principles of privacy.
However, maybe the shoe is about to be placed on the other foot.
http://www.academyfinance.ch/v2/next_events/AF654.pdf
Alongside the Common Reporting Standard, OECD has also developed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This has very comprehensive provisions for States to assist each other in collection of taxes. Quite scary. Not hard to see why the IRS might want access to these provisions. So far, this has not come into force in the US.
The Convention can be read online at http://www.keepeek.com/Digital-Asset-Management/oecd/taxation/the-multilateral-convention-on-mutual-administrative-assistance-in-tax-matters_9789264115606-en
JURISDICTIONS PARTICIPATING IN THE CONVENTION ON MUTUAL ADMINISTRATIVE ASSISTANCE IN TAX MATTERS STATUS – 14 MARCH 2016: http://www.oecd.org/tax/exchange-of-tax-information/Status_of_convention.pdf
I’m hoping someone with a better memory than mine can confirm or clarify my recollection that a number of the FATCA IGAs signed around the world contained a clause requiring the IRS to actually start providing reciprocal information by December 31, 2016 instead of vague promises. (Unfortunately Canada’s IGA was not one of them.)
IRS failure to start providing the reciprocal info by the specified date would render the IGAs containing such clauses null and void. In view of the fact that regardless who wins the upcoming US election the US will be without a functional government until January 2017 it seems unlikely Congress will be changing US law so the iRS can accommodate such data exchanges before the deadline. (Actually their government isn’t functional right now and hasn’t been for a long time.)
I hope I am remembering this right and I hope those IGAs start collapsing one by one starting in 2017.
@ maz57
Article 6 contains the US “we must try harder” clause.
In the US/Canada IGA – Article 3(5) commits both US and Canada to a period of 9 months after the end of the calendar year, but doesn’t specify which year.
https://www.fin.gc.ca/treaties-conventions/pdf/FATCA-eng.pdf
In the US/UK IGA – Article 3(5) commits both US and UK to the same ‘9 months after end of calendar year’ but more importantly commits (specifically) both US and UK to a date of no later than 30 September 2015 for information from calendar year 2013.
http://webarchive.nationalarchives.gov.uk/20120913103048/http:/www.hm-treasury.gov.uk/d/facta_agreement_tax_compliance_140912.pdf
maz57, will any of these help with your question?
http://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-3-of-3/comment-page-22/#comment-7202329
http://blogs.angloinfo.com/us-tax/2015/10/03/is-fatca-really-baring-its-teeth-reciprocal-automatic-exchange-of-tax-information/
https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Reciprocal-Model-1A-Agreement-Preexisting-TIEA-or-DTC-11-30-14.pdf
iota says
March 18, 2016 at 12:12 pm
Alongside the Common Reporting Standard, OECD has also developed the Multilateral Convention on Mutual Administrative Assistance in Tax Matters. This has very comprehensive provisions for States to assist each other in collection of taxes. Quite scary. Not hard to see why the IRS might want access to these provisions. So far, this has not come into force in the US.
………………………
Am I thinking this through correctly? The US would have to give up the world’s biggest tax haven status to receive legal collection assistance from other countries?
@TheMom – As I understand it, they’d need statutory authority before this tax collection treaty could come into force – not for collecting tax in other countries, but for helping other countries to collect within the US. They can’t have one without agreeing to the other.
@maz57
“I hope I am remembering this right and I hope those IGAs start collapsing one by one starting in 2017.”
Fortunately, without Senate approval, all IGAs have no legal effect whatsoever (technically speaking).
@Bubblebustin
“In it it’s reported that Koskinen “called for Congress to approve the U.S. use of the Common Reporting Standard (“CRS”) to replace reporting under FATCA.”
But the OECD-engineered Common Reporting Standard is based on residence, not citizenship (or, more accurately, personhood). How would a US-born Dutchman living in Germany be categorised under CRS if the Unite States were to sign up? He would be subject to double taxation, but the Convention on Mutual Administrative Assistance in Tax Matters states the following:
“Considering that fundamental principles entitling every person to have his rights and obligations determined in accordance with a proper legal procedure should be recognised as applying to tax matters in all states and that states should endeavour to protect the legitimate interests of taxpayers, including appropriate protection against discrimination and double taxation.”
This is very conflicting…
@MuzzledNoMore: Much more detail here:
https://web.archive.org/web/20160319040349/http://www.the-best-of-both-worlds.com/support-files/non-fatca-reciprocal-proposal.pdf
It’s always darkly amusing to see US hypocrisy turning into blowback. But that said, lest Brockers be tempted to cheer too hard for the TJN nutter proposing this, have a read over some of his other proposals, like the one where your country of last residence should be allowed to stalk you for ten years after you leave:
https://web.archive.org/web/20160319042533/http://www.the-best-of-both-worlds.com/support-files/previous-residencies.pdf
@Duality: my favourite part (and apparently the US government’s least favourite part) of the Multilateral Convention On Mutual Administrative Assistance In Tax Matters is Article 21, which says your country can refuse US demands for assistance which are contrary to public policy and which go against generally-accepted taxation principles
http://isaacbrocksociety.ca/2014/05/14/us10000-non-filing-fines-for-committing-ordinary-personal-finance-and-the-oecds-generally-accepted-taxation-principles/
Unfortunately I doubt any of the slimeballs inhabiting any of the executive branches of the world will have the guts to do so in practice unless forced by the courts. Also, there is a big effort underway to portray taxation-based citizenship as a “generally accepted” international principle;t his is being driven not just by the US, but also by negative rulings against Eritreans trying to get refugee status in Europe.
http://isaacbrocksociety.ca/2015/03/25/eritreans-in-uk-fight-back-against-diaspora-tax/ (UK example)
http://dip21.bundestag.de/dip21/btd/18/046/1804609.pdf#page=7 (German example)
@Eric
“Also, there is a big effort underway to portray taxation-based citizenship as a “generally accepted” international principle”
If so, why did the OECD not develop the CRS based on citizenship to apply across all countries? Can you imagine enforcing citizenship-based taxation across all financial institutions across the world (assuming all countries agree to participate)? If FATCA is anything to go by, it would be illogical, impractical, expensive, discriminatory, and subject taxpayers to double taxation.
Regarding the Eritreans, so long as citizenship-based taxation is still practiced in Eritrea and condemned by the United Nations, those folks will always have my backing for refugee status.
@Duality – “…the OECD-engineered Common Reporting Standard is based on residence, not citizenship (or, more accurately, personhood). How would a US-born Dutchman living in Germany be categorised under CRS if the Unite States were to sign up? ”
Wouldn’t a person in these circumstances, with accounts only in their country of residence, be in the same position under either CRS or FATCA? Reportable by Germany to the US, because of CBT, but not reportable to any other jurisdiction?
But a US citizen living in Germany, with accounts in Germany and in the Netherlands, would be reportable
– by the Netherlands to Germany and the US,
– by Germany to the US and the Netherlands
@iota
“But a US citizen living in Germany, with accounts in Germany and in the Netherlands, would be reportable”
Then the so-called Common Reporting Standard is no longer a “common … standard” since two different tax regimes are at play and conflict with each other. They would need to re-name it if the US insists on practicing citizenship-based taxation and signs up to the CRS.
Eric
What gets me about these tax experts is that they always write overly complicated rules. Why not doesn’t the OECD just put pressure on the places that allow people to become residents without actually residing in a place or that don’t tax residents? For example, why not require Panama, Gibraltar and the U.K. to do a lot of extra paperwork if they are the problem. It’s like making the whole class stay after when a few pupils have been playing up.