This was originally posted by Lynne Swanson on Maple Sandbox and includes links to several references. She writes:
“Here are a couple of well researched and presented papers on the economic costs of FATCA.
From a Canadian perspective, Mary Blackhill and McMaster University Emeritus Economics professor Stuart Mestlemen did an excellent analysis of the Costs of FATCA to Canada.
They estimate the annual cost to the Canadian economy is between $120 million and almost $2.6 billion (U.S.) They point out the cost is much higher given the exchange rate.
Of course, there is also the very real human cost, costs to financial institutions, costs to Canadian taxpayers and other costs.
Blackhill and Mestlemen report U.S. tainted people consider the Canadian government:
An appallingly poor protector of Canadian interests, Canadian sovereignty and the Canadian people.
The authors conclude:
As long as U.S. citizenship-based taxation is supported by Canada (and other governments), the United States will continue to hold the world in financial bondage.
From an American perspective, More Than Just Numbers: The Legal Dilemmas and Economic Repercussions of FATCA was written by an American Economics professor Brian Mottl.
Professor Mottl says:
FATCA has led to a parasitic relationship between the United States and foreign institutions where the US benefits from the assets reported, and the foreign financial institutions are bullied…
Professor Mottl reports on the economic costs to the American economy, the violation of the sovereignty of other nations, strained foreign relations and more.
Perhaps the most important point Professor Mottl makes is:
FATCA must be repealed because it violates international law.”
OT: was in the US embassy in Bern this morning renewing my son’s US passport. They had signs up saying “Having difficulty opening or maintaining a Swiss bank account due to your Amcit status? We may be able to help” or words to that effect.
I did ask, and they provided me with a yellow slip of paper with contact details for someone high up as Credit Suisse, and someone high up at UBS. Apparently the ambassador has managed to come to some kind of arrangement for these banks to take US citizens, and you’re supposed to contact these people directly.
So at local level the problem is at least identified.
Mr Mottl says he has no estimate of what FATCA will cost the IRS.
An economist with the Tax Foundation asserts that FATCA will cost the IRS $5 for every dollar it brings in:
“That mountain of data not only puts burdens on the individuals trying to comply, but that also puts a large burden on the IRS to go through the data,” said W. Gavin Ekins, a research economist at the nonpartisan Tax Foundation. “The cost of actually finding a dollar of tax evasion may cost us $5 of actually sifting through the data and compliance costs. From an economics point of view, I’m not sure how valuable the system will be. But maybe it really is from a fairness point of view, and people really believe fairness is worth the cost.”
https://www.washingtonpost.com/news/wonk/wp/2016/06/01/why-americans-are-giving-up-citizenship-in-record-numbers/?postshare=2331464810687483&tid=ss_tw
It refreshing to see Mr Mottl has addressed the “fairness” of such a scheme, as its really anything but fair when you look beyond what any homelander thinks.
It is good to see that the U.S. system of holding the world in “financial bondage” is now being seen and acknowledged for what it is by more and more people, both those directly concerned and abused by FATCA, as well as academics, journalists and other non-U.S. persons, not directly concerned nor abused by FATCA. Soon this illegal extortion racket will be over and the duplicity and criminality of a nation running its tax system like some sort of mafia enterprise will be exposed for what it is and for all to see. It really seems to be moving in that direction, as so many legal professionals that I meet, as well as non-U.S. business people and bankers all, without exception, express anger and disgust at this underhanded method of bleeding other countries of funds that should remain in those other countries. The anger is tremendous and more and more openly express their disdain.
Hear, here Anthony Thomas, and welcome.
@ Anthony Thomas
“It is good to see that the U.S. system of holding the world in “financial bondage” is now being seen and acknowledged for what it is by more and more people…”
Welcome and I agree. In speaking with credit union personnel and financial advisors here in Canada, it seems their awareness of the FATCA situation is growing. It is a form of financial bondage imposed by the USA and they recognize this, at least the ones I’ve spoken with. It’s great to be able to speak openly on the these issues. Something I was too frightened to do prior to renouncing.
The article by Brian Mottl is from the University of Puerto Rico Business Law Journal (volume 7 issue 2 available here:http://uprblj.org/). This is not a highly regarded journal, and the level of peer review is unclear. It appears that the author is a postdoc in International Legal Studies at American University in Washington, DC – though I can’t find any listing of him on the university’s website.
While the article has some good “sound bites”, the economic sections at the front confound the effects of FATCA and CBT. FATCA is just an information exchange – as we’ve been told by our governments, it imposes no new taxes (other than the 30% “withholding” used to bully FFIs into submission). FATCA is an enforcement tool for CBT. All of the economic arguments in the Mottl article are arguments against the enforcement of CBT, rather than information exchange, per se. Unfortunately, I fear that the genie is out of the bottle – repealing FATCA may make it easier to open bank accounts, but it won’t return us to the status quo ante of minimal enforcement of CBT. Plus, if FATCA is repealed, the US will sign on to CRS. The only way out is to move to RBT.
I live in Canada. I married a US citizen. If I knew what I know today, I’d be married to someone different….not to say I don’t love her dearly.
The government of the USA is a total prick, and I will never set foot in that shit hole once my mother in law is gone…..that is unless the USA becomes a friendly nation, which it currently is not. it’s a hostile predator as far as I’m concerned. Tourism Russia is an interesting concept to me now.
i have neighbours who are (or were born in or have parents born in) from the UK, Netherlands, Germany, Belgium, India, Singapore, Japan, Ireland….I could go on……who have no fear or disdain towards the FOREIGN country they come from. My wife does.
Tell me, all of those “patriotic” Americans out there……..who lost the birth lottery?
“Tourism Russia is an interesting concept to me now.”
LOL
Anthony Thomas: “Soon this illegal extortion racket will be over …” I hope, with all my being, that you’re right! Welcome to Brock!
@ PierreD
I agree with you 100 %
Last year I started to comply and filed 3 years. I made a mistake in a social security number for my son. No tax owed. But the IRS recalculated tax without my dependents and came up with tax owed (ignoring my very big foreign tax credit). I have now received about 25 letters. For each of the 3 years I regularly get a letter urging me to pay (latest was registered with $15 postage) and letters asking me to give them more time. I fully expect to owe nothing but they will have spent more than $100 on my paperwork. Many Americans I speak to abroad owe $15 to $25 each year (sic. Not $150 not $1500. Just $15). This can’t be cost effective.
Fred, first try filing a Form 1040X (amended return) where all amounts of changes from your original return are zero but you correct the social security number of your son. Even though I think you don’t need to include copies of your unchanged Forms 1116, I think it doesn’t hurt to include them.
After the next letter from the evil empire, I’m not sure if it will help to file Form 843. As far as I can tell, the evil empire is supposed to send you a Notice CP2000 and then you file Form 843 in response to that. They never sent me a Notice CP2000. I only learned by accident about that kind of notice. Now I’m demanding that they issue Notice CP2000, but they’ve still refused.
Under 26 CFR 601.101, the Director, Foreign Operations District, administers US international revenue laws for persons residing outside the US. I don’t know if the following address is correct or not, but my registered letter was signed for:
Director, Foreign Operations District
Assistant Commissioner (International)
IRS
1325 K Street, NW
Washington, D.C., 20225
U.S.A.
My registered letter took 1 day from Shinjuku to New York, 36 days from New York to Washington, D.C., and 2 hours from there to the IRS. Hurray for USPS tracking. But then USPS got embarrassed and deleted their tracking records. But later they reinstated their tracking records. Anyway my letter was signed for. After that of course the evil empire responded as usual; their reply fits in the period at the end of this sentence
After international revenue misadministration takes place, you’re supposed to file a protest at your local appeals office. The IRS has refused several times to tell me the address of my local appeals office. But I found which city my local appeals office is located in, as follows.
Under 26 CFR 601.103, the taxpayer is given an opportunity to request that the case be considered by an Appeals Office provided that office has jurisdiction (see section 601.106(a)(3)). If the taxpayer requests such consideration, the case will be referred to the Appeals Office, which will afford the taxpayer the opportunity for a conference. The determination of tax liability by the Appeals Office is final insofar as the taxpayer’s appeal rights within the Service are concerned. Upon protest of cases under the jurisdiction of the Director, Foreign Operations District, exclusive settlement authority is vested in the Appeals Office having jurisdiction of the place where the taxpayer requests the conference. If the taxpayer does not
specify a location for the conference, or if the location specified is outside the territorial limits of the United States, the Washington, D.C. Appeals Office of the Mid-Atlantic Region assumes jurisdiction.
Under 26 CFR 601.106, there are provided in each region Appeals offices with office facilities within the region. Unless they otherwise specify, axpayers living outside the United States use the facilities of the Washington, DC, Appeals Office of the Mid-Atlantic Region.
I thought I found the address of the Washington, D.C. Appeals Office of the Mid-Atlantic Region but I was wrong. USPS’s web site says my registered letter is undeliverable as addressed and is being returned to sender (me). Yesterday I sent four registered letters to Washington, D.C. Appeals Office of the Mid-Atlantic Region c/o addresses of related offices which should know how to forward my appeals and also inform me of the correct address. Anyway, sorry I don’t know the address yet.
Next, after your Local Appeals Office does nothing, you can write a letter to your Local Appeals Office demanding that they issue a Notice of Deficiency.
The Notice of Deficiency is your ticket to US Tax Court. The filing fee in US Tax Court is US$60.00, and can be waived if you can’t afford it.
US Tax Court is capable of ordering the IRS not to collect what the IRS is trying to collect. My gut feeling is that a case like yours would be easy to win.
A US Tax Court ruling becomes final 90 days after the ruling, unless appealed or vacated during that time. After a ruling becomes final, US Tax Court loses jurisdiction on anything that happens afterwards.
So all the IRS has to do is wait more than 90 days, and then they can collect whatever US Tax Court ordered them not to collect. Guess how I know this?
Anyway, give it your best shot. You have one address here to start with.
You can also try the Taxpayer Advocate. Taxpayer Advocate employees have never tried to help me; they’ve always sided with the embezzlers working in the IRS (such as Monica Hernandez). But I’ve read that some people have better luck.
“FATCA must be repealed because it violates international law.”
A violation of international law? Nothing new here. The irony is that the United Nations are headquartered in New York City. Some support from the UN would be helpful; if they could help overseas Eritreans, they could help us suffering from America’s CBTFBARFATCA …
Thanks, Norman! I will look into this in detail. Still hoping they’ll just get it straight. Should I attempt to call them??
@ Fred,
Yes, call them. I received 5 demands over a period of 10 months for tax that they said I hadn’t paid ( I had). I wrote with an explanation and proof of payment 5 times and got 5 computer generated letters in response with the original demand plus penalties. Eventually I called using my subscription skype, long wait, but it was sorted out within 5 minutes and the demand cancelled. The agent said there was a record of my letters on the computer, but they were a bit busy and no one had had time to deal with it yet!
Karen said: “While the article has some good “sound bites”, the economic sections at the front confound the effects of FATCA and CBT. FATCA is just an information exchange – as we’ve been told by our governments, it imposes no new taxes (other than the 30% “withholding” used to bully FFIs into submission). FATCA is an enforcement tool for CBT. All of the economic arguments in the Mottl article are arguments against the enforcement of CBT, rather than information exchange, per se. Unfortunately, I fear that the genie is out of the bottle – repealing FATCA may make it easier to open bank accounts, but it won’t return us to the status quo ante of minimal enforcement of CBT. Plus, if FATCA is repealed, the US will sign on to CRS.”
Koskinnen has expressed the view that the US should sign on to CRS, but he didn’t offer any suggestions as to how Delaware and the other tax haven states could be persuaded to agree. The bilateral FATCA/IGA reciprocity obligations can be fudged indefinitely, country by country. It might be more difficult to sidestep CRS commitments.
“The only way out is to move to RBT.”
An alternative, possibly more achievable solution, might be for other countries to put pressure on the US to adopt reasonable, inexpensive, humane renunciation laws.
“Still hoping they’ll just get it straight. Should I attempt to call them??”
I think there is zero chance that they’ll get it straight either by letters or by phone calls. If they give you an answer over the phone, they are not bound by it. They aren’t bound by their letters either, but letters can be evidence in court to get penalties or interest reduced, sometimes.
I’m amazed by Heidi’s posting. I’ve also phoned the evil empire both by my internet provider’s VOIP (about 3 yen per minute) and by Skype (Skype provides free calls to US 800-numbers). Sometimes they’ve told me stuff and sometimes not. When they’ve told me stuff they turned out just to be more lies. I’m amazed that they did something right for Heidi without needing a court order (not that they would obey a court order either, guess how I know).
One day I used Skype to call an IRS 800-number. I don’t remember how many times I dialled before their automated system let me stay in their queue instead of just cutting off the call. I was in the queue for over an hour. Several people couldn’t help and transfered me to others, each queue being at least half an hour. Finally someone gave an address to write to. Total time 4 hours. But we’re not done yet.
That day’s calls were because the evil empire continues to harrass my wife, a non resident alien who never had any US sourced income and had only ever entered the US for short visits on B1/B2 visas (which the US issued illegally but that’s a separate matter). My wife sent a registered letter to the address that the last IRS person had given. USPS returned the Advice of Receipt card (return receipt) uncompleted, i.e. showing non-delivery. My wife filed a request for postal investigation. Meanwhile, USPS’s web site showed that the letter had been delivered after all. Then later, USPS’s web site no longer had any record of the letter. After 3 months my wife filed a second request for postal investigation. Then later, USPS’s web site had TWO records of the letter, first showing the delivery it had previously shown, but second showing that the letter reentered USPS and apparently got lost after that. After 6 months my wife filed a third request for postal investigation, but the post office said that USPS was finally returning an answer to the second request so Japan Post would not forward the third request. USPS reported to Japan Post that the letter had disappeared without a trace, and Japan Post compensated my wife for the disappearance of the registered letter. Then later, USPS’s web site again no longer had any record of the letter. I wish I’d used archive.org to archive USPS’s two records on the day USPS was showing them. I did print them luckily, but an archive would be better.
TIGTA reports on corruption in the IRS, including identity theft and embezzlement, and also including theft of mail from IRS mail rooms. But who persuaded USPS to lose a registered letter in this manner? (And on a different issue, where a server not party to a case served evidence on a court by US domestic certified mail and USPS had the decency to return a completed return receipt, who persuaded the court to destroy evidence? How high does this corruption go?)
Hmm, Heidi? How long ago did the evil empire tell you they sorted it out? Maybe you haven’t waited long enough. Maybe there’s more abuse coming.
@Norman
It was about three years ago. It was a simple problem, they had attributed my final filing check to my spouse’s SSN rather than mine as we had filed together in the past but had to file separately after renouncing. The demands have now stopped. Incidentally they didn’t send spouse a letter offering a refund for the supposed ‘overpayment’ !
26 CFR 601.101:
https://www.law.cornell.edu/cfr/text/26/601.101
“The Director, Foreign Operations District, administers the internal revenue laws applicable to taxpayers residing or doing business abroad, foreign taxpayers deriving income from sources within the United States, and taxpayers who are required to withhold tax on certain payments to nonresident aliens and foreign corporations, provided the books and records of those taxpayers are located outside the United States.”
Now that a registered letter to the last known address of the Director, Foregin Operations District is being returned to sender, I’m trying again. Here is my latest guess about the address:
Director, Foreign Operations District
Assistant Commissioner (International)
Director, Philadelphia Service Center
Drop Point 8731,
FIRPTA Unit,
IRS
P.O. Box 21086
Philadelphia, PA, 19114–0586,
U.S.A.
And here’s an address which I’m not trying yet:
Director, Foreign Operations District
Assistant Commissioner (International)
Commissioner, Small Business/Self Employed Division (SB/SE)
S C3–413 NCFB
IRS
500 Ellin Road
Lanham, MD, 20706
U.S.A.
The source for the above two guesses dates from 2002:
https://www.irs.gov/pub/irs-irbs/irb02-34.pdf
26 CFR 101.106:
https://www.law.cornell.edu/cfr/text/26/601.106
“Unless they otherwise specify, taxpayers living outside the United States use the facilities of the Washington, DC, Appeals Office of the Mid-Atlantic Region.”
The IRS gave me the following address for the Washington, DC, Appeals Office of the Mid-Atlantic Region, and my registered letters were signed for (and ignored of course):
IRS Advisory Group
7850 SW 6th Court, MS 5780
Plantation, FL, 33324
U.S.A.
“Perhaps the most important point Professor Mottl makes is: FATCA must be repealed because it violates international law.”
The United States Government gives short shrift to international law except when it supports some claim it is trying to make. In some cases it is the sovereignty of the 50 states that interferes (as per the SCOTUS in Alvarez Machain or the non-applicability of U.S. tax treaties to the states (U.S. states sometimes do ratify treaties or legislate in conformity with them, often in matters of family law), but mostly the USG simply doesn’t respect any limitations to its freedom of action (viz: the Nicaragua case).
A few references:
Jeffrey D. Sachs, The high costs of abandoning international law
https://www.bostonglobe.com/opinion/2017/03/05/the-high-costs-abandoning-international-law/OXGzXIJP3th3Fc9EGNsXTN/story.html
Richard Falk, The Abandonment of International Law After 9/11
https://www.wagingpeace.org/the-abandonment-of-international-law-after-911/
Mark A. Pollack, Who supports international law, and why?: The United States, the European Union, and the international legal order
https://academic.oup.com/icon/article/13/4/873/2450819
Dozens more scholarly appraisals can be found on JSTOR. And the Sachs article suggests that things cannot get better under Trump. The law relating to the “stickiness” of U.S. citizenship, and indeed of U.S. tax liability, is accidental but those who rule (and those who lobby those who rule) America are unlikely to prioritise relief. Renunciation is not possible or viable for all and personal status (such as possession of another nationality) is generally a matter of chance.
As for the topic at hand: waste, fraud and mismanagement are endemic to government, a promise to “drain the swamp” is just a matter of political hypocrisy. The USG has used and will use its economic might to extort compliance from other states and those states’ financial services industry will in the end control the answer. (Think of Switzerland’s refusal for many years to ratify The Hague Trust Convention, and then to change its position when Swiss banks changed theirs.)
The store of messages over many years on IBS lead to only one answer: “Sauve qui peut !”