I agree with others that Jim Jatras’ words in The Hill is important for its own post. Thank you, Mr. Jatras, saying that…
FATCA’s only beneficiaries are the army of lawyers, accountants and software vendors who are making a fortune on it, with the costs passed onto consumers.
I started my journey regarding US tax compliance almost ten years ago. I have paid dearly from my retirement savings and, although compliance has ended for me (but will that ever change?), the absurdity has not ended for my US-deemed Canadian-born son who has a developmental disability and, without requisite mental capacity, who would be trapped into such ongoing, never-ending costs of US tax and reporting compliance. Again, I will say that it is not only for my son that I have come forward in this fight but for that of any person / family with the same entrapment. My son will not be the only one so affected and for them this injustice to continue, year after year, to benefit that described army of lawyers, accountants and software vendors who are making a fortune on it, with the costs passed onto him and others like him.
I chose to go the route of having these professionals help get my family out of this US citizenship-based taxation nightmare, but have found it is impossible. I don’t want any special work-around for my son. I want this to end for all such sons and daughters. Personally, I want the end result to be US residence-based taxation so no *accidental American* faces this injustice. If there is the exceptionality of US CBT rather than RBT of the rest of the world (save Eritrea), then, in my eyes, there should only ever be an OPT-IN to US citizenship if the facts permit, never an OPT-OUT where some, the most vulnerable, are entrapped into, by US tax law, never-ending US tax compliance and reporting.
FATCA needs to go. The unconstitutional IGAs need to go. And the US needs to change to the same and much fairer residence-based taxation as the rest of the world and end the unconstitutional “warrantless seizure of personal financial information without reasonable suspicion or probable cause.”
I continue to be incensed that my chosen country of citizenship, Canada, and the country in which my son was born and raised (and never registered as a US citizen abroad) chose to honour the US in agreement to sign the extra-territorial IGA with the USA. I continue to say that the words of Prime Minister Trudeau that *A Canadian is a Canadian is a Canadian* were political rhetoric, untrue and audacious. It is discriminatory that some Canadians, those with some US connection, however meaningless, do not fit with his faux words. I don’t know what will take away the injustice for many. I continue to feel betrayed by both my chosen country and the country in which my children were born and the country of my birth.
Again, thank you for this article, Mr. Jatras. I have included it all below. (If there is a problem for this site with quoting all of it, I will update to remove part of it. I think it important for all to read the article in its entirety.)
President-elect Donald J. Trump has stated that among his top priorities will be revocation of President Barack Obama’s misguided executive orders. Among the first such items to get the ax should be a series of legally infirm international agreements to implement a monstrosity unfamiliar to most Americans, called the Foreign Account Tax Compliance Act (FATCA).
FATCA, enacted by Democrats in 2010, is an indiscriminate information dragnet requiring — under threat of extraterritorial sanctions — all non-U.S. financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report data on all specified U.S. accounts to the IRS.
No proof or even suspicion of wrongdoing is required. The 2016 Republican Platform rightly called for FATCA’s repeal as an unconstitutional “warrantless seizure of personal financial information without reasonable suspicion or probable cause.”
FATCA supposedly is aimed at “fat cat” American tax cheats with money stashed abroad but does not include a single provision targeting actual tax evasion.
It has not yielded significant revenue recovery while imposing crushing compliance costs worldwide. FATCA’s only beneficiaries are the army of lawyers, accountants and software vendors who are making a fortune on it, with the costs passed onto consumers. It is a perfect example of the kind of wasteful, indiscriminate and counterproductive regulation Trump has promised to roll back.
Repeal of FATCA is a must-include item in a tax reform package Congress will send to President Trump’s desk in 2017. But while that package takes shape, there is something the incoming administration can do on its own authority as soon as the new president takes office, consistent with Trump’s pledge to reverse his predecessor’s extravagant abuse of his executive authority: He can nullify a series of unconstitutional fake treaties that outgoing Treasury Secretary Jack Lew (and before him, Timothy Geithner) used as a mechanism to implement FATCA.
This requires some short explanation. In addition to its other defects, FATCA is also one of the worst-drafted pieces of legislation this veteran of over 17 years working at the U.S. Senate has ever seen. Evidently no one noticed prior to enactment that the law’s central requirement — that hundreds of thousands of foreign firms outside of U.S. jurisdiction in almost 200 countries turn personal data directly over to the IRS — would be unenforceable under most countries’ privacy laws. Even supporters of FATCA concede it is “wholly unachievable” as written.
Accordingly, after FATCA became law, the Obama Treasury Department figured out that the only way it could work at all would be to pressure foreign governments to enforce it against their own citizens and to abrogate their domestic privacy protection laws to do so.
This was done through a series of bilateral “intergovernmental agreements” for which Treasury has no statutory authority, under either FATCA itself or any other law. While these agreements read like treaties and are duly ratified as such by foreign “partner” governments, they are not submitted to the U.S. Senate for its advice and consent under the U.S. Constitution.
In short, these agreements are purely distilled examples of Obama and his underlings using their respective pens and phones to create the appearance of legality where none exists. Dozens of such agreements have been signed and more are in the works.
But wait, it gets even worse! As a sweetener to induce countries to agree to sacrifice their sovereignty and to place their financial sectors under Internal Revenue Service (IRS) supervision, Treasury offered, also without statutory authority, “reciprocal reporting” from domestic U.S. institutions to foreign governments.
This would hit U.S. banks, credit unions, insurance companies, mutual funds, etc. with costs comparable to those FATCA inflicts abroad, extracting billions of dollars from American consumers and taxpayers and spurring job-killing capital flight from the United States.
Several attempts by the Obama administration to sneak through legislation for FATCA reciprocity have been blocked in Congress. But as long as the law remains on the books and the implementing agreements remain in force, they hang like a sword of Damocles waiting for the next Democratic administration to press forward.
The illegitimate FATCA agreements include a provision for one year’s notice of termination, which Trump’s Treasury secretary can issue upon taking office.
Even better, the Trump White House’s Office of Management and Budget could also immediately issue a determination declaring the agreements null and void on the grounds that the Obama administration had exceeded its legal authority in making the agreements in the first place.
That would effectively gut FATCA and put foreign governments on notice that the U.S. is pulling the plug on it, pending enactment of a tax reform bill that includes final repeal of what I have called “the worst law most Americans have never heard of.”
James George Jatras is a former U.S. diplomat and foreign policy adviser to the Senate GOP leadership. He edits www.RepealFATCA.com and recently published a major study, “How American Media Serves as a Transmission Belt for Wars of Choice.”