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.)
The Hill, Contributer: Jim Jatras, November 16, 2016 — Dumping Obama’s faux foreign tax legislation should be high on Trump’s to-do list
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.”
This is government legal response against EXPAT voting. Interesting in light of the FATCA IGA.
“The 30% withholding is a giant bluff. It would lose in the courts.”
It has already won in courts, when courts dismissed my refund suits.
“§ 7. The electors of President and Vice President of each State shall meet and give their votes on the first Monday after the second Wednesday in December next following their appointment at such place in each State as the legislature of such State shall direct.”
Excellent. Some states should give direction on Dec. 15 so the electors will meet in December 2017.
Ginny: I’ve been away for a week and have just read your wonderful statement about the education on FATCA you are giving to members of the next generation of lawyers. Whatever a fabulous way to get the word out! Let’s hope that by the time these young men and women enter the profession there will be no FATCA and no CBT for them to ever have to consider in their cases.
I have been following this case, and as usual appreciate Justice Laskin’s position in his minority decision. Having said that, what is unusual for me is that I haven’t been quite able to decide where I fall on this important decision. I have a lot of mixed thoughts on it. Nothing yet has tipped the balance for me as I can see both positions equally at this point and I need to give it a lot further thought. Tough case. Should be interesting.
Yes let’s hope so. Always an honour to be asked by my alma mater to speak to law students.
@Norman Diamond –
‘ “FATCA is in keeping with current worldwide efforts against tax evasion, being similar to other efforts in the EU that ask you to report foreign accounts.”
It is not. Efforts in the EU are for banks outside of the country where the person resides to report accounts to the country where the person resides. The Fuckedta version is far different.’
CRS, the EU Savings Directive (now repealed), FATCA – the basic aim is the same: accounts get reported to other jurisdictions where the accountholder is tax-resident. What makes FATCA different is the way “tax-resident” is defined, plus the withholding threat. But essentially, these Automatic Exchange of Information regimes all do the same thing.
I said: “What makes FATCA different is the way “tax-resident” is defined, plus the withholding threat. ”
And the absence of reciprocity.
Department of Unconscious Irony: an IRS person talks to an audience of tax lawyers in Philadelphia:
Co-operation? Anybody mention reciprocity?
“Tax-Writers Focused on 2017 Efforts; Treasury, IRS Work to Wrap-Up Outstanding Work as BEPS Implementation Continues”
What goes around, comes around: the IRS seems to be having its OMG moment:
New Treasury Secretary making giant promises:
1. So let’s see what the bill contains by the time it actually gets to the table
2. Last time we got a Gold Mansacks alumnus at the helm of Treasury (Hank Paulson during the reign of Bush II), he introduced no new diaspora policy besides lying about the expatriation numbers. Before Paulson, we had another ex-GS guy as Treasury Secretary: Robert Rubin. That was during Bill Clinton’s term, i.e. he probably had a big hand in drafting the exit tax.
Is this two-line quote the source of promise in FATCA reform? “In addition to these important reforms that will create a modern international tax system for businesses, the Committee on Ways and Means will consider the appropriate treatment of individuals living and working abroad in today’s globally integrated economy” on p. 29 of this 35-page PDF, just before section heading “A New IRS for the 21st Century”, http://abetterway.speaker.gov/_assets/pdf/ABetterWay-Tax-PolicyPaper.pdf.
Seems they want to put a little spin on it with the “today’s globally integrated economy” part – making it about money.
CBT has made it difficult, if not impossible for US citizens to integrate with the rest of the world since its inception. That was the purpose of it.
@SENIOREXPAT, thanks for that. This helps explain the campaign for TBT as it dovetails into it.