reposted from MapleSandbox
by Lynne Swanson
#FATCA Americans overseas: Do NOT allow US tax pros scare u into entering US tax system. Many have no business entering!
— Keith REDMOND (@kredmond_global) January 19, 2017
Backing up the above tweet, Keith Redmond posted the following on Facebook:
Dear Members: I just had a lengthy, robust call with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas ho have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas need to not succumb to the fear. Excellent conversation and I am glad my views have been validated.
This reflects what I have long believed. Unfortunately, there is still the nightmare of FATCA to deal with. In some countries, anyone born in the US cannot even get bank accounts. We are treated as criminals just for banking where we live.
I asked Keith how his contact explains and justifies this.
Keith replied:
He can’t. He finds the whole situation abhorent…
Oh yes, I remember.
http://isaacbrocksociety.ca/2016/06/27/pushback-to-fatca-in-france-italy-holland-israel/
@Dod
“Japan T. You must be kidding. Prosecutions take a lot of time and money.”
They cost a hell of a lot less than the 30% fine for not reporting you.
Each person who lies to their FI about being a USPerson is exposing that FI to the 30% fine. FIs will not take that lightly. It will cost effective for them to hammer such persons when “caught” in the hopes of averting the fine.
@Nononymous
“Regarding passport renewal, there seems to be a lot of misinformation. In the past the US passport application required you to fill in your Social Security number (or zeroes if you had none) and sign a little declaration that you were up to date on your taxes (on penalty of a $500 fine for perjury, which is a bargain compared to renunciation or having your tax returns prepared”
My application was a bit more threatening. Along with the $500. fine was the threat of delay or denial of the passport renewal. It also said that all the info on the application would be shared with the Treasury Dept. to see if and debts were owedto the Treasury.
Cut and pasted from my application form.
Section 6039E of the Internal Revenue Code (26 USC 6039E) requires you to provide your Social Security Number (SSN), if you have one, when you apply for a U.S. passport or renewal of a U.S. passport. If you have not been issued a SSN, enter zeros in box #5 of this form. If you are residing abroad, you must also provide the name of the foreign country in which you are residing. The Department of State must provide your SSN and foreign residence information to the Department of Treasury. If you fail to provide the information, you are subject to a $500 penalty enforced by the IRS. All questions on this matter should be directed to the nearest IRS office.
Your Social Security Number will be provided to Treasury, used in connection with debt collection and checked against lists of persons ineligible or potentially ineligible to receive a U.S. passport, among other authorized uses.
Your social security numbers will be provided to the U.S. Department of Treasury and failure to provide it may subject you to a penalty, as described in the Federal Tax Law provision. It also may be used for identification verification for passport adjudication and in connection with debt collection, among other purposes as authorized and generally described in this section. Providing your social security number and other information requested on this form otherwise is voluntary, but failure to provide the information requested on this form may result in processing delays or the denial of your U.S. passport application.
CONSEQUENCES OF FAILURE TO PROVIDE INFORMATION: Failure to provide the information requested on this form may result in Passport Services’ refusal to accept your application or result in the denial of a U.S. passport.
WARNING: False statements made knowingly and willfully in passport applications, including affidavits or other documents submitted to support this application, are punishable by fine and/or imprisonment under U.S. law, including the provisions of 18 USC 1001, 18 USC 1542, and/or 18 USC 1621. Alteration or mutilation of a passport issued pursuant to this application is punishable by fine and/or imprisonment under the provisions of 18 USC 1543. The use of a passport in violation of the restrictions contained therein or of the passport regulations is punishable by fine and/or imprisonment under 18 USC 1544. All statements and documents are subject to verification.
As I have read, lord knows where, people complained and they changed the wording…..with no mention of changing the practice. Kinda hard to change the practice if it is law as stated in the application I had to fill out.
So, they got me whenever they get that far down the stack of papers on the desk.
AIUI FATCA does not require banks to detect when their customers are lying.
@Trish
Video is very interesting and relevant. What strikes me is nothing about the debate has changed.
The debate continues on Brock in the same way it did in the months leading up to the IGA.
In this corner we have: led by the banks, the tax compliance community, and commenters (some represented in this thread) who eventually supported and do support the IGA. Members of this group are not particularly interested in the overall principles. They are interested in what works best for them personally. This probably constitutes the majority of humanity.
In the other corner we have: those who believe that the Canada should NOT enter into agreements to implement U.S. law on foreign soil and agree that their citizens are in fact U.S. persons.
Thinking less about today and more about tomorrow …
FATCA is a U.S. attack on the sovereignty of other nations. The question is: does one want to preserve a country’s sovereignty for future generations? Those who don’t care will simply sign the IGA. Those who do care will resist. It would be incredibly easy to end FATCA and end the FATCA IGAs. All countries need do is NOT comply. It’s really that simple. Do you really believe that the USA would follow through on FATCA threats against all countries of the world? Not a chance. The same is true (coming back to the purpose of this original thread) about citizenship taxation. Citizenship taxation would end if people collectively simply refused to comply. The problem is that it’s difficult to get enough people to believe this at any one time.
(FATCA will work if the world complies with it.
Citizenship taxation works because people comply.)
Those countries who have signed IGAs should apply to become U.S. states. They should ask the IRS if they can become a U.S. state. That would solve all the problems of PFICs, CFC and all the other tax problems because the country would no longer be “foreign”.
This is all about bullying and those who allow themselves to be bullied.
There are two reasons why the U.S. is able to bully other nations:
1. The status of the U.S. dollar as the dominant reserve currency. What should happen is that the non-U.S. world needs to move quickly to gradually make reliance on the U.S. dollar less relevant. Things like the “Blockchain movement” and the emergence of other currencies will make the U.S dollar less relevant.
2. The second is fear of U.S. military power. Would the United States use its military power to enforce citizenship-taxation and FATCA?
In any event, all that is needed is for one or two countries to begin the resistance to FATCA. “Public pockets of resistance” have begun in Canada (lawsuit), France (legislative commission) and I think Belgum. FATCA and CBT are discussed at various blogs and Facebook sites. (For the most part Americans abroad are supportive of all things Americans and are therefore very very supportive of CBT and the imposition of FATCA. Sadly, it’s true.)
Gradually this resistance will grow. It will grow no matter how hard people attempt to defend the IGAs.
The simple truth is (thinking of one of Ronald Reagan)’s great speeches) that:
FATCA and CBT are only one generation away from extinction./
It’s really up to you.
“CONSEQUENCES OF FAILURE TO PROVIDE INFORMATION: Failure to provide the information requested on this form may result in Passport Services’ refusal to accept your application or result in the denial of a U.S. passport.”
No U.S. Passport? Good riddance…
@USCitizenAbroad
“1. Mr. Redmond’s discussion with the Treasury agent is interesting, helpful and (to some reassuring). Beyond that, it is not an “Official Statement of Policy” from the IRS. But, the IRS cannot change the law. Therefore, the IRS will NEVER state an “Official Policy” of NOT going after Americans abroad. That said, there is NO evidence that the IRS has attacked Americans abroad. Why would they? They can rely on the “tax professionals” and banks to do it for them. In other words, no matter what the IRS does, many people will still be attacked by the banks, etc. The IRS is NOT your main problem. Your problem is with the banks (who lead you to the tax professionals by sending the FATCA letter)) and the tax professionals (who lead you into U.S. tax compliance).”
Thank you! I have trying to say this for the longest time. The IRS is NOT going after anyone. They do not have to. They have forced our FIs to round us up and deliver us to them.
@BB
I read a quote from a President of the late 19th century, that the quickest way to get a bad repealled is to fully enforce it.
Their way of enforcing all this may not be by accident.
“Members of this group are not particularly interested in the overall principles. They are interested in what works best for them personally. ”
Speaking for myself I’m interested in practical solutions. IMO the best way to understand what are the practical solutions is to try to understand the background, and understand what’s achievable (without bringing damage to self or others from unintended consequences) and what’s not.
“The penalty for failure to file is based on tax owed. So if you owe no tax there is no penalty.”
FBAR?
@iota
“If you want to be an American, shouldn’t you accept their laws and comply? If you can’t tolerate their laws, and can’t change them, why do you want to be an American?”
Want has nothing to do with it.
Those who accept the IGA assume that FATCA is a given, that it cannot be repealed and that the world must succumb to U.S. bullying. Those who do NOT accept IGAs simply do not share that view.
The opening question is:
Do you believe that we live in a world where FATCA is a given, U.S. bullying is the order of the day and that U.S. bullying is the present and FUTURE reality of the world.
If yes, then the IGAs may make sense.
If not, then one does NOT accept the right of the United States to bully other nations neither the IGAs nor FATCA should be tolerated.
It’s also important to note that no matter what you assume, there WILL be people who WILL be hurt and hurt very badly. (There already have been.)
To accept the IGAs and to believe that they are the best solution is to accept that “U.S. bullying is the order of the day and that is simply the present and FUTURE reality of the world”.
This is a BIG mistake!
If all the countries of the world just said NO, then FATCA and CBT would be a NO! It’s that simple.
@USCitizen Abroad – “Things like the “Blockchain movement” and the emergence of other currencies will make the U.S dollar less relevant.”
I used to think digital ledger systems might develop into an alternative payment system, but that looks less and less likely, what with the IRS going after Coinbase. 🙁
@iota
I believe there actualky is a law dating from the 1860s. Many rich northerners were taking off t Europe to sit out the war and thus avoid all the responsibilities of citizenship while their property, businesses and ships received federal protection. The law was aimed at them and has jut been left there.
@the Animal
“I apologize to any Brockers who might be offended (and you know I love all of ya and stand by your side), but on occasion my Canadian-born, Canadian patriot side comes out in full form and laughing its ass off: ”
Much of what you say does indeed hurt, more so because I can not fault what you say nor what you feel.
No need to appologize, you have been forced to earn those thoughts and feelings.
@Robert Ross
“The question alone of deciphering of who is or isn’t really a US citzen ,which has been been discussed at length, would entangle the IRS no end.”
Nope. The IRS forces the taxpayer to untangle the mess. If he can’t, he pays.
“If all the countries of the world just said NO, then FATCA and CBT would be a NO! It’s that simple.”
It’s not that simple at all.
All the countries of the world don’t want to say NO to FATCA. Many see it as an opportunity to achieve reciprocal information exchange with the US while at the same time making indirect use of US financial muscle combined with the idiocies of the US tax code to make progress towards cracking open bank secrecy.
“Those who accept the IGA assume that FATCA is a given, that it cannot be repealed and that the world must succumb to U.S. bullying. Those who do NOT accept IGAs simply do not share that view.”
I see the IGA as mitigating FATCA, and holding the potential to mitigate it further. I would indeed like to see FATCA repealed, but I see no sign that’s likely to happen.
@Wilton J. Tidwell
What do we do when our banks close our accounts?
I have little fear of the IRS. I fear what my FIs will do in response to the IRS.
A joint statement from 17 nations from 2013:
https://www.gov.uk/government/uploads/system/uploads/attachment_data/file/199016/Minute_statement_on_pilot_multilateral_exchange_facility.docx
@George (OR)
“@Brockers……for those that travel to the USA and rely on travel insurance….I had a small claim denied because of the fine print that basically was even though my kid is an EU Citizen she instantly transformed into an American when we visited and because US Citizens must have ACA compliant coverage and they are not an ACA Compiant insurerer they could deny the claim.”
What was the mechanism or transforming your kid to an American?
Citizens of Western Democracies (and especially the U.S. citizens) have been conditioned to believe that compliance with law is a virtue and that in a general sense that law reflects societal values and morality. After watching this discussion for the last five years, it’s clear to me that NOTHING could be further from the truth. The greatest evils and wrongs perpetrated on humanity have been under the guise of law.
Let’s look at the what happened in Germany in the 1930s. What the German Government did was all sanctioned by law. In that sense is was all legal. Through incremental changes in the law the German Government was able to inflict a massive and unconscionable wrong on humanity. Yet the German people allowed it. I suspect that most Germans were not even aware of what was going on. Why? Because they were too busy obeying the law. Now, I am not saying that laws are presumptively wrong or that it is wrong to obey the law. I am saying that law is the best place to hide the purest forms of evil. German society tolerated this because it was the law. The lawyers could have stopped it. But they didn’t because “it’s the law”.
I am imagining what would happen if somebody who knew nothing about CBT and FATCA were reading this thread. The person would probably say that the real issue is whether the world is going to accept injustice and evil because “It’s the law”. File your FBARs. It’s the law, etc. You can’t have a bank account because you have possible USness.
Let’s look at the whole U.S. regulatory and legal environment today. What is happening with respect to laws:
1. Many laws are enacted because they are slipped into unrelated pieces of legislation (often as revenue offsets). Incidentally EVERY piece of negative legislation affecting Americans abroad has been of this ilk. Bottom line is that few people even know these laws exist. Hell, the IRS didn’t even know about PFICs until 2009.
2. Oh my God. A federal government and 50 states. Thats’s 51 sets of laws at any given time. Trust me: every American is in violation of some law all the time. This is one of the reasons why one of the defining characteristics of “Americaness is living in fear”.
3. Speaking of being in violation of laws. The United States has the highest incarceration rate in the history of the world – far higher than the Stalin reign of terror. But, hey “It’s truth justice and the American way”. (By the way Superman renounced US. citizenship.)
4. We have law through regulations. One of the many negative legacies of the Obama presidency is the making of law through enacting regulations. Big problem …..
Once the laws are made the accountants and lawyers, learn of their existence and round up potential victims. Holy Shit Batmam!!!! You didn’t really buy a Canadian mutual fund, No, say it isn’t true. You need to be punished. Same is true of most of these laws affecting Americans abroad. Nobody knows they exist except the compliance industry and they become the “bounty hunters”. I am not saying they are bad people. I am saying it’s just what they do. They believe they are helping you. No, they are helping the U.S. Government.
Now, back to Germany in the 1930s. Because Germany in the 1930s was really a story of “Creating Evil Through The Creation Of Law”, the lawyers were the one group that might have stopped the whole thing. But, they didn’t. Why not? Well, because the law is the law. I bet there were many affected people who asked lawyers: “Can this really be so?” The lawyers said: “It’s the law”. (By the way, I would highly recommend the movie Cabaret – about Berlin in the 1930s – watch it from this perspective.)
Obviously the same is true of the legal profession today. (And NO, I am not saying that there are NOT lawyers who are good. Of course there are some.)
Anyway, the problem here is really about the willingness of people to go on obeying unjust laws.
There was a great American writer by the name of Thoreau. Let’s imagine Thoreau as an American abroad in a FATCA world, writing a book called “Civil Disobedience”. What do you think he might say about all of this?
My point is a simple one. This will continue only as long as people define their behaviour in terms of the law. Law has become a substitute for critical analysis. Critical analysis is necessary. It’s important to recognize the governments and laws are about force and coercion. (I am less of a Libertarian today.) Perhaps more emphasis should be placed on morality and critical analysis than mindless obedience to law.
See a couple of older Brock posts:
1. When law becomes a substitute for morality
http://isaacbrocksociety.ca/2013/03/22/when-law-becomes-a-substitute-for-morality/
2. Burning down barns is not wrong because it is illegal; it is illegal because it is wrong
http://isaacbrocksociety.ca/2015/03/31/burning-barns-down-is-not-wrong-because-it-is-illegal-it-is-illegal-because-it-is-wrong/
We seem to have reached Godwin’s law. 🙁
How long have FIs been sending data to the IRS? I think in Japan it is either about 6 months or 18 months. I believe they finally sent the first in July but with all the date changes don’t remember if it was 2016 or 2015. Is anyone here really expecting movement so soon? Give it a few years, once they have several years of data built up, for the shoe to drop. That is of course if we haven’t already had all our bank accounts closed by then.
@iota
No, other countries might like some of the principles of FATCA. And those principles may have inspired the OECD CRS. But,it’s pretty obvious that the rest of the world would be happy to have the U.S. join the CRS standard and NOT have FATCA. To say that other countries appreciate the FATCA bullying is ludicrous. Furthermore, the combination of U.S. FATCA and the unwillingness of the USA to sign the CRS, means that the USA has effectively bullied the rest of the world into allowing the USA, to be the worlds one tax haven. Because the USA is the world’s number one tax haven (reinforced by FATCA) the USA is allow to poach the investment capital of other nations.
The rest of the world might want information exchange. But, to allow the USA to impose FATCA and not join the CRS means that the USA is the principal and unfair beneficiary of this new world order.
If the countries stopped spending their time signing IGAs and more time saying no to FATCA then FATCA would be gone.