Spearheaded by Republicans Overseas and the Jim Bopp legal team, a group of plaintiffs (including myself) previously filed a lawsuit in U.S. Court arguing the presence of “…injuries to [“]Americans[“] abroad caused by the coercion of the Foreign Account Tax Compliance Act(“FATCA”) and Intergovernmental Agreements (“IGAs”) purporting to implement FATCA….”
This lawsuit (15-250; Crawford et al.) was filed on July 14, 2015 in U.S. District Court for the Southern District of Ohio.
It begins: “… This is a challenge to the Foreign Account Tax Compliance Act (“FATCA”), the intergovernmental agreements (“IGAs”) unilaterally negotiated by the United States Department of the Treasury (“Treasury Department”) to supplant FATCA in the signatory countries, and the Report of Foreign Bank and Financial Accounts (“FBAR”) administered by the United States Financial Crimes Enforcement Network (“FinCEN”). These laws and agreements impose unique and discriminatory burdens on U.S. citizens living and working abroad…”
The U.S. Sixth Circuit Court subsequently dismissed the lawsuit because of a perceived lack of “standing” of the plaintiffs.
The U.S. Supreme Court has now declined to review the case, meaning that the decision of the lower court dismissing the lawsuit because of lack of standing of the plaintiffs — remains.
See this link for links to the recent relevant petitions and the standing arguments.
The Plaintiffs-appellants were: (a) Mark Crawford; (b) Senator Rand Paul, in his official capacity as a member of the United States Senate; (c) Roger Johnson; (c) Daniel Kuettel;(d) Stephen J. Kish; (e) DonnaLane Nelson; and (f) L. Marc Zell. The Defendants-appellees were: (1) United States Department of the Treasury; (2) United States Internal Revenue Service; and (3) United States Financial Crimes Enforcement Network.
Republicans Overseas now wants to move forward with a new FATCA-plus lawsuit having plaintiffs expressing different characteristics that would successfully deal with the “standing” issue: “… [we] will regroup to fight another day by recruiting a FATCA and FBAR victim who didn’t sign a settlement agreement with the IRS & paid one of two fines to the IRS in the following states: AR, IA, MN, MO, NE, ND, & SD. Please help us to get the word out. We are committed to take down FATCA tyranny judicially, legislatively, and administratively.”
[— Our Canadian FATCA IGA enabling legislation lawsuit will move to trial (very early next year we hope) in Canada’s Federal Court. However, we can expect that Mr. Justin Trudeau’s attorneys will use a somewhat similar argument on “harm” — that none of our plaintiffs, witnesses, or Canadian citizens turned over by our own Government to a foreign country have really been “harmed” — or even if they have been harmed, all is justified to prevent U.S. from imposing financial sanctions on Canada.]
Petlover – the RO anti-FATCA suit has reached a dead-end because it has been ruled that the plaintiffs lack standing, in that the harm they are suffering as a result of FATCA is (according to the Treasury) caused by the banks, not by the pernicious FATCA law.
The RO lawyers based their case for standing primarily on two abortion-related rulings: Roe v. Wade and Susan B. Anthony List v. Driehaus. The Sixth District ruled against them, confirmed the adverse ruling on appeal, and refused the petition for en banc hearing. (See https://www.irsmedic.com/blog/2017/08/jim-bopps-response-to-6th-circuit.html for an interesting discussion of why that might have happened; this is why (it appears to me) shifting the argument to the Eighth District might seem attractive to those wishing to challenge Roe v. Wade).
If the petition for certiorari had succeeded, the question of whether the FATCA victims had standing to challenge FATCA, would have been considered by the Supreme Court. That would have presented an opportunity to discuss Roe v. Wade before the Supreme Court.
If that had happened, and the Court had decided the plaintiffs did have standing, that would have been a win for those wanting to challenge FATCA.
If the Court had decided that the plaintiffs did not have standing, despite the precedent cited (Roe v, Wade), that would be a definitive loss for anyone wanting to challenge FATCA and it would also have thrown into question the Roe v. Wade precedent. Many conservative Republicans, including Donald Trump, would like to see that happen.
The fact that conservative Republicans are now proposing to find new anti-FATCA plaintiffs – not expats, but US citizens living in the Eighth District, citizens who have paid FBAR-related penalties or FATCA-related penalties to the IRS – suggests to me that the aim of this new proposal would be to challenge Roe v. Wade, not to challenge FATCA, and clearly not to challenge FATCA’s insane meddling in the lives of people who don’t even live in the damned country.
Roe v. Wade is an important subject for US residents, for all kinds of reasons. (See “Roe v. Wade was about more than just abortion” for a thoughtful NYT article on the subject.) I hope that conflict gets resolved, somehow, with as little damage as possible. But it’s a different issue from the problems caused to people in other countries who are being refused bank access due to US meddling.
The USG (the defendants in the anti-FATCA lawsuit) could put right those problems, if it wanted the problems to be put right. Personally I think the administration does not want to put those problems right, because to do so would interfere with their agenda. Call me cynical.
@plaxy
I wouldn’t say that it’s cynical to suggest there are forces in the US that would throw non-resident US citizens under the bus to further a homelander agenda – it’s expected at this point.
So endeth the first lesson.
BB – I doubt if they’re any more concerned about the impact of FATCA on US residents.
US citizens living abroad suffer the brunt because they’re the key that unlocks non-US-source revenue. Not only individual revenue, but corporation revenue. It’s nothing personal. IMO.
That’s why I’m also not inclined to believe that the US Congress is going to remove CBT.
Though they might make changes. If so, USCs outside the US are less likely to benefit than to pay the price (again). IMO.
I remember a prominent Congressman (Schumer, possibly??) who was quoted a few years back:
“There is no good reason for any US citizen to ever have an account outside of the United States.”
This is the mentality we have been dealing with right from the beginning. Their attitude will not change, CBT will not change, and FATCA is not going away. In their hearts they believe that expats totally escape paying tax to anybody anywhere and thus deserve punishment for leaving the US. They are monkeys living in an alternate reality which allows no actual fact to puncture their bubble. (Guys like Trump being exhibit “A”.)
I figure the best we can hope for would be a successful challenge to the unreasonable $2350 renunciation fee. If, for whatever reason, you are not OK with renouncing, then close your foreign accounts and move back to the US.
maz57 – I remember that quote. I think it was in this IRS Practice Unit:
https://www.irs.gov/pub/int_practice_units/OAR9435_04_01R.pdf
Used to be full of gems. Most of the howlers have been blacked out, after it dawned on them they were being ridiculed.
I said:
“US citizens living abroad suffer the brunt because they’re the key that unlocks non-US-source revenue. Not only individual revenue, but corporation revenue.”
“That’s why I’m also not inclined to believe that the US Congress is going to remove CBT.”
Without CBT, the magic would stop working. So CBT will remain in place for at least another eight years.
That’s the final instalment of the transition tax. Also (purely coincidentally no doubt) that’s when many of the TCJA “tax cuts” expire, putting everybody’s taxes back up.
@plaxy
Thank you for your concise explanation of the relationship between Roe vs. Wade and FATCA. I understand now how it impacts.
Petlover – you’re welcome.
@plaxy
Thank you also for your explanation, the R v W reference confused me too.
I would agree, it will be another 8yrs at least for the ‘gift that keeps on giving’
Marie G. at American Expatriates found a good quote from Paul Arden (wrote about advertising and motivation), “If you can’t solve a problem, it’s because you’re playing by the rules.”
“If you can’t solve a problem, it’s because you’re playing by the rules.”
That’s why its a losing proposition for expats to play by US rules.
mazy57: “I figure the best we can hope for would be a successful challenge to the unreasonable $2350 renunciation fee.”
Is anyone planning to challenge this?
Challenge the CLN price, or challenge the need for the CLN?
For the US-born individual, the CLN is mainly needed because the residence country’s law requires banks to report accounts of a US-born individual as “refractory” unless the accountholder can produce this shoddy photocopied paper with the US stamp on it.
This is wrong on so many levels.
By making this law, and basing it on the country’s double-taxation treaty with the US, a country explicitly accepts America’s claimed right to impose US citizenship and double taxation of local-source income on the grounds of birthplace.
While at the same time, the residence country is using the same treaty to refuse to allow FTCs for double tax paid to America on local-source income.
I suspect some countries (and, in Europe, the EU) are well aware of the shaky ground they’re standing on, and are getting increasingly nervous about it.
A great solution (IMO) would be for residence countries to decline to require their banks to report only the accounts held by US residents; this would be in line with CRS due diligence and also, where there is an allegedly reciprocal Model 1 IGA, reporting only on those resident in America would make the claims of reciprocity look less absurd.
The only thing we can ask from inside the US is a cheap and easy way to renounce on human rights grounds. Anything else is bound to fail because it is not in their interest, whoever is in power.
Anything else will have to be done from outside. The rest of the world is very unhappy with the US’s extraterritoriality but it is taking them ages to understand how much they are losing and even longer to do anything about it.
And that was where the US made the US’s fatal mistake, for as Gwen said, automatically, “Kazia loves me; that’s what she told me, that she loves me,” suddenly she knew. She knew! Love. That was what she had that the US did not have. She had Kazia’s love, and Stephen’s, and Carol’s, and the real Ginny’s love, and the twins’, and Patricia’s.
And she had her love for them.
But how could she use it? What was she meant to do? If she could give love to the US perhaps it would shrivel up and die, for she was sure that the US could not withstand love.