Here is the Memorandum of Argument of our Plaintiffs (Gwen and Kazia) for our FATCA IGA legislation lawsuit that was submitted on October 3, 2018 to Canada’s Federal Court. [Note that text is limited to 30 pages.]
The Memorandum can be found HERE.
The gist of our argument (page 12) is that the FATCA IGA legislation is inapplicable to Provincially regulated institutions and violates Sections 7, 8, and 15 of Canada’s Charter of Rights.
Some Excerpts:
— “The Impugned Provisions trench upon the core of the provincial power over property and civil rights because they constitute the regulation of a particular industry – the financial industry – and the regulation of this particular industry is an exercise of the provinces’ core powers over property and civil rights.40″
—“…although some US Persons in Canada have obligations under US law to report their Accountholder Information to the IRS, they generally do not have an obligation to report this information to Canada.”
…“Canada admits that it does not know how many account records have been shared with the IRS which are associated with individuals who are not US Persons.49…”
—“That the Impugned Provisions authorize warrantless searches without any notice or means of judicial review of any kind is undisputed and fatal to their reasonableness.”
—“But Canada has admitted that it does not oversee – meaningfully or at all – the conduct of Canadian FIs in determining whose Accountholder Information will be reported to both Canada and the United States.”
—“…it is impossible for Canada to establish that its own use for domestic tax compliance purposes of Accountholder Information obtained pursuant to the Impugned Provisions (to which it admits63) is reasonable because Canada’s use of that information is unrelated to the objective underlying the Impugned Provisions.”
— “The plaintiffs and other reasonable hypothetical individuals have a reasonable expectation of privacy in their Accountholder Information. Canadian courts have observed that personal financial information prima facie attracts a reasonable expectation of privacy, and that individuals can reasonably expect their financial institutions to keep their information confidential.
—“Canada cannot justify the s. 8 infringement under s. 1 of the Charter because it cannot demonstrate that the Impugned Provisions minimally impair s. 8.”
—“Most importantly, the Impugned Provisions undermine the Group’s access to a basic aspect of full membership in Canadian society by denying them the protection of Canadian sovereignty by exposing them to the extraterritorial enforcement of another state’s taxation and tax compliance regime.”
NEXT STEPS:
— Canada responds to our Memorandum of Argument by November 21, 2018.
— We reply to Canada by December 7, 2018.
— Trial is held in Vancouver beginning January 28, 2019
Plaxy: they’ll probably destroy a whole lot of stuff before they even touch CBT and FATCA. The environment, the institutions, basic personal freedoms, health care… And they’ll leave a mess that a Democrat will have to clean up, as usual. And the inevitable Democratic wave, probably not this time but in the near future, will be more left wing than ever and make things even worse for us.
Fred:
“they’ll probably destroy a whole lot of stuff before they even touch CBT and FATCA. The environment, the institutions, basic personal freedoms, health care…”
Yep.
“…the inevitable Democratic wave, ”
I meander between thinking there will be a pendulum swing and thinking that that particular game came to an end in 2008 when the world decided to let the bankers keep the money. Future not so inevitable, these days.
I do think the Republicans, or indeed the Democrats, might eventually do something about FATCA. Rich donors don’t like it, I’ve heard tell.
Who thinks a Democratic pendulum swing would undo more of Obama’s FATCA and Nixon’s FBAR than a Republican pendulum swing did?
Personally I don’t think ideology would be allowed to stand in the way of fundraising.
Re: Sam – An assumption is being made here that a) Sam’s birth wasn’t registered at an US consulate as a birth abroad b) that Sam wasn’t issued a Social Security number at birth c) he doesn’t have an USA passport. If he was registered, has a Social Security number and an US passport, he needs to talk to someone like John Richardson. Everyone’s situation is different. I had no Social Security number, no US passport but this foolishness cause me a great deal of anxiety, money and issues with employment. I am pleased that for those who can not renounce formally because of finances that the lawsuit is getting closer to being heard. Hopefully in the future everyone will be free and not live in fear of this foolishness.
Ann#1: As someone in the situation you describe, thank you! As long as actions like this lawsuit are in play, there is hope.
@Ann#1
In the case of Sam, even if he did have an SSN and US passport as a consequence of his birth being registered at a US consulate, I’d argue that he is quite safe and neither renunciation nor tax compliance is currently necessary. Renunciation might be desirable for mental-health reason, but under today’s conditions it’s not necessary.
Even with a passport and SSN, Sam is not on the IRS radar. Sam can fail to mention US citizenship to banks and avoid FATCA reporting; with his Canadian birthplace nobody can prove otherwise. (Not just in Canada – he can use a Canadian passport to avoid the US taint anywhere in the world.)
I have a US birthplace, SSN and US passport and even with all that, I don’t feel that renunciation is currently necessary. I am off the IRS radar, fully non-compliant; I’m not subject to FATCA reporting because I do not disclose US citizenship when asked by banks; as a Canadian citizen living in Canada, I am protected from any US attempts to penalize me. Sam is in slightly better shape than I am because he was born outside the US.
Ann#1:
“I had no Social Security number, no US passport but this foolishness cause me a great deal of anxiety, money and issues with employment.”
FATCA has certainly caused a great deal of anxiety – whipped up unnecessarily by tax advisers and politicians.
It was and is such a peculiar thing to do – for a superpower to suddenly label everybody born within its borders as potentially criminal and therefore requiring special surveillance. Because it doesn’t make sense, it’s frightening.
It’s not the citizenship – it’s the birthplace. The banks have been ordered to treat all US citizens like shit, but in practice that boils down to only treating everyone born in America like shit, because if an accountholder wasn’t born in America, banks aren’t required to go through the FATCA charade. Those born outside don’t trip the FATCA surveillance wire, or radar,
For US tax purposes, there’s no surveillance tripwire, and no radar. But the tax advisers do their best to scare people into thinking the IRS is coming after them, and unfortunately it has become a partisan issue in American elections, so there’s little chance of this gaslighting stopping, It’s a shame, but there doesn’t seem to be any solution other than to walk away and refuse to be scared.
“I am pleased that for those who can not renounce formally because of finances that the lawsuit is getting closer to being heard.”
Hear hear! Success in the lawsuit would be a victory for common sense and justice.
As ever, the US birthplace is not an issue in countries like Canada where unverified self-certification is all that banks seem to require for FATCA.
Nononymous:
“As ever, the US birthplace is not an issue in countries like Canada where unverified self-certification is all that banks seem to require for FATCA.”
I think that a US birthplace is an issue in every country that has agreed to require its banks to report accounts held by US-born people to America.
Canadian citizens born in the US should have the same rights as Canadian citizens not born in the US. The ones that were born in the US shouldn’t be forced to lie and hide.
And the same for every other FATCA-IGAing country,
Speculative question: why does Canada not bother pretending that FATCA due diligence is being enforced?
I can think of three possible answers:
a) because Canada objects to the discriminatory criminalisation of Canadians;
b) because Canada doesn’t want to face Charter challenges from several hundred thousand more expats;
c) because Canada and the US were already co-operating closely on tax matters, before FATCA was invented; and consequently both tax agencies already have copious information on suspected tax criminals, and don’t care about the rest.
I guess C. Which is the way it should be, in theory. Investigation of suspected wrongdoing. Not carpet bombing.
Just curious if the 4th amendment was mentioned in the lawsuit?
The right of the people to be secure in their persons, houses, papers, and effects, against unreasonable searches and seizures, shall not be violated, and no warrants shall issue, but upon probable cause, supported by oath or affirmation, and particularly describing the place to be searched, and the persons or things to be seized.
Fred (B):
Yes, exactly, and IMO it’s not only the way it should be – it’s the only approach that likely to actually generate significant revenue through successful prosecution.
I suppose also that Canadian banks, interacting constantly with US banks, wouldn’t be thought likely to be secretly soliciting custom from US-resident taxpayers seeking to stash “US money” in foreign accounts. Tax-dodging Americans would probably want to move their savings a bit further away than Canada. So no prospect for Swiss-type bad-bank lucrative fines.
antman:
“Just curious if the 4th amendment was mentioned in the lawsuit?”
Yikes – Would US constitutional amendments have any bearing on a Canadian legal action? It’s Canadian law that’s being challenged in a Canadian court by Canadian plaintiffs.
Plaxy
Yeah but if those Canadian counted as American, it should be applied as well.
“c) because Canada and the US were already co-operating closely on tax matters, before FATCA was invented; and consequently both tax agencies already have copious information on suspected tax criminals,”
Yes.
“and don’t care about the rest.”
Eh? Who’s this “rest” you’re talking about? Both agencies already have copious information on everyone, because everyone’s a suspected tax criminal.
===
‘I guess C. Which is the way it should be, in theory. Investigation of suspected wrongdoing.’
Yes, carpet bombing.
‘Not carpet bombing.’
You too? What’s this drug everyone is taking tonight?
‘I suppose also that Canadian banks, interacting constantly with US banks, wouldn’t be thought likely to be secretly soliciting custom from US-resident taxpayers seeking to stash “US money” in foreign accounts.’
Uranium One.
antman:
“if those Canadian counted as American, it should be applied as well.”
The plaintiffs are Canadians, bringing a case against their government for breaching their Canadian rights.
@plaxy
All right I got your point.
I was thinking…if you want to apply CBT to accident American, you should protect the American from the 4th amendment as well.
By the way I got what you mean
I think the Republicans Overseas anti-FATCA case referred to the Fourth Amendment. Never got past the standing issue, so the 4th Amendment point has not been tested.
Perhaps a future US case against FATCA may get a ruling as to whether FATCA breaches Americans’ Fourth Amendment rights.
@plaxy well, they got superb lawyer James Bopp and they failed because of lack of standing, I was surprised indeed to be honest.
Anyway, I doubt there will be any FATCA lawsuit come up in US, given that the court can use the last lawsuit as a reference.
I think FATCA could be changed by the USG, if the administration wants to change it. Regulatory adjustments might be the easiest way, but court action could also work, now they’ve got control of the Supreme Court.
For those who are no longer USCs (or wish they weren’t), let’s hope the courts deliver, and rule that IGAs breach rights.
All,
If someone wants to sue the government for citizenship based taxation, where does one start? I know there was a case hundred years ago, but circumstances in that case were very different. Is it realistic to sue the government for cbtax? Has anyone recently tried in any of the courts?