As part of a fiendish effort known as FATCA supposedly aimed at extracting an extra billion or so dollars from U.S. taxpayers each year, the Obama administration is bypassing Congress to impose a far-reaching new tax regime on the world, and domestically on the United States. Experts and analysts say the scheme could destabilize the U.S. financial system and potentially even spark another economic crisis due partly to executive-branch mandates on American banks; yet the IRS and the U.S. Treasury are moving full-speed ahead in spite of major concerns raised by lawmakers and others over their authority to do so. Critics are referring to the whole plot as “fiscal imperialism.”
As we have been saying for a long time, ‘DATCA lite’ (FATCA IGA reciprocity) has the potential to be financially destabilizing. It, along with GATCA, was birthed from FATCA. DATCA and GATCA are the direct progeny of the 2010 Hire Act. Given the stealth nature of the FATCA amendment, is very hard to make a case that this was the intention of Congress, but it is now the ‘Rosemary’s Baby‘ reality that we are dealing with.
See this new article by Alex Newman.
A crucial component of the widely criticized new addition to the U.S. tax regime known as FATCA, passed by Democrats and signed by Obama in 2010 as part of a “jobs” bill, could result in massive capital flight from American banks and economic devastation if efforts to stop it are unsuccessful, experts and policymakers are warning. With the U.S. economy still teetering, some analysts are even suggesting that allegedly unlawful IRS mandates purporting to force American financial institutions to report foreign account holders to their governments could be the straw that breaks the proverbial camel’s back.
For a complete history of DATCA evolution and its opposition in Congress, read more here.
Of important note, is this addition I just made. It is the analysis from 2004 which merits your attention.
Mercatus Center at George Mason University
Treasury had tried before FATCA IGAs (going back to 2002) to impose a DATCA regime, but didn’t happen until it had an Administration in power to its liking. I didn’t realize this history, until this pdf analysis was sent to me recently. It just goes to show, that bad ideas have a long gestation period, and vigilance against them can NEVER be relaxed.
UBS offshore Tax evasion scandal and the birth of FATCA obviously (at least to me) were the “Shock Doctrine” moments that gave the Treasury its opportunity again, to impose DATCA lite unilaterally by their interpretation of ‘regulatory authority’ without regard to the will of Congress.
One of the criticisms lodged against using Federal Register page counts as a proxy for regulatory burden holds that many pages can be consumed in the process of deregulation, while only a handful of pages may be required to impose a particularly costly rule. The latter instance is clearly illustrated by the IRS’s proposed rule to require the reporting of deposit interest paid to nonresident alien (NRA) depositors of U.S. depositories. I hold this conclusion despite the IRS’s unsupported assertion in the scant (4 page) documentation of its proposed rule that the “proposed rulemaking is not a significant regulatory action as defined in Executive Order 12866.” (p. 50387).
Although proposed in 2002, and the comment period has long since passed, the NRA deposit interest reporting rule has not been finalized; however, the possibility that it may be implemented provides the motivation for this study. The analysis that follows confines itself to the likely economic consequences of the rule, and leaves the legal and political analysis of the rule to others.2 For ease of exposition, I summarize my analysis of the rule’s potential economic effects into primary effects, secondary effects, and other likely consequences.
I will update my timeline of DATCA to include this as an earlier start date, as my start date only begins at my moment of awareness of what was happening.
Since no one has posted officially about this milestone, I thought I would pull it out of some threads for wider attention.
The Treasury announcement that the final regulations have been released has lit up the FATCA Compliance Complex (FCC) Linkedin groups and various tax blogs.
It was reported on at Reuters in the Tax dodge language we have come to expect out of them. Treasury tweaks global tax dodge law one last time
It was more extensively described in an Accounting Today Article Treasury and IRS Amend Final FATCA Regulations
Where this interesting comment was made by an “unnamed Treasury official”
Asked about the increase in citizenship renunciations by Accounting Today, he pointed out that there are a number of reasons why a citizen may decide to renounce their citizenship and expatriate, and there is not necessarily a direct correlation between FATCA and the increase in renunciations in recent years. Continue reading
They all generally agree on the facts of the situation. Even so, there is very little pressure to change it. As one Senate staffer pointed out, nobody in Congress represents overseas Americans. And government officials think this law is succeeding at catching the tax cheats.
That may be worth the side effect of losing a few thousand American citizens every year.
Via Ari Shapiro, International Correspondent, London
As long time IBS readers have known, we have been saying that a global GATCA was the ultimate goal of the FATCA mis-adventure. It was the dream of the ideologues in Treasury and the IRS who who have been responsible for the implementation of FATCA.
The most recent posting about GATCA on Isaac Brock in this article by Alex Newman
Update 2/17: Alex has a new article out…
Maybe Obama, when he launched his offshore jihad didn’t understand what he was doing. (video here) Maybe Congressman in their FATCA PR announcements back in 2009, were just witless vassal’s and didn’t know it. Certainly few Congressman knew they passed it hidden in stealth in the Hire Act, but this is what we now are getting. A gotcha GATCA!
If you search for GATCA terms in archives you will find other earlier pieces last year like here, and the references go back farther in the comments. We were watching for the blow back onto domestic shores in the form of the reciprocity DATCA, the history of which is documented here., but it is beginning to look like that GATCA will get here first. Will America’s Congress accept it? Time will tell, as they say.
Today, after a lot of anticipation, we now have the official birth announcement, on the web site of the OECD , Jesse Eggert’s new employer.
Get used to the new acronym that is common in the OECD and FCC (FATCA Compliance Complex) parlance,
AEOI or Automatic Exchange of Information.
I have a feeling you will be seeing it or some variation of it more often now.
Bottom line, AEOI = GATCA and this monster was created by the Union of its FATCA Father and OECD mother.
We would be remiss, if we didn’t give special attention to this article by Don Whiteley.
In signing an agreement spelling out the details of how Canada will comply with a U.S. tax law targeting Americans living in Canada, our country surrendered its sovereignty
It deserves recognition, as there is no article out in the Canadian Media landscape that describes more accurately what has just happened with the IGA signing. However, we should not be surprised, as the author, Don Whiteley has often contributed his insights and comments on IBS. His continued contribution to the education of Canadians via good media articles is outstanding and deserving of praise. Continue reading
In an article that I saw last night on the Financial Post, there was a headline which read
The ‘No Option, No Choice’ meme certainly has become a popular with journalist and politicians alike around the world. “We have NO Option” was the whimpering cry from Prime Minister John Key out of New Zealand.
Very disappointing to see these capitulations out of supposedly conservative governments who DO HAVE OPTIONS, they have just elected for political expediency, fear of the bully’s sanction, ‘everyone else is doing it’ justification, or the desire for another golf game with Obama, not to take any of them!
So, when I see these memes, I am starting to comment with my 10 Options. 10 is always a popular round number. Petros asked that I publish them, so here they are. I am sure you can come up with others. Continue reading
There have been recent spat of news coverage of FATCA in New Zealand media after a long drought!
It is coming on the back of the Select Committee consideration of FATCA IGA implementation legislation buried in a “Remedial Matters” bill. This has been blogged about here with analysis, and here with a plea for comments. The comment submission process closes tonight.
The media coverage started at Wellington Dom Post by Journalist Ben Heather of firstname.lastname@example.org
It was reported on a NewZealand Stuff report, Move to Alter Privacy Laws to help US and has generated 176 comments so far.
There then followed Radio National coverage, a close parallel to CBC News and there are several audio links.
FATCA Top Story on the Radio National website
It was the first story on 8pm news last night:
There was a segment on the Afternoon panel:
(Note: Segment starts at 08:10. FCC lawyer from PWC gives the party line. As Osgood says, they still seem to think it is about Americans living here.)
Also there was further discussion with Select Committee members…
Another clip with quote from David Clark, also on Select Committee:
Now we wait to see if the NZHerald in Auckland, the nations largest newspaper, picks up the story and expands on it. I have written both the News Desk and the Editor asking for public coverage.
Factors that helped with awareness is the tireless efforts of @Osgood and the support we have received from James Jatras with this posting about the notice being sent to Ambassador Mike Moore about RNC repeal efforts.
In the RepealFATCA.com posting is included the text of Solomon Yue’s message to Ambassador Moore. Needless to say, he has received several tweets about it from me.
Also, today, just out, is this press release by CF&P
(Washington, D.C., Tuesday, February 4, 2014) The Center for Freedom and Prosperity submitted testimony in response to open solicitations from the Parliament of New Zealand regarding tax legislation to implement compliance with the Foreign Account Tax Compliance Act (FATCA). Authored by CF&P Director of Government Affairs, Brian Garst, the testimony warned that appeasement of U.S. demands is the wrong approach, suggesting instead that New Zealand should join in efforts to repeal FATCA.
So, it has been a busy time working the FATCA awareness side of the equation and it is gratifying to see all this attention that frankly we have Osgood’s efforts to thank for.
Further contact information:
Osgood just sent these other email address for those who might want to communicate directly to Radio National…
James Jatras has written to Ben, the journalist that broke the story originally at the Dom Post and got indications of interest in an interview in the future, which would be good.
A couple observations James made to Ben about the Radio National coverage that bear noting.
Some of the commentary and discussion on RNZ was excellent, while others (with all due respect, especially from Mr. Nightingale from PwC) was inaccurate. Note:
· FATCA does not just apply to “Americans living in New Zealand,” but would violate the personal privacy of an unknown number of New Zealanders in your own country.
· The pending FATCA agreement is not a “treaty” and is not just an extension of existing tax treaties (as Mr. Nightingale stated) but a new set of obligations imposed on NZ with at best questionable legal status, and no legal obligation on the US side.
· FATCA is not just about people who are avoiding taxes, and in fact not a single provision in the FATCA statute targets actual tax evasion activity; rather, it is an NSA-style data dragnet.
· Whatever meagre amount IRD claims enforcement of the pending NZ would cost, it would be far dwarfed by the millions of dollars per financial institution that will be passed on to Kiwi consumers.
· New Zealand would not receive any useful tax information in return from the US.
· The trump argument for agreeing to FATCA – the threat of 30% withholding – has no legitimate basis in international law or norms of state-to-state behavior. It is a threat of extrajudicial reprisal against your citizens, your consumers, and your national sovereignty.
These and other problems with the pending NZ law are addressed in my submission to the relevant NZ parliamentary committee, here.
That’s all for the moment. Now, back to proofing my own submission to the Select Committee and get it up loaded. 13 hours left until the comment ability is removed.
February 3, 2014 UPDATE: Urgent:
Public submissions can be made from anywhere in the world. All that is required is a name, email address and phone number. But you will have to be quick as the link will be closed at midnight on Wed 5th Feb New Zealand time. (That is actually 3 AM the morning of Feb 5th on the West Coast of America.)
I hope you will find time to express your opinion to them. It is very much appreciated. The link is here:
http://www.parliament.nz/en-nz/pb/sc/make-submission/50SCFE_SCF_00DBHOH_BILL12926_1/taxation-annual-rates-employee-allowances-and-remedial (scroll down to “make an online submission”)
Plainly put, FATCA is more Stealth in New Zealand than in America.
Osgood has provided us good informational analysis of the pending Legislation for New Zealand to capitulate without a fight to the FATCA IGA.
The Ministery of Revenue has NO IDEA OF THE COST of what they are doing, or HOW MANY U.S. PERSONs in New Zealand! Nor, do they or the Ministry of Justice seem to care. All they care about is finding a way legislatively to comply. Banks want their bailout, and the government is determined to give it to them, it would seem. Let ALL Kiwi bank customers pay the cost.
Osgood has recently sent an email plea for submissions from over seas, as when it comes to media coverage in New Zealand, FATCA is operating like a Secret CIA covert operation that the citizenry is unaware of.
See below for his request for help. Submissions are easy to do! They are due by February 4th, USA time. Continue reading
Mark Twain wishes to advise Brockers who Tweet, that there will be a Twitterfest opportunity to ask questions of the Republican response to Obama’s SOTU speech.
Next week President Obama will give his 6th State of the Union, and I’m interested to hear what you think. During the #SOTU, tweet me your questions using #NC09SOTU. After the Republican Response, I’ll take a few minutes to answer your questions! Tweet away!Congressman Pittenger will answer as many of your questions as possible. It’s that easy!
Whatever your political flavor choice, ask questions when politicians (Reps or Dems) are in a listening mode. Increase FATCA visibility for the Homeland.
Note: Robert Pittinger spoke at Republicans Abroad meeting at the Oslo embassy, together with Iowa Rep Steve King and Minn Rep Michele Bachmann. Many FATCA questions were asked.