Category Archives: Issues regarding US persons abroad

Small update

Thanks to USCitizenAbroad for posting links re Ms Ran Kim. Here is a piece she is listed on while interning at Caplin & Drysdale in Washington, D.C. (2012-2013, 2014)

Scott D. Michel, Zhanna Ziering & Young Ran Kim, U. S. Offshore Account Enforcement Issues, 16 J. Tax Practice & Procedure 65 (Aug./Sep. 2014).

U. S. Offshore Account Enforcement Issues

CONSIDERING "CITIZENSHIP TAXATION":
IN DEFENSE OF #FATCA- Hands Down Worst Academic Piece About FATCA ever Written https://t.co/qYvsrzpEyL

— Patricia Moon (@nobledreamer16) May 27, 2017

Profesor Paul Caron, on his TaxProfBlog posted the following article:
CONSIDERING “CITIZENSHIP TAXATION”:
IN DEFENSE OF FATCA 20 Fla. Tax Rev. 335 (2017):
by Young Ran (Christine) Kim

If any description could possibly be demonstrated over & over in this piece it would be the term “offensive.”  I confess to a hard-edged bias against academia, likely for the same reasons as most people; i.e., the rather noticeable and consistent lack of everyday common sense. Even in my own field (piano performance, where a doctorate is called a DMA not a Phd) there is a prevalence of people who may be perfectly schooled in the accuracy of Baroque ornaments, precise methods of articulation in Classic-period pieces or any number of other tedious accomplishments yet their actual playing (which is the whole point of a performance degree vs an academic one) is so devoid of vitality and inspiration it is enough to make one weep. I don’t know if the same exists in all disciplines but one thing that does apply here is a complete (and I mean complete) lack of awareness on the part of the author, of the harshness of how these theories play out on the lives of REAL people. What would make much more sense would be to address these problems head-on rather than justify “concepts” through a lot of theoretical jargon.

The following comment says it well:

The people affected by “citizenship-based taxation” are U.S. citizens and Green Card holders who live outside the USA and are “tax residents” (and often citizens) of other nations. The paper discusses (sort of) “citizenship-based taxation” as an abstract concept without considering the brutal effects that it has on the people subjected to it. The acknowledgement of the difficulties with pensions, retirement planning, foreign spouses, mutual funds, CFC rules, etc. (the reality of citizenship taxation) is most notable in its absence. And no, FBAR and Form 8938 (as obnoxious as they may be) are reporting requirements and not the specific tax rules (PFIC, etc.) that affect Americans abroad. I suspect that this paper will be subjected to the criticism that it so richly deserves.

Posted by: John Richardson | May 26, 2017 1:14:02 PM

While this criticism can be equally leveled at the members of Congress who passed FATCA, the Treasury Department personnel who wrote the regulations and last but not least, the heartlessness of many tax compliance practitioners, there is something especially repugnant about those pontificating from their ivory towers, proclaiming that FATCA, citizenship-based taxation, global transparency and all the rest of it, are worth the grief being caused.

Continue reading →

As many of you know, Lynne (Blaze) has been, from the very beginning, one of our strongest and tireless defenders of the Charter rights of Canadians opposed to our Government’s compliance with the foreign FATCA law. As part of our FATCA IGA litigation in Canada’s Federal Court Lynne acts as the Chair of the Litigation Committee of ADCS.

My sad news is that Lynne is now at the University Hospital in London Ontario. She was in the ICU but has now been transferred out of this unit.

From the hospital Lynne is already sending us emails about her thoughts on FATCA etc. and provided this update on Maple Sandbox:

“Thanks everyone for your positive thoughts. I was transferred last night from ICU to Neurology. Tonight a doc diagnosed me with epilepsy. I do not need that after all the challenges of 36 years of M.S.! She said I will probably lose my drivers’s license.

I was on a ventilator for a few days while I was in ICU–even though my Living Will clearly says no ventilator, dialysis, etc.

I didn’t check my e-mails for a few days and I am just working my way through 98. If you are one of them, I apologize for not responding to you.”

We all wish her a speedy recovery, and it might be nice if you could share your thoughts on this post.

Continue reading →

[May 18 2017 update: I now include in this LINK the recommendations of Elise Bean, a long-time FATCA supporter and witness at the FATCA hearing.]

On April 26 2017 there was a Hearing at the U.S. House Subcommittee on Government Operations dealing with the harm caused by the U.S. FATCA law imposed on the world.

At the conclusion of the hearing, Chairman Meadows asked the Witnesses for “three recommendations on how to improve the legal framework set up by the Foreign Account Tax Compliance Act” (FATCA).

My personal-only interpretation of this request is that the Chair is saying something like: “If FATCA has to be replaced with something else, can you recommend three compromise laws/approaches that would achieve the “good” aims of FATCA but minimize the harm, and which would receive bipartisan support?”

— I enclose as a link the May 15, 2017 submitted personal recommendations of Jim Bopp, a witness and attorney for the U.S. FATCA/IGA/FBAR lawsuit currently pending in United States Court of Appeals for the Sixth Circuit (I am one of the plaintiffs).

From the Bopp text:

“This letter provides three recommendations on how to improve the legal framework set up by the Foreign Account Tax Compliance Act (“FATCA”).

First, we recommend that any taxation of overseas Americans comply with established United States constitutional principles and international legal norms.

Second, we recommend that the current laws be repealed in their entirety [Bopp goes on to include specifically FATCA, IGAs, FBAR, and citizenship-based taxation] and certain proposals rejected.

Third, we recommend that Congress enact a 1099 requirement on foreign banks, established by treaty, as long as this complies with established United States constitutional principles and international legal norms…”

—- Appended to the end of the Bopp recommendations are my personal thoughts as a separate submission: I support, as does Mr. Bopp, the repeal in entirety of FATCA, FBAR, IGAs, and citizenship-based taxation (the latter to be replaced with territorial/residence-based taxation), do not support any “watered-down” FATCA-replacement legislation whatsoever — which I believe will continue the harm, and offer suggestions on changing U.S. citizenship laws in the very limited context of FATCA harm. In hindsight, I now feel that I should have gone further in my recommendations for citizenship law changes.

—- When I receive the recommendations of strong FATCA supporter Elise Bean, a hearing witness, I will post.

— Ongoing developments: Republicans Overseas has initiated an intensive lobbying campaign with Congress to kill citizenship-based taxation and replace with territorial taxation. There can be no promise of success, but these people are trying. I am not aware of similar efforts on the Democrat side.

Continue reading →

“…The government of Canada has a responsibility to stand up for its citizens when foreign governments are encroaching on their rights…We believe that the deal reached between Canada and the U.S. is insufficient to protect affected Canadians…” June 2015 Pre-Election statement of Mr. Justin Trudeau (now Prime Minister of the Government we are suing) to a constituent

May 13 2017 Canadian FATCA Litigation Update:

SUMMARY TRIAL MOTION has now been submitted on Constitutional/Charter issues. We are finally moving closer to trial and our Vancouver litigators have now served and filed in Canada’s Federal Court a “Notice of Motion for Summary Trial”.

As detailed in this brief motion (see link) this is a pleading to the Federal Court of Canada for a summary judgement we are seeking on the Constitutional-Charter issues.

We argue in the motion that the Canadian legislation enabling the FATCA Intergovernmental Agreement (IGA) violates Canada’s Constitution Act (by forfeiting Canada’s sovereignty and facilitating the extra-territorial enforcement of a foreign state’s taxation and tax compliance regime on Canadians) and Canada’s Charter of Rights and Freedoms (Sections 7, 8, and 15).

Some of you do not consent to be “U.S. Persons”. There is this statement in the Motion:

“The contours of United States citizenship and the definition of US Person are matters of United States law and/or policy and are subject to be changed by the United States at any time.”

There is also this:

“It is a principle of international law that every sovereign state has the right to conduct its affairs without intervention by other states (the “Principle of Non-Intervention”). The Principle of Non-Intervention is at the core of the international legal order and is a corollary of every state’s right to sovereignty, territorial integrity and political Independence. The Principle of Non-Intervention is an element of the unwritten constitution.”

Will the Federal Court of Canada accept this Constitutional argument?

This motion is NOT the main, detailed legal submission (i.e., where all of the case law is discussed, etc.) which will be filed much closer to the hearing date (yet to be decided).

AFFIDAVITS. You will notice on pages 22-23 a long list of affidavit titles. Because of a technical issue related to the litigation, it is not possible to publish the text of these affidavits at the present time.

Some of the affidavits include those we previously submitted and those Government submitted – which we feel will help our case.

There are also expert reports from three witnesses (Ryan Liss, Roy Berg, Kevyn Nightingale) who were selected by our litigators to provide an expert opinion based on our litigators’ assessment of their expertise and experience.

In addition, there are affidavits listed from lay witnesses.

Our litigators made a strategic decision on the selection of specific lay witnesses for the trial from the larger group of volunteers. I thank the lay witnesses and all witness volunteers for their courage and commitment to push for return of Canada to Canadians.

LIKELY NEXT STEPS. On May 19, 2017 there will be a teleconference with Government, Case Management Judge, and our side to deal with the Government Motion to compel further documents from the three plaintiffs (we oppose the motion).

After the ruling, Examinations for Discovery of the three expert witnesses and the plaintiffs will be scheduled and conducted. Our lawyers will likewise examine the Attorney General’s witnesses. It is also possible that the Attorney General might examine our lay witnesses. We currently do not know if they will elect to do so.

Upon completion of the all examinations of the parties, and after filing all required submissions, we will await a trial date to be set by the court. Trial dates are dependent on the availability of Justices and court (backlog) schedules.

I know that the slow pace of our litigation is frustrating. Thank you for your continued support and kind thoughts.

Stephen Kish

Continue reading →

Reposted from the citizenshipsolutions blog
“Guest post by
John Richardson - “Citizenship Solutions”

FATCA Hearings in Washington, DC – April 26, 2017
 
 
 
 

April 26, 2017 – Washington, DC – REVIEWING THE UNINTENDED CONSEQUENCES OF THE FOREIGN ACCOUNT TAX COMPLIANCE ACT https://t.co/VmeUIdJlqb

— Citizenship Lawyer (@ExpatriationLaw) April 30, 2017

Beginnings – It all began in July 2016

The purpose of this post is NOT to describe the hearing in detail (that has already been well done), but rather to provide my overall (and perhaps broader) impressions based on actually having attended the hearing.

The April 26, 2017 FATCA hearing in Washington was long in the making.
Its genesis was rooted in a meeting that took place in July of 2016 at the Republican National Convention. The planning and preparation involved the efforts and consistent cooperation (weekly meetings since August) of a number of people in different countries and on different continents. It was a privilege to have been part of this group. A list of the people who worked on making the hearing happen – the “FATCA prep team” – is described here. Those efforts culminated in what some witnessed “in real time” on April 26, and what thousands more will see (thanks to Youtube) in days to come.

The hearing has already been documented IN DETAIL and discussed in various places IN DETAIL, with the best commentary coming from posts at the Isaac Brock Society here and here and various Facebook groups here, here, here and here. (An example of ridiculous commentary is here.) When I say “commentary” I mean NOT ONLY the posts, but the rich and insightful comments. Seriously, this collection of “digital experiences” really is “History In The Making!”

Thinking about FATCA, What is it anyway?

I have written numerous posts about FATCA – “The Little Red FATCA Book” which you will find here. An explanation of how the Meadows “Repeal FATCA” bill would actually work is here.
Basically, FATCA is the collective effect of a number of amendments (including the creation of a new Chapter 4 of Subtitle A of the Internal Revenue Code – which has made largely irrelevant by the FATCA IGAs) which are designed to identify, attack and impose sanctions on:

A. FATCA: Non-U.S. banks and other financial institutions

Forcing them to “hunt down” the financial accounts and entities (examples include mutual funds, corporations, trusts and some insurance policies) owned by “U.S. persons”. The goal is to “turn them over” to the IRS.

This imposes enormous compliance costs on non-U.S. banks. The obvious effect is that they will not want U.S. person customers. Would you? Interestingly the focus of the witnesses
(Mr. Crawford and Mr. Kuettel) was primarily on the denial of basic access to financial and banking services.

Although important, this is only one half of the equation. What happens when “U.S. persons” learn (the vast majority had no idea) that they are subject to U.S. taxation?

B. FATCA: “U.S. Persons” with non-U.S. financial assets and bank accounts

It is not possible for “U.S. citizens” to BOTH: be U.S. tax compliant and live a productive life outside the United States, when they are also subject to the tax laws of other nations. (Digital nomads are the exception.) The reason is that U.S. citizens living outside the United States are living under a system where:

1. They are presumed to live in the United States (which they
   don’t); and
2. Their assets (which are local to them) are presumed to be
   “foreign” to the United States.

If you don’t understand (or don’t believe) why this is true, you will find an explanation here.

Just remember:

“When In Rome, Live As A Homelander” and do NOT “Commit Personal Finance Abroad!” (It’s UnAmerican)

Although a major effect of FATCA is to subject Americans abroad to a very special set of tax rules (think PFIC, foreign pension, CFC, and a crushing burden of forms that impact ONLY Americans abroad), there was NO witness that even alluded to this as one of the effects of FATCA. (FATCA is the enforcer of the uniquely American policy of “taxation-based citizenship”). There was also no witness that described how a “FATCA letter” can lead to absolute financial ruin for honest taxpayers, who have made a life outside the friendly borders of the United States of America. There was no witness who explained the confiscatory effects of entering one of the IRS “Amnesty – Ministry of Love” programs.

This had the effect of making it seem as though FATCA (in terms of the effect on Americans abroad) was just a simple “disclosure- Form 8938 issue. Nothing could be further from the truth.

If it were not for “taxation-based citizenship”, FATCA would be no more or less a problem for Americans abroad than it would be for Homelanders (which doesn’t mean it is not a problem). Unfortunately, the hearing did not provide evidence on this point.

(This is NOT a criticism. But, just imagine if there had been witnesses who had been
identified as a “U.S. Person” because of FATCA, did NOT know about “taxation-based citizenship” and then were forced into the “Offshore Voluntary Disclosure Program“. Now that would have been a story …!)

It is “taxation-based citizenship” that makes the effects of FATCA so hard on Americans abroad! In 2011, I remember thinking:

The United States can have either FATCA or it can have “taxation-based citizenship” but it CANNOT have both!

Continue reading →