Category Archives: Issues regarding US persons abroad

For those of us trying to make sense of FATCA and GATCA — the OECD CRS, this is a good read …

OECD CRS (Common Reporting Standard)

FURTHER GUIDANCE‌‌

Bloomberg BNA – September 26, 2016 “Finish Line Unclear for Some FATCA Pacts as Banks Worry”

By Alison Bennett

Sept. 23 — A bumpy path may lie ahead for crucial agreements to ease the process for foreign banks to report their U.S.-owned accounts under a controversial law—even as IRS pressure grows for countries to get their pacts in force quickly.

Some countries face legal challenges to agreements under the Foreign Account Tax Compliance Act, while others may not be moving quickly. The lack of agreements in force is raising big concerns among global banks with operations in some jurisdictions that have fully functioning pacts and some that don’t.

…

The alternative—directly reporting individual accounts to the U.S. or potentially facing a 30 percent withholding tax—is a major concern for cross-border financial institutions as difficulties continue in countries that haven’t managed to get an IGA in legal force. According to Sept. 23 Treasury Department data, 113 countries have agreements, but 49 still need to reach the finish line.

…

Tax attorneys said the Organization for Economic Cooperation and Development’s common reporting standard may be draining energy and legislative resources in some jurisdictions. The CRS is a separate multinational system designed to allow financial information exchange across many borders.

More than 100 countries have signed on for that exchange. The U.S. can’t fully adopt the CRS because of legal challenges. Some of those 100 countries have implemented CRS statutes before finalizing FATCA agreements.

…

Even if banks want to register for direct reporting, in many cases they still face the legal prohibitions that led to the creation of IGAs, she said. In another challenge, financial institutions that have already made huge efforts to document all their U.S. accounts under their agreements would have to redocument them to comply with FATCA, said Ferris, now a financial services principal with Ernst & Young LLP.

etc.

Related:

September 27, 2016 – Newsmax Finance “Treasury: IRS Spent $15 Million on Flawed FATCA System Rollout Read more: Treasury: IRS Spent $15 Million on Flawed FATCA System Rollout “

Donna-Lane Nelson is a co-plaintiff with me in the Republicans Overseas U.S. FATCA/IGA/FBAR lawsuit.

The July 14, 2015 Complaint states that: “…Fearing that she would eventually not be able to bank in the country where she lived, she [Donna-Lane] decided to relinquish her U.S. citizenship. She did so on December 11, 2011 at the U.S. Consulate in Bern, Switzerland. The decision to relinquish her U.S. citizenship was not easy, but ultimately she felt that she had to choose between having the ability to access local financial services where she lived or be a U.S. citizen…”

Donna-Lane, a novelist, has published a murder mystery (“Murder in Schwyz“) which includes a description of the harm caused by FATCA:

“…At home, Brett’s marriage is in deep trouble, but he doesn’t want a divorce. He wants the best for his two daughters and he is also trapped because Swiss banks are closing the accounts of Americans. He has put every asset in his Swiss wife’s name. A divorce will leave him with nothing.”

A novel that includes FATCA harm is, I think, a first.

 Now — Eric in Switzerland (see complete response below in comments) tells us about the Switzerland FATCA Fact:

“It might be a novel but it sure isn’t fiction.

I could write a short book myself about lives turned upside down here in Switzerland. My elderly parents (American father/ Swiss mother) had their account shut down for a time by UBS. My American sister who only lived in the US until she was eight years old and her successful French husband went through FATCA hell in Geneva until she renounced out of desperation on their lawyer’s advice. FATCA wanted her French husband to cough up “back taxes” for the sin of sharing an account with his American wife…but you guys know all this.

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U.S. expats come up short on many of the U.S. Bill of Rights. But their is some progress on of them, albeit one which much of the expat community doesn’t aggressively pursue–the 2nd amendment right  “A well regulated militia being necessary to the security of a free state, the right of the people to keep and bear arms shall not be infringed.”

At issue, is whether a U.S. citizen has an equal and non-limited right to be armed while that U.S. citizen is in the U.S.   The first discussion is that of an expat who holds a valid 2nd address in the U.S. The second discussion and case is related to an expat who has only a legal residence outside of U.S. The second case digs past a right which could be artificially be limited by the citizen’s uses, be it for sport or for self defense.

It’s not necessary for expats to enter into arguments as to whether this right is right or wrong, especially as this right is not shared in most of the countries where expats reside. In an effort to stay out of arguments as to whether this right is good or bad, just think of it as any one of any rights which might be granted by a constitution, which however is not afforded to non-resident citizens. Perhaps one could have a constitutional right to SuperSize Big Gulps, which may not be all that good for you or your family, but indeed it is a right which you might have to indulge in a product available to other resident U.S. citizens. The post is simply to point out only one effort to gain equal treatment for expats under the existing Constitution and its amendments.

RIGHTS FOR NON RESIDENTS

More relevant to most readers is that federal law effectively blocks the purchase of a firearm in the U.S. by a U.S. citizen living abroad with no residence in the U.S.

The federal ban is the subject of a long-running Second Amendment challenge, currently captioned Dearth v. Lynch. The most recent published opinion in that case, from June 2015, denied the government’s request for summary judgment and remanded the case for trial.

In the arguments (whose language and logic is partially understandable), it was established that the plaintiff indeed had no options available to him as a U.S. citizen to bear arms in the United States. The case looked at his potential ability to import a weapon, which he could not. It also looked at the various state/federal laws that may have allowed him to have firearms for sporting purposes, but the court found that there was no documented method of purchasing firearms for other legally valid purposes (self defense). It also appears to throw out any thoughts that it is  states that should be the plaintiff, and it finds that there indeed states which do not prohibit non-resident purchasers, but it is indeed federal law that prevents the plaintif from purchasing the weapon for which his constitution states should not be limited,

The case illustrates that indeed, it has been fully possible for a combination of state and federal laws to prevent the exercise of non-resident citizens from exercising their Constitutional rights. Also, that the possibility of seeing the proper court does exist if one has access (including financial) to lawyers with sufficient expertise. It also points out the long road necessary to even reach a court which might make a decision.

http://caselaw.findlaw.com/us-dc-circuit/1705364.html

Animal Farm – Wikipedia, the free encyclopedia// //

(Again, this author does not enter the argument as to whether the 2nd amendment is a good right or a bad right.)

FATCA costs 2014,2015,2016

The United States Government uses, on average, $54 million per year to locate its expat U.S. citizens and their assets in the bizarre government expat-locator program called FATCA.

FATCA, the Foreign Account Tax Compliance Act, was designed to locate  9 million U.S. citizens residing overseas and their assets.

Indeed, there is also a quantity of U.S. citizens who have savings and investments overseas, and also a U.S. immigrant population whose assets might remain in their country of origin. However, the greatest population of persons sought in the FATCA program are the 9 million U.S. expats. With respect to the 9 million, those quantities are nearly negligible, and it is quite accurate to say that the population that FATCA seeks to locate is approximately the 9 million U.S. expats. And the Obama rollout of FATCA pointed out that it was Americans overseas that were the object of FATCA.

$54 million / 9 million = $6 of costs to locate each of the U.S. citizens overseas.

Q: What value does America put on its expats? A: 6 bucks a piece. #FATCA

Republicans Overseas (RO) has brought forward a lawsuit against the United States Department of the Treasury, United States Internal Revenue Service, and United States Financial Crimes Enforcement Network over FATCA, IGAs, and the FBAR.

In the back and forth of the litigation, the US Government continues to argue that none of the plaintiffs have any “standing” or have suffered any harm that is relevant for legal/litigation purposes. This is the latest (September 15, 2016) response of the Jim Bopp RO team to the the Government’s arguments. See the link.

A bit of text From the response brief:

“In pre-enforcement challenges, as here, plaintiffs are not required to violate laws to challenge them. One may comply with a statute though deeming it unconstitutional and challenge it as being an unconstitutional burden. See, e.g., Davis v. FEC, 554 U.S. 724 (2008)…”

“The Government says it has never sought to impose an FBAR penalty against Zell [who is also the attorney in the Israeli FATCA lawsuit] (Opp’n 65), but the Government has nowhere eschewed enforcement, so the provision is not moribund and pre-enforcement challenges allow one to challenge provisions before enforcement begins. He reasonably fears enforcement for noncompliance. (Am.Compl. ¶¶ 130, 132.)”

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Trish Moon

U.S. tax laws, politics pushing more dual citizens to renounce citizenship

The lovely Trish Moon spoke to Jeff Lee of the Vancouver Sun. Still, he managed to interview some condors too. Alas.

Somehow Jeff Lee found someone who is thinking about renouncing because of Donald Trump and thus blames him in part for the spike in renunciations.

[SEPTEMBER 27, 2016 UPDATE: "The Hill" today picked up on the upcoming House Oversight Committee hearings on FATCA. Obviously the fight will be challenging and there are lots of reasons to complain and be skeptical about an attempt by some U.S. Congresspeople to kill FATCA --- note the tax compliance pundit in the Hill article who justifies FATCA because Treasury has spent a lot of money on it --- but the FATCA hearing will happen despite the naysayers.]

Recently, Representative Mark Meadows introduced a bill in the U.S. Congress (complementary to a similar bill in the U.S. Senate) to repeal FATCA.

Witnesses are now being sought who have been significantly harmed by FATCA and are willing to testify at the Congressional hearing on FATCA in Washington D.C. Details on timings, length of testimony etc. are to be worked out. If you are interested in testifying please send Keith Redmond an email at: FATCA_Testimonials@outlook.com

Although a focus is FATCA, if you have been significantly harmed by U.S.-imposed citizenship-based taxation, which is enforced by FATCA, please also consider testifying at the hearing.

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I thought the results of the Israeli court case deserved their own post.

According to the report, the judge in this case has determined that our expectation of privacy in the modern world is limited. Therefore, Israel must comply with the United States FATCA demands and perform the transfer to the U.S. of the (excuse me) private financial information of Israeli citizens living in Israel just because they have some sort of nominal association with the U.S.

The issue that was completely missed in this case was discrimination, a shocking oversight considering the historical background of the judge’s nation. I hope that Mr. Arvay in his prosecution of the Canadian lawsuit will stress this point heavily. Regardless of whether or not privacy must be held as a limited “right” in modern society, it should be equally limited and not more limited for some citizens than for others. As it now stands in Israel, Canada and every other country in the world, those deemed by the United States to be Americans have even greater limitations placed on their privacy than any other members of their populations.

That is the issue. That is the injustice. That is the wrong. That is our cause.