Media and Blog Articles – part 2 of 11 (Year 2015)

1,837 thoughts on “Media and Blog Articles – part 2 of 11 (Year 2015)”

1. @Neill — I have access to the Banking & Finance Review. How do I get a copy of the article to you?

2. @Karen,

   No need. Just say a few words about it for others.

3. This is what Voluntary Disclosure looks like in Canada, now and after AEOI:

   “A successfully filed Voluntary Disclosure eliminates the possibility of penalties and criminal prosecution, allows for partial interest relief and, in several cases, enables the taxpayer to limit the years required to qualify as a “complete” disclosure to ten, and possibly fewer, years. Our experienced Vancouver Income Tax Litigation Lawyers handle Voluntary Disclosures relating to unreported offshore bank accounts and unreported offshore income on a frequent basis and can manage the process to ensure the best possible outcome.”

   http://www.mondaq.com/article.asp?articleid=451512&email_access=on

4. @ Neill

   The article looks at costs and benefits of FATCA. They note that the costs fall disproportionately on middle class USCs living abroad.

   They put dollar amounts (for a “typical” overseas taxpayer with $50,000 in financial assets) on benefits and costs. Under their hypothetical example benefits (additional penalty/tax revenue net of IRS collection costs) is $212.50. Costs include FFI compliance costs, completing form 8938 and loss of privacy for a total of $248.01. So costs per person exceed benefits per person.

   As with all such exercises, they have made assumptions that could be challenged on both sides of the equation. The main component of their cost number is the loss of privacy:

   A data breach of a U.S. citizen’s private information typically costs that person an average of $188 (2013 Cost of Data Breach Study: Global Analysis, 2013). The illegitimate compromise of a citizen’s data is comparable to the legitimate compromise of data demanded by FATCA of American expatriates. In light of this, the study values the right to privacy at $188 per person.

   In aggregate (using 6.8 million Americans overseas), they find that costs exceed benefits by $241.6 million.

   They also note that Russia and China have not yet signed an IGA with the US. They claim that Russia has requested “full reciprocity and an abandonment of U.S. extraterritoriality”

   Finally, they conclude

   A potential solution to the negative externality that FATCA places on U.S. citizens living abroad is that the U.S. move away from its current system of taxation to a residence-based taxation system. This would allow FATCA to target solely those U.S. citizens attempting to hide funds in tax havens as opposed to all U.S. citizens with foreign holdings; i.e., income earned abroad and savings by those living overseas would not be subject to U.S. taxes; only citizens living within the U.S. with
   overseas holdings would still be subject to FATCA. While FATCA legislation may be well intentioned, its specifics need attention and reform. By changing the U.S. tax system from that of worldwide taxation to the residence-based system, the high costs placed upon U.S. citizens living abroad would be alleviated.

5. @Karen
   Sounds wonderful.
   Whats the date on that article?

6. @ Karen
   That article sounds like good ammo for the anti-FATCA and anti-CBT lawsuits. I hope they pick it up.

7. Does FinCen have too much power? http://www.fcpablog.com/blog/2015/12/15/does-fincen-have-too-much-power.html

8. In contrast to Karen’s to the article she gave a a synopsis of:

   Caplin and Drydsale is a very significant legal firm with strong Washington influence. If they say Americans abroad are the target of US legislation, it’s probably true. Unfortunately there’s no recognition of the fact that many people who don’t even know they are taxpayers will be swept up in this and FATCA legislation. You can email him your response to his claim that many people affected by this are scofflaws:

   “US. taxpayers who owe taxes, interest and/or penalties to the IRS now face a serious risk that their passports may be revoked or severely restricted. Such taxpayers should be sure to exercise their lawful rights in the IRS audit and collection processes, as the issues of taxpayer liability or ability to pay cannot be argued or litigated in the context of an IRS certification to the Department of State. And while the statute obviously reaches those taxpayers who now owe more than $50,000 assessed after audits, it also portends serious problems for taxpayers living abroad, or with unreported foreign assets, if the IRS later ascertains that they are non-compliant and assesses liabilities. Many individuals with such international issues have taken the view that the IRS cannot reach them, or their assets, because they live outside the U.S. To the extent taxpayers now ignore IRS audit and collection activity, they run the risk of having their passports revoked.”

   http://www.mondaq.com/article.asp?articleid=450890&email_access=on

9. @Karen,

   Thank you very much. So people are putting detailed numbers to the known economic loss of FATCA. Nice.

10. @Polly — the article is from an academic journal: Banking and Finance Review, vol 7 no 2 dated 2015 (no more specific date is given)

    @Neill / Embee — While I agree with their conclusion that costs outweigh benefits, I think their specificity may open them to criticism. To do the computation they had to make simplifying assumptions and IMO they left out some important costs and benefits. The vast majority of the costs listed comes from the loss of privacy rights, which could easily be discounted by FATCA proponents. Plus, while they correctly conclude that eliminating CBT is the appropriate fix, the body of the paper only briefly mentions a small subset of the arguments against CBT. That is, the conclusion is not well supported by the arguments in the body of the paper.

11. As long as I was in the database with the prior article, I searched for other articles on FATCA and found this one:

    WOLDEAB, Y. (2015). “AMERICANS: WE LOVE YOU, BUT WE CAN’T AFFORD YOU”: HOW THE COSTLY U.S.-CANADA FATCA AGREEMENT PERMITS DISCRIMINATION OF AMERICANS IN VIOLATION OF INTERNATIONAL LAW. American University International Law Review, 30(3), 611-647.

    It’s a Law Review article by a current law student. She argues that Canada’s IGA is unique in not including the U.S. Model anti-discrimination provision, and therefore violates international law (specifically the International Covenant on Civil and Political Rights [ICCPR]). The article recommends:

    …that (1) Canada amend its FATCA to include the U.S. Model’s anti-discrimination clause; (2) the United States should subsidize the cost of FATCA’s implementation in Canada to prevent discrimination against U.S. persons in Canada; or (3) the United Nations’ Human Rights Committee should find that Canada’s FATCA, absent anti-discrimination protections, violates the ICCPR.

    I’m not Canadian — so I don’t know whether the discrimination she’s mentioning is prevalent there. Most of the stories I hear of USCs being denied access to banking come from Europe.

12. Karen We talked about Woldeab before. It’s a total B.S. paper by a law student trying to qualify for her law degree. The discrimination she objects to is hypothetical in that Canadian FIs might close accounts of Americans. BFD. No mention of the harm done to accidentals and duals residing in Canada. Apparently she got her degree anyway.

13. sounded hypothetical to me too — but title/abstract was promising.

14. Correct me if I’m wrong, by my reading of Karen’s summary of the Ahlawat & Telson article comparing costs and benefits of FATCA, is that the costs to individuals outweigh the benefits. In other words, it isn’t a measure of whether or not the US Treasury benefits or loses from FATCA. If my reading is correct, then the article might be a small help in litigation, but unless there is a case that it’s costing the US government, such figures will be fully ignored by, well, everyone.

15. Nothing to do with FATCA, at least not yet. Maybe next year.

    http://www.seattlepi.com/news/crime/article/Lawyers-prosecutors-make-closing-arguments-in-6699620.php

    Federal judge denies request to dismiss hacking charges

16. @Barbara, The costs listed are per individual and include loss of privacy, and compliance cost by both individual and FFI — no costs to the US government are mentioned.

    So, the benefits all accrue to the US government and the costs are borne by USCs abroad and FFIs. No wonder Treasury is keen to enforce FATCA.

17. A message to Brockers from Emily Ritchie of The Australian, posted on “FATCA and Australia” thread today.

    “Hi everyone, Emily here from The Australian newspaper.

    Thanks so much to everyone who has been in contact and given me so much helpful information – I was appalled to find out how these laws are potentially going to affect dual nationals and what has already been occurring in Canada/Europe.

    I have been attempting to get quotes from the ATO and have written a few drafts with the information I have but I keep getting knocked back because of the lack of a ‘news hook’ or personal angle. So I really need either a new development or a dual national who is willing to speak to me and use their name. I understand completely and acknowledge the validity of your fears, but if I am to have any chance of getting a story about your plight out there I will need someone to put their name to their story. The Australian is committed to raising this issue, giving the story publicity and campaigning with you if anything further is to occur. But yes, essentially I need names.

    Please contact me (emily.ritchie@news.com.au) if you are willing to chat to me and put your name to it.

    Thanks so much and best wishes for the holiday season.

    Emily”

18. @Karen
    Thank you for sharing this info. I notice from your description they included under the costs for a “typical” overseas taxpayer with $50,000 in foreign financial assets, the cost of completing form 8938. I find this a bit confusing because 8938 limits for taxpayers are much higher (over $300,000 at any time or $200,000 on the last day of the year).

    @Barbara
    Agreed. I suppose that they were trying to point out that FATCA violates one of the widely accepted principles of taxation (it should not cost more than it raises), but the costs are borne by those outside the U.S. economy.

19. As anyone who has been interviewed by journalists knows — that is what the media wants and, it appears, needs to tell our stories.

    So I really need either a new development or a dual national who is willing to speak to me and use their name. I understand completely and acknowledge the validity of your fears, but if I am to have any chance of getting a story about your plight out there I will need someone to put their name to their story. The Australian is committed to raising this issue, giving the story publicity and campaigning with you if anything further is to occur. But yes, essentially I need names.

    So, unfortunately, we continue with one hand tied behind our backs.

20. Emily’s request for names to put on her story brings home to me, yet again, one of the central human rights violations that our community has suffered all these years. As Emily infers, it is perhaps the single largest reason that our cause has not received more publicity. It is the fact that many of us, even though we live in so-called “free” countries in which citizens are supposedly “free” to express themselves, are terrified of identifying either ourselves or people we love.

    Accidental Americans fear that their banks will discover their origins in the United States. Others who aren’t so “accidental” fear that self-exposure will alert the IRS itself to our existence even if we do not possess a Social Security Number. Even if the IRS currently lacks the resources, we know they have the power, and the mandate, to discover some of us with or without the help of other “alphabet agencies”. Ours is one of the most important stories of the 21st century so far yet it languishes in obscurity because we cannot risk taking the irretrievable step of self-identification. Nothing less than the “American Revolution in Reverse” is happening right now and we can’t tell the newspapers who’s involved!

    The situation is utterly damnable and something has to give. I would come forward today if it were not for the fact that I am protecting someone else’s life and prosperity as well.

    I am reminded of the horrible scene in one of those old WWII movies in which a small group of people, including a tiny infant, is being smuggled out of Germany in the back of a truck. They arrive at a check-point, papers are presented, and absolute silence needs to be maintained during the procedure or the group in the back will be discovered. The infant begins to be restless and the mother presses its face into her shoulder to prevent it from crying. Of course, the child is suffocated.

    Every day I feel like that suffocated child. If I cry out I could bring even worse consequences down on the heads of those in my household.

    Would Emily be willing to speak with a “former” dual citizen, one who has been able renounce his/her American “half” already? That person would no longer be in danger but would have experienced all the abuse in the past and be able to describe it personally and in detail. I hope for all our sakes that such a person might be found. It grieves me not to be that person.

21. You can read portion of this on google books. Looks interesting. I won’t be spending my money buying it though:

    Diasporas, Development and Governance
    edited by Abel Chikanda, Jonathan Crush, Margaret Walton-Roberts

    Paints the painful picture of Americans abroad. Covers taxes, voting and access to benefits (or no access).

22. Americans abroad are missing all this crazy stuff:

    http://www.politico.com/story/2015/12/white-house-obamacare-cadillac-tax-216881

    We had a stealth tax that was really meant to remove the tax subsidy from healthcare. Every bodies healthcare has changed over the last few years to plans with HSA’s, high deductibles and limited coverage in response to this tax on the horizon.
    Now they are going to delay this thing for two years in a bill that has stuff sun setting so the bean counters don’t notice it.
    Other countries can’t be this much of a mess right?

23. Calgary and Muzzled,

    The Australian journalist and ADCS both need to find people willing to go public with their names.

    Our Vancouver litigator needs Witnesses willing to provide affidavits as part of our litigation. The Federal Court justice needs to have an appreciation from actual Witnesses willing to disclose their names (like Ginny and Gwen) on the harm caused by the Canadian FATCA compliance law.

    Loss of potential public support because of an unwritten newspaper article is not good, but it is much worse for our lawsuit than “one hand tied behind your back” since we cannot proceed to Charter trial without Witnesses.

24. Wow, MuzzledNoMore, although the name of that movie you speak of has long left my memory, that scene has always stood out in my mind too! It’s now taken on a new relevance, thank you.

    Yes, this is so important that “something has to give”, and as anyone who’s read Malcolm Gladwell’s book, “The Tipping Point” knows, it’s often a culmination of events that starts a “wildfire”.

    “The tipping point is that magic moment when an idea, trend, or social behavior crosses a threshold, tips, and spreads like wildfire. Just as a single sick person can start an epidemic of the flu, so too can a small but precisely targeted push cause a fashion trend, the popularity of a new product, or a drop in the crime rate. This widely acclaimed bestseller, in which Malcolm Gladwell explores and brilliantly illuminates the tipping point phenomenon, is already changing the way people throughout the world think about selling products and disseminating ideas.”

    http://gladwell.com/the-tipping-point/

    It certainly doesn’t help that the many affected by this are essentially gagged from talking about it, but the magnitude of it shouldn’t stop us from reaching our own tipping point – it just might take longer, or for those who are vocal to be that much louder.

25. Absolutely, Absolutely, Absolutely, Absolutely, etc., Stephen.

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