Liberty and justice for all United States persons abroad

The Isaac Brock Society

Brock Project – In search of a better translation: “Accidental Americans”: rejected in France, the association will seize Europe

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The above tweet references an article in French describing the decision in France in which the Court declined to provide relief to Accidental Americans AKA citizen/residents of France. Implicit in the court’s decision is the notion that those “Born In The USA” (as Bruce would sing) are property of the United States. What follows is an attempt to translate the article (using Google Translate).

The Council of State rejected Friday the appeal initiated by the Association of “accidental Americans”, gathering French born on the American soil, opposed to the application in France of a tax regulation American of which they consider themselves victims: Fatca.
Learn more at https://www.cbanque.com/actu/75081/americains-accidentels-deboutee-en-france-association-va-saisir-europe#vJCYvsOX2rjp0YbU.99

Adopted by Washington in 2010, and applied in France since 2014, the Foreign Account Tax Compliance Act (Fatca) allows the US tax authorities to ask foreign banks for information on their customers considered as “American people”. This application was challenged by accidental Americans, these French having a dual nationality because of their birth on the American soil, and today faced with administrative hassles and banking problems.

No defect of execution

In its decision, consulted by AFP, the highest French administrative court found unfounded the request of accidental Americans, considering that the regulatory acts taken for the implementation of this agreement were not without a legal basis. The Conseil d’Etat thus followed the conclusions of the public rapporteur, who had estimated at a hearing in early July that the Fatca did not present a “proven” lack of performance but at most “technical difficulties of implementation.

“Such an assessment is, however, directly contradicted by various parliamentary reports, as well as by the Court of Auditors,” which lamented in 2017 that the United States had sent “no information” to the French tax authorities, the Association reacted. accidental Americans. The association “deeply regrets that its legal critics have not been heard by the Council of State and deplores an opportunity of resistance failed in the extraterritoriality of US law,” she added in a statement.

In addition to the lack of reciprocity in the implementation of the agreement, the lawyer accidental Americans, Me Patrice Spinosi, had invoked to challenge the application of FATCA “the lack of guarantees on the protection of personal data.” A point also contested by the Council of State, for whom “the information collected and transferred as part of the disputed treatment can be used only for tax purposes” and are otherwise “strictly limited and proportionate”.

Complaint to the European Commission

In its statement, the Association of Accidental Americans announced that it would “seize the European Commission of a complaint for breach of EU law,” regretting that the Council of State refused to question the Court of the European Union to decide this question.

Since the coming into force of the Fatca, some “accidental Americans” have been claimed several thousand euros in taxes by the United States without having ever worked in this country. Others saw their bank account closed, their bank fearing US sanctions. Still others are exposed to lawsuits because they can not submit their US tax identification number, which they do not have.

Complaint to the European Commission

In its statement, the Association of Accidental Americans announced that it would “seize the European Commission of a complaint for breach of EU law,” regretting that the Council of State refused to question the Court of the European Union to decide this question.

Justice MacTavish Decision on Canadian FATCA IGA Legislation Lawsuit in Federal Court to be Released on July 22, 2019: —- And Very Sad News That France Court just ruled that FATCA OK for FRANCE

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From Canada:

Just-obtained Directive from the Federal Court:

“Written directions received from the Court: The Honourable Madam Justice Mactavish dated 19-JUL-2019 directing that “The parties are advised as follows: 1. barring any currently unknown contingencies, the Court’s decision will be issued Monday, July 22, 2019, at approximately 2:00 pm EST…”

From France via Bloomberg:

“French Court Declines to Overturn Tax Treaty With U.S.
By Gregory Viscusi and Gaspard Sebag

France’s top administrative court has ruled that French authorities can pass on tax information to their U.S. counterparts, rejecting a motion by dual citizens who have been trying for years to stop France cooperating with the U.S.’s FATCA tax treaty.

The Conseil d’Etat ruled Friday that France’s measures to implement FATCA, or the Foreign Account Tax Compliance Act, didn’t contravene the country’s privacy laws. It also rejected arguments that U.S. doesn’t adequately cooperate with French tax authorities in return….”

From Ouest-France:

“…In its statement, the Association of Accidental Americans said it would “file a complaint of breach of EU law with the European Commission”, regretting that the Council of State refused to question the Court of the European Union to decide this issue…”

The Association des Américains Accidentels (AAA) [on its FB site] says: “If the government [of France] think we’ll admit we [are] defeated, he is mistaken” [translation].

— Thoughts from a few of the AAA FB commenters: “…Mais il faut continuer. Bon courage…Courage pour le combat. Je suis avec vous…La France qui lâche ses enfants…C’est sur tous les fronts et depuis des décennies que la France baisse son froc devant les US, et avec le sourire en plus…”

Brock Project: To file Form 3520 or not to file Form 3520 – which carries the greater risk?

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Introduction

For those wondering what is meant by the “Sisyphean task” …

In the ancient world …

In Greek mythology Sisyphus or Sisyphos (/ˈsɪsɪfəs/; Ancient Greek: Σίσυφος Sísuphos) was the king of Ephyra (now known as Corinth). He was punished for his self-aggrandizing craftiness and deceitfulness by being forced to roll an immense boulder up a hill only for it to roll down when it nears the top, repeating this action for eternity. Through the classical influence on modern culture, tasks that are both laborious and futile are therefore described as Sisyphean (/ˌsɪsɪˈfiːən/).

In the modern world …

In the modern world “Americans abroad” are U.S. citizens who had the temerity to leave the Homeland and make a life somewhere else. They are punished for their self-aggrandizing craftiness and deceitfulness by being forced to file tax and information returns, only to find that when they think they have complied, they are assessed penalty after penalty. They are forced to repeat this year after year until their death or expatriation.

I urge you to read the post referenced in the above tweet. It appears to describe a situation that is unremarkable – Americans abroad who have some kind of tax deferred vehicle, which is assumed (probably incorrectly) to be a foreign trust (and all the compliance horror associated with it).

This raises the question for Americans abroad:

Is it riskier to attempt compliance with the U.S. tax system or not attempt compliance? What other lessons are there?

If you have been assessed penalties in relation to International Information returns, could you please comment.

Update on Monte Silver’s U.S. Lawsuit Against Transition Tax: IRS/Treasury Defendants file Motion to Dismiss on technical grounds — Monte Silver responds (July 15, 2019) to Motion to Dismiss — And we are still waiting for Federal Court Justice MacTavish ruling on Canadian FATCA IGA lawsuit

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In a previous post I mentioned Monte Silver’s lawsuit against the US IRS and Treasury in United States DC District Court.

Mr. Silver’s lawsuit is a “technical-procedural challenge” against the U.S. Transition Tax (He discusses lawsuit on his FB site):

From Mr. Silver’s lawsuit:

“This action arises under the Administrative Procedure Act (APA), 5 U.S.C. § 551 et seq, the Regulatory Flexibility Act (RFA), 5 U.S.C. § 601, et seq, and the Paperwork Reduction Act (PRA). 44 U.S.C. § 3501, et seq. At issue is an extensive set of regulations issued by the United States Department of Treasury (“Treasury”) and the Internal Revenue Service (the “IRS”) that interpret the complex international tax provisions of the Tax Cut and Jobs Act, Pub. L. 115–97 (2017) (the “TCJA”). solutions for small businesses with regard to the TCJA as required by law, Defendants issued impenetrable regulations on or about January 15, 2019 (the “Final Regulations”) that impose many unreasonably complicated burdens upon a vast number of small businesses and small business owners like Plaintiffs…”

The first UPDATE on the lawsuit is that the IRS has now filed a Motion to Dismiss the lawsuit on pretty much technical grounds (Plaintiffs lack “Standing” [sound familiar? For lawsuit followers you already know that "no standing" is expected U.S. AND Canadian standard Government response to our FATCA/FATCA IGA lawsuits], lack of concrete injury/causality, too early for lawsuit until regulations have actually been applied and only then sue for a refund, etc.):

Part of the Motion to Dismiss:

“Plaintiffs, Monte Silver and his business, Monte Silver Ltd., bring suit under the Regulatory Flexibility Act (RFA) and the Administrative Procedure Act (APA) to challenge recent Treasury regulations issued to implement “certain complex international tax provisions of the Tax Cut and Jobs Act.” Amended Complaint at ¶ 1. Plaintiffs object to the content of the implementing regulations as too complex and burdensome and also allege several procedural errors in the promulgation of the regulations. Plaintiffs lack standing to maintain this action. The Court should dismiss the Amended Complaint because the Amended Complaint does not contain plausible allegations of a concrete injury, causation or redressability…”

Second UPDATE: Mr. Silver responds to the Motion to Dismiss. Part of his response (see the link):

“… Plaintiffs have standing under two different lines of authority. First, Plaintiffs have suffered injuries-in-fact in the form of added compliance costs and other burdens as a result of the Final Regulations. They have ” procedural standing “ because they seek to enforce a procedural requirement the disregard of which could impair a concrete interest of theirs. Here, Defendants had a duty to comply with the procedural safeguards of the RFA and related statutes designed to protect the interests of small business when they issued the Proposed and Final Regulations. Their failure to do so imposed compliance burdens and costs upon small businesses like Plaintiffs, which establishes Plaintiffs’ standing to bring this suit under the RFA. Second, Plaintiffs have standing even under the authorities cited by Defendants. Small businesses like Plaintiffs have incurred (and will continue to incur) injuries through compliance costs which are directly traceable to the failure of Defendants to consider accommodations for protecting small business when they issued the Regulations. That violation is redressable because under the RFA, in the case of a statutory violation, the court “shall order the agency to take corrective action including, but not limited to, remanding the rule to the agency and deferring the enforcement of the rule against small entities.” 5 U.S.C §61 l(a)(4)(emphasis added)…”

—- Note for comparison that Government of Canada attorneys have also argued at the Federal Court trial that our plaintiffs Gwen and Kazia also lack “standing” as plaintiffs. One commenter asked on June 7: “What is happening with your lawsuit? It’s been months since you argued the case” The answer is that we are still awaiting decision on our trial which ended on the first week of February.

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American Refugees : Turning to Canada for Freedom

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This brand-new book by Rita Shelton Deverell will be of interest to Brockers because it frames (in Introduction and Epilogue) the collection of personal stories with the author’s own account of formally terminating U.S. personhood in the 2015-2016 period.

Deverell was detained while transiting through the Miami airport early in 2015 (p. 5). On the basis of 1975 Canadian citizenship, she relinquished in August 2016 after a nine-month wait (p. 239). Far too politely, she makes no mention of the US $2350 fee. Likely this was not a big item in her budget.

The chapters gather mini-biographies under the standard headings of Canada’s treadworn exceptionalist narrative: Loyalists, Underground Railroad, McCarthyism, Vietnam War, same-sex marriage.

As a black originating from Houston Texas, and as a person familiar with Indigenous circumstances, Deverell shows some awareness of the deep cracks in the Canadian façade. Unfortunately, this manifestation of consciousness is more than offset by expressions of considerable privilege, both her own and that of most of her selected “subjects.” In the end, her attachments to Canadian statist sentiments cloud her vision, truncate her “research,” and facilitate repeated promo of how “welcoming” the essence of Canada really is.

Well-paid by Canada in many respects, Deverell pipes her tune on an unusually fancy stage. The publisher, University of Regina Press, proposes that it here provides “a voice for many peoples” in a “beautifully packaged” volume. After all, genuine criticism rarely sells well.
 

Brock Project: Can you provide specific examples of taxes paid in your country of residence that cannot be used as foreign tax credits in the United States?

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The background to the case referenced in the above tweet is described here. The “bottom line” result was reported on at the New York Times and Bloomberg.

It its simplest terms the controversy was over whether certain French taxes should be interpreted to be income taxes (in which case they could be used as Foreign Tax Credits) or Social Security taxes (in which case the taxes could not be credited against U.S. income taxes). At a minimum, the case assumes that NOT ALL foreign taxes can be used as tax credits to offset U.S income taxes.

(Beyond that, the DC court of appeal decision provides guidance with respect to (1) Who decides how foreign taxes are to be treated under a tax treaty (hint not ONLY the IRS) and (2) what kind of evidence is relevant in determining the question (hint U.S. dictionaries are not to be used).)

There are many people in the world, who think that all of the foreign taxes paid by Americans abroad can be used as credits against U.S. tax owing.

As part of a “conversation” with the “Powers To Be” in DC, I think it’s important to demonstrate that there are many foreign taxes that are simply not “creditable” against U.S. taxes.

Could you please provide examples from your country of residence? What are specific examples of “taxes” paid in your country of residence that are not eligible to be used as “foreign tax credits” under Section 901 of the Internal Revenue Code.

Brock Project: Could you share examples where lower income #Americansabroad would be required to pay U.S. taxes?

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Advocacy to change the U.S. rules of “citizenship-based taxation” is going strong. For example, last week there was a delegation in Washington, DC. Americans Citizens abroad is active and working hard. Republicans Overseas through the efforts of Solomon Yue has been a leader. Democrats Abroad is starting to rise to the occasion.

Legislative change will require a “conversation” with the “powers to be” in DC. It is difficult for those who have not experienced the difficulties of complying with the U.S. tax code (as a “taxpayer abroad”), to understand the problem.

One of the responses frequently heard is:

“What’s the problem”. You can exempt about $100,000 USD per year under the Foreign Earned Income Exclusion.

Although true, as you know, the exclusion applies to “earned income” only. There are many sources of income that are (1) not earned income and (2) are not taxable in your country of residence and (3) are taxable in the USA.

In order to assist those who will be part of “the conversation” in DC, I would like to ask that you provide examples of how/why a U.S. citizen living in another country with income well below the $100,000 Foreign Earned Income Exclusion can end of paying tax to the United States.

I think that a number of focused examples could be very important. These examples could include things like phantom capital gains and U.S. taxation “kicking in” at a lower level of income than in your country of residence. Of course it would be great to be able to document and wide and diverse range of examples.

When if you comment, if you could provide reasonable detail and specify where you live. Also, if you have any knowledge of how a tax treaty might affect U.S. tax (recognising that tax treaties mostly do not assist individuals) it would be helpful.

Thanks in advance!

Lawsuits involving FATCA and aspects related to U.S. citizenship-based taxation

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—- I believe that the ongoing lawsuits (or just successfully completed — the Eshel litigation below) worldwide involving FATCA or aspects related to U.S. citizenship-based taxation are the following:

— Our Alliance for the Defence of Canadian Sovereignty (ADCS-ADSC) Federal Court Canadian lawsuit targeting the Canadian FATCA IGA legislation as violating privacy and equality Charter rights of Canadians. The lawsuit began in 2014. Canadian Federal Court trial with Gwen and Kazia as Plaintiffs already held last week of January, 2019. See key court submission link. Federal Court decision by July 31, 2019?

— Monte Silver’s (plaintiff) U.S. lawsuit focused on a procedural challenge against U.S. transition tax. Here is the lawsuit. Ongoing discussion on Mr. Silver’s American small businesses for tax fairness FB site.

– In ten year old litigation in the United States (Ory and Linda Eshel v. Commissioner of Internal Revenue in U.S. Tax Court) the “Internal Revenue Service said in court filings that it should have allowed U.S. taxpayers resident in France to deduct so-called Generalized Social Contribution taxes, a levy imposed on income in France…The case grew out of an audit of the 2008 and 2009 tax returns of the Eshels, U.S. citizens who reside in France”. See Bloomberg and CBANQUE and the Local.

See part of the reason why the Eshel lawsuit took so long in a January 23, 2018 DC Court ruling. From American Expat Financial News Journal: “Horwich, the attorney who represented the Eshels, said there was scope for other France-resident U.S. taxpayers who, like the Eshels, had also followed the erroneous IRS guidance and failed to claim a credit for CSG and CRDS on their U.S. tax returns. He noted that the statute of limitations to claim CSG and CRDS as foreign tax credits “is 10 years, so we anticipate large numbers of refund claims will be filed to recover taxes that the IRS should never have collected.””

— A lawsuit in France (Fabien Lehagre, AAA, Association des Américains Accidentels) against the banks on discrimination on the basis of nationality by the banks. Pleadings not yet available.

– There is a second lawsuit in France (Fabien Lehagre, AAA, Association des Américains Accidentels) against the FATCA IGA between France and U.S. in which a motion was brought before the Conseil d’Etat for the cancellation of the decree of 25 July 2017 amending the order of 5 October 2015 creating by the General Directorate of Public Finances an automatic processing of automatic exchange of information (EAI). The Association claims that the contested decree is unlawful in that: on the one hand, the above-mentioned agreement, of which it constitutes an implementing measure, is not reciprocally implemented by the United States; on the other hand, the massive nature of the storage and transmission of tax data to the American tax authorities, which it authorises, ignores the right to privacy and the protection of personal data. Pleadings not yet available.

—- What other lawsuits are out there? If you are aware of others, or know that the status has evolved on the lawsuits (e.g., interim court decision), please comment on Brock with an update. Thanks.

A Comment on Repetitious Commenting

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Further to my post about commenting in general entitled Announcement March 31st, some specific points on repetitious commenting:

Going back and forth on a point doesn’t advance discussions and, after enough rejoinders, other readers tend to tune it out.  Repetitious comments made by a person or persons in a short period of time can be particularly problematic when a person replies, saying basically the same thing again, to every comment made in reply to their initial comment.

Such comments provide only redundant information and redundant thoughts/ideas while making a thread difficult to read efficiently.  Some people suddenly learn of a problem with their real or alleged US citizenship and are in distress and need information f-a-s-t.  As well, exchange of thoughts and ideas is hampered by repetitious and circular discussion.  Please bear this in mind when commenting.

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Webinar: Issues in Citizenship-Based Taxation in the US & Beyond, Monday 3 June, with K. Alpert, J. Richardson, L. Stern, L. Tuber

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Karen Alpert (Australia), John Richardson (Canada), Larry Stern (Israel) and Leonard Tuber (Israel) will discuss “territorial vs. citizenship-based taxation, their many advantages and disadvantages, and the myriad of challenges and questions posed by the US’s use of this type of tax system,” Monday 3 June 12:00 BST (11:00 UTC / 07:00 EDT).

You can submit questions at the TaxLinked site.  For more information and/or to submit a question, click here.