Liberty and justice for all United States persons abroad

The Isaac Brock Society

1,012 thoughts on “FATCA Discussion Thread (Ask your questions) Part One”

  1. *Mark Twain

    The only reason Passport Canada can revoke a passport is for unpaid debts relating to Consular Services(such as evacuation). I question whether the existing mechanisms used to collect things like Child Support Payments until international law are legal. Child Support is considered “penal” and generally not recoginized by foriegn courts.

  2. *

    9. Passport Canada may refuse to issue a passport to an applicant who

    • (a) fails to provide the Passport Office with a duly completed application for a passport or with the information and material that is required or requested

      • (i) in the application for a passport, or

      • (ii) pursuant to section 8;

    • (b) stands charged in Canada with the commission of an indictable offence;

    • (c) stands charged outside Canada with the commission of any offence that would, if committed in Canada, constitute an indictable offence;

    • (d) is subject to a term of imprisonment in Canada or is forbidden to leave Canada or the territorial jurisdiction of a Canadian court by conditions imposed with respect to

      • (i) any temporary absence, work release, parole, statutory release or other similar regime of absence or release from a penitentiary or prison or any other place of confinement granted under the Corrections and Conditional Release Act, the Prisons and Reformatories Act or any law made in Canada that contains similar release provisions,

      • (ii) any alternative measures, judicial interim release, release from custody, conditional sentence order or probation order granted under the Criminal Code or any law made in Canada that contains similar release provisions, or

      • (iii) any absence without escort from a penitentiary or prison granted under any law made in Canada;

    • (d.1) is subject to a term of imprisonment outside Canada or is forbidden to leave a foreign state or the territorial jurisdiction of a foreign court by conditions imposed with respect to any custodial release provisions that are comparable to those set out in subparagraphs (d)(i) to (iii);

    • (e) has been convicted of an offence under section 57 of the Criminal Code or has been convicted in a foreign state of an offence that would, if committed in Canada, constitute an offence under section 57 of the Criminal Code;

    • (f) is indebted to the Crown for expenses related to repatriation to Canada or for other consular financial assistance provided abroad at his request by the Government of Canada; or

    • (g) has been issued a passport that has not expired and has not been revoked.

  3. *Canada has $25 Billion in unpaid tax debt with a populatin of 35 Million

    US has $330 Billion in unpaid taxed with a population of 311 Million.

     

  4. *For every Canadian there is about 714 dollars in unpaid tax. For every American there is 1061 dollars in unpaid tax. This is in the context of Canada also having GST/HST collected by the Federal Government.

     

  5. Rand Paul responded to my email! Clearly this was not an automatic response and he is aware of the issue. Here is his response (my emphasis in bold):

    September 26, 2012

    Dear Mr. —,

    Thank you for taking the time to contact me regarding the Foreign Account Tax Compliance Act (FATCA). I appreciate hearing your thoughts on this issue.

    During the 111th Congress, Congress passed and President Obama signed into law, the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147). This legislation drastically expanded government involvement in the financial goings-on of Americans who live and work abroad. FATCA, the tax evasion provision in this bill, requires all foreign financial institutions (FFI) to provide a detailed report on American account holders to the Internal Revenue Service (IRS) beginning in 2013, or be subjected to a 30 percent withholding tax on income from U.S. assets. American account holders with more than $50,000 who fail to file a report with the IRS would also be subject to a 30 percent withholding tax. As a newly elected member of the 112th Congress, I did not participate in the debate of this law and would have voted against it if I had been.

    Not only does FATCA allow the government to obtain a wide array of international banking records without evidence of such tax evasion, but the outrageous cost of compliance with this requirement has been estimated at $30 million per FFI. Rather than comply, many banks have refused to serve American clients and have begun shutting down their accounts. I have serious concerns with FATCA and that is why, along with my Republican colleagues, Senators Saxby Chambliss (Ga.), Jim DeMint (S.C.) and Mike Lee (Utah), I wrote a letter to Treasury Secretary Tim Geithner questioning the implementation of this onerous mandate.

    I have long been a critic of government intrusion into the privacy rights of Americans. As a lead opponent of the May 2011 extension of the USA PATRIOT Act, which allows the federal government to engage in warrantless searches, I believe the right to privacy is critical to the preservation of other rights. We have to be very careful not to continue down the slippery slope that our current and previous Administrations has taken us.

    Rest assured I am fully aware of the effect FATCA is having on Americans overseas and will continue to keep a close watch on this issue. As I represent the Commonwealth of Kentucky in the United States Senate, I will remain committed to defending the proper role of the federal government, as outlined by the Constitution, and defending the rights of all Americans citizens.

    Again, thank you for sharing your concerns with me. Please do not hesitate to contact my office in the future regarding federal issues.

    Sincerely,

    Rand Paul, MD
    United States Senator

  6. (This article requires registration for access.)

    US tax policies delay $2bn Chinese loan

    http://www.ft.com/intl/cms/s/0/d07d1d1e-0574-11e2-bce8-00144feabdc0.html#axzz27eDuvy5o

    Excerpt: ‘A loan worth nearly $2bn from China Development Bank to help fund an ambitious San Francisco housing project is being delayed as a result of Chinese concerns about the effect of tax policies in the US, a person familiar with the situation said.
    The measures include the controversial Foreign Accounts Tax Compliance Act (FATCA), which comes into effect in 2014 and could force foreign banks to pay a 30 per cent withholding tax on the interest income on any loans made to US entities or persons.
    “They need to clarify the implications of these regulations before they approve the loan,” said the person.    ‘

    Just as well the US doesn’t need to borrow money from abroad, or from the Chinese in particular. Oh, wait…..

    I hope this is article is accurate and that there is more of the same in the future. FATCA is a frankenstein hybrid of capital controls and trade barriers; a nice way to get your country cut off from “foreign” investment.


  7. Pingback: The Isaac Brock Society - Rand Paul responds on FATCA

  8. ‘An unintended consequence of FATCA may be the impact on non-US individuals who invest in US securities. The complexity of the rules may leave some investors confused as to whether they are subject to the Act. Experts urge individuals to talk to their tax advisers even if they do not think they will be affected. The potential conflict of laws may cause individuals to fail to respond to certain requests from their financial institutions. If this occurs, they may be considered recalcitrant and possibly subject to withholding.’

    http://www.financierworldwide.com/article.php?id=9819&page=1

  9. The treasury posted notes from the FATCA meetings they had in Europe and Asia.
    http://www.fsitaxposts.com/2012/09/27/notes-u-s-treasury-fatca-meetings-europe-asia/

    A couple hightlights that I think are incredible:

    “The key reason for the reduced burden is based upon the expectation that every financial institution in a signing jurisdiction will be required to participate.”
    “There should be no expectation of negotiations regarding the terms of a model IGA.”
    “Once an IGA is signed, local domestic legislation will likely be required”
    “The remaining G5 countries are working to sign IGAs, and will then each begin to develop and implement local legislation.”

  11. @CanuckDoc

    Good find. Bill Hinchberger sounds like he talks to a lot of USP’s abroad, including perhaps some Canadians. It looks like he now lives in Paris. As Americans we’re not only shunned by banks, but when word gets out we’ll soon to be dumped in romance too. A Brocker at some point did a post about how those afflicted with ‘VD’ would become pariahs in the world. Whoever that was, would you please provide a link to it as it is brilliant!

  15. Just Me and Blaze:

    Just Me
    February 22, 2012 at 6:16 pm(Edit)
    @Stephen, with all due respect, I think you are in denial that this is a bad faith expression by the IRS…. You are no longer there. You have no further responsibility to defend bad policy and actions. We don’t hold you personally accountable for it. We are just looking for a little honest acknowledgement, please!

    The threats in the FAQs are crystal clear. There is no fudging or mealy mouth qualifications either expressed or implied.

    The threats from the FAQ permeated throughout the entire process into the Examiner group. Mate, I felt it, lived it, for 2 years. Can you not acknowledge that? I should have called BS much sooner and with stronger conviction, but frankly your profession was much help either. They were also frustrated with it, and the lack of ability to effect some change.

    I repeat to you what I said to you over on the 2% thread as maybe it did not sink in…

    http://isaacbrocksociety.com/2012/02/19/on-the-simple-extension-of-the-2-reduction-in-payroll-taxes/

    Quote “When I asked the Examiner about what the Opt Out might mean and how it would work, (if and when the IRS came up with a process) you want to guess what guidance I was given?

    I was to assume the maximum willful penalty in the Opt Out, on each and every CD type account number, and assume that they would double count funds transferred between accounts for figuring the highest aggregate!!! Now, I could quote the IRM to her all I wanted, and say, that’s absolutely absurd, however, both her and her technical adviser insisted that is what I had to do in weighing my decision on Opting Out. Of course, she could not give me advice on what to do and suggested I seek out legal council. I did! Spent more money, but in the end I took my own council and appealed to the TAS.

    So…. do you understand the implied threat there? IE, “maybe you better just stay in the program and take your VD penalty, as outside it could be much worse.” I bet a lot of Minnows have done just that. Well, I have learned, to call bullshit on that now, but at the time, it was a frightening prospect. It seemed that in spite of the novelettes I had written to her and God, no one at the IRS was going to listen to reason from me or a “30 year IRS vet”, for that matter.”

    It is very frustrating that you seem incapable of understanding that. Surely that is not the case. Have been on the handle side of the hammer for so many years, that you have forgotten what the metal head looks and feels like as it is raised over you!

    …but in a gesture of genuine good faith, no personal attack on you is implied or intended.

    I am just asking..

    What I have found out my dealings with the individuals within the system, humanity, compassion and empathy exists (with some exceptions of course), but once that humanity comes up against in incomprehensible complexity of the rules, regs, statutes and IRM, something happens, snaps, and all common sense sanity seems to fly out the window. Why is that?

    I have talked about some of the signs of individual IRS humanity here, so I am not engaging in just in a hyperbolic IRS rant, as easy as that would be to do..

    http://isaacbrocksociety.com/2012/01/22/just-me-writes-on-the-question-has-the-irs-stolen-my-life/

    The collective rigidity in the group think is the problem. I can not imagine what it must be like to be inside the belly of the beast, but it has to have an affect on one’s emotions and thought processes. I suppose if you see so much egregious tax cheating, evasion and some of the worst aspects of human nature, that it has to impact ones perspectives. I think I get that. I don’t know how else to explain it, but I don’t think I would survive within the organization. I would be too disruptive and challenging of the stupid policies I was supposed to apply without discretion. I told my examiner I don’t know how she could do her job, given how limited her options were. I couldn’t live like that. I did not do well as a Union member either when I was supposed to tote to the Shop Stewards commands to slow down, not work so hard, as we had to be sure we demonstrated that we needed another person for the job. I said BS to that too. I moved on to more productive employment where I could effect the outcomes, not just be directed to follow the stupid policies.

    Enough of this. I need to get a life!

    Again… thanks for your continued engagement. I hope you don’t feel too bruised by this. You do give some of us release, so that is good, eh?

    Blaze
    Submitted on 2012/02/22 at 8:32 pm
    @JustMe: I love your use of VD.

    VD is just like the other VD. It’s Risky, Bad For Your Health and Highly Contagious. For some VDs, there Is no cure. TAS may provide some symptom relief, but VD is insidious and will recur. The standard IRS prescription, (written in illegible handwriting–but finally interpreted) is “Give Us Your Money!”
    Anyone with VD is treated like they are dirty. They are told to “Come Clean.” They are told by the stalking spouse they divorced long ago “It’s Your Fault.” They are accused of “Cheating” when it’s Congress and it’s IRS illicit lover who are the Real Cheats–in bed together behind your back, refusing to communicate with you and spreading VD without no discretion or scruples.
    Claiming “I Didn’t Cheat” or “It Didn’t Mean Anything” won’t help you. After you get VD, you will not be able to plead “Not Guilty. Anyone who enters VD will be tortured until they pay up. Anyone considering VD should be notified they will be reported to the proper authorities for further persecution.

    Explaining “But the US Consulate told me I was renouncing my US citizenship” won’t work in VD. The Consulate has the constitutional right to lie. You were dumb to believe them. You are the sinner because you trusted and believed the Consulate’s deceit all these years. Don’t get trapped again. Don’t get infected with US VD! .

    Protect Yourself. Know The Risks. Take Precautions. Stay As Far Away From VD and the US as You Possibly Can. Keep Your Money In The Country Where You Live. Always Use A Safe (for your money, of course!).
    Be Responsible. Warn Potential Partners. Avoid Passing VD Onto Your Children Born Outside US.

    Today, the question isn’t “Do You Have an STD?” It’s “Where Were You Born? If the answer is anywhere in US, knowledgeable potential partners will turn and run for fear of catching your VD There is no possibility of marriage. Possible mates fear having their lives and finances ruined by your VD. No one wants to come near you. You are destined for a life alone.

    The only one who wants to screw anyone with VD is IRS. When IRS finishes with you, they toss you aside. IRS rapidly moves on to their next conquest. They gleefully spread VD that originated with them onto others. Instead of preventing greater spread of VD, elected officials in Congress get their kicks as a voyeur cheering IRS on.
    Can I say all of that here?!? What would Isaac Brock think?!?

    Blaze
    Submitted on 2012/02/22 at 8:59 pm
    I also would love to know the outcome of this. And the US dares to label us “cheats” and “criminals.”

    Steven, these ladies aren’t 92 and in a nursing home. But Ambassador Jacobsen did say US was not after Canadian grandmas. It seems someone forgot to tell IRS! These women could use the pro bono service you offered to Arrow’s mother.

    I have made some comments about VD (voluntary disclosure), comparing it to another form of VD in another post: http://isaacbrocksociety.com/2012/02/22/irs-is-bluffing-bad-faith-negotiations-in-the-ovdi/#comments

    I understand seniors have a rapidly growing rate of the other type of VDs. IRS seems to be happily passing it on to these two Canadian grandmas, whom Ambassador Jacobsen thought would or should be immune.

    Maybe the Ambassador lied–just like US Consulate did to many of us decades ago when they told us we were permanently renouncing. Our only crime is we believed them!
    I’m also not sure if I would believe a tax lawyer, immigration lawyer or accountant either. No one seems to know what the truth is. It all seems to depend on what the meaning of is is.

    Does anyone remember that old game Truth or Dare? (Maybe I’m showing my age). That’s what this feels like–it feels like we’re in a Truth or Dare challenge with IRS. If don’t believe them, we’re in trouble. If we do believe them, we could be in even more trouble.

    Best thing to do is what we tell our kids: Stay Out of Trouble! That should be so easy, but it’s not!

  17. You’re very welcome, bubblebustin.

    A walk back in time to some other references of “disease”:

    geeeez
    Submitted on 2012/01/10 at 10:28 am
    CanuckDoc, thanks for sharing your story. Why can’t you go back to the US if you renounce? The consulate told me there is no problem. I think the year was 1996 when CONgress said NOT letting someone back in is unconstitutional, even for tax issues. I think the internet, and especially this site, are better resources than many “professionals”, especially on the broader issues.

    About the comments at the border: The lunacy there never ceases to amaze me. Imagine my situation.. I feel like a passed a *disease* to my son. Luckily, there is a cure– renunciation.

    schubert1975
    Submitted on 2012/02/15 at 4:45 pm
    @everyone

    A lot of the focus on renunciation versus relinquishment ignores two important moral facts, ones which are the prime movers for everyone I’ve been helping personally to get a CLN based on relinquishment decades ago. These people aren’t worried about IRS forms, because their incomes put them well below the Form 8854 radar.

    Fact One. How can you renounce something you don’t have, in US law, and don’t believe you have? To renounce now would be an admission that you’ve always been a US citizen all those decades, in spite of your volition and intent to relinquish when you committed your expatriating act, and spite of having done ABSOLUTELY NOTHING to assert or exercise US citizenship or claim any “benefits” of US citizenship since committing that act. Not gonna happen, not with the feisty folks I know who came up here as Vietnam war resisters or their spouses (now in all the cases I know, ex-spouses).

    Fact Two. If you’ve lived the past 35 years of your life as a Canadian, not as an American, and have never for one microsecond thought of yourself as an American, acted like one, claimed to be one, and have always been a proud Canadian earning every penny of your income in Canada from Canadian sources, the US claim to your having US citizenship anyway and having to renounce rather than relinquish is essentially a theft of your identity and the reality of your very life for the past 35 years. The replies to this claim that I’ve heard are profoundly unprintable on a public website, as are the adjectives applied to the United States of America and all its works upon hearing this. Relinquishment is a proud claim of who and what you’ve been all these years; renunciation would be a desecration of that.

    For the people I know and have been helping (every one of them an ex-spouse of a Vietnam-era draft dodger or deserter), these two facts trump all other considerations. They are informing the US they relinquished decades ago, in hopes they then can still cross the border to visit ailing and aging family members, and so they can tell their bank to get stuffed when it asks where they were born.

    They are NOT Americans and have NOT been Americans since they became Canadians freely and with intent (not to mention joy and ferocious determination) to relinquish their former US nationality, which one of them has characterized as analogous to a deadly genetic disease.
    Not everyone is going to feel this strongly on this issue, but for those who do, renunciation is a complete non-starter. Either they’ll relinquish, or (in one case I know) they’ll simply refuse to cross the border, refuse even to submit a document to any US official, and fight their banks like banshees when the time comes.

    It isn’t about the money, it’s about their life and their identity and their love of Canada (and their revulsion with the US). And their outrage that the US actually thinks they’re US property and slaves just because they were born there, a choice they never made (unlike the choice they did make to become Canadian). Not entirely unlike the feelings that children born of slaves on US plantations before Emancipation must have felt on learning that, like their parents, they too were slaves.

    CanuckDoc
    Submitted on 2012/02/28 at 12:16 pm
    Interesting that the Russians only ask if you have a communicable disease if you are coming from the US. Maybe they are worried that unfettered capitalism is contagious.

    Tim
    Submitted on 2012/03/25 at 11:00 pm
    Its a disease called “FULL OSTRICH” unfortunately it can be fatal in many cases.

    bubblebustin
    Submitted on 2012/05/09 at 10:03 am
    Eric, I’ve heard it from two sources here recently, Phil Hodgen, and ACA, that there is a growing understanding among some in government of the obstacles we as US persons face when living abroad.
    Phil: http://hodgen.com/irs-meetings-today-about-rrsps/
    and in a letter to me from the ACA in reference to FATCA: “The IRS and Treasury are aware that the legislation is not practical and very unworkable.” ACA writes, as well: ” Please remember that, the IRS and Treasury can not “repeal” or “eliminate” FATCA only the Congress can do this.”

    You write, decisions are being made by “parochial nationalists who don’t have the slightest understanding of the world outside their borders and who think that their own land is the only place in the world where anyone could possibly make money…” I know from talking to people of this mindset that many feel that the mere thought of leaving the country to make a life elsewhere is an expatriating act. They obviously use the same amount of effort in researching why people leave as they do the unemployment numbers in the US. If another country can provide for US citizens what the US cannot-survival or even prosperity-what right does anyone have to criticize those who make that choice? The American dream is really meant to be realized by those living within the borders of America, otherwise it would not be impossible to remain American for many who live elsewhere. As George Carlin said, the American dream is called that because you have to be asleep to believe it. But, like anyone else, Americans desire to know the truth and the truth will come out. There needs to be more realization that renunciations are a symptom of the disease of citizenship based taxation, not a defect of the citizen himself.

    bubblebustin
    Submitted on 2012/05/10 at 7:56 pm
    For the more patriotic reader, it will come to a shock to them that anyone would consider themselves to be an “accidental American”, like accidentally catching a disease, when so many are complaining about anchor babies.

    Don Pomodoro
    Submitted on 2012/08/28 at 9:55 am
    I’ve been seeing this coming for some time – The UK already makes it very difficult to move overseas and lose your UK tax domicile status, especially for those born in the UK. I know someone who not only had to have no assets or property in the UK to be considered as permanently residing abroad, but he also had to give up membership in the London branch of his University’s club before the UK tax authorities would believe that he actually lived overseas!

    I assume that the UK version isn’t quite as bad as the US one since I imagine that it applies to UK residents and not citizens. I think though that the UK and France will be the first foreign countries to adopt citizenship-based taxation should the disease start to spread. I just hope that it stops there though and doesn’t spread to the whole EU…Imagine a FATCA for 27+ nationalities and birth places! I don’t see how that could work with current technology without costing an absolute fortune.

    Petros
    Submitted on 2012/08/28 at 6:59 am
    Thanks for this post. Excellent points and well researched. Hale Shepherd’s comments seem bigoted to me. Avoid disease, stay in the United States! LOL.

    badger
    Submitted on 2012/06/17 at 1:09 pm
    @Don, I see the parallel you’re drawing, and I think the root of the images and the disease are the same. Propaganda designed to bypass, subvert, and shut down legitimate and reasoned inquiry and analysis. Where people are told and indoctrinated that their country is ‘exceptional’, then it distracts the general populace from scrutinizing their government and leaders. The other side of unthinking nationalism is the suppression of dissent and active questioning ex. ‘Love it or leave it’. That is why it makes me very wary – in whatever country or form it manifests itself in.

    Petros
    Submitted on 2012/05/24 at 8:51 am
    @roedgroed Interesting that you should say that he asked the citizenship status of your family. My mother-in-law tells me that an acquaintance was passing a land crossing. They asked the purpose of the visit, and she said to see her daughter. The guard then asked if the daughter was a US citizen. She said, no a Canadian. The border guard then became rude and said, that the NEXT TIME she comes down, she must bring copies of her daughter’s papers to prove that she is in the United States legally. This gets dumb and dumber.

    So now it’s not good enough to be a Canadian visiting family and to have a passport, but you also have to prove that the people you are visiting are also in the US legally. Being a US citizen is a mental disease.

    Petros
    Submitted on 2012/05/17 at 9:34 am
    @ Renounce, Yesterday another Brocker took me to dinner–on of the few perks of blogging. Afterwards we mused about whether a new administration would signal an improvement. But it seems to me that even if we have a new president, things are going to get progressively worse, until, our little society will be here at ground zero of a growing protest movement. This is likely to be ten to twenty year trend before it is over, and the result really could be about 6 million renunciations–some people who are still in the US but decide to go back to their home countries, and many like us living abroad already.

    I don’t think that the US is going to take my advice and to take the high road. They are taking the lowest road possible. I am beginning to think that being an American is a mental disease.

    bubblebustin
    Submitted on 2012/05/15 at 11:57 am | In reply to omghesstillanamerican.
    @omg, they’ll finally see it for what it is, that the cure is worse than the disease.

    Ben Franklin
    Submitted on 2012/05/10 at 8:04 pm
    A disease that requires surgical removal or chemotherapy.

  18. Thanks to everyone who responded to my question on whether FATCA specifically ties passport issuance to tax compliance. I have written the head of the association asking them to be more careful in the future as Americans abroad are scared enough when they first become FBAR aware.  It is not a good idea to scare them more. Some of them might rush into an inappropriate voluntary disclosure program. I have not had a response yet.

  19. Time is of the essence in the implementation of FATCA. The European Fund and Asset Management Association has written an open letter to “all interested governments and parties” encouraging all European governments to become FATCA partner countries, as with the G5.

    ‘We note that, three years after FATCA was first proposed, no alternative approach to IGAs has yet been identified that would address the fundamental conflicts between the requirements of FATCA and of domestic law in European jurisdictions. No further time now exists for the industry to become compliant without clarity of approach on this core point, and thus we urge all European Governments to progress IGA negotiations as soon as practicable.’

    http://www.international-adviser.com/ia/media/headshots/FATCA-IGAs—EFAMA-Open-Letter.pdf

  20. Anyone knows what happened to the reciprocity killing bill. They called it “Regulatory Freeze for Jobs Act of 2012” (H.R.4078) when it passed Congress. I read it was placed on the Senate Calendar. Is there any way to know when they’ll look at it in the Senate?

  21. Full ostrich is going to be impossible starting in 2013. I was looking at a couple of banks in Europe last night (just making comparisons). They are demanding ID’s with place of birth, only. Without the place of birth, it doesn’t count. This is why I think these last few months of 2012 are good to get out now while the gittin’ is good! DoS can make $450 go to $2,500 with just a few signatures. It doesn’t affect US-residents so they’ll never even know about it.

  25. @monalisa1776: It is so oppressive and extreme, that I can’t sleep or take any joy in life. How can they not just acknowledge that those abroad have everyday lives just like anyone in the US, and that includes banking and saving, and selling houses, and supporting family, etc.  It beggars belief, and often I think I’m hallucinating it.

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