Liberty and justice for all United States persons abroad

The Isaac Brock Society

Monthly Archives: October 2013

Gary Wright: Welcome to the IBS Wall of Shame #FATCA

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http://www.bissresearch.com/blog/fatca-the-end-of-the-beginning/105

FATCA is still with us. Looming over financial services like a great big Golden Eagle, it has been gliding on the hot air of dissension for a few years, but make no mistake the FATCA bird is going to swoop down soon.

Like all regulations which cause industry wide change, FATCA has been taking hits from various jurisdictions around the world, which is the normal response from the finance industry when it comes up against the requirement to invest in technology developments that do not have an obvious business benefit. The tactic is always to rebound back to the inflicting authorities with a myriad of reasons why the laws and rules cannot be implemented, in the hope and expectation that the authorities do not know enough about the market mechanisms or technology to know any different. This has certainly been the case with many regulations that the rest of the developed world has been forced to adhere too. Implementing a global regulation is always a tough call, but in the current economic environment one that had very little chance of being waved through unopposed.

However, the issues that the financial world has with FATCA should not dull the appetite for this regulatory requirement not to be enforced by the revenue authorities across all markets. Indeed the UK has been adopting FACTA like positions already and a UK version of FATCA will no doubt emerge sooner or later. Quite right too in my opinion.

In fact all financial markets worldwide should be made to comply with FATCA, as a kind of test model for a similar requirement to be introduced by their own revenue authority. It is in this way that a global net can be created enabling tax avoidance by the rich and criminal to be eradicated. It’s a small price to pay for financial services firms to buy into the FATCA type projects, which should be viewed as an international development not simply by the will of the USA.

I find it hard to understand the resentment that FATCA has engendered, when in truth it’s a vital piece of tax management that only jeopardises the criminal. The financial markets have to ensure that they are seen as strong and resilient by working with government tax authorities for the good of all.

Isn’t this a good PR job for the financial services industry to undertake for the benefit of society?

Nestmann – Why Have So Many Americans Considered #Expatriation?

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So, while the media sound bytes tell you that expatriation is all about tax, don’t believe it. Sure, that’s a part of it, but the reality is much more complex.

 

My own experience with expatriated clients backs this up.

 

  • One who had lived in Switzerland for more than 40 years gave up her U.S. citizenship only after all of the banks she dealt with there closed her accounts. They didn’t want to deal with all the reporting requirements the USA requires if they accept U.S. account-holders. It’s easier just to fire their American customers.
  • Another client received a letter from the bank that had issued a mortgage years earlier for her home in Germany. The letter threatened to cancel her mortgage unless she could prove she was no longer a U.S. citizen. Rather than face a huge balloon payment, she gave up her passport.
  • A Canadian client contacted me after receiving a bill from the IRS for $20,000, despite being (he thought) 100% compliant with all U.S. tax and reporting obligations. He’d even hired a big-name U.S. accounting firm to prepare his tax returns each year, at a cost of more than $5,000 annually. He never owed any U.S. tax because taxes in Canada are higher than in the USA, but he still got screwed. It appears a Canadian educational savings plan account he’d set up for his daughter was the problem. Under Canadian law, gains in the account are tax-deferred—but not under U.S. law. That led to a big tax bill—and his decision to expatriate.

 

The fact is, more than 7 million Americans now live abroad. Many of them can no longer hold bank accounts, qualify for a mortgage, or set up a tax-deferred account for retirement or their children’s education.

 

U.S. tax law has some expatriates waiving the American flag

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By Henry ChuOctober 7, 2013, 7:00 a.m.

COLOGNE, Germany — Genevieve Besser knows that many people would kill to have what she’s thinking of giving up. It’s been her birthright for 52 years, something she’s cherished and taken pride in.

But being a U.S. citizen, she says, now seems more a penalty than a privilege. For 25 years, the New York native has lived here in western Germany with her German husband, whom she met when he was a student in the U.S. and whom she willingly, if warily, followed back to his homeland.

“I said we’ll go, we’ll try it, but we have to keep my American citizenship and the kids have to have American citizenship,” says Besser, a onetime member of the Daughters of the American Revolution, adding bitterly, “and now I’m thinking of renouncing it.”

More at the Los Angeles Times

China Calls on the World to “deAmericanise”

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Interesting article at the Post today talks about a Chinese officials calling on a “befuddled world” to “deAmericanise” in the wake of the IMF’s dire warning about another 2008 downturn should the US government default on its trillions of dollars of debt later this week.  (Please read the complete editorial with commentary at Zerohedge:  China’s Official Press Agency Calls For New Reserve Currency, And New World Order).

And you know what? It’s about time.

It’s past time really.

With FATCA looming and the US financial sector effectively holding everyone in the world hostage to their lunacy, why aren’t more countries working harder to find ways to exclude the United States and begin buying and selling in a currency other than the ubiquitous US dollar?

Sure, the US has held the monopoly and much that is money passes through their empire and greedy hands, but in terms of importance, dumping the dollar as the world’s reserve currency and moving to isolate America is probably more important to the survival of the people on planet Earth than figuring out how to minimize global warming.

It’s day 14 of the stand-off in Washington D.C. and despite the furious spinning of the media, none of the players in question are looking anything other than pre-schoolish  and really, really wrong in terms of what they are doing. It would serve them and the misguided who voted for them (again) right if the default occurs on the 17th, but why should everyone else in the world suffer along with them?

And meanwhile in Canada? Harper is getting ready to set the population free … from cable tv bundling. Way to go, Prime Minister. Though it’s not quite fiddling while Ottawa burns, it’s close enough.

Brother of CIBC Bank Board Member is an “Accidental American”

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Donald Le Pan, Accidental American

(Source: Wikipedia) Don LePan (born 1954 in Washington, DC) is widely known as a book publisher; he is the founder and president of the academic publishing house Broadview Press. He is also a painter and the author or editor of several books, most notably the dystopian novel Animals.

LePan grew up in Ontario, living variously in Ottawa, Kingston, and Toronto. He received a BA in English Literature from Carleton University in Ottawa and an MA in Renaissance Studies from the University of Sussex, where he studied under A.D. Nuttall; his research on Shakespeare’s plots became the basis for a monograph (The Birth of Expectation). He worked for some years in the 1970s and 1980s for the Canadian branch of Oxford University Press (where he was manager of the College Department from 1979-1982), and from 1982-1985 as a secondary school teacher in rural Zimbabwe with the development agency WUSC. In 1985 he returned to Canada to found Broadview Press, a book publisher in the humanities and social sciences. By 2010 Broadview had grown to a company with annual revenues of over $3 million and a staff of 25.[1] Though modest in size, the publishing house is held in high regard, particularly as a publisher of anthologies and literary editions; in 2004 LePan was awarded an honorary doctorate by Trent University in Peterborough, Ontario for his contribution to academic publishing.[2]

LePan’s father, Douglas LePan, was well-known as a poet and academic; his brother, Nicholas Le Pan, is well-known as a Canadian civil servant (he is a former head of the Office of the Superintendent of Financial Institutions).

 

Nicholas LePan (Canadian citizen and brother of Donald LePan)

Mr. Nicholas D. Le Pan is an Independent Director of Canadian Imperial Bank of Commerce, since February 2008. Mr. Le Pan is a Corporate Director with experience in financial services matters. Mr. Le Pan served as Superintendent of Financial Institutions for Canada from 2001 to 2006 and as Deputy Superintendent, Office of the Superintendent of Financial Institutions, Canada (OSFI) from 2000 to 2001. From 1997 to 2000, Mr. Le Pan acted as Deputy Superintendent (Supervision) where his duties included oversight of the supervision programs for banks and other deposit-taking institutions. Mr. Le Pan has been in international and Canadian regulatory coordination efforts, including representation as Chairman of the Basel Accord Implementation Group and Vice Chairman of the Basel Committee on Banking Supervision. He is also Chair of the Canadian Public Accountability Board, which oversees auditors of public companies, and Chair of the Independent Review Committee of Brandes Investment Funds. Mr. Le Pan holds a Bachelor of Arts (Honours) degree in Economics from Carleton University and a Master of Arts degree in Economics from the University of Toronto.

 

 

Another Chapter in the Canadian Snowbird Saga

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Mika Goodfriend is a photographer from Montreal who recently spent five weeks documenting the Québécois  snowbirds of Breezy Hill RV Resort in Pampano Beach, Florida. According to the article, these Canadians spend six months out of each year down south – a lifestyle that both embarrasses and is financially out of reach of their children – and they make up 98% of the residents of this particular RV park.

Two things leap out in this article.

The first is the amount of time in the United States these snowbirds are spending. Six months per year will quickly add up and put a non-American over the limit that automatically renders them US Persons for tax purposes in the eyes of Uncle Sam and the IRS.

The second thing, which I found more significant still, is that Goodfriend notes how the lifestyle of these retirees is dependent on the wealth they accumulated during their working years and the at pensions their jobs afforded them. They are extremely well off in a way the current generation of young Canadian workers are likely never to be.

Which makes me wonder, who is going to inherit all this wealth? The children and grandchildren of the Québécois of Pampano Beach or the United States government, which has very complex and far-reaching tax and estate tax laws designed to ensnare people like snowbirds who overwinter in places like Florida.

Raise a Little Hell!

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Listening to this song recently, while driving, and enjoying the most amazing fall weather in Ottawa that we’ve been having for several weeks, (was sunny and 22 Celsius today), made me think of (what else?) – the FATCA battle we’ve been fighting everywhere, but particularly here in Canada.

‘Raise a little hell’, is a song by Canadian rock band Trooper. The song is the 10th and final track on the band’s 1978 album ‘Thick as Thieves’. It is the band’s only top 100 US hit.

Maybe we can ‘raise a little hell’ of our own here in Canada, and make FATCA a US failure!

Happy Canadian Thanksgiving everyone!

Bank-Run: A thought-provoking translation

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Was immer die Politik in Washington nun unternimmt: Es ist eine klassische Insolvenzverschleppung.

Regardless of what politicians in Washington do: It is a classic bankruptcy delay.

Die größte Industrie-Nation der Welt wandelt damit auf den Spuren Griechenlands.

The largest industrial nation in the world is changing to follow the footsteps of Greece.

Die Auswirkungen auf die Psychologie der Märkte dürften von den zerstrittenen Parteien übersehen worden seien.

The impact on the psychology of the markets is likely being overlooked by the conflicting parties

Wenn die Banken jetzt schon Angst vor einem Bank-Run haben, ist das ein äußerst bedenkliches Signal für alle Investoren. Denn auch die US-Notenbank Federal Reserve ist wegen der massiven Aufkäufe von Staatsanleihen faktisch insolvent. Ihre aufgeblähte Bilanz-Summe ist eine Zeitbombe, die es ihr schwer macht, Obama in der Not zu helfen.

If the banks are already fearing a bank-run, then such is an extremely serious signal for investors since the Federal Reserve Bank Note is factually insolvent due to the massive purchases of government bonds.  Its bloated balance sheet is a time bomb which complicates its ability to help Obama.

Das System nähert sich seinem Ende.

The system is nearing its end.

High Noon in Washington – und kein Retter in Sicht.

High noon in Washington – and no savior in sight.

Translated from Deutsch Türkische Nachrichten 04.10.13, 10:12

IIAC Canada says FATCA is “Here to Stay”

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http://www.iiroc.ca/news/Documents/FAS2013_FATCA_JRando.pdf

Take note of slide #7

Canadian tax legislation and regulations will be changed to require due diligence on existing accounts, new account opening procedures and reporting by all “Reporting Financial Institutions” unless they are specifically listed as exempt or unless they meet criteria to be “deemed compliant”