The Cayman Financial Review has just published an excellent new article by Brian Garst, political scientist, blogger and Director of Government Affairs at the Center for Freedom and Prosperity:
Contributing to a growing wave of understanding about Treasury’s lack of legal authority for its concoction of Intergovernmental Agreements, Mr. Garst examines the likely trigger for FATCA’s self-destruct mechanism: its increasingly evident failure and likely permanent inability to provide promised reciprocity to its so-called IGA partners:
Since its passage in 2010, financial institutions and their governments have scrambled to comply with the costly impositions of the Foreign Account Tax Compliance Act (FATCA). To entice foreign governments to assist in administration of the law and bypass certain legal obstacles, the U.S. Treasury Department has promised reciprocal information sharing. Now, however, they are admitting to having promised more than they can deliver.
The U.S. government’s assertion of authority over the global financial sector has redirected tens of billions of dollars away from productive pursuits and towards compliance efforts. So complex are the demands imposed by FATCA that the law, as originally passed, was almost assured to fail. There was simply little chance that thousands of individual financial institutions would be able to both comply with FATCA’s demands and continue to operate within the legal requirements of their host nations, particularly when it comes to protection of privacy rights.
To circumvent the issue of conflicting local laws, the U.S. Treasury Department conjured for itself powers and responsibilities not part of the actual legislation. Namely, they developed intergovernmental agreements (IGAs) to allow foreign governments to first collect information on American taxpayers before sending it to the IRS. Because institutions are sharing the information with their own governments rather than directly with U.S. authorities, and those governments are updating their laws accordingly, the IGAs allow for compliance with local privacy laws as well as FATCA.
As would be imagined, not every government has been thrilled by the prospect of upending their laws to placate U.S. fiscal imperialism. To entice skeptical foreign governments to sign the IGAs – without which the law would fail – Treasury promised to share similar information on any of their citizens investing in U.S. markets. Now, however, it’s becoming increasingly clear such reciprocation may never occur, throwing FATCA’s viability back into question.
Incidentally, author Garst’s motto is:
Malo periculosam, libertatem quam quietam servitutem
“That’s right, the Treasury Department – the only U.S. body involved in authorizing, negotiating or signing IGAs – has no authority to provide reciprocal information. And since the agreements are not being submitted to the Senate for its advice and consent as constitutionally required for ratification of treaties, they haven’t true force of law within the United States. Although Treasury prefers not to advertise its need for additional authority, it’s been implicitly acknowledged by inclusions of provisions asking such authority in the administration’s budget requests, as well as by officials speaking behind closed doors.”
Along with extortion, we can now add fraud to the list of unsavoury things Treasury willing do to implement FATCA. Either one person or a small group of people are coming up with these brilliant ideas behind closed doors. One wonders if it’s someone so-called dedicated to the democratic process who’s pushing hardest to circumvent it.
I like the further part of the entry at the link you provided
“……I hold it that a little rebellion now and then is a good thing, and as necessary in the political world as storms in the physical.” – Jefferson to James Madison, January 30, 1787 ”
Pushback is critical. US extraterritorial CBT and undemocratic use of might makes right to extort the legal local assets of those outside the US is already infesting and infiltrating the fisc of Canada and the rest of the globe via asserting the right of the US to enjoy double taxation of whoever it chooses to deem a ‘US taxable person’, the ‘savings’ clause and the ‘last in time rule’ that the US routinely embeds in all of its tax treaties. FATCA IGAs are not even ‘tax treaties’. Not only is this destroying the legitimate enjoyment of Canadian resident citizens and taxpayers to “peace, order and good government” http://www.thecanadianencyclopedia.ca/en/article/peace-order-and-good-government/ in our own chosen home country of residence, but we are being deprived of justice http://taxblog.com/achristians/fair-taxation-basic-human-right/ and the US extraterritorial enforcement of CBT makes a mockery of the US constitution reference to the ‘consent of the governed’ http://en.wikipedia.org/wiki/Consent_of_the_governed and of CBT proponents’ weakly rationalized claims that we are legitimately taxed and penalized and controlled from afar as the price we must pay because we are (without our consent) part of the US ‘polity’ (as Kirsch and other CBT defenders claim http://isaacbrocksociety.ca/2014/05/02/toronto-citizenship-based-taxation-live-comments/comment-page-1/ ).
FATCA is only the tip of the iceberg. The US recognizes no limits to its extraterritorial activities and employs might makes right to pursue its own agenda at the expense of the rest of the globe.
Now Canada and the rest of the globe are ‘US taxable territories’.
Contribute to http://www.adcs-adsc.ca/?gclid=CJeTkdCAhMACFahaMgodHm0ACg .
Stop the US economic colonization of Canada as a ‘US taxable territory’.
@Badger, I honestly believe that the US under the right circumstance would prosecute a Canadian Citizen resident in Canada who happened to have clinging US Nationality, who happened to use a Mastercard Credit Card to purchase a bottle of Cuban rum.
Though not in Canada, I warn my teens to never do that and I do not think I have gone off the deep end.
@ George, as to the Cuban rum, this case is informative as to how far the US will go to control people http://caselaw.findlaw.com/us-3rd-circuit/1368519.html
@Badger, from the link which is the core problem.
The term ‘person subject to the jurisdiction of the United States’ includes:
(a) Any individual, wherever located, who is a citizen or resident of the United States;
It is impossible for a Canadian Citizen resident in Canada with clinging US nationality to be subject to the jurisdiction of the US.
As I have been pounding the drum..FATCA is not a tax problem…its a citizenship problem.
Badger: You are so right. Pushback is critical. As you know, on August 7, 2014 our community launched a major “pushback”. On that date a group of affected people filed a formal Human Rights Complaint against the United States for its CBT policy and against all nations who have conspired with her against their own citizens by signing IGAs.
Check for developments on this by clicking the link under “Take Action” on the sidebar.
Pingback: The Isaac Brock Society | “U.S. can't del...