Monthly Archives: April 2015

UPDATE: JUNE 14, 2015

from JakDak:

http://blogs.rollcall.com/topic-a-tax-finance/tax-reform-moves-to-back-burner-but-debate-remains-active/

The Senate Finance Committee chairman, Senator Orrin Hatch (R-UT), has established working groups to study different aspects of the tax system. These working groups are scheduled to report back to the committee by June 26.

http://www.mwcllc.com/updates/articles/2015/6/tax-policy-update-june-9-2015.aspx#Comprehensive_Tax_Reform

Tax Policy Update
June 09, 2015

[Interesting: NUMBER OF THE WEEK: 61. The number of countries that have signed on to implement the OECD’s multilateral agreement for the automatic exchange of tax information, in conjunction with the ongoing Base Erosion and Profit Shifting (BEPS) project. Although the U.S. has committed to implement the standard, it has not yet signed onto the formal agreement (the “multilateral competent authority agreement”), which lays out in detail what information will be exchanged, the timing and method of exchange, and how signatories will work together to ensure compliance. Signatories to the agreement will begin exchanging information as early as 2017. Additionally, the OECD released on June 8 its “Country-by-Country Reporting Implementation Package” developed under the BEPS Action Plan. Under the plan, which the Treasury Department has said it will implement for the 2016 fiscal year, multinational companies are required to aggregate and report information annually regarding where they do business, the global allocation of income, and amount of taxes paid, along with other information that will allow taxing authorities to more closely examine multinationals’ tax practices. The release of the package coincides with the 2015 OECD International Tax Conference in Washington, D.C., this week where OECD representatives are expected to review and discuss key initiatives under BEPS.]

SPOILER ALERT: Comprehensive Tax Reform Unlikely in 2015. In an interview last week, Senate Majority Leader Mitch McConnell (R-KY) outlined a busy legislative agenda between June and August recess: passing a highway bill, cybersecurity legislation, No Child Left Behind, and the Toxic Substances Control Act. Tax reform, however, is conspicuously missing from the list. “We’re certainly not going to be able to be doing big, comprehensive tax reform with this president,” McConnell said. Tax reform optimists have been eyeing the highway reauthorization bill as a potential vehicle to move a limited set of tax reform measures, but according to McConnell, the bill might instead be better suited to pick up a different legislative passenger—the reauthorization of the Export-Import Bank. McConnell believes the highway bill would provide the best opportunity to reauthorize the bank, which is set to expire June 30.

The inability of the Senate Finance Committee Tax Reform Working Groups to meet their original May 31 deadline to report recommendations to Chairman Orrin Hatch (R-UT) and ranking member Ron Wyden (D-OR) only adds to the general pessimism. The international tax working group may offer the only glimmer of hope, with reports that it has made the most progress in hammering out detailed recommendations. The working groups are now aiming to deliver their reports before Congress departs for the July 4th recess.

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UPDATE: MAY 25, 2015

Em’s comment to JakDak:

I’m not sure of the where for the SFC recommendations but the when has been delayed:

http://thehill.com/policy/finance/242916-senate-tax-reform-groups-get-more-time

The Senate Finance Committee’s leaders are giving tax reform working groups some more time to formulate their recommendations.

Finance Chairman Orrin Hatch (R-Utah) and the panel’s top Democrat, Sen. Ron Wyden (Ore.), had hoped for recommendations by the end of May.

But in a statement Thursday, the two senators said that the working groups made it clear that they needed extra time to do the job right. The panel will set a new deadline after lawmakers return from next week’s recess.

“It is our hope these bipartisan working groups will use this extended time to finalize their recommendations for tax reform and produce in-depth analyses of options and potential legislative solutions,” Wyden and Hatch said in a statement.

etc.

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Shadow Raider says
April 29, 2015 at 6:39 pm

The Senate Finance Committee just released the comments sent by the public on tax reform. As expected, there are lots of comments about CBT and FATCA.

http://www.finance.senate.gov/newsroom/chairman/release/?id=3b14e94b-69f9-41e2-9fd3-7d191971b7ee

 

Hatch, Wyden Release Public Input on Bipartisan Tax Reform

Over 1,400 Submissions Made to Working Groups

WASHINGTON – Finance Committee Chairman Orrin Hatch (R-Utah) and Ranking Member Ron Wyden (D-Ore.) today released over 1,400 submissions from stakeholders on how to best to overhaul the nation’s broken tax code.  In March, the Committee sought input from the public in an effort to provide additional data and information to the Committee’s bipartisan tax working groups, which are currently analyzing existing tax law and examining policy trade-offs and available reform options within each group’s designated area.

“We thank the stakeholders and public who provided us with this valuable data and input,” Hatch and Wyden said. “These submissions have equipped us with the ability to better evaluate how reforming the tax code will affect both American families and business of all kinds.  As our bipartisan groups work towards producing substantive recommendations on how to reform the tax code, they will now be able to consider these valuable ideas.”

All comments received by the Committee that met submission requirements were made public.

Submissions can be found below. Total submissions to each bipartisan tax working groups are as follows:

Individual Income Tax – 448

Business Income Tax – 332

Savings & Investment -128

International Tax – 347

Community Development & Infrastructure – 207

Each of the five bipartisan working groups is currently working to produce findings on current tax policy and legislative recommendations within its area, with the goal of having recommendations from each of the five working groups completed by the end of May.

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Thanks, Shadow Raider, for alerting all here.  There will be many Brockers reading, starting with the submissions (not all by individuals) to International Tax.

#Americansabroad need tax justice 2 http://t.co/iqm8W4aqqM Homelanders need 2 read & understand-we r NOT the cliché tax cheats nor r we rich

— Patricia Moon (@nobledreamer16) April 28, 2015

This is a fantastic article written by our own Lynne Swanson (Blaze) & Victoria Ferauge. Please go over to The Hill and add your comment there as well as here!

 
Excerpts:

“Why are we doing this to folks? Why are we tormenting them in this way?” IRS Taxpayer Advocate Nina Olson asked in an address to Securities Industry and Financial Markets Association FATCA Policy Symposium in Washington last year.

These “folks” are not FATCATS with offshore bank accounts. These are U.S. citizens with regular checking and savings accounts, retirement accounts and college saving accounts located in countries where they live. These are local accounts for Americans abroad—not offshore or foreign.

Even those who are fully tax compliant in the United States and their country of residence (where they are often citizens) are experiencing discrimination on the basis of national origin. Today, having an American birthplace or passport and living outside the United States means being a target and a pariah and living with the fear that banks will pull a mortgage or close bank accounts just because that person is a “U.S. person.”

Filing U.S. taxes from abroad is not only more complicated, it is more costly. Americans abroad must pay exorbitant sums to international tax specialists just to file the paperwork that shows they owe absolutely nothing to the U.S. government.

Not only does this put them at a competitive disadvantage in the global market but since over 80 percent of Americans abroad owe no taxes to the IRS when they do file, the United States gets mostly paperwork to process, not tax revenue. The only people making money from this torment are lawyers and accountants in the compliance industry.

Americans abroad take strong exception to being tarred as tax evaders and criminals. They don’t understand the logic behind the taxation because we all seem to agree that for most Americans abroad zero is a “fair share”.

The question is not will lawmakers “stand with the American people”? Americans abroad ARE “the American people.”

Americans abroad want to know if their fellow Americans and lawmakers will stand with them.

We have a special, unique perspective on this question.

Do you feel that “birthright citizenship” should be imposed without consent?

You can express your feelings on the merits of United States “birthright citizenship” to this U.S. subcommittee and Chair.

Why don’t you send your SFC submission with a preamble on birthright citizenship?

Apr 29 2015

HEARING: BIRTHRIGHT CITIZENSHIP: IS IT THE RIGHT POLICY FOR AMERICA?
2237 Rayburn House Office Building

1:00 p.m.

By Direction of the Chairman

Subcommittee on Immigration and Border Security

Witnesses
Dr. John C. Eastman
Founding Director
The Claremont Institute’s Center for Constitutional Jurisprudence
Dr. Eastman Testimony.pdf (365.2 KBs)
Lino A. Graglia
A.W. Walker Centennial Chair in Law, University of Texas at Austin School of Law
Testifying in his personal capacity
Graglia Testimony.pdf (1017.6 KBs)
Jon Feere
Legal Policy Analyst
Center for Immigration Studies
Feere Testimony.pdf (1.2 MBs)
Richard Cohen
President
Southern Poverty Law Center
Richard Cohen Testimony.pdf (398.7 KBs)
Permalink: http://judiciary.house.gov/index.cfm/2015/4/hearing-birthright-citizenship-is-it-the-right-policy-for-america

An excellent guest column by Brian Garst in the Cayman Financial Review reports on the US Government’s “atrocious” mishandling of its citizens’ private information and how inevitable breaches of poorly designed and managed IRS and OECD reporting systems will soon unleash a global torrent of unsecured personal identification and financial data:

http://www.compasscayman.com/cfr/2015/04/22/FATCA-reporting-system-leaves-taxpayer-data-vulnerable/

Here’s an excerpt:

The IRS itself has been accused by government watchdogs of having serious vulnerabilities, and of moving too slowly to fix them.

Every year since 2008, the Government Accounting Office has identified 100 cybersecurity weaknesses at the agency. Specifically, the IRS has been faulted for routinely failing to encrypt data or for using weak methods for doing so, allowing greater access to data than workers require to perform their duties, permitting user passwords that are easily guessed, and being dangerously slow to install crucial software updates and security patches.

This record alone is enough to question the ability of the IRS to secure and protect the sheer breadth of financial records it will receive due to FATCA, but serious concerns are already being raised about IDES’ specific security protocols.

The system’s rules for encryption recommend use of Electronic Codebook (ECB) as its encryption mode. ECB is widely faulted by cryptography experts as being incredibly weak, as it encrypts blocks one at a time and it thus does a poor job of hiding data patterns. Upon discovering the IDES recommendation of ECB in its protocols, prominent security expert Bruce Schneier incredulously asked, “Are they serious?”

Apparently they are not about protecting taxpayer information.

Global News, April 22: Unwilling dual citizens face 10-month wait to shed US citizenship in Toronto, to be read in conjunction with, as addressed in Isaac Brock Society post: Canadian Budget introduces the Common Reporting Standard (CRS),

http://www.budget.gc.ca/2015/docs/plan/anx5-1-eng.html#wb-cont

… and, in the new Canadian *budget* (quite deliberate obfuscation, to me) — no clear distinction in this Canadian Conservative government information for some Canadian citizens and residents about the difference for *US Citizens / Persons* in Canada, so more confusion for some readers of:

“Under the new standard, foreign tax authorities will provide information to the Canada Revenue Agency relating to financial accounts in their jurisdictions held by Canadian residents. The Canada Revenue Agency will, on a reciprocal basis, provide corresponding information to the foreign tax authorities on accounts in Canada held by residents of their jurisdictions. In order for the Canada Revenue Agency to obtain the information to be exchanged, the common reporting standard will require financial institutions in Canada to implement due diligence procedures to identify accounts held by non-residents and report certain information relating to these accounts to the Agency. It will not require reporting on accounts held by residents of Canada with foreign citizenship. The standard includes important safeguards to protect taxpayer confidentiality and ensure that the exchanged information is used only by tax authorities and only for tax purposes.

“Canada proposes to implement the common reporting standard starting on July 1, 2017, allowing a first exchange of information in 2018. As of the implementation date, financial institutions will be expected to have procedures in place to identify accounts held by residents of any country other than Canada and to report the required information to the Canada Revenue Agency. As the Canada Revenue Agency formalizes exchange arrangements with other jurisdictions, having been satisfied that each jurisdiction has appropriate capacity and safeguards in place, the information will begin to be exchanged on a reciprocal, bilateral basis. Draft legislative proposals will be released for comments in the coming months.”

Thanks once again, Patrick Cain, for paying attention and writing information necessary for *US Persons / Citizens* in Canada.

We delivered! Monumental effort 2 demonstrate harm 2 #Americansabroad submitted 2 Senate Finance Committee http://t.co/carqgGs6lj #FightCBT

— Patricia Moon (@nobledreamer16) April 15, 2015

 
UPDATE April 16 2015

 
We did it! Just as promised by John Richardson our submission to the Senate Finance Committee is signed, sealed and delivered….Remember this? :

I also made it clear that Dr. Kish and I would be taking the initiative to “educate” the Committee about:

– what “citizenship taxation” really is; and

– the true effects that it has on “Americans” (recognizing that many of you do NOT consider yourselves to be U.S. citizens) in Canada and elsewhere.

I am happy to report to you that on February 14, 2015 the videos were made as planned.

I am happy to report that on April 9, 2014 Dr. Kish and I met with representatives of the Senate Finance Committee and had a “productive discussion”.

I am happy to report that, today, April 15, 2015 our submission to the Senate Finance Committee (consisting of a total of 7 separate submissions on various topics) has been delivered. One of the submissions was the text of the “Human Rights complaint to the United Nations“. We acknowledge the tremendous work that went into the creation and submission of the complaint.

We encourage you to look at our complete “Folder of Submissions” as follows:

https://app.box.com/s/yn25x1gketbzrkqp2ghu5sbce7mqoynu

I want to remind you that this is going to be a “slow process”. Be patient. Keep yourselves focused on the “long term” goal. The key is to remain patient and focused.

For all who submitted comments to be included, please see here.

Thank you so much for all who took the time to send in your letters & comments in support of this project. Please spend time and explore all seven of the submissions as each is a very important component of demonstrating to the US government how perverse and discriminatory U.S. Tax policy is, not only against U.S. Persons, but to every country and person who is connected to one. We need residence-based taxation. We want the ability to make use of our tax-deferred savings vehicles in our countries of choice. We deserve the right to have our bank accounts free from the prying eyes of FinCen. We demand the recognition that we are not tax cheats and traitors. We insist that the privacy rights of our “alien” spouses and children be respected. For those who cannot act on their own behalf, we must have the ability to make choices free of imposed US citizenship be it from immigration or tax status.

It is time. The U.S.must start living up to its claim of being the land of freedom and opportunity. It must address its own areas of human rights violations and act in the best interests of all. We will not be satisfied nor stop until we receive exactly that.

Summary:  https://americansabroad.org/issues/fatca/same-country-exemption-fatca-reporting/

“The “Same Country” Exemption, sometimes referred to as “Safe Harbor” Rule, is the product of collaborative work among several groups representing Americans abroad. A detailed description was prepared by ACA and draws upon ideas and work of the other groups – which ACA greatly acknowledges. ACA is solely responsible for its content. This paper (attached) was drafted by Charles M. Bruce, Legal Counsel, ACA. Questions and comments are invited”

Description: https://americansabroad.org/files/4314/2900/7077/same-country-exemption-2015-04-06.pdf

An individual residing in a foreign country could elect, but would not have to elect, to have an account treated as a “Same Country” Account by providing an election to the relevant FFI (such as, the individual’s bank) and attaching a copy to his or her regular Form 1040 or Form 1040NR. The FFI would then be relieved from the requirement to treat the account in question as a US account and to process and report information with respect to it.9

The “same country” exemption would not affect in any way the requirement to file a Form 1040 or 1040NR.   Nor would the “same country” exemption affect in any way negate the requirement to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).

An American taxpayer subject to the Form 8938 filing requirements, who had elected to have one or more accounts treated as a same country account by filing the above-mentioned election, could omit the account(s) from his or her Form 8938.  The account would not count for purposes of determining whether or not one of the reporting thresholds, set forth in the Instructions to the Form, are met.  IF AN INDIVIDUAL ONLY OWNED ACCOUNTS AS TO WHICH HE OR SHE HAD MADE A “SAME COUNTRY” ELECTION, THERE WOULD BE NO REQUIREMENT TO FILE THE FORM 8938