March 8, 2016 UPDATE: Legal fees paid — on to Federal Court for Charter trial contesting Canadian FATCA IGA legislation.
Canadians and International Supporters:
You came through once again: $594,970 for legal costs have now been donated and our outstanding legal bill is finally paid off.
Thanks especially to those who donated even though they never had any “spare” money to give, and despite this gave over and over and over again.
This last round of fundraising also shows that our Canadian lawsuit remains dependent on the kindness of our International Friends: There would be no lawsuit without their financial help.
Know that a very generous donation (today) from a supporter in the United States made it possible to pay off the remaining legal debt. Also please appreciate that there would be no lawsuit without the help of the Isaac Brock Society which has kindly let us use its website to solicit funds.
Our next step is the Constitutional-Charter trial in Federal Court.
For this we need more Canadian Witnesses, and my next post will be devoted only to a request for Witnesses willing to go public, like our Plaintiffs Ginny and Gwen.
For the future: I want a win in Federal Court — and I want the new Liberal Government not to appeal that win.
Thank you all for your support,
Stephen Kish,
for the Directors,
Alliance for the Defence of Canadian Sovereignty
@Blaze, I agree with MuzzledNoMore’s suggestion (thank you!) – and I think that perhaps conversation between ADCS and the CCLA may get more traction. The CCLA have been made aware of the issues by yourself, by the ADCS, at their own conference via Arthur Cockfield’s presentation (his research and report sponsored by no less than the Privacy Commissioner of Canada), and as @calgary points out, the BCCLA also clearly acknowledges the issues exist. The case is going to the Supreme Court. It seems very short sighted not to show some public support for it.
@Stephen, I hope that CCLA will see fit to do what they can despite their limitations, and lend their support in whatever form to the fight against the unconstitutionality and Charter violations of the FATCA IGA and enabling legislation. I do think that at the very least they could have made more effort to issue public statements to raise the profile of the issues that FATCA raises in Canada, and to issue even a short argument against it during the Finance Committee hearings into the enabling legislation embedded in Omnibus Bill C-31.
I would hate to feel in the end that they are viewing it as essentially a taxation issue, affecting only those damned “Americans residing in Canada” whom they may view as somehow more privileged and less deserving of support than those affected in some of their other campaigns. Canadians of all classes and income levels may very well have had a US citizen parent or spouse or child or birthplace – Canadians inheriting US status weren’t issued with gold plated booties and a silver baby spoon to go with it.
To quote one of the CCLA pamphlets ‘The Fundamentals of Our Fundamental Freedoms’
by A. Alan Borovoy;
“THE FREEDOM OF NO ONE IS SAFE UNLESS THE FREEDOM OF EVERYONE IS SAFE”
and for example, the section on ‘The Right to Personal Privacy’ mentions the concepts of ‘reasonable cause’ in Canadian law, and ‘probable cause’ in US law.
https://ccla.org/category/fundamental-freedoms/
There is no reason to believe that merely having a US parent or a US birthplace, or being the Canadian spouse or child or parent or business partner of such persons, or having held an active or expired greencard at some time present or past automatically means that there is sufficient reasonable or probable cause to justify automatically searching and seizing our personal and financial data re bank accounts and assets and remitting them to a foreign power, and deeming us any more likely to be evading foreign taxes (i.e. US), money laundering, financing terrorists, or engaging in drug trafficking or other crimes ( FATCAnatics propose the uses of FATCA data collection should extend far beyond the tax administration).
And now, in a related vein, we are seeing how the Harper legislation targeting ‘PEPs’ (‘politically exposed persons’) has been enacted in a very similar vein to the FATCA IGA and extends even to the parents, children, spouses, (and presumably business partners) of judges and other public officials – for 20 years and also applying retroactively.
Re the PEP law; “…In a little-known law that Parliament has already passed, these officeholders are known as “politically exposed persons” and deemed at risk of being involved in corruption, money laundering and the financing of terrorism. Financial institutions, from banks and insurance companies to investment dealers and real estate brokers, will be required to keep special tabs on them. And not only them, but on their children, other family members and “close associates.”…”…
http://www.theglobeandmail.com/news/national/canadas-senior-public-officials-targeted-by-little-known-corruption-law/article26818093/
These laws are all part of a continuum, and I would like to see some public acknowledgement of that from the CCLA.
Given the scope of those directly affected by the FATCA IGA, the PEP law, and the Canadian taxpayer monies being expended to enforce and defend this overreach, who among us will be left untouched?
What is next in terms of direct surveillance of ordinary Canadians?
@Stephen Kish, please allow me to correct your first line……….
_________
Our FOCUS now is on the Constitutional-Charter trial — to prevent more handovers of your account information to U.S. IRS for those that were impacted in the September 30, 2015 handover and to prevent the likely larger handover of information for those many more that were not impacted in the first handover— which will take place sometime in 2016.
@Stephen, on the renunciation thread I discovered some interesting information that debunks the special negotiated position “protecting Canadian Citizens” from collection of tax.
From Bubbles link;
23. If the U.S. assesses me a FBAR penalty, will the CRA assist the U.S. to collect it?
The IRS cannot use the information it receives under this agreement to administer non-tax laws such as the U.S. Bank Secrecy Act. The CRA will not assist the U.S. to collect non-tax related penalties such as those for failing to file the FBAR.
___________
I wonder if we could get someone on the US Side to clarify if the information will be used for FBAR purposes. Or could we get Canada to state why their statement is “true.”
Stephen: Thank you so much for your interest in reconnecting with the CCLA. I think it’s worth a shot! Thanks again, Badger, for your always amazing research!
George,
As I recall, at the summary trial, the attorneys and Justice Martineau discussed the question whether Canada CRA could collect FBAR penalties from Canadians who were citizens at the time of the “offense” — but the question was never answered.
@Stephen
#16 states that the bank must allow its customers access to the info “when”, but not “whether” it’s been reported. It’s hard to conclude that the bank is withholding information or they just didn’t send any (Insert the Monty Python “How Not To Be Seen” video here).
Then there’s #10 that requires the bank to ask USP’s for their TIN.
@George
Here’s Roy Berg on “assessable penalties” upon failure to report FATCA form 8938 and others.
“Article XXVI-A: Assistance in Collection
The plaintiffs noted that Article XXVI-A:8 of the treaty precludes Canada from assisting the U.S. to collect taxes from individuals who were also Canadian citizens when the U.S. makes a revenue claim. They then argued that since providing account holder information includes everything needed for the IRS to assess and collect taxes, providing the information is equivalent to assisting the U.S. to collect taxes. In their notice of motion, the plaintiffs concluded, “Accordingly, this disclosure of accountholder information results in having provided assistance in the collection of Revenue Claims”12. In most cases, the argument that the disclosure of information is tantamount to assistance in collection falls a bit flat because the IRS’s authority to assess tax and penalties is typically subject to the deficiency procedures found in sections 6211 through 6215 of the code. The deficiency procedures generally assure the taxpayer access to administrative review (namely IRS Appeals) and a prepayment judicial forum (namely the U.S. Tax Court) for reviewing disputed additions to tax and penalties proposed by the IRS13.
However, “assessable penalties”14 are ineligible for the procedural safeguards of the deficiency procedures and can be assessed almost immediately by the IRS. Neither party raised the issue of assessable penalties in their submissions, but doing so may have helped the plaintiffs’ argument that disclosure of account holder information is the equivalent of providing assistance in collection.
Specifically, the failure-to-file penalties imposed by Chapter 61 of the code are assessable penalties ineligible for the deficiency procedures referred to above, and they may be assessed without affording the taxpayer access to administrative review and prepayment judicial forum. Further, the IRS may assess these penalties by simply providing the taxpayer with notice and demand for payment, and if payment is not made within 10 days, the IRS may commence collection15. This issue is even more important for U.S. citizens residing abroad because the failure-to-file penalties on many common information returns (for example, forms 5471,165472,17 926,18 8865,19 and 893820) are assessable penalties. Consequentially, merely providing account holder information could be tantamount to assisting in collection, at least as it relates to assessable penalties.”
https://www.linkedin.com/pulse/decision-canadian-legal-challenge-fatca-expected-soon-roy-berg
@Bubbles, thanks for that………
I thought Arveys argument was a good argument that providing the information was tantamount to providing collection. At first I did not “get it” but then it settle in……….
There are likely many Canadians who WILL send a check to Washington when the brown envelope arrives in the post.
But the reality in the treaty languages is that if the US assess tax/penalty, a Canadian Citizen can say pound sand. The CRA will NOT assist in the collection against against a Canadian Citizen. Same treatment with Denmark and their respective treaty.
We also know that France/Sweden and Holland will not assist in collection regardless if you are a seasoned citizen or a fresh citizen.
BUT we do know that France/Holland/Canada/Denmark/Sweden WILL assist in collection for the USA if you are not one of their own.
BUT again with respect to the above five minus Canada, I think they would have to afford the same identical treatment to any EU Citizen within their borders. So if you were Irish resident in France and the USA had a claim against you, France would not be able to assist in collection against any EU Citizen.
In regards to all the other treaty partners, there is no collection provision whatsoever, so a US landed immigrant is protected in those other countries. That may have something to do with the passport renewal bill that came and went as you would be mighty messed up and your immigration status could be in jeoperdy if you had your US Passprt revoked.
George: would these countries assist the USA in the case of a dual US-EU citizen?
@George
Is a letter from the IRS tantamount to assessing tax in Canada? I would think that for most people coming into compliance means consulting with a lawyer or accountant, where they would be ushered into Streamlined. One can’t simply “send a cheque” and be recalcitrant at the same time. Where we need clarification – and there are conflicting opinions here – is whether the IRS will allow people to enter Steamlined if the IRS finds you first.
Now if the IRS relaxes its rules to allow those they find first to go without penalty, what that really does is it tells people to lie low until the IRS finds you. What does that do for “treating similarly situated taxpayers similarly” when they’ve used these terror tactics in the lead up to FATCA? The IRS is simply going to have to find a way to beat people with carrots. Good luck with that.
@Fred, “would these countries assist the USA in the case of a dual US-EU citizen?”
Myself and many others subscribe to the opinion that “dual citizenship” can not exist and it does not exist in law.
The only EU Countries that we are concerned with in this regard is Denmark, Netherlands, Sweden and France. They are the ONLY ones that will collect per the treaty from US Citizens living in their country.
So the first question using just one country as an example, would France assist the USA in collecting against a French Citizen in France that the USA claims as one of her own?
The second question is if France would assist the USA in collecting against an Irish/EU Citizen resident in France that the USA claims as one of her own?
The treaty SHOULD prevent France from assisting in the collection against the above EU Citizen and the above French Citizen.
The caveat is that the EU and France DID step over a red line with FATCA. Did the politicians not realize what they did or did they intentionally agree to sacrafice some of their countrymen?
@Bubbles, I am operating under the “guess” that the USA might prepare what is called a substitute tax return based on FATCA information and immediately assess tax, interest and penalty.
Hence I say there would be a set of people who would write a check.
Now that would be something, George, wouldn’t it? I remember asking somewhere if the IRS would send out a substitute tax return, and I recall that they couldn’t for some reason. I just can’t remember what that reason was right now.
I wouldn’t surprise me if the CRA only sent the IRS account info on account holders with a US address so far. I’m also guessing how aggressively the IRS goes after Canadian residents will be in direct relationhip to the size of their bank balances, while continuing to shake the trees with the least amount of effort for loose or low-hanging fruit – gathering folks up as Muzzled said, “through attrition” – and in an effort to keep the screaming down to a minimum.
Here’s what *they* say on that subject: https://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Filing-Past-Due-Tax-Returns
Sounds plausible that a good percentage of those who can afford it will just write a damn cheque. But then what?
@Bubbles, I know of a handful of USC who have received Substitute Tax Returns with an assessment.
General facts as follows;
1. The persons were non-filers but were under the filing threshold for filing if filed Joint.
2. They had capital gains with gains of a couple thousand but gross income (stock sales) of over 20,000.
3. The sales were reported on a 1099 with SSN.
4. Substitute return was prepared based on single filer, no exemptions, standard deduction and the stock sales were 100% short term gain.
@Bubbles, I would guess in Canada the vast majority of FATCA “slips” were low hanging fruit.
1. US Residents.
2. Folks that sadly opened new accounts in 2014 and had the place of birth question.
As we have all learned, more dolphin will be caught in the tuna net as the years go by. So I was sad we did not get the injunction this year but I am hopeful for next year.
Ya know, as I read these old treaties on collections and the IGAs….I do think there were some people that knew the plight of expats and did not want to bother them.
My biggest problem is that the USA is attempting to “pierce the Canadian Citizenship of resident Canadians.”
How is that for a new phrase, piercing the citizenship? All prior international law and norms says NO to that, yet the USA is pushing to be the “dominant nationality.”
‘Re the PEP law; “…In a little-known law that Parliament has already passed, these officeholders are known as “politically exposed persons” and deemed at risk of being involved in corruption, money laundering and the financing of terrorism. Financial institutions, from banks and insurance companies to investment dealers and real estate brokers, will be required to keep special tabs on them. And not only them, but on their children, other family members and “close associates.”…”…
http://www.theglobeandmail.com/news/national/canadas-senior-public-officials-targeted-by-little-known-corruption-law/article26818093/‘
They could copy the NSA and keep tabs on everyone within 3 degrees of separation.
I met one of my relatives. My relative met the then-president of Taiwan and interpreted for some accompanying VIPs. Odds are that the then-president of Taiwan also at some time met Bush Jr., but if he didn’t, likely some of the accompanying VIPs did.
Some Brockers have met MPs…
‘the IRS’s authority to assess tax and penalties is typically subject to the deficiency procedures found in sections 6211 through 6215 of the code. The deficiency procedures generally assure the taxpayer access to administrative review (namely IRS Appeals) and a prepayment judicial forum (namely the U.S. Tax Court) for reviewing disputed additions to tax and penalties proposed by the IRS.
However, “assessable penalties” are ineligible for the procedural safeguards of the deficiency procedures and can be assessed almost immediately by the IRS.’
If the penalty is a tax penalty (26 USC sections 6651-6751), section 6665(a) requires that additions to tax be assessed in the same manner as taxes. To me this requires the procedural safeguards of the deficiency procedures. However, if the penalty is FBAR (31 USC section 5321(a)), the IRS can collect without due process because the Fifth Amendment has been overturned.
Allison Christians publishes more on the IGAs.
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2674435
Thanks for giving us link to Allison Christian’s latest on this, Shovel.
@George
That’s interesting what you say about some folks getting substitute returns. I hadn’t heard of this happening to expats before.
One question: did the IRS attempt to determine (or guess) non-stock sale income (e.g. employment income) of these people, or was the substitute return only focused on their stock sales?
If I’m correct, it appears that accounts under $50k need not be reported, and hopefully will not be reported by banks. I make a healthy living but have no accounts over that amount save a non-reportable (per treaty and IGA) retirement account. I owe no taxes to the US. Surely most US persons abroad are like me.
Which means this whole circus punishes me (no mutual funds, no company, thrown out of a bank where I had about 1500 euros) all for absolutely no gain to the US.
Tdott just on the stock sales
“I have no account >$50k”
My TD account is also under $50k; maybe that’s why they didn’t report me to CRA.
[About IRS preparing substitute returns]
“just on the stock sales”
Wow. I guess that’s the reason the IRS didn’t do it in my case.
The IRS had told me they might prepare a substitute return, for a year where they contradicted themselves on whether they did or didn’t have the return I sent. My response included an agreement to the idea of a substitute return AND included copies of my 1099 and 1042-S from Ameritrade. I never got that substitute return. I understand now that it would have been really useful to get it, but they didn’t do it.
Well, my 1099 and 1042-S included withholding. The IRS’s letter to me, and my reply to them, were at the same location where IRS data entry clerk Monica Hernandez was embezzling withholding from 1099’s. She hadn’t been caught yet. Her cohorts still haven’t been caught. No wonder they didn’t send me a substitute return.