FATCA is NOT about PROTECTING America’s Tax Base.FATCA is about EXPANDING America’s Tax Base into the Economies of Other Nations
Yesterday an article made the rounds with an interesting idea;
THE ONLY REFUGEES WHO SHOULD BE ENTERING THE UNITED STATES ARE THE AMERICAN REFUGEES WHO FLED OBAMA’S AMERICA…. WE HAVE THAT DUTY TO OUR FELLOW AMERICANS”
In 5 years I have never heard anyone come forward with this attitude. In spite of having no desire to go back myself, I do appreciate that somebody is finally showing some concern for us. It’s refreshing!
But they didn’t give up their citizenship because they all of a sudden became un-American; no, they did it because of a law that has turned living and/or working abroad into an expensive, onerous, bureaucratic nightmare for the ordinary American citizen.
FATCA and its ridiculous system has ensnared law-abiding American expats into a constant battle with the IRS, all over the day-to-day activities all citizens engage in.
A well-known citizenship lawyer clarifies that after years of confusion about tax, penalties, IRS programs and information reporting forms, to add insult to injury, FATCA is not even about tax! Read John’s interesting observation; it is our governments who did not understand what they signed by implementing the IGA’s and they need to reverse this before each country loses too much capital due to unfair citizenship taxation.
A comment from FATCA needs to go but unfortunately the FATCA refugees are never coming back
Thanks for drawing attention to #FATCA and #Americansabroad.
It has become clear that FATCA is is NOT about identifying American residents who engage in tax evasion. In other words;
FATCA is NOT about PROTECTING America’s tax base.
Rather:
FATCA is about EXPANDING America’s tax base into the economies of other nations.
"Thanks for drawing attention to #FATCA and #Americansabroad.It has become clear that FATCA is…" — John Richardson https://t.co/OY15EmerG1
— Citizenship Lawyer (@ExpatriationLaw) February 1, 2017
The United States believes that any person “Born In The USA” (and therefore a U.S. citizen) is required to pay taxes to the United States REGARDLESS OF WHERE THEY LIVE IN THE WORLD AND REGARDLESS OF WHERE THEIR INCOME IS EARNED. This requirement exists with respect to income earned outside the United States.
Think of it: the mere fact of a U.S. birthplace obligates somebody to pay taxes to the IRS for life! Somebody “Born In The USA”, who may have left the United States as a child, has a lifetime tax obligation to the United States.
The United States is currently expanding it’s tax base into other nations. It does so by hunting for people who (1) were born in the United States and (2) live in other nations. How is “FATCA Hunt” taking place? How does “FATCA Hunt” actually work?
In practical terms, the USA is forcing non-U.S. banks to “hunt” for people with a U.S. place of birth. Once identified their existence is reported to the IRS. The vast majority of people identified are actually citizens and residents of other nations. For example, on or about September 30, 2016 the existence of approximately 315,000 Canadian bank/brokerage accounts of (mostly) Canadian citizen/residents were reported to the IRS. Why? Because the account holder had a U.S. place of birth or were otherwise under suspicion of having a “U.S. connection”. Most of these reported do NOT consider themselves to be U.S. citizens at all.
Citizens of some European countries (example France) are not able to maintain bank and financial accounts because of a U.S. place of birth.
So, yes people are severing any possible ties to America. Believe me, if you were being “hunted” because of a U.S. place of birth, you would do the same thing! If severing that “U.S. tie” includes “renouncing U.S. citizenship” (which it often does), this is perfectly understandable.
“Never attribute to malice that which can be adequately explained by stupidity” or incompetence or ignorance.
The Common Reporting Standard is an idea whose time has come (unfortunately — I hate this idea). It’s something that is basically understandable and acceptable.
The USA of course decided to do this alone and came up with a nuclear weapon (FATCA) and did not realize, or rather did not care, that when this was entangled with CBT it would make life difficult for US Persons abroad.
The lack of enforcement methodology and the lack of financial returns on FATCA indicates that the whole idea isn’t to “expand the tax base”. It’s much more simple, and stupid. It’s a typical case of collateral damage. We are the collateral damage. Due to carelessness, ingorance, stupidity, whatever, but not from a vast scheme to tax the world (the US dollar is more effective).
This is in line with what was reported here previously, that the IRS doesn’t really want to know about all the small accounts in the world, and in fact cannot do much with that information. It is also in line with foreign governments, also incompetent, simply not understanding the consequences of FATCA on banks and on citizens. Again, stupidity, incompentence, carelessness, ignorance, lazy subservience to the USA, but not a conspiracy. The main reason other governments didn’t understand is that they are setting up CRS themselves and thought oh well this is just America doing it’s own version, AND that they don’t have CBT — people who aren’t implicated don’t know what CBT even means… intuitively the man on the street doesn’t think you’d continue to pay taxes in a faraway country you have no financial life in. CRS without CBT does make some sense (in the struggle against tax-evasion; again, I don’t agree with it).
FATCA alone, maybe. Give them the benefit of doubt.
But creating FATCA, while simultaneously reactivating FBAR, which theoretically does the same which higher penalties and lower limits, and hiding it from the affected, CANNOT be explained by stupidity. It must be malice, period.
At this point, it looks like a combination of stupidity and malice plus greed. Certainly I feel like a FATCA refugee, especially the few times I’ve had to travel as an “alien” to the USA to visit relatives.
Unfortunately, too many ‘regular’ Canadian citizens would rather be so-called ‘citizens of the world’ in opposition to the current US administration than fight for Canada’s sovereignty in their own back yard.
I got into a discussion with an acquaintance here who thinks Elizabeth Warren is the greatest crusader there is even after telling her that her own MP, Elizabeth May, is in direct opposition to Warren on FATCA. Although my acquaintance says she’s concerned about FATCA, she feels the existential threat Trump poses to the rest of the world is more important. I have to shake my head when I see so many Canadians losing their minds over things they can’t realistically do anything directly about, but when a threat comes to their door where they might actually have some say in, they do nothing.
They’d have to make targets of themselves, like Ginny, Gwen, Kazia and our witnesses have, when it’s so much easier to feel good about paying lip service to their ideals from their armchairs in the safety of Canada.
I couldn’t agree more with the analysis given here, that FATCA “is NOT about PROTECTING America’s Tax Base, ” but rather, “FATCA is about EXPANDING America’s Tax Base into the Economies of Other Nations.” It is for this reason that it is highly unlikely that anything will be done to repeal FATCA, even under Trump or the Republicans who promised repeal. They won’t do it, simply because as long as they are able to siphon funds out of other nations’ tax bases, they will continue to do so. The US is neither an ethical, just, fair or law abiding nation. Nothing in recent or past history or events would lead one to conclude differently. Accept it and stop dreaming that justice will be done and fairness and what is ethical and right will prevail. It won’t. Not with the U.S. The only way to stop this madness and extortion is to succeed in the Canadian lawsuit. A victory there will put a big dent in the mafia-like shakedown racket that the U.S. has been running with FATCA in relation to U.S. persons living outside of the U.S. The solution must come from outside, from an important country like Canada, being home to two million U.S. persons. Emphasis should be directed at Justin Trudeau’s Government and more media attention should be focussed on this matter, IN CANADA. Forget about anything ever happening within the U.S.
Unfortunately ,there are too many yanks at heart among the readership to give give up on that idea .I
believe your approach on the only realistic way to go
As Peter says,” Forget about anything ever happening within the U.S.” When I first heard about FATCA and FBARS, I still had some illusions about the US being a “great country” but no more. It is on a downhill slippery slope. Let’s hope the lawsuit prevails in upholding our rights and freedoms here in Canada. And hope the demise of FATCA then spreads around the globe.
@All
Is everyone aware that Paul Ryan has indicated they must deal with healthcare reform first and that they will not get to tax reform until after approval of the spring budget? IOW, not until summer will they even be talking about it…….
Even if any real discussions in Congress are months away it is never too early to think how to frame the debate. Two approaches that quickly come to mind:
1. Focus on the cost of useless and wasteful IRS regulations – it is a reasonable assumption that FATCA costs much more to the IRS than it brings in because the numbers we do know come nowhere close to IRS projections at the time this abomination became US law
2. View it as a marketing problem, and stress how it damages US trade. A comment by EmNotEx to the article “FACTA Needs To Go …” linked above ended with:
” . . . few regrets and heaps of relief having a US Certificate of Loss of Nationality (CLN) tucked away in a very safe place. The IRS can no longer expropriate our time, invade our financial privacy and tax our Canadian-earned income. The USA will no longer be the recipient of our tourist dollars either because there is no forgiving the US tax filing tyranny and the FATCA fear we endured”.
Bingo. And the cumulative impact is probably measurable, and adds on to the trade deficits that Donald Twump so hates, so dropping FATCA is clearly in America’s best interests.
@Ed –
Another line of argument is how FATCA and CBT make the US uncompetitive in foreign markets. US citizens are not playing on a level playing field when it comes to exporting US goods and services because of the onerous tax and reporting requirements imposed on US Persons, and not on French Persons, Australian Persons, or British Persons. Some of the testimony of Roger Conklin makes this point very well.
@Peter
I agree with you. The problem is that the whole world is dependent on the american economy.
I’m not sure who the author is or what smoke he’s blowing here. But I hold no hopes of ever waking up pre-FATCA again. We’ve come too far is this mess to try and untangle it. We’re all drones for the US tax system. Whey our batteries die, we are discarded (not without an estate tax, though) and they recruit more slaves. I’m sure this is what my great-great grandfather hoped for me when he was processed through Ellis Island.
@Jeffrey
True, we will never return to the status quo ante. FATCA has opened Pandora’s Box – but we’re still looking for hope among the ruins. IMO, the best we can hope for is CRS-like reporting on cross-border accounts only (along with a repeal of CBT). But this reporting would be on all account holders who are tax resident in a different country than the country they are banking in. AND in my best case scenario all persons would (either by treaty or by agreed international law) be treated as tax-resident in ONLY ONE COUNTRY AT A TIME!
Of course, I realise that this is a dream. But, like Pandora, I need to have some hope.
Well said, Karen!
@Karen and treated with one citizenship at a time.
@Ed
Welcome to Brock! I made the comment not from the perspective of delay but perhaps, being put off again and possibly never getting any tax reform, release from this dreadful nightmare. Good ideas about planning in advance.
@JeffreyB
The value of looking at FATCA as not being about tax but as confiscations of the assets of another country is to get other countries to see what is really going on here so they will wake up and regain their sovereignty by refusing to continue on with “complying.” At least to my mind anyways………..
“FATCA is not about protecting America’s tax base. FATCA is about expanding America’s tax base into the economies of other nations.”
No worries. I know affected Europeans here in the EU who have been more than happy to expand the extreme right-wing parties as retribution. I don’t blame them, like for like…
It is correct to believe that FATCA is not about the tax money they can raise. The IRS operates on all our fear that they will come after us and we know they will win because of being the IRS. We have seen the current commissioner willfully lie to Congress. We have seen Lois Lerner take the 5th in order to not tell the over site committee what she knows and they were each coerced into not granting her immunity and compelling her to talk. I understand that fear. They may be in congress but they all have to file a tax return and if they do grant immunity to anyone the IRS likes, the IRS will find a clause somewhere to rip them apart financially.
Your blogger was correct. First we must convince the people that they are in charge and then the government will follow. The late Chuck Colsen said it bluntly,”first you get them by the balls and their hearts and minds will follow”. We need millions of taxpayers, not the 51% who take benefits and determine what we the 49% will pay in taxes, but pay none themselves, to bury the congress with FairTax letters and cards and maybe someday well beyond my lifetime (I am 80) we will get the FairTax and the Americans abroad can relax and stay Americans and the feared and despised IRS will become a tax collecting body and not a Social Engineering, Brown Shirted, gestapho like government agency.
@ Wilton Jere Tidwell
“The IRS operates on all our fear that they will come after us and we know they will win because of being the IRS.”
But are the IRS winning? As I understand it, many so-called U.S. Persons living overseas are still not (and do not intend to be) compliant. Extraterritorial taxation can only expand so much; it has a point of diminishing returns…
I got my CLN last April and I am still angry and sad.
There are people living right here in the USA who have never filed s tax return and will never file one. They operate businesses that take in only cash and will not have a bank account or anything that requires a social sec number. If that is possible here then how would they know a citizen had left and lived somewhere else and lived as a national of another country with no intention of ever coming here even for a visit. It is those who have tried to be compliant who get their attention and their affection……
If every citizen on the mainland was required to file a tax return the IRS would be overwhelmed, so they mess with the ones they think they can get even more than they owe operating on the fear principle.
@Jadzia
It’s a real”Sophie’s Choice” for many of us.
and when you think about it- how did they come to include green card holders? What is the logic behind that? The green card holders who no longer live and earn in America- but make a living elsewhere- why do they still have to pay taxes to America? it is absurd.
@ Polly
I couldn’t agree more. You know me by now so you know why. Apparently, in the beginning, they did consider not including GC holders but then someone decided oh what the heck, it’s not fair but we’ll do it anyway because we can.
“and when you think about it- how did they come to include green card holders? What is the logic behind that?”
Logic? It’s because the US had to pay their countries of origin for the vast amounts those countries had spent educating these people who were now using their talents to work for the US, therefore when these people moved back to their countries of origin, there has to be some way to compensate the US’s expense that paid for educating these people.
This is logic, you see. “If A then B” doesn’t mean that “A” or “B” is true, it just explains the reasoning.
Now if you’d asked for facts instead of logic, I couldn’t help you. Judges are skilled at making up facts, I’m not.