Thank you to all those who worked so hard to make this hearing a reality, and in particular to witnesses Daniel Kuettel and Mark Crawford for putting a human face on the FATCA disaster. Here’s a brief overview of what happens during each section of the hearing. Longer and more detailed notes after the jump. See also the official webpage for the hearing.
| Time | Summary | Details |
|---|---|---|
| 14:36 | Quick introduction by Rep. Mark Meadows (R-NC-11) Meadows is the chairman of the Subcommittee on Government Operations |
|
| 15:32 | Testimony by Sen. Rand Paul (R-KY) Mentions that FATCA gathers far more information on foreign accounts than Form 1099 does on domestic accounts (I’ll call this “8966 vs. 1099” for short). States that he hopes to get FATCA repeal done as part of tax reform. |
Link |
| 23:07 | Opening statement by Meadows Mentions poor return-on-investment from money spent on enforcing FATCA. |
Link |
| 27:45 | Video by Donna-Lane Nelson Discusses her renunciation. Mentions that she’s a lifelong Democrat and not rich. |
Link |
| 30:45 | Meadows continues opening statement | |
| 31:30 | Opening statement by Rep. Gerald Connolly (D-VA-11) Connolly is the ranking member of the subcommittee. Makes incorrect statement that most countries tax worldwide income of citizens. Notes FATCA implementation difficulties. |
Link |
| 37:00 | Introduction and swearing-in of witnesses | |
| 38:30 | Testimony by James Bopp Lawyer for Republicans Overseas. Mentions Democrats Abroad survey showing FATCA’s effects, and that U.S. is one of only two countries which tax citizens abroad. See written submission. |
Link |
| 44:50 | Testimony by Mark Crawford American businessman in Europe. Mentions how Same-Country Exception (SCE) would not have solved his business banking issues. See written submission. |
Link |
| 50:10 | Testimony by Daniel Kuettel Ex-American who renounced to save his mortgage. Mentions that his daughter will eventually face the same choice he did, of having U.S. citizenship or having a normal life where she lives. See written submission. |
Link |
| 54:00 | Interstitial remarks by Crawford and Connolly | Link |
| 55:30 | Testimony by Elise Bean Former Carl Levin counsel. Says Forms 8966 and 1099 are equivalent, and that the number of citizens renouncing is not a concern because more immigrants are naturalising. See written submission. |
Link |
| 1:03:50 | Meadows questions Bean Asks about U.S. banks’ views of FATCA reciprocity, if revenue from OVDP was taxes or penalties, if suspicion of wrongdoing is sufficient justification for FATCA. |
Link |
| 1:10:30 | Connolly questions Bean Asks about FATCA implementation difficulties. Bean denies that FATCA is the problem, pointing instead to CBT and the lengthy renunciation process. |
Link |
| 1:15:50 | Connolly asks Bopp for response to Bean Bopp says that FATCA is causing problems for large numbers of people, not just renunciants; rebuts Bean’s earlier point about 8966 vs. 1099; notes that penalties are not tax penalties but FBAR penalties. |
Link |
| 1:17:34 | Recess Microphones left on, pick up some chatter at 1:22:00 regarding the Democrats Abroad survey. |
|
| 1:54:53 | Hearing resumes | |
| 1:55:25 | Rep. Jody Hice (R-GA-10) questions Bean Asks Bean how much revenue is lost to offshore tax evasion, how much FATCA recovers; Bean not familiar with JCT $870 million recovery estimate. Hice expresses concern at such poor results for potentially law which has both Fourth Amendment and separation-of-powers issues. |
Link |
| 1:59:45 | Hice questions Bopp Asks whether FATCA should be repealed or modified. Bopp responds proposed fixes (probably means SCE) don’t solve problems. Kuettel and Crawford also support repeal. Bean supports modification. |
Link |
| 2:00:59 | Statement by Rep. Carolyn Maloney (D-NY-12) Mentions membership in Americans Abroad Caucus, concerns about terrorism financing, disappointment at Treasury’s non-response to SCE (actually, Treasury said no). Notes she has introduced a bill to require SCE implementation. |
Link |
| 2:08:53 | Rep. Eleanor Holmes Norton (D-DC) questions Bopp and Bean Asks Bopp about SCE; Bopp says SCE will not relieve burdens. Asks Bean whether repealing FATCA and joining CRS would get same information; Bean unsure. Criticises Bopp, Crawford, and Kuettel’s call for repeal. |
Link |
| 2:16:00 | Meadows questions Bopp and Bean If nothing else, watch this. Meadows comes to the conclusion, based on Bean’s statements regarding 8966 vs. 1099, that FATCA was intended to circumvent the protections of the subpoena process. |
Link |
| 2:27:07 | Maloney questions Kuettel about SCE Kuettel responds that SCE would not have solved his problems because “the damage has already been done”, the banks are terrified of America, and that SCE still puts a burden on the banks themselves. |
Link |
| 2:31:10 | Closing statement by Meadows Rebuts remarks by Democratic members stating that FATCA addresses terrorism financing, noting that a Hezbollah sanctions bill he sponsored used different tools. Asks each witness to give him three suggestions for modifying FATCA if there is not bipartisan support for repeal. |
Link |
15:32 — Testimony by Sen. Rand Paul (R-KY)
Paul’s testimony is scheduled to go first, before Meadows’ formal opening statement, because he has another appointment at the White House afterwards. Starts out by discussing violation of Fourth Amendment; mentions Taxpayer Advocate report criticising FATCA. Mentions “double standard” (18:07): Americans overseas have balances and transactions disclosed under FATCA (on Form 8966, though neither he nor any of the other speakers mention the form number), while Americans at home only have actual income reported on Form 1099 (all the speakers know what a Form 1099 is). “Guilty until proven innocent” (19:32). Goes on to compliance costs (19:45), and then IGAs (20:11). Reiterates unconstitutionality of IGAs (21:08). Questioning begins at 21:40. Meadows praises Paul for bringing the issues to light. Paul responds that he hopes to get FATCA repeal into tax reform (22:30).
23:07 — Opening statement by Meadows
Mentions poor ROI of FATCA (25:00), and that shifting enforcement dollars from FATCA to general enforcement would actually result in a $1 billion revenue gain. Mentions burdens on trading partners (25:35), IGA partners’ anger at non-reciprocity (26:15), mentions renunciations (27:15).
27:45 — Video by Donna-Lane Nelson
Mentions that she is a life-long Democrat forced to renounce by FATCA, and that she needed to pay for a specialized accountant to help her with all the reporting requirements despite her limited income.
31:29 — Opening statement by Rep. Gerald Connolly
Claims that most countries tax worldwide income of their citizens (31:51). But even he admits that no one should have to renounce due to the burden of complying with the law (32:25). Claims that decades of FBAR non-compliance is evidence that some taxpayers “are not paying by the rules” (32:45). Mentions OVDP (33:45), lumping together taxes & penalties. Claims that 1099 has same information as 8966. Mentions Citigroup still offering accounts to Americans abroad (34:30). Mentions countries adopting CRS; claims that it gets information on “citizens”. Wants to find a way to protect FATCA.
My comments: some of Connolly’s incorrect claims — that most countries have citizenship-based taxation and that 1099 collects the same information as 8966 — and his lumping together of taxes, tax penalties, and FBAR penalties, were rebutted by later witnesses. No one, not even the Democrats, explicitly brought up U.S. non-participation in CRS.
38:30 — Testimony of James Bopp
Introduces self, mentioning role with Republicans Overseas. Draconian system of tax laws (38:54). Corrects Connolly, mentions that U.S. is one of only two countries with CBT. Ties territorial taxation of corporations to territorial taxation of citizens (39:30). Mentions FBAR (39:55). Illegality of IGAs (41:40). Mentions Democrats Abroad survey which found account closures, strain with non-American spouses (42:30). Mentions that people renouncing are ordinary middle-class Americans (43:00). Mentions Crawford v. Treasury (43:45). Closes by describing Americans overseas as ambassadors who promote American values and American products, but who are stamped with scarlet letter by U.S. laws.
44:50 — Testimony of Mark Crawford
Introduces self as businessman residing overseas with no other citizenship besides American. Mentions background with Clinton administration (46:00). Discusses effect of FATCA on small markets (46:30). Saxobank rejection of American citizens abroad, including Crawford himself, leading to Saxobank dropping Crawford’s business as well. Notes that Same Country Exemption (SCE) would not have solved his problems (48:30).
50:10 — Testimony of Daniel Kuettel
Introduces self as former American residing in Switzerland who was forced to renounce citizenship by FATCA. Mentions U.S. Army service, marriage with wife in Philippines, job loss in dot-com crash, move to Switzerland as “economic refugee”. Says he did not renounce to avoid taxes but that he enjoys paying taxes. Mentions failed efforts to refinance his condo (51:19), and that HUD, Veterans Affairs, and the Department of Justice did not help him (51:52). Mentions ongoing issues for his daughter who remains a U.S. citizen but not his son (52:45), and that she will eventually face the same choice he did of having U.S. citizenship or having a normal life in Switzerland (53:40).
In barely three-and-a-half minutes, he demolishes every one of the myths that Homelanders spread among why people move to other countries and why they renounce citizenship.
54:00 — Interstitial remarks
Crawford thanks Kuettel for his testimony and his service, jokes that Kuettel is the only witness who’s ever said he enjoys paying taxes. Moves on to Bean; opens with conciliatory tone, praising her for her work on the UBS scandal and describing negative effects of FATCA as unintended consequences. Connolly asks for statement from FACT Coalition opposing FATCA repeal to be entered into the record, jokes that only two types of people oppose taxes: men and women.
55:30 — Testimony of Elise Bean
Introduces self as presenting “another view of FATCA”, from her experience under Carl Levin. Discusses Cayman Islands credit cards, UBS and Credit Suisse undisclosed accounts and private bankers trying to get business in US. Mentions that both firms did not disclose many accounts. Mentions success at getting information from a bank in Liechtenstein which had opened accounts for a Florida businessman, who was caught by a whistleblower disclosure. Mentions OVDI, claims that 100,000 Americans have gone into OVDI and calls $9.9 billion “back taxes” without even mentioning the word “penalty” as Connolly did. Notes that FATCA does not impose taxes. Repeats claim about 1099s having the same information as 8966 and that Americans abroad are being treated the same as Americans at home.
Claims that FATCA’s rough early implementation was due to foreign banks being furious about their “secrecy” being attacked. Claims that CRS is doing the same thing as FATCA. Claims that Americans forced to renounce their citizenship are “a very small number of people” by comparing them to the number of people gaining citizenship (1:02:20). Closes by stating honest taxpayers at home have to give the same information to the IRS, and objects that “Americans who have the wherewithal to go abroad” should not have to do the same.
My comments: Bean repeats the usual FATCA-natic fallacy that large numbers of immigrants excuse harms done to emigrants. She takes it even further by trying to claim that the naturalisations demonstrate that the burden of U.S. tax compliance is fair. Well of course FATCA isn’t causing problems for most new citizens — their local bank accounts aren’t the ones being FATCA’ed. And even Bean’s fellow Democrat Carolyn Maloney later rejects the argument that a high ratio of naturalisations to renunciations means that there are no problems. No need for my comments on the rest, Meadows deconstructs it all very ably
1:03:50 — Meadows questions Bean
“Are you suggesting that the whole reason we’re doing this is because U.S. banks want us to do it?” (1:04:05). Lots of back and forth about whether Bean would change her position if U.S. banks did. Bean tries to draw distinction between the banks themselves and the banking industry associations which include foreign members. Meadows notes that the U.S. banks aren’t yet being subject to requirement for reciprocal disclosure, and that if and when they are they might start opposing FATCA. Meadows mentions that the money from the voluntary disclosure programs was 80% from penalties not taxes. Bean keeps trying to mention 1099s on domestic bank accounts. Meadows makes her answer whether she thinks that mere suspicion of wrongdoing should be enough to investigate a foreign account (1:09:00). Bean eventually says yes, says no to Meadows’ subsequent question about whether he should be able to read her emails on mere suspicion of wrongdoing.
1:10:30 — Connolly questions Bean
Implies that Meadows is only looking at extremes, goes to “opposite extreme” and asks whether an American should be able to open a bank account in Switzerland and never pay taxes on it. Admits nevertheless that FATCA has disrupted Americans’ lives, pointing to Crawford and Kuettel’s testimony. Attributes that to “the implementation was rocky”, asks Bean whether the implementation is still “rocky”. Bean responds that problems still exist. Connolly asks whether Bean admits that the other three witnesses have a point. Bean responds that their concern is misplaced because their real problem is CBT or the renunciation process (1:14:00) and that “FATCA does not require anyone to renounce their citizenship (1:15:00).
1:15:50 — Connolly asks Bopp for response
Bopp says problems caused by FATCA are not rare, pointing to the survey by Democrats Abroad. Rebuts Bean’s point about 1099s, noting difference between income reporting and balance reporting. Closes by noting penalties were not even tax penalties but FBAR penalties.
Followed by recess.
1:55:25 — Rep. Jody Hice (R-GA-10) questions Bean
Asks how much revenue is lost to offshore tax evasion. Bean responds $100 to $150 billion. Ask how much revenue is brought in annually because of FATCA. Bean responds that it’s too new since reporting only began in 2015. Hice responds with the Joint Committee on Taxation estimate $870 million, Bean says she wasn’t familiar with that estimate. Hice accepts JCT estimate, notes that FATCA recovers only a small proportion of the problem, and compares that to FATCA implementation costs and harms mentioned by other three witnesses and harms to U.S. allies. Notes issues whether FATCA is even constitutional or not, mentioning 4th and 5th amendment concerns due to FATCA demanding information which would normally require a warrant to obtain, as well as the separation-of-powers issues with IGAs, which aren’t authorised in the statute itself and never been submitted for Senate advice and consent. Calls it “not only disastrous as a law, but dangerous” despite any good intentions behind it.
My comment: even the JCT $870 million annual revenue estimate is probably still too high, and the IRS lowered its own estimates of FATCA revenue to not even one-tenth of the JCT figure before they gave up on making any estimates at all.
1:59:45 — Hice questions Bopp
Hice asks Bopp whether he agrees that FATCA needs to be repealed or majorly modified. Bopp states that fixes being proposed by “various individuals” (probably referring to SCE) don’t fix constitutional issues or implementation costs, because the banks still have to report.
Hice asks Kuettel, Crawford, and Bean for yes or no answers on repeal or modification. Kuettel and Crawford say repeal. Bean says no to repeal, tries to say something about courts, Hice cuts her off and asks whether she supports modification, Bean says yes.
2:00:59 — Statement by Carolyn Maloney (D-NY-12)
“I represent a district that has many Americans who love abroad”. Mentions that she has heard from many constituents who have had to renounce citizenship or who have been taken off of a spouse’s bank account. However states that she is sympathetic with Bean’s point about terror financing, drug trafficking, human trafficking. Does not support repeal but states that ordinary Americans should not be subject to same scrutiny as criminal tax evaders and money launderers. Mentions that she is co-founder of Americans Abroad Caucus and that due to that position she’s heard about negative effects of FATCA, including refusal to serve American customers. Says that it’s unacceptable that even one or two or two thousand people renounce their citizenship because of FATCA.
Mentions Taxpayer Advocate’s recommendation of Same Country Exemption. Mentions (in a way that suggests she thinks it’s good) that even with SCE, Americans abroad would still be required to file FBAR reports, so that the IRS would not lose access to their account information. Submits letter from members of Congress to Treasury recommending SCE in September 2015 and criticises lack of response. Mentions that she has introduced the Overseas American Financial Access Act to require SCE (see press release).
My comment: Maloney deserves credit for her early attention to banking issues caused by FATCA and her vote against repealing the Foreign Earned Income Exclusion, as well as her implicit rebuttal of Bean’s claim that the number of renunciations is not worthy of attention. However, Maloney is incorrect that Treasury has never responded to calls for SCE. They have responded — in the negative.
2:08:53 — Rep. Eleanor Holmes Norton (D-DC) questions Bopp and Bean
Mentions support for Maloney’s idea. Calls the problems “probable unintended consequences”. Expresses concern about Bopp, Kuettel, and Crawford’s responses to Hice on repeal, stating that the “evidence was overwhelming”. Asks “Do you really want no law on the book that goes after the bad guys” and accuses them of not helping. Bopp notes that SCE will not relieve burdens.
Norton goes on to ask Bean about the Common Reporting Standard and whether it shares the same information. Bean responds that CRS is based on FATCA but not identical. Norton states that it looks like the rest of the world is moving towards FATCA. Asks whether information of US accountholders would still be collected if Congress repeals FATCA but CRS went on. Bean doesn’t know. Norton criticises other witness for alleged unwillingness to negotiate.
2:16:00 — Meadows questions Bopp and Bean
Notes contradiction between Bopp and Bean’s testimony, with Bean stating that FATCA 8966 is the same as what US banks have to do with 1099s while Bopp disagreed. Bopp stands behind his position on 1099s, noting that 1099s only report interest, not gross receipts and withdrawals nor account value. Bean admits that Bopp is correct. Meadows asks why. Bean says “that was the way the law was written” and that subpoenas can obtain the same information from U.S. banks.
Meadows asks whether FATCA was intended to let the U.S. government get around subpoenas (2:18:23) and whether Bean wants to change her earlier testimony. Bean says that foreign banks have to file a form and US banks have to file a form. Meadows asks whether Bean would accept modifying the law to require foreign banks to only report 1099-equivalent information; Bean says no. Meadows criticises Bean for unwillingness to negotiate. Bean admits that “we are forcing [banks] through the 30% excise” (probably means threat of 30% withholding (2:20:19).
Meadows again asks whether Bean would accept foreign banks filing 1099s. Bean responds that the 1099 should be expanded to require FATCA-equivalent information from domestic acountholders (2:21:01). Meadows notes that he and Bean would never agree on that.
Meadows asks what Bean thinks the problems are with FATCA. Bean mentions two. States that penalties were unreasonable. Meadows asks for appropriate penalties. Bean brings up example of person hiding $21 million in Israel who was fined $8.3 million. Bean notes that penalties are scaled and sometimes the appropriate penalty is zero in some cases if you don’t know you’re violating the law. Bean mentions second problem is FBAR and FATCA duplication.
Meadows criticises Bean’s position as eliminating one form and waiving a few penalties. Asks why FATCA is only addressing a small amount of estimated offshore tax evasion. Bean responds that $150 billion includes corporate avoidance and evasion, while $30-70 billion is individual. Meadows asks Bopp, Crawford, and Kuettel to submit three recommendations for modifying rather than repealing FATCA.
2:27:07 — Maloney questions Kuettel about SCE
Maloney goes back to points about terrorism financing. Asks Kuettel whether SCE would have been sufficient to help him. Kuettel responds that it would not have, because “the damage has already been done” and the banks are still terrified of America, and that SCE still places burdens on the banks.
My comment: the full text of Maloney’s SCE bill is not yet available, but existing proposals for SCE either do not modify the bank’s reporting obligations at all (i.e. the individual is relieved of the requirement to file Form 8938, but the bank still has to file Form 8966), or require the customer to submit U.S. tax returns to the bank and for the bank to decide whether that means the customer is compliant (what Mark Twain likened to being strip-searched in the bank lobby).
2:31:10 — Closing statement by Meadows
Closing statement by Meadows. Says that this is not about terrorism financing. Compares his Hezbollah sanctions bill (H.R. 4411 to FATCA, stating that very different tools were used. Says that he does not like treating Americans abroad differently than Americans in the contiguous 48 states or Puerto Rico. Asks Bean to keep an open mind, and asks Bopp to think about replacement. Thanks Paul for attention to issue brought to his attention by citizens abroad who love the United States.
Conclusion
I can’t say it any better than badger said in a comment:
Tell us oh FATCAnatics and US CBT apologists how you and your tax laws and FATCA and FBAR benefited those outside the US who you slandered today? How did you support the children ‘abroad’? How did you support those with disabilities ‘abroad’? What healthcare or education did you provide us with? How about the roads we drive on? Post-secondary grants? Clean water to drink? Food or shelter?
Oh, you say we can’t qualify for anything – unless we live inside the US? Funny, in view of the claim that the US government benefits us wherever in the world we reside.
And you have the nerve to pretend that FATCA and FBAR and US extraterritorial CBT has not caused us harm and caused ordinary people and families to renounce? Or that even if that is the case, it is justified because you “meant well” and disingenously claim it was ‘unintended’?
Hmmm, what is ethical about lies, obfuscation and sins of omission coming from those sworn to serve?
Is it ethical to dismiss the harm to so many ordinary people in order to pursue your crusades and obsessions?
The FATCAnatics were all about pretending that their ends justified whatever harm their means have caused, and finding ways to make light of it – and apparently they’ve got no qualms whatsoever in playing fast and loose with the facts and abusing their control over the proceedings to upbraid those who don’t agree with them.
When Connolly gave his exaggerated example of the ‘extremes’ of egregious tax evaders in his attempt to dismiss the harms experienced by the witnesses, he basically said that it doesn’t matter what happens to the many ordinary people as long as they can pursue the few. And it is absurd and improbable that there are masses of US taxable millionaire and billionaires running loose outside the US, hiding among us ordinary folk, just waiting to be FATCAed.
After years of fighting, we are still missing a major point: our marketing is non existent. Our politicians (both here and there) work with notions, not facts. In all we do, we play their hand by looking at legal details while they claim the high ground because arguing about taxes or fiscal privacy is not politically correct nowadays. And today, nothing else counts to our nations of social justice warriors. International policy is decided by the number of likes on Facebook or how well you are doing on Twitter.
Every time we engage the press or politicians we need to use the terms “feodalism” and “slavery”.
If you have to pay to leave: America owns its citizens. There should be no argument about that, and nobody can argue that it is not wrong.
I am a slave.
Due to the circumstances of my birth, the last feudal state on Earth is claiming me as their property.
I have to work for them until I die, then my children will work for them.
The only escape is to buy my freedom, at an unaffordable price.
Instead of protecting me, my own country is helping them.
Citizenship Based Taxation by the United States of America is Slavery.
There is no place for slavery in the 21st Century.
The only way this will change is if we repeat this like a mantra. CBT is slavery. It is not a matter of how much needs to be paid, or what paperwork is involved, it is about the most fundamental freedom.
Right on, Anonymous by Necessity (and thank you for your earlier comment, http://isaacbrocksociety.ca/2017/04/27/reviewing-the-unintended-consequences-of-the-foreign-account-tax-compliance-act-video-and-summary-of-hearing/comment-page-3/#comment-7873787, that, for any of us, should be mind-boggling to think of re human rights lost with exceptional US CBT and FATCA!).
(And then there are those whose *lack of requisite mental capacity* would entrap them into US CBT and its consequences of, for some/most?, unaffordable yearly administrative cost for their US tax compliance and reporting. They cannot renounce for any abhorrent fee set by the US, nor their guardian, trustee or parent able to act on their behalf.)
Thanks for posting this, EmBee. Heitor David Pinto, as always, reviews in terms most can easily understand (except by most government representatives!).
@Anonymous
“Slavery” “Feudalism”
Communicated to FATCA Twitter Rally discussion group.
About that Bean comment that implies only the rich Americans can afford to leave and live abroad;
then why the exhortations from the previous White House for American youth to leave to study abroad?
‘First Lady Michelle Obama: “When You Study Abroad, You’re Helping to Make America Stronger” ‘
January 19, 2011
https://obamawhitehouse.archives.gov/blog/2011/01/19/first-lady-michelle-obama-when-you-study-abroad-you-re-helping-make-america-stronger
“Michelle Obama touted the power of study abroad programs as an important portion of U.S. foreign policy and encouraged youth from all races and socioeconomic backgrounds to pursue educational diversity.”
‘First Lady Urges More Americans To Study Abroad: Not Just For ‘Wealthy Students’’
http://washington.cbslocal.com/2014/03/25/first-lady-urges-more-us-students-to-study-abroad-not-just-for-wealthy/
Watch out, they just might like it there, marry someone and stay ‘abroad’.
And turn into a baby eating money laundering terror funding druglord taxevading cannibal – with OMG ‘foreign accounts” – like a foreign mortgage.
Cause guess what? They’re going to need to do some ‘foreign’ banking at some point. As we all know, that is the crime of ‘banking while ‘abroad’.
The Canadian brother-in-law obviously banked locally at some point in Canada naturally, as a Canadian citizen and resident, before he married into the White House first family, and who knows, he might even find he needs to do some Canadian banking at some point again.
Which would by the testimony of a FATCAnatic automatically make him into a person who would need to be FATCA’d – and suspected of potential baby eating cannibalistic terror funding money laundering tax evading drug lord human trafficking smuggling whose constitutional rights would no longer apply.
What other crimes will they conjure up to add to the rationale for FATCA? They say that it is about taxation, then they bury the tax part under terror funding, money laundering, drug trafficking, and now they’re adding human trafficking to the list.
Remember that Levin didn’t want FATCA to be about taxation only. He said the info was far too valuable to be confined only to the IRS and tax crimes http://maplesandbox.ca/2013/carl-levin-fatca-for-law-enforcement-national-security/ . And the FATCAfather Dick Harvey said it would be more palatable if rationalized as not just about taxation, but about other crimes “… Harvey suggests that tax authorities may want to increase coordination with the anti-money laundering/terrorist financing arms of government. Detailed customer due diligence may be easier to justify if it is being done for both tax and anti-terrorist/money laundering reasons…..”
https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2122491 .
The attempt to rationalize the collateral damage, the unacceptable treatment of innocent US citizens ‘abroad’, etc. that we saw coming from Bean, Norton, Connolly, is right in line with what Levin and Harvey wanted.
Maybe they could add the claim that the abuses of expats under FATCA must also continue (whether intentional or not) because it will also cure cancer, save the planet, or defeat Satan…
Who knows how outlandish the claims will get. Levin and Harvey don’t appear to have included human trafficking in their original list of things that FATCA is supposed to cure. But that doesn’t stop Ms. Norton from adding trafficking in bodies to the rationale proffered up at the hearing.
And so obviously they’re saying that if they burn us at the stake, who cares? If we renounce, who cares? Plenty more tax fodder where we came from right? They’ll just make more.
After reflection on the hearing and the press conference that followed:
Bopp sees the same constitutional issues with FATCA SCE as with the existing FATCA. He seemed to indicate that some people would not be helped by SCE (one lives in one country yet needs an account in another nearby country as example).
Perhaps of larger significance [my thought] is when FATCA reciprocity occurs as part of the IGA Agreements – then what of the constitutional considerations of a U.S. resident U.S. Citizen having citizenship of another country (dual citizenship)? Then that person would be discriminated against and have FATCA financial information collected that could not be collected from U.S. resident citizens (U.S. citizen only) outside of a warrant. ??
Bopp stressed the enormity of the cost of FATCA reciprocity on U.S. banks with the 210 odd countries of the world. He suggested that this would be unbearable. This then raises the question I have of the extent of the difference of work & burden required of banks for each of FATCA and CRS. I imagine there are more requirements (incl transactions reporting) for FATCA, more types of entities required for FATCA…what else and how much extra burden? Bopp suggest CRS costs would be unbearable as well.
This was one angle Bopp used: assumed application of FATCA reciprocity on U.S. banks as a key argument against FATCA.
The IRS Medic slammed Norton and Maloney [not by name] as mixing up FATCA and FBAR. FBAR is an important tool that may be used to financially cripple drug traffickers, terrorists, and child traffickers. Yet the Democrats used this intent and implied that it was for FATCA and implying that repealing FATCA would also repeal, to a crippling extent, an important tool against these behaviors. Meadows refuted this line as there is a tool box of such measures (he asked Maloney to yield for his clarifying questions which she did not claiming an important meeting she had to rush off to).
Bopp mirrored the Democrat mixing of FATCA and FBAR by highlighting the unreasonable fines of FBAR (50% account penalty) and mentioning these as if they had to do with FATCA, He did not mention the extra FATCA penalties on top of FBAR penalties (that would have been useful). In the press hearing he reiterated the excessive FBAR fines – ‘for not filling in a form’ even if no taxes are owed.
One analogy at the press briefing was this that FATCA was like stopping everyone on a freeway to check and see if there are people not wearing seat belts. If this went on long enough people would be found not wearing seat belts. A person in the room said the same of terrorists: if the road block was on for long enough that eventually a terrorist would be found. But, at what cost? The costs of a big big traffic jam and big expense of the search with money to track terrorists better spent elsewhere! ( Meadows made the point that of the return on effort of FATCA activity was far lower than other IRS activity suggesting that the money would better be spent by the IRS elsewhere.)
I am happy that the FBAR atrocity is still in focus and not just FATCA.
Meadows request for three proposals. Meadows ‘threw down the gauntlet’ when asking for 3 proposals from the witnesses. My take on the hearing is that this would include consideration of the preservation of the tax evasion curbing aspects of FATCA while alleviating unintended consequences on USP Abroad.
He said to report these proposals to him. I like such challenges. Will this happen? Then how will they be then handled? There is no further hearing to bring these forth. Would he then publicize proposals submitted?
Just thinking of how legal advice is deferred to in organisations. I imagine that such proposals will be put infront of Bopp before they get publicized. As stated above, Bopp does not see a way around the constitutional problems of FATCA/FATCA SCE. And he says he is not a tax expert. Therefore, with no work around of the constitutional issues of FATCA then Bopp may not have his own proposals.
This Request For Proposals is an opportunity to ask for measures to further highlight the injustices and highlight remedy for such injustices: Such as a move to TBT/RBT for individuals.
I’ll make a separate post on proposals.
Norton’s opposition was largely that you had better have a really good reason to change/repeal FATCA as it is quite an enormous task to get both houses of Congress to agree on anything; that there was good reason to pass such law in the first place. Her statement assumes a good standard of government and discussion and debate on the initial passage of FATCA.
Yet we know none of these happened and FATCA represents a relatively poor standard of government: as a “pay-for” tacked on to the unrelated Hire Act, undebated, far reaching yet without cost/benefit analysis, with legislation that could not stand and be implemented on its own, with Congress not returned to complete legislation on the shortcomings of the original FATCA, with international IGA treaties not submitted to the Senate for review and approval as required by the U.S. Constitution, with extortionate penalties threatened against the countries/banks of the world including key U.S. allies, with lie of promise of reciprocity, with reciprocity legislation not included with the original legislation all to have been voted on together, and with requirement of countries to approve the IGA’s and for their FATCA reporting to start without requirement of U.S. simultaneous reciprocation. With all this can’t the rug of Norton’s opposition just be pulled, while still respecting Norton’s point of opposition of any changes to bills passed by Congress if a good standard of governance were involved with the original passage?
Maloney made SCE sound simple. Yet pointed out in the press briefing that any change may mean going back to 110+ countries and asking their governments to approve of changes. Still lacking is any indication that the additional SCE requirements would make FFI happy about doing business again with USP. One remedy indicated by Democrats during the election campaign was to use FATCA powers against FFI who discriminate against USP. That would stir up an international hornets nest.
No mention of those countries (many poor and in Africa) that have not signed up to FATCA that may attract terrorists, drug traffickers etc.
An offshore bank or even your local bank in USA can cite any number of reasons to reject your account opening. So the discrimination suit against banks will not work. Already I have been rejected by various banks and brokerages that due to my US passport, I will be rejected by their compliance teams since they don’t want to deal with US citizens. Some of the bigger banks walked me to the outside door sorry your govt threatens penalties against us. We don’t even want anyone with a US company too. They have seen and read about fines paid by various banks and aware of that. What is really maddening the same rules also makes banks in US also quiver and not let any non US resident open up a bank account or brokerage account there unless you lie on your application and make sure never to sign on to internet banking without a US IP address or they will catch on to you and close your account.
CRS is here to stay. It was done by common agreement and it targets exclusively offshore accounts that were mostly cleaned up by the European Savings Directive. It is expensive and already judged inefficient but it is playing a role in dissuading ordinary people to have accounts just across the border. At a higher level, it is too easy to bypass as you only need a handful of non participating countries to hide the ownership of your money. The best one, of course, is America itself, which has always been the tax haven of South America but which is now attracting people from all over the world thanks to the lack of transparency of some States companies law.. and the pressure from CRS. Principally because of that, and with the utmost hypocrisy, America will never join CRS.
FATCA was imposed to banks under extreme duress, as a punishment for doing to America exactly what America has always been doing to the rest of the World. It is a system that breaks hundreds of laws in every country in the World (yes, even the North Korean state bank participates, although they probably don’t have much information to send) but has been accepted because it was a politically correct notion and leaders around the world had been waiting for the first excuse to lift banking secrecy. It was convenient, but it is still, of course, universally hated and most countries are getting wary of America’s costly and one-sided extraterritoriality. FATCA will not disappear (that would be losing face, which politicians are not fond of) but it will be seriously watered down because beyond scaring a handful of perfectly law abiding citizens to commit financial suicide and comply, it has actually not been terribly effective for the US and other countries will start using it as a bargaining chip in their international negotiations.
The “watering down” is an opportunity for the expatriates as long as we send the right, clear and unequivocal message. It has to be short and to the point and, dare I say it, it has to show “gassed babies”, not forms and regulations. America is acting like a feudal state, keeping its citizens under servitude whith no possible refuge. That should be easy enough to show. If we can get Trump to see it, maybe he will send a MOAB on CBT, FBAR and FATCA.
You must have noticed the complete absence of anything related to expatriates in the White House tax reform questionnaire so it is urgent that this message was sent or we will miss the opportunity. Please, whoever is in contact with our friends at Republicans Overseas, tell them it is the time to use the S word with their friends in Washington. I can’t believe people are still mistaking worldwide taxation for citizenship taxation so we are obviously not being clear enough: other countries tax their residents over their worldwide income, America applies feudal servitude to all its citizens. We are slaves because we have no escape, no choice. It is not the same.
My short story was just a story but every element of it is true. America actually granted citizenship to Vietnamese war babies born of love, lust or violence. Now they are slaves and escaping to Australia as “boat people” refugees will not save them from their new master.
@Anonymous by necessity perhaps you missed the part in the hearing when Meadows said that he believed that he had the bipartisan support to repeal FATCA. Also this week, Rand Paul signed on as cosponsor to a bill to provide territorial tax for US citizens.
Any proposals for Meadows.
@JC I did not hear that part about Senator Meadows that he had bipartisan support to repeal FATCA. CBT repeal is one other matter that I am glad Senator Rand Paul signed on but I don’t think it will fly with the compliance condors lobby. Think of it their entire industry will be out of jobs and would have to only work with US residents and there are many working overseas with families whose bread and butter are US citizens like us residing outside US. They would have to move back to USA and they will come and attack any bill that deals with the repeal of FATCA and CBT. I pray for the repeals to happen too just like you all but I doubt the condors will let it ever happen. I think this needs an executive action by Donald Trump to make it happen or congress will keep on toying with it and then casting it aside. My taxes are not as much as my CPA fees to keep me in compliance. But I am out of bank accounts option due to being denied based on US passport and I can’t start a new business with any foreign partner as they would not let themselves be scrutinized by IRS or by their own banks. You will find many banks and brokerages strangulated by not only FATCA but also Dodd-Frank Act another monstrosity of US extra judicial laws. Buying a foreign mutual fund is a big no no for us and US mutual funds are off limits to US citizens based overseas. I often wonder if the US Congress is hell bent on doing all kinds of injustice to US citizens based overseas. Weren’t we all supposed to be protected by the US constitution instead of restrictive laws to make sure we are on tight leash everywhere on the entire planet. There were checks and balances on abuse of power as guaranteed by the US constitution and these laws are evidences of abuse of power.
I too am frustrated after just reading the summaries and watching up to Ms. Bean.
First, why hadn’t Senator Meadows known of FATCA before his visit to Isreal? ACA testifies (or do they just present?) yearly at such hearings, do they not? How about the Annual Report to Congress that the IRS Taxpayer Advocate Service submits?
My point is not to knock Sen. Meadows, but this is the second time I have heard that legislators do not know of FATCA. The majority simply do not know of it despite the efforts of many.
I have serious doubts that, whatever the intent, the hearing, all hearings on The Hill are anything but ritual in nature. How many other Senators where present or at least had staffers there? Will most other senators still be just as in the dark as Meadows was before his trio to Isreal?
All witnesses swore an oath to tell the truth yet Ms. Bean clearly did not and was caught not doing so. What is the penalty for breaking her sworn oath? None that I can see. So, is swearing to tell the truth also just a ritual?
I serioulsly doubt Connolly will say anything different after the hearing than he did at its opening. Bean clearly has no interest in the laws FATCA breaks nor the consequences of it other than it is hoped to bring in more revenue.
There was a press release but has any news organization picked up on it? Can we find it mentioned on CNN? NBC? ABC? How about in the NY Times? Chicago Tribune? LA Times? I did find via a Google search a reference in the New American but what is their readership?
Don’t get your hopes up.
@JC – “He said to report these proposals to him. I like such challenges. Will this happen? Then how will they be then handled? There is no further hearing to bring these forth. Would he then publicize proposals submitted?”
H.R. 2054 calls for repeal.
From explanations at govtrack.us I get the impression that:
– if (as a result of discussions with Bopp, the Democrats, the Republican moderates, etc,) the Subcommittee on Government Operations wants to propose something other than repeal, and they think they could get the votes, they could amend H.R. 2054 accordingly, and it could then be brought to the floor by the Ways and Means Committee.
But I may have misunderstood.
@Harrison: Bean made it very clear under questioning by Meadows that the Constitution is just a pesky little irritant that should be ignored in her FATCA Attack. She wants FATCA extended to a domestic DATCA (which I have been predicting to my American family and friends for five years).
“The illegal we do immediately. The unconstitional takes a little longer.” (Henry Kissinger)
Meadows is a congressman, not a senator.
@JapanT
When compiling Twitter address list for all of the members of the Committee, I decided I wanted to see how each voted on the final roll on HIRE act. I did not see Meadows name as well as several others. Even some who did might not actually have realized it was in the bill- another omnibus bill. Not trying to say it’s okay but if not involved in any Committee’s FATCA would touch upon as well as not being a member of Congress at the time the bill was passed, I can understand why Rep Meadows did not know of it. I can send the list when actually on computer later today. thanks
@badger
There are a number of websites out there that explain the differences between CRS and FATCA, but this particular comment stood out to me:
“There is currently no de minimis limit under CRS. FATCA, by contrast, only kicks in for individual accounts with balances exceeding $50,000 – companies have different limits.
These add up to significant differences in scale. For example, the volume of U.S. persons reported under FATCA rarely exceeds the low thousands; whereas a major UK bank has estimated that 7% of its customers (several million accounts) will be reportable under CRS.”
https://tax.thomsonreuters.com/blog/the-differences-between-fatca-and-crs/
Unlike Ms Bean, Carl Levin didn’t mince words when he expounded on FATCA’s weaknesses here, page 172 and 173:
https://www.hsgac.senate.gov/download/report-offshore-tax-evasion-the-effort-to-collect-unpaid-taxes-on-billions-in-hidden-offshore-accounts-5-14-14-update
@JC
“Maloney made SCE sound simple. Yet pointed out in the press briefing that any change may mean going back to 110+ countries and asking their governments to approve of changes.”
Why would the US start playing nice now? Just tell the other countries what to do and threaten them with sanctions if they don’t cooperate.
@Patricia Moon – Meadows wasn’t in the House in 2009 when the HIRE Act was passed, according to http://www.citizen-times.com/story/news/local/2017/04/01/mark-meadows-has-taken-chances-rapid-rise-power/99865648/
He has shot up the ladder, and shows no signs of stopping. A very talented politician, without doubt.
IMO, if it suits his agenda to get FATCA amended, that perhaps makes it all the more likely to happen. Fine with me.
I don’t believe Meadows was a member of Congress at the time FATCA passed.
@ Blaze
“She wants FATCA extended to a domestic DATCA (which I have been predicting to my American family and friends for five years).”
Yes she did say that but her off the record remark to Rick Adams makes me think there is something in Ms. Bean that, as open as she appears to be to the idea of hoovering up everyone’s financial data with a DATCA, she at least would not resist a push to RBT. After all she’s FATCA’s midwife so of course she wants to defend her baby but CBT wasn’t her baby so if they ever get around to the process of adopting the RBT baby Ms. Bean might even move to the side of the good guys working to make that delivery a success. I’ll just repeat what Rick Adams wrote in case anyone missed it:
@Blaze Banks in USA already suspect and report anything to IRS. Try taking out 10,000 $ in cash from your bank account in USA and chances are teller will call the police up. Also try wire transferring even 8,000 $ to your bank account in USA from your Canadian or overseas account. You will get an SAR (suspicious activity report) from your bank that they have reported this amount to US Treasury. You will also get CTR (currency transaction report if you deposit cash 2-3 times a week. The minimum could be as low as 3000 $. Your accounts are checked by your banks in USA for any suspicious behavior. Now with Miss Bean’s action they will report all transactions in and out not just what they feel suspicious.
Welcome to America. Land of the police state. People and even foreigners all over the world are monitored already by NSA as revealed by Edward Snowden in 2013. You guys are just waking up now! I was disgusted by what I saw and left years ago for that reason even before Snowden came into the picture revealing to the world what a wonderful country US has become thanks to its govt.
I never renounced which is my biggest regret now but now I am seriously thinking about it. I think Patricia and iota both made me realize what I am missing . To live free is one of human beings basic concept and US govt is taking our rights away slowly piece by piece. Both parties are at fault here not just the Democrats. They are destroying the world by attacking countries after countries and making more terrorists and then they take away our rights as guaranteed by the Constitution by restrictions on banking, living overseas, watching and monitoring our phone calls and our investments so the plantation never runs out of slaves.
FATCA was signed 7 years ago and now suddenly people are realizing it’s impact. It caused a major shift in my life in 2011 and I was like what is this law as I saw how destructive it is. I was hoping for its repeal but it was a pipe dream. As time passed by, I saw more problems and more banks denial and brokerage accounts being shut down to US citizens as not even foreign banks at the time realized its impact and were laughing it off and shrugging it saying it’s not going to work with us. But then in a few years they were all denying services to us citizens and us citizens started feeling the pain. Those lucky ones who got out early are now rejoicing.
FYI, the destruction really started with the passage of Patriot Act in 2001 a week after the September 11 attacks. It gave sweeping powers to US govt to threaten banks worldwide and also monitor people all over the world. In 2004, FBAR penalty was imposed as they discovered more Americans living overseas and not reporting their accounts as most CPAs were not even aware of FBAR forms until recently after 2010. Recent immigrants to USA who had signed joined accounts with their relatives overseas were also impacted and fines were imposed heavily with no justification as I was reading some background history of what led to FATCA.
To alleviate unintended and burdensome consequences of U.S. government policies on U.S. persons overseas, the following are proposed in response to the recent request of Congressman Mark Meadows:
Shift to territorial/residence based taxation for individuals.
Repeal FATCA.
Limit FBAR requirement only to U.S. residents.
Outlaw barring of financial services to U.S. persons based on an overseas address by U.S. based financial institutions.
Allow Americans who had renounced U.S. citizenship because of FATCA opportunity to regain citizenship at $0 cost.
Provide all U.S. designated U.S. persons resident overseas, including those considered “accidental”, opportunity to renounce U.S. citizenship/terminate a Green Card at $0 fee and $0 tax requirement.
“Allow Americans who had renounced U.S. citizenship because of FATCA opportunity to regain citizenship at $0 cost.”
They’d be lucky. I’d charge at least £500K to even consider accepting US citizenship again.
Looking at the hearing, I am less optimistic now than I was when Trump was elected. We are in need of a paradigm change and we are instead getting bogged down deeper into the details of the existing, inhumane system. Mr Bopp was asked to give ideas on how to make FATCA work?
This is not happening.
The one thing we could ask for with a better chance of obtaining it, is an amnesty. A “US person” should be allowed to lose their nationality without any associated costs or requirements. In fact, if we ever got the UN to read our complaint, they would have to agree with it, no matter how much they are dependent on the US, because that freedom of choice is a basic human right in their own list.
An amnesty would involve pretty much no legislation at all and could even be enacted via a simple executive order. That would solve almost all of the problems of the accidentals and give a real choice to those who have a foot in each country. More importantly, it could save face for all involved. We would see it as a long deserved release and they would see it as getting rid of the unpatriotic bastards.
The technical details could remain very simple: set a date in the near future, and whoever has been living abroad for more than one year on that date can elect to lose their nationality at a small cost (they can even keep the existing fee if they want, freedom is worth more) with no questions asked, no backdated tax returns, no FBARs and no exit tax. Sign the paper and you’re out. If you ever want back in, you’ll have to join the queue or use the privileges of whatever other nationality you may have or acquire in the future. Keep the window open for six months, advertise it heavily (through the banks, it’s cheap!) and whoever stays in will at least do it knowingly this time.
The cost to the US would be negligible and they could give all these empty seats to eager immigrants.
An amnesty! An official pardon – for what crime?