[May 18 2017 update: I now include in this LINK the recommendations of Elise Bean, a long-time FATCA supporter and witness at the FATCA hearing.]
On April 26 2017 there was a Hearing at the U.S. House Subcommittee on Government Operations dealing with the harm caused by the U.S. FATCA law imposed on the world.
At the conclusion of the hearing, Chairman Meadows asked the Witnesses for “three recommendations on how to improve the legal framework set up by the Foreign Account Tax Compliance Act” (FATCA).
My personal-only interpretation of this request is that the Chair is saying something like: “If FATCA has to be replaced with something else, can you recommend three compromise laws/approaches that would achieve the “good” aims of FATCA but minimize the harm, and which would receive bipartisan support?”
— I enclose as a link the May 15, 2017 submitted personal recommendations of Jim Bopp, a witness and attorney for the U.S. FATCA/IGA/FBAR lawsuit currently pending in United States Court of Appeals for the Sixth Circuit (I am one of the plaintiffs).
From the Bopp text:
“This letter provides three recommendations on how to improve the legal framework set up by the Foreign Account Tax Compliance Act (“FATCA”).
First, we recommend that any taxation of overseas Americans comply with established United States constitutional principles and international legal norms.
Second, we recommend that the current laws be repealed in their entirety [Bopp goes on to include specifically FATCA, IGAs, FBAR, and citizenship-based taxation] and certain proposals rejected.
Third, we recommend that Congress enact a 1099 requirement on foreign banks, established by treaty, as long as this complies with established United States constitutional principles and international legal norms…”
—- Appended to the end of the Bopp recommendations are my personal thoughts as a separate submission: I support, as does Mr. Bopp, the repeal in entirety of FATCA, FBAR, IGAs, and citizenship-based taxation (the latter to be replaced with territorial/residence-based taxation), do not support any “watered-down” FATCA-replacement legislation whatsoever — which I believe will continue the harm, and offer suggestions on changing U.S. citizenship laws in the very limited context of FATCA harm. In hindsight, I now feel that I should have gone further in my recommendations for citizenship law changes.
—- When I receive the recommendations of strong FATCA supporter Elise Bean, a hearing witness, I will post.
— Ongoing developments: Republicans Overseas has initiated an intensive lobbying campaign with Congress to kill citizenship-based taxation and replace with territorial taxation. There can be no promise of success, but these people are trying. I am not aware of similar efforts on the Democrat side.
Slowly dawning on me during the course of this discussion: this situation might be what it takes to convince my children it’s worth taking the trouble to renounce.
Silver linings. 🙂
@JC said (of Bean’s suggestion to punish non-US banks who refuse accounts to USCs by banning them from buying US Treasury bonds):
“There are problems with this U.S. Bond sales barring proposal. Relatively large banks buy U.S. Treasuries. Small banks and other finance industry players may not buy them. So would this then be a green light for relatively small banks to discriminate against U.S. persons? Another problem is that while discrimination may be clear-cut for savings and checking accounts, for liability instruments such as mortgages there may be many factors a bank considers before offering such financial products.
Overall it sounds like another way to turn banks negative on America and Americans with potential for additional unintended consequences. There are potential negative consequences on the position of the U.S. Dollar as the reserve currency in the world. Added restrictions and rules on using U.S. Dollars provides incentives for global banks to buy bonds from other countries, and to use other currencies and payment systems other than SWIFT.”
Control of the purchase of Treasury bonds seems to be something of a hot-button issue for Bean:
http://www.datacenterdynamics.com/content-tracks/design-build/apple-could-cut-tax-with-reno-data-center-equipment-warehouse/98265.fullarticle
“They” (Ireland) doesn’t want to pay taxes to the US presumably?
“They don’t want to pay taxes, but they’re using the US financial system to benefit from our laws, security, productivity and all the rest of it.”
Is she out of her mind?
She’s not talking about Ireland. She’s talking about Apple.
Original Bloomberg article at https://www.bloomberg.com/graphics/2016-apple-profits/
Ok, thanks iota.
I still think she’s out of her mind though – probably driven crazy by the prospect of Ireland aiding and abetting US corporations in avoiding US tax while holding so much US debt.
She’s talking about US debt owned by Apple, not the Irish government.
It would show up in US Treasury figures as US debt owned in Ireland. Not US debt owned by Ireland.
@iota
Gotta love those silver linings.
@iota
I’m talking about Ireland being the US’ third biggest creditor, but I’m no doubt in over my head at this point
Bean’s comment about rejigging FBAR is in order for the IRS to get around/evade the limitations due to it being non-tax info vs. tax info (Title 31 vs. Title 26) – and very ominous considering what an unconscionable and unwarranted and unjustifiable threat it already represents to ordinary people – who contrary to the original intent of the FBAR, are being lumped in with moneylaunderingorganizedcrimedruglordgangterrorfunders and now in the sucommittee hearing, with human/childtraffickers. I am sure that BEAN wants to get around any current limitations in using/disseminating FBAR info, SOL, enforcement (ex. Canada US tax treaty does not allow for assistance in collection of FBAR penalty) etc. – which FATCA was partly designed to address. The IRS promised (and spectacularly failed to deliver ) a *“comprehensive marketing strategy” (see ex. pg. 16 of article by Sheppard cited below) to disseminate information to make taxpayers aware of the existence and provisions of the FBAR if it was given enhanced FBAR enforcement powers, penalties, etc. to wield by Congress; ex. the ‘newer’ NON-willful penalty under FBAR (created/enabled 2003/2004) – see pg 18 of *EVOLUTION OF THE FBAR: WHERE WE WERE, WHERE WE ARE, AND WHY IT MATTERS By Hale E. Sheppard http://www.hbtlj.org/v07p1/v07p1_sheppard.pdf . Read the Sheppard article in entirety to understand what I barely touch on.
Levin, Bean’s mentor/previous employer was also clear in his public statements that he was not happy with the limitations of the FBAR;
See his complaints in his; ‘STATEMENT OF SENATOR CARL LEVIN (D-MICH) ON INTRODUCING THE STOP TAX HAVEN ABUSE ACT
September 19, 2013
https://www.hsgac.senate.gov/download/?id=065D6E9F-4F48-4101-B0EA-898AF18AF1F3.
There is no doubt that Bean and the rest of the FATCAnatics want more power and less limitations re the FBAR along with the mission creep that has seen the FBAR go from its original purpose – intended as a tool to be used against identified organized criminals, to now being characterized in this subcommittee hearing as a tool to be wielded against terrorists and child traffickers. We can and should expect more of the same – the sanctification and rationalization of the persecution of ordinary people outside the US on the flimsy non-economic basis of their US parentage/birthplace, and the conflation of ordinary people with terrorists and other heinous criminals in the conscious FATCAnatic and extraterritorial CB apologist attempts to deflect attention from the now very conscious and deliberate harm being done via FBAR and FATCA and to rationalize the continued dismissal of the entirely verifiable claims of actual real and present harm being done by the US to people like the witnesses who testified and many many others, as well as the denial by the US of their equal constitutional and other rights.
I repeat again what the FATCAfather Harvey advised and supports;
“…..Treasury and the IRS should vigorously pursue agreement with other major countries as to the proper customer due diligence procedures. In pursuing that goal, the tax arms of government should consider further joining forces with the anti-terrorist-financing/money laundering arms of government.
The goals of each arm of government are similar,12 and it may be easier politically to justify detailed customer due diligence if it is being done for a joint purpose (that is, both tax reasons and anti-terrorist-financing/money-laundering reasons). ….”
http://www.taxhistory.org/www/features.nsf/Articles/7FE9806866554F5985257A5500712E6D?OpenDocument
Note this related issue of another less acknowledged abuse inherent in the FBAR;
The AICPA article at the link below is very interesting and well worth reading in entirety because it appears to identify another important potential Achilles Heel of the FBAR;
Analysis of the FBAR and IRS failure to meet terms of the APA ‘Administrative Procedures Act’;
ex.
“…..Because FBAR penalties are imposed under Title 31 of the U.S. Code and not the Internal Revenue Code, the assessment and collection procedures for FBAR penalties are different than for tax penalties, and those procedures may be more susceptible to challenge based on Administrative Procedure Act (APA) violations………..”;
from;
‘Developing a strategy to fight FBAR penalties’
By Larry R. Kemm, CPA, J.D.
May 1, 2017
http://www.thetaxadviser.com/issues/2017/may/developing-strategy-fight-fbar-penalties.html
As an aside, the AICPA site is very useful, (ex. http://www.thetaxadviser.com/issues/2017/apr/planning-nonresident-entering-us-tax-system.html ) and they have actively submitted advocacy letters to try and get the IRS/Treasury to address some of the glaring and unwarranted mistreatment of those living outside the US ex.
http://www.aicpa.org/advocacy/cpaadvocate/2016/pages/us-canada-cross-border-accounts.aspx
http://www.aicpa.org/_catalogs/masterpage/Search.aspx?S=fbar
http://www.aicpa.org/_catalogs/masterpage/Search.aspx?S=fatca
It doesn’t mean the Irish Government is the third biggest creditor. The writer of the article appears to be basing his statement on a table showing foreign-owned debt, by country, such as Table 2 in the CRS report at https://fas.org/sgp/crs/misc/RS22331.pdf. Other charts in that report show the percentage within each country of US debt owned by private foreigners, and US debt owned by official (governmental) foreigners.
Correction. Country-by-country information on percentage owned by private/governmental investors is not available, according to a note on Table 1 in the CRS report at https://fas.org/sgp/crs/misc/RS22331.pdf. See p. 3.
‘Did you know that Canada recently passed a similar law for air travel, but is strictly enforcing it?’
http://www.cic.gc.ca/english/visit/dual-canadian-citizens.asp#background
“Why you must travel with a valid Canadian passport
[…]
For Canadian citizens, including dual Canadian citizens, you must present an acceptable travel document that shows that you are a Canadian. This means you need a valid Canadian passport (or a Canadian temporary passport, or a Canadian emergency travel document) to allow airline check-in staff and border officials to confirm that you are Canadian.”
One time airline check-in staff recognized a Certificate of Canadian Citizenship. So who are the people who don’t recognize it, would they be border officials?
Back to this:
“Exception: If you are an American-Canadian dual citizen with a valid U.S. passport, you don’t need a Canadian passport to fly to Canada. However, you will still need to carry proper identification and meet the basic requirements to enter Canada.”
There was no announcement of such an exception when they first announced the policy, and they didn’t answer my question. But it’s still weird. If an Indian-Canadian dual citizen carries proper identification and meets the basic requirements to enter Canada, why are they forced to risk being arrested in India if India’s government catches them carrying two passports? They need the exception more than American-Canadians.
http://www.cbsa.gc.ca/travel-voyage/td-dv-eng.html
Hmm, it doesn’t seem to allow Canadian citizens to be visitors to Canada. We’re only allowed to be returning residents. I guess that’s consistent with the ability to sponsor my wife for immigration but she was denied a tourist visa because the Canadian government doesn’t want to let her go home after visiting.
Bubblebustin says:
“@iota
Gotta love those silver linings.”
It’s not that silver, Bubblebustin. If I can persuade them to renounce, it will cost $4700.
All because the “US passport to enter” law (the one you would like to see enforced more strictly) forced me to register them as US citizens.
I said:
And no explanation has been offered, so let’s see if I can figure this out because I’d really like to understand why anyone would think a law forcing expat USCs to register their children as US citizens should be strictly enforced.
Canada’s reasons for introducing a “enter Canada only on Canadian passport” for Canadian citizens are cited approvingly. Taking that as a clue: Canada basically says it’s because a Canadian passport is the only way to prove citizenship and claim right of entry.
But that can’t be a reason for forcing a USC to register his/her children as US citizens and get them a US passport: a person who wants to enter the US on the passport of the country of their birth, be they three or thirty-three, is asking to enter as a visitor; they’re specifically _not_ claiming a citizen’s right of entry.
So what do you think is the reason for the law, and why do you think it should be enforced strictly, Bubblebustin? I’m trying to understand.
@iota
I might have missed the part where you said whether your children were born in or outside th US.
I was told by a border officer that the reason why a US citizen must enter on a US passport is because if they don’t they will be treated as a visitor and subject to those limitations. If the US enforced that law then everyone with a US birthplace could enter the US on any passport they want.
‘All because the “US passport to enter” law (the one you would like to see enforced more strictly) forced me to register them as US citizens.’
You should have not brought sufficient documents with the applications to register them as US citizens, so the applications would have been rejected. If ever there was a way to prove why a non US citizen doesn’t have a CLN, that rejection ought to do it.
If you were a US citizen traveling to the US with small children and you were not yet naturalised as a citizen of the other country, it would have made sense to register your kids for US passports regardless of where they were born so that they could travel together with you to the US all on US passports. People did it in the old days without blinking an eye. Fatca of course changed all that.
Now US parents with children born outside the US (even adult children) are having to never travel with their kids at all to the US in case some border guard asks questions.
@Bubblebustin
Thank you for your reply. My children were born in the UK. I don’t quite get what you mean when you say that if the law were strictly enforced, those with a US birthplace could enter on any passport they want.
It doesn’t say “This only applies to USCs with US birthplace.”
Most born-abroad children whose birth gets registered, are probably registered willingly by parents who actively want them to have US citizenship. Those who don’t want to lumber their children with USness are more savvy nowadays, and wouldn’t dream of innocently applying for a visitor’s visa for the children. If they did make that mistake, I see no reason to think that they wouldn’t be told exactly what I was told, and told to register the children as USCs and buy a US passport for them. I don’t really see how a consular official could legally do otherwise.
Personally, I think no oneshould have US citizenship forced upon them. Strict enforcement of US law is unfortunately totally at odds with that view.
Norman, please stop telling me what I should have done. Of course I didn’t carry proof that the children were US citizens. They asked me, I told them, they recorded the births and issued the passport. It was 1975. How was I supposed to know it was going to turn out to be such a mess.
Believe me, you can’t reproach me as much as I’ve reproached myself.
I’m out.
“Of course I didn’t carry proof that the children were US citizens. They asked me, I told them,”
Wait, what? They believed you? Maybe you can still get their decision revoked, since you weren’t carrying proof.
In recent comments I was commiserating with you not blaming you. There’s a ton of stuff I should have done differently too, if I could have guessed what was coming. But this time my suggestion is serious. If the consul believed an oral statement without proof, it should be possible to overturn the consul’s decision.
I hope you haven’t left, Iota.
I only asked where your children were born because I too put my non-US born son on the US’s radar by making the uninformed decision to register him with the US consulate. In his case, he actually went to live in the US at the age of 18, where he met a nice lady and had two childen. They have since all moved to Canada and welcomed a third child. They are my silver lining and why I fight this fight.
I don’t see anything wrong with a country requiring its citizens to enter their country on the appropriate passport. There are all kinds of legitimate reasons why a country would do this. Had the US enforced their own laws earlier on word would have gotten out allowing people to make informed decisions.
It took minnows like me getting turned into grist before the IRS created Streamlined. There’s plenty of regret to go around in my world too, but what’s’ done is done.
As for carve outs for accidentals based on whether they’ve obtained a US passport after a certain age? I don’t think that’s going anywhere. I can however see children suing their parent(s) for registering them though. I believe someone has already tried, but don’t know the outcome.
If anyone should be reproached, it’s me. Possibly a worse story than Iota’s. If my son wasn’t such a teddy bear, I’d take seriously his jokes about suing me over his citizenship.
He was born in Hong Kong when we lived there. This was before the so-called ‘handover’ to China (I prefer to think of it as the greatest crime against a people since World War 2). You can see my attitude. Not only did I register his birth at the US consulate, but sensing what was coming with the communist takeover a few years ahead, I went through the relatively simple process of renouncing his right to Chinese citizenship, which a parent may do for a child.
Why? Check the news for the numerous accounts of HK-born business people held for ransom by Chinese police, and being denied British or Australian or Swedish consular protection, even though that’s the only passport they hold. My husband did business in China at the time. I imagined a family working holiday to Guangzhou in which some businessman blackmailer paid the police to detain our son. Further, my calculation was that when he became an adult, he may want to work or do business in China, in which case he should not be in any way deemed a Chinese citizen, so that he could claim US consular protection (in my naive belief that there is such a thing). Because China, like the USA, imposes Chinese citizenship on anyone born in HK, whether they want it or not, the moment they set foot on mainland Chinese polluted soil.
My son could easily apply for reinstatement of his Hong Kong Special Administrative Region of the People’s Republic of China passport, which would require him to renounce his US citizenship. (Of course it isn’t the same as a normal PRC passport: he would have free right to exit, and visa-free entry to 120 or so countries. But in China he would be deemed Chinese, and they could block his exit). Yet had I not renounced Chinese nationality for him, he’d be dual right now.
He is on the verge of deciding to do the above. As a young adult, he has to look ahead and decide whether he might want to someday live in the USA. Like many of us, he’s waiting to see if Congress pulls any of the right triggers this year. And in any case, Chinese citizenship looks less and less unattractive when compared to citizenship in the increasingly Stalinist USA. But meanwhile, whenever the topic arises, he is furious with me.
The worst part (for him) is: under a measure enacted in London at the time of the handover, had my son only been a HK citizen without any other citizenship, he could, today, make a claim for full UK citizenship.
Of course, with the hindsight unavailable to me at the time, I’d have never carried my precious baby through the jaws of the US Consulate in the first place. I am so very much ashamed.
Sorry, one clarification. I said: “Because China, like the USA, imposes Chinese citizenship on anyone born in HK, whether they want it or not, the moment they set foot on mainland Chinese polluted soil.” I should add: …unless they specifically renounce that ‘right’ (or in his case, unless his parents renounced it for him as a minor).
Sorry, one more addendum: why does my son joke about suing me? He’s tried for over a year to get a credit card, and though he qualifies in every possible way, he has been turned down. The application from his bank asks about his citizenship. You do the math. Had he been able to claim a HK Chinese passport, he’d be able to buy his movie and concert tickets online.