A new resource on all the issues faced by expats, #AmericansAbroad, #AccidentalAmericans, #US persons, et al:
FATCA: Citizenship-Based Taxation,
Foreign Asset Reporting Requirements and
American Citizens Abroad
I don’t think there is anything else which is so extensive or thorough. This is brilliant research and gives reference to many, many court cases. Definitely a resource we are fortunate to have. (Brock SWAT to compliance community: “Watch out!”)
Thank you Andrew Grossman!
It is permanently located on the sidebar at Brock under the Important Information box – Introductory and Essential Material on CBT, FATCA, Citizenship Issues.
“The Fourth Amendment to the Constitution of the United States is law, and this skirts it”
FATCA is US law; the IGAs are agreements between countries.
“the Treasury Dept. does not have statutory authority to enter in to these IGAs.”
Unfortunately the partner countries have agreed to implement FATCA and have done so, regardless of whether the US Treasury Department has US statutory authority for the IGAs.
It remains to be seen whether the agreements will be successfully challenged where it matters – where we live.
“They want something that US law stands in the way of, so they bypass it by going abroad and forcing non US entities to do it.”
It’s non-US law that, in some countries, made it illegal for banks to comply with FATCA. Those countries have changed their law to make it legal.
While we all know that in current practice this is not followed, but if a law violates the Constitution, it is not in reality a law. We say that it is “unconstitutional” but leagally, unconstitional laws are not allowed. The fact that we are denied our rights (USCs) to challenge it in court does not change that fact.
But you are correct, that it must also be stopped in the countries we live in, but it will not be stopped if we think there is nothing to be worried about. The law making bodies of the countries we live in are no more interested in challenging the US than the US is in following its own laws. It will require constant vigilance on all our parts towards what our various governments are up to.
It is more accurate to state that at the moment persins in this or that country seems to be safe based upon what we currently know. However, we are sailing through rocks and shoals and the winds are veriable, so keep a sharp watch and a keen weather eye.
“But you are correct, that it must also be stopped in the countries we live in,”
That’s not what I said, and it’s not the reality. FATCA/IGA is being challenged in courts in Canada and France. I hope those cases succeed, and am somewhat optimistic that that will be the case.
“It will require constant vigilance on all our parts towards what our various governments are up to.”
Constant worry doesn’t avert disaster; it just exacerbates stress, and conjures up additional, nonexistent problems to make things worse.
“That’s not what I said, and it’s not the reality. FATCA/IGA is being challenged in courts in Canada and France. I hope those cases succeed, and am somewhat optimistic that that will be the case.”
Meanwhile, not only are these nations sending sensitive person financial data to a third party, the IRS, countries, including France I believe, are starting their own FARCA like systems and most of the world is running headlong towards CRS. Winning these suits with have very little meaning once their IDs are wide open for theft.
“Winning these suits with have very little meaning once their IDs are wide open for theft.”
Success in Canada and/or France would be very significant for USCs in IGA 1 countries; but might not benefit USCs in IGA 2 countries.
IF they were able to prevent they data sharing until the decision, then yes it would have a profound effect. All individuals involved would have more control over the personal data. However, not only have they not been able to stop the sharing of their data, it is going to be shared via the CRS. Not with the US (HA!) but still be shared.
FATCA opened up a pandora’s box in which there is absolutely no privacy. Buy a book, and all will know. Buy plane tickets and criminals will know when to hit your house. Pay for school supplies and bad guys can easily track down how many children you have, their ages and where they go to school.
Winning the cases stop none of this. For many, the damage has already been done. The infection or cancer is already there. May not yet symptomatic, but the disease is there regardless of the decisions of these cases. Can’t put the genie back into bottle.
All individuals involved would have more control over the personal data. ”
Success in the legal cases would be great, but exactly what would transpire as a result (in the country of litigation, and elsewhere) is as yet undetermined.
What is determined is that winning will not undo the exposure of peoples financial information. It may stop further exposure, to what extent that that is actually possible once that kind of info is released to the public, but it can not return anyones anonymity.
If the lawsuits are successful, then those countries can not use IGA type 1. Why would that not mean a switch to IGA-2?
I see possible and likely outcomes of a win in the lawsuits.
1. Given the information you provided above, the court ruling that the county’s constitution or similar legal foundation does not allow for the type 1 IGA, the type 2 IGA is signed. In such a case, anyone who has not prepared for such a possibility will be trapped just like the rest of us in IGA-2 countries.
2. While renegotiating (if coercion can be called such) these countries are able to convince the US to allow them a second try, they pass another law allowing for the transfer of data of some of their citizens to the US while addressing the problems of the first attempt. This would mean that the same people would have to once again come up with hundreds of thousands of dollars to fund a second lawsuit.
I admit that othr possibilities may be out there but these must also be prepared for.
Don’t get trapped.
If a court makes a final ruling that the legislation implementing FATCA is discriminatory, or if a court strikes down the law for lack of reciprocity, “switching” to IGA 2 would be pointless, since both those failings are inherent in the discriminatory, non-reciprocal US FATCA law and therefore will always be present in any legislation designed to implement it.
“I see possible and likely outcomes of a win in the lawsuits.”
You’re perhaps not best placed to predict the future, given that you don’t live in Canada or France and don’t seem to have read the laws being contested or even the IGAs the laws are designed to implement.
It would depend on the exact reason it was struck down, but doubt there could be much other than the reason you give.
Then it’s hello to the 30% non compliance fee. Have fun with that.
What I know is the US doesn’t care for its own laws and cares even less for the laws of other countries. The IGAs alone should attest to that.
I know that the have little or no chpice but continue the pursuit of the pot of gold at the end of the rainbow, although perhaps in pursuit of the white whale would be more corret.
Do you really expect that if the lawsuits are won that the US will just go away and leave Canada and France alone on this?
I would say the opposite is true. The final decision will not come from the decisions of either of these two cases. The bottom line is that both countries must give the US the info it demands or its FIs in the US will pay the 30% fee. Th US doesn’t care a damn what Canadian nor French law says about the matter. Provide info or payment. The US doesn’t care how Canada and France go about it, just as long as they get what they want.
Unless the US changes, which could happen. Anything is possible, or so they say. Or, the French and Canadian governments decide to stand up to the US. If either was inclined to do so then the lawsuits would not be neccessary.
Unless they are allowing the lawsuits to buy time to work out another way out, but seems doubtful too.
At least in Canada it seems quite clear that they wish these malcontents would just renounce USCship. They have no stomach to learn the details of the issue far less to do something about it. They just wish the victims would just go away.
In the end, Canada and France will either send the info or money or eliminate the need to do either.
Third option, per the late Jim Flaherty: send the information (because gun held to head) but declare refusal to assist in the collection of penalties against your own citizens. If that isn’t an official invitation to non-compliance I don’t know what is.
It’s because the Bank Secrecy Act is not a tax law, apparently:
https://www.canada.ca/en/revenue-agency/services/tax/international-non-residents/enhanced-financial-account-information-reporting/information-individuals-holding-accounts-canadian-financial-institutions.html
Right. The Canadian government does not assist in collecting FBAR penalties against any Canadian resident, even those without citizenship (which is what saved Dewees from FBAR fines). Furthermore, per the tax treaty, the Canadian government does not assist in collecting any penalties or taxes owing from Canadian citizens, provided that the debt was not incurred prior to naturalization (which is why Dewees was hit with other penalties).
“what saved Dewees from FBAR fines”
And that’s why the IRS applied 1471 fines instead. Similar punitive fines, but tax-related.
So it doesn’t look as if Flaherty was either encouraging or discouraging compliance. Just stating the facts.
Fair point, but I’d say “they can assess but we won’t help them collect” doesn’t exactly encourage people to send the US a cheque.
I don’t know about Canada but I think the European politicians would rather keep a high wall between themselves and other countries tax laws – especially when the other country is America. “We completely respect the Americans’ right to determine their own tax laws” etc.
plaxy – That attitude would be OK in my opinion only as long as they also say something like “When you’re living in our country you’re a(n)(insert applicable demonym) first and foremost and we will not take part in enforcing other countries’ laws”.
Canada says essentially the same. See: http://isaacbrocksociety.ca/2018/05/05/brock-project-advice-on-how-to-explain-the-effects-of-the-ustransitiontax-through-a-question-in-the-house-of-commons/comment-page-1/#comment-8220542