An excellent new interview with John Richardson by Dave Taylor. Recorded September 3, 2014 on CHQR News Talk 770.
Both John and Dave cover the basics of FATCA, the Canadian IGA, the legal challenge, the role of ADCS and much more.
Author Archives: Deckard1138
Ron Paul warns “US Sanctions on Russia May Sink the Dollar”
http://www.sitnews.us/RonPaul/081614_ron_paul.html
Ron Paul knows exactly how this movie will end. Too bad only a relative handful of Americans are listening to him:
At the same time the US expects cooperation from European banks, it is also prosecuting those same banks and fining them billions of dollars for violating existing US sanctions. It is not difficult to imagine that European banks will increasingly become fed up with having to act as the US government’s unpaid policemen, while having to pay billions of dollars in fines every time they engage in business that Washington doesn’t like.
European banks are already cutting ties with American citizens and businesses due to the stringent compliance required by recently-passed laws such as FATCA (Foreign Account Tax Compliance Act). In the IRS’s quest to suck in as much tax dollars as possible from around the world, the agency has made Americans into the pariahs of the international financial system. As the burdens the US government places on European banks grow heavier, it should be expected that more and more European banks will reduce their exposure to the United States and to the dollar, eventually leaving the US isolated. Attempting to isolate Russia, the US actually isolates itself.
When it comes to trusts, “FATCA loves everyone”
Cayman Financial Review offers another clear-headed article about FATCA, this one by Peter A. Cotorceanu, a tax specialist in Zurich.
http://www.compasscayman.com/cfr/2014/08/08/FATCA–Has-Cayman-orphaned-its-trusts-/
Mr. Cotorceanu describes in detail how the Cayman Islands interpreted the original IGA boilerplate wording to its advantage, underlining the role of basic semantics in the complex imposition of FATCA. As a result, other jurisdictions may follow the Cayman’s example in restricting the application of the FATCA IGA only to trusts “…whose trustee is ‘incorporated, registered or licensed’ in the Cayman Islands.”
“U.S. can’t deliver on FATCA promises”
The Cayman Financial Review has just published an excellent new article by Brian Garst, political scientist, blogger and Director of Government Affairs at the Center for Freedom and Prosperity:
http://www.compasscayman.com/cfr/2014/08/08/U-S–can’t-deliver-on-FATCA-promises/
Contributing to a growing wave of understanding about Treasury’s lack of legal authority for its concoction of Intergovernmental Agreements, Mr. Garst examines the likely trigger for FATCA’s self-destruct mechanism: its increasingly evident failure and likely permanent inability to provide promised reciprocity to its so-called IGA partners:
Since its passage in 2010, financial institutions and their governments have scrambled to comply with the costly impositions of the Foreign Account Tax Compliance Act (FATCA). To entice foreign governments to assist in administration of the law and bypass certain legal obstacles, the U.S. Treasury Department has promised reciprocal information sharing. Now, however, they are admitting to having promised more than they can deliver.
The U.S. government’s assertion of authority over the global financial sector has redirected tens of billions of dollars away from productive pursuits and towards compliance efforts. So complex are the demands imposed by FATCA that the law, as originally passed, was almost assured to fail. There was simply little chance that thousands of individual financial institutions would be able to both comply with FATCA’s demands and continue to operate within the legal requirements of their host nations, particularly when it comes to protection of privacy rights.
To circumvent the issue of conflicting local laws, the U.S. Treasury Department conjured for itself powers and responsibilities not part of the actual legislation. Namely, they developed intergovernmental agreements (IGAs) to allow foreign governments to first collect information on American taxpayers before sending it to the IRS. Because institutions are sharing the information with their own governments rather than directly with U.S. authorities, and those governments are updating their laws accordingly, the IGAs allow for compliance with local privacy laws as well as FATCA.
As would be imagined, not every government has been thrilled by the prospect of upending their laws to placate U.S. fiscal imperialism. To entice skeptical foreign governments to sign the IGAs – without which the law would fail – Treasury promised to share similar information on any of their citizens investing in U.S. markets. Now, however, it’s becoming increasingly clear such reciprocation may never occur, throwing FATCA’s viability back into question.
Incidentally, author Garst’s motto is:
Malo periculosam, libertatem quam quietam servitutem
James Jatras lays-out FATCA risk to Russia
A recent article from James George Jatras published in RIA Novosti:
Moscow Must Close a Yawning Gap in Its Financial Armor
Topic: Sanctions Against Russia
As the chill air of a new Cold War begins to blow, James Jatras explains why Russia’s and the world’s future hinges on how every nation responds to the threats posed by FATCA. He forcefully argues that this is no time for strategic miscalculation by any country, especially by Russia, and especially in this increasingly dangerous geopolitical climate.
A wealth of FATCA insights
Not sure how this source and these articles have evaded detection for so long, but they deserve wider exposure:
http://wealthmanagement.com/commentary/fatca-violates-rights-american-citizens-overseas
http://wealthmanagement.com/wealth-planning/why-do-americans-hate-expatriates
http://wealthmanagement.com/legal-compliance/accidental-american-0
The newest, FATCA Violates Rights of American Citizens Overseas, is a hard-hitting commentary by Carrie Lowery, who is described thusly:
Carrie A. Lowery, Esq., has worked as a legal professional for over a decade. She recently founded Authority Legal Research & Writing Service, which provides legal research and writing support to practicing attorneys.
I was particularly struck by her close attention to the violation of treaty powers represented by Intergovernmental Agreements:
FATCA requires foreign financial institutions to report the financial holdings of their U.S. clients to the IRS or will be charged a 30% withholding tax on payments from US Banks.
The Treasury Department has been unable to cite any constitutional, statutory, or regulatory authority which allows it to compel foreign institutions to collect and share the financial information of U.S. citizens. As a result of foreign privacy laws which prohibit direct disclosure to the IRS, the Treasury Department has entered into numerous bilateral Intergovernmental Agreements (IGAs) with foreign agencies and governments. There is no reference to or authority provided for IGAs in the statute itself. When asked for a basis of authority for its action, the Treasury Department points to existing tax treaties with foreign governments. Unfortunately, there is one fundamental difference between existing tax treaties and the IGAs: lack of Senate authorization, in violation of the treaty power.
It would appear that Allison Christian’s definitive evisceration of Treasury’s IGA lies continues to make waves. Bravo!
The other two above-mentioned articles are less recent, but no less compelling, even though they do belie the incomplete perspectives of the compliance-industry. Nevertheless, some good solid reading here.
Treasury prepares shiny new DATCA Trojan Horse
As previously reported here:
and here:
http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=130
the Obama administration has been trying for some time, without success, to sneak some form of FATCA reciprocity past Congress to avoid any embarassing pants-on-fire confrontations with IGA signatories who were apparently promised the moon by American FATCA negotiators. Seems they’re at it again, with a duplicitous new twist, as the following links reveal:
http://www.jdsupra.com/legalnews/treasurys-fincen-proposes-rules-forcing-79017/
http://www.treasury.gov/press-center/press-releases/Pages/jl2595.aspx
http://www.fincen.gov/statutes_regs/files/CDD-NPRM-Final.pdf
In a nutshell, Treasury aims to glue just enough sequins onto its FinCEN (Financial Crimes Enforcement Network) CDD (Customer Due Diligence) requirements to convince IGA suckers that it is finally forcing domestic financial institutions to reveal the beneficial owners of accounts held by foreigners in the US. Since there is actually plenty of wiggle-room in the reporting thresholds, most such account holders will simply re-structure their ownership profiles and thus avoid reporting to their home countries, but no matter – the whole point of the exercise is merely to create a convincing-enough facsimile of reciprocity that the IRS will finally have the fig leaf it so desperately craves, not only for the FATCA club, but for its G8 G7 partners as well.
Now, in true FATCA IGA style, the proposed new legislation intends to simply bypass pesky Congressional authority altogether by being presented as a mere amendment to existing BSA (Bank Secrecy Act) regulations. Some bright light at Treasury finally made the right connection, thinking, hey, the ruse has worked fine for the IGA’s, so why not for DATCA?
Wonder how long it will take for Bill Posey to catch-on to this new effort?
What can you buy for only $870 million? How about the death of the U.S. dollar?
The law of unintended consequences remains far more powerful than any half-baked legislation coming out of Washington, as this article from South China Morning Post reminds us:
Fatca regime may have unintended consequences for financial system
Crackdown on Americans’ money in overseas accounts may lead to the growth of shadow banking and the financial power of other countries
Many financial institutions are still completely confused and unable to comply with the US government’s Fatca regime. “Foreign Account Tax Compliance Act” sounds like another innocuous tax regulation. But it represents the most ambitious tax and personal data collection strategy in financial history. It will embolden and encourage more global intrusions by US government agencies. More people will be driven underground to seek shadow banking services.
Fatca is controversial because it dramatically shifts the burden of disclosure from the American person to their banks. Foreign financial institutions are now more than just tax bounty hunters for the US Internal Revenue Service (IRS), but pawns in an historical power play for control over the global financial system.
Philippines’ Metrobank plays FATCA hardball with an ex-client
An interesting item found on the Expat Forum today. A commenter writes (emphasis mine):
Got this from Metrobank today. This indicates that the IRS wants gross receipts and withdrawals or payments, even though I no longer have an account with Metro. Has anyone else got something like this from other banks?
Here is the redacted form letter the commenter received:
James Jatras debunks legality of FATCA IGAs
James George Jatras details the complete absence of legal authorization for FATCA Intergovernmental Agreements in a new opinion piece for Forbes, as well as on his own blog site, repealfatca.com. As willfully ignorant countries around the world line-up to needlessly sign-away their sovereignty and privacy rights, it is important to remember that all FATCA IGA’s are mere pseudo-treaties, built on a legal foundation of quicksand. Only Congress has the constitutional authority to enact international treaties, not the executive branch – not Treasury, not the IRS and certainly not Obama, no matter how many executive orders he may sign with a Louis XIV-like flourish.
‘Unauthorized FATCA “Intergovernmental Agreements” Are Part of Obama’s Executive Overreach’
