Republican Party to vote for repeal of U.S. anti-tax dodging law
Tue, Jan 21 2014
By Patrick Temple-West
WASHINGTON (Reuters) – The Republican Party is expected to approve a resolution this week, calling for repeal of an Obama administration law that is designed to crack down on offshore tax dodging.
http://www.reuters.com/article/2014/01/21/us-usa-tax-fatca-idUSBREA0K1VS20140121
Toronto Globe & Mail editorial on the rights of dual citizens:
“You Can’t be Partly Canadian”
The Globe recognizes the needs and rights of dual citizens. I have responded with a posted comment, emphasizing the needs of dual citizens to be protected from their country of origin while within Canada, especially from FATCA and related US initiatives.
For now, the Department of Foreign Affairs seems uninterested in pursuing the suggestion of one of its senior bureaucrats: to scale back consular services for some Canadians with dual citizenship, who live abroad for long periods of time.
For Mohamed Fahmy, a Canadian journalist who has been held for more than two weeks in one of Egypt’s most notorious prisons, that’s especially welcome news.
If Ottawa were to change the rules of consular assistance – along the lines of what has been floated — Mr. Fahmy couldn’t count on Canada’s help to free him from detention in Egypt’s Tora prison. He has been held there, without charge, since Dec. 29, after authorities accused him of filming interviews with members of the now banned Muslim Brotherhood…
Canadians like Mr. Fahmy should get the consular assistance they need. There’s no such thing as a second-class Canadian citizen.
From the Finance Canada website:
“The Government of Canada today ratified the Convention on Mutual Administrative Assistance in Tax Matters, done at Strasbourg on 25 January 1988, as amended by the Protocol amending the Convention on Mutual Administrative Assistance in Tax Matters,done at Paris on 27 May 2010 (collectively, the “Convention”). Canada signed the original convention on April 28, 2004 and the Protocol thereto on November 3, 2011. The Convention will enter into force, in respect of Canada, on March 1, 2014, and will have effect in accordance with Article 28 of the Convention.
“The Convention, developed jointly by the Organisation for Economic Co-operation and Development and the Council of Europe, is a multilateral instrument, open to all countries, whose purpose is to improve international tax co-operation between the taxation authorities of countries that are a Party to the Convention, with a view to combating international tax avoidance and evasion. In Canada, the Convention will apply to Canadian taxes that fall under the Income Tax Act, Excise Tax Act, and the Excise Act, 2001.
“Under the Convention, Canada will exchange tax information pursuant to the OECD standard with other Parties to the Convention. Pursuant to reservations, Canada will not under the Convention be obligated to collect taxes on behalf of another country, or provide assistance in the service of related documents. Canada will instead continue to negotiate a provision on assistance in the collection of taxes on a bilateral basis, and has agreed to include such a provision in certain of its bilateral tax treaties.”
See: http://www.fin.gc.ca/treaties-conventions/notices/maatm-aammf-eng.asp
Is there anyone out there with the expertise to determine the relevance of this to FATCA implementation in Canada?
Does anyone know of cases where “US persons” at risk from the IRS have run into trouble entering the US? Have any of you had a bad experience?
The last time I entered the US was nearly three years ago and I was seriously hassled at the border crossing (we were driving) because I did not have a US passport. I have not dared try to enter the US since then. I do know a few people who seem to have come and gone without any questions asked.
Thank you.
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The contemporary model of civil forfeiture in the US was introduced as part of the “war on drugs”. Under terms of this law, which varies across US jurisdictions, law enforcement officers can seize property involved in unlawful, or suspected unlawful activity, such as drug dealing. In some jurisdictions, law enforcement organisations are allowed to keep some or all of the assets seized. This has led to some notable abuse, notoriously in Tenaha, Texas, but in other jurisdictions too.
See
http://www.newyorker.com/reporting/2013/08/12/130812fa_fact_stillman
Why post this to IBS? Just an interesting aside on the “culture” of confiscation in the US.
“In general, you needn’t be found guilty to have your assets claimed by law enforcement; in some states, suspicion on a par with “probable cause” is sufficient. Nor must you be charged with a crime, or even be accused of one. Unlike criminal forfeiture, which requires that a person be convicted of an offense before his or her property is confiscated, civil forfeiture amounts to a lawsuit filed directly against a possession, regardless of its owner’s guilt or innocence.
“One result is the rise of improbable case names such as United States v. One Pearl Necklace and United States v. Approximately 64,695 Pounds of Shark Fins. (Jennifer Boatright and Ron Henderson’s forfeiture was slugged State of Texas v. $6,037. [their story earlier in the article – Northernshrike]) “The protections our Constitution usually affords are out the window,” Louis Rulli, a clinical law professor at the University of Pennsylvania and a leading forfeiture expert, observes. A piece of property does not share the rights of a person. There’s no right to an attorney and, in most states, no presumption of innocence. Owners who wish to contest often find that the cost of hiring a lawyer far exceeds the value of their seized goods. Washington, D.C., charges up to twenty-five hundred dollars simply for the right to challenge a police seizure in court, which can take months or even years to resolve.”
…..
“…But civil-forfeiture statutes continued to proliferate, and at the state and local level controls have often been lax. Many states, facing fiscal crises, have expanded the reach of their forfeiture statutes, and made it easier for law enforcement to use the revenue however they see fit. In some Texas counties, nearly forty per cent of police budgets comes from forfeiture.”
The typical victims are poor, often black or Hispanic, i.e. individuals without the means to contest what’s been done to them.
Most of you have probably seen this news one place or another. The Guardian has been at the forefront:
Millions of internal records have leaked from Britain’s offshore financial industry, exposing for the first time the identities of thousands of holders of anonymous wealth from around the world, from presidents to plutocrats, the daughter of a notorious dictator and a British millionaire accused of concealing assets from his ex-wife.
More at:
http://www.guardian.co.uk/uk/2013/apr/03/offshore-secrets-offshore-tax-haven
Here is the Financial Times:
http://www.ft.com/intl/cms/s/0/7ca55c98-9d49-11e2-88e9-00144feabdc0.html#axzz2PWwSdno4
The Czech government recently approved the Finance Ministry’s intention to sign an intergovernmental agreement with the USA on providing information on bank accounts of American citizens to the US tax administration. The data would be provided by the Czech tax administration office.
http://www.pragueconnect.cz/en/s462/PragueConnect-cz/c1735-Finance/n21470-FACTA-Czech-USA
From the Irish Independent, Ireland’s largest circulation newspaper
December 6, 2012
IRELAND has signed an agreement with the United States to make it easier for Irish banks to hand over information on the financial affairs of US nationals living here, Finance Minister Michael Noonan said.
The agreement enables Irish banks to obey the rules imposed by US tax authorities under the Foreign Account Tax Compliance Act or FATCA.
http://www.independent.ie/national-news/deal-lets-banks-release-data-on-us-citizens-3317462.html
A relatively accurate, so far as I can see, article on FATCA in the NY Times:
Conrad de Aenlle, “A long-distance relationship with the I.R.S.”
Even articles that are fairly accurate seldom recognize that this affects “accidental” Americans, i.e. people who aren’t Americans at all, aside from a legal technicality of US law.
The government [of India] has asked the Reserve Bank of India to draft an agreement that Delhi can sign with Washington to shield Indian financial institutions from a controversial US legislation,which seeks to penalise entities that fail to report dealings of American residents to the US revenue authority
Full article:
FATCA FEAR
RBI to Work on Pact to Counter US Law Impact
Central bank to draft agreement that Delhi can sign with Washington
DEEPSHIKHA SIKARWAR NEW DELHI
The government has asked the Reserve Bank of India to draft an agreement that Delhi can sign with Washington to shield Indian financial institutions from a controversial US legislation,which seeks to penalise entities that fail to report dealings of American residents to the US revenue authority.The Foreign Account Tax Compliance Act,due to come into force from January 1,proposes a 30% withholding tax on any payment made to a foreign financial institution by a US firm if it does not comply with the regulation.We are examining as to how we need to deal with it… RBI will prepare a draft of an enabling domestic legislation, a finance ministry official told ET.The FATCA,enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act,aims to combat tax evasion by US nationals holding investments in offshore accounts.It is seen as advancement over the antimoney laundering framework put in place by the Financial Action Task Force,a global body tasked with curbing money laundering.Under the provisions of the new law,US taxpayers holding financial assets outside the country must report those assets to the revenue authorities.The law also requires foreign financial institutions to report directly to the US Internal Revenue Service details of accounts held by US taxpayers or foreign entities in which US taxpayers hold a substantial ownership interest.Any entity failing to register will face a higher witholding tax rate from all US firms that they deal with.The law will pose a similar challenge to Indian financial institutions.Indian entities may need to intensify the know your customer (KYC) requirements and also register with American tax authorities individually if there is no bilateral agreement among the two countries.They will need to undertake prescribed identification exercise for US taxpayers and report annually to the US revenue authorities.Experts say the Indian governments move is in the right direction.Any Indian financial institutions dealing with a US resident directly or indirectly will have to ensure compliance with FATCA … Entering into agreement with US authorities on individual basis may prove cumbersome for institutions, said Anish Thacker,partner (tax and regulatory services) at Ernst & Young.However,experts point out that norms under the Foreign Exchange Management Act also mandate stringent KYC norms.The existing restrictions under FEMA significantly reduce exposure of Indian financial institutions to FATCA, said Shinjini Kumar,director at PwC.She,however,said lack of clarity in the law makes it difficult to ascertain the exact impact on Indian financial institutions.
