Author Archives: Petros

Russia’s President Vladimir Putin has announced a new offshore amnesty program,  the anti-FATCA:

I announce a full amnesty for capital returning to Russia, and I repeat, a full amnesty. What does that mean? Those people who fully legalize, fully bring back their capital to Russia, should be protected from being dragged to various law enforcement agencies, and from having to prove where they got their money from, and from being exposed to criminal investigations.

We need to reverse the history of capital flight from our country, we need to end this era…. We have already done a lot of work to improve our investment climate, and now we need to turn to implement that legislation.

This is a brilliant move on President Putin’s part. Instead of punishing expatriated funds, he has welcomed them home. Wealthy Russians who have been burnt by confiscation during the Cyprus bailout and by illegal sanctions by President Obama, will find likely this a very welcome opportunity to repatriate their wealth.

I have received my (not) FATCA letter.

Background:  I opened my Scotia iTrade account without providing citizenship information. I was a permanent resident of Canada at the time. I did not fill out US paperwork W-9 or W-8BEN. The trading account is inactive. I have whited-out the account number and address.

Last Friday, I received a voice message from Scotia iTrade regarding this case number. I am planning to ignore them for the moment. This will, of course, increase the cost of FATCA implementation.

Observations:

1. The letter makes no mention of freezing or closing my account. But it does say I must respond to the letter or I will be subject to 30% withholdings on US income sources.
2. It seems that this is a fishing expedition to obtain US status information.
3. Renewal of the forms must take place every three years. This is new to me.
4. Certain information is allegedly “required” to open an account–such as “driver’s license, passport, citizenship card or age of majority card”. Does this mean if you prove you are a Canadian resident, they will be satisfied?
5. No mention of FATCA or new Canadian regulations conforming to FATCA appear in this letter. Instead, Scotia iTrade claims to be “a Qualified Intermediary for the Unites States Department of Treasury Internal Revenue Service (IRS)”.

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I had the most interesting comment to my post that pointed out that OVDP is a money-laundering program in which the IRS takes a piece of the action (e.g., Walter White puts meth money into a foreign account and launders it through OVDP):

Yeah, it’s an amusing story; but so far-fetched, I don’t see where the humor connects with reality. Far from being “so right on”; …transferring 600’000 cash offshore, letting it sit for a while, then entering the OVDI is so impossible and far-fetched these days, that one might as well have included aliens in the story too.
Sorry, Forrest Grumpy

I really like this comment because it expresses my own doubts about what I wrote. It seems very far-fetched indeed.

Nevertheless, I’ve been personally oppressed by the policies of the Treasury Department. I’d never committed a felony until about four years ago, but now I fear to return to the country of my birth because the Bank Secrecy Act has become an instrument to extort money from me and other innocents. This oppression has opened my eyes. But still I doubt. Would government officials dispense with truth, justice and equitable application of the law? Is that really far-fetched? What is in it for them?

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In the five season series Breaking Bad, Walter White earns an untold amount of cash through the production of blue crystal methamphetamine. In order to launder this money, his wife, Skylar, insists that they buy a car wash, through which she produces false invoices for cash sales. But in this scene Skylar shows Walt the cash that he’s brought to the car wash. She has moved it to a storage locker. She says she can’t launder this much money–not in ten years or even a lifetime.

What Skylar could not do through a car wash with less than a million dollars of gross revenue per year, the IRS has made possible through Offshore Voluntary Disclosure Program. First, one transfers the funds to an offshore account. Second, one enters the voluntary disclosure program and pays all back taxes, fines, interest and a in-lieu of FBAR fine of 27.5%. The money is now freshly laundered and can pay for Walter White’s childrens’ education, the legal costs for the defense of Skylar against criminal charges, and his extended family’s escalating health care expenses.

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Canada AM: US tax backlash

The Internal Revenue Service agents did not accuse Ms. Hinders of money laundering or cheating on her taxes — in fact, she has not been charged with any crime. Instead, the money was seized solely because she had deposited less than $10,000 at a time, which they viewed as an attempt to avoid triggering a required government report.

“How can this happen?” Ms. Hinders said in a recent interview. “Who takes your money before they prove that you’ve done anything wrong with it?”

The federal government does.

Law Lets I.R.S. Seize Accounts on Suspicion, No Crime Required

Does anyone except Jack Townsend still doubt that the IRS is a criminal organization?

Hat Tip: Zero Hedge

I received a phone call this afternoon from a concerned Brocker asking if I’d seen the discussion at Isaac Brock about whether it was ok to lie to the bank on the various self-certification forms. Specifically he asked my opinion about the ethics of lying. He said of course that the nuns at his parochial school said one should never lie, not even to save the world! But of course, as a theologian, the story of Rahab the Harlot came to my mind. She lied, and for that both Jews and Christians consider her a great heroine. Here is the main story of her boldfaced lie (Joshua 2.1-6; RSV):

1 And Joshua the son of Nun sent two men secretly from Shittim as spies, saying, “Go, view the land, especially Jericho.” And they went, and came into the house of a harlot whose name was Rahab, and lodged there. 2 And it was told the king of Jericho, “Behold, certain men of Israel have come here tonight to search out the land.” 3 Then the king of Jericho sent to Rahab, saying, “Bring forth the men that have come to you, who entered your house; for they have come to search out all the land.” 4 But the woman had taken the two men and hidden them; and she said, “True, men came to me, but I did not know where they came from; 5 and when the gate was to be closed, at dark, the men went out; where the men went I do not know; pursue them quickly, for you will overtake them.” 6 But she had brought them up to the roof, and hid them with the stalks of flax which she had laid in order on the roof.

Now the New Testament remembers Rahab in Matt 1.5, as a great-great-great-great etc. granny of King David and Jesus; and as a woman of faith in Hebrews 11:31: “By faith Rahab the harlot did not perish with those who were disobedient, because she had given friendly welcome to the spies.” James 2.25 also says, “And in the same way was not also Rahab the harlot justified by works when she received the messengers and sent them out another way?”

So it would seem that the Bible, as one the great foundational texts of both law and ethics in the Western world, has no problem with lying under certain circumstances. She lied to save the lives of two men who would soon become her new compatriots. Moreover, she’d seen that God was with the Israelites and Joshua, and she thus knew her city, Jericho, was doomed. So to protect herself and her family she decided to relinquish her Jericho citizenship under INS 349 (a) (7)–and become a daughter of Israel. She exercised her universal human right to change nationalities.

Yes, the King of Jericho would have severely punished her if he had found out her lie. And the homelanders of Jericho would have considered her a liar, traitor and tax cheat. But they didn’t write the history of the battle. Rahab had to do what was best for her family, and for that both Old and New Testaments praise her.

Hard times create unconventional heros.

A friend of mine sent me a private message on Facebook:

Hey, if you have an introductory article for us Americans who are clueless about FATCA, let me know and I’ll send it around.

I considered sharing with him Daniel Mitchell’s article:

Is FATCA the Worst Part of the Internal Revenue Code?

However, I wonder what others might recommend to their clueless American friends.  Which article would you recommend for your clueless Canadian or French or Swiss or other friends?

And speaking of Facebook, it would be good to network on social media. Have you considered liking the Isaac Brock Society on Facebook, or requesting friendships with such people like Petros? Then, you can share FATCA/FBAR/Renunciation articles with your social media friends.