Liberty and justice for all United States persons abroad

The Isaac Brock Society

Author Archives: Stephen Kish

July 13, 2023: Supreme Court of Canada Rejects Leave to Appeal Application for Canadian FATCA IGA Legislation Lawsuit

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On August 11, 2014 Plaintiffs Ginny Hillis and Gwen Deegan filed a Claim in Federal Court of Canada arguing that the U.S. FATCA law imposed on Canada violated the Charter of Rights and Freedoms of Canadians.  We lost in Federal Court and later in the Federal Court of Appeal. 

On January 10, 2023 our Appellant, Gwen, filed a “leave to appeal” request in the Supreme Court of Canada asking the Court to accept her application to hear the appeal.  In argument Gwen asked Court to consider both Charter sections 8 and 1.  Section 8 protects against “unreasonable” searches or seizures and section 1 protects rights and freedoms subject to reasonable limits. 

Today, on July 13, 2023 the Supreme Court of Canada decided not to hear the appeal, thus exhausting our last opportunity to appeal in the Canadian courts.     

Given the Supreme Court decision, the Alliance for the Defence of Canadian Sovereignty (ADCS) has decided to abandon its efforts to end the Canadian legislation enabling the U.S. FATCA law — and will dissolve our non-profit corporation. 

The ADCS Board thanks many for past support which made this lawsuit possible: the brave plaintiffs and appellants Gwen, Ginny, and Kazia, the Isaac Brock Society, and the hundreds of people who, since 2014, contributed financially and in other cases their encouragement that this legal challenge was necessary.

Thank you all for your support,

Alliance for the Defence of Canadian Sovereignty

U.S. Tenth Circuit Court of Appeal rules OK for IRS to prevent Americans from using passport

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Thanks to Mike for finding this article.

As reported by the National Review, a U.S. Tenth Circuit Court of Appeal ruled that it is ok for the U.S. Department of State to revoke a U.S. passport (to be used e.g., for international travel) if the IRS has certified that the person owes more than $50,000 in federal taxes.

As the Court says: “…the passport revocation serves only to incentivize repayment of the tax debt.”

See the July 20, 2021 ruling.

Do US persons have a right to international travel?

Continue reading →

My Canadian bank just sent me a “Request to validate your tax residency information” at online account sign-in

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Perhaps all Canadian banks routinely send out requests, at online account sign-in, to their customers to obtain info on tax residency — and this is old news.

Anyway, this morning I received this online request, for the first time, while trying to sign into my online account at my Canadian bank. I am a long-term customer at the bank:

“Hello STEPHEN,

Request to validate your tax residency information

To comply with Canadian tax law, we’re required to have clients validate that their tax residency information we have on file is correct and complete.

Our records show that your tax residency information needs to be confirmed.

Here are the next steps you need to take
• Online Banking: Select Customer Services > Change your tax residency
• Mobile Banking: Select Customer Services > Personal information > Change your tax residency

Please review your tax residency information now and update as required.

I understand

Tax residency is a method used by the Canada Revenue Agency (CRA) and by other countries to determine how much tax you should pay. Most countries, including Canada, determine taxes based on the amount of time you spend in the country, rather than your citizenship. For instance, some Canadians spend the winter months outside of Canada. The U.S., however, taxes all U.S. citizens as U.S. residents. It is your responsibility to determine your tax residency status in other countries.

[Customer clicks on “I understand” and is then asked three questions:]

Are you a tax resident of Canada? Yes/No

Are you a U.S. person for tax purposes? Yes/No

Do you pay taxes in any other country? Yes/No

By selecting continue I declare, as required by Canadian law, that the tax residency information and U.S. person status (including my Tax ID number) are to the best of my knowledge and belief, correct and complete. Failure to provide may result in my account information being reported to the relevant authority and I may be subject to a penalty under the Income Tax Act.”

Canadian FATCA Litigation Update: Please read below the “Notice of Constitutional Question” alerting AGs of all Canadian Provinces and Territories of our upcoming trial dealing with a Constitutional question — and PLEASE DONATE to help pay our legal expenses

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[BTW, THANKS for the Thursday afternoon donation!]

The below is a Notice of Constitutional Question” just sent by Appellants Gwen and Kazia to alert Attorney Generals in all of the Canadian Provinces and Territories of our upcoming trial in Canada’s Federal Court of Appeal.

It provides a very brief summary of the arguments and the remedy our appellants want.

If you don’t like Canada’s FATCA IGA legislation, please DONATE to help pay our legal expenses.

“NOTICE OF CONSTITUTIONAL QUESTION

The applicants challenge the constitutional validity of:

1. Sections 263-269 of the Income Tax Act R.S.C. 1985, c.1 (5th Supp.) and

2. The Canada-United-States Enhanced Tax Information Exchange Agreement Implementation Act, which is s. 99 and Schedule 3 of the Economic Action Plan 2014 Act, No1, S.C. 2014, c.20

(Collectively the “Impugned Provisions”)

Further, the Applicants seek a remedy pursuant to s.52 of the Constitution Act, 1982, being Schedule B to the Canada ACT (U.K.), 1982, c. 11 that the Impugned provisions are of no force or effect to the extent that they violate s. 8 of the Charter and cannot be saved by s.1.

The question is to be argued on a date to be set [Court is now deciding on the date]

The following are the material facts giving rise to the constitutional question:

1. The impugned provisions operate to compel banks to act as agents for the government in the collection of private information from people who the banks believe have indicia of US citizenship.

2. Those same people are compelled to provide private information to the banks.

3. That information is transmitted from the banks to the CRA and from the CRA to the IRS.

4. The IRS can use that information for the enforcement of its tax laws including for the prosecution of tax evasion.

5. The compelled collection and dissemination of this information is from persons who might never have lived in the United States, who might have citizenship to another country, and who might have no economic, social, familial, cultural or moral ties to the United States.

6. The purpose of the Impugned Provisions is simply to facilitate the interests of the US tax authority.

The following is the legal basis for the constitutional question, as elaborated in the Appellants’ Memorandum of Fact and Law attached to this Notice of Constitutional Question as Schedule A:

1. The privacy in the compelled information is constitutionally protected through section 8 of the Charter and the compelled collection and dissemination of that information constitutes an unreasonable seizure under section 8.

2. The trial judge erred in law in finding that the Impugned Provisions do not violate the rights guaranteed by section 8 of the Charter.

3. The trial judge erred in law by considering factors under the section 8 Charter determination which were irrelevant to that section and, instead, to be properly considered under section 1 of the Charter.”

Dated: March 22, 2021; sent to Attorney General of Canada (who we are suing) and the Attorney Generals of all of the Provinces and Territories of Canada

At Least 6705 Americans Renounced Their U.S. Citizenship in 2020

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As reported by American Expat Financial News Journal, at least 6705 Americans renounced their U.S. citizenship in 2020 — according to U.S. Treasury.

— This, despite US consulates/embassies closed for this service during much of 2020.

2020 Quarterly Renunciations:

Q1 2907
Q2 2406
Q3 732
Q4 660

Some previous years:

2016 5410
2017 5132
2018 3974
2019 2071

Expatriation is a right that should not be made difficult.

Dutch citizen loses lawsuit contesting bank requirement to provide U.S. TIN: Thank you for taking this to Court

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The PURPOSE of this post is to thank the courageous Dutch citizen (below), the Jennys, the Gwens and Kazias, the Fabiens, the Marc Zells (and their Plaintiffs), and all others who decided to take their complaints and their names to an actual Court of Law to stop imposition of these bad U.S. laws on their own countries.

[This news came from Fabien Lehagre and the AEFNJ.]

A Dutch citizen, who left U.S. as an infant, went to Court to contest his bank’s requirement that he needed to obtain a U.S. Tax Identification Number (TIN) for his accounts.

The Central Netherlands District Court ruled in an Interim Injunction on December 23, 2020 that the Volksbank may close one of his accounts and that the Dutch citizen would have to pay part of “costs”.

— There will be different reactions to this litigation, but there will be some who feel the need for many more citizens of Netherlands and other countries to lodge these complaints against their own governments.

From the Court Ruling (see link), here are some of the Dutch citizen’s complaints (using Google Translate to English)[Do you agree with his arguments?]:

“3.4.
[Claimant] puts forward four arguments on this point, which – in short – read as follows:

— It is not Volksbank’s task to enforce compliance with foreign law. There is no Dutch legal basis for this and there is also no Dutch legal obligation to request a TIN.

— Possible obligations of Volksbank under US law must give way to the right of [claimant] to a (basic) bank account. Volksbank must respect the fundamental rights of [claimant] (arising from, among other things, the GDPR and the ECHR).

— Volksbank may not put the problem of extraterritorial US regulations on the hands of [claimant] by terminating the relationship. Instead, the banks, in collaboration with the Dutch and European governments, must make an effort to improve the position of the Accidental Americans.

— For the time being there is no question of American sanctions against financial institutions such as Volksbank and by allowing the claims of [plaintiff] in these interim relief proceedings, Volksbank can demonstrate that it has fulfilled its best efforts obligation to obtain a TIN from [plaintiff]. Such an obligation of best efforts complied with averts the risk of US sanctions.

[3.5.
The preliminary relief judge is of the opinion that these arguments of [claimant] are unsuccessful and explains this below.]

AND

“Other arguments

3.10.
— This termination is contrary to legal and contractual obligations (including the General Banking Conditions) and also unlawful.

— Volksbank may not assume that [plaintiff] is guilty of forgery and tax evasion and may not terminate the banking relationship on that ground. By terminating on these grounds anyway, Volksbank provides [plaintiff] with a bad history, which prevents him from entering into a new banking relationship with another bank.

— The termination of the bank relationship must be assessed on the basis of neutral grounds for termination on the basis of the usual assessment framework. In that context, a weighing of interests must take place and this works out in favor of [claimant], because the consequences of termination for [claimant] are too great. It is essential for him to have access to the banking system and to keep his retirement products.”

See Link to December 9, 2020 U.S. District Court filing against U.S. State Department. It argues that excessive (US $2350) renunciation fee violates First, Fifth, and Eighth Amendments and is “…arbitrary, capricious, contrary to a constitutional right, not in accordance with law, not supported by substantial evidence, and in excess of statutory jurisdiction”

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Here is the link to the December 9, 2020 U.S. District Court filing by Marc Zell on behalf of plaintiffs and AAA.

The Complaint starts out by saying:

“1. Voluntary expatriation, the ability to renounce one’s nationality [1], is a fundamental right, upon which, arguably, all other civil rights ultimately depend. In the words of Thomas Jefferson, expatriation is a “natural right which all men have.” A Bill Declaring Who Shall Be Deemed Citizens of This Commonwealth, June 18, 1779….”

U.S. “TREASURY INSPECTOR GENERAL FOR TAX ADMINISTRATION” (TIGTA) argues in IRS audit for much better enforcement of tax rules for those who expatriate to support “Congress’s attempts to create disincentives for tax-motivated expatriation”

Posted on by Posted in Freedom, Issues regarding US persons abroad, Law & Morality, Relinquishment, Renunciation 15 Comments

[The audit is now mentioned in Tax Connections from, I think, a tax compliance perspective]

A commenter on Brock found this link to a recent September 28, 2020 TIGTA audit, a “review to determine the effectiveness of the Internal Revenue Service’s efforts in ensuring compliance with the expatriation tax provisions under Internal Revenue Code Sections 877 and 877A…”

Expatriation is a human right.

However the United States Congress and the U.S. Treasury Inspector General for Tax Administration (TIGTA) aim to discourage anyone who renounces because they don’t want the burden of annually filing those US tax forms — there must be disincentives for these persons.

TIGTA specifically argues that without a much better IRS “Centralized effort, Congress’s attempts to create disincentives for tax-motivated expatriation via I.R.C. § 877A will not be effective”. Of course, the disincentives would be applied also to “Accidental ‘Americans'”.

The audit concluded that IRS tax compliance efforts for expatriates is a mess and found, for example:

“TIGTA found that the IRS database of expatriates was incomplete for 16,798 expatriates who did not file Form 8854. In addition, TIGTA found instances of potential nonfiling, underreporting of income, and/or payment compliance issues by expatriates. From a sample of 26 expatriates who did not file a Form 8854, five had potential unreported income over $6 million. From a sample of 61 expatriates who filed a Form 8854, 15 had potential unreported income over $17 million. Lastly, TIGTA also found that expatriates with high net worth appear to not be paying their exit tax.”

… and TIGTA made some recommendations.

IRS Webinar: “Relief Procedures for Certain Former Citizens”

Posted on by Posted in Ethics, Law & Morality, reductio ad absurdum, Relinquishment, Renunciation 3 Comments

IRS Webinar: “Relief Procedures for Certain Former Citizens”

Excerpts:

“PHILIP YAMALIS: Welcome to today’s webinar, Relief Procedures for Certain Former Citizens. We are certainly very glad you are joining us today. My name is Philip Yamalis and I am a Stakeholder Liaison with the Internal Revenue Service and I will be your moderator today’s webinar which is slated for 100 minutes. Before we begin, if there is anyone in the audience that is with the media…”

“Phil, how about stopping here first for a polling question. YAMALIS: That sounds like a great idea. Let’s do it. Our first polling question, folks. Here it is. What are some of the common tax responsibilities of United States citizens? Now is the correct response, A, annually file income tax returns reporting worldwide income if income is over a specified threshold. B, annually file all required information returns, C, annually file Foreign Bank and Financial Accounts or FBAR on FinCEN Form 114, or, D, all of the above? Please click on the radio button that you believe most closely answers this question. I’ll give you a few seconds to make your selection. OK, let’s stop the polling now and we’ll share the correct answer on the next slide. And the correct response is D, all of the above. OK. I see that 97 percent of our audience responded correctly. That’s an awesome response rate. Thanks for your attention, folks. So with that, let me turn it over to Lara…”

“Philip, why do[n’t] we stop here for our second polling question? YAMALIS: Lara, that sounds very good to me. So, audience, are you ready for the second polling question? Here it is. I’ve heard this enough, so I think we all got this, but here it is. On what IRS form must individuals who relinquished citizenship certify compliance for the five years before expatriation? Is the correct response Form 911, B, Form 5471, C, Form 8854, or D, Form 8939? You know how this goes. Click on the radio button that you believe most closely answers this question…I’m glad that 90 percent of you responded correctly, the Form 8854, Initial and Annual Expatriation Statement. Available where? Yes, on IRS.gov. That’s a great correct response rate, by the way, 90 percent. Thanks so much for paying attention, folks…”

“So, in Hypothetical 1, we have John, who was born in the U.S. and became a U.S. citizen at birth. He renounced his citizenship on October the 1st, 2019. In making a submission, he tallies up his total tax liability and it’s under the 25,000-dollar threshold. Now, here’s an important point. It was stated in the Hypothetical. John uses his best efforts in computing his total tax for each year. John computed the income from his foreign [?]mutual funds and reported them as ordinary income on the other income line of his Forms 1040. Anybody that’s familiar with foreign [?] mutual funds knows that they’re treated as special categories of investments. John should have used a Form 8621. The title of that form is Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. We often refer to these as PFICs. So, John should have reported his PFIC on a Form 8621 with some special computation, but he didn’t. He tried his very best…”

“The term, Accidental American, is not a term used by the government…”

“…Thanks again for your time and attendance. We wish you much success in your business or practice.”