Author Archives: Stephen Kish

Are you a Canadian citizen and resident and have you renounced U.S. citizenship and have paid or are subject to the U.S. Exit Tax (IRS 877A)? [No, I do not mean the $2350 fee.]

If so, we ask you to consider being a Witness in our Canadian FATCA IGA lawsuit.

You might have renounced U.S, citizenship but own, for example, a now valuable house (i.e., Canadian-made IRS asset eagerly waiting to be confiscated) in Toronto/Vancouver/London etc. and have (because interest rates are now very low) a very valuable IRS-asset-company pension (IRS wants percentage of cashed out total value of your CANADIAN pension)— and had/have to pay a U.S. exit tax.

From the Toronto Star: “In a sign that Toronto’s real estate market is off to a hot start this year, a home on Palmerston Ave. north of Bloor St. near Bathurst St., has sold for 62 per cent more than the sellers paid two years ago. The three-bedroom semi went for $1.375 million on Tuesday. In December 2014, it sold for a mere $851,750 — $523,250 less.

— The value in U.S. dollars of your CANADIAN house, plus CANADIAN company pension, plus a few CANADIAN investments, might put you into “covered” territory where you, a CANADIAN, will be be punished for your success.

Information on the exit tax and examples of the exit tax can be found at the citizenshipsolutions.ca site.

We are specifically seeking as a possible Witness in our Canadian FATCA IGA lawsuit a person who:

— Has renounced and has paid an exit tax (the ideal witness);

— Has renounced and will be subject to exit tax;

— Is intending to renounce and know that they will have to pay exit tax; and

— Cannot afford to renounce because they have no way of paying the exit tax

If interested, and perhaps a little bit feisty like our Plaintiffs and Witnesses, email me at: Stephen.Kish.Chair@adcs-adsc.ca Your name and situation will be made public in a submission to the Federal Court of Canada.

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Yes, we all know that the U.S. House Ways & Means Committee is focused on tax reforms for “businesses”, but the (Republican) Tax Reform Task Force does say:

— “In addition to these important reforms that will create a modern international tax system for businesses, the Committee on Ways and Means will consider the appropriate treatment of individuals living and working abroad in today’s globally integrated economy.”

Republicans Overseas (RO) has now released (see link) its “White Paper” summarizing key details of its proposal on “Territorial Taxation” for individuals.

Would the readers of this post who care about U.S. tax legislation be better off — or not — if the RO White paper were enacted?

You can send your point of view to the Members of the House W & M. RO says: “We welcome your comments and suggestions. Please email them to Mr. Keith Redmond at FATCA_Testimonials@outlook.com for our consideration and addition.”

From The Republicans Overseas FB site:

[Go to the RO FB page for details: https://www.facebook.com/republicansoverseas]

The gist of the White Paper is:

“Details of Territorial Taxation Proposal for Individuals:

What would be Taxed:
— Any wage, salary, pension, dividend, interest, commission, service or other income paid
by a bank, corporation or other entity organized within the U.S.
— Capital gains on sales of any assets, tangible or otherwise, located in the U.S. and
securities of corporations or other entities organized within the U.S. or listed or traded on
a securities exchange with the U.S.
— Any wage, salary, pension, commission, service or other similar income paid to an
individual resident in the U.S. by any corporation or other entity organized outside the
U.S.
— Any dividends paid to an individual resident in the U.S. by any corporation or other
entity organized outside the U.S. that is actively managed and/or controlled, individually
or jointly, by such individual to the extent such dividends are derived from earnings of a
business engaged within the U.S.
— Any dividends or interest of a passive nature (not from a company actively managed
and/or controlled, individually or jointly by the resident) paid to an individual resident in
the U.S. by any bank, corporation or other entity organized outside the U.S.1
— Any profit on any unincorporated (flow through) business engaged in within the U.S.
would be taxed in the same manner as for corporations, regardless of the residency or
citizenship of the owner(s).

What would not be Taxed:
— Capital gains on sales of any assets, tangible or otherwise, not located in the U.S. and
securities of corporations or other entities organized not in the U.S. and not listed or
traded on a securities exchange within the U.S.
— Any wage, salary, pension, dividend, interest, commission, service or other income paid
by a bank, corporation or other entity organized outside the U.S. to a person not resident
in the U.S.
— Any dividends paid to an individual resident in the U.S. from a corporation or other entity
organized outside the U.S. that is actively managed and/or controlled, individually or
jointly, by such individual to the extent such dividends are not derived from earnings of a
business engaged within the U.S.
— Any profit on any unincorporated (flow through) business engaged in outside the U.S.
would be taxed in the same manner as for corporations, regardless of the residency or
citizenship of the owner(s)….”

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Canadian Federal Court FATCA IGA lawsuit SUMMARY:

— PLAINTIFFS argue that throwing Canadians under the CRA-IRS bus, because they are deemed by United States or local bank teller to be “U.S. tax-persons”, violates Canada’s Charter of Rights and the Sovereignty of our country.

— PRIME MINISTER JUSTIN TRUDEAU (his representatives, the Attorney General and the Revenue Minister) argues that the United States is a mighty, powerful nation that must be feared: EVEN IF throwing a few million Canadian families under the bus “technically” violates Canada’s Charter and Sovereignty, it is ok, even praiseworthy, to do so — because of the economic sanction the United States “promises” to impose if Canada does not give up its once proud sovereignty.

— This is a new update with some timelines from the Canadian Federal Court showing what has to be done before we know the Charter-Constitutional trial date (taking place next year). In part, there will be motions and responses related to differences of opinions as to what documents and information have to be provided prior to trial.

We can’t provide or speculate on what will be in the Government Motion until the motion is formally received by the Registry Office:

“Order dated 22-DEC-2016 rendered by Roger Lafrenière, Esq., Prothonotary Matter considered with personal appearance

The Court’s decision is with regard to Case Management Conference [recently held by the parties to move the litigation forward]

Result:

Court Orders:

1. D [The Defendants — Attorney General and Revenue Minister] are granted leave to s/f [serve/file] their motion in writing for production of documents and particulars.

2. P [The Plaintiffs — Kazia, Ginny, and Gwen] shall s/f their responding motion record within 28 days from the date of service of the D motion referred to in paragraph 1 above

3. P are granted leave to bring their motion for summary trial [the Charter-Constitutional trial]. P are dispensed from s/f a motion record at this stage and shall instead s/f a notice of motion and contemporaneously serve their affidavit evidence [e.g. testimonies from our Witnesses and Expert Witnesses].

4. The timeline for the D to file a response to the P motion for summary trial is suspended until further order

5. Any further affs, docs, or particulars, and anything else req’d by any order resulting from the D’s motion referred to in para 1 above shall be produced by the Ps to the Ds within 30 days of such order

6. The parties shall make best efforts to schedule the Ds examinations for discovery of the Ps within 45 days of satisfaction of the requirements, if any, described in para 5 above

7. The parties shall requisition a CMC [Case Management Conference] as soon as possible following completion of the steps set out in para 5 and 6 above in order to, among other things: A) fix a timetable for completion of the steps leading to the hearing of the P motion for summary trial; and B) schedule the hearing of the P motion for summary trial.

Filed on 22-DEC-2016 copies sent to parties”

Sorry again for the slow pace.

— I noticed on Brock a recent comment that “Brock is populated with anonymouses who toe the curb.” but confirm that our Witnesses (as well as our Plaintiffs) have all been willing to “out themselves” publicly.

Stephen Kish

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This is an update on our Canadian FATCA IGA lawsuit — just to let you know that the lawsuit is alive and is moving forward, slowly.

Today our litigators and the Government attorneys met with a Case Management Judge to resolve differences.

The good news is that we now have permission from the Case Management Judge to file a motion for the Charter-Constitutional trial and provide our evidence in support of the motion. Government will also file a motion, for which we have 28 days to respond, on an issue in which there is disagreement between our side and Government.

Once that Government motion and our response is sorted out, there will be another Case Management Conference to resolve remaining issues prior to trial and to schedule the hearing.

— I am sorry, but we do not yet have a trial date in 2017, and I will keep you informed on developments.

Thank you for your patience. By now, we all know that litigation against Government does not move quickly.

Finally, I want to thank the brave Plaintiffs and Witnesses for their courage: They make our lawsuit possible.

Stephen

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I want to give you a status update on the Alliance for the Defence of Canadian Sovereignty (ADCS-ADSC) “FATCA IGA” lawsuit against Canada’s Justin Trudeau Government.

Our lawsuit argues that the Canadian legislation that enables the U.S.-Canada FATCA “agreement”, made under threat of financial penalty imposed by the U.S., violates Canada’s Charter of Rights and our Constitution.

The Case Management Judge who is handling the logistics of the lawsuit has asked for a status update from Plaintiffs Ginny, Gwen, and Kazia. Our Vancouver litigators responded on their behalf on November 4, 2016 and said:

“We can advise that counsel for the Attorney General has advised counsel for the Plaintiffs that the Attorney General will be filing a motion for production of documents and particulars within the next two weeks.

The Plaintiffs intend to file a summary trial motion and supporting materials by December 2016. The Attorney General takes the position that a summary trial cannot proceed, even with respect to setting dates for service of materials in response, until the Attorney General’s motions have been resolved, any resulting orders satisfied, and examinations for discovery of the Plaintiffs have been completed.”

This means that our litigators expect to provide the Court with the submission for the Constitutional-Charter FATCA IGA trial (including expert testimonies and witness affidavits) by December 2016.

However, there is ongoing back and forth between Government and our side regarding timing of the production of “documents” (I can’t go into the details). These disagreements will have to be sorted out by the Court and could result in a delay in the trial, which will be held in Federal Court next year.

I know that litigation moves slowly, will keep you posted on developments, and thank you for your patience.

The Claims can be found HERE.

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[Many readers living outside the U.S. who are not IRS compliant, have sought advice from tax attorneys on whether they should or should not enter into a lifetime of IRS compliance, and what would be the “cost”. Maybe your tax attorney living in Canada etc. is also an Enrolled Agent of the U.S. IRS, possibly affecting the nature of the interaction between attorney and you the client. What were the options suggested and especially disclosures made to you by your attorney? Attorneys must adhere to the professional and ethical standards of their law societies. See discussion below:]

In a recent post I mentioned the situation of a “Caroline” who seeks advice from a Canadian tax attorney (let’s say in B.C.) regarding a question of (IRS) tax compliance with a country foreign to Canada.

How should the Canadian tax attorney advise this frightened Canadian citizen– specifically, regarding the disclosure of relevant options she (or any Canadian) should consider before entering, or not entering, into tax compliance with United States Internal Revenue Service?

What information should (must) the attorney disclose to the Canadian to comply with professional standards and ethical obligations of an attorney?

USCitizenAbroad suggests that the Canadian tax attorney needs to disclose two relevant facts:

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Donna-Lane Nelson is a co-plaintiff with me in the Republicans Overseas U.S. FATCA/IGA/FBAR lawsuit.

The July 14, 2015 Complaint states that: “…Fearing that she would eventually not be able to bank in the country where she lived, she [Donna-Lane] decided to relinquish her U.S. citizenship. She did so on December 11, 2011 at the U.S. Consulate in Bern, Switzerland. The decision to relinquish her U.S. citizenship was not easy, but ultimately she felt that she had to choose between having the ability to access local financial services where she lived or be a U.S. citizen…”

Donna-Lane, a novelist, has published a murder mystery (“Murder in Schwyz“) which includes a description of the harm caused by FATCA:

“…At home, Brett’s marriage is in deep trouble, but he doesn’t want a divorce. He wants the best for his two daughters and he is also trapped because Swiss banks are closing the accounts of Americans. He has put every asset in his Swiss wife’s name. A divorce will leave him with nothing.”

A novel that includes FATCA harm is, I think, a first.

 Now — Eric in Switzerland (see complete response below in comments) tells us about the Switzerland FATCA Fact:

“It might be a novel but it sure isn’t fiction.

I could write a short book myself about lives turned upside down here in Switzerland. My elderly parents (American father/ Swiss mother) had their account shut down for a time by UBS. My American sister who only lived in the US until she was eight years old and her successful French husband went through FATCA hell in Geneva until she renounced out of desperation on their lawyer’s advice. FATCA wanted her French husband to cough up “back taxes” for the sin of sharing an account with his American wife…but you guys know all this.

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Republicans Overseas (RO) has brought forward a lawsuit against the United States Department of the Treasury, United States Internal Revenue Service, and United States Financial Crimes Enforcement Network over FATCA, IGAs, and the FBAR.

In the back and forth of the litigation, the US Government continues to argue that none of the plaintiffs have any “standing” or have suffered any harm that is relevant for legal/litigation purposes. This is the latest (September 15, 2016) response of the Jim Bopp RO team to the the Government’s arguments. See the link.

A bit of text From the response brief:

“In pre-enforcement challenges, as here, plaintiffs are not required to violate laws to challenge them. One may comply with a statute though deeming it unconstitutional and challenge it as being an unconstitutional burden. See, e.g., Davis v. FEC, 554 U.S. 724 (2008)…”

“The Government says it has never sought to impose an FBAR penalty against Zell [who is also the attorney in the Israeli FATCA lawsuit] (Opp’n 65), but the Government has nowhere eschewed enforcement, so the provision is not moribund and pre-enforcement challenges allow one to challenge provisions before enforcement begins. He reasonably fears enforcement for noncompliance. (Am.Compl. ¶¶ 130, 132.)”

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