Author Archives: Tim

http://www.taxanalysts.com/taxcom/taxblog.nsf/Permalink/CBEN-97XAA3?OpenDocument

I also agree with a brilliant colleague who recently put it to me this way: The IRS is broken, that’s for sure. But the IRS is a symptom. The “disease” is the tax code. I think that’s absolutely right. And for me, this latest “scandal” concerning the IRS is going to make it impossible to reform our tax code anytime soon.

Why?

It’s already sucking the oxygen out of Washington. And tax reform is hard; it involves picking winners and losers. Politicians don’t like publicly picking winners and losers, which is inevitable at least somewhat in tax reform. They like picking winners and losers behind closed doors. But picking on the IRS? No danger there. Give them a choice between something hard and something that will cost them nothing politically, and I think we all know where the politicians will go.

I can tell you what they do talk about over here: FATCA. FATCA is a game changer, and with its negatives it will bring a great positive: increased transparency. Transparency is good for a tax system, and that makes things like advanced pricing agreements bad for tax systems.

Only the United States could have imposed FATCA on the tax systems of other countries. The United States has the power – read markets – to do it. And that is a huge reason why the United States should put some of its power into dealing with its own sick tax code and it’s own transparency issues. “Because with great power comes responsibility.” A lot of famous people get credit for that quote. But it sure sounds like something Winston Churchill would have said.

Perhaps Brockers might want to give Tax Notes Today editor Christopher Bergin a piece of their minds.

We finally have the draft agenda of the European Parliament’s Economic and Monetary Affairs Committee public hearing on FATCA next Tuesday.

http://www.europarl.europa.eu/document/activities/cont/201305/20130521ATT66354/20130521ATT66354EN.pdf

Unfortunately,  all of the scheduled speakers will almost certain defend FATCA as if their lives depended on it. My sense is there is a real political problem in Europe as more become aware of the IGA terms however, many others with all of Europe’s economic and deficit problems are strongly in favor of cracking down on tax “evasion.” I do know for a fact the reason this hearing is being called is do the protestations of anti FATCA MEPs such as Sophia In’t Veld however the net effect seems to be to have a hearing that at this point is completely dominated by pro FATCA voices. I do expect some tough questions from the likse of Ms In’t Veld that I suspect will cause some real discomfort for the currently scheduled speakers. However,  I expect plenty of softballs from the FATCA sympathizers on the committee. I also expect the IRS/Treasury rep to lie through his death and essentially pray on the lack of knowledge many European politicians have of the US system of government.

One problem and issue is the only organized groups against FATCA other than purely domestic US groups like Center for Freedom and Prosperity are those such as AARO, FAWCO, ACA etc that are volunteer based and relatively small. For whatever its worth I have strongly encouraged my contacts at those orgs to make a formal petition for participation(The current schedule is only a “draft”).  I have not heard a response back at this point.

http://www.youtube.com/watch?v=3uVZiFNkDsA

Many of her colleagues speaking prior as I understand were pretty pro FATCA

Additional press release comments from ALDE group(of which Ms In’t Veld is part of)

http://www.alde.eu/press/press-and-release-news/press-release/article/member-states-must-endorse-an-eu-strategy-against-tax-fraud-evasion-and-tax-havens-41476/

Only the EU, in a leading role, can ensure genuine international cooperation in this fight“. On FATCA, he concluded: “We cannot accept the direct application of FATCA on EU territory. Rather the EU should take FATCA as an example to develop, by democratic procedure, its own system of tax data sharing rather than importing wholesale the US one, in accordance with our own standards of data protection“.

Note: Sophia In’t Veld is part of the Dutch D66 along with two other MEP’s which in turn is part of a larger group of Alliance for Liberal Democrats in Europe which published the above release. I don’t have the Dutch translation at this point but D66 came out with a much stronger statement in opposition to FATCA.

http://www.ctj.org/taxjusticedigest/archive/2013/05/senator_rand_pauls_fight_for_o.php

From Citizens for Tax Justice:

Today Senator Paul is still blocking such treaties. Taking his efforts a step further, he has introduced a bill to repeal a major reform that clamps down on offshore tax evasion. That reform is the Foreign Account Tax Compliance Act (FATCA), which was enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act. Senator Paul says he opposes it because of “the deleterious effects of FATCA on economic growth and the financial privacy of Americans.”

His arguments are entirely unfounded and the only thing he is accomplishing is to help those illegally hiding their income from the IRS. FATCA basically requires taxpayers to tell the IRS about offshore assets greater than $50,000, and it applies a withholding tax to payments made to any foreign banks that refuse to share information about their American customers with the IRS.

For a country with personal income tax (like the U.S.), that kind of information-sharing is indispensible to tax compliance, as the IRS stated in its most recent report on the “tax gap”:

Overall, compliance is highest where there is third-party information reporting and/or withholding. For example, most wages and salaries are reported by employers to the IRS on Forms W-2 and are subject to withholding. As a result, a net of only 1 percent of wage and salary income was misreported. But amounts subject to little or no information reporting had a 56 percent net misreporting rate in 2006.

So why shouldn’t foreign banks that benefit from the business of U.S. customers report the assets they deposit to U.S. tax enforcement authorities? Without such reporting, people who have the means to shift assets offshore are able to evade U.S. income taxes, while the rest of us are left to make up the difference.

Here:

http://site.d66.nl/intveld/document/fatca/f=/vj90hk8obskl.pdf

Does the Commission consider that this condition of Swedbank is related to the recently adopted US law FATCA, the ongoing IGAs on it and the legal uncertainty for the FFI as to the extraterritorial application of FATCA?

Is the Commission aware that the extraterritorial effect of FATCA could lead to banks on the territory of the EU refusing to take US clients?

Does the Commission consider this practice as a violation of the general principle of equal treatment and non-discrimination, or any provision of the EU treaties?

Does the Commission consider that the definition of’ US person’ could also include EU citizens, which would mean that EU citizens could be affected directly by US law on EU soil?

Patrick W. Martin, Partner – Procopio, Cory, Hargreaves & Savitch, LLP
Lara Banjanin, Attorney Advisor – Office of Associate Chief Counsel – International (IRS)
Michael Welters, Partner – Bull, Housser & Tupper

Lara Banjamin is like ice woman however it is interesting to the Canadian lawyer next to see her discuss the legal obligations or lack thereof a Canadian lawyer has to the IRS. In Michael Welters seems to imply that under Canadian law a lawyer who happens to practice under circular 230 should recuse him or herself under certain circumstances

Mark Mathews, Steve Toscher, and Richard Harvey talk OVDI in second video below.(Two different videos)

Must watch, Must Watch, Must Watch

Provide for reciprocal reporting of information in connection with the implementation of the Foreign Account Tax Compliance Act (FATCA).—

In many cases, foreign law would prevent foreign financial institutions from complying with the FATCA provisions of the Hiring Incentives to Restore Employment Act of 2010 by reporting to the IRS information about U.S. accounts.

Such legal impediments can be addressed through intergovernmental agreements under which the foreign government agrees to provide the information required by FATCA to the IRS. Requiring U.S. financial institutions to report similar information to the IRS with respect to nonresident accounts would facilitate such intergovernmental cooperation by enabling the IRS to reciprocate in appropriate circumstances by exchanging similar information with cooperative foreign governments to support their efforts to address tax evasion by their residents. The proposal would provide the Secretary of the Treasury with authority to prescribe regulations that would require reporting of information with respect to nonresident alien individuals, entities that are not U.S. persons, and certain U.S. entities held in substantial part by non-U.S. owners, including information regarding account balances and payments made with respect to accounts held by such persons and entities.

This was found buried on page 202 of the Analytical perspectives of the President’s budget.

http://www.whitehouse.gov/sites/default/files/omb/budget/fy2014/assets/spec.pdf 

Additionally this request was NOT found in the Treasury Green Book where normally requests of this nature are made.

Harper government’s fraudulent attempt to look tough on tax havens: McQuaig

Starring Douglas Shulman as Police Chief Tolliver and MEP Sven Giegold as Police Lieutenant “Donny” Donaldson

I thought it might be nice to post about something other than FATCA and tax for a change. I don’t know if everyone will like this movie it has some good reviews and bad ones too. I do think it has a certain symbolism for out present predicament even though the movie is over the top on occasions. I would try to take note to societal references to pot, the Chicago Seven, third marriages etc. I am not sure it is explicitly mentioned but the movie is most definitely supposed to take place on either Martha’s Vineyard or Nantucket the two ultra rich, ultra elite, and ultra Liberal islands off the coast of Cape Cod(All of the cars have Massachusetts license plates and the cars of the BMW and Mercedes Benz variety). Both Martha’s Vineyard and Nantucket are also the playground of the Hollywood “elite” so for this reason the movie was not heavily distributed back in 1993. Nor are all cultural references that emphasized in the trailer.

You can rent it for $3.00 US on Amazon.

http://www.amazon.com/Amos-and-Andrew/dp/B001PSOQ2E/ref=cm_cr_pr_product_top

Starring Nicholas Cage and Samuel L Jackson

The theatrical trailer isn’t that good but I will post it anyways.

https://www.youtube.com/watch?v=II4lMyaIcug

I haven’t watched this video yet. Its just been posted. I have heard it was argumentative and Grinberg very much thought the IRS needed to crackdown on Canadian “tax evaders” who weren’t paying their fair share to their country of birth. This video is a MUST WATCH but you might want to have something to punch other than your TV or computer when watching.

http://mediasite.law.wustl.edu/Mediasite/Viewer/?peid=45a195b97d0f40c388b2dbbc9031a1291d

Not all of it is about FATCA and Canada so parts may be a little boring for most IBSers. Happy Watching.