An excellent new interview with John Richardson by Dave Taylor. Recorded September 3, 2014 on CHQR News Talk 770.
Both John and Dave cover the basics of FATCA, the Canadian IGA, the legal challenge, the role of ADCS and much more.
Category Archives: Issues regarding US persons abroad
Top Three Quotations
Somewhere around right about now, three years ago, the worldwide U.S. person horror show began its gruesome run. This fright night still plays strong in pretty well any country outside the United States that you may happen to reside in.
Here are my nominations for the top three quotations so far, in chronological order. Notice that two of the three characters have already departed the scene.
FATCA has far-reaching extraterritorial implications. It would turn Canadian banks into extensions of the IRS and would raise significant privacy concerns for Canadians. … Canada is not a tax haven. People do not flock to Canada to avoid paying taxes.
— Jim Flaherty (then Canadian Minister of Finance) 16 Sept 2011
My message on this one is to sit tight. We are not unreasonable. We are not unsympathetic. We are not irresponsible.
— David Jacobson (then US Ambassador to Canada) 18 Oct 2011
Political signals from the United States show that expatriation and tax policies are likely to get harsher. … The cost of expatriation now is less than the expected future cost of expatriation. Better to take the medicine now rather than later. … Expect the same exit tax rules, but more of them, and worse. Expect more expatriations. … Get out while the getting is semi-good. Don’t wait for more time. More time means more laws.
— Phil Hodgen (still a tax lawyer) 5 June 2012
Feel free to propose other sourced contenders in comments to this posting.
Obvious moral principle: the number of dogs at the pound is not an excuse for a man to abuse the dog he already has
Say you had a next-door neighbour named Sam who abuses his dog. Sometimes his dog comes to your property to seek refuge, but he just crosses right over the property line, retrieves his dog, and keeps beating it. When you confront Sam about his behaviour, he claims it’s justified because he fed and trained the dog when it was a puppy. Also, he says, there’s ten more dogs at the pound waiting to be adopted, and if his ungrateful dog runs away he’ll just get a replacement and it’s no skin off his back. In fact, Sam says, he’s a hero because those dogs at the pound might die if they don’t get adopted.
Well sure, I guess Sam is right about one thing: he’s unlikely to suffer much harm if his dog runs away. But you can’t seriously argue that Sam’s ability to abuse his dog without repercussions makes that abuse moral. And that assessment doesn’t change whether the pound has a hundred dogs waiting for adoption, or a thousand dogs, or no dogs at all.
And clearly this argument holds a fortiori when we are discussing the relationship of free human beings to the governments they institute, rather than dogs to their masters. But Homelanders often like to pretend that their country’s large population or high number of immigrants & naturalised citizens make it perfectly acceptable to abuse emigrants and renunciants, or to ignore their concerns. A fairly typical example is this recent comment by a law professor trying to “justify” the U.S. government’s violation of American emigrants’ fundamental right to renounce citizenship:
A bit of picking and choosing of numbers to made things sound dramatic. In 2013, 750 Americans renounced citizenship. That’s 1/3 of 1% of the traffic through LAX (LA International Airport) on a single day. At that rate, assuming no births or deaths or in-migration, we’ll run out of Americans in 4 million years.
U.S. FATCA Legal Action site is now live and U.S. lawyer Jim Bopp’s Legal Opinion available
From “JC”:
https://fatcalegalaction.com/ now live.
Attorney Bopp has issued a legal opinion on FATCA stating three constitutional claims, with strong legal merit, can be brought against the legal requirements imposed by the Foreign Account Tax Compliance Act (FATCA) and the Foreign Bank Account Report (FBAR).
Yes FBAR!
According to James Bopp, Jr., “It is our preliminary opinion that the potentially meritorious claims are a violation of the treaty power, an 8th Amendment Excessive Fines Claim, and a 4th Amendment Search and Seizure Claim. . . . We believe that these 3 claims form the basis for a successful suit that would stop the damage that FATCA and FBAR have inflicted of U.S. citizens.”
The meat of the claim: Bopp FATCA Legal Opinion
At the start of the Legal Opinion, Mr. Bopp highlights Allison Christians’ arguments regarding the legal status of the FATCA IGAs signed by countries around the world.
The legal status of these IGAs is unclear and susceptible to challenge. They are not treaties under U.S. law because they have not be en submitted to the Senate for advice and consent pursuant to the Treaty Clause of the U.S. Constitution, Art. II, sec. 2, c l. 2. Nor ae they congressional-executive agreements because Congress has not authorized the Treasury Department to conclude the IGAs as part of the FATCA implementation effort. Instead, the Treasury Department appears to be treating the IGAs as treaty-based agreements, interpreting the information exchange provisions of existing tax treaties and tax information exchange agreements already in place with FATCA Partners. However, Allison Christians, a tax law expert and associate professor of tax law at McGill University in Montreal, argues that none of the IGAs are properly considered treaty-based agreements. Allison Christians, The Dubious Legal Pedigree of IGAs (And Why it Matters), Tax Notes International Vol. 69, No. 6 (Feb. 11, 2013).
…
WSJ: More on U.S. Department of State Huge Jump in Fees for Renunciation
To bring the subject of one of Eric’s posts back to the forefront, State Department to hike renunciation fees to US$2,350; says “no public benefit” in respecting human right to change nationality, I add another article, today, from the U.S. — Wall Street Journal, Laura Saunders, August 30th: U.S. Fee to Drop Citizenship Is Raised Fivefold. Commenting is open and comments have started.
Advocates for U.S. expatriates reacted angrily to news of the increase. “I’m so disappointed and insulted by the continuing punitive actions of the U.S. in trying to prevent persons and companies from leaving,”
Also from the U.S., which complements the articles on higher fees for renunciation, one from the U.S. Chamber of Commerce, highlighted this morning by badger: Exit Strategy: FATCA Tax Law Keeps Pushing Americans To Give Up Citizenship. Growth opportunity — the HIRE Act continues to give.
Here’s a hot tip for accountants and tax attorneys: now is a good time to develop specialized expertise in advising clients who may be seeking to expatriate from the United States. That demographic looks more and more like a real growth opportunity.
Some firms have already figured this out!
Why FATCA is bad for America — update from ACA
Further to suggestion by “JC” that this be posted here at Isaac Brock:
Update (undated) from American Citizens Abroad (ACA) – Why FATCA is bad for America
There is a lot of information here. This is Americans Abroad argument why FATCA is Bad. May we at IBS comment on it with an eye to strengthening the arguments put forward, then we may send it back to Americans Abroad?
While there is lots of information at IBS there are no master documents summarising all points. Here is where Americans Abroad have a summary.
One area where it could be strengthened is mention of the tax treaties. Australia is mentioned and says that not much extra tax would be owed. Point of Information: the US wants to tax the Australian pension fund called Superannuation. Also, if you have a share/shares and get Australian dividends – there is an Australian tax break on dividends – you would likely have U.S. tax liability. Also, the US wants to tax on “passive income.” So the closer to retirement the more passive income you may have, the greater your retirement funds, the greater the U.S. double tax exposure.
Note: As has been discussed here before, ACA does not seem to represent those who wish to expatriate from the USA. It is more an organization that represents those who want to remain “Americans” and perhaps someday return to the US to live. They have well outlined much that is bad for America and may welcome additional input from some of us.
FATCA and USA Citizens in Canada: You are Screwed!
Is this what CRA, Banks & Compliance Industries have not been Upfront about? IOW, "US Persons" in Canada "Screwed"
http://t.co/Roy2tWwvLZ
— U.S. Expat Canada (@USExpatCanada) August 29, 2014
I just came across a rather disturbing bit of information that destroys any sense of security we’ve derived from the statements that “CRA will not collect taxes from anyone who was a Canadian at the time the tax was incurred.”
The author claims that Canadian Financial Institutions are not signed on to the Tax Treaty and that the IRS can take the information received from the CRA, contact the bank directly and ask the bank to collect penalties (not taxes and interest?) from the account holder and remit to IRS.
This doesn’t sound correct to me as the IGA may allow the banks to give info to CRA but I’m not aware that the IGA nullifies PIPEDA, which would still stand. If the argument is made that the “Treaty” trumps domestic law, and they can get away with applying that, we are in serious trouble. Allison’s arguments become very important and the government should have listened.
This position seems to depend upon a relationship between a Canadian bank that has branches in the US:
“IRS will go with a demand to collect penalties from the account holder’s information they have received from CRA to Canadian Banks operating in the USA, namely RBC, TD, HSBC etc. Once the USA branch of Canadian Banks gets the demand letter from IRS, they will forward it to respective Canadian Branch where the account holder has account with the banks. As far as bank operation goes, they will either collect and remit the penalties on behalf of IRS or freeze the account until the penalties are paid.
If Canadian banks don’t comply with IRS demand, any payment coming to them from the U.S. will be subject to 30% withholding tax on gross income. They will be also forced out of doing business in U.S. capital markets and markets that conclude contracts in U.S. dollars, 1.e. the commodity or petroleum market.
U.S. persons now must comply with USA tax laws, or risk the discovery by the CRA and IRS which can make their life miserable and wealth diminished.”
If this is truly the case, why haven’t the compliance community/politicians pointed this out? Is this a willful omission on their part? This information comes from a company in Vancouver “Cross Border Tax Service.”
Those of you in the legal community, please weigh in on whether a subsidiary branch of a Canadian bank in the US can force the Canadian parent company to collect/withhold. It sounds rather tenuous to me yet as we have seen in the last few days, they seem to be able to do whatever they want.
Here is the article.
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Presbyterian Church (U.S.A.): Those who oppose FATCA are going to burn in “HELL”
The exclusion of certain foreign-earned income (up to $95,100 in 2012) and housing benefits privileges income earned out of the country and encourages the movement of United States citizens to foreign jurisdictions.
1. With respect to tax evasion and fraud, work to maximize wealth and income transparency. The Foreign Account Tax Compliance Act (FATCA), and similar laws adopted by other countries, represents an important legislative step forward in requiring foreign financial institutions to report balances, financial activities, and transactions to a taxpayer’s home jurisdiction. Communions that recognize the fallen nature of humanity support transparent financial reporting. This transparency fosters equality and fairness, and helps address tax avoidance and fraud, including money laundering.
2. Work with international coalitions and communions to oppose “race to the bottom” policies enacted by states and countries that seek to attract business investment and wealthy depositors by assessing extremely low tax rates and creating secrecy jurisdictions. These policies hurt economic competition by disadvantaging companies that do not engage in tax avoidance strategies and reduce government revenues needed for domestic social and economic development.
Concern from a Wild Rose Constituent re: FATCA/IGA
This was posted a couple of days ago at MapleSandbox. Outraged Canadian points out 2 things to her MP; she has made a donation to ADCS to try and protect the her rights as a Canadian citizen AND that the CONS have lost a vote.
A really interesting idea here, is presenting the IGA as a public safety problem, due to the risk of identity theft. This has just been reported in Russia today. (with thanks to @STOP_FATCA). There are an awful lot of associate members of this particular committee. If you see your MP here, please consider sending him/her an email or tweet on this subject. Let them know we’re aware of the upcoming election in 2015 and that we’ll be watching. Thanks Outraged, for this idea!
Today I emailed the following letter to my MP – Blake Richards Member of Parliament (Wild Rose Alberta).
Dear Mr. Richards
In the past month I have done two things you should know about, as my elected Member of Parliament:
1. I donated money to help fund a lawsuit against my own government to protect my rights as a Canadian citizen.
2. I vowed never to vote Conservative again.
Continue reading
State Department to hike renunciation fees to US$2,350; says “no public benefit” in respecting human right to change nationality
Confirming reports passed on by commenters at the Isaac Brock Society, DiploPundit points to a State Department interim rule just placed on public inspection for printing in tomorrow’s Federal Register, which raises the fee for renunciation of U.S. citizenship (but apparently not relinquishment) to US$2,350, more than twenty times the average level in other high-income countries. As they state:
[D]emand for the service has increased dramatically, consuming far more consular officer time and resources, as reflected in the 2012 Overseas Time Survey and increased workload data. Because the Department believes there is no public benefit or other reason for setting this fee below cost, the Department is increasing this fee to reflect the full cost of providing the service. Therefore the increased fee reflects both the increased cost of the provision of service as well as the determination to now charge the full cost.
The Universal Declaration of Human Rights states that “No one shall be arbitrarily deprived of his nationality nor denied the right to change his nationality”, while the Expatriation Act of 1868 says that renunciation of citizenship is “a natural and inherent right of all people” and that “any declaration, instruction, opinion, order, or decision of any officers of this government which restricts, impairs, or questions the right of expatriation, is hereby declared inconsistent with the fundamental principles of this government”.
As of press time, the State Department has not yet commented on whether it sees “public benefit” in other human rights such as freedom of election or freedom of marriage, or whether anyone seriously believes that charging people a month’s salary to get a ballot paper or a marriage certificate would not restrict or impair those rights.