Category Archives: Issues regarding US persons abroad

Bubblebustin found and JC suggested the the following be a post:

Newsmax Finance, August 6, 2014: High Taxes, Abusive Enforcement Causing Businesses, Citizens to Flee America

Author, Peter Morici, starts out by blending US corporate and US personal of overreach of the US into other countries business and people:

President Obama, as promised, is changing America. High taxes and abusive enforcement are compelling businesses and ordinary citizens to leave the country altogether.

The United States has much higher corporate tax rates than other industrialized countries do, and increasingly, the IRS uses more aggressive enforcement tactics than foreign tax authorities use.

A recent article from James George Jatras published in RIA Novosti:

Moscow Must Close a Yawning Gap in Its Financial Armor

Topic: Sanctions Against Russia

http://en.ria.ru/authors/20140725/191441744/Moscow-Must-Close-a-Yawning-Gap-in-Its-Financial-Armor-.html

As the chill air of a new Cold War begins to blow, James Jatras explains why Russia’s and the world’s future hinges on how every nation responds to the threats posed by FATCA.  He forcefully argues that this is no time for strategic miscalculation by any country, especially by Russia, and especially in this increasingly dangerous geopolitical climate.

Not sure how this source and these articles have evaded detection for so long, but they deserve wider exposure:

http://wealthmanagement.com/commentary/fatca-violates-rights-american-citizens-overseas

http://wealthmanagement.com/wealth-planning/why-do-americans-hate-expatriates

http://wealthmanagement.com/legal-compliance/accidental-american-0

The newest, FATCA Violates Rights of American Citizens Overseas, is a hard-hitting commentary by Carrie Lowery, who is described thusly:

Carrie A. Lowery, Esq., has worked as a legal professional for over a decade. She recently founded Authority Legal Research & Writing Service, which provides legal research and writing support to practicing attorneys.

I was particularly struck by her close attention to the violation of treaty powers represented by Intergovernmental Agreements:

FATCA requires foreign financial institutions to report the financial holdings of their U.S. clients to the IRS or will be charged a 30% withholding tax on payments from US Banks.

The Treasury Department has been unable to cite any constitutional, statutory, or regulatory authority which allows it to compel foreign institutions to collect and share the financial information of U.S. citizens.  As a result of foreign privacy laws which prohibit direct disclosure to the IRS, the Treasury Department has entered into numerous bilateral Intergovernmental Agreements (IGAs) with foreign agencies and governments.  There is no reference to or authority provided for IGAs in the statute itself.  When asked for a basis of authority for its action, the Treasury Department points to existing tax treaties with foreign governments.  Unfortunately, there is one fundamental difference between existing tax treaties and the IGAs: lack of Senate authorization, in violation of the treaty power.

It would appear that Allison Christian’s definitive evisceration of Treasury’s IGA lies continues to make waves.  Bravo!

The other two above-mentioned articles are less recent, but no less compelling, even though they do belie the incomplete perspectives of the compliance-industry.  Nevertheless, some good solid reading here.

As previously reported here:

https://isaacbrocksociety.ca/2014/03/05/obama-administration-asks-congress-for-fatca-reciprocity-in-latest-green-book/

and here:

http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=130

the Obama administration has been trying for some time, without success, to sneak some form of FATCA reciprocity past Congress to avoid any embarassing pants-on-fire confrontations with IGA signatories who were apparently promised the moon by American FATCA negotiators.  Seems they’re at it again, with a duplicitous new twist, as the following links reveal:

http://www.jdsupra.com/legalnews/treasurys-fincen-proposes-rules-forcing-79017/

http://www.treasury.gov/press-center/press-releases/Pages/jl2595.aspx

http://insurancenewsnet.com/oarticle/2014/08/04/financial-crimes-enforcement-network-seeks-comments-on-customer-due-diligence-re-a-539529.html#.U-BlY1Z3geQ

http://www.fincen.gov/statutes_regs/files/CDD-NPRM-Final.pdf

In a nutshell, Treasury aims to glue just enough sequins onto its FinCEN (Financial Crimes Enforcement Network) CDD (Customer Due Diligence) requirements to convince IGA suckers that it is finally forcing domestic financial institutions to reveal the beneficial owners of accounts held by foreigners in the US.  Since there is actually plenty of wiggle-room in the reporting thresholds, most such account holders will simply re-structure their ownership profiles and thus avoid reporting to their home countries, but no matter – the whole point of the exercise is merely to create a convincing-enough facsimile of reciprocity that the IRS will finally have the fig leaf it so desperately craves, not only for the FATCA club, but for its G8 G7 partners as well.

Now, in true FATCA IGA style, the proposed new legislation intends to simply bypass pesky Congressional authority altogether by being presented as a mere amendment to existing BSA (Bank Secrecy Act) regulations. Some bright light at Treasury finally made the right connection, thinking, hey, the ruse has worked fine for the IGA’s, so why not for DATCA?

Wonder how long it will take for Bill Posey to catch-on to this new effort?

The law of unintended consequences remains far more powerful than any half-baked legislation coming out of Washington, as this article from South China Morning Post reminds us:

http://www.scmp.com/business/article/1565727/fatca-regime-may-have-unintended-consequences-financial-system

Fatca regime may have unintended consequences for financial system

Crackdown on Americans’ money in overseas accounts may lead to the growth of shadow banking and the financial power of other countries

Many financial institutions are still completely confused and unable to comply with the US government’s Fatca regime. “Foreign Account Tax Compliance Act” sounds like another innocuous tax regulation. But it represents the most ambitious tax and personal data collection strategy in financial history. It will embolden and encourage more global intrusions by US government agencies. More people will be driven underground to seek shadow banking services.

Fatca is controversial because it dramatically shifts the burden of disclosure from the American person to their banks. Foreign financial institutions are now more than just tax bounty hunters for the US Internal Revenue Service (IRS), but pawns in an historical power play for control over the global financial system.

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An interesting item found on the Expat Forum today.  A commenter writes (emphasis mine):

Got this from Metrobank today. This indicates that the IRS wants gross receipts and withdrawals or payments, even though I no longer have an account with Metro. Has anyone else got something like this from other banks?

Here is the redacted form letter the commenter received:

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From Bloomberg News, Russia Eyes Banning U.S. Chicken And Some European Fruit. But that is not all. They plan to ban the FATCA compliance industry as well:

In a separate development, Russia’s lower house of parliament, or Duma, may consider legislation to target companies in nations that impose sanctions against Russian citizens or businesses, according to Russian lawmaker Evgeny Fedorov.

The proposal would bar audit and consulting firms from nations defined as “country-aggressor” from working in Russia. If enacted, the law would cover Deloitte, KPMG, Ernst & Young LLP, PricewaterhouseCoopers LLP, Boston Consulting Group Inc. and McKinsey & Co., Fedorov said in a telephone interview today.

I’d love to see this in Canada too.  It is time to get the IRS tax collectors out of Canada. They have no business here. Now Russia, thanks to retaliatory measures against Obama’s increased sanctions, will do what no one seems to realize is the only logical thing to do: deport the US tax compliance industry.