Category Archives: Issues regarding US persons abroad

How cool is this? Dutch-Americans could be classified as ‘tax evaders’ IN THE NETHERLANDS!! https://t.co/zTCdzfxFaN pic.twitter.com/NwIdeLkwpq

— U.S. Citizen Abroad (@USCitizenAbroad) August 4, 2020

It’s hard to know whether the story referenced in the above tweet is true or not. But, assuming it’s true, this really would represent a milestone in the extra-territorial application of US law.

Think of this way …

So far, the United States of America – the great “citadel of freedom of justice” – has managed to:

1. Export FATCA to the rest of the world

2. Gotten the world to agree that, the United States, and the United States alone determines which of the residents of other countries are to be considered to be “US persons” for FATCA purposes.

3. Forced the non-US banks to pay for the witch hunt and general FATCA inquisition

4. Expand the US tax base into other countries (think of the OMG moment – am I really US taxpayer property?)

5. By expanding the US tax base into other countries manage to extract capital from other countries (think Exit Tax, Transition Tax, GILTI, etc.)

6. Solidify the status of the the United States of America as the world’s number one tax haven (remember since the USA hasn’t signed on to the CRS): “What goes on in Vegas stays in Vegas” and “What goes on in Wyoming (and other states) stays in Wyoming.”

But the best has now finally arrived … Truly amazing.

Assuming that this article is true, apparently now, the Netherlands may be willing to deem Accidental Americans (the one’s who accidentally escaped from America) as tax evaders in the Netherlands!!!! This is amazing. Think of it, now the United States doesn’t even have to charge these criminal “accidental Americans”. All they need do is:

A. Decree that a violation of US law in the Netherlands is actually a violation of the law of the Netherlands; and

B. Get the Netherlands to deal with them under the Dutch justice system.

Fantastic! One more expense that the United States need not pay. In the event that the “accidentals” are incarcerated (for disobeying the Homeland), the Netherlands can pay that cost too.

Russia, China and all other totalitarian regimes should really take note. Nobody does this better than America!

Good article (which has potential to challenge the basic assumptions of Homelander tax and compliance industry + @elisejosanbean) @TAPInternation: 1. explains the "Criminalization Of American #Emigrants 2. Explains that #expats are not really criminals https://t.co/dnAfl0Cv6a pic.twitter.com/WWBi748Or4

— U.S. Citizen Abroad (@USCitizenAbroad) August 2, 2020

The above tweet references an article published on June 29, 2020 in Tax Notes. In the article Laura Snyder describes many of the injustices inflicted on those who have the courage to leave the United States. The included list of injustices is well known. In addition the article includes a discussion of Professor Elise Bean’s claim that somehow offshore tax evasion is (or was) costing the United States 100 billion dollars annually. Ms. Snyder analyzes and ultimately explains the dubious validity of that claim. (That dubious claim did NOT stop Professor Bean from repeating the same malarky at the April 2017 Meadows hearing into FATCA.)

Ms. Snyder’s article includes:

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Update July 27, 2020 …

July 26, 2020 Those seeking #Justice4Harry will be interested to see @RaddSeiger on the @GeorgeGalloway show …https://t.co/XP8LWNCGj3

— U.S. Citizen Abroad (@USCitizenAbroad) July 28, 2020

and now back to the post as it was originally written …

________________________________________________________________

#HarryDunn’s mother Charlotte speaking to the American nation last night with a very clear simple message. Do the right thing. https://t.co/hAuprCaVPP

— Radd Seiger (@RaddSeiger) July 25, 2020

The last year has featured a number of posts about the role that extradition treaties play in the modern world. Interestingly most (if not all) of the posts have discussed how the United States is using extradition treaties to assert jurisdiction over individuals, who did not commit crimes while present in the United States. The United States is using extradition treaties to “capture” individuals under the following circumstances:

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Update – August 21, 2020:

The Government of Canada is appealing this decision to the Federal Court of Appeal. Ultimately (like the ADCS FATCA lawsuit which is also in Canada’s Federal Court) this case is likely to find it’s way to the Supreme Court of Canada.

https://www.theglobeandmail.com/politics/article-federal-government-to-appeal-court-ruling-that-struck-down-canada-us/

In her decision, Federal Court Justice Ann Marie McDonald concluded that the Safe Third Country Agreement results in ineligible claimants being imprisoned by U.S. authorities.

Detention and the consequences flowing from it are “inconsistent with the spirit and objective” of the refugee agreement and amount to a violation of the rights guaranteed by Section 7 of the charter, she wrote.

“The evidence clearly demonstrates that those returned to the U.S. by Canadian officials are detained as a penalty.”

The public interest parties who took part in the case immediately called on the federal government to stop sending people back to the U.S. under the agreement, and to not appeal the court decision.

In his statement, Blair said the agreement with the U.S. “remains a comprehensive vehicle” to uphold a compassionate, fair and orderly refugee protection system, based on the principle that people should claim asylum in the first safe country in which they arrive.

Introduction: So, what’s an agreement between Canada and the United States have to do with the FATCA IGAs?

Judicial recognition that the USA – a country where incarceration is almost a certainty – is simply not a safe country to return a refugee to. "Canada's asylum agreement with the U.S. infringes on Charter, says Federal Court | CBC News" https://t.co/xPkBrir87X

— U.S. Citizen Abroad (@USCitizenAbroad) July 22, 2020

Well, both the Canada US Safe Third Party Agreement and the Canada US FATCA IGA are agreements entered into between the governments of Canada and the United States. In both cases, the Federal Court of Canada has been asked to rule on whether the agreements violate Canada’s Charter of Rights. On July 22, 2019, Madam Justice MacTavish of the Federal Court Of Canada (as she then was) ruled that the FATCA IGA (and conforming legislation) did NOT violate Canada’s Charter Of Rights (discussion on Brock here). On July 22, 2020 (exactly one year later), Madam Justice McDonald of the Federal Court Of Appeal ruled that the Canada US Safe Third Party Agreement did violate Canada’s Charter Of Rights.

It is important to understand in what respect these two cases are the same in what respects they are different. This post will focus on the challenge to the Canada US Safe Third Party Agreement.

I would appreciate any thoughts/comments you might have the similarities and differences.

Understanding the Canada US Safe Third Party Agreement

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The FATCA/AEOI Papers: Mishcon publishes research trove, unearthed as part of crowd-funded UK FATCA case https://t.co/NQRwGz1QDc

— U.S. Citizen Abroad (@USCitizenAbroad) July 13, 2020

Jenny’s UK based anti-FATCA lawsuit has been discussed on Brock here and here.

Americans abroad, Accidental Americans and American emigrants (collectively referred to as “US Persons”) are the targets of FATCA and US citizenship-based taxation. They did NOT create the laws. But, they are now the single biggest obstacle to achieving success in the courts, US Congress, US Treasury and engaging the interest of other governments. To put it simply: the very group that Jenny is trying to help is working (sometimes consciously and sometimes unconsciously) against her.

Here are the reasons why:

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"CBT or not?" asks Barbara at the Issac Brock Society: China extends tax dragnet, with state employees in Hong Kong first to suffer https://t.co/OQoKGsGm5e via @scmpnews

— U.S. Citizen Abroad (@USCitizenAbroad) July 10, 2020

Introduction and background

In 2015, Eric contributed a brilliant post to the Isaac Brock Society in which he concluded that:

No, China does not have have citizenship-based taxation

I highly recommend the post and the comments. Eric concludes with an interesting summary of what citizenship-based taxation is and what citizenship-based taxation is not.

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We have discussed how the USA’s extraterritorial laws are a bad precedent, precisely because one day in the future, other powers may seek to imitate the USA. A new law in China does this. But according to the author, Mary Hui, China’s extraterritorial legal ambitions are unprecedented:

The new law is also expansive in another unprecedented way, even by the standards of China’s opaque legal system: it covers not just Hong Kong residents, but also anyone living abroad. That means foreign nationals, the Hong Kong diaspora, and Hong Kongers studying or working abroad.

The new law is “asserting extraterritorial jurisdiction over every person on the planet,” wrote Donald Clarke, a professor of law at George Washington University. Alarmingly, the law has an even broader reach than mainland Chinese criminal law, which only holds a foreigner liable for a crime committed outside of China if the effect of that crime occurs in China. Hong Kong’s nationals security law has no such limitation, Clarke explained. “If you’ve ever said anything that might offend the [Chinese] or Hong Kong authorities, stay out of Hong Kong.”

Apparently, Ms. Hui hasn’t heard of FATCA.

I had suggested that China would create CHATCA, but I guess they decided to start with a law making it illegal for anyone to criticize the government of China (which I am not doing, if anyone asks).

It’s about “ConFORMity”

Attention those seeking a back-dated CLN based on a relinquishment … Say "Good Bye" to the Old DS-4079. It's been replaced with a new version. pic.twitter.com/z7md6rESbH

— U.S. Citizen Abroad (@USCitizenAbroad) June 28, 2020

As you know, all interactions with the United States Of America are exercises in “ConFORMity”. Americans do love their forms. Hence, when the United States issues a new “form”, it’s important to pay close attention.

To the US Government, the issuance of a new Form is similar to a family experiencing the arrival of a new baby.

Forms, Culture And The Culture Of Forms

A form revision is an important moment in the United States. It’s often an opportunity to create new penalties or to increase old penalties.

Future “Form 4079ers” need to take careful note. What does this mean for future relinquishments?

Past And Future “Form 4079ers”

The DS-4079 has been an important part in the life journeys of those individuals, who were “Born In The USA”, but wanted a CLN (“Certificate Of Loss Of Nationality”), based on a back-dated relinquishment. Some past “Form 4079ers” have been successful and some not. Past “Form 4079ers” have learned that their freedom often depended on the presence or absence of one and only one word. Only “Form 4079ers” understand “The 50 Shades Of Intention”. Is expectation the same as intention? Does an understanding of the consequences equate to an intention? When is uttering the words “I renounce”, as part of a foreign naturalization, the same as the intention to relinquish US citizenship? When not? These are some of the most important questions of our age.

The Previous Form DS-4079

DS-4079 2013 Version

The Brand New Form DS-4079

DS-4070 2020 Version

The Brock Project

Are the old and new Form DS-4079s different in any significant way? If so, how?

CIRCA 1993: This fascinating article appeared in the Financial Post in 1993. Reasonably accurate and notes that some "U.S. exiles" may have thought they relinquished US citizenship by naturalizing as Canadians – but perhaps not. Notice that there was a US tax attache in Ottawa. pic.twitter.com/2KH555dfY5

— U.S. Citizen Abroad (@USCitizenAbroad) June 27, 2020

Somebody recently drew my attention to this 1993 article, that appeared in the 1993 Financial Post. Although it doesn’t provide much, it is surprising that this appeared in the Financial Post. The article appears to be reasonably accurate. Of most interest, is the discussion about people who naturalized as Canadian citizens believing that by doing so they had relinquished their US citizenship. Relinquishment is an issue of the person’s intention when he became a Canadian. Did the individual naturalize as a Canadian citizen, with the intention of relinquishing US citizenship? Notice also that (at that time) the IRS had a phone number in Ottawa that one could (presumably) call. Do you feel safer with the IRS on Canadian soil?

IRS Direct: 613 238 5335 (this is currently the “Emergency” phone number for the US Embassy in Ottawa. Yes, it makes sense that any US tax issues would be an “Emergency”).

The title is quite prescient. In 1993 Americans abroad were not “Exiles”. In 2020 US policy has turned many of them into “Exiles”.

What follows is a pdf of the article (should anybody have any interest in it).

IRS1993

In response to the global COVID-19 pandemic and in line with the Canadian government’s call to increase social distancing, the U.S. Embassy and all Consulates General in Canada are suspending all routine American Citizen Services from March 23 through August 4.

We will resume routine American Citizen Services as soon as possible but are unable to provide a specific date at this time.

The Embassy and Consulates will continue to provide emergency consular services to U.S. citizens.