Moby was the first publicly reported Opt Out of the 2009 OVDP. He has been very generous in sharing his experience, and has been an inspiration to others who have had to battle the fear of what draconian penalties the IRS ‘might’ apply outside of the OVDP. We all believe the IRS FAQ examples are hyperbolic maximums by intention to strike fear into non complying hearts, but until tested, you really don’t know. Moby basically turned down the “in lieu of” OVDP penalty, called their bluff, and won! If you are not familiar with his story, I would strongly encourage you to read it as originally reported on January 25th here and updated on March 10th here . Since the last post, he has been at work on a FOIA request related to IRS FBAR compliance improvement efforts, and asked me to share his findings. What follows is his report. Continue reading
Category Archives: Issues regarding US persons abroad
When one passport isn’t enough — CNN article about dual nationality
In this article, tax issues are mentionned, but no word about the life destroying effects of FBAR, FATCA and double taxation on Americans living abroad.
Also, the mention of Kenya as a country that doesn’t allow dual nationality is wrong, since the new constitution voted in 2010.
When one passport isn’t enough, by Maria LaMagna
John Baird vs Chuck Schumer
http://www.niagaraadvance.ca/2012/07/27/baird-rejects-us-nexen-concerns
Key Quotes:
A senior U.S. senator has called for a hard line on a state-owned Chinese company’s takeover bid for Canadian oil company Nexen, but Foreign Affairs Minister John Baird refuses to be pushed into anything.
“Decisions about the Canadian economy or about our economic relationship with China will be made in Ottawa, not in Washington or in New York,” Baird said on Friday.
His comments come after Sen. Chuck Schumer — a top New York Democrat — wrote to the U.S. treasury secretary about China National Overseas Oil Corporation’s (CNOOC) proposed $15.1-billion takeover of Nexen.
Schumer says Nexen’s operations in the Gulf of Mexico — U.S. territory — account for about 10% of its business, so any takeover by a foreign buyer would be subject to review.
Baird says he has “great respect” for Schumer, but doesn’t know if the U.S. can block the CNOOC-Nexen deal.
The minister also refused to link the Nexen takeover to securing greater access to the Chinese market.
“Obviously we’d like to see less trade barriers, more trade, more free trade that is unencumbered,” he said. “We will continue to pursue that independently of this decision.”
Denying US Persons banking services: “It’s All About Fairness”
“It’s all about Fairness”, Bank Coop wrote on the 23rd of May, 2007.
With its fair banking campaign, the medium-sized Swiss bank is emphasizing its conscious focus on broader society and offers good services at fair prices
It’s all about Fairness
In May, 2012, Bank Coop had 250 customers who lived in the United States.
Wir haben derzeit rund 250 Kundenbeziehungen zu Kunden, welche in den USA leben.
Generalversammlung Bank Coop, 2. Mai 2012
On July 17, 2012, Bank Coop declared that it was terminating the accounts of 250 US customers.
Die Bank Coop trennt sich derzeit von ihren US-Kunden – rund 250 Kundenbeziehungen werden liquidiert – und will im Bedarfsfall auch die Kündigungsfristen verlängern.
Tages-Anzeiger
I inquired on Friday, July 27th, 2012, if this ruling also applied to dual Swiss citizens who lived and worked in Switzerland and was informed that they are also denied banking services at Bank Coop if they are considered as being “US Persons”. So, I searched for an official statement from the bank on the net, but could only find one on Equity Yield Notes.
EYNs may not be offered, sold or delivered within the United States of America or to U.S. persons except as permitted by the Prospectus.
Equity Yield Notes
On Securities, it writes that the purchase or sale is not allowed for customers who live in the US, but makes no mention of US persons in Switzerland.
keine Kauf- und Verkaufsaufträge für Wertschriften von Kunden mit Domizil USA entgegengenommen werden, wenn diese aus den USA ausgelöst werden.
Boersenauftraege
This leads me to the conclusion that they either haven’t updated their records, or they can’t since such would not be about “fairness” or it would be in violation of Swiss laws. Swiss law allows banks to deny services to “politisch exponierten Personen“, which are high ranking government officials involved in money laundering. Bank services may also be denied when the source of the customer’s money is questionable and the law prohibits banks from accepting money of criminal origin. Yet, all of this doesn’t apply to Swiss citizens who work and live in Switzerland without being in violation of any laws but are simply identified as being “US persons”. Bank Coop is likely reacting to the Wegelin situation:
Möglicherweise kam Wegelin nur deshalb unter Beschuss, weil die Amerikaner eine aggressive, sagen wir: imperialistische Auslegung der eigenen Steuergesetze vornahmen. Dass die Amerikaner dies taten, ist enttäuschend. Dass die Schweizer Behörden nichts dagegen unternahmen, ist erschütternd.
Die WeltWoche
In the case of Wegelin, the US government applied an imperialistic interpretation of its own tax laws, while the Swiss government failed to take action.
Denial of CLN to would-be renunciant upheld by DC District Court
On Wednesday, in Johannes Weber v. Department of State, Judge Ellen Huvelle of the United States District Court for the District of Columbia granted a State Department motion for summary judgment against a pro se litigant who sought to renounce U.S. citizenship in favour of retaining his existing German citizenship. (Pro se is a Latin term for a heretic who refuses to hire a priest to help him complete his obeisance to the paperwork gods).
Note that this is indeed a case of renunciation and not relinquishment: Weber signed an Oath of Renunciation. State denied the renunciation based on the consul’s judgment that Weber lacked full mental capacity at the time. This is unfortunate but sadly to be expected. What really worries me about this case is Huvelle’s entirely unprompted comment that recent, vaguely-defined “affiliation” with the U.S. is grounds for the State Department to determine that a renunciant lacks the required intent to lose citizenship. This is something that even State themselves does not seem to have claimed.
Retirement Plans Get Relief from Foreign Asset Reporting Law
This will have a real effect if it applies to Canada. For the cash sitting in other funds, just spread them around and keep them below $50,000 each
http://www.thompson.com/public/newsbrief.jsp?cat=FINANCE&id=3907
Canada puts pressure on Eritrea – National Post – More from Stewart Bell
Prologue – December 2011 – The U.S. Supports U.N. Sanction Against Eritrea
[http://www.youtube.com/watch?v=gewPTSK2hJU]
Eritrea has put Toronto on the international map. As you know, Eritrea and the United States are the two countries in the world that practice citizenship-based taxation. Of course, the U.S. takes the position that it is wrong for Eritrea to use citizenship-based taxation. For an example of U.S. hypocrisy at it’s finest, see this video of Susan Rice at the United Nations. (Susan Rice apparently once worked in Toronto for McKinsey. It would be interesting to know whether she filed her FBARs). It is becoming increasing clear that citizenship-based taxation, in its application, may be in violation of international law.
Even the CBC “As It Happens” did a segment on this issue. Continue reading
Germany may ditch Fatca if reciprocity agreement not honoured, experts warn
Germany will not meet its Foreign Account Tax Compliance Act (Fatca) obligations if the US reneges on an intergovernmental agreement with the country, an observer of the US legislation warns.
….Frankfurt-based Martin Schulte, head of capital markets at the Association of Foreign Banks in Germany, agrees reciprocity is key for Germany to engage in an intergovernmental Fatca agreement. “The reciprocity is one of the key issues for the German government,” he says. “Although I don’t think the German Treasury expects there are too many German citizens hiding in non-transparent vehicles in the US, reciprocity is a matter of principle – like a balance of power and ‘we’re not just following the US wherever they go: if they want something from us, we want something back’.”
The comments come on the back of growing concerns that the agreement is not legally binding on the US side. As such, European participants fear US banks may struggle to supply relevant data to a growing number of individual countries as part of the reciprocity agreements, and may decide not to honour them.
Schulte expects the German government won’t take kindly to any kind of rescindment from the US on the intergovernmental agreement. “If it turns out the agreement wasn’t properly enforced on the US side, then I don’t think the German government would undertake substantial effort to enforce the German Fatca implementation, even though it’s going to be a national law,” he says.
As well as the five intergovernmental agreements, the US has entered into so-called model II agreements with Switzerland and Japan. Nordic countries have also been pushing for reciprocity-style agreements.
Schulte warns this may have a negative impact on the reciprocity process. “Unfortunately, if other partner countries insist on reciprocity too, US banks might face even more effort and compliance costs than their foreign counterparts, since they will have to identify and report customers from not only one but from various countries. It’s hard to imagine this could really work.”
US Treasury Issues Model Intergovernmental FATCA Agreement
US Treasury Issues Model Intergovernmental FATCA Agreement
by Mike Godfrey, Tax-News.com, Washington
27 July 2012
The United States Treasury Department has published a model intergovernmental agreement to implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (FATCA), together with a joint communique with France, Germany, Italy, Spain and the United Kingdom endorsing its text.
See:
Addendum: Here is another report which includes links to the model agreements:
http://www.advisorone.com/2012/07/26/treasury-releases-model-agreement-for-foreign-tax
189 names in Federal Register name-and-shame list for second quarter of 2012
Secretary of the Treasury Timothy Geithner has RENOUNCED! Renounced the evil ways of his earlier life of sin, that is. He has sworn off those wicked days of yore in which he repeatedly flouted the Homeland’s tax laws, and has been walking the straight and narrow path, rendering unto Caesar that which is Caesar’s.
And today, Caesar demanded a list of names. Yes, for the second quarter in a row, Mr. Secretary has brought us — in a timely fashion — the Quarterly Publication of Individuals, Who Have Chosen To Expatriate, as Required by Section 6039G. This list contains names of former citizens and green card holders who are on Chuck Schumer’s hit list no longer U.S. Persons. (To be clear, Geithner’s name is not one of them). He still hasn’t fixed the superfluous comma in the title, or the misspelling of HIPPOPOTAMUS, but hey, no one’s perfect, right?
However, even though Treasury Timmy met his publication deadline, it remains an open question whether he has published the names of all of the individuals with respect to whom he received information in the preceding quarter or quarters. The number of names in this quarter’s list is much smaller than in previous quarters. Furthermore, absent from the list are a number of people known to have given up U.S. citizenship in 2011 and early 2012, including Belizean anti-crime activist Yolanda Schakron, Jamaica’s former Commissioner of Customs Danville Walker, and notorious Canadian terrorist Peter Dunn of Isaac Brock’s Army.