Court felt that it “…is difficult to see how a seizure contemplated by the Impugned Provisions significantly intrudes into privacy interests, as the appellants appear to suggest”. See the decision.
This announcement includes a link to the decision.
Thanks to Mike for finding this article.
As reported by the National Review, a U.S. Tenth Circuit Court of Appeal ruled that it is ok for the U.S. Department of State to revoke a U.S. passport (to be used e.g., for international travel) if the IRS has certified that the person owes more than $50,000 in federal taxes.
As the Court says: “…the passport revocation serves only to incentivize repayment of the tax debt.”
See the July 20, 2021 ruling.
Do US persons have a right to international travel?
Perhaps all Canadian banks routinely send out requests, at online account sign-in, to their customers to obtain info on tax residency — and this is old news.
Anyway, this morning I received this online request, for the first time, while trying to sign into my online account at my Canadian bank. I am a long-term customer at the bank:
Request to validate your tax residency information
To comply with Canadian tax law, we’re required to have clients validate that their tax residency information we have on file is correct and complete.
Our records show that your tax residency information needs to be confirmed.
Here are the next steps you need to take
• Online Banking: Select Customer Services > Change your tax residency
• Mobile Banking: Select Customer Services > Personal information > Change your tax residency
Please review your tax residency information now and update as required.
Tax residency is a method used by the Canada Revenue Agency (CRA) and by other countries to determine how much tax you should pay. Most countries, including Canada, determine taxes based on the amount of time you spend in the country, rather than your citizenship. For instance, some Canadians spend the winter months outside of Canada. The U.S., however, taxes all U.S. citizens as U.S. residents. It is your responsibility to determine your tax residency status in other countries.
[Customer clicks on “I understand” and is then asked three questions:]
Are you a tax resident of Canada? Yes/No
Are you a U.S. person for tax purposes? Yes/No
Do you pay taxes in any other country? Yes/No
By selecting continue I declare, as required by Canadian law, that the tax residency information and U.S. person status (including my Tax ID number) are to the best of my knowledge and belief, correct and complete. Failure to provide may result in my account information being reported to the relevant authority and I may be subject to a penalty under the Income Tax Act.”
[BTW, THANKS for the Thursday afternoon donation!]
The below is a Notice of Constitutional Question” just sent by Appellants Gwen and Kazia to alert Attorney Generals in all of the Canadian Provinces and Territories of our upcoming trial in Canada’s Federal Court of Appeal.
It provides a very brief summary of the arguments and the remedy our appellants want.
If you don’t like Canada’s FATCA IGA legislation, please DONATE to help pay our legal expenses.
“NOTICE OF CONSTITUTIONAL QUESTION
The applicants challenge the constitutional validity of:
1. Sections 263-269 of the Income Tax Act R.S.C. 1985, c.1 (5th Supp.) and
2. The Canada-United-States Enhanced Tax Information Exchange Agreement Implementation Act, which is s. 99 and Schedule 3 of the Economic Action Plan 2014 Act, No1, S.C. 2014, c.20
(Collectively the “Impugned Provisions”)
Further, the Applicants seek a remedy pursuant to s.52 of the Constitution Act, 1982, being Schedule B to the Canada ACT (U.K.), 1982, c. 11 that the Impugned provisions are of no force or effect to the extent that they violate s. 8 of the Charter and cannot be saved by s.1.
The question is to be argued on a date to be set [Court is now deciding on the date]
The following are the material facts giving rise to the constitutional question:
1. The impugned provisions operate to compel banks to act as agents for the government in the collection of private information from people who the banks believe have indicia of US citizenship.
2. Those same people are compelled to provide private information to the banks.
3. That information is transmitted from the banks to the CRA and from the CRA to the IRS.
4. The IRS can use that information for the enforcement of its tax laws including for the prosecution of tax evasion.
5. The compelled collection and dissemination of this information is from persons who might never have lived in the United States, who might have citizenship to another country, and who might have no economic, social, familial, cultural or moral ties to the United States.
6. The purpose of the Impugned Provisions is simply to facilitate the interests of the US tax authority.
The following is the legal basis for the constitutional question, as elaborated in the Appellants’ Memorandum of Fact and Law attached to this Notice of Constitutional Question as Schedule A:
1. The privacy in the compelled information is constitutionally protected through section 8 of the Charter and the compelled collection and dissemination of that information constitutes an unreasonable seizure under section 8.
2. The trial judge erred in law in finding that the Impugned Provisions do not violate the rights guaranteed by section 8 of the Charter.
3. The trial judge erred in law by considering factors under the section 8 Charter determination which were irrelevant to that section and, instead, to be properly considered under section 1 of the Charter.”
Dated: March 22, 2021; sent to Attorney General of Canada (who we are suing) and the Attorney Generals of all of the Provinces and Territories of Canada
[The audit is now mentioned in Tax Connections from, I think, a tax compliance perspective]
A commenter on Brock found this link to a recent September 28, 2020 TIGTA audit, a “review to determine the effectiveness of the Internal Revenue Service’s efforts in ensuring compliance with the expatriation tax provisions under Internal Revenue Code Sections 877 and 877A…”
Expatriation is a human right.
However the United States Congress and the U.S. Treasury Inspector General for Tax Administration (TIGTA) aim to discourage anyone who renounces because they don’t want the burden of annually filing those US tax forms — there must be disincentives for these persons.
TIGTA specifically argues that without a much better IRS “Centralized effort, Congress’s attempts to create disincentives for tax-motivated expatriation via I.R.C. § 877A will not be effective”. Of course, the disincentives would be applied also to “Accidental ‘Americans'”.
The audit concluded that IRS tax compliance efforts for expatriates is a mess and found, for example:
“TIGTA found that the IRS database of expatriates was incomplete for 16,798 expatriates who did not file Form 8854. In addition, TIGTA found instances of potential nonfiling, underreporting of income, and/or payment compliance issues by expatriates. From a sample of 26 expatriates who did not file a Form 8854, five had potential unreported income over $6 million. From a sample of 61 expatriates who filed a Form 8854, 15 had potential unreported income over $17 million. Lastly, TIGTA also found that expatriates with high net worth appear to not be paying their exit tax.”
… and TIGTA made some recommendations.
“PHILIP YAMALIS: Welcome to today’s webinar, Relief Procedures for Certain Former Citizens. We are certainly very glad you are joining us today. My name is Philip Yamalis and I am a Stakeholder Liaison with the Internal Revenue Service and I will be your moderator today’s webinar which is slated for 100 minutes. Before we begin, if there is anyone in the audience that is with the media…”
“Phil, how about stopping here first for a polling question. YAMALIS: That sounds like a great idea. Let’s do it. Our first polling question, folks. Here it is. What are some of the common tax responsibilities of United States citizens? Now is the correct response, A, annually file income tax returns reporting worldwide income if income is over a specified threshold. B, annually file all required information returns, C, annually file Foreign Bank and Financial Accounts or FBAR on FinCEN Form 114, or, D, all of the above? Please click on the radio button that you believe most closely answers this question. I’ll give you a few seconds to make your selection. OK, let’s stop the polling now and we’ll share the correct answer on the next slide. And the correct response is D, all of the above. OK. I see that 97 percent of our audience responded correctly. That’s an awesome response rate. Thanks for your attention, folks. So with that, let me turn it over to Lara…”
“Philip, why do[n’t] we stop here for our second polling question? YAMALIS: Lara, that sounds very good to me. So, audience, are you ready for the second polling question? Here it is. I’ve heard this enough, so I think we all got this, but here it is. On what IRS form must individuals who relinquished citizenship certify compliance for the five years before expatriation? Is the correct response Form 911, B, Form 5471, C, Form 8854, or D, Form 8939? You know how this goes. Click on the radio button that you believe most closely answers this question…I’m glad that 90 percent of you responded correctly, the Form 8854, Initial and Annual Expatriation Statement. Available where? Yes, on IRS.gov. That’s a great correct response rate, by the way, 90 percent. Thanks so much for paying attention, folks…”
“So, in Hypothetical 1, we have John, who was born in the U.S. and became a U.S. citizen at birth. He renounced his citizenship on October the 1st, 2019. In making a submission, he tallies up his total tax liability and it’s under the 25,000-dollar threshold. Now, here’s an important point. It was stated in the Hypothetical. John uses his best efforts in computing his total tax for each year. John computed the income from his foreign [?]mutual funds and reported them as ordinary income on the other income line of his Forms 1040. Anybody that’s familiar with foreign [?] mutual funds knows that they’re treated as special categories of investments. John should have used a Form 8621. The title of that form is Information Return by a Shareholder of a Passive Foreign Investment Company or Qualified Electing Fund. We often refer to these as PFICs. So, John should have reported his PFIC on a Form 8621 with some special computation, but he didn’t. He tried his very best…”
“The term, Accidental American, is not a term used by the government…”
“…Thanks again for your time and attendance. We wish you much success in your business or practice.”
The United States engages in a human rights violation by making it difficult/impossible to renounce U.S. citizenship because of the high citizenship renunciation fee it imposes.
The Association des Américains Accidentels (AAA) seeks Canadian plaintiffs in a lawsuit against the U.S. Department of State that will contest the unreasonably high citizenship renunciation fee.
The lawsuit will be launched in early 2021.
It is expected that some plaintiffs, for example,will have already have paid the fee and have renounced, but others were not able to renounce because they could not afford the high fee.
You will have to provide your name, residence, facts surrounding your U.S. citizenship (e.g., you might have no meaningful relationship with the U.S. but had citizenship imposed) and your renunciation/desire to renounce details.
Assume that your name will be published in a public record and that you might have to sign a written declaration at some point in the future.
If you are interested in being a plaintiff your questions will be answered by emailing firstname.lastname@example.org with subject line “Plainte USA”
Our FATCA IGA litigation trial DEEGAN ET AL. v. ATTORNEY GENERAL OF CANADA ET AL., Court file number A-370-19, has just been held in Canada’s Federal Court of Appeal on March 30, 2022.
At the trial Canada’s lawyers argued that there was no significant Charter 8 (privacy) breach to the Canadian FATCA IGA legislation, especially since Canadians who the U.S. deems to be US persons, already have to comply with US tax law. We continue to feel differently.
Decision expected to be made in 4-6 (?) months.
Thanks to our Appellants Gwen and Kazia and to all of our supporters, over many years, who made it possible for us to get to the Appeal Court.
CANADIAN FATCA LITIGATION UPDATE —
LITIGATION PROGRESS: This is a lawsuit, begun in 2014, challenging the constitutionality of Canada’s FATCA IGA legislation, which was imposed on us by a foreign country, and which violates the privacy rights of Canadians (see our ADCS website).
The Trial (with three Justices) in Canada’s Federal Court of Appeal was held on March 30, 2022.
Our four ADCS Board members are John Richardson (co-chair and legal counsel), Patricia Moon (Treasurer), Carol Tapanila, and Stephen Kish (Chair).
The Canadian FATCA hunt and turnover are NOT hypothetical.
This year the CBC (Canadian Broadcasting Corporation) told us that financial data on 901,000 accounts were turned over to the U.S. in 2019 and also discovered that most of the data did not have to be turned over under the so-called FATCA “agreement”:
“According to information released by the CRA in response to an access to information request, the account balances in 615,000 of the 901,000 records the agency transferred to the IRS in 2019 were below $50,000 U.S.
The year before, 610,000 of 900,000 accounts the CRA reported to the IRS fell below that threshold…
[This means that] The Canada Revenue Agency has been reporting hundreds of thousands of Canadian bank accounts to the Internal Revenue Service, despite the fact that they fall below the mandatory reporting level set in an agreement between Canada and the United States…
Mathieu Labrèche, spokesperson for the Canadian Bankers Association, said their members are simply following the [FATCA] law.”
John Richardson responded to this CBC article:
“The people impacted by this are your middle class neighbours who you have known for years. They are Canadian citizens living in Canada. They have a lingering/technical US citizenship because of the accident of a US birthplace. But, that’s it.
It’s bizarre that a subgroup of Canadian residents (identified by a US place of origin) could be subject to stricter reporting obligations to a country they don’t live in (USA) than to a country they do live in (Canada).
It’s clear that FATCA serves no public policy objective. It simply imposes costs and regulations on Canadian residents. The Government of Canada needs to end this agreement!”
For more details on our lawsuit see: Alliance for the Defence of Canadian Sovereignty
Our four ADCS Board members are John Richardson (co-chair and legal counsel), Patricia Moon (Treasurer), Carol Tapanila, and Stephen Kish (Chair).
Canadians and International Supporters, we have now received sufficient donations to pay off the $45,000 installment for the legal fees bill for our Canadian FATCA lawsuit appeal. Thank you for your longstanding support.
As Embee says: “This lawsuit may have been overshadowed by these trying times but it’s still important to assert one’s right to justice and plead for common sense to prevail in whatever form US bully boy tactics threaten our well-being”
The FATCA Canada lawsuit began in 2014 and will likely be resolved only in the Supreme Court. Its simple aim is to strike down the FATCA IGA and enabling provisions of Canada’s Income Tax Act in their entirety. Stated differently: We want our nation’s sovereignty back.
A commenter reminded us that we will not receive any support from either Conservative or Liberal Canadian governments: “Harper signed the IGA (Flaherty did clearly point out it’s failings but it went ahead anyway) and Trudeau criticized the agreement and vowed to do something (he did nothing)”. This means that we are on our own.
Please help us to stay the course.
DONATIONS ARE NEEDED TO FUND a lawsuit attacking the constitutionality, regarding autonomy, privacy, and equality rights, of the Canadian FATCA IGA legislation that was imposed by the United States on Canada. We want our sovereignty back.
You can DONATE by cheque and cash in the mail, PayPal and transfers.
CANADIAN FATCA LITIGATION UPDATE May 21, 2020:
LITIGATION STATUS: The Notice of Appeal has been filed. This will be followed by the Appeal Book and the Memorandum of Fact and Law (the arguments). My (SK) personal guess is that the trial itself will take place during the first quarter of 2021.
The Alliance for the Defence of Canadian Sovereignty and Gwen and Kazia have raised $45,000 in this first installment funding round (Thank you for your support!) for the legal expenses of our FATCA IGA lawsuit, now at the Canadian Federal Court of Appeal.
Justice Mactavish said that it is “important” to avoid consequences threatened by the U.S. But we say not at the expense of our Charter rights.Please help end one of the FATCA compliance laws that impact on all of our countries.
CBC says that, for 2018 tax year, information on 900,000 financial records of Canadian residents was turned over by Canada to U.S. IRS because of the Canadian FATCA law. Gwen and Kazia, two Canadian citizens having no meaningful relationship with the U.S., are appealing on your behalf two Federal Court decisions to the Canadian Court of Appeal.
The grounds for appeal will include violations against their autonomy (Charter section 7), privacy (8) and equality (15) as well as arguments that the ruling was improperly based on the finding that the Income Tax Act is primarily regulatory in nature, and that factors such as the relationship between Canada and United States were not properly dealt with. Fleshed out details of appeal grounds will be provided in the Factum, likely mid-year.
“Conservative revenue critic Pat Kelly is calling for parliamentary committee hearings into the transfer of Canadian banking records to the U.S. Internal Revenue Service, saying he wants to know why the numbers have risen sharply. “I think that it’s a big number and the trend of ever-increasing transfers is going to be a concern to many Canadians,” Kelly told CBC News. “I think that the Canada Revenue Agency should be able to give a better explanation than they have so far about what’s driving the ever-increasing requests for record transfers.””
Mr. Kelly kindly spoke to me today and provided more clarification of his position:
— He said that he wants an explanation for the increasing turnover numbers, the correction in number of transfers for 2017 tax year, whether some accounts were transferred that should not have been transferred, and the issue of uncertain U.S. reciprocity — but Mr. Kelly confirmed that he does “not advocate repeal of FATCA“.
If you are interested in a Canadian Court striking down the entirety of the FATCA IGA legislation, Please donate to our Canadian FATCA lawsuit.