March 18, 2020 marks the tenth anniversary of FATCA? What are you doing to celebrate?

Coming off a successful article yesterday, CBC Reporter Elizabeth Thompson is keeping FATCA in the news. FATCA is real news and not fake news.

CRA should tell people when their banking records are shared with U.S., say critics | CBC News https://t.co/rXidz7Mww7

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

(Look carefully at the above tweet. Notice that the text refers to the CRA. The picture is of the IRS building. Yes, it’s true that FATCA has turned the CRA into an extension of the IRS. Maybe, Canadians should just start filing their tax returns directly with the IRS.)

In Canada Elizabeth Thompson is the only journalist demonstrating an interest in this issue. Because of the number of articles she has written, she has “in effect” become a “One Reporter FATCA Wrecking Crew”. Opponents of FATCA should be grateful that she is keeping FATCA in the Canadian media. No other reporter in Canada is.

FATCA at ten …

In 2012, some in the compliance industry referred to FATCA as “The Gift That Just Keeps On Giving”. Careers have been and continue to be built around FATCA. In fact, I am reminded of the following @USCitizenAbroad tweet from March 19, 2013 which worshipped the compliance opportunities generated by FATCA:

@MopsickTaxLaw Great post on "FATCA Feast" think you salivating people mean "stakeholders" – not "steakholders" http://t.co/8CLv2U0Ija

— U.S. Citizen Abroad (@USCitizenAbroad) March 19, 2013

Continue reading →

Prologue – Today as reported by Elizabeth Thompson at CBC

Stakes getting higher for Canadian residents with U.S. citizenship and could include fines or bank accounts being closed. https://t.co/icLTbKUrjU #cdnpoli #FATCA #tax

— Elizabeth Thompson (@LizT1) March 3, 2020

Introduction – About the background to this

1. Article 2 of the Canada U.S. FATCA IGA includes an obligation to report the U.S. Social Security Number of the U.S. Person. Here is what Article 2 of the IGA says:

Article 2

Obligations to Obtain and Exchange Information with Respect to Reportable Accounts

1. Subject to the provisions of Article 3 of this Agreement, each Party shall obtain the information specified in paragraph 2 of this Article with respect to all Reportable Accounts and shall annually exchange this information with the other Party on an automatic basis pursuant to the provisions of Article XXVII of the Convention.

2. The information to be obtained and exchanged is:

a) In the case of Canada with respect to each U.S. Reportable Account of each Reporting Canadian Financial Institution:

(1) the name, address, and U.S. TIN of each Specified U.S. Person that is an Account Holder of such account and, in the case of a Non-U.S. Entity that, after application of the due diligence procedures set forth in Annex I, is identified as having one or more Controlling Persons that is a Specified U.S. Person, the name, address, and U.S. TIN (if any) of such Entity and each such Specified U.S. Person; …

Continue reading →

Do you believe that Treasury is accurately reporting the number of people renouncing U.S. citizenship? Given the long wait times in Canada, can the absurdly small number of renunciations reported by Treasury be accurate?

From @HelenBurggraf: Questions continue to be asked, as U.S. list of Q4 renunciants contains fewer than 300 names. Given wait times of up to one year to renounce in Canada this number cannot be believed and that's a #FATCA! https://t.co/8iVP3WOs9E

— U.S. Citizen Abroad (@USCitizenAbroad) February 29, 2020

Closing renunciation centres in Halifax and Quebec City will increase wait times and make it more difficult for dual citizens to renounce

Friday Feb 28, 2020 the State Department announced that Halifax and Quebec City no longer processing renunciations of U.S. citizenship. Dual citizens in Canada must attend: Toronto, Ottawa, Montreal, Vancouver or Calgary. Increased wait + more expense for those in Atlantic Canada

— U.S. Citizen Abroad (@USCitizenAbroad) February 29, 2020

Clearly "Not All #AccidentalAmericans Are The Same" – "U.S. Treasury remains silent as bank accounts of EU 'accidental Americans' still being frozen" https://t.co/oB2Gdmb88B

— U.S. Citizen Abroad (@USCitizenAbroad) February 17, 2020

The article referenced in the above tweet from Helen Burggraf from American Expat Financial begins with:

The U.S. Treasury is continuing to maintain its silence with respect to the issues European banks have been struggling with for months over their perceived need to report to the U.S. – under the tax evasion law known as FATCA – government tax information details on certain of their American account-holders that they don’t have, European banking sources, expat groups and others report.

This is in spite of the fact that so-called “accidental Americans” in Europe are continuing to have their non-U.S. bank accounts frozen in cases where their banks say they have failed to provide “Tax Information Numbers” (TINs, typically Social Security numbers) as the banks say FATCA requires them to have as of the end of last year, according to sources in the accidental American community.

In the same way that U.S. “citizenship-based taxation” impacts people differently in different countries, FATCA impacts people differently in different countries. Canada and Europe are home to large numbers of “Accidental Americans” (however they may be defined). Although Canada and most European countries have the same model 1 IGAs, it appears that the “FATCA Experience (How do you like your freedom now?) differs between FATCA and Europe. Specifically: more Europeans are experiencing: pressure to provide U.S. Social Security Numbers, bank account closures and the resulting pressure to enter the U.S. tax system.

Interestingly the latest catalyst for FATCA problems is the “panic” resulting from a supposed December 31, 2019 for Accidental Americans to supply U.S. TIN numbers (AKA Social Security Numbers) to the banks. At the risk of oversimplification, what happened was this:
Continue reading →

Update – February 15, 2020

See the following exchange in Parliament – this is riveting!

While the US continues to deny justice to Harry Dunn, will the Prime Minister commit today to seek an equal and balanced extradition relationship with the US? pic.twitter.com/uBcFgV5Fzu

— Jeremy Corbyn (@jeremycorbyn) February 13, 2020

Prologue

I have urged the Home Secretary to delay the extradition of Mike Lynch until his UK civil trial has finished. In the long term, we need to re-balance our extradition treaty with the US. We need to give British citizens the protection, certainty and the justice that they deserve. pic.twitter.com/fm1Mklq5f2

— David Davis MP (@DavidDavisMP) January 23, 2020

David Davis is a British MP – with an interesting career. The video referenced in the above captures him speaking to an almost empty (how can this be) House of Commons about:

1. The imbalance in the UK US Extradition Treaty**

2. The inappropriateness of the imbalance

3. The need to “rein in” the US extraterritorial tendencies.

If you go his Official Site, you will find a link an article written by him discussing the treaty in the context of UK Businessman Michael Lynch.* I highly recommend the article to: (1) Freedom loving individuals everywhere as an example how international agreements and treaties can restrict opportunities and freedom and (2) Individuals the world over who want to understand how international agreements (which appear to be for the purposes of preventing terrorism practised by individuals) can be used as (instruments to promote terrorism by governments).

About the Lynch case

The US-UK extradition treaty is a bad treaty. Last week's arrest of Dr Mike Lynch for his potential extradition to America is a vivid example of the problematic nature of our extradition arrangements with the United States. https://t.co/HSrSAIcdHB

— David Davis MP (@DavidDavisMP) February 10, 2020

Continue reading →

And so the @USTransitionTax came to be … https://t.co/oG4BRfxphI pic.twitter.com/qhplJeLhuE

— U.S. Citizen Abroad (@USCitizenAbroad) February 5, 2020

The article referenced in the above tweet (although long) is worth the read.

It helps explain why:

– individuals who live in other countries are subsidizing tax reform for U.S. corporations

– U.S. corporations are not likely to pay much U.S. tax anytime soon

and more.

Please retweet:
Are you an American moving to Canada or who has moved there in the last few years? I'd like to speak with you for a story I'm working on. Please DM me or reply.
Thanks!

— Bob Ortega (@Bob_Ortega) January 21, 2020

This may be of interest to some readers.

As you know, U.S. taxation of its citizens in other continues is a vexing issue. The US Federal Tax Cuts and Jobs Act of 2019 (the “TCJA”) imposed severe harm to business owners of all sizes throughout Canada through the imposition of a Transition Tax (which adversely affected the retained earnings of small business corporations owned by Americans abroad) and rules regarding Global Intangible Low-Taxed Income (or GILTI – this was designed to prevent individuals from using foreign corporations to defer income).

There is an ongoing effort to try to convince Washington to ease the burden on US citizens living abroad.  One of the persons who is leading this effort is Monte Silver. He commenced a legal action against the U.S. Department of the Treasury for failing to consider the effect the regulations it promulgated under the TCJA would have on small businesses; the Treasury Department is required to make this consideration anytime it issues new tax rules.

Mr. Silver is scheduled to speak on this matter and on other related tax matters affecting US citizens in Canada at a seminar entitled “Onward and upwards – Mr. Silver’s lawsuit against the roll out of the Section 965 Transition Tax Continues”. This will take place on Wednesday January 29, 2020 from 6:00PM until 9:00PM at the Vault located at 1 King Street West in downtown Toronto.

There is no fee to attend this event but pre-registration is required. You may register by contacting John Richardson of Citizenship Solutions at pregistration@citizenshipsolutions.ca.

This will be a great opportunity to join Chapter members Trowbridge, Hanson Crossborder Tax and others in meeting Monte and others who have assisted individuals with Transition Tax and GILTI issues. This looks to be a stimulating and timely tax policy event.

If you would like more background on this issue please click here.

Tom Alciere is getting the word out to US presidential candidates as they campaign in his state for the critically important New Hampshire Primary (which takes place February 11th), He’s provided info on FATCA (see below) to several candidates and spoken with two of them at Town Hall meetings.

Tom writes:

“It’s that quadrennial season again, and the candidates are in New Hampshire campaigning for the first Presidential primary. I was able to bring this up to Andrew Yang during a The FATCA letter reads:

18 January 2020

Senator Sanders:

Imagine getting a birthday card with a check for college, and you like your other grandfather better because he sends toys. Mom and Dad bring you to the place where they have free lollipops and instruct you to write your name on the check and the bank form. Decades later you face criminal charges and devastating financial penalties for failing to report your “foreign” bank account to the U.S. Treasury, when you don’t even live in the U.S.A. This includes border babies born on the U.S.A. side and children of college students returning to their country.
Extraterritorial application of U.S. tax laws and bank account reporting requirements is causing hardships and fury in other countries. Victims now cannot accept employment involving signing the payroll checks because they’d be required to report the employer’s confidential information to a foreign government, the U.S.A. government. Victims infected with United States citizenship are forced to find accountants capable of completing U.S. tax returns that are far more complicated because another currency is involved. Some live in countries with high sales tax rates instead of income tax, and they cannot claim credit for the sales taxes.
U.S. statutes relieved some victims of U.S.A. citizenship when they became naturalized in their country. SCOTUS re-infected them with U.S.A. citizenship without asking if they wanted it.
Under the Foreign Account Tax Compliance Act, banks are forced to report these accounts of “United States persons” to the U.S. Treasury. That data is valuable, especially to hackers.
Some victims are called “accidental Americans,” but they are not Americans at all. Ted Cruz didn’t consider himself a Canadian when he learned in 2013 that he was classified as one of their citizens under their laws. Where the victims live is their country. What could be more infuriating to a proud, loyal, patriotic person than being called a “United States person”?
See: http://www.adcs-adsc.ca, https://isaacbrocksociety.ca

Tom Alciere, PO Box 106, Nashua NH 03061″

Introduction – Remembering Todundsteur 2013

The early years of Brock featured fascinating comments and analysis. Some of the best and most interesting comments and observations came from “TodundSteur”. Although referred to by Brockers as “Tod”, “Tod und Steur” means “Death and Taxes” in German – hinting at Todundsteur’s profession. Todundsteur exhibited a mastery of the application of how U.S. tax law applied to Americans abroad. I doubt that Brock has had as knowledgeable of a “tax commenter” since. For Brockers trying to understand the U.S. tax system he was a great teacher. For Brockers who were beginning to become FATCA activists he was a great mentor. In some of Todundsteur’s comments he identified Georgetown Law Professor Itai Grinberg as an individual who might be worth connecting with.

On January 6, 2013 Petros highlighted the following comment from Todundsteur:

FATCA is a large, clumsy, crude and unilateral attempt by the United States to cudgel, bluster and otherwise persuade the world to subscribe to the US American totalitarian assumption that the financial affairs of every denizen of the planet should be an open book to whatever sovereign entity claims the right to tax that person.

Over the years since the Civil War the citizens of the United States, with no historical experience – yet – of a totalitarian regime have been steadily surrendering power at every level: individual, familial, community and state to a centralized, Federal government.

The citizens of the US have been especially careless of their rights to privacy in the realm of financial and economic affairs. It began with the gradual introduction and imposition of electronic tax withholding and reporting on investment income in the early 60′s and then took a giant leap forward in 1970 with the massive wholesale surrender of financial privacy to the Federal government through passage of the “Bank Secrecy Act”.

The co-option of US financial institutions as the long arm of the IRS was part and parcel of that development.

The early 21st century has witnessed efforts – some more successful than others – by the democratically elected representatives of the US to expand the intrusion of the federal government into nearly every nook and cranny of economic intercourse; chiefly, by imposing reporting requirements on just about any individual or business that makes a commercial purchase of goods or services. Partly out of economic necessity the IRS has recently begun the process of co-opting the entire tax return preparation “industry” in the US and bending them to its will as the unpaid “deputies” of the tax collector.

It is perfectly natural that governments aspire to ominiscience and that is why citizens must always be on their guard and be prepared to challenge. But technological developments have abetted this megalomaniacal urge on the part of the US government to attain financial omniscience. There is serious doubt about the future of cash and the barter-based – and private – economy that cash enables.

Against this backdrop FATCA should be viewed not as an end in itself but rather a very large step in the direction of spreading the notion of the omniscient state throughout the world.

In the big picture, the US insistance on citizenship based taxation is simply a curiosity – but a potentially important one. If the US did not engage in the pointless stupidity of citizenship based taxation FATCA would have remained entirely invisible within the US and the political opposition to FATCA in and out of the US – weak as it is – would likely not have existed at all.

For those of you who are understandably focussed on the collateral damage inflicted by citizenship based taxation on US persons residing outside the US, I suggest that you consider looking for allies in the battle against US citizenship based taxation in a very unlikely place:

FATCA PROponents.

For those of you with the interest and patience to contemplate that possibility and who would like a clearer picture of the truly huge stakes for individual liberty and privacy that FATCA has put into play, I commend to your attention the recently published article by Itai Grinberg in the UCLA Law Review:

Click to access 60-2-1.pdf

Itai is a very intelligent scholar who has only recently left the US Treasury Department to return to academia. He is young and idealistic and he is deeply – and primarily – concerned about the ability of the nation state to force the winners of a globalized economy to contribute to the commonwealth of whatever nation in which they reside.

The question in my mind that I cannot yet answer is: assuming that the goal Mr. Grinberg espouses is good, is it worth the price in the loss of individual liberty and privacy?

When reading his article, ask yourself: would Mr. Grinberg be amenable to backing an end to the tomfoolery of citizenship-based taxation if in so doing it enhanced the possibility that FATCA or something like it became a universal model for world tax administration?

Todundsteur’s comment explains why opposition to FATCA in general and the FATCA lawsuits in particular are important.

Continue reading →