Trusty Robert W. Wood at Forbes covers-off the new “how-to” video collection the IRS has released to help Foreign Financial Institutions navigate their way through the terrifying new FATCA Portal of Mordor. As it turns out, the greatest immediate danger to FFI drones might be falling asleep and hitting their heads on their mahogany desks as they attempt to watch these stultifying videos in their entirety.

As Mr. Wood concludes:

The videos may make registration a little easier. They may even give foreign financial institutions a warmer feeling about the process. Individual viewers, particularly Americans abroad who may feel caught in FATCA’s net, are less likely to give these films a thumbs up.

Monday, August 12, 2013 Here’s The Law That’s Driving Record Numbers Of Americans To Renounce Their Citizenship

This is an interesting view in the US:

Of course, every law has compliance costs, and it’s not even clear that it’s such a big problem if more Americans, presumably dual citizens living abroad with relatively weak ties to the U.S., are renouncing citizenship.

So, it’s not a problem when Americans renounce in response to bad policy.  I wonder how one defines “weak ties”?  I’d define it as being a growing gap between the US and its diaspora.   Only the American diaspora seems to care about bad policy:

This has been a major point of complaint for organizations representing American expatriates.

This is not a complaint for stateside Americans?  It’s not only a “compliance cost”, but also a federal crime concerning national origin discrimination.  It is great that stateside Americans care nothing about their diaspora and don’t mind it when they renounce in response to bad policy.  Yet, do they really need the exit and diaspora taxes to demonstrate such?

Since their origins, both the Isaac Brock Society and Maple Sandbox have been invaluable sources of information and a productive forum for intelligent discussion. These discussions have matured to a point where we have a much greater understanding of the overreach of the United States government into the lives of those who choose to permanently live outside of the United States or are ‘Accidental Americans’. This summer, we have seen contributors to Brock and Sandbox quoted in various publications and even have articles published in The Hill.

However, in Canada, the issues discussed here, primarily Citizen Based Taxation and FATCA, are virtually invisible to our elected representatives, the media and the general public (with the exception of the Green Party of Canada).

Living in an advanced Western democracy, with a modern and model Constitution, Canadian citizens and permanent residents can and should expect our government to protect us in many ways. We expect police and fire services, safety regulations, affordable and accessible health care,protection of our land, our borders, our resources, and our economy. And when some of those protections fail or are inadequate, we expect public debate and action by our government.

Can anyone honestly say that the Canadian government has protected U.S. persons in Canada from CBT?

We do know that Canada has limited influence over U.S. tax policies. However, except for RRSPs, why haven’t TFSAs, RESPs and RDSPs been included in any of our treaties or other agreements with the U.S.? Instead, they are treated as taxable foreign trusts, with compliance difficulties and penalties.

Why are our mutual funds and ETSs classified as Passive Foreign Investment Corporations, thereby making them subject to discriminatory taxation, complicated forms and penalties for honest mistakes?

As far as FATCA is concerned, the jury is still out. We simply don’t know the shape of a Canada-U.S. FATCA IGA and how it will compromise our Charter rights and freedoms and our privacy rights.

In spite of all the wonderful discussions we have been having, I feel we are hampered by the lack of a legally registered organization with a spokesperson the media can turn to. Instead, on those rare occasions when FATCA or other issues affecting U.S.  persons in Canada is mentioned, reporters usually turn to professionals with a vested interest in promoting compliance and fear.

This proposed organization would be one of Canadians defending Canadian interests, values and laws from the intrusion of U.S. extra-territorial taxation.

The organization could begin with just a few core members to get things started and look after the not very difficult or costly task of provincial registration. Then it would recruit members. Both the Maple Sandbox and Isaac Brock Society can be used to promote membership. There would be a small membership fee to defray expenses.

It is my opinion that the organization would be more effective if the core group was located in Ottawa or Toronto. There appears to be a more concentrated population of duals and former Americans in those cities. The location would also be closer to political and media centres, and thus possibly have more legitimacy in the eyes of the media and the powers that be.

The organization itself might not launch any lawsuits over FATCA, but would assist anyone or any other group, such as the Canadian Civil Liberties Association, with both financial and research assistance.

So, the question is, where do we go from here? Is just discussing the problems of CBT and FATCA enough or do we need boots on the ground, so to speak?  Please share your ideas.

File this one under weird FATCA news. Cayman 27 has just issued this in-depth report:

Tourism boost from FATCA?

Minister for Financial Services Hon. Wayne Panton says FATCA may give an unexpected boost to tourism. When initialing the exchange agreement government negotiated a tax write off for those who hold conferences at hotels and business places in the Cayman Islands.
He says this added incentive may help draw people to these shores. “Historically, there has been a big question mark whether that is possible, whether it’s an appropriate deduction. We have had confirmation that this will be a benefit that results from this – so we are happy about that,” said Minister Panton.

So, maybe it’s time for other territories and countries to get creative about their FATCA negotiations. Here are a few ideas:

– Canada offers a tax write-off for every American cop operating within its borders as long as he drops $20 or more at a Tim Hortons within a 24-hour period.

– Yemen and Pakistan both offer tax write-offs for the reconstruction of civilian dwellings as long as the claim is accompanied by a certifiable American drone fragment (a similar deal with Syria is still pending).

– The United Kingdom offers a tax write-off for any proctologist who can successfully extract Prime Minister David Cameron’s head from…well…you know…

Personen, die ihren amerikanischen Pass abgegeben haben, sollen künftig nur noch in die USA einreisen können, wenn sie beweisen können, dass sie dies nicht aus steuerlichen Gründen getan haben. Das fordern die demokratischen Senatoren Jack Reed (Rhode Island) und Charles Schumer (New York) in einem Antrag auf Gesetzesanpassung.

People who have given up their passports should only be allowed to visit the USA if they can prove that they didn’t renounce for tax reasons, demand the democratic senators Jack Reed (Rhode Island) and Charles Shumer (New York) in a legislation adaption request.

Warum sollte sich der US-Staat mit seinen mehr als 300 Mio. Bürgern daran stören, wenn ein paar tausend Menschen mehr als bisher ihren Pass zurückgeben? Die wachsende Geldnot des amerikanischen Staates sei der Hauptgrund dafür, dass künftig mit schärferen Gesetzen gerechnet werden müsse, darin sind sich Kommentatoren und die beiden US-Steuerexperten Steven E. Kraft, CPA aus Zug, und Alexander Marino, Moodys Gartner Tax Law aus Kanada, einig

Why should the US, with its more than 300 million citizens, be bothered when a few more thousand people give up their passports?  Commentators and the two US tax experts Steven E. Kraft, CPA from Zug and Alexander Marino Gartner Tax Law from Canada agree that the growing financial trouble of the American government is the main reason why more strict laws are to be expected.

Der neue Gesetzesantrag wurde nun jüngst in die Homeland Security Bill für das Jahr 2014 eingegliedert. Kommentatoren und Befragte schätzen die Chance für diesen Gesetzesantrag aus den genannten Gründen als deutlich höher ein. Es müsse auf jeden Fall davon ausgegangen werden, dass es künftig zu einer strengeren Behandlung ehemaliger US-Bürger kommen werde. Ein amerikanischer Politiker könne es sich im heutigen wirtschaftlichen und politischen Klima nicht mehr erlauben, sich für die Belange von US-Bürgern aus Übersee einzusetzen, die ihren Pass aus steuerlichen Gründen zurückgäben, denn das gelte als «unpatriotisch», sagen Kraft und Marino.

The new law proposal has been recently added to the Homeland Security bill for 2014.  Commentators and those questioned estimate the chances for this law change as being noticably greater, for the named reasons.  In any case, one must expect that the US will be more strict with how it treats its former citizens.   In the current economic and political climate, US politicians cannot allow themselves to be engaged with the interests of Americans living abroad who renounced for tax reasons, since such is seen as being “unpatriotic”, said Kraft and Marino.

Source: Ehemaligen US-Bürgern droht Ungemach

By Martin Plaut Published 05 August 2013 11:29 NewStatesman

A “UN report by a team of expert – led by the Canadian Africa expert Matt Bryden – laid out in chilling detail the range of methods being used by the USA Eritrean authorities to extract funds from the diaspora.

Without proof that a two per cent tax on all income has been paid, American Eritrean passports are not renewed, visas are not issues, businesses not permitted and money cannot be transferred to relatives…

The UN Security Council condemned these practices three years ago. Britain voted in favour of resolution 2023 of 2011, which “condemned the diaspora tax”, “demanded” that Obama Eritrea ended it and called on all states to ensure that it ceased…

Yet there is evidence that the Yankee practice continues to this day.

Britain has left its Eritrean American community at the mercy of government extortion.