Further to my post last Sunday here at IBS, SWAT–Switzerland IGA: Still not enough information available in Switzerland, I received a reply email from the Swiss State Secretariat for International Financial Matters (SIF) yesterday. I stand corrected: it seems that I didn’t search hard enough on the Swiss Federal Authorities site (admin.ch) and that not only the agreement text is now available in Swiss national languages, but also a “law of application” has been drafted to enforce the agreement. From what I understand, Parliament will be formally informed of the package to vote on by 15 March 2013, but is not expected to vote on the issue until next summer. It would appear that the Cantons, Communes, Political Parties, etc. are expected to provide feedback by 15 March and this feedback will go to Parliament in some formal fashion, but of course this does not preclude lobbying directly to deputies outside of the formal consultation procedure between now and the vote next summer.
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John Paulson, Puerto Rico, and U.S. Persons abroad
As you’ve probably seen on Bloomberg or elsewhere by now, billionaire investor John Paulson is reportedly considering a move from New York to Puerto Rico in order to save on taxes. As Business Insider helpfully summarises, unlike U.S. persons abroad not only will he be able to avoid U.S. federal taxes entirely, but Puerto Rico will not charge him any local income tax on his investment gains either — making Puerto Rico the only place in the Solar System where a U.S. citizen can move and owe no tax whatsoever.
Puerto Ricans deflect the criticism of their plucky little island’s unique tax status by claiming that they have to pay U.S. federal taxes on income from the mainland. But, as Business Insider fails to make clear, “income from the mainland” is determined under the rules of 26 CFR 1.937-2(f) — which means that a U.S. citizen who has lived in Puerto Rico for 10 years and sells the stock of a mainland corporation is deemed to have “income from sources within a possession” and not from within the mainland United States — and thus thanks to 26 USC § 933, owes no U.S. federal capital gains tax. (See IRS Publication 1321 if you’d like an official non-legalese summary of the regulations.) This is a far better deal than the so-called “foreign earned income loophole” that Americans abroad get, which only allows exclusion of wage income — not investments, pensions, local unemployment benefits, nor childrens’ disability benefits.
The other common excuse given by Puerto Ricans for their enormous tax breaks is that they get far less benefit from U.S. federal spending than any of the fifty states — for example, with regards to Medicaid or educational funding. Of course, Americans abroad pay both U.S. and foreign taxes on all our income with more complicated forms than any Homelander or Puerto Rican has ever seen, and we get squat from Medicaid or Medicare or U.S. educational funding — instead we get those “great embassy services” and a vague promise that the U.S. Navy will come save us when we get into trouble. Apparently Puerto Rico has no puertos at which the Navy can dock in the event of a disaster, unlike landlocked Paraguay.
Ex-President of Novartis Daniel Vasella leaves Switzerland for the USA
Translation from the French: Continue reading
Patriotism, disloyalty, renunciation and the relation among them
Ron Paul and his son Rand Paul have been newsworthy items. On Friday March 7, 2013, Ron Paul spoke at the Manning Conference in Ottawa. Last week, Rand Paul of #STANDFORRAND fame was conducting a filibuster in the Senate protesting the appointment of Mr. Drone – John Brennan – to the head of the CIA. Both Paul’s believe that government is out of control and that liberty is under attack. Rand Paul was protesting the conduct of the Obama administration – specifically the Obama drone kills on U.S. citizens. He was opposing his government. Is Rand Paul’s opposition to the Obama administration unpatriotic? Have we reached the point where to support freedom is construed to be NOT supporting the government? Have we reached the point where to support freedom is unpatriotic? Looking at America today, one wonders.
What about renouncing US citizenship? Is it either unpatriotic or an act of disloyalty? Is the renunciation of U.S. citizenship necessary as an act of self defense? (A recent poll suggests a large number of U.S. citizens abroad feel they must renounce to defend themselves from a government turned predator.)
SWAT–Switzerland IGA: Still not enough information available in Switzerland.
I am flabergasted that the only official Swiss government press release that I seem to be able to find on the FATCA IGA contains only and merely the same sort of general summary of the agreement that we saw in the announcement last summer about impending negotiations and the December announcement about pending signature.
[Addendum: As it turns out, while the press release did not give links to the agreement in its text, there was a link in the righthand column to a French translation of the agreement: http://www.news.admin.ch/NSBSubscriber/message/attachments/29631.pdf as well as a link to documents related to the parliamentary consulation on the agreement, which I had clicked on the other day but didn’t see anything related to FATCA–you have to scroll down several pages or CTRL-F and search for FATCA: http://www.admin.ch/ch/f/gg/pc/pendent.html I will be creating another post today on the response I received from the Swiss State Secretariat for International Financial Matters].
Almost a month later, the Swiss people are being kept in the dark. I wrote the Swiss federal government spokesman that issues the press releases today on this matter:
Bonjour Monsieur Tuor,
Je trouve aberrant que votre annonce sur admin.ch (http://www.admin.ch/aktuell/00089/index.html?lang=fr&msg-id=47779) à propos de FATCA ne donne ni référence au texte de l’accord, ni au texte du règlement d’application FATCA, à savoir :
Click to access FATCA-Agreement-Switzerland-2-14-2013.pdf
https://www.federalregister.gov/articles/2013/01/28/2013-01025/regulations-relating-to-information-reporting-by-foreign-financial-institutions-and-withholding-on
Les implications de FATCA en termes de son complexité ainsi que les menaces posées par son application méritent une analyse approfondie par le peuple suisse et ses élus au parlement.
Il n’est également pas évident si le parlement va débattre l’accord pendant la session de mars 2013, ou plus tard. Auriez-vous des informations à ce propos ?
Aussi, comment est-ce que le conseil fédéral puisse signer un tel accord sans referendum obligatoire (Art 140a,b, 141a CFS) accompagné des modifications constitutionnelles nécessaires, vu que FATCA est incompatible avec des multiples protections garanties par la Constitution, comme par exemple : liberté d’opportunité économique, anti-discrimination, droit de famille ? Sans mentionner la loi réglant la question de nationalité dominante (RS291 Art 23). Si l’accord FATCA est approuvé, le résultat est l’adhésion à une communauté supranationale parce que le principe juridique américain en matière de taxation « Last in Time Rule » permet les autorités américains de changer les règles de jeu quand ils veulent, malgré des traités, conventions et accords. Et alors, le conseil fédéral n’agit pas en bonne foi et ne veut pas protéger les suisses contre l’arbitraire (Art 9 CFS).
Une acceptation d’une loi extraterritoriale étrangère comme FATCA est une claire violation du mandat constitutionnel « La Confédération suisse protège la liberté et les droits du peuple et elle assure L’indépendance et la sécurité du pays. » (Art 2 Al 1 CFS).
Et tout ça à l’insu du souverain peuple suisse !
Je demande des explications !
Salutations,
Jefferson D. Tomas
All Brockers who can speak and/or write in French, German, or Italian, please SWAT this guy (Special Writers and Theses): +41 31 322 46 16, mario.tuor@sif.admin.ch.
Getting a U.S. residence visa after giving up citizenship
Most of us here have little interest in going back to live in the U.S., but others who are considering giving up U.S. citizenship may be worried about whether they’ll be able to get back into the country in case their career takes them there in the future, or to care for aging relatives, or for any number of other reasons, either temporarily or permanently.
Though there are some cases which may show evidence of the USCIS trying to retaliate against renunciants when it comes to visas and treatment at the border, there are also many examples of ex-citizens both low-profile and high-profile who have managed to return to live in U.S., among them naturalised Japanese citizen Arudou Debito (the former David Aldwinckle, now an affiliate scholar at the East-West Center in Honolulu), Taiwan constitutional court judge Chen Be-yue (who renounced in 1996 and then got a green card in 2008 through her U.S.-born daughter, though she wisely cancelled it again the following year), and Fred Alger (who came back on an H-1B visa to rebuild Alger Asset Management after all its employees were killed in the WTC attacks).
A recent article in the Korea Times, a Korean diaspora newspaper published in North America, gives us many more examples of Korean Americans who gave up their U.S. citizenship to try their hand at politics in South Korea, then returned to the U.S. when things didn’t work out. I’ve translated it below.
Carl Levin to Retire From Office
http://news.yahoo.com/blogs/ticket/michigan-democrat-sen-carl-levin-retire-223007537–politics.html
I read the letter that is included with the article and in it he talks about his work to reign in tax avoidance and evasion. I notice though that in his critique of Americans who use such tools to avoid paying taxes that he uses the word “scheme” to describe the process by which they do so.
Now of course the question to be asked is that just how does one’s choice to live abroad or one’s birth abroad become a tax avoidance/evasion “scheme”? I believe that his own words clearly demonstrate that FATCA and FBAR are both totally unjustified laws as applied to the lives of innocent U.S. persons abroad.
On the other hand, for those who are struggling financially, tax obligations can feel like a burden they can’t shoulder. A 1000 dollar loan may seem like a lifeline in such situations, but it’s important to remember that accumulating additional debt can create more complications down the road.
America’s treasured National Origin Discrimination has reached Thailand
National origin discrimination, a federal crime in the United States, is now causing Americans in Thailand to be denied financial services due to US policy.
Federal laws prohibit discrimination based on a person’s national origin, race, color, religion, disability, sex, and familial status. Laws prohibiting national origin discrimination make it illegal to discriminate because of a person’s birthplace, ancestry, culture or language. This means people cannot be denied equal opportunity because they or their family are from another country, because they have a name or accent associated with a national origin group, because they participate in certain customs associated with a national origin group, or because they are married to or associate with people of a certain national origin.
United States Department of Justice
Nobody hates American law greater than the American government, who enjoys being criminal against the American people by causing innocent Americans abroad to be denied financial services simply because of their US national origin.
IT IS STARTING TO HAPPEN IN THAILAND NOW. Financial companies don’t want to do business with Americans, thanks to the tyranny of the IRS.
My wife is a dual citizen, Thai and American. We bank at the local K-Bank, the short name for KasikornBank in Thailand, and the bank has her ID of both citizenships. Yesterday, my wife went to switch a regular savings account into a year long CD with the same bank and was refused. The reason: they will not accept any new CD accounts from Americans, regardless whether they have the legal right to do so or not.
Trapped US citizen born in Canada: What should he do?
Born in Canada asked the following questions, and I offer my version of defiance afterward:
I have only just recently discovered the tax/FBAR obligations of being a USC abroad, and have spent the past few days reading as much as I can about the subject. I echo the feelings of extreme stress and frustration that so many people here have already expressed.
I was born in Canada in the 80′s to a USC (Cdn PR) parent (other was Cdn cit by birth). Fast forward to 2009, when in casual conversation with a US CBP officer into the states, I mentioned my American parentage. He stated that I was considered a US citizen, and should be entering the US on a US passport.
And back on the OVDP front, just when you thought it was safe
IRS Yanks OVDP Deal From Taxpayers With Secret Bank Leumi Accounts – Forbes http://t.co/3VWR6EdWVW – Kicks those previously accepted out!
— U.S. Citizen Abroad (@USCitizenAbroad) March 7, 2013
The Internal Revenue Service this week sent faxes to tax attorneys nationwide informing them that clients who were previously accepted into its criminal amnesty program for those who disclose once-secret offshore accounts, have “upon further review” been disqualified. The faxes, signed by John R. Tafur, director of of Global Financial Crimes at the IRS’ Criminal Investigation division, affect dozens of American taxpayers who had undisclosed accounts at Bank Leumi le-Israel Ltd., Israel’s largest bank, says Robert E. McKenzie, apartner at Chicago’s Arnstein & Lehr , who queried fellow top tax attorneys on a private email listserve after he received one such fax this week. He called the IRS’ reversal “scary” and “extraordinary”. Edward M. Robbins Jr., of Hochman, Salkin, Rettig, Toscher & Perez, the big West Coast tax defense firm, confirmed in an email to Forbes that “numerous” Leumi related rescission letters have been received.
Complete article is here.