Liberty and justice for all United States persons abroad

The Isaac Brock Society

Passport Tort

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This posting is dedicated to Meunier.

 
Caveat:  only a lawyer can or should attempt to read written law. (You can pay lawyers, and pay them exorbitantly — with no guarantees that they can read the stuff either.)

Even so, an extraterritorial U.S. person who holds only a U.S. passport may want to take a glance at the recent passport-related legislation glommed into the FAST Act.

The Fixing America’s Surface Transportation Act can be found at

        https://www.congress.gov/114/bills/hr22/BILLS-114hr22enr.pdf

On pages 418-422 is found

        Title XXXII–OFFSETS
        Subtitle A–Tax Provisions

which adds to Internal Revenue Code “the following new section:”

        SEC. 7345. REVOCATION OR DENIAL OF PASSPORT IN CASE OF
        CERTAIN TAX DELINQUENCIES.

The not-comforting language in these five pages includes this zinger:

The taxpayer may bring a civil action against the United States in a district court of the United States or the Tax Court to determine whether the certification was erroneous or whether the Commissioner has failed to reverse the certification.

This seems to translate as — “You think the U.S. has made a mistake? O.K. Up to you and your lawyer to sue the United States. And good luck to you.”

The tired cliché “Timing is everything” may liven up with entirely new meanings for a person who finds themselves assessed and then either has notice of lien filed against them with “administrative rights” OR faces levy “pursuant to section 6331.”

So what is that bit after the little word “or”? It seems to be this:

        26 U.S. Code § 6331 – Levy and distraint
        https://www.law.cornell.edu/uscode/text/26/6331

This section starts off with some viciously tight timelining:

If any person liable to pay any tax neglects or refuses to pay the same within 10 days after notice and demand, it shall be lawful for the Secretary to collect such tax (and such further sum as shall be sufficient to cover the expenses of the levy) by levy upon all property and rights to property …

Apart from the clear presence of time windows whose business is inexorable closure (whatever the specified periods may amount to in the only-for-lawyers details), some more accessible news (p. 421-422) falls under the heading

        WITHOUT SOCIAL SECURITY ACCOUNT NUMBER

and provides for the denial of passport to anyone (i) not providing a number, or (ii) providing “an incorrect or invalid social security number willfully, intentionally, negligently, or recklessly.”

That memorable string of adverbs should cover just about anything?

When all is said and done, though, only a lawyer can or should attempt to read written law.

But sometimes curiosity leads into doing scary things. Especially scary for the extraterritorial U.S. person without alternative passport.

Yours truly, a fearless explorer, a survivor of many shipwrecks — never through airlift because neither a bird (condor, ostrich, whatever) nor a U.S. person who can count on that famous benefit of worldwide extraction from dire situations.

Oops, forgot, ostriches can’t fly anyway. Still, they are feathered bipeds. Feathered without tar, by the way.
 

Fatca Forum Exactly 3 Years Ago Today! How Far We Have Come!!

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UPDATED
The video links are hopefully fixed. I neglected to acknowledge that the transcripts were made by pacifica and calgary411. Any emphases are mine.

 


 

I had intended to write something for Brock’s 4th birthday (December 10) but when I got up and looked at the calendar I noticed I had missed it. But then I realized, today was the 15th and that the FATCA Forum was exactly 3 years ago today. I actually feel as if it were 10 years ago, probably because so much has happened since then and it has been so intense.

Brock was certainly the start of our section of the expat movement. Absolutely no doubt about it. But the FATCA Forum was the beginning of something else equally important – Brockers coming together and becoming active in other ways. I definitely think without the Forum, things would not have taken shape in the way they have.

Likely a lot of you have never seen the videos/read the transcripts of that day. Some people seemed to think that since there weren’t hundreds of people there, it wasn’t effective. But they couldn’t have been more wrong.

Technically, if I remember (and someone please correct me if they know otherwise), the meeting was sponsored by the Progressive Canadian Party, headed by the Hon. Sinclair Stevens. I remember being quite impressed by him; such a gentleman but no-nonsense about the shenanigans that had taken place when the Conservative Party voted to dissolve the party and merge with the Canadian Alliance to form the modern-day Conservative Party of Canada. I had absolutely no idea what he was talking about. But then he started to talk about the Charter. Up to that point, I don’t recall focusing on the idea that Canada would be/could be involved in helping us out of the miserable situation we all found ourselves in which at that point was mostly about FBAR and renunciation. When he said the Charter didn’t apply just to citizens, it included permanent residents, visitors, in fact anyone who happened to be in Canada, he planted the seed for the CDN lawsuit (at least in my mind).
 


 

…. in the sense that I think it’s very appropriate today. Canada needs representation at the national level.
And what you are considering today – and I’m looking forward to some of the experts that are here to discuss it is the fact that a foreign nation is attempting to levy taxes against people who are still technically citizens of the United States – and there are over a million of them in Canada – and we say that’s just wrong. It’s just inherently wrong not to acknowledge the sovereignty in this case of Canada.

And to that extent there will be three headings that you will be told about today. But the heading that I’m most interested in is the Canadian Charter of Rights and Freedoms. I was in Parliament when that was passed in 1982. I remember the debate. I remember the significance that was felt, not only in Parliament but throughout the country, that we were getting our own Charter, a Charter that would identify what is uniquely the Canadian rights and freedoms.

Now, the reason it’s relevant to today, as I’ve indicated what we’re living with is this threat from the United States, who wish to become extra-territorial in the sense of tax collection – I think it’s interesting to bear in mind some of the wording of the Charter of Rights and Freedoms.

In order that there is no doubt that a permanent resident of Canada has a say and it must be protected, I would refer you to s. 6 of the text of the Canadian Charter of Rights and Freedoms. It says:

“Every citizen of Canada and every person who has the status of a permanent resident of Canada has the right” and that section deals with certain things.

But the most significant section of the Charter is s. 15(1) – and put yourself in the context when I say “individual,” put yourself in the context of a US citizen, according to the Americans, being referred to. That section says:

“Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and in particular without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.”

That catches the so-called US citizen. Certainly if he’s been here longer than six months, he’s a permanent resident. And this Charter and coming out of today, if you agree, we will be making a representation first to Finance in Ottawa, who have requested comments on this subject. We will be making a representation among other things pointing to the need to obey the Charter of Rights that is thirty years old in Canada.

I thank you for coming. I hope to hear your input as we go ahead. But by all means, you are doing a great service for Canada and the citizens and permanent residents of Canada.

Thank you very much.

 
John Richardson was one of the first people to make us aware of the fact that FATCA et al, was NOT about taxes. People often miss his point when he says “You don’t have a TAX problem, you have a COMPLIANCE problem. They haven’t filed their taxes, how is it they don’t have a tax problem? They don’t understand what he means when he says it’s a myth that Americans abroad won’t owe any taxes. Of course what he means is that once you have dealt with the compliance problem by filing, THEN you will begin to have tax problems. He was the first person I can remember who made us understand that it wasn’t about owing income tax; of course, many do not due to the FEIE, FTC etc. I believe nobody understands better than he, where we WILL owe:

  • when we sell our homes
  • when we invest in tax-deferred savings accounts that the US will not recognize
  • when we invest in non-US mutual funds
  • when we file a US tax return as MFS (incurring AMT & Obamacare tax)

Understanding tax is not the point, it is understanding how it affects peoples’ lives. And one of the reasons he gets this better than anyone else could not possibly be demonstrated better than the following explanation:
 

 

Now the US is a country that really doesn’t like anything that they call ‘foreign’. In fact, if you were actually to look at the Internal Revenue Code in theUS, you would see that the word ‘foreign’ wherever the word ‘foreign’ is, the word ‘penalty’ is sure to follow. Now what this means is that a number of day-to-day activities that people in Canada and other countries engage in, which by the way are heavily promoted by government policy, things as unimportant in life as retirement planning for example, are in fact subject to US tax laws and are taxed in very, are not recognized, as tax-saving vehicles. Now I’m going to give you one example. I could give you more but I just want to give you one example to demonstrate the point. As you know, the Government of Canada in 2009 introduced something called a TFSA, Tax-Free Savings Account. How many have heard of that? And, it is, I think this is very important to understand that this is part of what is considered to be desirable domestic Canadian policy to assist and encourage people to save for retirement. Agreed?

Well, let me tell you what that is from the point of the United States Government. First of all, it is not recognized as anything, but remember that US Persons are required to file tax returns accordingly to exactly the same laws that people in the United States are and because there are no TF(S)A’s in the US, therefore there are no TFSA’s anywhere in the world, but under US law for example, these are considered to be a ‘foreign trust’. Now, so what you ask? Well, in theUStax system on the one hand there’s the issue of how much tax is owing. But, there’s another dimension to it, which is used which I think also, I suspect, to raise revenue and this has to do with the filing of information returns.

OK? So, in other words, it’s OK to have a foreign trust, but what’s not OK is to not report it to the IRS. Well, you might think, OK, so what, so let’s, we’ll call them up and drop them a line. Not so simple. Very complicated reporting requirements, very complicated forms. For those of you who areUStax geeks, you might recognize the Form 3520 for those who have been thinking about this. You say so what, give me the form, I’ll fill it out. You will not be able to fill out this form without professional help, totalling thousands of dollars, if you can even find that kind of professional help in this country. And, the penalty for non-willful, $10,000. How many think that’s absolutely outrageous? You do? Well, you’re not going to believe what I’m about to tell you next then. Because, it’s a foreign trust and the one thing theUStax system is based on a system of complete distrust, they want verification from what is called the Trustee. Now in people talk that means if you have a TFSA at, say, the Toronto Dominion Bank, the Toronto Dominion Bank would be the Trustee and the Trustee, under US (imagine this, OK), under US law, the Trustee, the TD Bank, is required to file with the IRS a form which essentially duplicates your form to essentially just validate that in fact you’re telling them the truth. You think the TD Bank is going to do that; how many imagine they’re going to do that? No, they’re not.

Well, the problem is this. Two problems. The first is, your tax return if you’re living in the USis due April 15th. For people outside the US, it’s June 15th and you can get an extension until October (OK, if you don’t owe them any money. We’ll get to that – I see you’ve had some problems here – I’ll be interested in hearing later.). If this form is not filed by March 15th, which by the way is well before the due date of your tax return, then you, not the TD Bank, you are subject to another $10,000 penalty. OK? Now, I’m going to just continue the discussion of the forms and the penalties in a specific way, but what you need to understand, and for the purpose of this whole discussion today, is that when we’re dealing with theUS tax system, we have taxes, which you understand. I mean there’s nobody inCanada who could not understand taxes. How many think they are high? Oh, you don’t? OK, but what you don’t understand and what’s left out of this discussion is the information returns which are actually the bigger problem, a) because nobody knows about them and b) because I guarantee you, and I’m going to stand by this word (I would rarely use the word, guarantee) that nobody except a person who does not own anything except the shirt on their back could afford to file a US tax return for under about $3,000, and I don’t care who you are. If you have anything, OK, if you have anything, it’s going to be much more and I know somebody personally who filed aUS tax return in 2011 that was almost 200 pages of information returns. Very middle class person as far as I can see unless there’s some stash that he hasn’t told me about, in which case I don’t think he’d be telling to the US government either. But my point is that we are dealing with a tax system of enormous complexity. I’ve heard it referred to when it’s applied to US Persons abroad as simply nothing more than a tax and penalty club.

 
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Received from CCLA today

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Thank you for your email. While it is unfortunate you are not renewing your membership we respect your decision — however there is one point of misinformation. We have spoken on FATCA in the past. This year we retained a major Canadian law firm to research this issue for us — we do not intervene or weigh in on every single civil liberties issue — but when we feel we can contribute effectively the first step is to ensure we have the best research. on FATCA we outsourced the research to ensure we had a complete picture of all the issues on both sides of the border. We had expected this research earlier this year , and have received replies from the firm that we will get the memo this fall. I am not sharing this information with you to change your mind, only to let you know that we have not ‘chosen not to address’ the issue.

We need Witnesses for Canadian Charter Trial willing to file affidavits and go public

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We want to move quickly on the Constitutional-Charter trial and are now seeking Witnesses.

The Charter trial cannot proceed until we have the necessary Witnesses.

Witnesses will provide affidavits describing the harm caused to them by the FATCA IGA enabling legislation and will, like Plaintiffs Ginny and Gwen, disclose their names publicly.

If you believe that you have the characteristics of a Canadian who has been somehow harmed by this FATCA legislation, are interested in helping out by becoming a Witness in our lawsuit, and are willing to have your affidavit statements and name go public, send me an email through our ADCS site.

You need to assume that your Witness affidavit and name when made public will find its way to the U.S. IRS and to unpleasant people who will insist that you are not paying your fair share.

Without limiting ourselves to this category, we are especially seeking IRS non-compliant Canadians who have a reportable account, are likely to be turned over by their bank to CRA/IRS because they have a U.S. taint or have already been turned over, and because of their situation, would suffer significant harm (financial and other) if they decided to enter the United States IRS system. For example consider the situation of innocent Tina.

You might have a US taint and own a personal banking account or be responsible for a company, entity, or executor account. Perhaps you have have suffered medical or financial harm, or have had to change, with much difficulty, your behaviour (e.g., divorce, removal of name as Director or as signing authority on account) so as not to harm others in your family or company. You might be responsible as a guardian for a US person who has no possibility of escape. Chances are that most of you with U.S. taint reading this post are IRS non-compliant and refuse to become compliant to a foreign government, notwithstanding FATCA, a PR exercise of the U.S. IRS. The list of possible harms is endless.

We do not want to proceed with the Charter trial without the Witnesses we feel will give us the best chance of success in Federal Court.

We hope that out of the 1,000,000 plus Canadians affected by the FATCA IGA enabling legislation we are contesting — a handful, like Ginny and Gwen, will come forward, take that risk, and go public as Witnesses in our litigation.

Yes, we have a new Liberal Government, but that Canadian FATCA compliance law is still on the books.

It would be a shame if our litigation were compromised because we could not find a few brave Canadians willing to confront publicly the Government that promises to do them harm.

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About #CookvTait taxation without representation – do #Americansabroad participate in a democracy?

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Today I found myself in a lengthy telephone conversation with a former (she renounced) U.S. citizen abroad. She was describing her difficulties in attempting to vote in the 2008 election. The United States thinks of itself as a democracy. But then again any country that allows a citizen to cast a ballot considers itself to be a democracy. The former East Germany even named it self the: “Deutsche Demokratische Rupublik“.

This got me thinking about the characteristics that a country must have to be entitled to call itself a “democracy”. It strikes me that for a country to call itself a “democracy” it must have at least the following characteristics:

1. It must allow it’s citizens to vote. The denial of the right to vote cannot be arbitrary and cannot be based on characteristics that are irrelevant to voting. For example: age may be a relevant criterion but face may not be a relevant criterion.

2. The “opportunity to vote” must be realistic. Voting must be logistically possible. For example, one must be able to vote without traveling thousands of miles. There must be sufficient time to vote.

3. The system must encourage candidates who are interested and capable of representing the votors.

4. The system must encourage and allow citizens to actually run for public office.

I was recently discussing “citizenship taxation” with a member of a prominent political organization. He suggested that as long as overseas Americans have the right to vote, citizenship taxation must be retained. Is there any basis for linking the right to vote (if there is one) to citizenship taxation.

From a U.S. perspective the “right to vote” in a strong indicator of U.S. citizenship. Those who have completed DS 4079 know that one of the questions asks about your voting habits in the U.S.A.

Those Americans abroad who have voted in U.S. election, it would be interesting to hear about your experiences in attempting to vote. Were you successful?

Those Americans abroad who have NOT voted. What is that makes you reluctant to vote?

Should the right to vote be linked to citizenship taxation?

Emails sent to the new Liberal Government Attorney General need to be received by the Attorney General

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Some of you have been sending suggestions to the new Liberal Government Attorney General, Minister Jody Wilson-Raybould, about our lawsuit against the FATCA IGA enabling legislation inherited from the Conservative Government.

A practical problem is that a “gatekeeper” for the AG has been forwarding the emails to the Minister of Finance, and it is not clear whether the AG actually receives the email.

My suggestion is that when you receive this response (see below) you resend the email and explain to the gatekeeper that you really do want the AG to receive the email.

You can explain that 1) the AG’s office is involved in a lawsuit related to the issues you are raising in your email and 2) it is the AG, in the role of Minister of Justice, who has the mandate to ensure that Canada’s legislation (including the FATCA IGA enabling legislation) passes Constitutional/Charter muster — also an issue you are raising.

Here is an email that some have received:

“Dear [XXXXXX]:

On behalf of the Honourable Jody Wilson‑Raybould, Minister of Justice and Attorney General of Canada, I acknowledge receipt of your correspondence of [XXXXXXXX], concerning the intergovernmental agreement between Canada and the United States under the Foreign Account Tax Compliance Act (FATCA).

Matters related to FATCA fall within the purview of the Honourable William Francis Morneau, Minister of Finance. I have therefore taken the liberty of forwarding a copy of your correspondence to Minister Morneau for his information and consideration.

Thank you for writing.

Yours sincerely,

[XXXXXXXX]

From @YourVoiceatIRS Conference: @TaxPolBlog – Forget what the law says, this is what it means

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After having read Professor Christian’s presentation, I request that you respond to the following in as comments:

In a purely practical, “day to day” sense, how has U.S. citizenship-based taxation affected and/or changed your life?

On November 18, 2015 McGill Professor Allison Christians spoke at the Taxpayer Advocate Tax Conference in Washington, DC.* On November 20, 2015 a video of an interview with her was posted here at the Isaac Brock Society. It was an excellent interview which highlighted and demonstrated some of the injustices of U.S. ‘place of birth taxation”. The interview was also posted on the IBS YouTube channel.

Now, TaxNotes has made the text of her speech available for general reading.

Why Professor Christian’s speech is important
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Letter to my bank manager: What do Brockers think?

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2015-07-22 19.01.23Here is what I am thinking of submitting to my bank manager. Please note one small change that I made from Stephen Kish’s template highlighted in boldface:

Dear bank manager,

I am a customer at your bank and have several personal and business accounts, as a well as self-serve trading accounts at your discount brokerage.

I understand that on September 30, 2015 Canada CRA turned over private banking information on 155,000 accounts to the United States Internal Revenue Service (IRS). Your bank also provided some of this information.

Please tell me whether your bank passed on any of my banking information to CRA for the subsequent transfer of the data to the IRS. I think it is very possible as I was born in the United States and may have presented my US passport as a form of identification when I opened some of the accounts.

I need this information in writing by ASAP so that I can prepare my family for the impact of having the IRS know everything about our bank accounts..

If you are unable to comply with my request, would you please kindly provide your reasons?

Thank you and always a pleasure,

Petros

Linking of passport to taxation confirms “taxation-based citizenship” undermining #CookvTait

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This post ends with the following question:

Are Americans really “so beaten down, so subservient, so fearful of authority that it complies with the most horrific and undemocratic “laws” and is unable to unite and simply say NO, collectively.”

I invite you to express your answer in this poll:

Perhaps you could consider this question while reading the following post.

_____________________________________________________________________________________________

The above tweet references the following  comment from @Homelander_NOT on Robert Wood’s blog.

Yet another punitive measure that will further the creation of a US Berlin wall plus make life more complicated for Americans/”U.S. Persons” abroad. Other recent moves which demonstrate the tendency of the U.S. government to repeatedly “do the wrong thing:” ” Is US considering not publishing #USExpatriation list anymore? If yes, efficiency or embarrassment?” https://www.federalregister.gov/articles/2015/12/01/2015-30366/proposed-collection-comment-request-for-information-collection … (not at all sure that is what implied by this tweet I received) and Executor liability for U.S. income tax and penalties, interest, etc., may extend to you if you were aware that the decedent owed the U.S. treasury for say tax from unfiled tax returns.http://www.taxconnections.com/taxblog/good-to-know-part-3-from-larry-stolberg-cpa-ca/#.Vl79_PmrTIV . For such an “ advanced” nation, the U.S. seems not to understand basic psychology. The more one tries to restrict somebody, the more they are likely to be resisted. If it is true the Name & Shame List’s days are numbered, it won’t be of any consequence. Who reads the Federal Register anyway? Personally, I could care less if they kept an ongoing list published in the NYT and like many, consider it a badge of honor. Proof of being a ‘real’ American if you will. And more nonsense/confusion for an executor (really? even an “alien one? Just how would they enforce that?). Or is it more along the lines that no one can even imagine someone having the gall to not obey the exceptionalistic conditioning that can only be dumped by experiencing the rest of the world? It is a well-documented problem that the IRS does not have records for expats; even with FATCA there are likely to be many pieces of undeliverable mail. Yes the IRS cares not and will continue to follow their own procedures. I expect thousands upon thousands to simply ignore those letters. People are developing resistance and figuring out there is not much the U.S. can do. Other than count on the fact that such folks will surely want to come to the U.S. so “we’ll get them at the border.” Lots of people are figuring out the better choice is simply to go elsewhere for vacations and have family visits where the expat families are. All of this is pathetically sad. All this grief for insistence on filing forms to show there is likely no tax owed-when everyone KNOWS its the big fish living in the U.S.that all this effort should be expended toward. Again, such a very basic, basic thing that eludes those running the most dominant, most fortunate country on earth. I remain puzzled that this is what has happened to the country I grew up in and in spite of awareness of its many flaws, still loved until FBAR.

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If your Canadian bank won’t tell you whether your private banking info was sent to CRA for turnover to U.S. IRS, please let me know. Do it today.

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Some of you may wonder whether your private banking information was sent by your bank to Canada CRA, for subsequent turnover to the United States Internal Revenue Service — because you have some U.S. indicia.

For the few who are willing to do this, I ask that you make the above very specific request to your bank officer (see draft letter below). If your bank refuses to provide you with this information, or makes it difficult, get the name of the individual you spoke to and write down what was said and when. Best would be a refusal in writing.

I am looking for a single brave soul willing do this, which would find its way into an affidavit for our litigation.

I personally think that it is outrageous that “our” banks do not automatically notify a person if they have been reported to the CRA arm of IRS — but that is another issue.

Here is a draft letter that you could send to your bank customer service representative or simply provide this message by phone to the rep. Do NOT spend any time going to another official at the bank. A draft:

“Local Bank officer,

I am a customer at your bank and have [ ] bank accounts.

I understand that on September 30, 2015 Canada CRA turned over private banking information on 155,000 accounts to the United States Internal Revenue Service (IRS).

Some of this bank account information was provided by your bank to CRA.

Please tell me whether your bank passed on any of my banking information to CRA for the subsequent transfer of the data to the IRS.

I need this information in writing by [date].

If you are unable to comply with my request, kindly provide your reasons.

Thank you,”

Makes no difference whether you have one dollar (below so-called threshold of today) in your account or $100,000, or whether you have or do not have any U.S. indicia. A refusal is a refusal. I personally have no account greater than $50k but did ask my own bank for this information.

Refusals from the banks might be helpful in the litigation. You can reach me through the ADCS website.

Assume that your name will be made public should this be part of our litigation.

See below December 1 2015 letter I sent to Canadian Bankers Association and their (not surprising) December 2 response:

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