Category Archives: FATCA

Whether through regulation or legislation #FATCA Same Country Exemption won’t work

In the beginning there was Facebook …

and from a second Facebook group:

 

Introduction: If you were to REPEAL FATCA

A previous post discussing the what exactly is meant by FATCA and the Mark Meadows “Repeal FATCA” bill, described:

FATCA is the collective effect of a number of specific amendments to the Internal Revenue Code which are designed to target both (1) Foreign Financial Institutions and (2) Those “U.S. Persons” who are their customers.

1. There are “Three Faces To FATCA” which include:

– Face 1: Legislation targeting Foreign Financial Institutions (Internal Revenue Code Chapter 4)

– Face 2: The FATCA IGAs (which for practical purposes have replaced Chapter 4)

– Face 3: Legislation targeting individuals (primarily Americans abroad who commit “Personal Finance Abroad – While Living Abroad” – Internal Revenue Code 6038D which mandates Form 8938)

2. The amendments to the Internal Revenue Code that would be necessary to reverse the sections of the Internal Revenue that created FATCA.

Legislative FATCA vs. Regulatory FATCA

The sections of the Internal Revenue Code that comprise “FATCA” are surprisingly few.

FATCA Face 1: Internal Revenue Code S. 1474(f) gives Treasury broad authority to make “FATCA regulations”.
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Impressions of the @RepMarkMeadows April 26/17 #FATCA Hearing in Washington, DC – Opportunity to make case to end “taxation-based citizenship”

FATCA Hearings in Washington, DC – April 26, 2017

Beginnings – It all began in July 2016

The purpose of this post is NOT to describe the hearing in detail (that has already been well done), but rather to provide my overall (and perhaps broader) impressions based on actually having attended the hearing.

The April 26, 2017 FATCA hearing in Washington was long in the making. It’s genesis was rooted in a meeting that took place in July of 2016 at the Republican National Convention. The planning and preparation involved the efforts and consistent cooperation (weekly meetings since August) of a number of people in different countries and on different continents. It was a privilege to have been part of this group. A list of the people who worked on making the hearing happen – the  “FATCA prep team” – is  described here. Those efforts culminated in what some  witnessed “in real time” on April 26, and what thousands more will see (thanks to Youtube) in days to come.

The hearing has already been documented IN DETAIL and discussed in various places IN DETAIL, with the best commentary coming from posts at the Isaac Brock Society here and here and various Facebook groups here, here, here and here. (An example of ridiculous commentary is here.) When I say “commentary” I mean NOT ONLY the posts, but the rich and insightful comments. Seriously, this collection of “digital experiences” really is “History In The Making!”

Thinking about FATCA, What is it anyway?

I have written numerous posts about FATCA – “The Little Red FATCA Book” which you will find here. An explanation of how the Meadows “Repeal FATCA” bill would actually work is here. Basically, FATCA is the collective effect of a number of amendments (including the creation of a new Chapter 4 of Subtitle A of the Internal Revenue Code – which has made largely irrelevant by the FATCA IGAs)  which are designed to identify, attack and impose sanctions on:

A. FATCA: Non-U.S. banks and other financial institutions

Forcing them to “hunt down” the financial accounts and entities (examples include mutual funds, corporations, trusts and some insurance policies) owned by “U.S. persons”. The goal is to “turn them over” to the IRS.

This imposes enormous compliance costs on non-U.S. banks. The obvious effect is that they will not want  U.S. person customers. Would you? Interestingly the focus of the witnesses (Mr. Crawford and Mr. Kuettel) was primarily on the denial of basic access to financial and banking services.

Although important, this is only one half of the equation. What happens when “U.S. persons” learn (the vast majority had no idea) that they are subject to U.S. taxation?

B. FATCA: “U.S. Persons” with non-U.S. financial assets and bank accounts

It is not possible for “U.S. citizens” to BOTH: be U.S. tax compliant and live a productive life outside the United States, when they are also subject to the tax laws of other nations. (Digital nomads are the exception.) The reason is that U.S. citizens living outside the United States are living under a system where:

  1. They are presumed to live in the United States (which they don’t); and
  2. Their assets (which are local to them) are presumed to be “foreign” to the United States.

If you don’t understand (or don’t believe) why this is true, you will find an explanation here.

Just remember:

“When In Rome, Live As A Homelander” and do NOT “Commit Personal Finance Abroad!” (It’s UnAmerican)

Although a major effect of FATCA is to subject Americans abroad to a very special set of tax rules (think PFIC, foreign pension, CFC, and a crushing burden of forms that impact ONLY Americans abroad), there was NO witness that even alluded to this as one of the effects of FATCA. (FATCA is the enforcer of the uniquely American policy of “taxation-based citizenship”). There was also no witness that described how a “FATCA letter” can lead to absolute financial ruin for honest taxpayers, who have made a life outside the friendly borders of the United States of America. There was no witness who explained the confiscatory effects of entering one of the IRS “Amnesty – Ministry of Love” programs.

This had had the effect of making it seem as though FATCA (in terms of the effect on Americans abroad) was just a simple “disclosure – Form 8938 issue. Nothing could be further from the truth.

If it were not for “taxation-based citizenship”, FATCA would be no more or less a problem for Americans abroad than it would be for Homelanders (which doesn’t mean it is not a problem). Unfortunately, the hearing did not provide evidence on this point.

(This is NOT a criticism. But, just imagine if there had been witnesses who had been identified as a “U.S. Person” because of FATCA, did NOT know about “taxation-based citizenship” and then were forced into the “Offshore Voluntary Disclosure Program“. Now that would have been a story …!)

It is “taxation-based citizenship” that makes the effects of FATCA so hard on Americans abroad! In 2011, I remember thinking:

The United States can have either FATCA or it can have “taxation-based citizenship” but it CANNOT have both!

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Tweet #Citizide: The new response of US citizens to #FATCA #FBAR #PFIC


Searching for Uncle #FATCA: Where is he? What does he do? Why is he a danger to America? Can Congressman Meadows and Senator Paul save America?

Outline:

April 7, 2017

Part 1: Prologue – Introducing  Uncle FATCA – Who is he? What does he mean in your life?

Part 2: What is FATCA, what are the FATCA IGAs, what is the Meadows Bill and how do these things interact?

Part 3 – What does it mean to repeal FATCA and how exactly does the Meadow Bill repeal FATCA? A section by section analysis

Part 4: An important reminder – FATCA repeal does not mean IGA repeal

Part 5: The text of FATCA and the text of the Meadows Bill (very dry and technical and not likely to be of interest to the casual reader)

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The Bopp FATCA Legal Action U.S. Based Lawsuit

The FATCA Legal Action lawsuit is organized by Republicans Overseas and is prosecuted by the Bopp Law Firm in Indiana. It argues that FATCA is unconstitutional based on a number of legal grounds. One of the plaintiffs is Dr. Steven Kish, who is also the Chair of “The Alliance For The Defence of Canadian Sovereignty” (the organization bringing the FATCA lawsuit in Canada). Interestingly, Dr. Kish reluctantly renounced U.S. citizenship in August of 2016.

What follows are tweets that link to various posts that I have written about the progress of the U.S. based FATCA Legal Action lawsuit. The lawsuit is still held up on “standing issues”. Judge Rose ruled that the plaintiffs did NOT have “standing to sue”. This decision was appealed and argued on January 24, 2017. We are waiting for a decision to see if the lawsuit can proceed. You may listen to Mr. Bopp’s oral argument here.

Here is the twitter timeline for @FATCALawsuit:

John Richardson

The Little Red #FATCA Book – (Review, Identify and Report on “U.S. Persons”) – How FATCA affects the non-U.S. World

About FATCA – The “worst law nobody has heard of” …

FATCA (The Foreign Account Tax Compliance Act) was signed into law – as a revenue offset provision to the Hire Act – in March of 2010. It is doubtful that Congress even knew that FATCA was part of the HIRE Act (“Hiring Incentives To Restore Employment”). Yet, FATCA has created havoc in banking systems around the world, has destroyed the lives of the citizens and residents of other nations (who just happen to have been born in the United States), led to many Americans abroad renouncing their U.S. citizenship and forced banks to waste tens of millions (and this is conservative) of dollars in compliance fees. Interestingly FATCA has also led to other countries actually changing their domestic laws (overriding their own constitutions) to “hunt” for people with a U.S. birthplace. FATCA has generated significant hatred of America and has severely eroded America’s “moral capital” during a time when China is challenging the United States for global supremacy.

FATCA has recently been part of an inquiry by the Government of France into the “overreaching” of U.S. laws. Nigel Green of the Devere Group has joined with Jim Jatras to lobby for the repeal of FATCA.

2012 – The world according to FATCA  – For the compliance industry: “The Gift That Just Keeps on Giving” …

2014 – At Home In Canada – The genesis of the ADSC Lawsuit – Opposition Rising …

2015 – Meanwhile, In The Homeland – The Bopp FATCALegalAction.com Lawsuit begins …

Interestingly, in August 2016, Dr. Stephen Kish, a plaintiff in the Bopp lawsuit and Chair of the Alliance For the Defence of Canadian Sovereignty renounced his U.S. citizenship.

Listen to the legal arguments …

 

December 2016 – Advocacy For Americans Abroad Fails: U.S. Treasury refuses proposed FATCA Same Country Exemption for Americans Abroad (but not for “Accidental Americans”) …

To be clear, much of the FATCA harm caused to “some” Americans abroad could be alleviated with the FATCA Same Country exemption (proposed by “ACA” and “Democrats Abroad”). FATCA SCE could be achieved by regulation. In December of 2016, U.S. Treasury refused to support a regulation creating the FATCA Same Country Exemption. This means that, the Obama administration was:

1. Aware of the harm that FATCA was causing to Americans abroad (leaving aside the harm to the rest of the world); and

2. Refused to provide relief for Americans abroad!

2017 – The world according to FATCA  – Hearings in Washington, D.C. …

 

On April 26, 2017, at the initiative of Congressman Mark Meadows and Senator Rand Paul, “FATCA Hearings” will take place in Washington, DC. Although FATCA has been the subject of much discussion outside of the United States, there has been little discussion of FATCA inside the United States. In fact, FATCA is NOT well known in the United States.

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The “Little Red FATCA Book” Documenting the “Worldwide Hunt” for “U.S. Persons” …

The “Little Red FATCA Book” is a collection of posts that I created over an 18 month period. I have decided to collect the individual posts and organize them in one place. I have grouped the individual posts into three broad chapters which I will call Chapter A, Chapter B and Chapter C. This is a “work in progress”. Some of the posts are incomplete.

FATCA which is essentially the enforcement mechanism of U.S. “Place of Birth Taxation” is a controversial topic. Feel free to post your thoughts and comments.

John Richardson

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Part 22: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Oh my God! #FATCA affects even a Paypal account!

 

 

 

Part 18: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Responding to the #FATCA Letter

The above tweet references an earlier post about the FATCA Letter and how to respond.

Part 25: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – What if the 8 month year old Canadian is a “US Person”?