What the Canada U.S. FATCA IGA is NOT about
Canada’s FATCA IGA is NOT about information exchange. The United States does NOT exchange information under the FATCA IGAs.
Canada’s FATCA IGA is not about residency. After all the purpose of FATCA is to transfer information from a country where the person DOES actually reside (and is a tax resident) to a country where the person does NOT actually reside (but is deemed to be a tax resident).
What the Canada U.S. FATCA IGA IS about
Canada’s FATCA IGA IS about the Government of Canada surrendering its citizens to the United States (effectively stripping them of their rights as Canadian citizens).
Canada’s FATCA IGA is about assisting the United States in imposing worldwide taxation on Canadian citizens who actually live in Canada, are tax residents of Canada and pay full taxes in Canada. Transition Tax anyone? Do you feel GILTI today? What were you thinking by buying that Canadian mutual fund in Canada?
Canada’s FATCA IGA is NOTHING like the OECD Common Reporting Standard. In simple terms, under the CRS information is transferred from a country where the person does NOT live to a country where he does live. Yes, Canada’s lawyers spent the week of January 28, 2019 to February 1, 2019:
1. Denying each of these obvious points; and
2. Arguing that Canada that Canada has a constitutional right to betray its citizens by turning them over to the United States. Post 1 – February 17, 2019:
The U.S. claim of lifetime tax jurisdiction based ONLY on the fact of having been born in the United States
This is based on a post from March of 2015 which was about the number of so called “Accidental Americans” in the Eastern Townships of Quebec.
Let’s start by listening to the CBC interview with Ali Brunette. Question:
Do these life long residents of the Quebec Eastern Townships (great ski country) seem like U.S. tax evaders to you?
With just two weeks to go before the start of the ADCS-ADSC FATCA lawsuit, U.S. based MLex reporter Paul Merrion has written a nice piece about our upcoming FATCA Canada lawsuit.
The court documents can be accessed on the ADCS-ADSC site. For those who are not up to speed on what has happened so far, you might reference the “FATCA Trial: Law Students Edition” which is found on the Alliance blog. How we got there – Canada’s Standing Committee on Finance May 2014
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) January 15, 2019
2019 – The Trial Begins In the Federal Court of Canada – January 28, 2019
Mr. Merrion’s article contains a nice summary of the legal issues, the impact of the outcome of the decision, a description of the plaintiffs, a summary of the legal issues AND (by discussing Representative Holdings’s 2018 bill) an acknowledgement of the role of “citizenship based taxation”.
As we move into Thanksgiving Weekend, I am pleased to report that the we have reached an important milestone in the ADCS FATCA lawsuit. As you know, ADCS is suing the Government of Canada for enacting a foreign law – the US Foreign Account Tax Compliance Act (“FATCA“) – on Canadian soil. By so doing Canada violated numerous rights found in the Canadian Charter of Rights and Freedoms. These are Charter rights guaranteed to all Canadians, regardless of where they happened to have been born.
Please take the time to read this important document – the Memorandum of Law – prepared by our lawyers. 2018 10 03 Plaintiffs’ Memorandum of Fact and Law_summary trial_FINAL
We expect the hearing to take place in Vancouver in January of 2019. The history of our FATCA lawsuit to date
The Government of Canada signed a FATCA IGA with the United States in February of 2014. FATCA became operational in Canada on July 1, 2014. Our lawsuit was also launched in 2014. 1. This video which explains the background leading leading up to Canada’s signing the FATCA IGA
2. See the FATCA – @ADCSovereignty Book of Posts that I have written which describes the background to and evolution of the lawsuit.
______________________________________________________________________________ Thanks to all of you have made this possible! Our FATCA lawsuit would never have been possible without each of you. I would like to specifically recognize …
– the generosity of our numerous donors. Incredibly, this has been possible through the donations of ordinary Canadians who have given what they can. Although the amounts donated have been significant to the individual donors, we have not had a single “deep pockets” or Corporate Donor. Thank you again!
– the witnesses and the people who have contributed countless hours of their valuable time
– our plaintiffs: Gwen and Kazia – it takes tremendous courage and conviction to volunteer your name and circumstances to a lawsuit of this type
– our lawyers who have been with us since the beginning
On behalf of the Board of the Alliance For The Defence of Canadian Sovereignty I wish you the best. John Richardson
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:
They are presumed to live in the United States (which they don’t); and
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! Continue reading →
— John Richardson – lawyer for "U.S. persons" abroad (@ExpatriationLaw) July 10, 2014
The above tweet references an Op-Ed by Thun Financial’s David Kuenzi which recently appeared in the Wall Street Journal. This is a nicely done article which adds reinforcement to the excellent journalism by the Wall Street Journal’s Laura Saunders and Liam Pleven which appeared in the Wall Street Journal on June 18, 2014 and (discussing the new IRS Streamlined procedures) on June 19, 2014. (The new Streamline Procedures were discussed by various “stakeholders” extensively: The OVDP and Streamlined Historians – Perspectives of various Americans Abroad: – at the Isaac Brock Society here and here – by American Citizens abroad here The second citizenship advocates: – by Mark Nestmann here The accounting firms:
– from Frank Hirth (U.K. based) here The “What is non-willfull” group here: – by Stephen Mopsick here and earlier here – by Patrick Martin here – more by Patrick Martin here – by Jack Townsend here – by Robert Steinberg (particularly good analysis) here The “Technicians” AKA “who is streamlined intended for” here: – by Moodys here – by Virgina La Torre Jeker here – by Jack Townsend here – by Robert Steinberg here) Those who recognize that citizens of certain countries may have a second level of “home country specific issues” (Iran): – by Virginia La Torre Jeker here The Logistics – How to manage Streamlined “conFORMity”: – by Virginia La Torre Jeker here
Interestingly both Mr. Kuenzi (as a presenter) and Ms. Saunders (as a journalist) attended the recent conference on U.S. Citizenship-based taxation conference which was held at the University of Toronto on May 2, 2014. The Toronto citizenship-based taxation Conference was a great success. Those interested can read: Thoughts and reflections on the Toronto Conference on the taxation of Americans abroad in the 21st century. Continue reading →