Treasury Faces a Labor of Sisyphus to get FATCA Infrastructure in Place | Let's Talk About: US Tax http://t.co/qfh60l07Oo
— V. La Torre Jeker JD (@VLJeker) September 22, 2014
The U.S. Treasury has been working overtime to:
1. Persuade the world’s sovereign countries to cede their sovereignty to and “Pledge FATCA obedience” to the U.S.
2. “Make the world believe” that Treasury has been and will continue to be successful.
In order to achieve this, Treasury has created what I call “the pretend IGA”. A “pretend IGA” is where a country has NOT signed an IGA, but it is anticipated (presumably by Treasury) that an IGA will be signed. That is to say, that an IGA is a “done deal”.
The tax compliance complex has (for the most part) joined the Treasury Chorus to sing to the tune of:
“It’s a small (FATCA) world after all“.
The problem is that neither Treasury nor the FATCA Compliance Complex deal in facts. They deal in “myths”.
Facts are stubborn things
An interesting post appears on U.S. tax lawyer Virginia La Torre Jeker‘s blog which considers the “FATCA of the matter”.
The post comes from:
Dorothy van Schooneveld, J.D. who is a member of the Illinois and Indiana bars who moved to France 27 years ago. For the past 22 years, she has been intensely involved with American Citizens Abroad (www.americansabroad.org). She is a past Executive Director of the organization, has edited both ACA’s hard copy and e-newsletters, and founded its network of country representatives. She is retired from the World Health Organization, and currently is a freelance copy-editor for international organizations in Geneva. She can be contacted at: firstname.lastname@example.org Dorothy educates us today about Treasury’s uphill battle in implementing FATCA. She carefully picks apart the statistics that heretofore made it seem as if all the world had magically become FATCA compliant. Despite all the hype from Treasury, just how little has actually been settled says it all.
Ms. van Schooneveld is on both the Board of Directors and Professional Tax Advisory Council of Americans Citizens Abroad. Note that Ms. van Schooneveld is NOT a member of the FATCA Compliance complex. I recommend that you read her post in its entirety and send in on to anybody who is involved in the FATCA discussion.
The post includes:
Only Five IGAs Fully “In Force”
Deducting all the IGAs not in force for varying reasons, there are only a total of five (5) IGAs actually in force as at 1 September 2014, as listed on TIAS (Texts of International Agreements to which the US is a Party), in which the State Department must, by law, publish all international agreements.
For the remaining 59 countries which have agreed in principle to conclude an IGA – not to mention the other 94 countries not even on the bottom rung of the ladder – there will have to be not only IGAs signed, but quite possibly also TIEAs or protocols to other tax treaties negotiated. TIAS recently published, for example, a TIEA with Colombia that came into force on April 30, 2014, having been originally signed on March 30, 2001!
For many developing countries, or countries in conflict, there is an enormous chasm to be breached before FATCA compliance is possible, all good will notwithstanding. Consider, for example, Mauritius, which was the first African country to sign an IGA. Mauritius will be expected to transmit required data to the US by September 2015. But as the President of the Mauritian Financial Services Commission recently noted [article in French] the financial and banking institutions and the Mauritius Revenue Authority presently lack the equipment at the ISO standards necessary for safe data transmission. They do not have the ability to protect security of the data, assure confidentiality, or ensure that the data required for FATCA compliance will not be mingled with other data.
The folks back in the US Treasury may not regard the task ahead as a work of Sisyphus, since some progress has been made. But simple mathematics shows that Treasury is merely filling the cup with sand, one small grain at a time.
To reiterate the inferences:
– 195 countries in the world
– 42 actual signed FATCA IGAs
– 59 “pretend IGAs”
– only 5 IGAs are operational (including Canada)
Canada – A “Superstar” in FATCA Complicance
Think of it. If it is true that there are only 5 countries in the world with “operational IGAs” and Canada is one, Canada is a “Superstar in FATCA Compliance”. This should strengthen the ADCS-ADSC.ca FATCA lawsuit against the Government of Canada.
A focus on the countries that are NOT FATCA compliant:
U.S. Treasury has worked hard on trumpeting the “success of FATCA”. In July Robert Wood devoted about FATCA which suggested that 77,000 banks and 70 countries were FATCA compliant. But, what does the number 77,000 mean in in relative terms.
Here, in the spirit of the Dorothy van Schooneveld article, is a site that focuses on the countries that are not FATCA compliant.
Obviously FATCA is not the success (surprise surprise) that U.S. Treasury and the FATCA Compliance industry claim it is.
Consider what previous U.S. presidents might have said:
The great Republican President Ronald Reagan might have said:
“Facts are stubborn things.”
The facts suggest that Treasury, by perpetuating “FATCA Myths” is not being truthful.
At the Yale commencement address in 1962 (the year of the CFC rules) The Democrat President Kennedy said:
“The great enemy of truth is very often not the lie–deliberate, contrived and dishonest–but the myth–persistent, persuasive and unrealistic. Too often we hold fast to the cliches of our forebears. We subject all facts to a prefabricated set of interpretations. We enjoy the comfort of opinion without the discomfort of thought.