Congressman Bill Posey asks Treasury Secretary Mnuchin to deal with #FATCA

 

Persistence pays off!
Suzanne Herman, a long-time Brocker, never gives up & look at the result!
We need more of this kind of thing!
BRAVO!!!

See the original here

letterhead image of Posey letter to Mnuchin
 
 

September 29, 2017
The Honorable Steven Mnuchin
Secretary of the U.S. Department of the Treasury
1500 Pennsylvania Avenue, NW Washington, DC 20220

Dear Secretary Mnuchin,

I am writing to you regarding the Foreign Account Tax Compliance Act (FATCA) [26. U.S.C. § 1471-1474; 26 U.S.C. § 6038D]. As discussed below, FATCA is an invasive, costly failure that I strongly suggest must be repealed at the soonest possible opportunity, hopefully in the context of tax reform enacted this year. In addition, the means adopted during the tenures of your predecessors Jack Lew and Timothy Geithner to implement FATCA via a series of legally dubious and constitutionally infirm non-treaty agreements with other countries must not be allowed to stand. I ask your assistance in assuring that FATCA repeal is part of any relevant legislation, and that the Treasury Department takes prompt action to cease the implementation of FATCA via Intergovernmental Agreements (IGAs).
FATCA’s proponents claim that it is simply a “transparency” measure – similar to a domestic 1099 – to ensure greater tax compliance for assets held offshore. This characterization is misplaced. Domestic tax law requires reporting of taxable events, such as income (a W-2 Wage and Tax Statement) or bank interest (a 1 099-INT). U.S. law, based on a presumption of innocence, does not generally require inquiry into asset principle unless there is reason to suspect wrong-doing. By contrast, FATCA requires wholesale reporting of Americans’ assets and transaction history absent any such suspicion, solely because the asset is held outside the United States. This is despite the fact that the IRS’s own Taxpayer Advocate Service reports that “the vast majority” of Americans residing abroad “actually appear to be substantially more compliant than a comparable portion of the overall U.S. taxpayer population.”

Despite such an invasion of privacy, FATCA has failed in its stated purpose of recovering revenue lost to offshore tax evasion. Last year the Internal Revenue Service (IRS) credited FATCA for “collecting” $10 billion from “taxpayers coming back into compliance, ,2 but that figure conflates genuine tax revenues with penalties for filing deficiencies and recoveries from all offshore enforcement programs, not just FATCA. In the estimate of Professor William H. Byrnes of Texas A&M University School of Law, the real net tax recovery of FATCA alone is about $200 million annually and may be only half of that. Professor Byrnes projects that FATCA may “soon cost more money than it brings in.”‘ Indeed, his view may actually be overly optimistic in light of the IRS’s commendable enforcement standard of recovering seven dollars for every dollar spent.4

By contrast, because of the IRS’s need to try to discern indicators of evasion within a sea of indiscriminate personal information belonging to non-evaders, W. Gavin Ekins of the nonpartisan Tax Foundation suggests that, under FATCA, finding “a dollar of tax evasion may cost us $5 of actually sifting through the data and compliance costs.”5 FATCA’s unsatisfactory ratio of return must also be weighed against the impact on taxpayers saddled with burdensome reporting paperwork. The Tax Foundation estimated in 2016 that these requirements cost individuals nearly four and half million hours and more than $165 million,6 an amount comparable to FATCA’s likely proceeds. This does not even take into count the massive compliance costs imposed 011 financial institutions.
The above summarizes the good and sufficient reasons why FATCA must be repealed and enforcement dollars spent on more effective programs to detect and punish actual tax evasion. While your support for that effort will be appreciated, it is a task primarily of Congress. But I now turn to a matter almost entirely within your purview, on which I ask your prompt and decisive action. This relates to IGAs invented by the Department in consultation with five European governments for the purpose of enforcing FATCA.

While the IGAs read like treaties and have the effect of treaties in purporting to create mutual obligations between sovereign states they are not submitted to the United States Senate for that body’s advice and consent to their ratification, though the non-U.S. “partner” country is required to do so under its necessary internal procedures for entry into force. In July 2013, I wrote7 to Secretary Lew with a specific request for the statutory authority for the IGAs. The Department responded, after a delay of nearly a year, with the following statutory justification: 8
 

“The United States relies, among other things, on the following authorities to enter into and implement the IGAs: 22 USC Section 2656; Internal Revenue Code Sections 1471, 1474(f), 6011, and 6103(k)(4) and Subtitle F, Chapter 61, Subchapter A, Part III, Subpart B (Information Concerning Transactions with Other Persons).”

 

None of the sections cited above confers on the Treasury Department any authority for making agreements with foreign governments for the furnishing of private financial information. In particular, there is nothing in the cited sections that allows the Department to promise (under the so-called “Model 1” IGA) on behalf of the United States FATCA-“equivalent” reporting to foreign tax services of private information obtained from domestic American financial institutions. Following through with this unauthorized promise would impose on American banks, credit unions, insurance companies, and other institutions crushing compliance costs of the magnitude already suffered by foreign institutions – costs that would inevitably be passed on to American consumers.

The IGAs represent a prime example of the kind of executive overreach that unfortunately typified the previous administration. I ask you to rein in this abuse by ceasing the negotiation of new IGAs and freezing the implementation of existing ones. This action should include a freeze on enforcement of FATCA regulations on taxpayers and financial institutions. Further, I ask that you notify IGA jurisdictions that these dubious pseudo-treaties are under legal review and that their nullification or abrogation from the U.S. side can be expected pending FATCA’s anticipated repeal.

Nothing in the foregoing should be construed in any way as being “soft” on tax evasion. Quite to the contrary, in addition to its other flaws FATCA is a distraction and a diversion of resources from effective tax enforcement based on standard investigatory techniques. As a member of the Financial Services Committee I look forward to working with the Department on measures to ensure effective tax enforcement that targets the guilty, without penalizing the innocent or
compromising our cherished American constitutional and legal norms. In the meantime, FATCA and the IGAs must go.

Thank you for your assistance on this critical matter.

posey signature

___________________________________

1 Taxpayer Advocate Service, 2016 Annual Report to Congress, Vol. 1; “FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA): The IRS’s Approach to International Tax Administration Unnecessarily Burdens Impacted Parties, Wastes Resources, and Fails to Protect Taxpayer Rights,” page 221; See:https://taxpayeradvocate.irs.gov/Media/Default/Documents/2016-ARC/ARC16 Volumel MSP 16 FATCA.pdf

2 IRS press release, “Offshore Voluntary Compliance Efforts Top $10 Billion; More Than 100,000 Taxpayers Come Back into Compliance,” Oct. 21, 2016; See: https://www.irs.gov/newsroom/offshore-voluntarv-comphance-efforts-top-10-billion-more-than-100000-taxpayers-come-back-into-compliance

3 “Background and Current Status of FATCA” Texas A&M University School of Law Legal Studies Research Paper No. 17-31, pages 1-34, 35; See: https://paers.ssrn.com/soI3/papers.cfm?abstract id=2926 119

4 IRS press release, “National Taxpayer Advocate Delivers Annual Report to Congress; Focuses on Tax Reform, IRS Funding and Identity Theft,” Jan. 9, 2013; See: https://www.irs.gov/newsroom/national-taxpayer-aclvocate-delivers-2012-annual-report-to-congress

5 “Why Americans are giving up citizenship in record numbers,” Washington Post, June 1; 2016: See:

6 Tax Foundation, “The Compliance Costs of IRS Regulations,” June 15, 2016; See: https://taxfoundation.org/compliance-costs-irs-regulations/

7 See: http://www.repealfatca.com/downloads/Posev letter to Sec. Lew July 1, 2013.pdf

8 See: http://federaltaxcrimes.blogspot.com/2014/07/irs-letter-to-congressman-defending-its.html
For a definitive section-by-section demolition of the Department’s response, see Professor Allison Christians, McGill University Faculty of Law, “IRS claims statutory authority for FATCA agreements where no such authority exists,” http://taxpol.blogspot.com.au/2014/07/irs-claims-statutory-authority-for.html

Tax Reform Hearing – Senate Finance Committee – Tuesday October 3

 
 
 
 
Fortunately Virginia La Torre Jeker tweeted this earlier today; otherwise, I had not heard anything about this.
 


 
See below for description of meeting/testimonies. The site lists that a live video of the hearing will be available.

It states this is a “Full Committee Hearing” so it would seem fair game to contact any/all members of the SFC with your concerns/comments. We have been advised earlier than calling is more effective than emailing so telephone numbers are provided as well as Twitter handles and FB pages if available. Emailing seems to be possible only via a form on individual members’ websites however, we do have the assistants’ emails, likely more effective, from earlier campaigns(with thanks to Karen Alpert for latest version). I started by listing the two members who will present at the hearing followed by members of the relevant subcommittee – Subcommittee on Taxation and IRS Oversight. I will add the remaining members’ contact info after this post is up – there is precious little time left. I may also list contact information for the three witnesses (Bret Wells, Kimberly Clausing, Ph.D., Stephen E. Shay and Itai Grinberg).

https://www.finance.senate.gov/about/membership

Orrin Hatch

@GOPSenFinance
https://www.facebook.com/senatororrinhatch
Phone: 202-224-5251
James Williams james_williams@hatch.senate.gov

Ron Wyden
@RonWyden
Phone: (202) 224-5244
Fax: (202) 228-2717\
Victor Fleischer victor_fleischer@wyden.senate.gov


https://www.finance.senate.gov/about/subcommittees#taxation

Chairman
Rob Portman (R – OH)
@senrobportman
“https://www.facebook.com/senrobportman
Phone: 202-224-3353
Zachary Rudisill zachary_rudisill@portman.senate.gov

Ranking Member
Mark R. Warner (D – VA)
@MarkWarner
https://www.facebook.com/MarkRWarner
Phone: 202-224-2023
Maureen Downes maureen_downes@warner.senate.gov

Republicans

Mike Crapo (ID)
@MikeCrapo
https://www.facebook.com/mikecrapo
Phone: (202) 224-6142 (skype)
Fax: (202) 228-1375 (“)
Mike Quickel mike_quickel@crapo.senate.gov

Pat Roberts (KS)
@SenPatRoberts
https://www.facebook.com/SenPatRoberts
Phone: 202-224-4774
Fax: 202-224-3514
Chris Allen chris_allen@roberts.senate.gov

Michael B. Enzi (WY)https://w
@SenatorEnzi
https://www.facebook.com/mikeenzi
Phone: (202) 224-3424
Fax: (202) 228-0359
Toll-Free: (888) 250-1879
Bart Massey bart_massey@enzi.senate.gov

John Cornyn (TX)
@JohnCornyn
https://www.facebook.com/SenJohnCornyn
Phone: 202-224-2934
Andrew Siracuse andrew_siracuse@cornyn.senate.gov

John Thune (SD)
@SenJohnThune
Phone: (202) 224-2321
Fax: (202) 228-5429
Toll-Free: 1-866-850-3855
Mark Warren mark_warren@thune.senate.gov

Richard Burr (NC)
@SenatorBurr
https://www.facebook.com/SenatorRichardBurr
P: (202) 224-3154
F: (202) 228-2981
Natasha Hickman natasha_hickman@burr.senate.gov

Johnny Isakson (GA)
@SenatorIsakson
Phone: (202) 224-3643
Fax: (202) 228-0724
Monica McGuire monica_mcguire@isakson.senate.gov

Patrick J. Toomey (PA)
@SenToomey
https://https://www.facebook.com/senatortoomey
Phone: (202) 224-4254
Fax: (202) 228-0284
Richard Morgan richard_morgan@toomey.senate.gov

Tim Scott (SC)
@SenatorTimScott
https://https://www.facebook.com/SenatorTimScott
Phone: (202) 224-6121,
Toll Free: (855) 425-6324
Fax: (202) 228-5143
Spencer Pederson spencer_pederson@scott.senate.gov

DEMOCRATS

Thomas R. Carper (DE)
@SenatorCarper
https://www.facebook.com/tomcarper
Phone: (202) 224-2441
Fax: (202) 228-2190
Chris Prendergast chris_prendergast@carper.senate.gov

Benjamin L. Cardin (MD)
@SenatorCardin
https://www.facebook.com/senatorbencard
Phone: (202) 224-4524
Fax: (202) 224-1651
Beth Bell beth_bell@cardin.senate.gov

Claire McCaskill (MO)
@McCaskillOffice
https://www.facebook.com/senatormccaskill
Phone: (202) 224-6154
Fax: (202) 228-6326
Elizabeth Herman elizabeth_herman@mccaskill.senate.gov

Robert Menendez (NJ)
@SenatorMenendez
https://www.facebook.com/senatormenendez
Phone:202.224.4744
Fax: 202.228.2197
Jason Tuber jason_tuber@menendez.senate.gov

Michael F. Bennet (CO)
@SenBennetCO
https://www.facebook.com/senbennetco
Phone: 202-224-5852
Fax: 202-228-5097
Brian Appel brian_appel@bennet.senate.gov

Robert P. Casey, Jr. (PA)
@SenBobCasey
https://www.facebook.com/SenatorBobCasey
Phone: (202) 224-6324
Fax: (202) 228-0604
Livia Shmavonian livia_shmavonian@casey.senate.gov

Maria Cantwell (WA)
@SenatorCantwell
https://www.facebook.com/senatorcantwell
Phone: (202) 224-3441
Fax: (202) 228-0514
Artie Mandel artie_mandel@cantwell.senate.gov

*******

HEARINGS
Full Committee Hearing
International Tax Reform
Date: Tuesday, October 3, 2017 Add to my CalendarTime: 10:00 AM Location: 215 Dirksen Senate Office Building

Check back for live video of this hearing

Member Statements
Orrin G. Hatch (R – UT) Ron Wyden (D – OR)
Witnesses

Bret Wells
Professor Of Law And George Butler Research Professor Of Law, Law Center
University of Houston
Houston , TX

Kimberly Clausing, Ph.D.
Thormund A. Miller And Walter Mintz Professor Of Economics
Reed College
Portland , OR

Stephen E. Shay
Senior Lecturer On Law, Harvard Law School
Harvard University
Cambridge , MA

Itai Grinberg
Professor Of Law, Law Center
Georgetown University
Washington , DC

How do I submit a statement for the record?
Any individual or organization wanting to present their views for inclusion in the hearing record should submit a typewritten, single-spaced statement, not exceeding 10 pages in length. Title and date of the hearing, and the full name and address of the individual or organization must appear on the first page of the statement. Statements must be received no later than two weeks following the conclusion of the hearing.

Statements should be mailed (not faxed) to:

Senate Committee on Finance
Attn. Editorial and Document Section
Rm. SD-219
Dirksen Senate Office Bldg.
Washington, DC 20510-6200

After Five Decades of Abuse, Enough is Enough!

 
cross-posted from Brock
Posted on February 12, 2012 by Just Me
 
Forget about the notion that CBT has been with us since the Civil War. Forget about the absurd conclusion of Cook v Tait. The real beginning of our story started 55 years ago on October 16, 1962. This was the beginning of the U.S. government’s campaign of punishment for Americans who dare to live abroad.

Many people have often said that the only way to get the U.S. to understand our situation is to focus not on harms, or fairness, or Constitutionality. Doing that just fuels the clichés and “alternative facts” about all the fatcats abroad, cheating on taxes. Instead, as Roger Conklin tried to do, the Congress, new Treasury Secretary Mnuchin and POTUS should realize that these policies have resulted in a trade deficit for 55 years.

Finally, it merits at least some mention that fifty years ago, before these extra fiscal and financial reporting burdens were put on the shoulders of overseas Americans, and while they were still fully able to compete with the citizens of other countries in the same foreign markets, the United States had enjoyed more than sixty-seven years of unbroken trade surpluses with the rest of the world. During the subsequent decade, after this new toxic tax burden was imposed on those living and working abroad, the U.S. foreign trade position began to weaken, as many had predicted, and a trade deficit appeared for the first time in the 20th Century in 1971. As the tax burden on overseas Americans became increasingly heavy and increasingly incomprehensible, these deficits soon became a permanent fixture of U.S. trade performance, and we are now in our 36th straight deficit year with the cumulative amount of these trade deficits now exceeding $8 trillion.

It is not very obvious so far that the current Administration in Washington , despite the enthralling campaign promises that were made in 2008, has any serious interest in leveling the worldwide playing field for trade. The results for the first eleven months of 2011 already show an impressive deficit for this most recent year of more than $500 billion, which is the worst trade performance of the last three years, and this deficit still grows each and every day at a rate in excess of $1.5 billion. The aggregate trade performance for the first three years of the current administration is now a negative $1.4 trillion! (Update: Year over year, the trade gap for 2011 was up 11.6% to $558 billion.)

This history of the sad and incomprehensibly self-destructive behavior of the United States during the past 50 years, which is unique among all of the major trading nations of the world today, is well worth reading and contemplating.

As has been stated many times before, major world powers don’t always decline due to destruction coming from outside. They sometimes infect themselves with terminal obsessions from within that, alas, seem to then become incurable. This doesn’t have to happen this time to Uncle Sam, but to avoid it something rather urgent needs to be done before it becomes too late.

This is something our oft-criticized fellow expats at ACA understood and have fought for decades. Andy Sundberg is the author of the report which comprises the main portion of this post. Read the entire report and decide if all coming to this situation in the last five years understand the history of this problem better or are entitled to criticize other actions in hindsight. In a recent private email group discussion, a story that came out might offer a useful perspective:

A teacher once told me he was curious why geese always flew in a “V.” So he looked it up and found that the one in the front led until he no longer could and he moved to the back being replaced by the next and so on. In that way they reached their destination.

So no matter whether you come from ACA 50 years ago, or DA, or RO, or AARO, FAWCO, Brock 5 years ago or American Expatriates 3 years ago, we are all trying to get tax reform in order to right this situation once and for all. Each has a part to play in this unfortunate situation. This is much more in keeping with this post’s resolution:
 
So Let Us Now All Rise Up, Join Together to Throw off These Shackles, and Take Appropriate Action to Prepare for a Much More Positive Future for All of Us, our Heirs and for Our Country.
 
 

“ENOUGH IS ENOUGH”

AFTER FIVE DECADES OF ABUSE

IT’S TIME FOR A CHANGE

  

THIS COMING OCTOBER WE WILL MOURN

THE 50TH ANNIVERSARY

OF THE DEATH OF

A LEVEL PLAYING FIELD

FOR OVERSEAS AMERICANS

AND NOW IT’S TIME TO GET IT BACK

 

Reproduced by permission of Andy Sundberg, Fellow and Secretary, the Overseas American Academy , Geneva , Switzerland , 16 January 2012. Continue reading After Five Decades of Abuse, Enough is Enough!