December 22 2016 Update on Canadian FATCA IGA lawsuit — Moving closer to the Charter-Constitutional trial

cross-posted from isaacbrocksociety.ca

This is a new update with some timelines from the Canadian Federal Court showing what has to be done before we know the Charter-Constitutional trial date (taking place next year). In part, there will be motions and responses related to differences of opinions as to what documents and information have to be provided prior to trial:

Order dated 22-DEC-2016 rendered by Roger Lafrenière, Esq., Prothonotary Matter considered with personal appearance

The Court’s decision is with regard to Case Management Conference [recently held by the parties to move the litigation forward]

Result:

Court Orders:

1. D [The Defendants — Attorney General and Revenue Minister] are granted leave to s/f [serve/file] their motion in writing for production of documents and particulars.

2. P [The Plaintiffs — Kazia, Ginny, and Gwen] shall s/f their responding motion record within 28 days from the date of service of the D motion referred to in paragraph 1 above

3. P are granted leave to bring their motion for summary trial [the Charter-Constitutional trial]. P are dispensed from s/f a motion record at this stage and shall instead s/f a notice of motion and contemporaneously serve their affidavit evidence [e.g. testimonies from our Witnesses and Expert Witnesses].

4. The timeline for the D to file a response to the P motion for summary trial is suspended until further order

5. Any further affs, docs, or particulars, and anything else req’d by any order resulting from the D’s motion referred to in para 1 above shall be produced by the Ps to the Ds within 30 days of such order

6. The parties shall make best efforts to schedule the Ds examinations for discovery of the Ps within 45 days of satisfaction of the requirements, if any, described in para 5 above

7. The parties shall requisition a CMC [Case Management Conference] as soon as possible following completion of the steps set out in para 5 and 6 above in order to, among other things: A) fix a timetable for completion of the steps leading to the hearing of the P motion for summary trial; and B) schedule the hearing of the P motion for summary trial.

Filed on 22-DEC-2016 copies sent to parties”

Sorry again for the slow pace.

— I noticed on Brock a recent comment that “Brock is populated with anonymouses who toe the curb.” but confirm that our Witnesses (as well as our Plaintiffs) have all been willing to “out themselves” publicly — and that their names will be disclosed in the affidavits.

Stephen Kish

Continue reading “December 22 2016 Update on Canadian FATCA IGA lawsuit — Moving closer to the Charter-Constitutional trial”

ADCT Will Retain James J. Butera for CBT LawSuit

The Alliance for the Defeat of Citizenship Taxation will retain James J. Butera in the lawsuit against the United States regarding citizenship-based taxation.

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In a related matter, on September 8, 2014, our sister organization, the Alliance for the Defence of Canadian Sovereigntyhired Washington-based attorney James Butera of Jones Alkers LLP to advocate specifically for “Accidental Americans” – “those who are not U.S. citizens in any normal sense of the word” but who meet the technical, administrative definition of “U.S. person” but who have lived all their lives in Canada and feel no real connection to the United States.

“Growing numbers of Canadians dispute the right of the United States to impose U.S. citizenship on them without their express consent,” Mr. Butera says.

from The Alliance for the Defence of Canadian Sovereignty website:

WASHINGTON D.C. ATTORNEY Mr. Jim Butera of Jones Walker LLP files a submission on behalf of the Alliance to the United States Department of State pointing out that the renunciation fee increase from US$450 to US$2,350 violates the Expatriate Act of 1868 and the U.S. Administrative Procedure Act and must be immediately suspended. Read Mr. Butera’s able submission and our press release in English and in French.

Mr. Butera has a J.D. from Georgetown University Law Centre and was admitted to the Bar of the District of Columbia in 1973. His areas of specialty are Banking & Financial Services and Government Relations & Legislative Advocacy. He has argued cases in the U.S. Court of Federal Claims,U.S. District Court for the District of Columbia, U.S. Court of Appeals, Federal Circuit and the U.S. Supreme Court.

Mr. Butera entered law school at Georgetown University Law Center after serving as Captain in the United States Marine Corps. He served two combat tours in Vietnam as a Lieutenant. His decorations include the Bronze Star Medal, the Purple Heart, a Navy Commendation and two Presidential Unit Citations. He has published law review articles on a variety of topics, and was a contributing author to Jaws of Victory, an analysis of presidential politics published by Little, Brown & Co.

After graduating with his juris doctor degree, he began his law and government relations career on the staff of the American Bankers Association. From 1974 to 1989, he handled federal government matters for the National Council of Savings Institutions, a major Washington-based national trade association. During his tenure at that association, Mr. Butera directed its government affairs program and served as the organization’s Executive Vice President. Mr. Butera served on a federally-appointed financial institutions Advisory Council in 1987 and 1988. In 1988, he was among the industry experts selected to prepare The American Agenda, under the direction of former Presidents Carter and Ford, to identify the major banking issues facing the incoming Administration.

Mr. Butera has been at the forefront of another FATCA-related case since 2013; the Florida and Texas Bankers Associations filed suit in order to prevent releasing private banking information of their clients. Please see:

Complaint
Decision
An appeal to re-hear the case was denied.

The Cato Institute has some interesting observations about the case; along with the National Federation of Independent Business has filed an amicus brief in support of Supreme Court review.

The Florida and Texas Bankers Associations are trying to challenge this regulation, but are being frustrated by interpretative jiggery-pokery that prevents their serious legal arguments from even being heard. While the federal district court allowed this lawsuit to proceed, the U.S. Court of Appeals for the D.C. Circuit reversed course and held that the associations couldn’t challenge the regulation because, under the Anti-Injunction Act (AIA), one can’t challenge a tax until the government has attempted to enforce the allegedly improper law and collect the attendant tax.

And from Bloomberg BNA we have:

To be sure, we haven’t heard the end of either of these debates. But the debates should be allowed to play out in the courts.

On June 2, 2016, the SCOTUS wil review the decisions and consider whether they will hear the case.

Mr. Butera is clearly suited to best represent our interests and we look forward to moving ahead on this issue.

The agony of US citizenship for US citizens living outside the US

cross-posted from renounceuscitizenship blog

The agony of US citizenship for US citizens living outside the US
 

 
U.S. citizens cry out in agony! But, the U.S. government Silence is Deafening .

The cries are getting louder and louder! Inside the U.S. only Taxpayer Advocate seems to be listening. Outside the United States, American Citizens Abroad continues to soldier on. In Canada, the home of (probably) the largest number of U.S. citizens (many of who are also Canadian citizens) the Government of Canada is listening. Finance Minister, Jim Flaherty, has been consistent in his position that FATCA is intrusive and unnecessary and the Canada will not collect FBAR penalties. He has been consistent with the sentiments expressed in his public letter of September 16, 2011. U.S. citizens in Canada are in a far better position than U.S. citizens in other countries. Furthermore, Mr. Flaherty has been responsive to citizen’s concerns, recognizing that Canadians are desperate for help. The evidence is building. to protect themselves from the U.S. government. Take the above poll which is from a previous post describing how renunciations of U.S. citizenship are soaring under Obama. Consider the following wisdom from a U.S. citizen living in France.

Homeland Americans do not love their “Domestic Abroad” and routinely characterize them as “traitorous Benedict Arnold’s.” Now these citizens abroad are in a complete panic now that they are aware of the U.S. tax and reporting requirements. They are facing the same compliance issues as U.S. immigrants and they are now encountering discrimination in their host countries (loss of local banking services, for example, or limited retirement investment opportunities or even being cut out of business deal by non-US partners) as a result of FATCA.

Many of them cannot easily return to the U.S. – if they did they would have to close their businesses or leave their jobs, get divorces from their foreign spouses and, in some cases, leave their minor children behind in the host country. Contrary to popular belief in the homeland, the vast majority of these people are not millionaires and run a real risk of arriving back home in the U.S. with limited assets, if not in a state of outright penury. On the other hand, they can no longer continue to reside in their host countries as U.S. citizens where they risk paying double taxes (U.S. taxes in addition to host country taxes) and must pay the increasing cost of compliance (international tax specialists to file the 1040 and a whole host of other forms demanded of overseas citizens who have built lives abroad and are permanent residents of their host countries). Even Nina Olsen, the IRS Taxpayer Advocate in the U.S., said in her 2011 report:

The complexity of international tax law, combined with the administrative burden placed
on these taxpayers, creates an environment where taxpayers who are trying their best to
comply simply cannot. For some, this means paying more U.S. tax than is legally required,
while others may be subject to steep civil and criminal penalties. For some U.S taxpayers
abroad, the tax requirements are so confusing and the compliance burden so great that they give up their U.S. citizenship.And that sums up quite nicely what is, in fact, happening. Those who are in the know and can afford it are mostly “complaining and complying” while those who cannot are renouncing U.S. citizenship. 2011 was a banner year for renunciations of U.S. citizenship. 2012 will be worse (see this and this excellent analysis over at Overseas Exile.)

http://thefranco-americanflophouse.blogspot.ca/2012/03/diaspora-tax-war-of-2012-stakeholder_27.html

In addition to the current Government of Canada, the Official Opposition of Canada (NDP) is taking the IRS assault on Canadian citizens very seriously. Individual MPs have made an effort to respond and educate. Individual MPs have organized public meetings. Interestingly, the newest NDP MP, Craig Scott is a law professor/human rights lawyer. Furthermore, he attended a public meeting about FATCA. He would be a great addition to the cause. Interestingly there has been very little support from the Liberal Party of Canada. Here is a letter from Bob Rae. Although the Green Party of Canada has only one seat in the House of Commons, their leader Elizabeth May (who was born in the U.S.) has expressed her support for Canadians.

As the FATCA implementation date comes closer and as we find ourselves in tax season, many U.S. citizens (whose only crime is to live outside the United States) are living in a state of desperation and agony. Some samples:

This man gives the word “prescient” real world application:

In closing, some “psychotherapy for U.S. citizens living outside the United States” – the Widsom of Moe Levine:

We are living in interesting times.

Collective psychotherapy – U.S. citizens outside U.S. – Not what they take from you, it’s what they leave you with

cross-posted from renounceuscitizenship blog

Going back to a general thread from a few weeks ago – on law and morality – this post speaks more to the effects of the law when it is not rooted in morality. On one level, an apologist might claim that “doing one’s duty” and “paying one’s share” is moral and is necessary to maintain funding and order in a society. However, when such a law is applied to those who live outside that society, as we all know from experience, unexpected conflicts, resulting punitive actions and penalties tend to denigrate the quality of life. We are not talking about “quality of life” amounting to physical comforts or financial wealth. By “quality of life, what is referred to is mental stability, emotional trustworthiness and the ability to move through difficulties with a sense of direction and confidence. When these parameters are stifled by confusion/lack of clarity of what is expected, and ridicule and negativity is directed toward those affected, the result is a not an issue of lack of compliance but rather, wrongly imposed requirements that simply make people anxious, immobilized by fear, depression and a general inability to adjust to the situation. How this can be justified when those same people ARE compliant in the society where they live, strikes many as simply being immoral.

*****

The Wisdom of Moe Levine Moe Levine (not that I ever met him) was considered to be one of America’s greatest trial lawyers. Although he died in 1974, his wisdom lives on his book (appropriate called) “Moe Levine on Trial Advocacy“. He (legend has it) was a master at delivering the closing statement in his jury trials. When arguing for a severely injured plaintiff he (according to the commentators of his time) would tell the jury (referring to a badly injured client):

“It’s not what you take from them it’s what you leave them with.”

In other words, the inability to live a normal life was worse than the injury itself. Leaving aside the financial costs, Obama/IRS tyranny has had a very serious effect on the lives of many U.S. expats. Few of them will ever forget the day they learned about these problems. One (of many) example is the story of Ambassador Jacobson’s 70 Year old grandmas” in Saskatchewan.

A recent post offered people the chance to describe how recent events have impacted on the lives of U.S. citizens outside the U.S. Check out the comments – there were plenty of them. Yesterday a post appeared on at the Isaac Brock Society called “Your Citizenship Personality“. The comments included a number of descriptions of how the recent Obama/IRS/Levin assault on U.S. citizens living abroad has damaged their lives. I encourage you to read all the comments, but I wanted to share the following two (the second of which is my own) in a separate post:

fullTurtle

March 9, 2012 at 5:15 pm

I’ve been a lurker on this site for over a month. I’ve never “blogged” before today. I am not a writer, nor as eloquent as most you and am woefully ignorant of all this tax and legal stuff. In these 30+ days, I have read every single thread on this site and have visited every link offered. I have read the entire “OVDI Drudgery for Minnows”, all of the personal stories, and have even printed out pages & pages of suggestions and opinions (thank you so much, JustMe!). But I can’t take it anymore… this being silent and feeling so estranged and “criminalized”. The only place I feel connected anymore is while I’m reading postings from all of you. After reading zucchero81′s comments on this thread (“…this whole FATCA issue has been more like going through the 5 stages of grief…”) I feel compelled to peek out of my seemingly safe lurker shadows. You have it right, usxcanada… I am one of those lurkers wondering if/how to transition past pure denial. I have yet to make a real decision (which would require real action) on what the heck to do. My gut reaction is to run fast, run far, hide deep. But the more I read, the more that is sounding impossible to accomplish. I have chosen “fullTurtle” as my alias because doing a “full ostrich” would leave far too much exposed at the surface. Since becoming aware just 6 weeks ago (and purely by accident) of my requirement for filing US taxes… then FATCA and all the rest, my whole life has turned upside down. I can think of little else. I’ve attended a free seminar on the subject of cross-border taxation given by a high-end legal accounting firm in town (can you say ca-CHING?) and have spent the vast majority of my waking hours researching the subject. All I seem to have done is become almost catatonic with dread. I swing wildly between the extremes of near homicidal rage and suicidal depression. Okay, I’m more in the homicidal phase today. To get back to the topic of this thread, I want to renounce my citizenship so bad I can taste it. And thanks renounceuscitizenship; I agree 100% with pretty much everything you’ve posted, and I visit your site regularly too. It would be so worth the $450 USD just to fling my passport & birth certificate down at the US Consolate and tell them exactly where to shove it. When the day comes that I can renounce (my Canadian citizenship application was mailed Feb.6th so it will be 18 mo’s to 2 years), I will write that cheque on a shirt, duly certified by the bank of course, and explain it to them thusly: “Seeing as the US Gov’t is taking the shirt off my back, I thought you might like to keep the shirt.” In ending this tirade, I am so grateful to ALL of you regular posters who have unknowingly kept me from jumping from a tall building (so far). And especially you, Petros, for creating this web site. You have no idea the number of people you are helping give voice. I hope someday to add my story to those of you who have survived this holocaust. Okay whew, if I can do this… the rest of you lurkers out there can do it too!

renounceuscitizenship

March 10, 2012 at 9:36 am

@Fullturtle A warm welcome to the Isaac Brock Society. It’s a great place – with a lot of great people. It’s interesting how the comments often move the intent of a post in a different direction. What struck me about these comments is that one can feel the excruciating pain, the agony, the fear, the uncertainty, the despair, the anger, the rage, the sense of betrayal, and in some cases the unbelievably intense hatred of the U.S. government. I do believe that many people on this board have never experienced the range and intensity of emotions they are feeling today. As noted by Pacifica777: “This horrible gamut of emotions and mood swings seems to be universal, and statistically, I would guess that few of us have ever had to deal with such extreme feelings before, so it’s so unfamiliar that it’s scary. I have never felt such intensity of emotions and such a bizarre range of them, nothing close to it, ever. This US mess just takes over one’s life, feeling like caught in a complex trap, that it will never end. Though it’s not over yet, I have found as time went on, while I still feel an amazing range of emotions, they don’t seem to be so intense and overpowering. For a couple of months, it overtook all of my life — with such an overpowering complex confusing situation, it was hard to focus on anything else. Eight months on, it is still, unfortunately, a big part of my life, but slowly I’ve found more and more of my normal life, and my normal personality, returning. It’s still a big problem but not overwhelming everything else.” Blaze reiterates: “I’m hoping you are just joking in your comment about wanting to jump from a tall building, but I fear you may be serious. Another person has expressed similar disturbing thoughts. Many of us have had sleepless nights, health challenges, strained marriages and personal relationships, expensive accountants and lawyers who are draining retirement savings, difficulties at work, worry about Canadian born children, etc.” JustMe (in his infinite wisdom) has said that it is important to not hate. It will only destroy the person doing the hating. You need to be focused, methodical, purposeful and committed to achieving whatever course of action you decide is best for you. You said that you felt “criminalized”. I understand. If you are not careful, and if you allow yourself to feel “criminalized” long enough, you may actually believe that you have done something wrong. You have done NOTHING wrong (and chances are that you have done a lot right). You are on the receiving end of a vicious assault by an unprincipled vicious debt-ridden thug – The United States of America. I want to add one more thought to this moment of “collective psychotherapy”. There is good news and bad news. First, the good news. You do NOT live in the U.S. You live in Canada. You are in a situation that any sane person would dream to be in. Sure, Canada has its problems. But, lurking beneath all the problems is a basic assumption of fairness, justice and decency. I repeat you live in Canada. In addition to the good things I just mentioned, you have the benefit of the tax treaty. Canada will not collect FBAR penalties. Furthermore, (I don’t have stats on this), but I suspect that a large number of U.S. citizens here are also Canadian citizens (giving them political power). Second, the bad news. As horrible as this situation is (and it is a nightmare for most), you must go on with your life. At least in my case (and I suspect most of you) that life is a life shared with non-U.S. citizens. This is a very important point. The Obama/IRS/Levin assault cannot be understood by anybody unless they are a U.S. citizen living outside the U.S. To be specific, they cannot understand your rage and anger. They cannot understand your feeling of injustice. They cannot understand the intensity of your emotions. They cannot understand your sense of betrayal. They cannot possibly understand these things because they are not experiencing it (and probably will never experience anything like it). So, don’t expect the understanding from them that you really need. My point: You need to be very careful to not allow any of this to damage the valuable relationships in your life – friends, marriage, work, extended family, etc. We are in a situation where we are in a sense forced to protect ourselves from a repressive government. This is has gone on throughout history. Never did I believe, that government would be, (according to Margaret Thatcher) the United States –that “Great Citadel of Freedom and Justice”. But, that’s what is happening. I once met a man who had escaped from another repressive government. He wanted his children to be well educated – commenting that, the only thing that a government couldn’t take from you was your knowledge/education. It’s not the only thing they can’t take. They can’t take your attitude, or your capacity to tell right from wrong. Unless of course you let them (and we wouldn’t let than happen, now would we)! Take the weekend off from your worry. You deserve it. Renounce and rejoice!

So what am I trying to say? 1. There is no way the IRS can understand the effect of their conduct on honest, hard working people, who just happen to live outside the United States. They cannot understand it and never will. 2. Your job is to get through this and have the life you deserve.

More #Americansabroad will pay capital gains tax on sale of principal residence in Canada

 
cross-posted from citizenshipsolutions

More #Americansabroad will pay capital gains tax on sale of principal residence in Canada

The price of Toronto real estate continues its upward trajectory.

This morning I met with yet another (who could have known) Canadian resident who wishes to renounce U.S. citizenship. This person is completely compliant with his U.S. tax obligations. He is renouncing for a very common reason.

The reason for renouncing U.S. citizenship is to:

Protect the tax free capital gain, which results from the sale of his Canadian principal residence in Canada.
Continue reading “More #Americansabroad will pay capital gains tax on sale of principal residence in Canada”

This is Fantastic! Don’t Think We Have Ever Had Support Like this!

Came across this today: Ways & Means committee members letter

I do not have permission to reproduce in full but here are a few excerpts:

Dear Speaker Ryan, Majority Leader McConnell, Rep. Brady, and Sen. Hatch:
As free-market and taxpayer protection organizations representing millions of Americans,
we urge that repeal of the Foreign Account Tax Compliance Act (FATCA)—a plank in the
2016 Republican Party Platform—be included in any tax reform package sent to the
White House.

Since FATCA’s introduction, Americans living overseas have lost access to their banking
and investment accounts as foreign financial institutions drop clients rightly perceived as
toxic. This has not only impacted the welfare of the estimated nine million Americans
who live and work abroad but hampers small businesses owned and operated by
Americans attempting to compete internationally

FATCA repeal bills will soon be introduced in the House and Senate. We urge the
leadership and committees of jurisdiction to include this vital correction of misguided
enactment of the past administration by including it in any forthcoming tax bill

There is a list of 24 individuals/organizations. I ask any Tweeps to RT like mad to show our appreciation for what they are doing. PERFECT timing for the Rally tomorrow! Perhaps someone could put together an email list for those who do not Tweet.

@RepealFatca
@nigeljgreen
@GroverNorquist
@CFandP
@AmerComm
@RSI
@MarketInstitute
@ismurray
@Andrew_Langer
@limittaxesorg
@C4Liberty
@Lisabnelson
@Protectaxpayers
@NTU
@GLandrith
@60PlusAssoc
@SovereignInvest
@LimitGovt
@FreedomWorks
@tgiovanetti
@KarenKerrigan

I could not find an address I could confirm for either these individuals or orgs:

Jeffrey Mazzella President Center for Individual Freedom
Chuck Muth President Citizen Outreach
Pamela Villarreal National Center for Policy Analysis

Andrew F. Quinlan President Center for Freedom and Prosperity
Grover Norquist President Americans for Tax Reform
Phil Kerpen President American Commitment @AmerComm
Iain Murray Vice President Competitive Enterprise Institute
Andrew Moylan Executive Director R Street Institute
Charles Sauer President The Market Institute
Jeffrey Mazzella President Center for Individual Freedom
Nigel Green and Jim Jatras Co-Leaders Campaign to Repeal FATCA
Pete Sepp President National Taxpayers Union
David Williams President Taxpayers Protection Alliance
George Landrith President and CEO Frontiers of Freedom
Jim Martin Chairman 60 Plus Association
Wayne T. Brough Chief Economist and VP for Research FreedomWorks
Bob Bauman Chairman Sovereign Society Freedom Alliance
Andrew Langer President Institute for Liberty
Lew Uhler President The National Tax Limitation Committee
Chuck Muth President Citizen Outreach
Norman Singleton President Campaign for Liberty
Lisa B. Nelson CEO Jeffersonian Project
Tom Giovanetti President Institute for Policy Innovation
Rick Manning President Americans for Limited Government
Pamela Villarreal Senior Fellow National Center for Policy Analysis
Karen Kerrigan President and CEO Small Business and Entrepreneurship Council

Did Mr. #FBAR really pay a surprise visit to Canada?

 

cross-posted from citizenshipsolutions

The FBAR Chronicles continue …
 
FBAR 101

First, A Public Service Announcement – Mr. FBAR Get’s A New Filing Due Date

This is one more of my posts about Mr. FBAR. Mr. FBAR is a mean, nasty vicious thug who has no place in any civilized society.

Thomas Jefferson once said:

Were it left to me to decide whether we should have a government without newspapers, or newspapers without a government, I should not hesitate a moment to prefer the latter.

My thoughts are that:

Were it left to me to decide whether we should have FBAR without outlaws, or outlaws without FBAR, I should not hesitate a moment to prefer the latter.

Unfortunately, Mr. FBAR has become the new symbol of American citizenship. Furthermore, Mr. FBAR disproportionately affects the local bank accounts of Americans abroad – becoming (in effect) a form of “domestic terrorism” against U.S. citizens living outside the United States.

Mr. FBAR As Applied To The Canada U.S. Dual Citizen …

As reported by CBC news, Global News in Canada, The Isaac Brock Society and various Facebook groups. a U.S. Canada dual citizen (Jeffrey P. Pomerantz – the Defendant) has been sued in Washington State, by the U.S. Department Justice, to collect FBAR penalties for the years 2007, 2008, and 2009. It appears that at the present time, the Defendant lives in Vancouver, Canada.

The actual “Complaint” filed in the Court which summarizes and explains the Government’s allegations is found here. (If you have read this far, you should pause and read the Complaint.)

The facts are horrendous. Basically the Defendant was assessed significant FBAR penalties which increased through interest charges to the point where they had grown to approximately $800,000 U.S. dollars (approximately 1,100,000 million Canadian dollars) by the time the law suit was commenced in 2016. FBAR penalties are frightening, draconian and are really a form of Civll Forfeiture. One comment, as reported on the Isaac Brock Society put it:

On a practical note, there is one commenter in particular, Kathy “Powell”, who could use upticks on the CBC article for her efforts to set things straight … if anyone here has CBC commenting privileges. (I gave mine up when “real names” were required.)

As for Jeffrey Pomerantz who is truly living “a friggin’ nightmare”, there’s just too little information to create a clear picture of his situation. I won’t judge him as others at CBC are doing. I’m just shaking my head at how those without a clue keep tossing in misinfoturds to muddy the waters even more. What is crystal clear to me is that the villain in this scene is the IRS/DOJ and even if Jeffrey Pomerantz is guilty of something he doesn’t deserve to be completely impoverished for it.

The complaint filed by the Department of Justice is here and should be read by all bloggers and other commenters. At first blush one gets the impression that this case is primarily about the IRS assessing an FBAR penalty on a Canadian citizen resident in Canada and that the penalty was based on unreported Canadian bank accounts. This interpretation reinforces the fear (real and legitimate) that the IRS might attempt to attempt to confiscate the wealth of Canadian citizens resident in Canada through civil forfeiture FBAR penalties. I do NOT believe that this is a fair reading of the Department of Justice Compliant. (The situation is bad enough without expanding it’s reach. There is no need to accelerate the “fear mongering”.)

This case is more like a Homelander with unreported bank accounts in Switzerland …

Here is why.

Please note that this story is based on FBAR violations for the tax years of 2007, 2008 and 2009. Based on the Department of Justice complaint, we see the exploration of the following factual allegations.

Factual allegations:

A. Was The Defendant a U.S. Resident Or A Canadian Resident During The Years In Question?

Although it is unclear, it appears likely that the Defendant was a both a U.S. citizen and a U.S. resident during all or some of the years of 2007, 2008 and 2009. The CBC article includes:

While the Justice Department’s complaint says Pomerantz lived in the United States during all three years, documents prepared by Pomerantz’s side found in the court file say he and his wife, a Canadian-Norwegian dual citizen, only lived in California for part of 2008 and 2009 before moving back to Canada.

Assuming that he was a U.S. citizen residing in the United States, his case (presumably) would have been viewed as that of a Homelander with offshore accounts.

B. Where Were The Offshore Accounts That Were The Basis For The FBAR Penalties?

RBC (Royal Bank Of Canada Accounts):

The Department of Justice complaint (paragraphs 12 and 13) describes the existence of RBC accounts which were opened “prior to or during 2007”. A reading of the brief suggests that the RBC accounts were NOT counted towards the FBAR penalties. The RBC accounts were in the name of a Vancouver, Canada based company. Although not conclusive, this suggests the the Department of Justice did NOT target those specific RBC accounts located in Canada.

Swiss Bank Accounts In The Name Of A Turks And Caicos Corporation

The Department of Justice pleading (paragraphs 8 to 10) allege the Defendant opened:

  • five swiss bank accounts in the name of a Turks and Caicos Island Corporation;
  • that the Turks and Caicos Corporation performed no active business but was opened for the sole purpose of holding the Defendant’s investments (paragraph 7); and
  • that the income from the accounts was NOT reported on the 2007 – 2009 tax returns (paragraphs 22, 36 and 44).

In other words, the FBAR penalties should be seen as penalties imposed on Swiss bank accounts (sounds horrible) which were located outside the Defendant’s country of residence (in a tax haven).

The Two CIBC “PERSONAL CHECKING” Accounts Opened Prior To 2001

Paragraph 5 of the Government’s Complaint describes two CIBC accounts that:

  • were opened prior to 2001
  • remained open during the years of 2007, 2008 and 2009
  • were not reported on an FBAR.

(Because they were “checking accounts” it is unlikely that they generated taxable income.)

Although we can (I think) assume that these accounts were located in Canada, the compliant does not specifically state this.

Nevertheless, my impression is that:

  • although the CIBC accounts were included in the group of accounts that were part of the FBAR penalty base (see paragraphs 17, 31 and 41);
  • the FBAR penalties were motivated by the Swiss bank accounts opened for the benefit of the Turks and Caicos Corporation.

To summarize …

Nobody deserves the treatment that this defendant was subjected to. It is however, wrong to interpret this case as the IRS attempting to impose FBAR penalties on the Canadian bank accounts of Canadian residents. There is enough FBAR hysteria already! This case should be seen as the IRS attempting to impose an FBAR penalty based on the unreported offshore Swiss accounts that were for the use of an offshore (Turks and Caicos) corporation used to hold personal investment assets.

Although FBAR penalties are (in general) unconscionable, unfair, draconian and a form of civil forfeiture):

this case should NOT be interpreted that the IRS attempting to impose FBAR penalties on the Canadian bank accounts of Canadian residents.

This post has been based largely on the Department of Justice complaint as filed in the Court.

John Richardson

The U.S. Cannot Force a Person Born Outside of the United States to Accept U.S. Citizenship

 

It is odd that we are STILL hearing arguments that refuse to accept a person born outside the United States, having a statuatory (NOT a CONSTITUTIONAL) claim to U.S. citizenship may decide not to accept it. As USCitizenAbroad so clearly states below:

Seriously, do you really believe that the U.S. can deem anybody in the world to be a U.S. citizen?

What if the U.S. decided to pass laws that said:

  • All cars in Japan with a US-made part are the property of the United States …..or
  • Any family with a naturalized US citizen are now citizens of the United States …..or
  • Anyone with a family member who speaks English now is a citizen of the United States …..or
  • If there are 300 sunny days in Canada, Canada now belongs to the United States

 
The reason “the US can force a person to be a citizen” sounds less silly (perhaps) than the 4 statements above is only because your mind is used to the idea that that is possible. And only because other people claim it is so.

The apologists would have you believe that in any argument, if you want to “play in the US’ playgrounds (“markets”) you have to do what the U.S. requires of you.

WEll, they might be able to force SOME of the people a lot of the time but they cannot force ALL of the people all of the time.

So they have managed to stuff FATCA down the throats of every nation on earth via the IGAs. This occurs because of U.S. law plus the U.S.tendency to bully because no nation wants to commit financial suicide.

They cannot force every person born outside of the United States to be a U.S. person, nor to be taxed as one. A person born outside the U.S. does not have a constitutional right to U.S. citizenship. U.S. law is limited to jurisdication. Don’t forget:

  • The United States was completely unable to make FATCA work (jurisdictional/statutory fact)
  • without the IGAs (US bullying of other nations)

 
U.S. Law applies to the U.S.
Be Clear.
Do not believe that U.S. law transcends the laws of your own country.
 
In the end, that person can CHOOSE – to comply or not to comply. Since that is the practical end result of what this argument is about, what is so hard to accept about it?

And if the “but then they won’t be able to go to the US” argument is raised, then that depends upon what that individual chooses. What’s so great about going to the US? “Warm climate and beaches”? Other countries have warm weather and beaches. “Cheaper prices than other places”? – well, compare what you will have to pay in order to get those “CHEAP” prices……….
 
****cross-posted from Brock ****

USCitizenAbroad says
March 15, 2017 at 7:03 am
@All

Q. Do those children born outside the United States to parents who have the statutory right (as has been redefined over the years) automatically have U.S. citizenship imposed on them regardless of the wishes of the parents (and later, the children) or do those children have the right but NOT the obligation to accept U.S. citizenship?

A. They have the right but NOT the obligation to accept/register themselves as U.S. citizens if they so choose.

This discussion has been going on since the inception of Brock and has been the subject of numerous threads.

Furthermore, the answer seems to depend on who you ask (U.S. based immigration lawyers who believe that everybody in the world wants to be a U.S. citizen) or people outside the U.S. (who recognize that the forcible imposition of U.S. citizenship on those born outside the U.S. would be an unjustifiable extension of U.S. law beyond the U.S. borders). Seriously, do you really believe that the U.S. can deem anybody in the world to be a U.S. citizen?

Some explanation follows …

1. The grant of citizenship to people born outside the U.S. is determined ONLY by statute (hence the shifting laws) and NOT by the 14th Amendment of the U.S. Constitution. This means that granting citizenship to those born outside the U.S. is in the discretion of Congress.

2. As everybody knows, under the INA there are only two ways to obtain U.S. citizenship: (A) birth or (B naturalization. Birth means that you ARE a citizen from birth and naturalization means that you BECOME a citizen after birth.

3. The INA is a statute that presumes that every life form on the planet wants to live in the USA and/or wants to be a citizen of the USA and essentially prescribes conditions under which residence or citizenship can be granted or recognized.

4. Therefore the correct way to read the statute “this person IS a citizen” is that:

these are the conditions under which we will recognize somebody is a citizen if that person wants to be recognized as a citizen.

5. The conditions acknowledged in “4” need to be proven by objective, extrinsic and reliable evidence. Even if somebody wants to be a citizen, it won’t be recognized unless those conditions are proven (which is what this post is about).

6. Therefore, unless the parent or later the child makes the claim of citizenship then the person could not be recognized as a U.S. citizen – period. Without being recognized as a U.S. citizen you are NOT a U.S. citizen. Don’t believe me? Just try to enter the U.S. based on nothing more than “I claim I am a U.S. citizen”.

7. There are numerous examples of information from consulates and the State Department (some of which is discussed in the comment thread) making this point clear. (Much of this has been discussed in other posts.)

8. There is not a single known instance of the U.S. Government forcibly imposing U.S. citizenship on somebody born outside the USA. (They are not going door to door and forcing identification of where the parents of children were born). In fact, if you are born outside the USA there is a presumption of alienage – that is a presumption that one is NOT a U.S. citizen (how many would kill for that?)

9. If the parents register the kid as a U.S. citizen, it is probably “game over” and the child IS a U.S. citizen. But even on that point, I believe that it may be possible to argue that a kid whose parent committed “citizenship crime” against his child, by registering him as a U.S. citizen might be able to defend against U.S. citizenship.

Hey, if one can’t renounce U.S citizenship until 18, then maybe one can’t accept U.S citizenship until 18.

10. I attempted to raise this discussion in an extensive post in 2015 which is here:

http://isaacbrocksociety.ca/2015/07/26/help-can-the-united-states-impose-us-citizenship-on-those-born-outside-the-us/

There are additional comments at that post.

A suggestion moving forward …

The Isaac Brock Society (whether you love it or hate it) is the most read and most influential source of information on all things U.S. (probably in the world). I believe that the Issac Brock Society should assume a leadership role by suggesting that the answer is:

Nobody born outside the U.S. is a citizen UNLESS he/she BOTH:

1. Meets the statutory conditions making he/she eligible to receive the statutory recognition of U.S. citizenship; and

2. Voluntarily (directly as an individual or vicariously via a parent) registering that U.S. citizenship.

The problem is that this is the first time in history that U.S. citizenship has been perceived to be such a horrible thing to have. Neither the State Department nor U.S. based immigration lawyers have adjusted to the idea that U.S. citizenship is now a form of cancer (unless you want to live in the United States). Even the border guards believe they are helping you by telling you that you are American. These people have not caught up with the reality that true Obama legacy has been to make U.S. citizenship the most toxic citizenship in the history of the world.

Yup, “Change you can believe in!”

it’s time to articulate the law that is consistent with the Obama legacy …

Brockers have always said that in the area of U.S. tax that lawyers make the law ….

It’s time for the Isaac Brock Society to “lay down the law” on this topic! The law is that nobody born outside the United States is automatically a U.S. citizen. If you meet certain conditions, they you can claim it if you want!

When Law Becomes a Substitute for Morality & Causes Cruel & Unneccesary Harm

 

if you cant trust

 
Another comment deserving its own post

USCitizenAbroad says
March 13, 2017 at 7:08 am
@Karen and all

Thank you for collecting and posting these stories.

Our Stories

I would like to offer some general observations (of which Shaun is one of many examples) and suggest some lessons which are largely based on Shaun’s story in particular.

Shaun’s Story

It seems to me that the lesson(s) from Shaun’s story are simple. So, let’s summarize them:

1. Those Australians who have entered the U.S. tax system need to renounce as quickly as possible (hopefully before they are “covered expatriates”) and probably even if they are “covered expatriates”.

Anybody who doesn’t get this does not understand the U.S. tax system. (Not that anybody understands the system.)

2. Because of the prevalence of Superannuation in Australian society, those who are NOT in U.S. tax compliance should not be too quick to enter the U.S. tax system (better clarification on the tax status of one’s particular Superannuation – they are NOT all the same) – is needed.

3. Under NO circumstances should anybody in Australia engage the services of a U.S. based CPA or lawyer. The simple reality is that these “specific life forms” (1) Don’t give care about you in the least (2) don’t understand your local tax system (3) subconsciously believe that you are a “tax cheat” (because all Americans are) and (4) are required to view the world entirely through the “perverted prism” of the Internal Revenue Code (which presumes that anything that is “Not U.S” (not one of “us”) exists ONLY for the purpose of defrauding the U.S. Treasury.

Remember that when it comes to the Internal Revenue Code and Americans abroad:

– Americans abroad are deemed to actually live inside the USA; and

– the assets of Americans abroad are deemed to be foreign (even though they are really local to the individual)

4. It is painfully obvious that Shaun would have been far better off if he had NEVER entered the U.S. tax system. This is hindsight. He could never have understood where this was going. Truth is that things have changed a great deal over his 30 years in Australia. But, Shaun has provided a great lesson to Australian citizens and residents who are NOT in the system.

The lesson is this:

For Americans abroad in general, but for Australians in particular (think Super), the consequences of entering the U.S. tax system lead to far worse results than the consequences of NOT entering it. It’s pretty simple. Shaun lost the following:

– his retirement
– his health
– his happiness (you can be sure that he carries with him anger and resentment)
– he has probably become a very negative person
– if he has an Australian spouse (or still has one) it is likely that this has impacted his family in a big way

Shaun is unique. Although it doesn’t specifically say that he has filed U.S. taxes for 30 years, it is clear that he has filed U.S. taxes for many many years. Poor Shaun. He filed because filing “is the law”. Yes, it’s the law. Shaun probably thought that there was some connection between law and morality or law and “doing the right thing”.

There is no connection between law and morality. Filing U.S. taxes is “obeying the law” and obeying unjust and immoral laws. A great American writer (by the name of Thoreau) wrote a book (considered to be subversive in the land of the free) on this topic. It’s called “Civil Disobedience”. Read it sometime. (He discusses the relationships among: laws, unjust laws and compliance with unjust laws.)

Clearly Shaun (and others who have exhibited this kind of “life time” compliance while living outside the USA) are “model citizens”. Yet they have been proven to have been “model fools”. Through compliance with these laws, they have destroyed their lives.

The U.S. tax system, enforced by the tax professionals (who usually don’t know what they are doing anyway) is such that:

It’s far more punitive to be in the U.S. tax system than not be in it. There are a number of reasons for this, but we see how Shaun loses his life savings by trying to comply (doing the “right thing”).

Believe, me Shaun has lost a lot more than his money. Year ago I wrote a couple of posts based on theme that:

“It’s not what they take from you, it’s what they leave you with”.

Collective psychotherapy – U.S. citizens outside U.S. – Not what they take from you, it’s what they leave you with

followed by:

The agony of U.S. citizenship for U.S. citizens living outside the U.S.

Take particular note of the comments (including one from MarkPineTree who was Dr. Marcio Pinheiro whose anxiety over Mr. FBAR made the last few years of his life a “living hell”). See a tribute to him at:

http://isaacbrocksociety.ca/2015/08/18/another-brock-warrior-down-in-memory-of-marcio-v-pinheiro/

Finally, this story is a sad, sad reminder that those who have been most hurt by the predatory and immoral practice of U.S. “place of birth taxation” are the ones who tried hardest to comply.

The Tax Compliance Industry might say:

“Resistance is futile!!!!”

Those who have tried hard to comply will say:

“Compliance is impossible”

Put it this way:

“It’s very clear that “compliance is impossible”. But, it’s not clear that “resistance is futile”. The proof is rather simple:

Seven out of eight Americans abroad recommend non-compliance and every one of them is in a better state than our friend Shaun!

When Law Becomes a Substitute for Morality- & is Used to Punish as Well

a comment cross-posted from the Isaac Brock Society blog

@Bubblebustin

Excellent sentiment:

You know what I think is immoral? A government’s sudden enforcement of laws that it chose to conveniently ignore in the past. A lot of the problems associated with illegal immigration and Citizenship-Based Taxation could have been avoided if the US government hadn’t been negligent in enforcing its own laws. It borders on entrapment really, but “the law is the law”, and until the laws change any government can pick it up, dust it off and enforce it to its fullest degree.

Actually you are being far too kind to the U.S. government and ascribing a level of respect that it (particularly the former Obama administration) doesn’t deserve.

Take the case of applying the PFIC rules to Canadians who are/were long term holders of Canadian mutual funds. Basically, the longer the holding period the higher the confiscation just for the crime of retirement planning in Canada. (Your money should be in the Homeland.) Both the rules and the application of the rules are immoral, criminal and result in the financial rape of Canadians attempting to save for retirement.

But, it’s far worse because the IRS was not even aware of the PFIC rules until 2009 (thank the OVDP program). But, once the IRS discovered PFIC they began retroactively applying the punitive form of taxation to something that:

1. Nobody could have imagined existed

2. The IRS didn’t even know existed

3. The U.S. tax compliance industry didn’t even know existed.

Think of it. They applied rules to Americans abroad that THEY THEMSELVES DID NOT EVEN KNOW EXISTED!

But, did that stop the tax compliance industry and the IRS? Hell no.

They simply revelled in the:

“Joy Of Discovering A New Way To Rape and Pillage The Economies and Citizens Of Other Nations!”.

It’s the American way!!!!!

One takeaway from this is that you need to be very very careful about what information you give to tax preparers, etc. and what tax preparers you choose. The compliance industry is the enforcer (with pleasure) of these rules.

Americans abroad must choose between:

1. Obeying these horrible unjust “laws” which result in their financial destruction; or

2 Doing what they need to do to save themselves.

There is NO possibility of existing as “U.S. tax compliant Americans abroad” in such a brutal, immoral, dishonest and corrupt system.

All Roads Lead To Renunciation” – the only question is which road you personally will take.

Burning Down Barns is not Wrong Because it is illegal; it is illegal Because it is Wrong

 

Burning Down Barns is not Wrong Because it is illegal; it is illegal Because it is Wrong

 


 

Every #Americanabroad (along with his/her “alien” family) understands all too well the reality of the betrayal perpetrated by the U.S. government in the fight against “tax evasion.” To have it then furthered by the country of residence changing the law in order to allow it is a further betrayal. One does not feel betrayal unless one has been wronged.
 
The government would have one think that it is walking the moral high road, taking upon itself the noble fight of searching out those who rob everyone else because they are not “paying their fair share.” Isn’t it just and right to do so? On the surface it would apppear it is but the problem becomes twofold. First, it has to be devised well-enough to actually produce the results it seeks to achieve and second, while doing so, certain rules of fairness about how the attempt is applied are required. Every kid on a playground learns this and readily understands when the rules are broken.
 

It is easy enough to see that the FATCA hunt has huge “design problems.” First off, the U.S. indicia are all items that suggest one lives in the Homeland. There is nothing to “weed out” those who aren’t American but don’t have CLN’s (and that doesn’t mean you are an American). Banks turning in people below the thresholds is truly wasteful as those people are so unlikely to owe tax. The crowning glory however, is that there is no simple way for the IRS to get money from people outside the country unless they willingly send it. I cannot think of any aspect of FATCA that would suggest it is well devised.
 
kids fightingTwo groups of kids are on the playground. The more agressive kids’ part of the playground is on their side of a line dividing the space. The other kids have their space on the other side of the line. One of the bullies comes up to the edge and says somebody on the other side really is one of them and tries to forcefully pull them over. There is no reason other than the bully wants something that isn’t his. What would happen? The other side would probably try to prevent the exchange, even if they are smaller and unlikely to win the fight. But everybody knows who started it and which side of the line the kid really belongs on. Then an adult shows up and all kinds of nonsense starts being spewed to try and muddle the issue because admitting wrong is not going to happen.
 
There is no way that an Accidental American belongs on the “American” side of the line no matter how much the U.S. whines and bellows it is so.
There is no way that anyone who chose to leave for education, marriage or employment and is living in another country in tune with the laws there, can be seen to “belong” to the U.S.
 
What are they going to do? A sort of reverse of what may happen soon in the U.S.? Where they kick out “illegal” adults and purposely separate them from their (American) children? Have everybody shipped back? They probably ARE mean enough but the fact is, that costs money. Lots of it.
 
The 14th Amendment, the 16th Amendment, Cook v Tait and all of it, belongs to those people who are on the U.S. side of the line. All the “laws” and arguments about polity and old case law just muddles the real issue. The fact of life is:
 
Everybody else has a right to be on their side of the line.
 
So everytime a condor hits you with that “It’s U.S. law” or “Until it’s changed it has to be obeyed” don’t allow them to drag you into arguing. It’s just plain dumb and so are they for thinking they can fool (or shame) you with such stupid arguments.
 
*****

Brock founder Peter Dunn/Petros says it quite eloquently. Re-blogged from the Isaac Brock Society March 31, 2015

We are living a crisis of morality in which leaders have difficulty distinguishing between what is right and wrong. Today, political leaders facing a legal obstacle to their agenda believe that all they have to do is change the law. So if the government stealing from people is illegal, all that one needs to do is change the law and call it “civil forfeiture“, and suddenly it becomes morally acceptable.

I recall reading a few years back a National Post article that brought up the question of lawmaking and morality came up.  Fortunately, Mark Steyn, cites the money quote from George Jonas:

Back in the Trudeaupian golden age, you may recall, the great man’s barnstorming transformation of Canada was momentarily halted by a storm about barns. It emerged that some overzealous officers of the Royal Canadian Mounted Police had burned down barns belonging to Quebec separatists. The press was briefly exercised over this, but M. Trudeau gave one of his famous shrugs and airily remarked that, if people were so upset by the Mounties burning down barns illegally, perhaps he’d make the burning of barns by the Mounties legal. As the great George Jonas commented:

“It seemed not to occur to him that it isn’t wrong to burn down barns because it’s illegal, but it’s illegal to burn down barns because it’s wrong. Like other statist politicians, Mr. Trudeau seemed to think his ability to set out for his country what is legal and illegal also entitled him to set out for his citizens what is right and wrong. He either didn’t see, or resented, that right and wrong are only reflected by the laws, not determined by them.

The Honourable Stephen Harper, Prime Minister of Canada, is a moral embarrassment. Before he forced the FATCA IGA into law, it was illegal for the government of Canada, based on national origin discrimination, to give the financial information of Canadian citizens to a foreign government. But it is still wrong to do so, and it doesn’t matter how many laws Harper forces through Parliament, it will remain wrong.

When law becomes a substitute for morality

When law becomes a substitute for morality

reblogged from the renounceuscitizenship wordpress blog

Today I’ve decided that I would like to go back and reblog some of the best expat posts from the last five years. For lack of a better title, I am going to call it the “A Blast From the Past Series.” This week I am going to focus on the disconnect between law and morality.

Every now and then I realize that people are still coming into awareness and that they do not realize a lot of what has gone on; how long some of us have been involved in this and most importantly, why some of us are so vehemently resistant and unyielding when it comes to evaluating the U.S. government, the tax compliance industry and so on. I guess some of us are afraid that this long period of lassitude may give a false sense of “safety.”

Without resorting to outright fearmongering, there are a number of things that may not happen (tax reform) or that will change (discontinuation of the Streamlined Program) etc. Our main reason for being involved in this from the very beginning, was to get the word out, to do our own research/take responsibility for educating ourselves and others about this hideous situation. I think it is important for people to understand how this situation has played out since the beginning……..

One of the worst aspects of everything happening today is the growing lack of morality in the world. I mean this in the “big” sense of the word; something which is on the mind of every human being as we watch America turn from being an open and welcoming society into one moving toward closed borders, over-the-top surveillance, etc. Today the Secy of Homeland Security literally said he was considering separating (illegal) parents from their (American-born) children. Unbelievably cruel and totally unnecessary. And the reinstatement of the “travel ban” which has been tweaked a bit but cannot possibly be seen for anything except what is clearly is – a move to keep Muslims out of America.

What does this have to do with us? Everything. Because when you see your government behaving like this, you are forced to evaluate two things:

1) Can YOU trust them?
2) Is there any reason to reject them/protect yourself given the unusual situation expats find themselves in?

In addition to being scared out of my mind and full of doubt whether to renounce or not (late 2011), what I could not ignore was my observation of how the U.S. was behaving outside the law. Clear, undeniable abuse of the law. Invading Pakistani airspace (I don’t care what the reason, that is not supposed to be done); the horrid abuse of prisoners at Abu Ghraib ; the assassination of Americans without due process and worst of all, holding men at Guantanamo Bay for as long as 12 years without charge, torture, etc. I did not find it difficult to believe the U.S. would think nothing of destroying our retirement by forcing me to sell my home to pay FBAR fines. It was a no-brainer.

Everyone has to come around to this decision on their own terms. All the more reason however, to take a long hard look at what has gone on over the last five years (which should influence whatever decision you choose to make).

Some of the people mentioned in this post you may not be aware of:

renounceuscitizenship – in addition to his/her own blog, one of most influential authors at the Isaac Brock Society from the beginning. Has an uncanny ability to predict long in advance, how things are going to move and a piercing, unbending analytical approach to assessing the source of our issues. Originator of the Renounce & Rejoice meme.

Steven J. Mopsick – aka “30 year IRS Vet” – a former IRS attorney who took part in a lot of the early conversations at Brock. The relationship was friendly at first and eventually disintegrated due to the natural friction between someone from a compliance point-of-view and those who did not intend to buckle under. A nice gentleman of whom was said “You can take the man out of the IRS but you cannot take the IRS out of the man.”

JustMe a much-beloved expat who suffered two-plus long years having entered the 2009 OVDP program, trying to make things right. He coined many of our expat idioms: “LCUs (Life Credit Units – how much of your life lost trying to deal with this); FATCAnatics (you can guess); CC&W (Complain, Comply & Warn-his explanation of what he was doing!),DATCA, GATCA, and so on. After he requested the help of the Taxpayer Advocate, he spent quite a long time devoting himself to our cause and taught a lot of us how to do Twitter, learn html, you name it. He finally needed to put it aside (I am sure his wife was happy about this!) and is much missed……..

Former Secretary of the Treasury Timothy F. Geitner aka “Turbo Tax Timmy” – who hadn’t paid social security or self-employment taxes on income received from the International Monetary Fund from 2001 to 2004; the IRS audited Geithner for tax years 2003 and 2004, which resulted in him paying back taxes and interest–but no penalties–totaling $16,732. Geithner voluntarily amended his 2001 and 2002 returns only after Obama expressed interest in nominating him to the Treasury post. The total bill this time: $25,970. He also failed to get proper verification for three individuals who worked for his family. As a prior Treasury employee who prior to Secy position, had run the NY Federal Reserve, one has to wonder how he could fail to understand social security or SE tax. This was infuriating to expats suffering through the OVDP/OVDI penalties. As well, former Congressman Charlie Rangel (D-NY), a sponsor of FATCA, headed the powerful House Ways and Means Committee that writes the nation’s tax laws, was censured by the House of Representatives in December for ethics violations.A chief violation included his failure to pay 17 years’ worth of taxes on rental income from the Dominican Republic property. GRRRRRRR! (still burns……..)
****************

tombstones

The following tweet appeared as a post at the Isaac Brock Society and generated a collection of comments.

To provide some context:
Steven J. Mopsick wrote a post which was a report of his experience at a recent FATCA conference. He was impressed by how the attendees were exploiting the business opportunity (inadvertently referring to them as “steakholders”) that FATCA has created for the compliance industry. Interestingly, Mr. Mopsick specifically makes the point that:

The focus of the conference was strictly on FATCA from the standpoint of complying financial institutions. Most of the participants did not even know about and individual’s duty to file FBAR’s, Foreign Asset Statements (form 8938) and there was very little talk about privacy concerns, fears about the dangers of an emerging international banking data base system, or how Canadian politicians were doing in shaking their lap dog image as pawns of the US government.

In other words: the focus was on the law of FATCA with no consideration of the morality, unintended consequences or effect on society as a whole. (Most law students would kill to have a prof like this!) To put it another way, the important consideration is the law itself. The fact of the law itself is the only issue. The values that underlie the law are irrelevant.
“Just Me” in his usual “wit and wisdom” commented that:

This is the Truism I take away from Steven: “The people around the world who stand to profit from FATCA are not thinking much about government intrusions into the private lives of the world citizens.”

“Them’s the FATCAs FACTs”, as they say.

Although, they may think it is a ‘business and growth opportunity’ others see it as a pending financial disaster for the World’s economy. Who is right? I think the latter, but we shall see. I could be wrong.

FATCA and US fiscal imperialism threaten to sink global economy

In all due respect to 30 year IRS vet, I think he may have his perspectives twisted (which comes from his background?) when he thinks that profiting off the backs of the government regulatory tit is “free enterprise/free market system at work.” Rather, it represents the worst of unprincipled and amoral aspects of human nature at work. These actions are not based upon free enterprise/free markets, but on artificial markets based upon dubious legal assertions.

Free markets do not require or accept extortion as their engine of enterprise.

I can think of other examples of so called free enterprise ~70 years ago, where other“hard-working, serious, responsible business men and women who were on their way up in their companies” were probably attending conferences on how to ramp up manufacturing and supply of cattle cars for another freight train in another era that he would not be so willing to celebrate. He would not like that comparison, and maybe it is a bit hyperbolic, but the same human nature principle is at work.

More recently, there was an army of war profiteering “hard-working, serious, responsible business men and women” contractors, attending conferences in Vegas to learn how suckling off the “free enterprise” of ‘War Contracting Gone Wild’ could benefit their companies. They didn’t want to get left out of the ‘business and growth opportunity’that an amoral and unnecessary war provided. What if the government threw a contractor party to support its misguided war effort at that time, and no one came? I blame the compliant and willing contractors co-enablers as much as the government initiators for the sad legacy we left in Iraq.

Maybe in fairness to Steven, what he is saying, is yes, human nature is responding to an artificial market that would NOT exist, except for US hubris, financial imperialism and extra-territoriality. I don’t think I would be citing the FATCA Compliance Industrial Complex’s (FCIC) “hard-working, serious, responsible business men and women” as an example of ‘supply and demand’ in action that Adam Smith would identity or praise.

Although I certainly agree that “Free markets do not require or accept extortion as their engine of enterprise”, the Mopsick post raises an even larger issue. Mr. Mopsick has and continues to make an enormous contribution to the discussion of FATCA, FBAR and U.S. tax compliance in general. Some of the best thinking on these topics may be found in the “Mopsick Trilogy” – a series of posts that he wrote about the compliance problems facing US citizens abroad. His posts are a unique blend of raising questions and answering questions. In this case, his post has raised an important issue.

The issue is that, in the America of today, laws have become a substitute for morality. A society where laws have become a substitute for morality, is a society that is past the point of “no return”. This is where “Form Nation” – AKA The United States of America – finds itself today.

“Form Nation” – A country structured by laws and not by men

In the beginning we had the ten commandments which were expressions of the fundamental principles of justice. The ten commandments reflected principles which were for the common good. Gradually legislatures began to create laws. In the early stages of society, these laws were specific applications of fundamental principles of justice and for the most part these laws continued to be for the common good.

What is in the common good is not necessarily what is good for specific individuals. Those specific individuals who control the political process have strong incentives to act in their interest at the expense of the public interest.

Once legislatures saw how easy it was to create laws, they began to create laws which were NOT for the common good but were to benefit specific individuals at the expense of the common good. That’s how the Internal Revenue Code and regs grew to 17,000 pages. It’s simply incredible. Mr. Romney pays low tax on his “carried interests” and U.S. citizens abroad pay confiscatory taxes on their mutual funds “PFICs”. Not only is this unfair, but it’s a wonderful example of how laws are passed to benefit the individual at the expense of the common good.

But, it gets far worse. Who exactly are the legislatures? Democracy in the “Form Nation” of today is controlled by two private clubs. You will recognize them as the Democratic and Republican parties. Not only are they private clubs, but they have the intellectual dishonesty to rely on public funding for their existence. Their job is to campaign and to stay in power. Why? Because they will profit from being power. Those of you who have seen the Movie Chicago will remember Mama Morton singing “reciprocity“.

If you have the money you can get the ear of a Congressman. If you don’t you can’t. If you are the mutual fund industry you can lobby to get the PFIC laws passed. If you are the Romney’s of the world (and I still believe Romney would have been a better president) you can lobby to get your “carried interest” laws passed. As Fareed Zakaria has noted, the system is corrupt at it’s core. A large part of the problem is the way the political system works in the United States. There is nobody who represents the voters. The elected representatives (and they are not really elections because of a lack of choice on the ballot) are in business for themselves. Their business is in passing laws that benefit themselves or their clients. This is the only reason that the IRC and regs grew to 17,000 pages. To put it simply: elected representatives are in the business of making laws.

It’s laws, laws and more laws!

The United States of today is burdened by so many laws that:

– everybody is in violation of some law (show me the man and I will show you the crime);

– the complexity of the laws means that people cannot even understand what they are required to do (the FBAR rules are a weird combination of the enabling statute, the regs and the form itself);

there are fewer and fewer laws where “mens rea” (the intent to commit the crime) is necessary for a conviction;

– people are forced to pay lawyers for an opinion on what they may be required to do (lawyers have become the modern day “priests”);

– the sheer volume of laws means that enforcement is largely discretionary (will the IRS enforce FBAR penalties or not?);

– the focus on laws leads to a presumption of criminality (the fact that US citizens abroad are subject to so many laws means they must be guilty of something);

– the moral foundation (if any) of the law becomes irrelevant. The original purpose of the law becomes irrelevant. All that matters is the mechanical application of the law. Nobody ever imagined that PFIC rules, Foreign Trust rules or the FBAR rules would be used to unleash a “reign of terror” on US citizens abroad. On the “Homelander Front”, do you really believe that Martha Stewart deserved incarceration? Of course, the good old USA has the highest rate of incarceration in the world.

Laws have become a replacement for morality. Laws are the only standard for morality.

If you are not in violation of the law, you are not immoral.

If you are in violation of the law you are immoral.

(If the U.S. is really concerned about the “crime rate” then maybe it should reduce the number of laws.)

Conclusion: The US does not have laws that are fair.

“Form Nation” – A country governed by those who decide when to apply the laws and in relation to whom! (A government of tyrants)

In the context of the laws, the laws are not applied equally

President Obama commented that Mr. Geithner should not be punished for a mistake commonly made. It was okay for Timothy Geithner, a man with the money to get accurate tax advice, to file inaccurate tax returns. It is NOT okay for US citizens abroad to fail to file or to file inaccurate tax returns.

Conclusion: The US does NOT have fair application of the law.

1. The United States of today is country where laws are passed by members of private clubs, which have no incentive to benefit the common good and every incentive to benefit themselves at the expense of the common good.

2. The laws are so numerous that every person in the United States is in violation of something.

3. The laws that passed carry no presumption of morality and simply have no moral force.

4. The laws (regardless of content) are enforced in an unpredictable and unfair way.

The result is that people live in terror of the government.

As Jefferson said:

When people fear the government there is tyranny. When government fears the people there is liberty.

So, what’s all this got to do with #FATCA and the Mopsick post?

FATCA is the “gift that keeps on giving” (well to the compliance industry that is). As Mr. Mopsick confirms, the concern of the industry in on the fact of the law. What does it say? What does it require? As Mr. Mopsick reports:

Many readers of this blog will be disappointed to hear this report. The people around the world who stand to profit from FATCA are not thinking much about government intrusions into the private lives of the world citizens. That is the furthest thing from their minds. These folks were all good students, in effect, knowing full-well that there was a new body of rules and regulations on the table which they needed to learn and master.

The implication is that the “good students”, those “hard-working, serious, responsible business men and women who were on their way up in their companies”, the “best and the brightest” (are they really that bright?) should be concerned with embracing the new morality, getting in tune with the “new world” caring about the implications of their conduct. That’s exactly what happens when law becomes a substitute for morality. Just Me compares this mentality to another time in history when he notes that:

I can think of other examples of so called free enterprise ~70 years ago, where other“hard-working, serious, responsible business men and women who were on their way up in their companies” were probably attending conferences on how to ramp up manufacturing and supply of cattle cars for another freight train in another era that he would not be so willing to celebrate. He would not like that comparison, and maybe it is a bit hyperbolic, but the same human nature principle is at work.

Interesting analogy. What is the purpose of FATCA? What are the moral underpinnings of FATCA? Has anybody ever asked the question? Clearly nobody in the world of the FATCA compliance industry. They would be afraid of the answer!

But, that’s what happens when law becomes a substitute for morality. Many of you are concerned about what reason to give for renouncing your U.S. citizenship.

Why not just say:

I do not wish to be a citizen of a country where law has become a substitute for fairness and morality!
 

TOMORROW : Burning Barns Down is not Wrong Because it is Illegal – It is Illegal Because it is Wrong