OCTOBER 29, 2017 CANADIAN FATCA IGA LITIGATION UPDATE:
Our trial on Canada’s FATCA IGA legislation in Federal Court will now be delayed further because Mr. Justin Trudeau’s lawyers are having problems obtaining their expert witnesses (our side’s experts have already filed affidavits).
The problem is that Government’s contracting/procurement process is not functioning as it should, and Government is having difficulty establishing the necessary retainer contracts for each of the experts they wish to use.
The hoped for time frame for the experts contracts is now end of November; however, Government experts want at least 12 weeks to prepare their affidavits.
I can’t give you a firm date yet on the trial, but speculate that trial might take place sometime early summer 2018.
— Each year more and more Canadian citizens are rounded up and turned over to a foreign country…
OCTOBER 24, 2017 FATCA IGA legislation/FATCA litigation update.
Canadian (Alliance for the Defense of Canadian Sovereignty [ADCS] is the “client”) FATCA IGA legislation lawsuit:
We are suing (since 2014) the Government of Canada (specifically Justin Trudeau’s Attorney General and Revenue Minister), in Federal Court for rounding up Canadians having a U.S. taint and turning them over to a foreign government. We argue that this violates Canada’s sovereignty as an independent nation and its Charter of Rights that is meant to protect all Canadians.
As to next steps, it now appears likely that most, if not all, of our brave lay witnesses, who provided written affidavits demonstrating harm, will NOT be examined by the Government lawyers. This is good news as it means that we will get to trial “sooner”. We do expect, however, that our expert witnesses will be cross-examined by Government next.
We have not yet received all of Government’s affidavits (e.g., from their experts). When we do, our legal team will need to decide whether they need to cross examine any of the affiants. We are moving forward but I am sorry but I cannot give you a time frame on this.
It is the “job” of the Case Management Judge, who supervises our case, to keep our litigation “moving”.
U.S. Republicans Overseas (RO, the client) FATCA, IGA, and FBAR lawsuit:
Mark Crawford, Senator Rand Paul, Roger Johnson, Daniel Kuettel, Stephen Kish, Donna-Lane Nelson, and Marc Zell are Plaintiffs, Republicans Overseas is the client. The lawsuit is in the U.S. Court of Appeals for the Sixth Circuit.
From the petition: “This case challenges FATCA, the IGAs unilaterally negotiated by the U.S. Department of the Treasury (“Treasury Department”) to supplant FATCA in signatory countries, and the Report of Foreign Bank and Financial Accounts (“FBAR”) ad- ministered by the U.S. Financial Crimes Enforcement Network. These laws and agreements impose unique and discriminatory burdens on U.S. citizens living and working abroad.”
U.S. Government lawyers have been arguing, so far successfully, that none of the Plaintiffs have the necessary “standing” to go to trial. The RO attorney however, argues in part that a “certain” threat of harm/prosecution is not necessary, but that a “credible” threat of prosecution should suffice for standing.
On August 30, 2017, Plaintiffs filed a petition for rehearing to the 6th Circuit Court of Appeals, arguing that the original panel’s Opinion conflicted with two decisions of the United States Supreme Court. Plaintiffs asked that the original panel reconsider the case under correct standards, and absent such action by the original panel, we asked that the full Court consider the case en banc to establish and apply standing rules compliant with existing Supreme Court decisions.
The 6th Circuit has now denied rehearing. Plaintiffs’ next step will be to file (which they will) a certiorari petition to the United States Supreme Court, asking them to review the decision of the lower court on standing. This petition is due on Monday, December 25, 2017.
— I mention the U.S. negative court decisions on Plaintiff standing as I personally suspect that this general issue will be brought up by Government attorneys in the Canadian FATCA IGA legislation lawsuit — Mr. Trudeau’s Ministers arguing that there has been no “FATCA harm” caused to any Canadian. I personally dispute this as Government admits that the Canadian FATCA IGA legislation has directly resulted in over 100,000 Canadians (now up to 500,000?) being turned over to a foreign country — a clear harm that is a Charter and Constitutional violation.
Alliance for the Defeat of Citizenship Taxation (ADCT) litigation efforts in United States:
An aim of ADCT is to defeat by litigation in U.S. court citizenship-based taxation and related laws that we believe, in part, violate the U.S. Constitution. ADCT is not moving forward with any lawsuit in U.S. Court until the US tax reform legislation is passed by Congress (probably in 2018) and our legal claims can be clarified in light of that legislation (or absence of legislation) and established at that time as being reasonable to pursue.
Can the common law “revenue rule” be used to stop the enforcement of U.S. “citizenship taxation” on non-U.S. residents?
What the United States calls “citizenship taxation” is actually U.S. taxation of certain citizens and residents of other countries. The U.S. claims the right to impose full U.S. taxation on the “world income” of certain people who do NOT even live in the United States.
Prologue: In August of 2017 it was widely reported that the Canada Revenue Agency had assisted the IRS in enforcing a massive penalty ON A CANADIAN RESIDENT levied under the U.S. Internal Revenue Code. The penalty was imposed on that Canadian resident was for failing to report to the IRS, that he had been carrying on a Canadian business, through a Canadian Controlled Private Corporation. At the time of collection, the penalty was for approximately $133,000 U.S. dollars!
Q. How did this happen? A. He entered the 2009 IRS OVDP (“Offshore Voluntary Disclosure Program”). Those who entered #OVDP were basically “signing up” to pay penalties to the IRS. Those interested in reading about the horrific treatment of another Canadian resident, who tried to “do the right thing” by entering OVDP should read this.
Federal Tax Crimes: Court Sustains $10,000 Per Year § 6038(b) Penalty https://t.co/cx26P98rDV – imposed on U.S. citizen residing in Canada
The initial reaction of the Canadian government to FATCA can best be described by a letter then-Finance Minister, the late Jim Flaherty wrote, intended to be placed in major American newspapers.Virtually no one believed there would be any reason for the U.S. to impose this given Canada is a higher tax jurisdiction and owing annual income tax was rather unlikely. Back in 2012, in spite of all the scaremongering created by the IRS and foreign tax compliance practitioners, the underlying hope/belief of “US Persons” in Canada was that it would be impossible to get around the Canadian Charter of Rights and Freedoms. In spite of the fact that the first Model 1 IGA was released on 26 July 2012 by the US Treasury. The IGA was developed cooperatively with France, Germany, Italy, Spain and the United Kingdom.
The post below was written over a year before the Canadians signed the IGA agreement on Feb 5 2014. Interestingly enough, it was written on the same day as a letter written by Peter Hogg, perhaps THE most important constitutional lawyer in Canada. This letter was sent to the Department of Finance and was welcome news.
“Note that the prohibited grounds of discrimination
include ‘national or ethnic origin’, and the Supreme Court has held that
citizenship is an ‘analogous ground’ also prohibited by s. 15(1).” (Andrews v. Law Society of BC (1989) 1 S.C.R. 143)…
“The point of this letter is to urge the
Government not to agree to an IGA which would call for foreign
legislation which would offend s. 15
of the Charter.”
Perhaps I just have a bad memory but it is curious to me now, that there is such a difference in the time some of our main allies signed and when we signed. I only recently (and surprisingly) learned that the U.K. and Germany do not have anything comparable to our Charter. Could that be a reason they were more willing to sign earlier on in the process? Does it mean the Canadian government at first considered the possibility that any action they took would not be able to withstand a Charter Challenge? And if so, what was it that made them change their minds? How did they come to believe they could get away with changing a law to break the law? Bill C-31 is the only of the clearly unconstitutional laws that the Trudeau government refuses to budge on (the others being C-23 C-24 & C-51).
While Canada clearly failed when it had the chance to stand up to the U.S. government, perhaps we can count on the Supreme Court of Canada, in the end, to demonstrate leadership by living up to the ideals enshrined in the Charter.
Love him or hate him (and there was very little in between) former Canadian Prime Minister Pierre Trudeau left his mark on Canada. The Trudeau Liberals brought Canadians a set of entrenched constitutional rights. From April 1, 1982 the history of Canada was forever changed.
1982: The Charter was intended to give individual Canadians rights …
The Canadian Charter of Rights was intended to give individual Canadians (including permanent residents who were non-citizens) an important set of rights that governments could not (as a general principle) override. These rights included rights in a number of categories including: legal rights, rights to freedom of expression, mobility rights, equality rights and more. Although originally touted as the “biggest make work project ever for lawyers”, Canadians in general have benefited from these rights. The focus of the Charter was on “individual rights”.
2012: The Charter may be used to shield the country of Canada from the U.S. FATCA attack …
The Honourable Sinclair Stevens of the Progressive Canadian Party has argued that the Charter of Rights can be used to protect Canada from FATCA. According to an attendee at the recent FATCA Forum in Toronto Mr. Stevens emphasized that:
… the rights and protections of the Canadian Charter applied to permanent residents of Canada and that individuals in Canada are all equal and under the protection and benefits of that Charter regardless of race, nationality, ethnic origin, etc. He state unequivocably that Canada MUST obey the Charter (which would never allow for FATCA’s discriminatory parameters). He is a very well-spoken and articulate man and I was very impressed with his strong words and message about the importance of the Charter.
In other words, instead of the Government of Canada saying NO to FATCA, Canada will not enter into a FATCA IGA (which is what it should say):
S. 15 of the Charter may possibly be used for the Government of Canada to say:
No Canada will NOT enter into an IGA, because S. 15 of the Canadian Charter of Rights prohibits us from entering into an agreement with you that discriminates on the basis of citizenship and/or national origin.
Here is the text of Charter S. 15 (1):
Every individual is equal before and under the law and has the right to the equal protection and equal benefit of the law without discrimination and, in particular, without discrimination based on race, national or ethnic origin, colour, religion, sex, age or mental or physical disability.
Although S. 15 does not specify citizenship has a ground of discrimination the Supreme Court of Canada has included citizenship has a prohibited ground of discrimination. For the Government to help the IRS seek out U.S. citizens is to deny Canadians who are U.S. persons the equal benefit of privacy laws. (Now for the lawyers reading this, I realize that Charter S. 1 and the override are possible issues.) That said, the starting point in the analysis is the likely violation of S. 15.
Of course, S. 15 applies only to governments. Therefore, it may prohibit the Government of Canada from entering into a FATCA IGA. The Charter of Rights applies to government activity and would not affect the conduct of the banks and other FFIs. The prudent course would be to NOT sign the FATCA IGA and let Canadians see how their financial institutions are willing to betray them to the IRS.In other words:
For the government to sign an IGA is to give the Canadian banks the license to betray Canadians! This is another reason why there can be no IGA. Let the banks betray Canadians at their peril. Let the banks deal with the lawsuits. Let the banks absorb the costs! Let some banks advertise that they are a “FATCA Free Bank”.
The Financial Institutions are subject to provincial human rights codes that prohibit discrimination based on citizenship. It is up to Canadians to hold the Sun Life and Bank of Nova Scotia s of the country accountable.
