# Bopp FATCA case



## iota2014

This is the case that was dismissed last year on the grounds that all of the plaintiffs lacked standing "because none had been adversely affected by FATCA."

Now they are having another try. This time they're arguing that they're like pregnant women "who were denied abortions by doctors fearful of penalties imposed by the government."

(Which I personally think is totally offensive.)

"Judge Eugene E. Siler Jr. rounded out the Sixth Circuit panel and joined via video conference.

No timetable has been set for the panel’s decision"

https://courthousenews.com/overseas-banking-taxes-debated-in-sixth-circuit/


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## arlekin

iota2014 said:


> This is the case that was dismissed last year on the grounds that all of the plaintiffs lacked standing "because none had been adversely affected by FATCA."
> 
> Now they are having another try. This time they're arguing that they're like pregnant women "who were denied abortions by doctors fearful of penalties imposed by the government."
> 
> (Which I personally think is totally offensive.)
> 
> "Judge Eugene E. Siler Jr. rounded out the Sixth Circuit panel and joined via video conference.
> 
> No timetable has been set for the panel’s decision"
> 
> https://courthousenews.com/overseas-banking-taxes-debated-in-sixth-circuit/


Is the senator Rand Paul still involved in this case?


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## iota2014

Dunno.


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## arlekin

Just saw an interesting article from Trinidad and Tobago - you might be aware of FATCA controversy there :

Opposition Leader Kamla Persad Bissessar has written to US President Donald Trump asking him whether his government intends to nullify the Foreign Accounts Tax Compliance Act (FATCA).

In a two page letter dated January 13, Persad-Bissessar congratulated Trump on his election and said her purpose in writing him was the law enacted by his predecessror Barack Obama which had become the “subject of sharp controversy here in Trinidad and Tobago.”

Persad-Bissessar said she wrote the letter because she had urged Prime Minister Dr Keith Rowley to raise the matter with the new US President and was rebuffed by Minister of Finance Colm Imbert, who claimed Trump“did not have time for this.”

Noting that a Joint Select Committee of Parliament had started to examine the FATCA Bill, she told Trump: “It would be helpful for us to know if the relevant US law may soon be nullified, either by legislative or executive action, or both.”

She reminded Trump that among his campaign promises was revocation of executive actions taken by his predecessor which exceeded his authority as President.

“This would appear to cover non-treaty Inter-Governmental Agreements with Trinidad and Tobago and many other countries to implement FATCA under terms not codified in US statute or treaty terms,” she said.

Persad-Bissessar noted that Republican bills to repeal FATCA were introduced in the former US Congress by Senator Rand Paul and Representative Mark Meadows, but went nowhere because of the Democratic controlled Congress.

She said she had been “informed that a FATCA repeal bill might be among the reforms included in Trump’s comprehensive legislative package.

“Whatever information you may provide about how your administration intends to proceed would be much appreciated so that the Parliament of Trinidad and Tobago may have a better sense how we might proceed,” she said.

Persad Bissessar told President Trump she is awaiting his earliest reply.


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## iota2014

From what I've read about the T&T FATCA squabbles, it's essentially to do with local politicking rather than any real intention to refuse to implement the IGA. The deadline is Feb - can't remember what date.


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## celticweb

Thanks for the update Iota. I think I vaguely heard about this case but there have been so many initiatives to fight this recently. 

It's totally ridiculous that they can say that the plaintiffs lack standing. It's not just the banking problems, which are bad enough but it's also problems with employment and marriage when one spouse is not a US citizen, problems with accountants even for dependent children that are not US citizens, problems getting a mortgage, being turned away from business opportunities, saving for retirement, investing. All these things are real and would be fixed if CBT was ended. Fatca isn't the main problem but Fatca and CBT together is unsustainable for a US person now to live normally.


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## iota2014

celticweb said:


> Thanks for the update Iota. I think I vaguely heard about this case but there have been so many initiatives to fight this recently.


Have there? I'm know of the Canadian case arguing that the Canadian IGA violates the Canadian Charter, and I believe there's also an anti-CBT case - don't much about that one.


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## celticweb

I think i read about this case you mention here last year and there was another one that was referenced somewhere, maybe the Canadian one you mention or French case for accidentals. and wasn't there an Israeli one too? Maybe I am getting confused and they are all different versions of the same case? but at least people are putting themselves out there on this and it's being written about and making people aware.


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## iota2014

celticweb said:


> I think i read about this case you mention here last year


Yes this Bopp case was dismissed before for lack of standing and seems likely to be dismissed again for the same reason.



> French case for accidentals.


I don't think there's a legal case underway in France. There was a hearing, which seems not to have led to any action.



> and wasn't there an Israeli one too?


Republicans Overseas succeeded in getting an injunction to delay the transmission of FATCA data; the court subsequently approved the transmission and Israel has since received some US data in return which they are pleased with.



> Maybe I am getting confused and they are all different versions of the same case? but at least people are putting themselves out there on this and it's being written about and making people aware.


Personally I don't see much prospect for change, but who knows, if the Treasury Secretary finds FATCA inconvenient it could end up sleeping with the fishes.


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## Bevdeforges

In checking out a few details on FATCA I stumbled onto something that indicated the Republicans had included the elimination of FATCA as part of their platform at the convention last year. Not that those party platforms mean a whole lot, but if folks with Republican reps in Congress would "remind" their elected officials of this, maybe something might start happening.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> In checking out a few details on FATCA I stumbled onto something that indicated the Republicans had included the elimination of FATCA as part of their platform at the convention last year. Not that those party platforms mean a whole lot, but if folks with Republican reps in Congress would "remind" their elected officials of this, maybe something might start happening.
> Cheers,
> Bev


Do USCs abroad get to vote in state elections? The one time I voted from abroad, I was only allowed to vote for Federal candidates. I wasn't sure if it was because I'd been out of the country for so long, or if it was a general rule. The result, at any rate, in my case was that I didn't have a Congressional representative of any flavour. Which at the time I thought was fair enough - that was before the onset of FATCA, and before I knew anything about non-US-residents being subject to US taxation.


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## Bevdeforges

USCs are limited to voting in Federal elections - however, Congress is a Federal level position so overseas voters can, indeed, cast a vote for Congressional Rep and Senator as well as for President.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> USCs are limited to voting in Federal elections - however, Congress is a Federal level position so overseas voters can, indeed, cast a vote for Congressional Rep and Senator as well as for President.
> Cheers,
> Bev


Ah. That makes sense. I probably have just misremembered or misunderstood what happened in my case. Thanks for clarifying.


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## celticweb

Bevdeforges said:


> In checking out a few details on FATCA I stumbled onto something that indicated the Republicans had included the elimination of FATCA as part of their platform at the convention last year. Not that those party platforms mean a whole lot, but if folks with Republican reps in Congress would "remind" their elected officials of this, maybe something might start happening.
> Cheers,
> Bev


Yes the Republican Platform was the reason I didn't renounce last year. I thought I might as well wait to see the outcome of this. I had an opportunity for a directorship. There were talks last year but nothing definite, when it became definite for 2017, I renounced because I could see problems with that in future if the rules didn't change. Plus the headache with my spouse with the Fbar and inheritance laws and some financial banking problems. 

I was a realist about these things from day one and made decisions based on practicalities not emotions. Even if there is change, I would be worried about another president coming along and putting new rules in place in future. and I don't feel that optimistic that we are going to see much change anytime soon. The main voter base is in the US and they are the ones being catered to and I can imagine what some would think if they thought we were getting away with not paying our share of tax. I think there will be change for corporations though.

However I admire the ones who are fighting in the limelight because it brings awareness to what is really going on and there is always hope.


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## celticweb

iota2014 said:


> Yes this Bopp case was dismissed before for lack of standing and seems likely to be dismissed again for the same reason.
> 
> 
> 
> I don't think there's a legal case underway in France. There was a hearing, which seems not to have led to any action.
> 
> 
> 
> Republicans Overseas succeeded in getting an injunction to delay the transmission of FATCA data; the court subsequently approved the transmission and Israel has since received some US data in return which they are pleased with.
> 
> 
> 
> Personally I don't see much prospect for change, but who knows, if the Treasury Secretary finds FATCA inconvenient it could end up sleeping with the fishes.


Thanks for the clarity iota and putting me accurately in the picture about my vague recollections. and yes sadly I agree with you about the change.


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## iota2014

The trouble is, it's difficult to challenge FATCA because the OECD, the EU, and most of the developed market economies now support AEOI and the idea that banks can be required to report accounts to the accountholder's countries of tax-residence. It's CBT that causes the accounts of US citizens, even when held in the country they live in, to be forever reportable to the IRS.

And it's difficult to challenge CBT because CBT is not the result of a policy decision to tax USCs abroad - it's just that they've never decided not to. There's no CBT law or laws that could be repealed, so it would require new legislation. 

The RO group have drawn up a plan proposing "territorial taxation for individuals" and have submitted it to Congress. (https://en-gb.facebook.com/republicansoverseas/). I haven't read it - looks too much like hard work!


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## Bevdeforges

The other big problem with trying to change or adjust either FATCA or CBT is that, back in the US, the image of "expats" is that of big corporate fat cats on generous expense accounts. So, of course, Joe Average Taxpayer wouldn't want to let THEM off the hook for taxes.

Then again, most folks back in the States have no idea about CBT or what it is. Heck, some accountants back there are surprised to hear that I still have to file and (potentially) pay US income taxes. It's just not someone most folks engage with - and any move to repeal or fix it comes across like letting the fatcats off easy. Some days you just can't win.
Cheers,
Bev


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## iota2014

A link (which I saw posted on the Isaac Brock Society website) to audio of the Bopp hearing on standing:

Court Audio | Sixth Circuit | United States Court of Appeals

Interesting point I picked up from this (if I've understood it correctly):

It's a pre-enforcement challenge: FATCA, and apparently FBAR, have not actually been enforced on any of the plaintiffs even though the plaintiffs have refused to comply. The Treasury lawyer kept making the point that (according to his argument) none of the plaintiffs have suffered harm from FATCA, therefore (according to his argument) they don't have standing.

Which seems (to me) to support Allison Christians' view that the aim of FATCA is to scare the banks into submission and (my supplementary theory) to accumulate potential evidence to use against HNW US-resident Americans holding foreign accounts, should the occasion arise. Rather than to check up on whether average expat USC accountholders are compliant.

Also seems in line with the apparent non-enforcement of CBT in general, as per Nononymous's "cheerful advice" thread.


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## iota2014

iota2014 said:


> From what I've read about the T&T FATCA squabbles, it's essentially to do with local politicking rather than any real intention to refuse to implement the IGA. The deadline is Feb - can't remember what date.


The Trinidad & Tobago FATCA-enabling legislation has now been passed:
https://www.guardian.co.tt/news/2017-02-24/fatca-finally-goes-through

Quite an interesting debate on the pros and cons, as reported in the T&T press over the past few weeks/months. It shows very clearly how hard the small economies like T&T are hit by FATCA: if they sign, they fear that USC money will slope away to non-FATCA-compliant countries such as the US; if they don't sign, it's certain they'll lose the correspondent banking accounts on which the economy depends.

Also, in the report cited above, a quite revealing bit on notification:


> The Opposition had suggested the account holder be notified 28 days before the information was sent to the BIR and IRS.
> 
> But Imbert said the Treasury Solicitor and Law Association had said this would be contrary to the aim of the legislation.
> 
> Prime Minister Dr Keith Rowley also said Government couldn’t have agreed to that, since it would undermine the legislation and create costs for the taxpayer in the event the account holder chose to challenge it legally during the 28-day period.
> 
> “We’re not going to agree to that - it has consequences for the taxpayers,” the PM added.
> 
> However, all sides eventually agreed the account information would be reported to the relevant authorities by September 30 of the year in question and the account holder would be notified - with one notice - four months later in the following January.


That seems to show that at least some FATCA signatory governments are concerned that a legal challenge might be successful.


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## iota2014

FATCA hearing yesterday, House Oversight Committee, SubCommittee on Government Operations:





Signs of a willingness to reach a compromise in order to get FATCA's various legality/constitutionality problems sorted out?


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## iota2014

As noted on the IBS site - Bopp has now written to Meadows giving his recommendations on how FATCA should be changed.

https://www.facebook.com/groups/citizenshiptaxation/permalink/1389624397793971/

Worth a read.


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## iota2014

FAWCO and AARO have also responded to Bopp's request for recommendations for amending FATCA "to make it less stinky."



> *Possible options to mitigate the unintended effects of FATCA on the overseas population*
> 
> Submitted to the Subcommittee on Government Operations following the April 26th hearing on “Reviewing the Unintended Consequences of the Foreign Account Tax Compliance Act (FATCA)”
> 
> Delegates from the Association of Americans Resident Overseas (AARO) and the Federation of American Women’s Clubs Overseas (FAWCO) attended the hearing on the “Unintended Consequences of the Foreign Account Tax Compliance Act (FACTA)” held by the Committee on Oversight and Government Reform – Subcommittee on Government Operations - on Wednesday, April 26, 2017.
> 
> Subcommittee Chair Congressman Mark Meadows opened the meeting and, after opening remarks, asked for testimony from five witnesses.
> 
> Our two organizations would like to thank Chairman Meadows and his colleagues for organizing such an informative and productive hearing. We were pleased to see that the Subcommittee was exploring FATCA’s unintended consequences seriously and appeared to have a good grasp of the impact this law has had on American citizens residing abroad.
> 
> We felt that Congressman Meadows’ closing remarks, asking for at least three recommendations from each witness on possible alternatives to FATCA as it now stands, represented a positive step in not only recognizing the gravity of the situation but showing a willingness to learn from the experience of those personally involved.
> In the spirit of that request, we would like to propose some options which could be considered in any effort to mitigate the damaging unintended repercussions of this law.
> 
> § Exempt from FATCA reporting all financial accounts held in the country in which the filer is a bona fide resident (as recommended by the National Taxpayer Advocate and the recently introduced H.R. 2136).
> 
> § Adopt, as an alternative to FATCA, the Common Reporting Standard (CRS) developed by the Organization for Economic Co- operation and Development (OECD) and now adopted in 100 jurisdictions.
> 
> § Eliminate duplicative reporting as recommended by the National Taxpayer Advocate by developing a single reporting form which satisfies the needs of all the relevant compliance organizations.
> 
> § Rethink the penalties related to FATCA reporting requirements, including both the 30% withholding imposed on Foreign Financial Institutions and the punitive fees imposed on individuals.
> 
> § Meet financial reporting obligations on Foreign Financial Institutions with the submission of 1099s that comply with US tax reporting standards.
> We were pleased at the end of the hearing to see that the Chairman and his colleagues appeared willing to seek bipartisan solutions to this situation which has caused such distress to great numbers of American citizens living and working around the globe. It is clear that they have listened to the multiple stories of emotional and financial hardships and that they understand that bills drafted by Congress sometimes have significant consequences on various segments of the population of 8.7 million overseas Americans which were never intended by the original drafters.
> 
> Our organizations would be more than happy to work with the Committee in all efforts to modify current FATCA legislation and, while respecting the original intent of combating tax avoidance and tax fraud, to mitigate the deleterious effects of FATCA legislation on law-abiding citizens abroad.


https://aaro.org/images/2017_position_papers/recommendations_to_subcommittee.pdf


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## celticweb

Thanks Iota for keeping us up to date on this. I have to admit that I am not following the latest updates with this battle so it's great to get your updates.

These FAWCO and AARO recommendations seem to be still support the Citizen tax which is the real problem here. So I can't see how this is going to fix anything in the long term. they need to be switching to residence tax. Who is to say the bank will even go for this bona fide stuff. who is going to police this every year, people are mobile in today's world.

what about the problem of saving for retirement and the PFIC nightmare, where is that addressed? 

I would say it's time for some common sense to prevail, join the rest of the world and tax on the basis of residence where people pay for services and infrastructure they receive and a society that they are a part of. it. 

with all the stuff going on in the USA at the moment, are they going to be able to fix anything?
Not holding my breath for that but do hope there might be some change for the ones still caught up in this mess.


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## iota2014

As far as the banks are concerned, I think that ship has sailed. Hang onto your CLN, because the time is never going to come (is my guess) when the US-born will be able to open a bank account without documenting US tax status.

For the rest of it - I doubt if any significant legislative action of any kind on any topic is likely while chaos reigns in Washington, and FATCA is hardly significant except for expats and banks. However, I do think there has been a noticeable shift in attitudes towards FATCA, since the Meadows hearings. Less of the "tax cheats" rhetoric and a greater willingness, among Democrats, to acknowledge that it needs to be rewritten. Eventually, possibly years from now, a bipartisan bill may emerge. I expect both parties and even the White House would rather see legislation than see FATCA forcibly struck down by SCOTUS, as they would then face a lot of pressure to sign up to the dreaded multilateral CRS.

Me, I've pencilled in "Watch Roger Stone documentary" for this weekend.


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## iota2014

And next: as posted on the IBS website, link to recommendations from witness Elise Bean who reportedly helped to draft FATCA:

https://www.dropbox.com/s/fb7mxs5fj...ows post-hearing questions 5-12-2017.pdf?dl=0

Not terribly helpful, esp No. 3 suggesting (as a remedy for FIs' FATCA-induced reluctance to accept USPs as customers) that the US could legislate to give said FIs yet another sharp kick in the teeth as punishment for turning down a USC. 

She is however the only one so far to suggest lowering the renunciation fee, which would be genuinely useful if only it could be got through.


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## JustLurking

iota2014 said:


> Not terribly helpful, esp No. 3 suggesting (as a remedy for FIs' FATCA-induced reluctance to accept USPs as customers) that the US could legislate to give said FIs yet another sharp kick in the teeth as punishment for turning down a USC.


Also one atrocious misspelling. In item 4 she spells "righteous" as "misplaced".


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## celticweb

iota2014 said:


> And next: as posted on the IBS website, link to recommendations from witness Elise Bean who reportedly helped to draft FATCA:
> 
> https://www.dropbox.com/s/fb7mxs5fj...ows post-hearing questions 5-12-2017.pdf?dl=0
> 
> 
> 
> She is however the only one so far to suggest lowering the renunciation fee, which would be genuinely useful if only it could be got through.


Thanks for this iota.

She should add that they will refund the difference for those who were forced to pay the exorbitant renunciation fee especially for accidentals.

What she describes for accidentals sounds complicated too. they may need to issue certificates of termination because those with a US birth place will still get discrimination and have to prove they are not US citizens. we do that now with the CLN so we will need something else in its place.

Yes not very helpful but I think the biggest bonus about all this is that it has created awareness of the issues and has gotten different people and groups taking notice and talking about it.


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## celticweb

yes they will have to issue either CLNs or something else, an accidental citizen CLN or certificate for those that they say can get out of the system as accidentals.


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## iota2014

celticweb said:


> Thanks for this iota.
> 
> She should add that they will refund the difference for those who were forced to pay the exorbitant renunciation fee especially for accidentals.
> 
> What she describes for accidentals sounds complicated too. they may need to issue certificates of termination because those with a US birth place will still get discrimination and have to prove they are not US citizens. we do that now with the CLN so we will need something else in its place.


I suspect the only reason she mentioned it was to take the opportunity of pushing some of the blame for CBT/FATCA's injustices off on the State Department. Any solution dreamed up by the makers of the problem is all too likely to have the same kind of hallmarks - mad obsession with preventing a single expat from escaping with a single untaxed dollar. I'm glad I don't know her.



> Yes not very helpful but I think the biggest bonus about all this is that it has created awareness of the issues and has gotten different people and groups taking notice and talking about it.


I agree.


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## iota2014

iota2014 said:


> And next: as posted on the IBS website, link to recommendations from witness Elise Bean who reportedly helped to draft FATCA:
> 
> https://www.dropbox.com/s/fb7mxs5fj...ows post-hearing questions 5-12-2017.pdf?dl=0
> 
> Not terribly helpful, esp No. 3 suggesting (as a remedy for FIs' FATCA-induced reluctance to accept USPs as customers) that the US could legislate to give said FIs yet another sharp kick in the teeth as punishment for turning down a USC.
> 
> She is however the only one so far to suggest lowering the renunciation fee, which would be genuinely useful if only it could be got through.


IRSMedic video analysing Elise Bean's recommendations:


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## iota2014

Another group proposing legal action - this time in France:



> The Association has two goals: First, to seek legal opinions in French, European and International law to defeat FATCA in France or better yet in the European Union altogether and secondly to undertake the necessary judicial actions to exclude binationals from the FATCA IGA's once and for all. Preliminary conversations with highly qualified lawyers have been promising and we think that there may be solid legal grounds to achieve this goal whether at the French or European Union level or both


https://www.leetchi.com/c/association-accidental-americans

"Accidental Americans" not defined.

Personally, and speaking as a former USC, my advice would be to spend the money on renunciation fees. Much better value.


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## Bevdeforges

iota2014 said:


> Personally, and speaking as a former USC, my advice would be to spend the money on renunciation fees. Much better value.


Depends on your precise circumstances, however. With no significant ties to the US (especially financial ones) I would tend to agree. However, be careful if you have US assets and/or entitlements (say, to US Social Security benefits).
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Depends on your precise circumstances, however. With no significant ties to the US (especially financial ones) I would tend to agree. However, be careful if you have US assets and/or entitlements (say, to US Social Security benefits).
> Cheers,
> Bev


Entitlement to Social Security benefits isn't affected by renunciation; taxation of the benefits may or may not be, depending on treaty provisions.

But the point I was making is that a person who wants to escape from US tax law is IMO more likely to achieve that goal by renouncing, than by pursuing legal action against other countries.


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## iota2014

iota2014 said:


> Entitlement to Social Security benefits isn't affected by renunciation; taxation of the benefits may or may not be, depending on treaty provisions.


Social Security benefits are exempt from US tax when paid to a non-USC resident in these countries:

Canada
Egypt
Germany
Ireland
Israel
Italy
Japan
Romania
United Kingdom

It might be well worthwhile USCs in other countries organizing to press the government of their country of residence to negotiate with the US with a view to making SSA benefits exempt from US taxation.


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## Bevdeforges

iota2014 said:


> Social Security benefits are exempt from US tax when paid to a non-USC resident in these countries:
> 
> Canada
> Egypt
> Germany
> Ireland
> Israel
> Italy
> Japan
> Romania
> United Kingdom
> 
> It might be well worthwhile USCs in other countries organizing to press the government of their country of residence to negotiate with the US with a view to making SSA benefits exempt from US taxation.


For the time being, probably best to plan for retirement based on the conditions as they currently are. I don't get the feeling that many tax treaties are up for re-negotiation at the moment. Heck, it would be nice if the US would appoint a few ambassadors after having kicked all the old ones out.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> For the time being, probably best to plan for retirement based on the conditions as they currently are. I don't get the feeling that many tax treaties are up for re-negotiation at the moment. Heck, it would be nice if the US would appoint a few ambassadors after having kicked all the old ones out.


Depending on other factors specific to each country (such as whether they themselves have a current functioning government, which in the UK sadly is not the case ), catching US with his trousers down could be an excellent opportunity to press for most-favoured treatment of retirement income.


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## iota2014

"Article 7 of the Model 1 IGA provides that the United States shall notify its partner jurisdictions of any more favorable terms under Article 4 or Annex I of the IGA afforded to another partner jurisdiction."

It would make a lot of sense for a similar provision to be added to each of the US's bilateral double taxation treaties with Model 1 IGA countries, given that those treaties provide the legal justification for the reporting of accounts to a foreign country.


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## iota2014

iota2014 said:


> Another group proposing legal action - this time in France:
> 
> 
> 
> 
> The Association has two goals: First, to seek legal opinions in French, European and International law to defeat FATCA in France or better yet in the European Union altogether and secondly to undertake the necessary judicial actions to exclude binationals from the FATCA IGA's once and for all.
> 
> 
> 
> https://www.leetchi.com/c/association-accidental-americans
Click to expand...

So that's three legal actions/proposed legal actions:

- The Bopp case in the US courts, currently awaiting a ruling on standing
- The Canada Charter case, apparently still grinding slowly through the mill
- This proposed French case

Plus the proposed US legislation "To repeal the violation of sovereign nations’ laws and privacy matters" (https://www.govtrack.us/congress/bills/115/hr2054), which like most bills introduced in Congress apparently has a 1% chance of becoming law.

Personally I'm doubtful any of these legal or legislative efforts will be successful. ICBW 

What's missing, it seems to me, is any action on FATCA's weakest point: IGA governments treating non-US-tax-residents as US-tax-resident, without appeal.


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## celticweb

Thanks Iota for always keeping us up to date on this. 

What's good about all this even if nothing comes of it is that is is creating awareness. Sooner or later the USG are going to have to deal with this. Even if they don't want to change their laws, they need to make it easier for people to renounce.


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## iota2014

celticweb said:


> Thanks Iota for always keeping us up to date on this.
> 
> What's good about all this even if nothing comes of it is that is is creating awareness. Sooner or later the USG are going to have to deal with this. Even if they don't want to change their laws, they need to make it easier for people to renounce.


Yes, I agree, they should make it easier for their citizens to renounce. It's outrageous to sell proof of non-citizenship at such a high price, just because that's what the market will bear. But the US is riddled with injustice, and always has been. An injustice that affects so few, is probably not going to be a priority even for those US lawmakers who recognize it as an injustice (or claim that they do because that temporarily suits their political agenda).

I don't expect the USG to deal with it, but I'm hopeful some other countries, the UK among them, may eventually find ways to mitigate the effects on their (innocent) citizens while continuing to co-operate with other countries, even the US, in reporting those who actually are committing international financial crime.


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## celticweb

Accidentals with absolutely no ties to the US should be able to renounce or opt out with no further costs or filing. This is something they need to sort out if nothing else, the plight of the accidental American.

It's just accepted by other goverments that the US operates a worldwide tax system. however what is interesting about the latest challenge, is that it is accidentals. and people like this should be protected from their government, people with absolutely no ties at all to the US except an accident of birth. 

This challenge shows the US in a very bad light. it's one thing for a bunch of expats that spent a good portion of their life in the USA to move abroad and to complain about unfairness but it's a completely different story when it is people that have never had a single benefit from the USA.

I have started warning people now. a colleague of my husband wants to pursue a green card and I have warned her. i have not been scaremongering or exaggerating, just stating the facts. it's fine if you want to go over there, check it out i have told her but try to avoid getting a green card, try to get some other sort of work permit. but if you do get a green card, make sure you turn it in before you get trapped into the exit system or the estate tax system or all the gotchas that exist.

people look at me with amazement when i issue warnings and it takes me having to dig up articles for them to see the light. The majority of people that are citizens of other countries are completely unaware. The more challenges, the better if it makes more people aware.


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## iota2014

celticweb said:


> Accidentals with absolutely no ties to the US should be able to renounce or opt out with no further costs or filing. This is something they need to sort out if nothing else, the plight of the accidental American.
> 
> It's just accepted by other goverments that the US operates a worldwide tax system. however what is interesting about the latest challenge, is that it is accidentals. and people like this should be protected from their government, people with absolutely no ties at all to the US except an accident of birth.
> 
> This challenge shows the US in a very bad light. it's one thing for a bunch of expats that spent a good portion of their life in the USA to move abroad and to complain about unfairness but it's a completely different story when it is people that have never had a single benefit from the USA.


I may have misunderstood, but isn't the French campaign arguing that dual nationals should be allowed to _retain_ US citizenship, but not be subject to FATCA reporting?



> ...to undertake the necessary judicial actions to exclude binationals from the FATCA IGA's once and for all.


It's not clear to me how excluding dual nationals from FATCA IGAs could improve matters. It would just make dual nationals even more a hot potato for banks, if they were excluded from the IGA. 

But as I say, I may have misunderstood. I would be interested to be corrected, if so.



> I have started warning people now. a colleague of my husband wants to pursue a green card and I have warned her. i have not been scaremongering or exaggerating, just stating the facts. it's fine if you want to go over there, check it out i have told her but try to avoid getting a green card, try to get some other sort of work permit. but if you do get a green card, make sure you turn it in before you get trapped into the exit system or the estate tax system or all the gotchas that exist.
> 
> people look at me with amazement when i issue warnings and it takes me having to dig up articles for them to see the light. The majority of people that are citizens of other countries are completely unaware. The more challenges, the better if it makes more people aware.


Maybe. I wish there was a challenge that was proposing a solution that would clearly make the situation better for USCs and USborn, but I don't know what that solution would be. (Other than getting the US to abandon CBT, and/or make renunciation easy and cheap.)


----------



## celticweb

iota2014 said:


> I may have misunderstood, but isn't the French campaign arguing that dual nationals should be allowed to _retain_ US citizenship, but not be subject to FATCA reporting?


Iota you are probably right. but i thought it was a challenge not so much for dual citizens but for accidental Americans. there are many people that become dual citizens but are not accidental Americans. so i thought this was a group of accidentals bringing the challenge but of course any challenge helps everyone.

there is a group of people (like me) that were born abroad to foreign parents and left at a very young age (some in diapers) and have not been a part of American society at all nor their families, parents etc, they don't have American families or ties and never had a single benefit of the USA. This is different from people born to American parents in the USA that decide later on to move abroad. of course there is the group also born to Americans overseas but this group can ignore the whole thing without a birth place. i was thinking this was a challenge of those like me of accidentals with the US birthplace.

Accidentals don't want to be involved with Fatca for sure but more importantly they don't want to be under CBT either and if you retain US citizenship, then you will have to deal with CBT
But as I said before any challenge, helps the whole group.


----------



## Bevdeforges

I think one problem here is that everyone seems most passionate about looking out for their situation - be it bi-national, accidental or some other - without regard to the overall impact.

What the expat groups have advocated for a long time now is to exclude "local" accounts (i.e. accounts held in the taxpayer's country of residence) from FATCA reporting. At least here in Europe, there are regulatory differences between a "resident" account and a "non-resident" account and though things change over time, this distinction has been made for ages by the banks and financial institutions. The idea is that, with a resident account, the local tax authority is primarily concerned with any tax or reporting issues. Makes perfect sense to me - in all the various situations here.

Further to your considerations, I have a friend who has lived in Germany for almost 50 years now and wants to (at last!) take German nationality. It's really not a tax issue for her, simply one of acknowledging where her home is, and has been for ages now. Germany does not allow you to keep your old nationality when you naturalize, but the US will not waive the renunciation fee (as they used to do almost automatically in this sort of situation). 



> I may have misunderstood, but isn't the French campaign arguing that dual nationals should be allowed to retain US citizenship, but not be subject to FATCA reporting?


France doesn't require anyone to give up their old nationality when they take French nationality. But the banks here are the primary reporting agency for the tax authority. This is the perfect situation for simply exempting "resident accounts" from FATCA (and FBAR) reporting. So simple, yet so difficult to achieve.

Of course, the next step is something like civil disobedience, which the IRS would be very hard put to pursue.
Cheers,
Bev


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## iota2014

Personally, I don't think US tax law has much to do with justice. 

True there is an exemption in the exit tax legislation for dual citizens in certain circumstances, but that's not because the IRS recognizes or accepts that it would be unjust to require citizens of other countries with few or no US connections to pay the barbaric exit tax: it's because the US simply doesn't have the power to strip non-US-resident citizens of other countries of their non-US-source pensions, and also would have no grounds for asking for extradition. And, worse (from their point of view), even the tame US tax courts might not find in their favour, should a young dual with no US connections choose to challenge such a demand. That is exactly the kind of case that could result in CBT being ruled unconstitutional. So they provide this exemption, to make sure that can't happen.

But this French campaign, like the Canadian case, seems to be a challenge against the IGA partner - not against FATCA. But I may be misunderstanding.

It's a confounded mess, no doubt about that. The one action that could perhaps help, it seems to me, would be a charitable fund to help pay the renunciation fee for those who want to renounce and need to renounce but can't afford to pay.


----------



## iota2014

Bevdeforges said:


> What the expat groups have advocated for a long time now is to exclude "local" accounts (i.e. accounts held in the taxpayer's country of residence) from FATCA reporting. At least here in Europe, there are regulatory differences between a "resident" account and a "non-resident" account and though things change over time, this distinction has been made for ages by the banks and financial institutions. The idea is that, with a resident account, the local tax authority is primarily concerned with any tax or reporting issues. Makes perfect sense to me - in all the various situations here.


It would make perfect sense without the US, I agree. As long as the world's dominant economic power treats anyone with US citizenship as resident in America, a system based on distinguishing between "resident" and non-resident" accounts becomes meaningless, where USCs are involved.



> Further to your considerations, I have a friend who has lived in Germany for almost 50 years now and wants to (at last!) take German nationality. It's really not a tax issue for her, simply one of acknowledging where her home is, and has been for ages now. Germany does not allow you to keep your old nationality when you naturalize, but the US will not waive the renunciation fee (as they used to do almost automatically in this sort of situation).


Yes, I understand Germany will waive the requirement to renounce, if the person's income is below a certain threshold. Power games between the States, it seems to me, with no consideration for what the would-be German citizen wants.



> France doesn't require anyone to give up their old nationality when they take French nationality. But the banks here are the primary reporting agency for the tax authority. This is the perfect situation for simply exempting "resident accounts" from FATCA (and FBAR) reporting. So simple, yet so difficult to achieve.


What would the banks do about their reporting obligation?



> Of course, the next step is something like civil disobedience, which the IRS would be very hard put to pursue.


Indeed. Every item not reported, every form not filed, can be seen as an act of civil disobedience. Unfortunately, although CBT can be dealt with that way, FATCA letters may have to be answered. The person may then have to choose between handing the IRS the necessary bullet, by signing one of their wretched W forms, or losing the account. There is no outcome which can achieve the just end to which civil disobedience should be the means.


----------



## Bevdeforges

> Yes, I understand Germany will waive the requirement to renounce, if the person's income is below a certain threshold. Power games between the States, it seems to me, with no consideration for what the would-be German citizen wants.


Apparently it's not that simple. It's not just the income level, but the case has to be made that renunciation would prove a genuine "hardship" in some manner. Not sure the precise criteria, but it's more than just the expense involved.



> What would the banks do about their reporting obligation?


The only real change would be that the need to ask for a SSN from resident Americans would be eliminated. The French banks report all resident accounts to the Banque de France anyhow - and that information is passed along to the French Fisc (i.e. tax authority). As it is, your banking information is pre-printed here on your French tax forms - and excludes information on the "tax free" savings accounts (which are limited to a fixed maximum - and which are specifically excluded from reporting in the relevant bilateral agreement on FATCA reporting). 

I presume, but don't know for sure, that there is some sort of reporting on "non-resident" accounts to the Banque de France. I suspect that the Banque de France could easily report this information (or not) to the IRS, as they choose.



> The person may then have to choose between handing the IRS the necessary bullet, by signing one of their wretched W forms, or losing the account. There is no outcome which can achieve the just end to which civil disobedience should be the means.


There are plenty of folks who are, consciously or not, civilly disobeying the current regulations. Giving the banks a SSN doesn't mean that the IRS knows all. The only information they are currently reporting is a year-end balance in the accounts (and not the tax-free accounts). The only information the IRS has to compare to are the self-reported "high balances" from the FBAR filings. And due to the various tax treaties, there are LOTS of overseas Americans (accidental or not) who have no tax return filing obligation, due to insufficient income. (Say, those receiving US social security in countries where the local tax authority has exclusive taxing rights per the tax treaty - like Germany or the UK.) 
Cheers,
Bev


----------



## iota2014

Bevdeforges said:


> The only real change would be that the need to ask for a SSN from resident Americans would be eliminated.


Would the US be likely to agree to this change? It seems to me they would not.



> The French banks report all resident accounts to the Banque de France anyhow - and that information is passed along to the French Fisc (i.e. tax authority). As it is, your banking information is pre-printed here on your French tax forms - and excludes information on the "tax free" savings accounts (which are limited to a fixed maximum - and which are specifically excluded from reporting in the relevant bilateral agreement on FATCA reporting).
> 
> I presume, but don't know for sure, that there is some sort of reporting on "non-resident" accounts to the Banque de France. I suspect that the Banque de France could easily report this information (or not) to the IRS, as they choose.


But they have *agreed* to report USC accounts to the Americans. It's all set out in the IGA. Of course France like other countries can withdraw from the IGA; the reason no one does, is because they don't want their banks to be hit by punitive withhoding, and they don't want the reputational hit that would come from seeming to shelter us tax criminals.



> There are plenty of folks who are, consciously or not, civilly disobeying the current regulations. Giving the banks a SSN doesn't mean that the IRS knows all. The only information they are currently reporting is a year-end balance in the accounts (and not the tax-free accounts). The only information the IRS has to compare to are the self-reported "high balances" from the FBAR filings. And due to the various tax treaties, there are LOTS of overseas Americans (accidental or not) who have no tax return filing obligation, due to insufficient income. (Say, those receiving US social security in countries where the local tax authority has exclusive taxing rights per the tax treaty - like Germany or the UK.)


The bullet's not the SSN, it's the penalty-of-perjury jurat. Once you sign that form, refusing to file US taxes loses any chance of being seen by courts or public opinion as a principled act of civil disobedience; it's just going to be seen as lawbreaking, in both countries. Of course the IRS may never take any interest, as you say. Some people may positively take pleasure in signing the form and then not filing. Which is fair enough - but it isn't civil disobedience.


----------



## Bevdeforges

> But they have agreed to report USC accounts to the Americans. It's all set out in the IGA. Of course France like other countries can withdraw from the IGA; the reason no one does, is because they don't want their banks to be hit by punitive withhoding, and they don't want the reputational hit that would come from seeming to shelter us tax criminals.


Read the IGA though - and here in France there are also some documents from the Banque de France about precisely how the IGA is being implemented here. The IGA specifically exempts certain types of accounts (i.e. the tax-free ones, and certain retirement savings plans) from being reported. The IGA also exempts specifically certain types of banks and other financial institutions (mostly smaller ones that aren't "internationally" oriented) from the reporting. It's up to the Banque de France what gets reported - or not - once the banks report to the Banque de France.



> Of course the IRS may never take any interest, as you say. Some people may positively take pleasure in signing the form and then not filing. Which is fair enough - but it isn't civil disobedience.


Call it what you like - I prefer calling it the "render unto Caesar" approach. Report everything faithfully that the IRS has any reason to have direct knowledge of. Past that, it's a decision call. Especially if you're in a country where the local taxes have a tendency to exceed whatever the IRS might try to do you for. But the IRS is extremely unlikely to pursue anything overseas unless it's more or less "guaranteed" to return a significant amount of unpaid taxes.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Read the IGA though - and here in France there are also some documents from the Banque de France about precisely how the IGA is being implemented here. The IGA specifically exempts certain types of accounts (i.e. the tax-free ones, and certain retirement savings plans) from being reported. The IGA also exempts specifically certain types of banks and other financial institutions (mostly smaller ones that aren't "internationally" oriented) from the reporting. It's up to the Banque de France what gets reported - or not - once the banks report to the Banque de France.


I'd be interested in hearing more about the French implementation. I was under the impression that the exemptions listed in Annex II are applied during due diligence: so for example an exempt institution is simply not required to run due diligence at all; while exempt accounts at a non-exempt FI are flagged by the due diligence screening as not reportable. 

But I don't see that it matters who processes exemptions. The UK IGA definitely doesn't say anything about the IGA partner choosing which non-exempt accounts it wants to send to the IRS. I find it hard to believe that the US would agree to spare FIs the punitivevwithholding penalties, if the IGA partner was refusing to pass on account information for non-exempt USC accounts. But I would be extremely pleased to be proved wrong.


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## Bevdeforges

In several (most?) cases, the actual reporting to the IRS is done by the national central bank rather than by the individual banks. But in France, the banks report to the Banque de France in any event, so it's mainly just a matter of the "additional" information being requested so that the Banque de France is covered as having lived up to the IGA requirements. Given that the US doesn't report any information on non-resident or foreign held accounts back to other governments, it would be interesting to see to how they would know and what they could do should they "suspect" that the national bank authorities weren't reporting everything they were supposed to do under the IGA.

Under the current administration I don't expect any increase in the IRS budget, especially not for "enforcement" of existing tax regulations.
Cheers,
Bev


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## iota2014

https://www.irsmedic.com/blog/2017/06/fatca-updates-with-solomon-yue.html

Interview with Republican Overseas CEO. From the text accompanying the video:


> _How are things progressing?_
> Things are definitley moving in the right direction. We do expect to have a vote to repeal FATCA, at least from the house side. We are unsure exactly when that may happen as there is currently a leadership transition happening. There is a new committee chairman, so the vote is on hold for the time being.


This doesn't seem to make sense. The House bill to repeal FATCA has been referred to the House Ways and Means Committe, which is the Committee that will or will not send it for a vote, if I understand the procedure correctly. That Committee does not have a new chairman. It seems quite duplicitous to imply that the only thing delaying a vote on FATCA repeal is a leadership transition, when no such transition is in fact happening. If he's talking about the House Oversight and Government Reform Committee, where the FATCA hearing was held - that Committee has no power to send the FATCA bill for a vote, it just happens to be run by the bill's sponsor, Mark Meadows, which is why Meadows was able to schedule the hearing. Somebody correct me if I'm wrong.



> _What has transpired since the FATCA hearing?_
> About a week after the hearing, Solomon and his team proposed their Territorial Taxation plan for individuals. It was very well received and now has more focus than ever on it. Not only does Trump support the idea, it also fits into his Job Creations Agenda.


Nowhere have I seen any indication that Trump supports "Territorial Taxation for Individuals." Be interested to hear of anything I've missed.



> Paul Ryan tweeted his support of the Territorial Taxation plan on June 20th.


He actually tweeted: "We cannot accept a system that perpetuates the drain of American jobs overseas. Let’s aim to be the best once again. #TaxReform #MFGSummit"

Interpret that as you will. It certainly doesn't strike me as an endorsement of RO's plan for Territorial Taxation for Individuals, but as ever ICBW.


----------



## iota2014

Bevdeforges said:


> In several (most?) cases, the actual reporting to the IRS is done by the national central bank rather than by the individual banks. But in France, the banks report to the Banque de France in any event, so it's mainly just a matter of the "additional" information being requested so that the Banque de France is covered as having lived up to the IGA requirements. Given that the US doesn't report any information on non-resident or foreign held accounts back to other governments, it would be interesting to see to how they would know and what they could do should they "suspect" that the national bank authorities weren't reporting everything they were supposed to do under the IGA.


Lol. It wouldn't happen here, is all I will say. I hope it does happen in France.

It would make a good movie.


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## iota2014

iota2014 said:


> ... [Paul Ryan] tweeted: "We cannot accept a system that perpetuates the drain of American jobs overseas. Let’s aim to be the best once again. #TaxReform #MFGSummit"
> 
> Interpret that as you will. It certainly doesn't strike me as an endorsement of RO's plan for Territorial Taxation for Individuals, but as ever ICBW.


Ryan seems to have been talking about corporation tax, not CBT:



> "We're pushing businesses overseas,” Ryan said about the current tax code. "We're telling U.S. companies to stay overseas, and if you make money overseas by selling something overseas keep it there. That’s crazy."
> 
> "We need to make it so that companies can be successful on a worldwide basis, and bring those dollars back home. We got two or three trillion [dollars] of U.S. money parked overseas that should come back into the U.S. economy but we can’t because of our tax code..."


https://www.realclearpolitics.com/v...rantees_tax_reform_will_get_done_in_2017.html

Ryan is clearly sounding off about unemployment in the US - not about US expats' CBT/FATCA problems. The tweet was surely about the same issue: essentially, getting Apple etc to move their jobs or at least their money back to the US. Nothing at all to do with the Republican Overseas plan for "Territorial Taxation for Individuals."


----------



## JustLurking

iota2014 said:


> ... It certainly doesn't strike me as an endorsement of RO's plan for Territorial Taxation for Individuals, but as ever ICBW.


...and for anyone interested and who has not yet seen it, RO's white paper describing their proposal is here.

It does sort-of solve CBT, defined in the narrowest way.

In all other aspects though, it is about the clearest case imaginable of the 'cure being worse than the disease'. The large tax increases on NRAs and the sheer number of tax treaty overrides provide a huge clue as to why. Inward investment into the US would simply collapse under these proposals.


----------



## iota2014

iota2014 said:


> Another group proposing legal action - this time in France:
> 
> https://www.leetchi.com/c/association-accidental-americans
> 
> "Accidental Americans" not defined.
> 
> Personally, and speaking as a former USC, my advice would be to spend the money on renunciation fees. Much better value.


Even better would be to remove the barriers to renunciation. It seems l'Association des Américains Accidentels is lobbying for that.



> *Accidental Americans want out*
> 
> Thousands of ‘accidental Americans’ who face surprise US tax demands and intrusive investigations of bank accounts have called on the new French MP for North America to help them end their problems.
> 
> Anyone born in the US has US nationality – and an obligation to pay US tax – even though they may have no links other than the accident of birth.
> 
> The Association des Am*ér*icains Accidentels [..] have spoken to French and European politicians and Mr Lehagre said they raised their concerns with Roland Les*cure, the new French MP for North America, to find *a simple way to renounce US nationality.*


https://www.connexionfrance.com/French-news/Accidental-Americans-want-out


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## celticweb

Thanks Iota for the update.
This is what I have always said, if they don't want to change their laws, the least that they could do is make it easier to renounce. it's criminal what it costs now and with their excuse of needing more administrative work is nonsense. they saw that this could be another source of revenue and they took it. Maybe a cynical view but I am sure an accurate one.

Again all this brings awareness too which is needed.


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## iota2014

I speculate that the sudden increase in numbers renouncing may have been seen by the USG as tax cheaters trying to avoid the exit tax - a loophole in need of sealing.

But revenue is no doubt one of the nails that will make it difficult for any administration to lower the fee back to a sensible level.


----------



## iota2014

A second angle being pursued by l'Association des Américains Accidentels is lack of reciprocity.

It seems there's an Article in the French constitution which states that any treaty which is not reciprocal becomes null and void. The AAs are hoping to get a legal opinion on this.


----------



## iota2014

Seen on another forum: this link to a EU Parliament session in which an Accidental American presents a petition about FATCA.

https://www.treasury.gov/press-center/press-releases/Documents/hp16801.pdf

The presentation of the petitition starts about halfway through. Petition requests that the EU Commission be asked by the Parliament to seek a mandate from member states to renegotiate FATCA.


----------



## JustLurking

iota2014 said:


> Seen on another forum: this link to a EU Parliament session in which an Accidental American presents a petition about FATCA.
> 
> https://www.treasury.gov/press-center/press-releases/Documents/hp16801.pdf


It looks like you may have posted the wrong URL. Did you perhaps mean this one?


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## iota2014

JustLurking said:


> It looks like you may have posted the wrong URL. Did you perhaps mean this one?


Yes. Thanks JustLurking. Apologies for my error.

Responses to the petition:

From LIBE Committee:
http://www.emeeting.europarl.europa.../PETI/DV/2017/07-10/LIBE_FATCA_1088-16_EN.pdf

From ECON Committee:
http://www.emeeting.europarl.europa...ETI/DV/2017/07-10/1088-16_ECON_opinion_EN.pdf


----------



## iota2014

Summary of the petition and the Commission's response:



> NOTICE TO MEMBERS
> Subject: Petition No 1088/2016 by Mr J.R. (French) on the US’ Foreign Account Tax
> Compliance Act’s (FATCA) alleged infringement of EU rights and the
> extraterritorial effects of US laws in the EU
> 
> 1. *Summary of petition*
> 
> The petitioner’s grievance mainly concerns the US’ Foreign Account Tax Compliance Act
> (FATCA) - as well as the intergovernmental agreements implementing it in the EU - which obliges European and other foreign financial institutions to report to the US tax authorities all holdings of their “US persons” customers. In his view, this law violates various fundamental principles of European law (including the right to respect for private and family life, the prohibition of discrimination and data privacy,) as well as the Payment Accounts Directive.
> 
> While FATCA was purportedly targeted at fighting tax evasion by US resident taxpayers, the petitioner states that in practice it has affected a large number of European citizens and in particular so-called ‘accidental Americans’, citizens who are nationals both of the US and a Member State, as well as their non-US family members. Because non-compliance with the requirements imposed by FATCA results in heavy fines for financial institutions, many of them responded by avoiding all commercial business with customers presenting any US connection, whether actual or not.
> 
> The petitioner states also that the extraterritorial application of US laws comes at a very high price for the EU’s economies and companies. He mentions, in this respect, the case of BNP Paribas, which was fined $8.9 billion by the US in 2014, even though it had not breached any French or European laws. The petitioner also expresses his concern about the fact that the exchange of information is not reciprocal and that the use by EU firms of US consultants and accountants is economic espionage under the veneer of legality.
> 
> 2. *Admissibility*
> 
> Declared admissible on 11 January 2017. Information requested from the Commission under Rule 216(6).
> 
> 3. *Commission reply*, received on 30 June 2017
> 
> According to the petitioners, several "accidental Americans" or dual European/US nationals face repeated discrimination by European financial institutions, as they are precluded from accessing different financial products, including payment accounts, because of the compliance requirements imposed on European financial institutions by the Intergovernmental Agreements ("IGAs") to implement the Foreign Account Tax Compliance Act ("FATCA"). In the petitioners' opinion, compliance with FATCA would de facto be incompatible with the European Convention of Human Rights (ECHR) and the Payment Accounts Directive1 (2014/92/EU).
> 
> Firstly, it must be noted that FATCA and the related IGAs are bilateral agreements negotiated between the United States and other countries, including Member States. Therefore, it is in the first place up to Member States to take into account the specifics of the US tax system as well as their Union law obligations when negotiating those Agreements, and to request revisions thereof in view of any practical issues or incompatibility with Union law faced or any further amendments, in particular with regard to full reciprocity.
> 
> Secondly, with regard to the alleged breaches of the right to privacy, reference is made to Article 8 ECHR. The Commission observes that the fundamental right to privacy and
> protection of personal data are enshrined in the Charter of Fundamental Rights of the
> European Union. Member States are required by Union law to respect those rights when they are implementing EU law.
> 
> Thirdly, with regard to the alleged incompatibility of the Payment Accounts Directive (PAD) with the FATCA IGAs, the Commission would like to point out that Chapter IV of the Payment Accounts Directive regulates access to payment accounts in the EU. Article 15 ("non-discrimination") of the Directive provides: ‘Member States shall ensure that credit institutions do not discriminate against consumers legally resident in the Union by reason of their nationality or place of residence or by reason of any other ground as referred to in Article 21 of the Charter, when those consumers apply for or access a payment account within the Union. The conditions applicable to holding a payment account with basic features shall be in no way discriminatory’. Article 16 ("right of access to a payment account with basic features") provides, essentially, that Member States must ensure the right for any consumer legally residing in the Union to open a payment account with basic features, i.e. a new type of product whose features are enshrined in the Directive, provided that this consumer complies with anti-money laundering rules. Notwithstanding the reporting requirements imposed on EU credit institutions under FATCA and the related IGAs, credit institutions designated by Member States are required to grant access to payment accounts with basic features to any consumer legally resident in the EU, under the conditions set out in the Directive.
> 
> Conclusion
> 
> The Commission is of the view that credit institutions designated by Member States according to Directive 2014/92/EU will have to grant access to payment accounts with basic features to any consumer legally resident in the EU, under the conditions set out in the Directive.


In other words (if I understand the above correctly), as long as those with US citizenship and/or birthplace can access a payment account with basic features (i.e. no credit, no interest), there's no discrimination. Beyond that, it's up to Member States to make sure they don't infringe EU law when negotiating or renegotiating IGAs with the US.


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## Bevdeforges

Wow, certainly a step in the right direction. Thanks for sharing that (though it remains to be seen what progress is possible given the somewhat "distracted" state of the US Congress at the moment). Still, at least the EU is aware of the issue.
Cheers,
Bev


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## iota2014

What did I miss? It seems to me nothing has changed.

These basic payment accounts are very very basic. Literally pay money in, take money out. No debit card, no direct debit facility, no overdraft.


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## Bevdeforges

When I say a step in the right direction, I mean that at least the EU has taken note of the problem and sees an issue relevant to EU persons. Agreed, it doesn't resolve anything, but sometimes you have to define a problem before there can be anything done about it. I note, too, the the dates on the two memos are June, 2017 so things are still in a very early stage.

On the other side of the coin, we're starting to get more reports of "foreign" residents having difficulties with their US bank accounts or other financial services based in the US. 
Cheers,
Bev


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## iota2014

Bevdeforges said:


> When I say a step in the right direction, I mean that at least the EU has taken note of the problem and sees an issue relevant to EU persons.


You think? To me it seems the Commission has simply pointed out that as long as the Member States don't break EU rules on data protection and access to basic banking, the Commission will not be taking any action.

And to be honest, I don't see that there's much the EU could do, if they _did_ want to take action.


----------



## Bevdeforges

iota2014 said:


> Y
> And to be honest, I don't see that there's much the EU could do, if they _did_ want to take action.


At the moment, with all the Brexit stuff going one, probably not. However, I think the Brexit negotiations may raise the issue of just exactly what areas are open to bi-lateral agreements with individual EU countries and which ones are EU - US areas of "interest."

Look, nothing is going to happen quickly. But it's far more likely that the EU will "get concerned" than that anyone in the US government will give a damn. I've just run into "issues" with a financial service provider in the US not wanting to deal with anyone with a "foreign address" - though this is a service provided through a bank that is more than happy to deal with me as a customer, foreign address and all. At the moment the bank is "negotiating" with the service provider to try to work something out. (Hey, I'll take help on these matter where I can get it.)
Cheers,
Bev


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## JustLurking

JustLurking said:


> It looks like you may have posted the wrong URL. Did you perhaps mean this one?


Now available on Youtube. This one should be much more convenient to view than the embedded playlist version quoted above.


----------



## iota2014

Bevdeforges said:


> At the moment, with all the Brexit stuff going one, probably not. However, I think the Brexit negotiations may raise the issue of just exactly what areas are open to bi-lateral agreements with individual EU countries and which ones are EU - US areas of "interest."


Supposing it came to pass that the EU and the US negotiated a EU-wide agreement to replace the existing bilateral IGAs - what would you hope such an agreement might include, that would improve the situation for USCs? I'm not trying to pick an argument, I'm just trying to understand what people think the EU might be able to do.



> I've just run into "issues" with a financial service provider in the US not wanting to deal with anyone with a "foreign address" - though this is a service provided through a bank that is more than happy to deal with me as a customer, foreign address and all.


 Expats not welcome inside _or_ outside the US? 



> At the moment the bank is "negotiating" with the service provider to try to work something out. (Hey, I'll take help on these matter where I can get it.)


Indeed. Good luck.


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## Bevdeforges

iota2014 said:


> Supposing it came to pass that the EU and the US negotiated a EU-wide agreement to replace the existing bilateral IGAs - what would you hope such an agreement might include, that would improve the situation for USCs? I'm not trying to pick an argument, I'm just trying to understand what people think the EU might be able to do.


Actually, all I was thinking was that it might be nice to have one single arrangement for the EU rather than 27 separate agreements with their particular variations. Oh, and one agreed-upon level of what information the national banks would be allowed to report. (Hey, you gotta dream, right?)



> Expats not welcome inside _or_ outside the US?


It seems to be more and more the case these days.



> Indeed. Good luck.


Something will get worked out - or it won't. Whichever way, I'll cope however I can.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Actually, all I was thinking was that it might be nice to have one single arrangement for the EU rather than 27 separate agreements with their particular variations. Oh, and one agreed-upon level of what information the national banks would be allowed to report.


The petitioner, and his supporters, appear to be hoping for a much more significant intervention by the EU - an intervention which would somehow negate the effects of FATCA on them altogether. But how that could be made to happen, does not seem to be discussed. Maybe they don't have any specific plan in mind - they just want the EU to make FATCA go away.

Which (IMO) the EU can't do, and doesn't want to do. 

Thanks for your comments.


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## Bevdeforges

Hey, it's their money - can't imagine what they're paying their attorneys for this action. But I wish them all the luck in the world.
Cheers,
Bev


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## JustLurking

iota2014 said:


> Maybe they don't have any specific plan in mind - they just want the EU to make FATCA go away. ... Which (IMO) the EU can't do, and doesn't want to do.


This looks like an attempt to remove 'Accidental Americans' and other duals from FATCA reporting, by having the EU ban EU banks from reporting FATCA information on _EU citizens living in the EU_.

This will not make FATCA go away. It would still be there, but now much more in line with CRS and AOEI. And critically, it solves many of the most egregious problems that FATCA has disinterred. EU countries would be _partially_ complying with FATCA, but complying with the part that _should_ matter most to the US. That is, reporting on _US residents hiding US taxable money in non-US banks_, which is how the US justified FATCA. 

So, this would be the EU calling the US's bluff on the _intersection_ of CBT and FATCA.

If the EU adopted this 'mostly' FATCA compliant policy, would the US push the big red button on 30% withholding for _every_ EU bank, or would it be forced back to the negotiating table to offer a better deal? My money would be on the latter, under 'mutually assured destruction' rules.

Of course, the EU should have done this years ago while the very first IGAs were being negotiated. At that point, Treasury was creating _de facto_ tax treaties and effectively new law out of whole cloth anyway. So fixing this aspect of FATCA would have been much easier then than now.


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## iota2014

Bevdeforges said:


> Hey, it's their money - can't imagine what they're paying their attorneys for this action.


It's a grassroots effort, if I understand correctly - not a legal action. An EU citizen can submit a petition to the EP, which may or may not be ruled admissible. No need to pay lawyers.


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## iota2014

JustLurking said:


> This looks like an attempt to remove 'Accidental Americans' and other duals from FATCA reporting, by having the EU ban EU banks from reporting FATCA information on _EU citizens living in the EU_.
> 
> This will not make FATCA go away. It would still be there, but now much more in line with CRS and AOEI. And critically, it solves many of the most egregious problems that FATCA has disinterred. EU countries would be _partially_ complying with FATCA, but complying with the part that _should_ matter most to the US. That is, reporting on _US residents hiding US taxable money in non-US banks_, which is how the US justified FATCA.
> 
> So, this would be the EU calling the US's bluff on the _intersection_ of CBT and FATCA.


The intersection of CBT and FATCA is what enables all the other AEOI reporting regimes. It has been the motive power which has allowed the extraordinarily rapid destruction of bank secrecy. If I'm not mistaken, the EU is very much in favour of this march towards transparency. And on what possible grounds could USCs (tax-resident in America) be granted immunity fron reporting, when all other EU citizens are having their accounts reported to countries in which they're tax-resident?

In addition, it seems to me the EU is very unlikely to consider even for a millisecond the idea of going against the Hague conventions by intervening between a State (the U.S) and its citizens. I just think that's a non-starter.



> Of course, the EU should have done this years ago while the very first IGAs were being negotiated. At that point, Treasury was creating de facto tax treaties and effectively new law out of whole cloth anyway. So fixing this aspect of FATCA would have been much easier then than now.


The UK and the other G5 nations saw the possibilities, proposed the IGAs and negotiated the agreements with the US. I can't see any indication that the EU or any European nation sees the effect of FATCA on USCs as within their sphere of responsibility.


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## iota2014

I said:


> The UK and the other G5 nations saw the possibilities, proposed the IGAs and negotiated the agreements with the US.


The G5 followed up by agreeing a mini-AEOI pilot scheme between themselves, based on the FATCA IGA model (UK signs tax deal with France, Germany, Italy and Spain - Telegraph).

Separately, the UK forced the CDOT fatcalike regime on the Crown Dependencies and Territories by the simple measure of refusing to allow them to sign FATCA IGAs (thus gaining protection from withholding) unless they first accepted CDOT.

It may suit individual politicians and parties in Europe to cluck sympathetically when USCs try to explain the unfair dilemmas FATCA creates for them, but on a policy level (IMO) Europe is unlikely to oppose FATCA. It's just not in Europe's interests to do so.


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## JustLurking

iota2014 said:


> The intersection of CBT and FATCA is what enables all the other AEOI reporting regimes.


I do not understand what you mean by that. Can you explain how _both_ are required to underpin AEOI?

Suppose the US practised RBT, the international norm. And suppose that US residents really do cost the US $100bn/year in lost tax revenue (yeah, right!) by using offshore accounts. The US would still have passed FATCA, giving the precise same rationales. And the OECD would have jumped on the bandwagon just the same.

It seems to be that it is FATCA alone that triggered AEOI and CRS. The CBT element is irrelevant to that effort. CRS reporting specifically _does not_ include citizenship. If CRS can support AEOI without CBT, I cannot see why is this not also true of FATCA.

As already stated, the _intersection_ of CBT and FATCA is where the most egregious problems lie. Without CBT, FATCA would be just as effective but much less contentious. (And we certainly would not be having _this_ conversation!)



iota2014 said:


> In addition, it seems to me the EU is very unlikely to consider even for a millisecond the idea of going against the Hague conventions by intervening between a State (the U.S) and its citizens.


But this can be seen as a _foreign_ State (the US) harassing EU citizens. Action here seems entirely likely. Dual US/EU citizens _living in the EU_ are EU citizens first and foremost, in precisely the same way as they are US citizens first and foremost if they live in the US.



iota2014 said:


> The UK and the other G5 nations saw the possibilities, proposed the IGAs and negotiated the agreements with the US.


The UK in particular jumped on the FATCA/IGA bandwagon with indecent haste. My guess is that it saw this as a golden opportunity to hammer the Crown Dependencies, and if it gave any thought at all to the CBT problems inherent in FATCA -- highly unlikely -- it considered this to be acceptable collateral damage.

An _EU citizen living in the EU_ should receive full EU protection. If the US or any other country also claims that person as a citizen under its own (non-EU) laws and then applies some unpleasant responsibilities based on whatever dubious or tenuous claim it has made, it is the job of the EU to protect them. Just as true for FATCA as for FGM, in my opinion.


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## iota2014

JustLurking said:


> I do not understand what you mean by that. Can you explain how _both_ are required to underpin AEOI?


It was the combination of CBT and FATCA which presented EU banks with the FATCA dilemma: they couldn't legally report on accounts held by local USP residents (because of DP laws), but if they didn't report on accounts held by local USP residents they would be subject to unsustainable levels of withholding.

And that predicament led to the IGAs - providing the precedent which allowed CRS implementation to follow in FATCA's wake. Fatca changed local laws; CRS followed easily.



> Suppose the US practised RBT, the international norm. And suppose that US residents really do cost the US $100bn/year in lost tax revenue (yeah, right!) by using offshore accounts. The US would still have passed FATCA, giving the precise same rationales. And the OECD would have jumped on the bandwagon just the same.


Without CBT, the justification for the IGAs would not have existed: the banks would have been able to comply with FATCA and report the accounts of US-resident accountholders without contravening local DP law.



> It seems to be that it is FATCA alone that triggered AEOI and CRS. The CBT element is irrelevant to that effort. CRS reporting specifically _does not_ include citizenship. If CRS can support AEOI without CBT, I cannot see why is this not also true of FATCA.


The necessity of complying with FATCA forced FIs to put in place the systems for due diligence and reporting; CRS came in on the coattails. Yes, very likely the OECD would eventually have succeeded in getting some kind of transparency regime in place, at least among the richer nations, but it couldn't have happened so fast, so easily, and so comprehensively, without FATCA/IGA.



> But this can be seen as a _foreign_ State (the US) harassing EU citizens. Action here seems entirely likely. Dual US/EU citizens _living in the EU_ are EU citizens first and foremost, in precisely the same way as they are US citizens first and foremost if they live in the US.


They're not, actually. The accepted international practice is actually stated in the UK passport - as I realized for the first time on the day I first heard the word FATCA. Never noticed it before that stressful day. The UK can't protect dual citizens from demands made on them by their other state of nationality.




> The UK in particular jumped on the FATCA/IGA bandwagon with indecent haste. My guess is that it saw this as a golden opportunity to hammer the Crown Dependencies, and if it gave any thought at all to the CBT problems inherent in FATCA -- highly unlikely -- it considered this to be acceptable collateral damage.


Yep. George Smuggery Osborne, I reckon, or one of his smug coterie of advisors. You can see how pleased they were with themselves in any number of documents on the gov.uk website.



> An _EU citizen living in the EU_ should receive full EU protection. If the US or any other country also claims that person as a citizen under its own (non-EU) laws and then applies some unpleasant responsibilities based on whatever dubious or tenuous claim it has made, it is the job of the EU to protect them. Just as true for FATCA as for FGM, in my opinion.


The EU doesn't have (or, probably IMO) want, the power to protect EU citizens who are also citizens of a non-EU Member State, from demands made by the non-EU Member State. It doesn't have to _enforce_ the demands (and doesn't), but it can't offer protection(*). It would be different for a dual citizen of two Member States, as both would be under the jurisdiction of the ECJ.

* Especially where taxation is concerned, given that international co-operation on tax matters is a EU commitment.


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## iota2014

Somewhat surprisingly to me, Sen. Orrin Hatch is apparently seeking recommendations on tax reform.



> *Hatch Calls for Feedback on Tax Reform*
> 
> _Utah Senator Says, “…it is essential that Congress has the best possible advice and insight from experts and stakeholders.”_
> 
> WASHINGTON – As Congress and the administration continue to work to overhaul the nation’s broken tax code, Senate Finance Committee Chairman Orrin Hatch (R-Utah) today called on tax stakeholders to provide ideas, proposals, and feedback on how to improve the American tax system.
> 
> “After years of committee hearings, public statements, working groups, and conceptual exercises, Congress is poised to make significant steps toward comprehensive tax reform,” Hatch said in a letter. “Members from both parties have acknowledged the shortcomings of our current tax system and the need for meaningful reforms to encourage economic growth and alleviate many of the burdens imposed on hardworking taxpayers…As we work to achieve those goals, it is essential that Congress has the best possible advice and insight from experts and stakeholders.”
> 
> Submissions may be made to the Senate Finance Committee at [email protected]. The deadline to respond is July 17, 2017. All submissions will be carefully examined and considered as Congress works to craft an overhaul of the U.S. tax code. To ensure the privacy of stakeholders and their proposals, all submissions will be kept confidential.
> 
> Specifically, Chairman Hatch is looking for recommendations on:
> 
> 1. Providing much-needed tax relief to middle-class individuals and families through reforms to the individual income tax system;
> 
> 2. Strengthening businesses – both large and small – by lowering tax rates and broadening the relevant tax base in order to put the economy on a better growth path and create jobs;
> 
> 3. Removing impediments and disincentives for savings and investment that exist in the current tax system; and
> 
> 4. Updating our international tax system in order to make our nation more competitive in the global economy and preserve our tax base.


https://www.finance.senate.gov/chairmans-news/hatch-calls-for-feedback-on-tax-reform


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## iota2014

Democrats Abroad submission to Hatch. It's kind of bizarre.



> Americans resident abroad pay taxes to their local tax authorities on the income earned in their country of residence and then report their income again to the IRS. The Foreign Earned Income Exclusion and the Foreign Tax Credit ensure that most Americans abroad are not double taxed on their ordinary earnings. However all other types of income – such as investment earnings, retirement savings and even social welfare payments – are subject to U.S. tax with no exemptions or offsets. These items are, in fact, double taxed.
> 
> State-sponsored retirement savings programs trigger highly-punitive passive foreign investment company (PFIC) rules under the U.S. tax code. So do non-U.S. mutual funds held by U.S. citizens living abroad, even if the mutual fund is located in the jurisdiction where the citizen is living. Aside from the punitive tax treatment, by the IRS’s own estimate, PFIC filings take over 40 hours to complete.
> 
> Filing itself imposes a substantial cost on even ordinary, middle class Americans living abroad because reporting foreign income on specially designed forms is so complex and often stressful. Although a range of expat tax return preparer services are available, the cost of preparing a return that includes earned income and retirement savings runs to hundreds if not thousands of U.S. dollars, even when no tax is owed.
> 
> Citizenship Based Taxation discriminates against Americans abroad. Their tax burden is higher; their investment and retirement savings options are narrower (see Appendix I); their compliance costs are greater; and, to the extent that these factors increase the cost of hiring U.S. citizens, their employment options are fewer.
> 
> Compounding these injustices is the fact, acknowledged by the IRS itself, that the U.S. has utterly failed to properly advise citizens abroad of their tax filing and reporting obligations. Due to a combination of ignorance, misinformation, cost and confusion, tax compliance amongst Americans abroad is low. Serious penalties for non-compliance, combined with the ability of Foreign Account Tax Compliance Act (FATCA) disclosures to bring non-compliant taxpayers abroad to the IRS’s attention, are creating enormous anxiety and anger at the innate unfairness of Citizenship Based Taxation.


Pity the Democrats didn't take this innate unfairness into consideration before they created FATCA.



> Because of the difficulty and cost to foreign financial institutions of FATCA compliance - and the enormous penalties for FATCA compliance failures – banks outside the U.S. are refusing service to Americans. In addition to the loss of access to a diversified supply of banking and investment products, FATCA reporting, in its current form, is making it harder for Americans to find jobs, start business partnerships and maintain stress-free domestic relationships with non-Americans who object to their joint accounts being shared with the IRS.


It's like they just can't understand how this was allowed to happen...

https://d3n8a8pro7vhmx.cloudfront.n...dations_from_Democrats_Abroad_.pdf?1500526198


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## iota2014

iota2014 said:


> Somewhat surprisingly to me, Sen. Orrin Hatch is apparently seeking recommendations on tax reform.


Hatch, McConnell, Mnuchin etc have issued a statement indicating they're ready to put pen to paper, and outlining (vaguely) their intentions:


> Over many years, the members of the House Ways and Means Committee and the Senate Finance Committee have examined various options for tax reform. During our meetings, the Chairmen of those committees have brought to the table the views and priorities of their committee members. Building on this work, as well as on the efforts of the Administration and input from other stakeholders, we are confident that a shared vision for tax reform exists, and are prepared for the two committees to take the lead and begin producing legislation for the President to sign.
> 
> "Above all, the mission of the committees is to protect American jobs and make taxes simpler, fairer, and lower for hard-working American families. We have always been in agreement that tax relief for American families should be at the heart of our plan. We also believe there should be a lower tax rate for small businesses so they can compete with larger ones, and lower rates for all American businesses so they can compete with foreign ones. The goal is a plan that reduces tax rates as much as possible, allows unprecedented capital expensing, places a priority on permanence, and creates a system that encourages American companies to bring back jobs and profits trapped overseas. And we are now confident that, without transitioning to a new domestic consumption-based tax system, there is a viable approach for ensuring a level playing field between American and foreign companies and workers, while protecting American jobs and the U.S. tax base. While we have debated the pro-growth benefits of border adjustability, we appreciate that there are many unknowns associated with it and have decided to set this policy aside in order to advance tax reform.


Joint Statement on Tax Reform | Speaker.gov

This doesn't seem to me to suggest that reform/repeal of FATCA, or a shift away from CBT, is on the table.


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## iota2014

Update on the Isaac Brock website with regard to the Canadian case contesting the legality of the Canadian IGA:



> NEXT STEP: In oral testimony Plaintiffs will be examined by Government attorneys...at the end of this month…


http://*****************.ca/2017/08...iffs-to-begin/comment-page-1/#comment-7955547

**********..ca

Never mind. If interested, google "isaac brock society". Should be easy to find.


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## JustLurking

iota2014 said:


> Never mind. If interested, google "isaac brock society". Should be easy to find.


For annoyances like this a web redirection service such as TinyURL is your friend. For example:
The Isaac Brock Society | August 3, 2017 Canadian FATCA IGA Legislation Federal Court Lawsuit Update: Plaintiffs have complied with Court Order; Examination of Plaintiffs to begin


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## iota2014

From the July newsletter of "PETI" (the EU Parliament Committee on Petitions):



> “Accidental Americans” and FATCA - The extraterritorial reach of US fiscal laws and impact on EU citizens[/color]
> 
> A lively debate ensued in the PETI meeting of 11 July following the presentation of petition 1088/2016 on the US’ Foreign Account Tax Compliance Act (FATCA) and its alleged conflict with EU laws, including the evolving EU data protection framework. The petitioner outlined a number of real-life scenarios in which the privacy and property rights of “accidental Americans” (dual EU/US citizens holding US citizenship due to being born on American soil) have been adversely affected by the application of FATCA in EU Member States. Enacted in 2010, FATCA is intended to combat tax fraud by US residents domiciled abroad. Under the international application of the Act, non-US financial institutions are obliged to provide data to the US tax authorities of all clients who are US citizens. The petitioner claims that this leads to EU banks limiting the financial services provided to such clients in the EU, due to the possibility of US claims on tax arrears, penalties and other fees. *The Commission’s response, that there is no breach of the Payment Accounts Directive (Directive 2014/92/EU) and that the bi-lateral regime between Member States and the US comprising Intergovernmental Agreements (IGAs) are beyond the competence of the Commission, were not accepted by the majority of PETI Members as adequate. In view of additional concerns raised in the LIBE and ECON opinions on the petition, PETI took the decision to keep the petition open and request a new reply from the Commission based on the petitioner’s presentation.*


Emphasis added by me.

USCs, accidental USCs, and former USCs living in EU countries might want to consider writing about FATCA to the MEPs representing your area, as this might add to EP pressure on the Commission to come up with a more helpful response.

http://www.europarl.europa.eu/cmsdata/124980/03. Newsletter July 2017.pdf


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