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Friday, May 15, 2015

Another Front in the Fight Against FATCA: The Alliance for the Defence of Canadian Sovereignty

"And it came to passe in those dayes, that there went out a decree from Cesar Augustus, that all the world should be taxed..."

Luke 2:1, King James Bible (1611)

The Foreign Account Tax Compliance Act is, in its own weird way, a kind of census.  Among other things, it tells the American government where those it considers to be taxable under US law live and work and raise families. 

Having tried and failed miserably at conducting an accurate census of Americans abroad, the American government looked for other ways to find those "US Persons" (a term that includes US residents and Green Card holders, as well as US citizens).  Their method was delegation - an admission of failure in a sense - because FATCA requires foreign financial institutions (FFIs) to do what the US government couldn't manage to accomplish on its own:  to seek out all US persons in the world (their names, addresses, and account balances).

Those of you who have already been FATCAed, know all too well what that means.  Those of you who have not yet signed a W-9 or had your accounts closed, please don't feel left out, your time will come.

Americans abroad organizations like AARO, ACA, Democrats abroad and Republicans Overseas are fighting FATCA and you can read about their efforts here.  

But I would be remiss if I did not mention other efforts which are equally important.  The one I have been following (and cheering on) is the other lawsuit filed in Canada by the Alliance for the Defense of Canadian Sovereignty (ADCS).  

This is a grassroots initiative that pushes back against FATCA in Canada. ADCS argues that the Canadian legislation that implements the FATCA intergovernmental agreement with the United States "violates the Canadian Constitution, Canada’s Charter of Rights and Freedoms, the principles of Canadian sovereignty and democracy, and the fundamental rights of all Canadians."

By signing an agreement to turn over the private information of Canadian citizens to a foreign government (the United States) the Canadian government is violating, they say, the rights of those whom the US is unilaterally claiming as taxable US Persons, but who consider themselves to be Canadians first and foremost.  They reject utterly the idea that another country can simply demand that Canada provide the private information of individuals who have some connection to the United States, however nebulous it may be.  

The plaintiffs in the case are two Canadian women "who have never held a U.S. passport or developed any meaningful relationship with the U.S." but who are, nonetheless, considered to be US citizens by virtue of being born in the US."  They never consented to that citizenship and see no reason why it should be foisted on them now just because the US says so.

There are citizens in just about every country in the world right now who are in exactly the same position as the two plaintiffs:  people who thought they were "just French" living in France or "just Thai " living in Thailand.  Many are finding out that they are indeed US Persons when they receive a note from their local banks informing them that they appear to be US citizens under US law.  

I could not think of a worse way (or a worse source) for someone to learn that he or she might be a US citizen.  I find this not just shameful on the part of the US, but an extreme and worrisome delegation of sovereign power.  Foreign financial institutions should not be in any way arbiters of US citizenship or status, or be tasked with implementing a US extraterritorial national census of any sort for any purpose whatsoever.  

Among the different fronts against FATCA, this is a very worthy effort because it asks a nation-state like Canada to take a stand:  Are these people claimed by the US really Canadian citizens with all the right enumerated in the Charter? Or has the Canadian government downgraded them to semi-citizenship status based on the claims of a foreign power?  

Funded entirely by small donors, ADCS has miraculously raised enough money so far to hire very competent legal counsel, and on August 14, 2014 they filed their suit in Canadian Federal Court.  I back them 100% and have contributed even though I am not an "Accidental American" or even a dual.  

You can support ADCS by making a donation here.  They are excellent transparent communicators and you can follow the progress of the lawsuit on their website, at the Isaac Brock Society, or at Maple Sandbox

And finally I invite you to watch this superb video which they prepared after testifying last year before the House of Commons Finance Committee.


Anonymous said...

Contrary to what is placed in newspapers, FATCA and FBAR are not taxes. Neither FATCA nor FBAR investigate income. FBAR only records assets and not income. US has no taxation of financial assets (no wealth tax)

FATCA is a tool at banks (financial institutions). It searches for suspected US persons.

Such tracking of persons and their nationality has not been seen during the last 70 years, but now it has been revived.


P. Moore said...

Excellent piece, Victoria. We know that you have been following this issue for a number of years now and that this is only one in a number of pieces you and others have written on the subject. I would just add that the upcoming summary trial in August in Vancouver will not deal with the Charter violations, as I understand it. There will be a separate trial in 2016 to deal with that part of the suit.

The arguments to be heard in the Aug/2015 trial will be mostly about how the intergovernmental agreement between Canada and the US (IGA) to implement FATCA actually violate the tax treaty between the 2 countries. As you know FATCA was poorly drafted legislation to implement what you in essence describe as basically an illegitimate imposition on foreign financial institutions and governments. It seems to me that the concoction of the IGAs that the US is 'negotiating' (or rather imposing, under threat of sanctions) is an attempt to fix the illegitimacy and impossibility of FATCA as written. Now they run into pesky details like tax treaties. I read the submissions by the plaintiff's counsel and the arguments appear to be pretty compelling, yet I believe as strong as they are, the Charter violations are even a bigger deal.

Just as an aside, the current government in Ottawa has sustained a string of loses in the courts over a wide variety of issues giving me and others the impression that they are oblivious to the laws and the constitution until somebody takes them to court (or rather "takes them out to the woodshed") to give them a lesson they have trouble learning.

I am proud to see, in this case this initiative is being taken by so called 'little people'.

I hope you and others who have an audience will keep writing about this. Thanks for your contributions and support.

Bruce B. said...

Mark, thanks for your comment (and I'm being serious, not snarky):

FATCA [...] searches for suspected US persons.

IMO you're absolutely right in your Orwellian formulation: "suspected" of being a "US person".

The more I read about what's being done (or, unfortunately, more often not being done), the more revulsion I have at the continuing extraterritorial thinking of the current US Empire. And what I mean by "empire" is one government thinking it can unilaterally impose it's supposedly legal codes on any and all other sovereign nations worldwide by threats and sanctions "because [the US] Congress has spoken".

bubblebustin said...

The renunciation numbers are a sort of census too, only of those who USED to be US citizens.

Anonymous said...

I admire those two women so much. And although I'm not Canadian , I support their effort asmuch as I can with postings or donations. They are amazing!
However, I find it scandalous that it costs so much to fight for one's constitutional rights.

Anonymous said...

Is the ADCS lawyer asking for the cost back if he wins?
After all, it seems that this will benefit most Canadians. It is just fair that the ones who initially donated be financially compensated if the lawsuit succeeds.

Anonymous said...

We need to donate money to help anyone who wants to take FATCA to court.
Next, we need to elect the right president in 2016.
This is not about tax evasion. This is about basic freedom and privacy.

Victoria FERAUGE said...

@Noble Dreamer, My pleasure and sorry it took so long to get the post up. I did not include ADCS in last month's post about SCE and the Bopp lawsuit because I thought ADCS deserved a post all to itself.

Good news! I had no idea that another lawsuit is in the works. I'll try to get up to speed and post here about it as news comes in.

@anonymous, Yes, it's a bit disingenuous of the US gov and certain advocacy groups to tie FATCA and FBAR directly to taxes. As was said in the video - this is an information grab.

@P. Moore, Thanks for that information. Whaty I can't figure out is why FATCA implementation was OK'd by the Canadian government with full knowledge that it violated the Charter and would probably be nullified by the courts. What the hell. Any explanation for this?

@Bruce B: "suspected". Never thought I would hear that word attached to a nationality.

@bubblebustin, It would be if they could ge the list right. I think there are still reports at Brock that the renunciation list is late and inaccurate.

@Marina, Thank for the comment and for posting and donating to ADCS. I too admore Ginny and Gwen very much. The Bopp lawsuit is similar - costs a lot of money to put these cases together. I wonder what it would cost in other countries?

@anonymous, Good question. I don't think so but maybe one of the ADCS folks can answer that.

@anonymous, I agree with donating and supporting those causes but I've just about lost faith in the political system. Before Obama was elected the first time there was list of things he planned to do on behalf of Americans abroad. None of them we got. For the next round we need to pin them down and get solid promises and then we need to agressively follow up. If that doesnt' work then we need to send a message that we won't be fooled twice.

P. Moore said...

Victoria, regarding your question: "What I can't figure out is why FATCA implementation was OK'd by the Canadian government with full knowledge that it violated the Charter and would probably be nullified by the courts. What the hell. Any explanation for this?"

Here is an article, from a year ago that might help give some perspective. Since it was written, the government has lost more cases in the courts and the relationship between the Harper government and the Supreme Court continues on in the same vein.

Victoria FERAUGE said...

@P. Moore, Fascinating. Thanks for the link.

I had the same question about EU countries passing their FATCA implementation laws. I believe that there will be cases brought before the EU.

Some conjectures on my part. Just ideas I've floated:

1. Passing the FATCA laws got their banks out of the direct line of fire which is good enough for now. Good enough to placade the bankers and keep those campaign contributions coming?

2. They know reciprocity will never happen. And this gives them options in the future - they can continue to generously pass the info to the US government in good faith or they can stop when the US fails to meet its IGA obligations. As long as the info is in member states' hands and not passing directly from the banks to the US government, they have the power to turn on the tap or turn it off.

3. They needed FATCA as a push to get EU and OECD information sharing off and running. Once that happens they no longer need that "American threat" to push other EU countries to accept AEOI. When they no longer need FATCA for this they can push it aside in favor of their own system.

Paul said...

As a (very disappointed, former) lifelong Democrat, I have to correct your inclusion of Democrats Abroad in the list of organizations fighting FATCA. In fact, Democrats Abroad supports FATCA. Their position is stated quite explicitly: "Democrats Abroad does not support the repeal of FATCA" (from a position paper on their website).

Democrats Abroad does support a "Safe Harbor" exemption from FATCA for "US tax compliant" expats, which is very weak tea. They also claim to support Residence Based Taxation, but insist that it's not realistic, and failed to even mention the issue of citizenship based taxation in their submissions to the Senate Finance Committee.

Democrats Abroad is not a worthy advocate for the expat community, and no one who thinks that citizenship based taxation is unfair and unjust should support them.

Victoria FERAUGE said...

@Paul, I too was very disappointed in Dems Abroad. I contacted them a few years ago and wanted to work with them. It came to nothing and my biggest gripe was that I felt like they were telling me to sit down and let the big boys and girls handle things. :-)

Then I met Peter and found Brock and these days I just route around them.

But I've met some folks on the inside of Dems abroad who are just as disappointed and who are working within the org to get them to change. They have my respect and support.

As for the Repubs I am cautiously optimistic. The lawsuit was a damn good idea. I reserve judgement when it comes to their candidates. But next election we need to be a lot better at pinning all the candidates to the wall and asking why we, as Americans abroad, should support them.

Tim said...


I agree completely is was VERY important for non US government(i.e. France, Germany, Canada) to have any information exchange be strictly on a government to government basis. Almost everyone involved with FATCA for or against agrees with this statement.

Second, on the question of reciprocity according to some pay-walled articles I recently obtained there are definitely voices within the OECD pushing France, German et all to impose their own 30 withholding tax on US banks IF the US Congress doesn't follow through with reciprocity and refuses to join OECD CRS. The articles all admit though this is just "talk" and there are real questions as to whether Paris, Berlin etc will really follow through. However, the discussions are happening which I was surprised by when I first found out.

Admin said...

Fatca is a bad dream . It is about surveillance and Big Brother.
Big Brother needs to know everything about us so he can take care of everyone fairly. We all need to trust and worship Big Brother.