Monthly Archives: July 2014

Andrew Coyne: Judges rule to hold Parliament to its word, not to usurp its power

Thanks to Andrew Coyne for a well written article on:
1. The Harper Government’s attitude toward Canada’s Charter of rights; and
2. The role of law and the constitution in Canada.
In an era where the Supreme Court of Canada has become the “Official Opposition”, this article raises issues worth considering.

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Part II: U.S. Enforcement/Collection of Taxes Overseas against USCs and LPRs – Pasquantino – Wire Fraud and Mail Fraud

There’s good news and bad news:

First, the good news – The revenue rule appears to remain the law making it difficult to enforce U.S. tax claims abroad;

The bad news – There are other statutes that can be used.

“At the end of the day, it seems this case stands for the proposition that the U.S. government can indeed use U.S. laws, to at least indirectly enforce the tax laws of another country. The dissenting opinion in this 5-4 decision, written by Justice Ginsburg at 375 noted that (“Canadian courts are best positioned to decide ‘whether, and to what extent, the defendants have defrauded the governments of Canada and Ontario out of tax revenues owed pursuant to their own, sovereign, excise laws.’”) (quoting United States v. Pasquantino, 336 F.3d 321, 343 (4th Cir. 2003).

The direct enforcement by the U.S. government of U.S. tax judgments overseas will usually be very difficult, specifically to collect overseas assets to pay the taxes. However, the point of Pasquantino is that the government has yet another tool to bear against U.S. persons, at least in certain circumstances, that may help them effectively (and indirectly) bring legal actions against them in the U.S. to effectively enforce tax claims arising from transactions overseas. This can be a very powerful tool for the government.”

Tax-Expatriation

Please see my prior post for important background and an introduction to the “Revenue Rule”, U.S. Enforcement/Collection of Taxes Overseas against USCs and LPRs – Legal Limitations

The 9th Circuit Her Majesty case and the Canadian Supreme Court Harden case were both discussed. Both cases are older (1997 and 1963, respectively) and both directly address the old English common law “Revenue Rule” which stands for the proposition as explained by the Canadian Supreme Court citing to another case that:

“. . . there is a well-recognized rule, which has been enforced for at least 200 years or thereabouts, under which these courts will not collect the taxes of foreign States for the benefit of the sovereigns of those foreign States; and this is one of those actions which these courts will not entertain.”n3 [1928] Ch. 877 at 884.

More recently in 2005 in Pasquantino, the U.S. Supreme Court reaffirmed the…

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CCICS – Reliance on Other Agencies Complicates FinCEN’s Bid to Toughen Enforcement

“Other signs suggest FinCEN is toughening its approach in different ways. In October, ACAMS moneylaundering.com reported that the bureau is considering whether to employ its subpoena power under Title 31 of the U.S. criminal code to retrieve account data from foreign financial institutions with correspondent accounts in the United States.”

ronaldwederfoort


Reliance on Other Agencies Complicates FinCEN’s Bid to Toughen Enforcement

By Colby Adams

Efforts to ramp up the U.S. financial intelligence unit’s enforcement of the Bank Secrecy Act have run into a longstanding hurdle: the bureau’s reliance on financial regulators for case leads.

Under the directorship of former federal prosecutor Jennifer Shasky Calvery, the Financial Crimes Enforcement Network’s once-separate compliance and enforcement functions have been combined into a single office within the new Division of Enforcement. The bureau, known as FinCEN, has staffed the division with former federal prosecutors.

The division’s establishment came as part of a bureau-wide reorganization that commenced in June 2013, and a subsequent hiring campaign intended to enhance the issuance of warning letters, injunctions and civil money penalties against institutions and individuals that violate U.S. anti-money laundering (AML) rules.

But despite the fact that FinCEN has grown its team of enforcement specialists from four to as…

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Canadian retirement plans of “U.S. persons” subject to double taxation

The above tweet references a comment to the Allison Christians revelation that the U.S. Treasury has no authority to enter into IGAs.

Although I have not had time to research this specific issue, the questions it raises are so important that discussion must begin now. I have reproduced the comment in its entirety. See also the comments responding to this comment. If this is true, the effect is that:

The retirement plans of Canadian citizens who are considered to be U.S. taxpayers will be subject to taxation in both Canada and the U.S. – pure double taxation. In other words, you work you whole life for retirement only to see the plan subject to double taxation. Assuming the truth of this (and I intend to do further extensive investigation) it is absolutely essential that you renounce U.S. citizenship at the earliest possible moment. It is my sincere hope that this commenter is incorrect. But, I will find out.

I hope you are sitting down before you read this.

Continue reading

More on “PFICs” and their Complications for USCs and LPRs Living Outside the U.S. -(What if there are No Records?)

Your conclusion is:
“All of these tax compliance rules begs a very important question for a USC who is considering renouncing their U.S. citizenship. The issue arises if they have had investments in PFICs during the last five years. “If the USC has not been complying with IRC Section 1297 regarding PFICs, how can the taxpayer ever certify under penalty of perjury ” . . . that he has met the requirements of this title for the 5 preceding taxable years. . . [for purposes of Section 877(a)(2)(C)]“?”
Your post demonstrates beyond a shadow of a doubt whiy long term U.S. citizens must renounce U.S. citizenship. Leaving aside the S. 877 certification test, the idea of applying these rules to non-U.S. mutual mutual funds bought by Americans residing in the country where the fund is incorporated is not just stupid – it’s actually sick. Then we add to this the fact, that foreign mutual funds were not even considered to be PFICS until recently, coupled with the willingness to compute the interest charge on years before they were even understood to be PFICS is an embarrassment to U.S. law, an embarrassment to the IRS and an embarrassment to the lawyers and accountants who play a role in the “PFIC Confiscation of Assets”.
To your point of “can mutual fund owners ever certify 5 years of tax compliance”? Probably not. But, the U.S. tax code so complex that nobody could ever certify the 5 years anyway.
Main point is to NOT be a U.S. citizen.

Tax-Expatriation

More on “PFICs” and their Complications for USCs and LPRs Living Outside the U.S. – -(What if there are No Records?)

The statutory rules of PFICs are set forth in 26 U.S. Code § 1297 – Passive foreign investment company.  The U.S. Treasury and IRS also published new regulations in January 2014 on PFICs.

For an overview, see “PFICs” – What is a PFIC – and their Complications for USCs and LPRs Living Outside the U.S.

United States Citizens living overseas, whether or not they are “Accidental Americans”, as well as  lawful permanent PFIC Form 8621residents (LPRs) living outside the U.S. generally have the burden of proof under U.S. tax law to show they complied with U.S. law.  Indeed, when the Internal Revenue Service (IRS – the U.S. revenue authority) makes a tax assessment against an individual, the law generally carries with it a “presumption of correctness” in favor of the IRS.

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Has Treasury Changed Its Position Regarding Capital Flight Resulting from FATCA?

Note the following comment on this article at the Isaac Brock Society:
Bubblebustin says
July 5, 2014 at 8:41 pm

Allison gets another mention here:

Has Treasury Changed Its Position Regarding Capital Flight Resulting from FATCA? http://wp.me/pA2Cl-12T

Wealth & Risk Management Blog

In 2013, I participated in a constitutional law conference regarding international agreements, held in Siberia, Russia.  My invited role was to discuss FATCA’s IGAs basis in US domestic law and international law policy, and comparatively discuss IGAs in the context of various EU countries.  Some of those slides are available in my broader FATCA lecture at the University of Amsterdam International Tax Program Winter Session at http://www.slideshare.net/williambyrnes1/uv-a-winter-2014-fatca-and-eoi

In light of my academic interest in this subject matter, today I came across two pertinent blog posts that I share below, wherein Treasury justifies its policy based upon the potential for capital flight, followed by the Treasury opposite stance to the Court just months before in Florida Bankers Assn v Treasury.  Below I post some of my lecture comments from 2010 regarding FATCA and capital flight.

Does Treasury have new information / data that it did not previously have, leading to its change…

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Mark Twain, the East German STASI, the NSA, the IRS, and the Correct Meaning of Patriotism

International Liberty

Exactly three years ago, I posted a simple quiz about libertarians and patriotism.

The two questions in that quiz are illuminating since they highlight how libertarians in some cases may differ from conservatives (click here for more on that issue), but I also included this t-shirt, which seems to capture the mindset of a lot of Americans regardless of their political outlook.

Well, it seems that Mark Twain had the same attitude as the young lady in the photo, at least if we can believe the quote in this Steve Breen cartoon.

Simply stated, our loyalty should be to a set of ideals, not to any particular group of people who happen to hold power.

Patriotism Cartoon

What makes the cartoon so effective, though, is the inclusion of an IRS thug and a snoop from the NSA.

Reminds me of this cartoon about Obama and the Founding Fathers.

But there’s a…

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