Monthly Archives: September 2016

FATCA Hatred: “It makes me so sad to say that I never thought I would harbor so much hatred for my own country”

Eric in Switzerland says
September 25, 2016 at 2:42 pm

It might be a novel but it sure isn’t fiction.

I could write a short book myself about lives turned upside down here in Switzerland. My elderly parents (American father/ Swiss mother) had their account shut down for a time by UBS. My American sister who only lived in the US until she was eight years old and her successful French husband went through FATCA hell in Geneva until she renounced out of desperation on their lawyer’s advice. FATCA wanted her French husband to cough up “back taxes” for the sin of sharing an account with his American wife…but you guys know all this.

I’ve had friends lose their house mortage, credit card accounts etc. I know an American couple who lived and prospered here since 1972 and were forced to sell everything and retire in the US although they had prepared for years to retire in Switzerland. FATCA made that Swiss retirement totally impossible. They spent a small fortune trying before just giving up.

I cannot speak for other countries in Europe but the Swiss banks are enforcing FATCA with a rare zeal. I am almost prepared to believe that they are collectively saying “You bloody American bastards want FATCA, well then we’ll give you FATCA even if it means chasing every goddam US citizen out of the country.”

I’m half Swiss. I have Swiss uncles, aunt’s, cousins, nieces, nephews and a Swiss half-brother from my Swiss mom’s first marriage. I know the Swiss. I have lived and worked and married into Switzerland since 1985. The Swiss are polite but they are definitely not docile. Above all they hate being pushed around; especially like this, and especially when it’s a foreign power doing the pushing.

The US used the carrot and the stick to force the IGA signing but really, in the end, all there was was the stick. The Swiss know this and they are very bitter.

I had lunch with my half-brother about two months ago. He is a very honest, wealthy, clever and hard working businessman based in Geneva. He’s mainly into real estate. He owns a dozen apartment buildings, restaurants, a tourist hotel near the Cornavin train station and who knows what else. He has never lived or worked in the US. He just turned seventy last July. So we were having lunch and he told me that he deeply resented having to fill out a new form for his bank stating that he had no dealings with any Americans in the form of partners,investors, etc. He told me that he called up his bank and said “what is this bullshit”!?. They just told him (politely of course) to fill it out and sign it or we’ll have to suspend all your banking activities until you do. They also said, again very politely, don’t get pissed at us and change banks because there’s no escape. All Swiss banks are doing this.

You can multiply this outrage by every single business account holder in Switzerland.

Oh congratulations Chuck Schumer D/NY. Oh job well done Charlie Rangel D/NY. Sterling idea there Carl Levin (ret.) D/MI. And finally, bravo mister president Barack Hussein Obama, you thick c%ç*. You have successfully pissed off the entire international business world and have made them puke at the very idea of getting an American “person” even remotely involved with their enterprise in any way, shape or form. Brilliant, just f&%*ing brilliant!

I am a proud US Navy veteran. I volunteered in 1974. The Navy launched my career in aviation maintenance which eventually took me all the way to working for Swissair. It makes me so sad to say that I never thought I would harbor so much hatred for my own country. It makes me cry to think that short sighted and insatiable greed has replaced every noble principle that America was originally founded on.

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My Big Theory Of Everything: Thomas Campbell

Interesting thoughts on the role of fear – something that many Americans abroad endure on a daily basis.

What's it all about anyway?

I have recently read the My Big TOE trilogy (MBT) by Thomas Campbell, a respected physicist and it is FABULOUS! For someone who believes, or would like to believe, that a Universal Consciousness interconnects, creates and continuously evolves all existence, this is a book of such compelling wisdom that reading it requires a block of post-it-notes, several highlighters and very patient relatives….

As usual we would welcome any comments or discussion on this review. If you are viewing on Facebook or Linkedin please feel free ‘Like’ and to post comments on josephbray.wordpress.com

“Only the quality and depth of our consciousness is what matters…” This refers to the quality of an individual at their very core. Not what a person appears to be or how they behave on the surface but what they actually are inside….You evolve higher quality consciousness not through right action or result, but through right motivation and intent”…

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Planning to ‘Blow the Whistle’ on Your Employer?’ Read This First.

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New UK rules on the treatment of ‘whistle-blowers’ came into effect two days ago,on the seventh of September. For now they are only applicable to UK deposit-takers with assets of £250m or greater. They cover banks; building societies and credit unions; PRA (Prudential Regulatory Authourity) designated investment firms; Solvency II insurance and  re-insurance businesses; the Society of Lloyd’s;and managing agents.

For  all other firms regulated by the Financial Conduct Authority (FCA) the rules are of ‘non-binding guidance’ only.

Unlike the situation in the the US Securities Exchange Commission who can remunerate ‘whistle-blowers’, UK rules make no such provision.However the PRA provides for  an employment tribunal to award unlimited compensation for those victimised for disclosing wrongdoing. These decisions will now have to be reported directly to the PRA.

In addition to the existing requirements that relevant entities assign responsibilities to a whistle-blowers’ champion to oversee the preparatory steps for the new regime, the new rules…

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The Tax-Related Aspects of the G20 Leaders’ Communique Hangzhou Summit

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(Photo: Guardian )

The G20 Leaders Summit took place from September 4-5 in Hangzhou, China. Here is what they agreed on international tax reform.

19. We will continue our support for international tax cooperation to achieve a globally fair and modern international tax system and to foster growth, including advancing on-going cooperation on base erosion and profits shifting (BEPS), exchange of tax information, tax capacity-building of developing countries and tax policies to promote growth and tax certainty.

We welcome the establishment of the G20/OECD Inclusive Framework on BEPS, and its first meeting in Kyoto. We support a timely, consistent and widespread implementation of the BEPS package and call upon all relevant and interested countries and jurisdictions that have not yet committed to the BEPS package to do so and join the framework on an equal footing.

We also welcome the progress made on effective and widespread implementation of the…

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In #FATCA and #FBAR world: “All roads lead to renunciation”, but “Not all roads lead to S. 877A Exit Tax litigation”

USCitizenAbroad says
September 5, 2016 at 2:07 pm

@Watcher

There are at least seven possible reasons why there has not YET been a court challenge – Note that is is relevant only with respect to “covered expatriates”

1. People who are “covered expatriates” based on the net worth test are busy making themselves “non-covered” by reducing their worth and the filing the appropriate paper work (demonstrating that they are not covered);

2. I suspect (but have no direct evidence) that a lot of people are just renouncing (which terminates their U.S. taxability from that point on) and then just not filing. This is more likely if they are “covered expatriates” based on the asset test (> 2million USD). If people are “covered expatriates” because of the asset test, then why would they file the 8854 if the only reason to do so is to prove that they are compliant based on the 5 year tax filing test? Who knows what will happen with them?

3. There is the issue of those who are able to get a CLN based on a “relinquishing act” prior to June 3, 2004. For those who are able to get an actual CLN indicating a “relinquishment date” on the CLN of say (June 3, 1984), and they are covered based on the asset test, why would they file anything? Admittedly there are a few law firms who seem to believe (and are advising – beware) that the S. 877A rules are retroactive. But, there are others who are not sure or believe that they are not. So, why would somebody, who might not be subject to the S. 877 A Exit Tax, assume that they are and file? Why adopt an interpretation that leads to certain destruction rather than take a defensive position that is rational? My point is that in this case the failure to file the Form 8854 doesn’t affect whether they are covered or not.

4. What about those who are clearly “covered expatriates” and are NOT U.S. tax compliant. Well again, they are subject to the S. 877A Exit Tax rules regardless of whether they are U.S. tax compliant or not. Those people are probably (but again this is just speculation on my part) just lying low. Why would they file anything? There are many accidentals who have no Social Security number.

5. As you point out, the U.S. has different tax treaties with different countries. The Canada U.S. Tax Treaty includes in Article XXVI A – Assistance in Collection :

8. No assistance shall be provided under this Article for a revenue claim in respect of a taxpayer to the extent that the taxpayer can demonstrate that

(a) where the taxpayer is an individual, the revenue claim relates to a taxable period in which the taxpayer was a citizen of the requested State, and

(b) where the taxpayer is an entity that is a company, estate or trust, the revenue claim relates to a taxable period in which the taxpayer derived its status as such an entity from the laws in force in the requested State.

In other words, some people may simply be saying: Too bad, so sad, not paying any exit tax. You might think I owe it, but Canada will not help you collect it.

6. The dual citizenship from birth exemption: The recent post about the “dual citizenship exemption” and South African apartheid reminds us that there are people (I suspect quite a few) who are exempt from the Exit Tax because of the dual citizenship exemption. In their case all they need to do is show tax compliance for five year …

7. Green Card Holders: We are not just talking about citizens. We are also talking about Green Card Holders. Green Card holders (because of somewhat different rules under the Internal Revenue Code coupled with treaty provisions) have more options available to defend themselves than do citizens. Those in the worst position are those who were born in the United States and have ONLY with U.S. citizenship.

In any case, I suspect that the reasons that we do not know of any treaty challenges are a combination of one or more of these reasons. Why get into into an expensive fight if there is a way to avoid it?

Defending yourself from the Exit Tax by using the Tax Treaties – Defensive position

With respect to a possible treaty challenge:

I am not sure that I would get overly technical about this. It surely was NOT the expectation of treaty slave/partner countries that they were signing a treaty that would allow the USA to confiscate the assets of citizens/residents of the treaty/partner country just because a person says he doesn’t want to be a U.S. citizen. That (in my view) is the primary defense and the rest is just gravy. The United States Court of Appeals (First Circuit) has recently ruled that the expectations of the treaty partner country are relevant in interpreting the treaty.

In any case, it is becoming increasingly clear that people will have NO choice but to renounce and to extricate themselves from this abuse. I emphasize again that a CLN (which is not granted by the IRS) is all that is required to end this nonsense on a prospective basis. Once the CLN is issued, I suppose people can decide as individuals whether they choose to turn their assets over to the IRS or not.

Defending yourself from the Exit Tax by using the Tax Treaties – Offensive position

It seems to me that challenging the Exit Tax based on treaty provisions is a last resort. Perhaps (at least from a Canadian tax treaty perspective), rather than challenging the Exit Tax with the IRS, one might consider using:

Article XXVI – Mutual Agreement Procedure

1. Where a person considers that the actions of one or both of the Contracting States result or will result for him in taxation not in accordance with the provisions of this Convention, he may, irrespective of the remedies provided by the domestic law of those States, present his case in writing to the competent authority of the Contracting State of which he is a resident or, if he is a resident of neither Contracting State, of which he is a national.

This would be to use the Tax Treaty as a “sword” and not as a “shield”. Actually, this strikes me as a good idea. At least this will ensure that the Government of Canada is aware of this issue. They either will “go to bat” for Canadian citizens or will agree that Canadian citizens can be claimed by the USA and capitulate to the Obama administration. What this approach also does is puts the cost of raising this issue on the Government of Canada which makes it more doable.

In closing …

The idea of the USA going around the world and forcing the citizen/residents of other nations to pay a ransom – percentage of their net worth to the USA – to NOT be a US citizen (especially when those assets have nothing to do with the USA) is absurd and should NOT be done.