TaxConnections


 

Testimony: A Letter To Senators From An American Affected By FATCA



John Richardson, Tax Advisor

Dear Senators:

I wish to address a serious injustice that the United States government is perpetrating against millions of innocent law-abiding citizens and residents of countries around the world. Through the Foreign Account Tax Compliance Act (“FATCA”), the United States of America is violating the international human rights of persons who possess some degree of (often distant) US origin.

All of you and I share one thing in common: we were born in the USA. However, I was born to a Canadian father, who brought my family back to Canada when I was an infant. I am therefore a Canadian citizen from birth (“born abroad”) and I have lived essentially my entire life in Canada, only as a Canadian. I have never lived as an adult, studied, worked or earned income in the US.

I have never received any services or benefits from the US government. I have no US social security number, no US passport and have never voted in a US election. The United States has always been a foreign country to me, and a country that I have enjoyed visiting. My US place of birth has always been a harmless novelty –until now.

Incredibly, the US government considers me someone who should be filing US tax returns and paying US tax (and I would owe tax), in addition to filing my private financial account information (“FBAR’s”) with the US Dept. of Treasury (under threat of draconian IRS penalties). All because of an old bad law that goes back to the time of the American Civil War!

This law, commonly known as citizenship based taxation, whereby citizens are taxed no matter where in the world they live, is practised by only two countries, the USA and Eritrea. Eritrea is a small country in Africa which is not a democracy and which has a poor record on human rights issues. Interestingly, the US has condemned Eritrea at the United Nations for its diaspora tax.

This law was never previously enforced because it would be unjust to enforce an old law that has no rightful place in today’s world of residence based taxation and because enforcement requires the co-operation of other countries. However, the Obama administration is now trying to enforce it through FATCA. Under the threat of a 30% penalty on US source income, the US is using its financial clout to commit extortion on othercountries by forcing them to break their own privacy and anti-discrimination laws and turn over confidential financial account information on their citizens and residents who are deemed “US Persons”.

The US Treasury Dept. has negotiated “IGA’s” (intergovernmental agreements) with other countries under the guise that they are treaties –except that proper treaties require ratification by the Senate, and the IGA’s have not undergone this ratification.The prevention of legitimate tax evasion (such as US residents hiding money in Swiss or Cayman Islands bank accounts) is a commendable pursuit, but FATCA is not the right way to achieve this. It violates the 4th and 8th amendments of the US Constitution. The IGA between the US and Canada violates sections 7, 8 & 15 of the Canadian Charter of Rights of Freedoms.

The United States was founded as an independent nation on the principle of unjust taxation (by England) of persons abroad. Now the USA is committing the same offence!

You may or may not be aware that renunciations of US citizenship are skyrocketing around the world, and the punitive way that the USA is treating its “expats” is causing extreme disgust, anger and bitterness towards the Obama administration, as well as fear, anxiety and stress-related health problems in many people of retirement age.

President Obama and Congress have made a mistake. It can be corrected. FATCA can be repealed and the United States can change to residence based taxation to be consistent with the rest of the world and the principles of just and fair taxation. Please work with your fellow Senators, Congress and the President to make this happen and end this injustice. I request that you ask yourself the following questions:

How would I feel about paying taxes to a foreign country where I have never lived, worked or earned income?

How would I feel about having my private financial account information turned over to a foreign tax agency for the pursuit of unjust taxes and penalties?

Have I ever been the victim of injustice?

Have I ever been made to feel like a criminal when I have done nothing wrong, because “it’s the law”?

I personally have found inspiration from the quotations of Dr. Martin Luther King, who, as you know, spent his life fighting unjust laws:

“Injustice anywhere is a threat to justice everywhere.”
“Our lives begin to end the day we become silent about things that matter.”
“Never forget that everything Hitler did in Germany was legal.”
“The time is always right to do the right thing.”
“One has a moral responsibility to disobey unjust laws.”

Thank you for your attention to this important matter.

Yours sincerely,

A concerned “US Person”

Original Statement Taken On Feb. 5, 2015
The United States Senate Committee on Finance
Washington, DC, United States of America

Have a question? Contact John Richardson

Your comments are welcome!

The Reality of U.S. Citizenship Abroad

My name is John Richardson. I am a dual citizen. I am a lawyer – member of the Bar of Ontario. This means that, any counselling session you have with me will be governed by the rules of “lawyer client” privilege. This means that:

“What’s said in my office, stays in my office.”

I am also a member of the American Citizens Abroad Professional Tax Advisory Council (PTAC). This is an advisory panel focused on assisting American Citizens Abroad in an FBAR and FATCA world.

The U.S. imposes complex rules and life restrictions on its citizens wherever they live. These restrictions are becoming more and more difficult for those U.S. citizens who choose to live outside the United States.

FATCA is the mechanism to enforce those “complex rules and life restrictions” on Americans abroad. As a result, many U.S. citizens abroad are renouncing their U.S. citizenship. Although this is very sad. It is also the reality.

6 comments

  1. FATCA did not enact “Worldwide Taxation” for US Citizens. This has always been the case. It gave the IRS “teeth” in its pursuit of tax evaders by requiring foreign banks to disclose all US Citizens holding accounts in those banks. Yes, it has put all Americans living overseas, law abiding or not, on notice that their offshore holdings are subject to more scrutiny.

    • Shovel says:

      I would like Richard A. Garcia, CPA, to affirm that he himself would not mind “paying taxes to a foreign country where [he himself has] never lived, worked or earned income.”

      Time to practice yourself what you preach, Mr. Garcia.

    • Mr. A. says:

      Mr. Garcia, your comment strongly implies that you either do not understand the perspective of the letter writer (who truly is a Canadian, not an American) or you crassly choose to ignore such.

      Justifying US citizenship taxation on the basis that it “has always been the case” is quite lame. As the letter states, it is an old bad unjust law; old bad things need to be thrown out. This is how our societies progress. Should slavery not have been abolished in the 1800’s because it was “always the case” (ex. since the 1600’s)?

      Citizenship taxation violates various articles of the Universal Declaration of Human Rights (read them over and see how many you can identify).

      A Canadian who lives in Canada and who has financial accounts in a Canadian bank does not possess “offshore holdings”. They are local, just as your American accounts are. A Canadian who lives in Canada, earns income in Canada, and pays tax to Canada on that income, is not a “tax evader” – even if he/she was born in the USA.

  2. Richard – thanks for your comment. This letter is one of many from Americans abroad submitted to the Senate Finance Committee in 2015.

    The letter does NOT say that FATCA enacted “Worldwide Taxation” for U.S. citizens. What the letter says is:

    “This law, commonly known as citizenship based taxation, whereby citizens are taxed no matter where in the world they live, is practised by only two countries, the USA and Eritrea. Eritrea is a small country in Africa which is not a democracy and which has a poor record on human rights issues. Interestingly, the US has condemned Eritrea at the United Nations for its diaspora tax.

    This law was never previously enforced because it would be unjust to enforce an old law that has no rightful place in today’s world of residence based taxation and because enforcement requires the co-operation of other countries. However, the Obama administration is now trying to enforce it through FATCA. Under the threat of a 30% penalty on US source income, the US is using its financial clout to commit extortion on othercountries by forcing them to break their own privacy and anti-discrimination laws and turn over confidential financial account information on their citizens and residents who are deemed “US Persons”.”

    The point is that FATCA is the “enforcement mechanism” for “worldwide taxation AKA “citizenship-based taxation” for U.S. citizens.

    Would be interested in your views (having read the letter) on the U.S. policy of imposing the full force of the Internal Revenue Code on the residents of other countries (which is what the letter focuses on).

    As a member of the tax compliance community, would you be willing to support the repeal of the U.S. practice of imposing taxation on the residents of other countries?

    Thanks again for commenting!

  3. JC Double Taxed says:

    Where is the link to all those submissions to the Senate Finance Committee? The U.S. government one no longer has the letters accessible. The one made by a broker on a separate site no longer works.

  4. JC Double Taxed:

    There are two places where you will find the submissions:

    http://www.box.com/citizenshiptaxation

    http://fatca.eu.pn

Leave a Reply

Your email address will not be published. Required fields are marked *

TaxConnections