$500,000 raised for legal fees — Justice Martineau summary trial decision on FATCA IGA legislation due in September/Notre procès sommaire est maintenant terminé, il ne reste qu’à attendre la décision du juge Martineau en septembre.

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UPDATE August 26 2015: $500,000 DONATED FOR LEGAL FEES, 18 (OR LESS) DAYS TO SUMMARY TRIAL DECISION IN SEPTEMBER.

SEE ALSO DISCLAIMER AND LITIGATION UPDATES.

SEE AUGUST 20 2015 BLOOMBERG BNA ARTICLE ON OUR LAWSUIT. See also this recent commentary on the trial issues by Roy Berg and John Richardson’s thoughts on Mr. Berg’s commentary. For copyright reasons the article has to remain (uncopied) on our ADCS blog.

— We could not have funded this lawsuit without the help of our Australian supporters.

Alby and Embee remind us below of the “gun-to-the-head” reason why Australia capitulated to the U.S. and signed a FATCA IGA. Taken from a 2014 Australian Government Committee discussion:

“Mr WHITELEY: Even though FATCA does not attempt to directly impose penalties, it does. There is no question about that. So any non-compliance is a penalty. How have other countries that have significant interests in the US responded to this across the board?

Mr Allen: As I said, they have signed these intergovernmental agreements to avoid that kind of penalty.

Mr WHITELEY: They have signed them but what has been the take on the gun-to-the-head approach? You must have discussions with other countries. They may have got there in the end but what are their feelings on this?

Mr Antioch: I stand to be corrected by colleagues, but I have personally not struck in my international dealings with colleagues any strong reservation about having this so-called gun to the head. Everybody acknowledges it is a weapon.

CHAIR: When is a gun not a gun? If it is not a gun, is it a spear?

Mr Antioch: It could be a machine gun. It could be a missile. It could be lots of things.

Mr WHITELEY: I think at $255 million—

CHAIR: It sounds like a nuclear weapon.

Mr WHITELEY: it could be nuclear weapon.

Dr STONE: But you get a non-complying financial institute stamp if you do not do it.

Mr WHITELEY: We do not think for one moment that the $255 million cost to the financial institutions is going to come out of nowhere. We know who is going to pay it. Their clients are going to pay it.

Mr Antioch: That is right. Inevitably, that is quite correct…

…Dr STONE: I think this is a very interesting point. You are asking us to comply with this agreement but we do not have reciprocity yet. It is an aspiration. And, when we do, it is not expected that the withholding tax initiatives will be reciprocal. You are also telling us that the G20 is looking to evolve a global or cross-nation tax avoidance framework. So what is the rush? Why are we entering into this right now with the USA? Why don’t we wait until that evolution and until there is better reciprocity—I would argue complete reciprocity—before we impose what are, as our chair said, quite significant costs on the Australian financial system?

Mr Wood: What underpins this agreement is the US FATCA regulations, which operate unilaterally. That is where the withholding tax comes into play. The withholding tax would apply if we did not sign the agreement. The US FATCA regime commences on 1 July, so that is the rush—to get something in place by 1 July which would actually save our financial institutions from incurring the withholding tax…

…Mr WHITELEY: Nothing like a good gun to your head—

Dr STONE: It is called capitulation.

Mr WHITELEY: In an environment where we are trying to reduce costs on business, $255 million is an extraordinary amount of money coming out of the Australian economy.

Dr STONE: I think Mr Whiteley has belled the cat in the sense that I am not yet convinced of the value for Australia in this…” [etc. etc.]

AUGUST SUMMARY TRIAL UPDATE: JUSTICE MARTINEAU WILL TRY TO RENDER A DECISION BY SEPTEMBER 13 — before the date CRA will turn over private financial information to the U.S. IRS. Notre procès sommaire est maintenant terminé, il ne reste qu’à attendre la décision du juge Martineau en septembre.

OUR BRIEF LITIGATION HISTORY: One year ago, on August 11, 2014, Litigator Joseph Arvay filed a FATCA IGA lawsuit in Canada Federal Court on behalf of Plaintiffs Ginny and Gwen, the Alliance for the Defence of Canadian Sovereignty (en français), and all peoples.

Because of a Government delay we initiated a “summary trial”, using some of the arguments, which offered the possibility of preventing bank information from being turned over to the IRS before September 30, 2015. The summary trial took place on August 4-5 2015 and we hope to have a decision by September 13 2015 (a sunday).

See Alliance’s Claims, our Alliance blog, and AUGUST 4-5 SUMMARY TRIAL FILINGS in LITIGATION UPDATES.

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An Interesting Analysis of an Analysis: John Richardson on Roy Berg on the Summary Trial

 


 
Stephen Kish has obtained permission from Tax Notes International to reproduce an article by Roy Berg to be posted (only there and only once) at the Alliance for the Defence of Canadian Sovereignty WordPress blog. The article is an interesting analysis of some main points regarding the Summary Trial which took place in Vancouver August 4-5, 2015.  John Richardson has taken that article, comments from the recent BNA article (linked below) and his own experience at the trial and examined how he sees the interaction. I am providing some main excerpts which will hopefully give a sense of what is involved and make you curious enough to go over and read the the article and the post.
 

On August 20, 2015,  BNA published an article on the Alliance For The Defence of Canadian Sovereignty that took place earlier this month. The article was posted by Stephen Kish at the Isaac Brock Society. As expected the article generated a large number of comments. The BNA article included the thoughts (and only the thoughts) of a number of Canadian tax practitioners.

Early Brock commentary on the Vancouver trial noted the presence the of lawyers from Moodys Gartner. The BNA article included commentary from  Moodys lawyer Roy Berg. In an article published on August 24 by Tax Notes, Mr. Berg expands on his views of the issues raised in the Vancouver trial.

A “report” on Mr. Berg’s Report …

The article, which is really a “report” of the trial, attempts three things:
First – to identify the issues raised in the Vancouver Trial

Second – to distinguish the issues raised in the Vancouver trial from the issues that are likely to be raised in the “full Charter trial”

Third – to provide his own commentary on how the issues should be resolved.

 

Having sat throught the Summary Trial, I can guarantee that trying to be clear about the issues raised, is/was not easy. What was really difficult was realizing that the interplay of the Treaty, the IGA, Canadian law, US law etc., does not end up with a nice and neat, clear answer. Determining how to weigh it all out seems to me, impossible to do (objectively). I suppose primarily because, in spite of the Treaty, one would naturally expect that in Canada, Canadian law should have precedence. The issues concern for the most part, Canadian citizens and Canadian residents, regardless of their US status. Their relationship to the United States should be a secondary one. All other nations of the world seem to understand this principle. The aberration here is as we all know, citizenship-based taxation. Why any country would sign a treaty with the US with the inevitable savings clause is truly mystifying. What does the other country gain by agreeing to such a thing? NOTHING! That, along with that annoying “tax treaty override” tendency, (say it now, U-S-A, I-G-A! U-S-A, I-G-A!) certainly suggests expecting the US to honor what is signed in a reasonable way is just plain naive and or stupid. That’s why they need the 30% sanction. Kinda like they have to have the IGA because what they are doing is not in the Treaty….A never-ending loop……
 

I encourage you to read his article. There are two areas that I found to be of interest.

We all know that Justice Martineaus’s decision will be appealed. If the plaintiffs win, this means that the Court has ruled that the information cannot be transferred to either the CRA or the IRS.

 

In his article, Mr. Berg suggets should the plaintiffs win, the defendants will likely appeal with the appeal and trial on the Canadian constitutional issues being heard later this year or by early next year. Whether or not the win would prevent the IGA entering into force is unknown. If so, it would be likely that the U.S. Treasury or the competent authorities would be likely to intervene in order to prevent such a result.
 

Imagine, the Obama’s U.S. Treasury “intervening” in a Canadian court to attempt to enforce the right of the U.S. to extract information from Canadian citizen/residents! What a spectacle that would be

 
I cannot follow how the United States would be permitted to intervene in a Canadian court proceding. As if the extraterritoriality of the entire issue is not enough, we must then endure their interference in our own judicial system? At what point do we as a separate nation, have the right to chart our own direction based upon our own best interests? I can feel your blood rising already….
 

Second, Mr. Berg’s analysis of the distinction between “assessable penalties” and other kinds of penalties. This is interesting and is an argument that is helpful to the plaintiffs.

 
This is perhaps, the most fascinating aspect of the article. If I understand correctly, should the IRS apply information reporting penalties, the plaintiffs would not have access to IRS Appeals nor the US Tax Court. The net result would be that having given the IRS the information resulting in assessment of penalties, Canada would have provided assistance in collection. The late Finance Minister, Jim Flaherty repeated this over and over and over; that Canada would not provide assistance toward the collection of FBAR penalties. And why? Because it is not in the Treaty! Does this also include other non-tax, information reporting forms penalties? I am far too tired to attempt another try at the Treaty right now but it sounds like it might.
 

Conclusion …

The “Alliance For The Defence of Canadian Sovereignty” and the STOP FATCA movement have had difficulty (so far) in generating media coverage. Mr. Berg’s commentary is an important part of the process in raising awareness of these issues. In addition, the content of the  commentary in his article was (in my opinion) fair, balanced and a welcome addition to the “FATCA debate”.

 
 
I am sure all will have plenty to say. Look forward to hearing it!
 
 

John’s Report of Roy Berg’s Report

Roy Berg (of “jingoistic hyperbolic rhetoric” fame) has written an article for Tax Analysts on the Summary Trial.

Stephen received permission to post the article at ADCS website. We cannot post the article here for copyright reasons, but you can read John’s Report on Roy Berg’s report at ADCS. There is a link there to Mr. Berg’s article.

John says:

The question is simple:

Do the provisions of the Canada U.S. FATCA IGA provide the conditions that would allow for the transfer of information that the FATCA IGA contemplates?

The answer is difficult

The plaintiffs say NO and the Government says YES.

We are all hoping the judge agrees with the plaintiffs.

One Mile. A Disastrous Difference.

Ginny asks how the USA justifies targeting just one innocent little sister.

In sending this photo, the cowgirl in the center said:Cowgirl Ginny

Two got off scot free, although all three are Canadians: One owes her soul and financial information to The Man. Three little girls, with one born one mile apart across the Detroit River. A disastrous difference.

Two sisters were born and raised in Windsor. Ginny was born to two Canadian parents a mile away across the Detroit River. Like her sisters, Ginny grew up in Windsor and has been a Canadian citizen since birth.

This shows the insanity of all of this–including why is her Canadian government making Ginny less a Canadian citizen than her sisters?!?

As Ginny says:

Three little sisters sitting inocently on a wagon. Only one is a tax evader. Her parents obviously brought Ginny, their little five year old American/ born Canadian back to Canada so she could stash their millions in a sheltered off- shore account in Canada. When the Harperites candidates knock on your door asking you to vote for them, ask them why this little girl and her over one million similarly situated Canadian citizens are being sacrificed by the Canadian government.

Disappointing Response from Privacy Commissioner

In my letter to the Privacy Commissioner on FATCA, I outlined issues and asked:

I am writing to ask what is your position on FATCA IGA and the enabling act. Do privacy laws prevail over this or does the enabling act supercede over PIPEDA and the Privacy Act? Is there any basis for a complaint to be made?

I also said:

I hope you will be as disturbed at the signing away the privacy rights of one million Canadians to a foreign government as I am. I hope you will be willing to work with me and others to provide redress.

The Privacy Commissioner did not respond himself. But the response from the Information Centre was very disappointing.

“In the interest of all parties, our office strongly encourages individuals to try to resolve concerns directly wtih organizations before filing a complaint with us…We would note that PIPEDA permits organizations to disclose individuals’ personal information required by law.”

In other words, this non-response says:

“Don’t bug us.”

UPDATE August 23: My reply to Privacy commissioner:

YOU are the Privacy Officer at the organization I am concerned about—the Government of Canada. Aren’t you?…

I am stunned the Privacy Commissioner of Canada who is “the person in charge of privacy” for the Government of Canada is not as alarmed as I am at the signing over the privacy of one million Canadians, their spouses and business partners to a foreign government.

I hope you will stand up for privacy rights of all Canadians as “the person in charge of privacy” for Canada.

USA World’s Largest Tax Haven Growing

The World’s Largest Tax Haven Is About to Get Bigger.

As the US is FATCAing the rest of the world, they themselves are growing as the world’s largest tax haven.

Mark Nestmann writes:

Here’s an “inconvenient truth” for President Obama and those in Congress who want to shut down what they call “offshore tax havens.” It’s this: The US is by far the world’s largest tax haven…

no one is surprised when you tell them that the world’s single largest tax haven is an island. But they are often shocked when you tell them the name of the island is Manhattan.

But Manhattan offers only the same tax advantages the entire US offers foreign investors. Now Congress wants to sweeten the deal.

It seems Boris Johnson should have invested in real estate in the US instead of in his home in Great Britain where he lives.

I don’t know why they can still boggle my mind. I should be used to it by now.