FATCA Summary Trial Filing

We argue that the FATCA IGA enabling legislation is contrary to sections of the Income Tax Act and the Canada-US Tax Treaty. These are “technical” arguments that we feel are appropriate for a summary trial. Charter considerations could not be used in the summary trial (but would be used in the full trial if required).
We say:

“The Tax Treaty Issues [raised in the summary trial] are discreet and distinct from the other issues raised by the plaintiffs. The plaintiffs’ other grounds of complaint involve division of powers and Charter breaches. These issues are factually and legally distinct from the operation of the Canada-US Tax Treaty and its relationship to the Impugned Provisions. As a result, the matters addressed in this motion [the summary trial] will not be re-litigated in the Charter and division of powers aspect of the plaintiffs’ claim.
The Tax Treaty Issues will need to be adjudicated even if they are not decided summarily. If this Court finds against the plaintiffs on this summary trial motion, the range of issues to canvass at [full] trial will nevertheless be significantly narrowed. If the plaintiff prevails [there are many “depending ons”] in respect of its claims in this motion, it will likely be unnecessary to proceed with the other issues raised by the plaintiffs.”

The motion includes a request for:

An order in the nature of a permanent prohibitive injunction preventing the disclosure of taxpayer information to the United States by the Minister of National Revenue and her authorized representative(s) where:
a. the taxpayer information relates to a taxable period in which the tax payer was a citizen of Canada;
b. the taxpayer information is not shown to be relevant for carrying out the provisions of the Tax Treaty Act or the domestic tax laws of Canada or the United States; or
c. the disclosure of the taxpayer information subjects United States nationals resident in Canada to taxation and requirements connected therewith that are more burdensome than the taxation and requirements connected therewith to which Canadian nationals resident in Canada are subjected.

Our summary trial will be heard at Federal Court, 701 West Georgia Street, Vancouver, British Columbia, commencing on Tuesday, August 4, 2015 at 9:30 a.m. for a maximum duration of two days.
UPDATE On May 8, 2015, the Arvay-Gruber team filed the comprehensive Memorandum of Fact and Law.

11 thoughts on “FATCA Summary Trial Filing

  1. The Canadian government has filed a motion to strike portions of our expert witness testimony for Summary Trial in Volume 1 and Volume 2.
    Joe Arvay’s response “… disagrees with the government’s claim that aspects of the expert affidavits are inadmissible and will be providing full argument to the Court at the appropriate time.”
    We are still waiting for the government’s response to the Summary Trial motion filed by the Arvay team.

  2. Joe Arvay’s Reply Argument.
    As Stephen said in another thread, this makes brief, brilliant (in my biased opinion) arguments that can easily be understood. IN PART IT SAYS:

    “…Though the defendants [the Government] assume the plaintiffs are citizens of the US who therefore owe compliance obligations under the domestic laws of the US, the plaintiffs themselves do not consider the fact of their birth in the US subjects them to the laws of a foreign state, whose citizenship they have never accepted or acknowledged. On its face, there is no legitimate reason for Canada to help a foreign state identify and punish them for failing to file forms they do not believe the foreign state had any right to demand of them, particularly where, as here, there is no reason whatsoever to believe they are engaged in tax avoidance or evasion…”
    “…The defendants’ say in answer that deemed tax residence of US Persons under US tax law and the consequences that flow therefrom is a domestic policy choice that is beyond this Court’s role to evaluate. But construction of Article XXVII is a matter of international law. And international law does not give the US any presumptive right to impose its domestic tax reporting regime within Canadian territory. As noted by one international law scholar:
    ‘… For there is clearly no general rule of international law granting all states extraterritorial rights in other states. If among any particular states extraterritorial rights exist, they either stem from a treaty or from special customary practice that amounts to consent on the part of the
    territorial state….’”
    “… the defendant’s position relies on seeking to locate the IGA within an emerging “international consensus” on automatic information exchange, from which it actually radically departs. In all other examples of this emerging consensus, information is only automatically exchanged where the individual maintains an Fl account in the disclosing jurisdiction and there is an indication of actual residence in the receiving jurisdiction. This is the same basis upon which information has been automatically exchanged between Canada and the US for decades prior to the IGA. In this situation, the taxpayer is doing something international, by banking or investing in a foreign jurisdiction. By contrast, the plaintiffs are banking and investing at home. While one might legitimately believe there is a heightened risk of avoidance or evasion where a taxpayer maintains foreign FI accounts, there is no such indicia of increased risk to justify the disclosure of Canadian FI information of Canadian residents…”
    “…The defendants’ attempt to paint the IGA itself as extrinsic evidence of a broader intention of the parties in agreeing to Article XXVII is without evidentiary foundation. In fact, as set out in the Supplemental Report of Allison Christians, the IGA is not an agreement between the same “parties” to the Convention since, on the US side, it has not been submitted for ratification to the US Senate, which was a party to the Convention. Indeed, the constitutional validity of the IGA in the US is dubious, and that validity is a matter currently being litigated there…”

    You go Joe! (Ginny and Gwen too).

    1. Absolutely so.
      Will the brilliant common sense of the Joseph Arvay team, backed up by international law and departure from the US / Canada Tax Treaty take precedence for Gwen and Ginny and all others caught up in this.
      John Richardson expressed it so well: https://adcsovereignty.wordpress.com/2015/08/02/fatca-infested-countries-explaining-the-adcsovereignty-fatca-lawsuit-to-a-pure-canadian-thoughts-on-round-1/
      Why we will win …
      It’s very simple. At the end of the day, FATCA, CBT, FBAR, etc. are moral issues. They are just plain wrong. They trample the human spirit and impede human progress.
      John Richardson

  3. I’m caught up in this mess as well, I was born in the US but have never lived there or worked there since age 2. I ‘m now required to obtain a US SIN so I can begin filing US tax returns (at the request of my accountant). Should I delay doing so until the trial concludes.
    Any advice?
    Thanks so much

    1. Simon, whoa! Hold your horses. Don’t do anything until you have a much better understanding of what’s involved. There is several weeks worth of reading for you here and at ISaac Brock Soc. Firstly read The building blocks and Canadian information and resources (links below)
      You may have relinquished. You may not be a US citizen. It is not easy to get a social security number. You don’t have to file taxes before renouncing citizenship and on and on. It ain’t going to be easy but it will be worth it to get it right.
      This lawsuit won’t be resolved for quite a while. In the meantime explore all of your other options which range from doing absolutely f*** all to becoming fully tax compliant and remaining a U.S. Citizen ( if you are one and if that’s what you want) Put the accountant on hold she sounds like a compliance condor.
      Finally, you will get more replies on the relinquishment thread on Isaac Brock Society site. God luck we are here to try and help.

    2. @Simon: I agee completly with everything Portland said.

      First, I should say I am not a lawyer or an accountant.  However, you need to be wary of those who try to scare you into complying.

      Wondering posted some excellent questions to ask cross-border accountants and lawyers.  I added what the responses should be if they are being honest in their answers.  Read these and perhaps submit them to your accountant.

      Also read John Richardson’s What you should consider before consulting a lawyer.
      As Portland says, Do NOT rush into anything. Do not let yourself be bullied by IRS or terrorized by your accountant. Hang out here and at Brock. Ask questions. Gather information. Learn as much as you can. Then do whatever it is that gives you the greatest peace of mind.
      Above all, remember that as a Canadian, you have rights. Join us in fighting to have those rights upheld.

    3. @Simon, you don’t actually say if you are a Canadian citizen or not. Things are different if you’re a permanent resident, unfortunately. Definitely, if you’re Canadian, you have more options. And the reassurance that the US cannot come in and get you in Canada for not filing tax returns. Keep in mind that although filing returns can be expensive and painful, that’s actually not the biggest issue (in my mind, anyway). The FBAR, financial bank account reports, is the scariest one, with massive non-filing penalties. 

      Although the first reaction when first finding out about this is panic (or at least mine was), make sure you take the time to research everything carefully. It may turn out that the best solution for you is to file FBARs and returns, but it may not be. So, research, read and ruminate before making any kind of a decision that has such long reaching consequences on your life.

Leave a Reply

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