U.S. “culture of penalty” and inflation: First, inflation used to first increase the size of #FBAR penalty base and then increase the size of actual penalties

cross-posted from citizenshipsolutions blog
written by John Richardson

Introduction: Penalty as a part of American Culture


The above tweet links to a wide range of examples of America’s culture of penalty.

The purpose of this post is to explore how inflation results in the facilitation of enhanced penalty collection in America today.

What is inflation?

In its simplest terms:

“Inflation is defined as a sustained increase in the general
level of prices for goods and services in a county, and is measured as
an annual percentage change. Under conditions of inflation, the prices
of things rise over time. Put differently, as inflation rises, every
dollar you own buys a smaller percentage of a good or service. When
prices rise, and alternatively when the value of money falls you have

Source: Adam Hayes, CFA

(Note his use of the words “goods and services“. Are
FBAR penalties and the S. 877A Exit Tax consumer goods or
government services

Inflation can either be helpful or can be hurtful. Some benefit from
inflation and others are hurt by inflation. At a minimum, inflation will
always erode the value of cash.

Effect of inflation on owners/lenders of cash: When it
comes to cash inflation will hurt the owners/lenders of cash. This is
because inflation will erode the value of cash.

Effect of inflation on borrowers of cash: Inflation
will help he borrowers of cash. This is because inflation erodes the
value of the cash that must be repaid.
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Morales-Santana: SCOTUS Makes it Harder for People Born Abroad to U.S. Citizens to Become U.S. Citizens

cross-posted from the citizenshipsolutions blog

by John Richardson


Prologue:U.S. citizenship is not as attractive as it was

One benefit of U.S. citizenship: If one is a U.S. citizen then one cannot be deported from the USA

Some Green Card holders become U.S. citizens. Some do NOT become U.S.citizens. Many of those Green Card holders become U.S. citizens in order to avoid the possibility of deportation. Deportation results in expatriation and can (among other things) subject the unfortunate Green Card holder to the S. 877A Expatriation Tax, which can result in significant confiscation of assets. In fact, the S. 877A Expatriation Tax discourages people from seeking Green Cards in the first place. That said, it is only Green Card Holders who are “long term residents” who are subject to the Exit Tax.

The plight of Mr. Morales-Santana: No U.S. citizenship = the possibility of deportation

The facts as described by the court:

In 2000, the Government sought to remove Morales-Santana based on several criminal convictions, ranking him as alien because, at his time of birth, his father did not satisfy the requirement of five years’ physical presence after age 14. An immigration judge rejected Morales-Santana’s citizenship claim and ordered his removal. Morales­ Santana later moved to reopen the proceedings, asserting that the Government’s refusal to recognize that he derived citizenship from his U. S.-citizen father violated the Constitution’s equal protection guarantee.

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#FATCA and the Canadian Charter of Rights and Freedoms

The initial reaction of the Canadian government to FATCA can best be described by a letter then-Finance Minister, the late Jim Flaherty wrote, intended to be placed in major American newspapers.Virtually no one believed there would be any reason for the U.S. to impose this given Canada is a higher tax jurisdiction and owing annual income tax was rather unlikely. Back in 2012, in spite of all the scaremongering created by the IRS and foreign tax compliance practitioners, the underlying hope/belief of “US Persons” in Canada was that it would be impossible to get around the Canadian Charter of Rights and Freedoms. In spite of the fact that the first Model 1 IGA was released on 26 July 2012 by the US Treasury. The IGA was developed cooperatively with France, Germany, Italy, Spain and the United Kingdom.

The post below was written over a year before the Canadians signed the IGA agreement on Feb 5 2014. Interestingly enough, it was written on the same day as a letter written by Peter Hogg, perhaps THE most important constitutional lawyer in Canada. This letter was sent to the Department of Finance and was welcome news.

Note that the prohibited grounds of discrimination
include ‘national or ethnic origin’, and the Supreme Court has held that
citizenship is an ‘analogous ground’ also prohibited by s. 15(1).”
(Andrews v. Law Society of BC (1989) 1 S.C.R. 143)
“The point of this letter is to urge the
Government not to agree to an IGA which would call for foreign
legislation which would offend s. 15
of the Charter.”

Perhaps I just have a bad memory but it is curious to me now, that there is such a difference in the time some of our main allies signed and when we signed. I only recently (and surprisingly) learned that the U.K. and Germany do not have anything comparable to our Charter. Could that be a reason they were more willing to sign earlier on in the process? Does it mean the Canadian government at first considered the possibility that any action they took would not be able to withstand a Charter Challenge? And if so, what was it that made them change their minds? How did they come to believe they could get away with changing a law to break the law? Bill C-31 is the only of the clearly unconstitutional laws that the Trudeau government refuses to budge on (the others being C-23 C-24 & C-51).

While Canada clearly failed when it had the chance to stand up to the U.S. government, perhaps we can count on the Supreme Court of Canada, in the end, to demonstrate leadership by living up to the ideals enshrined in the Charter.


Reposted from renounceuscitizenship blog on December 21, 2012.

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Seeking a Few Additional Witnesses Willing to File Affidavit for Canadian FATCA IGA Lawsuit

The May 31 2017 Canada Federal Court Order gives us 60 days to comply by providing additional information to Government as part of our lawsuit.

This delay may give us time to provide to the Court additional evidence of harms caused by the Canadian FATCA IGA enabling legislation.

— If you are a Canadian citizen and resident who the U.S. deems a U.S. citizen, and you would like to renounce your U.S. citizenship and tax citizenship, but cannot because you would have to pay a U.S. “exit tax” because of the value of your assets (see link) — or you renounced and DID pay an exit tax; or

— If you are a Canadian citizen and resident and a U.S. citizen who had your bank account information turned over to CRA/IRS and the U.S. IRS has now contacted you about your account.

AND you are willing to provide a written, public (your name will be disclosed) affidavit to Canada Federal Court explaining your situation,

– please contact me at Stephen.Kish.Chair@adcs-adsc.ca

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May 31 2017 Canadian FATCA IGA lawsuit update: Plaintiffs ordered by Federal Court to turn over more detailed financial records to Government

As part of our FATCA IGA litigation in Canada’s Federal Court, Our three Plaintiffs previously provided financial information to the Government lawyers on their accounts. However, Government submitted a motion to compel Plaintiffs to provide additional very detailed financial information.

Our litigators felt that this request was unnecessary and unreasonable — and resisted the motion; however, the Case Management Judge sided with Government and ordered today, on May 31 2017, Plaintiffs to provide further documents.

Plaintiff Gwen responds to court order: “If the nosy-ass government hacks feel that they will find something that they didn’t know before, they will be sorely disappointed and this changes nothing other than to piss us off even more…”

Plaintiff Ginny comments: “I am disappointed with the decision that permits the government to invade our privacy in further minutia. This power play demonstrates to me that the government has no respect for privacy principles and will do everything possible to uphold their decision to support FATCA, and the importation of US law into our sovereign nation.

Their choice to ask for costs is another clear warning to discourage any citizens wishing to challenge unjust legislation. However, the three of us remain undeterred in seeking justice for all of us affected. Once again, I rely on my family motto: don’t let the bastards get you down.”

Plaintiff Kazia says: “Although I am disappointed with this outcome, I am hopeful that these next steps, however uncomfortable, will get us even closer to ultimately achieving a positive resolution in our favour. We will stand up for what is right.”

The documents that now must be turned over are:

Every document that reveals the nature and content of the following financial vehicles that the plaintiffs currently hold, or held after January 1, 2014 (domestically or otherwise):

o All bank accounts

o All mutual funds

o All brokerage and investment accounts, and

o All insurance accounts or plans that have cash value, such as life insurance contracts or annuities (including but not limited to whole and/or universal life coverage, etc.)

With respect to the 2014 and 2015 taxation years:

o Filed T1 tax returns

o T2 tax returns in respect of any businesses that the plaintiffs own or control, and

o Any related documentation, slips or schedules

The Court also requested more “particulars” on the Claim.

These include:

Each type of physical harm the Plaintiffs allege as been suffered; or will for certain be suffered if the impugned provisions remain operational by any one of them or by anyone else, as a result of the impugned provisions;

All mental or psychological harm the Plaintiffs allege has been suffered; or will for certain be suffered if the impugned provisions remain operational; by any one of them or by anyone else, as a result of the impugned provisions;

All financial harm, loss, or damage that the Plaintiffs allege has been incurred; or will for certain be incurred; by any one of them or by anyone else, as a result of the impugned provisions.

In addition, Court ordered Plaintiffs to pay $2500 in costs for the motion.

Plaintiffs do not have to pay these costs if we ultimately win the court challenge; however this order emphasizes again the personal financial risks Plaintiffs have undertaken on behalf of Canada and Canadians.

The Court has given Plaintiffs 60 days to provide the information and ordered that Government complete examinations for discovery within 45 days of the latter.

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