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.

With such an amazing group, it's simply NOT possible to NOT succeed! Thanks from @ADCSovereignty

cross posted from ADCSovereignty WordPress Blog


 
This afternoon I received news that the Alliance For The Defence of Canadian Sovereignty had  met its $500,000 funding goal. I had two simultaneous/thoughts or reactions.
My first thought was that I was always completely confident that we would achieve our funding goals. You would never allow us to fail. (Ask Stephen. I have never for a moment doubted the funding!)
My second thought was a feeling of amazement. Did we really do this? It’s simply amazing!
Q. How could I both be so confident of our success and amazed by that very success?
A. These seemingly irreconcilable thoughts are easily reconciled because:

It’s obvious that we would achieve our funding goals because we were working with  such an amazing group of people!

It’s also important to recognize the important role played by both the Isaac Brock Society and Maple Sandbox for allowing us to publicize our FATCA lawsuit on their respective blogs. I offer a special thanks to Peter Dunn of the Isaac Brock Society and Lynne Swanson of the Maple Sandbox blogs. Without their generosity and support it would have much much harder to have reached this milestone.
Continue reading With such an amazing group, it's simply NOT possible to NOT succeed! Thanks from @ADCSovereignty

Another Brock Warrior Down – In Memory of Marcio V Pinheiro


 
Marcio-head-only-212x300Marcio de Vasconcellos Pinheiro was a long-time Brocker, known primarily as “markpinetree” and also as “ThatIsMe” and “Still American.” He died on Friday night after a long struggle with cardiac disease. He was 82 years old.
He was a very kind and gentle man who suffered greatly from a feeling of betrayal from a country he chose to embrace and become a citizen of. He was a medical doctor by profession having come to the US from Brazil in 1958 for his internship and residency in psychiatry. He chose to become a dual citizen in 1967. He was very proud of his two daughters, son and granddaughter living in the US. He worried about his health and what would happen to his wife should he continue to become worse. He also was afraid to even consider renouncing, in spite of the ill effects this situation had on him, because he feared it could affect the situation of his family in the US.
 
Clearly at the mercy of tax professionals, (or IOW, clearly mislead into entering OVDI), he mentioned $300 per hour lawyer fees and he ended up paying 27.5% of his life savings. Unbelievably, he had a letter from the IRS indicating that his best course of action would be to renounce his US citizenship.
 
This was what he emailed to me to include as his personal submission to the SFC:
“I became a dual citizen in 1967. I loved the USA. Lives and worked there for thirty years. I am grateful for the way they received end treated me. I came back to my country of origin and continue to pay my income tax to the IRS. Since a few years ago I don´t believe what I am going through, I feel that I am treated very unfairly by the USA for the first time in my life. I am in failing health and I am spending sleepless nights afraid of losing my small life savings. I have to comply now with so many forms and information that it is always difficult to know if I am doing it right. I can not prove this but I suspect that my health is deteriorating because of this. I never expected one day to me in this predictament, of the USA being unfair to me.
Please so no publish my name.”

 
He seemed to enjoy and respect Robert Woods’ columns on Forbes and put many comments over the years. Here are a few of them, all of which demonstrate how proud he was to be American, how he valued what the US stood for and yet, how horrid the effects of being so were on his last years of life. I have a lot of his comments as a result of including them in the Senate Finance Committee submission since his were expressed so simply and with such heartache.
 

ThatIsMe
Mr. Wood, again thank you. I lived and worked in the USA for thirty years. In 1967 I was proud to become an US citizen. I am now back in my original country, with a failing health afraid to lose my small life savings in sleepless nights for the past many years. I never thought that this would be happening to me in my very old age. I cannot believe that this is happening in a Country supposed to be fair where there is no taxation without representation. Too late!

 

ThatIsMe
Mr. Wood. I don´t miss one of your articles. For the simple reason that they make sense. This is what the USA Government should be doing insofar as Americans, Dual Citizens and Green Carders living abroad. How come you can see things so clearly and the USA insists in going after innocent American citizens living and working abroad. Do they think that these Americans, who have no representation or even a voice, com be trapped and milked to help pay for the American debt? Let me confess that I have been a democrat all my life and up to recently I have supported in many ways President Obama. But against my best wishes I will no longer do it because I can´t believe what is being done to us. Is this the America that I was so proud of becoming a citizen?

 

ThatIsMe
Mr. Wood. Again, congratulations and thank you. What you describe is the truth. The great majority of us Americans living and working abroad are not renouncing in order to avoid paying taxes. I am beginning to explore this possibility because I cannot spend six months filing my Income Tax return to two countries, besides being double taxed. Not to speak of the enormous fear of doing something wrong and losing my life savings. Do I like this? No! But I feel I have no choice.

 

Thatisme
Once again Mr. Wood. I am beginning to give up. In my thirty years in America I used to hear: “you can´t fight city hall”. Never quite understood it. Now I do. In my situation I believe the best I can do is to shut up and every year go from January to September or October collecting data, filling forms and send them to a CPA in NYC to do my IRS Return, FBARS and all. In a way I am glad that I will not have much long to go in this world. And I regret having one day, many, many years ago going to an US Court and become an US Citizen. Thank you for all your help.

 

StillAmerican
Thank you very much. I trust you and above all your expertise and judgement. After living and working 30 years in the USA I came back to my country of origin about 10 years ago. I have nobody here who is a US CPA and understands about IRS Returns from Americans Abroad. I have one telephone number to call in Philadelphia (paid), I do not have representation (the congressmen from the last State I lived on do not accept e-mails from outside the USA. I have spent an enormous amount of time and money trying to do the right thing. I only learned about FBARS in 2009 when visiting my “children” in the USA. This was too late, I was already considered a criminal for not filing it before and the penalties were stiff and included 27.5% of my small life savings. There are so many things. For instance Americans in France do not pay US Income Tax on their French pensions. I do. If filling as a Self Employed I have to pay Self Employment Tax to two countries, 16% to each, having no return. I live in fear, the advices I get do not always coincide. I am slepless and in bad health. I don´t want to become a “victim”. I will listen attentivelly to your thoughts. Many thanks and regards.

Continue reading Another Brock Warrior Down – In Memory of Marcio V Pinheiro

Life in the Penalty Box

John Richardson has written Life in the Penalty Box for Tax Connections.
John highlights the rather cunning comments made by then U.S. Ambassador to Canada Jacobsen. (who is now Vice-Chairman of Canadian bank BMO in Chicago.)
John also highlights part of the U.S. Internal Revenue Code. Penalty Box

If you read the “Internal Revenue Code” you will see that:
If the word “foreign” appears, the word “penalty” is sure to follow.
To put it simple, those U.S. citizens (and this includes Green Card holders too) who live outside the United States live life in the “penalty box”.
I look forward to sharing these issues and concerns with you at the “Internet Tax Summit” on September 21 2015.
This has been Part 1 – “Life In The Penalty Box”. I will continue this series of posts in the days leading up to the “Internet Tax Summit“.

I will update further posts here as they appear.

Questions to Ask Cross-Border Lawyers and Accountants

Over at Brock, Wondering has put forward several excellent questions to ask cross-border lawyers or accountants before doing anything.
If you are a Canadian citizen considering engaging ANY cross-border lawyer or accountant, ask these questions at the initial conversation:

1) If I do not choose to comply with US extra-jurisdictional tax claims, what is the specific mechanism by which they will collect a tax claim from me using Canadian courts and laws? Can the US or any other foreign state garnishee my Canadian wages? Can they seize my Canadian bank accounts?
2) I understand that under the Canada–US Tax Treaty, Canada will not assist in collecting US taxes from any Canadian citizen, unless the tax claim proceeded their becoming a Canadian. How does this protection apply to my situation? Am I protected by this Treaty?
3) Do you know of any specific case where a Canadian court enforced a US personal tax claim or penalty against a Canadian citizen in Canada? When, where and who?
4) Do you know of any specific case where a Canadian citizen was detained the the US border because they had not filed US tax forms? When, where and who?
5) Are you prevented by any US law, professional certification, official registration or similar covenant with any US government agency from giving me full and frank advice?

I personally will not go anywhere near the cross-border folks. I already know the answers to most of the questions. My lawyer and my accountant agree with me that I have no obligation to do anything with the IRS.
If the cross-border specialist is honest, the answers should be:

1. There is no mechanism by which the IRS can collect tax claims in Canadian courts, The US cannot garnishee your Canadian income. The US cannot seize funds in your Canadian bank account.
2. If you are a Canadian citizen, CRA will not assist in collecting U.S. taxes–even if you are also an American citizen.
3. There is no known case of a Canadian court enforcing a U.S. tax or penalty against a Canadian citizen.
4. There are no reports of Canadian citizens being detained at the U.S. border because they had not filed U.S. tax forms.
5. Full and frank advice is greatly lacking from those in the cross-border compliance industry who are trying to suck Canadians in.

Don’t let IRS or the cross-border condors terrorize you. Know your rights before you do anything.

What a Prime Minister SHOULD Do About FATCA

Will Our Leadership Fail could be said of Canada and most other countries around the world. But, the author, a banker, is in Barbados.
Wild Coot begins with a familiar memory:

I might be wrong but if I remember correctly, the first reaction of our leader was “they can’t do that”. I am speaking about FATCA.

He says there once was a Prime Minister of Barbados who stood up to extraterriorial bullies. Justin, that is what your father would have done on FATCA.

There once was a prime minister who defied the US when it wanted to play in our territorial waters without permission – when it downgraded our airport for spite. He carried his case to the highest authority. That is when we were somebody. We had guts.

And he asks some questions that apply to us:

Will our esteemed politicians pass legislation that is iniquitous to our people? Let’s see who will vote yes or who will stand for democracy in the face of the “most democratic nation” in the world. Should not our Central Bank be prepared to defend our banks? Or can it? The silence is deafening.

Our so-called leaders have failed us. We have a chance to exercise our democratic rights in Canada during this election campaign. We need to ensure our voices are heard–even though all the “leaders” are now silent on FATCA.