July 28

‘Unauthorized FATCA “Intergovernmental Agreements” Are Part of Obama’s Executive Overreach’ (Forbes)

Canadians Hit with a Billion in Costs, Challenge FATCA

It cannot be said too many times: the so-called “intergovernmental agreements” (IGAs) the U.S. Treasury Department is signing with foreign governments as the linchpin of its efforts to enforce FATCA (the “Foreign Account Tax Compliance Act”) are the weak link in the “worst law most Americans have never heard of.” If the IGAs go, FATCA goes. The law is otherwise unenforceable.

That’s why the Department is keen to pretend the IGAs – which are not treaties, whatever some foreign governments may think – are authorized in statute. They are not, as conclusively analyzed by Law Professor Allison Christians of McGill University. (No wonder the Department continues to drag its feet on the Freedom of Information Act request from RepealFATCA.com about the IGAs.)

At a time when the U.S. House of Representatives is taking the Obama Administration to task for numerous instances of exceeding its constitutional and statutory authority, it’s time to pull the rug out from under the IGAs – and bring down FATCA too. To that end, please see below the full text of “Unauthorized FATCA 'Intergovernmental Agreements' Are Part Of Obama's Executive Overreach” published in Forbes today.

Also appearing today in the Wall Street Journal is an important note regarding Canada – a “must have” country for keeping FATCA alive. While inaccurately calling FATCA a “law aimed at cracking down on tax evasion by expatriates,” the article (“Canada Banks Tally Their Tax-Compliance Tab”) exposes the recklessness of Canadian banks’ seeking to appease the U.S. Treasury Department on the backs of their customers and Canadian taxpayers, not to mention compromise of Canada’s sovereignty. The projected costs so far: a billion dollars and counting. Benefit to Canada: zero. Commendably, the article flags the heroic effort of the Alliance for the Defence of Canadian Sovereignty to challenge Ottawa’s capitulation to FATCA in violation of citizens’ constitutional rights.

As Andrew F. Quinlan of the Center for Freedom and Prosperity correctly observes, “FATCA remains both politically and legally vulnerable, and ultimately represents a doomed effort to treat the symptoms of the tax code’s many inadequacies rather than root causes.”

The item in today’s Forbes concludes:

The Department should not be allowed to get away with this overreaching, Obama-style rewrite of a bad law in a desperate effort to save it. First, the House should withhold any use of appropriated funds for negotiation and implementation of the IGAs – and preferably, for any FATCA enforcement. Second, the unauthorized IGAs should be among the claims included in the House’s suit against the President for his failure to “follow his oath of office and faithfully execute the laws of our country.”

James George Jatras
Editor, RepealFATCA.com
+1.202.375.1007
RepealFATCA@gmail.com or jim@globalstrategicpr.com

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The full text and source link follows below:

Source: http://www.forbes.com/sites/realspin/2014/07/28/unauthorized-fatca-intergovernmental-agreements-are-part-of-obamas-executive-overreach/

Unauthorized FATCA ‘Intergovernmental Agreements’ are Part of Obama’s Executive Overreach

James George Jatras

As charged by House Speaker John Boehner, President Barack Obama has demonstrated an unprecedented circumvention of Congressional authority “through executive action, changing and creating his own laws, and excusing himself from enforcing statutes he is sworn to uphold — at times even boasting about his willingness to do it, as if daring the American people to stop him.”

Paradoxically, the Administration’s “boasting” has gone hand-in-hand with blatant dishonesty. Infamous examples are Director of National Intelligence James Clapper’s denial to the Senate Intelligence Committee that the NSA collects “any type of data” on Americans and ex-IRS official Lois Lerner’s supposed forgetfulness about targeting of conservative groups.

Now it’s time to add another instance where the Administration not only has far exceeded its constitutional and statutory authority but has misrepresented its actions and sought to thwart Congressional inquiry into them. At risk is not only constitutional and legal principle but a potential partial default by the federal government, with, literally, incalculable impact on the American and global economy.

Last year, Florida Congressman Bill Posey, a respected member of the House Financial Services Committee, wrote to Treasury Secretary Jack Lew regarding the Department’s legal authority for entering into “intergovernmental agreements” (IGAs) with foreign governments to enforce the “Foreign Account Tax Compliance Act” (FATCA).

Enacted in 2010 by an all-Democratic Congress with almost no legislative review and no cost/benefit analysis, FATCA was slipped into an unrelated jobs bill as a minor budgetary pay-for provision. It went into effect on July 1 of this year. FATCA supposedly is aimed at “fat cat” American tax cheats with money stashed abroad but includes not a single provision targeting actual tax evasion. Instead, FATCA creates an indiscriminate NSA-style information dragnet requiring – under threat of sanctions – all non-U.S. financial institutions (banks, credit unions, insurance companies, investment and pension funds, etc.) in every country in the world to report data on all specified U.S. accounts to the IRS. No proof or even suspicion of wrongdoing is required.

Hoping to avoid sanctions threats and crushing compliance costs, institutions around the world are dumping Americans’ accounts and divesting from the U.S., thus undermining American jobs. Experts have called FATCA “hare-brained” (Jim Rickards) “sheer idiocy” (Henry Bouma) the “worst part of the internal revenue code” (Dan Mitchell) “an act of economic strangulation” (Richard Rahn) “heavy-handed, inequitable and hypocritical” (The Economist) and “a hammer blow for American jobs and the broader U.S. economy” (Nigel Green).

Even supporters of FATCA concede it is “wholly unachievable” as written. Treasury simply cannot enforce an extraterritorial law against hundreds of thousands of institutions outside of U.S. jurisdiction in almost 200 countries. The only way this ill-advised and badly crafted mandate can be implemented is to pressure foreign governments to sign agreements to enforce FATCA against their own citizens and to abrogate their domestic privacy protection laws. Thus far, about 40 IGAs have been signed and more are in the works.

The trouble is, FATCA doesn’t authorize Treasury to make these agreements with foreign governments, nor are IGAs treaties that will be submitted to the Senate for advice and consent. Hence Congressman Posey’s reasonable question about the IGAs’ legal authority.

The Department’s belated response to Mr. Posey provided a matter-of-fact list of statutory sections:

“The United States relies, among other things, on the following authorities to enter into and implement the IGAs: 22 USC Section 2656; Internal Revenue Code Sections 1471, 1474(f), 6011, and 6103(k)(4) and Subtitle F, Chapter 61, Subchapter A, Part III, Subpart B (Information Concerning Transactions with Other Persons).”

Well, that certainly seems like pretty impressive legal authority! But only if no one bothers to look at the actual language in the cited sections.

Unfortunately for the Department, Law Professor Allison Christians of McGill University knows how to read. Detailing Treasury’s response point by point (“IRS claims statutory authority for FATCA agreements where no such authority exists”), and quoting the texts of the sections cited, she concludes: “None of these sources of law contain any authorization to enter into or implement the IGAs. It is patently clear that no such authorization has been made by Congress.”

For example, the cited section “26 U.S. Code §1474(f)” only authorizes Treasury to “prescribe such regulations or other guidance” needed to carry out FATCA. By what possible interpretation, Professor Christians asks, can that be considered an authorization to negotiate agreements with foreign governments? The claimed authority just isn’t there.

This is not just a question of deficient legality, as serious as that is. More disturbing is the Department’s answering Mr. Posey with a dishonesty that rivals Clapper and Lerner. Not only has the Department revealed its awareness that it lacks necessary statutory authority, it tried to mask that deficit through pretense. In making its attempted deceit available for public posting, Treasury also sought to discredit Congressman Posey’s effort to hold the Department accountable. In the end, Treasury has only discredited itself and proved Mr. Posey’s point.

The Department should not be allowed to get away with this overreaching, Obama-style rewrite of a bad law in a desperate effort to save it. First, the House should withhold any use of appropriated funds for negotiation and implementation of the IGAs – and preferably, for any FATCA enforcement. Second, the unauthorized IGAs should be among the claims included in the House’s suit against the President for his failure to “follow his oath of office and faithfully execute the laws of our country.”

James George Jatras is a former U.S. diplomat and U.S. Senate staffer. Now a Washington-based government and media relations specialist, he edits RepealFATCA.com.