Why Am I Writing So Much about FATCA?

I have been writing a lot about FATCA. Which is funny, as after my final US tax return next year it should never be an issue for me again.

I guess I am behaving like a jilted lover in many respects. But it feels even deeper than that. I feel as if my country of origin has unwittingly declared war on me and people like me. And the first battle that I was fully engaged in was renouncing my US citizenship, still one of the hardest decisions I’ve ever had to make.

When in the Course of human events, it becomes necessary for one people to dissolve the political bands which have connected them with another, and to assume among the powers of the earth, the separate and equal station to which the Laws of Nature and of Nature’s God entitle them, a decent respect to the opinions of mankind requires that they should declare the causes which impel them to the separation.

I suppose the various tax laws and their applications are akin, in my war, to the events of the early 1770s leading up to the American Revolution. And the renouncement of my citizenship was equivalent to the introductory paragraph to the Declaration of Independence. Which is comprised of some very powerful words indeed.

I often tell my British friends that the American Revolution was an English revolution of Englishmen asserting their rights as Englishmen under the rights won for them in the Glorious Revolution of 1688. And my own battle comes back to that battle cry of “No Taxation without Representation.” Things come full circle, I suppose

It was only in the McCain/Obama contest that I realised that my absentee ballot was not likely to get counted unless the results for my home state were close and they needed tie-breaking votes.

I have a confession to make, fellow FATCA exiles: as a latter day Benedict Arnold, I worked briefly on the FATCA implementation programme for a big British bank. It was apparent from the activity around me that no one in the bank, even at C-level, thought there was necessarily anything wrong with FATCA; they were only concerned about how much of a pain and expense it would be to implement, with any lobbying being done to absolve them of data protection issues (the UK govt) and to postpone the reporting and withholding regimes (the IRS) not even looking at the risk it poses to the financial system when withholding does come about.

My recent activism (well, actually just writing of three letters and a few blog posts) has been my attempt to make amends and strike back for working on that loathsome programme. It is also part of my way to lash out at the power that tried to hold me under its dominion from 4000 miles away.

I’ll not dedicate my life to it, but it sure feels good trying to throw a spanner in the works. I hope my efforts, and the efforts of those doing similar around the world, will begin to have at least some sort of an effect.

This may be the last I write on it. But we’ll see.

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Letter to my MP about the FATCA IGA

Hi ___,

I hope you are well. I thought I would share with you something I’ve written to both Liberty and Privacy International regarding a recent IGA signed between HMG and the US on the US tax law FATCA, and to be written into law in the 2013 Finance Bill. This has huge implications for many British people and possibly everyone living here (as someone will have to bear the costs of implementing FATCA compliance in the banks.)

The US’s extraterritorial taxation on citizens has many other implications beyond just collecting tax from Americans. For instance, US tax law says that because I am Treasurer for [a community group I belong to], I would have to divulge ___’s account information to the IRS.

US tax law for expatriates has become so burdensome in terms of the cost and effort of compliance, with draconian penalties for non-compliance, that I took the very difficult decision to renounce my US citizenship, which I did back in May (rendering me 100% British!). So you can say I no longer have a pony in this race. However, FATCA is a time bomb ready to go off in the world’s financial system, and should even one or two British banks be deemed non-compliant by the IRS, we could see a liquidity meltdown thanks to the withholding regime that would be imposed on the US accounts of non-compliant banks.

US extraterritorial taxation also denies money to the Exchequer both directly and indirectly, as US persons (see my note below for what constitutes a US person) [in my letter to Liberty] seek to structure their affairs to minimise their taxation burdens in both countries.

Additionally, besides the lifting of data protection for British citizens that the IGA commits our government to, it implies some level of reciprocity from the US for similar information on UK persons. However, a recent explanatory letter – attached – from the US Assistant Secretary of the Treasury for Tax Policy to Senator Rand Paul makes it clear that US banks will not be subject to similar obligations, saying:

While the reciprocal version of the Model Agreement includes a commitment to pursue equivalent levels of reciprocal automatic exchange in the future, no additional obligations will be imposed on U.S. financial institutions unless and until additional laws or regulations are adopted in the United States.

 

It appears the IGA is rather one-sided, and appears as a typical further extension of the “special relationship” with the US. I am not sure whether your colleagues at Treasury and the FCO are aware of the lack of obligation on the US’s part given the division between executive and legislature that does not exist here.

Anyway, the FCO memorandum – attached – on the IGA stated that there will be a consultation period, so please consider this my input.

Rather than bending over backwards to comply with US law, non-US governments and banks should be resisting this attack on sovereignty and the affairs of their residents.

With warmest regards,

A Gentleman’s Rapier

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My letter to Liberty

I have yet to write to my MP, but I thought I would drop a line regarding FATCA to Liberty (one of the main civil liberties group in the UK) after reading this post at Isaac Brock Society and this post at Maple Sandbox. Here’s what I wrote [please forgive the typos, it was done in one of those little online submission boxes, awfully hard to proofread in it!]:

Hello,
I was just wondering if you were aware of the recent IGA signed by the UK and the US, committing HMRC to provide the banking details for US persons in the UK to the US govt under the US’s draconian FATCA law tax law. What will happen is that UK banks will collect the data and hand it over to HMRC, HMRC will hand it over to the US. The IGA effectively waives data protection for anyone in the UK, absolving the banks of their data protection obligations, who is defined as a US person.

(See here: http://www.fco.gov.uk/resources/en/pdf/3706546/594588382/716347982/TrEmUSANo12012FACTA )

A US person is not defined only as a US citizen, but anyone connected financially to the US at some point, whether it is a British spouse or a business partner, or a British citizen with dual citizenship. In order for UK Banks to be compliant with FATCA, they will, by definition, have to discriminate against “US Persons” in some way or another, whether it is in the treatment of personal data, higher fees for banking, or choosing not to do business with US persons at all.

In Switzerland, already, rather than choose to implement costly compliance regimes, Swiss banks are now refusing to do business with US persons, cancelling mortgages and current accounts for people with dual citizenship; I suspect the same will happen here, or at least other discriminatory practices against people defined as US persons. (The US Ambassador to Switzerland even advised Americans to renounce their citizenship if they were planning on staying in Switzerland!)

In Canada, the Canadian Civil Liberties Association has weighed in with an open letter to the Ministry of Finance there, regarding FATCA.
(See here: http://maplesandbox.ca/wp-content/uploads/2012/12/CCLA-Letter-2-Finance1.pdf )

There is a lot of information on FATCA on the web, but a good starting point would be the Isaac Brock Society ( http://isaacbrocksociety.ca/ ), with many Canadian “US Persons” sharing their experiences. I’m not sure how aware US Persons in the UK are of what is about to happen; part of the conditions put upon UK banks with regard to being considered compliant was that they were not allowed to “tip off” their customers ahead of FATCA implementation. If considered non-compliant, the US will impose 30% withholding tax on all money going through the US accounts of British banks.

It is easy to dismiss this as a domestic US issue, but the implications for British citizens could be massive. The Government has agreed in principle to lift the data protection rights of British citizens; this is effectively lifting British sovereignty in favour US global taxation.

Regards,
A Gentleman’s Rapier

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The die is cast…

Recently, Her Majesty’s Government signed an inter-governmental agreement (IGA) with the US on sharing information that the US is looking for regarding the bank accounts of so-called “tax-dodging” US persons.

(When it comes to taxation in the US, everyone is guilty until proven innocent, and just about anyone with a connection to the US involving money or has business with someone – such as a spouse or business partner – who has a connection is a US person.)

The IGA refers to FATCA, and essentially allows for HMRC to share information that the US govt was looking for directly from UK banks, but which UK banks could not share due to data protection laws. (The banks have been bending over backwards to comply with FATCA rather than lobbying to get the Government to tell the US to go forth and multiply.)

The IGA implies that the IRS will share similar information, garnered from US banks on UK persons, with HMRC to help address British tax-dodging.

However, I was made aware of what the US Treasury’s interpretation actually means. It is certainly not bilateral and only goes to show how great the “special relationship” is.

This information-sharing is one-sided, with the UK signing it into law (because in the UK, the executive equals the legislature) whereas it is not particularly binding in the US because the executive is separate from legislature and would require legislation to be passed in the US requiring banks to provide the same information for foreign governments that the US government is demanding from foreign banks.

As the one or two readers of this blog know, I have already renounced my US citizenship because FATCA compliance (on top of the rest of the US tax reporting regime) was the final straw for me.

When I discovered what the US’s interpretations of the IGA were, and how the UK ceded some of its sovereignty to the US by colluding in the subversion of data protection rules, without real reciprocity, I began to write a letter to my MP. When I last left it, it was sitting at about 800 words.

Having slept on it, I’ve decided that sending the letter is a bit like p***ing in the wind. As nice as my MP is, I suppose I will get some sympathetic platitudes, and as usual, I will have been the only constituent who has contacted him about this issue (as it is with other things I have written to him about.) And it will not do much to change anyone’s mind at HM Treasury or the FCO.

I have never seen anyone in a senior position in government or bureaucracy acknowledge that maybe they made a mistake. According to the FCO memo linked to in my first paragraph above, this issue will be put to consultation, but my experience here in the UK tells me that most consultations have foregone conclusions and generally only give the appearance of democratic process.

I wonder whether the surrender of sovereignty was by design or by accident. Either way, FATCA is a time-bomb ready to go off some time next year, with all the major banks in on it, ready to comply. The costs for compliance are actually astronomical, as many systems are being changed in order to a) separate data on US persons from others and b) to maintain the system as an ongoing compliance regime.

Naturally, large corporations love expensive compliance regimes; they are an added barrier to market entry for leaner, hungrier organisations willing to provide more value for money to their customers.

The British _ankers Association’s willingness to bend over backwards (or is it forwards?) to comply with FATCA, and HM Government’s willingness to collude are just further symptoms of the sickness infecting our economic lives here in the UK/EU (although the EU, to its credit, declined to sign up as a body, leaving the flouting of data protection rules to its member governments).

Sad, really.

FATCA has the potential to be disruptive to more than just US persons living abroad. If a couple of banks alone are deemed to be non-compliant, and the withholding regime is applied to their US money movements (beginning some time in 2014/15) there will be a chain reaction leading to worldwide freezing of capital movements. This is a ticking time bomb for an already compromised international banking system (whether you embrace the current regime or not).

And someone is going to have to pay for the reporting and withholding regime, it is certainly not going to be the zombie banks, and it would be damn near impossible for them to recoup the costs via their US customers, alone. Along with the systematic erosion of the value of your cash through ZIRP, QE, and price inflation, the cost for banking for everyone outside the US is likely to go up.

If you are an American thinking about renouncing your citizenship in light of FATCA and all the other tax reporting requirements, it is probably in your best interest to renounce, particularly if you aren’t planning on going back any time soon; of course, it all depends on your individual situation. Things are probably going to get worse before they get better for US citizens living abroad.

I am really sad that I had to make the decision, and am still in mourning, but the peace of mind it provides me is worth it.

Special hat tip to the contributors and commentariat at the Isaac Brock Society for the sources.

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Sandy on Social Awareness

Sandy on Social Awareness.

My comments:

Sounds like you go to a Waitrose. At my local Waitrose, the socially unaware have another name: Pensioners.

 

They must always have their shopping trolleys right next to them which means blocking off access to at least two sections of shelving for everyone else. The reason is quite natural: someone may walk off with their trolley-full of unbought items.

 

And God forbid, you have to go to a Waitrose on a Friday at midday. It is impossible to find a parking spot, not because there isn’t one available, but because pensioners are ambling about as if it is a Sunday drive.

 

(I call Fridays at the local Waitrose the Day of the Dead, as there is a general aimless shuffling about that I have previously only ever seen in George Romero films.)

Sandysview

I’ve coined a phrase, it already exists in a roundabout sort of way but the existing phrase is some crap about consciousness and how society works within itself or some such hippy sounding bollocks. My phrase is ‘Social Awareness’. In my world it means having the first clue about what is going on around you. I’m going to have a rant about those who don’t. You know who the people with no social awareness are because you are a rational sensible human being and they are not. They most certainly don’t read my work, but if they did they would be reading it right now, on a tablet walking down the middle of the footpath not knowing you were trying to get past them.

Those with no social awareness sit beside you on a crowded train, open and start to eat a cheese and onion sandwich with no clue that…

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The Ultimate Playlist – A love letter to my Wife on My Birthday

(This is a rather long post, so feel free to skip down to the playlist, if you can’t wait.)

It is my birthday today. I am now 43 years old.

I usually go through a pensive stage of navel-gazing ahead of my birthdays, and although there has been a bit of that, I think the flavour this time around is slightly different.

I first met my wife when I crashed a party in East Dulwich. I was almost inclined not to go out that night, but one of my work colleagues at the time invited me to come to a party being thrown by an acquaintance of one of his friends. I was tired that night and almost bailed. But glad I didn’t.

A couple of hours into the party, I met my future wife, we clicked almost immediately and we spent the next 30 hours or so in each other’s company talking to each other (ISTR it was a bank holiday weekend and neither of us had to be anywhere, but I’m not entirely sure.)

When my lease ran out on the flat in Fulham, I rented a studio flat up the street from her in East Dulwich.

It’s been a long strange trip ever since.

The reason I am thinking of this, is that the first time I recognised my pre-birthday navel-gazing was the lead-up to my first birthday around her. I had been a bit withdrawn, and 4000 miles from “home” and generally reviewing the events that led me to London. I was 29 and thinking of all the things I could have been and regretting opportunities that I passed up or I let pass me up.

I was in a terrible mood in the weeks leading up to my birthday. A bit morose, full of self-pity, and not really appreciating what it is I had. My future wife put up with my moodiness, but pointed it out to me, and she couldn’t figure it out. Luckily I snapped out of it.

At the time, David Gray’s “Please Forgive Me” was getting limited airplay on BBC’s London radio station, Greater London Radio (GLR) [one of the best radio stations in its time], before it was released to the wider world. But the tune really summed up what I was thinking about my life, and feeling about her. I rang GLR up and requested the song, they recorded my conversation with the DJ, wherein I confessed to my navel-gazing self-pity and how I was taking it out on her and now I was begging forgiveness for being a bit of a git. I ran down the road to her place, and told her to turn on the radio and have a cassette ready to record it. And they played it, and she forgave me, because as much as she would like to deny it, she is as much of a sap as I am, and is a sucker for a bold romantic gesture.

In the intervening years, life has had its ups and downs, and she has followed me to hell and back. I think we have lived through situations that would have broken other couples up rather quickly. But we seem to be so in tune with each other, that being together hasn’t seemed like a struggle at all. Mind you, the only person who ever does anything to piss off the other is me, as I am still capable of pulling off real bonehead maneuvers.

This year, the lead-up to my birthday seems to be a different animal altogether. I seem to be looking more forward rather than behind. I think it’s partly because we have a bun in the oven. And some of the plans we had have had to have been modified. I have to admit, it seems a little scary. But I also have a sense of mission and of hopeful anticipation. But my birthdays are now reminders of how much I have rather than how much I don’t have.

The Mix Tape / Playlist

Whenever I have made a mix tape (or a playlist now) for her, “Please Forgive Me” is always the first song. Playlists are one manifestation of the romantic in me, and I’m glad she likes them. So, as a bit of a love letter to her (because my birthday always reminds me how much we love each other,) I am going to list some of the choice songs on my evolving iTunes playlist for her, and why they are on it:

“Please Forgive Me”- See above

“Iris” by the Goo Goo Dolls – The song was out at the time we met, and the chorus really captures how I felt about her when I first met her: “I just want you to know who I am…”

“Wagon Wheel” by Old Crow Medicine Show – The story of a guy trying to get home to his baby. It used to make me nostalgic for the South (that is, USA). But now it is about Home, which is wherever she (and my daughter) is.

“Thinking of You” by Paul Weller – This remake of a Sister Sledge tune was from Paul Weller’s Studio 150 album, which she bought for my birthday one year. A sappy love song.

“Hard Man to Love” by Kevin Fowler – Kevin Fowler is a death-metal-guitarist-turned-country-music-singer. This song captures what I was like when we were first together, as I partied a lot, and seemed to be more trouble than I was worth at the time. Thank God she didn’t think so.

“You Are the Sunshine of My Life” by Stevie Wonder – Rather cliche and self-explanatory. But appropriately sappy.

“Rudi’s in Love” by Locomotive – A classic ska tune. She digs ska and reggae to, and this rude boy was won over.

“Good Hearted Woman” by Guy Clark – A cover of a Waylon Jennings song, better than the original. See “Hard Man to Love” above. “She’s a good-hearted woman in love with a good-timing man…”

“Special Brew” by Bad Manners – “We’re a pair, I don’t care, when they say we are a special brew…” Some of our closest friends think we act as one unit when we get into heated debates about politics and the like.

“Ice Cream Man” by Tom Waits – The ultimate in lascivious double entendre.

“Isn’t She Lovely” by Stevie Wonder – Poor form to stick two tunes by the same artist on the same compilation, but this song sums up one of the happiest days of my life: the day our daughter was born.

“English Rose” by The Jam – “No matter where I roam, I will return to my English Rose…”

And I’ll leave it at that. There are loads more on the list, but these always seem to be a basic core.

I am so happy that she saw in me something about myself that I couldn’t at the time.

And after this latest bout of navel-gazing, would I want to do it all over again?

Nah. I like what I’m becoming more than I like what I was, and she has always made me want to be a better man.

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Kate Rusby – The Hawth, Crawley – 18 November 2012

As a bit of a music anorak, I view it as my responsibility to ensure that my child(ren) are exposed to “good” music, rather than the factory-style output that is typical of the charts. A parent can’t necessarily overcome the pressures of conformity on a child’s taste, but occasionally, a parent can temper poor taste in music by exposing a child to “good” music.

A case that I take particular pride in is the fact that one of my daughter’s favourite musicians is Kate Rusby. She has become a bit of a role model for my daughter, inspiring her to sing and write more (and it warms the cockles of my heart when I walk by her room and hear her singing.)

My daughter made me promise that next time she was on tour we would go see her. So go we did, last night in Crawley. It was my daughter’s first proper let’s-buy-tickets-and-go gig.

I explained in a previous post how I recently became a fan of Kate Rusby. And as an anorak, it’s annoying that I come to the party rather late, but I am glad I did, regardless.

Ms. Rusby has been singing for 20 years, and her latest album is a celebration of that, with new arrangements of old songs, joined by special guests (including the modfather, Paul Weller.) The tour, of course, is in support of the latest album.

Last night’s show was not disappointing, and it was everything one could expect. A rather intimate, quiet affair consisting of two very strong sets of tunes. Ms. Rusby was joined by an accomplished group of musicians (one of whom is her husband/co-producer, Damien O’Kane) whom she has recorded with over the years.

The musicianship was flawless. And the showmanship, although low-key, was entertaining. In between songs, Ms. Rusby would regale the audience with stories about the songs in question or about her children (she has a 3-year-old and a six-month-old, the six-month-old on tour with her.)

I was pleasantly surprised, as for some reason, I was expecting a more serious demeanour from Ms. Rusby. Instead, there was a good bit of banter on stage (her husband had a devilishly dry Northern Irish sense of humour), and she came across as being a down-to-earth Yorkshire lass. I was also surprised by her speaking voice, only because it was deeper than what I expected.

And her singing voice was amazing. A truly sublime show.

I could go on, but there is nothing I could fault in the show. And a good, wholesome, first gig for my daughter to attend. (She also walked out of there with a tee-shirt and a couple of songbooks. Daddy is such a sucker, but daughter was extremely grateful for the experience.)

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