The Constitution Breached by FATCA
In Sunday ‘s Gleaner (January 4, 2015), a leading prosecuting attorney for the Government, once more extolled the problems and issues that face a potential crisis in Money Laundering; which may be applicable to businesses who operate with cash or near-cash transactions.
I say this because any large money transaction in recent times has been settled by a banker’s draft, which is controlled by the bank’s record of source of funds. So the first contrary point I am emphasizing Is that larger transactions, which may be presented to a Cambio in a cheque form, should have been vetted by the issuer, another financial institution, or a bank; which leads us to say, “Why must we do this verification again?” May I also point out that Cambios in Jamaica are considered financial institutions.
The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, is an important development in U.S. efforts to combat tax evasion by U.S. persons holding investments in offshore accounts.
Under FATCA, certain U.S. taxpayers holding financial assets outside the United States must report those assets to the IRS. In addition, FATCA will require foreign financial institutions to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
FATCA requires certain U.S. taxpayers holding foreign financial assets with an aggregate value exceeding $50,000 to report certain information about those assets on a new form (Form 8938) that must be attached to the taxpayer’s annual tax return. Reporting applies for assets held in taxable years beginning after March 18, 2010. For most taxpayers this will be the 2011 tax return they file during the 2012 tax filing season. Failure to report foreign financial assets on Form 8938 will result in a penalty of $10,000 (and a penalty up to $50,000 for continued failure after IRS notification). Further, underpayments of tax attributable to non-disclosed foreign financial assets will be subject to an additional substantial understatement penalty of 40 percent.
Other intermediaries in the system of reward are the administrators of ‘FATCA’ benefits, including the Governments that apply to the taxpayer.
But the beginning of the problems listed above is not the main difficulty. Any action by a financial task force against a “’Money Merchant”” has no relief in law.
A Financial Institution, which previously enjoyed a confidential relationship with its clients, is open to be publicly accused of these infractions, before steps may be taken in redress. The law is so structured that it allows search and seizure of all of the Companies assets: Money, goods, work in progress and disbursements to directors, without any judicial permission or waiver, an action in breach of the Constitution of Jamaica.
A likely consequence is the removal of investments from all other countries, including Jamaica, assuming no special arrangements, are made with the Investor.
Many countries have decided to amend or disregard this ordinance, to the extent that that Americans living out of their country prefer to renounce their citizenship, especially Canadians.
Large business interests, like Warren Buffet’s ‘’ BURGER KING ‘’ are relocating their businesses to Canada, saving millions of dollars in taxes.
A client of a well known Canadian Bank said despite the complications she has not thought about renouncing her U.S. citizenship. She said she will exhaust all options before going that route. She does say it’s been increasingly difficult to remain optimistic about the situation. On a last note, She admits “’ To be brutally honest with you, I’m just very tired” she wrote in a recent blog post. “I’m tired of writing letters, tired of explaining and tired of fighting. There is so much about this that I simply cannot change.
I cannot make homeland Americans feel differently about their expatriates. My influence — even as a U.S. voter — is practically nil. I have lost all faith in the U.S. Government . I no longer think it will improve – on the contrary I can think of a hundred ways it could get worse. And I have slowly come to the realization that American citizenship and globalization are an imperfect fit these days. Perhaps it will get better with time but that, it seems to me, is something I can hope for my children’s sake, but not something I am coming to believe that I can realistically expect to have for myself.””
(730 words) – ©Ramesh Sujanani
(ref: Isaac Brock Society, Canada)
This matter is becoming quite serious, and there is no sign of a solution.