IRS claims statutory authority for FATCA agreements where no such authority exists!

http://taxpol.blogspot.com.au/2014/07/irs-claims-statutory-authority-for.html
This is in response to a ridiculous letter from Treasury to Congressman Posey siting statutory authority for creating FATCA IGA pseudo treaties with other countries around the world. Have to hand it to the FATCAnatics, they were very clever in duping even the Chinese to sign onto them.
I don’t think much of Congressman Boehner and his threatened lawsuits against Obama for over use of Executive power (where was he when Bush was doing it?). It is seen as too crassly political. Still …these arguments by Christians would be a good addition to the effort if he goes that route.
Why is this law still enforceable ?


Reason number One: USD reserve currency status combined with the 30% withholding sanction, means, if you want to conduct business in USD, you are forced into compliance, even if you DO NOT have ONE U.S. Person as an account holder.
Right now, in the international exchange game, the USA owns the only viable football. If you are to play, you have to use their ball. Ever since 9/11 there is a financial war happening that has been conducted by the U.S. Treasury. The most recent iteration is represented by this FATCA offshore jihad. Treasury is increasingly employing a “pay to play” strategy on access to US financial markets with using only ‘their’ USD football.
If you are NOT familiar with this, I would highly recommend this book by ex-Treasury official called “Treasury’s War: The Unleashing of a New Era of Financial Warfare” by Juan Zarate
http://amzn.to/1mXBx6c
Coming back to FATCA….. All the FFIs of the world, (Foreign Financial Institutions – a very VERY broad definition) naturally want to avoid the sanction threat from Treasury for their U.S. investments or dollar exchanges that by the current international game design flow through New York.
Understandably, no one wants to be whacked by that 30%.
The FATCA Compliance Complex (FCC) composed of the Big 4 Accounting firms and legions of U.S. Tax Lawyers and CPAs (it is a gold mine in consulting fees) tells them they have to comply >544 pages of complex regulations, but hint at a “so called” easier route that Treasury has provided without statutory authority, I might add (see my earlier comment above). The FCC gladly market and co-enable the FATCA alternate solution.
In a brilliant strategy the FFIs are encouraged to lobby their governments to bail them out with an Inter-government agreement (called an IGA). This gets them off the hook for the 30% withholding sanction, and enlists their governments as collaborators with the USG as tax and financial data collectors for the International Revenue Service (IRS)
Of course all this data then becomes available to the alphabet soup of Homeland Security Departments….
If you like NSA spying, you will love FATCA, but nevermind.
…and the foreign government by default becomes a U.S. taxpayer as money is siphoned out of their economies and back to the USA.
Some governments, like New Zealand, are now using tax payer owned asset sales to help finance their Internal Revenue Department (IRD) pay for the cost of being the FATCA tax collector and enforcer for America.
http://bit.ly/Vo8HWY
They never seem to learn there is a real cost associated with being an IRS collaborator, but that 30% threat drove the response. It also moved the noncompliance cost risk from the FFI to the NZ Tax payer. But isn’t that how it always works in the bailout world these days?
Anyway, that is the number one reason for how the power extortion game works. That is why it is enforceable. The mafia has employed these techniques for years.
Reason number two: Hope for Reciprocity.
To help entice governments into cooperation, the Treasury promised a reciprocity carrot in the IGA, or at least to advocate for reciprocity. Right now, there will be nothing of significance as a REAL reciprocity trade for all the data the USA requires. Not to worry, Delaware,Wyoming and Nevada are still safe havens from any FATCA like transparency reciprocity efforts!
Yes, hypocritical, but….. the Obama Administration has a blowback surprise in the form of a Domestic version of FATCA (I call it DATCA) planned for USFIs buried in their Fiscal Year Budget FY2015 on page 203. You can read it yourself here.
http://1.usa.gov/OY69ff
Congress probably ‘knowingly’ will NEVER approve this, but the way our democratic process works you can bury an unrelated amendment in some other bill and get it passed by stealth without public knowledge or debate - (as John Oliver cleverly said, “if you want to do something really evil, hide it inside something boring,”) .
That is how the Hire Act HR 2847 became the Trojan vehicle for “the worst law most Americans have never heard of”
http://www.repealfatca.com/

“The IRS admits that it does not know exactly how much money non-resident aliens have deposited in U.S. banks. …
Instead of using exact data, the IRS estimated, based on a mountain of existing information from the Treasury Department, that non-resident alien deposits in U.S. banks amounted to no more than $400 billion. …
… The IRS was unconcerned because it had determined that very little of this money would be affected – namely, because these regulations would not deter any rational actor other than a tax fraud from using U.S. banks
Capital Flight :  … As a result of those protections, the Government concluded that the “regulations should not significantly impact the investment and savings decisions of the vast majority of non-residents.”........They claim that the IRS ignored the massive capital flight that took place after the Canadian reporting requirements became effective in January 2000.  The IRS, by contrast, contends that the alleged Canadian capital flight is a fiction: While the amount of Canadian interest-bearing deposits may have dipped after the reporting requirements were issued, they climbed back up shortly after that.”