Anti-FATCA lawsuit plaintiff vows fight against FATCA ‘will go on’

One of the seven plaintiffs in a closely-watched lawsuit against the US Treasury Department over the Foreign Account Tax Compliance Act that the US Supreme Court on Monday declined to hear has vowed that the fight against FATCA will go on – in Canada, if nowhere else. 

Stephen Kish, pictured left, a professor of Psychiatry and Pharmacology at the University of Toronto, said on Tuesday that another lawsuit, involving a Canadian organisation known as the Alliance for the Defence of Canadian Sovereignty (ADCS), is continuing against the Canadian government for its “turning over to the US Internal Revenue Service” information on all those Canadian citizens whom the US deems to be “US persons” and therefore subject to US tax.

Canada has been providing this information to the US tax authorities since 2015, as part of an agreement it signed the previous year to help the US to enforce FATCA – and in so doing avoid potentially significant financial sanctions that the US would otherwise impose.

As reported, the ADCS’s lawsuit involves two Canadian women who happen also to be considered to be American citizens by the US, who filed suit in Canada’s Federal Court in 2014 against the Canadian government for what they said was its role in enabling the US to come after them by agreeing to enforce FATCA.

FATCA, which was signed into law in 2010 by President Obama and began to come into force in 2013, obliges non-US financial institutions around the world to report to the US Internal Revenue Service on any accounts they have which are held by American citizens.

To do this, the US has obtained the agreement of foreign governments, such as Canada’s, to collect the information and pass it on to the IRS.

As a group Canadians who hold American citizenship, often as a result of having been born there when their parents were temporarily south of the border, have been among FATCA’s biggest critics, and even maintain and contribute to a blog, the Isaac Brock Society, where issues of concern to them are discussed and relevant news shared. (A gathering of these “Brockers” is pictured above, at a 2013 anti-FATCA demonstration in Ottawa in 2013.)

The Alliance for the Defence of Canadian Sovereignty – which Kish, a Canadian citizen who renounced his American citizenship, chairs –  is funding the Canadian court case. According to the court documents, the two plantiffs in the case are arguing that the defendants – essentially the Canadian government, as represented for the purposes of the lawsuit by the Canadian attorney general and National Revenue minister – lack the right under Canadian law to provide their information to the IRS, as they are Canadian citizens and the information about them which the Canadian government is providing “is not shown to be relevant for carrying out the provisions” of the laws currently in force.

Although Canadian citizens, the two plaintiffs, Gwen Deegan and Kazia Highton, are considered by the US to also be American citizens as well – and thus having US tax obligations – because they were born there, even though they left at a young age.

Kish says the expectation is that the case will reach Canada’s Federal Court “early in 2019”.

Adds Kish: “My hope is that citizens of other countries (eg, England) who are also regarded by the US, without their consent, to be American citizens, will also sue their own countries for assisting in the roundup and turnover of their information to a foreign government, and the confiscation of their locally-made assets.

“Canada’s argument that it is okay to sacrifice the right of some of its citizens to prevent a mean-spirited US financial sanction doesn’t wash.”

As for the US Supreme Court’s decision on Monday not to hear the matter of Mark Crawford et al v United States Department of the Treasury, et al, Kish said he was, “as one of the plaintiffs…very disappointed that our case never actually made it to trial”.

“But hopefully the Republicans Overseas organisation will be successful in finding other plaintiffs who have suffered a type of FATCA harm that will survive the Government’s “standing” argument,” he added, referring to a call by the Republicans’ expat organisation for seven individuals to be party to another lawsuit.

As reported, the case in which Kish had been involved had been brought by a group of seven American expatriates as well as Kentucky Senator Rand Paul. Their argument hinged on their contention that the 2010 FATCA legislation violated their constitutional rights.

However, they lost their case – as of Monday, when the US Supreme Court declined to hear their challenge to a Sixth Circuit court decision handed down last August – on grounds that they lacked the standing to sue, and that the harms they claimed to have suffered as a result of the law were not, in fact, directly caused by it.

In addition to the US Treasury, the other defendants in that case were the IRS and the Financial Crimes Enforcement Network.

The Supreme Court petition, Mark Crawford et al v United States Department of the Treasury, et al, may be viewed on the Treasury’s website by clicking here. 

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