This seems to be a war that will probably never end. But who really wins when everyone seems to lose?

The folly of the incurable hubris of a deluded hegemon on steroids perhaps??

Enjoy.  Andy


Swiss bankers travelling to European countries could risk arrest

SwissInfo, 7 August 2012.

Swiss bankers whose names were delivered to the United States in April as part of the crackdown on US tax evaders face the risk of arrest while travelling in some European countries, not just on US soil.

Extradition treaties between the US and countries including France, Germany, Italy, Austria and Britain make it possible for the US to take legal steps via Interpol against bankers suspected of helping US citizens evade taxes, Denise Chervet, central secretary of the Swiss Bank Employees Association told the Swiss News Agency.

“If the US issues an arrest warrant via Interpol, the employee targeted could be arrested in any country with which Washington has an extradition treaty, and where the alleged offences are also punishable,” Chervet said.

Around 10,000 employees of 11 banks under investigation by US authorities could be affected by potential travel restrictions.

Chervet said that employees visiting the US who had had direct contact with American clients “run the risk of being arrested for violating American tax laws for having assisted with tax evasion”. Other bank employees who may not have had direct contact with clients could be called as witnesses, she said.

Bankers’ families could also be implicated: a report in La Tribune de Genève newspaper this week said two teenagers who arrived in the US to visit their grandparents were interrogated by officials for six hours about the whereabouts and working habits of their father, a Geneva banker.

Staying put

Following pressure from the US government, in April the Swiss government authorised the eleven banks to deliver the names of their employees to the US authorities. The data, however, had to be encoded.

Since then, some 10,000 files have been relayed to the US Department of Justice containing written correspondence and notes of telephone calls made between bank staff and US clients. Some of this data has been used to identify specific bank staff.

Swiss bank employees, fearful of how the decision to hand over data could affect them, have begun legal proceedings against banks and the government in an effort to find out what personal data was transferred to the US.

“You don’t know what the US is planning to do with the data of bank employees. As a precaution I’m advising my clients not to leave Switzerland,” said Geneva lawyer Douglas Hornung, who represents 40 current and former bank employees.

The dispute between the two countries over Switzerland’s bank secrecy laws and US citizens’ use of Swiss accounts to shield  untaxed income has overshadowed relations since 2009, when Swiss bank UBS was fined $780 million (SFr.755 million) for helping US citizens dodge taxes.

A double-taxation accord signed by the Swiss and US governments in September 2009 was revised and ratified by the Swiss parliament in March, but still requires ratification by the US Senate.

Swiss Finance Minister Eveline Widmer-Schlumpf said at a press conference on Tuesday that the government had authorised banks to hand over data to US authorities for the purpose of self-defence. The finance minister said she plans to meet with bank employees who may be affected by the delivery of data.

The government had unable to ascertain whether the banks acted in accordance with data privacy acts and labour laws, Widmer-Schlumpf said. However she stressed that the responsibility lies with the banks involved and with Swiss financial market regulator Finma.


US attempts to clean up on tax evasion took a new twist when a Geneva banker's two teenage children were detained when they arrived on US soil, it was reported Monday.

TheLocal, Switzerland, 6 August 2012.

The teenagers, due to visit their grandparents, were questioned for several hours by US officials who asked them the whereabouts of their father and whether he sometimes worked in the country, according to La Tribune de Genève newspaper.

During their six-hour interrogation the youngsters were not allowed to contact their grandparents who were waiting for them at an undisclosed airport, the report added.

The development is the latest twist in a long-running tax dispute that has dominated Swiss-US relations in recent years, with Swiss banks agreeing in April to hand over confidential information to Washington in April so as to avoid US proceedings.

In all, some 10,000 names of people linked to Swiss banks with American clients were given to the US tax office with Bern's blessing, according to SwissRespect, the organisation founded by Geneva lawyer Douglas Hornung who represents bank employees caught up in the affair.

"I advise my clients not to leave Switzerland," said Hornung, who advises around 40 bank staff in the country.

Another six banks are in Washington's sights – Wegelin, Neue Zürcher Bank, Liechtenstein landesbank LLB and Israeli banks Leumi, Hapoalim and Mizrahi.

Switzerland has signed an agreement on the issue with Germany, Austria and Britain on curbing tax evasion and Swiss President Widmer-Schlumpf recently announced that she hoped to come to a "global solution" on the issue this year.


Top Swiss bankers have voiced doubts that the tax deal with the USA will be completed before the end of the year, with some saying agreement may never be reached.

TheLocal, Switzerland, 30 July 2012.

Finance Minister Eveline Widmer-Schlumpf’s aspirations to conclude a tax deal with the USA before the end of the year are unrealistic, according to the newspaper SonntagsZeitung, Tages Anzeiger Online reported.

While some bankers told the paper they believed any deal would take longer to come to fruition, others said they doubted that the two sides would ever reach agreement.

In any event, the banking world is not expecting to see any developments soon.

“We have indications that any solution has been put off indefinitely,” a banking chief told SonntagsZeitung.

The delay has in part been caused by the US presidential campaign, which has diverted Barack Obama’s attention to re-election issues. Should he lose, it is unclear in which direction negotiations would proceed.

Further, the chief negotiator of the new treaty, US attorney general Eric Holder, has lost credibility after having been caught up in a disastrous campaign against weapon-smuggling.

Additional problems have been caused by the fact that those Swiss banks not on the US target list have refused to assist the eleven banks that are. Further, the banks are becoming increasingly resistant to the idea of sharing data with the US as they believe this will have a negative effect on competition.


Retail bank Raiffeisen is Switzerland's latest institution to part with its US clients  because of increasing red tape and amid an ongoing tax row with the United States, media reports said on Saturday.

AFP/TheLocal Switzerland, 23 July 2012.

"We will soon shed those American clients who are taxable in the United States," bank spokesman Franz Wuerth told ATS news agency confirming reports by several regional papers.

But he added that Raiffeisen had "very few foreign clients and even fewer from America". Only 0.03 percent of its clients would be affected out of a total 3.5 million.

Coop, another retail bank, announced it had stopped doing business with its US clients.

US tax officials have been putting pressure on Swiss banks to release information about clients who are US nationals and who might be evading taxes and the two countries are involved in talks to settle the dispute.

Overall, 11 Swiss or Switzerland-based banks have been targeted including Credit Suisse, Julius Bär, Wegelin, Zürcher Kantonalbank (ZKB), Basler Kantonalbank (BKB), Neue Zürcher Bank, the Swiss subsidiary of HSBC, Liechtensteinische Landesbank (LLB), as well as Israel's Leumi, Hapoalim and Mizrahi banks.

As part of the ongoing negotiations Finance Minister Eveline Widmer-Schlumpf has authorized Swiss banks to reveal to US authorities the names of their staff working with US clients.

The data transfer to US justice authorities has caused alarm among bankers who fear that they might be arrested on arrival in the United States.



On the 2nd of August, legislation was adopted by the House of Representatives that proposes to get rid of “Citizenship-Based Taxation”.  Hooray.

Take a look at page 8, Section 5 (F) of the attached legislative language and you will see that this legislation proposes transitioning to a globally competitive “territorial tax system.

Alas, the prospects of this Bill being adopted in the Senate, under its current Democratic majority, are very dim.

The article below in yesterday’s Wealth Strategies Journal gives a bit more background information on this, and if you go to the Library of Congress website there is much more:

Given the current impasse in the Congress, what do you think we should try to do next??  What would you be willing to do to try to help move this along??

All the very best and take care,  Andy

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House Votes to Pass Bill for an Expedited Consideration of a Comprehensive Tax bill

Posted by Neda Barkhordar, Senior Associate Editor, Wealth Strategies Journal, 7 August 2012.

The House voted 232 to 189 to pass a bill that would allow for the speedy consideration and deliberation of  a comprehensive tax reform bill.

“The Pathway to Job Creation Through a Simpler, Fairer Tax Code Act of 2012” (H.R 6169) requires the tax reform bill to be presented to the House by the Means and Ways Chair by April 30, 2013. (See attached).

Further, it requires the Joint Committee on Taxation to find that it confirms to the five reform parameters, which include broadening the tax base, condensing the current six tax brackets into two tax brackets of 10% and not more than 25%, reducing the corporate tax rate to not greater than 25%, and imposing a territorial system of taxation. 

With a Democrat-led Senate, the chances the bill will pass are negligible.



By David Barnes, TIGTA, 8 August 2012. [email protected]

WASHINGTON – Complaints from Internal Revenue Service (IRS) employees that their supervisors were urging them to ignore potential fraud in a program that reviews and verifies applications for Individual Taxpayer Identification Numbers (ITINs) have been validated in a report publicly released today by the Treasury Inspector General for Tax Administration (TIGTA).

The ITIN program was created in 1996 so that individuals who are not eligible to obtain Social Security Numbers could obtain an identification number for tax purposes. In 2011, the IRS processed more than 2.9 million ITIN tax returns resulting in tax refunds of $6.8 billion.

Following referrals from Members of Congress, TIGTA reviewed complaints from IRS employees regarding the management of the ITIN Program. The objective of TIGTA’s review was to assess the efficiency and effectiveness of the IRS’s process to identify questionable ITIN applications.

TIGTA substantiated many of the allegations set forth in the IRS employees’ complaints. Those complaints alleged that IRS management is not concerned with addressing questionable applications and is interested only in the volume of applications that can be processed, regardless of whether they are potentially fraudulent.  In particular, TIGTA found that IRS management:

  • Created an environment which discourages tax examiners from identifying questionable ITIN applications;
  • Eliminated successful processes used to identify questionable ITIN application fraud patterns and schemes; and
  • Established processes and procedures that are inadequate to verify each applicant's identity and foriegn status.
“TIGTA’s audit found that IRS management has not established adequate internal controls to detect and prevent the assignment of an ITIN to individuals submitting questionable applications,” said J. Russell George, Treasury Inspector General for Tax Administration.

“Even more troubling, TIGTA found an environment which discourages employees from detecting fraudulent applications,” he continued, adding, “To their credit, the IRS recently announced a series of improvements that will take effect immediately on an interim basis, in response to our findings.  It is to be hoped that significant, systematic change, rather than interim improvements, will take place.”

TIGTA made nine recommendations in its report. The IRS agreed with seven of the recommendations and has announced plans to implement interim changes based on TIGTA’s findings. IRS management is considering the other two recommendations while it conducts its own review.

Read the report by clicking here.



Note: The difference between the date TIGTA issues an audit report to the Internal Revenue Service and the date TIGTA publicly releases the report is due to TIGTA's internal review process to ensure that public release is in compliance with Federal confidentiality laws. 


The more you read these stories, the easier it is to understand why the IRS, and the Congress, spend so much time vilifying Americans who live overseas.  It is ever more obviously a distraction strategy to get people to look far away, rather than up close, at what is really going on. Perception management at its finest!

And, since we have not a single dedicated advocate anywhere in the U.S. Government today, either in the Executive Branch, Congress, or the Judiciary, to speak out and defend us, we who live abroad are the irresistibly tempting long hanging fruit, which can be an ever available Piñata whenever the next distraction option card needs to be played.

So enjoy yet another ridiculous story and howl with laughter yet again.  And prepare for the inevitable next attack pompously declaring how bad and immoral overseas Americans are, by definition, and will always so usefully remain. AMEN!

And if you have a few extra moments, take a look at the attached TIGTA report too, because this Florida address story seems to be small chicken feed compared to what has been coming out of addresses in Michigan and elsewhere.

My, oh my, oh my indeed!!!!

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By Alexander Eichler, HuffingtonPost, 7 August 2012.

More than 700 tax returns were filed in 2010 from a single residential address in Belle Glade, Fla. The IRS reportedly issued over a million dollars in refunds to the Belle Glade address that year.

Either one particular home in South Florida is really, really crowded, or there's something shady going on.

In 2010, 741 tax returns were filed to the federal government from a single address in Belle Glade, Fla., the South Florida Sun-Sentinel reports. In response, the Internal Revenue Service issued over $1 million in combined tax refunds to that address, which is, y'know, embarrassing.

Most or all of those returns were probably filed by identity thieves, and the Belle Glade case isn't even the worst of it, according to a report issued last month by the Treasury Inspector General for Tax Administration (see attached). That report notes that in addition to the Belle Glade home, there was an address in Tampa that sent in 518 tax returns and got back almost $1.8 million in refunds, and an address in Lansing, Mich., sent in 2,137 tax returns and got more than $3.3 million back. The returns from these addresses all bore the hallmarks of identity theft, according to TIGTA.

Tax-refund scams don't seem to be going away any time soon. Identity theft and fraud are reportedly rampant in some parts of the country, especially Florida, which is home to three of the five U.S. addresses that filed the greatest number of tax returns in 2010, according to the TIGTA report.

Scams of this kind are growing more common, and they're making it harder for law-abiding taxpayers to get refunds that are rightfully theirs. Identity thieves reportedly have a number of ways to soak the IRS, from borrowing the names and information of dead people to hijacking the Social Security numbers of Puerto Rican citizens, who don't pay federal income tax. The TIGTA report estimates the IRS will send out $21 billion in refunds to criminals over the next five years.

That's a forecast the IRS itself has, not surprisingly, taken issue with, and the agency claims it's cracking down on identity thieves and fraudulent returns. The IRS has reportedly put controls in place to spot stolen identities and returns that use the Social Security numbers of dead people. Last week, CNNMoney reported the agency has already picked out almost twice as many suspicious returns this year as it had by this time last year.

Still, fooling the IRS doesn't seem like an impossible task, considering one guy reportedly did it from a jail cell with a typewriter, according to a recent story in The Kansas City Star.


By Donna Gehrke-White, Florida Sun Sentinel, 6 August 2012.

A small South Florida city has attracted the attention of federal investigators looking into tax refund fraud and identity theft, according to an independent watchdog agency that oversees the Internal Revenue Service.

In Belle Glade, nestled along Lake Okeechobee, 741 tax returns worth more than $1 million in refunds were filed from a single address last year, according to the Treasury Inspector General for Tax Administration.

The Belle Glade address ranked third nationally for number of returns filed. Investigators would not release the address, citing confidentiality rules on tax returns. But House Oversight Subcommittee Chairman Charles Boustany Jr., R-La., referred to it as a home.

Three of the top five addresses used to file potentially fraudulent returns were in Florida, the Inspector General reported.

Tampa and Miami were mentioned as the top cities where potentially fraudulent 2010 tax returns were filed last year.

Nationally, thieves are suspected of using the identities of 2,274 children, 105,000 dead people and almost 1 million people who don't normally file returns to collect $5.2 billion in refunds.

The Inspector General's analysis found that incidents of identity theft jumped 155 percent last year.

"The report really underscores just how bad a problem ID tax fraud is in Florida and around the country," said U.S. Sen. Bill Nelson, who asked the Treasury Inspector General last year to investigate the extent of the problem. "It's become an epidemic that's costing law-abiding U.S. taxpayers billions of dollars. And it's one we've got to fix. That's why I've filed legislation aimed at putting a stop to these fraudsters."

The IRS disputed some of the watchdog's findings, including estimates of $21 billion in potentially fraudulent tax returns in the next five years.

Plantation IRS spokesman Mike Dobzinski said Monday that his agency "along with the Department of Justice, has significantly stepped up its activities to pursue those who attempt to steal identities to commit tax fraud." That will help cut down on future abuse, he said.

But Rep. Boustany was concerned that the IRS wasn't spotting suspicious multiple filings at one address.

In addition to the Belle Glade home, an Orlando post office box allegedly received $1,088,691 for 703 suspected fraudulent tax returns filed, he said. A home in Tampa netted even steeper refunds: It allegedly sent out 518 potentially fraudulent fake returns but collected nearly $1.8 million from Uncle Sam, Boustany said.

David Barnes, public affairs liaison of the Treasury Inspector General for Tax Administration, said his agency "did not analyze the fraud by geographic or metropolitan location." So he said he couldn't comment on why the state — and South Florida in particular — leads the nation in identity theft.

His agency's report showed, for example, that Miami thieves allegedly submitted nearly 75,000 bogus tax returns last year and received nearly $281 million in refunds.

It is "one of the biggest constituent problems we see in our office," said Alex Conant, a spokesman for U.S. Sen. Marco Rubio. The tax fraud "often prevents law-abiding taxpayers from receiving the tax refunds they deserve."

"Over the past several years my office has seen a dramatic increase in the number of individuals needing assistance because of tax refund identity theft, a clear indication this crime is becoming a big problem in South Florida," added U.S. Rep. Debbie Wasserman Schultz, of Weston. That's why she said she introduced a bill to help stop this problem and protect Americans.

Florida IRS spokesman Dobzinski said his agency is working hard to stop the fraud. This January, the IRS and Justice Department worked together to press 923 charges against 105 people in 23 states.

"To support our prevention efforts, we enhanced our return processing filters to improve our ability to identify false returns and stop fraudulent refunds from being issued," he added.

The IRS also established a specialized unit that analyzes and develops leads on identity theft, Dobzinski said.

But others are skeptical with several South Florida tax preparers saying tax-related identity theft is up even more this year than last.

"We need to know why the IRS is not catching this fraud," Rep. Boustany said.


Here is another interesting update on the nasty hegemonic FATCA fiasco.  Enjoy.

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KPMG LLP,  July 30, 2012.

The U.S. Treasury Department on July 26, 2012, released two versions of the Model I Intergovernmental Agreement (Model IGA) to implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (FATCA), together with a joint message with France, Germany, Italy, Spain, and the United Kingdom endorsing the agreement.

KPMG’s analysis of the distinctions between the Model IGAs and the requirements under the proposed regulations examines the following areas:

  • Modification of definition of financial institution
  • Significant reliance on self-certifications
  • Modification to account identification timeline
  • Elimination of certain reporting requirements
  • Elimination of withholding requirement for gross proceeds
  • Modification to the limited foreign financial institution (FFI) rule
  • Additional carve outs for retirement plans
  • Reciprocity—potential for future requirements for U.S. withholding agents
KPMG LLP: Model I Intergovernmental Agreement released as alternative to FATCA regime (See attached).


Where is this going now, and is there even an iota of adult supervision anymore in that ever more aberrantly behaving and bizarre City Upon a Hill?

What do you think about this? Is there a cure? Your comments and suggestions would be most welcome.


by Petros, IsaacBrockSociety, 6 August 2012.

Swiss newspapers are reporting that two children of a Swiss asset manager were interrogated by US customs as to the whereabouts of their father, what their father did, whether their father made trips to the US, etc. They were entering the US to visit their grandparents. Sorry, interrogation of children looks like something from the Gestapo playbook.

The original article below is in French. Here is a translation of the first couple paragraphs by Innocente:

“What a holiday! On a beautiful Sunday in May, two teenagers from Geneva and children of an asset manager took off from Geneva Airport. They left for the U.S. to visit their grandparents, who live in that country, while their parents remained in Switzerland. Upon arriving at the airport of a large city *, these two minors were given special attention of police. “Where is your dad? What does your dad do for a living? Has your dad ever worked in the United States? “Both young men were subject to these questions and others for six hours at the offices of the police. They weree not allowed to contact people outside. Throughout the questioning their parents and grandparents received no information. These facts, reported by a Swiss lawyer, suggest what a large part of the Swiss financial center have been fearing: the U.S. authorities have already begun to exploit the (employment) data delivered in April by five banks….”

Here is a partial translation thanks to Jefferson Tomas:

The banks recommend that their current and former employees whose names were transmitted to the other side of the Atlantic avoid going to the US. But such a precaution seems to be quite insufficient, considering the number of extradition treaties that exist.

“I encourage my clients not to leave Switzerland” said Douglas Hornung, Attorney at Law in Geneva, who represents approximately 40 employees of banks involved in this matter.

The disagreements go much further than a limited choice of vacation destinations, or family visits that must be postponed. Few banks in Switzerland or elsewhere, perhaps none at all, are interested in employing a “listed” bank employee from one of the 5 banks who gave data to the Department of Justice in order to avoid criminal prosecution. Careers risk being derailed because of this.

“Banks are not afraid to expose their employees to potentially devastating consequences” wrote another newspaper “Le Temps” last month.

A double unknown makes the situation worse: nobody knows how the Yankee justice will use the information that they have harvested. Thousands of people are unaware that they are involved. [Sounds like many USPs]

“If one had to inform everybody, one would be talking about thousands of persons…”, said the CEO of Credit Suisse, Brady Dougan [He is American I believe], “…If an employee is concerned, they can ask for information.” Ex-employees are only rarely informed.

Doubts about legality

This matter has caused accusations of treason in the Swiss financial world. Opinions of [legal] experts have only reinforced this. The Swiss Federal Commissioner on Data Privacy, Hanspeter Thür, has continually repeated his doubts about the legality of delivering employee data to the American administration.

“The employer does not have the right to reveal the names of its employees. If it is compelled to do so, it must inform the employees, and cover any damages and legal fees”, warns Thomas Geiser, Professor of Law at the University of Saint-Gallen.

Huge Inconsistency

The five banks implicated in the matter can certainly defend themselves. The Federal Council formally authorized the transfer to the DOJ of identity data concerning the 10’000 employees. This is inconsistent: in 1997, in exactly the same sort of circumstances, two banks asked for a similar authorization to respond to DOJ requests. The Federal Council refused it at that time considering that Swiss banking laws prevented such.


Par Philippe Rodrik, Tribune de Genève, 6 Aout 2012.

Les autorités américaines commencent à exploiter des données sur plus de 10 000 employés de banques suisses.

Dans les aéroports américains, les fonctionnaires sont particulièrement vigilants

Quelles vacances! Un beau dimanche de mai, deux adolescents genevois, enfants d’un gestionnaire de fortune, décollent de Genève Aéroport. Ils partent aux Etats-Unis pour rendre visite à leurs grands-parents, domiciliés dans ce pays, tandis que leurs père et mère restent en Suisse. A leur arrivée à l’aéroport d’une grande ville*, ces deux mineurs retiennent tout particulièrement l’attention des fonctionnaires de police.

«Où est votre papa? Que fait votre papa? Votre papa vient-il parfois travailler aux Etats-Unis?» Les deux jeunes gens subissent ces questions, et quelques autres, pendant six heures dans les bureaux de la maréchaussée. Ils ne sont pas autorisés à contacter des personnes à l’extérieur. Tout au long de leur audition, parents et grands-parents ne reçoivent aucune information.

Ces faits, rapportés par un avocat suisse, tendent à démontrer ce qu’une large part de la place financière helvétique redoutait: les autorités américaines ont déjà commencé à exploiter les données livrées en avril par cinq banques: Credit Suisse, Julius Baer Co AG, HSBC Private Bank (Suisse) SA, la Banque Cantonale de Zurich et la Banque Cantonale de Bâle-Campagne. La masse de renseignements fournis comprend les noms de plus de 10 000 collaborateurs (estimation de l’association Swiss Respect) ayant eu des contacts électroniques, téléphoniques, voire des relations d’affaires avec des clients contribuables chez l’Oncle Sam.

L’effroi et la haine

Du coup, le cœur de milliers d’employés de banque vacille entre l’effroi et la haine. D’autant plus qu’environ 90% d’entre eux ne seraient pas des gestionnaires de fortune et n’auraient jamais démarché de clients aux Etats-Unis. Une immense majorité des personnes concernées se seraient en effet contentées d’exécuter des ordres. Dans un cadre purement administratif ou comme secrétaires de hauts responsables.

Les banques recommandent bien sûr aux collaborateurs et aux anciens dont les noms ont été transmis outre-Atlantique de ne plus se rendre aux Etats-Unis. Mais cette précaution semble vite insuffisante, vu les nombreux accords d’extradition existants. «J’encourage pour ma part mes clients à ne plus quitter la Suisse», indique Douglas Hornung, avocat genevois conseillant une quarantaine d’employés de banque empêtrés dans cette panade.

Les désagréments ne se limitent d’ailleurs pas à un choix restreint de destinations de vacances. Ou à des rencontres de familles reportées. En fait, peu de banques, de Suisse ou d’ailleurs, voire aucune, trouvent désormais un quelconque intérêt à intégrer dans leurs effectifs un collaborateur «listé». Son nom figure parmi les données fournies au Département de la justice états-unien par cinq établissements menacés de sanctions pénales et coopérant afin d’y échapper. Des carrières risquent donc fort d’être entravées. «Des banques n’ont pas craint d’exposer leurs employés à des conséquences potentiellement dévastatrices», affirmait notre confrère Le Temps le mois dernier.

Une double inconnue aggrave en plus la situation: nul ne sait en effet comment la justice yankee utilisera les informations recueillies, et des milliers de personnes ignorent complètement qu’elles sont concernées. «S’il fallait prévenir tout le monde, il s’agirait de milliers de personnes, relève le président du directoire de Credit Suisse, Brady Dougan. Si certains employés se posent des questions, ils peuvent se renseigner.» Les «ex» ne seront donc que très rarement avertis.

Doutes sur la légalité

Cette affaire a suscité des sentiments de trahison sur la place financière helvétique. Des avis d’experts n’ont pas manqué de les renforcer. Le préposé fédéral à la protection des données, Hanspeter Thür, n’a cessé de répéter ses doutes quant à la légalité de la livraison de données personnelles à l’administration américaine. «L’employeur n’a pas le droit de transmettre les noms de ses salariés. S’il y est contraint pour des raisons impérieuses, il doit alors les informer, couvrir financièrement les dommages et les frais d’avocat», prévient Thomas Geiser, professeur de droit à l’Université de Saint-Gall.

Grosse contradiction

Les cinq banques impliquées dans cette affaire peuvent certes se défendre: le Conseil fédéral leur a formellement donné l’autorisation, le 4 avril dernier, de fournir au Département américain de la justice (DOJ) des renseignements comprenant l’identité de plus de 10 000 employés. En ce sens, le Conseil fédéral n’hésite pas à se contredire. En 1997, dans des circonstances parfaitement comparables, deux banques avaient sollicité une autorisation similaire du gouvernement pour répondre à des exigences du DOJ. Le Conseil fédéral ne l’avait alors pas accordée, estimant que la Loi sur les banques l’en empêchait.

Le 14 avril 2012, le porte-parole du Secrétariat d’Etat aux questions financières internationales, Mario Tuor, a jugé bon de rassurer tout le monde: «Légalement, tout est en ordre». Trois des sept Sages se seraient pourtant opposés à l’autorisation accordée dix jours plus tôt: Ueli Maurer, Simonetta Sommaruga et Alain Berset.

A ce jour, un ex-chef juridique de HSBC Private Bank (Suisse) SA, Eric Delissy, a dénoncé son ancien patron au Ministère public de la Confédération. Quatre autres employés de banque ont intenté des actions civiles auprès des justices genevoise et zurichoise: trois contre Credit Suisse et une contre HSBC Private Bank (Suisse) SA.

*Les lieux exacts sont connus de la rédaction (TDG)


Another interesting story here about how individuals in the Congress try to make sure that special benefits will be protected for their key constituents.

And, once again, it raises the enigmatic question of why so many overseas Americans have been so averse to our having our own direct representation in the Congress too.

While many of us have fought for this for the last several decades, (see attached) many others have been adamant in their opposition because, supposedly, this would impede our influence on those we elect indirectly via States back home. But as a mere 1% of any such constituency, and a very tempting target for any and all accusations with no effect way to defend ourselves, we are sitting ducks for this constant abuse.

Anyway, it becomes increasingly clear, as the attacks on overseas Americans become ever more virulent, and even presidential candidates denounce anyone with an overseas bank account, we are doomed to mistreatment until we start taking ourselves a lot more seriously.  And that, brothers and sisters, still seems a Herculean task still today.

Enjoy and take care,  Andy

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By Jonathan Weisman, NYTimes, 20 July 2012.

WASHINGTON — As a member of the “Gang of Six,” Senator Mike Crapo of Idaho has emerged as something of a hero among advocates of bipartisanship, one of three conservative Republicans working with three Democrats to cut the deficit by closing loopholes that allow businesses and households to avoid paying taxes.

Yet earlier this year, the senator made sure that a $3 billion loophole — protecting “black liquor,” an alcoholic sludge used as fuel in timber mills and factories — remained open in the negotiations over the highway bill that President Obama signed this month. Many budget experts criticize the loophole as a tax dodge because it allows the sludge to qualify for an energy subsidy created to wean the country off imported oil for vehicles, which black liquor does not do.

On Capitol Hill, lawmakers casually point to closing loopholes as the answer to much that ails the country. Negotiations to avoid automatic military spending cuts in January, to enact sweeping deficit reduction and to lower corporate and personal income tax rates all hinge on closing unidentified loopholes.

But the back-room actions on black liquor point to just how difficult it will be to lower the budget deficit through painless changes in the tax code. Even for a self-proclaimed deficit hawk like Mr. Crapo, one man’s loophole can be another’s vital constituent interest.

An Idaho company “feared losing the write-offs could affect employment decisions,” said Lindsay Nothern, a spokesman  for Mr. Crapo.

Mr. Nothern would not identify the company, but Matt Van Vleet, a spokesman for Clearwater Paper, a Spokane company with a large pulp mill in north-central Idaho, confirmed that his company had gone to Mr. Crapo seeking to keep the tax break open.

“We would have felt significant pain,” he said.

Federal tax receipts are reduced by more than $1 trillion a year by various tax deductions and credits, known as tax expenditures, often tied to a policy aim. Ending them would nearly eliminate the federal deficit, which is projected to be $1.2 trillion in the current fiscal year.

But the three largest are as popular as they are expensive: the mortgage interest deduction has cost about $75 billion a year recently, the employer deduction for health care has cost $120 billion a year, and the charitable-giving deduction has cost $38 billion a year, according to the bipartisan Joint Committee on Taxation.

Others are more hotly debated, like the exclusion or deferral of taxes on overseas corporate earnings. Legislation by Senator Debbie Stabenow, Democrat of Michigan, to end a tax deduction for the expense of moving business overseas fell to a Republican filibuster in the Senate this week.

Still other tax breaks verge on the unpopular, criticized by aides of both parties. Offshore tax havens and other tax shelters cost the government about $150 billion a year, said Senator Kent Conrad of North Dakota, chairman of the Senate Budget Committee.

For tax aides in both parties, black liquor falls into the category of the hard to defend.

Mr. Nothern, the spokesman for Mr. Crapo, confirmed the senator’s role in the disappearance of the provision that would have eliminated the loophole, which happened sometime between its approval by the Senate Finance Committee and its arrival on the Senate floor this spring.

But he added that those actions bore no impact on the deficit negotiations that Mr. Crapo helped start. Mr. Nothern said in an e-mail: “Instead of discussing individual loophole closures to save a buck here or there (more than likely so the bucks can be immediately spent elsewhere), the Gang of Six and bipartisan partners remain talking about a much larger agreement — a simultaneous effort to agree on spending caps, tax reforms (including loophole adjustments and lowering of tax rates), plus reforms to Social Security, Medicare and related programs to keep them solvent.”

The company in question did not appear to be a political contributor to Mr. Crapo, but the forestry and forest products industry has given him $216,286 over his career, ranking 13th among industry givers, according to the Center for Responsive Politics.

Since the 1930s, the timber industry has used an alcoholic sludge produced as a byproduct of wood processing to power its mills and plants. In 2009, black liquor became something else — a tax haven. The timber industry labeled black liquor an alternative fuel under the provision Congress created to encourage ethanol production for cars and trucks. Congress never agreed, but the Internal Revenue Service did, backing the timber industry’s interpretation.

That year, black liquor cost the Treasury more than $4 billion.

Congress reversed track later in 2009, saying black liquor would not count as an alternative fuel after 2009, and lawmakers went further in the 2010 health bill, also barring the timber industry from claiming black liquor as a cellulosic biofuel, which receives even bigger tax advantages.

But the I.R.S. gave black liquor one last chance. It ruled that the health care provision did not prevent the timber industry from redefining black liquor produced in 2009 as a cellulosic fuel, worth $1.01 a gallon, even if a company had claimed it as a regular alternative fuel, worth 50 cents a gallon. In other words, companies were permitted to give back one credit already claimed for another worth double, a $2.8 billion bonus for the industry.

Senator Max Baucus of Montana, chairman of the Finance Committee, saw the money as a way to help pay for a transportation bill this year. But Mr. Crapo protested, saying at a hearing that changing the law would “cause very significant damage to a number of people and impact jobs around the country, not the least of which is a major facility in my state.”

Mr. Baucus, a Democrat, tried to assuage his colleague’s concern, whittling down the black liquor provision to save $1.6 billion. It still was not acceptable. Finance aides said a bipartisan vote on the committee was more important than a fight over black liquor. By March, the bill reached the Senate floor with the provision gone, and Mr. Crapo was the first Republican to back the Baucus measure.

In the demise of the provision, members of the Gang of Six, including Mr. Crapo, see a cautionary tale: Go big or don’t go at all. Little provisions can be picked off by members in ways that a comprehensive deficit reduction cannot, they say.

Senator Richard J. Durbin, Democrat of Illinois, who is participating in the deficit talks with Mr. Crapo, said: “We have to invite the American people to be part of a conversation about how to rationalize this tax code, reduce its complexity, try to bring rates down in a reasonable way and still reduce the deficit.”

He added: “I drink red wine. I’m not into black liquor.”


Read this and enjoy a long awaited bit of intellectual and common sense fresh air:

“The other reality is that the caricature of high-living American expats makes them an inviting target. Not only are they small in number, their political representation is thinned by being spread over 50 states. That makes them vulnerable to the operating assumption we now have with Fatca: If you are working abroad, you must be a tax cheat.

“A better way to think about these men and women would be as America's international sales force. With only 4% of the world's population, America has to look abroad for most of its new customers.

“President Obama recognized this reality in his State of the Union in 2010. There he talked about the importance of being competitive, and he announced an initiative to double exports as a way of creating two million American jobs. Alas, it's hard to see how you increase American exports to markets overseas when you make it more costly and difficult for Americans to be in those markets.

“Whatever the ills of ObamaCare, we are at least now having a debate on the merits. How much better we'd all be if we could say the same about the Foreign Account Tax Compliance Act. “


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Who wants American partners when that means opening up the books to U.S. bureaucrats?

By William McGurn, WSJ, 16 July 2012.

Within the United States, almost no American has heard of it. Save for the occasional article, it's gone largely uncovered. And just like ObamaCare, the nastiest, job-killing aspects will not hit until after this November's election.

It's called the Foreign Account Tax Compliance Act, and it's a doozy. With little debate, Fatca was tucked into the Hiring Incentives to Restore Employment Act of 2010—a jobs bill dominated by tax breaks designed to get businesses to hire unemployed Americans.

Fatca was the revenue side of that bill. The theory was that we would pay for the tax breaks by making fat cats hiding money in their overseas accounts pay their "fair share." The reality is that the tax breaks did little to dent unemployment, and the legislation's penalties may end up killing more U.S. jobs than all the call centers in India combined. Delayed once already, Fatca is set to take effect in January 2013.

Strictly speaking, Fatca isn't a new tax—it's a new requirement for reporting overseas financial accounts, backed up by heavy fines. It requires foreign financial banks, investment houses, insurance companies, etc. to identify any Americans among their customers and turn over information about their accounts to the IRS (or to the local government, if that country has a sharing agreement with Uncle Sam).

At the individual level, Americans are now required to report foreign accounts at thresholds beginning at $50,000. Failure to file, or filing incorrectly, means a heavy fine. Among the most wicked aspects of this legislation is that a taxpayer can rack up tens of thousands of dollars in fines even if he or she doesn't owe the IRS a dime in actual taxes.

Right now, Fatca is bearing out Nancy Pelosi's prediction about the health-care bill: that we had to pass it to find out what was in it.

So far, that's translated into 388 pages of rules, released earlier this year. This weekend, Obama campaign adviser David Axelrod invoked the holy grail behind the Fatca-led, global IRS expansion. "We lose $100 billion a year to offshore tax shelters," Mr. Axelrod told CNN.

To put this in perspective, the Joint Committee on Taxation estimates that Fatca will bring in less than a billion dollars annually for the next decade. That suggests that Fatca is only the first step toward an IRS that will be far more expansive, aggressive and intrusive than most Americans can imagine.

Indeed, in a paper called "Leveling the Playing Field," (see attached) the White House says "the IRS will hire nearly 800 new employees devoted to international enforcement." It's safe to say that while we will see only a fraction of that $100 billion in revenue, we will bear the full price that a globally empowered IRS can inflict.

Already, honest citizens are taking the hit. A woman emailing this reporter from Sweden says she's been shut out of a promising Information Technology partnership since the chief investor learned that having an American on board would mean opening the partnership's books to the IRS.

On this side of the Atlantic, Joe Green, chairman of Canada's Democrats Abroad, announces a website ( where Americans can post their horror stories anonymously. In testimony at IRS hearings on Fatca in April, Mr. Green cited another example of the price U.S. expats are paying: American executives with foreign companies who "are being refused a promotion because it puts the company in a vulnerable position."

Thus far, these and similar anecdotes have gained little public attention. Partly this is because the affected group—the roughly six million Americans living overseas—is much smaller than those who are directly affected by, say, the president's Affordable Care Act. For most Americans, the negative consequences of Fatca are highly abstract.

The other reality is that the caricature of high-living American expats makes them an inviting target. Not only are they small in number, their political representation is thinned by being spread over 50 states. That makes them vulnerable to the operating assumption we now have with Fatca: If you are working abroad, you must be a tax cheat.

A better way to think about these men and women would be as America's international sales force. With only 4% of the world's population, America has to look abroad for most of its new customers.

President Obama recognized this reality in his State of the Union in 2010. There he talked about the importance of being competitive, and he announced an initiative to double exports as a way of creating two million American jobs. Alas, it's hard to see how you increase American exports to markets overseas when you make it more costly and difficult for Americans to be in those markets.

Whatever the ills of ObamaCare, we are at least now having a debate on the merits. How much better we'd all be if we could say the same about the Foreign Account Tax Compliance Act.

Write to [email protected]

Another sad and perplexing dimension of the dilemma of the eternal chase for money in the City Upon a Hill, in both the public and private sectors.


Weak Economy Cited as Local Property-Tax Increases -- Needed to Balance Budgets—Strain Homeowners' Ability to Pay

By Kelsey Gee, WSJ, 13 July 2012.

When Elsa Dabreo inherited a house from her late father, she thought it was the best thing that ever happened to her. But now she is struggling to keep it.

The house, in a suburb of Boston, was mortgage free and valued at about $330,000 when she received the deed in 2005. However, it was saddled with $20,000 in back taxes which Ms. Dabreo, now 54 years old, couldn't pay. In 2010, after the taxes and penalties had ballooned to $42,000, the city of Weymouth, Mass., sold the debt at a tax-lien auction. If Ms. Dabreo can't pay the debt, she could be subject to foreclosure.

Relatives advised her to sell the home and pay off the debt, but she refused.

"I wouldn't be honoring my father's memory if I sold the home that he worked so hard to buy," said Ms. Dabreo, a former child-care worker who is now unemployed.

She recently filed for bankruptcy and hopes to keep living in the home—which has fallen in value to $296,000.

A report released this week by the National Consumer Law Center, says Ms. Dabreo's situation isn't unusual. Although mortgage default is behind most home foreclosures in the U.S., the number of foreclosures tied to delinquent tax payments is climbing. The NCLC, an advocacy group, estimates that $15 billion of tax-lien foreclosures happened in 2010, the latest year for which data are available.

Rising tax-lien problems stem from two overlapping trends associated with the weak economy: To close budget deficits, some local governments are increasing property taxes to raise additional revenue. But a growing number of homeowners, many unemployed or living on fixed incomes, are finding those tax bills—even before rate increases—a strain.

When homeowners fail to pay, municipalities have the legal authority to foreclose or auction off the tax lien to debt collectors, who can charge interest rates as high as 50% on the outstanding balances. If the homeowner doesn't pay—the deadlines to do so vary across the nation—many states allow the tax-lien holders to take ownership of the properties and resell them.

Brad Westover, executive director of the National Tax Lien Association, an industry group, defended the process. "It is a financial service that benefits local governments with the funds needed to operate, the investors with a reasonable interest rate on annual returns, and often times benefits the delinquent taxpayers with a decreased interest rate than if the tax lien was never sold," Mr. Westover said.

While the sales are causing distress for some homeowners, they reflect hard fiscal realities at the state and municipal level.

"Cities and towns are facing their own budget problems and of course need homeowners to make prompt tax payments," says John Rao, an NCLC attorney who wrote the report. Homeowners are slipping on tax payments for the same reasons they are falling behind on mortgage payments, Mr. Rao said: "They're unemployed, or underemployed, expenses have gone up, and you don't have enough money."

Advocates for the elderly and the unemployed, the groups most at risk of losing their homes, say it isn't uncommon for consumers with homes valued at hundreds of thousands of dollars to lose the properties after failing to pay a few thousand dollars in taxes.

"The system is really counterintuitive," said Laura Newland, an attorney with AARP, an advocacy group for people age 50 and older. "Some of the properties that are most vulnerable are the ones without a mortgage." (Local taxes on homes with a mortgage are often paid by the mortgage lender, which collects taxes from homeowners in their monthly payments.)

Frank Alexander, a professor who specializes in tax-law foreclosures at Emory University's law school, said municipal governments selling tax liens are being shortsighted. "It creates short-term cash, but generates long-term problems," he said, pointing out that tax-lien sales and tax foreclosures often spark legal challenges that can last for years and prove costly for homeowners and municipal governments.

Some states have different approaches. In Rhode Island, a 2006 law to protect taxpayers from losing their homes was named after 81-year-old Madeline Walker, who was evicted after falling behind on paying a 2001 sewer bill totaling $150. Investors bought her house at a tax sale for $836 and eventually resold it for $125,000. The event drew media attention and inspired former governor Donald Carcieri to advance a bill to protect Rhode Island residents from similar tax-sale foreclosures.

Since the Madeline Walker Act went into effect, state tax authorities are required to notify Rhode Island Housing and Mortgage Finance Corporation, a public agency, when homeowners fall behind. The agency works to help them get their tax payments back on track. In 2011, Rhode Island Housing sent notices to 4,000 homeowners at risk of a tax-lien sale. That tally is up 18% from 2010; the agency expects the number to rise again this year.

Fred Pontarelli, a 67-year-old retiree, nearly lost his Johnston, R.I., home in 2008 and again in 2011 because of property taxes. In 2004, Mr. Pontarelli paid off his mortgage on the $220,000 home. But he had trouble keeping up with property taxes, which climbed between 2006 and 2011.
After receiving a tax-sale notice in November 2008, he heard from Rhode Island Housing, which offered to purchase his liens and allow him to repay the debt over a five-year period.

The assistance was just what Mr. Pontarelli needed to catch up on his payments.

"You work all your life and when it comes time to retire, I don't think I should never have to pay taxes," he said. "I should reach a point where I feel comfortable."

Write to Kelsey Gee at [email protected]



The Supreme Court has long distinguished the regulatory from the taxing power.

By Paul Moreno, WSJ, 6 July 2012. Mr. Moreno is a professor of history at Hillsdale College and the author of "The American State from the Civil War to the New Deal," forthcoming from Cambridge University Press.

In 1935, Secretary of Labor Frances Perkins was fretting about finding a constitutional basis for the Social Security Act. Supreme Court Justice Harlan Fiske Stone advised her, "The taxing power, my dear, the taxing power. You can do anything under the taxing power."

Last week, in his ObamaCare opinion, NFIB v. Sebelius, Chief Justice John Roberts gave Congress the same advice—just enact regulatory legislation and tack on a financial penalty, as in failure to comply with the individual insurance mandate. So how did the power to tax under the Constitution become unbounded?

The first enumerated power that the Constitution grants to Congress is the "power to lay and collect taxes, duties, imposts, and excises, to pay the debts and provide for the common defense and general welfare of the United States." The text indicates that the taxing power is not plenary, but can be used only for defined ends and objects—since a comma, not a semicolon, separated the clauses on means (taxes) and ends (debts, defense, welfare).

This punctuation was no small matter. In 1798, Pennsylvania Rep. Albert Gallatin said that fellow Pennsylvania Rep. Gouverneur Morris, chairman of the Committee on Style at the Constitutional Convention, had smuggled in the semicolon in order to make Congress's taxing power limitless, but that the alert Roger Sherman had the comma restored. The altered punctuation, Gallatin said, would have turned "words [that] had originally been inserted in the Constitution as a limitation to the power of levying taxes" into "a distinct power." Thirty years later, Virginia Rep. Mark Alexander accused Secretary of State John Quincy Adams of doing the same thing after Congress instructed the administration to print copies of the Constitution.

The punctuation debate simply reinforced James Madison's point in Federalist No. 41 that Congress could tax and spend only for those objects enumerated, primarily in Article I, Section 8.

Congress enacted very few taxes up to the end of the Civil War, and none that was a pretext for regulating things that the Constitution gave it no power to regulate. True, the purpose of tariffs was to protect domestic industry from foreign competition, not raise revenue. But the Constitution grants Congress a plenary power to regulate commerce with other nations.

Congress also enacted a tax to destroy state bank notes in 1866, but this could be seen as a "necessary and proper" means to stop the states from usurping Congress's monetary or currency power. It was upheld in Veazie Bank v. Fenno (1869).

The first unabashed use of the taxing power for regulatory purposes came when Congress enacted a tax on "oleomargarine" in 1886. Dairy farmers tried to drive this cheaper butter substitute from the market but could only get Congress to adopt a mild tax, based on the claim that margarine was often artificially colored and fraudulently sold as butter. President Grover Cleveland reluctantly signed the bill, saying that if he were convinced the revenue aspect was simply a pretext "to destroy . . . one industry of our people for the protection and benefit of another," he would have vetoed it.

Congress imposed another tax on margarine in 1902, which the Supreme Court upheld (U.S. v. McCray, 1904). Three justices dissented, but without writing an opinion.

Then, in 1914, Congress imposed taxes on druggists' sales of opiates as a way to regulate their use. Five years later, in U.S. v. Doremus , the Supreme Court upheld the levy under Congress's express power to impose excise taxes.

Then, in 1922, the court rejected Congress's attempt to prohibit child labor by imposing a tax on companies that employed children. An earlier attempt to accomplish this, by prohibiting the interstate shipment of goods made by child labor, was struck down as unconstitutional—since it was understood since the earliest days of the republic that Congress had the power to regulate commerce but not manufacturing. "A Court must be blind not to see that the so-called tax is imposed to stop the employment of children within the age limits prescribed," Chief Justice William Howard Taft wrote in Bailey v. Drexel Furniture Co. "Its prohibitory and regulatory effect and purpose are palpable." Even liberal justices Oliver Wendell Holmes and Louis D. Brandeis concurred in Taft's opinion.

Things came to a head in the New Deal, when Congress imposed a tax on food and fiber processors and used those tax dollars to provide benefits to farmers. Though in U.S. v. Butler (1936) the court adopted a more expansive view of the taxing power—allowing Congress to tax and spend for the "general welfare" beyond the powers specifically enumerated in the Constitution—it still held the ends had to be "general" and not transfer payments from one group to another. After President Franklin D. Roosevelt threatened to "pack" the Supreme Court in 1937, it accepted such transfer payments in Mulford v. Smith (1939), so long as the taxes were paid into the general treasury and not earmarked for farmers.

And now, in 2012, Justice Roberts has confirmed that there are no limits to regulatory taxation as long as the revenue is deposited in the U.S. Treasury.

Are there any other limits? Article I, Section 2 says that "direct taxes shall be apportioned among the states" according to population. This is repeated in Article I, Section 9, which says that "no capitation, or other direct tax, shall be laid," unless apportioned.

The Supreme Court struck down income taxes in 1895 (Pollock v. Farmers' Loan & Trust Co.), on the ground that they were "direct" taxes but not apportioned by population. Apportioning an income tax would defeat the purpose of the relatively poorer Southern and Western states, who wanted the relatively richer states of the Northeast to pay the bulk of the tax. The 16th Amendment gave Congress the power to tax incomes without apportionment.

Other direct taxes should presumably have to be apportioned according to the Constitution. Justice Roberts quickly dismissed the notion that the individual mandate penalty-tax is not a direct tax "under this Court's precedents." To any sentient adult, it looks like a "capitation" or head tax, imposed upon individuals directly. Unfortunately, having plenty of other reasons to object to ObamaCare, the four dissenting justices in NFIB v. Sebelius did not explore this point.

Some conservatives have cheered that part of Justice Roberts's decision that limits Congress's Commerce Clause power. But an unlimited taxing power is equally dangerous to constitutional government.