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Strategy Roadmap – Rough Draft

“Give me six hours to chop down a tree and I will spend the first four sharpening the axe.”
― Abraham Lincoln

While it may seem like there’s very little activity here, we have been busy behind the scenes. The Steering Committee (myself, Carl Greenstreet, and Caroline Day), have been working on articulating our strategy. We have a very rough draft of our initial strategy roadmap that we are now releasing for comment. There are still many holes to fill – the table of contents shows an outline of where we’re heading.

Previous blog entries have discussed our overall vision. Carl’s Plan to Succeed post foreshadowed much of the structure of the current document. In Priorities I outlined several main goals which have been incorporated here. And in One Step at a Time I talked a bit about the long time horizon that may be necessary in our struggle. The governance section of the document comes mainly from my Steering Committee post. The Strategy Roadmap pulls all of this information into a single document.

This is a first draft. Your comments and suggestions are needed to assist with refining the current document and extending it. Getting the strategy right is an important first step. As the old proverb goes: “What’s the use of running if you’re not on the right road?” You can make comments here, on the Facebook group, or by completing the feedback form on the About page.

Comments will help us develop a coordinated action plan for 2017. We look forward to your feedback, and will be calling for assistance from everyone as our plans for 2017 take shape.

I’d like acknowledge Carl’s efforts in putting together the initial outline that became this first draft. Fleshing out his outline has been a group effort. If you are interested in joining the Steering Committee to help with further refinement of this document, please fill in the form here.

Download the document here: FTT Strategy Roadmap

FOI Request

On 29 November I submitted a Freedom of Information request to the ATO requesting copies of all data about my accounts that was sent to the IRS under FATCA. The fact that I had to ask is outrageous – account holders should be automatically notified when their data is sent overseas. But, current Australian privacy law does not require any notification. Continue reading “FOI Request”

When Tax Professionals Disagree

Walter B. Wriston (former CEO of Citicorp): “All the Congress, all the accountants and tax lawyers, all the judges, and a convention of wizards all cannot tell for sure what the income tax law says.”

Applying US tax law to “foreign” legal structures is problematic.1 This is one of the great frustrations of trying to comply with the US system of citizenship based taxation (and one of the reasons why this extraterritorial application of US law should be carefully considered by all countries who negotiate tax treaties with the US). Inevitably there will be differences of opinion as to how US law applies to particular foreign income or taxes – and these differences will lead to different US tax treatment of the same or similar items. There may be no single “right” answer, and we (or the tax professional we have hired) will have to choose how to interpret US tax law to determine our US tax liability on our foreign (home) income. Understanding how our local law meshes with the structures defined in the US tax code is the first step.

In Australia, we have two advantages relative to much of the rest of the world (especially those which are not part of the Commonwealth). First, our laws are written in English. While there are several Aussie colloquialisms that differ in meaning from American English, our laws and other formal writing are written in language that is mostly the same as US English (with a few extra vowels here and there, and the occasional “zed” that has been replaced by an “s”). Second, our legal system is derived from the British system, so many of the underlying principles are at least similar between the two countries. Even so, there are differences.

Continue reading “When Tax Professionals Disagree”

Where to now?

It’s been ten days now since the US election. Many (including me) were surprised by the result. Regardless of how you voted (or didn’t – I’m no longer eligible to vote), the US electorate has spoken, and it’s time to move forward under the new regime. Over on the Isaac Brock website, they are organising a letter writing and Twitter campaign to encourage the Trump transition team to enact the planks in the GOP platform calling for the repeal of FATCA and legislation to enact Residence Based Taxation (here are two other currently active threads – [1][2]). It appears now that the current FATCA repeal bills will be re-introduced when the new Congress convenes in January.

Continue reading “Where to now?”

One Step at a Time

journey

It’s crystal clear by now that the US and Australian governments are not going to wake up tomorrow and realise that FATCA and CBT are unjust and discriminatory. It will take quite some time to get rid of CBT and move to RBT. The other night I was catching up on my long list of podcasts, and stumbled upon the latest edition of the Freakonomics Podcast – In Praise of Incrementalism.  The podcast explores how an incremental approach worked for gay marriage, and the civil rights movement as well as how an incremental approach might be used for current issues such as #BlackLivesMatter. Listening to the podcast soon after reading a discussion about the civil rights movement in the American Expatriates Facebook group, started me thinking about our struggle to get our elected representatives to understand the injustice of FATCA and CBT. When it comes to fixing FATCA and CBT, a home run is unlikely. But each hit makes a run more likely. So while we have our eyes on the prize, we need to also aim for small victories that will eventually make a shift to RBT seem inevitable.

What does incremental look like?

Incremental is SLOW. It’s not exciting. But eventually it gets you there.

The incremental approach is most effective when the obvious, low-hanging fruit, is tackled first. I’ll suggest three potential baby steps that could get us on the road to victory – please add more in the comments.

Accidental Americans
Many of those claimed as US persons don’t identify as Americans at all. Perhaps they were born in the US, but their non-American parents took them home while they were still children. Or maybe they were born outside of the US with at least one US citizen parent. They may not even speak English. And now, if they admit their place of birth or parentage to their local bank, they are asked to fill out a W-9 so their account information can be sent to the IRS. What right does the US have to tax these people? The injustice is so obvious that President Obama has proposed an inadequate remedy in the 2016 and 2017 budget proposals. And recently there has been some push back against the US taxation of Accidental Americans in France.

Privacy/Transparency
Last week’s post argued that US Persons should be automatically notified when their account information was reported to the IRS via the ATO. Implementing this type of reporting would be an acknowledgement that affected US Persons have a right to know who has their financial information. Again, this is a baby step towards overturning the massive privacy violations of FATCA. A comment in the Facebook group argues that privacy is just a distraction, and that we should, instead focus on more substantive problems with FATCA. However, once our governments admit that there are some privacy concerns with FATCA, it may be easier to get them to understand some of the bigger problems.

Same Country Exemption (the right way)
This excellent video by Professor Allison Christians (McGill University) from 2014 was recently linked in the Citizenship Taxation Facebook group.

Starting about 6 minutes into the video Professor Christians advocates a “Same Country Exemption (SCE)” as an incremental approach to dismantling FATCA. SCE has a bad name among some groups of US expats because of a specific proposal that links SCE with IRS compliance. However, I think Professor Christians is advocating a simple SCE without any need for the FFI to check anything other than proof of residence: if you bank where you live, the bank is absolved of all FATCA reporting requirements. Plus, you’re being taxed where you live, so the chances of your “foreign” bank account being used to evade a significant amount of US tax is fairly small. SCE would be a small incremental step that would bring relief to many (not all) of those adversely affected by FATCA. Does it go far enough? No. But, implementing this type of SCE would alleviate at least some of the injustice of FATCA – it would be a small wedge that might allow us to push the door open wider.

 

Transparency

In my last post, one of the priorities listed was more transparency in FATCA reporting. What I meant was that everyone should have the right to know what is being reported about them to the ATO/IRS by their local (foreign to the US) financial institution, and the right to correct any errors in that information. Continue reading “Transparency”

Priorities

Following on from Carl’s post, I think the main issues have been obvious since this site was started. What we need now is to set specific goals and objectives. We can divide these into two broad groups – Tax Treaty goals and FATCA goals. The purpose of this post is to list the goals so that we can prioritise action. Continue reading “Priorities”

Plan to Succeed

“If you fail to plan, you are planning to fail!”

Many of us would recall this famous quote by Benjamin Franklin.  I believe this statement also holds true for an advocacy group like Let’s Fix the Tax Treaty!   To address this, I have been working with Karen to help develop a draft Advocacy Strategy and Action Plan for our group.   Before too long, we will be tabling a draft plan for your comments and feedback.  But first, I wanted to set the stage so that everyone understands the importance of going through this process and getting it right.

When I discovered Let’s Fix the Tax Treaty! I was immediately attracted to this group as it 1) focused on finding solutions to the unfair USG CBT taxation issue that I am passionate about, 2) targeted its efforts in my home country of Australia (rather than a country located on the other side of the world that I left 26 years ago and where I have struggled to be heard) and 3) provided a vehicle for organised collective action.

However, the first time I read through LFTT! website,  I immediately had many questions on the next level of detail.   What are our specific priorities?   How will we go about achieving our aims in an organised fashion?  Okay, if we want to press the Australian Government to amend the underlying tax treaty and intergovernmental agreements, has anyone actually written down what needs to be changed and why?  What are our the strongest arguments in our favour?  What activities should we do and why?  So many questions…

This is where a written Advocacy Strategy and Action Plan comes in.  A good advocacy plan will help our group decide where to spend time and effort to achieve our goals and assist us to be as effective as possible with our limited resources.  The plan should be a key reference document that is updated as we progress towards achieving our goals.

Fortunately, there are a number of great templates available online to assist groups in developing an effective Advocacy Strategy and Action Plan.   Some of the better ones are here, here and here.   I personally found the planning exercise to be very familiar as the process is very similar to business strategic planning which I have been involved with for many years.

 

advocacy-cycle

Developing an Advocacy Strategy and Action Plan is a fairly straight-forward process that requires the group to consider key questions:

  • What is our goal?
  • What are the specific objectives that will lead us to achieving your goal?
  • What are our arguments and evidence?
  • Who can we collaborate or partner with?
  • Who do we need to influence?
  • What are our messages? How will we deliver these messages?
  • How will we approach this? Public / Private / Direct / Indirect?
  • What key activities should be undertaken?
  • What are our priorities and timings?
  • How will we organise and manage our group?

You can see that there is quite a bit to think about and work through which is what Karen and I have been working on offline.  We are happy to take early feedback in the comments below or on our FB group regarding your thoughts on the answers to these key questions.

I firmly believe that this front-end effort will pay off through better focused and organised efforts, leading to better results.  That said, we won’t get anywhere without broad involvement by impacted persons who are willing to pitch in to bring about positive change; so I remind you once again to spread the word and to get involved!

Strength in Numbers

Many Hands Make Light Work
Old English Proverb

United we stand, divided we fall
Aesop

There is always strength in numbers.  The more individuals or organisations that you can rally to your cause, the better
Mark Shields

All for One and One for All!
Motto from the Three Musketeeers, by Alexandre Dumas

I not only use all the brains I have, but all I can borrow
Woodrow Wilson

Alone we can do so little; together we can do so much
Helen Keller

With an estimated 200,000 persons of American origin living within Australia, one would think that the awareness would be greater of the significant threats imposed on them through the US Government’s harmful and unjust practices of extraterritorial taxation.   I’ve been baffled at how few actually understand the breadth of compliance expectations, costs and potential risks such reporting compliance penalties and double taxation but I also recognise that following years of minimal enforcement or education, many would have been able to stay blissfully ignorant of expectations imposed by a far far away country.

However, all this is changing now that the USG, with Australia’s full cooperation, has begun to enforce their extraterritorial Citizenship Based Taxation regime, aided and abetted by FATCA.  Stakeholders are starting to wake up to the material threats they face and are motivated to seek change.  This led to the recent formation of Let’s Fix the Tax Treaty! as an Australian focused advocacy group seeking to press the Australian Government for amendments to the Australia/US Tax Treaty and the FATCA IGA to eliminate discrimination against a subclass of Australian citizens that is also disadvantageous to all Australians

As a new, word-of-mouth grassroots initiative, it is pleasing to see that membership in our Facebook group has already reached over 125 members.  Nevertheless, current membership is a very small fraction of the impacted community and clearly our cause will be better served by greater membership representation.

Why does membership numbers matter?  Firstly, if we are seen to represent a large stakeholder group having aligned goals, we’ll have much greater creditability and a better opportunity to influence Australian policy and opinion makers.   Secondly, our advocacy group strategy (currently under development –look for blog posts on this soon) will flow onto specific activities that will require volunteer efforts to execute.  To successfully bring about change, we will all need to get involved.  Recently, a call went out for volunteers to serve on a Steering Committee (which remains open, hint, hint!) and there will be further calls for volunteer support as standing committees are formed to support targeted activities.   Thirdly, the more broad and diverse the skills and mindsets we can draw upon, the more successful our efforts are likely to be.

Who are the Stakeholders we need to attract?  Stakeholders consist of:

  • Australian residents of American origin, many of which are dual citizens;
  • Australian spouses of American citizens;
  • Australian citizens living in America who are now subject to US tax laws including potentially material (penalty) taxes on Superannuation and passive investments they established before moving to the US
  • Indirectly, all Australians who have to pay for FATCA systems, suffer money being unfairly diverted from their domestic economy into a foreign economy and tolerate a loss of Australian sovereignty as Australia domestic policies are undermined by a foreign power.

 

So if we accept that larger membership is desirable, what can we do about it?

  1. Spread the word to your network and ask them to do the same. Most of us know many impacted people so this is a great place to start.  To make this easier, I’ve previously posted a “model email” (look for it in the comments) that you are welcome to modify and personalise as your own.
  2. Let appropriate organisations know about our group. I’ll cross-post this in the a couple of relevant Facebook Groups I am a member of (Yanks Down Under and North American Expats in Adelaide and South Australia) please do this with other appropriate groups and please tell us about them in the comments.
  3. Media helps immensely. After the recent SMH article featuring our very own leader Karen Alpert, we saw a sharp uptick in FB membership requests and visits to our blog site.  We’ll be formally working the media angle further as the Steering Committee and group strategy gets rolled out but perhaps some of you already have connections or ideas here?  Please tell us about it in the comments.
  4. Finally, we are happy to take other ideas in the comments.

I think we should be targeting to grow this group to the 2,000 to 5,000 persons size, which seems to me both a reasonable and achievable target.  Of course, we recognise that numbers for numbers sake is not what we are here for and we will soon table an advocacy strategy and corresponding activity plan for your input and feedback.  Then it will be time to get involved!  Look for my next post soon on the benefits of having a well thought-out advocacy strategy.