An Interesting Analysis of an Analysis: John Richardson on Roy Berg on the Summary Trial


Stephen Kish has obtained permission from Tax Notes International to reproduce an article by Roy Berg to be posted (only there and only once) at the Alliance for the Defence of Canadian Sovereignty WordPress blog. The article is an interesting analysis of some main points regarding the Summary Trial which took place in Vancouver August 4-5, 2015.  John Richardson has taken that article, comments from the recent BNA article (linked below) and his own experience at the trial and examined how he sees the interaction. I am providing some main excerpts which will hopefully give a sense of what is involved and make you curious enough to go over and read the the article and the post.

On August 20, 2015,  BNA published an article on the Alliance For The Defence of Canadian Sovereignty that took place earlier this month. The article was posted by Stephen Kish at the Isaac Brock Society. As expected the article generated a large number of comments. The BNA article included the thoughts (and only the thoughts) of a number of Canadian tax practitioners.

Early Brock commentary on the Vancouver trial noted the presence the of lawyers from Moodys Gartner. The BNA article included commentary from  Moodys lawyer Roy Berg. In an article published on August 24 by Tax Notes, Mr. Berg expands on his views of the issues raised in the Vancouver trial.

A “report” on Mr. Berg’s Report …

The article, which is really a “report” of the trial, attempts three things:
First – to identify the issues raised in the Vancouver Trial

Second – to distinguish the issues raised in the Vancouver trial from the issues that are likely to be raised in the “full Charter trial”

Third – to provide his own commentary on how the issues should be resolved.


Having sat throught the Summary Trial, I can guarantee that trying to be clear about the issues raised, is/was not easy. What was really difficult was realizing that the interplay of the Treaty, the IGA, Canadian law, US law etc., does not end up with a nice and neat, clear answer. Determining how to weigh it all out seems to me, impossible to do (objectively). I suppose primarily because, in spite of the Treaty, one would naturally expect that in Canada, Canadian law should have precedence. The issues concern for the most part, Canadian citizens and Canadian residents, regardless of their US status. Their relationship to the United States should be a secondary one. All other nations of the world seem to understand this principle. The aberration here is as we all know, citizenship-based taxation. Why any country would sign a treaty with the US with the inevitable savings clause is truly mystifying. What does the other country gain by agreeing to such a thing? NOTHING! That, along with that annoying “tax treaty override” tendency, (say it now, U-S-A, I-G-A! U-S-A, I-G-A!) certainly suggests expecting the US to honor what is signed in a reasonable way is just plain naive and or stupid. That’s why they need the 30% sanction. Kinda like they have to have the IGA because what they are doing is not in the Treaty….A never-ending loop……

I encourage you to read his article. There are two areas that I found to be of interest.

We all know that Justice Martineaus’s decision will be appealed. If the plaintiffs win, this means that the Court has ruled that the information cannot be transferred to either the CRA or the IRS.


In his article, Mr. Berg suggets should the plaintiffs win, the defendants will likely appeal with the appeal and trial on the Canadian constitutional issues being heard later this year or by early next year. Whether or not the win would prevent the IGA entering into force is unknown. If so, it would be likely that the U.S. Treasury or the competent authorities would be likely to intervene in order to prevent such a result.

Imagine, the Obama’s U.S. Treasury “intervening” in a Canadian court to attempt to enforce the right of the U.S. to extract information from Canadian citizen/residents! What a spectacle that would be

I cannot follow how the United States would be permitted to intervene in a Canadian court proceding. As if the extraterritoriality of the entire issue is not enough, we must then endure their interference in our own judicial system? At what point do we as a separate nation, have the right to chart our own direction based upon our own best interests? I can feel your blood rising already….

Second, Mr. Berg’s analysis of the distinction between “assessable penalties” and other kinds of penalties. This is interesting and is an argument that is helpful to the plaintiffs.

This is perhaps, the most fascinating aspect of the article. If I understand correctly, should the IRS apply information reporting penalties, the plaintiffs would not have access to IRS Appeals nor the US Tax Court. The net result would be that having given the IRS the information resulting in assessment of penalties, Canada would have provided assistance in collection. The late Finance Minister, Jim Flaherty repeated this over and over and over; that Canada would not provide assistance toward the collection of FBAR penalties. And why? Because it is not in the Treaty! Does this also include other non-tax, information reporting forms penalties? I am far too tired to attempt another try at the Treaty right now but it sounds like it might.

Conclusion …

The “Alliance For The Defence of Canadian Sovereignty” and the STOP FATCA movement have had difficulty (so far) in generating media coverage. Mr. Berg’s commentary is an important part of the process in raising awareness of these issues. In addition, the content of the  commentary in his article was (in my opinion) fair, balanced and a welcome addition to the “FATCA debate”.

I am sure all will have plenty to say. Look forward to hearing it!


Chapter 8: The problem of #Americansabroad and ownership of non-U.S. real estate

Coming Into U.S. Tax Compliance Book” – Chapter 8

John Richardson –

For chapters 1 – 7 see here.


If (U.S. Person) then (Mr. #FBAR Ms. #PFIC and Uncle #FATCA) = Few investment and financial planning opportunities).

Yes, it’s true. There are only three things that Americans abroad can “invest in” that don’t trigger punitive taxation and/or expensive and complicated reporting requirements. They are:

1. Interest (as long as it is NOT from a money market fund – think PFIC)

2. Dividends from individual shares of stocks (NOT mutual funds – think PFIC)

3. Real Estate (as long as the real estate is not owned through a foreign corporation)

Let’s talk real estate and Americans abroad
Continue reading Chapter 8: The problem of #Americansabroad and ownership of non-U.S. real estate

Chapter 7: The problem of #Americansabroad and non-U.S. Mutual Funds Explained with an Example

This is a series of posts developed from my “Educational Outreach” program for Americans abroad. It is an effort to respond in a practical way to the questions that people have.

The chapters of my “Coming into U.S. Tax Compliance Book” are:

Chapter 1 – “Accepting Cleanliness – Understanding U.S. Citizenship Taxation – To Remain a U.S. Citizen or to Renounce U.S. Citizenship

Chapter 2 – “But wait, I can’t Renounce U.S. citizenship if I’m not a U.S. Citizen. How do I know if I am a U.S. Citizen?”

Chapter 3 – “No matter what, I must come into U.S. Tax Compliance – Coming into U.S. Tax Compliance for Those who have NOT been Filing U.S. Taxes

Chapter4 – “Oh no, I have Attempted U.S. Tax Compliance by Filing Tax Returns. I have just Learned that I have made Mistakes. How do I fix Those Mistakes?”

Chapter 5 – “I don’t want to Renounce U.S. Citizenship. How to live Outside the United States as a U.S. Tax Compliant Person

Chapter 6 – “I do want to Renounce U.S. Citizenship. This is too much for me. How the U.S. “Exit Tax” Rules Might Apply to me if I Renounce

Chapter 7 – “I Really wish I Could do Retirement Planning like a “Normal” Person. But, I’m an American Abroad. I hear I can’t Invest in Mutual funds in my Country of Residence. The Problem of Americans Abroad and non-U.S. Mutual Funds Explained.

The “Coming into U.S. Tax Compliance Book” is designed to provide an overview of how to bring some sanity to your life.

Chapter 7: The Problem of #Americansabroad and non-U.S. Mutual Funds Explained with an Example

My Assumptions: This discussion assumes without deciding,  that non-U.S. mutual funds are PFICs AKA “Passive Foreign Investment Corporations”. Although a clear majority of the tax compliance community considers non-U.S. mutual funds to be PFICs, it should be noted that:

1. Although the “consensus” is that non-U.S. mutual funds are PFICs, the IRS has never definitively said that non-U.S. mutual funds are PFICs; and

2. Some tax professionals take the position that only “some” non-U.S. mutual funds are PFICs.

Before we begin,  please note  there are different ways that PFICs can be taxed. This post focuses on the “default method”. The “default method” applies unless another option is elected. For all practical purposes, Americans abroad, who own non-U.S. mutual funds  have NOT made another election. Hence, the “default method” will apply. Let’s begin.

First – some practical advice – Get individual counselling:

The above tweet references my comment to an article – “Why U.S. Expats Should Never Own Foreign Mutual Funds” – written by David Kuenzi of Thunfinancial. I suggest that you:

  • Read David’s helpful article and
  • Read all the comments to the article. The article includes a general warning about both the punitive tax and reporting aspects of owning non-U.S. mutual funds. He writes:

    U.S. expats commit their fair share of investing mistakes. One of the most disastrous, in my view, is owning non-U.S. mutual funds.

    For U.S. tax purposes, non-U.S. mutual funds qualify as Passive Foreign Investment Companies (PFICs). PFICs almost always result in a costly mess for U.S. taxpayers. Here are two main reasons why:

    1) PFIC investment income is generally subject to highly punitive U.S. federal income tax rates of no less than 39.6% and potentially much higher. Losses in PFICs usually cannot be used to offset gains in non-PFIC investments, and gains are taxed annually, whether realized or not. In contrast, long-term capital gains rates for U.S.-registered mutual funds range from 15% to 23.8% and the tax is deferred indefinitely until realized through sale.

    2) U.S. reporting rules require that each separate PFIC investment must be reported yearly on tax Form 8621. Completing Form 8621 requires meticulous annual record-keeping and complex reporting. The IRS estimates that each Form 8621 requires more than 30 hours of accounting time a year to prepare and file. Not surprisingly, paying a tax preparer to properly report a handful of PFICs can cost thousands of dollars.

    The “known knowns”:

    – If you don’t own non-U.S. mutual funds don’t buy them.

    – If you DO own non-U.S. mutual funds, don’t buy any more of them.

    A “known unknown” and more difficult question is:

    What should you do if you already own non-U.S. mutual funds?

    What follows is my comment to his article:

    Continue reading Chapter 7: The problem of #Americansabroad and non-U.S. Mutual Funds Explained with an Example

Another Brock Warrior Down – In Memory of Marcio V Pinheiro

Marcio-head-only-212x300Marcio de Vasconcellos Pinheiro was a long-time Brocker, known primarily as “markpinetree” and also as “ThatIsMe” and “Still American.” He died on Friday night after a long struggle with cardiac disease. He was 82 years old.

He was a very kind and gentle man who suffered greatly from a feeling of betrayal from a country he chose to embrace and become a citizen of. He was a medical doctor by profession having come to the US from Brazil in 1958 for his internship and residency in psychiatry. He chose to become a dual citizen in 1967. He was very proud of his two daughters, son and granddaughter living in the US. He worried about his health and what would happen to his wife should he continue to become worse. He also was afraid to even consider renouncing, in spite of the ill effects this situation had on him, because he feared it could affect the situation of his family in the US.
Clearly at the mercy of tax professionals, (or IOW, clearly mislead into entering OVDI), he mentioned $300 per hour lawyer fees and he ended up paying 27.5% of his life savings. Unbelievably, he had a letter from the IRS indicating that his best course of action would be to renounce his US citizenship.
This was what he emailed to me to include as his personal submission to the SFC:

“I became a dual citizen in 1967. I loved the USA. Lives and worked there for thirty years. I am grateful for the way they received end treated me. I came back to my country of origin and continue to pay my income tax to the IRS. Since a few years ago I don´t believe what I am going through, I feel that I am treated very unfairly by the USA for the first time in my life. I am in failing health and I am spending sleepless nights afraid of losing my small life savings. I have to comply now with so many forms and information that it is always difficult to know if I am doing it right. I can not prove this but I suspect that my health is deteriorating because of this. I never expected one day to me in this predictament, of the USA being unfair to me.
Please so no publish my name.”


He seemed to enjoy and respect Robert Woods’ columns on Forbes and put many comments over the years. Here are a few of them, all of which demonstrate how proud he was to be American, how he valued what the US stood for and yet, how horrid the effects of being so were on his last years of life. I have a lot of his comments as a result of including them in the Senate Finance Committee submission since his were expressed so simply and with such heartache.

Mr. Wood, again thank you. I lived and worked in the USA for thirty years. In 1967 I was proud to become an US citizen. I am now back in my original country, with a failing health afraid to lose my small life savings in sleepless nights for the past many years. I never thought that this would be happening to me in my very old age. I cannot believe that this is happening in a Country supposed to be fair where there is no taxation without representation. Too late!


Mr. Wood. I don´t miss one of your articles. For the simple reason that they make sense. This is what the USA Government should be doing insofar as Americans, Dual Citizens and Green Carders living abroad. How come you can see things so clearly and the USA insists in going after innocent American citizens living and working abroad. Do they think that these Americans, who have no representation or even a voice, com be trapped and milked to help pay for the American debt? Let me confess that I have been a democrat all my life and up to recently I have supported in many ways President Obama. But against my best wishes I will no longer do it because I can´t believe what is being done to us. Is this the America that I was so proud of becoming a citizen?


Mr. Wood. Again, congratulations and thank you. What you describe is the truth. The great majority of us Americans living and working abroad are not renouncing in order to avoid paying taxes. I am beginning to explore this possibility because I cannot spend six months filing my Income Tax return to two countries, besides being double taxed. Not to speak of the enormous fear of doing something wrong and losing my life savings. Do I like this? No! But I feel I have no choice.



Once again Mr. Wood. I am beginning to give up. In my thirty years in America I used to hear: “you can´t fight city hall”. Never quite understood it. Now I do. In my situation I believe the best I can do is to shut up and every year go from January to September or October collecting data, filling forms and send them to a CPA in NYC to do my IRS Return, FBARS and all. In a way I am glad that I will not have much long to go in this world. And I regret having one day, many, many years ago going to an US Court and become an US Citizen. Thank you for all your help.


Thank you very much. I trust you and above all your expertise and judgement. After living and working 30 years in the USA I came back to my country of origin about 10 years ago. I have nobody here who is a US CPA and understands about IRS Returns from Americans Abroad. I have one telephone number to call in Philadelphia (paid), I do not have representation (the congressmen from the last State I lived on do not accept e-mails from outside the USA. I have spent an enormous amount of time and money trying to do the right thing. I only learned about FBARS in 2009 when visiting my “children” in the USA. This was too late, I was already considered a criminal for not filing it before and the penalties were stiff and included 27.5% of my small life savings. There are so many things. For instance Americans in France do not pay US Income Tax on their French pensions. I do. If filling as a Self Employed I have to pay Self Employment Tax to two countries, 16% to each, having no return. I live in fear, the advices I get do not always coincide. I am slepless and in bad health. I don´t want to become a “victim”. I will listen attentivelly to your thoughts. Many thanks and regards.

Continue reading Another Brock Warrior Down – In Memory of Marcio V Pinheiro

With such an amazing group, it’s simply NOT possible to NOT succeed! Thanks from @ADCSovereignty

cross posted from ADCSovereignty WordPress Blog


This afternoon I received news that the Alliance For The Defence of Canadian Sovereignty had  met its $500,000 funding goal. I had two simultaneous/thoughts or reactions.

My first thought was that I was always completely confident that we would achieve our funding goals. You would never allow us to fail. (Ask Stephen. I have never for a moment doubted the funding!)

My second thought was a feeling of amazement. Did we really do this? It’s simply amazing!

Q. How could I both be so confident of our success and amazed by that very success?

A. These seemingly irreconcilable thoughts are easily reconciled because:

It’s obvious that we would achieve our funding goals because we were working with  such an amazing group of people!

It’s also important to recognize the important role played by both the Isaac Brock Society and Maple Sandbox for allowing us to publicize our FATCA lawsuit on their respective blogs. I offer a special thanks to Peter Dunn of the Isaac Brock Society and Lynne Swanson of the Maple Sandbox blogs. Without their generosity and support it would have much much harder to have reached this milestone.

Continue reading With such an amazing group, it’s simply NOT possible to NOT succeed! Thanks from @ADCSovereignty

Morning after hangover – Don’t think about law and drive – more on @ADCSoverignty #FATCA Summary trial

reposted from ADCSovereignty WordPress Blog

The “Summary Trial” hangover – Friday morning August 7/15

Yup my head hurts. I have a splitting headache. I don’t feel well. I can’ eat. I am not going to be able to work today. But, my “hangover” is not from too much alcohol. It’s from listening to and thinking about too much law. Too many statutes. Too many stupid arguments. Too much “splitting hairs”. Too many poorly written statutes. Too much uncertainty over what statue applies to who and when. It’s just too much. But, that’s what law is and what legal arguments are about.

This week I sat with about 20 people in a courtroom in Vancouver listening to a bunch of high priced lawyers and a judge (largely through written statements) talk about and try to apply law. I’m not even sure what I was doing there or what events in my life brought me there. After all, I was 1 of about 20. (There may be a reason there were only 20 people there.)

It begins in August 1977

So, in August 1977 I was just about to start law school. (It’s true. My classmates were Archimedes and Plato. Both passed law school.) I wanted to become a lawyer. I had respect for law. I clearly assumed that somehow law reflected standards of basic morality. During that time (like most law students) I was interested in ONLY what the law was and how it could be used. I didn’t care: how it was made, the values it reflected. I certainly didn’t appreciate how law (although in some cases a force of good) could be used to institutionalize evil. I had never thought about politics and how laws were made. It never occurred to me that in many cases, laws were made because people could help themselves by hurting others (the Canadian banks come to mind). Of course, I didn’t know anything about “place of birth taxation” and couldn’t have anticipated FATCA.
Continue reading Morning after hangover – Don’t think about law and drive – more on @ADCSoverignty #FATCA Summary trial

“FATCA Infested Countries”: Explaining the @ADCSovereignty #FATCA lawsuit to a “pure” Canadian – thoughts on Round 1

reposted from ADCS-ADSC blog

The end of the beginning …

Time flies. It seems like just yesterday that your FATCA lawsuit was filed. Well, it’ been a year. It’s been a busy year. A “busy year” always seems like “just yesterday”. I am spending next week in Vancouver. The obvious reason is that I want to watch the opening round of your lawsuit. Win, lose or draw, please understand that this is going to be a long process.

Tis the season …

It’s election season. It’s widely believed that Prime Minister Harper will “call the election” this weekend. An election affords an excellent opportunity to discuss “all things Harper”. Of course to discuss “all things Harper” might include discussing “all things FATCA”.

Democracy is NOT a spectator sport – I have a suggestion for you …

Consider running as a candidate in the upcoming election. You can run as an “Independent Candidate” (a concept that has always been dear to my heart). You could also run as a “small party candidate”. Both the Green Party and the Progressive Canadian parties have voiced opposition to FATCA. If you are interested in running (I am quite serious) shoot me an email, I will explain how to do this. It’s very simple. You will have fun. You can make “FATCA” part of the overall debate about the Harper Government.

FATCA lawsuit – round 1 …

The summary trial on August 4, 5 will be based on “affidavit evidence”. What this means is that the evidence is presented to the presiding judge in the “form” (no pun intended) of written statements. If the evidence were offered through a “live witness” the witness would/could be “cross examined”. The same thing is true for “affidavit evidence”. I found it quite interesting to read the Government’s “cross examination” of your witnesses (Professor Christians and Mr. Wood). The cross examinations reveal both good news and bad news:

First the Good News …

I have the distinct impression that the Government lawyers do NOT understand what FATCA, the IGA, CBT, etc. are about.

Second the Bad News …

I have the distinct impression that the Government lawyers do NOT understand what FATCA, the IGA, CBT, etc. are about.

When the good news and the bad news are the same …

Yes, the “Good News” and the “Bad News” are exactly the same. It’s hard to understand and explain the technicalities of these issues. What is a “poor lone judge” to do? I am completely confident that our lawyers are vastly superior to the Government lawyers. Yet, the question is whether the judge will understand the issue(s). We will see …

Remember that win or lose this is going to be appealed. The “FATCA Chronicles” are heading to the Supreme Court of Canada where the issue will be decided by nine judges.

Continue reading “FATCA Infested Countries”: Explaining the @ADCSovereignty #FATCA lawsuit to a “pure” Canadian – thoughts on Round 1