Just when it was beginning to seem that a challenge to the U.S. tax evasion law known as FATCA actually had a chance of getting somewhere, a lack of financing has emerged as an issue...
As reported here and elsewhere in recent weeks, a U.S.-born, UK-resident complainant known only as “Jenny” is hoping to formally challenge a May 29 decision by the UK’s Information Commissioner’s Office (ICO) not to uphold her crowd-funded complaint over the way her personal data has been sent to the U.S. by British entities in recent years, in compliance with the U.S.’s so-called Foreign Account Tax Compliance Act.
However, it seems she'll need further funding from the "crowd" if she's to do so.
Thus it is that with just days to go before a decision has to be made (the deadline is Aug. 29), campaigners are issuing a call that they hope will be heard by one or more people who might be able to make a significant donation to the cause, as well as others who share their frustration with the failure of European government authorities to stand up to the U.S., even when their own citizens’ rights are being violated.
"Whether or not you're personally affected by FATCA, it is the enforcement tool the U.S. uses to impose worldwide taxation on people who live in, and pay taxes to, other countries," said John Richardson, a well-known, Toronto-based citizenship lawyer and American expat rights campaigner. "FATCA is therefore a problem that is far bigger than the issues affecting any one individual. It affects your friends and neighbours in your country of residence; it also affects the tax base and sovereignty of the country in which you're currently living.
Her problem, Jenny and her legal team explain, is that in the UK – as they note that the House of Lords has also pointed out recently – the undertaking of a so-called ‘judicial review’ is prohibitively expensive and therefore, effectively inaccessible to ordinary taxpayers, even those, like Jenny, who, they note, are lucky enough “to enjoy the benefit of crowd-funding by an extremely dedicated community”.
(As of this week, Jenny has £90,969 with which to make an appeal against the ICO’s decision, well short of the £156,000 she has set as her goal for going ahead with her challenge.)
As she said on her crowdfunding page, "A legal challenge of this type requires an enormous amount of work. It is complicated and untested, which means it is hard to predict how it will develop."
Separately, she told the American Expat Financial News Journal: "As documented by my legal team, the ICO failed to act independently in my case – eg., they based their decision in my case on political expediency instead of legal principles – and also failed to ensure that proper Data Protection Impact Assessments were carried out, as required by the EU’s GDPR [General Data Protection Legislation] legislation. [The GDPR is a relatively-new (2018) EU law that governs the way personal data may be transferred within the EU and outside of it.]
“So we believe we have a reason to challenge the ICO’s ruling.
“On the other hand, I have been told that those who file for a judicial review not only need to find the money to bring such a challenge, but face a much bigger hurdle of ‘adverse party costs’ – that is, the need to pay the legal costs of the other side, if, for whatever reason, their case were to be thrown out.”
Added Filippo Noseda, the Mishcon de Reya law firm partner who has been overseeing Jenny’s FATCA challenge: “It’s a difficult issue, and one that I have been actively liaising with the barristers in an effort to try to resolve."
One reason Jenny says she’s reluctant to walk away from the case, in spite of the financial risk it would pose for her if she fails to raise the money she’s told she needs, is because a European Court of Justice decision on July 16, in a well-known and closely-watched privacy case known as “Schrems II”, is seen as a potential game-changer for her and other FATCA challengers in Europe.
As reported, the Schrems II ruling struck down the so-called “Privacy Shield”, the main mechanism used by the EU to protect the personal data of EU citizens when it's transferred to the U.S.
The case was originally brought more than five years ago by 30-something Austrian national named Maximilian Schrems, in the form of a legal complaint about the way Facebook had been sending his personal data to the U.S.
Immediately after the ECJ issued its Schrems II ruling, Noseda and others, including experts quoted in stories published by such media organizations as The Economist and Bloomberg, described it as a "potential game-changer".
The Bloomberg article, in fact, which was dated Aug. 18, bore the headline “EU privacy law offers hope to Foreign Account Tax law critics”.
Meanwhile, as Noseda and other data protection experts have pointed out, the ECJ ruling also came on the heels of a series of major personal data breeches in Canada, Germany and elsewhere, suggesting, they say, that the regulations are in need of urgent review at the very least.
Noseda, who is a dual Swiss/British national, isn’t personally affected by FATCA, but he admits that he does believe that the way European countries are allowing personal data to be sent across national borders falls well short of complying with the GDPR regulations and is in urgent need of reform.
American expats who actually are struggling as a result of FATCA, however, have a powerful reason to want to see Jenny file her appeal, Noseda said.
A recently-renounced American who now lives in France, who has been a visible campaigner against FATCA in recent years, said it seemed to him that American citizens who are resident abroad “are generally either too apathetic or too disorganized to get behind Jenny’s claim", even though he believes they – like him – should.
"It is a crying shame, particularly given the fact that as long ago as 2016, we recognized that FATCA’s Achilles Heel in Europe was data privacy, and now we at last have a chance to argue the case before the EU courts,” this American, who requested he be identified only as “J.R.”, added.
“We’ll also probably never have a more qualified and more enthusiastic legal team that Filippo and the lawyers at Mishcon de Reya.
"However, it seems that we're in danger of missing the boat, if Jenny isn't able to pursue her appeal.
"If we do, we'll have no one but ourselves to blame."
EU data protection concerns
In a separate matter, Noseda yesterday wrote to European Data Protection Board chair Dr. Andrea Jelinek to call her attention to another letter, written last week, in which 20 UK Parliamentarians called UK Information Commissioner Elizabeth Denam's attention their belief that the government had "paid scant regard to both privacy concerns and data protection duties" during the Covid-19 pandemic.
Noseda cited the Parliamentarians' letter because he said it was "not an isolated incident" but evidence that the UK's data protection authorities were "not discharging their duties for reasons of political expediency and, in the case of the UK, lack of independence from government...
"In light of the above, I would ask you please to provide me with an update on the work that the EDPB is allegedly carrying out in relation to FATCA following the recent CJEU [European Court of Justice] judgement in the Schrems II case and in the light of the existing opinions from the WP29 [Article 29 Working Party, established under Article 29 of the pre-GDPR data protection directive, a European Data Protection Board entity], the EDPS [European Data Protection Supervisor], the AEFI Group [Automatic Exchange of Financial Account Information group] , the PETI [European Parliament's Petitions Committee], the T-PD [Consultative Committee of the Convention for the Protection of Individuals with Regard to Automatic Processig of Personal Data], and, as our April-May 2020 correspondence shows, even the European Commission."
To read more about Jenny's campaign and to make a contribution on her CrowdJustice.com page, click here.
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- U.S. TIGTA report finds 'actions needed' to fix FATCA compliance