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1,012 thoughts on “FATCA Discussion Thread (Ask your questions) Part One”

  1. I read in an article that FATCA does not apply to government-owned banks. Is this true? If so, is this going to be a big loophole countries can use to avoid compliance?

  2. I had a “quick” read over Notice 2010-60. (Notices 2011-34 and 53 don’t seem to say anything useful about this topic.) Looks like the “government-owned” exemption you are thinking of applies only to Non-Foreign Financial Entities which are 100% owned by a foreign government (see p. 22). There’s various criteria under which a Foreign Financial Institution can either be “deemed-compliant” or “not treated as a financial institution” and thus basically exempt from FATCA reporting, but I didn’t see any mention of government ownership as one of those criteria (pp. 6 to 19).

  3. Victoria, I found this in an article about the fact that China will avoid complying with FATCA. The article said: “Industry observers, including the lobbying group American Citizens Abroad (ACA), said earlier this year that China could circumvent Fatca by passing all foreign currency transactions through government-owned banks, “as this category of bank is exempt from the Fatca regulations”.

    “This provides China with a unique competitive advantage over publicly and privately owned banks in the rest of the world,” ACA said in its July report.”
    http://www.risk.net/operational-risk-and-regulation/news/2131127/chinese-banks-avoid-fatca-observers-warn
    And further: “”The critical point of distinction is that the statute exempts foreign governments and foreign central banks of issue where they are the beneficial owner of the income,” says Charles Kinsley, tax partner at KPMG in Hong Kong. “Where such a person is acting on behalf of others, that exemption should not apply. Therefore, I don’t see this as a real option.”

    “Stephen Fiamma, a US tax partner at international law firm Allen & Overy based in London, agrees. “I don’t believe every government-owned bank will necessarily qualify as an ‘agency or instrumentality’ of the Chinese government, which is what would be required to fall outside of Fatca withholding,” he says. “I suspect that if this route was tried, the US would clarify that a ‘controlled commercial entity’ – a bank that engages in normal lending and deposit-taking – will not be exempt.”

    The rest of the article discusses what China may or may not do about FATCA. Interesting story.

  4. Many of the more recent news article related to FATCA that I have seen are behind paywalls however, one of the more recent I saw indicated that was a very definative conflict between FATCA and the EU commission’s proposed privacy law amendments due to come into effect in 2015. Currently the issue is under “negotiation” between Brussels and Washington according to both sides which you could say is a sign weakness from the IRS as as recently last summer they indicated there would be no “negotiations” on the issue. On the otherhand the EU nor any other country including Canada has come out flatly to say they will block compliance by financial institutions in all circumstances. I would say people are right to suspiscious especially in Europe that there governments will want to get into a huge fight with the US over this but that doesn’t mean they necessarily won’t either.

  5. Tim, even now the US practically owns the SWIFT wire transfer system from Belgium. How’d that get past the European privacy laws? With US pressure of course!

    http://en.wikipedia.org/wiki/SWIFT#Terrorist_Finance_Tracking_Program
    ^^ This link mentions the issue. Just last year, the Europeans had a mess up and “didn’t know” if European citizens’ information had been accessed by Americans. It looks like the European governments are complicit. They are trying to say that there was a problem instead of just saying that the broke the rights of their citizens.

    Saxo Bank (from Denmark) even says in their account applications that details of your wire transfer may [will] be sent to the US Government in an effort to fight terorism! This is all about total control.

    I’m also in the camp that believes that the world governments actually want this. I’ve never been a big believer in that NWO/One world government stuff, but with stuff like this it keeps going in that direction!

  6. I largely agree. However the Europeans get very little back from the US by going along with this as they don’t tax their own citizens on the basis of nationality. The EU also has its own system of sharing tax information among themselves called the savings tax directive that they want the US join(opposed by many banking interests in the US) which would force the US to share info on European resident accounts in the US. There is also a vocal contigent in the EU against further information sharing with the US that is slowly getting stronger groups like the Greens and the Pirate Party. I also think there are enough conflicts between existing law in the EU and other countries and FATCA that most foreign governments will have to bring forward legal and adminstrative law changes in a very messy and public way if their financial institutions have any hope of complying. I am not saying it can’t be done but it is soon going to have to be made light of publically.

  7. Thank you all (Tim, Foxladyhawk, geeeez, and Eric) for your replies. And thanks for the link – I had heard that China would not comply and it gave me links to follow and do more research.

    I agree with Tim about Europe. Privacy issues are taken very seriously here and there would be a huge public backlash if the EU simply started handing confidential (bank) information over to the U.S. That does not however mean that there won’t be some sort of deal if the U.S. banks are forced to do the same thing. We’ll have to wait and see what happens. In my more paranoid moments I ask myself if EU government won’t start a misinformation campaign which attempts to convince EU citizens that FATCA is something that only impact U.S. citizens and is therefore irrelevant to EU citizens.

  8. For those of you Canadians who understand French, here is an open anonymous letter that I released to the Swiss President (Madame Widmer-Schlumpf) as well as the Swiss-French télévision. You can find the letter via this link:
    http://www.infrarouge.ch/ir/thread-364069-suisse-protege-assez-peuple-contre
    So far, two people have responded to the letter via the Infrarouge site. Please feel free to respond there in English or French.

    I just started my own blog, please feel free to post in English or French anything related to double taxation or other American administrative imperialism issues.
    http://stopunconstitutionaldoubletaxation.wordpress.com/ I will post links to Isaac Brock, ACA, and other useful sites on my blog.

  9. Pingback: The US tax policy, FATCA, FBAR in Suisse website: the embarrassment of the United States | The Isaac Brock Society

  10. Excellent letter. Says it all. I will reply in French and I will post a link on my blog here http://thefranco-americanflophouse.blogspot.com/

    Once you have your blog up and running, post the link (or contact me directly via email v_ferauge@yahoo.com) and I’ll do everything I can to promote it around the folks and bloggers I know here in France.

    Just for info I’m the American spouse of a French national, my Frenchlings are duals and I’ve lived outside the US for about 20 years. I am hopping mad and happy to do anything to fight this because “nous sommes tous dans la merde, mon gars…”

  11. @victoria, do your kids have US passports? I started thinking today: my wife is NOT American, I’m going to renounce, but my son is considered “American” even though we never registered him. Would he be forced to get an American passport to travel to America, or could he go on a Brazilian passport and a visa?

    I”m scared to death for us to travel to the US (non-americans) wth a USC child.

  12. @geeez we are thinking alike here. Yes, my Frenchlings have US passports. Oddly enough they were born in the US when we were sent to the US by my husband’s French company (yes, folks I was actually an “expatriate” in my own country for a few years 🙂 and I took that opportunity to have two kids and stay home. We left when they were still toddlers. The Frenchlings have always had passports because we often send them to their grand-parents in Seattle for a few weeks in the summer.
    I’m assuming your kids were born in Brazil. It might be OK if they go through with their mother but if you go through as a family they might see your birthplace (which I’m assuming is the US) and ask questions. I’d be worried too. What do the rest of you think?

  13. My beef about this is that I think it should be my wife’s (the child’s mother’s) “right” to determine the citizenship of the child, and not the US Government. Great.. now I’m even more paranoid about travelling to the US.

    Pretty soon, I wouldn’t be surprised if the US starts trying to link us to conspiracy-theory types to try to discredit what we are saying, even though we are only stating facts.

  14. Well, this is just crap! Look at what I found on the US embassy’s website:

    “Children born in Brazil to American parents, except those in diplomatic or official status, acquire Brazilian Citizenship at birth as well as a possible claim to American Citizenship. They are dual nationals, and are required to have Brazilian passports to leave Brazil. They will need American passports to enter the United States or other countries.”

    The last two sentences irk me the most. We don’t WANT US citizenship!!!!

  15. So does anyone have any idea how to go about organizing a class-action lawsuit against the U.S. government and its tax laws based on citizenship? One really doesn’t have control over where he or she is born. Is this kind of legal action even possible? What happened to “no taxation without representation”? I technically and logically have no U.S. representation; it feels rather dishonest to vote for candidates in a state and country that I haven’t lived in for almost eight years. And now one has to annually renew one’s right to vote in the U.S. by “Federal Post Card Application (FPCA) to your local election officials every year” each January in order to exercise this right. Don’t get me wrong–I didn’t mind paying taxes in the U.S. when I lived there. Taxes pay for the services we need like schools, safety, etc. I am a stay-at-home parent with little or no income except the support provided by the hard work of my husband. But the latest tax law changes are overreaching and draconian for middle class expats. I hadn’t seriously considered relinquishing my U.S. citizenship until recently. But now it seems I will have no alternative in order to avoid the burden on my family.

  19. http://cens.com/cens/html/en/news/news_inner_39260.html

    “The threshold requiring financial institutions to collect information on clients’ assets, for instance, has been raised to US$1 million, from US$500,000 originally. The reporting threshold for corporate accounts has been set at US$250,000, a stipulation which can greatly reduce the trouble for small and medium enterprises.

    Foreign institutions with deposits scale less than US$175 million will be exempt from the requirement. ”

    Can anyone confirm or clarify what this article here is saying? Is this implying that bank accounts under 1 million dollars won’t be reported by the bank?

    Also, isn’t 250,000 dollars still a really low limit for a corporation?

  20. That information is incorrect with respect to individuals as far as I can tell. The draft regs are here
    http://www.irs.gov/pub/newsroom/reg-121647-10.pdf

    Accounts under 50,000 are exempt. Accounts gtr. than 50k less than 1MM will be subject to ‘electronic search’ of the FFI’s data. . for US address, US forwarding address, US birth place etc. I can’t imagine why the bank would have the birth place in its files.

    For accounts more than 1 MM. Someone in the bank is supposed to verify and vouch for the account holder. As I continue to stress, RSPs, TFSAs and other tax favoured accounts may well be exempt from FATCAT reporting by the FFI. See pages 286 and 287.

  22. KALC – You are almost entirely correct – just one small point – it is at the Non-US financial Institution’s discretion whether it chooses to ignore accounts below $50k. In practice they probably will.

  23. Need some clarification on FATCA.

    — I have an account in an overseas (non-US) bank wherein I have Fixed Deposits jointly held with my father.
    — Account was opened last year (2011)
    — Money in account has all been generated from rental income. Property is located overseas. Property has been declared on Federal Tax return 1040 in US.
    — Interest and Tax Deducted on interest which is paid overseas is being reported on current 1040 and applied as tax credit. Of course I will not be spared the state tax ! Tax on money not generated in the US!
    — No monies from US are or were sent to this account
    — Account balance is above the limit for married filing joint ( that is my filing status here in US)

    Do I need to file a FATCA?

    thanks.

  25. @Steur
    ‘Do I need to file a FATCA’. FATCA is not a form to file, it is an Act being shoved down the throat of Foreign Financial Institutions around the world regarding reporting requirements to the IRS.

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