Liberty and justice for all United States persons abroad

The Isaac Brock Society

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

  1. @Mona Lisa, Something to cheer you up: tomorrow I’m going to meet with Marylouise Serrato, the director of American Citizens Abroad, who just moved from Switzerland to Washington, DC. We should discuss the residential taxation proposal, and she is already planning meetings with the IRS/Treasury and several congressmen.

  4. @Shadow Raider, that’s great news.
    I know the main issue is regarding American living abroad, but would that be possible to mention the immigrants case also in your talks. So far, nothing has been done to help us. This is very depressing.

    Thanks!

  5. *@Badger and @Shadowraider, thanks so much for the kind words. @Badger, I can relate to all the stress you’re feeling…and@Shadow, I too really appreciate all your efforts. It’s all one can do but try.

  6. Related to FATCA implementation in Australia:
    UK FATCA agreement gives hope to super funds
    The good news: super funds are likely to be exempt.
    The bad news: “FATCA is here to stay, unfortunately.“

    “When we met with Democrats, who were responsible for drafting the legislation, we got responses such as: ‘Oh my god, we didn’t know about these superannuation funds.’ But we got a strong commitment to work through the issues from those people,”

    Surprisingly, the Republicans were not keen on repealing FATCA either.

    “When we met with the Republicans and when we asked . ‘will you repeal FATCA?’, [they answered:] ‘Oh no, sorry, it wouldn’t look good for us, because we have these problems with [Republican presidential candidate] Mitt Romney having been accused of hiding money offshore and it would be awkward for us to repeal it.’

  7. @saddened, @Mona Lisa, You’re welcome.

    @Christophe, I considered both Americans abroad and immigrants in my bill draft. The bill would exempt Americans residing abroad from reporting to the IRS, but it would also solve the problems for immigrants by repealing the FBAR completely and keeping only form 8938. This would eliminate the draconian penalties, which I view as the main problem in practice.

    It looks like the first of ACA’s meetings here will be with the IRS and Treasury. If I can, I’ll try to convince them to apply Nina Olson’s recommendations to the recent compliance program, which would erase some restrictions, increase the unpaid tax threshold and also include US residents.

  9. And now we come full circle: “Certain” ‘foreign financial institutions’ (FFIs) are going to promote the new ‘streamlined compliance’ program to their account holders, in order to make complying with FATCA easier

    ……………”Undoubtedly, FATCA will bring about an increase in voluntary
    disclosures under the Streamlined Filing for Non-Residents Procedure. In
    light of the foregoing, certain FFIs have determined that     in raising
    awareness about these types of programs amongst their U.S. customer base
    not only will they be strengthening their existing relationship with
    such customers    ; they will also make the transition to FATCA a much
    smoother one for all parties involved    .”… http://www.martindale.com/banking-financial-services/article_Gunster_1596212.htm ”FATCA Sparks Interest from U.S. Taxpayers Living Abroad in New Streamlined Disclosure Program’

    So now we can look forward to our banks not only acting as agents of the IRS, but they offer full service tax compliance advice and counselling too. And, they somehow think this will enhance and strengthen our relationship with them? What were the originators of that concept smoking at the time?

    No deluded self interest and conflict of interest there? Plus a total lack of expertise in the area of US tax?

  10. @ShadowRaider; thank you for including the recent immigrants and for thinking about the details of the recent compliance program. One outstanding thing is that more of us abroad would not even have to file (to yet again prove that our US tax is zero) if the return filing thresholds were higher, but for those of us with non-US spouses who adamantly refuse to consider being included in any US tax return (which just extends the perils of filing to yet another family member), the threshold for married filing separately from abroad is punitive in that it is so much lower than that for filing jointly, and so are the other rates. Why penalize us by making the return reporting thresholds so low for those abroad?

    The meetings between ACA and the IRS and Treasury will be illuminating I’m sure.

  12. Thanks, Just Me and bubblebustin.

    Good piece. Good new term 8938 = Shadow FBAR (duplicative and attached to actual tax returns) and another we’ve learned of this week: Surveillance Creep.

  15. “Thankfully, it’s not too late for the U.S. to chart a new course. Originally, the new regulations demanded by FATCA were to be crafted and implemented by January 1st, 2013. But faced with a significant backlash over the excessive costs and expensive burdens of the rule from financial institutions throughout the world, the Treasury Department has pushed back the implementation date to the middle of 2014.”

    Question – can anyone verify that this is true?

    http://www.schweizermonat.ch/artikel/the-janus-face-of-us-tax-policy

  18. And how does Geithner explain away the treatment of immigrants to the US who had pre-existing post-tax accounts in India – their country of origin, or who own or have joint interest in, or have co-signed on accounts with family members still in India – which cannot be dissolved or transferred to the US, and so inevitably fall into the FBAR and FATCA fundraiser penalty regime? How did he explain to India why the US continues to solicit would-be immigrants – especially those likely to have pre-existing assets in their country of origin – but does not warn them about the harsh and confiscatory way their ‘foreign’ accounts in India will be treated by the US IRS? How does he address the fact that these people are not given prior consideration during the visa or immigration application process in order to help them understand what they have to do with their ‘foreign’ accounts BEFORE they come to the US, and before they fall into the FBAR/FATCA trap, and why the US is not addressing their concerns and helping them become compliant BEFORE hand, and now, not assisting in any way after the fact?

  19. @badger

    It’s simple, he doesn’t! You ever had a used car salesman point out every nick, scrape and ding on that car you had your eye on?

  20. @Badger, I totally agree. I think that if the foreign governments agree to FATCA, it should be on the condition that their citizens who immigrated to the US or US citizen who immigrated to their country not be ruined if they give up their names. They should insist on a way to compliance other than OVDI. They should negotiate an amnesty for their citizens. After all if the rules change, why not “restart the counter”. And they also should insist on reciprocity – as the German said: at least for principle. Why would the burden be only on FFIs? Maybe Asia should also put in their agreement that money going to the US would also be subject to 30% withholding if US banks don’t comply. I don’t understand why they’re not using the same weapons the US is using against them.

    I think the problem is that foreign governments are not aware of that the IRS is advertising OVDI as the only path to compliance and the impact it has on middle class immigrants/expats. Again, the immigrants/expat issue is not talked about. They agree to FATCA in the context of tax evasion and money laundering. In this context, who would disagree that IGAs are a bad thing.

    The problem is that it is about more than tax evasion and money laundering. It is about capital controls, and not many articles are actually mentioning it – otherwise, why would the reporting threshold be so low.

  24. As FATCA beat goes on, US and UK sign pact with ominous signs for institutions, persons on both sides of ‘pond’

    Interesting comment that I have not seen before…

    “Ominously for US institutions in doubt about the fate of proposed “beneficial owner” rules the Financial Crimes Enforcement Network floated early this year, the agreement requires the US to revise its laws and regulations on beneficial ownership and other issues to bring them in line with international standards. As the agreement makes clear, the two nations are working to achieve common tax reporting and due diligence standards for financial institutions.”

    This is the first I have seen an agreement or comment to this effect, but then I haven’t been reading these IGAs that closely.  So who in Congress is going to revise U.S. laws towards this purpose, and in what unrelated Amendment is it going to be buried. This is the first I have seen an agreement to this effect.  Does anyone have any insights on this? 

    Then there is this new article…

    IRS could struggle to reciprocate on FATCA IGAs

    Maybe this is how the cost of FATCA comes home to roost!  

    A well-placed source in Washington circles said the IRS was facing budget cuts from Congress, and would be hard-pressed to meet its obligations with countries which have signed IGAs.

    “The IRS has a huge amount of work to do if it is to meet these obligations. IGA obligations will cost a lot of money and will require the IRS to set up systems and upgrade their IT so they can provide the relevant data to signatory countries. It will be another layer of workload for the IRS to handle,” said the Washington-based lawyer

  25. @just me

    Great finds. Sounds like the UK is willing to “walk straight into the sh*t storm”, by meeting FATCA head on. FATCA isn’t going away, but given enough weight it could collapse on its own. Do you think that other countries are clamouring onto the IGA bandwagon in attempt to add more weight to it? 

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