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. and, ……….”“Firms and their employees breaking into foreign markets will probably
    make lots of mistakes    ,” says Gary Hufbauer, an international trade and
    tax expert at the Peterson Institute of Internal Economics in
    Washington. “They will miss reporting deadlines. U.S. employees with
    foreign spouses will forget to report their foreign bank accounts.
    Penalties will be huge. This will all come as a shock.””    ……… from http://globalconnections.hsbc.com/united-kingdom/en/news-insight/expat-taxes

    And the IRS will benefit – not through collecting actual US tax owed, but through generating confiscatory penalties levied on inadvertant errors – assessed on legal post-tax assets earned outside the US.

    There is no ethical or just reason that the US should profit through making it more likely for people to fail. There is a conflict of interest. The US and IRS have no motivation to make it simpler to comply, or less complex and error-prone. They benefit more from inadvertant error than from perfect compliance.

    Citizens should not have to quake in fear while filing a form on legal assets and income. They should not have to fear that they AND the expensive tax and legal ‘professionals’ will make an error that will alter their lives – and in the absence of any actual US tax owed. I found several significant obvious errors on FBARs and 1040 and related forms that a very expensive firm prepared on my behalf, and I’ve spoken with others who had a similar experience. This wasn’t H&R Block or merely a local ‘preparer’ either.

    Why would we want to continue to live under a citizenship regime which causes us overwhelming anxiety over a too-complex-to-comply-with ‘reporting’ and ‘information’ form, when we don’t actually owe any US tax? And where the so-called ‘crossborder experts’ can’t even guarantee that they’ve completed the forms correctly?

  2. Rep. Reichert questions IRS regarding FATCA IGAs

    In early October, Ways and Means member David Reichert, R-Wash, raised several issues and questions regarding FATCA implementation in a letter sent to IRS Commissioner Douglas Shulman. In the letter, Rep. Reichert appears to question the process and authority of the Executive branch to enter into  intergovernmental agreements (IGAs) absent Congressional oversight:

    It is now clear that the implementation process of FATCA involves the IRS acting with an implied license to determine a new direction for global tax policy. This goes so far as the creation of recently announced treaty-like agreements between the IRS and the taxation authorities of a number of different countries. I believe Congress should be aware of this change, and its implications, as we look toward comprehensive tax reform in the next Congress.

    He also asked about…

    US persons living abroad — the degree to which US persons, US companies and their foreign affiliates are increasingly unable to access normal financial services while living or working abroad, the disparate effect this may have on them in comparison with their compatriots at home, and the potential impact on US corporations’ ability to build export-led business caused by the potential difficulty in finding US persons prepared to accept the significant additional tax and personal financial burdens that a foreign posting to generate export sales may increasingly involve.

  3. Tax act has to be made less intrusive
    From Mr Joe Seet.

    Sir, It would seem that the US tax authorities may not have considered the full implications of the Foreign Account Tax Compliance Act (FATCA) for investors of US government debt. In his report “Japan edges closer to China as largest holder of US bonds” (October 17), Michael Mackenzie states that China and Japan sovereign and investment funds continue to be the biggest holder of US Treasuries.

  9. You’re right. Canada has not caved in. Hope your government will be stronger than the rest of the World.

  12. FATCA a stage too far  by Nigel Green

    It is easy to see why for some expats FATCA may be the straw that breaks the camel’s back as the U.S. is the only developed nation in the world which taxes its citizens on income they earn abroad.

  13. Some comments on FATCA, FBAR’s, tax treaties from the US based Organization for International Development, whose mission is to advocate for the

    ‘fair, non-discriminatory treatment of foreign-based companies and works to promote policies that will encourage them to establish U.S. operations, increase American employment, and boost U.S. economic growth.’ 

    Overview: When the federal government needs to raise revenue, it often looks to those paths with the least political resistance.  The false perception that U.S. subsidiaries are “foreign” companies and therefore, do not represent voters, leaves them vulnerable to tax hikes.  OFII works to ensure that policymakers appreciate the millions of American jobs (and voters) dependent on foreign direct investment.  Further, OFII educates Congress on the unique application of international tax rules to U.S. subsidiaries and advocates for non-discriminatory tax treatment of insourcing companies.

    http://www.ofii.org/policy-issues/tax-federal-initiatives/379-overview.html

     

  15. @bubblebustin, and @all:

    Just struck me that while all the articles about FATCA keep mentioning the 5 European countries that have signed an agreement of some sort with the US, they NEVER mention that the two countries with the most US citizens – right next door, Canada and Mexico, haven’t signed anything so far as we know. And, they NEVER note Finance Minister Flaherty’s published statements and letters against FATCA and the IRS incursions into Canada.

    Many of the articles keep saying something similar to this “Not all European Countries have signed up to it, to date. So far, five
    countries including the UK, France, Germany, Italy and Spain have signed
    the Inter Governmental Agreement     (IGA) committing financial
    organisations to disclosing financial information about U.S.
    citizens/residents to the U.S. tax authorities.” (quote from the Tarquini article above).

    Seems to me, that if I was a journalist, or someone with any knowledge at all of North America, and US trading partners and economies, I’d be making a point of noting that Canada still hasn’t agreed. Why the glaring omission?

  16. I see the $50,000 FATCA threshold figure quite frequently in articles and I think it is a bit misleading because it is my understanding that for US citizens who live abroad the threshold for filing form 8938 is higher. Is a bank’s reporting (i.e. snitching) threshold lower than an outlander taxpayer’s actual filing threshold number? If so, this sets up an awkward situation for those US citizens who live abroad, particularly because it isn’t that unusual for people to have accounts at more than one bank. Am I confusing something here? I do understand that for US citizens who actually live in the US the filing threshold is $50,000.

    http://www.irs.gov/Businesses/Corporations/Do-I-need-to-file-Form-8938,-“Statement-of-Specified-Foreign-Financial-Assets”%3F

    If you are a taxpayer living abroad you must file if:
        •    You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
        •    You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.

  17. @Em

    You are correct in the reporting requirements for taxpayers, but the $50K is the bottom limit in which there would be an electronic search required of the customer’s accounts for US indicia. 

  18. @badger

    Yes, Canada and Mexico are conspicuously missing from the reporting. As my mother-in-law might say, What are we, chopped liver?

    It’s testament to the quality of journalism today and rather surreal, I’d say, that it may just be a matter of being considered part of the United States on North America, nothing more.


  21. @bubblebustin…

    That certainly is the executive summary for the masses that have no idea what they are talking about. thnx

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