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. From the article above posted by Barney Rubble:

    “….The definition includes citizens, green-card holders and non-Americans deemed U.S. residents by being present in the country for at least 183 days over a three-year period, which makes them subject to U.S. tax on their worldwide income, according to the IRS. ”

    Is this accurate? So, say some university-aged student comes to the US for three summers in a row just to study English for 90 days each time as his Visa Waiver passport allows, thus going over this 183 day limit. Is he considered a US person then? If so, I find this to be beyond criminal, even worse than what the US does its own citizens. I do not understand how the US can say that somebody is a tax resident in this manner. In the EU you have to register your address with the local town council or town hall after staying longer than three months in most countries.

    Is there even any warning whatsoever on the ESTA website not to stay longer than 183 days over a three year period? I will be warning every friend I know who regularly travels to the US and I hope that they seek alternative travel locations after they understand the full weight of what this means.

  2. Oh, and what about students studying in the US? Are they supposed to be filing FBARs as well under these nonsense rules? Is the US trying to make itself as undesirable as possible for people to visit, to study in or to work and live in and eventually gain citizenship in? If I were a young, ambitious international student I would certainly be looking at studying in the UK, Canada, other EU countries, Australia, etc, over studying in the US any day, and that is true even when just comparing the differences in tuition cost.

  3. @Don Students on student visas have a different status as they are not allowed to work and typically they use foreign money to study. Your question is actually a very good one. I spoke with a person whose parents were students in the US when she was born. Is she rightfully under the 14th amendment even a US citizen? What does it mean to be “subject to the jurisdiction of”? Certainly this discounts children of diplomats. But what about students?

  4. @Don Pomodoro:

    Is this accurate? So, say some university-aged student comes to the US for three summers in a row just to study English for 90 days each time as his Visa Waiver passport allows, thus going over this 183 day limit. Is he considered a US person then? If so, I find this to be beyond criminal, even worse than what the US does its own citizens. I do not understand how the US can say that somebody is a tax resident in this manner. In the EU you have to register your address with the local town council or town hall after staying longer than three months in most countries.

    I think this is referring to the “substantial presence” test. Phil Hodgen has a good explanation: the math comes out to 121 days per year.
    http://hodgen.com/the-substantial-presence-test-explained/

    The substantial presence test has all sorts of weird exceptions. E.g. for students. But not for people receiving medical care — that’s the part which has people in the Caribbean worried, because a lot of them go to U.S. hospitals if they have a serious condition which their town doctor can’t treat. The substantial presence test has a “medical” exemption, but apparently it only applies if you develop a medical condition when you’re already in the U.S., not if you went there to receive medical care specifically. And there’s also the “closer connection to a foreign country exemption”. And all sorts of other crazy stuff.
    http://www.irs.gov/businesses/small/international/article

    And of course if you take one of the exemptions: There’s A Form For That Too.

  6. @Petros & Eric

    Talk about confusing! The IRS guidelines made my head turn. So, my understanding then would be that students on a student visa are exempt. What about, say, some teenager (non-US citizen) visiting US-based grandparents as a tourist. Seems like they would be “covered” then? Also, I imagine that the aspect of ‘who is a US person’ is almost unenforceable from a FATCA perspective. In the future all banks will have to ask you: “Are you a US citizen? Are your parents US citizens? Were you born in the US? Have you ever lived in the US? Do you have a green card? Do you regularly visit the US and/or have you been there for a combined 183 days…”. Its just so much overkill…

    By the way, I am currently renewing my private insurance today, and, for the first time, I see online that they have special categories or restrictions for US citizens in place, and US persons are banned entirely from certain plans. They don’t explain anywhere why this is, but I imagine that it is due to FATCA for whatever reason. I don’t think that they realise that I hold US citizenship…yet!

  7. Don, on international private health insurance, I could pay for US coverage or without. Of course, US coverage costs more money due to cost of care. That’s for everybody though– not just “US Persons”.

    I’m not aware of any insurance restrictions being placed on “US Persons”. If things keep going the way that they are though, I wouldn’t doubt it if that starts happening.

  8. @geeez

    Check this out for example (not my insurance plan but subsidiary of same company):
    http://www.asfe-expat.com/index.php?lang=en&page=Nos-Solutions&param1=First-Expat&param2=Indice-50

    This plan is not valid for coverage in the US (you can see this if you download the tables of benefits pdf at the bottom of the page), yet it is specifically is open to any nationality except Americans (and is aimed at those in typical expat countries like Singapore and the UAE). I’ve delved into the legal mumbo jumbo and they don’t explain why as far as I can see.

    My insurance plan is the same as yours actually it seems – I am covered worldwide except in the US and Canada. To add North American coverage would have nearly doubled my insurance costs so I didn’t bother since I don’t travel there.

  9. Just stumbled across these bank training videos for FATCA:

    FATCA Principles

    FATCA 101

  10. refresh of some links about FATCA and potential account closure in Switzerand and in US:
    http://www.bcf.ch/LegalReference_fr.html “Restrictions
    La BCF n’ouvre pas de relation avec des citoyens américains » (« The State Bank of Fribourg does not do business with American Citizens ») By the way, this is a violation of Article 261bis, Swiss Federal Penal Code (Racial discrimination).
    http://www.bcbe.ch/informationen_zu_fatca.pdf http://www.swissinfo.ch/eng/specials/expat_woes/Swiss_expats_caught_in_middle_of_US_tax_conflict.html?cid=32137500
    http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=483&Itemid=107 US
    http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=215&Itemid=107 US

  13. re FATCA and collection of birthplace and nationality, personal information of ALL customers, not just US ‘persons’ suggested as useful for the future; see quote (and full article) below:

    http://www.risk.net/operational-risk-and-regulation/news/2179612/banks-prepare-fatca-style-legislation-experts-warn
    “Banks must prepare for more Fatca-style legislation, experts warn”
    Author: Jessica Meek
    Source: Operational Risk & Regulation | 25 May 2012

    ..”Chris Tragheim, Fatca head for Europe, the Middle East and Africa at Deloitte UK, gives an example. “At the moment, people are considering whether they should collect the nationality and place of birth of customers rather than just asking if they’re American. This will help them future-proof against any Fatca-type legislation that might come forward.””……..

  14. It looks like our banking masters are ramping up quickly to stamp bar codes on every person on earth so that every country one has the misfortune to step foot in, physically or financially, will be able to take an ounce or a pound of flesh.

    “Banks must prepare for more Fatca-style legislation, experts warn.”

    No, I don’t think banks are reacting to FATCA legislation, present or future. I think they are behind the legislation — at least the large global banks are. It seems the whole world is a corporation (or will be soon) and people are merely a commodity.

  15. @badger
    I could be wrong, but I believe that in Canada, it is against our charter rights, to be asked ‘where we were born’.

  16. @tiger, that is what I keep reading here, and I hope that it remains so – and not only in this context. Any erosion of the charter is bad for Canada.

    The recent article http://ca.news.yahoo.com/blogs/canada-politics/rcmp-ease-canadians-idea-u-agents-canada-201905380.html about easing into letting the US operate on Canadian soil, re crossborder security makes me worried – because it starts with giving up small things, and turns into what we are experiencing – like the boiling frog. The erosion of civil rights has already been amply demonstrated by and inside the US – laws used for purposes not intended. I think that Canada will find itself grappling to keep the US from further incursions into Canadian sovereignty – not in Canada’s best interest. The mission of the US is looking out for itself first and foremost – even if there may be some small benefit to Canada – can a minnow benefit from a relationship with a shark?

  17. @ badger
    Regarding the RCMP article. I’ve been aware of that tap dripping for quite a long time but what really disturbed me was how blatant the statement was — like they are so confident about what they have deemed to be our destiny that they will come right out and say it. We’ll just ease you into it … smarmy … really smarmy.

  21. Don’t know if this article has already been mentioned:
    http://thechronicleherald.ca/business/97835-us-taxman-extending-reach-abroad
    ‘U.S. taxman extending reach abroad’
    May 18, 2012 – 5:39pm By ROGER HAINEAULT

    “…….the American government is hoping it can find a new source of revenue.

    Canadians have a long standing neighbourly relationship with our friends to the south. We share all kinds of information and regulation now, but when one thinks of a tax haven, Luxembourg comes to mind before Lunenburg.

    The Foreign Account Tax Compliance Act rules are far from static and will be excessively lobbied before being struck — and that’s a good thing.

    Reportedly, there could be as many as one million people living in Canada who will be affected by these provisions.

    And while the financial burden is front and centre, it will be interesting to see if these new American taxation laws will cause problems on other fronts.

    I’m thinking the Canadian privacy commissioner might take a look at whether we should be sharing the information the Americans want, just because the U.S. government has made it a law.”

    Roger Haineault is with Tax Filers here in HRM. His column appears Saturdays. You can follow him on Twitter @TaxFilers in addition to emailing him at rhaineault@herald.ca

  22. @ FromTheWilderness
    Bingo! It feels good but doesn’t mitigate the anxiety to finally have some company under the tin umbrella. I’ve been saying all along we must be aware of those secret negotiations. It’s not paranoia, it’s just prudent.

  24. Waiver of Client Confidentiality
    “I agree that the release of such information by TD Waterhouse to the IRS shall not be considered a breach of any duty of confidentiality owed to me by TD Waterhouse. In connection with the requirements and regulations established by the IRS, I hereby acknowledge and consent to the disclosure to the IRS by TD Waterhouse of information concerning income, tax withholding, tax information and related material with respect to all source of income received by me in my TD Waterhouse account(s).”

    Someone reprinted that in a comment section of a Globe and Mail article. Who in their right mind would sign such a thing? I’d be tempted to remove all my money from that GD TD bank and then smugly tell them to take their waiver and shove it.

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