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. @ Just Me

    “By using the LDF, you will aut.omatically receive a ‘no prosecution’ guarantee and the opportunity of having a ‘look back’ period of just 13 years – rather than the standard 20 years – to April 6, 1999.”

    13 years? Maybe we should feel lucky.

  2. @Nobledreamer…

    Drawing a blank.  LDF?  Link to the quote please. I am sure it must be one I posted, but not sure which… LOL

  3. @ Just Me

    I think this is what you are looking for …

    “However, HMRC recognises that many people want to put their tax affairs in order and are pointing them towards the Liechtenstein Disclosure Facility (LDF).

    Anyone who looks likely to be caught in the new legislation needs to act now and shelter under the generous terms offered under the LDF to put their affairs in order.

    The scheme offers a tax solution to anyone who had an offshore account or asset on September 1, 2009, and a financial connection with Liechtenstein – a bank account comes under this heading.

    Essentially, anyone who has paid too little tax can open a bank account in Liechtenstein and begin negotiations to resolve their tax problems with HMRC.

    By using the LDF, you will automatically receive a ‘no prosecution’ guarantee and the opportunity of having a ‘look back’ period of just 13 years – rather than the standard 20 years – to April 6, 1999.”

    http://www.iexpats.com/2013/01/offshore-targets-in-sight-for-british-fatca/

  4. @Em…

    Oh, I remember now, just hadn’t put those acronyms to memory!  Interesting VD program, don’t you think?

  5. @ Just Me

    I can’t say that I understand that LDF thing — sounds like a place to get strip searched or something.

  6. I received this definitive response:

    Senator Enzi’s Legislative Assistant for tax in the D.C. office provided the following:

    “The repeal of FATCA as well as rules that tax U.S. citizens that reside outside of the United States are long-term initiatives. We would be happy to keep you informed if progress is made on those two fronts.The odds of repealing the FATCA legislation in the foreseeable future are slim, particularly given that Sen. Enzi’s party is in the minority in the Senate and does not control the White House. “

    I see that my best option is now to apply for asylum to either Brazil, Russia, or China.

  8. I doubt if it is humanly possible for someone with a healthy amount of business activity, such as her, could find an accountant that could successfully file all of the papers to USA.  The same is true for a US Citizen owning a pomme frites shop in Belgium.

  12. @Badger  “regarding “Reciprocity = Work in Progress” comment…”   It says what I have been saying for a long time… 🙂

    1.5 In addition, the IGA is ‘nominally” reciprocal and provides for the IRS to provide HMRC with information on the US accounts of UK residents. However, there is currently no US domestic law that provides for the collection of information regarding UK residents. While there are US information reporting rules that require information relating to non-US investors to be transmitted to the IRS (e.g. the US bank deposit interest reporting requirements), there is currently no requirement to identify the investor’s country of residence. The IGA contemplates that further negotiations between the parties will take place prior to 2016 in order to further establish the type of information required to be provided to HMRC by the IRS.

  13. thanks Just Me, everytime I see the word ‘reciprocity’, I remember that you were on to this stuff from the beginning!

  14. ACA posted this on Facebook today:

    ACA continues to combat the negative effects of the Foreign Account Tax Compliance Act (FATCA). In doing so, ACA was instrumental in the US Treasury Department’s decision to include an anti-discriminatory clause in the recently published IGAs agreements for FATCA (see ACA letter below). This means that those countries who sign onto the IGA must ensure that Americans overseas are not denied bank accounts if they are to qualify for the IGA agreement.http://americansabroad.org/files/9813/5807/4437/ACALettertoMazur.pdf

  15. they should receive very large congratulations and thanks, for being able to do a very small thing in the face of a horrendously large tidal wave.

  16. @Mark Twain

    This concession leaves FFI’s defenceless against the Trojan soldiers riding in on the Trojan horse FATCA is. Foreign governments must seriously consider restricting US person’s taking up residency in their countries as a means of defending themselves. Of course, that would only up the ante for the US.

  17. With FATCA rules upon banks requiring reporting back to Jan 1, 2013, renunciation is no longer an option.  I intend to ask for asylum to some country which won’t allow FATCA reporting by its banks.  Question is, who?  China? Brazil? Russia?

  18. I hate to rain on the ACA’s parade but the anti-discrimination clause is, in my opinion, virtually worthless. First, it applies only to “small financial institutions with local client base”. In order to be a “small financial institution”, you have to, amongst other things, not having a banking license in any country outside your home country, have 95% of your client assets from account holders residing in your home country and you must not solicit customers outside your home country. There are several other conditions such that the subset of financial institutions who qualify is extremely small. Think credit unions or, in the UK, building societies but then only if they want to achieve deemed compliant status. In practice, there will be very few financial institutions in this category.

    Second, for the anti-discrimination clause to apply to a “small financial institution” they have to register for deemed compliant FFI status and, presumably, some may choose to discriminate as opposed to registering for deemed compliant status.

    Third, the anti-discrimination clause doesn’t even exist in either the UK or Mexico IGAs according to Sullivan and Cromwell as at 28 Nov 12 (http://www.sullcrom.com/files/Publication/c85acc9c-f550-4b68-a6f5-7be1b4ca47c0/Presentation/PublicationAttachment/ebcbb8ab-f3e0-47a7-aa58-d2132757ac40/SC_Publication_FATCA_International_Agreements.pdf). So, it doesn’t even universally apply to “small financial institutions”.

    The inclusion of such a feeble attempt to resolve a major issue suggests to me that a) it didn’t occur to the US government that discrimination against US citizens was likely to result from FATCA; b) when confronted with the likelihood of discrimination, they’ve chosen to apply anti-discrimination to only an extremely small number of institutions; and c) the US government was so concerned about discrimination against its US citizens abroad that it didn’t even bother to amend the UK IGA, the country deemed so compliant to US requests that it was selected to sign the first IGA.

    By choosing to apply anti-discrimination to only “small financial institutions” the US government is actively condoning, authorising and encouraging every international bank to discriminate against its citizens.

  19. *Too true Edelweiss.  It won’t make any difference to the Swiss cantonal banks who have already dropped their American clients.  They’d already figured out that the small numbers of US citizens they had banking with them wasn’t worth getting compliant for so why would they now bother to register for deemed compliant FFEI status.  Easier for them to just keeping saying no to Americans. 

    It might have some effect with UBS, Credit Suisse and PostFinance but apart from that I don’t expect to see much change here for US clients.  The subject comes up pretty regularly on the English Forum site here so if there’s any word of change it should appear fairly soon.

  20. @Edelweiss, re;..”The inclusion of such a feeble attempt to resolve a major issue suggests
    to me that a) it didn’t occur to the US government that discrimination
    against US citizens was likely to result from FATCA;”…..

    Actually, I think that even IF the US hadn’t considered the issue of US citizens being denied access to banking services when they live abroad;

    – The discrimination assists the US in implementing FATCA, since being denied banking services serves to tighten the screws and helps to flush out US citizens and get them to jump through the IRS hoops to become ‘compliant’, in order to keep their basic banking and try to make living ‘abroad’ viable, as the alternative is not to be able to live any kind of ordinary live – banking is necessary to receive wages, pay bills, etc. unless they are resigned to a mere shadow life that is usually more the lot of illegal aliens. But many/most will have non-US family who will refuse to abandon their homes and move to the US. Many ‘abroad’ were born there, or are duals by naturalization – and moving to the US would be unthinkable. This may push them to be compliant – and they may decide to pay a very high price – in order to be able to renounce and leave the US burden behind. Paying a kind of proxy hostage or freedom fee to the US under duress.

    Thus, even IF the US didn’t previously consider that this would happen, they will be happy to turn it to their advantage by pretending that they are doing something about it, while enjoying the pressure it places on those living and/or born ‘abroad’.

    If it makes living outside the US impossible for those the US deems to be ‘taxable persons’, it is a bonus for the US. If we move back to the US, then our assets are repatriated, within easier reach of the IRS, and helping US banks by depositing those ‘foreign’ assets into US domestic accounts. WIN WIN for the US and IRS, and for US banks.

    So really, what incentive would the US have for actually addressing any discrimination that results from FATCA? It is not in their interest to assist. And they obviously are not really concerned about any bad PR, or any ethical or civil and human rights issues.

  22. @Medea

    The anti-discrimination clause won’t apply to UBS or Credit Suisse since neither would qualify as a “small financial institution” (they both have banking licenses outside Switzerland). They are free to discriminate against US citizens at will (except inside the US). I’m guessing they would be delighted to open an account for a US citizen in Switzerland with their SEC registered units in Switzerland provided, of course, you meet their minimum account threshold (a different form of discrimination). I’m not sure what Postbank’s status is. Are they a government entity?

    @Badger

    For the time being, I’m still inclined to believe that the master plan is to gain financial omniscience into homelanders’ financial assets abroad. I thought I read somewhere that the US thinks there are many trillions of assets owned by homelanders that are going untaxed abroad. I think these are the assets they really want because a) the entirety of the income associated with these assets is taxable by the US because they belong to US residents (as opposed to a secondary claim to the income of US citizens abroad) b) repatriating these assets would be a boon to the US economy. A trillion of assets yielding 3% annually produces $30 billion of taxable income and $10 billion of tax revenue at 33%. But willful FBAR penalties are $500 billion (or about 3% of the national deficit).

    Personally, I think the many trillions is wildly exaggerated. Some of the UBS bankers very actively solicited US clients. UBS turned over 4,000 names (all of them US residents) that had $1 million or more in their accounts at any time in prior years. I think the biggest whale was Igor Olenicoff with several hundred million. Let’s assume that the average account size was $5m x 4,000 names = $20 billion. That means you need 49 other UBS’ just to get to $1 trillion. Personally, I don’t think there are another 49 UBS’ on our planet. Credit Suisse may be equal to UBS but after UBS and Credit Suisse there is a huge dropoff. The Wegelin indictment accused them of hiding $1.2 billion some of which will have previously been at UBS. You need 800+ Wegelin’s to get to a trillion.

    I would like to think that thanks to the efforts of people like Roger and organizations like ACA, the US recognizes that US citizens abroad serve a very valuable function but that we are considered acceptable collateral damage as the US pursues its Holy Grail. I tend to think the US is neither smart enough nor short-sighted enough to come up with a master plan of forcing US citizens abroad to renounce or repatriate.

    But, then again, maybe I’m just being incredibly naive.

  23. IMO, FATCA encourages discrimination when the law says that FFIs must close the accounts of customers who refuse to sign the waiver. And it’s not even sure that they’ll keep recalcitrants accounts open (i.e some who would sign the waiver saying they’ll agree to comply, but then refuses to provide the required documentation).
    Alison’s presentation at the FATCA conference in Canada was pretty clear on the subject.

  24. @Edelweiss, I don’t think that they have a master plan to get us to renounce/relinquish, rather, that they don’t care if we do or not. As a bonus, if we do, they get the  5 years tax and reporting compliance info when we file the 8854, and they know where we are and what we have. If we don’t, we may either not have any access to banking, or the banks will rat us out – or demand a CLN. 

    One way or the other, the US cares not a whit about us, or any ‘unintended’ or collateral damage, and discrimination that results. It does not care about us at all – except for the purposes of data collection, identifying assets outside the US, assessing us for tax, and enforcement. We are merely taxable sources to them, and only ‘citizens’ for that purpose.

  25. “As a bonus, if we do, they get the  5 years tax and reporting compliance info when we file the 8854, and they know where we are and what we have.”

    @ badger

    That’s correct of course but post-CLN and after the IRS paperwork is done then most people would quickly change the locks on the doors (i.e. move their accounts to a different location). The new banks would not be able to rat you out because you have escaped the tentacles of the vampire squid by that time and you have the proof in hand.

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