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. @Edelweiss, PostFinance up until this year was a government entity and as such had to provide an account to anyone who lives in Switzerland if they asked for one.  However, as of this month I understand it’s become a private company and can now decide if it wants Americans or anyone else as a client.  I know some people posting over on the English Forum have been refused accounts late last year because of the citizenship issue, but whether that will continue if/when the new IGA is approved I don’t know.  I’m not sure how much “international banking” presence they have outside of Switzerland.  Of course, they may have plans to expand in that direction which may affect any potential client issues.

    @Em, That’s assuming those idiot Senators don’t get their way and make paying tax by renunciants/relinquishers permanent for life and retroactive.  If so, the question then becomes will banks worldwide stand up and say no to giving client details?  The smaller cantonal banks here may well refuse, but then what pressure would the US bring to bear on the Swiss goverment to force compliance?

    As far as I’m concerned if you have a CLN then you aren’t American and can’t be taxed, but I see a European Court of Human Rights battle looming if any legislation actually gets passed in Congress over this.

  2. @medea fleecestealer

    That’s assuming those idiot Senators don’t get their way and make paying tax by renunciants/relinquishers permanent for life and retroactive

    The kind of soul-crushing rhetoric we hear our of Washington that leads us to believe that this may really happen is enough to send many over the deep end. What kind of hell-on-earth do these elected officials want to create for their people, and WHY? 

    “When governments fear the people, there is liberty. When the people fear the government, there is tyranny.”

    -Thomas Jefferson

  3. *The kind of hell on earth that exhorts money out of ex-citizens for the rest of their lives.  As far as they’re concerned once we renounce we’re “not their people” any more, but we’re sure going to pay for the privilege of being an ex.

  5. Will FATCA turn banks into tax advisors?

    The self-certification portion of the FATCA programme entails the provision of information through the completion of IRS-approved forms (e.g. W-9 and W-8BEN), along with the provision of additional documentation (depending on the indicia identified).

    It is important to note that W-9 or W-8BEN forms are not mandatory from a FATCA compliance perspective. The legislation states that the evidence to support U.S. or non-U.S. status “… may be on an IRS form W-8 or other similar agreed form…”. However, having said this, most banks will err on the side of caution and use the W-9 and W-8 forms.

    what’s puzzling me is this: when a bank identifies a customer with some US indicia and contacts them asking them to self-certify if they are or are not a U.S. person or entity, should the bank instruct the customer as to which form to complete? If they do divulge which form (either W-9 or W-8BEN) they should complete and submit, are they, in fact, inadvertently giving tax advice to that particular customer? Is it the bank’s responsibility to tell them which form they should complete based on the information that they hold on the customer?

    There is no doubt that, upon proper cleansing, remediation and identification of customer data banks should have a solid basis for knowing which form should be completed. And it would certainly take some of the confusion and ‘work’ out of the equation for the customer if they could direct them towards the right form and make it as easy as possible for them to complete e.g. through online portals. However, the question is, does this push the role of the bank over the line to tax advice?

    http://rfpconnect.com/news/2013/1/28/will-fatca-turn-banks-into-tax-advisors

  7. So will those IGAs really save money in compliance and other costs for the banks who pressed so hard for them?

    http://www.iexpats.com/2013/01/fatca-hmrc/

    Get FATCA Right Or Pay Up, Warns HMRC

    by Lisa Smith : January 28, 2013

    “Financial
    firms may face compensation claims for breaking data protection laws if
    they send the wrong information to HM Revenue and Customs under new FATCA laws.

    HMRC flagged the issue in recently published guidance notes.

    The tax man warns that under section 13 of the Data Protection Act, a
    person can claim compensation if they suffer damage because wrong data
    was passed to a third party about them. They can also claim for any
    ‘distress’ that is caused by erroneous data and sue the US authorities.

    The UK was one of the first countries to sign up to the Foreign
    Account Tax Compliance Act (FATCA) which is aimed at finding those US
    taxpayers who have undeclared assets abroad.”………….

  8. Here is the promised public stance on FATCA – from the Green Party of Canada!!!!

    http://www.greenparty.ca/statement/2013-01-28/backgrounder-canada-and-fatca?utm_campaign=NC.W.RSS&utm_source=rss&utm_medium=rss

    “

    Backgrounder : Canada and FATCA

    28 January 2013 – 2:10pm

    IRS Tax Collection: Evasion of the US or Invasion of Canada?

     The Green Party of Canada is calling on the government of Canada to
    stand on guard against the demands of the United States (US) for
    extraterritorial enforcement of an American law: the Foreign Account Tax Compliance Act (FATCA).
    The Government of Canada must protect our citizens and residents from
    FATCA’s invasive violations of individual privacy, and refuse to make
    Canadian consumers and taxpayers pay the significant costs to enforce a
    unilateral American mandate that does not benefit Canada in any way.”………….

  9. *”They can also claim for any ‘distress’ that is caused by erroneous data and sue the US authorities.”

    Oh, come on.  Have you ever tried suing the US authorities?  Even HMCR couldn’t afford to, so how is the ordinary man/woman in the street supposed to?

  10. *Here is the promised public stance on FATCA – from the Green Party of Canada!!!!

    Good.  Elizabeth May is one such US Person.

  13. January 28, 2013 — Living With FATCA Uncertainty: What Should A Foreign Financial Institution Do Until A Bilateral Agreement Is Signed? http://mopsicktaxlaw.blogspot.ca/

    The IRS is as frightened of FATCA as we are. Top level IRS managers and worker bees are sweating out twelve to fifteen hour days, seven days a week trying to figure out how they are going to administer this thing.

    For the foreign financial institutions the stakes are far too high to wait for an elected government or their own IRS bureaucracies to come to the rescue. In the Darwinian world of international finance, the survivors are going to be measured by their foresight, initiative and action well in advance of the coming new regime.

  14. @badger

    I am getting disillusioned with this Lisa of iexpat a bit, as her headlines mischaracterize a lot, and frankly, she missed the biggest part of the story. In this case, the source documents she is using to write this totally missed possible elimination of the $50K safe harbor threshold issue.

    Data protection concerns were raised by some respondents to HMRC’sconsultation (24-page / 106KB PDF) on how to implement the UK-US FATCA agreement. Some respondents said that the UK should do away with the financial “thresholds” that trigger the requirement to report to US tax authorities because they felt this may cause them to have to “modify account opening platforms, systems and processes to accommodate the self certification processes”. HMRC said it would consider whether to make such a change to its initial proposals.

    “HMRC has some concerns about requiring a broader set of information to be reported than that required under the terms of the IGA (the UK’s Intergovernmental Agreement with the US) but recognises that many respondents wish to have the option of reporting all US Accounts regardless of the thresholds as this may actually reduce business costs in some circumstances,” it said. “The draft regulations contain a provision that would allow for this to happen. HMRC will continue to give consideration to the respective cost to business and HMRC of allowing such a provision.” 

  15. @badger

    This Lisa, from iexpat.com is at it again, making either deliberate or ignorant assertions which IMHO doesn’t do us any favors…

    I reference this

    FATCA – Time for Change:  (she is the author on this web site..)

    Here is how it starts out….

    Third paragraph;

    FATCA was designed, say its proponents, to target the undeclared assets of American taxpayers who live abroad.  

    I had a long winded response that is in Moderation, but will save it here..

    Excuse me.  Say what????????

    That is the lead? You are starting out with this false assertion?!

    Wait a second!

    Correction: The primary mission (design) was to target the Homeland evading Whales that were engaging in Offshore tax evasion ala UBS…

    Those 5000 names that the DOJ shook loose had everything to do with the tax evasion schemes that UBS was marketing on the Homeland shores They weren’t going around the world and knocking on the doors of Americans living abroad and saying, “hey we have a deal for you to hide your money from the IRS”.

    No, they were working the homeland shores of New York and Florida not New Zealand, Australia or Canada, for gods sake! That was what Congress was trying to stop!

    So, who are these proponents that you are now quoting? Name me one.

    Show me one bit of debate or discussion pre FATCA vote that shows this was about targeting American Taxpayers who live abroad. Maybe there was one fool somewhere in dungeons of Treasury who thought that was an ancillary benefit. Maybe there are even some now, in their misguided zeal, that are using Citizenship taxation as an excuse to extend their reach, but this was NEVER the intent of Congress or FATCA when it started.

    Why would Congress act so aggressively against their goodwill ambassadors abroad in a deliberate witch hunt like this which raises so little revenue, pisses off the entire expat community and has thousands looking at renouncing their citizenship?

    Makes absolutely no logical sense. What rationale Country would do that knowingly and willingly to their Citizens? Cuba and China don’t even go that far in repressive behavior?

    So, give me a quote, a reference or link to one of the designers of this FATCA Fiasco on the Joint Committee on Taxation (JCT). If that was the purpose when they bragged about what they were trying to do, where is the statement in their press release? They would know, right? That would be the time to spell out the intention, right? Where is it?

    There is NOTHING THERE that speaks to a FATCA designed to “target the undeclared assets of American Tax Payers that live abroad”, as asserted!!

    Here is there press release: http://bit.ly/V6Aee7

    So, my suggestion, is to re-edit your piece and start over, as you lose all credibility when you start out so erroneously

    Americans Abroad are the collateral damage, the after thought, and maybe even now being targeted by the fools in the IRS that just can’t help themselves, but it was NOT the prime motivator for this FATCA monster.

    So, when you say this about going after Americans Abroad, “Whilst the primary aim of FATCA is a just and proper one.”

    I say.. NOT SO

    If, this was the primary aim, as you imply,  then it is an an UNJUST AND IMPROPER ONE!

    Frankly, if the FATCAnatics in Treasury really colluded with the Congress to go after Americans abroad as this piece asserts then they are more morally and pervertedly bankrupt than I have considered them to be. I prefer to think, and with good evidence, that they are just inept, bungling and incapable of considering the collateral damage of their actions, rather than deliberative in such a corrupt and frontal assault!

  17. @Just Me

    Thank you for catching and responding to Lisa’s false interpretation of the facts. A general acceptance that US persons abroad are FATCA’s target would be very dangerous indeed. It would be the basis by which many would heap more punishment on us.

  18. For the record, it is not the same Lisa who posts here.  I saw some bizarre rant from a Lisa on a blog ages ago and was so annoyed that I was not going to post any more, but Just Me told me not to give up.  I don’t read iexpat so I had no clue that the other Lisa is still at it.  I am not really sure how to manage this.  

  19. @Lisa…

    Not to worry.  You can’t manage it, other than adjust your handle as “Not that Lisa! ”  LOL


  21. @Christophe

    Thanks for post that About the John Doe Summons.  I agree with the Not Making Sense, if you assume that FATCA was about revenue or really finding current tax evaders. 

     I am just posting this on linked in.  

    So explain to me again why we need a Global GATCA carpet bombing effort, when these more precision guided missiles by the DOJ do work and have less collateral damage?

    I guess the answer is in this sentence, ” The IRS sometimes finds that the John Doe Summons procedures slow it down.”  

    They would rather have GREAT BIG GLOBAL COMPLICATED automatic tax data exchanges!

    But isn’t that why we have “due process” enshrined in our legal proceedings, to slow down aggressive, unwarranted and abusive behavior by authorities?  John Doe may be slower, but it works!

    Yet with our global FATCA, created out of the broken Congressional Legislative process, we are circumventing any ‘due process” based upon reasonable cause that someone is evading taxes.  We are happily co-enabling a GATCAwellian world where John Doe Summons are never needed even though they have been effective to the mission at hand – finding those Homeland Offshore Tax evaders!

    FACT is, we do NOT need FATCA.  With John Doe, “The dam was breached, and the expectation is that the hole will get bigger through exchange of information treaty processes.”  

  22. FATCA compliance and the individual.

    Trying to get together the last bits of info before deciding whether to get a CLN as an old relinquisher.

    As far as I can see, most of the discussion here is about how to stop FATCA from getting info on Canadian residents who may be considered US persons, but I don’t understand the practical consequences.

    In the case of someone who is a Canadian citizen with no assets in in US, what happens if he or she admits when asked by their bank that they were born in the US and have had Canadian citizenship for decades?  According to some posters, IRS can’t collect from such people anyway.

    And, if I understand correctly, the bank couldn’t close your account for being a recalcitrant since you complied.

    I may seem to obsessed by the old relinquishers problems, but there are a lot of us, and understanding clearly what the practical outcome is would help us fill out our decision trees  😉

  23. There are some weird Insurance policies, with exhorbiant maintenance fees, which are offered to foreigners, under the guise of ev______ t_x  or of providing retirement income.   I had someone try to sell a domestic variant to me while I was still in USA University.

  24. I just had some thoughts that seem too simple and easy, so I must not be understanding things fully.

    Am I dreaming, or do I understand that the banks (in Canada at least?) won’t send any info to the IRS unless you give them permission to do so?

    If you don’t (meaning you refuse to even tell them if you’re a US person or not), you’re branded recalcitrant and the bank has to withhold 30% of any income payments to your account that come from the US, or close your account.

    Well, a lot of people pay more than 30% tax anyway, so why not be recalcitrant and let them withhold the money? I”m sure we’d get a tax slip for it to apply to our Canadian tax return to apply as a foreign tax credit. And, if you don’t have any money coming from the US anyway, there’s no problem at all.

    This way, you get to keep your accounts and not expose yourself to the IRS.

    What am I missing?

  25. @WhatAmI

    The 30% withholding is a separate issue from being a recalcitrant bank account holder and what that means.  

    30% withholding applies to those FFIs, that refuse to be Participating FFIs, or PFFIs and sign up with the FATCA Portal of Mordor.  Their funds held in US financial markets are subject to the 30% withholding by other financial institutions if they choose not to be compliant with the FATCA requirements.

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