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. Ah, so the 30% is against the entire FFI, not its individual account  holders. Ouch. Sounds like extortion to me.

    So, back to the idea of looking for credit unions with no US dealings if necessary.

  4. Computer Weekly: “IT departments at the ready as FATCA becomes latest banking regulation”

    http://www.computerweekly.com/news/2240177114/IT-departments-at-the-ready-as-FATCA-becomes-latest-banking-regulation

    From the article:

    “Daniel Mayo, financial services analyst at Ovum, says while FATCA will have less of an impact on banks than originally thought, it could trigger similar laws emanating from other countries.”

    “’The impact has been less than originally thought because of how the legislation has been toned down,’” added Mayo.”

    “’I think the interesting thing is that this could be the start of a series of laws from other countries,’” he said.”

  5. What’s good for the goose is good for the gander, or better yet, the chickens are coming home to roost:

    Americans Surprised that FATCA Impacts Domestic Financial Account Holders

    Individually, Americans have largely ignored the impact that FATCA has on foreign countries. Many Americans think the foreigners have it coming. Besides, they don’t think it has anything to do with them.

    Wrong.

    That one-way thinking is going to change. Some countries are thinking that what is good for the goose should be good for the gander.  

    FATCA reciprocal agreements, depending on the terms of agreement, will require the IRS to enforce against American financial institutions the same horrific reporting system that other countries are required to employ against their own financial institutions to report to the United States.

    Americans are about to find out for themselves the horror of being subject to the tax information-reporting regime they thought was only going to happen in foreign countries to Americans with foreign accounts.

    http://www.moneynews.com/Kleinfeld/FATCA-financial-accounts-reporting/2013/01/29/id/487821

  6. @Just Me, re; “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!    “

    Yes, exactly. But, just as in FBARs, the IRS has decided that it makes no sense to respect due process, or to assume innocence before being proven guilty. Faster just to shoot first, and maybe ask some questions later – if they’re forced to by the TAS.

    The Treasury and the IRS has chosen to take the first position that all non-US accounts are ‘foreign’ and thus suspect. All non-US ‘foreign’ accounts are potentially criminal – because they are non-US. Anyone who holds a non-US ‘foreign’ account is a criminal-tax-evading-money-laundering-terror-funding-druglord. Of course > 6 million were born and are living abroad, and have non-US accounts, because they all live outside the US. Thus, > 6 million are criminal-tax-evading-money-laundering-terror-funding-druglords.

    Why let logic, justice, ethics or facts get in the way? Takes too much time.

    Off with their heads says the IRS.

  7. I like that article bubblebustin, especially ….”The Treasury claims these agreements are not treaties, so no Senate approval is required……….”. http://www.moneynews.com/Kleinfeld/FATCA-financial-accounts-reporting/2013/01/29/id/487821#ixzz2JQTA9bpJ

    I am wondering where they got that idea from. Had never read it stated so clearly until Prof. Christians said it. http://www.lexisnexis.com/community/taxlaw/blogs/taxlawblog/archive/2013/01/21/why-fatca-is-a-tax-treaty-override.aspx http://taxpol.blogspot.ca/2013/01/current-status-of-us-tax-treaties-with.html

    Good to see it being said out loud.

  9. Comparison of the Final FATCA Fatwa Rules

    We now have the final rules; however, many countries have not announced let alone signed IGAs. Thus, many financial institutions still do not know which rules to follow. Optimists suggest that we will know which rules prevail in the major financial centers by the end of the first half of 2013. Unfortunately, even an optimistic outlook allows very little time. Moreover, because the regulations did not relent in easing conflicts of law (or other issues), the focus, pressure, and urgency to finalize and sign IGAs has moved  to local regulators and tax authorities.

    It should also be remembered that the IGAs are effectively statements of policy. While there are some details included in the IGAs, much will depend on yet-to-be-written local guidance and regulations. The HMRC guidance process and result will inform the necessary substance of local rules to implement an IGA, and the process required to finalize those rules.

    Despite this uncertainty, financial institutions can, and probably should, make an informed decision as to the rules likely to govern their compliance with FATCA. The highlights of the similarities and differences between the rules are illustrated below, and, where possible, a reference is made to the relevant guidance. This table will continue to be updated and expanded as the rules are reviewed.

  10. The Nation: “FATCA: Will Thailand enter intergovernmental agreement with US?”

    http://www.nationmultimedia.com/business/FATCA-Will-Thailand-enter-intergovernmental-agreem-30199055.html

    From the article:

    “It has been reported that the Thai Bankers Association and the Federation of Thai Capital Market Organisations have called for the Thai government to enter an IGA.”

    “While many large Thai FIs absent an IGA will in essence be required to comply with Fatca because of their extensive contacts with the US financial system, many mid-size and small Thai institutions have little or no interaction with the US and would otherwise choose not to comply with the act.”

    “With little or no US source income they would not suffer any withholding until at least 2017 when something called pass-through withholding may come about. An IGA would impose significant compliance costs and burdens on FIs that would otherwise have chosen not to comply.”

  11. In Accounting Today, Jeff Cronin talks about how FATCA Will Exacerbate Withholding Woes:

    http://www.accountingtoday.com/news/Increased-B-Notices-Withholding-65483-1.html

    “In 2014 and beyond the backup withholding picture gets much more complicated, when regulations from the Foreign Account Tax Compliance Act begin to be implemented.

    FATCA backup withholding adds layers of complexity to an already complicated process. Withholding rates and rules may differ between tax authorities where the person is a registered taxpayer, so how much and who you withhold on may be different for 50 different non-U.S. persons.“

     

  12. More FCC NEW$:

    Firms Fearful as Fatca Spreads its Net

    Compliance costs are set to soar and some firms are even contemplating not providing services to U.S. clients because of the complexities involved.

    “Most firms are going through a process right now to analyze their clients’ accounts,” said Bob Cumberbatch, head of regulatory and industry affairs at Interactive Data, a provider of financial market data

    Dion Global Solutions, too, is looking to assist firms over Fatca. It has launched the Fatca TRAC Indicia Check Service to allow firms to measure the impact of the Fatca regulations on their business.

    Got FTICS?


    http://marketsmedia.com/firms-fearful-as-fatca-spreads-its-net/

  13. How will a FI know what nationality their clients are if the id they used was not US? A self disclosure form? Why would a US person offer that information to the FI knowing it would self incriminate?

    What I fear more than anything is if national governments agree to provide the US govt with all their naturalized persons of US origin.

    I gather no such information sharing agreement has been initialized in any IGA up to this time?

  14. *Never thought of this before, but…can one have more than two nationalities?  Maybe 4 or 5?  And, if so, what would that look like to the FATCA folks with pluridirectional exchanges of information going on?  They would go nuts trying to divide the pie of his estate!

  15. @msd, I figure if the Canadian Govt rolls over for the IRS and agrees to an IGA and to give the IRS the personal financial information of Canadian citizens who are also US persons, then surely they are going to share birthplace info with Canadian FIs to facilitate their commitment to comply with FATCA.

    The question that I have is if this sharing of birthplace will be part of the “electronic search” that FATCA calls for in the case of accounts worth between $50K and $1 million (if I understand the rules right). For now, I can only assume that it will, and there is no hiding (after a year or so from now?) if a person doesn’t have a CLN.

    I did a quick search about credit unions the other day, and got the impression that because of dealings that credit unions have with various other entities, they could all get sucked into FATCA as well even if on the surface they don’t have any direct US business ties.

  16. @Woofy, yes certainly you can. I have dual nationality and live in Switzerland; if I wanted to and met the Swiss citizenship requirements I could also apply for and get Swiss nationality, giving me three.  I think it will become even more common as more people marry people of other  nationalities than their own and have kids, some of whom may be born in yet another country.  Those children could well inherit two different nationalities from their parents and get a third from the country they’re born in.  If in future they make a life for themselves in another country/ies they could conceivably have 4 or even 5 nationalities in their lifetime.

     

  17. More from the FATCA Compliance Complex (FCC):

    Bob’s Guide (blog): “Dion launches FATCA TRAC Indicia Check Service”

    http://www.bobsguide.com/guide/news/2013/Jan/28/dion-launches-fatca-trac-indicia-check-service.html

    From the article:

    “The FATCA TRAC Indicia Check Service, built with Dion’s partner Mahindra Satyam, performs the required U.S. indicia checks by taking a full or sub-set of client data, either in a pre-defined format or a format of the firm’s choice. This analyzed data is provided to the firm as dashboards, offering visualizations of client categories and results. Firms can then drill-down into specific account details and interrogate any U.S. indicia found.

    Watch-lists and activity lists for accounts with U.S. indicia are also produced for account, client and relationship managers to take any necessary remediation.”

  18. some European countries can store your identification data together with your country social security info.  Your nationality could be stored.  Your birthplace would be stored together with your passport info.

    An IRS agent today confirmed in a presentation that accounts of $50,000 minimum must be searched and reported.  She stated likely that (with software) it would be cheaper to firms not to sort out based upon account value, but to send all accounts with US indicia.

  19. @Mark Twain

    That is exactly what is going to happen. For the ostriches out there that think there will be a $50K safe harbor are in for a BIG awakening!

    Read the last paragraph those of you so naive as to think you can hide or structure accounts below $50K

  20. @mark twain

    That sounds like BS doesn’t it? The software could programmed to detect $50K or more as easy as it would be for $0. Unless I’m wrong (which is likely because I know nothing about software) turning over folks with <$50K will get banks sued for divulging more than what’s required under FATCA. This flagrant and seemingly flippant disregard for the protection of their own citizens is infuriating.

  21. @bubblebustin…

    The $50K limit is a regulation, and I don’t think it is in the actual law. 

    From a software programmer stand point, it is much easier to ignore the threshold. It saves all those “if and or equal to < > ‘  programming language statements. I understand why they would choose to ignore.  If the IRS then just wants to screen for $50K and above, they can, but as the programmer of the FFI might say, “not my problem’. 🙂

  22. My question is, wouldn’t FFI’s providing information to the IRS about accountholders that’s not required under FATCA potentially get them in hot water?

  24. *@Duke of Devon   Yup, almost as bad as imagining that the CRA is going to give place of birth info directly to the IRS…..not gonna happen.  And my husband says, I am paranoid.  He should read here.   

    I may sound flippant, but I am not.  This whole thing is scary, but people need to get a grip.

  25. Someone else had said something like “just because you are paranoid doesn’t mean you are not right”

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