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. An IRS agent from London today confirmed that $50,000 is a minimum, and that ignoring the minimum is likely a cheaper software solution.

  2. @Duke of Devon… and WhiteKat…

    Not sure how you can say that unless you are being tongue-in-cheek.  Are you not keeping up with the guidance HMRC in the UK is putting out.  Did you not read the link I posted above.

    This is hardly sheer wild speculation and fear mongering when HMRC says that is what they are considering to do…  Now, if you were thinking that somehow the $50K threshold might give you reason to not be concerned, I am just saying you need to pay attention to what they say, not what is just speculation.  This is NOT speculation.  I am not making stuff up to Fear Monger, and frankly, I resent the implication.  🙂  Here, once again, for about the 5th time I have posted this ….

    READ IT AND WEEP!

    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.” 

  3. She also stated that form 8938 violations cannot be reported to Treasury for FBAR penalties, due to the standing laws not allowing IRS data to be shared. (I didn’t see how that situation would occur anyways)

    This got me thinking, as to how it works in the other direction—-FATCA IGA/FFI reporting is through ?Treasury? and is not governed by standard IRS non-sharing rules—-therefore 8938 penalties and any potential criminal effects would automatically follow?

    And the IRS has full authority to enforce (perform audits) upon FBARs, I Believe this is stated obviously?

  4. *@Just Me

    I’m sorry.  This whole FATCA thing is driving me crazy too.  I have been used to being the ‘paranoid’ one at home for an entire marriage.  I guess, being on the other side,and suggesting others are more paranoid than me, has gone to my head.  

    We’re screwed.

  5. are the w-9’s and all the recalcitrant bs passed over with an IGA?   Do they just send in the data of the suspicious US persons and be done with it?

  6. *@Just Me

    In my previous life, I used to be a computer systems analyst.  I left that career about 10 years ago, but the ‘what if’ mind-set has not left, and never will.  I was obsessed with my code being ‘perfect’, and spent countless hours imagining ways that it could be broken, and tweaking it so it would not.  

    My point is,   yes you have a rational fear.  However, maybe you need to step away from the fear for awhile.   ‘What if’s’ will drive you crazy.  Wait and see what happens.  Pay attention, but try not to imagine too much.  Life is short.

  7. @Mark Twain…

    Thanks Mark for the comments. Do you have a link to those comments?   I like to have the source for those that wildly accuse me of being a ‘Fear Monger’.  Me, of all people, who strives to keep hyperbole down to a reasonable minimum!  LOL 

    BTW, your question about the so called Chinese wall between Title 31 FBAR and Title 26 FATCA is a good one…

    Someone on Linkedin made a similar comment as this one from Treasury, to which I replied….

    Thanks LeVine for your comment. I understand the issue as they present it. I am just not totally sure I buy it.

    You know. Those guys in Treasury (FinCin) that operate under title 31, delegated their enforcement power to those guys in Treasury (IRS) that operation under title 26. It is amazing how they can find ‘ways’ to do things they want to do.

    Also, those guys (attorneys) in Treasury worked hand in hand with the Congressional Staffers that came up with FATCA legislative language in the first place. Frankly, since they were slipping an amendment into a Hire Act to create FATCA, had they wanted to, they could have also added a provision to either amend FBAR requirements in the1970 Bank secrecy Act to do the work of FATCA, or not added the provision to create another duplicative FATCA form under title 26 in the first place.

    They had to know they were doubling down on form filing complexity and piling on penalties to boot! I don’t buy their legal excuse about their Chinese wall between the two titles. 

    Since FBAR had been delegated for enforcement, could it not have also been delegated for income filing purposes too? They are very creative when they want to be. Look at how clever they are at constructing the amorphous IGA that is what ever you want it to be – A bi-lateral Tax Treaty, and inter-government agreement, or just a Competent Authority agreement depending on your needs to avoid legislative oversight. Clever these Fatcanatics! :).

    BTW, now that I think about it, I wonder exactly what was the legal or regulatory authority that allowed FinCen to ship their FBAR work over to the IRS in the first place? Has a good regulatory attorney ever looked at that, I wonder. Kinda like what is their legal authority for IRS bulletin 2012-20. http://1.usa.gov/11sGZsl

  8. @WhiteKat

    That’s ok. I am not imagining too much. I am just reading their words.

    I am pretty open in my comments and tweeting that I do, and so maybe I should be more paranoid then I am, but I have paid the cost of compliance in the OVDP, and now I am getting my money back in warning others to pay attention to what is being said, not just wild speculation about what could happen.

    What a person decides to do with that knowledge, is their choice. 

    Frankly the FATCAnatics (a deliberate hyperbole) mission is pretty transparent.  You just have to read their pronouncements, their bulletins, their interviews to see what they are up to. I don’t have to speculate as to their goals, or what might happen, when in the case of the HMRC, they say what they are doing.

    Now, it is reasonable speculation to wonder if they would be the only country doing this. They are the first and farthest along at the IGA and issuing guidance. You have to think, and this is a reasonable speculation, that other countries considering the IGA are pouring over their regulations and exceptions they write.  It is a copy cat world out there, and if it looks to be working for UK, why would country number two want to reinvent the IGA guidance wheel?  We just need to watch and see what they write.

  9. http://www.fundweb.co.uk/blogs/ima-uk-is-leading-the-way-on-fatca/1065238.article

    Looking ahead, tax evasion is likely to be given increased prominence by most governments – in the UK, the prime minister has passionately voiced his views against those who don’t pay their fair share. And the signing of an intergovernmental agreement to implement Fatca by the UK, France, Germany, Italy and Spain – giving national regulators the power to enforce the regulation – suggests that many countries may be thinking along similar lines and want to future-proof their systems and processes.

    The UK has already gone further and announced similar agreements with Jersey, Guernsey and Isle of Man and committed to exploring the possibility of arrangements with other countries.

    There are also discussions taking place at the OECD (International Organisation for Economic Cooperation and Development) on what a future framework for multilateral tax information exchange might look like, with Fatca as its template.

    It is therefore vitally important for the funds industry to get Fatca right. Not simply to prepare existing investor information systems, but to think strategically about what information they collect and keep on clients and what benefits can be derived for customers – such as better access to tax treaties. However, it’s important that the industry is not burdenedwith excessive requirements for information which will be difficult to sustain in the long term as Fatca-type legislation is rolled out in other countries.

    So far the UK has got it right. It has gone further than any other country in taking prompt steps to clarify what Fatca means to its financial sector. It has consulted widely and deeply with stakeholders to ensure that it meets the aims of Fatca without imposing a disproportionate cost to business or investors. And it is at the forefront of intergovernmental discussions to shape Fatca in the future. The IMA has played a prominent role in UK discussions, as well as within Europe and the OECD.

  11. *All of you should watch the GMU videos I just posted with Jim Jatras, Jesse Eggert, and a representitive of the German goverment. As much as we sometime criticise the likes of Kevin Shoom and Brian Ernewein I don’t think either would EVER go on stage and slavishly praise the US the way the German government rep.

     

     

  14. @calgary411

    Oh, that is, in the words of @Duke of Devon  “Wild Speculation and Fear Mongering..”

    Actually I am just joking.  Thanks for posting that article, as I had not seen it before…

    This is the key statement for me… That “similar lines” says to me the copy catting and group think that begins to set in when one country,i.e, UK, does something. 

    And the signing of an intergovernmental agreement to implement Fatca by the UK, France, Germany, Italy and Spain – giving national regulators the power to enforce the regulation – suggests that many countries may be thinking along similar lines and want to future-proof their systems and processes.

    UK is being held up as the IGA model.  So, that being the case, would not other countries emulate this?  Reasonable speculation, I think…

    So far the UK has got it right. It has gone further than any other country in taking prompt steps to clarify what Fatca means to its financial sector. It has consulted widely and deeply with stakeholders to ensure that it meets the aims of Fatca without imposing a disproportionate cost to business or investors. And it is at the forefront of intergovernmental discussions to shape Fatca in the future. The IMA has played a prominent role in UK discussions, as well as within Europe and the OECD.

    BTW, I hate that “Fair share” meme.  I know it is just a popular talking point, but what the hell does it mean anyway?  Fair share, buy whose standard and measure, and how much is fair?   I would bane from all conversation. It such a stupid statement. 

  15. Regarding the 50K threshhold: It’s not as simple as just checking or ignoring that piece of data. That assumes that customer static data and current account data are stored in the same system. In all likelihood, they are not, and it would require extensive development efforts to build interfaces to link those systems together. For that reason, I think it will be common practice not to consider the threshhold when searching for US indicia.

  16. *Duke of Devon

    ”  *Just me       Sheer wild speculation and fear mongering on your part.”

    With all due respect, i personally think the LAST thing that Just me would do is knowingly participate in fear mongering! His statement about the 50k USD threshold might be speculation, but it is a 50/50 possibilty.

    I’ve posted elswhere that in my early years I was an Oracle SQL database programmer and administrator. I mainly programmed databases for technical and engineering purposes. A program code consists mainly of line of text that get compiled into an executable, so please believe me when I say that the MAIN goal of any programer is to keep his code clean and simple. In other words if a constraint is NOT needed I would leave it out of my code.

    Like I said it’s a 50/50 chance whether the FFI’s will respect the 50k USD threshold or not, and I believe that Just me is only trying make us aware of as many facts as possible so that we ALL may find a way to prepare ourselves. Even I can’t, like all the rest of us, close allof  my accounts, but I did my best to get them below the threshold before Dec. 31 2012

  17. @John Brown.

    Regarding the link to the IT piece you posted tonight. Thanks.   I found another that might interest you…

    Headline…

    Multitude of FATCA data tasks give corporate IT staffs headaches, as technology providers drool

    This process demands a streamlining of data management systems, revisions to customer onboarding procedures, and continuous monitoring of client profiles. If it sounds like a massive ongoing data management project and a huge marshaling of IT resources and legal and compliance expertise, it is this and more.

     IRS regulations will trigger a huge data influx that is sure to test global records management infrastructures and practices. Now, when a new client opens an account, institutions must capture and absorb information that identifies if the account is a FATCA liability. It must also be able to request, process and report to the IRS the supporting documentation when the account’s status is in question.

    Foreign institutions must also detect and flag changes to accounts. This will affect how the accounts are reported under FATCA. For example, if a person’s tax documentation expires, the status of his or her account could change upon renewal.

    @notamused and Uncle Tell Good points The simpler route for a programmer is something I understand them wanting to do, and so I also understand why HMRC is considering provisions to allow just that. It simplifies the business costs.

  18. I read only the first set of instructions.  I remember it saying that the bank MUST search and report accounts over 50k.  It didn’t say that you couldn’t or must not search or report accounts under 50k.  

  19. There is another threshold of $1 million, above which the FI is required to do more than the required electronic search for US indicia. Having that in place, it’s trivial to also check for a balance if $50. They may well decide to report accounts of less than $50K, but for other business consideratiins, not just to save a few lines of code.

  20. Has anyone ever heard of Avaaz.com? Forgive me if this has been discussed before and it pre-dates my three months of avid readership. I did try searching the site but it didn’t turn up any results.

    I just happened to see a segment on the Daily Politics Show on the BBC on “slacktivism” which featured a brief interview with a Canadian-British co-founder of Avaaz, Ricken Patel (http://en.wikipedia.org/wiki/Avaaz). Other co-founders include former Virginia congressman Tom Perriello. It is part-funded by MoveOn which is, in turn, funded by George Soros. It’s an online activism and campaigning site which says it has 18m members across 194 countries. I’ve only heard of it today.

    Anyway, I sent them a very long email with a ton of background information and suggested there could be a campaign around the plight of the 7 million US citizens abroad (when will there be a telethon?). I suggested there might be 2 possible campaign-worthy topics 1) citizenship based taxation where the US appears so at odds with the rest of the world and 2) the US is discriminating against and forcing discrimination against its own citizens through FATCA and the all too predictable consequences. Of the two, the discrimination angle is clearly more likely to garner the required level of public sympathy to be successful. It has the advantage of being relatively easily explainable, broadly falls into a human rights issue and more likely to provoke a sense of injustice magnified by the fact that it is the US itself perpetrating the injustice against it’s own citizens. I only suggested them as campaign topics. I didn’t try to define what the objective of the campaign should be (ie sign a petition, write a letter etc.).

    We’ll see if it gets a response. In the absence of a response it appears you can start your own campaign though that likely requires someone willing to front it.

  21. Imagine the degree of pressure being applied to governments to sign IGA’s QUICKLY! FFI’s appear to be stuck between a rock and a hard place already:

    For institutions in many countries, the act of complying with FATCA’s demands would lead to them breaching laws – mainly on data protection – and so many governments are negotiating bilateral tax deals to clarify various issues.

    The big issue for many of the world’s 300,000 financial institutions is that they have to comply with FATCA by January 2014 which means many will not have a bilateral tax arrangement in place with the US.

    Without such an agreement, the financial institution cannot send information to the Internal Revenue Service (IRS) without committing a crime in their country.

    In turn they face a hefty fine of a 30% withholding tax on all transactions between the institution and the US.

    http://www.iexpats.com/2013/02/fatca-rules-confuse/

  23. Thanks, Edelweiss.

    I’ll definitely check this organization out and perhaps give them the same information I’ve given to the Canadian Civil Liberties Association (CCLA). I appreciate your comment on this.

  24. http://cnsnews.com/news/article/irs-cheapest-obamacare-plan-will-be-20000-family

    In a twisted sense, we are lucky that the penalty system is beginning domestically.  In this article, the fear that the author is trying to invoke is regarded to the cost of the Insurance.  What he really should be referring to is that an excessive penalty structure is being erected for Obamacare.

    “Under Obamacare, Americans will be required to buy health insurance or pay a penalty to the IRS.

    The IRS’s assumption that the cheapest plan for a family will cost $20,000 per year is found in examples the IRS gives to help people understand how to calculate the penalty they will need to pay the government if they do not buy a mandated health plan”

  25. @ Edelweiss

    I have signed Avaaz petitions before but truthfully you provided more information than I had about the organization. The funding (back to Soros) bothers me a bit and I often wonder if signing an Avaaz petition just got me on an “activist list” but I really don’t know. Avaaz will keep sending you e-mails after you sign a petition but you can stop the flow with an UNSUBSCRIBE. SignOn has had a petition up for many months regarding the repeal of FATCA but it hasn’t even got 2000 signatures yet. If you are interested here’s the URL …

    http://signon.org/sign/repeal-fatca#privacy

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