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. @Em

    I would complain to your province’s privacy commissioner’s office and federal privacy commissioners office. In fact I might shoot off an email myself right now.

  3. The IRS Oversight Board issued its annual report dated May 2012 in which the “intense criticism” of FATCA by Americans abroad is mentioned. Possibly we have their attention. Please see below:

    IRS
    Oversight Board

    Annual
    Report to Congress

    2011

    Foreign
    Account Tax Compliance Act

    The Foreign Account Tax Compliance Act
    (FATCA) was enacted as P.L.111-147 in March 2010. It requires foreign financial institutions (FFIs) to comply with disclosure requirements for
    U.S. accounts. The objective of these new reporting requirements is to detect and deter tax evasion. These new information reporting requirements are intended to provide an additional tool for the IRS to detect non-compliance, in this case focused on non-compliance through the use of offshore assets.

    Activity in 2011 was focused primarily in developing guidance to implement the FATCA withholding requirements. Several guidance documents were issued during the last
    year, including proposed regulations in February 2012.15 Along with the proposed regulations, the US issued a joint statement with five European partners indicating joint support to the underlying goals of FATCA and promoting an intergovernmental approach to FATCA implementation. However, intense criticism has been received from US citizens living abroad, who claim that the regulations impose heavy
    compliance burdens on them.16

    FATCA implementation carries with it much promise but also burden. The challenge facing the IRS will be to use meaningful measures to evaluate its use of the additional information, and assess whether the benefits received from the program outweigh the costs.

    Footnote:
    16 New York Times, For Americans Abroad,
    Taxes Just Got More Complicated, April
    16, 2012.

  5. @all

    I met with my financial advisor from RBC Dominion Securities yesterday. I will just mention a few things she pointed out to me.

    1. Fatca will happen. She admits she does not know its’ “final form”, but it will happen. The US will not “change its’ mind”.
    2. Our Canadian government will eventually reach an agreement with U.S. Treasury Department. Yes, citizens of Canada do vote and could vote our present government out of office, but our financial institutions do also pay taxes to the government of Canada. And those financial institutions do not plan on ceasing doing business in the U.S.
    3. The agreement will probably be some kind of “government to government” reporting, similar to what has been set up with 5 European countries.
    4. A way around “privacy issues” will be worked out.
    5. Lastly, she said that it will be “almost impossible” for the financial instituions to “weed out” all U.S. persons. Her final words were – “How on earth could they be expected to find all U.S. persons”

    So, I am still not sure how I feel about my meeting yesterday. On a personal level, she does not believe that an ‘electronic scan’ would show US indicia for myself. She also is aware of my “renunciatory oath” from my citizenship ceremony. So she does not feel any pressing need that she needs to report me. On the other hand, I was not pleased to hear that in the opinion of at least one employee of RBC Dominion Securities, FATCA will go through.

     

     

  6. @all…

    Just thought I would use this thread as a place to add some recent FATCA news that is of interest, but probably doesn’t merit a post on its own.  This to keep you endlessly amused and entertained as the FATCA Follies continue. 

    For Canadians is this from the July addition of The Bottom Line

    Ottawa looks to trim FATCA burden of U.S.

    “The government is actively seeking a solution with the U.S. government that both countries will find agreeable,” said Jack Aubry, spokesman for the Department of Finance Canada, adding that efforts to minimize conflict with privacy and other laws are among the issues being discussed.

    FATCA readiness for asset managers: comply or die!  by Doug Morgan of Finextra blog

    The Foreign Account Tax Compliance Act (FATCA) is expected to radically alter how asset managers conduct business on a global scale. With final regulations to be issued in July 2012, financial institutions must take immediate steps to prepare for this game-changing legislation or risk stiff fines. 

    US Lawyers Urge FATCA Changes For Insurance by Mike Godfrey, Tax-News.com, Washington

    In order to ease those costs, the ABA Section of Taxation, in its letter, has outlined an alternative approach to implementing some of its information collection and reporting requirements as they relate to insurance companies and insurance products. It has concentrated on trying “to strike an appropriate balance between meeting the policy objectives of the government and mitigating burdens for insurance businesses and customers”.

    FATCA:  A survival guide for Non financials.  
    By Kimberly Tan Majure and Matthew Sontag, KPMG LLP, Daily Tax 

    Non financial Companies who have escaped the FATCA  spot light, might, upon reflection, be less comfortable with the impending rules.  They assume the rules will have little or no effect on their daily operations, and that is not necessarily true.

    IRS Posts Draft Revised Withholding Forms Conforming to FATCA  
    Posted by Terri Eyde

    Just the first of new forms and modifications plus reams of explanatory booklets to help you decide which of the 24 categories of Foreign Entity you are!  To learn more about the withholding of tax on nonresident aliens and foreign entities, see IRS Publication 515 (2012).

  7. Three more items for today….

    FATCA could have significant unintended costs from Investor Daily

    Polarization of industry could occur. FATCA has the potential to divide the global industry into compliant and non-compliant organisations, BlackRock says. “All large financial institutions would become compliant, but where those institutions dealt with smaller firms, they could potentially lose business,”  BlackRock director Mark Oh said.

    The OECD’s Double Standard by Author: Andrew Quinlan

    CF&P has long pointed out that the OECD’s real objective is to use this supposed “high standard of international cooperation” as a back-door means to protect high-tax jurisdictions by limiting tax competition. To accomplish this the OECD does two things: 1) It attacks low-tax jurisdictions and attempts to saddle them with restrictions reducing their attractiveness to foreign investment and, 2) it hypocritically ignores many of the very same policies it condemns in smaller jurisdictions when they are employed by the larger nations. 

    And who do you think, is the supporter of these OECD initiatives?  Well if you said the supporters of FATCA, you would be absolutely right.  Herein is the foundations of the GATCA they desire.

    Beyond FATCA: An Evolutionary Moment for the International Tax System by Itai Grinberg of GeorgeTown Law.

    The international tax system is in the midst of a novel contest between information reporting and anonymous withholding models for ensuring that states have the ability to tax offshore accounts. At stake is the extent of many countries’ capacity to tax investment income of individuals and profits of closely held businesses through an income tax in an increasingly financially integrated world.

  9. Twitter ablaze today with this from Reuters..

    UPDATE 1-Japan, Swiss set up tax deals with U.S. Treasury

    WASHINGTON/ZURICH, June 21 (Reuters) – The U.S. Treasury Department said on Thursday it had reached agreements with Switzerland and Japan to crack down on tax evasion by Americans, a move meant to help banks in those countries comply with upcoming U.S. tax regulations.

    The announcement expands the list of countries already cooperating with the Treasury to implement the U.S. Foreign Account Tax Compliance Act, or FATCA, a 2010 anti-tax evasion law.

    Follow on out of GenevaLunch.com
    US, Swiss launch Fatca negotiations: US taxpayers, Swiss banks affected

    Ed. note: I was speaking to a French woman and a Dutch man, both of whom have moved to Switzerland in the past two months, in separate conversations this morning. Both say that when they opened bank accounts they were asked if they are American and were told that if they have green cards or US passports they would not be able to open accounts. 

    Caribbean Banks Urged To Prepare For FATCA by Amanda Banks, Tax-News.com, London

    Warning regional financial institutions to begin considering the impact of FATCA on their business, Phillips said: “There are several important risks that arise as a consequence of this for local financial institutions. There are the legal risks relating to the unauthorized disclosure of customer information; legal risks relating to withholding and or closing customers’ accounts; there are the operational costs and risks relating to retrospective and additional due diligence and data transmission measures; and there are the risks related to the withholding on a foreign financial institution’s US income payments and possible closure of that foreign financial institution’s US accounts.” 

    Proposed FATCA Regulations Feature InterGovernmental Approach by White & Case LLP on 6/20/2012
    This is another of the multitude of scholarly articles on FATCA that have come out recently that glaze you over with technical explanations.  This is not exactly an opening paragraph must read “grabber”, but it is an executive summary of what it is all about…

    Sections 1471 through 1474, commonly referred to as the Foreign Account Tax Compliance Act (FATCA) were originally enacted as a part of the Hiring Incentives to Restore Employment Act on 3/18/10. FATCA requires foreign financial institutions to enter into reporting agreements with the US with respect to their US account holders or be subject to a new 30% withholding tax imposed on certain US source payments. This new withholding tax generally applies to US source payments of interest, dividends, and other fixed income, as well as gross proceeds from the sale or other disposition of property of a type that can produce interest or dividends from US sources. FATCA also applies to certain “passthru payments” made by a foreign financial institution that are US source payments or that are deemed attributable to the foreign financial institution’s US assets. 

    Finally, for this morning, I provide this example of the FATCA Compliance Complex in creation where everyone is jumping on the business opportunity to market ‘service products’ and build the dependancy that will always lobby in the future to maintain the status quo.  You can’t fault them, but there are thousands of examples of marketing going on everywhere you look now that FATCA seems to be a “fait accompli”.

    And finally, here is the Press Release from Treasury that started all the reports today…

    http://www.treasury.gov/press-center/press-releases/Pages/tg1618.aspx

  10. One more I just discovered…

    Danilack: Model FATCA Intergovernmental Agreement Could Be Done Soon

    A model agreement for government-to-government participation in the Foreign Account Tax Compliance Act (FATCA) could be completed “much sooner than the end of the summer,” IRS Deputy Commissioner Danilack says. “There’s a great urgency to that. We have to get it done,” Danilack tells BNA following a panel discussion on FATCA at an Institute of International Bankers conference. During his panel appearance, the IRS official says the agency still is working hard to finalize the more than 400 pages of proposed rules (REG-121647-10) it unveiled in February. 

  11. As usual,  no-one questions the validity of the US claims that duals and others deemed US ‘persons’ abroad are hiding assets ‘abroad’ where they live and work permanently, or were born. And of course, any discussion of onerous conditions are purely from the point of view of the institutions, not the account holders. It’s not a ‘voluntary’ ceding of privacy if it is under duress. As usual, it does not acknowledge or address the non-US spouses and other non-US joint account holders who have no US reporting obligations, and who do have rights over the accounts.

  12. @badger

    I know. It just drives you mad.  I don’t know when any journalist at any level will ever bring this up in a forum that gets attention.  Probably never in the US media.

  13. I would think once banks start ‘reciprocating’ and reporting the financial information of green-card holders and foreign nationals living in the U.S. back to the ‘home country’, it might make a stir. I wish someone would do an article in the main stream press about how banks/financial institutions in the U.S. are going to cover the cost of complying with these reciprocal agreements and how they plan to pay for it. That might also stir a few people to complain. I can’t imagine that your typical American is going to be thrilled to pay extra bank fees at their local bank in order to report ‘foreigners’ information to foreign governments.

    I know that a Senator or two have complained about the reciprocal reporting requirements that FATCA has stirred up. Has anyone seen or heard any more information about that?

  17. @Expat in the UK

    Regarding your question:  

    I know that a Senator or two have complained about the reciprocal reporting requirements that FATCA has stirred up. Has anyone seen or heard any more information about that? 

    The only thing I have seen or read on this recently has been posted here starting on June 7th entries

    Thanks for the link to the Reuters II update.

    @Rivka88
    This says it all.  The OECD wants GATCA, and FATCA provides the fishbowl model.

    In the OECD, there are people who would like a f­inancial fishbowl where all governments have access to your information for their own purposes 

  19. A few comments:

    I don’t see Canada going for this “deal” just as they didn’t sign onto the last one. The US though is seemingly giving up on the idea of recalcitrant account holder closure which may be a plus. Additionally their seems to be some language about exempting smaller credit union/cooperative type institutions.

    It increasingly seems the main focus of negotiations are with countries with big financial sectors not so much the Canada’s, NZ’s, and Australia’s. I do have wonder though by not being able to get Canada and Australia onboard with one of the two models announced whether the US is not painting themselves into a corner.

     

    There is was also an interesting article in Politico about some of the political considerations involved with “cracking down” on Israeli accounts.

    http://www.cnbc.com/id/47878133

  20. @Tim:  I don’t know if  you saw my post on another thread about a letter I received last week from TD Bank Group.  The beginning of the letter was info about FATCA.

    One paragraph towards the end is interesting:

    “While the FATCA guidelines issued by the IRS will apply to all non-US financial institutions around the world, there is also a possibility that the Canadian and U.S. governments could negotiate a bilateral agreement that would define the requirements that would apply to Canadian banks specifically.”

    I have no idea what this means.  It could mean an agreement like the European ones.  It could mean a special agreement because of the long-standing tax treaty. Or, it may not mean anything at all.  I was surprised to see it in the letter.

    The letter is signed by TD’s Associate Vice-President FATCA, so they are certainly gearing up.

  21. Nothing against the lady that responded to you but Associate Vice-President is not as important of a title as it appears. There are AVP’s of just about everything in a bank as large as TD. What it does mean is there are definately people working on FATCA full time which is not at all surprising.

  22. @Tim

    That is an interesting political angle, for sure. I have kept wondering when Aipac would weigh in with their lobbying strength to slow up the FATCA express, at least as far as Israel goes…

    Lots of stories today..

    Here is another…

    FBAR, 8398, FATCA, And Capital Controls – The Trail That Leads To The Forced Repatriation

    FBAR – “Tell Us Where Your Money Is”

    Form 8398 – “Tell Us Where Your Foreign Assets Are”

    FATCA to Banks – “In Case You Didn’t Tell Us, They Will”

    Capital Controls – “Now That We Know Where Your Money Is . . . “

  23. *Swiss banks step up efforts to identify, quarantine or avoid US citizens

    GENEVA, SWITZERLAND – Americans living in Switzerland have been abuzz for months with stories about fellow citizens who were starting to have trouble with their Swiss banks closing accounts. Some of the first stories were shared at a Town Hall meeting at Webster University in 2011, organized by American Citizens Abroad. Rumours and innuendo have given way to several concrete stories in the past month, of Americans who have lived in Switzerland for a number of years and who are now seeing their financial accounts closed.

    Amy Webster

    , a communications specialist who lives in Morges, shares her story. Ironically, her mother was one of a group of US citizens who fought hard in the 1970s to be able to pass on their US citizenship to their children born abroad, who were not at the time recognized as Americans

  24. *Now an article on the Japanese version of WSJ .

    Treasury Gets Japanese and Swiss Banks to Agree on FATCA Compliance Method

    This story talks mostly about Switzerland, but when I read the Japanese Press release, I have to wonder what kind of program it is.  Is this model I, II or III or something else?  I asked some questions in the comments on this story. I think the best they have come up with a vague MOU with lots and lots of details to be worked out.  I wonder if the IRS will have any management left to work on anything else, except FATCA?   That will be good for homeland tax evasion, as they wont have as much time to look domestically as all the resources will be directed overseas.  

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