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”

  2. Interesting article from David Walker entitled “FACTA failure will cost the US“.
    Highlight that some people have already brought up are the following:
    “The US Foreign Account Tax Compliance Act (FATCA) will fail to raise significant extra revenue from US taxpayers abroad and will probably result in a net loss for US authorities“.
    I like the author’s analysis of the cost vs benefit. It would be interesting to see the one from the authorities in Washington who think it is worth to go ahead with FACTA.

  3. New FATCA Alternative For Foreign Institutions to Report Directly to Internal Revenue Service

    The joint statements contemplate agreements with Japan and Switzerland that would allow institutions to report directly as permitted under domestic laws. If consent is necessary but cannot be obtained from an account holder, the governments would be able to provide the information on the account holder pursuant to a treaty request.

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

    “It’s another indication for institutions with their heads in the sand that FATCA is here to stay,” said Wicks. “They need to be making sure that they are in a position to meet the 2013 deadlines or else create negative customer impacts, face reputational damage or lose competitive edge in international markets.”

  4. U.S. Enlists World In Crackdown On Tax Evasion  @arabtimes  Updated 6/24/2012 

    Law Termed ‘Imperialist’>  A bank in Tajikistan which holds US Treasuries in its portfolio and opens a savings account for a local camel herder must either verify and report to the IRS that the herder is not a US citizen or withhold taxes and remit them to the IRS.

    Discriminatory Anti American Banking Law passed   @English Forum, Switzerland

    I was informed by my bank this last week to be prepared as in a month, 2 maybe, then end of the year I would need to close my bank account, not with Die Poste(but I am not at Die Poste and it was only stated that maybe they were still taking Americans on).

  5. Switzerland is moving towards FATCA implementation  by KPMG

    Overall assessment

    By this agreement the IRS is now a step closer to achieve their primary objective. They are interested in the names of the account holders and not in getting proceeds from withholding. We therefore consider this being a step towards implementation of FATCA in Switzerland. It somehow creates additional uncertainty, especially to the extent that certain relaxation for the FATCA implementation will be considered for Switzerland. It is however unclear what these exactly are.

    Furthermore, it is now clearer that it will be dealt with the reporting and withholding restrictions around art. 271 of the Swiss penal code. Under the assumption that anyway all Swiss FFI’s are FATCA compliant, they will not face the withholding problem.

    Why Obama’s FATCA Law Is A Threat To Business Growth  by Dan Mitchel @Forbes

    We need to recirculate this old one.  It was written a year ago, but still true today. 

  6. Fatca timeline in question with new Swiss-US deal by  Jessica Meek of Risk Net

    This is behind a paywall, but if you go to Google News, and search for the title from there, you should be able to access it. 

    Tony Wicks, London-based director of anti-money laundering at US security firm Nice Actimize, believes the new agreement should push FFIs into action. “It’s another indication for institutions with their heads in the sand that Fatca is here to stay and that they need to be making sure they are in a position to meet the 2013 deadline or else they will create negative customer impacts, face reputational damage or lose competitive edge in international markets,” he says.

  7. Credit Unions Too Will Be Affected By FATCA, Says Finance Minister Dr Phillips of Jamaica

    Finance Minister Dr Phillips has told credit union leaders that they too must become familiar with the new United States (US) tax law, the Foreign Accounts Tax Compliance Act (FATCA) and should discuss it with their membership. 

  8. I posted this question in one of the other FATCA threads, but I don’t think anyone saw it. So I will try to post it here, since this thread seems to be getting more action…..

    And my question is… “Why FATCA?” Really. Why? Why was this allowed to
    happen? What is the history behind the idea of FATCA? What inspired
    Senator Levin (D-MI) to tack this on to the hire bill? I can’t imagine
    for a moment that he created this beast in a vacuum. It came from
    somewhere. Where? Why are financial institutions allowing it to happen
    at all? I thought the financial world not only had a monumental lobby in
    Washington, I thought they owned Washington for the most part. So
    what’s in this for them?

    I want to do some research on this, because I believe when you
    understand something, it makes it easier to fight it. And I don’t
    understand this at all. There is no benefit to anyone. It’s not going to
    create huge tax revenues that are going to wipe out the federal
    deficit, and it’s costing financial institutions across the globe
    billions of dollars/pounds/whatever.

    I’ve only been researching this for a couple of weeks, and the only
    sort of ‘background’ I’ve found so far is this paper written by Itea
    Grinberg at Georgetown Law School where he is given as:

    “Associate Professor, Georgetown University Law Center. Until the
    summer of 2011, the author served in the Office of International Tax
    Counsel at the United States Department of the Treasury. In that
    capacity he was substantially involved in FATCA from its inception, and
    also represented the United States at the OECD and at the Global Forum
    on Transparency and Exchange of Information for Tax Purposes.”

    The link is here for those who are interested: http://scholarship.law.georgetown.edu/cgi/viewcontent.cgi?article=1162&context=fwps_papers

    I’m trying to read my way through it, but it’s about as interesting
    as watching paint dry. I just wondered if anyone else has any insight to
    the reasoning behind FATCA and from what rock it crawled out from
    under?

  9. You can try emailing professor Grinberg himself but I have a feeling most people involved in FATCA from a theoretical perspective such as Itai Grinberg, Stephen Shay, et all don’t really want to talk publically about it that much.

  10. @Expat in the UK

    I have come to believe, that the origins of all of this probably come from a group of left leaning bureaucrats and intellectuals who would like to see the end of Tax competition between Nations, and create a global Tax Data exchange where there is no place for those they deem to be rich to hide!  They would like uniform (and higher) rates of taxation by all nations.

    I think that FATCA may have just been the US portion of a Bigger agenda to use “US financial might” as a stepping stone towards this goal.  I admit, that this is just speculation on my part, but I think there is some evidence of these trends and desires coming out of Europe OECD which may be combining with the likes of an intellectual like Grinberg to help make this dream a reality. I am not suggesting that there is a conspiracy at foot, but there could be some converging trends that are making this so.   You might find this from last year by Daniel Mitchel interesting. This is a libertarian, Cato institute view.  

    Also, here is another “paint drying read” that you can entertain yourself with. It claims to be an insider’s account.  

    Offshore Accounts: Insider’s Summary of FATCA and its Potential Future

  11. @Just Me

    Thank you for the links. I look forward to reading them, even the paper by J. Richard Harvey. I really want to understand a) where the heck this came from b) why no one tried to stop it and c) why no one is trying harder to repeal it.

  12. @Expat in the UK

    I  just skimmed through the Grinberg article,  although I skimmed over a lot of the technical stuff.  It is interesting,  and puzzling. 

    The general idea is that because of the evolution of the international financial system,  lots of countries are losing out on tax revenue of their residents,  so there is a general interest in a multilateral information sharing system  (GATCA?).  There are several systems out there,  one of which (the Swiss) involves anonymous withholding,  and most of the others which involve information sharing of various sorts.  He is strongly supportive of the information sharing versions,  but comments that the various systems all their benefits and what really needs to happen is for the various systems to get together and work out something that works for everybody.

    But here is the puzzling bit.  He repeatedly talks about the expectation that the country of RESIDENCE   should be   entitled  to be collecting tax.  However when he talks about FATCA and the US system,  he uses the “US persons” terminology,  and occasionally even throws in “Citizen”  in a manner which suggests he means “resident”.   

    Does he really not know the difference?  I  have decided  he actually does,  and is not making a deal of it because it would detract from his main point,  I’m  pretty sure the system he is proposing  is residence based.  He just doesn’t come out and say as much.  There is a footnote (#210  on page 62)  which outlines briefly  the problems for “US persons”  living in other countries.  And there is one other comment  which  rather pointedly  refers to  “US persons”  where they reside (in the US)  which is odd  unless it is a little jab at citizen based taxation,  which is  noticeable only to those of us in the know.

  13. HSBC retired banker sues Geneva branch over US data sharing

    GENEVA, SWITZERLAND – A 71-year-old former manager at HSBC bank in Geneva is suing the bank’s current management for giving his name to the US Justice Department, reports Swiss news agency ats, confirming  information published Sunday by Le Matin. The ex-banker has taken his former employer to the Swiss Attorney General’s office for violating banking secrecy, crimes against the State and supplying information of an economic nature to a foreign government, ats quotes his lawyer in Geneva, Douglas Hornung, as saying.

  14. @JustMe

    Here is a video of Manal Corwin as in that Manal Cowin of the US Treasury Department in charge of FATCA. I have to same I am greatly dissappointed in her. I thought she would be far more “gruff” and “tough” like Linda Beale.



    The subject of video is bone dry boring.

  15. So, what is the impact of FACTA on US multinational companies?
    It might be more difficult for them to send expats abroad for extended period of time, but apart from that?

  16. @CanuckDoc Thank you so much for your synopsis of the Grinberg document. I have to admit, my eyes glazed over after a couple of pages, so I have a lot of respect for you being able to digest it and gather relevant information from it!

    Now, I have to say, the document that @JustMe recommended (http://papers.ssrn.com/sol3/papers.cfm?abstract_id=1969123) was a real eye-opener!  That gave me real insight into the minds of those who created this Fatca fiasco. It reads as if the IRS have a desire for world domination. Some of my favourite quotes were:

    (From the footnotes) “Birkenfeld has been fighting his sentence and also is pursuing a large whistleblower settlement pursuant to IRC 7623(b). Although some have argued the DOJ was to tough on Birkenfeld, no one can dispute that the Birkenfeld case has sent a strong message to future whistleblowers that they should disclose everything they know, especially if their own hands are not 100% clean.”

    Or maybe whistleblowers learned that if you blow the whistle you will end up in jail. The IRS has been lamenting the decrease in whistle blowing lately – imagine that!

    Another point:

    “The major weakness of FATCA is that the US is attempting to unilaterally require FFIs to report information to the US. When FATCA was being conceptualized, it was this author’s hope that the US would aggressively market the FATCA concept to other major countries. It is not clear whether this has been occurring (70).

    (70) Informal discussions suggest most of the IRS’s attention has been on implementing FATCA in the US without much attention being paid towards educating other countries about joining with the US to leverage the FATCA system. Hopefully, my information is incorrect.”

    Considering this was written in December 2011, someone must have read this and poked a stick at the IRS. Because as we all know it wasn’t until mid-2012 before other countries signed on to a reciprocal system and Japan/Switzerland have been dragged in kicking and screaming. I know other countries are considering joint agreements, but it seems to be the stick that is pushing them into this and not an enticing carrot.

    And speaking of sticks and carrots:

    “Certainly, it would be helpful if all countries participating in a multilateral FATCA arrangement could agree on all three major aspects of FATCA. However, in the real world the chances of different countries agreeing on all aspects of FATCA are not high. Fortunately, agreement on all three aspects is not necessary for the US to accomplish its goals. Rather, all that is needed is for the US and other countries to agree on (i) a standard set of customer due‐diligence requirements to be performed by P‐FFIs, and (ii) some stick to get FFIs to participate.

    The imposition of a 30% withholding tax on payments to NP‐FFIs could be the stick, but each country would be free to choose its own penalty to be applied to a NP‐FFI. However, the penalty would have to have some teeth to it.”

    Nothing like putting some stick about!

    Anyway, it was a very interesting read. And gave me a lot of insight into the mindset of the people who created FATCA.

  18. @Expat in the UK

    I just saw someone post on Linkedin that HM Treasury and HMRC are going to have a three month FATCA “comment” period on the UK FATCA intergovernmental agreement starting on June 30th. Get your pencils and keyboards ready. I would also recommend any letters be sent to both HM Treasury and your local MP’s. I would definately be contacting your local MPs during constituency surgeries also. (Their might also be the possibility for public comment in other FATCA partner countries such as the France and Germany.)

  19. @Tim Thank you for bringing this to my attention. I haven’t had much experience working the political system here in the UK, but now that I’m a citizen of the UK I do have a voice, thankfully.

  20. Bahamas Urged To Lobby Over Fatca

    They may have woken up too late to stop the FATCA Train.  I wished I would see more lobbyist besides just this one, James Jatras, quoted as urging it to be undone. Wonder what money and clout is behind him, as he does keep popping up in other stories. I don’t disagree with him, but wished there was a chorus of other lobbyist speaking out to beat back the FATCA Compliance Complex.  Where are the anti FATCA Superpacs when you need them?!

    James Jatras, a principal of Squire Sanders Public Advocacy, told Tribune Business that FATCA’s impact on international financial centres such as the Bahamas could be immense, with international clients pulling money out of US investments to avoid it falling under FATCA reciprocal information sharing and institutions doing likewise, in a bid to avoid the 30 per cent withholding tax liability. 

  21. IF this is true, then game over…

    Tough new US law sits heavy on S’pore banks 

    [SINGAPORE] Much as they dislike it, Singapore banks are taking steps to comply with a new US law which requires all financial institutions to provide details of US accounts.

    The Monetary Authority of Singapore (MAS) also said the US authorities have been constructive in addressing industry concerns about the new law.

    The Foreign Account Tax Compliance Act (Fatca) – or the US taxman’s “big stick”, as some call it – cannot be wished away. Even bankers who say they will not accept US accounts anymore will have to live with it.

  22. U.S. act sparks privacy concerns in Canada

    In other words, we have U.S. legislation that requires Canadian banks to create and instal expensive systems to send the U.S. government financial information about Canadians who may have some tenuous connection with the U.S.

    The cost of these systems will be borne by the banks, and thus indirectly by Canadians in general, and Canadian governments in terms of fewer taxes as a result of the higher initial and ongoing compliance costs

  23. In the “U.S. act sparks privacy concerns in Canada” article posted by Just Me there is a very good comment by CanadianStudentAdvocate. Could he/she be a Brocker I wonder?

  24. @Em I think that she was at the Expat Forum under the alias “Legal Beagle”; to my knowledge, she has never participated here.  I tried to get her to contact me because she was very helpful with her knowledge of the human rights codes.  But alas.  If she is out there, she remains a lurker.

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