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. @bubblebustin…

    I have been using it as a repository of misc FATCA information, that might not be worth a post of its own, and not to lose track of good articles.   

  2. An interesting article about the 30% withholding tax for non compliant institutions:
    http://www.theaustralian.com.au/business/financial-services/us-tax-laws-pose-risk-to-banks-bottom-line/story-fn91wd6x-1226433317673

    “The payment doesn’t have to have any connection with the US for the provisions to apply,” he said, pointing out that FATCA applies to “passthru” payments between any complying and non-complying financial institutions, whether or not those payments relate to US citizens.

    “If a large complying Australian bank made a transfer to a smaller credit union related to a worker’s wages, that would be subject to withholding, too.”
    In these cases the withholding tax rate is cut by the percentage of the paying institution’s US assets.
    “After the law was passed, people wrote to congress saying ‘there must be a mistake’ because the ‘passthru’ provisions will ultimately force practically every financial institution in the world to comply,”
    “But congress intentionally made the global burden of not complying very high in order to ensure the IRS received as much information as possible.”

  5. Reuters reports…

    U.S. Treasury to release foreign tax pact rules within days

    (Reuters) – The U.S. Treasury Department will release before the end of July new compliance rules for foreign governments eager to cooperate with looming U.S. tax laws and spare their domestic banks from U.S. fines, a Treasury official said on Tuesday.

    The comments were made Michael Plowgian, an attorney advisor in the Treasury office of Internal Tax Counsel, speaking to the tax and legal news service BNA. A Treasury spokesperson confirmed Plowgian’s comments.

     

  6. @JustMe, have to love that phrasing; “for foreign governments eager to cooperate with looming U.S. tax laws and spare their domestic banks from U.S. fines“

    And for those governments, and domestic banks, who don’t give a rat’s ass about national sovereignty, ethics, their citizens and their families or their fiduciary duty to ALL account holders.

    @christophe, re:
    ““But congress intentionally made the global burden of not complying very high in order to ensure the IRS received as much information as possible.””

    More and more I’m convinced that its about the US assessing an ongoing levy or asset tax on all possessions of those ‘abroad’ – not an income or earnings tax. Nothing to do with taxes assessed or owed. Has nothing to do with tax evasion or crime prevention.

  8. Could the complexity of GATCA help to kill extraterritorial taxation? If there is enough of a mess, and enough evidence that there can’t be true reciprocity from the US – and not enough gain by the other countries to justify the cost and complexity – maybe it will become obvious the mess extraterritorial taxation causes. 

    Plus, the US is bound to try and get more of the already taxed and reported legal assets it sees untapped abroad. Hard for it to resist trying to get some more from those without any votes or true representation. Since the US spends zero money on services to us, it gets revenues from us without any real matching expenditures – except the extraction and enforcement costs. The IRS and the US will be tempted even more to try and rejig international tax rules to grab more of what it can see that we have. And if other countries don’t stand up to effectively help the duals in their midst, the asset leakage funneled to the US will increase in volume. Canada and Mexico have the most US deemed taxable persons, so they’ll be the most tempting targets.

  9. @badger, if the grab for cash from its citizens abroad escalates to violence, unlike Canada’s ‘antiques road show’ of an army, Mexico at least has the arms to fight them off courtesy of the USA!

    Seriously, I believe you are right. At a time when governments are cutting things lean, FATCA or GATCA doesn’t seem cost effective, unless of course, governments believe the prize is worth it. I should get into the fire-proof mattress business because I see a demand coming.

  10. FATCA costs may drive wealth managers out of business

    by Lisa Smith : 

    July 28, 2012Financial advisers are finally waking up to the notion that tax management laws rolled out by governments across the world are aimed at them and not taxpayers.

    The Oslo Dialogue Agreement signed by the 34 member states of the Organisation of Economic Cooperation and Development in March 2011 is the key date.

    Under the agreement, each country signed up to swop information about financial institutions, advisers and taxpayers involved in cross border tax management.

    Since then, lawmakers have worked on putting the agreement in to practise – and the result is the US Foreign Account Tax Compliance Act (FATCA) and the latest announcements about curbing advisers and companies selling ‘aggressive tax avoidance schemes’ by Exchequer secretary David Gauke.

  13. Pingback: The Isaac Brock Society - Deserves own post… FATCA

  14. @christophe;

    I loved this quote from an article link http://www.washingtontimes.com/news/2012/jul/9/rise-of-the-global-tax-collectors/#disqus_thread embedded in your link http://www.prnewswire.com/news-releases/washington-expert-applauds-senators-scrutiny-of-fatca-hails-first-nail-in-coffin-of-bad-law-164446156.html; “Most people view their tax returns and bank account information as “confidential.” Would you voluntarily risk your life on the unenforceable promise of someone in government not to lose, misplace, sell or leak your financial information?”
    from http://www.washingtontimes.com/news/2012/jul/9/rise-of-the-global-tax-collectors/#disqus_thread ‘ RAHN: Rise of the global tax collectors; Congress is giving international bureaucrats the power to intrude’

    but, ironically, it is cooperation with the OECD (JustMe’s DATCA and GATCA!) that the article is describing, whereas the quote above is exactly what the US does not recognize our right to where we live outside its borders – to be free from extraterritorial asset reporting and taxation by the US – as well as the threat implicit in IRS datamining- to have all of our local (post-tax) account and asset information gathered by the US and shared however they like, and at risk for the same identity and data theft already endemic for other IRS tax return information inside the US.

    the article says;

    “The Constitution gives Congress the exclusive right to tax Americans at the federal level. Yet Congresscontinues to give away this most fundamental responsibility to international organizations, the most dangerous of which is the Paris-based Organization for Economic Cooperation and Development (OECD).

    Most Americans probably would not approve of their tax dollars being used to support an international organization that undermines their fundamental liberties and promotes giving their hard-earned money to other governments, often run by corrupt or dictatorial regimes. This is precisely what the OECD is doing, with the blessing of the majority members of Congress.”

  15. Christophe…

    Thanks for those links. Just got back from a trip, and noticed that you have posted them..

    That Washington Times piece sure gives voice to what I have been thinking and saying for sometime now about GATCA.  The  OCED, combined with the IRS and Congressional FATCA passed by the Dems is creating a monster to end tax competition between countries and strip every person naked with total transparency as to income and assets. Of course we will need Wikileaks to figure out their secrecy!  A brave new world!  

    I see our expert… Jatras is back at it putting out press releases and working the FATCA repeal Angle.   He has been popping up a lot recently.  I wonder who is funding his effort?  This is not just a patriotic civic endeavor on his part.  Hummm.

    http://isaacbrocksociety.ca/2012/07/31/deserves-own-post-fatca/ 

  18. *@Just Me, I also replied on Linda Beale’s Blog concerning ‘Does the Tea Party support Tax Dodgers’?

    :…Hello, as an American permanently based in London for over 23 years, I find it burdensome that I have to file two tax returns and suffer double taxation, especially when my overall taxation is far higher in the UK. I also suffer a further tax on tax via having to shell out for expensive cross-border accountant fees. I do not have a high income but still have to pay over 15% of my net pay on professional fees and double US taxation…and as I earn under $30,000 per year, I feel that this is onerous.

    I am effectively banned from making use of the local equivalent of IRA accounts because the IRS doesn’t recognize their tax-advantaged status; and because I have a foreign address, my US brokerage account won’t allow me to set up an IRA. I thus suffer a second class status with both the UK and US. And like many others, I fear that my credit union will eventually force me to close down my savings and checking accounts where I live because they won’t want to deal with US persons on their books.

    I appreciate that FATCA is trying to stamp out tax evasion but it is causing too much collateral damage. I want to maintain my dual citizenship but am living in chronic fear of draconian penalties for mere footfaults in my reporting of my ‘foreign’ accounts and assets via FBAR and now, 8938…’

  19. @monalisa1776

    Thanks for joining in.  It is the one thing we can do, and that is not to let mischaracterizations or FATCA apologist go unchallenged. 🙂

  20. Have noticed an Australian Blog called 

    CCH Tax Chat

    FATCA – will it keep personal information private?

    Thought I would give them some information, that they might not have.  It is in moderation.

    You may not be aware of two recent developments in the States as U.S. legislators wake up to this monster they have created.

    First, is a push back by Congress against the IRS reciprocity tool they are trying to impose unilaterally on U.S. Banks to make them report foreign interest to the IRS so they can trade it for the IGAs (Intergovernment agreements) that they just recently announced.  

    This was reported here…. http://bit.ly/OrYTSm

    The reason they are now responding, is there is starting to be the natural Capital flight in Florida banks as reported in the Miami Herald.  http://hrld.us/R8Az8g   FATCA is the fallout back on U.S. banks.  Comments there explain it more, if you are not aware of the relationship.

    Secondly, 4 U.S. Senators have recently written Geithner basically grilling him about what Treasury is doing.  We have a Bureaucracy running wild and setting policy, and the Senators are just waking up to what they created.  As you may not know, they don’t read the bills that they vote for, or only later realize the unintended Consequences of their actions.  http://www.repealfatca.com/downloads/letter.pdf

    I hope Wayne Swan can take some lessons from Canada’s Flaherty who isn’t just rolling over to the ridiculous and extra-territorial demands of the Yanks!

  22. FATCA simplified  – the Good, the Bad & the Ugly

    The US, unlike virtually every other country in the world taxes its citizens on their worldwide income. Its citizens are made to report their income on a global basis.

    FATCA is effectively the IRS extending its long reach internationally into every country on the globe and forcing its financial companies to report to it, to disclosure to it and to withhold tax on its behalf. Essentially FATCA is the IRS ordering foreign institutions to do its dirty work – by making non-US companies act as unpaid tax collectors!

  24. A bit of delayed reporting  by Reuters… Just repeating a lot of Treasury press releases, along with this FATCA IGA one. 

    NEWS BRIEFINGS – FEDERAL TAX

    8/2/2012 — Treasury Department releases long-awaited FATCA model agreements 

    Summary:

    The Treasury Department has released its long-awaited model agreements for intergovernmental information sharing under the Foreign Account Tax Compliance Act (FATCA). There is a reciprocal model agreement for countries with which the U.S. has in effect a tax treaty or tax information exchange act, and a largely identical nonreciprocal model agreement. Among other things, the agreements clarify the responsibilities of financial institutions in reviewing and reporting accounts based on the identity of the account holder and the balance or value of the account. They also suspend certain requirements relating to recalcitrant account holders. 

    Need to understand more, what this below means… humm  Does this take the pressure off Canadian banks and fears of Expats being denied accounts overseas?  Not sure I totally understand the implications…  Need to study more.  I see why lawyers get paid Big fees to follow the labyrinth of code, rules, references and figure out if  these statements apply to their entity…. ”
    provided certain requirements are met.”

    The agreement suspends the rules relating to recalcitrant accounts, stating that the U.S. won’t require a RFPFI to withhold under Code Sec. 1471 or Code Sec. 1472 with respect to an account held by a recalcitrant account holder, or to close such account, if the U.S. Competent Authority receives the requisite information set out of Article 2 with respect to the account.(Article 4) It also treats FATCA partner retirement plans that meet certain requirements as deemed-compliant FFIs or exempt beneficial owners for purposes of Code Sec. 1471.

    The agreement clarifies that, if a FATCA partner financial institution that otherwise meets certain Article 4 requirements has a related entity or branch that is a nonparticipating financial institution and that operates in a jurisdiction that prevents the related entity or branch from becoming a participating (or deemed compliant) FFI for Code Sec. 1471 purposes, the FATCA partner financial institution shall nonetheless continue to be treated as a deemed compliant FFI or exempt beneficial owner for Code Sec. 1471purposes, provided certain requirements are met.

  25. Australian trade body head ‘highly confident’ of FATCA exemption

    The head of a leading financial trade body in Australia has returned from a trip to the US “highly confident” that the North American government will exempt superannuation schemes from the controversial Foreign Account Tax Compliance Act (FATCA).

    John Brogden, a former politician and chief executive of the Financial Services Council – a trade body representing Australia’s retail and wholesale fund management businesses, superannuation funds, life insurers and financial advisory networks, made the comments to Australian magazine Global Custodian.

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