Americans abroad — frustrated by the uncertainty of what FATCA will do to their financial lives, and facing repeated delays of the IRS’ promises to bring some clarity through proposed regulations — are increasingly turning to the politicians of the places where they live in an effort to get some answers. In the past week several government officials at the national or supranational level have brought up the issue of FATCA, in response to concerns expressed by constituents — both dual citizens who elected them, and banks and other institutions for whom FATCA amounts to yet another extra-territorial unfunded mandate by the US. A number of scholars have also released draft papers about FATCA and FBAR. Here’s the roundup for the past week or so. If you see any more, leave them in the comments:
- Canadian MP Hoang Mai (NDP/Brossard-La Prairie, Quebec) submitted a written question in the Canadian parliament on 27 January, requesting that the Canada Revenue Agency clarify a long list of questions regarding the effects of FBAR and FATCA on Canadian citizens and financial institutions. You can thank Mr. Mai on Twitter (@hoangmai_npd) or by e-mail, web contact form, or letter. As of 7 February, his question remains on the Order Paper.
- The Taipei Economic and Cultural Office in Boston, Taiwan’s unofficial consulate for the northeastern U.S., organised a FATCA seminar on 28 January together with the Taiwan Chamber of Commerce of New England and Paul Tierney of local law firm Connolly and Tierney. Out of all countries in Asia, Taiwan seems to be paying the closest attention to FATCA, a fact reflected in Taiwan’s media coverage of FATCA. (29 January, Republic of China Overseas Compatriots Affairs Commission press release).
- Cayman Islands premier McKeeva Bush announced that he will make another official visit to the United States in March to discuss FATCA with the IRS. In public comments earlier in the week, Bush was quoted as stating, “Through our dialogue with the IRS we have been assured that whatever system that is employed by the U.S. will be fair and that the Cayman Islands and U.S. dual citizens will not be given less preferential treatment than any other person.” And with IRS assurances plus $10, you can buy yourself a decent lunch. (3 February, Cayman News Service Business Edition)
- European Union Commissioner for Taxation, Customs, Anti-Fraud, and Audit Algirdas Šemeta will update the EU Tax Policy Group on discussions with the U.S. regarding the application of FATCA in the EU. Mr. Semeta is also on Twitter: @ASemetaEU. (6 February, European Commission press release)
A small sampling of the many private sector reactions to FATCA: A report by Russian finance portal banki.ru finds that few Russian banks have made any preparations for FATCA; most banks in question refused to make public comment on the issue. The Association of Canadian Pension Management sent a letter to Canadian Finance Minister Jim Flaherty stating their view that Canadian pension funds should be classed as “deemed compliant” under FATCA due to their low risk of tax evasion, in order to avoid an “onerous and costly burden”. And our own Jefferson D. Tomas points to a debate on Swiss TV about FATCA.
Finally, three law professors — all of them American homelanders — have also released draft papers about FATCA or FBAR in the past week:
- Georgetown law professor Itai Grinberg released a draft paper “Beyond FATCA: An Evolutionary Moment for the International Tax System“. Unfortunately, it mischaracterises FATCA as an issue of taxation of “an elite class of potential non-payers who have the sophistication to utilize foreign institutions” while entirely ignoring the fact that many ordinary U.S. citizens conducting ordinary financial activities for ordinary lives in foreign countries also make use of foreign institutions as well as foreign tax-advantaged savings and self-employment structures — structures intended for use by unsophisticated taxpayers, but on which U.S. laws impose an increasing series of reporting burdens of which FATCA is only the latest iteration.
- University of California Hastings College associate law professor Susan C. Morse released a draft of a paper to be published in the Villanova Law Review: “Ask for Help, Uncle Sam: The Future of Global Tax Reporting“. Her abstract echoes comments by Acting Assistant Treasury Secretary Emily McMahon in suggesting that the U.S. will need to provide reciprocal incentives to foreign governments to gain their cooperation with FATCA. She goes even further than McMahon, amusingly suggesting that U.S. administrators of FATCA “could consider side payments to non-U.S. governments to induce them to support the FATCA project.” Her abstract evinces no indication of any concern for the effects of FATCA on Americans abroad. I have not been able to read the actual paper because of issues downloading from SSRN.
- Another Villanova Law Review paper of interest comes from Indiana University law professor Leandra Lederman, about the effects of the OVDI, entitled “The Use of Voluntary Disclosure Initiatives in the Battle Against Offshore Tax Evasion“.
We should tweet, write letters, or otherwise make public and private expressions of support for politicians looking into FATCA. If you feel able, you may also wish to contact the authors of draft papers who ignore the effects of FATCA on Americans abroad and calmly and succinctly express your concerns to them. I’m neither calm nor succinct so I’m holding off on that last step for now.
Thanks for the efforts at putting this together. I tweet everything I see on FATCA, (not that it does much good) and if you have any suggestions on additional Hash-tags to get attention, I am open to them…
Also, I try to target specific news organizations with tweets…
Here are some of my favorites that are totally missing in action on this story…
@MktplaceRadio @npratc @planetmoney @nprwatc @NPRWeekend @MuckReads @MorningEdition @paulsolman @paddyhirsch @pritheworld
Also, I also try to email as many authors of articles as I can when their story is slanted the wrong direction, misses the point, or if they are on mark, thank them for their efforts. With this post, I have a few other targets. Thanks… I will get started.
Really nice research, Eric. The links are great. I echo Just Me – time to heat up the Mac and start writing.
Eric, thanks for pulling that together. Hoang Mai’s questions to Canadian Parliament are brilliant. I will be interested in the answers. I will also drop him a note thanking him. I will attach a copy of my letter to the PM two weeks ago.
Those of you in other countries may wish to review Mr. Mai’s excellent questions to Canadian government in the Order Paper. These may be useful for you to have discussions with elected representatives relevant to your country of residence.
FATCA isn’t the problem, and in fact IMHO it’s a dead duck: nobody supports it. Repealing it or letting it languish unenforced or modifying it won’t change the situation of the folks who are compliant where they live but face idiotic criminal penalties for failing to file useless FBAR reports. The paper by the Indiana law professor says, among other things showing she doesn’t get it, “the IRS’s repeated use of offshore voluntary disclosure
initiatives may have diminishing returns unless the government continues to make well-publicized
criminal prosecutions.” That means us.
@Russ
FATCA is alive and kicking!!!!
Just last night I watched a documentary on Swiss television about FATCA. It seems that 99% of all the Swiss banks are in the process of signing on to FATCA. The pressure from the IRS and DOJ has been so high recently that they see no other way out of the pressure cooker. The Swiss financial minster keeps stating that talks with DOJ and IRS are underway and there seems to be a “global deal” on the far horizon. Global meaning for all the Swiss banks. This global deal can only be FATCA, because this gives the US everything they’ve always wanted, names so they can go after us. FATCA isn’t really all that new, the EU has something similar but the Swiss were able to get away without reporting the information but have to retain a withholding tax of 35% (they even get to keep 25% of it!) the rest goes to the account holder’s tax agency where he resides. The US could actually keep FATCA if they would just abolish citizenship based taxation!
If all the countries in this wonderful world would just implement a national sales tax instead of taxing income we probably would have this terrible mess.
@myslef 🙂
“…….income we probably would have this terrible mess.”
I meant to say “….would not have this terrible mess.”
my thoughts were faster than my typing 🙂 sorry!
Here’s the link for those interested in documentary I mentioned. Unfortunately it’s in only in German 🙁
http://www.videoportal.sf.tv/video?id=cec22450-31cb-4d61-9400-bf2db520e1d6
@all: go look at Russ’ page, it’s packed with good information & links.
@Russ:
Well yes, winning the fight against FATCA would mean that expats remain in status quo ante bellum on everything else besides FATCA. But on the flip side, losing the fight against FATCA would mean that the details of past FBAR, PFIC-reporting, CFC-reporting, etc. non-compliance come to the IRS’ loving attention. They’d get names, addresses, account numbers, and account balances, giving them quite enough information to make requests for even more information under most bilateral TIEAs or to start sending out nasty automated penalty letters.
So it hardly hurts us to beat a dead duck. And, as others stated, FATCA hardly seems dead. There are some extremely broke governments all over the world who would happily shred their own privacy laws and compel their banks to comply with FATCA if they thought they could get information about their own citizens’ US holdings in return. That quid pro quo may be almost impossible for US financial institutions to implement in practise, but it’s what Treasury is trying to sell to Europe right now — they’ll promise the moon in exchange for the stars, and once they’ve got their hands on the stars they’ll deliver up a plate of blue cheese.
I’d never argue that FATCA isn’t a catastrophe, from every point of view, and worth defeating. But I think we can get distracted at beating this particular duck (not dead, I grant you) from what seems to me the main point, which is the FBAR penalties.
I think the US Taxpayer Advocate has made the most powerful move yet against FBAR. I’m not sure when it was put up, but there is now, on their Web site, an amazing document called “”The IRS’s Offshore Voluntary Disclosure Program ‘Bait and Switch’ May Undermine Trust for the IRS and Future Compliance Program.” It’s #12 in their series of “Most Serious Problems.” The first part of it, especially, is worth reading carefully. I think Nina Olson is our strongest ally, and the one most likely to make a difference. Read it here:
http://tinyurl.com/73lc5xs
@Petros thanks for sending me the paper! Hilarious reading. She basically suggests that the US bribe other jurisdictions to cooperate with FATCA by offering them a cut of the spoils: “Side payments are an important potential tool that might be used to induce non-U.S. governments to cooperate in the enforcement of FATCA. The ESD withholding option, which features 75/25 revenue sharing between the residence jurisdiction and the paying agent’s jurisdiction, provides one example of a side payment that is closely related to the architecture of the tax itself.”
@Russ yes, and all us taxpayers are still waiting for Shulman’s response to Olson (see e.g. this post. Just_Me was also running a countdown on Twitter trying to draw attention to the issue.) But I think most people around here have given up on the idea of “allies” in the US government. Congress seems dead set on maintaining and expanding ridiculous reporting requirements for Americans who dare to have financial lives outside the Homeland, and as Steven Mopsick points out, the IRS doesn’t really have that much latitude to deviate from that clearly-expressed Congressional intent no matter how much the TAS yells at them.
I have noticed we have now been picked up by the Linkedin FATCA forum. This is interesting as the people who tend to reside their work in the banking industry and tend to be somewhat unwilling to “rock the boat” so to seem. I suppose you could go over there and give them a piece of your mind other than for the fact Linkedin tends to not like people who get too “bolshie.”
http://www.linkedin.com/groups/FATCA-Foreign-Account-Tax-Compliance-3731046
Pingback: Letölthető anyagok | Fatca.HU
I found this page on the Deloitte web site, that is interesting. It lists the letters from congressmen, senators, and other groups that were submitted to the IRS regarding FACTA, and the response that some of them got from the IRS.
http://www.deloitte.com/view/en_US/us/Services/tax/global-business-tax/business-tax/Tax-Controversy-Services/ffba750a5bbea210VgnVCM3000001c56f00aRCRD.htm
There is some people that might be interesting to contact, like Michael Caballero, the International Tax Counsel, that is listed in the latest letter from the Treasury.
@Christophe, it is an interesting resource. Unfortunate that there is nothing really recent in it though.
@All, this is new;
http://www.risk.net/operational-risk-and-regulation/news/2170830/nordic-banks-push-fatca-dealNordic banks push for Fatca deal
Published online only
Author: Jessica Meek
Source: Operational Risk & Regulation | 27 Apr 2012
“Banking associations in each of the Nordic countries have contacted their governments to request action be taken. The Swedish Bankers’ Association has stressed the urgency of the situation in a letter to the Swedish finance ministry.
“A rapid response from the Swedish side is required, as there is no indication the US will slow down its process, despite massive criticism of Fatca worldwide,” the letter says. It goes on to ask that the Swedish government “actively commit to making the necessary changes urgently in existing tax treaties with the US on reporting on a reciprocal basis”.
The Danish Banking Association has a taken a different angle with its approach to its government. “The Swedish letter focuses on their double-taxation treaty [with the US]; this is not the approach we decided on in Denmark,” says Mick Thimm Sayed, manager at the department of economic policy and banking at the Danish Bankers’ Association in Copenhagen. “We, in general terms, asked our ministry of taxation to get involved and contact the US authorities in order for Denmark to be part of this group of countries with inter-governmental agreements. We didn’t ask for a change in double-taxation treaties because from our perspective that’s not the way it would work.”
And the Norwegian and Finnish banking associations have also been in discussions with their own governments about entering into an inter-governmental agreement with the IRS under Fatca. “We are fully in line with our Swedish, Danish and Finnish colleagues,” says Jan Digranes, manager of banking and capital markets at Finance Norway. “And we are just as worried [about Fatca] as they are.””…………
“Nordic banking associations open Fatca reciprocity talks
The push for reciprocity under the US Foreign Account Tax Compliance Act (Fatca) is gaining pace, with banks in four Nordic countries now also urging their national governments to facilitate bilateral agreements with the US.
Related articles
Fatca reciprocity splits industry opinion
Fatca passthru payments to be simplified, expert says
More sovereigns edge towards two-way CSAs – and clearing
Fatca statement adds to confusion
The reciprocity agreements will allow foreign financial institutions to report US customer data to their national governments, rather than directly to the US Internal Revenue Service (IRS). When the draft Fatca regulations were released in February this year, the UK, Spain, Italy, France and Germany issued a statement of intent alongside the US detailing their intention to seek reciprocal agreements.
Banking associations in each of the Nordic countries have contacted their governments to request action be taken. The Swedish Bankers’ Association has stressed the urgency of the situation in a letter to the Swedish finance ministry.
“A rapid response from the Swedish side is required, as there is no indication the US will slow down its process, despite massive criticism of Fatca worldwide,” the letter says. It goes on to ask that the Swedish government “actively commit to making the necessary changes urgently in existing tax treaties with the US on reporting on a reciprocal basis”.
The Danish Banking Association has a taken a different angle with its approach to its government. “The Swedish letter focuses on their double-taxation treaty [with the US]; this is not the approach we decided on in Denmark,” says Mick Thimm Sayed, manager at the department of economic policy and banking at the Danish Bankers’ Association in Copenhagen. “We, in general terms, asked our ministry of taxation to get involved and contact the US authorities in order for Denmark to be part of this group of countries with inter-governmental agreements. We didn’t ask for a change in double-taxation treaties because from our perspective that’s not the way it would work.”
And the Norwegian and Finnish banking associations have also been in discussions with their own governments about entering into an inter-governmental agreement with the IRS under Fatca. “We are fully in line with our Swedish, Danish and Finnish colleagues,” says Jan Digranes, manager of banking and capital markets at Finance Norway. “And we are just as worried [about Fatca] as they are.”
And the Federation of Finnish Financial Services, which represents insurance companies, asset managers and the wider financial community in Finland alongside its banks, has also confirmed it had discussions about a month ago with its finance ministry.
But industry observers are concerned it is the banking associations and not governments themselves that are pushing for talks about Fatca reciprocity. “I’m surprised the banking associations are asking their governments to get the reciprocity, as I would have thought the governments themselves as part of the bilateral arrangement would want to the quid pro quo,” says Angela Foyle, a tax and financial services specialist at consultancy BDO in London. “If you’re just about to impose a reporting obligation that will cost your taxpayers money to set up, as a taxpayer I would be expecting my government to be asking the same to come back from the US.””…………
http://www.fundweb.co.uk/us/ima-calls-for-fatca-delay/1050477.article
Home
US
“IMA calls for Fatca delay”
27 April 2012 | By Gary Jackson
“The Investment Management Association (IMA) has called on the US to delay the implementation of Foreign Account Tax Compliance Act (Fatca)…….”
also;
http://www.international-adviser.com/news/tax—regulation/ima-calls-for-us-treasury-to-delay-fatca
and
http://www.fundweb.co.uk/blogs/us-should-get-its-own-house-in-order/1050487.article
@Badger
I though the IMA comment letter was interesting in the fact they claimed only true recipriciocity could be ensured by domestic US banks asking for nationality of all their US client living in the US.(Something I suspect is very unlikely to happen).
@Tim, I thought I read that reciprocity and getting ready for it wasn’t high up on the US banks’ list of priorities. So, if any country wants the info from the US, how long would they be prepared to wait?
I posted an article excerpt to that effect, (re US not ready for reciprocity) but now I can’t find it. : (
@badger (your post April 21: http://isaacbrocksociety.com/2012/04/20/peaceful-resistance-to-fatca-will-result-in-an-alternative-financial-system/ Is this what you were looking for?
Thought you might be interested in what I watched this morning….
Jamaica TV actually had a talk show on FATCA, with some pretty good detail…
http://bit.ly/Is5A7R
So, I had to tweet this to the TV station in New Zealand, if Jamaica can do this, why not them?
Here’s a mention of Russia:
(at first I thought it said ‘invasion’, not ‘evasion’!)
“FATCA: rest of the world may finance US tax evasion initiative”
http://www.lexology.com/library/detail.aspx?g=f2793902-06d1-485d-8df8-fd95c50b0e10
CMS, Russia
Stanislav Tourbanov and Pavel Vasin
European Union, Russia, USA
May 2 2012
………….”It raises many questions, from legal issues connected with the protection of personal data of investors and bank secrets, to the financial and time costs of implementing the US requirements. A special concern that FATCA triggers is its interrelation with the Russia-US double tax treaty that provides for a limited number of occasions for withholding tax. Therefore, the legitimacy of an additional unilateral 30% withholding tax on all payments to Russian residents is debatable…..
“In this regard, support of the Russian Government would be helpful: a number of European countries (France, Germany, Italy, Spain and the UK) have concluded an intergovernmental agreement with the US, allowing for the centralised participation in FATCA through governments. This participation has the advantage of:
The centralised transfer of data to the IRS by the national tax authorities instead of single entities;
The commitment of the IRS to provide similar information on the European holders of European accounts in US financial institutions;
Gathering the information by the national tax authorities without breaching the requirements of the national law; and
Abolishing certain FFI penalties for the afore-stated European countries.
However, the Russian Government has not officially responded FATCA.
What should be done?
In case the Russian Government does not take any steps with respect to FATCA, Russian companies would be forced to cope with it themselves, i.e. either report their clients to the IRS or suffer a 30% WHT. In this regard, it is recommended to carry out FATCA due diligence to determine the applicability of it to specific types of income, accounts and account holders, and determine their practical effect on business activities.
A strategic analysis should be carried out to decide whether US individuals will be retained as clients and US investments retained in the investment portfolio. If the answer is “yes”, concluding an agreement with the IRS is advisable. If the answer is “no”, US investments should be exited, and contracts with US individuals should be terminated.
In the event that an agreement is concluded between the Russian Federation and the US, then Russian companies should monitor their client base and relations with the Russian authorities responsible for providing data to the IRS.”
@badger
thanks for the Russian story, and digging it out behind the registration wall. It is interesting that Russia has not responded at all to FATCA
Some details about objections to FATCA from Mexico. Valuable article. As noted on another thread, Mexico tried to get the US to provide reciprocal information previously – as recently as 2009, and the US basically ignored them.
“The Road to FATCA implementation in Mexico” Aug. 24, 2012
http://www.internationaltaxreview.com/Article/3079950/The-road-to-FATCA-implementation-in-Mexico.html
The section of the article on witholding should be emulated by Canada – the ar
for more background on the lack of US reciprocity in Mexico’s pre-FATCA efforts to combat money laundering, see; Mexico sent a letter in 2009 to Geithner at Treasury asking for an information exchange in order to stem the billions in illicit funds moving back and forth over the common border, and they never received a reply. http://www.financialtaskforce.org/2012/01/31/u-s-should-expand-automatic-exchange-of-tax-information-to-mexico. One report cited the amount of funds lost to Mexico at “$872 billion to illicit financial outflows between 1970 and 2010″ . http://mexico.gfintegrity.org/en/
The US didn’t see any point in assisting with stemming the crossborder flow of money from Mexico into the US – and of course, the US banks benefited hugely from non-resident accounts holding Mexican and S.American assets. As long as the funds flow into the US, they don’t care. They just don’t want US persons to hold any assets outside the US – thus the confiscatory FBAR and FATCA penalty structures. The US sound bites about anti-money-laundering, etc. are just part of the convenient, disingenuous cover story for FATCA – otherwise they should have no problems forcing the US banks in Florida, Texas, Nevada, Arizona, Wyoming, etc. from coughing up reciprocal account information for Mexico and other countries right in the name of FATCA right? And stop the bs. that Canada is a tax haven.
The section of the article on the legal impediments to withholding by Mexican banks, and the civil and criminal penalties – including up to 15 years of jailtime applied as a sanction for bank officials who do so without authorization is very interesting. Which would be welcome as a deterrent to rein in financial institutions and financial sector lobby groups here in Canada who are considering how best to throw account holders under the FATCA bus for the sake of shareholders and US derived profit. See http://www.internationaltaxreview.com/Article/3079950/The-road-to-FATCA-implementation-in-Mexico.html , the section headed ‘Witholding’.
Not sure where to post this, hope it gets noticed by administrators;
Excellent article: http://de.ibtimes.com/articles/26112/20121011/detlev-schlichter-neuer-sozialismus-kapitalverkehrskontrollen-freiheit.htm
In German, it says we are undergoing a new generation of socialist capital controls.
The main gist of the article is that since western societies are all bankrupt; they have come to a turning point because more than 50% of the population is state-dependant (if they were bankrupt and less % were state dependent, they could turn things around; but in this situation it is impossible). Governments must find a new enemy and that is the “Rich Man”. (or even worse: the “rich” man living in another country not paying taxes to us).
France now taxes 75% of anyone’s income that is over a certain amount for a given year. And imposes a “Wealth Tax” on “Rich” people, taking away bit by bit what they have earned and paid taxes on over their lives. This article points out that France is no longer a free country but rather a marxist state.
The article goes on to cite FATCA as an element of allowing the government to apply capital controls and curtail freedom.
The prize winning quotation comes at the end of the article:
Nobody is more enslaved, than the people who falsely believe they are free… as do modern day Americans!