According to the Hill magazine a “son” of FATCA proposal by Carl Levin is heading for Senate approval as soon as today. Link below:
Key features:
Credit and Debit cards issues by non-FATCA compliant banks such as Canadian credit unions will not be accepted in the US anymore.
Update: Son of FATCA proposal attached by to Highway Bill by voice vote. Will try to provide more details. Absolute Disgrace.
Further Update: The amendment is so new it doesn’t even show up on the Senate website yet. Bill still far from final Senate approval. I should note that while I am not an expert on US politics I seem to have heard some place that the main sponsor of the Highway Bill California Senator Barbara Boxer earlier had indicated she was opposed to any non transportation related amendments being made to this bill. The US Senate won’t be in session until Monday so we should now more about what actually passed by then. I do feel though that for those of you still involved in US politics and American Citizens Abroad this might be a good opportunity to make a stand. Given the large number of expats from California this might be a very good opportunity to put some pressure on California Senator Barbara Boxer.
OMG: Do you mind if I use your fantastic motto “We Don’t Negotiate with Financial. Terrorists” in my replies to Canadian Bankers Association and Jim Flaherty?
Love it! Let’s throw that quote back at the US!
No problem Blaze.
I wonder if what the Americans are trying to do through the international banking system could be considered an act of war against every country they do it to.
I did some checking on Wikipedia and this is what I found:
What is the #1 Tourist Destination in the World? The United States of America
How many foreign tourists visited the United States last year? 56 million
How much revenue does this foreign tourism generate in the United States annually? $110 billion.
Senator Carl Levin certainly merits citation, recognition and an award for this bold action in discouraging foreign tourists from visiting the United States.
Perhaps he will also merit an award from the Cuban government for encouraging foreign tourists to go to Cuba rather than visiting the United States.
They will be able use their foreign credit cards in Cuba, even though they cannot use them in the United States. Raul Castro will undoubtedly be grateful to Sen. Levin for introducing this legislation which, if passed by Congress and signed into law by president Obama, will give Brazilian, Canadian, Chinese, European and other foreign tourists from everywhere else in the world a real incentive to spend their vacations on the sandy beaches of Veradero, and visit the historic sites in Old Havana, rather than coming to the US to spend their billions of dollars in Miami Beach, Disneyworld, Grand Canyon, Yellowstone National Park, Niagara Falls, Carlsbad Caverns and everywhere else. What a relief it will be to not have to listen to these pesky tourists chatting away in unintelligible languages that must be so irritating to the good Senator.
There are already several daily flights between both Montreal and Toronto and Havana and other Cuban cities. There are also direct flights to Brazil, many Euopean cities and the other Latin America catpital cities. Senator Levin’s legislation will likely result in more flights being added to accommodate the increase in Canadians spending their winters in Cuba rather than in Florida, California, Arizona, etc. Already the Canadian blogs are overloaded with messages describing how Canadian citizens with even remote ties to US citizenship are being apprehended at the border and being forced to pay tens of thousands of dollars because they have not complied with every jot and title of US tax laws the never knew applied to them. When this happens, they turn around and head back home, vowing never to visit the US again.
Senator Levin’s legislation also contribute to increasing our already high unemployment as millions of Americans currently serving this horde of foreign tourists lose their jobs and join the ranks of the unemployed. Thank heavens the Chinese are still willing to loan us money to finance our massive unemployment compensation, food stamp and other welfare benefits for unemployed Americans.
Of course this is just a follow-up on Senator Levin’s bold action in introducing FATCA, which was passed by Congress and signed into law by the President in 2010. This law obligates every non-US bank everywhere in the world – from Australia to Zimbabwe – to provide detailed reports on all their accounts held by US citizens; including those who live, work or are retired living anywhere in the world, so that they may be properly double taxed by the IRS on all their foreign income. Not only does it include persons born in the US who are temporarily deployed abroad, but also those residing permanently abroad who were born abroad of one US parent, are dual citizens by birth of the countries where they were born, don’t speak a word of English, have never held a US passport and not only have never lived in the US but have never once in their entire lives set foot in US territory. As the only nation in the world which subjects its citizens living abroad to home-country taxation, the US, through its unique citizenship-based tax legislation, has with this double taxation, made it next to impossible for the persons holding US citizenship to both live and survive residing outside of the United States.
FATCA subjects foreign banks to drastic penalties if they fail to flagrantly violate the privacy laws of their own countries and provide this information on their US citizen accounts to the IRS, by withholding 30% on funds transferred to them from the US. So drastic is this penalty that foreign banks are closing down accounts held by US citizens domiciled abroad, without which they cannot survive, rather than being subjected to severe penalties by foreign countries by divulging this information to the IRS. Clearly the only way a US citizen can survive living and working in a foreign country is to become a naturalized citizen of that country and irrevocably renounce their US citizenship. Not only must a fee be paid to the US government for issuance of a Loss of Nationally Corticated, but the US citizen may be subject to a stiff US “Exit Tax” as well. By renouncing citizenship, under the Reed Act enacted in 1996, which is directed at persons who renounce their US citizenship for tax reasons, they may be blacklisted and barred from ever visiting the US, for any reason, for the rest of their lives.
Surely Senator Levin merits an award for the destruction of the human rights of US citizens for his visionary policies in punishing US citizens who relocate abroad. This promises to be an effective method for reducing foreign immigration to the US, once it becomes known that once you get in you must pay a very high price to ever get out.
@Roger Conklin
“Already the Canadian blogs are overloaded with messages describing how Canadian citizens with even remote ties to US citizenship are being apprehended at the border and being forced to pay tens of thousands of dollars because they have not complied with every jot and title of US tax laws the never knew applied to them.”
I do not think this has been happening (yet)..
For those that are getting a real education on the way the sausage is made in Washington, I encourage you to go an look through the Transportation bill and see how many gotchas are being added related to increased penalties for every kind of failure you can imagine. NOT JUST related to Expat issues….
This just shows not only is America “Form Nation” it is “Penalty Nation.”
Just do a search on Penalties, and see what you get…
I may have missed some… 🙂
Sec. 1403. Minimum penalties for repeat offenders for driving while intoxicated or driving under the influence.
Sec. 31203. Civil penalties.
Sec. 31207. Increased penalties and damages for odometer fraud.
Sec. 32108. Increased penalties for operating without registration.
Sec. 32110. Revocation of registration and other penalties for failure to respond to subpoena.
Sec. 32207. Revocation of foreign motor carrier operating authority for failure to pay civil penalties.
Sec. 32503. Penalties for violation of operation out of service orders.
Sec. 32505. Minimum out of service penalties.
Sec. 32507. Increased penalties for evasion of regulations.
Sec. 34011. Civil penalties.
Then see below how the penalties are added in some convoluted language, which means you have to go back and look at old statutes to really figure out how they are being amended and what changes are that are being made.
So, some Homelanders are going to get gorged by this and not even know it… 🙂
SEC. 32110. REVOCATION OF REGISTRATION AND OTHER PENALTIES FOR FAILURE TO RESPOND TO SUBPOENA.
Section 525 is amended—
(1) by striking ‘‘subpenas’’ in the section
heading and inserting ‘‘subpoenas’’;
(2) by striking ‘‘subpena’’ and inserting
‘‘subpoena’’;
(3) by striking ‘‘$100’’ and inserting
‘‘$1,000’’;
(4) by striking ‘‘$5,000’’ and inserting
‘‘$10,000’’; and
(5) by adding at the end the following:
‘‘The Secretary may withhold, suspend, amend, or revoke any part of the registration of a person required to register under
chapter 139 for failing to obey a subpoena or requirement of the Secretary under this chapter to appear and testify or produce records.’’.
I think you get the point. Do you own search! and be sure you know all of these penalties so you can remain compliant! 🙂
And I must point out, this is a bi-partisan effort and approved by both parties. Congress loves its penalties.
@Jie Smith, I have read of a few cases – one a lady born in California to Canadian parent university students in San Diego who went back to Canada with them as a baby in arms. She was stopped at the border, asked for her US passport when the US immigration officer noticed she was born in the US. She did not even realize that she held US citizenship so did not have a US passport. As I recall she ended up paying $60,000 for having failed to file FBAR reports. I think there may have been others as well. Does anybody know? If there have been, we need to publicise them.
@Roger Conklin
Very well said indeed. I think that Levin views himself as being on a crusade to “find the tax cheats” and doesn’t even notice the HUGE collateral damage that he is doing. If I were a foreign tourist from the EU I would probably look at going to Latin America or Canada if wanted a holiday in the Americas.
Where did you read that the US is the most visited country in the world though? I’ve always believed that to be France, and even this list on Wikipedia shows that France is the most visited by a large margin:
http://en.wikipedia.org/wiki/Tourism
What will be interesting to see is if the US will slip behind China and Spain in the next few years.
I think she was surprised about it and then, panicking, paid all of this voluntarily. She was not apprehended at the border nor held.
@Dom Pomororo,
You are right. France is numvber 1, the US is number 2: 79 million vs 60 million.
http://en.wikipedia.org/wiki/World_Tourism_rankings.
I misread the the information when I checked it this morning. Sincere apologies and thank you for catching this.
@JoeSmith, You may be correct. The story I read, as I recall was not totally clear, but I do recall she was “called” because she did not have a US passport. It is technically illegal for a US citizen to enter or leave the US using the passport of which the US may be a dual citizen. I am aware that US consulates abroad will not issue or stamp a US entry visa in a foreign passport if the person was born in the US, unless the person has irrefutable proof of having renounced US citizenship or, having been born to a foreign diplomat non-citizen parents while in the US.
There was another published story of a person born in Canada to a US parent who learned, after being referred to a immigration supervisor at the border that because he was born in Canada to a US parent he was coming to the US to visit in a nursing home, that he also was a US citizen. As I recall he was permitted to enter although he could have been denied entry because he was using a “foreign” passport.
Sooner or later I expect to see more vigorous enforcement of the US passport requirement and, now that the IRS and Immigration are more closely coordinating their activties, those with tax law non-compliance should likely expect to have genuine problems at the border.
Brian Dooley over at the International Tax Counselors blog has an interesting “big picture” analysis of Levin’s amendment: he sees it as going way beyond credit cards, as another step towards the full imposition of capital controls:
@Eric
I’ve seen this coming for ages. The US wants full, total control of its capital flows. I think that they are planning for when the dollar is no longer the reserve currency in order to prevent the US economy tanking overnight. I expect the “markets” to turn their attention to the US finally once the Eurozone crisis is over, and everyone should get their money out of the US while they still can!
Even the ACA proposal for tax reform included what I considered to be a very unfair amendment which would have US expats still face an estate tax up to 20 years after leaving the country. The reason that they gave was to placate senators who are worried about rich people leaving. Maybe they should ask themselves WHY the rich people are leaving. It can’t only be about money, since the US has one of the lowest tax rates in the industrialsed world (and in comparison with the tax rates where I live, are almost a total joke)
Are we really to believe that every moderate, well to do person is going to set up shop on some tax haven island or in Dubai the moment that the US turns into a residential system? A handful of the hyper wealthy will do this of course. Why not stop with the “one size fits all” tax approach and actually create a system that treats their supposed targets, the super rich, with a more stringent system and ignore the rest of us who are just trying to live their lives overseas?
This brings back memories of the exchange controls in Brazil when we lived there 40 years ago. There was no software to control remitting currency in those days, but the Petroleum crisis resulted in Brazil taking some draconian measures. Brazil, unlike today, back then was almost 100% dependent on imported petroleum, and when its price on the world market skyrocked there was an acute shortage of foreign exchange to pay for what was so necessary to keep the country running.
You could not walk into a bank and exchange local currency for dollars. All imports requried an import license and payment for approved and licensed imports were made by the Central Bank. Payment from abroad for Brazilian exports was made by the foreign importer to the Central Bank which then paid the exporter in local currency. Residents of Brazil traveling abroad could obtain a limited number of dollars from the bank; this being stamped in the person’s passport when they exchanged local currency for dollars at the bank to travel. Remitting dollars outside of the country was stricty controlled. Applications from Americans for dollars to pay taxes to the IRS were denied because Brazil considered levying and collecting taxes by a foreign government within its borders to be a violation of its soverereigny and removing dollars from Brazil for this purpose was a money laundering crime.
Residents of Brazil, both citizens and foreigners, traveling abroad had to make a cumplulsory deposit equal to US $1,000 in order to board a plane flying internationally or cross a land border to an adjacent country. This deposit was refunded one year later without interest. This discouraged persons from traveling abroad and spending hard currency from the nation’s limited reserves.
There was a black market where you could buy dollars at a premium, but getting caught dealing in dollars was subject to severe penalties. Passengers boarding flights abroad were subject to search and if they were found carrying more dollars than were legally allowed they had better have a good explanation of where they obtaned them, or else they could be barred from traveling and have them confiscated.
Brazil is much different today. The National Treasury is overflowing with dollars so there is a free exchange. And the value of the Brazilian Real with respect to the dollar has moved steadily upward. Brazilians used to hide dollars in their mattresses, but now they want to get rid of any they have as quickly as possible because their value goes down almost daily.
I considered getting on the letter writing bandwagon re DATCA and Levin’s attack on non registered FFI’s, but now am of the mind that maybe the US should start to feel the effects of their self inflicted wounds. Why should I want to spare them anything when they are hell bent on going down the slippery slope? Sounds to me like the banking system is already considering moving some operations to Toronto. I told a Canadian friend about the US’s plans to render her credit union credit card useless in the US and her response was that she just wouldn’t travel there anymore. When awareness of these reckless policies begin to leave our sphere, that’s when public sentiment will really be behind us. Let the chickens come home to roost, I say!
@ bubblebustin
I USED to spend a few thousand dollars every year in the United States during my trips that I USED to do, often with my wife (2x). Florida Keys, Texas, Maui, Boston, Atlanta, San Diego, Washington DC, Anchorage, Indiana-Seattle, Continental Airlines, Alaska Highway (Alaska part), United Airlines, San Antonio, Sheraton Hotel, Boston Marriot, Philadelphia, Chicago, Seattle, Maui, Austin, Brownsville, San Diego, and Maui.
The winners in this tourism contest? Dominican Republic, Europe, Africa, Aruba, Grand Cayman, Barbados, Guadaloupe, etc. , because I will not be going to the United States, a tyrannical country again.
@petros, I note Cuba is not on your visitation list, but Senator Levin’s latest action against foreign credit cards in the US issued by non-US financial institutions that are not FATCA-compliant, could well earn him the Fidel Castro Award for diverting Canadian tourists and there dollars away from the US; leading to an upswing in Canadian toursts going to Cuba.
@ Roger Canadians love Cuba since the Trudeau days. But I’ve never been there. Cayman Islands is close though.
What are the penalties for US citizens getting caught visiting Cuba? Also heard on the news today that Canadian cross border visits to the US are down. This, even with the high CDN dollar.
bubblebustin: I think they draw and quarter you. Seriously, anyone with a Canadian passport that says born in the USA is in for a whole mess of hurt if they get unlucky, and a Varadero-bound flight has to drop into Atlanta for some reason. Probably even worse if it happens on the way back, since you’ve now already broken US law for sure. it would be interesting to research how many Americans have been caught, and what happened to them.
@bubblebustin
I understand your sentiments of “Let the chickens come home to roost,” you say….
Unfortunately we have seen what happens when the “chicken come home” like in 9/11. Then we have bewildered presidents and Americans asking “Why do they hate us?” and they truly have no idea, because we all were silent about misguided US policies. That allows the gullible Americans believe “W’s” declaration that “they hate us for our freedoms” without any recognition that their freedoms are being taken away one Carl Levin type Amendment at a time.
@Just Me The reason Al Qaeda hated America was that they had military bases in Saudi Arabi. He considered Saudi Arabia holy land on which no infidel should be allowed to enter. That is the stated reason that Osama bin Laden declared war on the United States. Bin Laden also condemned Gulf War I and the promise of the second Gulf War against Iraq, and also the US support of Israel.
@bubblebustin, Here is the US State Department link with respect to visiting Cuba.
http://travel.state.gov/travel/cis_pa_tw/cis/cis_1097.html.
Cubans resident in the US, including those have become US citizens, are free to visit relatives and Cuba and remit funds to them, with few restrictions. There are licences available for others for traveling to Cuba for other purposes, but not for the purpose of tourism. There are many direct “charter” flights between the US, but no regular scheduled flights. US travelers entering Cuba are required to have Cuban visas which, if they do not have them when the depart the US they can obtained at the airport when arriving, for a fee. Cuban immingration routinely does not stamp US passports for arriving US citizens, unless the citizen specifically requests it. These restrictions apply to US citizens resident anywhere in the world and to foreign residents of the US.
Civil penalties of up to several thousand dollars may be imposed on US travelers who return to the US after having traveled to Cuba for an “unauthorized purpose.” Strictl speaking US law does not resrict “travel” to Cuba, but it does restrict the spending of money in Cuba. That is the reason why travel licenses are issued by the US Treasury Department. It is automatically assumed that the traveler returning after having been in Cuba for more than one day has spent money there and is therefore subject to the above-mentioned civil penalties, if the travel was not for an authorized purpose. In reality probably very few who have made unauthorized visits to Cuba are actually required to pay these penalties. But every now and then we hear of persons returning to Miami from Cuba being hit pretty hard.
Travelers are not permitted to bring Cuban merchandise into the US whether purchased in Cuba or elsewhere, or having been received as a gift, and such merchandise may be confiscated.
US credit cards are not valid in Cuba, and US citizens resident outside of Cuba are not permitted, under US law, to use foreign credit cards in Cuba.
Cuba welcomes US visitors since they contribute to the Cuban economy. Having traveled there myself under a Treasury Department issued license with a group from our church, for which we were issued Cuban visas requested by the Eastern Cuba Baptist Convention, we had no problems in Cuba. Two of our group, who were born in Cuba but left to live in the US as children, were questioned by the police who came to our hotel to question them, but were satisfied as to purpose of our visit. The police were satisfied that they were not there to cause dissention or for counterrevolutionary purposes, so had no problems. Persons born Cuba, even though they are naturalized citizens of a foreign country, are considered in Cuba as citizens of that country and must have valid Cuban passports and visas to enter Cuba and return to their current country of residence. Children born abroad to Cuban parents are also considered Cuban citizens and may also be required to have Cuban passports, but this rule does not appear to be strictly enforced. But it is the rule and it could be. You never can be sure.
@Arrow
From what you say I would not even want to attempt a visit there, but Ron Paul said he would work to reestablish relations with Cuba.
@Just Me
I just have the feeling that rather than have our cries fall on deaf ears in the US, maybe our efforts would be better spent encouraging our governments where we live to better protect theirs and the interests of their citizens against the US’s overreaches. Bad laws beget bad laws and Carl Levin would be irresponsible to his brain child FATCA if he didn’t close up the credit union loophole. He’s just adding another car to the freight train coming our way and our governments need to be ready for impact. I think it’s really interesting that some international banking institutions might be interested in pulling up stakes in the US to move to Toronto. The banking industry in Canada is very strong and stable. If the banking industry here sees an opportunity-regardless of whether the US loses- I’m sure they’d take advantage of it. It’s just business.
@Petros, thanks for your addition to my point, American’s don’t understand the “whys”, cause and effects or blow back, if you will. There will be blow back from FATCA, that is almost assured. What form it will come in, is mostly supposition right now, but when it happens they will never understand it. That will allow a politician to engage in demagoguery with the explanations of “Why this is so..” and then pass some more legislation to make matters worse.
@Roger, thank you for the info. Better to avoid Cuba altogether as a US citizen, even while living in another country.