Just a quick note to draw your attention to Michael Cohn, of Accounting Today who has been polific in writing about FATCA and offshore tax issues.
He is in the league with Robert Wood at Forbes in providing consistently good articles on the issues at hand. Here are the two links to the two new stories today…
Taxpayers Strained by New FATCA Requirements
NYC CPAs want IRS to clarify FATCA Reporting
I always try to comment if I have the time when I see his stories for the reasons I have explained elsewhere…
congress’s motto should be “ready, shoot, aim”.
There is another article that I don’t find so thrilling below. Who the hell would want to business with institution that is happy about FATCA. I have to admit though Merrill Lynch was bailed by the US government so I suppose they can’t complain too much.
Merrill Lynch’s Miles: the RDR and Fatca opportunity
@Tim this guy is a real spin doctor. These are the same people who treated their customers like garbage and are now deciding that it’s a good thing that they meet their customers face to face. What an opportunist.
@tim Thanks for the Merrill Lynch self promotional piece… 🙁
thanks for the laugh @bubblebustin’
I needed it.
I agree that Michael Cohn writes well about our issues. I did respond to the article about the NYSSCPA however, I am a bit leary about the 2nd article as the lawyer indicates that even non-willful offenders should enter the program, then opt-out to avoid criminal prosecution and see how they do with the penalties. He also thinks Accidental Americans receiving a penalty of 5% is a good deal. AT the moment, I don’t think I can be civil about that advice. Grrrr 😛 Care to be the diplomat?
and so, I trust you can be civil and make a comment disagreeing with the attorney.
I will for sure…
I was kind of surprised with the advice to come voluntarily…that nothing will happen. Most people who want to start with their FBARS would be doing that if they would not be considered criminals, have to hire lawyers at 350 an hour and did not have to pat 50% of their life savings. They say: come thatthis will not happen if you have a “reasonable cause”. But can we count on that?…
Short of having your accountant give you bad information, I still don’t know what reasonable cause is, as ignorance of the law is not. I guess when we hear back re our FBAR penalty in OVDI, we’ll find out.
@Tim: Ah, good old Merrill Lynch, Pinch, Finch, and Cinch. They and their ilk are the ones who provoked this whole FATCA mess by helping onshore whales hide money, so of course they’re happy to see that every bank is getting screwed equally by it. They know that FATCA implementation has a giant fixed cost as well as a per-account cost. And they know they can absorb it without blinking whereas their small competitors can’t. But of course “the law, in its majestic equality, forbids the rich as well as the poor to sleep under bridges, to beg in the streets, and to steal bread.” Missing the irony in Anatole France quotes is what passes for “progressivism” and “social justice” in the US these days, apparently. 🙂
I just put up a comment..
Here is what I posted at the article:
Taxpayers Strained by New FATCA Requirements
Similar themes you have heard before… Find agreement, and then go to differences of perspective and try to educate.
I have to say that Mr Appel is right about a lot, but is making too general of a statement about the advantages of the IRS VD programs without recognizing the serious harm for the benign minnow expat or new immigrants who for a host of reasons might find themselves in non compliance. They were not the target UBS type Homeland rich Whale that the VDP was designed for. Yet they are treated the same in a “one size fits all” penalty regime.
In the original 2009 OVDP, there was a FAQ 35 safe harbor relief that allowed for examiner discretion to calculate lower non willful penalties. The IRS withdrew it midstream which got them the Directive from Nina Olson of the TAS, which Shulman has chosen to ignore.
In the current program there is no such safe harbor, except that they created a back end “opt out”: process that is so inefficient that if you are a minnow you can expect a 2+ year grind just to Opt Out at the end. Then you may get a regular audit with its IRM discretionary FBAR penalty relief which is often way less than even the 5% VD penalty. BTW, it is outrageous that an accidental American should even have to pay 5%!
Right now, the process is actually a disincentive to coming forward. It is leading many to do a quiet disclosures (QD) and play the lottery audit which is the same as the Opt Out. More folks living overseas are just saying “bye bye” and renouncing. New immigrants, caught up, are just walking down the jet way and going home rather than handing over family life savings to the IRS for benign failures. If the IRS was really concerned about efficiency and compliance, they would design a front end “opt out” for minnows, while still processing the Whale under the “One size fits all”. For them the program is a pretty good deal.
Or, they should allow Minnows (actually encourage them) to do QDs without the hyperbolic threats of criminal prosecution which they don’t have the DOJ resources for anyway. MAKE IT EASY! Just ask for back taxes, interest, accuracy penalties, and drop all the hyperbolic criminal threats. That is what Canada does.
Here is how their program works…
“The Voluntary Disclosures Program (VDP) allows taxpayers to come forward and correct inaccurate or incomplete information or to disclose information they have not reported during previous dealings with the CRA. Taxpayers may avoid being penalized or prosecuted, if they make a valid disclosure.”
Do you think the IRS could learn something from this? No, me either, because I don’t think it is in their genetic make up, and this is really NOT about compliance. It is about REVENUE!!
In that $4.4 billion of revenue, how much was penalty, and now much was taxes? They won’t say. For all the offshore fuss, how much of the revenue collected is just a one off occurrence, and how much will really be reoccurring revenue in the future allowing for the foreign tax credits? No answer from our silent friends. But then, in fairness, no one is asking them
BTW, I want to also post your comment that you put up at Accounting Today. Good one! Wished more would find the time to do that, but understand how busy and difficult it is to keep up with the opportunities these type of articles present. Thanks for the effort.
NYSSCPA Wants IRS to Clarify Foreign Asset Reporting
I understand there is a huge deficit however, to emphasize tax collection as a way to help offset this does not make sense to me. From recent reading, it is my understanding that some 83% of Americans pay their income taxes. I presume this refers to resident Americans. The majority of USC in Canada owe no US taxes.I strongly suspect the same can be said for the majority of US expats in other foreign countries. The business in Switzerland is a whole different world and I could understand approaching that situation as the IRS is currently doing. What I can’t accept is to do the same with those who simply were unaware of the reporting requirements.
It is refreshing to see another group of respected professionals come forward and question the severity of the penalties. If a taxpayer has filed and has made mistakes, it would seem some credit for doing the right thing should outweigh an out-of-proportion punishment for a miscalculation. This rigid and heartless attitude does nothing to promote compliance from those who are terrified of losing everything they have. Thank you NYSSCPA’s. Like Nina Olson, you exhibit what used to be taken for granted in the US; i.e., every citizen has the right to expect to be treated in a fair way and continued resistance in providing that is completely unacceptable and won’t be tolerated.
There must be some way to set a priority of factors used when determining the value of a foreign asset. What are the variables that affect that value? Which ones are more stable, predictable? If the value comes that close to the threshold, after applying weighted factors, why not establish a reasonable latitude? If not, there will simply be too much opportunity for the IRS to continue with the current regime of punish at the maximum possible, with no consideration outside of a narrow interpretation of the factors involved. FATCA is not about taxes it is about reporting the fact that accounts exist. If the total value is that close, of what use is it to classify a mistake in the same category as a willful attempt to evade? If the IRS is serious about expecting compliance, they will have to find a better way than using draconian fines and assuming one is guilty until proven innocent. It just isn’t going to work.At least not with those of us abroad. The numbers of those renouncing are on the rise, whether DoS or IRS admits it nor not.
@ Just Me,
sorry so long to reply. Just finished (Yahoo!) all the bookkeeping for my husband’s business and all the rest of the junk the accountant needs for our personal returns. Almost 2 weeks early! Will be caught up soon!
Ok, done! Oh, but there are typos 🙁
Don’t worry about the typos. Most of us are not perfect, and our brains rush ahead of our fingers so we miss them before we hit entry… uh enter! 🙂 I see more sites are coming up with edit abilities for comments which allow the user to clean up their mistakes afterwords, which is good feature. Maybe wordpress will add it one day.
Just adding to the list of Accounting Today reports on #FWhat?
Banks Expect to Miss FATCA Deadlines
Now remember this, Banks are just a portion of all the Foreign Financial Institutions. Not sure what the percentage is. Just Imagine…. What if all the FFIs Just said No?
Also, let me add this from Bloomberg….
U.S. Millionaires Told Go Away as Tax Evasion Rule Looms