I came across this today over at the ACA web-site.
[Editor’s note] In this post, ACA cites a law article:
Professor Allison Christians, of McGill University Montreal, has published in the July 9, 2012 issue of International Tax Notes an excellent article on FBAR and FATCA filing entitled “Could a Same-Country Exception Help Focus FATCA and FBAR?”
I saw this too, but what about 3rd country accounts for the bone-fide business conducted there from the foreign country where the USP is resident? If they have the nationality of their country of residence, persons that should normally have the right to confidential bank accounts in a 3rd country (e.g. between EU and European Economic Area countries) should retain the same priviledges their dominant nationality bestows upon them.
Also on ACA there is the reference to the new threshold for bone fide residents abroad (already mentionned in another article at IBS I think- Hale Sheppard) http://www.aca.ch/joomla/index.php?option=com_content&task=view&id=523&Itemid=45
I’m afraid though that my Swiss and Grand Cayman bank accounts would not be exempted, even though I claim my gains them on my Canadian taxes as part of my worldwide income.
@Petros if you also have a Swiss account, remember that Swiss taxes are automatically withheld on interest once you go over a few hundred in annual interest. At least on the typical sorts of accounts I know about (savings, current). I don’t know what happens with brokerage accounts. Also, the account could be with a Swiss bank but the funds offshore (LUX, Channel Island, etc.).
Anyway, a same-country exemption could be a good step forward.
Agree that the EU would have to be considered as one entity for this to legally work or make sense as an exemption for European residents. I am Belgian, but I also have accounts in other EU countries (also in Germany, which is becoming problematic since they are rooting out ‘US persons’). I imagine that many others also retain third country accounts (and not just in Jersey and CH).
She is American just moved to McGill.
http://www.mcgill.ca/channels/announcements/item/?item_id=213959
Here looks like the blog of the author of the article, appears to be open to comments:
http://taxpol.blogspot.ch/2012/07/taming-fatca.html
Thanks Allison
email sent to her at allison.christians@mcgill.ca
WELCOME TO CANADA!
And thank you for your new article on Same-country exception for FATCA?You may — after getting used to having a social democratic party in opposition and funny names like Manitoba and Saskatchewan — decide to become one of us!
Best wishes,
@Joe Smith
She is actually a returning Canadian although that is hard to find anywhere.(Which is why I am little uncomfortable bringing that up). In my opinion she is a pretty big deal in the world of tax law especially in the US in a way that Arthur Cockfield for example isn’t. I will also add that this “might” be something someone like Carolyn Maloney can run with more than making a wholesale change to the entire tax system.
@Don
There is a strong case for the EU to be treated as a single country especially after the new Savings Tax Directive is put in place.
At the very minimum we can probably depend on her support when the FATCA implications hit the fan!
*There is also a strong case along the lines of what she proposed for a same country exemption to the PFIC rules. When reading the piece you have to make note of the first paragraph which discusses the Subpart F same country exemption. In really basic layman terms Subpart F is a corporate version of PFIC.(I am going to have Phil Hodgen who knows a lot more about Subpart F than me explain how it works some day).
“Could a Same-Country Exception Help Focus FATCA and FBAR?”
Well-argued, Prof. Christians! That is one of the most sensible compromise solutions I have heard in a long time.
Especially if there were a similar exemption for the PFIC rules, as Tim suggests.
http://www.pwc.ch/fr/vos_defis/foreign_account_tax_compliance_act_fatca/neuf_questions_frequemment_posees_sur_le_fatca.html
I thought this was interesting :
“Ce sont les «withholdable payments», c’est-à- dire les paiements soumis à déduction fiscale. La définition qui en est donnée est large et englobe les Fixed and Determinable Annual or Periodical Payments (FDAP) de source US, de même que le produit brut de la vente de certains actifs US. Font notamment partie des FDAP les paiements d’intérêts, les Original Issue Discounts, les dividendes, les dividendes compensatoires, les loyers et les salaires.
Le FATCA concerne aussi bien les «withholdable payments» directs que les paiements indirects, dits «pass-thru payments», ou paiements en continu, ayant pour origine des «withholdable payments».”
So this sounds like only US source salaries would be subject to witholding… I about panicked when I saw the word salary. If your salary comes from a foreign branch of a US company (another foreign account, it wouldn’t be US source, right?)
Have we mentionned this site on IBS before? http://www.fatcareport.com/
Great paper, but only a first step. The EU and Schengen countries must be considered as one country.
What about the US person working for a European company who is sent to work in China or India for a year? It happens. Showing residence or “substantial ties” to the European country as well as some kind or residence/work permit for the non-EU country should be allowed in order to resolve this issue.
This exception would not address the immigrants case. We’re really screwed….
You’re right @Christophe. Perhaps you or others reading here who know that scenario better could write to her and point out the major problems the US has caused for the very immigrants it seeks to attract – those more likely to have assets in their country of origin.
Sorry, we concentrate on the situations we know best. And so it is very valuable for you and others to remind us that there are others. Particularly poignant are the stories on the Townsend blog – where immigrants have come to the US, married there with families, and cannot jeopardize their US status or return home as a solution – because their US spouse refuses to consider leaving.
@Badger, yes, I am one of them. My American wife is not interested at all in speaking French, and has no interest in moving. I am in an impossible situation. The stress from this is killing me and she doesn’t seem to understand. My green card is due to be renewed in a couple years, and I am afraid it might not happen if they look at taxes. My immigration lawyer told me to enter OVDI. My accountant told me that even if it were to cost me $400k (shouldn’t be that high, but she was making a point), I should do it to keep my family together. They made me feel bad that I was not putting my family first when I told them, that no, I won’t subject myself to this legalized robbery.
I feel trapped, and cornered. I am not even sure my marriage will survive this.
@Christophe
Would your wife move to the UK or Ireland?
Well, she’d definitely prefer an English speaking country, but refuses to move until there is a problem with my immigration status.
@ Christophe;
Irresponsible of the lawyer to say that – shouldn’t they be presenting facts and advice based on the law and professional advice, not making moral or social judgements of their clients. Sounds like they buy into the whole US exceptionalism thing and the ideology bleeds over into their professional conduct.
@Christophe
Come to Brussels! You can have it both ways and live in a French-speaking city whilst your wife would have no problem finding work as an English speaker – There are tons of Brits and others here who can barely, if at all speak French, and a lot of business in Brussels is actually conducted in English, since that is the best common language of all Belgians and all the EU people floating about..
@christophe
The pressure must be enormous. Have you talked to TAS? Through them, we’ve been given hope that the penalty on the cap gain tax will be ebated. Reasonable cause may take care of the FBAR penalty. Approx $150K reduced to $65K (bad enough on a tax owed to the IRS only because the Canadian government didn’t levy it on the sale of our principal residence in Canada).
For the legal buffs out there. Would the Canadian government have grounds for suing the US government for these overreaches?
*@bubblebustin
Unfortionately, no. Remember at the end of the day the Finance Minister has come out and said that Canada will not collect any FBAR penalties on anyone or US tax claims on any Canadian citizen.
@Bubblebustin. I tried to contact TAS multiple times and they’ve been useless.
The first time, they told me that they could not help, as I was not in trouble yet and could not provide advice. And they’re right: I guess I am not in trouble until I am audited before the statute of limitation is over. And maybe I am just paranoid, and that nothing bad will happen. I guess I’ll just have to wait it out.
The second TAS person I talked to told me OVDI was the only solution.
As I mentioned in another post, I filed the immigrant issue as a systemic issue with TAS, explaining that the new procedure they’re about to release did not address their issue, and received an automated email saying they assigned a case# and that they’ll get back to me within 3 months. I will post whenever I receive an update from them.
There can be few other common sense solutions. Bu this administration wouldn’t even pay attention to none of them, because they are very happy with FBAR fundraising. They don’t want to loose the leverage. If they want fairness, they would have listened to Miss. Olson.