The Miami Herald had this story in the Sunday paper. (Hat tip to Roger Conklin)
Under new IRS disclosure regulations, details about U.S. bank accounts held by foreign nonresident depositors could be shared with their home governments. As a result, bankers say hundreds of millions of dollars have left Florida since April.
What is interesting to me about this story is this: While they talk about the global crackdown on tax evasion, and reference the history of UBS, and the IRS voluntary disclosure program, there is no mention of FATCA anywhere. Not sure if that is intentional, or if the journalist doesn’t understand the connection between FATCA, and this domestic effort which I call DATCA (my shorthand).
As Christophe pointed out here, Congress recently voted to delay this IRS regulation. So, the battle is becoming more public, and wonder how long this will remain non political in this silly season.
For the likes of Debbie Wasserman Schultz , Chair of the Democratic National Committees, she is now in a tough place. She voted for FATCA, and then voted to delay DATCA, the IRS reciprocity fall out of her first vote. Ah, sweet irony! 🙂
I continue to record the history of this developing story here
Excerpt from an Economist article dated 11 February 2012 called:
Swiss banking secrecy
Don’t ask, won’t tell
Amid a global squeeze on tax evasion, Switzerland is the prime target
“The embattled Swiss bemoan the pressure and even like to label their
detractors “imperialists”. A common (and reasonable) complaint is that
many of the countries pressing them are also tax havens in their own
right. The United States houses money from Latin America in its Florida
banks, and under Delaware and Nevada law it is easy to set up a
tax-friendly shell company. Britain has the Channel Islands. “They have
no moral right to push Switzerland on this, because they haven’t cleaned
up their own mess,” harrumphs a Swiss proponent of secrecy. But,
clearly that is not stopping them.”
@Just Me, Yeah, Mexico would just LOVE to get their hands on that info. Would love to hear more about what your Mexican friends are saying. On my side I correspond with some U.S. expats there (and I actually have a family member living there. She’s living with a Mexican national and living on Social Security). What they seem to be saying is that they still bank in the U.S. and use ATM’s to get their money. So they don’t really care about FATCA – there is nothing to find.
So this would be a fabulous deal for Mexico. Not so much for the U.S. 🙂
*As a US national using ATMs she has nothing to hide from FATCA. The only question that might be ask is if living in Mexico is she properly reporting her US Scoial Security income for Mexican tax purposes. It is doubtful that her US bank even has her addreess in Mexico as her address of record.
She is one of many Americans who have retired and live on their US Social Security benefits income by withdrawing local currency from an ATM. One is a retired couple, born in Greece who immigrated to the US and became US citizens but after returement returned to their land of birth where they withdraw funds to live on from an ATM. Their address of record with their US bank is that of one of their sons who lives in the US. Another is an American who lived and worked in Brazil during his later working live who retired and lives their with his Brazilian wife and their Brazilian-born children. His Miami bank has as his address of record that of his sister in Miami. He also withdraws funds in Brazilian currency from ATMs in Brazil. He does not have a bank account in Brazil. Not being employed in Brazil his retirement income is US source for US tax purposes so he cannot claim a US tax credit for any Brazilian tax he may pay on this retirement income.
I know nothing about how these retirees deal with income taxes in the countries where they live, but understand the new IRS reporting regulations on foreign nationals with deposits in US banks would not affect them since as far as their banks are concerned they are US residents and send form 1099s to their US addresses of record.
*@Victoria, one of those Mexican dual citizens living in the US is a chap by the name of Mitt Romney. His father, born in Mexico, was a dual Mexican-US citizen as well and since Mitt was born outside of Mexico to a Mexican citizen father he also has dual Mexican-US citizenship.
But Mexico does not tax the income of its citizens who live abroad so he is not required to file Mexican tax returns or pay Mexican tax on his income from non-Mexican sources. I am sure he is aware of his Mexican citizenship but undoubetly he has never presented himself at a Mexican consuate in the US to be issued a Mexican passport.
Mexico would have no interest in his financial accounts or income in the US. What they are interested in is the accounts of residents of Mexico, both Mexicans and others, who have US accounts. There are, according to estimates I have seen, as many or more US citizens living in Mexico as in Canada which would place the number at about one million. There are several American retirement communities in Mexico and of course many Mexicans resident in that country who were born in the US.
Until fairly recently Mexican citizenship was passed to a child born outside of Mexico only if the father was a Mexican citizen, but that legislation has now been changed so being born to a Mexican mother outside of Mexico provides Mexican citizenship to the child as well. I am not sure, but I don’t believe this was made retroactive.
@Roger, Very interesting about Romney. I imagine that he would not want to activate his Mexican citizenship – not something I think the American electorate would approve of. But I wonder if it does in any way shape his life – even in an indirect way. Has he ever said anything about his father and his life in Mexico? Just curious here…
*@Victoria, As far as I know Mitt has not made any public mention of his father’s life in Mexico. As I recall his father was still a small boy when his parents moved back to the US bring him along with them.
There was, however, an article in the Miami Herald a few months back about Matt’s cousins who are Mexicans whose parents did not return to the US and still live in Mexico. There were apparently several members of the Romney family which emigrated to Mexico at the time of the controversy about the Mormon doctrine which allowed for more than one wife. Mormonism in the US later disavowed this doctrine and became compliant with US laws which prohibited it.
Several of these cousins were interviewed for the Miami Herald article.
I am not sure, but I suspect that it is no longer practiced by Mormons in Mexico either. There were apparently several Mormon families which moved from the US to Mexico back then and today, accordance to the Miami Herald, the descendants of that migration sill have a strong presence in the area of Mexico to which they relocated.
I agree with you that it is highly unlikely that Romney would ever “activate” his Mexican nationality by being issued a Mexican passport. Even though under Mexican law it would not be a problem for him to do so, it would not be at all prodent for a US presidential candidate to be issued the passport of a different country.
There is nothing in the Consisution that prohibits dual nationals from being President of the US, but it sure would not be prudent. The only nationality requirement is that he be a natural born citizen of the US.
Neither the consititution or any subsequent legislation has defined just what that term means, but the general opinon of most legal experts I have read seem to believe that it means that the person was a US citizen from the moment of birth as opposed to a person who has to be “naturalized” in order to receive US citizenship.
*@victora, This is not the Miami Herald story to which I referred in my prior posting, but it is a link that describes the Mormon community and the Romney’s that still live in Mexico.
*@Victoria, Here’s a link to a story about the Romney history in Mexico
@Roger, Fascinating. I’ve always been very interested in Mormonism. (I have a few family members who are part of the LDS church in the Pacific Northwest). It’s an amazing story. Looks like Romney is distancing himself a bit from his Mexican roots. Understandable given the political climate in the U.S. Hopefully, he will say more one day. Thanks so much for the links and I’m off to Amazon to see if I can find a good book about the Mormon settlers who headed south….
*There were actually more than a few Mormon settlers that headed north too into Alberta. Some of their descendents latter got into Alberta politics. I can think off hand of Cindy Addy, Rob Anderson(The MLA of I believe one Brocker) and a few others I can’t think of.
Cindy Ady actually was born in the US and would appear to be FATCA “in scope” unless she has a CLN(which of course she doesn’t because no one does).
Thanks for your research about Mexico. Those links were great! Well worth reading the entire articles.
According to both articles, 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/
Funny about that timing – shortly after Obama was elected – and the ‘offshore’ ‘foreign’ banking programs were in full swing – yet they didn’t see fit to stem the flow of illicit funds flowing across a mutual and very porous border where the drug wars were raging and US security was ostensibly a big and ongoing concern?
So much for the self-professed lofty goal of bringing banking transparency to the world, and increasing global cooperation for anti-terrorism and anti-money laundering activities – not to mention the oft cited US war on drugs. Funny that with the large population of US duals, and the drug wars next door, and the routes from Central and S.America, the US needs to delay any domestic reporting on non-residents until it’s economy picks up and unemployment reaches a specific figure? 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/
So, the disingenuous rationale for FATCA is really just a convenient blind for US self interest, and the self interest of US banks.
Similar to how Canadian mutual funds came to be punitively treated as ‘trust’ by the IRS – at the behest of US bank lobbying efforts. Having little or nothing to do with actual ‘tax evasion’.
@Roger: Mitt Romney’s father, George Romney, did not have Mexican citizenship. He was born in Mexico in 1907, and came to the US with his family in 1912. The Mexican Constitution of 1857, valid at the time, only conferred nationality to those born from Mexican parents (http://bib.cervantesvirtual.com/servlet/SirveObras/35716152323148053754491/ima0036.htm). Mexico approved a new constitution (the current one) in 1917, and only in 1934 it was changed to confer nationality to all people born in Mexico regardless of their parents’ nationality, in addition to children of Mexicans born abroad (http://www.diputados.gob.mx/LeyesBiblio/ref/dof/CPEUM_ref_016_18ene34_ima.pdf).
According to article 14 of the Mexican constitution (http://www.diputados.gob.mx/LeyesBiblio/pdf/1.pdf), no law can be applied retroactively to harm anyone. (This is different from US legal tradition, where civil (but not
criminal) laws can be applied retroactively even if they somehow harm others.) So George Romney could not be considered Mexican against his will, and since he never requested Mexican nationality, he was never Mexican. By extension, neither is Mitt Romney (although perhaps he could request it).
@Victoria, Here is an article about Mitt Romney’s view on his Mexican heritage: http://multiamerican.scpr.org/2012/07/mitt-romneys-son-in-new-tv-ad-my-grandfather-george-was-born-in-mexico-video, and another about his relatives in Mexico: http://www.washingtonpost.com/politics/in-besieged-mormon-colony-mitt-romneys-mexican-roots/2011/07/21/gIQAFGOXVI_story.html.
*@Shadow Raider, Thanks for the research and the reference. A job well done.
Current law provides that anyone born in Mexico, regardless of the nationality of the parents, is a Mexican citizen. As you state the Mexican constitution does not allow laws that “harm” anone to be applied retroactively. Retroactive recognition of citizenship, from what I understand, would not be considered harmful.
Likely Mitt, with his father’s birth certificate in hand, would have to request that his Mexican citienship be recognized, which I am sure he is most unlikely to do. It has been some time but a few years ago I had a discussion on this subject with a Mexican who was directly affected by that legislation.
There are various examples of nations retroactively granting citizenship, as in the case of new nations which have been created when their colonial status was replaced with the creation of independent nations, like in Africa. Another example is that of persons born in Puerto Rico when it was a colony of Spain. In 1917 the US Congress extended US citizenship in 1917 to persons born in Puerto Rico which had been ceded to the US in 1898 by the Treaty of Paris which ended the Spanish-American War. Cuba, Guam and the Phillippines were also ceded to to the US by that same treaty, but they were treated differently as far as US citizenship was concerned.
The citizenship laws of the various countries are very different so it is never safe to draw conclusions on citizenship in one country based on what another country does.
*@Victoria, Mexico has shown hospitality to other religious minorities suffering persecution; the Mennonites being one example who, having fled from Germany (I believe) to Russia in the days of the Czar then went to Canada, the US, Mexico and Brazil as a result of the triumph of Lenin.
@Tim, I didn’t know they went to Canada too. You know, there is a story about U.S. emigration that is just begging to be told. I’ve looked far and wide and still haven’t found something that is well-researched and gives the big picture.
@badger, Thanks! The topic I was working on at the time was Population and Politics of North America and I tried to put the four nations concerned side by side to try to get a larger view of these nations in some sort of context. And it was very surprising to read about Mexico’s relationship with its northern neighbor and all the issues that Mexico has brought up over the years. Yes, it is hypocritical to turn a deaf ear to Mexico’s request for information about its citizens’ accounts in the U.S. and bad for everyone. The drug war has many casualties on both sides of the border and some form of information exchange just might help everyone.
@shadowraider, Thanks for the additional links. Great research and I think its time for another Flophouse post about citizenship. Nations have very interesting reasons for changing their citizenship laws depending on whether they are trying to limit who can become a citizen for diverse reasons or (and this happens) they want to extend the nation in some way in order to have MORE citizens in order to serve some larger purpose. And Roger is right – sometimes they do this retroactively in order to “capture” people. From the states’ point of view there is nothing harmful about it – on the contrary they congratulate themselves on the liberalization of their laws. But behind that rhetoric is simple self-interest. For a fascinating take on it, I highly recommend Thomas Janoski’s The Ironies of Citizenship.
@Victoria and all, Obama’s father was not born a citizen of Kenya either because Kenya did not yet exist as a nation. But having been born in what later became Kenya he was granted citizenship in Kenya after he was born as were the children born to Kenyans outside of Kenya.
Incidentally the world is horrified today at how the Syrian government today is treating its revellious citizens, but we must not forget that the United States went through pretty much the same thing during its civil war when the Confederate South attempted to separate from the Union. Even to this day the burning of Atlanta by General Sherman and his Yankee troops is remembered as a pretty horrible occurrence. It took many years for those wounds to heal as citizen had taken up arms against citizen and sometimes even familiy members found themselves on opposite sides facing each other with guns in hand on the same battlefied.
By the way a bill has recently been introduced in Congress by Cong. Steve King of Iowa to make English the official language of the United States and require that in order to be a citizen you must speak English. His bill does not reveal what would happen to the 3 million Puerto Ricans in Puerto Rico where Spanish is the linga franca and Spanish is he official language.English is also an official language in Puerto Rico, but the majority if its residents only speak Spansh. The schools are taught in Spanish and English is taught as a foreign language. Currently they are US citizens even though they don’t speak English. I wonder if they would be deprived of their citizenship? The US has never had an official language, although some of the states do. At one time New Mexico had both English and Spanish as official languages, but Spanish was dropped a few years back.
@Roger, Wasn’t he referring to people who become US citizens by naturalization, not those who acquire US citizenship by birth? He cannot possibly require a person to speak English at birth because babies do not speak any language. 🙂 And everyone who goes to school in the US, including in the territories, learns English either as a first or second language, as you mentioned regarding Puerto Rico. In the case of naturalization, there is already a requirement that the person must speak, read and write English. (The actual test is pretty easy, it consists of reading a sentence and writing another one. This is in addition to the test about US history and civics, which consists of answering a few questions orally.) And although the US has no official language, in practice all documents published and received by the federal government must be in English or accompanied by an English translation.
Other congressmen have also proposed similar bills in the past, and they generate publicity and controversy. But in practice, they would have very little effect. Legal and illegal immigrants would still not be required to speak English until they decide to naturalize.
*@Shadow Raider, I have not read the details of his proposed legislation but there is no mention of it being a requiredment just for naturalization in the press releases. It may be there, but I would not be surprised if he is just not aware of Puerto Rico’s Spanish – language heritage. When I lived and worked there in my first job out of college Engish was spoken by very few. My first week there I nearly starved because I could ot order a meal. I finally just pointed at something on the restaurant menu, not having the slightest idea what I was ordering,
Foreign language instruction in US schools, including Puerto Rico, is terribly inadequate whether it be Spanish, French or whatever. It is little above the “:see spot run: level.
I once saw a sign in a cheese store in Paris that read “high school French understood here.” You are correct that an English language test has to be passed for naturalization, but it is extremely elementary. Persons older then a certain agie are exonerated from taking the test in English and may take it in their own language.
Here in Miami, all election ballots are, by law, printed in 3 languages – English, Spanish and French Creole. In other parts of the country ballots are printed in these same or other languages. Almost all IRS tax forms and instructions are available in Spanish, and some months back the IRS announced that it was making them available in several other languages as well.
If you call the IRS for assistance you must select 1 for English or 2 for Spanish. The new FATCA form 8939 so far must be submitted only in English.
I agree this bill is unlikely to become law. It has been tried many times, but it never gets to first base.
Which makes me wonder if these agreements negotiated betwen the US and the small number of European rquriements include the requirement that FATCA reports on foreign bank accounts must be submitted in English. I wonder if those that include reciprocity require that reciproca report from USn banks must be submitted in then language of the foreign country to which they are to be provided. Can you imagine US banks preparing reciprocal reports in the different languages used in the other 192 countries of the world?
Pingback: U.S. Wages its 2012 Diaspora Tax War « FrenchNewsOnline
Just updating this thread with the most recent Miami Herald article about DATCA. I have posted a comment there to tell the “rest of the story”
US domestic banks providing money laundering and tax haven services, but what is good for non-US banks under FATCA is allowed to continue INSIDE the US.
U.S. Banks Picking Mexican Drug Cartels’ Side In The U.S.’s War On DrugsMay 19, 2011 By Mina Remole
……”In addition to Wachovia, Bank of America, HSBC, Citigroup, Bank of
Credit and Commerce International, and American Express Bank
International have all had their own recent money-laundering scandals.
Despite the high profile nature of many of these scandals, prosecutions
under the Bank Secrecy Act or other federal laws remain scarce. The
Justice Department has instead dealt with these sorts of situations
through the use of deferred-prosecution agreements and fines, such as
the one Wachovia was subject to.”….
Pingback: The Isaac Brock Society