@All
See below: “U.S. Treasury to miss deadline on tax crackdown – sources” (Reuters)
So much for the FATCA juggernaut – another delay! This also signals IGAs are not falling into place as fast as they need to. Another reason CANADA must not rush to sign an IGA.
Impacted interests (FFS, foreign governments) need to stop preemtive surrender and wake up to the fact that Treasury is shooting blanks — and STOP negotiating IGAs with Washington. Instead, they need to support FATCA repeal in DC!
Media need to stop acting as bulletin boards for government releases and see that there’s a big story here: FATCA IS IN TROUBLE.
http://www.reuters.com/article/2012/12/20/us-usa-taxes-fatca-idUSBRE8BJ0T320121220
Exclusive: U.S. Treasury to miss deadline on tax crackdown – sources
10:16am EST
WASHINGTON (Reuters) – The Treasury Department will miss a year-end deadline to publish final rules for a new global tax enforcement regime targeting the offshore assets of U.S. taxpayers, sources familiar with the timing said on Wednesday.
The rules represent one of the last implementation steps for the U.S. Foreign Account Tax Compliance Act, or FATCA, which is scheduled to take effect in 2014.
The accounting industry sources, who asked not to be named, said the rules are on track to be released in January.
A spokeswoman for the Treasury Department on Tuesday would not confirm whether the year-end deadline will be met.
“We are still working to issue the final regulations and they will be released soon,” the spokeswoman told Reuters.
Treasury has already missed one deadline for the publishing the final rules. It came and went in September.
FATCA was enacted in 2010 after an outcry over a Swiss banking scandal that revealed U.S. taxpayers had hidden millions of dollars in assets overseas from the Internal Revenue Service.
The law requires foreign financial institutions to tell the tax-collecting IRS about Americans’ offshore accounts worth more than $50,000.
International businesses ranging from Western Union Co to BlackRock Inc are waiting anxiously to see the rules so they can figure out how to comply with the law.
Delays mean businesses will have less time to prepare for compliance. Multinational firms have said they need at least 12 months to prepare for FATCA’s 2014 start date.
“It is critically important that final FATCA regulations are issued as soon as possible,” said Barbara Angus, a principal at Big Four accounting firm Ernst & Young LLP.
Treasury efforts on the rules may have been slowed by a number of government-to-government FATCA information-sharing deals it started pursuing earlier this year, tax experts said.
The United States has completed FATCA deals with the UK, Denmark and Mexico. Switzerland and Spain also have “initialed” agreements with Treasury.
Meanwhile, negotiations are continuing for deals with at least 50 other countries, according to the Treasury Department.
These deals represent a shift in FATCA implementation. While not envisioned as part of the 2010 law, the agreements are seen as a more practical way to implement the law.
Rather than forcing all foreign financial institutions to deal directly with the IRS, in some cases the agreements will allow the banks and funds to report information about American accountholders through their home governments to the IRS.
(Reporting by Patrick Temple-West; Editing by Kevin Drawbaugh)
I’m not sure the 12-month notification is the issue. It’s failure to keep the IGA schedule on track so they don’t have to drop the hammer on unlilateral enforcement. If the IGAs don’t start rolling in, they may well have to push back the deadline on enforcement, and keep pushing it back.
@The_Animal, Schubert 1975 —
I’m no lawyer, constitutional or otherwise. But my understanding of the Charter is it applies to people in Canada and citizens of Canada, but would not apply to a US citizen residing in the US. So a US citizen living in New York with a bank account in Canada would not have a charter claim. Where it would get interesting is if a Canadian citizen living in the US with a green card (therefore a US Person) has bank accounts in Canada (that wouldn’t be unusual). Would that person have a charter claim if CRA sent bank account info to the IRS? I would think so — he is a Canadian citizen after all. But that’s where it gets murky.
The US-Canada tax treaty apparently commits CRA to send account info to the IRS for any US citizen & resident with Canadian accounts — but I think only on a specific request from the IRS — no fishing expeditions.
Just a Canadian
Apparently a senior Canadian bank official made that very suggestion in an early FATCA meeting — tongue in cheek, of course, but his point apparently was that if every bank in the world sends its entire database to the IRS it will take them a couple of centuries to get through it all.
*
*Arrow
In “theory” the treaty commits Canada to providing banking and tax records on ANYONE. So the IRS for example in “theory” could formally request the CRA(on a upon request basis) provide all T-Slips and banking records of Jim Flaherty and his wife Ontario MPP Christine Elliott or those of Stephen and Laureen Harper. However the Minister of National Revenue(head of CRA) has the power the deny any request for information sharing on a fairly broad grounds and unofficially it is understood the IRS would never make such a irrelevant and broad request nor would Canada ever accept. From the standpoint of an individual IRS Agent who wishes to make a request of CRA to help an investigation there is a fairly lengthy approval process within the IRS before such a request is actually sent to Ottawa to avoid any “inappropriate” and diplomatically impolitic requests thus avoiding a request being turned down by Ottawa/CRA. Of course in theory all of this works in reverse too CRA can make “upon request” requests for information to the IRS too.
@Arrow
My wife and I have spent some time in Greece and know a bit about how things work there. We can hardly wait until the IRS tries to get banking info from Greek banks. From what I’ve seen of Greek bureaucracy, they’re more likely to end up with data on Greeks than on Americans, by error, moreover mostly with text information in Greek (both language and alphabet). We amuse ourselves imaging how long it would take that data submission to bring IRS computers to their knees sobbing for mercy.
Those of us who have in the past subscribed to various degrees with the teachings of Sol Alinsky and Mahatma Ghandi have, over a glass or two of wine, dreamed of what would happen if the banks and governments of the world simply did as the Canadian banker mentioned and shipped to the crazy buggers every scrap of data we have … Imagine that hitting the IRS’ aging computer systems in the midst of major budget and staff cuts as the US grapples with their fiscal cliff. Wheeee…
Reminds me of a time a couple of decades ago when some idiot in a certain “central agency” in Ottawa sent around requirements for everyone in government to declare all their stock and mutual fund holdings, in detail, on a conflict of interest form. A quiet reply stopped that idea in its tracks, when some folks (I was one) suggested that in the interests of full conflict of interest compliance all staff should consult the stock market listings in the papers each morning (on “company” time and with great care) and submit daily updates. Message received and, as I recall, the requirement was revised to something a bit more sane. (In industrial quarters it’s called “work to rule.” Fastest way to grind things to a halt that I know of, especially when there’s a 72,000 page rule manual the buggers are trying to enforce. What’s that lovely phrase the IT folks use, “denial of service” attack? hmmm I wonder if the sudden flood of IGA negotiation requests is part of a devious secret master plan by the rest of the world’s governments … Why only 50? Why not 190 or whatever the latest membership count is at the UN General Assembly? But each negotiator pushing for different modifications and exemptions. Great makework project for law students.)
@schubert1975
Who will be responsible for translating FATCA regulations into the various languages of the world? Will US arrogance extend so far as to make it each foreign language speaking county’s problem?
@bubblebustin
So sorry. No speaka English. Not reply to nothing unless ina my language. You do. I reply when I get I can read. Not before. P*** off pls.
Or would you like me to translate your stupid and incomprehensible language, as I feel I have time and understanding to interpret, into my country’s language and give that to my banks and to your IRS goons and let you guys sort out the inevitable mess?
What a great idea!
I wonder where they think the banks are going to find the sacrificial goats willing to serve as “compliance officers” with the threat of personal penalization if they miss an account, as I think at least an earlier draft was stipulating if it still isn’t.
To err is human, but to really f*** it up takes a committee of IRS and Treasury boffins. Or better yet several committees.
“Not reply to nothing unless ina my language” should be “ina alla my official languages”.
I don’t know how a paltry $8B over 10 years can justify this. Any endeavour of this magnitude could only be justified if it was to bring world peace and the end of starvation on earth, not the persecution of its own people. Someone should take the keys away from that reckless driver before he wraps himself around a telephone pole!
Good point, my bad for missing it.
My eyes glaze over when I read anything from the IRS, and I’ve spoken English as my first language all my life and got straight-As in high school English, for whatever that’s worth in reading IRS-speak. And I rarely came across any document in the Government of Canada that I couldn’t understand when I was working there. But the IRS and Treasury (and in fact almost every US government document I’ve ever seen) are truly “exceptional” in the way they botch the language of Shakespeare. Never mind logic or exposition.
I can’t imagine what it must be like for any banker or government official in any number of other countries in trying to make any sense out of them. At least most so-called US persons abroad speak English so they have a quarter-or-less-chance at making heads or tails out of the forms and instructions. Sort of.
LOL the idea of foreign banks hiring USP’s abroad to translate FATCA regulations from Hinglish. Actually, that’s kind of creepy. Sounds like the kind of job a member of Democrats Abroad would fit nicely into.
@ Schubert and Bubblebustin,
Once or twice, back in the days before tax forms were on line, I did my taxes in French because there were no English forms left at my post office. No problem at all – and French is not my native language. IRS forms and publications are completely baffling.
It’s like Canadian tax forms pre-suppose you have the language skills to read a newspaper. And US tax forms/instructions pre-suppose you have an MBA in Taxation (and that’s just to understand the vocabulary they use) – I suspect even then the instructions don’t make sense.
I see Mr Mospsick will be participating in a FATCA workshop on January 30th geared toward banks, insurance companies and asset managers:
http://www.mopsicktaxlaw.com/FATCAConference.pdf
Adding another layer of complexity to the translation challenge is:
“Applying FATCA to the life insurance industry…
Translating FATCA into life insurance language: The challenges “
Interesting, these folks attribute FATCA delays to language translation, and the ambitious job of negotiating agreements with 60 other countries:
“However, the IRS is working on signing intergovernmental agreements with many countries – particularly in Europe – allowing the countries to share information from one government to another. Since the Department of the Treasury will have to negotiate such agreements with over 60 countries, which will take some time and a significant amount of foreign language translation, it is not certain if the agreement will be signed and ratified in time for D-day, 1 January 2013.”
A rather presumptuous delay, isn’t it?
http://www.translationforlawyers.com/2012/10/financial_translation_services.html#more
@bubblebustin
Never underestimate the ability of pompous “central agency” bureaucrats in any government to be grossly unrealistic about how the real world works and what real world timelines look like.
About a year before I retired from the (Canadian, even) federal government, there was a monumentally idiotic government-wide plan to rewrite all the job descriptions and reclassify job categories for about 250,000 bureaucrats using a theoretical framework dreamed up by some lunatic US (surprise!) academic who was brought in to do that. I was one of the “pilots” in my deparment to write my (senior-level professional) job description. My old one was about 14 years out of date. (Never bothered me nor prevented me from doing my job; I generally ignored it.) It was six pages long. Using the new standard, my final draft was about double that and even less readable. Handed it in at the end of August to the Treasury Board Secretariat twit. He thanked me and, on my questioning, assured me that all those other job descriptions (which hadn’t even been started yet) government-wide would be done by Christmas (sic). I asked, of what year. He said this one. When I finished roaring and wiping the tears of laughter from my eyes, I said “not even in your wettest dreams, boyo.” Five years later I bumped into a retired TBS boffin I knew at the local gym and asked what he was up to these days. Back in TBS on contract, trying to help clean up (guess what) that same job description project. Again, tears of laughter. True story. They never learn. They have no idea. They haven’t inhabited the real world since they were let out of kindergarten. Hopeless.
Just checked your web link. That article you’re quoting was written in October of this year. I’ve never worked on an international agreement, never mind translating one, but extrapolating from the job description exercise and a few others I’ve known about (at least the JD project was in only two languages), I’d say that anyone who this past October thought that sixty IGAs being negotiated in multiple languages around the globe would all be done by 1 Jan 2013 was smoking something they shouldn’t have been.
For a gripping and sad story of how stupid “brain trust” bonzos from the Beltway can be, dig up David Halberstam’s excellent book on the Vietnam catastrophe, “The Best and the Brightest,” read it, weep and gnash your teeth. They’ve not got better, they’ve got worse. (See for example Iraq and Afghanistan for openers.)
*There was supposed to be a big meeting between the US and Middle Eastern along with some African countries back earlier in the month in Qatar. However, it was announced earlier in the month that it was delayed until some time late in January. I suspected at this point the final regs wouldn’t come out until after this big meeting.
Oooh that Qatar meeting sounds like fun. Piece of cake, right guys? In what year are you betting the final regs will come out, Tim? Even 2013 sounds like a bit of a stretch to me … Oops again, sorry I forget, it’s “the exceptionals” who are running this, not us mere Canadians. Mazel tov.
Any of our EU or Swiss confreres, who have even more experience with multi-lingual and multi-cultural fun and games, want to weigh in on this silliness?
*Schubert1975
I am Jim Jatras will sure get a laugh out of this. One of the questions from the Federation of Arab Banks was whether the US would negotiate an IGA with the Bashar Al Assad government in Syria or with the Syrian Opposition/Rebels being supported by the US. Another question was whether the US would be signing an IGA at all with Iran and Sudan.
*Schubert Great story. They are going to be up to their eyeballs in useless paper. Won’t have time or resources for minnows.
It’s something of a bitter irony that while the IRS demands absolute perfection, punctuality and in depth knowledge of international tax legislation from its citizens, the IRS and USG themeselves are completely lacking in the ability to get its own issues sorted out. It’s a shame we couldn’t penalize them for their utter incompetence in the same way they attempt to penalize us for not dotting every ‘i’ and crossing every ‘t’!
On the question of workability and enforcement, let me share an anecdote:
Last summer, I had a chat with a naturalized US citizen, resident in the US, who was born in Italy. Not long ago, he learned that his mother, who lives in Italy still, openned a bank acount in his name and transferred money into it. Although I don’t really know, I assume she intended to avoid some version of Italian estate taxes. Knowing about FATCA, when the son learned of this, he flew to Italy and closed the account. Not only that, Italy being Italy, paying a little bribe made the account go away. It never existed.
Enforcement of FATCA, whether through IGAs or bank-to-IRS, is only as effective as the transparency and honesty of the players. Greece, Russia, etc.? I don’t think so!
I think Thelma and Louise have gotten ahold of the wheel in the US now.
Enjoyed the discussion above on government idiocy!
So, here are a couple misc stories that caught my attention this past week.
Want a laugh? If you hear IRS announce that Pakistan signed an FATCA IGA, consider this story via @npratc http://n.pr/V9QTe8 Not a chance! Does this sound like a country you would want or could have a reciprocal agreement with?
Then, on an unrelated, but unrealistic dream, how about Seassteading? Somewhere in the past year, I think I posted something about this offshore Libertarian Utopian that is planned. I could not resist commenting some of the Citizenship and reporting practicalities.. 🙂
Don’t Like The Government? Make Your Own, On International Waters
My comment is about 183 on the list. No, probably no one at NPR thought or took notice of the FATCA mention there 🙂
*Might be interesting if the transfer was only “by request” and…..each “request” took as long to process as it takes the Vancouver consulate to process relinquisment “requests”.
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*Too true Schubert1975. I don’t think the French will take kindly to being asked to provide everything in English either. They defend their language from English invasions with a vengence so can’t see them meekly doing it in anything other than French.
And then, of course, you have the Swiss with 4 different official languages. I can’t wait to see how the IRS deals with Romansch.