By Andrew Quinlan, April 24, 2013
There are many problems with the FATCA intergovernmental agreement (IGA) process. From a US perspective, they agreements represent a subversion of the proper treaty process, an unconstitutional expansion of executive powers, and an unwise commitment to saddle US banks with expensive new reporting requirements.
From an international perspective, the IGA’s are deceptive and ill-advised. For more on this perspective, Allison Christians has a great write-up in the Cayman Financial Review that can serve as an IGA primer for those who are still confused about the process and its implications.
Sitting at my computer stealing a thought from the Sandbox … tdott wrote: “What I don’t understand is why the EU does not negotiate as a block. The divide and conquer technique the US is using would fall apart in the face of that.”
That made me think that one USA negotiator should be plunked down in a chair at a big table to face off with representatives from 193 countries working as one block. Sure the USA has financial and military might but it needs to be made aware that it is still just one nation among many. I think if this situation ever happened (definitely won’t hold my breath on this one) FATCA would die and become just another black page in US hegemonic history and nothing more.
My husband and I met with someone from RBC Dominion today. According to him, the banks are making so much money that the cost to implement FATCA is just a ’rounding error’ for them. The capital flight from the US however, isn’t. Will FATCA partners let the US have their cake and eat it too?
@bubblebustin,
We should urge a boycott of FATCA sympathizers and collaborators like RBC Dominion and only use credit unions where possible. Even if credit unions are forced to comply in the end, they did not lobby our own home government to sign a FATCA IGA.
Comments submitted by Americans abroad to Ways and Means Tax Reform Committee create a stir in Washington
http://www.bloomberg.com/news/2013-04-24/americans-paying-up-wherever-they-reside-beseech-congress.html
http://americansabroad.org/
Allison Christians with more perspectives…
Cayman Financial Review :: What You Give and What You Get: Reciprocity under a Model 1
More on the Florida and Texas bankers association lawsuit against the IRS and US Treasury, as it relates to this post:
“The rule means the agencies would send account information to foreign depositors’ home governments in a gamble to trade information about U.S. citizens similarly avoiding taxes.”
The US is in a gamble that they’ll receive information about US persons holding foreign bank accounts? Au contraire, mon ami.
http://www.bizjournals.com/houston/morning_call/2013/04/texas-florida-bankers-sue-irs-over.html
@bubblebustin,
Their gambling game is rigged!!!
@bubblebustin and calgary;
That article http://www.bizjournals.com/houston/morning_call/2013/04/texas-florida-bankers-sue-irs-over.html says;
…..”Last year, the HBJ reported that informal estimates of foreign deposits in the state’s banking industry varied from $3 billion to $20 billion, according to the Texas Department of Banking and the Texas Bankers Association . Industry observers had said because of the sheer size of the foreign population in the state, Texas would be hard hit in a flight of deposits by foreign nationals.”….
It will be interesting to see how this US ‘transparency’ plays out: re those in glass houses…….
Expect to hear more cries like this from Senator Gordon Smith when expressed his failure to understand “why we put the enforcement of other nations’ tax laws as a priority at Treasury,” giving the impression that it is other nations who are being aggressors.
Using a marshall arts technique, IGA’s may just be the vehicle to deliver FATCA’s force against the US itself.
@bubblebustin
Thanks for the link to that Houston Biz article. I am going to reference it over here where it is topical…
http://isaacbrocksociety.ca/2013/04/19/banker-groups-sue-treasury-irs-over-account-reporting-rule-or-datca/
Re:http://www.bloomberg.com/news/2013-04-24/americans-paying-up-wherever-they-reside-beseech-congress.html
http://americansabroad.org/
It must be a full moon or something because FATCA and the USA war on ‘tax cheats’ is getting to me more than usual. I posted this as a comment to this article:
OMG, Israel Jackson, you are so misinformed, and very rude. How many times have you told someone to shutup or called them stupid in your comments to this article? This alone shows your lack of intelligence and inability to think ethically, empathetically and critically.
The foreign income exclusion amount of 92K (or so) applies to ‘EARNED’ income only – meaning money you receive from an employer. It does not apply to any other sources of income such as pension income, investment income, unemployment benefits, disability benefits, etc. Try being a pensioner who is a dual citizen living outside of USA and you will be double taxed. Imagine being unfortunate enough to have lost your job and be collecting unemployment benefits – you will be double taxed. Try buying non-USA mutual funds in the country you live in – you can’t because USA considers these to be ‘passive foreign investment income corporations’ and taxes the hell out of them.
I was born in the USA to Canadian parents and left as an infant thus am dual from birth – not by choice. I have never been schooled or worked or invested in the USA, yet USA expects annual tax returns at the cost of a couple thousand per year, and annual FBARS for all my bank accounts which USA says are ‘foreign’.I live where my accounts are, so HOW ARE MY ACCOUNTS FOREIGN?
Unlike other Canadian citizens, because I am tainted with a US birthplace, I cannot take advantage of any of Canada’s registered savings plans – cannot save for retirement, cannot save for my kids university, and am required to jump through hoops every year to prove I owe little or no taxes. In addition I am required to report on every detail of every bank account with my name on it which are held in the country where I live and am a citizen of. I must spend thousands every year preparing US tax returns and ‘foreign’ bank account reports which are much more complicated than the reporting required by US citizens living in US.
Do US citizens in US have to prepare detailed reports of each and every bank account they have in US? No, but I have to report all my locally held accounts to the USA and hope to GOD there are no breaches of privacy of my personal information that might subject me to identity theft. Even the government of Canada does not require me to annually report the details of each and every account I hold.
I pay high taxes where I live already – higher than Americans in USA do. I want to be able to save for retirement so the Canadian government won’t have to pay to take care of me in my old age – I know USA won’t. Who will take care of me if I am not allowed to take advantage of my own countries registered retirement plans?
Why not renounce you say? Because, I never had a clue until now (at age 50) that USA even considered me a taxpayer. Why would I? It makes no sense to tax people who DO NOT LIVE in USA, never worked there, never earned income there, and never plan to live there. No other country does this. Since all the publicity surrounding FATCA, I discover I am in big trouble for not filing all these years, even though I have always paid taxes to the Canadian government. USA will not let me renounce unless I can prove 5 years of US tax compliance which requires paying 10’s of thousands in lawyers and accounting fees and risking PENALTIES for previous non-filing of ‘foreign bank account reports’ (aka accounts in MY country of residence).
Soon, thanks to FATCA, my own local banks will be required to send all the personal details of every account my name is on (including those held jointly with my Canadian only spouse) to the IRS because USA thinks it owns a piece of me and apparently anyone who is remotely connected to me.
Isreal Jackson and others with similar mindsets, before you whine about people not ‘paying their fair share’, maybe you should RESEARCH and try to understand what is really happening instead of blindly taking up the pitchforks and assuming everyone who does not pay taxes to the US is a witch that should be burned at the stake.
@bubblebustin
Do you have a link to the comment by Senator Gordon Smith?
It is archived here
http://archive.freedomandprosperity.org/ltr/smith-irs/smith-irs.shtml
and also,
Note; this letter is also footnoted as #13 “Letter from Sen. Gordon Smith to Treasury Secretary John Snow, reprinted in BLOOMBERG’S DAILY TAX REPORT, (20 February 2003) (concerning proposed non-resident alien interest reporting rules (REG-133254-02)).” From Allison Christians ‘What You Give and What You Get: Reciprocity under a Model 1
Intergovernmental Agreement on FATCA’
TOPIC: Inside Offshore
April 12, 2013 article
http://www.compasscayman.com/cfr/2013/04/12/What-You-Give-and-What-You-Get–Reciprocity-under-a-Model-1/
@ whitekat
Dynamite comment at Bloomberg! I was hoping someone would blow that Israel Jackson out of his swamp. You did it!
Thanks badger, I was working on that too but have difficulties with doing links from my phone. Allison Christians referenced Gordon Smith’s quote in her article.
@Em,
Thanks. He had it coming – big time. And he caught me in a ‘mood’; glad I made some use of it, rather than bitching at husband or kids…lol.
@Les Fant:
Some of us have seen your posts at Forbes, AccountingToday and possibly elsewhere. We subsequently reviewed your website “ExpatriationCopesthesiaConsultants.com” and, to some of us, it looked like a website set up for identity theft purposes. Your Contact page requests that unnecessary personal information be entered, e.g., DOB, citizenship information, etc. Your website also gives little information about who is behind it, i.e., no Impressum. I also recall that someone traced your company to a warehouse area in Ireland or the UK.
Summa summarum, a number of us on IBS don’t trust you and your “company”, or whatever it is.
@WhiteKat,
I agree with bubblebustin. Great and explicit comment that any of such people should be able to get through their heads. It did you good and it did many of us good — and, hopefully, your clear explanation schooled a few!
A foreigner can deposit $1mn into a non-interest bearing account in a US based bank and it will not be reported to their home government. What a great place to hide money! However an FFI must report on any aggregate balance above $50k. It’s totally one-sided.
Also to take the UK as an example why did it not occur to HM Treasury to specify the following UK indicia in the IGA:
Current UK telephone number
Standing instructions to transfer funds to an account in the UK
Current effective power of attorney or signatory authority granted to a person with a UK address
An “in care of” or “hold mail” address that is the sole address the US financial institution has on file for the account holder
If US financial institutions had to report on that quantity of information how many more lawsuits will it garner! Imagine searching for those criteria for 72 different countries! If the beast is attacked internally and externally it will die.