Due to slow progress in signing IGA’s. Will this happen. I say its 50/50. IRS/Treasury probably listens to SIFMA more than any other group because of its domestic US political influence. Its also very notable that SIFMA is pointing to a long list of very specific promises by made the IRS to the banking industry that have not been met on time at all. SIFMA is also basically predicting a huge mess come January 1 2014 if the IRS goes ahead at this point.
Will there be a change in the effective date. As I said its 50/50. The IRS might also feel this is a now or never moment.
If this is truly a ‘now or never’ moment, then perhaps another delay will mean that an outright repeal of FATCA is probably going to happen?
We can only hope.
There just feeding the problem, why don’t they call for FATCA to be repealed instead!
WOW. This is where FATCA’s rubber meets the road, and spells out what’s been said all along, that FATCA deputizes FFI’s to be withholding agents for the IRS, a ridiculously ambitious feat under the best of circumstances.
Stalling could serve to allow more time to pull up stakes in the US. They must be freaking down there.
I wonder what effect a delay would have on Canada’s IGA.
@taxconfuzaled
That would be admitting defeat. American hubris will never allow that. Look at Iraq. Look at Afghanistan. They’ve been in both countries for ten years, and what did they win? Nothing. Iraq is still a war torn mess, and in Afghanistan, they’re quietly negotiating with the Taliban to end the hostilities. These wars are barely even talked about in the US news media these days, and that’s because nobody cares anymore. It’s just easier to not give a shit than to actually admit that the wars are lost. The only people that won are the people that made money from these wars. Who cares about the people that fought and died in vain?
No. I am not taking any glee in this. I think it’s all a damn shame, and a total waste of humanity, all to chase a buck. I deeply resent being born in such a depraved society.
@Tim,
Delivered as promised! Thank you for this extremely important letter. A “now or never moment” indeed. I am curious if Treasury or Congress might intercede and tell IRS to at least put a hold on all of this. What a huge mess they’ve created. I almost (only a tad mind you), feel sorry for the IRS.
It would make sense that Canada would hold up signing the IGA if they were aware of how delayed any practical implementation of this monster is. I still feel Flaherty’s original comments and attitude were honest and knowing how unhappy the CDN FFI’s are about it, wish as much as we do that this would all just go away.
In the meantime, it may give those who have yet to hear about their CDN citizenship applications a bit of breathing space as well.
Section 1 in the Comments says it all! Do the IRS really feel they are ready to implement this monstrosity in just six months time? Interesting times ahead.
@US in the UK
You mean this one? LOL, wake up Congresscritters!
“Such withholding will likely have severe adverse consequences for the financial markets generally, and will potentially expose financial intermediaries to claims from their counterparties.”
I can imagine the chaos, after the comments regarding decisions the FFI’s will have to make; IGA or not, or sign on directly with the IRS (and probably risk breaking their own countries’ laws). I recall one or two mentions a while back that one (or more) Canadian banks had signed on directly with the IRS. Does anyone remember which one(s)? If Canada signs the IGA, does that let that/those banks off the hook with IRS or could it possibly turn into a messy situation?
Scotiabank has a notice up that they will be implementing FATCA starting Jan. 1 2014. I inquired as to how they could do this without an IGA and sent them a copy of Peter Hogg’s letter. They offered for me to call their “help line” I said “No thanks.” I notice their privacy policy seems to be very, very broad lately. We are already getting out of there so they’ve lost us after twenty years as customers. They really jumped on board right out of the gate. HOW they planned to find anyone with “U.S. indica” is still unclear.
At any rate I find it highly amusing that U.S. banks inside the U.S. are actually opposed to having to do this. Goose meet Gander. They said nothing when the U.S. was demanding this of every other bank in the world. Yes, it complicated, yes it’s going to cost more than it brings in, yes it violates other countries laws and maybe some of theirs too but, they were fine with it until that little word “reciprocity” hit them.
FATCA was very poorly thought out and then the U.S. bulled ahead full speed with it. Shocking how complex and fool hardy it is. Perhaps if it had been used the way it was originally intended we wouldn’t be in this mess, nor would they. This is an excellent find!
Well, Tim, I read through this thing, and I can’t possibly represent that I understood 1/2 of what they were talking about. However, that said, item 4 was very helpful for me. I used it to respond to an uncharitable comment from a FATCA compliance Complex person on linkedin. I was accused me of being a troll and to go elsewhere, which I did not, of course. 🙂 They did not like me asking practical questions about how their frontline customers were going to handle U.S. Person indices.
Also, number 10 struck me, kinda of funny. The regulations still require exempt government organizations in annexes still to provide certification of their status to withholding agents, and SIFMA wants that provision dropped. Even hough Treasury deems them compliant or exempt, but still wants them to prove it everytime. I think that is fair… LOL If not, withhold the money and send it to the IRS. Another stealthy way to get IRS hands in their knickers..
I hope Treasury is arrogant enough to say NO
http://ec.europa.eu/justice/data-protection/index_en.htm
data protection rules ought to be of interest in such discussions
I think linked in likes me less than just me—most of them enjoy just me’s comments and wait for his inputs.
However, I actually got invited by a compliance jockey (jerky) to join up in one of their groups—that they wanted some dissent to keep discussion turnover moving.
It seems that what doesn’t kill FATCA just makes it stronger. I still hold hope, though, that it will one day end up in the rubbish bin of great American boondoggles.
Section 4 includes the following statement:
“We understand the rationale underlying the “reason to know” standard, but we are concerned that as drafted it could be interpreted to impose due diligence requirements that are impractical and burdensome, and thus could expose financial institutions to substantial liability for risks that they should not reasonably be bearing. Customer on-boarding personnel are not U.S. tax experts and should not be required to, for example, scour credit reports and other files to ascertain whether they might contain information that is inconsistent with a customer’s claimed Chapter 4 tax status”
As is obvious from the discussion taking place on the Renunciation and Relinquishment thread, the determination of who is a US person is murky at best. Will each bank branch have to have a US immigration lawyer on call to determine US personhood? And if they do, would one lawyer agree with another lawyer given the same facts?
@Hazy says
I essentially got asked to quit offering opinion or asking this uncomfortable question on a Linkedin thread which the number 4 addresses. So, I gave them this link to show it is not out of bounds to wonder about how the frontline customer service agents “outs” all their U.S. Persons. They are NOT U.S. tax experts. However the FATCA COMPLIANCE Industrial complex doesn’t want to think about what they are doing, or why, they just want the nuts and bolts on How TO. If I ask the question, then I must have “Issues” and take them somewhere else. I guess I am the skunk at the party. 🙂 I am moving on, as you do.
They want an easy way to detect someone slipping under a bar already set impossibly high. It doesn’t exist!
“This standard assumes that onboarding personnel have detailed knowledge of the different FATCA classifications and presents financial institutions with requirements for which no reasonable processes can be established.”
To me, this should make or break FATCA, but does the IRS really care about what’s “reasonable”?
Couldn’t one also say that US tax filing for US persons living abroad is a ‘requirement for which no reasonable processes can be established’? But still the USG continues to act as though it’s possible and is willing to inflict serious punishment to prove that it is.
Looks like the letter had some impact. Withholding delayed another six months, and the Portal of Mordor doesn’t open now until August 19th
@ all
Just read this article in Accounting Today titled Treasury-Delays-FATCA-Withholding-Requirement:
“Given the groundswell of international interest in FATCA, we are providing an additional six months to complete agreements with countries and jurisdictions across the globe, before withholding begins,” said Treasury Deputy Assistant Secretary for International Tax Affairs Robert B. Stack in a statement. “The high volume of international participation in this effort represents a quintessential race to the top. Every additional country we bring on board means we are one step closer to winning the fight against offshore tax evasion.”
What an example of how to “spin” the story. Instead, countries are scrambling to figure out how to sustain their economies in their efforts to comply with the US Congressional sanctioned extortion demands being foisted upon the global community. When will the “real story” be told.
@therapist604, my thoughts exactly.
And, I think these characterizations in the crafting and delivery of these public statements made by the US go far beyond ‘spin’, and beyond disingenuousness into outright lying and deliberate distortions.
Adding yet another layer of willful lack of regard for the truth to the might makes right foundations of FATCA and this whole process as demonstrated by the US so far. What an example for us – and confirmation that the US is morally and ethically bankrupt in this regard.
Any country which goes along with this patently false characterization of the situation is a willful collaborator.
If I despised this Stack guy before, you can imagine how I feel about him now. What other face can he put on now that FATCA is in such trouble? He knows what’s at stake here, the US’s reputation should FATCA fail. Can time really fix what ails FATCA, or is the USG just looking for a way to kill it themselves and somehow come out heroes in doing so? Stay tuned, the plot sickens.
Here is the actual notice for your reading pleasure…
http://www.irs.gov/pub/irs-drop/n-13-43.pdf
and if you were looking for the Accounting Today story that @therapist604 quotes, here is the link…
http://www.accountingtoday.com/news/Treasury-Delays-FATCA-Withholding-Requirement-67404-1.html