Acknowledging the welter of detail and difficulties in the law, part of 2010’s Hiring Incentives to Restore Employment Act, Mr. Cantor said the only people that like FATCA are lawyers and accountants.
“From the perspective of a U.S. international tax attorney, we love FATCA for four reasons: complexity; uncertainty, with all the changes since 2010; change, with all the amendments and reforms to the law; and fear-mongering,” Mr. Cantor said.
“One man told me it was the end of Western civilization as we know it,” Mr. Cantor said, explaining that “No, FATCA is aimed at foreign financial institutions and other financial intermediaries to prevent tax evasion by U.S. citizens and residents through use of offshore accounts.”
Audible despair gripped the hundreds of audience members when Mr. Cantor described eight IRS and Treasury Department forms required by the agency, followed by another five that might be needed.
Penalties are stiff for not filing, he said. For example, falsifying or failing to submit Treasury Department Form 90-22.1 could draw a $500,000 fine and up to 10 years for in prison. Tax evasion, he said, is liable to a $250,000 fine and up to five years. Failing to file a tax return attracted a $100,000 fine and up to one year imprisonment.
Following the presentation, Mr. Cantor, alongside Mr. McTaggart and KPMG partner and “head of tax” Doug Harrell, heard an hour of eager audience questions, most related to complex personal circumstances.
Mr. Cantor told one interlocutor that renouncing U.S. citizenship is unlikely to be effective: “First, you have to have another passport before you can do that. You cannot be stateless.”
An “exit tax” would also apply, he said, describing a law that “started when a certain resident here [Cayman] came from Belize.” Someone seeking to expatriate themselves, he said, could be forced to sell their assets, relinquish any trusts and pay state taxes.
“Until the State Department gives you a certificate [of expatriation], you cannot relinquish your passport, not until all your taxes are paid.”