http://www.ctj.org/taxjusticedigest/archive/2014/01/republican_platform_expected_t.php#.UuIfC_2Cokg
More uninformed nonsense from the useful idiot wing of the FATCA camp:
Those who are directly affected by FATCA are likely to be few in number and they certainly have the means to fill out the disclosure form required with their federal income tax return under its provisions. The $50,000 threshold excludes housing and other non-financial assets. That means that even a relatively well-off American who works for a few years abroad and even someone who owns a house abroad will not be affected unless they hold over $50,000 in cash or financial assets in the other country.
Whatever inconvenience is caused by these requirements is far outweighed by the benefits to the U.S. and its law abiding taxpayers. According to the Congressional Joint Committee on Taxation (JCT), FATCA’s anti-tax evasion measures are estimated to raise $8.7 billion (PDF) over their first decade of implementation. (JCT does have a history of underestimating tax enforcement measures.) Considering that the U.S. loses an estimated $100 billion (PDF) annually due to offshore tax abuses, this seems like a modest reform.
Other opponents of FATCA, like the Wall Street Journal, have claimed that it is causing Americans living abroad to renounce their U.S. citizenship, but as we have pointed out, those renouncing citizenship make up a tiny fraction of one percent of the six million Americans living abroad.
The support of Fatca is usually because some are misinformed on it’s consequences and regulations. To say that a “tiny fraction of 1 percent” will renounce, well now, I bet only a “tiny fraction of 1 percent” know about Fatca. Anyone who learns of Fatca and keeps their “US Person” status is either incredibly patriotic or incredibly stupid. These authors of these type of support letters and articles will eat their word once the shit hits the fan. The true colours of Fatca will be front page news and this will lead to world problems. If we forget “politics” and look at facts, the Republican National Party are heros to US persons around the world. Not one of the supporters if Fatca can give any good intelligent factual reasons to support it. Sheesh, I hate when BS is written and distrubuted!!! **** Sorry guys, was incredibly peeved and sent this message without proof reading!!*****
Well, if renunciantions are insignificant because it’s less than 1% of Americans abroad wouldn’t the repeal of FATCA be equally insignificant since the cornerstone legislation for the War on Offshore Tax Evasion will close the “$100 billion” offshore tax gap by less than 1%?
In the AFL/CIO’s world, everyone gets a defined benefit pension at age 65. That world no longer exists in the US and doesn’t exist here either. There are informal reports these week that the banks in Switzerland are planning to report defined contribution pension assets, which were held in bank accounts temporarily for those in-between jobs or permanently for retirees during the period 2008 to 2013, to the IRS under the so-called US Programme (“FATCA looking back to 2008”). The USPs who were temporarily unemployed or who retired from 2008 to 2012 will then need to enter the OVDP and pay 27.5% of the highest account balance if these accounts were not properly reported on an FBAR.
Interestingly enough, the typical Swiss defined contribution pension plan is considered a defined benefit under US GAAP because it is required to give a minimum return to the employees, i.e., it is not a true defined contribution plan. Swiss subsidiaries of US companies, or any other company in Switzerland reporting under US GAAP, would carry these pension plans on their balance sheet. Defined benefit plans don’t normally need to be reported on an FBAR or Form 8938, as I understand it.
Was it US Ambassador Jacobson who said that they weren’t planning to throw grannies under the bus? Under the US Programme it is starting to happen in Switzerland as grandma and grandpa’s pension assets will be confiscated at 27.5% of their asset value if they enter the OVDP. Of course, the alternative is for these USPs to let the banks report them and then face criminal prosecution and the normal 50% FBAR fine in a year or two.
@ atticusincanada, mjh49783:
Some more occupations with Americans here:
Airport ground crew worker
Cabinet maker
Hotel employee
Bank clerk
Used auto parts dealer
Pastor
Secretary
Receptionist
Switzerland, since it appears to be on the leading edge of FATCA related issues, is an interesting case. I think we had a reference point from the previous ambassador to Switzerland that Bern was processing about 800-1000 renunciations per year. According to this document (https://www.overseasvotefoundation.org/files/counting%20american%20civilians%20abroad.pdf) on page 7, Switzerland has about 18,000 Americans. I have seen estimates of 20,000 elsewhere. So, in Switzerland it’s about 5% per year. This may still be insignificant for the AFL-CIO but it suggests the potential for a very alarming flood of renunciations if the response to FATCA in other countries approximates the response in Switzerland. A 5% renunciation rate would equate to about 300,000 per year or about 100x the current “official” number of renunciations.
You may not be able to comment on their article, but CTJ allows the public to post on their Facebook page:
https://www.facebook.com/taxjustice
@Edelweiss:
I agree with your comment that Switzerland is at the bleeding edge of FATCA-related issues and a preview of what may happen to USPs in other countries.
One of the advantages that USPs in other countries have is that FATCA is forward-looking, which gives time for alert USPs to take steps such as separating their contaminated assets from the rest of the family. The “US Programme” in Switzerland is backward-looking so USPs who did not properly file or did not file completely, e.g., missing FBARs, between 2008 and 2013 will be reported to the IRS by the end of April. (Banks are contacting USPs here for proof that they properly filed since they face penalties of 20 to 50% of the account balance held by USPs.) US tax advisers in Switzerland are reported to be overloaded with calls from USPs for advice. The situation is grim.
The AFL/CIO might also like to know that there is another difference between the US and a number of European countries such as Switzerland and Germany. In the US around 65% own their own homes. At retirement, many Americans downsize their homes and use some of the equity from the larger home for retirement. In Switzerland around 35% own their own home and save for retirement through the required company pension plan. (The housing situation is similar in Germany although the pension assets are typically held directly by the company in a defined benefit plan.)
The comparatively large pension assets held by Switzerland-resident USPs in the banking system at any time from 2008 to 2013 is what the IRS will learn of from the US Programme and will then confiscate at either 27.5% (OVDP) or 50% (FBAR penalty).
My understanding is that non-US defined benefit retirement plans are not reported on the FBAR, but must be reported on the 8938. Of course there is no clear guidance on how that is to be done, either before retirement or once retirement distributions begin….
Incidentally, in its 21 January edition, the Geneva-based newspaper Le Temps had three articles on a favorite topic: the enrichment of the compliance industry. They describe the utterly intrusive and absurd steps, complete with exhorbitant fees charged by the compliance firms, involved in rooting out any sign of “Americanness” in accounts held by Swiss banks that have entered category 2 of the so-called US program. The articles are behind a paywall, but maybe @Innocente or someone else may be able to find another link. The titles are: “Quand l”Amérique enrichit les avocats,” “Avocat des banques, une affaire juteuse” and “C’est un effort extraordinaire qui a un coût.” (Avocat means lawyer, not avocado!). The journalists are Sébastian Dubas and Willy Boder.
@Lord Jim: Thanks for your input. As you may know, the typical Swiss pension plan has elements of defined contribution and defined benefit plans. One DB element is that there is a required annual return while a pure DC returns whatever the underlying investments return. The typical plan also has reserves which have not been applied to the pension “accounts” of the employees. A DC element is that a shadow accounting is done for each employee in the pension with an annual calculated “account balance” which is used if the employee were to leave the company before retirement. Also, at retirement, these pension plans normally are required to “top up” the account balance, which is not DC-like, if the retiree converts his account balance into an annuity. (If the retiree takes the capital out without transferring it to an insurance company for an annuity, he may not be eligible for this top-up.)
So are these typical Swiss pension plans DBs or DCs? US GAAP clarified this topic in 2003 when it determined that any pension plan anywhere in the world that was not strictly a DC was to be classified as a DB. (Many US companies have hybrid pension plans as well which were then re-classified as DBs.) But US GAAP is not the same as the IRS and, insofar as I know, the IRS has not issued guidelines on when a foreign (“offshore”) pension plan is a DC and when it is a DB. USPs abroad who have not complied with these unknown and unclear IRS rules may find themselves facing draconian fines if discovered.
It’s a war on expats and they just don’t care who we are, who are families are. They are determined to demonize us as “able to afford” which is just crap!!
Why should my Canadian spouse making all of our income here in Canada be beholden to the U.S. just for marrying me? In what universe is this acceptable. That article is full of blatant falsehoods, it’s also very ill informed. We have LIVED the damage this is doing. I bet they wouldn’t have the courage or strength to come and sit with us and have a real conversation about the damage this has done. Like I said this thing has been an equal opportunity destroyer. No expat family left unturned. It’s alright to damage our families for yours???
Selfish, arrogant, stupidly ill informed, and callous. Sound just like the people they say they are against. Narrow minded and bigoted for the U.S.A.! Shameful.
A German here sees similarities of East Germany’s treatment of its fleeing citizens to the US’ treatment of its citizens abroad. He described the hunt for US expats in Switzerland as an effort to “slaughter and dismember” the expats and their pensions even though earned living abroad. As US expats in other countries learn of this heartless approach, they will also line up to renounce (see Edelweiss comment above). He expects that countries in Europe with private pensions, such as the Netherlands, the UK and Ireland, will be targeted by the IRS since there is easy money there. He thought it was possible that the IRS/ DOJ would try to implement backward-looking FATCA agreements with other countries, similar to the so-called “US Programme” with Switzerland that requires banks to divulge bank accounts records of USPs back to 2008, especially if the US Programme in Switzerland results in significant revenue. He expects to hear of more US expat divorces, as non-US spouses try to separate their finances and pensions from their US spouse, and suicides. Since Canada has private pension plans, it probably should be included as a potential target.
@Lord Jim:
I wasn’t successful to get behind the Le Temps paywall. Sorry.
http://www.aflcio.org/Blog/%28tag%29/24521
‘Rand Paul and Republicans Love Tax Evasion and Offshore Havens’
Jan 27, 2014 Kenneth Quinlan
More of the same distortions and conflation of ALL non-US accounts held by ALL those outside the US as ‘tax evasion’ via ‘offshore havens’.