In an article at Bangkok Post. Andrew Wood writes “the arrival of FATCA has given rise to some myths”, and:
All institutions worldwide will be required to report any US citizen’s account with a value exceeding US$200,000 (6.47 million baht) for non-resident expats. That means that if you have a bank account, the details could be sent to the US Internal Revenue Service (IRS). This may seem significant, although if Americans worldwide were acting as they should, it would be insignificant and even unnecessary.
The entire article can be read here: http://www.bangkokpost.com/news/investigation/401244/is-fatca-just-for-fat-cats-us-expats-beware
A misleading article designed to drum up business for Mr. Wood, it seems to me. Although how people can use the rules to their advantage is not clear to me. Any ideas, anyone? Or is this just the compliance industry at work?
This may merit its own post Please do so if you like, Monitors
Sunday, March 23, 2014
Nomadic Politics has a guest host today ..Some of you may know already. Robert Morris.
FATCA: Why New Tax Haven Laws are a Disaster in the Making
Excerpt: Here’s a guest post with some further insight on a controversial piece of legislation called FATCA. Robert Morris explains why this law on tax havens is a really really bad idea.
First off, I would like to thank Nomad Politics for bringing up this issue, and also for reaching out to seek an opposing viewpoint to its FATCA coverage. This is the kind of open-mindedness that we could all use more of.
In that spirit, let’s start by laying out a positive aspect of FATCA, the Foreign Account Tax Compliance Act.
http://nomadicpolitics.blogspot.ca/
More importantly the $200,000 figure is not correct. Banks supposed to investigate all existing accounts with over $50,000 in them (except the ones exempting through IGAs). $200,000 is the threshold for total overseas holdings on one of the treasury forms individuals have to file..
This made me very cranky this morning.
It’s worth pointing out that the Bangkok Post has not accepted any of my comments, which all fall well within their guidelines.
Well it does not make me cranky, but it does make me mad. Both linked articles have errors in them both in fact and speculation we could drive trucks through.
How is it such esteemed writers get it so wrong on so many levels.
“Americans will merely go home and not bother to have businesses abroad”??
Both articles show they have not read through nor understand anything to do with people who are personally impacted by this monstronsity.
And when dealing with the complexities of FATCA the ‘high speed train that will’ we forget that coming down the track is the monolithic monster called GATCA equipped with a front plow that will take everything out. Track and all.
We all talk about CBT being the evil and oh, if we could only get them to agree to RBT everything would be alright.
Well, GATCA is Residency based which means, it does not matter where in the world we live we WILL allow all private , personal and financial information to be sent to those at the OECD with the evil gleam in their eyes. OR ELSE. NO sovereignty, no borders, no exceptions. Individuals, businesses large and small and corporations. ALL will comply.
THAT is their intent.
This dude just does not get it.
I am NOT a US Expat, I am a (insert) Citizen that has clinging US Nationality solely because of a narrow US Supreme Court decision!!
@FuriousAC,
I’m pretty sure Andrew Wood is a wealthy financial services executive first and an “esteemed writer” second. These aren’t journalists “getting it wrong” but people with much to gain from FATCA putting the spin on the truth.
Mr Wood is fishing for business as are the Big 5 accounting firms in Bangkok. There are about 35K US citizen in Thailand, but many more Green Card holders and dual citizens that are not counted by the US Embassy. The Bangkok Post accepts articles from people like Mr Wood to fill space. More disturbing is that Thailand is just rolling over – the Thais don’t really understand the depth of the affect of FATCA, but they are now appreciating the cost the banks must pay and the government responsibilities to report. No IGA yet, but it is coming. There is no resistance.
Here is his Twitter handle: @andrewwoodpfs
Is #Fatca just for fat cats? US expats beware | Bangkok Post: news http://www.bangkokpost.com/news/investigation/401244/is-fatca-just-for-fat-cats-us-expats-beware … – Most misinformed and ignorant article yet!
I posted a comment a couple of days ago correcting the reporting threshold errors, and it’s still hasn’t shown up, although it did let me put a link to it on my Facebook page where my comment shows up only partially with instructions to follow the link back to the article if you want to read my comment in full – where it doesn’t show up. It’s BS.
We are a Capitalist country and capital should be able to seek its best use. The best use is where it will earn the most for its owner.
I belong to a group who wants the citizen based taxing system repealed. We would automatically void FATCA and FBAR and institute a National sales tax. We have introduced it into congress every year since 1999. This year we have over 70 sponsors in the house of Representatives and 10 in the Senate. It would provide a steady stream of money to pay our bills, collect from the over 50% who pay no income taxes and they do owe taxes, they simply evade them and the IRS cannot deal with a group that large.
The poor would be exempted by a system of prebates they don’t have to apply for. The prebate is refunded in advance to every registered Social Security Card holder with a U.S. address and every death is registered and removed from the monthly prebate list. It is called the FairTax, because everyone who buys a new item would pay it.
The poor gets to keep all their meager pay and prices go down 30% giving them an immediate 37% raise in income. they tend to buy used houses and used cars so no taxes, but the pimps and drug dealers will pay and the congress can stop the campaign contribution extortion game and concentrate on cutting spending.
A man hour savings of 400 billion dollars will be the outcome when lawyers, accountants and tax form preparers are cut from the system.
I repeat, capital should be liquid and move wherever the return is best and the nosey reps and senators could get lost.
Getting raped is always the victim’s fault.
How does an expat “act as they should”? Each nation has different expectations and each individual in each nations expects something different from the expat.
@FuriousAC – GATCA as you call it is the OECD’s Common Reporting Standard. Don’t make the same mistake as the guy in Bangkok by scaremongering with inaccuracies.
“all private , personal and financial information to be sent to those at the OECD with the evil gleam in their eyes”
1. Not all – but sufficient to identify the account holder to their tax authority, and how much capital and income they have that may be taxable and not declared where they pay tax.
2. Not to the OECD, but to the tax authority where the account holder pays tax, provided that there is a bilateral agreement in place between the account booking jurisdiction and the taxpayer’s tax jurisdiction(s).
Unlike FATCA this is of course based on residence of the account holder, as shown in the records of the FI that operates the account. It is only a problem for the account holder if this is actually tax evasion, and seems much fairer than CBT.
The main problem I see is that these countries are ‘anticipating’ huge chunks of revenue flowing in as a result of tax evaders being caught, but on the evidence of the US and UK recovery so far this is massively overstated. The IRS is making most of their revenue from the punitive fines even where no tax is owed. The UK isn’t making so much as they don’t (yet) impose such huge fines, and has had to admit that the UK/CH agreement has pulled in a lot l;ess money than they wanted.
If he is trying to drum up business, why is he getting it so wrong? How many people are going to read his article, think that FATCA only applies to people with $200,000 in the bank and possibly get caught out with only a quarter of that amount? It is one thing for a financial company to offer accurate information and then to offer further assistance for a price. It is entirely unacceptable for someone to provide inaccurate information. @Bubblebustin. Thank you for trying to get a correction.
@FuriousAC @p33t
P33t is right: the OECD is pretty much just a talking shop. Even if the OECD did get all the tax data, which they won’t, they don’t have the power to go after individuals. Getting rid of CBT is something we can all agree on.
Of course Wood and all his parasite accounting/ lawyer brethren are using this an opportunity to scaremonger and fish for gullibles.
Hopefully, all expats will be smart enough to steer clear of these scumbags at all costs.
@SwissPinoy. For US expats “acting as they should ” now means getting rid of US citizenship ASAP!
How dare the tax authorities try to obtain information on persons (US specified persons in the case of US FATCA, or persons tax resident in the country the information is being reported to in the case of UK FATCA and the OECD CRS) who are legally obliged to provide the information anyway.
Yes, this is a massive compliance burden on Financial Institutions, and yes, this is unlikely to generate a significant amount of revenue for tax authorities in comparison to the amount it is costing, but unfortunately the US had a large enough stick (the threat of withholding on any US source income or proceeds) to start the FATCA ball rolling. However, at the end of the day, FATCA and other FATCA-like agreements are designed to collect information on persons who are not fulfilling their own tax responsibilities.
@TommyH, You are the famous Tommy Hunter, correct? Anyway, stick it where the ‘sun don’t shine’ with your comment: “FATCA and other FATCA-like agreements are designed to collect information on persons who are not fulfilling their own tax responsibilities”
When the USA starts taxing based on RESIDENCE and not who USA CLAIMS AS CITIZENS, then your statement might have merit. Someone like me, born in USA to Canadian parents who worked in USA temporarily, has been branded with USA CITIZENSHIP, whether I like it or not. I DO NOT HAVE ANY RESPONSIBILITIES TO MY MASTER IF I AM A SLAVE. My responsibility is to free myself.
Oh, I know, next thing you are going to tell me is to renounce my US citizenship if it is such a burden. Awesome. Can you tell me how to do this without it costing me a small fortune, and without risking bankrupting penalties for not filing ‘Foreign Bank Account Reports’ for my LOCAL, CANADIAN bank accounts up the street from where I live?
@ WhiteKat
Yes, T.H. (the hunter) might go to the “renounce” theme next but usually he passes through “cowards” and “whiners” first. 😉
@TommyH000
Now why would the US have any right to tax its non-residents when you claim the US enforces residence based taxation?
@whitekat, I am in a similar situation to you – born in the US to non-US parents temporarily working in the US. Unfortunately this has left me as a US citizen with the associated tax responsibilities despite never having lived or worked there. I am definitely not saying I am a supporter of the citizen based tax regime of the US – it would make my life easier if the US enforced residence based taxation like the rest of the world. However, I am tax resident in a country with higher tax rates than the US, so although I am obliged to file tax returns I have no tax liability due to the double tax treaty in force between the US and my country of residence. Therefore I am already providing the US with the information they would collect through FATCA.
As Publius said on 24 March, “Getting rid of CBT is something we can all agree on”. However, until it has been got rid of, a US citizen (no matter how grudgingly they have been branded as such) does fall under the IRS citizenship based taxation and should be completing tax returns. Yes, I know this is easy for me to say as it isn’t costing me significantly.
@Em, I haven’t looked into renouncing my citizenship as it currently has little negative impact on me, so i can’t comment.
@bubblebustin, logically they shouldn’t have that right, but in reality they have the power to do so. The US financial industry has been a key player in global markets for so long that there are few economies who could survive without them (possibly with the exception of China, but I do not know much about that). In line with local tax legislation, the IRS can tax US source income in line with US law and, as can be seen with the introduction of FATCA, this is enough of a threat for the US to “bully” its way to enforcing its CBT.
As I mentioned, an example of this is with US FATCA, where the US Treasury imposed the threat of withholding 30% on gross proceeds from the sale of US assets as well as on US source income on any non-US. When this was first announced, there was an article that stated that under these conditions, a (major) non-compliant foreign financial institution would go bust within 7 minutes of trading (or something equally as ridiculous). Whilst US FATCA is a withholding regime, the UK FATCA (between the UK, its Crown Dependencies and Overseas Territories) and the potential OECD CRS (a mutlilateral information exchange between a number of countries – I believe around 44 are currently signed up) are reporting regimes rather than withholding regimes and are more concerned with identifying people tax resident in their country holding undisclosed assets offshore.
(p.s. I don’t know who Tommy Hunter is)
@TommyH000, you are an exception. Most US expats currently don’t file with the IRS, due to the fact they think they don’t owe anything, or because it is so onerous, or because they just don’t know they have to do it because they already pay taxes in their country of residence and don’t know about CBT. You say it doesn’t cost you much, maybe because your situation is really simple and you don’t have retirement accounts, PFICs foreign stock etc. When you start adding that to the mix, filing a tax return becomes extremely complex.
FACTA might not be an issue with people who are compliant, if their banks don’t close their accounts, but non compliant people are terrified of the penalties now that they know they should have been filing.
And they’re in the millions…
@TommyH000,
Re: “However, until it has been got rid of, a US citizen (no matter how grudgingly they have been branded as such) does fall under the IRS citizenship based taxation and should be completing tax returns”.
BullShit!
It’s Interesting that your alias is almost the same as a certain “TommyHunter” who was hanging around here a few days ago with the same philosophy as you – i.e. that people born on the US plantation should be doing what they are told. Are you sure you are he are not one and the same?
Regardless, what USA is attempting to do here is immoral. Just because they might have the power to make this work in their favour (doubtful as it will surely backfire), doesn’t make it right. I feel sorry for people who appear to have no heartfelt sense of what is right versus wrong.
Just because it is no big deal for you (as you are already in compliance with the master), you appear to be suggesting that everyone else SHOULD also ‘comply’ with the master, regardless of the cost – both financially, and emotionally. And regardless of the cost to ALL Canadians, for sitting back and allowing the big bully to trample over all Canadians’ charter rights and freedoms, which we should all hold dear and be on guard for.