Added, May 3rd: from Professor Allison Christians’ Tax, Society & Culture blog: Tax, Society & Culture, Allison Christians, Marco G.: “FATCA non-delay delay”
The below notice will require some very close reading by a great number of people.
-Notice 2014-33; 2014-21 IRB 1
Originally announced, AGAIN, on a Friday, when it will get lost in the weekend news.
Reuters, May 2, 2014: Foreign banks get transition period on U.S. tax evasion law
From “innocente” and George:
US Treasury and the mythical Bob Stack blinked today, “U.S. Treasury gives relief to banks for anti-tax evasion law”…
from Jim Jatras:
Interesting news today!
Treasury seems to want to have its cake and eat it too: delay FATCA yet again (since it clearly would be a mess on July1) without appearing to do so. It’s a transparent sign of weakness, stalling for time to get more unconstitutional pseudo-treaties signed. It might actually make things worse. Who knows.
from Just Me:
This is akin to declaring all the IGAs non complete as being a done deal, and so added to the count.
and reply back …
I think this is aimed more an individual FFIs being able to take more time to comply, so as to drive more countries into IGAs – which is the only way they can really enforce this. That’s the paradox: foreign governments (like Canada’s) sign IGAs because their banks are terrified of FATCA, but if they didn’t sign them, FATCA would collapse and there’d be nothing to be scared of.
There’s one born every minute . . .
Added, May 3rd: from Professor Allison Christians’ Tax, Society & Culture blog: Tax, Society & Culture, Allison Christians, Marco G.: “FATCA non-delay delay”
The Christians blog has a great image of a moving target.
Also, she couldn’t resist pointing out that FATCA has now “officially” been revealed as sanctions. I’m sure she feels vindicated, because sanctions is the exact (edgy at the time) word she and Arthur Cockfield used for FATCA in their Mar. 10 submission to Finance.
@Rev Susi
Re: “what is to stop the US…?”
MAD: Mutual Assured Destruction
The announcement on Friday doesn’t postpone the July 1 implementation of the law, known as the Foreign Account Tax Compliance Act, or FATCA. However, the Treasury and Internal Revenue Service won’t rigorously enforce many of the law’s requirements for 2014 and 2015, as long as firms are trying to cooperate, according to the notice.
So now that the threats against our banks is lifted as long as they “try to comply in good faith, this puts our banks in a position of voluntarily ratting us out to the CRA. Now the CRA can kick it back to the banks and we can sue the banks for taking any action at all until it is absolutely required by our rulers in the Reich House in the District of Criminals. What say you Joe?
Treasury was between a rock and a hard place. They proclaimed no more delays for FATCA yet if they put it in full effect they would be sanctioning more than half the world. So now they can threaten to sanction anyone that is not in their mind coming around plus political targets like Russia et al. If the republicans take the senate and hold the house there should be a full court press to defund.
@calgary,
This is a great quote from Allison Christians:
“As an important aside, if there was ever any doubt as to the nature of FATCA’s “withholding tax” before, that should now finally be put to rest. This is not a tax, it is an economic sanction to coerce persons outside the jurisdiction to comply with domestic information gathering goals, which can also be used to inflict punishment for other, unrelated offences….” http://taxpol.blogspot.ca/2014/05/fatca-non-delay-delay.html
And I want the Harper government to explain why FATCA isn’t an issue they feel should be challenged under NAFTA, whereas they and others are raising NAFTA re the Keystone XL pipeline?
See;
“…… Former Canadian Prime Minister Brian Mulroney and his former chief of staff, Derek Burney, who played central roles in negotiations that led to the Canada-U.S. Free Trade Agreement and subsequently NAFTA, suggested in separate speeches in recent days that Obama’s persistent delays are offside the spirit of the agreement.
“A negative verdict by the U.S. government would contravene a major tenet of NAFTA under which the U.S. was guaranteed unfettered supply in exchange for unfettered access by Canadian exporters to its market,” Mr. Mulroney …. said April 9.”
The quote above re NAFTA, from Mulroney, was here:
http://business.financialpost.com/2014/04/30/keystone-xl-nafta-challenge/?__lsa=f6bc-6c29
‘Ottawa mulls Keystone XL challenge under NAFTA after U.S. dodges decision again’
Claudia Cattaneo | April 30, 2014
I agree with Prof. Christians. What has happened to the rule of law? How can it be tolerated that the IRS may apply a massive financial sanction depending on whether the IRS makes a determination (on a standard-free and evidence-free basis, as far as I can see) that an FFI in Russia or Uganda or China or Chile is not making “good faith” efforts to comply with FATCA?
The only possible positive interpretation of the IRS Notice is that this is the end of FATCA.
Does anyone have a list of jurisdictions that have not negotiated FATCA agreements besides Russia or are prohibited from registration by their local governments?
@Jeffrey: here you go:
http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA-Archive.aspx
That gives you the list of the 30 IGA countries and the 29 countries that are close and we’ll just pretend tehy have an IGA for now. Note, Canada is an IGA country and, of course, we have yet to approve the IGA in Parliament and are not on track to do so much before mid-June at the earliest. So take the list with a grain of salt as not all the deals are “done deals”.
Dear Anne,
Thank you for the compliance update. I do not see any retirement destinations from the Far East included in the list so far. Perhaps China is to much of an influence and a likely candidate to start its own “Reserve Currency” when it gets its gold reserves up to the USA post WWII level.
@Anne Frank
Here is another misrepresented report…
FATCA transition okayed by US
Done deals if you believe these lazy journalist.
We do like to pretend….
@just me
I am hopeful that we have reached the end of the line. The deeming of unsigned IGAs to be agreements and the suspension of sanctions against FFIs if they are deemed by the IRS to be making “good faith” efforts, are clear evidence that the IRS accepts that FATCA is either unenforceable or too costly in terms of lost inward investment, etc., for the US to try to enforce. FFIs and countries should now take courage and stand up against FATCA. I wish the Canadian challenge total success!
@ Steve K
“…if they put [FATCA] in full effect they would be sanctioning more than half the world.”
The bully can keep up the threat only so long as “divide and conquer” works.
Well, it seems clear to me that with this latest back-pedal by the U.S. Treasury the document that the Canadian government signed on February 5 should be declared null and void. Even though this latest development is probably good news it shows that the U.S. is still in “changing-its-mind” mode. Until this law is truly in final form, how the hell can Canada or any other nation know what it’s agreeing to?!
Accounting Today has a story on this Non delay, delay…
I decided to direct my one budgeted comment today its direction….
What this means in practical terms is that Treasury blinked.
Facing a train wreck, they pushed it down the tracks, and effectively we have a non delay, delay.
So, with this face saving announcement, they will have a ‘soft opening’ and enforcement at their discretion for a transitional period.
This means they have neither the resources to police the monster of their own creation, nor the budget to use all the dragnet data they will be collecting…
So what are ‘good faith’ efforts? Just reading the 544 pages of regulations and >200 pages of amendments? Well the IRS will tell you when they decide you haven’t tried hard enough.
In the meantime, Treasury hopes, before the Republicans get back in power, they will get bigger budgets and more enforcement agents. Without resources for enforcement, the beauty of FATCA, is like in the movie “12 years a Slave’, where Pasty is whipped by Solomon Northup for some minor infraction, they have gotten the FFIs to flog each other via the 30% sanction, as vassals of the American overlord.
This announcement is just clever propaganda and spin, just like suddenly “deeming” about 30 countries as IGA countries even though agreements aren’t signed and there are even fewer parliament approvals.
Those approvals, if they come, will be in the form of stealth legislation in “remedial matters” bills or ‘Omnibus’ bills, (just the way America passed FATCA buried in a last minute amendment to the Hire Act) and never given to Parliament for open debate and discussion with up or down votes. It is how America democracy works, and so is copied everywhere.
The American Surveillance state is creating a dragnet world of data collection, and FATCA is just the latest iteration, but the most sensitive and important. With each country capitulation, it cements in place the total end of Individual Privacy.
In the meantime, as this “transitional period” rolls on, at IRS discretion, the enforcement can be deployed if you are doing anything unrelated that America doesn’t like, as with Russia. It is just another economic sanction without additional action.
APs most recent story, has the terminology right, FATCA is an ‘economic weapon’, but fails to recognize that FATCA does NOT just target Russia, it is carpet bombing the world.
Google: AP ENTERPRISE: US TO UNLEASH IRS ON RUSSIAN BANKS
So, do as America wants, or FATCA enforcement will be brought down on you! Oh, the power of the Hegemon!
When will the world’s financial institutions begin wake up to this over use of sanctions by the US, and begin to take defensive actions? Which countries banks are next?
Good follow up here…
Which FATCA Deadlines did Treasury’s May 2nd Notice Extend? Is Today’s Deadline Still in Place?
From William with some additions by me…
Is the May 5th Deadline a Hard Deadline? Yes and No.
Two significant caveats as to this May 5 deadline.
Firstly, FFIs in the 60 current IGA jurisdictions have an extension to register with the IRS to obtain their GIINs until December 22, 2014. This would include Australia, Canada and New Zealand,
They are deemed IGA jurisdictions…
So it is possible that on July 1st an FFI is considered non-participating (NPFFI) for purposes of withholding, but on July 2nd its country agrees a IGA with Treasury and the NPFFI goes back to simple FFI non-withholding for FATCA, at least until Dec 22.
Secondly, Treasury has stated that every 30 days it will reissue its PFFI) list. So at least by intention, on Wednesday July 2 the IRS should release another list of PFFIs that do not require withholding sanctions.
Here is how the Liberals frame the FATCA non delay, delay
IRS to Tax Dodgers: Your Swiss Accounts Are Safe
A delay in a new rule will protect big banks’ big-shot clients
http://www.newrepublic.com/article/117652/shameful-irs-skips-crackdown-tax-cheats-swiss-bank-accounts