We used to call the USA the land of opportunity. But with FATCA, the USA has become the land of importunity.
The US is forcing all the banks in the world to give them banking information. To say this is an importunate demand is a bit of an understatement.
I’ve heard the figure that there are about 250,000 FFIs worldwide. So 77,000 odd thousand amounts to about 30%. Does that mean the other 70% are not interested?
Hardly a head over heels result for the USG and IRS.
There’s an element for the IRS of pushing water up hill, China and Russia teaming up to de-throne the dollar, and if the USG doesn’t ram this down everyone’s throat soon, the upcoming foreign legal challenges will unveil FATCA for what it is – an unpopular discriminatory US Law whose definition of a US person can be changed at the whims of the US Congress.
No good for the rest of the world.
It seems that, in the short run at least, the list of FFIs is going to be as much of a source of amusement as the quarterly Federal Register “name and shame” list. One thing that FATCA is doing is to swamp U.S. bureaucrats with work — the State Department processing applications for CLNs and the Treasury Department registering FFIs and IGA-compliant governments. At least that keeps some people employed 🙂
@Edelweiss look at a search in both the UK and Canada but use credit union.
Credit unions in the UK are thin on capital and are rightly not required to register at all. But besides they are not subject to the compliance jackals because they do not have any money to pay these jackals!! Many of the employees are unpaid volunteers.
But the list for Canada is long and some of the names on the list likely were exempt from registration!!
The just released the 2011 tax stats:
http://www.irs.gov/uac/SOI-Tax-Stats-SOI-Bulletin-Spring-2014
For 2011, the total amount of foreign-earned income reported on Form 2555, Foreign Earned Income, by nearly 450,000 U.S. taxpayers was $54.2 billion. This represented growth in real terms of 32.3 percent since 2006, the last year a study was prepared on these data. Asian-based U.S. taxpayers reported the largest amount of total foreign-earned income ($24.9 billion) from any continent, a 52.2-percent increase in real growth from the $16.4 billion reported for 2006. In addition, U.S. taxpayers claimed more than $28.3 billion as a foreign-earned income exclusion on their tax returns for the year. Between 2006 and 2011, the inflation-adjusted amount of the foreign-earned income exclusion increased 38.4 percent, while the housing exclusion increased 5.8 percent, rising from just under $1.5 billion to nearly $1.6 billion for 2011.
So less than half a million taxpayers reporting earned income abroad. Are the rest retired :-).
@Neill, 6.9 million returns were filed from abroad claiming foreign tax credit (form 1116, which I do since US taxes are lower than Canadian). Just do a 1040 and a 1116, not a 2555.
This is later in the same article:
“Foreign Tax Credit Highlights
From 2006 to 2011, inflation-adjusted foreign-source
gross income reported on Form 1116,Foreign Tax Credit,
grew 27.0 percent, and real foreign tax credits claimed
rose 34.5 percent. U.S. taxpayers claimed a total of nearly
$16.5 billion in foreign tax credits from approximately
6.9 million returns for 2011; these credits were based on
a reported $170.0 billion in foreign-source gross income
and $22.0 billion in foreign taxes paid or accrued.”
This is about $2400 per return.
@kermitzii,
I file 1116 though and I live in the US.
Since they break out this foreign income we should look for trends with people giving up green cards and citizenship to affect the numbers.
@kermitzii, what Neil just said. Someone owning a typical international fund would be affected.
@Neill, also 6.9 M is about the number of Americans living abroad worldwide and we all know a small proportion actually file so obviously the majority live in the USA. But is foreign income as a resident of USA is normally taxed by the foreign country (neill you file 1116 which is foreign tax exclusion)? I have had some income from Sweden (several thousand a year for 5 years) and I think they did tax it, as it was for when I actually was in Sweden (but only a week or two a year) (I live in Canada normally).
@kermitzii ,
Pretty much any foreign investment fund or many foreign stocks will have foreign taxes paid. So if you own NOK your 1099-DIV includes foreign withholding taxes you paid to Finland. I get a lot of this of ETF’s like VEU, VSS. VEU pays about 7% of it’s income in foreign taxes. VSS is 8%. You have to do this calculation at tax time where you say what portion of the fund dividend was taxed (not the whole dividend) and what the tax was so they can only give you back tax that was covered by the American tax.
This is very common for anyone with taxable investments. None of this is particular to me being an evil foreigner. It’s because I am an evil rich person (for the Obama version of rich. I am not on food stamps).
Like kermitzii said, most of those 6.9 million are probably homelanders with a bit of foreign investments. The best guess at the number of extraterritorial taxpayers claiming an FTC is probably that they comprise the majority of people with “other income” on their Form 1116. From Table 3 on page 164, there were 721,330 Form 1116 filers with “other income”. (FFS why didn’t the IRS just give a breakdown by “passive category”, “general category”, etc. like Form 1116 itself uses!?!?!)
I’d guess “Other income” is mostly wage income, and the vast majority of people with foreign wage income are, of course, “U.S. Persons” outside of the U.S. (But not 100% are. There’s probably some remote workers, etc. mixed up in that category too.) Also from Table 4 on page 167, you can see that “other income” is the category on which the overwhelming majority of foreign taxes are paid. I can hardly wait for a GAO report telling us that the FTC on “other income” is another “Tax Expenditure” that we need to cut so Chuck Grassley can pay for more pork in Iowa.
An important point of clarification, I think, is that this list does NOT represent 77,000 institutions that will be reporting. It includes institutions that are deemed compliant, and thus EXEMPT from reporting. In fact, that may well be the vast majority of them.
Albeit an old story, it confirms that the IRS has incentives for whistle blowers, but try and get your pay out is another story. Interesting read if not downright disgusting. Here it is: Sounding the tax alarm to Little Applause-NYTimes.com.
http://www.nytimes.com/2014/02/09/business/sounding-the-tax-alarm-to-little-applause.html?_r=0
he gets it!
http://m.youtube.com/watch?v=iWcKXmXv_Cs&feature=youtu.be&a=
@hehe
Wow. I never knew that Saddam Hussein wanted to sell his oil in Euros. Guess thats what all the US presidents mean when they say “We are going to protect OUR INTERESTS in the region.” Gives a different twist on the war. But I find this youtube clip deeply disturbing. The only solution he offers is to try to get a second world currency to rival the dollar. Until then…..tyranny.
In the totalitarian state that the US is proving to be, you can never have too many or the wrong kinds of FFI’s registering for FATCA. The fact that the US Treasury makes no distinction between entities to me says that nothing would please them more than to have every entity or individual in the world register as an FFI.
The FATCA FFI searchable list is now available as a $1.99 iTunes app. Only for iOS — at least so far — and I have Android devices. I’m devastated…
The FATCA FFI searchable list is now available as a $1.99 iTunes app. Only for iOS — at least so far — and I have Android devices. I’m devastated…
Interesting post regarding the FFI list..
The FATCA GIIN list broken down by IGA and countries
Notice that North Korea, for god’s sakes as 4 insitutions getting their “Mark of the Beast”, a GIIN
William Byrnes has some additional commentary up on Linkedin in response to a question I posed about how many of these FFIs are actually reporting FFIs, and how many might just be deemed compliant, but out of caution, getting a GIIN to assure they escape the 30% withholding sanction.
Here is the Link…
and here is the comment
@ Just Me
Maybe you can ask him why Nestle found it necessary to register as an FFI in Switzerland. Is there some sort of tax evasion scheme involving Kit Kat bars that I am not aware of? I presume that it’s a finance subsidiary and they are concerned about the repayment of intercompany loans from their US subsidiaries without the US stealing 30% of the principal and interest.
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