This new post very well illustrates a lot that is in John Richardson’s presentation posted HERE.
Before that, however, it may be best to let you know a little about who I am. I am an American citizen who has lived most of my adult life in Japan. My spouse and our toddler are Japanese. I became aware of this problem around two years ago when applying for a new passport. There were statements on the application that I knew to be illegal. Searching into that issue lead me to your website and, well, you’ve been there, you know the rest.
This is today’s summarization, asking for input, corrections, etc. from other readers here. He says “Tear it apart.”:
Here is a summary I came up with from memory. My notes are unavailable to me while on the trains and subways of Tokyo, when I have time post.
Tear it apart! Any inaccuracies correct. I need this as spot on as possible.
Some time ago American bankers constructed a money transfer system that functions well enough and is secure enough that it is reported to be the most commonly used route to transfer money across borders. It functioned so well that it was cheaper for bankers in other countries to pay to use this system to move money than to build their own. If I want to send money from my bank here in Japan to someone in Germany, it will most likely pass through the US on its way. Buy something online from Spain, the credit card payment goes through this system. Vacationing in Thailand or Europe and go to an ATM to pull out cash, your money most likely passes through this network set up by American banks somewhere along its way to you. The US government has hijacked this system.
In 2010, President Obama signed the HIRE act into law. Attached to the bill was the required method of funding. In this case The Foreign Account Tax Compliance Act (FATCA) is the method of funding.
FATCA requires all foreign (from the perspective of the US) financial institutions (FFIs) to report all monthly financial activity of US Persons to the US Internal Revenue Service (IRS). FFIs include banks, investment firms, insurance companies, pension funds and others.
Who exactly are “US Persons” has not yet been defined despite reporting having started on October first of this year, but do include the following; all US citizens and many who once were a citizen of the US (So, even if I had become a Japanese citizen, I would still be a US Person.) their spouses, regardless of their nationality or residence and any children from such a union regardless of place of birth and/ or residence. Anyone who works for an American founded corporation is also a US Person. It was very recently reported that there are a record three million American citizens born in the US who now live abroad. The US government estimates that there are six to seven million US Persons living outside the US who are subject to US tax law. Who are these 3 to 4 million US Persons?
Any FFI that doesn’t dance to Washington’s tune will be charged a noncompliance fee of thirty percent (30%) of any amount sent to, from, within or through the US. This would cause severe damage to the financial industry of any nation and possibly be fatal to some. But how can the US enforce this? Remember that the most common way to transfer money around the world has been hijacked by the US. In a word, extortion. My government is extorting the world.
Compliance is not cheap, however. The president of Canada’s largest bank and at least two banking organizations with in Europe have estimated the cost of the new computer system needed to comply with the reporting requirements to be $100,000,000 per large bank.
Knowing that is illegal in most countries for FFIs to give such information to anyone, especially a foreign government, without some kind of due process, the US Treasury Department will allow foreign nations to enter into InterGovernmental Agreements (IGAs) in which the signatory nations would agree to amend or bend their laws to allow their financial institutions to comply with these dictates from Washington. In return, Treasury will allow FFIs to report to their own governments which would then forward the information on to the IRS, thereby greatly reducing the financial burden on the individual banks. Faced with a choice between paying an additional 30% in fees for any money transfer across borders or buying a $100,000,000 reporting system in the absence of an IGA, bankers petitioned their governments to sign the offered IGA or risk financial collapse.
These IGAs violate not only the laws of the nations signing them with the US, but also, most likely international law and certainly do violate US law as well!
What must be reported? Although the reports are sent annually, FFI’s must report the highest monthly balance within any account held by a US Person in Dollars. This is a momentous task. Even if the balance remains the same in the local currency, exchange rates fluctuate daily. This requires a daily calculation of an account’s balance in dollars. Insurance companies and pension funds are also required to report the highest monthly value in US dollars of all policies and accounts held by US persons.
Banks simply do not have the resources to perform this task and risk the penalties stated above if they misreport. Thus, banks in Europe and around the world are now forbidding Americans from opening new accounts and closing the accounts of current US Person account holders.
Yeah, well so what, I’m not an American. It doesn’t effect me. You sort out your own problems and leave me alone!
Not so fast. By signing IGAs with the US, all signatory nations also agreed to exchange information amongst themselves. So, the UK agreed to also exchange all financial data of not only Japanese citizens who have accounts in the UK but of all Japanese residents. And so too did Japan agree to report to the UK all British nationals and UK residents who have accounts in Japan. And thus it is for all nations that have signed IGAs with the US.
This is how a friend of mine living just outside Tokyo, Japan, a British national has had his accounts in the UK closed. His now former banks have to report to the Japanese government and the reporting is too cumbersome to be bothered with. Likewise, he is experiencing great difficulty with his accounts in Japan as they have to report to the UK.
ARE YOU prepared for life without a bank account, insurance and pension?
My comment yesterday:
Thank you, Japan T, for your comment and your description of reaction of others to the subject of FATCA. I agree as many will here:
How do we, I, get such people to listen? They have no patience for anything that might upset their world view, just bat everything aside and reply in a manner that has nothing to do with what was just said. By the time it’s a reality to them, it will be too late. I have offered them this website’s address, none have bothered to check it out.
The importance of the information in the post of this particular thread and what you describe should not be overlooked. I think many have not taken their view past FATCA to GATCA.
Approaching GATCA? “Foreigners” (and not just U.S. foreigners) in Israel finding themselves ensnared …
P.S. THIS ARTICLE IS CERTAINLY RELEVANT: FATCA Costs on the Rise (Economia, November 2014).
Don’t give up trying to educate others. We must not!
Although I am endeavoring to instruct my students on the obligations to the US that may attach themselves to them should they decide to spend too much time there, I share my students with the teachers I described earlier. Whatever impact I may have is limited, perhaps even undermined, by my colleagues. Hence the need for a precise and concise summary.
@ Japan T,
Regarding a summary, perhaps MuzzledNoMore’s article, “ FATCA: An Introduction for Americans to the ‘Worst Law Nobody Has Ever Heard Of.'” It’s all together in one PDF now.
@Pacifica777
Thanks. That is an excellent summary. I have read it recently several times.
Sadly, it is too long for these folks and for the few minutes between classes I have to try to convince them to dig further. I have provided this site’s address so they may research on their own but they have not done so.
They know the law exists. But they think that it is only as the various governments report, an indespensble tool for catching rich tax cheats. The discussion on CBT does not interest them. They are not US citizens. They refuse to believe that such a thing as a US person other than the narrow traditional view of citizenship exists. Attempts to inform them of these always leads to the “So what, we are not in America and American law does not hold in Japan!” comment.
This is why I think that for this group at least, a clear and concise discussion of how the US can force local FIs to provide this info on anyone to the IRS if they have any accounts on their books held by US persons is needed first.
Their fall back position is that US law has no effect beyond the borders of the US. I need to breach this position before they will even consider the rest.
Globes (Israel’s Business Arena), January 13, 2015) Israeli banks extend FATCA declarations to businesses “By next year, the US Internal Revenue Service will require all Israeli businesses to declare whether any shareholders are US citizens.”
Thanks.
Sorry I have been silent for so long. Far too busy. While there are several unresolved points on this thread I very much would like to address, a very recent Japan Times article needs to be responded too and I would once again like to ask for your assistance.
http://www.japantimes.co.jp/community/2015/01/28/how-tos/making-u-s-tax-filing-japan-little-bit-less-taxing/#.VMz7rywYFDQ
One of the points in question is the following Q&A.
Do I need to report accounts held by my Japanese spouse if my name is not on them?
No, as long as you don’t file a joint return.
My understanding is that my Japanese spouse is a US Person because they are married to a US citizen. I may not have to report their accounts in my returns but they are to report these to the IRS themselves.
This one also seems not entirely correct.
I am filing a joint tax return with my noncitizen spouse. She recently inherited a house and
financial assets from her deceased mother. Are they reportable?
No.
last year my spouse’s company accidentally sent a questionnaire regarding US taxes. It was an electronic IRS form. my spouse worked in the US for a 3 month stint several years ago and last years was the first year my spouse did not have to file an US income return since that trip. The questionnaire started of with a statement similar to (this is from memory) ‘To better serve you, we ask you to answer the following questions. Failure to provide accurate responses could result in a $10,000 fine, ten years imprisonment or both.
Tell us, who do you live with?
What are their relationships to you?
Where do they work? (address, phone#)
Where do they bank? How much do they have in their accounts? What is their account number?
And a lot more along these lines.
It seemed to me to be the questionnaire that has caused lots of trouble between married US citizens and their non US spouses that I have read much about. Does anyone know where I can obtain a copy of this document? We read it on my spouses company computer and could not print it and my spouse is in denial as to the potential danger and did’t email it to me.
@foo,
I am planning on meeting my British friend, referred to above, in a week. What specific questions do you wish me to ask him?
Sorry, it’s been a while. Busy, busy.
Japan T,
No problem!
I guess. I’m curious about which Japanese financial institutions denied him an account, what kind of account, and most importantly, for what reason?
I have never heard of a non-US-person being denied an account here, not even for illiteracy, so would like to know what’s happening, say if there is something new afoot.
Japan T, foo, Tokyo Rose:
Victoria would like to contact people in Japan. See her comment here: http://isaacbrocksociety.ca/2015/03/20/timeless-wisdom-the-more-things-change-the-more-they-stay-the-same/comment-page-1/#comment-5830002.
Let me know if I can have her contact you by email. Thanks.
Yes, by all means.
Hi Japan T. Just arrived in Japan from France. Am getting some inquiries from folks here about FATCA. I am also hearing stories (second hand) about Japanese banks refusing to open new bank accounts for US Person. I have one person whose bank has tried to close her account (she’s a long-term resident). The situation is really not clear to me but I’d like to try and understand what’s happening here. One person I talked to suggested going to FEW (foreign executive women) or another org for the foreign spouses of Japanese citizens. If you have other suggestions, please let me know.
@calgary411,
I’ve sent Victoria a message.
Victoria,
Sadly, I do not know of any other U.S. Person other than foo, yourself and myself who are concerned about this. A British friend of mine living here had his shares account in Great Britain closed and can not open a new account anywhere. His close friends and family have been made believers, everyone else thinks I’m off my rocker.
Very recently I have learned of some now three year old cases of Americans being denied new accounts here in Japan but had yet to learn of any existing accounts being closed. You know of a long term resident here whose bank tried to close her account? Which bank? How did they go about it? How did she prevent them from doing so? Please give all the info you can on this. This is very worrisome for me. My spouse and our child are Japanese. No account means no employment.
You can ask your spouse or other trusted non-US person to open an account in his/her name, but for your exclusive use. “Prête-nom” accounts are necessary for financial survival, thank you USA. Of course it needs to be someone you can trust, and doesn’t solve all problems, the money is no longer yours, technically. But you can function in daily life, get paid, and use a debit card and PC banking. To be safe, absolutely no bank transfers to/from any of your accounts, ever. As long as you declare your income to your local government, it shouldn’t be a problem. At least it isn’t in the countries I’ve investigated. Naturally you don’t list this on your FBAR 😉
@Fred
Nope, no can do! None of my employers will deposit my pay into any account that is not in my name. Only one, ironically the one I am not currently doing any work for, will pay in cash.
No account=no payment.
@Japan T:
Jeez.
Seems to me in the EU countries I know I could just give an account number to be paid. Also some EU banks do accept US persons, but with restrictions (e.g. only checking & savings, no investments). Also France has or will have a law asserting that having a bank account is a RIGHT.
What about Citibank Japan? It would be interesting to note if US banks refuse US customers.
Good luck.
Japan has been practicing the idea behind Know Your Customer for a very long time. A number only is rarely if ever enough for anything. You have to have photo ID and an inkan or stamp. My employers and even the local tax office actually look at my bank pass book and often even photo copy it along with my passport and alien registration card in the case of my employers.
All I know of Citibank is that you need $10,000 cash to open an account. Depending on the year, that is a third to a quarter of my yearly income. There is no way I can come up with that amount of cash nor retain a balance that high.
@Fred,
Citibank has a long, shameful history of discriminating against US citizens, at least with respect to investment accounts, from way before FATCA.
@ foo & Fred
I have heard stories to the effect over the years, but as I said, even if they were stellar, I can not afford their services.
Thanks, foo.
She made contact through the forum. If she prefers, she can email me.
Wow. I guess life in the EU isn’t that complicated after all.
Woohoo! I am an anarchists now! So I have been called for daring to suggest the the U.S. government is legally abliged to follow certain admendments to the Constitution, ie to follow the law.
What happened?
Oh, nothing other than the usual when trying to tell a home lander of this issue. Just I have never been called a anarchist, nor anything remotely close before.
Seems strange that one who points out how FATCA/FBAR violate various laws is called an anarchist.
We have truly lost the language.
Just another new title for my self.