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!
Japan T: Anarchist is much sweeter than terrorist, tax evader, fraudster, criminal, anti-American, or traitor… You seem to have communicated with a civilized homelander. 😉
Indeed!
Of the list you provide, terrorist is the only one I have Not been called.
Sad, isn’t it?
I order to use the word “Constitution” in the Land of the Free, you will first need to evaluate who it is you are talking to. Then, you will need to use either the word “ACLU” or “2nd amendment” in the same sentence. If you don’t or if you use the wrong one, you will be one of those words mentioned.
@Mark Twain
I want to reply but the only thought that comes to mind is a long grunt of frustration…not directed at you.
In Nothern Europe, if you mention Constitution in the local language you will immediately be called out for being a typical American. There are lots of “they have a right”, but that wouldn’t apply to any American speaking. Keep mouth shut and listen to other people talk about their new furniture.
http://www.japantoday.com/category/business/view/attention-u-s-taxpayers-are-you-ready-for-fatca
US extraterritorial tax apologists commenting there are in desperate need of education. Repeating myths about the FEIE, that expats abroad can ALL can vote absentee from abroad, that they have representation, that they can ALL access medicare, social security, etc…….
@Badger
Thanks for the notification. I spent a lot more time than I had on preparing my post on the subject. The result was way too long. I split in into to several parts planning to post them separately only to learn after my first post that I am not allowed to post one after another. Sadly, it seems too much time has past and interest has waned.
@foo,
Way back when you replied,
“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.”
I did meet with my British friend and was unusually willing to discuss his situation. Unfortunately, being at a drinking party, he did not have anything with him indicating which banks refused him service and why. He did offer this, “Basically, the only two who will work for me are Shinsei Bank and Citi Bank, and Citi Bank is shutting down all operations in Japan by the end of the year.”
I had hoped to find out exactly which banks refused service and the reasons they gave but have been able to.
@Japan T,
Thanks for the follow-up. Those two banks seem to have English online interfaces (at least Shinsei says they do, and I assume Citibank does as well), which makes me wonder if that might be a requirement from his end? Or maybe he got rejected by one Japanese bank for language issues, and he assumed all others would reject him as well? Though as mentioned, I have never heard of a bank rejecting someone for illiteracy — I got my first account here when I could barely yet write my own name and address, for example. Hopefully we can learn more some day about what happened.
By the way, it looks like Citibank’s operations will be taken over by SMBC Trust (the private-banking arm of SMBC) as is, so if he has an account there, he should be able to keep it.
@foo
I will continue to try to find out. We are planning to get together again in July. I am sure it was more than one bank that turned him down. He also said that Citi Bank was bought out but that all services as Citi Bank will end after the take over. He specifically said that Citi Bank credit card services will end, for example. Wish I had more to share.
Nihon wa kōka-teki kyoseidesu. Ever since WWII. They’ve had their head up the USA’s rectum for the past 70 years. Ever since they got their asses handed to them. I’m not surprised that they’d treat FATCA as a good thing. deru kugi wa utareru Shikata ga nai.
Donate to ADCS. We need to make this go away.
My mother spent WWII in an internment camp in Canada because of the color of her skin and the ones who spent WWII in internment camps in the USA were the ones who voted to push FATCA through (the late Sen. Daniel Inouye for one; yes, the one who received the Medal of Honor for actions in Italy with the 442 RCT; Mazie Hirono and Daniel Akaka). So as a Japanese-Canadian who married an American woman, I’m pretty damned pissed off. So I’m telling my wife that the first chance she gets, she’s getting her Canadian citizenship and we tell the USA to F*** off! They want our money they can go suck sand.
@The Animal,
Thanks for your comments.
Although I share much of your anger, I think Japan is going along because they believe the bill of sale, that FATCA is just a common sense method of catching tax cheats. I have several students who are USCs due to being born in the U.S. while their fathers were working there. The believe among the Japanese language blogs on the topic is that Japanese born in the U.S. are somehow exempt. They believe that even those who have maintained US passports are exempt. I doubt that is the case but if so may be another avenue to attack this as U.S. law prohibits unequal treatment…..
Becoming a Japanese citizen would be very difficult. I firmly believe that one should assimilate into a new nation if they gain its citizenship. There is not a shred of Shikata ga nai in my soul, nor never can be. If there were, I wouldn’t be fighting this. Nor can I ever see myself subscribing to the concept of beating down the nail that sticks out as I have always been that nail, back home in the US and especially here in Japan. Yet I would if it would protect my family.
One of the main problems with obtaining Japanese citizenship is the exit tax. I had a family account, similar to a joint account, with my spouse until I learned of the danger for my spouse. This account has been closed but not soon enough to prevent it being reported through FATCA. As I did not report it and leaving US citizenship requires one to “come clean” before the eyes of the IRS, I would have to report this account and all my spouse’s assets connected with it. Thus, I would be required to pay tax on assets that are not mine and for which I do not have the financial resources to pay. I will not allow my spouse to pay a single yen to the IRS extortionists.
Another problem is that we have a child whom the US lays claim to, or will once they learn of their existence. If I become Japanese, then I will have no say in the US and have no ability to protect my child against this, not that I have much say now. Japan won’t lift a finger to protect a “hafu” if they won’t protect their own. The only protection would have to come from a USC.
Our cases are reversed as with your family it is the nonUSC who sees the threat and is trying to get their USC spouse to understand it. With my family it is the USC trying to do whatever necessary to protect the family while the nonUSC does not see the threat.
I have contributed to the ADCS lawsuit, at least I hope I have. I have sent two envelopes with some yen. In the second of these, I included my contact info and asked for notification of receipt. Having not received any notice, I am left to wonder if instead of adding my little bit to the cause that I am contributing to the drinking fund of a mail carrier with sticky fingers.
@ Japan T
Please e-mail Stephen Kish. I’m sure he will verify if your donation has arrived. The mail can be very slow at times but I’m certain he would want to know if, in your case (and any others), there is anything that has gone astray.
http://www.adcs-adsc.ca/ContactADCS.html