A new video advertorial from CNS Business in the Cayman Islands takes us to the retail front line of the rapidly-metastasizing FATCA compliance industry and shows us how it’s done. A good-sized group of
prospects Cayman-based US Persons were invited to a free seminar last week at the Caribbean Club entitled “Navigating US Tax Requirements and Strategic Methods of Coming into Compliance”. Attorneys from Caplin & Drysdale, a DC-based law firm specializing in “the tax controversy area” co-hosted the event with Ham, Langston & Brezina LLP, a multi-service accounting firm based in Texas.
As the story reports:
“There’s no longer the option of ‘I reside in this small island country – no one will find me’
Right now the message I deliver is FATCA is changing all of that and just because you’ve had an account here for 20 or 30 years without issues doesn’t mean you won’t get a letter in the mail. We’ve had clients in Cayman, as well as a host of other countries, receiving these letters,” stated [Caplin & Drysdale attorney, Dianne Mehany].
“It’s becoming harder and harder to hide and you really want to be ahead of the situation. You don’t want the IRS knocking on your door. There are options for you to come forward and come into compliance now before they come to you because once they come to you, it’s a very different conversation,” added Caplin & Drysdale attorney, Zhanna Ziering.
Both attorneys explained they are not trying to scare anyone, but want them to understand there are criminal and civil penalties if you don’t come into compliance.
Heady days indeed for FATCA compliance firms – their oyster truly is the entire world.
Of course, others are not so enthusiastic about the kind of help these firms are pitching. Comments are open and here was the first one:
Just disgusting that our government should be aiding and abetting these greedy parasites. Especially when you remember that many of the “Americans” living here are American only as a matter of law. They were born in the USA to Caymanian parents and have never lived or worked in the States.
And the beat goes on…
It’s all about the money. The more money that the compliance industry gets, the more money they will seek to have.
There is no doubt that the compliance industry is a much bigger problem than the U.S. Congress and the IRS. The compliance condors are really the modern day equivalent of bounty hunters.
One of the problems of using a firm like to come into compliance is that your costs will be exponentially higher. There is always a cost penalty to use this kind of firm.
Clearly these people do not have a conscience. I am wondering if they even understand what a conscience is.
Also can be referred to as the “Fifty Shades of Compliance” seminar. The valley girl says “it’s going to hurt a little bit”, with as much sympathy as to be expected from someone who’s only there to help themselves, but under the guise that compliance will ultimately bring enjoyment to the taxpayer.
My MP John Weston spoke very highly of the advice the Canadian government received from Mark Matthews of Caplin & Drysdale and other prior to the Canadian government signing the FATCA IGA.
“A number of constituents contacted me with their concerns during the
negotiation-process. As a New York-licensed lawyer who practiced
international law prior to entering public life, I took the initiative
among Government Caucus members to contact and consolidate information from
a circle of top US lawyers and accountants. I contacted them in an attempt
to provide our Finance Minister, the Honourable Jim Flaherty, with their
insights as people who advise Canadians with IRS reporting obligations”, blah, blah, blah.
I’m certain that the advice the Canadian government received was the same as what individuals receive – that resistance is futile. These compliance experts would have offered absolutely nothing in the way of creativity in helping Canada obtain a well-deserved exemption from being designated a tax-haven by its biggest trading partner, but after all, that’s not the condor’s job, is it? That’s the job of our government representative’s, which I reminded Mr Weston of when I told him “these people will only tell you how to comply with FATCA, and advise you against any alternative to doing so. The Canadian government in it’s rush to appease so-called “Canadian” banks was not willing to listen to Canadians and any advice that would detract from the goal of entering into an IGA with the US government!”
Also could be seen as a form of modern day Carpet Bagger.
The biggest problem the FATCA compliance industry is going to have is convincing 95% of US ex-pats to comply at all. Very few are really interested in filling in the IRS’ intrusive complicated forms to prove zero tax owed. The only way forward is take the reporting onus off the FFIs and return it back to the ex-pat through this legal challenge.
It’s sad and hard to know who’s worse, the US government/IRS complex or the compliance condors. From a great large country like Canada to a small Cayman Islands Paradise, they have all caved in to FATCA/IGA tyranny. Let’s keep the legal challenge going.
@bubblebustin, re “My MP John Weston spoke very highly of the advice the Canadian government received from Mark Matthews of Caplin & Drysdale and other prior to the Canadian government signing the FATCA IGA.”
Here is a sample of the type of comment on FATCA that Scott D. Michel gave the Canadian government – at least what is on public record (who knows what was said in private to Harper and cabinet);
“…this Foreign Account Tax Compliance Act. And believe me, I’m not a proponent of this legislation. I think it’s incredibly burdensome in many respects. But the U.S. Congress came up with a way that they hope will prevent Americans from being able to hide their accounts.
Basically, the legislation says that any bank anywhere in the world that wants to invest in the United States for any purpose on behalf of any client must enter into an agreement with the Internal Revenue Service. In effect, they must promise to disclose the names of all of their American account holders on an annual basis, and they must implement procedures to make sure that they are identifying all their American account holders.
That is one step. I think to some extent it’s an excessive step, but that’s a step that the U.S. Congress has decided to take. …”….
February 8th, 2011 / 9:35 a.m.
Other comments by Michel to the Finance Committee – in 2011 – on the OVDP, etc.
@Bubblebustin. ” I’m certain that the advice the Canadian government received was the same as what individuals receive – that resistance is futile.”
Despite what the compliance industry says, the fact that Congress came up with FATCA at all proves that the opposite is true; resistance is quite effective. Once people figure out how to navigate the FATCA minefield, it will be like a mere traffic snarl to a savvy cab driver. A few back streets, a couple of shortcuts, and presto! you are where you want to be.
I don’t think FATCA will even move the needle on expat compliance, but it sure is effective at pissing off all of the US’ friends. And as far as raising revenue goes, how does that work when most of these people owe no tax?
I wish to take the opportunity of this thread to thank the creators of and contributors to the Isaac Brock Society. Until a month ago, I was running scared, losing sleep, calling so-called US tax experts in London, the USA and Hong Kong, trying to get a clear picture of my husband’s and my situation and how to remedy our small “errors”. Each advisor I spoke to made me more frightened, and had me nearly convinced to fork over US$500 to submit “revised” back-year FBARs per year. The compliance condors had me by the short hairs.
Thank God I found this site at last, and figured out what the condors were doing. With the plethora of information, resources and advice available here–not always in agreement with each other–I have changed from frightened out of my wits to simply mad as hell.
A big warm thank you to everyone!
“I have changed from frightened out of my wits to simply mad as hell.”
Ignore the glam send-up… your attitude shift is right on.
@Barbara, “:not always in agreement with each other”
There is actually probably great agreement on comparisons of identical situations.
The problem is that no one has an identical situation. My own situation is extremely unique as a few moderators know.
Easiest example is an American Citizen in Canada who has submitted and received approval to naturalize in Canada next month in April. There is likely great agreement that person should get a sworn statement they are relinquishing at the ceremony and then get an appointment to get a CLN and then cleanly exit.
(cont) Least likely agreement is a former USC who naturalized in a country other than Canada over twenty years ago and who has exercised no trappings of remaining a USC since then.
Barbara, at least with myself and in my mind the logic has developed that it is in fact a Human Rights Violation for any foreign country to impose its nationality on a person who already has another nationality that they are exercising and happy with. To think otherwise, think of the havoc if the Republic of Ireland imposed CBT and then granted retroactive citizenship back five generations?
In my own case, I learned here on Brock that because of changes in Canadian Law and my unique heritage that Canada now considers me one of her own. I dio not consider myself Canadian, do not care to be Canadian BUT I do not care because Canada is not going to impose a plethora of must dos with that gift I did not ask for.
Well, George, I don’t know your situation, but it may not be as unique as you think. My situation is: non-dual citizen in a country we intend to stay in but are not particularly thrilled about applying to become citizens, and where it’s damned difficult (but not impossible) to do so, and where a Caucasian with local citizenship is a walking freak show, but I now feel backed into a corner to start the process. Yet I doubt I’m all that unique. I think there are thousands like me around the world, who don’t live in Canada, the EU, Aus/NZ, or other places where naturalizing is almost a no-brainer, and yet we can’t afford to buy a passport in Antigua or Cyprus or Mars (too late to apply to go to the latter), thus stuck with the toxic US passports. For us, the options are quite confusing and, as I said, even on IBS the advice is far from reaching consensus. But at least I now feel more rational in my considerations rather than simply reacting in terror, as the compliance condors (and passport brokers) were encouraging me to feel.
Barbara well done. Changing a FBAR would be like changing a needle in a haystack yo a flashing red neon light. Some numbers for you to consider. Only 0.25% of tax filers are audited each year. If there are no red flags, it goes down. Out of hundreds of millions of tax filers, only about 1000 are prosecuted per year. What are the odds? Now think of someone who isn’t in the system. ( No s.s. number) The odds just became infinitesimally small. Sleep well.
Your comments are certainly food for thought.
I have decided to become compliant this year, and file returns and FBARs and such, but I remain somewhat unconvinced that this is wise. I will, after all, be, handing them information about myself. I’m doing it for 2 reasons: 1/ my banks will some day find me and ask about my compliance and 2/ the future will probably make things harder, travel-wise, and also because I am somewhere in the databases, having a valid US passport.
But becoming compliant with professional help seems costly and complicated. Inevitably, if only to prevent malpractice accusations (but with glee, of course), professional help will take one through myriad forms and declarations and procedures that the lonely innocent and simple-minded filer will not know of. And I think that in the grand scheme of things, it is far more likely that the small fish with no tax owed will be OK if he stays simple, even if he doesn’t become 100% compliant (if such a thing is even possible). That small lonely fish will also save a ton of money.
What gets me is when professionals touting for overseas business simply forget to include in their on-line articles is that there is a streamlined compliance program and just mention OVDI. How convenient for them, but makes me wish that consumer protection laws were international.
My thoughts exactly.