Can move this discussion further, after the little interesting budget thing in the Senate:
badger says
The FATCA-Mythspinning machine leaps into action:
http://thehill.com/blogs/congress-blog/economy-budget/237110-endorsing-tax-evasion
March 27, 2015, 03:00 pm
‘Endorsing tax evasion’
By Rebecca J. Wilkins
“..The U.S. loses an estimated $150 billion in tax revenue each year to tax haven abuse – a revenue shortfall that honest taxpayers have to make up. About $40-70 billion of that revenue loss is from individual tax evasion…”
.”To oppose FATCA is to oppose transparency and cooperation and take the United States out of its leadership role in combating tax evasion. The United States Congress is faced with a choice. It can stand for openness, transparency, and honesty – or for tax evasion, secret bank accounts, and subterfuge.
In the geeky tax world, we often refer to FATCA as FATCATS. It helps us remember the acronym. The FATCATS are the ones with those offshore bank accounts. Will members of Congress protect them? Or will they stand with American people?
Wilkins is the executive director of the Financial Accountability and Corporate Transparency (FACT) Coalition.”
Same old bullshit numbers pulled out of someone’s, er, pocket. And this deliberate lie makes me sick; “The United States Congress is faced with a choice. It can stand for openness, transparency, and honesty – or for tax evasion, secret bank accounts, and subterfuge.”
Right, that’s why the US Treasury signed IGAs that they have no authority to enter into, and why US banks do not and will not be providing EQUIVALENT RECIPROCAL information to other countries on all accounts held in the US. And why the US hasn’t and won’t sign on to the OECD CRS. No mention of the dirty secret of US extraterritorial taxation based on who your parent was or the geographic location where your mother gave birth…..
Let us remember those US resident homelanders who I am sure want a more transparent system – as long as they have the inside track on jiggling the rules for their own benefit:
ex. Take the Pritzker family trusts:
“……President Barack Obama’s nomination today of Chicago businesswoman and Forbes 400 member Penny Pritzker to be the Secretary of Commerce, her family’s legendary use of hundreds of offshore trusts to protect its wealth from taxes and the prying eyes of the Internal Revenue Service…..”……
http://www.forbes.com/sites/janetnovack/2013/05/02/pritzker-family-baggage-tax-saving-offshore-trusts/
‘Pritzker Trust Dodges Illinois State Income Tax’
http://www.forbes.com/sites/peterjreilly/2014/01/02/pritzker-trust-dodges-illinois-state-income-tax/
Plenty more material where that came from.
Yet, local legal everyday accounts in Canada – held where we live, to hold post tax wages, pay bills, save for education, disability, retirement, etc. are to be reported to the FINANCIAL CRIMES ENFORCEMENT NETWORK, because the US treats the education savings of a child in Canada with a US born parent as so much more likely to be ‘offshore’ assets belonging to a tax evader than say, the US resident owners of the family trusts like those of the current Commerce Secretary.
Some of us are motivated. In 2012 we found out that the only way to “get it right” was to enter OVDP and tithe 25%. It wasn’t until late 2014 that the Streamlined program allowed us to get out on parole.
@Haydon Does CRS GATCA require birthplace?
@marktwain your ps tells me you have understood me perfectly. FATCA can be completely bypassed by the CRS.
If FATCA falls but the CRS remains, FATCA won’t have failed: it will simply have rebranded and spread across the globe.
I misred and see that you already responded:
GATCA REQUIRES PLACE OF BIRTH REGISTRATION.
In Sweden, they have been asking for city, even with Sweden.
Is GATCA strictly reporting of the accounts of nonresidents to resident country?
Or does it have leakage or is the dam completely blasted away?
Hi Mark, nice post, I want to put some specific points which i felt while reading which are if U.S loses around $150 Billion in tax revenue per year and $40 to 70 Billion revenue is from individual then aren’t they serious about their country, I mean instead of preserving, saving, protecting, helping, their own country what they are exactly doing is destroying, ruining, and spoiling themselves and filling their own pockets with bundles of money and letting other people starve and ask for help and support.
Now next part=> Openness, Transparency and Honesty Really? or corruption, Scams, Secret backaccounts etc. Come on guys grow up stop Jiggling Rules for you your benefits onto others, go and get a life, one last thing if cannot make someone happy don’t ever make someone Sad by doing some of your creepy things which might hurt somebody.
Thank You
Regards
~Piyush Dhiman
@marktwain under the CRS all tax residences will be established, so it a person has tax residency in the UK, the USA and say, Canada, then there data will be reported to each.
That will be interesting. The workers in the oil industry are now migrating to Nigeria, Angola, Saudi, Iraq, Algeria, and the other OPEC countries that are now the only ones pumping easy oil at full capacity. So the Brits and Norwegians and Mercans who have migrated to the jobs in those challenging locales will have their homeland bank accounts reported to the country where they are working.
The value of a westerner is going to increase dramatically with their data being entrusted to the country where they work. These governments are entrusted with this GATCA and FATCA data. Because those people can’t be trusted.
@Piyush: Um…huh??? Not sure who you’re talking about. Are you scolding the mythical US expats who owe a make-believe number of $70 billion in taxes? Or is your post there simply to provide a backlink to your website, for SEO? I sorta suspect the latter.
But the last two posts by Haydon and Mark have me confused. Under GATCA, you’re saying that an expatriate will have his homeland bank accounts reported to his/her country of residence? In theory, I can see the reasoning, since many countries do tax on worldwide income. But in practice, the mess of data traveling back and forth seems to me so open for error, mismanagement and misunderstanding that the servers themselves might experience a meltdown.
@Haydon Perryman I am not going along with you that the US would settle for a transformation from FATCA to GATCA. While the all powerful US financial institutions may not care about US legislation inflicting $200 billion compliance on the banks of other countries, they would oppose any extra compliance cost on themselves in the US; because they can oppose, because in a sense they run the US government and not completely the other way around.
While it may make sense for say a bank in Luxembourg to ask one’s place of birth (sounds like passport information) and country of tax residence – and more accepting for say those in Luxembourg to provide such information, when you get to say Alabama/middle of America – there tends to be a bit more independence, resistance to government authorities, and questions of citizenship a bit more “foreign.” Plus the Democrats may not like such questions in America as it could be potentially used to “out” and discriminate against illegal aliens.
I see here the greatest weakness in the success of FATCA and the transformation of FATCA into GATCA, are the implementation issues – such as recalcitrant nonUS persons refusing to sign FATCA forms. Next the US will never adapt it for reasons listed above.
However, I believe GATCA may be very successful in more regional areas such as in Europe.
@Haydon you say that the IGA’s got rid of witholdings yet not the witholdings against US persons not ticking the right boxes on the FATCA forms – and this witholdings the banks will be reluctant to get involved with and there still remains questions of implementation and dispute mechanisms for wrongful witholdings.
A point not raised here: because of FATCA and GATCA the US is winning the global tax haven superpower race by undermining other tax havens, leaving the US the last tax haven standing for nonUS persons/entities. It is too bad the focus has been on individuals when the real focus should have been on multinationals.
Barbara, I read that the bank customer self reports who it is that they are liable for taxes, regardless of residence. So, if Belgium enacts CBT than all Belgians in AUstralia then would have to tell their bank that they are responsible to pay taxes back to Belgium while they are living in Australia.
And that birthplace and birthdate would be collected to more clearly identify people who might have duplicate names.
And FATCA forced all banks in the world to buy the base compliance software implementation. In Australia, this is about $137,000 per FFI. Once that’s forced down every bank’s throat, then the CRS add-on package is easy to sell in.
@JC there are a number of points here.
If I may, I would like to separate them.
1) Corporate Vs individual tax evasion. Yes, the former is a much bigger problem. BEPS deals with that. That is a much broader conversation.
2) The IGAs explicitly suspend withholding. Withholding in Inter Governmental Agreement countries will only happen in isolated situations. Those situations are where customers brazenly refuse to fill out forms. We don’t live in a world anymore where such an option is available to any body. This is true of both FATCA and the CRS. Banks don’t want customers who won’t declare their tax residences. We may not like it but the world has changed in this regard.
3) The U.S. is the sixth largest secrecy jurisdiction. The fact the US has inflicted FATCA on the rest of the world and not signed up to the CRS puts the U.S. as a secrecy jurisdiction at a competitive disadvantage.
4) The peversity of 3 will be what causes the U.S. eventually to sign the CRS. The US is important and influencial but the rest of the world is more important and more influencial so the US will eventually sign. Sure, the U.S. Banks will allow the US to conform when it is in the interest of the U.S. banks.
I think I read Haydon ‘s comment to say that CRS is not restricted to residential based reporting. It is designed to enable either RBT or CBT, as each country desires.
And, note also that OECD is no longer driving tax agreements to prevent dual taxation–it is driving them to prevent dual non taxation.
CRS is not the solution to FATCA and not a restrictor to RBT, as I read.
I am very distressed to learn that the Common Reporting Standard requires place of birth regardless of the fact that it is residency based. Somehow this thread is the first place I’ve seen this mentioned, at least so that the printed words actually sunk into my aging brain.
For most of the world’s population, stating one’s place of birth has no financial repercussions. They can shrug, fill in the blank and go on with their day without the slightest concern. But, as all of us here know full well, if one has a U.S. birthplace it’s an entirely different story. As long as U.S. citizenship-based taxation is with us asking for my birthplace is like asking me to point a gun at my head and pull the trigger. If this is what the CRS requires then I consider it as evil as FATCA. It’s just another attempt at Orwellian world-control.
As a long-term investment strategy the mattress is looking better every day.
the IGA also allows to turn things around a little and the various country can then pass its own legal method of screwing US persons. For example, the W8’s and W9’s can be written according to local law (and violating their content would then be treated by local law and not by threats of perjury enforced in US)
Yes, CRS is RBT based and requires PoB. I fully apprecaite that those two facts coexisting is counter-intuitive.
@MuzzledNoMore – you make a powerful point about why CRS can not be ignored.
This is why I make the point that we should not get “FATCA fixated” and ignore the CRS.
I see that CRS is currently used only with RBT countries, but
Please explain. How is crs RBT based if it asks who one is liable to for taxation?
(as I understood) If one is CBT, one is liable to be reported, according to CBT rules.
(keyboard failure)
Haydon mentioned that CRS requires reporting to which ever country one is tax-responsible.
If a Belgian lives in Canada, and Belgium enacts CBT, then Canada is then required to report to Belgium that it has a Belgian tax slave with a bank account in Canada.
We’re all assuming a person is a tax resident in only one jurisdiction. I used to assume the same but I have seen people be tax resident in as many as 4 countries at once.
so “tax resident” and not “tax responsible” is what CRS reports, I assume.
@Mark Twain please explain “tax responsible” as opposed to “tax residence”. I don’t understand.
Basically if 5 jurisdictions believe they have a claim on you, and one is the US, then all the information gets disclosed to 5 jurisdictions including the US.
A truly horrific but simple scenario. Perhaps it is so horrific that people think this can’t be real.
Tax resident, might mean living in that place, such as is enforced by RBT. Like if one performs work in a number of countries and they each claim residence or presence..
Tax responsible, could be CBT or RBT–whoever one is obliged to, even if one never lives there, such as Eritrea or USA.
So, then, you say “CRS is RBT based”, then I understand that it is only “based” on RBT, but fully capable of reporting according to CBT demands and actually WILL report according to CBT.
(Not trying to entrap you in words, just trying to understand if CRS is used to enforce CBT as well as RBT. This is news to me)
Proponents of FATCA, as the author of the Hill article is, will one day regret making it a moral issue when the US has the light shone back on them. By declaring FATCA as the impetus for GATCA, it inevitable that true comparisons will be made if only to determine whether having both systems is redundant. The fact that the US hasn’t really committed to either puts them in a poor position from a moral perspective, if that’s what they’re preaching.
Whilst CRS is based on RBT, conceptually it could capture jurisdictions whose tax system is CBT.
That said, this would be conjecture. Neither the U.S. nor Eritrea has signed up to the CRS.
I suppose, in theory the US could declare it’s Citizens as “US Residents for Tax Purposes”. Who knows?