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.
I think that those words are used verbatim in some cases.
Therefore, GATCA is currently as dangerous as FATCA because it is only residence based because only its current members are RBT. If Eritrea enters, then Eritrea has something as good or better than FATCA.
CRS then enables any country in the world to implement CBT, and CRS can be used to enforce it. Norway is close, its citizens are CBT due for 5 years after leaving. Indentured servants, rather than tax slaves. Likely CRS can help enforce Norway CBT for 5 yrs.
@Mark Twain Exactly
Haydon – when will you do another videocast?
@King I’m honoured that you ask. They takes ages to do. Much longer than I thought. Also, it has been my impression that no-one is really listening. In fact today, on this website, is the first time I’ve ever felt that I’ve communicated successfully on this subject, with people who are not already tax experts.
Being followed by tax experts is great but communicating with intelligent lay people is more rewarding.
Is there something you’d like me to videocast about or a particular set of questions you would like to be addressed?
Haydon –
As a layman, I can only learn from your videocasts. It would be great – if you can – explain some of the subtle differences between IGA 1/2 implementations by country. You have discussed this in the past, but what does this actually mean for the individually affected USP?
The other thing I’d like to know is what rights and mechanisms do I have for my FFI bank to issue me a 1099? And secondly, what rights do I have (and how best should I do it) to determine what my FFI is sharing with 3rd parties, such as competent authorities?
@ IBS admins – may I suggest a separate posting on IBS where people can post clever questions, and then Haydon could answer them Q&A style.
Just an idea …
Sure – lets start a separate thread for that
@Haydon Perryman. I note your comment that FATCA may just hang it self on reciprocity issues around 2016 when the IGA’s are up for renewal. Yet on the other hand you indicate an inevitableness of CRS and hint that perhaps CRS was the US plan all along. However, it appears the same reciprocity that may derail the FATCA IGA’s will also likely derail CRS implementation in the US. Perhaps you may enlighten us about US financial institution plans to ask all their account holders their country of birth, country of tax residence etc. I had thought that certain US states such as Delaware want to maintain their tax haven status for international entities/persons and maintain their secrecy as indicated here: http://www.welt.de/wirtschaft/article131288881/US-Steuerabkommen-Fatca-ist-eine-Einbahnstrasse.html.
However, I may see the CRS working like this for the USA, the CRS members get the financial information, the US NSA taps into that information and gets it all without providing anything.
@Bubblebustin Yes interesting if Eritrea would want to join CRS. Yet they might figure it would cost their banks more in compliance costs than in what they could gain on their CBT. Plus I imagine the CRS would have some hurdles and some preconditions to the automatic handover of information on Eritreans within the CRS net.
@Haydon Perryman I find that “tax experts” tend to be absorbed with “the law is the law” aspects of FATCA. In reality there remains serious constitutionality, privacy, excessive fines, unreasonable seizure, implementation, and unintended consequences issues with FATCA.
Here is one for you. With FATCA if you are a US person you are under threat of 30% account seizure “witholdings” if you don’t tick the right FATCA form boxes. Under GATCA what is the consequence if you incorrectly indicate that the country the financial institution is in is your only country of tax residency?
Or is the assumption that everyone will complete all forms correctly then it is just a matter of 100% IT proper functioning to get the data where it is supposed to go.
@JC
I thought that countries that were deemed to have an insufficient capacity to deal with tax information were essentially being cut out of the information exchange. It has the Tax Justice Network people hopping mad, since they thought that poorer countries would get to find out where their former dictators had hidden their country’s wealth, but the golden rule applies (unfortunately, it is those who have the gold make the rules and not do unto others…). What I find maddening about tax lawyers is that they never think about power or interests.
If everyone did what the U.S. did, the world economy would fracture. DeBlis did a blog recently on PFICs and the below the line comments were fascinating. Apparently, it is possible for a U.S. person run afoul of the PFIC laws by investing in a foreign start-up that has very little assets or that runs at an operating loss for just one year. So no U.S. person can wisely invest in a foreign internet startup, but foreigners can freely invest in U.S. internet startups. Who writes this tax code, Frank Underwood? What gets me is that all of the tax lawyers were puzzled about why the U.S. had such an overly broaden PFIC definition (maybe because it benefits them greatly!) .
@Haydon Perryman While I paint a picture of landmines and mined “safe harbours” for FATCA implementation in the US (also potentially impacting GATCA in the US of A) I am getting the impression that your helicopter overview has not been perturbed.
I’ll add a few more brushes to the tapestry. Do you remember the “Oklahoma City Bombing?” Do you remember what that was about? A bit of reminder: it was about in protest of the perceived UN takeover of the US government. This is very serious stuff. There are armed groups training in the American wilderness and word out over the years is that one of their concerns is the UN takeover of America. I believe these groups have strong connections with the US National Rifle Association.
The US starts to force its residents to state under perjury the country they were born in and what their citizenship is, and to list all the countries of their tax residencies = they will not be happy about it = the NRA will not be happy about it. And many others. It will all be too much political cost to appease foreign governments.
All the above does not appear to be true of say residents from Luxembourg.
@JC: Your last, somewhat hyperbolic comment, is a bit out of line, I think. All we need is for the rabid pro-FATCA Jubilee USA to latch onto such remarks and say, “See? Those tax evading expats are potential violent terrorists!” Landmine metaphors are one thing. But to imply that we’re even inadvertently on the same side as Timothy McVey can wreck our whole message in one fell swoop. I know you didn’t say that, but the comment can be taken out of context if anyone wishes to. Just as we find ourselves foaming at the mouth at ignorant yet inconsequential articles in The Hill, don’t think that FATCA proponents wouldn’t love to paint us as potential terrorists.
@Barbara We have to be careful as everything gets taken out of context. It wasn’t about US persons overseas complying, it was about US persons in the US not comfortable completing CRS forms. FATCA is not about these forms for US persons anyway – as US banks are not “foreign” – even though there is the suggestion of reciprocity.
I know that. You know that. But in the context of this expatriate website/forum/advocacy group, I suggest we keep potentially incendiary comments off the board when discussing anything that has to do with taxes and compliance, whether referring to US citizens abroad or those in the homeland.
@JC let’s call out this issue of withholding by getting specific. Please give an example that includes both the jurisdiction of the FI and what is entered on the self declaration that you believe leads to withholding.
I’m quite pleased that you’ve been able to take questions here.
I’ve never understood the process that a US institution must go through when making payments, to see if that institution might be required to with hold 30% upon any payment.
Both, for making a payment to an individual but also a general payment to a foreign financial institution.
(trying to gain info as to why US institutions have yet to complain about their additional FATCA work)
Do they just look and see if it is a registered FFI and then send 100% of payment it if they are? (and send 70% if they are not?)
@Mark Twain. We’re FATCA fixated again. The perception that withholding prevails is proving persistent.
Let’s see what JC comes back with.
One question at a time. Either that or somebody collects the questions.
@Haydon Perryman My understanding is that there are three areas where there may be 30% witholdings (1) US dollar transfers to countries who refuse to sign an IGA, (2) for unregistered FFI, (3) for individual US persons – either on the basis of a particular payment or based on account value – for persons deemed ‘recalcitrant’ who don’t want to sign the FATCA form when asked by their FFI. My comments above related to (3). These areas of witholdings may be clarified. You seem to indicate that for individual US persons that there would not be risk of 30% witholdings.
@JC I need you to pick a particular country for a particular scenario. I can’t work with universals like “FATCA sucks” I have to narrow it down.
Without a particular country being given I can’t help.
Bear with me and you’ll see where I am going.
https://thebanks.eu/articles/countries-which-will-not-automatically-exchange-account-information
Full list of jurisdictions which will not automatically exchange information (United States is listed)
@Haydon Perryman
How about: Canada, UK, Australia.
I accept Canada, UK, Australia it is.
I will answer, with Canada first.
@JC
Canada IGA http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Canada-2-5-2014.pdf
Page 13
*Article 4 section 1*
“Each Reporting Canadian Financial Institution shall be treated as complying with, and not subject to withholding under, section 1471 of the U.S. Internal Revenue Code if Canada complies with its
obligations under Articles 2 and 3 of this Agreement”.
…..
Article 2 is “Obligations to Obtain and Exchange Information with Respect to Reportable Accounts”
Article 3 is “Time and Manner of Exchange of Information”
—–
Canadian FI will conform with both Article 2 and 3, hence, no withholding can apply in Canada under this IGA.
——-
Does this answer your question?
@JC All things being equal, withholding can only occur, under FATCA, in Countries that have no IGA. Currently 112 Countries are treated, for FATCA purposes, as having an IGA in place.
I can provide a list on Non IGA countries.
Of course, I am assuming that most IGA countries will comply with Article 2 and 3. If not, then they’ll probably go out of business because other market participants will not want to be a counter-party to them.
can someone shed the status of Eritrea’s IGA signing?
Alternately, what implications exist in Eritrea, given that not a single one so far has registered for a GIIN?
http://non-fatca-banks.com
@king
https://haydonperryman.files.wordpress.com/2015/03/gatca-1-9c-20150326t0834z1.pdf
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