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.
@king no Inter Governmental Agreement in Eritrea
@Haydon Perryman. That is what you have been saying. Your focus appears to be on financial institutions. How about individuals? Most all people commenting here are individuals. My reading of it is that if you are a US Person living in Canada/UK/Australia, you are “recalcitrant” and refuse to fill out the FATCA form, that 30% any US source payments may be withheld. Then plus for individuals there is FATCA 8938 and penalties around not filing/not properly filing this.
@JC Bear with me. Who in Canada would be the party withholding?
The Canadian Bank, but they can’t because the Canadian Inter Governmental Agreement suspends withholding.
So this is relevant to the Canadian individual as the Canadian Bank has no reason or mandate to withhold as a result of the Canadian Inter Governmental Agreement.
Under what law, agreement, statutory instrument could the Canadian Bank possibly withhold on its Canadian customer for FATCA?
Don’t give up – please carry on with the debate.
Precisely who is withholding on whom and under what law? It certainly isn’t the Canadian Inter Governmental Agreement.
I have a friend who used to work at a bank and when I told him that, from now on, people will have to fill in forms requiring them to fill in information, including place of birth, for each of their existing accounts he laughed out loud.
He told me that typical compliance for existing clients for any “form-filling” is less than 20% and that is with repeated mailing, phone calls and even with offers from bank personell to “help” customers fill out the forms (ie. do it for them) . How will this play out? An 80% non-compliance rate of the existing customer base is typical, so for something that is probably considered an intrusion and perhaps abhorrant to many, it will probably be a lot less.
What a gummed up mess that is going to be. That’s going to be some fun, fun times!
I’m getting my lawn chair and popcorn for the fireworks show! 😀
Ever thought about how an innocent bank mistake can put you in the crosshairs?
This struck me for a moment, “Hey, I wouldn’t mind having someone inject $50,000.00 or more in my bank account (I’d give it back to the bank). However when one looks at it, it’s not the happy rosy situation for Americans abroad who are afflicted by FATCA and its reporting requirements. Even a simple mistake can have catastrophic repercussions.
FATCA requires people to report their bank accounts to the Department of Treasury if at any point during any calendar year, the account goes over $10,000.00. So take for example the hypothetical dual border baby who came up to Canada, made a life for herself or himself in Canada, grew up married, had kids, the whole nine yards, all while thinking she was a card carrying citizen of Canada, not knowing that she had the plague that was United States Citizenship like a noose around her neck? So while those of you who are 100% fully Canadian would cheer uproariously to find $50,000 in your bank account; the unknown dual is having a heart-attack, because her operating account just got punched up over ten thousand, all through a simple “bank error”.
What happens to her? Well, for one, the IRS pitbulls get a sniff at her. “Oh…you got money over $10,000 in your account, they say. Doesn’t matter. Your account was over the limit for 2-3 days. It was technically YOUR money for that time, so you owe Uncle Sam. the taxes on it…as well, since you failed to report it, we’re going to ding you with $100,000.00 fine for failure to report it on an FBAR. Considering the fact that it is wilful since you knew that money was there, took steps to figure out where it came from, we’ll just classify it as willful, won’t we?”
So poor Ms. “I Didn’t Know I Was American” gets to undergo FATCA(T) scrutiny just because the bank made a stupid error. Seems rather unfair doesn’t it? Unfortunately the IRS and US Department of Treasury doesn’t think so.
Will this happen to someone? I’m absolutely sure of it. And when the ramifications of that simple “mistake” on the part of the bank comes out, the American expat ends up losing damned near all their finances thanks to a mistake made on the part of the bank. In that sort of instance, I think the bank should be held liable for the damage done to the person’s finances. But unfortunately the courts may not see it that way.
In fact the only recourse that an expat can take is to sue the bank to recover whatever damages to their finances including the cost of fines that they’ve been hit with by the IRS and by the Dept. of Treasury.
@Haydon Perryman:
This contradicts what you said about there not being any witholdings:
“an FFI must withhold 30% on any passthru payment it makes to a recalcitrant account holder, as well as to payments it makes to another FFI unless that FFI meets certain requirements.”
http://fatca.thomsonreuters.com/about-fatca/faqs/
Your are making FATCA sound nice and friendly and manageable. It will take lots more to sway me from the view of FATCA as evil (especially when combined with CBT and FBAR for US persons living overseas), unconstitutional, live wrecking, anti-vet, anti-American, etc.
One of the banks in Sweden jumped the gun on GATCA reporting. It wasn’t until reading this session that I fully understood why
A copy below shows the demanded questions, which ask for country of birth and city of birth in pulldown menus. It is at one of the major Swedish intl banks, Nordea, in its banking app. People have been so far able to click “later” but it keeps on coming up during their logins.
It also asks for “other nationalities”
There is a second page (I’ve heard) that asks specifically if one is tax-resident for US.
Then it goes in to questions asking where you get your money from.
Unlike US-typical forms, it doesn’t come up with threats of fines or imprisonment for perjury.
https://bancdelasteroideb612.wordpress.com/2015/01/09/sweden-begins-discriminatory-profiling-its-citizens-by-country-of-birth-and-by-national-origin/
I suspect that this content is Nordea’s imperfect attempt to fulfill GATCA and FATCA in one swoop
@JC. I appreciate the appearance of contradiction.
The “must withhold” comment is true of the U.S. treasury version of FATCA.
However, a Country that has an Inter Governmental Agreement has its own Inter Governmental Agreement version of FATCA.
If I may JC, I’m not trying to make FATCA sound great. I am attempting to answer your question.
@Haydon
Thank you for your informative input. JC asked also about UK and Australia. Could you please enlarge upon the legally plausible effects in these countries, as well as in Canada?
OK, I am assuming we now understand that because Canada has an IGA, all things being equal, there is no withholding in Canada.
To the UK:
http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-UK-9-12-2012.pdf
Page 13
Article 4, section 1:
Each
Reporting United Kingdom Financial Institution shall be treated as complying with,
and not subject to withholding under, section 1471 of the U.S. Internal Revenue
Code if the United Kingdom complies with its obligations under Articles 2 and 3
———
Australia:
http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Australia-4-28-2014.pdf
Page 12
Article 4, section 1:
“Each Reporting Australian
Financial Institution shall be treated as complying with, and not subject to withholding under,
section 1471 of the U.S. Internal Revenue Code if Australia complies with its obligations under
Articles 2 and 3 of this Agreement with respect to such Reporting Australian Financial
Institution”
@Haydon Thanks for the discussion. I appreciate your humour and a lot of how you present FATCA in your video and on the web.
Sounds like not a worry about individual account witholdings. Perhaps again the US Treasury is trying to use fear and misconception as well as the law to coax behavior to its liking. Perhaps that is why http://www.fatcalegalaction.com did not mention individual account witholdings as part of their legal opinion paper. However, the IRS Tax Advocate specifically mentioned these witholdings and that there is no mechanism to remedy wrongful witholdings for individuals. Yet your answer explains a bit why as there will not be these witholdings.
Before FATCA there was already 30% witholdings on certain US source investment payments, unless one claims tax treaty relief, that may reduce to 15%.
That may answer this next question: Please enlighten me:
What are the consequences for US and non US persons to answer wrongly/be recalcitrant on FATCA/CRS forms? Then what incentive is there to fill out FATCA/CRS form correctly?
@JC OK. We understand each other on withholding.
I’d agree scare tactics have been used.
Moving on from Withholding………the IRS and IGA Countries don’t always agree on what the IGAs say.
http://haydonperryman.com/2015/03/27/an-spirited-debate-irs-vs-sifma/
My point, yes, it is darned confusing.
Here in the UK, we were the first to sign an IGA (right or wrong) and the first to implement a Statutory Instrument (right or wrong).
We got a few things wrong and have had to amend the regulations in the UK (for other FATCA geeks – I’m talking about Holding Companies, Treasury Centres and Nil Reporting).
Here in the UK, we’ve made a dogs breakfast out of our own IGA.
So here – I am acknowledging that the confusion is well placed and puts you in good company.
2) On a separate point, and this might seem surreal:
The “withholding” under the US Treasury version of FATCA is not a tax, it is a penalty.
Loosing the will to live yet? Even where there is withholding – it is not a tax.
It is Alice in Wonderland stuff I know.
Further down the rabbit hole is yet further surrealism:
That USD 8.9 BN the US said in would get from FATCA Withholding can not ever happen because the US signed that away in the IGAs.
You could not make this up.
Moving on to the next point….
3) The “before FATCA” world still exists. To simplify the 30% and trety of which you speak is:
Chapter 3 / Qualified Intermediary.
Ready? That world still exists.
Chapter 4 is applied first. If there is no penalty under FATCA (note 1) then a tax can be applied via Chapter 3.
Note 1: US Treasury FATCA – not IGA FATCA. (Often referred to as Unilateral FATCA and Bilateral FATCA.
4) Recalcitrant Accounts. By way of example of how IGA Countries are impacted. Here is a quote from Article 4, section 2 of the UK IGA:
“Suspension of Rules Relating to Recalcitrant Accounts. The United States
shall not require a Reporting United Kingdom Financial Institution to withhold tax
under section 1471 or 1472 of the U.S. Internal Revenue Code with respect to an
account held by a recalcitrant account holder (as defined in section 1471(d)(6) of
the U.S. Internal Revenue Code), or to close such account, if the U.S. Competent
Authority receives the information set forth in subparagraph 2(a) of Article 2,
subject to the provisions of Article 3, with respect to such account.”
Under the IGAs and under the CRS, a recalcitrant account holder would neither incur US Withholding, nor Account Closure.
But they will be reported.
What happens then is not within the remit of FATCA, the CRS or the IGAs – its between the tax payer and their Host Country Tax Authority.
These last four points are really complex and counter-intuitive. I fully accept that.
In any event, allow me to reiterate – the CRS in advancing with unprecedented speed, it requires place of birth, the CRS is unopposed.
@The_Animal – that is NOT far fetched …. there is a court case presently in Jamaica where a man found J$500,000 in his account by “windfall”, promptly withdrew it and, when requested by the Bank, refused to return it …. there is another person in Jamaica (in the news recently) who went to an ATM and the balance enquiry slip told him he had a balance of J$99,999,999.99 before he did any transaction. This is a man who expected not to have even a few hundred dollars in his account. The man has not drawn any of the “windfall” but has been trying to get clarification (up to the other day unsuccessfully) from his bank. Imagine if HE has US Taint. Hilarious how nasty webs get when once they start to be weaved … worse yet with something like FATCA whose object seems designed to deceive.
under the CRS regime, what are the penalties for not answering thePoB question correctly, nonwillfully or willfully?
(specifically: either global standard, Sweden, or Canada)
I seem to have put one too many 9s in the long figure in my previous post …. the figure is supposed to be 1 cent less than J$100,000,000.00
Took a stab at responding to this one today at the Flophouse:
http://thefranco-americanflophouse.blogspot.jp/2015/03/now-we-are-endorsing-tax-evasion.html
@marktwain Consequences – I’ve no idea. Except to say that a FI can rely on what is on the self declaration form it receives unless it conflicts with what they already know.
Point 5) then should be that anyone refusing to state if they are or are not American (on W8’s and W9’s), when attempting to open a new account, are now (as of Feb 2) required to not open an account. Therefore, a Sri Lankan who refuses to the answer the question at his bank cannot have a new bank account.
(and some countries are arguing against this new rule, because it was just another one thrown in
http://www.bna.com/inconsistent-handling-new-n17179924682/)
Victoria: THANK YOU for your strong words against Ms. Wilkins’ article. You always speak plainly and clearly on behalf of all of us. All the politicians have to do now is damn well sit up and LISTEN!
@Mark Twain – yes, hence the link in point 2. This is highly controversial. I anticipate many more such controversies will emerge.
@JC, @mark twain I think you’re immediate questions (of me) are answered?
Someone asked about 1099 reporting – I’ve no expertise in that area.
This is what Rebecca J. Wilkins has written before:
http://financialservices.house.gov/uploadedfiles/102711wilkins.pdf
http://www.taxjusticeblog.org/archive/2014/08/how_corps_are_avoiding_taxes_b.php