reposted from MapleSandbox
by Lynne Swanson
#FATCA Americans overseas: Do NOT allow US tax pros scare u into entering US tax system. Many have no business entering!
— Keith REDMOND (@kredmond_global) January 19, 2017
Backing up the above tweet, Keith Redmond posted the following on Facebook:
Dear Members: I just had a lengthy, robust call with an individual who spent 25 years in upper management with the Department of Treasury IRS Criminal Investigation. He confirmed what I thought about the IRS. There is more bark than bite. He stated that there are many, many Americans overseas ho have no business in entering the US tax system and that Accidental Americans UNDER NO CIRCUMSTANCES should enter the US tax system. He confirmed that there are MANY US tax pros who prey on Americans overseas and Accidental Americans through fear and falsehoods. (e.g. you will get arrested, etc.). Any US tax professional who pushes and scaremongers these individuals to comply are not professionals and should not be used! He confirmed that the IRS is NOT going to go after you in your country of residence (most especially if you are a citizen of that country) and the IRS is NOT going to arrest you at the US border. The IRS does not have the resources to do this plus they go after those who have committed a crime not the average American overseas. He stated that Americans overseas need to not succumb to the fear. Excellent conversation and I am glad my views have been validated.
This reflects what I have long believed. Unfortunately, there is still the nightmare of FATCA to deal with. In some countries, anyone born in the US cannot even get bank accounts. We are treated as criminals just for banking where we live.
I asked Keith how his contact explains and justifies this.
Keith replied:
He can’t. He finds the whole situation abhorent…
@iota
Look at page 22 of the U.K. U.S. FATCA IGA:
https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-UK-9-12-2012.pdf
With a U.S. place of birth the self-certification process of “reasonable explanation” applies only with respect to those “renouncing” U.S. citizenship. This means that those who have “relinquished” without renouncing do not have the opportunity to self-certify. This means they will be deemed to be U.S. citizens for FATCA purposes even though they are no longer U.S. citizens for nationality purposes.
To put it simply, pursuant to the U.S. U.K. FATCA IGA, the U.K. is allowing the U.S. to “deem” U.K. citizens to be U.S. citizens when they are not. Yes, the U.K. should be protecting its citizens from the forcible imposition of U.S. citizenship.
“With a U.S. place of birth the self-certification process of “reasonable explanation” applies only with respect to those “renouncing” U.S. citizenship. This means that those who have “relinquished” without renouncing do not have the opportunity to self-certify.”
Of course they do. And my guess (strictly a guess) would be that if there’s no US indicia except place of birth, and it’s a long-standing customer who rhey know well, then, depending on the bank, they’ll probably accept it. If they have doubts, they may ask for more documentation.
CBT is very unfair, but the responsibility rests with the US, not the UK. The UK doesn’t, and can’t undertake to protect dual citizens from the consequences of US policy. And it’s a mystery to me why people can’t see that it’s not the IGA that causes the unfairness, it’s CBT. We’re better off with the IGAs than we would be without them,.
That’s my concern with the Canadian lawsuit. If we get rid of the IGA without getting rid of FATCA, we may in fact be worse off.
Though that’s all a bit moot if you can easily stay off the radar.
Yes. Certain Accidental Americans I know (born outside US) are completely untouched by FATCA.
“And my guess (strictly a guess) would be that if there’s no US indicia except place of birth, and it’s a long-standing customer who rhey know well, then, depending on the bank, they’ll probably accept it”
a year and a half ago I had to open up an account for one transaction a year at a big five bank that I have been banking with for almost 30 years. no questions were asked and no information given but the branch manager knows me on a personal level and knows my situation.
no problem. I have however moved the majority of my banking over to a “client based” credit union who have been great as well to deal with. they knew next to nothing about FATCA and the lady that opened my accounts there was in shock when I was telling here about it.
“American extraterritorial fiscal/financial laws aren’t enforced in Britain, to the best of my knowledge.”
Not a complete answer but relevant:
https://www.irs.gov/pub/irs-wd/0143032.pdf
“FATCA is a US law. Legal action against it would have to be taken in the US courts.”
Saudi Arabia would like that. They should pass a law prohibiting any vehicle that has ever used oil from Saudi Arabia (including refined products such as gasoline) to transport any female without a male relative being present. Legal action against the law would have to be taken in Saudi courts.
“That’s my concern with the Canadian lawsuit. If we get rid of the IGA without getting rid of FATCA, we may in fact be worse off.”
@Nnymous et al
You are more knowledgeable here but please explain how that can be true. All I know is that the IGA has to do with us and FATCA is strictly in a US decision which we can’t get rid of .
“Safest thing for your son would surely be to keep well clear of the US. They can,t put him in a uniform if they can’t get hold of him.”
Like the way they couldn’t get hold of Saddam Hussein? Or Noriega?
@Norman Diamond – sorry but I don’t see that it’s relevant. It’s about whether a summons can be served by the IRS on a UK resident, and they decide that it can and the summons would be enforceable in D.C. but the interview is supposed to take place in the Embassy in London. No explanation as to how they’re going to get their target to the interview if s/he chooses to ignore their summons.
The treaty’s been updated since then, as noted. Nowadays they can ask just HMRC for the information they’re seeking.
It’s not an instance of US extraterritorial fiscal/financial law being enforced in the UK.
Canada should pass an extraterritorial maple syrup tax, then take legal action against anyone outside the country who fails to pay this tax plus complete the accompanying mandatory, complex, penalty-laden forms. They could be said to be benefiting from a sugar boost by consuming this Canadian-derived maple syrup. Makes as much sense as the US taxing Canadian-derived income by pretending it is US income and saying Canadian-residing USC/USPs benefit from their US taint.
@Robert Ross – without the IGA, banks would be trapped between the IRS requiring them to report on USP accounts or be subject to disastrous levels of withholding (on the one hand); and local law preventing them from reporting (on the other hand).
Under those circumstances their only safe course of action would be to make sure they didn’t have any USP accounts.
That’s what happened in Switzerland, AIUI.
Apparently, some laws will be strictly enforced, and we must fear that. Meanwhile, other laws will be winked at, and we can ignore them.
How do those above who are speaking out of both sides of their mouth decide which laws are which?
@Robert Ross
FATCA conditions are stricter than IGA conditions (in Canada the IGA makes tax-protected savings accounts like RRSPs exempt from FATCA reporting, even though a fully compliant US person would have to account for them on tax returns and FBARs). The US would use the threat of a 30 percent withholding tax on all transaction to bully Canadian banks into cooperation. The banks would then be responsible for vetting their customers and transmitting the information directly to the IRS. Which means that we’re better off under the IGA. On the other hand, if the banks attempted to comply with FATCA they’d be sued six was to Sunday for violating Canadian privacy laws etc.
And it’s entirely moot because the US couldn’t collect any taxes and penalties against Canadian citizens living in Canada with no US assets…
@Norman Diamond
Black helicopters!
@Shovel
Whether IRS bureaucrats decide to enforce a law or not isn’t entirely relevant. The US cannot *enforce* its tax laws outside its borders, particularly not against dual citizens. It can bully and scare and make life miserable for foreign banks and governments, but that’s not quite the same thing.
@iota,Nnymous
Many thanks for your responses. It seems that the 30% withholding is the crux of the matter.
If one could get over that hurdle somehow and have the banks ignore the threat (forget the rose tinted glasses) and see what would happen.I feel that the perception of the beast is unfortunately worse than the reality. It’s like using a hammer to kill a fly.
Withholding is a pretty big stick. To avoid it the banks would probably be forced to purge all their US persons, as reporting a dual citizens info directly to the IRS would likely violate Canadian law. Rock, meet hard place. Which is why I thought the IGA made the best of a bad situation.
“It seems that the 30% withholding is the crux of the matter. If one could get over that hurdle somehow”
Easy. Get his walls built and prevent investments from crossing the walls in either direction.
Talk of the 30% withholding can be called what it is… fear mongering.
30% a big stick? It’s entirely reasonable to suggest it’s too big a stick to wield. Mutually assured destruction.
Some laws supposedly we should fear, and some we should wink at. Well, why not wink at the big stick? Again, how do you choose which laws to fear monger about, and which to ignore?
Should the Canadian suit win at some level and the IGA is invalidated, it is very possible that other factors will shift in the meantime with a result that could be different, more nuanced or changed in some way. It does not necessarily mean that the immediate result will be reverting to FATCA being imposed on the FFIs.Things are always changing. Governments are getting more impatient about the lack of reciprocity. Some governments are reviewing how FATCA/IGAs affect their citizens (not having realized originally, that duals would be affected, not just Americans residing in their countries). There is certainly more push-back and dissent occuring in the expat community. To suggest that we are better off with the IGA seems to me, to simply sit back and accept defeat. CBT may be the source but both are bad, and both need to be defeated. It also suggests a lack of support for the lawsuits. Clearly, letter writing, emails and tweets to all levels of government are pretty ineffective. We do not have direct representation or much effect when trying to “work within the system.” Our particular group of people have put time, energy and donations into this effort because it was what made sense to us. Clearly, the Brock community also felt it would be useful as the support for it is really nothing short of a miracle. A small grassroots community organizes, collects just under $600k and challenges our government. Is it productive to go back and forth about how much better off we are with an IGA? Do you have a better idea or suggestion?
As to governments protecting their own citizens, I am reminded of a video from a few years back.
@ Patricia Moon
“Things are always changing.”
I’m no legal expert, but perhaps that Congress over there could introduce a constitutional amendment banning extraterritorial (or double) taxation. That would be quite a change…
“Is it productive to go back and forth about how much better off we are with an IGA? Do you have a better idea or suggestion?”
Gradual amelioration? Lobby one’s lawmakers to go back to the negotiating table and press for changes, one step at a time, to bring the implementation of FATCA in line with the implementation of the other AEOI regimes.
* – Drop PoB from the due diligence;
– restore to same-country customers the “presumed innocent until proven guilty ” right
– let banks refer a same-country account to the local tax authority for investigation, rather than having to treat it as reportable to the IRS, if there are doubts as to the accountholder’s tax-residency.
Et cetera.
Little by little.
“Some governments are reviewing how FATCA/IGAs affect their citizens (not having realized originally, that duals would be affected, not just Americans residing in their countries).”
Interesting. Which governments?
@iota
“Interesting. Which governments?”
The French Government. As I understand it, there is a Committee investigating American extraterritorial fiscal/financial laws…