Same Country Exception. A letter writing campaign “exempting” one from FATCA reporting has now been kicked off. If one can show that one is tax compliant, one won’t be reported. In this case, one needs only to send a different piece of paper to the IRS that declares that one is same-country exempted. Sounds Good. Is it?

We’ll look at the details. But first, let’s look at something that came along, albeit at a much slower pace–the Social Security number. Since it’s not the prime point, I won’t claim to have researched its history fully, let’s just talk about it from my own memory. And, remember that the course of history need not be planned in advance. However, it can be expected to morph itself to a known end.

Social Security came about as a forced savings system for one’s retirement. The payments after retirement were well publicized, and the incoming payments were accepted by legislation in the houses. In order to keep track of the payments, identification was required for the first time in America. Lots of people complained, that identification was not part of the American ideal. It was a huge transition, for which we dismiss today as “conspiracy theories”. Many of us have a Social Security card which is overlayed with “not to be used for identification purposes”. This didn’t last very long. In fact, long before my first card was printed, the Social Security number was indeed used on tax forms and not just on Social Security.

During the early 80’s, judicial and legislation determined that no one could require you to supply your social security number to them (loans, credit cards, universities, whatever)–however, those institutions need not issue you their services if you don’t cough up your number. The Social Security number has morphed into most everything. In Europe, the government number is used everywhere. Anyone can require that you hand it over. In many countries, the birthdate is ingrained in the number. You have to cough it up for almost anything, including discount cards at the store.

Trying to keep it short, the Social Security number morphed from something with a real need into something used everywhere. Now, with FATCA, globally. Remember that something starts and with or without fore-planning, it morphs into mainstream.

Now, we are being offered Same Country Exemption. Safe Harbor (another Orwellian name which has a background in other areas). You have a safe harbor, if you prove to your bank (by attaching your 1040 IRS document) that you are US-tax compliant. (An individual residing in a foreign country could elect, but would not have to elect, to have an account treated as a “Same Country” Account by providing an election to the relevant FFI (such as, the individual’s bank) and attaching a copy to his or her regular Form 1040 or Form 1040NR. The FFI would then be relieved from the requirement to treat the account in question as a US account and to process and report information with respect to it.)When you do this, your bank will not FATCA report you. You will also then be allowed to not file your form 8938. It does not mention that you would still be required to file your FBAR.

Let’s begin with why this might be a benefit. If you’ve already crossed all your T’s and dotted your i’s, why would you care if you were being reported? If you are filing a paper with the statement that you are only same country, what is the difference between that and just sending in the firetrucking 8938?

Q: Does Same Country Exemption eliminate the FBAR? A: No. Q: Does it eliminate the penalties? A: No. So, now we’ve reached the point of “who cares” and Safe Harbor. But it gets worse.

If you want to take advantage of Same Country Exemption, you need to SEND YOUR PRIVATE AND PERSONAL TAX FORMS TO YOUR LOCAL BANK. Your bank will then make a determination of whether your IRS 1040 is good, bad, or needs to be whistleblown. This would be the first instance where a 1040 tax return might be reviewed by an external source. (Go back to the Social Security example).

Do you want this? But, Safe Harbor is voluntary. When you write to your Congressperson, you support that you can voluntarily submit your private and personal 1040 form to an institution. When your Congressperson reads your letter, he sees that you support voluntary submittal of your personal 1040 form to an institution. He reads thousands of letters of persons who support voluntary submittals of 1040 forms to their institutions.

What does your legislator learn from this? He learns that thousands of persons support the idea of submitting their private and personal 1040 forms to their institution. People will gladly show their private information to an institution. WELL, IF SO MANY THOUSANDS OF PERSONS WOULD VOLUNTARILY SUBMIT THEIR PRIVATE TAX FORMS TO A 3RD PARTY, THEN THOSE SAME PERSONS WOULD NEVER COMPLAIN THAT THEY WOULD BE FORCED TO SHOW THEIR PRIVATE TAX INFORMATION TO A THIRD PARTY. And if they don’t they wouldn’t mind being banned from using that institution.

Do you really want your bank to judge your 1040? Why not your grocer? Why not your gardener? Why not bring your 1040 to the singles bar and paste it to your forehead? Why not send a copy of your 1040 along with your passport application (oops, it looks like that already might be required according to the transportation bill).

So, hurry up and write a letter to your Congresscritter and tell them that you support Same Country Exemption. At the same time, ask them to inform all of the bank employees to close their eyes while they strip search you in the bank lobby.

Addition:

BE CAREFUL WHAT YOU ASK FOR. And be careful about what others are asking for– remember that a few hundred people will be supporting DA/ACA/AARO/FAWCO SCE as-is. That proposal could affect you.

By all means, write the letters. Be specific about what is needed. Be specific if something is not objectionable and what is definitely objectable. Make sure that you discuss your opinion about the specific issue of giving your bank your personal tax records, in both cases of mandatory or non mandatory.

Noted: (The “Same Country” Exemption, sometimes referred to as “Safe Harbor” Rule, is the product of collaborative work among several groups representing Americans abroad. A detailed description was prepared by ACA and draws upon ideas and work of the other groups – which ACA greatly acknowledges. ACA is solely responsible for its content. This paper (attached) was drafted by Charles M. Bruce, Legal Counsel, ACA….)

New FBAR Limits Reflecting IRS Concern on Eighth Amendment Litigation.  More poopourri:

(Spritz the bowl — before you go — and no one else will ever know that your FUBARs stink)

or, in the words of this BNA article “New constraints on penalties the IRS will impose when taxpayers don’t properly report their foreign bank accounts show agency concerns that some will argue in court that huge penalties are unconstitutional, attorneys told Bloomberg BNA.

IRS guidance limiting the penalties examiners can assert for failure to file the Report of Foreign Bank and Financial Accounts “reflects some awareness and sensitivity about the constitutional issue presented by a multi-year FBAR penalty,” ……..

“The notion that the government will exercise some administrative restraint is a good development.”

Let the litigations begin.

(sign up for the free trial to read the whole article)

http://www.bna.com/new-fbar-limits-n17179927429/?elq=4e5f8e82daa945c3a42c287a14e85623&elqCampaignId=882&elqaid=1571&elqat=1&elqTrackId=ef57973ec09040b1be7c66555ff36435

or shortlink

http://bit.ly/1MOU4kv

http://www.repealfatca.com/index.asp?idmenu=4&idsubmenu=156&title=repealfatcacom-alert

Stop ‘Backdoor’ Authority for FATCA and OECD Reciprocity!

Summary:  https://americansabroad.org/issues/fatca/same-country-exemption-fatca-reporting/

“The “Same Country” Exemption, sometimes referred to as “Safe Harbor” Rule, is the product of collaborative work among several groups representing Americans abroad. A detailed description was prepared by ACA and draws upon ideas and work of the other groups – which ACA greatly acknowledges. ACA is solely responsible for its content. This paper (attached) was drafted by Charles M. Bruce, Legal Counsel, ACA. Questions and comments are invited”

Description: https://americansabroad.org/files/4314/2900/7077/same-country-exemption-2015-04-06.pdf

An individual residing in a foreign country could elect, but would not have to elect, to have an account treated as a “Same Country” Account by providing an election to the relevant FFI (such as, the individual’s bank) and attaching a copy to his or her regular Form 1040 or Form 1040NR. The FFI would then be relieved from the requirement to treat the account in question as a US account and to process and report information with respect to it.9

The “same country” exemption would not affect in any way the requirement to file a Form 1040 or 1040NR.   Nor would the “same country” exemption affect in any way negate the requirement to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).

An American taxpayer subject to the Form 8938 filing requirements, who had elected to have one or more accounts treated as a same country account by filing the above-mentioned election, could omit the account(s) from his or her Form 8938.  The account would not count for purposes of determining whether or not one of the reporting thresholds, set forth in the Instructions to the Form, are met.  IF AN INDIVIDUAL ONLY OWNED ACCOUNTS AS TO WHICH HE OR SHE HAD MADE A “SAME COUNTRY” ELECTION, THERE WOULD BE NO REQUIREMENT TO FILE THE FORM 8938

Michael DeSombre, Worldwide President of Republicans Overseas just submitted Overseas Americans’ Input on Individual Income Tax to the U.S. Senate Finance Committee, especially how FATCA and CBT impact Americans residing abroad negatively.

April 14, 2015

The State Department has estimated that there are 7.6 million Americans living outside of the United States. If Americans overseas comprised a separate state of the Union we would be the 13th largest state by population. Our purpose at Republicans Overseas is to represent those millions of Americans living outside of the United States. It is in this capacity that we write today to highlight two specific issues that significantly harm Americans residing overseas and can be easily remedied. The examples and problems detailed in this submission have been provided by Americans living overseas who have been negatively impacted by the Foreign Account Tax Compliance Act (FATCA) and citizen based taxation (CBT).

Summary

1. Reporting of foreign bank accounts and financial assets as implemented by the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR or FINCEN form 114) violates the constitutional rights of 7.6 million law-abiding Americans overseas and results in the denial of financial services and professional opportunities to the detriment of the individual Americans. The ability of American enterprises to export goods and services is restricted or denied because foreign financial institutions are denying or revoking financial services preventing American enterprises to engage in business outside of the United States. FATCA and FBAR should be repealed.

2. The United States is the only developed country that taxes the global income of its citizens based on citizenship (Citizen based taxation or CBT) when they reside outside of the country. This means that American citizens residing outside of the United States pay taxes both to their country of residence and, additionally, pay further taxes to the IRS. Double taxation treaties do not prevent Americans from being subject to punitive double taxation because many countries tax their residents through mechanisms other than income tax (which are not creditable against U.S. income tax obligations) and America imposes additional taxes (such as capital gains tax and the 3.5% tax for the Affordable Care Act) for which no foreign taxes may be creditable.

3. The United States implementation of CBT results in lower employment for Americans, fails to raise significant revenue and deters successful businesspersons and entrepreneurs from becoming American citizens. It is far more cost effective for any business enterprise (both U.S. and non-U.S.) operating overseas to hire any person other than an American. The extra cost of hiring an American worker hurts not just the employment of U.S. citizens but prevents U.S. enterprises from competing globally and limits any U.S. enterprise’s ability to expand its operations outside of the United States. CBT should be repealed and replaced with RBT.

4. The Senate Finance Committee should investigate the true costs and benefits of FATCA and CBT so that the maintenance or repeal of these provision would be based on accurate information rather than faulty assumptions as to the intentions of Americans residing overseas.

continued on facebook

FATCA and GATCA implementation and its costs are primarily where the large percentage of the population puts their money: In low-bearing standard savings and checking accounts.

(Yes, it also controls investments and insurance industries which may hold larger asset values, but certainly the largest quantity of control is where the largest quantity of persons have accounts. (FATCA and GATCA costs are not greaer for the account that is $999,999 versus the account that is $50,000.00 . And the small quantity of $1+ million accounts is also irrelevant)

So, what is this revenue that FATCA and GATCA are chasing after? I mean, the FATCA programs that cost $18 to $40 per capita to implement.

Are they so broke that they need the taxes on all the bank accounts of the world that are yielding less than 0,25% interest?

What should we think–knowing that these accounts are all (82%), in high-tax countries, and are all (according to tax treaty) due tax only to the country where they reside?

(Sure, there is some money to be skimmed from investment accounts where a smaller quantity of people are currently making some money. But the quantity of these accounts and the percentage of FATCA/GATCA implementation costs for investment accounts is much lower).

Why are King David’s controllers controlling a huge population that isn’t making any money?

Do they want this money to repatriate itself, so that Merca can tax it at the typical 0.02% interest being gained at US savings institutions?

What about those large investors that actually have negative interest? Does FATCA and GATCA want the proceeds from that too?

How many trillions of lost tax money must be needed to get the $870 million when FATCA’s profit is only 0.02% ?

Envy knows no bounds.

Just asking. It’s Sunday morning,

Can move this discussion further, after the little interesting budget thing in the Senate:

badger says

http://www.fas.org/sgp/crs/misc/R40623.pdf was found by JC and placed in a comment.

It is a recent release which I haven’t seen discussed elsewhere.

Tax Havens: International Tax Avoidance and Evasion
Jane G. Gravelle Senior Specialist in Economic Policy
January 15, 2015
Congressional Research Service

It has quite a history of tax proposals which are claimed as having originated from the Obama administration.

Plus a history of the dastardly ones we know of (Ex Patriot Act, MAP 21, etc)

Lots of unconstitutional solutions upon 7.6  million US citizens and 10’s of millions of immigrants, in order to chase after a small quantity of bad guys.

This one pulls its own unfootnoted number for total tax evasion out its whazoo.

Don’t get bogged down by the corporate discussions.  The individual discussions come in the last pages.

You’ll learn about the history of the attack on expats and that the dastardly proposals have not gone away.

Options to Address Individual Evasion …………………………………………………………………………….. 34

Information Reporting ………………………………………………………………………………………………. 34

Multilateral Information Sharing or Withholding; International Cooperation ……………… 34

Expanding Bilateral Information Exchange ……………………………………………………………. 35

Unilateral Approaches: Withholding/Refund Approach; Increased Information Reporting Requirements……………………………………………………………………………………. 35

Other Measures That Might Improve Compliance ………………………………………………………… 35

Incentives/Sanctions for Tax Havens …………………………………………………………………….. 35
Tax Havens: International Tax Avoidance and Evasion
Congressional Research Service
Revise and Strengthen the Qualified Intermediary Program ……………………………………… 36

Place the Burden of Proof on the Taxpayer …………………………………………………………….. 36

Treat Shell Corporations as U.S. Firms ………………………………………………………………….. 36

Extend the Statute of Limitations ………………………………………………………………………….. 36

Greater Resources for the Internal Revenue Service to Focus on Offshore …………………. 37

Make Civil Cases Public as a Deterrent …………………………………………………………………. 37

37 Strengthening of Penalties ……………………………………………………………………………………. 37

Address Tax Shelters …………………………………………………………………………………………… 38

Regulate the Rules Used by States to Permit Incorporation ………………………………………. 38

Make Suspicious Activity Reports Available to Civil Side of IRS……………………………… 38

Summary of Enacted Legislation in 2011 ………………………………………………………………………….. 38

The Hiring Incentives to Restore Employment (HIRE) Act  (P.L. 111-147): FATCA ………… 38

Reporting on Foreign Accounts …………………………………………………………………………….. 39

Deduction of Interest for Bearer (Nonregistered) Bonds ………………………………………….. 39

Additional Information Reported on Tax Returns ……………………………………………………. 39 Penalties ……………………………………………………………………………………………………………. 39

Statute of Limitations ………………………………………………………………………………………….. 39

Reporting on Foreign Passive Investment Companies ……………………………………………… 39

Electronic Filing …………………………………………………………………………………………………. 40 Trusts ………………………………………………………………………………………………………………… 40

Treat Equity Swaps as Dividends ………………………………………………………………………….. 40

Summary of Legislative Proposals …………………………………………………………………………………… 44

American Jobs and Closing Loopholes Act (H.R. 4213, 111th Congress) …………………………. 44

President Obama’s International Tax Proposals ……………………………………………………………. 45

Provisions Affecting Multinational Corporations and Other Tax Law Changes …………… 45

Provisions Relating to Individual Tax Evasion, Not Enacted in the HIRE Act …………….. 49

The Wyden-Gregg and Wyden-Coats Tax Reform Bills ………………………………………………… 49

Chairman Camp’s Territorial Tax Proposal (Included in H.R. 1, 113th Congress) and Senator Enzi’s Bill (S. 2091, 112th Congress) ……………………………………………………………. 50

Stop Tax Haven Abuse Act ………………………………………………………………………………………… 51

111th Congress (S. 506 and H.R. 1245) ………………………………………………………………….. 51

112th Congress (S. 1346 and H.R. 2669) ………………………………………………………………… 52

113th Congress (H.R. 1554, S. 1533, and H.R. 3666) ……………………………………………….. 53

114th Congress ……………………………………………………………………………………………………. 53

Finance Committee Proposal, 111th Congress ………………………………………………………………. 54

Who is the criminal? You–because you live “offshore”–or the media and politicians because of their “truths” ?

http://www.nestmann.com/government-stats-strike-again#.VQ0LgU1_lMt

“Here’s another big, fat, hairy lie being trotted out right now by President Obama, Congress, and the mass media: ‘Offshore tax evasion costs the US Treasury more than $150 billion annually.’

That’s today’s number. In 2001, it was $70 billion annually. By 2010, the number was $100 billion. According to a recently published Senate report, it’s now $150 billion.

That’s one hell of a jump. Either the rich are totally sticking it to “the man,” or someone has been massaging the numbers just a tad.

Let’s look at the history, shall we?

The $70 billion figure originated with Jack Blum, an attorney and former congressional researcher. Blum cited this figure in 2001, when he signed an affidavit in support of an IRS summons for records from MasterCard and American Express.

He never explained how he arrived at this number……….”