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Author Archives: Eric

In a time of crisis, Ukraine’s bankers focus on what REALLY matters

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A stop to the violence and hatred? A stable coalition government? A resolution to the crisis in Crimea? Nah, none of that stuff really matters compared to the business of privatising the profits and socialising the costs. And with Ukraine’s U.S. “allies” pushing FATCA down their throats, the banks have some big costs they need to foist on the Ukrainian taxpayer, to make sure the banks don’t have to pay all of it themselves.

So Ukraine’s banks have taken a cue from Carl Levin’s strategy of sneaking FATCA itself through as a midnight amendment to a bill that was too long for anyone to read — they only conduct their anti-democratic IGA advocacy when no one is looking. And what better time than when the rest of the public is busy paying attention to some minor political kerfluffle like the fate of their country?

НАБУ обеспокоена отсутствием реальной имплементации Закона FATCA в Украине

NABU concerned about lack of real implementation of FATCA law in Ukraine
http://news.kompass.ua/news/2014-03-07-34186
Независимая ассоциация банков Украины (НАБУ) обеспокоена отсутствием официальной информации о подготовке проекта Соглашения между правительством Украины и правительством Соединенных Штатов Америки относительно имплементации Закона «О налоговых требованиях к иностранным счетам» (Foreign Account Tax Compliance Act, FATCA). Об этом Ассоциация сообщила в своем письме в адрес премьер-министра Украины Арсения Яценюка. The Independent Association of Ukrainian Banks (NABU) is concerned by the lack of official information on the preparation of the draft Agreement between the Government of Ukraine and the Government of the United States of America concerning the implementation of the Foreign Account Tax Compliance Act, the association stated in its letter to Prime Minister of Ukraine Arseniy Yatsenyuk.

 

“We must save our country immediately so we can surrender it to the IRS in one piece!”

Google Translate handles the article surprisingly well, so I’ll let you read the rest there. Apparently the greed and chutzpah of bankers is a universal language.

Data releases on renunciation, relinquishment, and green card abandonment

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Summary: South Korea’s Ministry of Foreign Affairs reports that 3,621 of their citizens filed Declarations of Permanent Return last year after cancelling foreign citizenship or permanent residence (likely to be about half from the U.S., though their report does not specify), prompting anguished reactions from Korean Americans who didn’t move back; only 95 new renunciants were stripped of firearms purchasing rights and added to NICS in February, the second-smallest monthly total since 2012; and finally, USCIS estimated that 9,371 people will file Form I-407 to abandon their green cards in 2014 and subsequent years, even though the average level in the past five years has been twice that.

Details and links after the jump.

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Obama Administration asks Congress for FATCA reciprocity in latest Green Book

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The “General Explanations of the Administration’s Fiscal Year 2015 Revenue Proposals”, or the “Green Book” for short, has just been released (hat tip: Tax Prof Blog, of course — and it seems Just Me beat me to the story in a comment a few hours ago). It includes a proposal to “Provide for Reciprocal Reporting of Information in Connection with the Implementation of the Foreign Account Tax Compliance Act”, a.k.a. “DATCA”, beginning in 2016. There are also a half-dozen other proposals which may also be of interest to extraterritorial tax filers, most of which were also offered up last year but failed to pass.

The inclusion of a proposal in the Green Book by no means ensures its passage (witness previous failed attempts to repeal “check-the-box”, or just note all the similarities between last year’s Green Book to this one’s), and it also gives concrete form to something which up until now was vague and uncertain. That means there is now specific language around which domestic opposition can coalesce, which in turn may provoke international concern about the likelihood of getting any actually reciprocity from these IGAs their bankers are urging them to sign.

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Who renounces U.S. citizenship? South Korean apple farmers

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Here’s yet another renunciation story of the kind that the U.S. media refuses to tell — a story about an ordinary man who decided to leave New York City and give up his U.S. citizenship, an immigrant who found that the American dream wasn’t all it was cracked up to be and that happiness is more important than money or status.

역이민 최용탁씨 3代의 歸去來辭

A homecoming letter for three generations of Choi Yongtak’s family
http://news.naver.com/main/read.nhn?mode=LSD&mid=sec&sid1=103&oid=032&aid=0000041501
2003-11-20 20 November 2003
충주|글 안홍욱|사진 박민규기자 Chungju. Text: Ahn Hong-wook. Photo: Park Min-kyu.
가는 길, 내내 궁금했다. 다들 선망하는, 그것도 성공적으로 정착한 미국 이민생활을 접고 돌아온 속내는 대체 무엇일까. 역이민해 정착한 곳도 대도시가 아니고 농촌. 돈 주고도 못 산다는 미국 시민권도 흔쾌히 포기했다고 한다. 학교에 다닐 아이들은…. He often wondered about the path he was following. Why on earth would he have packed up his successful & settled U.S. immigrant life that would have been the envy of many and come back here? The place where he settled down after coming back wasn’t a big city but a farming village. He even happily gave up something you can’t buy no matter how much money you pay: U.S. citizenship. The children, going to school …

 
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Chinese birth tourist’s baby pops out early in Mexico instead of LA, saved from lifelong IRS offshore investigations

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400px-Bandera_Mexicana ¡Viva México! Photo: Rafael Aparicio/Wikimedia, CC-BY-SA.

With all the scary news coming out these days, it’s more important than ever to remember to take a deep breath and smile. So to add to Petros’ recent posts, here’s something a little different from the Taiwan edition of Apple Daily, which you should probably take with an appropriately-sized grain of salt:

唱唱跳跳不慎早產 赴美孕婦墨西哥誕子

Too much fun leads to accidental pre-term delivery: pregnant woman going to U.S. gives birth in Mexico
http://hk.apple.nextmedia.com/international/art/20140228/18640489
2014年02月28日 28 February 2014
中國孕婦千辛萬苦赴美生子，結果生個墨西哥國籍的娃兒！網傳一名懷孕七月赴美產子的中國孕婦，因離預產期還早，就跟同一月子中心的其他孕婦去墨西哥旅遊，不料早產，生下一個男嬰，墨西哥籍。 A pregnant Chinese woman went through all sorts of hardships to go to the U.S. to give birth, but in the end she gave birth to a Mexican boy! A story is spreading on the internet about a seven-months pregnant Chinese woman who went to the U.S., but because it was still a while away from the expected date of birth, went on a trip to Mexico with another pregnant woman from the same birth centre, and unexpectedly had a pre-term delivery, giving birth to a baby boy, [who now has] Mexican citizenship.

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FATCA and China: still no news, just opinions, fantasies, and bad analogies

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Seeing as it’s been nearly eight months since I last wrote about this topic, I figured there’d be something new to say. But there really isn’t. The “best effort” negotiations conducted “as early as practicable” last summer with the aim of reaching a FATCA IGA “in advance of the January 2014 deadline in the legislation” have clearly produced no results, as law firm Dezan Shira’s China Briefing noted last week. Interestingly, mainland financial magazine Caijing reported on Dezan Shira’s article just yesterday — but only in English, not in Chinese. Other Compliance-Industrial Complex members are less honest about the lack of FATCA progress in China, and have taken to calling a pedestrian set of updated Chinese asset self-declaration regulations by the misleading name of “China FATCA” in an effort to generate hype.

The biggest genuine FATCA news I have to report is that finally, for the first time in nearly a year, a Hong Kong newspaper decided to let someone besides Patrick Yip at Deloitte and Jennifer Wong at KPMG say something about FATCA. Du Jinsong — apparently an MD in equity derivatives trading at Bank of China (International) Hong Kong — wrote a short opinion column in Wen Wei Po, one of Hong Kong’s “traditional left” pro-Beijing newspapers, telling us something we already know: Hong Kong’s finance industry would really like a FATCA IGA. What’s interesting about this column is the way in which he says it: he presents FATCA as a grand opportunity for Hong Kong to gain valuable “experience” with automatic information exchange and to help China to expand the previously-mentioned pedestrian set of updated asset self-declaration regulations into genuine control of the international financial system.

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Not “China FATCA”: foreign asset self-reporting under China’s new International Payments Statistical Declaration Regulations

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At the beginning of this year, China began implemented a new system of self-reporting for foreign assets by amending two-decade-old regulations which required reporting of foreign transactions. Though these amendments do not add any new reporting requirements for financial institutions, neither the old nor new regulations ever applied to Chinese citizens permanently resident abroad, they don’t violate the privacy laws of foreign countries, and the implementation of the regulations is actually proceeding on schedule rather than being delayed by years, the Compliance-Industrial complex has been quick to saddle it with the inaccurate name of “China’s FATCA”.

For a translation of the regulations and a brief analysis of the impact of the amendments, keep reading. This post probably won’t be of much use to U.S. Persons seeking practical advice for dealing with the citizenship-based taxation mess that the Homelanders have thrown at us; it’s a supplement to my next post that’s actually about China and FATCA.

Violation of 26 USC § 6103 in latest Federal Register list

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As Innocente notes, the Quarterly Publication of Individuals Who Have Chosen to Expatriate for Q4 2013 is now available for public inspection on the Federal Register website. The list has a bit more than 630 names; the usual caveat about the completeness of the list applies, especially seeing as, once again, the FBI’s count of renunciants is greater than the IRS’ count of renunciants, relinquishers, and green card abandoners combined.

Update: the FBI has also posted its latest monthly report on Active Records in the NICS Index, which showed 24,127 records in the “Renounced U.S. citizenship” category, up by 320 since the beginning of the year. That suggests the total number of renunciants and relinquishers during January was around 600. According to the Federal Denials report, NICS also caught one firearms purchase attempt last month by a renunciant or, more likely, a person fraudulently using a renunciant’s identity.

With the latest Federal Register list, fresh list author Maureen Manieri may have broken the United States of America’s tax laws in a creative new way: not just by submitting the list for publication after the 30-day deadline, but by disclosing information in violation of 26 USC § 6103, “Confidentiality and disclosure of returns and return information”: one entry in the list contains not just a name, but other information whose disclosure is illegal.

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Foreign Earned Income Exclusion on the chopping block again

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As part of their newly-published paper on “Options for Reducing the Deficit“, the Congressional Budget Office has suggested, as Option 12 (at page 130), to “Include All Income That U.S. Citizens Earn Abroad in Taxable Income” — in other words, to eliminate the Foreign Earned Income Exclusion and Foreign Housing Deduction. They estimate that this would bring in US$33.3 billion over the next five years, and US$88.5 billion by 2023 — roughly an order of magnitude more than the US$8.7 billion that FATCA is expected to reap in the course of a decade.

This is the third proposal this year to eliminate the FEIE. Eight months ago, the Congressional Progressive Caucus derided the FEIE as the “Foreign Earned Income Loophole” and claimed that eliminating it would raise US$71 billion over ten years (not clear whether they include the FHD in that number). Days before that, when Dennis Ross (R-FL) presented his own hilariously hypocritical plan to kill the FEIE so that corporations could enjoy territorial taxation, the Joint Committee on Taxation estimated that cutting both the FEIE and the FHD would raise US$36.3 billion over five years. CBO states that they are are using the JCT’s new estimates as updated for 2014.

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Relinquishment has same tax consequences as renunciation for new ex-U.S. citizen Tina Turner, contra Washington Post

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Coincidentally, on the same day that the latest Federal Register “published expatriates” list finally came out, the Washington Post “In the Loop” blog reports that Tina Turner has finally visited the U.S. embassy in Bern to sign her DS-4079 to confirm that she naturalised as a Swiss citizen with the intention of giving up U.S. citizenship. (No doubt the latter news will overshadow the former, and I fully expect that in the coming days some newspapers will mix up the two news items and erroneously report that Tina Turner appeared in the list.)

Anyway, the news of Tina’s relinquishment comes straight from the horse’s mouth — an embassy “activity report” (but not a public one?) — and is likely to be quite accurate, but the Washington Post wrote something else that comes from an anonymous and entirely misinformed reader:

The key word in the embassy report apparently is the term “relinquishment.” That means, a knowledgeable source told us, that she did not “formally renounce her U.S. citizenship under 349(a)(5) Immigration and Nationality Act, but took Swiss citizenship with the intent to lose her U.S. citizenship.” As opposed to formal renunciation — a much more complex process, we were told — there are no “tax or other penalties for loss of citizenship in this fashion.”

Writer Al Kamen was probably anxious to get the news out, but he was right to hedge this un-fact-checked quotation with “apparently” and “we were told”. (Update, 14 November: he has since issued a correction.) A reading of the actual text of 26 USC § 877A — the portion of the Internal Revenue Code which imposes the “exit tax” on newly-minted ex-citizens — confirms that the “knowledgeable source” is incorrect: the tax consequences are the same whether you renounce citizenship, relinquish citizenship, lose citizenship by court-ordered denaturalisation like an ex-Nazi, or even give up your green card when you were never a citizen at all.

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