FATCA Discussion Thread (Ask your questions) Part Two

3,498 thoughts on “FATCA Discussion Thread (Ask your questions) Part Two”

1. US Citizens outside the Berlin Wall. United States (Land of the Free?) major financial institutions forbid US citizens to live outside the USA and maintain investment accounts.

   http://samuelclemmons.wordpress.com/2014/06/28/us-citizens-outside-the-berlin-wall/

2. https://www.facebook.com/republicansoverseas/posts/269602166556919?fref=nf

   Sixteen RNC members, including six members of the 9-member RNC Resolution Committee joined Solomon Yue, Vice Chairman and CEO of Republicans Overseas to propose the following RNC resolution in order to end double taxation and FATCA for 7.6 million overseas Americans.

   Resolution Supporting “Residence Based Taxation”

   WHEREAS, Residence-Based Taxation, (RBT), is a fair, equitable, and efficient taxation of American Citizens living overseas because it taxes their worldwide income only once in the country where they actually reside and receive government services;

   WHEREAS, RBT would not only align U.S. law with the other industrialized countries, but also eliminate complex requirements and tax forms, such as the Foreign Account Tax Compliance Act (FATCA) and the Report of Foreign Bank and Financial Accounts (FBAR); and, it would significantly reduce IRS administrative expenses;

   WHEREAS, The United States is the only industrialized country in the world that taxes foreign-source income of its citizens living overseas by Citizenship-Based Taxation (CBT), resulting in double taxation; all other industrialized countries only tax foreign-source income of their citizens residing in their home country (Residence-Based Taxation or RBT);

   WHEREAS, The complexity of a U.S. tax return for an American living overseas and the significant additional penalties applicable to
   Americans living overseas requires these U.S. Citizens to hire expensive tax preparers; the cost of this double-taxation along with the costs of preparation and compliance put American job seekers at a competitive disadvantage to other non-American workers, thus costing American jobs;

   WHEREAS, The higher cost to hire American workers resulting from CBT causes multinational corporations, even those headquartered in America, to hire fewer Americans, to have less of a connection to America and purchase fewer American goods and services, thus decreasing American exports;

   WHEREAS, The Foreign Account Tax Compliance Act (FATCA), implemented as a result of CBT, has caused banks, both U.S. and foreign, to deny access to banking and other financial services to the 7.6 million Americans overseas, thus denying employment and investment opportunities and forcing them to choose between U.S. citizenship and their livelihood;

   WHEREAS, The implementation of FATCA to enforce CBT promotes the abandonment of the U.S. Dollar as the global reserve currency and hurts the U.S. economy; and

   WHEREAS, History reveals that replacing Citizenship-Based Taxation with Residence-Based Taxation will raise net Federal tax revenue because of increased economic growth, therefore be it

   RESOLVED, The Republican National Committee urges Congress to repeal Citizenship-Based Taxation and its supporting legislation such as FATCA and FBAR;

   RESOLVED, The Republican National Committee urges Congress to permit restoration of citizenship for those who were compelled to renounce their citizenship because of the crushing burdens of FATCA and FBAR; and

   RESOLVED, The Republican National Committee urges Congress to align U.S. law with the laws of other industrialized countries of the world by limiting taxation to Residence Based Taxation on American Citizens living overseas which will encourage increased employment of Americans and increased export of American goods and services.

   Chief Sponsor – Solomon Yue, Jr., Republican National Committeeman for Oregon (Vice Chairman and CEO of Republicans Overseas)
   1st Co-Sponsor – Carolyn McLarty, Republican National Committeewoman for Oklahoma (Chairman of the RNC Resolution Committee and Member of Republicans Overseas Board of Governors)
   2nd Co-Sponsor – Jeff Kent, Republican National Committeeman for Washington (Vice Chairman of the RNC and Member of Republicans Overseas Worldwide Advisory Committee)
   3rd Co-Sponsor – Demetra DeMonte, Republican National Committeewoman for Illinois (Secretary of the RNC and Chairman of Republicans Overseas Legal Action Fund Committee)
   4th Co-Sponsor – Helen Van Etten, Republican National Committeewoman for Kansas (Member of the RNC Executive Committee and Secretary of Republicans Overseas)
   5th Co-Sponsor – Melody Potter, Republican National Committeewoman for West Virginia (Member of the RNC Resolution Committee)
   6th Co-Sponsor – Bruce Ash, Republican National Committeeman for Arizona (Chairman of the RNC Standing Rules Committee and Chairman of Republicans Overseas)
   7th Co-Sponsor – Roger Villere, Jr., State Chairman of Louisiana (Vice Chairman of the RNC)
   8th Co-Sponsor – Rosie Tripp, Republican National Committeewoman for New Mexico (Member of the RNC Executive Committee and Republicans Overseas Board of Governors)
   9th Co-Sponsor – Pat Longo, Republican National Committeewoman for Connecticut (Member of the RNC Resolution Committee)
   10th Co-Sponsor – Raul Reynolds, Republican National Committeeman for Alabama (Member of the RNC Resolution Committee)
   11th Co-Sponsor – Debbie Joslin, Republican National Committeewoman for Alaska (Member of the RNC Resolution Committee)
   12th Co-Sponsor – Steve Scheffler, Republican National Committeeman for Iowa (Member of the RNC Resolution Committee)
   13th Co-Sponsor – Donna Cain, Republican National Committeewoman for Oregon
   14th Co-Sponsor – Linda Herren, Republican National Committeewoman for Georgia (Member of the RNC Budget Committee)
   15th Co-Sponsor – Cindy Costa, Republican National Committeewoman for South Carolina (Member of the RNC Executive Committee)
   16th Co-Sponsor – Susie Hudson, Republican National Committeewoman for Vermont (Member of the RNC Executive Committee and Republicans Overseas Legal Action Fund Committee)

3. US Treasury admits in clearest statement I have seen that the US is NOT able to provide reciprocity, and never ever intended for FATCA to apply to US FIs:

   “……… Accounting Today asked about complaints that companies are still able to skirt the FATCA requirements by setting up shell corporations in the U.S. without declaring the beneficial owners of them. The senior Treasury official noted that the Obama administration has a budget proposal to provide for such reporting but acknowledged that the FATCA requirements don’t currently apply to U.S. banks. “Under FATCA, under certain circumstances foreign banks have to identify the owners of entities that hold passive assets,” he said. “The reason for that is, if those people are U.S., it could be a way of holding assets. The United States, of course, is not subject literally to FATCA so we don’t provide exactly what has to be provided by other foreign financial institutions to us. The [Obama] administration has a budget proposal that would make FATCA what we call ‘reciprocal,’ that is to say, we would be giving the same information that we’re getting from other jurisdictions and in that space there is a proposal for United States financial institutions to learn about the owners of entities that hold passive assets and report them to our reciprocal-type jurisdictions………” http://www.accountingtoday.com/news/government_news/fatca-tax-withholding-deadline-takes-effect-71137-1.html

   Send a copy of this to Conservative MPs and anyone else you can think of re FATCA IGAs who says that Canada got a ‘good deal’. The US has never intended to provide for any reciprocity, it wasn’t contemplated by FATCA as designed and written, and it isn’t going to happen.

   Conservative MPs who passed the IGA can continue to twist the truth about FATCA, and they will, but in the end, the US is going to make it plain just how obvious it is that they are patsies for the US and traitors to Canada. And the more those who voted to implement FATCA inside Canada try to make the FATCA IGA smell like roses, the more BS they’ll have to shovel, since it is going to be increasing clear that the US NEVER intended any mutual assistance or data swap, and that FATCA is not any true adjunct to the existing Canada US treaty, nor does it have any MUTUAL aspect to it. It is and always has been intended to be a one way deal to buy the US a free lunch at the expense of all the taxpayers in the rest of the world, forever and ever.

   Re-read this Treasury official statement:
   ….”.The United States, of course, is not subject literally to FATCA so we don’t provide exactly what has to be provided by other foreign financial institutions to us…”…

4. Credit for the link to that Accounting Today quote from Treasury and lack of any FATCA reciprocity, as cited above, goes to this tweet by Just Me, https://twitter.com/FATCA_fallout/statuses/483960980079009792 which I saw here on USCitizenAbroad’s site http://renounceuscitizenship.wordpress.com/2014/07/01/anti-fatca-movement-gains-momentum-time-to-protest-canadian-banks/

5. More evidence that US ‘reciprocity’ under FATCA IGAs is not going to happen:

   “..“Delaware is highly protected by political lobbies in the US. A huge number of Fortune 500 companies use Delaware, and that is why it will be so hard to push through reciprocity in Congress,” said John Christensen, director of the Tax Justice Network in London. “Perhaps some of the most extraordinary discussions I’ve had have been in (the state of) Wyoming, where service companies and trust companies seem to compete with one another on being devastatingly secret and illegal. It is real Wild West territory and beyond the federal government. In terms of scale it is not like Delaware but tends to be attracting low life activities, not the Fortune 500, so a bottom feeder.”…”‘
   http://backinbeirut.blogspot.ca/2014/07/fatca-china-and-world.html

6. Interesting blog post by Allison Christians:
   http://taxpol.blogspot.ca/2014/06/irss-super-creditor-status.html

   “Thursday, June 26, 2014
   IRS’s “Super creditor” status
   Bryan Skarlatos recently testified to the House Ways & Means Committee about the IRS’s “Super creditor” status via its federal tax lien power. Given the global nature of the US tax jurisdiction over nonresidents with US person status, the powers of the IRS to seize assets in satisfaction of tax debts is of increasing interest. I think this power is very likely to be ill-understood by those outside the United States. Looking ahead at life under FATCA, consider that soon the IRS will have the information to start assessing tax debts on its global diaspora, and then we will see what happens.
   “……………

7. So how likely is it that the USA is going to adopt the same RBT (residence based taxation) system like the rest of the world, and how long is this going to take?

   I am asking because the CBT/FATCA/FBAR issue is the main reason* for us to decide against the green cards that we are able to get within weeks from now…the obligation on so called “US Persons” to continue to file taxes, declaring assets and bank accounts and thereby even discriminating against local (to them: “offshore”) pension funds etc as not in line with US income tax codes…., all while actually living overseas for say a few years…in another jurisdiction….paying taxes THERE, … is simply modern day slavery.

   So for as long as the USA hurts its expat community and thereby the US Nation as a whole for lack of fair play in a globalized world, we will most likely reject the green cards in a last minute decision.

   I actually know of quite a few other people from modern industrialized nations, who are also close to getting their green cards (via the DV lottery) and who have serious doubts, too for those reasons.

   Why would you punish 99.99% of global expats with US ties, for claiming to expose some dodgy tax cheat who is actually living onshore in the USA? This is beyond ridiculous. The US Govt hurts its people, its economy and its reputation. I can tell you that currently, in most of Europe, people are getting increasingly aware of what US policy on so called “free trade” (re: TTIP) means to them: Genetically modified food crap to Europe, legal basis for big corps to sue by superseding national consumer laws…the list goes on and on……then came FATCA and the US showed even more of its ugly face.

8. Rob,
   I’d say it’s not impossible, but in my view it is extremely unlikely that the USA will adopt RBT. In the near term it can be ruled out for all intents and purposes. Even if there was substantial support for it among a majority of politicians who are in a position to introduce legislation for it (there currenlty isn’t, not by a long shot), it would take years to actually put it into place.

   I wouldn’t advise anyone to accept a green card from the USA. The US govt. is very much aware of what it is doing to anyone unfortunate enough to have the stigma of “US personhood”, and the situation is much more likely to get worse than better. IMHO.

9. @Rob, I have to agree with NotAmused. Although one of the Republican committees has called for a change to RBT it’s by no means a certainty that the Republican party would commit to this as part of their election promises and, even if they by some chance did, it would take years to come up with the new legislation and get it passed through Congress.

   Until either RBT is adopted or FATCA repealed – or both – I’d avoid the Green Card like the plague unless you REALLY want to live in the US for the rest of your lives. If you can see it as being your “home” forever and you want to try and get US citizenship later on, then it’s a different matter of course. But if you plan to be there only a few years and then return to your home country or move elsewhere I’d forget it.

10. @Rob

    Chances of going to RBT…. I would say… slim to none… I have spoken to many people as I can… Don’t do it… Residence cards in other countries… when they expire… u can just renew it or let it lapse & move on… easily… Alot of countries understand… Immigrants have/had lives outside of their countries… what we own there… they don’t care.. only pay on what we have in their countries…

    I am so sorry my family took the gc… this has been a noose around our necks… We got it because we are so close to the US border… we could earn a living & still go back & forth… We are treated as fake citizens… have to pay for everything as citizens do but we no rights to vote, or have gov’t representation, & a kick in the teeth… we have to pay an exit tax to leave… which we knew nothing about. We thought the taxes were the same as other countries… this can & will be devasting to our funds… GC is so not worth it because it makes all immigrants tax slaves if we stay or go… Even if the card expires & u leave… u have to formally give it up… we did not even know that… We thought it expired… its done…. now we find out… nope.. still a tax slave to the US but we can’t leave there

11. **still a tax slave to the US **but we can’t leave there**

    Geez… I meant… we can’t live there… sorry about that… hard to proof & work at the same time

12. Canada seems satisfied with the mere promise of FATCA reciprocity. With their threat of extortion, the US could have promised us the moon and it would not have made any difference.

13. Hi, I have asked a variation of this question before but I’m stuck on the implications of it so, sorry if I’m flogging the horse. Now that FACTA is law, won’t large employers such as CN, CP etc and publicly funded institutions such as universities and hospitals, have to identify all their American employees to be sure they’re do not have signing authority on any accounts?
    I hope I’m just overacting again. Because if I’m not then this has huge employment and social implications.
    Thanks for your thoughts and your patience.
    Xlch

14. @Rob
    I believe that it’s only after you’ve become a long-term green card holder that you have tax issues.
    See: http://hodgen.com/green-card-received-in-2007-expatriate-in-2013-or-else/
    Note that the article was written in 2013, so presumably it’s 2008 that’s now significant.

15. @tdott

    Definition of long-term can change on a whim. I rather not risk my future on that. Alot of canadians got the GC & just tossed it into a drawer…. forgot about it… low & behold… u are screwed… That is why I warn all I meet or know… don’t go… lots & lots of other places u can go to make money without this noose…

16. Sorry no one got back to you on your question, Hdxlch. Since I didn’t know how to answer, I ran your question by a lawyer who frequently posts here. He says:

    No, I don’t see any reason why large employers would be required to identify anyone. The reporting obligation is on the person with the signing authority.

    That would put them in the same position as our “foreign financial institutions” — and Canada hasn’t passed legislation that goes that far.

17. http://federaltaxcrimes.blogspot.ca/2014/07/irs-letter-to-congressman-defending-its.html

    ‘Wednesday, July 2, 2014
    IRS Letter to Congressman Defending Its Implementation of FATCA (7/2/14)
    June 23, 2014’

    “June 23, 2014

    The Honorable Bill Posey
    U.S. House of Representatives
    Washington, DC 20515

    Dear Representative Posey:”……….

    “..Your letter also asks about statutory authority to enter into and implement the IGAs. The United States relies, among other things, on the following authorities to enter into and implement the IGAs: 22 USC Section 2656; Internal Revenue Code Sections 1471, 1474(f), 6011, and 6103(k)(4) and Subtitle F, Chapter 61, Subchapter A, Part III, Subpart B (Information Concerning Transactions with Other Persons).

    The Treasury Department and the IRS will continue to work closely with businesses and foreign governments to implement FATCA, including implementation by means of IGAs, in a manner that appropriately balances the compliance objectives of the statute with whatever burdens the statue imposes.

    We appreciate your continued attention to this important effort to reduce tax evasion. If you have additional questions, please contact Sandra Salstrom, Office of Legislative Affairs, at (202) 622-1900.

    Sincerely,

    Alastair M. Fitzpayne
    Assistant Secretary for Legislative
    Affairs “

18. @Calgary411
    Thanks for making the time to investigate it and for getting a legal opinion. It’s very reassuring to know that we’re not going down a very ugly road.

19. hdxlch: The road we’re on is ugly enough.

20. http://taxfoundation.org/blog/foreign-account-tax-compliance-act-fatca-goes-force-today

    “the law may be pushing to disengage with the U.S. tax system altogether. Since 2010, about 8200 people have renounced their U.S. citizenship, 2999 of those happening in 2013 alone. This is compared with the relatively low-level of expatriations in the previous decade (about 500 a year). According to international tax experts, a major reason for this increase in renounced citizenships is the “ever-increasing burden of complying with U.S. tax laws.” If people with assets held abroad continue to renounce their citizenship, it is likely that FATCA will raise even less revenue than predicted. That would defeat the purpose of the law.

    Instead of being a fix to prevent tax evasion, FATCA is a poor bandage for a broken tax system.”

21. @Hdxlch

    Those organizations do not have to perform , however read the FBAR reporting form and see what reporting is required of US persons and get an idea to the answer to your question.

22. @MuzzledNoMore, if this road is not ugly, I do not want to see UGLY.

23. @Badger, it’s been obvious for some time that this was happening so not really a surprise. Except maybe to the IRS/Congress idiots. And once people have left, there’s no cash cows to milk any more. They thought the golden goose they’d found was going to keep laying and laying; well sorry folks, but no we’re not.

24. Actually what they are going to find out is what they thought were golden geese are merely sitting ducks soon to fly the coop. We will have been of much better value had we been left alone rather than forcing us to replace any allegiance we may have had for the US with resentment and anger.

25. @Mark Twain- I’ve been avoiding that but yes, it’s about time i finally had a look at it so I took your advice and now I’m even more confused. If I had a position where i had control of a budget then I would have to report the budget amount, the company or organization, their BANK ACCOUNT INFORMATION??? If i worked for a company which competes against a US company then I’d be giving away private company information to the US!! What if I worked for SPAR Aerospace, CN, CP, Bell&Howell, and I was responsible for an R&D budget! Unless I completely missunderstood that form, i would have to give away information which could be used to determine how much they are investing in a specific project. How come CDN businesses are not screaming bloody murder about this? And doesn’t it mean that the American who’s running CP might be reporting CP financial information to the IRS? I realize that’s a simplistic view but I think it illustrates a point that this is detrimental to CDN busniesses- if I am not completely mistaken about the form.
    Also, line 35 on No Financial Interest, they want a TIN for the organization. Would every CDN business have a US TIN? would this form be accepted without one or would the filer be flagged as non-compliant or at least flagged for an audit?
    My questions have turned into a rant. sorry. I hope my concernes are moot and i simply do not understand the No Financial Interest Account Information. thanks for your attention if you’ve read this far.