FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
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NB: This discussion is a continuation of an older discussion that became too large for our software to handle well. See FATCA Discussion Thread (Ask your questions) for earlier discussion.
Just a comment that those responsible for the murder of the American journalist in Syria are apparently British. It is deeply worrying that inside Britain, banks and other financial institutions will be trying to find out whether their clients are United States citizens, will be making and keeping (with what security?) notations of information that includes their names, addresses, bank accounts, etc., will be transmitting that information to HMRC (with what security?) and that HMRC will then transmit that information (with what security?) to the IRS where it will be held (with what security?). And of course there are the e-filed FBARs ripe for hacking. Maybe it is irrational to fear to be identified as a US person in Britain, but in other places, it most certainly is not irrational.
Democrats Abroad issues a FATCA update – and manages to do so without any mention that Canadians are taking the FATCA IGA to court and that so many Canadians are renouncing that the Toronto consulate is prebooked up to late January 2015. To the Democrats Abroad, it apparently doesn’t warrant notice or comment despite the fact that this is occurring in the US nearest trading partner with the second largest population of those deemed ‘US persons’ outside the US (Mexico is first) .
They also gloss over the problems and uncertainties with Streamlined and dismiss the costs of compliance from abroad:
“…….Democrats Abroad is aware of recent media reports that published what we believe are highly misleading estimates about the cost of tax advice. The “big brand” global tax advisers that cater to high net worth individuals probably charge at a level in the tens of thousands of dollars, but their fees reflect the level of work required to prepare the accounts of taxpayers who have complex investment portfolios.
There are services available to Americans abroad that are far more reasonably priced and we recommend that you visit the American Citizen Services section of the website of your local US embassy or consulate to see if they post a listing of local expat tax service providers. ”
https://www.democratsabroad.org/group/fbarfatca/august-2014-fatca-frequently-asked-questions-reference-our-work-reforming-fatca
@qm
This is indeed a huge concern. In some countries you could be listed on “the database” simply for exhibiting US Indicia and you would not even know it. All significant financial institutions will be upgrading their IT systems (if they have not already done so) to record the “FATCA status” of each account holder. In some countries (such as New Zealand) this information will be collected when accounts are open even if they are never reported to the home government as the reporting thresholds are not met. The “US person” taint will still be recorded.
There is a very real risk of the data being hacked or intercepted while in transit between, or stored at, the various organisations involved. Perhaps worse, what is to stop a bank worker leaking the names and addresses of US Citizens to extremist persons or organisations?
Costs of collaborating with US FATCA implemented in the UK, for ordinary UK citizens and taxpayers:
http://www.telegraph.co.uk/finance/personalfinance/tax/11050777/British-families-billed-500-to-prevent-Americans-dodging-tax.html
‘British families billed £500 – to prevent Americans dodging tax
New US tax measures, aimed at helping American authorities collect tax from their overseas citizens, are leaving innocent Britons out of pocket ‘
By Kyle Caldwell
8:01AM BST 23 Aug 2014
” Draconian legislation enacted in America – and aimed solely at helping American authorities collect tax from their overseas citizens – is translating into bills of hundreds of pounds for ordinary British families.
The total cost to British businesses and individuals of abiding by the new US laws, which became effective here only last month, is put at £1bn. Most people will pay unknowingly through higher fees for their investments, banking and other services. But for some families the costs are more explicit. And the invoices are starting to land on their doormats…….”
“……tens of thousands of other families are beginning to receive letters, and invoices, simply because they have established run-of-the-mill family trusts. …..”….” Although it was established for wholly innocent reasons, this trust along with an estimated 100,000 others now falls within the far-reaching scope of FATCA.
Once the review is undertaken, if the accountant is satisfied the trust does not need to fulfil any further obligations under FATCA, there are no further costs – and no information will be passed on to HMRC or the American authorities. “This whole process seems extraordinary,” said Mr Stewart. “The trust just has a property inside that is not providing any income so I don’t understand why it needs to be reviewed, simply to satisfy regulation introduced by another country.”………..” It is different for those people who have set up trusts. They will be contacted irrespective of whether there is any suggestion of a US connection and, as with the Stewart family, they may have to pay their accountant to undertake a review. About 100,000 trusts could be affected including those set up to look after children’s assets or reduce inheritance tax.
……….”………The UK divisions of firms have hastily complied – at customers’ expense. ”
And Canada? Where is the cost/benefit analysis from the Harper government? Or from NZ, Australia, etc. governments ?
We can’t get RRSPs and RRIFs automatically from US extraterritorial taxation and form filing and penalty regimes, but:
http://www.bna.com/foreign-investors-push-n17179893998/
“Foreign Investors Push Tax Exemption as Route to Fund U.S. Highways
Wednesday, August 20, 2014
from Daily Tax Report(1)
Aug. 19 –
“U.S. lawmakers desperate for revenue to pay for roads and bridges are hearing a novel pitch from the north: cut taxes by billions of dollars.
Canadian pension funds have quietly pressed Congress to spare them a 35 percent tax that applies to foreigners who invest in U.S. real property, promising a flurry of investment in U.S. public works projects in return, according to lobbyists and others familiar with their overtures.
The effort by Canadian funds-including the biggest in the country, the Canadian Pension Plan Investment Board-is also reflected at the White House, where the Obama administration has tried to rekindle an idea it floated in 2014 and 2015 budget requests to exempt all foreign pension funds from the Foreign Investment in Real Property Tax Act, which the administration said would spur enough investment to outpace a projected $2.2 billion in forgone tax revenue. “
@badger
The link to the Telegraph article does not seem to be working?
Badger: Do you think the British public will start a major push-back against their government now that the chickens are finally coming home to roost? The British government has a great deal to answer for, in my opinion, having been the first government to sign on to the FATCA travesty.
Below is an invitation to send in debate questions to Free & Equal debates for candidates. A small quantity of questioners should get a good response, then the debates are televised on web tv.
You’ll need to formulate your questions so that it doesn’t create the Homeland Backlash (you don’t want the answer to be to “They should all go and denounce themselves”).
I don’t think you need to donate in order to ask the question (that would be illegal)
———————
http://us3.campaign-archive2.com/?u=32d7ea9e5ff3d6e89c13e9208&id=0c0803bdd5&e=f8232621a5
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http://blogs.angloinfo.com/us-tax/2014/08/25/iran-sanctions-becoming-us-tax-compliant-poses-a-hidden-problem-for-many-iranian-americans/#.U_qwDYOZEWo.twitter
More news from the Land of the Free.
US citizens are some of the least free individuals in the world.
“Iran Sanctions – Becoming US Tax Compliant Poses A Hidden Problem For Many Iranian-Americans
August 25, 2014
Along with a host of others, many US-Iranian dual nationals are now becoming aware of their US tax and reporting obligations and trying to become US tax compliant. All fine and good. In advising these clients, however, the professional cannot forget that Iran is a sanctioned country and that the US has some very complicated sanction rules in place with Iran. Generally, the sanction rules prohibit US persons from engaging in most business activities with Iran unless a license is first obtained from the U.S. Treasury Department’s Office of Foreign Assets Control (OFAC).
My blog post today, imparts knowledge graciously shared by George M. Clarke, a tax partner at Baker & McKenzie in Washington D.C. George and I have worked on a number of very complex tax matters together and George has an expertise in dealing with the thorny issues presented when the Iran sanction laws and US tax laws create a dangerous combination for a client with Iranian connections who wishes to become US tax compliant.
Who is a “US Person” Subject to Iran Sanction Rules?
First, who is a “US person” subject to the Iranian Transaction Regulations (ITR)? The answer given ….”
@osgood, here is the link, which is working for me http://www.telegraph.co.uk/finance/personalfinance/tax/11050777/British-families-billed-500-to-prevent-Americans-dodging-tax.html
‘New US tax measures, aimed at helping American authorities collect tax from their overseas citizens, are leaving innocent Britons out of pocket ‘
http://profwilliambyrnes.com/2014/08/22/fatca-lecture-remarks-of-2nd-week-for-seminar-b-professor-william-byrnes/
‘FATCA lecture notes for Seminar B (W-8BEN intro, 2nd lecture)’
see also:
Chapter 1 which is available for download at http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2457671
Further to my recent post with regard to Aberdeen Asset Management in Australia I emailed them concerning their apparent prohibition of former US Persons from investing with them. They replied as follows:
I’m not sure if they didn’t understand the due diligence requirements or if they changed their mind. You still aren’t able to invest with them if you are a fully documented tax compliant US Person.
@Osgood, well not such a big surprise. You can’t invest here in Switzerland either now if you’re a US citizen and fully tax compliant. Not via the banks anyway, unless you have several million to throw around. Good that they’ve responded to your query though and made it more clear.
Osgood: Thank you for writing to Aberdeen and getting clarification on that. It doesn’t change the fact that by refusing to serve fully compliant Americans the company is engaged in national-origin discrimination in opposition to the United Nations Declaration of Human Rights and probably also against the human rights laws of Australia.
I though you might like this from the Australian Financial Review:
http://www.afr.com/p/business/financial_services/big_banks_stall_on_global_tax_evasion_KUurnKuqx7NMlYgpgcH2yM
http://lawprofessors.typepad.com/intfinlaw/2014/09/fatca-ffi-update-and-it-doesnt-look-pretty-september-did-not-break-100000.html
Tuesday, September 2, 2014
‘FATCA FFI Update and It Doesn’t Look Pretty. September Did Not Break 100,000!’
By William Byrnes
“The IRS published its September list of 99,861 FFIs registered for FATCA. But that’s just an increase of about 4,500 registrations since the August list of 95,239. The disappointing September result is a harbringer of the rough waters ahead for general FATCA compliance…….”………..
….”How Many Foreign Financial Institutions Are Still Not Registered? Most!
Most pundits thought at least 20% of the FFIs requiring FATCA registration would have done so by September – with only 120 days left before the precipice of 30% withholding begins against IGA countries. 120,000 is the minimum number brought up by industry for the September list that would need be registered to show wide compliance buy-in. The declining increase is indeed troubling. Total global compliance remains less than 20% by both the IRS and foreign government estimated numbers.”………..
@Badger
Unfortunately most of us live in countries with IGA’s where the low-hanging plump fruit grow, Canada, Mexico and the UK.
I can’t help but notice that US compliance is minimal….why aren’t other countries crying foul on the “reciprocity” issue?
@GwEvil, too busy trying to become US FATCA compliant. I think there have been some requests, but how many versus what the US may have asked for I don’t know. The US uses what is called a “John Doe” warrant or summons to check accounts where a country has requested info.
http://www.capdale.com/david-rosenbloom-comments-on-domestic-fatca-requirements-possibly-complicating-compliance
‘David Rosenbloom Comments on Domestic FATCA Requirements Possibly Complicating Compliance’
August 27, 2014, International Tax Monitor
“Nations’ Domestic FATCA Requirements Could Complicate Compliance, Practioners Say »
“The International Tax Monitor interviewed H. David Rosenbloom and other practitioners regarding differences among intergovernmental agreements (IGAs). Practitioners disagreed on whether those differences could seriously complicate FATCA compliance for businesses. However, many agreed that a country’s domestic implementation requirements could create stricter compliance obligations than FATCA. For the complete article, please click on the link above to view a PDF.
Excerpt taken from the article.
“……The U.S. cannot directly impose FATCA’s legal reporting obligation on non-U.S. persons with no connection to the U.S., so it imposes that obligation on U.S. withholding agents, institutions or other entities making payments to non-U.S. financial institutions…..”….
…”…..The U.S. government is trying to get as much information about U.S. depositors and owners as it possibly can from anybody around the world,” said H. David Rosenbloom at Caplin & Drysdale…….”……….
…..”……..Rosenbloom, who recently negotiated a Model 1 IGA for a jurisdiction, said: “My client insisted on putting in some things that are a little divergent. But just like for tax treaties, there could be variations in the text of IGAs, depending on the particular negotiation and the specific country, but the differences are unlikely to have much cross-border impact.”
“[The U.S.] is not trying to do one-off deals with countries and give them unique terms,” he added….”…………..
…………….”….IGA Terms ‘Lack Clarity.’
Many FATCA terms and phrases in IGAs “lack clarity,” so guidance notes would clearly make compliance easier, said Rosenbloom, adding, “I think the IRS and Treasury would be inclined, in the absence of stiff resistance from the other side, to use [the U.K.] guidance notes in interpreting IGAs that don’t have guidance notes.”….
……”..Domestic Implementation Concerns
Rosenbloom said the degree of compliance with FATCA IGA Model 1 will depend on what local authorities require as they put in place processes for getting information that they can turn over to the U.S. “That is going to vary country-by-country, at the least,” he said.
Jurisdictions are free to impose a stricter standard, such as requiring reporting of accounts under $50,000—even of all accounts—or setting tighter deadlines, and to set their own noncompliance penalties, Corwin said……”….
See full PDF linked in title of article on Caplin site.
Note that the H. David Rosenbloom of Caplin is the same one here, “appearing as an individual” speaking before the Finance Committee on Feb. 7th, 2013;
“Evidence of meeting #103 for Finance in the 41st Parliament, 1st Session. (The original version is on Parliament’s site, as are the minutes.)
A recording is available from Parliament”
http://openparliament.ca/committees/finance/41-1/129/h-david-rosenbloom-2/
..”.I would add two thoughts on the basis of what I have heard thus far in this hearing. I throw them out for further elaboration. One, I do suggest to the committee that you carefully distinguish between concern about corporate-level tax avoidance, the use of tax havens by multinational companies, and transfer pricing, things that concern the multinational company on the one hand, and things that concern individuals taxpayers on the other. For the most part there we’re talking about offshore accounts, the use of offshore trusts, etc. I think we’re talking about two related but distinct problems, and I think there ought to be different responses.”
More results, see:
https://openparliament.ca/search/?q=%22David+Rosenbloom%22
‘FATCA Threatens Russia’s Financial System, Official Says’
The Moscow Times
Sep. 04 2014 16:37
“FATCA, the U.S.’s global tax avoidance law, is a threat to Russia’s financial system, the head of Russia’s money laundering watchdog said Thursday, in the latest outburst from a Russian official against Washington’s unilateral application of its own laws beyond its borders….”.
..””In effect our financial institutions will become tax agents, tax informants for the U.S. economy,”……….
…”In substance, FATCA is a sanction, he said, adding that such mechanisms would only be acceptable if they were multilateral…..”…..
http://www.themoscowtimes.com/business/article/fatca-threatens-russia-s-financial-system-official-says/506452.html
http://www.vancouversun.com/Douglas+Todd+Ameri+Canadians+point+fury+Uncle/10178232/story.html
‘Douglas Todd: Ameri-Canadians point fury at Uncle Sam’
“Canada has millions of people with some sort of American connection; U.S. tax laws have many of them burying or even formally giving up their American roots”
By Douglas Todd, Vancouver Sun columnist September 5, 2014 11:52 AM
“With the Canadian government’s decision to comply in July with a Washington tax crackdown on “U.S. persons” around the world, many Ameri-Canadians are feeling rising anger, fear and even hatred toward their powerful country of origin”……..
“…Anti-FATCA websites in Canada, such as the Isaac Brock Society, are urging Americans to renounce their U.S. citizenship — and to show their positive commitment to Canada….”…
…..
“But, except for writing this column, I basically never think of myself as having American origins……..”
“Ameri-Canadian”, another word for pariah.
I tend to not talk much when in Europe among strangers. My Ameri accent gives me away. I can truthfully say I am Ameri Canadian but only a Canadian citizen since I have my CLN. Good article Badger Thanks for posting.
It seems that 95 percent of my emails are about FATCA. I put lots of time reading them. I commend and thank all of you who put so much more time into finding and posting them.
You are my heroes.