FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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.
http://www.telegraph.co.uk/finance/personalfinance/tax/11077310/No-Isas-for-Americans-Post-Office-overreacts-over-hated-US-tax-law.html
‘No Isas for Americans: Post Office ‘overreacts’ over hated US tax law
The Post Office has said it will no longer stop US citizens from applying for a cash Isa ‘
” The draconian US tax legislation which is creating nightmares for US expats and ordinary British savers alike has struck again – this time at the Post Office.
Following recent reports in these pages on the Foreign Account Tax Compliant Act (or “Fatca”), an American citizen, who is also a British resident, contacted us to complain that he was turned away when trying to opening a Post Office Isa.
It emerged that well in advance of Fatca applying in Britain the Post Office introduced terms barring US citizens from opening Isas. HMRC rules make Isas available to all UK residents, regardless of citizenship.
Among those who would not have been able to take out a Cash Isa with the Post Office is Boris Johnson, the Mayor of London, who was born in New York and holds a US passport. …”……..
from new blog post by Prof. Allison Christians:
Friday, September 5, 2014
‘The power to tax ‘
“…With FATCA, the US is using its sheer economic clout to get the whole world involved in chasing what it deems to be “US persons” for their tax tribute, without any discussion about whether the state’s unilateral conferring of citizenship constitutes consent to (permanent and worldwide) taxation. Indeed, it continues to erect ever-higher barriers to shedding that status, without a single policy discussion at any level of government about the merits of this action. Those who think not can be expected to resist per Foucault, or, if it suits your taste better, Locke:
[People] therefore in society having property, they have such a right to the goods, which by the law of the community are their’s, that no body hath a right to take their substance or any part of it from them, without their own consent: without this they have no property at all; for I have truly no property in that, which another can by right take from me, when he pleases, against my consent…”…
http://taxpol.blogspot.ca/2014/09/the-power-to-tax.html
@Badger
“Among those who would not have been able to take out a Cash Isa with the Post Office is Boris Johnson, the Mayor of London, who was born in New York and holds a US passport.”……..
As Medea pointed out on a previous post. Boris Johnson is again running for a parliamentary seat, some say he has his eye on being Prime Minister. If this happened or he were to become Chancellor of the Exchequer with a signature authority over Gov accounts, they would all have to be declared to the IRS.
Absolutely CRAZY.
After his first outburst at being stopped at the airport he now seems to be strangely silent on his situation.
from website for UScitizens in the Czech republic:
http://www.expats.cz/prague/article/money/the-truth-about-US-expat-taxes/
http://www.thenewamerican.com/usnews/politics/item/19072-gop-votes-to-end-tax-regime-that-is-crushing-americans-abroad
Monday, 08 September 2014 09:56
‘GOP Votes to End Tax Regime That Is Crushing Americans Abroad ‘
Why do people say that adopting RBT will eliminate FATCA and FBAR? The US will still want those programs to catch wealthy American _residents_ who hide assets and income in offshore accounts.
Yes, there is the huge benefit that non-residents would not have to file taxes, FBARs, or be reported by FATCA, and life would be as it should be. However, the US likely would still want to force FFIs around the world to report on accounts held by US residents and the cost to FFIs for FATCA or its global equivalent would still be there.
@WhatAmI, they can do that either by the existing pre-FATCA laws where they had to provide enough evidence to warrant getting the info or they can man up and properly become part of the European anti-tax evasion plan that’s heading our way.
Japanese banks seem to be a bit slow in ramping up for FATCA. In the past 4 weeks my wife and I have opened new accounts at 5 different banks, and only one had Yes/No checkboxes for US person, with the accompanying definition. One bank had Japan/Other checkboxes for nationality, and the other 3 banks were no questions asked.
I have a question I’m hoping you can help me with. I’m lucky that this isn’t a life changing problem, but more a question of how many of my rights I’m willing to sign away.
I live in Switzerland (always have), and my bank, UBS, has sent me a W-9 form to fill out. Signing this form also requires me to waive all rights and protections I have enjoyed under Swiss law as far as my finances go.
I’m tax compliant with the IRS, and I’m up to date on my FBARs. I earn little enough that I could use the streamlined procedure to become compliant. They already know about my accounts, so my hesitation isn’t about wanting to hide anything.
I don’t want to sign this because my Swiss rights are precious to me and I don’t want to sign them away voluntarily.
If I don’t sign, apparently my account will be classed as recalcitrant, and Swiss banks will send the total number of recalcitrant accounts and total amount of money in these accounts to the DOJ, which means the DOJ can ask Swiss authorities for assistance in implementing their tax treaty, at which point the banks can send your private information to the IRS without your permission (i.e: “Sorry US persons, you’re not protected by Swiss law”).
In a way, I’d almost prefer to let the IRS work to dig up the information on my account, and make them have to extract it against my will, than to just open up the door to them and invite them in (Hello 4th amendment!:-). Let them go through all that work just to find my small, tax compliant accounts. But am I causing needless trouble for myself? A part of me is telling me to just play along, but waiving my rights just seems wrong.
My questions: Signing a W-9 is not a legal requirement for ME, but for my BANK, right? I’m pretty sure I’m going to need to close these accounts, but the IRS can’t come after me for not signing that form, right? What can happen if I don’t sign, but remain tax compliant? Am I inviting a IRS audit that will cause me grief?
What would you do?
I’m still not sure what my future plans are for my citizenship. I’m becoming a Swiss citizen, and at that point I could relinquish. If I don’t relinquish right away though, and file taxes again, that means that I’m affirming my US citizenship, and I won’t be able to relinquish (correct me if I’m wrong). Up to now, I figured that I could always renounce and pay the 450$ later if necessary. Now the price is 2350$, and who knows where the price will go next. The wall is getting higher, and I’m getting nervous. Suddenly I’m realising that I will have to relinquish right away, or take the risk of being stuck with my citizenship. At the same time, the anti FATCA, anti CBT movement is picking up momentum, and I’ll feel silly if I give up my citizenship right before CBT ends. I really don’t know.
Thanks for your opinions and input.
@AJ
The W-8 and W-9 forms were supposed to be for your bank to have on file so they know how to treat any US source income that you have in your account (for instance dividends from US listed companies like Verizon). A W-9 means you’re exempt from US withholding but they then send that info to the IRS. W-8 means you have withholding of 30% on dividends (lower if you claim the treaty rate). It used to be the case that trading of US stocks was automatically disabled and to enable it you had to fill out one or the other form. But the purpose of W-8/W-9 has changed dramatically and it’s now required by FFIs even when you have no US source income. You should check the Swiss “enabling” legislation to see if it is a legal requirement to provide it.
You should also understand clearly from UBS if there are negative consequences for you of not providing it. For instance, would they subject you to “backup withholding”? I have heard of one case (not in Switzerland) where an FFI said that failure to provide a W-9 for a trading account belonging to a person with US indicia would lead to ALL (not just US source) income being subjected to 30% backup withholding in addition to the withholding of local taxes. That’s 30% of interest, capital gains, dividends etc. getting shipped off to the US and, if I understand correctly, it’s only the IRS that can remove backup withholding from your account and that can take ages to accomplish.
@heidi, the case of Boris Johnson is very interesting.; “If this happened or he were to become Chancellor of the Exchequer with a signature authority over Gov accounts, they would all have to be declared to the IRS.”…. He won’t be the only one in that position in the world. Question is who in that position is actually complying – if anyone?
The case of David Alward, Conservative Premier of New Brunswick was also interesting http://en.wikipedia.org/wiki/David_Alward who was reported to have entered the OVDI in 2011 http://intltax.typepad.com/intltax_blog/2011/10/new-brunswick-premier-caught-in-us-tax-net.html http://hodgen.com/new-brunswick-premier-is-in-the-ovdi/ . Wonder how he feels about the FATCA IGA and legislation his own Conservative party – though at the federal level, enacted to bind and report Canadians like him to the IRS? And did his FBARs include any government accounts?
bit.ly/1qDFxzq Give U.S. this day our daily bread. For thine is the kingdom!
The IRS is demanded to take its mandate to decide if church speech is taxable or non-taxable.
@AJ, you seem to be a bit confused about what you need to do here. If you’re already US tax compliant there’s no need for you to enter Streamlined or any other OVDP. Why would you think you need to? Those programs are only for people who aren’t compliant with their US tax filings.
If you’re applying for Swiss citizenship how far along are you in the process? It can take from a few months to a couple of years. In the meantime you’ve got to continue doing your US tax filing/FBAR until you get your Swiss citizenship. Then you can relinquish. If you decide to wait to see what happens with the RBT and Republicans a) it could be many years before we even see CBT replaced and b) the price will probably keep going up for renouncing. They may also grant an amnesty for those who relinquished/renounced due to the FATCA situation, but again that will probably not happen immediately.
As for the W-9, although I understand your wish to protect your Swiss rights I really don’t think it’s worth you refusing to sign the document. If you refuse to sign and close out your accounts what are you going to do then? Any other bank in Switzerland is going to require you to sign the W-9 when you try and open an account with them so you’d be without any accounts here at all. The other possibility is that you refuse to sign and UBS close the accounts themselves. They’re not required to under the IGA, but it doesn’t mean they won’t anyway. Edelweiss has outlined the other possibility of the 30% withholding being applied.
You sound to me as if you really don’t want to give up your citizenship, but are unhappy with what you have to do to keep your accounts nowadays. You need to do some soul searching and decide whether you want to stay as an American regardless or whether you don’t. Only then can you take the next steps.
Somewhere else, a guy wrote something along the lines of : Welcome to Paraguay! Land of the free! No FATCA here so you can open an account and are free to do as you like with it.
Is that so?
Thanks for the replies! To clarify my situation: when I mentioned the streamlined procedure, it was in the past tense: about two years ago, since I didn’t have much income, I was able to enter the streamlined procedure without problem, and that’s why I’m now IRS compliant.
I also have an account at Postfinance, and they haven’t asked me for any forms yet, even though I told my adviser that I was American when I first opened the account. I’m not too bothered about not having a UBS account any more. Also, these are purely savings/checking accounts, and I have no investment income, so there is nothing for them to withhold.
As far as becoming Swiss goes, I’ve already been approved by my commune and by the Confederation, and in three weeks I’ll be interviewed by the Canton. Hopefully I’ll be Swiss by next spring by the latest, possibly even this year still.
I’m pretty sure nothing bad will happen if I sign the W-9, and I might be just rocking the boat for no reason. It just feels wrong though, and sometimes it seems the boat needs some rocking…:-)
Thanks
@AJ, I’m not sure if I’d sign the papers. Who knows when the Swiss govt. smells the roses and starts asking the swiss banks for information concerning swiss tax payers? When that happens the bank will happily give the local “Steuerverwaltung” your info ’cause you’ve already given up your rights! But like Medea said here in CH if you are a “US person” I don’t think there is any way around giving up your right here in CH, unless you are married to a NRA the you can gift him / her over 100K USD per year and have them hold it in an account that is only in their name. I know people who are doing it that way. 🙂
Quote: ” But like Medea said here in CH if you are a “US person” I don’t think there is any way around giving up your right here in CH […]”. That’s what I’m wondering… from what I understand the IRS is going to get access to my accounts in any case, with or without my consent. Since I’m compliant (tax and FBAR), and the amount of money isn’t huge, there isn’t really anything they can use against me. Somehow I prefer the idea of letting them play out their injustice and violate my rights, than to submit and surrender my rights. It’s about principle for me, but I’d like to know what I can expect by taking this course of action.
Interesting point about them someday giving my info to the local tax authorities, I hadn’t thought of that. I have nothing to hide, but I still value my privacy, and it’s probably pretty hard to get back a right you’ve relinquished.
@AJ, what you have to be careful of is having your accounts here frozen/blocked until UBS/PostFinance are happy. If you refuse to sign the W-9 I suspect that PostFinance in particular will freeze your account until you do, even if you are tax compliant. Over on the English Forum there have been several cases of people finding their PF accounts blocked until they can prove their tax status and the latest poster to hit trouble has had his account frozen until he provides them with his SSN – something which at the moment he doesn’t seem to have.
Getting the W-9 form is part of the IGA between the US and Switzerland for new accounts.
“If the self-certification establishes that the Account Holder is resident in the United States for tax purposes, the Reporting Swiss Financial Institution must treat the account as a U.S. Account and obtain a self-certification that includes the Account Holder’s U.S. TIN (which may be an IRS Form W-9 or other similar agreed form).”
It’s just that the Swiss have taken it a step further in the same way that they’re checking all accounts which may be American linked and not just those which have certain specified amounts in them.
Also bear in mind that those of us who have already renounced are still having to sign a W-8EN form to certify that we’re no longer US persons
@ AJ
You can sign but specify for the years up to and including 2014 ONLY. You can add a note explaining your situation to the bank.
By next year hopefully you will be Swiss with all the rights of anyone else in the world who resides in Switzerland.
I’m just wondering through my morning brain fog if a recalcitrant and noncompliant person could simply refuse to provide any paperwork or information to the IRS. (Add totally uncooperative to recalcitrant and noncompliant.) In essence, make the IRS go fetch it all themselves through all their nefarious means (NSA, 5 Eyes … whatever); calculate the penalties themselves; and try to collect those penalties from someone who has nothing they can seize in the USA and will never cross the border (voluntarily) thus making themselves unseizable. I know in the future the CRA could get legislation changed to abrogate more charter rights and make themselves collection agents for the IRS as well as the data gatherers and snitches they already are, but that hasn’t happened yet. I’m also wondering what dollar amount would make the IRS interested in pursuing an uncooperative noncompliant recalcitrant — 10 – 100 – 1,000 – 10,000 – 100,000 – 1,000,000 … ? Penalties can, of course, exceed a person’s bank balance but how can they take what doesn’t exist? Would they put someone in a work camp to pay off the balance owed? How many people are IRS agents capable of pursuing “overseas” with the manpower and funding they have — hundreds, thousands, millions? Any thoughts … anyone?
http://taxpol.blogspot.ca/2014/09/this-fall-at-mcgill-colloquium-on-tax.html
Interesting opportunity to attend an event that Prof. Allison Christians is co-convening at McGill:
and ;”These events are free and open to everyone. We welcome students, faculty and the general public to attend”….
See her blog post for details of the lineup of speakers. Here is how it is described:
“I am pleased to announce that the annual McGill tax policy colloquium is now being generously supported by the law firm Spiegel Sohmer, Inc., under a grant established for the purpose of fostering an academic community in which learning and scholarship may flourish.
This fall, in its inaugural instalment, the Spiegel Sohmer Tax Policy Colloquium will return to tax policy fundamentals by critically examining the goals of taxation from a law and philosophy perspective.
The Colloquium will therefore be convened jointly by myself and Daniel Weinstock, who is the James McGill Professor in the Faculty of Law and Director of the McGill Institute for Health and Social Policy. His research explores the governance of certain types of liberal democracies, and the effects of religious and cultural diversity from an ethical perspective on the political and ethical philosophy of public policy.
Each talk takes place in the Seminar Room, Institute for Health and Social Policy, 1130 Pine Ave, from 14:35 to 17:35. These events are free and open to everyone. We welcome students, faculty and the general public to attend…..”
Let the US government know how you feel about their recent 422% renunciation fee hike! Only 21 so far!
http://www.regulations.gov/#!documentDetail;D=DOS_FRDOC_0001-2956
@AJ
Given you compliant status, I’d recommend you bite the bullet and forfeit your privacy rights. It’s unlikely to have any deleterious effect on anything except your pride. Remember that while banks can help to identify undisclosed US accounts, a US person’s FBAR and FATCA filings can help the IRS identify banks with poor compliance. Perhaps if you see yourself and your bank as victims here, then it might ease the pain. You could try providing the necessary disclosure for the bank, while amending the W9 by striking out the privacy waiver, but I doubt the bank would allow that, or that it would honour your ‘unique W9 status’ when reporting to the IRS. What you must certainly not do, is sign a W8 under penalty of perjury. Such action is a recognisable offense under most extradition treaties. The triple reporting (FBAR, individual FATCA, FFI FATCA) would likely expose this fraud, and this is an area where the IRS will most certainly attempt to exercise its extra-jurisdictional powers, much more so than, say, minnows with undisclosed accounts.
Regarding your relinquishment versus the possibility of RBT implementation: it’s obviously about time. How many years of further compliance will I endure against the potential of RBT reform? Of course nobody knows the answer to the question of RBT reform, and the consensus opinion is: don’t hold your breath. I have a few thoughts on this issue.
I’m starting to believe that tax compliance is a bit of a cover story, and that FATCA’s real purpose is to create a mechanism by which the US can increase its control over the international financial system through FFI agreements. If this is the case, then the foreign accounts of US persons provide the jurisdictional ‘hook’ that the US needs to justify FATCA to its IGA partners. Under this scenario, FATCA will need to be fully operational, and smoothly so, before the US would contemplate relinquishing any such jurisdictional claims over US accounts by, for example, moving to an RBT system. Once the US is comfortable with FATCA’s operational capacity, I suspect they’ll turn their attention to addressing the damage being caused by their foreign tax policies. This might be a move to RBT; more likely it will start with concessions and waivers for groups with few US ties, like accidental Americans.
Even without the ‘financial control’ theory, the blowback from unfair US taxation practices, which largely started at IBS, is gaining legitimacy and momentum in the US, and is only going to increase as FATCA evolves, should eventually prompt Congress to take some action.
Nothing along these lines is going to happen before all proposed FATCA provisions have been implemented; currently scheduled for 1/1/2017. At that point, if FATCA’s working nicely, the US might START considering taxation and filing relief for us guys. It’s possible if the blowback becomes quickly intense (perhaps the IRS ‘mistakenly’ targets some influential foreign politicians) that the US carves out exceptions before 2017 for some narrowly defined groups of taxpayers. If it’s RBT you’re waiting for, don’t expect anything before 2020.
Must read article – describes more ‘unanticipated consequences’ of FATCA:
‘Thank You, FATCA, You’ve Just Left Me Stateless’ – Virginia La Torre Jeker
September 15, 2014
Multiple Nationalities – Caught in the Big FAT(CA) Trap
……..”…….Not only are many desperately struggling to become US tax compliant, many GCC nationals are becoming quite concerned that their government will learn they hold a prohibited “second” nationality. Under FATCA, foreign financial institutions must agree to verification and due diligence procedures – meaning they must be on the look-out for customers, owners or beneficiaries evidencing any “US indicia”. They must identify and report directly to the US Internal Revenue Service or to their own government via an intergovernmental agreement (IGA), information on US account holders. FATCA will help expose GCC nationals who hold US citizenship by a financial institution’s transmission of that information directly to the home country government agency responsible for gathering information under the IGA. America, in its quest to root out tax cheats, has now put many of its own innocent citizens in a very perilous position…..”
#OverseasVotersGuide : @DemsAbroad @RepubAbroadHK
Send links 2 your candidates’ statements 2 US citizens abroad. http://bit.ly/1rqMyUO
Brockers, send links to overseas voter issues
“The Swing States are determined by Swing Voters. Lest your candidate forget–the 2004 election came down to counting the absentee ballots in one swing state. But your candidates have indeed forgotten and they are not addressing the issues of this minority—US citizens overseas. US citizens overseas are outraged at the attitude of their politicians. And the race has come this far and a tiny few candidates have addressed any of overseas voters’ issues.
US candidates are currently courting the Homeland vote. Many candidates are directing their talking points at US citizens overseas with derogatory labels. This is the place where candidates have a chance to turn that attitude around and address the overseas vote that is going to turn the elections in 2014 and 2016.
Candidates are especially invited to comment by sending links to their published statements regarding their support-for or antagonism-to Overseas Voters . Bloggers and media are especially invited to copy this concept and provide their own guides.
This post will help to show the critical issues that affect Overseas voters directly. All Representatives are up for re election each 2 yrs.”