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.
@notamused…
To date, no country has passed legislation which ratifies the FATCA IGA or changes their countries privacy laws to facilitate what the IGA agreement between technocrats calls for. The first country most likely to do this, will be the UK, as the US poodle, they like to lead the way. None of the others are even close, if my read of the legislative process is right. Tim tracks this closely, and he would know better.
recently published FATCA and FBAR resource from Texas Tax Lawyer publication
http://www.texastaxsection.org/LinkClick.aspx?fileticket=shC9CdR%2BAd4%3D&tabid=80
RECENT FBAR AND FATCA DEVELOPMENTS
February 26th, 2013
Deidra W. Hubenak, JD, CPA
Austin C. Carlson, JD
TEXAS TAX LAWYER
–
WINTER 2013
I’d like to ask your opinions on the route a friend is choosing to take. He is an American expat living in Switzerland. He has never filed since leaving, and he is aware of FATCA and other issues.
His plan: he has been off the radar for over 20 years, he has no assets in the US, and doesn’t even plan on ever returning there. Eventually he will acquire Swiss citizenship, and he might relinquish/renounce at that point if he sees a benefit in doing so. His attitude is basically to let them pound sand and come and get him, as he won’t ever be going back there. His bank might report him to the IRS, but if he doesn’t have any assets they can seize, what’s going to happen? If he allows the bank to report him, he isn’t recalcitrant, so they might let him keep his account? It will be interesting to see how this pans out.
In any case, if the Swiss turn down FATCA he’ll be fine.
Depends if he can live in Switzerland without a bank account. Not only will the banks want to pass on his banking details, if he isn’t tax compliant they may still close him down. They do not want to risk any more trouble with the US so would rather lose a customer than face financial penalties. I am the same, I have not lived/worked in the US since 1968, but I have renounced and am sorting out the tax side, because I don’t want to lose my Swiss bank. If it were not for that I would tell them to take a running jump but, for me, that risk isn’t something I’m prepared to take. My life is here in Switzerland for the foreseeable future and not having any type of account would make life very difficult, if not completely impossible.
Do not delude yourself that if the Swiss reject the current FATCA IGA agreement that another won’t be signed at a later date. Yes, some Swiss parties are looking to preserve some banking secrecy, but I wouldn’t put it past the US to retaliate in some way that hits Swiss banks hard if they are unhappy with what the Swiss come up with. I think eventually there will be some sort of agreement unless FATCA is totally compromised by the likes of China, Canada, Russia, etc. Whether an agreement is reached sooner or later, FATCA is law and the banks will not risk the 30% withholding tax for the sake of one client.
And what about travel to the US? Does he plan never to go there again at all for either business or pleasure? As an American citizen he is required to enter/leave the US on an American passport. There are suggestions that future US passport renewal will be dependent on being tax compliant otherwise no renewal and this may become law at some point.
….and he might relinquish/renounce at that point ….. unfortunately he needs to be tax compliant (1040 and FBAR) going back 5 years from “that point“. I assume he did renew his passport via Bern at some point so the IRS already knows where he lives and of course an important question is how much has he been making in the last 20 years p.a and how big are his assets in CH ? Currently in 2013 the banks have been starting to send W9`s to us expats and in most cases if you refuse to sign they politely ask you to take your business somewhere else.
First Switzerland now… U.S. Seeks Answers in Liechtenstein on Tax Cheats http://www.bloomberg.com/news/2013-03-24/u-s-seeks-answers-in-liechtenstein-on-tax-cheats.html …
@AJ,
“Might” is always the operative word for how we decide — that and our individual levels of (or freedom from) paranoia. The future will be interesting.
Something to send on to Prime Minister Harper and Finance Minister Flaherty:
The goal is for the US to end up with all the chips – and coerce or hoodwink all other countries to pay the international enforcement costs that would have fallen to the IRS and Treasury, via FATCA IGAs.
See: “How to Make America a Global Tax Haven
By Ramesh Ponnuru Mar 25, 2013 6:30 PM ET ” http://www.bloomberg.com/news/2013-03-25/how-to-make-america-a-global-tax-haven.html
I have the feeling that signing an IGA with the US will end up being not only unconstitutional and in essential conflict with the Charter, but also a deep historical embarrassment for the Conservatives. How can you expect even faux ‘reciprocity’ with a country who not only has been named the world’s biggest tax haven (Harvard study), but has whole states (Florida) whose banks would fail if unreported non-resident foreign accounts from other countries were pulled out, “For 16 of the region’s 22 state-regulated foreign institutions, foreign deposits account for at least 90 percent of holdings” http://www.mcclatchydc.com/2012/07/30/v-print/158707/miamis-international-banking-clients.html and another which hosts to the largest number of Fortune 500 corporations registered in the home state of US VP Biden – Delaware, the US’s very own internal tax haven state for US corporations “Delaware has more corporate entities, public and private, than people” http://www.thebureauinvestigates.com/2012/07/06/delaware-the-us-tax-haven-of-choice/ .
see also;
http://taxpol.blogspot.ca/2013/03/how-to-make-america-global-tax-haven.html
Tuesday, March 26, 2013 by Allison Christians:
‘How to Make America a Global Tax Haven’
“Isn’t it astonishing that at the very moment the USA is twisting arms the world over ostensibly to crack down on tax havens and the erosion of the tax base they help perpetuate, Bloomberg could run this headline without irony or shame, and we can get a brand new quote from yet another American lawmaker about the virtues of making the US a tax haven……………..”
Article written from perspective of US credit unions:
http://www.cuinsight.com/will-congress-repeal-fatca-before-it-takes-effect.html
‘Will Congress Repeal FATCA Before It Takes Effect?’
by Michael Edwards, World Council of Credit Unions on March 27, 2013
“…….. Some members of Congress have questioned FATCA’s wisdom, but the U.S. credit union movement will likely need to advocate for FATCA’s repeal in order to keep this new compliance burden from affecting credit unions….”
……”FATCA does not seem to have very many supporters in Congress, but it is already the law of the land and will affect U.S. credit unions eventually unless Congress acts. World Council of Credit Unions and the Credit Union National Association are working to gain traction in Congress for such repeal, but at this juncture, repeal is far from guaranteed in a divided Congress that is concerned about deficit spending. While we will continue to advocate repealing FATCA and its unnecessary compliance burdens, we will also be pursuing regulatory relief with the Treasury and other policymakers. “…….
great find with the credit unions. It looks like they are focusing on what happens in USA during the time when FATCA withholding kicks in (2017?), which comes later than the FATCA reporting regime where we become exposed 15 April 2015.
@badger
Yes, as Mark says, great find. I must admit I hadn’t really considered what’s entailed on the “US withholding agent” side of things up till now. Even if US banks aren’t forced into FATCA-IGA reciprocity, they will indeed have a considerable burden in determining whether the 30% withholding tax applies and processing that withholding with the USG. And I suspect they will need to engage quite a few lawyers to handle the lawsuits from customers who claim that the withholding tax on them was unjustified.
yeah, and the administration of it has an un-understandable logic.
The IGA’s get around it, but it is also impossible for USA to make IGA’s with every country in the World—-it’s only the pansies who can afford to give away billions to the compliance industry that are making negotiations now.
@Badger… Good find, and it is now bouncing around the internet. James has sent out his massive emailing. I posted it, and also put it up on linkedin too.
@all, I’ve tried to keep up with what the Canadian credit unions are saying, but I’ve found that their main FATCA section is available to employees and staff only:
Look under the ‘Advocacy’ tab, where FATCA has its own dropdown, but all you get is this log-in http://www.cucentral.ca/SitePages/login.aspx?ReturnUrl=%2f_layouts%2fAuthenticate.aspx%3fSource%3d%252FSitePages%252FProgramsAndServices%252FFatca%252Easpx&Source=%2FSitePages%2FProgramsAndServices%2FFatca%2Easpx
A site search does get this recent result worth reading:
at http://www.cucentral.ca/SitePages/Home.aspx
‘FATCA Details Slowly Emerging’
Gary Rogers,
Vice President, Financial Policy, Credit Union Central of Canada
….”…….”The Canadian government remains in “intense” IGA negotiations with the U.S. thatmay be delayed by Canadian constitutional issues.
As a result, while the broad outlines of FATCA requirements are known, much detail is still to come.
Canadian Central is engaged in continuous dialogue with Finance Canada and the Canada Revenue Agency (CRA) to ensure that, first, our strong opposition to this new compliance burden is heard and, second, exemptions are maximized and compliance obligations minimized and practical, especially for small financial institutions….”……..
Important to note that the article cited above titled ‘FATCA
Details Slowly Emerging’, from ‘Connections’ newsletter, is dated March 15, 2013
and then there is this more recent one in the CU Central newsletter ‘Connections’; from March 21, 2013
‘Good News/Bad News: Other Taxation Measures’
by Gary Rogers, Vice President, Financial Policy,
Credit Union Central of Canada
“FATCA
Credit unions have growing concerns about the compliance burde
n they may face, beginning in
2014, to comply with the United States
Foreign Account Tax Compliance Act
(FATCA). The first reporting is scheduled to begin in 2015, for new accounts in excess of $50,000 opened after 2013, and for pre-existing accounts with more than $1 million. We impatiently await the progress
of negotiations between Canada and the U.S. that will result in an Intergovernmental Agreement (IGA) detailing the requirements for Canadian financial institutions, including credit unions.
Canadian Central is working with Finance Canada to maximize exemptions and streamline the requirements for small financial institutions. We are also working closely with other national trade
associations for financial institutions and with WOCCU to ensure we speak with a common voice to government.
Budget 2013 refers to the negotiations and states: “Under the agreement, information exchange would be improved on a reciprocal basis to facilitate tax compliance in both countries.
” This may suggest that part of the delay in reaching an IGA is extracting some concessions from the American government that will provide some benefit to Canada”
One mentions constitutional issues, and the next one dwells on an anticipated IGA.
It is hard to know how to interpret the difference in tone between the two articles, which are dated a week apart.
@ badger
Thanks for the update on Canadian credit unions. I have a relative who works in the overseas/cross-border money transfer division who claims to know nothing at all about FATCA, that nobody has even mentioned it. There might be a gag order on employees or the executives just don’t know what to do yet so they feel there’s no need to inform their employees at this time. I also noticed that at the Credit Union Central site there is a lock on the FATCA section — for “members” only (i.e. employees and directors).
http://www.cucentral.ca/SitePages/Home.aspx
Don’t you love these headlines…
Ingenious launches US business to build on Fatca opportunity
I could ‘retort’ but why even bother with these “opportunist”
A couple comments before yours from SwissPinoy, Just Me, on a different thread: http://isaacbrocksociety.ca/2013/03/28/thomas-jefferson-award-2012-via-acavoice-americansabroad/comment-page-1/#comment-248978
Opportunity knocks for sure and those ‘ingenious’ know an opportunity when they see one.
Credit unions do not require proof of citizenship to open an account only government picture ID. So it would be difficult to find US persons. Also their privacy statement is much narrower than the banks. It specifies what “third parties” they will share your info with, unlike the banks.
They are provincial not federal. However this may change with the new regulations that came down with the budget. This may allow them to become federal in the next few years.
http://www.prlog.org/12096265-online-investigators-fatca-experts-and-36-others-share-insights-at-acfcs-financial-crime-conference.html
Stibbards will teach advanced search techniques to mine open source databases, social networks, “deep web” sources, and obscure pockets of data for invaluable, unexpected intelligence and evidence.
All financial crime specialists should have open source skills, Intriago says
“No one who works in financial crime, particularly AML, FATCA and anti-corruption officers, can function effectively without knowing how to exploit open source intelligence. It is a must-have skill,” said Charles A. Intriago, a former federal prosecutor who is president of ACFCS.
New good business to prepare for DATCA
http://www.financialcrimeconference.com/panels/
AML Applicability: FATCA is now or will become the duty of many AML compliance officers. At its heart, FATCA addresses money laundering or its equivalent by US taxpayers.
FATCA, the US tax evasion-financial crime dragnet called has arrived. US financial institutions are feeling the impact of the law that will uncover hidden wealth of US persons in foreign accounts. The law will also unearth secret wealth of financial criminals that comes from money laundering, corruption and fraud. US institutions face formidable due diligence and data management duties in classifying accountholders, determining FATCA-compliant institutions, and preparing for the withholding tax, to avoid penalties. They also face the headache of divulging information to foreign tax authorities on their non-US accountholders, a duty created by US “Inter-Governmental Agreements” (IGAs) with other nations. But FATCA has a silver lining. It forces institutions to improve compliance and customer data collection procedures, and synchronize databases. How should US institutions meet the due diligence challenges? How should they manage their data under FATCA? How should they prepare for the coming duty to report non-US customers under the bi-national “Intergovernmental Agreements?” Here, top experts give you these and other answers and guide you through the morass of FATCA.
@Mark Twain
Good catch, and also rather personally disturbing since it now taints my memories of having stayed at the very same hotel and conference complex (the Westin Diplomat in Hollywood, Florida) with my wife and daughter just last summer when we drove down for one of my daughter’s major dance competitions.
Has anyone noticed how the language of the FATCA compliance complex seems to be evolving? They now seem to be deliberately conflating the mere existence of “foreign” bank accounts with big-time money-laundering and other organized-crime activities, ratcheting-up the hyperbole from more pedestrian, Romney-style stashing of retirement nest-eggs in the Caymans.
“At its heart, FATCA addresses money laundering or its equivalent by US taxpayers”, says the panel description. Interestingly, money-laundering wasn’t even mentioned in the original rationale for FATCA (I just did a word search on the actual HIRE Act to verify), but seems to have been recently adopted as safe cover by the FATCAnatics since it’s an idea that can more easily be woven into motherhood statements about fighting international crime, defunding terrorists and the rest of the Homeland Security self-justification mythology.
These may be signs of a growing, coordinated PR effort to sell FATCA to the world. If true, it will prove even more challenging for groups like ours to fight back since our opponents will have virtually unlimited means to outspend us on everything from full-page newspaper and magazine buys to sophisticated TV ads that will paint all of us as not merely garden-variety tax cheats but as highly-dangerous criminals and terrorists who pose an imminent threat to The American Way of Life® (or its Canadian equivalent, the increasingly dictatorial Harper Way of Life®).
Finally, here are some other related upcoming conferences we need to keep an eye on, and perhaps even find ways to “infiltrate”:
http://www.canadianinstitute.com/2013/416/fatca-compliance
http://www.canadianinstitute.com/2013/437/anti-money-laundering
http://www.americanconference.com/2013/556/fatca-compliance-in-europe
…and painting all with the same brush — that we are criminals until proven otherwise.
the worst that I see is that they are looking for wealth. And really, they are looking for the wealth of nearing-retirement people. Just one category of people they are Calling “rich”. It just confirms Everything said that the oligopolies at the top are out to get any potential competition from the “rich” that are Rising up and accumulating smidgeons of wealth.
The ones that get through are those that have no savings and are performing their duty to borrow and consume.
As the ambassador to Norway had said “they are after the rich” (yeah, right, people are sending their Money to Norway to avoid taxation)
How much does it cost to attend the Canadian institute FATCA complience sonference? If anyone can attend is there anyone who follows this web site who could attend and report back? At least that way we would have some insight on what is happening and can prepare ahead? we would be willing to contirbute towards the cost of someone attending. At least this is cheaper than a constitutional challenge 🙂 ?