Liberty and justice for all United States persons abroad

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FATCA Discussion Thread (Ask your questions) Part Two

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Please ask your questions here about FATCA.

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

  1. @enzo
    If you are the typical US expat who recently had your OMG moment and now want to get compliant, I do not see the need for a lawyer. You are not a criminal/tax-evader, you are one of many (millions?) of people who were tripped up by the US’s system of CBT.

    So, if your accountant suggests contacting a lawyer, why not just politely decline? If the accountant is competent in cross-border tax preparation, you really should have no need for a lawyer, IMO. And if your accountant is not competent, then you probably should find a different one. Having said that, it sounds like depending on what part of the world a person lives in, finding a competent cross-border accountant can be difficult.

    As for do-it-yourself, people do indeed do that. However, it can be tricky if you have mutual funds (PFICs) and tax advantaged saving vehicles such as RESP, TFSA, UK ISA, as these are considered “foreign trusts” (although there is some question as to whether TFSAs and ISAs are really foreign trusts).

    So,
    1) If your situation is simple, DIY should be fine.
    2) If your situation is not simple, but you are not concerned about 100% accuracy in filing (e.g. PFICs and foreign trusts, and other gotchas), DIY is fine.
    3) If your situation is not simple and/or you have significant assets, and you do want your returns to be as accurate as humanly possible, then consider a competent accountant.

    I guess it comes down to the complexity of your situation, your tolerance for risk, and your ability to pay for professional services. There is no one-size-fits-all answer.

    Re #2, I don’t know if we’ve ever heard of any expat being audited. Have we?

    Note that should you go the DIY route, folks here at IBS would be happy to answer your tax questions to the best of their abilities (which are actually quite considerable). As well, there are other forums that can assist.

  2. More from Tara Info on executive action treatment of who has an IGA and who doesn’t

    One of these files linked in the article below is how an “in substance” agreement is made for a foreign country with an an IGA. It is written by Tara at the IRS, who first became known for creating her own new FATCA indicia (in addition to those written in the law) to compliance firms attending conferences. (MVH wrote the post which explained my analysis of Tara, who had made the rule that all bank managers were responsible to report those that they knew had the US-person taint). Hence, today the indicia terms are expanded according to her verbal comment.

    Also, a comprehensive list of which IGA’s are signed and which are “in substance”

    These were found at this website

    http://haydonperryman.com/2014/12/11/fatca-weather-report-extreme-turbulence-in-2015/

    I wonder how the Senate might ratify an “agreement in substance”?

    p.s. The list is helpful too

  3. Caveat – I post the information below with NO intent to advise, or to advocate re ‘compliance’ with US extraterritorial tax, FBAR or FATCA. I merely enjoyed it because I think it smacks of irony and US hypocrisy.

    As @Orwell points out on another IBS thread, http://isaacbrocksociety.ca/fatca-and-switzerland/comment-page-2/#comment-4784374

    This announcement is now on the US Embassy site for Switzerland

    ‘The U.S. Internal Revenue Service (IRS) is Coming to Switzerland’

    “The U.S. Embassy is pleased to announce a visit and presentation by the Internal Revenue Service (IRS). ”
    http://bern.usembassy.gov/federal_tax_law.html

    But, ironically in light of FATCA, and its inception rooted in US concerns with Swiss banks, and the denial of banking and financial services to those ‘abroad’ it also says:
    “Please note that the IRS will NOT be able to answer questions regarding banking matters. “

  5. @Mark Twain,
    maybe someone can ask the IRS at the Swiss event why they’re persecuting ordinary individuals with NO US economic connection while US corporations get tax breaks defended by the US Ambassador to the UK, and make secret deals – aided by the big 4 in the compliance industry;
    http://www.ft.com/cms/s/0/a069e046-7fb4-11e4-b4f5-00144feabdc0.html
    http://lawprofessors.typepad.com/intfinlaw/2014/12/leak-exposes-secret-tax-deals-for-disney-koch-brothers-and-340-other-global-companies.html

  6. @badger

    They will just brush the question aside… then keep doing their presentation as if nothing is wrong… then state how wonderful OVID is for all…. how being a US person is the best thing in th

  7. @badger

    I am sorry… kid has discovered the joy of *enter* & clicking buttons with the wireless mouse… sheesh..

    *how being a US person is the best thing in the world… better then sliced bread*

  8. http://www.wsj.com/articles/neil-gandal-why-does-uncle-sam-hate-american-expats-1418687615
    ‘Why Does Uncle Sam Hate American Expats?’
    ‘Foreign banks close U.S. citizens’ accounts rather than deal with the mess that Congress created.’
    By
    Neil Gandal
    Dec. 15, 2014 6:53 p.m. ET

    “It’s not easy to be an American living abroad these days, and some are even giving up U.S. citizenship. The reason is ill-considered legislation most people never heard of: the Foreign Account Tax Compliance Act………………”

    @USFP, used to be the telephone was like a kid magnet. Now they’re on to bigger things.

  10. http://blogs.angloinfo.com/us-tax/2014/12/15/2765/
    ‘More Guidance from IRS: Final Regs and Specified Foreign Financial Assets / Form 8938 ‘
    December 15, 2014

    Interesting tidbits, including this:
    “…The final regulations rejected commentators’ suggestions that Form 8854, “Initial and Annual Expatriation Statement” be added to the list of forms in Treasury Regulation §1.6038D-7(a) intended to relieve duplicative reporting. The Treasury Department and IRS considered the nature of the information collected on Form 8854 and concluded that requiring Form 8938 would not duplicate the information currently being reported on Form 8854. Further, Treasury and IRS stated that filing of Form 8938 is expected to “substantially enhance” IRS compliance programs with respect to Form 8854 filers.”

  11. India rushes to sign on to a FATCA IGA in honour of visit by Obama – thus ensuring that pre-existing accts in India, belonging to immigrants to the US from India are ensnared, as well as Americans of Indian descent with joint accts with family members in India.

    http://economictimes.indiatimes.com/news/economy/foreign-trade/gearing-up-for-obamas-visit-finance-ministry-to-rush-cabinet-note-to-sign-us-fatca-by-december-31/articleshow/45597588.cms

    ‘Gearing up for Obama’s visit: Finance Ministry to rush Cabinet note to sign US FATCA by December 31’
    By Deepshikha Sikarwar, ET Bureau | 22 Dec, 2014, 01.36AM IST

    “NEW DELHI: The finance ministry is planning to rush through a Cabinet note seeking permission to sign an accord with the US on exchanging investment information before a December 31 deadline, ahead of President Barack Obama’s visit to Delhi at the end of January…..”

  12. http://blogs.angloinfo.com/us-tax/2014/12/22/2784/
    ‘Pope to Sign Model 1 IGA’
    December 22, 2014

    “FATCA is really making the rounds. The latest announcement from the US Department of the Treasury is that the Holy See has just reached an Intergovernmental Agreement (IGA) “in substance”. The Holy See will eventually be signing on to a FATCA IGA Model 1. The agreement “in substance” was reached on November 30, 2014 with the result that the Holy See has consented to being included on the list of jurisdictions maintained by the US Treasury to be treated as having an intergovernmental agreement in effect respecting FATCA compliance……”

  14. Another interesting blog post by Virginia La Torre Jeker J.D. Thanks, badger.

    From CBC News this morning speaks to the Vatican’s finances: http://www.cbc.ca/news/world/pope-francis-issues-sharp-critique-of-vatican-bureaucracy-1.2881162.

    …Francis and his nine key cardinal advisers are drawing up plans to revamp the whole bureaucratic structure, merging offices to make them more efficient and responsive.

    The Vatican’s finances are also in the midst of an overhaul, with Francis’ finance czar, Cardinal George Pell, imposing new accounting and budget measures on traditionally independent congregations not used to having their books inspected.

    Yet it was perhaps Pell that Francis had in mind when he complained about the temptation to lust for power even if it means defaming or discrediting others “even in newspapers or magazines, to show themselves as more capable … in the name of justice and transparency.”

    Pell recently penned an explosive essay in Britain’s Catholic Herald in which he said his team had discovered that the financial situation of the Holy See was “much healthier than it seemed, because some hundreds of millions of euros were tucked away in particular sectional accounts and did not appear on the balance sheet.”

    The Vatican later clarified that the money hadn’t been hidden and that nothing illicit was going on, just that the funds didn’t appear on the Vatican’s balance sheet. Over the weekend, the Jesuit magazine America reported that an internal Vatican memo had undercut Pell’s claim of having found the cash in the first place, saying the funds kept in the Vatican Secretariat of State were well-known, duly reported, were used to cover Vatican losses and special projects and actually had been well-managed over the years.

    All that and FATCA as well.

  16. A couple of questions on compliance for an individual:
    a) Is there a way to calculate how much they are going to claim I owe them in back taxes if I do decide to comply? I haven’t paid any US taxes for 25+, and have paid UK taxes through PAYE.

    b) By what criteria do they decide you have wilfully not paid or that you have just unknowingly not paid?

    c) Can they claim on assets you jointly hold with a spouse? What if we move those assets into the UK citizen’s name only?

    d) How far-reaching are the IRS’ tentacles? I mean, if I divest myself of the bank accounts I currently have in my name, and don’t fill in the W-9, will the bank still assume that I am a US citizen and “report this to HMRC who will inform the IRS”? Or will they forget about me?

    Many thanks

  17. Has anyone had any experience with Swiss banks closing accounts because the account holders have not agreed to provide FBARS and waive their bank secrecy rights?

    The bank I’m dealing with threatens to withhold 30 percent on “American source income transiting through their banking relationships,” if account holders don’t comply. What does this mean? Swiss banks already withhold 35 percent of earned interest. Does this mean they will withhold an additional 30 percent on earned interest on accounts of recalcitrant account-holders?

    Clients are also told that, if they don’t comply, the bank has the right “to terminate the banking relationship with immediate effect.” That seems to be worded in a self-serving manner. FATCA actually requires that banks close such accounts. This is what I want. Yet the bank is refusing to do that. I object to being denied access to my funds until I provide the bank with personal information and documents that will help reduce the penalties it agreed to pay under the program it voluntarily entered into with the U.S. government. This is not my problem.

    Any ideas how to get the bank to follow my instructions to close the account and send the money to a U.S.-based account?

  19. Sylvan Moon. normally, if you decide to try and become compliant , you would file 3 or perhaps 5 yrs. If you owed no tax because of ‘foreign’ earned income exclusion or ‘foreign’ tax credits, then there would be no penalties.
    b) who can say? perhaps only an expensive tax professional.
    c) Doubtful either way.
    d) there is little they can or would try to do to a ‘minnow’ with no US ties. Why would the bank assume you are a US person? There is some indication that the bank might report a closed account. If the IRS did get your account no and amount what would they do? Send a letter?

  20. @Paintbrush

    PS. I realize that your issue may not be with FATCA, but with the deal the DOJ struck with your bank, but the FATCA lawsuit might be the best chance we have to stop this insanity against us at this point. Do you think your representive in Washington might help (chances diminish if s/he is a Democrat)?

  21. Maybe I’m getting carried away, but could there be a turf war brewing between Treasury and Justice in Switzerland?

  23. b) By what criteria do they decide you have wilfully not paid or that you have just unknowingly not paid?

    Many people have become compliant via Streamlined Procedure or quiet disclosure and there are no known cases of anyone being dinged with penalties of any kind (including penalties or prosecution for wilful non-compliance); note that back-taxes are a different issue. If you were genuinely non-wilful you should have nothing to be concerned about. It sounds like you were living in the UK for 25+ years, so you would likely just be one more expat who didn’t know about the idiotic US tax rules.

    Having said that, I can’t specifically answer your question re criteria.

  24. @paintbrush
    The Swiss banks have sold their soul to the Devil (and are only now beginning to realise it) when they signed the ‘Joint Statement’ absolving them from prosecution if they agreed that they had all been naughty boys and hidden American accounts knowingly or unknowingly. Most signed ‘category 2’even though they had not courted American money unlike UBS who were )category 1). and did not have the option of the non prosecution agreement.
    Cat 2 required them to report all present and past American accounts back to 2008 and to also certify if these accounts were compliant or non compliant. They were required to pay a large fine (approx 30% of the value of the account) on any non compliant accounts, hence their need to get you to sign the secrecy waiver and provide proof of Fbars. I suspect this freezing of accounts is a form of blackmail and illegal under Swiss law. The banks now are now working for the IRS and Swiss law seems to have been thrown out of the window. You could try threatening them with a lawyer’s letter and legal action if they don’t close your account and transfer your funds back to the US.

  25. @SylvanMoon
    The banks I believe are doing ‘due diligence’ for new accounts and will not trawl through old accounts looking for US persons until some time in the future. Many are hoping that FATCA will have died a death before then.
    You have a few options.
    1.Renounce your US citizenship and back file 3 years of tax returns and 6 yrs of FBARS as part of the ‘streamlined process’, with an accompanying statement saying that you were not aware of the filing obligations until now. Many have done this with no problem so far, I doubt the IRS has the resources to go after a minnow.
    2. Take your name off that account and wait. (But it will be hard to claim ignorance of filing in the future).
    3. Renounce and do nothing, re filing, you will then have a CLN for the bank, but this would make you a ‘covered expatriate’ , which may be a problem if you have any funds or inheritance in the US and traveling there in future may be a problem if the IRS and immigration get their act together.

    You and your husband should also be aware that there are other problems for an ‘alien spouses’, where one is an American and the other is not.
    http://blogs.wsj.com/expat/2014/11/16/ask-an-expert-tax-tips-for-expats-with-alien-spouses/
    Read carefully the info on this site before making your decision.
    Others may chip in advice here that I may have forgotten.
    Good Luck.

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