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.
@Bubblebustin
Wouldn’t you say that the “same country exemption” serves Americans abroad equally whether or not they are US tax compliant?
@WhatAmI
The proposal DA is urging the US to adopt is a same-countrynexemption for “law abiding” US persons, that is those who file taxes.
The banks are still going to have to find US persons regardless, if only to omit non-residents. The US still exercises citizenship based taxation, I really doubt that the US is going to allow potentially millions of delinquent taxpayers to avoid compliance.
The US will never be convinced that FATCA is harmful to US citizens abroad unless they are shown that compliant Americans are being harmed, otherwise they will be viewed as being soft on offshore tax evasion.
I think some of the resistance Mythster Stack has for FATCA repeal efforts is because of the fact that with FATCA repeal, a lot of Americans won’t be brought into they system that otherwise would have been. He’s a Treasury guy after all.
@Embee and Bubblebustin, I just skimmed the paper (having trouble keeping up with reading all the IBS threads too, much less try to respond) – and glad to find that the ADCS challenge is mentioned. Amazing confirmation of the strength of the impact of Victoria and Lynne’s efforts the The Hill article too.
@BC_Doc, thanks for tweeting it on!
@KS, welcome. We have all felt alone with this – and hopefully the information here will help with that.
@ badger
Our SwissPinoy was mentioned too (page 30).
Thanks @Embee, I need to sit down and really read it through instead of skimming.
Same country exemptions will still cause problems for Americans. What about the nerd to have an account in a country where you are not resident because one needs to manage the affairs of an elderly parent?
What about Americans with vacation homes outside their country of residence? I know of Americans in Switzerland who have had their accounts closed and now cannot pay their utility bills and can’t even sell their their apartment as in Switzerland any monies from a property sale has to be first deposited in a Swiss bank.
Why would any bank risk taking an American if they didn’t need to?
The US encourages foreigners to buy their vacation homes in Florida yet when an American does so abroad he is considered to be a tax cheat. With same country exemptions Americans will still be prisioners in their own country or in their country of residence. Residence based taxation is the only answer.
This may be of use to those in the EU looking to challenge FATCA; see sections on data privacy, constitutionality, proportionality, data security, etc.
http://www.financialtransparency.org/wp-content/uploads/2015/03/First-report-of-the-Expert-group-on-automatic-exchange-of-financial-information.pdf?80f948&80f948
I also placed it on the country specific section as of interest to those in the EU
‘Finance Minister Defends in Parliament Ratification of Non-reciprocal Agreement between Bulgaria, United States under FATCA Law’
27 March 2015 / 16:35
http://www.bta.bg/en/c/DF/id/1046092
FATCA mentioned in blog article – in context of mass surveillance by US:
http://governmentdeniesknowledge.com/the-american-panopticon-why-a-free-society-cant-have-mass-surveillance/
‘The American Panopticon: Why A Free Society Can’t Have Mass Surveillance’
March 28, 2015
Use find function to search for the term FATCA if you want to go directly to that section.
Keep in mind what the Cons are trying to do to Canadians in Bill C-51.
for example, see;
http://elizabethmaymp.ca/issues/c-51/2015/03/26/elizabeth-may-on-bill-c-51-adjournment-proceedings/
http://www.michaelgeist.ca/2015/03/a-conversation-about-bill-c-51-how-the-anti-terrorism-bill-undermines-canadian-privacy/
http://thetyee.ca/News/2015/03/06/Privacy-Commissioner-Slams-Terror-Bill/
http://ottawacitizen.com/news/local-news/idle-no-more-and-friends-gather-to-protest-c-51-anti-terror-bill
http://www.theglobeandmail.com/globe-debate/the-government-has-not-made-its-case-for-c-51/article23678195/
And remember the newest ‘harmonization’ with the US re the Beyond the Border initiative allowing US border agents to operate on Canadian soil, and also Canada’s collaboration as one of the ‘Five Eyes’ http://www.cbc.ca/news/canada/cse-tracks-millions-of-downloads-daily-snowden-documents-1.2930120 .
http://www.taxanalysts.com/www/website.nsf/Web/FreeSiteSearch?OpenDocument&q=FATCA:%20Swatting%20Flies%20With%20Atom%20Bombs&from=0&size=20&orderby=searchdate&order=desc
‘FATCA: Swatting Flies With Atom Bombs’
Tax Notes Today and FATCA Expert and Worldwide Tax Daily: News Stories
“Possible inflation of the offshore tax evasion problem and the staggering costs of the Foreign Account Tax Compliance Act are causing even the most ardent advocates of information sharing and ending…”
Unfortunately this fulltext only available for those with a subscription, or those able to access via academic databases like Lexis-Nexis – usually staff, faculty, student members of university community (may also be possible to access with a day guest pass for a member of the community visiting a university library in person – ask about this at your nearest university).
http://theexpatwriter.blogspot.ca/2015/03/the-unbanked-and-jubilee.html
Monday, March 30, 2015
‘The unbanked and Jubilee ‘
Thanks, badger!
Part here: http://rothcpa.com/2015/04/tax-roundup-4215-for-gift-deductions-its-not-just-the-thought-that-counts-its-the-paperwork-and-more/
@Badger
I heard a rumour yesterday that Harper is working to convert from the metric system to American imperial system of measurement. I hope it was an April Fool’s joke. Even though many of us in Canada will remember what a pain it was to convert to metric, it seems ridiculous to revert back to a system that only the US for the most part uses.
Interesting development re IGAs?
http://www.lexisnexis.com/legalnewsroom/tax-law/b/newsheadlines/archive/2015/04/03/u-s-treasury-to-treat-fatca-agreements-in-substance-as-agreements-in-effect.aspx
”
04-03-2015
‘U.S. Treasury to Treat FATCA Agreements in Substance as Agreements in Effect’
“The U.S. Treasury Department and the IRS announced on April 2 (Announcement 2014-17, 2014-17 IRB 1) that jurisdictions that have reached agreements in substance with the United States on the terms of intergovernmental agreements under the Foreign Account Tax Compliance Act can be treated as having agreements in effect until the end of 2014.
Practitioners welcomed the announcement as a “really positive development” for taxpayers.
“Treasury had, several months ago, said this was something they weren’t going to do,” Jonathan Jackel of Burt, Staples & Maner LLP said. The announcement reflects a “nod to pragmatism,” given that it’s clear that not all eligible jurisdictions will sign IGAs by July 1, he added.”……………..
Note to IBS readers:
Fulltext not available without access to LexisNexis subscription, or access via privileges at an academic library (as staff, faculty, student or sometimes via day guest pass).
One of my banks (in Germany) is now demanding both forms W-8BEN and W-8CE. I had previously never heard of the latter; it is solely for covered expatriates. The former contains a claim for treaty benefits and the latter a treaty benefit waiver, so they must never both be submitted.
Please forgive me if already addressed, having trouble searching the forum. I’m a US citizen, now with CAD citizenship too. Have Canadian only kids (aware that the US sees them as US Persons regardless) with RESP set up by Canadian father-in-law in Canadian wife’s name (no connection to me at that particular financial institution). Need some advice.
Options; a: report RESPs to IRS, hoping that they never get taxed, b: IRS finds out later and penalizes me, or kids, c: FATCA matures to fall under tax treaty so that RESPs, RRSPs, and even TFSAs (as if) are no longer recognized as foreign trusts, and then slaps on a penalty. Completely paralyzed. Any input greatly appreciated.
@ hopelesslyweary
Welcome to Brock — home to many weary people.
You can’t report the kid’s RESPs because you do not have signing authority.
Your Canadian wife cannot report the kid’s RESPs because she is not American.
The bank cannot report the kid’s RESPs because the FATCA IGA exempts RESPs for bank reporting.
That leaves the kids … I suppose if they are precocious entrepreneurs and earn enough to owe US taxes you could send them to a cross-border tax expert to do their paperwork but make them pay the bill. When they turn 18 they can either renounce their US citizenship (inherited from you) or they can keep the option of being able to move to the USA. Lucky them — born dual so they would not have to pay an exit tax. I cannot even guess what the renunciation fee will be at that time but if they are very wealthy entrepreneurs by then, make them pay the freedom fee too.
hopelesslyweary. As Em says, there isn’t a problem.. You said the kids were only Canadian. I guess that means they were born in Canada and not registered as Americans born abroad. That’s a separate issue. They have a claim to US citizenship. Whether or not they ARE automatically American is the subject of much debate on IBS.
In the meantime the RESPS do not have to be reported by anyone.
I think that we have to assume that the US considers even the unregistered as theirs, as the Obama budget proposal referred to “duals at birth” with no references as to how they got that way.
http://blogs.angloinfo.com/us-tax/2015/02/05/relief-for-accidental-americans-obama-administrations-2016-revenue-proposal/
‘Taxpayer Advocate Recommends Merging FATCA and FBAR Reporting Rules’
Washington, D.C. (April 21, 2015)
By Michael Cohn
http://www.accountingtoday.com/news/tax-practice/taxpayer-advocate-recommends-merging-fatca-and-fbar-reporting-rules-74367-1.html
Nina Olson’s recommendations posted by ACA here:
https://americansabroad.org/files/5914/2913/2714/tax-advocate-recommendations-13-april-2015.pdf
‘FATCA reporting system leaves taxpayer data vulnerable’
By: Brian Garst
April 22, 2015
“….Given the sensitive nature of the data involved, security is of paramount importance. Unfortunately, the track record of the U.S. government and the IRS suggests individual taxpayer data will be extremely vulnerable.
At issue is FATCA’s requirement that banks essentially spy on their U.S. customers and report a wide variety of detailed information to the IRS. The reporting requirements create multiple new sources of vulnerability for individual financial data thanks to the government’s inability to keep its technology up to date, the incompetence of its personnel, and the tendency of IRS bureaucrats to abuse their positions to punish political opponents.
Poor government record on cybersecurity….”
http://www.compasscayman.com/cfr/2015/04/22/FATCA-reporting-system-leaves-taxpayer-data-vulnerable/
When it comes to cybersecurity, the record of the U.S. government can only be described as atrocious.
Unsettling read, badger.
So what is with the U of Michigan’s FATCA page? Now FATCA compliance is appearing on US homeland based sites. Not sure who it is directed towards (‘foreign’ based faculty and students?);
http://www.finance.umich.edu/tax/fatca
Looks like it’s aimed at foreign vendors.
I guess fireign companies that supply microscopes, test tubes, or textbooks had better hike up their skirts, or drop their drawers. Here comes the IRS to withold 30%. I wonder what the penalties are for incorrectly completing forms.
Bloody ridiculous.