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.
I’m trying to catch up here at IBS, haven’t had much time/access to internet recently, so forgive me if this was already noted elsewhere.
Read this article in entirety; http://www.bna.com/taxpayers-facing-big-n17179928972/
July 1, 2015
‘Taxpayers Still Facing Big Challenges One Year After FATCA Goes Into Effect’
By Alison Bennett
See for example the excerpt about the number of stalled or incomplete IGAs – or those deemed to be still only “agreements in substance” as mentioned below:
“IGA Concerns
Despite some positives, nearly all the practitioners interviewed said they have concerns about the IGA network. Although more than 60 agreements have been signed, nearly 50 pacts have only been agreed in substance and have yet to be formalized. Four major jurisdictions that have yet to sign agreements, according to the June 30 version of a Treasury list, include China, India, Taiwan and Saudi Arabia.
The IRS’s original deadline to get all the IGAs signed was Dec. 31, 2014, but the government ended up giving jurisdictions with agreements in substance more time. On Dec. 1, 2014, the IRS said in Announcement 2014-38 that it would consider such IGAs to be in effect as long as those jurisdictions can demonstrate “firm resolve” to get them signed.
The agency said it would conduct monthly reviews to ensure those efforts continue.
Treasury Efforts
Even for those that have been signed, many countries have yet to formally implement them in local law, and the lack of guidance is creating major uncertainties, practitioners said….”……..
Article goes on to touch on other important issues we’ve discussed.
Thanks again, badger.
Those other important issues in the article, important in Canada:
Differences on New Accounts
In another example, controversy surrounds the U.S. view that foreign banks must get new customers to certify whether or not they are U.S. tax residents before they can open an account.
Both the U.K. and Canada have issued guidance saying that under their IGAs, banks can open the accounts even if they can’t get those “self-certifications,” as long as they treat the accounts as reportable.
At the same time, the U.S. has issued guidance in the form of a frequently asked questions and answers (FAQs) specifically saying that without those certifications, banks aren’t allowed to open the accounts or have to close them. Treasury officials have said the U.S. plans to stand by that view.
Here’s more of US hypocrisy re FATCA – the US was named as one of the countries harbouring oil wealth stolen from South Sudan, while the Sudanese people starve;
see
http://www.pressreader.com/canada/toronto-star/20150711/281749858029002/TextView
yet;
‘Sudanese banks to implement US law targeting tax evasion’
http://www.sudantribune.com/spip.php?article50514
http://www.inform.kz/eng/article/2803243
“.Although FATCA formally goes into effect October 1, 2015, the United States has suspended penalties against Kazakhstani banks for noncompliance with FATCA until the final U.S.-Kazakhstan agreement is reached, the statement issued by the US Embassy reads. .”
Canada, being an early adopter, will hopefully live to regret the distinction of being one of the first countries to capitulate to the US’s extraordinary demands, Badger. Their excuse that “we had no choice” wears thinner and thinner.
@bubblebustin, Canada as an ‘early adopter’ is about to reap what it sowed – injuries to the Canadians whose data is being collected, remitted to the CRA – and transferred to the IRS (and under the Patriot Act – disseminated to whosoever the NSA, etc. cares to share it with – despite the IGA saying it is supposed to be for tax purposes only).
Here we go:
http://blogs.angloinfo.com/us-tax/2015/08/16/identity-protection-services-after-fatca-security-breaches-irs-generosity-knows-no-bounds/
‘Identity Protection Services After FATCA Security Breaches….. IRS’ Generosity Knows No Bounds! ‘
August 16, 2015
“We all know what a big problem tax identity theft has become. The growing volume of tax-related identity theft cases has now turned into a tsunami of gigantic proportions with the Internal Revenue Service (IRS) scrambling to keep up with the problem. Such scrambling is to be expected when one realizes that IRS was receiving approximately 730,000 taxpayer identity theft cases in each of the 2013 and 2014 calendar years.
Overseas Financial Accounts– Ripe for Security Breaches?
Americans abroad are particularly fearful of new security risks they face due to implementation of the Foreign Account Tax Compliance Act, commonly called “FATCA.” Under FATCA, the personal financial information of US persons having accounts at foreign financial institutions is reported by the institutions directly, or through relevant home-country foreign government agencies, to the IRS. FATCA reporting includes the name, address and taxpayer identification number of each US account holder at the financial institution; the account number; account balance and value; the account’s gross receipts and gross withdrawals or payments; and other account related information requested by the IRS….”……….
” ‘Data Breaches and Identity Protection Services – Taxable by the IRS?’ ”
“I believe it is just a matter of time before personal information mandated by the FATCA reporting rules will be compromised in a data breach. When that happens, one would hope that the relevant financial institution will step up to the plate and provide identity protection services to the victims. Such services typically include credit reporting and monitoring services, identity theft insurance policies, identity restoration services, or other similar services.
The question arises whether the value of providing such identity protection services free of charge to the individuals whose personal information may have been compromised in a data breach is taxable income to that individual. Existing guidance does not specifically address the question.
In its largesse, IRS just announced that it will not assert that an individual whose personal information may have been compromised in a data breach must include in gross income the value of the identity protection services provided by the organization that experienced the data breach..”…..
The CRS which some claim to build on FATCA, is being proposed by the OECD.
The OECD does not represent the majority of the world, and does not allow for direct input by those affected.
And, as we know, the US FATCA was designed and mandated by even fewer people – to be applied to the whole globe, paid for by ALL individuals and taxpayers – costs borne by ALL taxpayers outside the US – even those who are not and have never been and never will be ‘UStaxablepersons’.
See criticism of the OECD and the CRS;
http://taxpol.blogspot.com/2015/08/in-global-tax-governance-institutions.html
“The OECD, whose members are essentially the world’s 34 richest countries, certainly has the capacity to set international standards on taxation. Yet the domination of a select group of countries over tax norms has meant that, in reality, the global governance architecture for taxation has not kept pace with globalization. The Monterrey Consensus reached in 2002 included a call to enhance “the voice and participation of developing countries in international economic decision-making and norms-setting.” But although the OECD invites some developing countries to participate in its discussions to establish norms, it offers them no decision-making power. The OECD is thus a weak surrogate for a globally representative intergovernmental forum.I understand that it is costly and complicated to develop institutions that allow for meaningful participation by all people affected by transnational tax policy norms. But the international tax system is a resource allocation machine that has significant impacts on people’s life chances across all populations. I fail to see what principles of justice support a world in which a small and privileged group of people make decisions of both process and substance that directly impact, and yet purposefully and systemically exclude, the majority of the world’s population. The substance of norms, rules, and standards may matter in global tax governance, but ultimately institutions matter even more. ” from http://www.project-syndicate.org/commentary/addis-ababa-international-tax-cooperation-initiative-failure-by-jose-antonio-ocampo-2015-08
Interesting FATCA/CBT/FBAR discussions here:
http://reddit.simonvreux.be/p/33y057/new
@badger
I see a whole lot of confused (and some just plain wrong) discussion at that reddit site http://reddit.simonvreux.be/p/33y057/new
Can anyone post a comment there referring the readers to this site ? I tried without success.
Not so much a question as a remark FWIW and FYI and an expression of annoyance. I just today received a letter from the RRQ demanding proof of physical residence by 15 September or they would cut off my pension on the grounds that all they have for me is a Canadian PO Box and perhaps (although they don’t say it) my RRQ annuity is paid into a credit union located in the USA. (I don’t live in North America at all and haven’t for many many years, but get US, Canadian and UK pensions). Here’s the relevant text, in French:
“La Régie des rentes du Quebec verse actuellement votre rente de retraite par dépôt direct.
“Nous avons toutefois constaté que l’adresse inscrite dans nos fichiers comporte seulement une case postale. Afin de nous conformer aux normes plus strictes établies par le gouvernement américain, nous devons obtenir votre adresse municipale complète afin de continuer à vous verser la rente.”
For me it’s just an annoyance since I file tax returns to the USA and 2 other countries, and under the relevant tax treaties (and I know not all accountants agree but the IRS has in my case) my RRQ, Social Security and other State Pensions are taxed only by the UK where I spend more days in the year than any other country. And my main CSR-type pension and TSP are taxed only by the USA not the UK or any other country. (All the tax authorities have agreed on that.)
So I sent them proofs from the list they gave, including driving licenses (not my Canadian one, would have opened another can of worms).
As it happens Canadian and provincial tax (if I still had to pay it) would be nastier in my particular case than what I pay now to the US, UK and another country.
P.S.: It isn’t obvious that RRQ even knows about my US connection (I got my Social Insurance Number and provincial driving licence around 1969). A bit overreaching by the IRS in that case, although as it happens it costs me nothing: I’ve filed FBARs and multiple tax returns since the 1970s. Free since I do them myself: I feel bad for those who have to pay.
First, let me say thank you to all who maintain and contribute to this site. I am ashamed to say that I was completely unaware of the CBT situation affecting so many of my fellow Americans before it it became relevant to me. I’m still getting over the initial shock of the reality awaits me as a future expat and have been obsessively wading through as much information as possible. There is so much on this and other sites that will be invaluable to me after I move abroad to Sweden, where I will be joining my future husband. (Thankfully, he is still that even after I have reluctantly shared the sad news that my U.S. citizenship will follow me there much like, as someone put it, a financial STD.) The irony is that, rather than discouraging me, having been enlightened to the difficulties facing American expats has instead removed any remaining doubts I may have about leaving behind the country I have blindly loved and called home for so many years.
One thing I have not found, though I am sure must exist, is anything that might help me in planning for the move abroad. I’ve gotten the basic gist of steps I’ll need to take to make sure I can bank abroad.
In many ways, I am in a good situation with having very little in assets besides traditional and Roth IRA accounts and a car that I will sell before leaving. I am in a state that will require tax filing if I don’t cut all ties to it, so I plan to move my DL to another one that is more neutral. I have no dependents and will not be having children and I am current on my tax returns. I’ve informed my future spouse that we won’t be able to have any joint accounts or be able to own property together, at least for the first few years until such time that I will be eligible for citizenship there (Sweden) and can make the determination of whether to renounce.
The facts I am including are not to solicit advice though that of course is more than welcome; it’s more to show where I am so far with my current understanding in hopes of being pointed toward resources that might be of assistance in getting my affairs in order before my move abroad.
Good luck to all of you who are muddling through this unconscionable treatment at the hands of our government. I will soon join you and will do whatever I can to also bring light to this travesty of justice.
@ The Burr
Welcome to Brock! As you head into your new life in Sweden, your foreknowledge of the CBT/FBAR/FATCA triad is the best thing (next to your wonderfully understanding fiancé) that you will have going for you. It will help you avoid the pitfalls of those who simply never knew there was a tax, form and penalty trap affixed to their emigration. It sounds like you really don’t need any advice because you’ve already figured out that keeping your finances separate from your spouse and as basic as possible is the way to go. I don’t know how long it will be until you are eligible for Swedish citizenship but you’ll have enough time to properly plan future steps. Best of luck to you both!
@The Burr, welcome to IBS. As EmBee says you seem to have a good grasp on what you’ll need to do once you move abroad. All I can add is that you will need to sign a W-9 form to open a bank account so said bank can pass that info on the the IRS or whichever authority in Sweden is dealing with the IRS. Keep up with your tax filings obviously and also FBAR’s will need to be done annually if the aggregate amount in your account/s comes to more than $10,000 a year. This has to be filed electronically these days and is fairly simple to do, basically just being a listing of your accounts, where they’re held and the US equivalent amount in each. Here’s the IRS page about it:
http://www.irs.gov/Businesses/Small-Businesses-&-Self-Employed/Report-of-Foreign-Bank-and-Financial-Accounts-FBAR
You may not have seen it, but the IRS/State Department have decided to now also impose a fee of $2,350 for people who relinquish their citizenship, renunciants already pay this fee. At the moment relinquishment is free, but the change will come in later this year I believe. So if/when you obtain Swedish citizenship and wish to use this as your relinquishment act you will have to pay the fee. Investigate the requirements for Swedish citizenship here:
http://www.migrationsverket.se/English/Private-individuals/Becoming-a-Swedish-citizen/Citizenship-for-adults.html
Also, is there any chance you could claim another citizenship by descent? Were your parents or grandparents immigrants from another country that allows descendents to claim citizenship? This could be another way to get a citizenship which would allow you to renounce the US one earlier.
Keep up to date by visiting IBS fairly regularly and also check on https://americansabroad.org. Other possible sources of info are http://www.thelocal.se/discuss and http://www.englishforum.ch/forum.php. I’ve no idea how much info you may find on the Swedish site, but the Swiss one is very active and usually is up to date on FATCA related issues.
As you still have voting rights in the US, use this to vote for Senator Rand Paul who is trying to get FATCA repealed. The Republican party has said it will repeal the act if it gets re-elected, but they admitted it was mainly a vote catching ploy so whether they will ever follow through is anyone’s guess.
So how is it that little Croatia gets to postpone complying with FATCA until September 2016, but Canada signed us away with a FATCA IGA that took force on Canada day 2014?
Re Croatia, see;
http://online.ibfd.org/ifa-basel/data/tns/docs/html/tns_2015-09-11_hr_1.html?WT.z_nav=rssfeed
and for those with subscription access to Tax Notes, see;
“The Croatian tax authority announced September 10 that it would not implement reporting provisions of the intergovernmental agreement it signed….”
‘Croatia to Delay Implementation of FATCA Agreement ‘…
http://www.taxnotes.com/tax-notes-today/fatca/croatia…fatca…/15280956
FATCA Industrial complex – sample pricing guide;
“Services Offered
Entity Classification, Registration and Ongoing Compliance
o Determine entity’s FATCA classification
o Complete IRS registration, if appropriate
o Obtain Global Intermediary Identification Number (GIIN)
o Prepare and submit ongoing applicable FATCA reports to IRS
o Assist with ongoing FATCA compliance
Other Services
o Complete Form W-8BEN-E for FFIs and NFFEs
o Prepare Attorney’s Letter certifying FFI’s FATCA status (for owner-documented FFIs)
Pricing
FATCA Compliance Package
o Setup Fee: $1,250 (initial entity classification, FFI registration on IRS portal (if necessary), due diligence review and
preparation of initial W-8BEN-E)
o Annual Fee: $350 (maintain FATCA registration, comply with applicable reporting obligations and general ongoing
FATCA compliance)
Form W8-BEN-E: $450
Attorney’s Letter: $1,850
Additional Services: Billed on a time-spent basis at applicable hourly rates”
I just read something that I hadn’t heard before, or thought through.
http://taxcontroversywatch.com/2015/09/18/fatca-update-treasury-relaxes-september-30-deadline-for-model-1-iga-jurisdictions-to-exchange-tax-information/
I am looking for a list of countries which have signed RECIPROCAL Model 1 IGA and those that have signed NON-RECIPROCAL ones.
Can anyone help me?
Worth reading in entirety, touches on many aspects of FATCA, the IGAs, data transmission, etc.
See transcript of FATCA webinar (Byrnes, Perryman, et al. );
https://taxlinked.net/taxlinked/live-events/fatca-webinar-transcript
FATCA Webinar – The Transcript
06 October 2015
In real terms, what can the US Government do to enforce FATCA abroad?
As someone who only recently found out that I am still classed as an American citizen (left the country when I was 6 and never thought much more of it), I renounced earlier this year to try and get away from it all, but they have no way of telling me when I will get my CLN. I have told the embassy that I have no interest in their approval or otherwise, but that I want the document I paid 10% of my life savings for.
In absence of the CLN, my (former) bank has now told me that they are going to report me to HMRC here in the UK. I only had the account open for about five days before I got a FATCA letter and ran away scared. In total it never had more than about $2000 in it. I have moved all money to private accounts belonging to my wife for now as I have heard that ‘American’ owned accounts may get frozen without notice.
Is that true? What else may the HMRC do? I have been paying my taxes in the UK my entire working life and have never been a tax dodger… Apparently there may be prison sentences and fines? I can’t believe that the UK Government would extradite a law abiding citizen to another country (even the USA) for imprisonment due to ‘laws’ I can’t understand on a technical or moral level. How would they fine me?
I have tried talking with the IRS, they said they don’t care about me as I have no Social Security, I have tried to understand all the laws too, but I find so many contradictions and interpretations. I don’t want to pay for an expensive lawyer or tax adviser as I feel I have already suffered enough for the crime of being born. Plus, the lawyer/adviser is just someone interpreting stuff too.
If they can only enforce within America, then I am more than happy to never go there again…
Any advice would be great.
@ChrisM
Welcome to Isaac Brock.
I am amazed that a UK bank find it necessary to report your account that had only $2000 . The threshold for them to report is meant to be $50,000, however your threshold for FBAR reporting is $10,000 total for all ‘foreign’ (non US) accounts. I doubt that HMRC will pass on the account info on that balance, or
that the IRS would have any interest in your account as it is below the reporting threshold. However if you are concerned then you could show the bank a receipt for your renunciation and insist that you are no longer a US person.
ChrisM Wow. What can the US do to you? Not a heck of a lot. If they knew about you, they might withhold 30% of any payments to you from the US. Since there are no US source payments there is no problem
That’s about it. HMRC won’t do anything. No fines or prison for you. No extradition either (can you imagine the cost?) When you get your CLN you can reopen bank accounts.
You don’t need a lawyer or tax advisor. Your life savings appear to be about 25,000. No need to file anything with respect to the exit tax either.
Actually minor cases such as yours will gum up the IRS works so much that they might eventually come to their senses and change the rules (but OTOH they are so dumb, they won’t change a thing)
Hi,
Thanks for the thoughts PortlandPLC, just wish I could get that as a written guarantee from the UK Government.
Are there any specific cases or articles you can refer me to?
My mother still lives in America, so I guess it may jeapordise any inheritance, but I’m not really fussed about that.
As I said, if otherwise the worst case is that I never get to go back to the USA, then that’s ok by me :).
Chris
Chris You are on 2 different threads. Any inheritance is not jeopardized. US estates are settled by the estate. Taxes, if any are paid by the estate. After that, your parent can leave her money to you, her cat, or the man in the moon- it doesn’t make any difference.
You have the same right to travel to the US as every other Brit. There have been no reports of ordinary folk being hassled because they renounced.
@ChrisM
Have you ever been hassled entering the US on a British passport with a US birthplace or did you ever have/use a US passport?
Hi,
Thanks for the thoughts PortlandPLC, sorry regarding the multiple threads, I just tried to keep it to the thread topic, anyway, it seems that it is really a case of judgement here… The response from the embassy was the predictable shoulder shrug ‘Not our problem, see the IRS.’ As yet more lack of service for us ‘foreign citizens’.
@Heidi – I’ve only been to the US once as an adult, hassled, no. Though off a flight of about 300 people, the border control for foreigners had about 200 people waiting for one control officer, whilst there was half a dozen serving the Americans. When all the Americans were through, all the people serving them just sat there. Perfect example of the ‘US Foreign Policy’.