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.
@Chris
If you have never had a US passport and never had a SSN, then you are not on their radar screen.
If you are only worried about that particular account (having transferred all your other accounts to your wife) then you should insist to that bank that you are not a US person and show them a receipt for the renunciation. The account is WAY below the reporting threshold and should not be reported to the IRS by HMRC. Even if it is, the IRS will have no interest in it as it is below $10,000 reporting threshold.
You are a minnow, they will not waste their diminished resources on you.
OK Brocker folks, I have a situation and need support /answers / information.
I invest with a Canadian FFI (for example, RBC-Dominion) and just got a W-8BEN from them that “has to be” filled out and signed; otherwise, they will no longer allow me to trade/invest with them. I spoke with my investment counselors associate (who knows my situation totally and has discussed much about FATCA with me) and told her I found it outrageous that I should be required to sign a US IRS form to say to my Cdn investment firm that I am not a US citizen. They (the FFI) got this exact same information from me back in 2013 via a “Substitute W-8BEN” when I transferred all my accounts there and I would be happy to sign an additional “Substitute W-8BEN” from them now. I’d even be willing to provide a copy of my CLN.
My recollection is that the IGA includes wording that allows Canadian FFIs to use their own equivalent of a W-8BEN (in this case, the “Substitute W-8BEN” with a page heading of XYZ Wealth Mgmt, ABCD Securities”) rather than the actual US form (which has, at the top “Department of the Treasury, Internal Revenue Service”, so that any signature is “under penalty of perjury” to the US).
I don’t intend to perjure myself or in any way lie, but is it required, under Cdn law now, that I must sign a US legal document to prove that I am not a US citizen to my Canadian financial institution? I would hate to lose my investment advisor of many years but this has really angered me and I’m sure I am not the only one who will be getting this document to sign now that the FFIs are beginning to look more thoroughly at “established” accounts.
Any advice / information / links to the part of the IGA stating that FFIs are not required to use the US form / etc would be very greatly appreciated.
@LM
“…but is it required, under Cdn law now, that I must sign a US legal document to prove that I am not a US citizen to my Canadian financial institution?”
I find this very distasteful and wonder does it apply to all Canadians or just those with a possible US taint? Now that I have a CLN and wish to consider investing in Canada, my home country, it would be very disturbing to have to sign a US legal document under penalty of perjury at a Canadian FI. And one with Department of the Treasury/ Internal Revenue Service at the top of this US form.
I will be looking into this as well. It may take a little while.
@LM
Please see link to instructions for IRS W8BEN below. According to “Purpose of Form” section, it looks like this may only apply to “US SOURCE INCOME”. If this is so, it is another great reason not to have any US investments. Maybe other Brockers have more experience with this problem. I’m still in the learning phase but this is something we need to know about.
https://www.irs.gov/instructions/iw8ben/ch01.html#d0e175
Purpose of Form
Establishing status for chapter 3 purposes. Foreign persons are subject to U.S. tax at a 30% rate on income they receive from U.S. sources that consists of:
•Interest (including certain original issue discount (OID));
•Dividends;
•Rents;
•Royalties;
•Premiums;
•Annuities;
•Compensation for, or in expectation of, services performed;
•Substitute payments in a securities lending transaction; or
•Other fixed or determinable annual or periodical gains, profits, or income.
Highly recommend reading this:
http://tax-expatriation.com/category/fatca-chapter-4/
‘FATCA – Chapter 4
Why Most U.S. Citizens Residing Overseas Haven’t a Clue about the Labyrinth of U.S. Taxation and Bank and Financial Reporting of Worldwide Income and Assets’
Posted on November 2, 2015 Updated on November 2, 2015
So much for all the great “help” from the US gov’t that overseas US persons are supposed to be “thankful” to have?
http://www.nytimes.com/2015/11/03/opinion/how-the-fbi-can-detain-render-and-threaten-without-risk.html?emc=edit_ty_20151103&nl=opinion&nlid=70546637&_r=0
Just, wow…
http://federaltaxcrimes.blogspot.ca/2015/10/national-taxpayer-advocate-nina-olsen.html
Saturday, October 31, 2015
“National Taxpayer Advocate Nina Olsen Comments on FATCA and OVDP (10/31/15)
Tax Notes Today has an interview with Nina Olsen, National Taxpayer Advocate (“NTA”). William Hoffman, Tax Analysts Exclusive: Conversations: Nina Olson Stands Up for Taxpayer Rights, 2015 TNT 211-4 (11/2/15), no link available. Ms. Olsen’s bi is here. The role of the NTA is described here and here. As readers know, the NTA has criticized some features of the IRS offshore voluntary disclosure initiatives. In this interview, she makes brief comments about FATCA and OVDP.”…..
Would be a good read for anyone who has access to TNT – for example, via Lexis Nexis database at an academic library (guest access to university libraries is sometimes available).
@Jane;
Welcome, and
thanks for sharing that article http://www.nytimes.com/2015/11/03/opinion/how-the-fbi-can-detain-render-and-threaten-without-risk.html?emc=edit_ty_20151103&nl=opinion&nlid=70546637&_r=0
Wow is right. So much for US CBT apologist ‘benefits’ based rationalizations for US extraterritorial CBT.
Excerpt from the article you flagged above;
“…………….The questions hanging over the proceeding were: can the United States government allow, or even facilitate, the rendition of an American citizen to another country for interrogation? And can United States officials themselves conduct rendition and interrogations of American citizens, including threats of torture, on foreign soil?
According to a decision handed down last week, the answers appear to be yes. If this decision stands, it will mean that an American citizen overseas who is unlawfully targeted by the United States government for rendition, interrogation and detention with the help of a local government will have no form of redress in the courts…………”………….
from
‘How the F.B.I. Can Detain, Render and Threaten Without Risk’
By PATRICK G. EDDINGTON NOV. 3, 2015
A family friend came to me yesterday in a foaming-at-the-mouth rage, showing me a FATCA letter from his bank, “requiring” FATCA documents for his company. He is a Chinese citizen doing business entirely outside the USA. His company has no US indicia, no US shareholders, employees, or directors. To add insult to injury, his company is dormant, and the account hold a token amount, so far below the $50,000 reporting threshold that you can’t even consider it. He’s not averse to completing documents required by a bank, but draws the line at filling out a foreign tax form (W8-BEN) from a country he has zero connection to. He came to me for advice.
I helped him type a letter with bullet points listing all the above, stating that under both US law and the IGA, there is no requirement for him to fill in forms from a foreign tax authority, and therefore he declines to do so.
Did I let my own anger get in the way? After sending the letter, I wondered whether he’d have been better off gritting his teeth, submitting the W-8BEN, and not making trouble for himself.
Any thoughts?
@Barbara,
A lot of people get bent out of shape about this use of the W8-BEN form. I may be wrong, but my interpretation of the IGA is that the W8-BEN form is just a suggestion as a convenient existing “information capturing” form for Canadian FFIs, and that the form is never actually sent to the IRS, and possibly not even to the CRA. The IGA basically says “or a reasonable facsimile”. I suggest that the IGA would not allow home-grown alternatives if the form was meant to go to the IRS. If it had to go to the IRS, surely the IRS would only accept the W8-BEN, but that’s not the case according to the IGA.
As well, the W8-BEN form is to state one’s status as _not_ being a US person for taxes, which is what we want to declare.
So, I don’t see the problem but that’s easy for me to say because I haven’t been asked to fill one out! If I am ever asked, I would then do some research as to what is really going on. One way to do that research is to state an opinion here to see what thoughtful counter-opinions it might inspire. 😉
@WhatAmi: Thanks. We’re not in Canada, but there’s an IGA, and I’m dealing with a friend who is ready to declare war over this imposition toward his company bank account. I tend to agree with him that since he has no US indicia, it is morally wrong to file a United States tax form, whether or not it is submitted to the IRS. Ironically, I have a personal account at this same bank, opened years ago with my local ID card, hence no US indicia, and I have not been FATCA’d. Hence, the bank isn’t FATCA-ing every account. Hence, it seems that my friend’s company account should be under no legal or even procedural obligation to file a W-8BEN. But he isn’t willing to pay a lawyer over this.
Seeking any other opinions.
@Barbara,
It occurs to me to try this:
Get a copy of the W8-BEN, and type up your own letter with all the exact same questions using the exact same wording, and fill in the answers and sign that. The bank gets what they need, and no US form has been signed.
For me, the bottom line is that like it or not, the bank is obligated (if they have indicia!) to get certification that you are not a US person. The fact that a US form is used to declare that I’m not a US person doesn’t bother me personally. I signed many W8-BEN forms back in the 90’s when the company I worked for had a US parent, and the W8_BEN was required to avoid US tax withholding on free money that I got from stock options and employee purchase plans. Yes, it’s distasteful to have to sign the form when there isn’t any transaction going in in the first place. But again, the form is not for any transaction, but a FATCA device to let you certify that you don’t fall under FATCA.
I have no idea what I would do if my Canadian bank presented me with these forms. As I understand it, the form that shows you are a US person requires a SSN and many accidentals don’t have one. I have zero US income/investments. Zero US indicia since I came to Canada as a child. Sometimes I wonder what the two plaintiffs, Gwen and Ginny, would do if their bank asked them to fill out these forms. It really scares me to think that every individual with a bank account outside of the US may be forced to fill out one of these forms regardless of whether they have US sourced investments.
By coincidence I just came from the bank–a different bank than the one referred to above–and heard a British acquaintance cursing up a storm. I heard “FATCA”, so I intervened. Turns out the bank just FATCA’d the local high school girls’ rugby club, and he came in to question the letter (12 pages long!). It’s registered as a non-profit society, and he is the treasurer. The only other signatories are also British. Not a single drop of US indicia, yet they’re demanding FATCA documents. What’s more, the account has never held more than US$2000.
I realized that W-8BEN is only for individuals, not companies like my friend’s nor societies like the girls’ rugby club. I advised the guy to write a letter, add the words “Sod off” and send it in.
WTF is going on? In both the above cases, the banks’ cover letters cite “US law this” and “US law that”, never even mentioning an IGA. How is anyone supposed to respond seriously when your bank in China, Korea, Taiwan or Hong Kong tells you that you must obey US law?
Double dose of rage for me today!
@Barbara, well I assume the banks are trying this under the Entity part of the IGA which means they have to identify the account holder as being US or not so it would be necessary to sign either a W-9 or W-8BEN. But still, it sounds as if they’re been way too enthusiastic in this as the Swiss IGA at least says Entitiy accounts under $250,000 are not to be reviewed or reported. But then you could say the same about the Individual account figure of $50,000 – I don’t think banks are working to these at all, they’re just checking every account they hold regardless. They’re more fearful of being fined by the US or having the 30% withholding applied to them than they are in looking after their clients properly.
I’m scanning back in the forum and struggling to see an answer to my question – but apologies if I am repeating old ground.
I’m really anxious for some advice.
I am a US citizen but have been living in Asia for the past 3 years. I am currently based in Bangkok and I have a Thai bank account and pay taxes here. I have just been told about FATCA, and am having a bit of a meltdown. I have not been chased by the IRS, however I watched this video –
https://www.youtube.com/watch?v=9lYQSeLK0YU&list=PL_qx7spWbxRZ0giN5e1vdrFIFSVPG32Ia
The adviser in the video tells the story a story of a woman who was unaware she needed to file, and was subsequently fined $1 million…
I’m guessing I won’t be considered rich enough to be fined a million bucks, however I am anxious about approaching the IRS directly before I am fully aware of my facts.
I work for a NGO, so I am certainly not rich, however it is enough to be quite comfortable here – it’s definitely a great wage for a charity. In any case I’m wondering (hoping!) that there is some kind of threshold, and that I will be below it.
Does anyone know about such a threshold, and what it is?
Thanks so much in advance for any advice.
@Elissa, firstly welcome though I wish you really didn’t have to be here. But we’ve all been in your boat re FATCA and had our own OMG moment. Secondly, that video is scaremongering and very unlikely to happen to most.
However, as an American citizen you’re still required to file US tax returns no matter where you live in the world. I assume you haven’t been doing that – join the club, a lot of us didn’t know about this until FATCA reared its ugly head. So first step is to educate yourself in your filing responsibilities. Start here:
https://www.irs.gov/Individuals/International-Taxpayers/U.S.-Citizens-and-Resident-Aliens-Abroad
Look particularly at things like the Foreign Earned Income Exclusion info and other deductions you can make.
This may also help you:
http://isaacbrocksociety.ca/expat_tax/
@Elissa:
First, don’t panic. Get a coffee (or local equivalent!), sit down, and relax.
Second, if you have no significant assets, don’t panic at all.
Third: read Petros’ post: http://isaacbrocksociety.ca/2015/11/11/our-sociopathic-society-strategies-for-coping-with-the-sociopaths/#more-44976
Fourth: don’t volunteer info to your bank, wait till they ask
You need to file US taxes (unless you engage in some form of civil disobedience). Make life simple, and educate yourself. Do not embark with alarmist compliance firms. Find a nice simple tax preparer somewhere (I live in the EU but found mine in Canada).
2 ways not to pay US taxes: use the tax credit, i.e. the tax you pay in Thailand is deductible from tax owed to the US. This works perfectly in high-tax countries. It offsets your tax, and is cumulative over years. The other way is the Foreign Earned Income Tax Exclusion: you can earn under something like $80K a year abroad and not be taxed for this. But this is only for Earned Income, not investment income, etc.
It can all be very complicated but you can make it very simple.
You also need to file FBARs concerning your foreign accounts.
2 options: file 3 back years, or just go forward. Don’t enter any programs, just start filing and forget about it. They will not come after you.
Best to you!!!
Elissa,
As Medea and Fred stated, the requirement for US citizens to file and pay taxes on their income earned abroad is not new since FATCA became law in 2010. I have filed as a citizen living abroad for the past 20+ years, at first all done by hand, and then using TurboTax. The other tax preparation software that is useful is by H & R Block. They are both structured to be able to deal with expat income taxes. If your finances are simple and straight forward, you don’t really need an accountant.
Also, if you have more than $10,000, in aggregate, in foreign financial institutions, you will have to file what used to be called a FBAR. This must be done online at this web site:
https://www.fincen.gov/forms/bsa_forms/fbar.html
At first glance, it all seems very complex and confusing, but after you spend some time reading and studying, it all boils down to a relative simplicity. The information available on the IRS website is the gold standard, but unfortunately, is written so as to be quite unclear and muddled. It is very helpful to read multiple sources available on the internet.
Best of luck in succeeding to combat this taxing issue. Just look upon it as another stressor in life which you can easily overcome.
@Elissa: If you scan the forums you’ll see my own OMG meltdown all over the place dated around this time last year. I encourage you to ask LOTS of questions here. Everyone is eager to help.
A couple questions might be in order: first, how much do you have in the bank? As others have said, if you have a total, across accounts, of less than US$10,000 in your Thai bank accounts (not including any US-based accounts you may still have), then you’re off the hook as per FBAR, which would be good. FBARs in some ways are a scarier thing than tax filings, what with the IRS saber-rattling and threatening life-destroying fines over “hidden assets” in “foreign” accounts.
Anyway, ask questions all over the place. I found the Isaac Brock Society to be a better cure than Jack Daniels for my IRS-induced insomnia.
@Daniel Kovnat
Just look at another tax master as a “stressor in life you can easily overcome”? You might add, “that is if you dont mind being treated like a second class-citizen, or worse a criminal in spite of any effort you make in being US tax compliant.”
@Barbara
If it’s pertaining to a company and not an individual, that bank should be asking for form W-8BEN-E (for entities), not for W-8BEN (for individuals). The former is 8 pages long, the latter 1 page. Not that this is particularly good news for him/her…
Thank you so much everyone for your kind and considered comments. You’ve helped ease my anxiety more than you know!
I do have less than $10,000 in my Thai bank account, so guessing that’s a good thing (first time I’ve felt that way, that’s for sure!)
I’m feeling more confident about getting more organized now. I’ll keep checking back with the group. This is a great forum!
Elissa,
Notice that in my comment about FBAR, I said $10K “in aggregate.” You should really look up the requirements as they include any and all types of accounts with FFIs (Foreign Financial Institutions). If you have a retirement fund, CD-type of account, bonds, etc. It includes all foreign based cash or cash-value accounts. This would include standard bank accounts (checking, savings, foreign currency etc) as well as non-standard investment-type bank-held accounts like securities. Also any pension-type or insurance accounts that could have been redeemed* in the tax year, need to be reported. Accounts that are solely owned by the citizen, jointly owned by at least one US citizen, or even those that the U.S. citizen merely has signature authority over, must be reported.
If you must file this FBAR and haven’t done so yet, hurry up and file for 2014 even though it is beyond the deadline. Also look back over those three years and make sure that you didn’t have to file then. If you were required and didn’t, do so now with a long letter explaining why you didn’t.
Also remember, that it is the maximum amount during the year and not the year end amount that you need to report.
It always sounds complicated and daunting at first, but afterwards, it’s a piece of cake.
Dan
I am looking at purchasing direct stock using various companies’ stock transfer agents (Computershare, AMStock, ShareownerOnline, etc.). However, in every case, the one online question that I have to certify is that I am not required to have FACTA reporting requirements. Although, in doing research on FACTA, I have figured out that I am not required to have any FACTA reporting, it has peeked my interest. Why would a company ask me to certify that? And what if, in the future, I do have to report to FACTA? All of you intelligent folks can perhaps help me understand this. Thank you.