FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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.
The stocks you would/will hold through Computershare and other DRIP investing accounts are all in American companies and are not subject to reporting as foreign accounts. They will be reported by those investor services to the IRS on a Form 1099 and you will receive a copy to use for filling out your 1040 each year.
As far as their requesting that you certify is that you are not required to have FACTA reporting requirements, the Form W-9 states, “The FATCA code(s) entered on this form (if any) indicating that I am exempt from FATCA reporting is correct.” If you look at the instructions, it states that it applies to persons submitting the form for accounts maintained outside of the United States by
certain foreign financial institutions. This form is being submitted for an account you hold in the United States at Computershare and you may therefore leave this field blank. It’s all a lot of bureaucratic fury signifying nothing.
http://backinbeirut.blogspot.ca/2015/09/fatca-cost-and-effect.html
Sunday, September 27, 2015
‘FATCA – cost and effect’
Money Laundering Bulletin
http://www.moneylaunderingbulletin.com/risksandcontrols/taxevasion/fatca–cost-and-effect-111491.htm
“The United States’ Foreign Account Tax Compliance Act (FATCA) went into effect on 1 July 2014. A year on, financial institutions are filing for the first time, but teething problems abound, Paul Cochrane discovers, with some banks no longer accepting new US clients and registration volumes far below expectations.
FATCA, which requires foreign financial institutions (FFIs) to provide information on US accounts above US$50,000 to the US’ Internal Revenue Service (IRS), has been a complicated piece of legislation from the get-go. The over 1,000 page Act, which is aimed at curbing tax evasion, was delayed repeatedly after its passage in 2010, as US authorities worked to persuade more jurisdictions to sign Intergovernmental Agreements (IGAs), and FFIs to secure a Global Intermediary Identification Number (GIIN).
The uptake was slow due to FATCA’s extra-territorial nature, requiring legislative changes in many countries, including override of national banking secrecy and to effect financial institution reporting to a foreign jurisdiction.
With FFIs having to screen all clients for US indicia as well as hiring new compliance staff, FATCA has proved both onerous as well as expensive to implement; it has cost an estimated $8 billion worldwide. …………..”
A warning to anyone in “foreign financial institutions” or “foreign non-financial institutions” NOT to take on the FATCA Responsible Officer (FRO) role if they are also a US citizen:
“……..Regardless of just how much legal or financial liability an FRO or other administrative officer has in helping his or her firm comply with FATCA, there appears to be a rule of thumb. US citizens shouldn’t take the job at any cost.
As officers of their firms they will have to fill out a separate tax form with the IRS — Form 5471 — which could require them to not only reveal their designations as officers but also identify any individuals or corporations owning more than a 10 percent stake in the firm they work for. “It may be a time- consuming task for US citizens,” says Celoria.
Second qualm: “The IRS will likely have a lot more power to enforce possible jail time with US citizens who are FROs,” says Mockler. Foreign governments are far more likely to extradite US citizens to the US than their own, he believes. However, others insist that isn’t the case and even foreign citizens should be concerned about the IRS’ growing reach.”……..
http://finops.co/compliance/fatca-responsible-officers-be-careful-very-careful/
http://www.arthurbellcpas.com/news/2015/12/here-we-go-again-irs-revises-effective-dates-for-fatca-compliance/
Again I received an email from an old friend asking for advice. He’s Chinese, living in Hong Kong, has a small limited company. He has no connection to the USA going back 5000 years, does no business with Americans. He just got a blunt letter from Bank of China in Hong Kong informing him that he must complete their form and a W8BEN, accompanied by a densely-worded three-page explanation about FATCA this and FATCA that, United States law and US legal requirements. Not a single, solitary word about Hong Kong law, or why he should give a flying fart about USA law or why a Hong Kong based bank should write to a Hong Kong Chinese citizen with a Hong Kong LLC about American FATCA requirements. Throughout the letter are threats of withholding 30 percent of all payments in and out of his accounts.
I resisted the urge to tell him to write back with “F— YOU, I’m not American” scrawled in red across their form. Instead I’ve agreed to help him with the forms so he won’t be bothered again.
But all day I’ve been pacing my room, muttering, “F— you, America.”
Hey Barbara,
I don’t like FATCA at all. I don’t like America’s citizenship based taxation at all. Don’t get me wrong, but in this instance, it sounds to me like your friend’s Hong Kong bank F—– UP !
@Barbara, it’s clear in the US-HK IGA that if there’s no US indica as outlined then no further action needs to be taken.
https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Hong%20Kong-11-13-2014.pdf
(pages 13/14)
Still, it seems to be entirely up to individual banks how they deal with accounts regardless of what the IGA says and if they choose to get either a W9 or W8BEN from all their clients there’s no much that can be done about it if you don’t want to be penalised by the 30% withholding or risk having your account closed.
Seems like China is running even more scared of the US than the Swiss banks were/are.
The sooner the dollar is not the currency of choice for international transactions the better. Then maybe we can stop all this nonsense.
@Medea: Thanks for the reference. Help me with this. I want to be able to NOT have to submit a W8BEN for my friend. Pages 13-14 of th US-HK IGA refer to personal accounts, but they have not contacted him regarding any of his personal accounts, only his company account. It’s hard for me to determine where in the IGA it refers to company accounts. If a company account is an “Entity” under the IGA, then there are so many conditions and cross-references that I can’t make heads or tails of it, and probably neither can the poor non-native-English-speaking junior manager in the Bank of China compliance department who sent this out.
Do you have any idea which sections of the IGA refer to this situation, where there are no US indicia for a company account? I really would like to toss this back at them. It’s almost fun–or at least cathartic–to hopefully sow some uncertainty and confusion in the bank’s back rooms.
Medea, you say, “The sooner the dollar is not the currency of choice for international transactions the better. Then maybe we can stop all this nonsense.”
When, pray tell, is the dollar no longer going to be the currency of choice for international transactions? Not in our lifetime!
And what WILL be its replacement? What doomsday scenario is being proposed to cause such a monumental shift in international relations, politics, and economics?
Update: problem solved, sort of. I looked at the W-8-BEN-E, which is the form for non-US businesses. I nearly fell out of my chair at its complexity: 8 pages of indecipherable questions, none of which are truly clarified in the 15-page instructions. Example: “I certify that the FFI that has not obtained a GIIN is not a QI, WP, or WT.” My answer to those acronyms: WTF??
So I made a couple long-distance calls to Bank of China and, surprisingly, got through to their FATCA compliance desk. After listening to my tirade of refusal to submit foreign government forms, the woman calmly informed me that for those non-US entities who decline to fill out US government forms such as W8BEN, they have their own bank form we could download. This form has a pre-printed declaration that the beneficiary is not a US entity. Fill out name and address and sign, that’s it.
Of course, no mention of this alternate form in their original letter, which numerous times tells the recipient to refer to the United States Internal Revenue Code, but no mention at all of the US-HK IGA or Hong Kong banking law. The USA is in charge of Hong Kong? How did China even tolerate this?
@Barbara, I’m not sure but it looks to me as if business accounts are treated as “individuals” as they don’t seem to match the descriptions for either a financial institution or an investment entity.
@Daniel Kovnat, well we can always dream/hope. As for other currencies, well the Chinese yen is a possibility and maybe even the Swiss Franc which is where most people/governments run to when their finances are in trouble.
http://www.bna.com/irs-banks-time-n57982066377/
January 20, 2016
‘IRS: Banks Get More Time to Certify Accounts Under FATCA’
By Alison Bennett
“Jan. 19 — Foreign financial institutions will have more time to certify whether their pre-existing accounts are owned by U.S. taxpayers under the Foreign Account Tax Compliance Act, the IRS said in Notice 2016-8.
The Jan. 19 notice answers many significant questions raised by taxpayers on compliance with the law. FATCA requires foreign banks to tell the Internal Revenue Service about their U.S.-owned accounts or face a 30 percent withholding tax on their U.S.-source income in some cases.
According to the guidance, some foreign financial institutions won’t have to submit pre-existing account certifications until they give the U.S. their first periodic certification that they are complying with the law—what the IRS called a “deferral of the submission date.” The agency said this applies to participating financial institutions and those who are reporting to the U.S. under a Model 2 intergovernmental agreement.
Specifically, the notice said, the compliance certification must be submitted on or before July 1 of the calendar year following the certification period, instead of no later than six months following the end of the certification period…….”…………..
http://lawprofessors.typepad.com/intfinlaw/2016/01/irs-notice-2016-08-extends-fatca-account-certifications-for-preexisting-accounts-nonparticipating-ff.html
“Wednesday, January 20, 2016
‘IRS Notice 2016-08 Extends FATCA Account Certifications for Preexisting Accounts & Nonparticipating FFIs and Reliance on Electronically Furnished Forms W-8 and W-9’
By William Byrnes
The IRS issued Notice 16-08 announcing that it will extend timelines or modify four elements of FATCA –
(1) modify the date for submitting to the IRS the preexisting account certifications required of certain foreign financial institutions (FFIs);
(2) specify the period and date for submitting to the IRS the periodic certification of compliance for a registered deemed compliant FFI;
(3) modify the transitional information reporting rules for accounts of nonparticipating FFIs to eliminate the requirement to report on gross proceeds for the 2015 year; and
(4) specify the circumstances under which a withholding agent may rely on electronically furnished Forms W-8 and W-9 collected by intermediaries and flow-through entities.”………..
@badger
All these FATCA extensions make me wonder if the US really has the guts to pull the 30% withholding trigger on it’s friend and allies. Do they want the entire world to turn into Switzerland?
It’s time to call their bluff, Canada.
I opend an account overseas ( inheritance)in 2010 and closed it in 2013. never reported it. AM I in trouble?
@confused, nope. What the IRS doesn’t know won’t hurt you. As far as I know all the IGAs are concerned with current/future accounts, not ones that have been closed so unless you tell them about it, they’ll never know.
@Bubblebustin, re; “..All these FATCA extensions make me wonder if the US really has the guts to pull the 30% withholding trigger on it’s friend and allies….”
Yeah, I wonder too. Canada should check its pockets for the gonads it misplace and defend its own rather than selling us down the river to the south, and kissing USA_ _ to please the Banksters.
Confused,
That depends on a lot of things, not the least of which is how much you are talking about. Also of importance is what happened to the money when you closed the account in 2013. If you suddenly had a large sum deposited into an account which generated a report to the IRS, you’d better be careful. If it were I, and I suggest that you, pay a small sum for a consultation with someone expert in the field such as a tax attorney or accountant specializing in overseas accounts. Better safe than sorry.
it is a 300k inheritance which I put under my sister’s name in Manilla
Confused,
It is true what is stated above by someone else who said, “What the IRS doesn’t know won’t hurt you.” BUT WHAT THE IRS LATER MAY FIND OUT, could very well get you into troubles that you don’t want to bring upon yourself. I would definitely consult with someone who is honest and knowledgable in these matters. Best of luck to you.
@confused
FATCA reporting began with accounts existing in 2014. If you closed it in 2013, it’s irrelevant for FATCA purposes. Bringing it up with the IRS now is probably the silliest thing you could do.
I want to come clean. I am willing to go for the streamlined process but it is tough to prove non willfulness otherwise the straight OVDP will cost me 2/3 of my money……..
@confused, there’s no need to “come clean”. FATCA wasn’t operational when you closed the account, As notamused said it’s irrelevant.
1. Honesty is the best policy.
2. Seek professional help.
3. Lawyers and accountants can give advice based on their expertise.
4. Don’t be guided by strangers’ opinions.
@Daniel Kovnat
1. Not needed in this case. Account closed before FATCA started.
2. Maybe – if you can find one that won’t put getting cash off you before acting in your best interest.
3. See 2. The advice both I and notamused have given is perfectly valid and legal – but will not earn a lawyer/accountant anything so of course they’re not going to tell Joe that. They want to scare him into entering Streamlined or OVDP so they can then charge him fees for preparing the paperwork. And remember most tax preparers have little to no knowledge of FATCA/Streamlined/OVDP so how much expertise are do you think they’re really going to have?
4. Sometimes good advice, but if you don’t even want to consider strangers’ opinions then why bother to ask for them on a public forum.