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.
Extensive discussion of FATCA, FBAR, constitution, excessive fines, layered fines, several references to Bopp lawsuit:
http://scholarship.law.wm.edu/cgi/viewcontent.cgi?article=1759&context=wmborj
Tyler R. Murray
‘The Eighth Amendment and Tax Evasion: Whether FATCA Non-Compliance Fines and FBAR Penalties Are Excessive’
Repository Citation
Tyler R. Murray, The Eighth Amendment and Tax Evasion: Whether FATCA Non-Compliance Fines and FBAR Penalties Are Excessive, 24 Wm. & Mary Bill Rts. J. 553 (2015), http://scholarship.law.wm.edu/wmborj/vol24/iss2/8
@Heidi
Believe me, I am hardly arguing that this situation makes any sense. I have just received a FATCA form from Santander UK (with a letter than not very helpfully notes: “we cannot provide individual tax advice, so if you do have any specific tax questions, we recommend you speak to your tax adviser”, as if most of the affected people have a U.S.-qualified tax adviser or even a tax adviser at all). Even though I have declared the accounts to the U.S. authorities and I am a good customer, Santander could boot me out on the basis that U.S. persons are too risky to do business with due to the penalties for inaccurate reporting and the U.K. government would back the bank. My U.S. senator has made clear that she is completely unwilling to do anything about account closures (not even writing a perfunctory letter to Treasury about the problems). I could survive at the local credit union, but in the U.K. the credit unions were set up for the poor and therefore poor-quality institutions since there really isn’t a belief that the working class deserve better and that the banks deserve competition. I am lucky enough to have paid my mortgage, so that can’t be called in by some bank over zealously trying to get rid of its U.S. customers, but it’s stressful enough as it is.
@ publius
Sorry, I am not following you. (It’s difficult when the threads mix and change).
“Believe me, I am hardly arguing that this situation makes any sense.”
Which situation are you referring to?
In my last post, I was referring to US citizens who own property in Europe, but do not live there.
I see that there is an EU directive effective sometime in 2016, that any RESIDENT living in the European Union (including the UK ) is entitled to a basic bank account whatever their citizenship. The banks shouldn’t be able to refuse a bona fide EU resident.
Can’t you also apply for British citizenship if you have been resident there for 5 yrs?
4,279 people gave up US citizenship/green cards last year, breaking the previous year’s record numbers.
https://www.rt.com/usa/331643-us-renounce-citizenship-record/
Finally have admitted it’s due to the introduction of FATCA.
Questions about the il/legality of the FATCA IGAs, reciprocity, etc.
See a paper by Leopoldo Parado, highlighted by Prof. Allison Christians on her blog; “….Parada’s article goes further in the analysis and lays out a number of enduring difficulties. It seems to me that governments are simply ignoring these difficult issues as inconvenient barriers to desired outcomes and courts will face the same temptation. But I don’t think these issues go away with time and gradual acceptance of FATCA as an institution. Instead, I think the issue will cause systemic problems going forward, both in terms of raising endless conflicts of law, and in terms of the precedent set for international tax relations by the failure of states to challenge US exceptionalism even as it tramples on law and legal process throughout the world….”
quoted from;
http://taxpol.blogspot.ca/2016/02/parada-legal-questions-surrounding.html
The article by Parada raises issues such as the legal nature of the FATCA IGAs, etc.
Free fulltext is available via SSRN: http://ssrn.com/abstract=2720182
See;
Parada, Leopoldo, Intergovernmental Agreements and the Implementation of FATCA in Europe (June 24, 2015). World Tax Journal Vol. 7, No. 2, 2015. Available at SSRN: http://ssrn.com/abstract=2720182
…………”2.4. The legal nature of the IGAs
Are the intergovernmental agreements truly international agreements?Following the analysis of the general
characteristics of IGAs Model 1 and 2, the author estimates that there are important arguments, in form and in substance, to consider that the new IGAs lack the characteristics of an international agreement, at least for one of the parties involved: the United Sates.[27]
Formally speaking and contrary to the normal process of approval of international agreements in the United States, the IGAs follow the proceedings of an internal law coming into play as “executive agreements”.[28] This means that the agreements do not contemplate any process of ratification,as is normally required in the United States for international agreements.[29] Then, a simple written notice between the parties is deemed sufficient, provided that the domestic proceedings in each country have been accomplished.[30] Furthermore, the IGAs do not contemplate normal mechanisms
of reform in comparison with other international agreements.[31]
Additionally, and substantively speaking, there are two specific characteristics of the IGAs themselves that permit to support the idea that they would not be proper international agreements for any of the parties involved………………”
…….
..”Second, and contrary to other international agreements of this nature,[36]there are enough
arguments to consider that the IGAs lack of a serious level of reciprocity, imposing more liabilities for the contracting states than for the United States in the exchange of information under the IGAs.[37] This issue will be further analysed in this article.[38]. In principle, the formal arguments can be counteracted considering that a similar treatment is adopted for other instruments of similar nature in the United States, i.e. TIEAs;[39] however, it must be remarked that there has been no official pronouncements from the US Treasury Department neither to confirm nor to deny the nature of international agreements of the IGAs.[40] So far they have simply skipped the first step in the normal treaty process in the United States,
which is the review by the Senate Foreign Relations Committee.[41] Nevertheless, in the author’s view, the silence of the US Treasury Department constitutes an implicit recognition that the IGAs cannot be formally treated in the United States as international agreements. Regarding the substantive arguments, the author considers that they are more complicated to counteract, because they are intrinsic characteristics of the IGAs themselves. They confirm that the IGAs lack of the basic characteristics of an international agreement, such as reciprocity in rights and liabilities as well as self-existence, not requiring other instruments to be applied……….”………
Many other interesting parts of this article, though I didn’t see anywhere the question of taxing/id’ing persons on the basis of birthplace and parentage vs. residency. Canada was mentioned once – in terms of access to banking law. Taxpayer rights raised, etc.
Worth reading.
Feedback wanted over a current FATCA issue:
My adult son keeps getting FATCA notices which I have been feeding straight to the shredder. Am I doing him a disservice? Here’s the scoop:
He was born overseas, went back to the USA for a few years of his own accord, and is now back in Asia for a year, basically futzing around while he “finds himself”, doing some odd jobs paid in cash. He is not a dual citizen, though he is a permanent resident.
He has a bank account, opened when he was 13, using his local ID card. Back then they didn’t ask for place of birth or citizenship, so there are no US indicia on his account, period. Neither his father nor I are co-signers.
He is being FATCA’d as part of the bank’s blitzkrieg of every single one of its customers, not because they suspect he has US cooties. In fact, the bank has two letters: one for the US tainted and one for foreign nationals. They don’t see any US indicia, so he got the latter, asking for “evidence of non-US status”, such as his current nationality. Obviously he is unable to do that without brazenly lying.
He isn’t on any IRS radar. Never earned enough in America to file a 1040, his current cash income abroad is far below any filing threshold, and his account has around US$350 in it, so it shouldn’t even be FATCA’d at all, and is not FBAR-eligible. He uses the account for small local debit card purchases. For all intents and purposes, he should never have been contacted in the first place.
But if he doesn’t file the f***ing FATCA form, the bank warns of dire consequences.
I’ve been shredding the letters and the follow-up demands, not wanting to toss him into the cesspool of IRS scrutiny, even if there is nothing for the IRS to find out. However, he may be hanging around here for awhile, may get a real job. He needs that bank account.
In my imagination, I see hundreds of thousands of the bank’s local customers, who’ve never heard of FATCA, getting something in the mail that goes on and on about “USA taxes” and “USA law”, and asking them to submit a US tax form W-8, and saying to themselves, “WTF?” and promptly binning the letter. I doubt my son would be alone in not replying.
Am I being too righteous/paranoid, or letting my anger get the best of me, by shredding these FATCA notices? Should he simply file and thus avoid future noncompliance Hell? Would there be any noncompliance hell for not responding? Or does reporting to the bank become the thin end of a wedge that could eventually lead to even worse?
What’s your advice?
@Barbara if he plans to return to the US then I think he should file the form with his bank. As a permanent resident he’s required by US law to file returns, etc, if he meets the requirements. Okay, at the moment he doesn’t, but that will change in the future once he starts earning more money. And by not filing the form he could be seen by the bank as being wilfullly non-compliant and have his account closed immediately. Although you are not co-signers, it may well be that the bank has picked up his possible US connection through one of you if you have the same bank.
If he doesn’t plan to return to the US then he should give up the Green Card asap using the proper form (I-407).
http://www.ustraveldocs.com/no/no-iv-greencard.asp
He should then ask the bank for a W-8BEN form to fill in. Dealing with the 8854 form should be easy, simply fill it in with zeros, add a note to say he never earned enough to meet filing thresholds and send it off.
Medea, thanks for the feedback.
I should have been more clear about one thing: he has US citizenship and no other citizenship. He has local permanent residence here, because he was born here. My husband and I are also US citizens only, now sort of in the initial stages of applying for local citizenship. From what my son says, he has no intent to return to the USA anytime soon (within the next 5 years).
However, your advice is very well noted. Thank you.
And why he doesn’t get local citizenship, having been born here, is the same reason why after almost 30 years in this lovely land with the despicable despotic government, we haven’t been keen to do so until FATCA, and even then only with enormous hesitation.
@Barbara, if he has US citizenship, then the bank WILL want to confirm that and have him sign a W-9. Not to do so will leave him open to having his account there closed as they’ll consider him wilfully non-compliant. He could try another bank if that happens, but of course they’re likely to ask for proof of citizenship just in case he is American. I don’t know what happens where you live, but here in Switzerland a passport is usually asked for by the banks if you’re not a Swiss national – this was the case even before FATCA.
@Barbara
So, a Canadian bank is asking *all* account holders to confirm or refute US citizenship? Is that correct? If so, which bank would that be?
tdott,
Neither Barbara or her son live in Canada so she doesn’t refer to a Canadian bank asking all account holders to confirm or refute US citizenship.
http://foreignaffairs.co.nz/2016/03/01/new-fatca-exception-clause-for-accounts-held-by-lawyers-or-notaries/
‘Headline: New FATCA exception clause for accounts held by lawyers or notaries ‘
Questions:
But still reportable under FBAR?
Just lawyers and notaries in Switzerland? Don’t they have to grant favourable clauses to ALL of the same Model type signatories if one gets granted a better deal?
https://www.youtube.com/watch?v=5tu32CCA_Ig
I’ve watched this video before but when I looked at it again today I got thinking about FATCA and where this idea might really have come from. We know who inserted it into the HIRE Act (Rangel and Baucus) but according to this video, legislation is generally written by interested parties outside the government. These “outsiders” pitch the legislation to colluding and conniving congressional members who see to it that the legislation gets passed. Searching for where or from whom FATCA originated might be as simple as asking, “Cui bono?” I’m not good at deep analysis like Eric and others so I’m just going to say I think it might have been certain financial institutions inside the USA which created FATCA. As FATCA spreads around the world, the USA is taking on the title of “the biggest tax haven” and continues to protect the secrecy of foreign deposits. This means that certain US financial institutions are raking in assets which were previously stored outside the USA. It certainly looks like they are benefiting from FATCA and that’s why I think it might have been their creation.
OK, Brockers, I have a rather contorted situation that (while a possible boon to my pocketbook), is giving me a lot of stress. The situation is this: I was a US citizen up until April 2014. At that time, I was totally up to date/compliant with US tax “obligations” and forms; I filed my last FBAR and tax forms in April 2015 and included my 8854 communicating “I’m done with you folks”.
Now, 10 years after the death of my father, it has been found that he owned an asset that we (and his executor) didn’t know about (a property in a foreign country) Indeed, I’m not even sure my father knew about this property asset as something he had inherited as it was originally purchased by my grandfather (and none of my uncles or cousins had heard of this over these 35 years). The rest of my grandfather’s descendants (living happily in the USA) are hot to claim the asset and sell it for it’s 2016 (which, I gather, is much higher than the value was in 2004, and certainly higher than in the early 1980s when grandfather died).
I am wondering if a further estate filing will have to be done – – of my father’s or even also my grandfather’s estate (pulling off some of these wind-fall profits)? Also, because I was AT THAT TIME a “US Person”, will I have to refile my 8854 with this additional asset which I didn’t know about but, we now realize, became mine prior to renunciation? This addition to my “Total Assets as of the day prior to renunciation” will NOT take me over the $2,000,000 line. But I am terrified of having to go back and file anything more with the IRS, anything that might make them see my file as “awakened and worth another look”. Even if I do not sign to be part of this process, as an heir to my father’s estate, the legal system probably has my SSN and could track me down (assuming that all my living relatives do the right thing and pay their taxes on this sale.
Now, the sale will be in this foreign country and possibly the monies could come to me directly from XYZ country; however, the “lost-heir” investigator who discovered this (that my grandfather as original owner was now deceased) is sited in California and who knows what legalities he has to go through in terms of bringing the monies back to the US (to deal with reopenned estates?). Hubby asked if the “found money” turned out to be $10,000.00 would it be worth it and I said “definitely not”. It’s value is probably more, and I understand that the rest of the heirs want to go ahead, but I just want to not even get started again with the possibility of anything to do with the IRS. But even if I don’t sign on, and thus technically gift my share away, will I have to account for that gifting (which technically occurred after dad’s death but before I renounced)?
And can you think of any other issues I should be considering/stressing about ? Grrrrrrraugh*!@&^X8rrrrrrrrrrrrrr!x*#+qaaaaaaaaa
I would say you accurately reported on the 8854, which applies to the date the day before you renounced, so this is no reason to amend or resubmit a second 8854.
You are no longer a US citizen, so the US will do whatever it will do with tax on a US estate asset, whether you choose to be in or out.
Received today from RBC
Good Afternoon,
As you know, the regulatory environment that we operate our business within is ever-changing due to increased global criminal activity. As such, our industry is always initiating changes to the kinds of documentation that we are required to collect from clients. One of the documents that is required is called a W-8BEN form and this form is required as part of the new U.S. Foreign Account Tax Compliance Act (FATCA). The W-8BEN form confirms that you are not a US person or entity and it ensures that if you hold individual U.S. securities that pay income, you are benefiting from the lower withholding tax as a result of Canada and the United States having a tax treaty. I have attached an article that explains in further detail what FATCA is and how it applies to Canadians.
I will be mailing the form to your home address today. When you receive it, please sign and date where indicated, and then mail the original document back to us in the postage-paid envelope enclosed.
Please let me know if you have any questions.
Kind Regards,
I intend to shred it
Note the misinformation RBC is sending to their clients.
“increased global criminal activity”….”Our industry is initiating “…..”required to collect”…… “W8-Ben is required by FATCA”…..
@Duke
Would you mind providing us with the link RBC sent you in the letter before you shred it? I’d like to know just what’s in this article that they’re using to explain FATCA.
It sounds like these letters are going out en masse. It might benefit us to create a repository for them here, with key words that would help lead those searching the net for more information straight to Brock.
BB
It was an attachment not a link
Google RBC FATCA and Navigator and you should find it. The link wouldn’t copy for some reason above my pay grade.
I believe this is the link DoD,
https://profile.rbcwealthmanagement.com/getimage.asp?content_id=64166
I’ve come across that article before. I’ll have another look when I get a chance. Thanks.
Go to Twitter retweet away / Many comments from other patriots fighting for what is true justice
JC Double Taxed
@JCDoubleTaxed
My wife got the FATCA letter from RBC.. Interestingly, her account manager already knew she was tainted. But, no matter, the letter helpfully included a W8-Ben and a return envelope. The W8-Ben was already filled in with Canadian for citizenship and only required a signature. When we pointed out that her only account was a RIF, they said ‘ forget about it’. Lord knows what the IRS is going to do with all this useless information. Maybe when they have tried everything else, they will see some sense. I’m not holding my breath.
@Duke, “Lord knows what the IRS is going to do with all this useless information. ”
They WILL plug it into their software and somehow manage to generate a tax and penalty notice.
I received a phone call today from my bank asking me to come in and sign some papers.
So I went to the branch and they had a stack of FATCA related papers for me to sign to include a W-9.
I explained to the account manager that I was not a US citizen and had already provided a copy of my CLN (certificate of loss of US nationality) and already signed a bunch of papers attesting to me not being a US or dual citizen of any kind.
The account manager said the papers they wanted me to sign were not about citizenship, but about my PLACE OF BIRTH.
I said I will not sign any more papers and demanded to speak with the manager. The account manager left to go upstairs to speak with the manager, then came back to inform me that I do not need to sign any more papers and everything was in order. No apology was offered for the way I was treated.
All this stupid harassment for a whopping equivalent of $500 in my account.
I am chalking it up to a compliance department that has gone wild in its hunt for anyone with US indicia.
The moral of the story is that FATCA makes banks treat anyone with US indicia with suspicion of having some kind of disease.
I am glad that I renounced, even if having a US birthplace still hangs from my neck like a stinky dead albatross.