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FATCA Discussion Thread (Ask your questions) Part Two

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Please ask your questions here about FATCA.

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3,498 thoughts on “FATCA Discussion Thread (Ask your questions) Part Two”

  3. Years into the FATCA and FBAR and OVD messes, still no in-person assistance from the IRS to those in Canada. Notice on the US Embassy and Consulate sites still state that due to budget cuts, there will be NO IRS help sessions or personnel to assist those in Canada. How ridiculous it is that Canada might sign an IGA with the US IRS, who demand extortionate compliance, and complains about the so-called ‘international tax gap’, but that can’t be bothered to invest in even periodic information sessions or services for the second largest group of people ‘abroad’ who will be affected by FATCA – right next door.

    From; Tax Management International Journal, 41 TMIJ 651, 12/14/2012 in the article “11 Reasons why FATCA Must Be Repealed” http://freedomandprosperity.org/files/fatca/11%20Reasons%20Why%20FATCA%20Must%20Be%20Repealed.pdf
    See:
    “Reason #9. Waste of Treasury and IRS Resources.
    Treasury and the IRS are now pouring immense resources
    into the implementation of FATCA. Not only are they
    pouring immense resources into the development of
    the FATCA regulations (the proposed version of
    which was almost 400 pages long) and into the IRS’s
    administration of FATCA, but Treasury and IRS offi-
    cials are now traipsing around the world to negotiate
    potentially 190 (or more) FATCA IGAs.
    footnote 31 ”

    The IRS is sinking massive amounts of time and staff and other resources into implementing FATCA – including sending IRS personnel all around the world to do FATCA compliance workshops and to try and set up the IGAs. Ex. http://www.caribbean360.com/index.php/business/677375.html#axzz2Pt70zDl6

    Contrast that with the notice on the US Embassy in Ottawa website, where for at minimum the last 3 years, the ‘Taxpayers Assistance’ page notifies us that here in Canada, just over the border – within easy commuting distance for IRS personnel – there is, and will be no assistance for those in Canada ( equivalent to aprox. > 1 million ‘US taxable persons’) seeking help with their ‘compliance’ to the US extraterritorial tax system – due to budget cuts:

    The US Embassy (Ottawa) site says:
    “The information on this page is intended especially for taxpayers residing in Canada. Note: Owing to budget cutbacks, the Internal Revenue Service will not/not be providing any in-person assistance or tax seminars at the U.S. Embassy and certain of the Consulates General in Canada.”

    Note that all the contact phone numbers listed on the US Embassy site are long distance – no working 800 numbers for tollfree calls to the IRS for help, for those of us in Canada. The Taxpayer’s Advocate number listed for us to use is in Puerto Rico.

    What do you think the rate per minute for a call to Puerto Rico from Canada might cost? Bell lists the costs as ranging from .99 per minute, to 1.44. http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=2&cad=rja&ved=0CE8QFjAB&url=http%3A%2F%2Fwww.bell.ca%2Fshop%2Fen%2Fjsp%2Fcontent%2Fpersonal%2Fcatalog%2Fphoneservices%2Flong_distance%2Fbaserates%2Fpdfdocs%2Fbr_international.pdf&ei=Re5iUZGeG-nM0AG9lICwBw&usg=AFQjCNFe0SvZvRmpNsEnOwTZaRNH1hqTow

    Just continuing evidence that we are to enjoy no benefit of our US citizenship, yet bear the full costs and burdens of ‘compliance’ – even in the absence of any US tax owed, and having paid fully in our home country – of Canada or another non-US country.

  6. Let’s just say that any test that produces as many false positives and false negatives that FATCA will, is not worthwhile.

  7. Thanks, badger.

    Really — how can any country, any bank, any person think that FATCA is anything but insane after reading the excellent Tax Management International Journal, 41 TMIJ 651, 12/14/2012 article “11 Reasons why FATCA Must Be Repealed” http://freedomandprosperity.org/files/fatca/11%20Reasons%20Why%20FATCA%20Must%20Be%20Repealed.pdf??? Do they not read the same words that I read? Do they not see it can all be boiled down to what I think all justice can boiled down to: the Golden Rule “Do unto other as you would have them do unto you”? FATCA in this piece is compared to bullying — and the US is the world’s bully with FATCA.

    Also asked and fits in with latest from Asia that Just Me has alerted us to: http://www.asianinvestor.net/News/338560,china-may-strike-fatca-agreement.aspx

    It might be argued that to repeal FATCA now would be inopportune because FATCA is causing so many countries to enter into FATCA IGAs with the United States. However, is it fair to negotiate with someone when you have a gun pointed at their head? Does that accord with the American sense of fairness?

    The article’s conclusion makes perfect sense to me:

    CONCLUSION
    The bottom line is that FATCA is sheer idiocy and must be repealed as soon as possible. The world economy has enough problems as it is without having inane reporting requirements imposed upon it. More-over, the U.S. economy has enough problems as it is without having legislation that causes foreigners to think twice about investing in the United States.

    FATCA has resulted in an extremely inefficient deployment of Treasury and IRS resources, which would be much better employed going after noncompliance involving $450 billion a year, rather than $9 billion over 10 years. Existing enforcement tools, including the encouragement of whistleblowers, have proved themselves more than adequate to deal with the so-called ‘‘scourge’’ of offshore tax evasion. Finally, it is outrageous for the United States to impose the burden of FATCA on the rest of the world when it is not willing to impose the same reporting burden (truly equivalent reporting) on U.S. FIs.

    FATCA was clearly written and enacted without being thought through carefully; it shows what can happen when tax legislation is considered by Congress without ever having been subject to any hearings by the House Ways and Means Committee or the Senate Finance Committee. Hopefully, there will be some ‘‘profile in courage’’ in Treasury who will stand up and declare that FATCA is madness and urge Treasury and the White House to push for repeal.

    If, after repeal, Treasury still wishes to pursue some type of worldwide automatic information reporting system, it should do so within the context of the OECD/Council of Europe Multilateral Convention on Mutual Administrative Assistance in Tax Matters (which, despite its title, is open to all nations)and should seek changes to that convention that are acceptable not only to the other signatory countries but also to U.S. FIs and the U.S. Congress.

  8. Here is the reality, I fear…

    Bankers are seeing FATCA or more specifically GATCA as a global trend… and FATCA, as I have often said, is just the “Tip of the Spear” in this global war on offshore Tax evasion. (WOOTE) Bankers are capitulating around the world.

    “We want to strengthen cooperation with foreign tax authorities,” said the Finance Minister Luc Frieden, Sunday in the “Frankfurter Allgemeine Sunday newspaper.” “The international trend is towards an automatic exchange of bank information. We are not strictly opposed, ““said Frieden. Luxembourg, one of the six founding members of the European Union is increasingly in the spotlight, especially targeted for its culture of banking secrecy.

  9. All I can say is that we’ll probably see a huge surge in the worldwide employment figures because everyone is going to need to hire extra staff to cope with all the paperwork/e-filing!

  10. A Linkedin question that those of you who have a linkedin account might want to respond to..

    http://lnkd.in/EXxDQU

    FATCA and Canada – What is the status?

    Is anyone familiar with the very latest on FATCA and Canada. I have recently read that there are objections to its constitutionality under Canadian law. I had last heard, in November. that Canada was negotiating an IGA with the IRS. I would appreciate being directed to any information out there. Thanks.

    I posted some links back here…

  11. Add this the the lack of service, badger: http://www.accountingtoday.com/news/IRS-Staffers-Warn-Taxpayer-Assistance-Delays-Budget-Cuts-66295-1.html?ET=webcpa:e6936:241779a:&st=email

    A recent survey by the National Treasury Employees Union found IRS members warning that tax refunds for identity theft victims could be delayed by six months to a year because of budget cuts. The agency currently has nearly 650,000 active identity fraud cases; and the Treasury Inspector General for Tax Administration has warned of billions in fraudulent refunds over the next five years unless identity theft is adequately addressed.

    Wait a minute,

    Honest taxpayers are affected in another important way by budget cuts, the NTEU cautioned. Reduced enforcement efforts caused by inadequate staffing tend to encourage scofflaws, shifting a costly burden to those who meet their tax obligation. IRS and Census Bureau data indicate that in 2006, the average U.S. household effectively paid an extra $3,300 to subsidize noncompliance by others. The gap between taxes owed and taxes paid currently is estimated to be approximately $400 billion annually.

    “The tax-avoidance citizens are going to get away with cheating the government due to lack of resources,” a respondent to the NTEU survey said.

  12. Interesting how tax “avoidance” has now become a euphemism for tax “evasion”, when one is legal and the other isn’t. This is the jargon of those out there who would like to lump the two together in order to justify more expansive ways of creating more tax revenue, imo. BEWARE!

  14. ‘Good news for TPAs’ EU to copy the Yanks!

    Alan Morgan-Moodie, chief executive officer of the Association of Life Offices, said the G5 “FATCA” was good news not just for tax authorities in the five countries in question, but also for the software providers and third party administrators (TPAs) who will be tasked with the formidable job of developing the systems for collecting what will unavoidably end up being a huge amount of information.

    Here is the press release from the Uk

    http://www.hm-treasury.gov.uk/press_37_13.htm

  15. They’re all pressing ahead with an EU FATCA after the Cahuzac scandal and the recent leak of the list of people using tax heavens. This could not have happened at a worst time.
    Looks like FATCA/DACTA, GACTA, whatever you call it, is bound to happen. Let’s just hope that this will trigger the end of citizenship based taxation. It’s either that or the end of dual-citizenship.
    And pray for more reasonable compliance path / penalties. And I think that the transfer of tons of minnow data is not necessarily going to be bad for minnows. They’ll need to provide more streamline compliance procedures, once they get millions of records.

  17. An Update on FATCA: Momentum Building Worldwide, or so says the Treasury FATCAnatics…

    http://www.treasury.gov/connect/blog/Pages/An-Update-on-FATCA-Momentum-Building-Worldwide.aspx

    as Roger says…

    This is like saying that the Atomic bomb dropped on Hiroshima was targeting the mayor of that city.

    or James says..

    It is, in effect, a “stop and search everybody” law.

    It’s hard to know what’s more pathetic, the actual performance described in this Note, or the fact that Treasury felt the need to blow their own tiny little horn.

    Notice nothing about China, Russia, Canada or Brazil. Even the stuff they cite is intentions, not signatures on IGAs.

  18. Thanks for this, Just Me.

    Frederic Alain Behrens, University of Wisconsin
    April 9, 2013
    Wisconsin Law Review, Vol. 2013, No. 1, p. 205

    Con’s and Some Pro’s (why’s and why not’s) are given — good work and read!

    Several methods, used along with lobbying Congress, can achieve
    the repeal of FATCA. “These include hearings, ordering [a]
    cost/benefit stud[y] (which never was done for FATCA), withholding
    [IRS] enforcement funding, freezing Executive Branch nominations, and
    . . . most importantly, blocking implementation of [more Model 1 and 2]
    IGAs as the ‘weak link’ in the FATCA enforcement plan . . . .”178 A
    significant public relations campaign is also needed to educate the public
    about FATCA. The financial industry should consider funding a
    substantial Congressional lobbying and media campaign to avoid the
    substantial compliance costs it will face once FATCA goes into full
    effect.

    …

    In considering whether the movement to repeal FATCA will be
    successful, it is important to consider some roadblocks that groups
    lobbying for its repeal must face. First, FATCA was voted into law under
    the HIRE Act, which had broad bipartisan support.185 The main purpose
    of this Act was to get Americans back into jobs and bolster the American
    economy through a significant stimulus package.186 Besides the FATCA
    provisions, other parts of the bill create new tax credits that encourages
    businesses to hire new employees.187

    In the current environment, with voters not interested in raising
    taxes, a repeal of FATCA, which is aimed at increasing tax revenue, will
    not be looked upon favorably. Even the most vociferous proponents of
    repeal concede that FATCA will be a tough nut to crack, but claim that
    “if and when FATCA receives the kind of scrutiny in the United States it
    should have received before enactment, it is unlikely to survive.” 188
    Further, tax evasion is a contentious political issue. Voters will not like
    seeing a bill repealed that is aimed to target tax evasion by wealthy
    Americans taking advantage of loopholes in the current system.189 As
    long as getting Americans back to work remains a top priority for
    Congress, the bipartisan support that enacted FATCA will struggle to
    repeal it.
    In addition, Americans living outside the United States do not have
    a big footprint in American politics and have no concentrated voting
    strength in any particular state or district. Although groups such as
    American Citizens Abroad and Republicans Abroad have organized
    movements to repeal FATCA, American expatriates have trouble
    speaking with a unified voice on the issue.190 A strong unified message is
    needed to ensure the success of the repeal movement.
    Lastly, FATCA is not mainly about revenue and is more about
    information on foreign bank accounts held in foreign countries.191 This
    may also be part of the reason why a proposed withholding regime would
    not be implemented because it is not in line with Congress’s policy
    purpose behind the bill when it was enacted. There could be other ways
    to get information from banks, but in general there will be a similar
    sentiment against this. However, efforts to repeal tax legislation enacted
    by President Barack Obama have succeeded before.192
    187.
    …

    CONCLUSION: FATCA, THE ROAD TO NOWHERE
    It is critical for all participants, including government organizations
    and the general public of consumers, to strike an acceptable balance of
    burdens on each side, so that all participants can achieve their goals.
    FATCA is not the way for the U.S. government to prevent income tax
    evasion. Moreover, the current state of the U.S. economy is already
    problematic, and legislation increasing the reluctance of foreigners to
    invest in the United States is worrisome.203 The IRS should not force
    taxpayers and banking consumers of foreign nations to pay the costs of
    compliance with American tax laws from which these people derive no
    benefit.
    It is becoming increasingly apparent that the protests against the
    implementation of FATCA, the burden on IRS regulation writers, and the
    enormous cost of compliance for FFIs are not worth the tax revenue and
    information that FATCA is projected to produce.204 The growing
    opposition movement will continue to attract the opposition of foreign
    banks, international governments, and American citizens abroad likely
    culminating in the repeal of FATCA. In the end, if someone wants to
    hide their assets abroad, they will figure out a way to do it. The goal of
    FATCA is laudable, but using it as a means of achieving a reduction in
    offshore tax evasion is destined to fail.

  19. Source: http://ssrn.com/abstract=2247615
    See also: http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=122

    Using a Sledgehammer to Crack a Nut: Why FATCA Will Not Stand

    Frederic Alain Behrens

    April 9, 2013

    Wisconsin Law Review, Vol. 2013, No. 1, p. 205

    Abstract:

    The Foreign Account Tax Compliance Act (FATCA) became law in 2010 and is an important development in combatting income tax evasion. Under FATCA, American individual and corporate taxpayers must provide comprehensive information to the Internal Revenue Service (IRS) regarding foreign bank accounts. In addition, a more controversial part of FATCA requires foreign banks to report directly to the IRS certain information about financial accounts held by American taxpayers.

    These drastic changes in American tax policy are alarming to the international financial community. International banks are forced to implement expensive compliance programs to satisfy the information reporting requirements. An increasing number of foreign financial institutions will no longer want any involvement with American citizens or investments. Furthermore, Americans living abroad might be forced to denounce their American citizenship in order to gain access to insurance and basic banking options.

    In response to the unilateral imposition of FATCA, foreign governments and banks may lobby for its repeal. This Comment examines factors in the global movement to repeal FATCA and suggests several workable solutions that would be agreeable to the United States and foreign nations. Specifically, this Comment suggests how investment income withholding and increased IRS enforcement actions are a better solution to prevent income tax evasion.

    Number of Pages in PDF File: 32

    Keywords: FATCA, tax, irs, FBAR, offshore, foreign banks, FATCA repeal, withholding tax, tax policy, tax evasion, OVDI

    Accepted Paper Series

    +++++++

    The full text can be downloaded at “Using a Sledgehammer to Crack a Nut: Why FATCA Will Not Stand”.

    James George Jatras
    http://www.RepealFATCA.com
    RepealFATCA@gmail.com
    @RepealFATCA
    +1.202.375.1007

    Visit http://www.RepealFATCA.com for more information on “the worst law most Americans have never heard of”

    +++++++++++++++++++++++++++++++++++++++++++++++++++++++++++++

    James George Jatras
    Principal, Squire Sanders Public Advocacy, LLC
    http://sspa.squiresanders.com/

    Email: james.jatras@squiresanders.com
    Office: +1 202 626 6248
    Mobile: +1 202 375 1007
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    Squire Sanders Public Advocacy, LLC is a wholly owned affiliate of Squire Sanders (US) LLP.

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  20. @Joseph Zerncik
    Mr Behren should have said that Americans and their bankers alike are denouncing US citizenship 😉

  23. Under the agreement, banks in the G5 will be forced to reveal financial details of foreign clients which will then be handed on to the tax domicile to be checked for evasion. The agreement, which is described as a “pilot” scheme, is based on the America’s Foreign Account Tax Compliance Act (FATCA) which has been used to capture US tax evaders abroad since 2010.
    http://www.telegraph.co.uk/finance/personalfinance/consumertips/tax/9982660/UK-signs-tax-deal-with-France-Germany-Italy-and-Spain.html

  24. Another piece of BS from the US:

    ” ………SENIOR US Treasury official said yesterday that the US government was not seeking to ‘strong arm’ foreign jurisdictions into Intergovernmental Agreements (IGA) for Foreign Account Tax Compliance Act (FATCA) reporting…………” from http://www.tribune242.com/news/2013/apr/11/no-us-strong-arm-fatca-compliance/

    You mean, that it’s not bullying, extortion, blackmail or ‘strong arm(ing)’ to impose a 30% withholding as a penalty?

    Maybe that comment by the US Treasury official is a reflection of how FATCA is being seen by the rest of the world – and thus how the US is being judged. Otherwise, why bring it u?

  25. Unlike the US unilateral extraterritorial imposition of FATCA, when it is convenient, the US will oppose ‘extraterritorial’ taxation as imposed on it by other countries : ……”The Committee stated that it is almost certain that the U.S. will never enact a financial transaction tax and, indeed, may even view such a tax with hostility as an extraterritorial tax.”…. from Friday, April 05, 2013 ‘U.K. Parliamentary Committee Questions Extraterritorial Reach of E.U. Financial Transaction Tax ‘ http://jimhamiltonblog.blogspot.ca/2013/04/uk-parliamentary-committee-questions.html

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