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.
Wonder what will happen if IRS and Treasury are determined not to have the power to force US banks to provide any semblance or faux reciprocity to other countries – as FATCA IGAs call for.
Wonder if some of the issues – as in cost-benefit issues will ever be raised in a US court, as in this issue:
http://jimhamiltonblog.blogspot.ca/2013/04/oral-argument-in-dc-circuit-on-resource.html for example; ….” Eugene Scalia of Gibson, Dunn & Crurcher, representing the petitioners, noted that, with respect to cost-benefit analysis, an agency assigned to protect shareholders has adopted a rule with a minimum of $14 billion cost on U.S. shareholders and to the competitive advantage of foreign countries. He argued that there were numerous ways beyond the small ministerial changes identified by the SEC counsel by which the Commission could have vastly reduced the costs, including, for example, grandfathering countries that currently prohibited these kinds of disclosures. For all of these reasons, the petitioners ask the court to vacate the rule.
Judge Tatel noted that, on the cost benefit analysis generally that the SEC states that the court’s opinion in the proxy access case was different because here there is a command by Congress to issue these regulations. In a sense, reasoned Judge Tatel, the SEC is arguing that Congress has already made the determination, at least on the benefit side of the analysis.
Rejecting the Commission’s contention, Mr. Scalia countered that any reasonably informed rulemaking where there’s a statutory duty to do a cost-benefit analysis
looks at where their costs fall and where the benefits fall.”……….
@Badger… BS indeed, but as they will say, joining to be FATCA compliant is a voluntary decision. 🙂
This just out…
Four Reasons Why American Tax Laws Make U.S. Expats Suffer http://bit.ly/Zc7RKW via @SeekingAlpha @DougGoldstein
FATCA encourages the World to use USA financial Products
http://articles.economictimes.indiatimes.com/2013-04-08/news/38374220_1_chinese-yuan-direct-trading-australian-dollar
China and Australia will begin direct conversion of their currencies in a sign of growing business links, Australian Prime Minister Julia Gillard said Monday on an official visit.
“The Australian and Chinese currencies will be directly traded on the Chinese mainland for the first time,” she told Shanghai’s China Executive Leadership Academy Pudong, a Communist Party school.
The currency move allows the Australian dollar and Chinese yuan to be directly swapped without using the US dollar as an intermediary, making foreign trade settlement more convenient and cutting transaction costs.
I may not be the first to come up with this possible scenario, but I’ve not yet seen it, so here it is. Would appreciate comments on the likelihood of it.
Could this be what’s happening behind closed doors:
The CA government has a number of constitutional experts on staff who have long ago advised that implementation of FATCA as written would be problematic in Canada for constitutional reasons. Peter Hogg’s letter was basically stating what the federal government has long since known.
The CA government long ago advised the US of this. Since the US has its own constitution which restricts what governments can and can not do, the US government is reasonably sympathetic. Thus, the US has agreed to allow Canada to exempt residents, regardless of US citizenship, from FATCA reporting requirements. Canada will thus sign on to FATCA with this exemption. The one condition is that this deal will not be announced until the absolute last possible moment so that the other counties who have already signed on (e.g. UK), or who are in the process of signing on, don’t take this exemption as a signal to try to (re)negotiate significant exemptions of their own.
I realize that this is an all-too-hopeful outcome, but it is possible, no? Or is it just 100% wishful thinking on my part?
You can always hope, but, if wishes were horses………………….
@Mark Twain
re: “FATCA encourages the World to use USA financial Products”
I think you mean “NOT to use USA financial products”, correct?
Deckard. Sometimes, if I look back at what I read too long ago, I have to wonder if I was sarcastic or not. In this case, I could surmise strong implications of China specifically being influenced by FATCA, and speeding up the process to get out of US products
@Mark Twain
Sometimes I wish there was a punctuation mark for sarcasm.
Sorry. Sometimes people need confirmation when I’m not sarcastic. I doubt that I am going to be changing my behavior when I grow up.
@Mark Twain
OK, sarcasm understood – I often create the same challenges for others. After all, my Huffington Post tagline is “Every silver lining has a cloud”.
@tdott;
I think your scenario is interesting to consider. A deal with the devil though if true – and I doubt all the other countries would be pleased if they were rooked in by thinking that Canada had folded, if Canada went along with such a plan. I also doubt the US is ‘sympathetic’ re the existence and restrictions of our respective constitutions since the US is very busy trying to neuter its own. They have no problems demanding that other countries change their laws to suit the US.
….”The one condition is that this deal will not be announced until the absolute last possible moment so that the other counties who have already signed on (e.g. UK), or who are in the process of signing on, don’t take this exemption as a signal to try to (re)negotiate significant exemptions of their own…”
Just saw this:
http://www.expatexchange.com/expat/index.cfm?frmid=267&tpcid=3371790
“Dear fellow US citizens,
Please distribute this message widely!
Please send an URGENT message today to your newsletter and on your website, urging your members to personally send letters to Congress by the Monday, April 15th deadline (tomorrow!), pleading Congress to repeal FATCA and change the tax system from citizenship-based taxation to residency-based taxation just like it is in the rest of the world.
As you very well know, these issues have caused immense financial hardship to all of us (US citizens living abroad).
We don’t get any benefits from the US but we have to file US tax returns??!! The US is the only country in the world that harms its citizens residing abroad in this way!
It’s time to tell Congress and the IRS: Enough is enough! No taxation without representation!
More information on the call for action can be found on the website of the American Citizens Abroad association:
http://americansabroad.org/issues/taxation/have-your-say-tax-reform/
Our voice is starting to have a positive impact:
http://thehill.com/business-a-lobbying/293187-americans-living-abroad-plead-for-relief-from-irs
But we need to keep on with the pressue, and we need your support as well!!
It is EXTREMELY important that we ALL support this effort and make our voice heard on the Capitol in order to put an end to our unnecessary suffering once and for all!
Please explain that even if one misses the deadline by a few days, it is still crucial and worthwhile to send the letters to Congress, as they will most probably take them into account as well.
Finally, you can add that to those US citizens abroad who are reluctant to send such emails since they don’t want their names to end up on some list that somehow finds its way to an unfriendly eye in the IRS, there is a very simple solution: create a new email account using gmail, yahoo, or hotmail, under a made-up name, and send the emails from that account.
Thank you very much for your immediate help and support on this crucial issue that is affecting you, me, and all of us!
Sincerely yours,
A fellow US citizen “
Hi all!
I’m back. Two things to mention :
1. About a week ago I received a pdf of a letter addressed to me by Mr. Flaherty, very official, as a response to an email opposing FATCA sent by me to the Prime Minister. It’s four pages long including attachment. It seems to be stuff I’ve already seen on IBS as to FBAR and general filing requirments — the “we’ve negotiated leniency” approach. On FATCA, however, he states that the current negotiations are stressing that exchange of information should be based on the already existing tax treaty, and that privacy issues are recognized. Non-collection against Canadian citizens is mentionned TWICE in the form we’ve seen before.
Has anyone else reveived this letter? It would be worth putting on the site.
2. Two questions about spouses:
i. Am I correct in assuming IRS limits the term to legally married, opposite sex spouses? One hears a lot about the “marriage tax” in the US, where common law couples who marry find themselves paying more under joint filing. What about civil unions, which here in Canada are still grouped under common law by CRA?
ii. Under FATCA scanning of accounts for inidicia, are Canadian spouses of US persons at risk only in joint accounts, or will all with accounts over $50000 be asked if they have an American spouse?
@ Old&Simple
Nice to hear from you again! Your letter sounds like the same one as I got and I believe it was posted at least in part somewhere at Brock but I have no idea where. Question a) Sorry I don’t know. Question b) I believe only joint accounts would be reportable if they find someone with US indicia. If they reported a non-US spouse’s separate accounts there would be grounds for a lawsuit. I don’t believe they will ask anyone if they have a US spouse but maybe that’s wishful thinking. Truth is we don’t know until we are presented with an actual questionnaire.
Old and simple. There won’t be a ‘questionnaire’ Accounts over 50 k won’t be asked anything. A lot of people here are exaggerating the risks.
The proposed regulations and the so-far agreed IGAs (UK) call for ‘electronic screening’ of existing accounts. If there is nothing in the record of US status for pre existing accounts, that’s the end of it.
canadian spouses of US persons aren’t at risk for anything. What gave you that idea? How many times Oh Lord?
Thanks Em and KalC.
The non-US spouse has come up on IBS in discussions of other aspects, so I was just wondering about how it might tie in to FATCA. Anyway, I don’t think many couples keep large joint accounts…too confusing already for Canadian taxes ( rules of attribution, etc. ).
As RRSP accounts are not going to be scanned, I doubt there could be a problem about a USP making spousal contributions.
I know of lot of questions come up repetitiously and have already been answered. That’s a problem with thread discussions. Would be great if someone had the time to write a “FATCA for dummies”
Hmm. A smiley symbol after Dummies seems to have cut my message in half. .. To continue:
Incidentally, is there a way to send a pdf to IBS? I think the letter I got from Flaherty might be worth sharing.
If you could convert the pdf to a word document you could just copy the text and paste it into a posting here..
Old&Simple,
I’ve sent you an email. If you can send me the pdf, I will work with it to put it into your comment. I presume you want your personal information blacked out.
Tomorrow, now. … and thank you!
@CalcC,
re; …”canadian spouses of US persons aren’t at risk for anything. “…
Perhaps Old and Simple meant this:
from Deloitte ‘FATCA Frequently Asked
Questions’ (FAQs) http://www.deloitte.com/assets/Dcom-UnitedStates/Local%20Assets/Documents/Tax/us_tax_FATCA_FAQs_061711.pdf
“31. If a joint account is held by a U.S. person and a non-U.S. person, is it considered 50% U.S.
or 100% U.S.? Does it make a difference if they are not U.S. residents?
A joint account which has one U.S. owner is treated as a U.S. account and the entire account is subject to reporting as a U.S. person.”
Badger Understood. It is the US spouse that is at risk not the Canadian one.
It is my understanding that under the US tax system spouses must file a joint income tax return, and taxes are based on the combined income. This applies even if one of the spouses is a non-US person.
Apparently the Philippines may also have constitutional issues with the implementation of FATCA.
See http://www.businessmirror.com.ph/index.php/business/banking-finance/11916-2013-04-10-12-49-22
@old and simple and others
You can file as married filely separate. A non resident non US person spouse does not have to file. Any joint accounts of whatever sort with any US person have to be listed on the Fbar form, this means the greatest total amount on the account at any time during the year .
This is strange , because if you move an amount from one account to another – typically from a checking account with no interest to a savings accounts with a bit of interest, then the same amount will appear twice. Making it seem you have twice the amount. I actually phoned the Fbar helpline to ask about this. The answer was yes, write the greatest amount on all acounts during the year.
So, my NRA spouse is going to have to start working on the accounts and not leave it to me anymore, no more joint acounts for us!
If a bank account is held jointly and one person is Canadian how can the total amount be reportable if both are contributing to the account? Doesn’t reporting the accountr violate the privacy of the Canadian spouse since their money is in the account too??