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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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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.

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

  2. Thanks @Just Me. As the author of the paper (Susan Morse) notes in the introduction, that she discussed it with Allison Christians, I am sure that there has been opportunity to digest it. Looking forward to reading any comments.

    Am struck again by how in re-reading so many of your posts about what FATCA might mean for us, and about the development of ‘DATCA’ and ‘GATCA’, you understood where this was going and laid it out for us to understand the bigger picture, and thus to try and sound the alarm in our home countries – outside the US.

    Amazing what individual participants like you, and the whole IBS crew have put together, and how it has grown. Bet no-one anticipated that the deliberately obscured FATCA would become of avid interest to ordinary citizens from such a broad spectrum of circumstances and backgrounds.

    Thanks to you and to all!

  3. @badger
    I am not often right about my view of the Bigger picture, but I am always looking for the larger frame to understand what is happening on ground leve. This FATCA, DATCA, GATCA story just became obvious to me early on, and still amazes me that journalist don’t see or report on it….

    I just read the Reuters story tonight on the lawsuit by Bankers association, with not one word of FATCA anywhere in the story. I made a comment, and it is the only one. So maybe the journalist will get it…

    http://reut.rs/11ORnse

  5. Badger,

    You below, others, (and my angry spouse) have complained about privacy breach when unfortunate non US person-Canadian citizen spouse is forced yearly to disclose joint accounts (with signature required) to FBARS because of threat of significant harm caused to entire household by non-compliance with a foreign government.

    You say: “I couldn’t believe that we were to report on balances and account information on accounts jointly owned with a non-US person, and that in one instance mostly came from the post-tax, Canadian NON-US wages of my NON-US spouse, created and held here OUTSIDE the US. Which is none of the US’s business and violates the privacy rights of my spouse.”

    There will also be different privacy breaches when FATCA kicks in.

    If we all feel that this is a privacy breach, I wonder then how many IB commenters have filed a (really simple to file) online complaint to the Office of the Privacy Commissioner of Canada (or to similar OPC in other countries) for this and anticipated (FATCA) privacy breaches—and what would the reason not to make the simple filing?

    The fact that the very limited track record (years 2002 and 2004 complaints) of the OPC (in Canada) dealing peripherally with this issue has not been positive should not deter (see below links to OPC archives):

    http://www.priv.gc.ca/cf-dc/2002/cf-dc_021219_4_e.asp

    http://www.priv.gc.ca/cf-dc/2004/cf-dc_041221_02_e.asp

  6. @IRSCompliantforever
    “The only way to effectively deal with this problem is for the Canadian government to either ban US persons from living in Canada, or make it clear to ‘regular’ Canadians the danger that Americans pose should you involve yourself with one. Americans in Canada should be required to obtain from any potential marriage or business partner written acknowledgement that they are aware of the all of the dangers an American exposes them to in a partnership. Should a US citizen not disclose these dangers to a marriage or business partner and therefore cause the Canadian harm, they should be immediately jailed and held for deportation. The same applies to US citizens born in Canada. The responsibilities owed to the US by a ‘dual’ citizen should always take precedent over any rights they have as a Canadian. NOT!”
    @just me
    Apparently there’s more than one Steve Miller who’s a Joker. “I really love your peaches want to shaker your tree”- of any low hanging fruit, or other says he.

  9. Another impact of the offshore tax evasion obsession…

    Banks pull back from risky regions

    Some of the world’s biggest commercial banks are pulling back from selected operations in fast-growing markets in the Middle East and parts of Asia, fearing they may fall foul of tightening rules on anti-money laundering

    http://link.ft.com/r/4RNQTT/EKNQHE/9ZISET/GDMCYF/4VJ4VS/9A/h?a1=2013&a2=4&a3=21

    So, again, tell me how this is good for the world’s economy.

    At the same time as pulling back from risky exposures, many senior bankers at the big trade finance lenders have begun lobbying for a relaxation of regulators’ tougher stance on money laundering.

    At a meeting of the World Trade Organisation’s expert panel on trade finance 10 days ago in Geneva, commercial bankers and representatives of not-for-profit development banks alike spent the bulk of the session debating the issue. “There could be unintended consequences from the incredible bureaucracy we’re having to comply with,” complained one participant at the meeting.

    In addition to the money laundering issue, bankers remain concerned that trade flows could be jeopardised by uneven national implementation of incoming Basel III global rules on capital, liquidity and leverage rules around trade finance.

    They just left out FATCA from this story, as AML, KYC, Basil III, FATCA, etc, are all part of the same over regulation which is happening right now.

  11. @IRSCompliantForever, I saw those 2 disappointing instances you cite (and a few others, ex. regarding CIBC and Visa account information of Canadian citizens and residents being sent to be processed across into the US – by a third party in the US – and thus being subjected to the Patriot Act http://www.priv.gc.ca/cf-dc/2005/313_20051019_e.asp

    See also the very good discussion below re why the CIBC/Visa instance was/is so significant. The author Alex Cameron, notes that this is an evolving issue, that provinces like BC have developed privacy guidelines that may be more stringent than PIPEDA, and that the issue of Canada’s privacy provisions exceeding those of the US may result in the blocking of transfers of personal information across the US border in some future instances.
    http://www.fasken.com/files/Publication/bc3fc925-e089-4e31-8295-4018e0b976c2/Presentation/PublicationAttachment/185aa6ef-b89c-4d41-b417-68916075cf61/BULLETIN_PRIVACY_AND_INFORMATION_PROTECTION_OCTOBER_2005.PDF “Privacy and Information Protection Bulletin
    October 2005
    Fasken Martineau DuMoulin LLP
    Canada’s Privacy Commissioner issues highly-anticipated finding
    regarding outsourcing and transborder transfers of personal information”
    by Alex Cameron, Vancouver

    I had concluded that the Privacy Commissioner was toothless in the FBAR instance. Hadn’t thought that my complaint would mean anything since apparently Canada has not stated outright that we do not have to comply, only that Canada will not help the US to enforce FBARs or collect FBAR penalties in Canada (for Canadian citizens AND also residents). Won’t the Privacy Commissioner just refer me to the IRS, and then as we know, and as I was directly told by the IRS hotline, the IRS will restate that US law trumps local/Canadian law? I am effectively being forced to breach my Canadian spouse’s privacy, against both our wills – and break either Canadian or US law, but don’t see what the Privacy Commissioner will do about that? I can see how they are directly responsible to consider the actions of Canadian businesses and banks re our joint accounts under the terms of FATCA, but not clear how they would agree to investigate this familial or individual issue? I think they will just duck it. Any thoughts on that angle?

  12. @Just Me, re Allison Christians comments on the Norwegian IGA, thanks, they were very interesting.

    Am wondering about the last paragraph by Allison – as cited below, because I didn’t quite follow it as to import:
    “………….My intrigue with the new language in the Annex here is that I’m not sure why this condition applies only to local banks, and not other deemed compliant FIs. Those who think the FATCA regime is now deliberately aimed not at catching HNW Americans living in the USA and stashing cash offshore (few of whom hold large amounts of cash in accounts with their own names attached, as Lee Sheppard has repeatedly pointed out) but instead at imposing upon US citizens living abroad with their middle class wage earnings and their lack of effective representation in Washington, could have a field day with this provision.
    ” from “Thoughts on the “you first, no you first” provision in Norway’s FATCA agreement with the US Treasury ” by Allison Christians http://taxpol.blogspot.ca/2013/04/thoughts-on-you-first-no-you-first.html Saturday, April 20, 2013

    What is “HNW”? and about the ability to ‘have a field day’, I need it spelled out. Can you explain?

  13. @Badger…

    HNW = High Net Worth…

    Basically, as I understand it, The IRS is closing the loophole exemption for local banks it opened with another leverage point!

    The local bank deemed compliant provision (which was supposedly created to help Americans living abroad) says that unless Norway starts exchanging information, when it is obliged to do so, the “deemed compliant” status they (a defined local bank) had been granted (which some Americans abroad have taken to mean a safe harbor for their deposits) will NOT stand. IE, they have to be compliant FFIs, or have the 30% withhold regime applied to them.

    Crafty little buggers these FATCAnatics!!!!

  15. Thanks for the explanation @Just Me. I’m getting lost sometimes with all the acronyms and complexities, so it is great when the significance of some of the details is spelled out!

  16. Thanks CalK, I understood the phrase re ‘have a field day’, just not exactly why that was possible – but now I understand from Just Me’s comment that it has to do with the ‘local bank’ provision – which would benefit US persons living and banking ‘abroad’, and NOT the US Homelanders hiding accounts outside the US.

  17. @Badger…

    When I say “create a leverage point” do you understand what I mean…?

    Basically the IRS is saying to you the American Abroad, (as well as the local bank that thought it was getting off Scot-free) that if you want to maintain that “local bank exemption”, and if you want to continue to have the safe harbor for your funds so they aren’t reported to the IRS, then maybe you, like the all the FFIs in Norway, should be lobbying the Norwegian government to comply with FATCA IGA and ON TIME!

    Clever eh? Make you a co-enabler with the FCIC to encourage FATCA IGA compliance…. They are cooping your allegiance! Like I said, clever little buggers those FATCAnatics..

  18. Just another example of how broad the classification of Financial Institutions is…

    Applying FATCA to captive insurance arrangements: Surprising results may occur

    A captive insurance company is an example of an entity that can produce surprising results when the FATCA rules are applied – affecting both the captive and other entities involved in the arrangement. This may occur notwithstanding that captive insurance companies provide a variety of financial and business benefits relating to insuring risks for many multinational enterprises. One surprising result is that some captives may fall under the definition of an FFI thereby triggering various reporting and withholding obligations. Other foreign asset reporting requirements of the US owners of captive insurance companies may also arise.

  19. Badger,

    The relevant question I think is whether filing individual complaints to the Privacy Commissioner in Canada (as well as to the Human Rights Commission for discrimination concerns) re: FATCA/spousal disclosures etc. has any chance of influencing government policy.

    Yes, I agree with you that the OPC (and HRC) in Canada may well refuse to consider the complaint or will side with IRS–but don’t you feel that filing individual privacy/HRC complaints, with the filer also alerting the PM, local MP,.and Finance Ministry of the complaints, could influence even slightly government policy irrespective of any ruling of the OPC/HRC?

    In Canada we have a window of opportunity to influence government policy that ends when FATCA is signed off.

    I still do not see downside in such filings, as long as we do believe that privacy breaches have already occurred in Canada, and that more will occur with FATCA.

    .

  20. @IRSCompliantForever,

    Do you really think that, ‘In Canada we have a window of opportunity to influence government policy that ends when FATCA is signed off’?

    I think that when FATCA is ‘signed off’ is exactly when the ‘window of opportunity’ presents itself. Personally, I am anxiously anticipating the day, that our government makes public its decision – one it has already made but we are not privy to – rather than pussy footing around saying nothing affirmative, but we all know that silence speaks volumes.

    Let the class action suits begin already!

  21. @IRSCompliant,

    In other words, an IGA with Canada is pretty much already signed, at least that is what the Conservative government is aiming for. We would know already if this is not what they had in mind.

    Too bad for them, that the pesky Charter of Rights gets in their way.

  22. CISPA is to the internet what FATCA is to the world’s financial institutions. Congress tried to put this puppy through last year and are now trying again:

    “The legislation would allow the private sector to acquire and search sensitive data relating to U.S. citizens. “Blanketed under the guise of using such sharing — without court-ordered warrants — in order to combat cybercrime, data including health records, banking and online activity could be shared without anonymization,” noted Osborne.”

    http://www.salon.com/2013/04/22/anonymous_pushes_anti_cispa_protests/

  23. The time for countries to say no is now. Work is being performed in the banks to implement FATCA inside their systems prior to September. They are all idiots to not have pressed for a “no” decision up until now. Scandinavian culture (and most others also) is to wait so that time makes the decision for you.

  24. What is the objection to FATCA Form 8938? If you had to summarize it, how would you do it?

    I saw this in an email exchange and thought I would post here for reference…

    The question:

    What, in sum, would you say are the main point of objection? For example, that’s it superfluous and largely duplicative of FBAR; that it’s time-consuming and invasive; that (especially for “accidentals” and others who didn’t even know they had to file a US tax return) it’s just piling on the threat of penalties for non-filers – anything I’ve missed?

    A good, fairly concise answer

    In addition to what you list, it proves to be very onerous to complete when a professional tax preparer tackles it. It is necessary to cross trace revenues with assets – a totally futile exercise in my opinion.

    It includes a bad trip up for some. There is a box about if the account was opened or closed in the year. If one or the other is not checked but should have, it could lead to problems.

    It is more than duplicative of FBAR; it is a major source of confusion because its thresholds are different and it requires more comprehensive information than FBAR.

    Since joint accounts have to be reported in full value, Form 8938 creates a particular problem for foreign spouses who do not want their bank account information attached to an IRS report.

    Finally, this report attached to the 1040 is terrible from an identity theft point of view. If it ever gets into the wrong hands, the thief has EVERYTHING. Name, address, phone number, social security number, name of banks and insurance companies and pension funds with account numbers, the maximum balance in each during the year. What more could a thief want?

  25. @Just Me
    How about like FBAR, it has nothing to do with income reporting and more to do with surveillance (of the Orwellian sort). The Canada Revenue Agency doesn’t even go as far as to want to know balances.

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