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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”

  2. US anti-tax evasion legislation known as FATCA – the Foreign Account Tax Compliance Act – has caused upheaval among the American expat community and dual Swiss-US nationals living in Switzerland where it was agreed in February.

    “People are very angry and upset but some are really scared,” declared Jackie Bugnion, a director and tax specialist at American Citizens Abroad (ACA), a Swiss-based organisation that calls itself “The voice of Americans overseas”.

  3. Looks like the Swiss have come up with a temporary solution at least:

    http://www.bluewin.ch/fr/index.php/136,823884/Solution_pour_regler_le_sort_des_banques_aux_Etats-Unis_en_vue/fr/news/suisse/sda/

    My English translation:
    The Federal Council found a solution to settle the conflict with the United States concerning the banks. Washington, not wanting to wait longer for its application, the government asks the Federal Chamber to modify the law from June, but for one year only.

    The executivel adopted Wednesday the message allowing the legislative to process the topic in a special procedure during its summer session. The text will allow all Swiss banks to draw a ling through the past and to regulate their relations with the American authorities, announced the government.

    Collaboration with the IRS

    The banks will be able to collaborate with the IRS across the Atlantic and will be able to provide the information necessary to defend their interests. They will be able to communicate on the business relationships with American customers and people implicated in the banks’ activities concerning the United States.

    On the other hand, the project doesn’t allow the supply of customers’ data and account information. Their transmission will be solely in the context of an administrative request to help via a convention in force against double taxations.

    Protection for employees

    The law obliges the banks cooperating with the American IRS to guarantee the best possible protection to their employees. The establishments are meet with staff associations to negotiate to guarantee minimal requirements.

    This puts an end to the conflict with the American IRS in the Swiss banks which it accused of having helped American customers evade tax. The solution regulates the case of a dozen banks with the regulator in Washington, but also of all other Swiss establishments.

    How this will affect any forthcoming referendums on banking secrecy/FATCA remains to be seen.

  7. See this article : //fw.ifslearning.ac.uk/Archive/2013/march/features/makingtheworldsafeforunclesam.aspx
    ‘Making the World Safe for Uncle Sam’: ‘Christopher Alkan calculates that the US approach of extending the scope of its laws beyond its own territory will eventually backfire.’

    Not recent article (2011?) , but very timely. Particularly in terms of US official Stack at the meeting in Brussels http://www.google.ca/url?sa=t&rct=j&q=&esrc=s&source=web&cd=1&cad=rja&ved=0CC0QFjAA&url=http%3A%2F%2Fwww.europarl.europa.eu%2Fdocument%2Factivities%2Fcont%2F201305%2F20130521ATT66359%2F20130521ATT66359EN.pdf&ei=q9OoUcjXArO84APEuYCgDw&usg=AFQjCNHKlxYAxEsZsMfcAJdYBhg_1ipWTQ&bvm=bv.47244034,d.dmg

    Stack attempts to rebut the perception that FATCA is NOT a multilateral global cooperative effort to combat international tax evasion, but really FATCA is a lopsided unilateral US law imposed extraterritorially on the rest of the globe by the US – via force of the threat to restrict access to US markets ; see his comments in the video of the Public Hearing on FATCA at the EP in Brussels http://isaacbrocksociety.ca/2013/05/31/public-hearing-on-fatca-at-the-european-parliament-in-brussels/

  9. @badger

    Great article. It’s still current, with the exception of the introduction of IGA’s. It’s the first one I’ve read that delves as much into how FATCA will negatively effect the US’s reputation, which the US has managed to somewhat control by the introduction of reciprocity. They can never change the fact that it was the recklessness and arrogance of Congress that had to be mitigated through IGA’s, and the fact that they are using an extortive 30% withholding proves that it was not their initial intention to create a cooperative means by which to fight international tax evasion.

  10. @ bubblebustin, good point re “the fact that they are using an extortive 30% withholding proves that it was not their initial intention to create a cooperative means by which to fight international tax evasion.”

    Someone should have asked the US person Stack that during the ‘Public’ Hearing on FATCA in Brussels recently. In other words, Mr. Stack – if this was meant only as a domestic US measure – as a condition of access to the US financial markets, and not extraterritorially applied, then why the elaborate punishment and 30% withholding structures that go on down the chain even to those who deal with third parties that are not deemed to be FATCA compliant? And, if an account holder is resident outside of the US, and is a dual citizen of another country, then isn’t their account ‘foreign’ by IRS and Treasury definition? The account holder might be deemed to be a “US taxable person”, but that does not change the fact that the account, the assets, the residence, and the salient citizenship of the person is NOT US – therefore FATCA withholding is extraterritorial in action, application and intent. Our involuntary US status does not mean that the Canadian accounts we might hold jointly with a non-US spouse or business partner is a ‘US account’. The US seeks to have it all ways – deeming accounts ‘foreign’ for the purposes of the punitive reporting and penalties if it is outside the US, but seeking information on the ‘foreign’ accounts that actually belong to non-US persons as joint or beneficial owners – as if they belong to the US via our US status- severed from our residence, our tax home and our other citizenships.

    And one does not enact a 30% withholding in a multilateral cooperative agreement.

    Are those in the EP unaware also of the US ‘savings clause’ and ‘last in time’ rule in every US tax treaty?
    Are they unaware of the built-in loopholes? If the US claims that the IGAs are somehow just an extension of existing tax treaties, then they already come with the US favoured conditions. And doesn’t the US refuse to assist with enforcement and collection inside the US for anyone that is a US resident?

    We’re motivated to look into this, but we’re not experts. Aren’t there any experts amongst the people dealing with this, or do they just ignore what they know because it will get in the way? Hasn’t anyone there any experience with just how tricky the US is?

  11. @badger

    I’ve had to wonder just how just how in tune these politicians are too. I’d like to think that they are, but I also know that they may not be…Perhaps we should error the side of believing they know at least as much as we do and are perhaps restrained by something we aren’t, which is international diplomacy 🙂

  14. @Just Me
    I’d better park my yacht and Rolls Royce out back with my race horse where the IRS can’t see it behind my Lear jet.

  19. If Rosa Parks was an expat, I wonder what she would do if faced with the treatment expats are getting today.

    Would she still keep riding in the back of the bus?

  20. A blog picks up on the EP session, as well as using Just Me’s term “DATCA” to refer to the reporting requirements that US domestic banks are resisting.

    http://derrenjoseph.blogspot.ca/2013_06_01_archive.html

    “….Recently the European Parliament held a public hearing on FATCA which is available on YouTube as well as on my blog. The UK was the first nation to sign a FATCA intergovernmental agreement (IGA) because the financial systems of the two nations are so inextricably linked that there was no real choice. From the debate within the European Parliament however, it is clear that there is a momentum towards a global FATCA. Noble sentiments but the most obvious obstacle for me is that even though there may be a bill drafted and thus willingness by the White House, I anticipate serious opposition in Congress to any legislation that gives foreign governments (even Russia or China?) or foreign financial institutions access to the financial details of holdings in US financial institutions. This reciprocity to FATCA is sometimes termed DATCA by the media.

    If you think the resistance to gun control was tough, wait till someone tries to push DATCA thru Congress!

  24. @Calgary…

    I doubt it is copy rightable, and even if it was, to what point. It is my gift to the world. Just hope more journalist start using it as short hand for what is happening..

    @Badger..
    BTW, looking at the posting, I recognize the blogger as a guy that posts on Linkedin, and I am sure he picked it up from my many responses and posts there too. I use it all the time in relation to the promises of reciprocity. Trying to get the guys of the FATCA compliance complex to question it themselves, and to that point, it seems to be working, if this is any guide…

    We need more of them to be making this point.. “If you think the resistance to gun control was tough, wait till someone tries to push DATCA thru Congress!”

  25. @Just Me,

    The media can roll those terms out after they really learn what FATCA is and the consequences — moving on to DATCA and GATCA. We, here, will know the father of those terms.

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