FATCA Discussion Thread (Ask your questions) Part Two
Please ask your questions here about FATCA.
Participants will need to provide their e-mail address (real or fake) and an alias. The only written rule is that participants must use a same alias each time they post (and not “anonymous” or derivatives thereof).
Bear in mind that any responses that you get from participants is peer-to-peer help, and it is not intended as a replacement for professional advice. Also, the Isaac Brock Society provides this disclaimer: neither the Society nor any of its members are professionals. We offer our advice here only in friendship and we recommend that our readers seek professional advice if they need it.
If you wish to receive an e-mail notification of comments, check the box to that effect when making your first comment.
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.
Lebanon chimes in:
http://www.dailystar.com.lb/Business/Lebanon/2013/Feb-20/207147-fatca-presents-challenges-for-lebanon.ashx#axzz2LOyhlGPc
@calgary411
There is that meme again…
Just like in the Bahamas piece above…
I had to pose the question….
Right on and thanks, Just Me!
@Mark Twain
Have you considered renouncing and not filing form 8854? Then you will have a CLN so won’t get reported under FATCA. You are no worse off than you are now, but at least you are no longer a citizen and subject to future filing?
Hogwart. I am not in a good position to renounce. BUt I am filling out the paperwork today. In addition, I intend to Contact the Chinese and Russian embassies to see what Vladmir Putin could offer US persons for security and protection.
Interesting story tonight about the Isle of Man
Clock ticks on Isle of Man tax haven
Note how differently and more reasonably, the UK is structuring their OVDP ahead of their Son of FATCA agreement with the Isle of Man. Penalties are tied to taxes owed, not high aggregate amount of money in the account. Even when copying the US with their Son of FATCA, they aren’t as egregious!
I also doubt that the UK is interested in the local bank accounts of Isle of Man residents who just happen to have been born in, or previously lived in, the UK.
@Just Me – Indeed. A propos memes, I always cringe when I see the oft cited one stating that the USA is “one of the few countries with citizenship-based taxation”. As if there were any others (besides Eritrea, which doesn’t count in my view.)
…………penalties are tied to taxes owed, not high aggregate amount of money in the account…..
you see it is possible to be civil !!
@badger…
Sorry for the late acknowledgement, but good comment on Ernst and Young about intrusiveness.
BTW, I got an interesting response from a LevantLogic on Lebanon The Daily Star comment I made above. Of course I have replied.
If you are interested, you might click over and have a read.
re Just me. THIS IS THE REVEALING COMMENT.
Comment section. “My Lebanese brother’s-in-law boss has a daughter. She holds a graduate degree in finance from Columbia University in New York. She also speaks fluent Arabic and has family roots in Lebanon. She did an internship at the White House. When the first-term Obama Administration was helping to write the Act, they decided to hire her after her internship was finished. Her main job was to focus on the Middle East and “how to best get the most tax compliance from U.S. citizens who also hold another citizenship from Middle Eastern countries.” Those were her own words. She was assigned Lebanon, Syria, Jordan and the Occupied Territories. (I am sure others were assigned the rest of the M.E. countries.) Her mission was to try to strike a balance between COLLECTING AS MUCH TAX (penalties) as possible and, at the same time, preserving the financial health of that given country—
Hogwarts: I am not informed about renouncing. If you could explain the beneft of what you mentioned (renouncing and not filing form 8854), it would be appreciated.
I’ve been a boy scout–I’ve filed Everything I knew about every year—-it’s taken 2 weekends working full time to get through it each year, and I’ve read the instructions quite thouroughly every year (hundreds of pages). Once you know what you are not supposed to fill out (after Reading those hundred pages), it’s not that difficult to fill in the few blanks needed to be filled in.
And then I find out I should have been filing FBAR’s. I’ve lived and worked weekdays in 3 different countries, one of them is one of those terrible tax havens (10 yrs ago). If one has been saving for retirment, Form 8938 to have been filed in 2012 is then just an entrapment device (as they planned)..
Resistance is futile. Should one face their Obama (or was that “maker”) together with the aid of the compliance devils, or should one get the hell out of Dodge.
@Mark Twain
I think I misunderstood your situation. I assumed you had been filing nothing at all and therefore would have a problem with the 5 year compliance statement on the 8854. According to things I have read here, you could file the 8854 based on your filing history as it is a grey area with regard to the need to have filed FBARS to certify compliance. Then, the risk is that they might make an issue of the unfiled FBARS, if they bothered to check.
I’m not sure where you live or how easily they could collect even if they tried to assert penalties on you. That is the risk to assess I suppose.
well, the tax treaty allows for Collection of tax. I don’t see this country as caring about the difference between sections 26 and 31. They would just send the bill to the state-run Collection Agency and be happy they have caught Another tax evader.
I expect the FATCA reporting in APril 2015 will create audits at the end of 2016. Sweden will provide the standard FATCA info and them some. Anytime in advance of that, the IRS could throw out any semi-random audit they wanted——especially if they act upon any of those SAR’s—Suspicious action reports, which are generated by any large-sum activity a person might do in order to maintain the normal large aspects of their lives such as buying and Selling property and/or moving Residences.
@Just Me, mea culpa, as well; I’m missing good things all the time here, and often can’t keep up to answer to all the good comments, or to acknowledge commenters and respond properly.
That earlier post of yours http://isaacbrocksociety.ca/fatca/comment-page-3/#comment-194068 with the comment stream (LevantLogic on Lebanon The Daily Star) http://www.dailystar.com.lb/Business/Lebanon/2013/Feb-20/207147-fatca-presents-challenges-for-lebanon.ashx#comment-805282482 from the article about banks and FATCA in Lebanon is very intriguing – everyone should read it.
It would be interesting to know once and for all if those of us living outside the US were purposefully targeted, or were just found after the fact to be a convenient situation worth exploiting to the max. I do think that the FBAR has been kept so low as a useful club in the arsenal. The difference between ‘local’ for us, and ‘local’ for the US is so very very convenient for them. And as the US dollar is devalued, and inflation occurs, the lower and lower that effective reporting threshold becomes.
As long as children are born to US citizens abroad – and can inherit US status via parentage, there will continue to be millions with ‘foreign’ bank accounts where they live outside the US, to levy penalties on. It is the gift that keeps on giving.
Amazing that a class of ‘criminals’ is created out of lawabiding ordinary citizens and maintained simply by choosing to apply an insanely onerous standard to a legal necessity of life. We all must have a bank account and at least some savings in order to survive. They may have still issued pay packet envelopes of cash back in 1970, or employment checks that you could cash outside of banks, but now everything is direct deposit.
The fact that the US chooses to continue to criminalize any savings outside the US, using such a low threshold, and having expanded the ‘overbroad’ definitions of ‘reportable’ ‘accounts’, and the ‘who must report on what’, AND adding a substantial penalty even for NON-willful, means that they are entirely deliberate in what they are trying to do. The fact that the penalties apply even in the ABSENCE of any reportable income, and in the absence of any illegal act, or any US tax liability means that they are milking it for all it is worth.
Except, as in the example of Mahmud Karzai and his extended family of US citizens in Afghanistan, it is exceedingly glaring that he was not prosecuted – since it is exceedingly difficult to believe that there were perfect and complete FBARs being filed. I mean he not only would have ‘foreign’ accounts in Dubai and Afganistan, but he actually owns a significant proportion of an entire (insert profane word of choice) ‘foreign bank.
But, (and I have to insert some personal rant here) my local, legal, transparent, post-tax, everyday savings account (with less than >100.) is subject to extortionate US penalties.
Thanks too @Samuel Clemmons for commenting on that article. We can never know how making those connections enlists others with similar concerns – or in this case, generates interesting information that we have no other access to.
compliment deferred to Just Me—-he’s the man–the man with the magic pen. I’m the copy-paster and the smart ass.
Fascinating article. Especially the comment that said that Canada Revenue has been reporting on the banking accounts of USP’s to the IRS for years already. If this is the case, and the IRS knows about accounts – why FATCA?
In any case, I have no trouble believing that those working on FATCA in the US had a fairly good idea of the collateral damage and just chose to overlook it b/c life destroyed would enrich the US via fines. As long as they keep their looting to levels that don’t arouse widespread unrest in other countries, I am also certain that they will be allowed by other govts to get away with it.
@badger…
Not a problem, as I am missing more than I like to admit. I seem obsessed these days with trying to comment and keep up tweeting, at the expense of not getting my home projects done. My wife is very tolerant. Think this will be the last for a few hours! 🙂
Recently I have been trying to counter the “FATCA was all about Expats” ‘meme’ that is repeated endlessly in articles. I do think many don’t make a distinction between intent of Congress and intent of FATCANATICS. The US government is seen as a unitary imperial power and acts with one intent.
The end result of FATCA is definitely that Expatriates are targeted, but I have yet to see something out of the ‘horses mouth” that says this was their intention. I accept that it is so now, and maybe it doesn’t matter, as it probably doesn’t hurt (well, of course it hurts US imperial image) to have all the conspiracy believers in the Middle East thinking the IRS was deliberately targeting them living in their homelands. I guess maybe I should fan that flame, but I do try to separate fact and fiction and keep hyperbole within reasonable grounds, although not always successful! 🙂
And I like smart ass Mark Twain or Samuel Clemmons or whoever you chose to be! 🙂
BTW, you might find this discussion on Linkedin with a CPA who had “no sympathy”
http://lnkd.in/KtaZrt It probably better belongs over at the FBAR thread, so might put it there too.
This belongs to the GACTA thread, but I can’t find it…
A very interesting article:
http://www.investmenteurope.net/investment-europe/feature/2249483/us-fatca-is-just-the-start-warns-csc
Quotes from the article that I think are of interest:
“The financial industry is so focused on US Fatca that it is ignoring the risk of other governments implementing their own Fatca”
“The nightmare vision Ferrara has is of a ‘UK Fatca’, ‘Germany Fatca’, ‘France Fatca’ and so on, as each government looking to improve tax revenues realises they can go after their own citizens in the same way the US has.”
“There is even a template for similar developments, when the OECD spent two decades developing common standards of anti-money laundering, Ferrara says.”
“Another concern Ferrara points to is statements from US Treasury officials suggesting they will be monitoring implementation of the legislation to see how well it is working and then move to “tweak” the regime.”
“Other governments would apply their own Fatcas to their own expats, with their own treasuries perceiving the revenue gains as “free money”.
Here the author misses the point that other countries expats are not subject to taxation in their country of origin. I think FATCA would not get as much pushback if it was only targeting Foreign accounts used by one country’s residents.
“Global trend to Fatca-type regulation will supersede specific data protection statutes”
Can’t access the fulltext here http://www.iflr.com/Article/3158020/Americas-Fatca-the-latest-in-a-backwards-approach.html
but the title is intriguing;
“Americas: FATCA the latest in a backwards approach”
@Chris,
Re: Your comment above at 12:25. I can’t move the comment, so I copied it to the GATCA thread. Unfortunately, that way it comes out with my name on it, which isn’t fair to you — so I put an introductory line: “‘Chris posted this comment on the FATCA thread but wanted it to appear here.’ ………..”
If you’d like to post your comment again to the GATCA thread, I can remove the one I put there. Or you can leave things as they are. Whichever you’d like is fine.
….. The fact that the penalties apply even in the ABSENCE of any reportable income…. regarding FBAR`s this is not correct…if there is no unreported income with respect to the account, no penalty will be imposed………http://www.irs.gov/uac/Information-for-U.S.-Citizens-or-Dual-Citizens-Residing-Outside-the-U.S.
One more thought – the IRS has boasted in the press approx. 33,000 brave souls came forward for OVDI/OVDP. Let’s to do a fast calculaton – it’s generally thought to be at least 5 million US citizens abroad (excluding military). Lets say 80% of the 5 million must file, of that 30% file, leaving 2.8 million non-filers, if you take 33,000/2800000, that leaves less than 1% taking up the IRS’ kind VDP offer.
I think in anyone’s book that would be regarded as a failure. What’s next the death penalty? What’s on offer is already a financial death penalty.
The rules of the game will discourage participation in the program going forward. I predict the Commissioner will not be announcing statistics with such fervor this time. “We crucified lots of grannies and snowbirds ! We rock!”.
Note that, in order to collect an FBAR penalty against someone who doesn’t volunteer to pay it especially if there was no or very little interest earned, the Department of Justice would need to bring a lawsuit and I mean against every single violation/year/account; and I don’t think this kind of case is one they would ordinarily want to bring because it would set presedence.
@Mike Tarantes, the percentage is probably much lower than that, assuming that at least a percentage of the roughly 30 million immigrants in the US have to file and are non compliant.
@Mike, correct me if I am wrong, but isn’t it possible to be assessed an FBAR penalty for not reporting the mere existence of an account, even with a minimal balance, which is NOT interest bearing, and thus earns no interest income to report on a return? The FBAR penalty is for not reporting the existence of the account on an FBAR, regardless of whether there is zero or minimal interest income earned from the account in question?
So isn’t the ‘unreported income’ in question the unreported account interest – on the return?
Is the situation you’re referring to where the US return was filed, and the income (ex. interest) earned from any financial account was reported on the return, BUT no FBAR form was filed? Or the return was filed, but the account had no income to report, AND there was no FBAR filed?