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.
Don’t know where to stick this, but I didn’t want to lose it as it looks like a good resource, FATCA related FFI’s, reciprocal banks in US, that sort of thing: http://credfinrisk.com/banking.html
FATCA — an example of the vast planning and preparation, one of many in the big compliance industry: http://www.worldfinancialreview.com/?p=616
Victoria posted this on her Fb today:
“Foreign companies baffled by US FATCA
Controversial new anti tax avoidance measures look set to get off to a chaotic start next week – as the US Internal Revenue Service requires many foreign businesses to register with it but has not explained what they need to do.”
http://www.globallegalpost.com/global-view/foreign-companies-baffled-by-us-fatca-move-69974513/#.UdyOthZa_zJ
Those who have never dealt with the IRS on this level. Another slide in dates coming?
Recent articles re FATCA.
http://www.bna.com/looming-fatca-withholding-n17179875057/
http://www.opalesque.com/647178/US_continues_making_FATCA_agreements_despite_doubts_on717.html
http://www.bingham.com/Alerts/2013/07/FATCA-The-UK-US%20Inter-Governmental-Agreement-and-the-UK-FATCA-Regulations
Shift he onus, the cost and better Homelander acceptance to Homeland Security: http://www.accountingtoday.com/news/Republicans-Propose-Cutting-IRS-Budget-Limiting-Videos-Bonus-67366-1.html?ET=webcpa:e7369:241779a:&st=email
http://www.swedishbankers.se/web/bf.nsf/$all/3E688D1937624ECDC1257B8D0040A560
Swedish bank association
Sweden negotiating FATCA
Swedish government sends in June a new basis for negotiations to the U.S. for a bilateral agreement on mutual exchange of information in accordance with the model agreement for FATCA, 1 A, revised version.
Bankers’ Association has submitted comments on the content. Possibly contracts written during the summer of 2013.
FATCA, the Foreign Account Tax Compliance Act, will gradually be applied by financial institutions, with or without an agreement with the U.S., and there is great uncertainty still surrounding what will apply to financial institutions in countries whose governments are in negotiations with the United States. Swedish legislation on the implementation of FATCA in the national team will not be able to enter into force on 1 January 2014.
Reportedly intend EU Commission in autumn 2013 put forward proposals for the extension of the so-called assistance directive which means that a system of information gathering à la FATCA will become standard among EU Member States.
Published June 19, 2013
Here is Senator Rand Paul’s response an e-mail I sent him regarding the impact of FATCA on citizens abroad.
Dear Mrs. Marie,
Thank you for taking the time to contact me regarding the Foreign Account Tax Compliance Act (FATCA). I appreciate hearing your thoughts on this issue.
During the 111th Congress, Congress passed and President Obama signed into law, the Hiring Incentives to Restore Employment (HIRE) Act of 2010 (P.L. 111-147). This legislation drastically expanded government involvement in the financial goings-on of Americans who live and work abroad. FATCA, the tax evasion provision in this bill, requires all foreign financial institutions (FFI) to provide a detailed report on American account holders to the Internal Revenue Service (IRS) beginning in 2014, or be subjected to a 30 percent withholding tax on income from U.S. assets. American account holders with more than $50,000 who fail to file a report with the IRS would also be subject to a 30 percent withholding tax. As a newly elected member of the 112th Congress, I did not participate in the debate of this law, nor would I have supported it.
Not only does FATCA allow the government to obtain a wide array of international banking records without evidence of such tax evasion, but the outrageous cost of compliance with this requirement has been estimated at $100 million per FFI. Rather than comply, many banks have refused to serve American clients and have begun shutting down their accounts. I have serious concerns with FATCA and that is why, along with my Republican colleagues, Senators Saxby Chambliss (Ga.), Jim DeMint (S.C.) and Mike Lee (Utah), I wrote a letter to Treasury Secretary Tim Geithner questioning the implementation of this onerous mandate. The response we received months later was wholly inadequate and all together avoided the questions we proposed.
I have long been a critic of government intrusion into the privacy rights of Americans. As a lead opponent of the May 2011 extension of the USA PATRIOT Act, which allows the federal government to engage in warrantless searches, I believe the right to privacy is critical to the preservation of other rights. We have to be very careful not to continue down the slippery slope that our current and previous Administrations has taken us.
I am fully aware of the effect FATCA is having on Americans overseas in addition to the burden of compliance costs on U.S. financial institutions. FATCA is a defective law that does not accomplish its objective of ending tax evasion. Furthermore, it infringes on basic constitutional rights, oversteps the limits of Executive power and unleashes a host of unanticipated destructive consequences. For these and other reasons, I have introduced a bill (S. 887) that will restore privacy to American citizens living abroad by repealing many provisions of FATCA. This legislation was referred to the Senate Finance Committee, of which I am not a member, where it awaits further consideration.
Rest assured as I represent the Commonwealth of Kentucky in the United States Senate, I will remain committed to defending the proper role of the federal government, as outlined by the Constitution, and defending the rights of all Americans citizens.
Again, thank you for sharing your concerns with me. Please do not hesitate to contact my office in the future regarding federal issues.
Sincerely,
Rand Paul, MD
United States Senator
Paul says:
“…many banks have refused to serve American clients and have begun shutting down their accounts.”
“I am fully aware of the effect FATCA is having on Americans overseas…FATCA is a defective law that does not accomplish its objective of ending tax evasion. Furthermore, it infringes on basic constitutional rights, oversteps the limits of Executive power and unleashes a host of unanticipated destructive consequences.”
This is a comment to a report that Belgium is anxious to sign an IGA..
“The US adopted this legislation in 2010 which will soon force all banks on the planet to convey the information required to tax american citizens.
And if Iran passed a law requiring all women in the world to wear a veil, we would submit?
Belgium isn’t an american territory.”
http://www.acfcs.org/the-acfcs-fatca-united-states-iga-scoreboard/?goback=%2Egde_3731046_member_257420428
This ACFCS FATCA United States IGA Scoreboard will continually update the status of nations that have signed IGAs, entered meaningful negotiations with the US, or remain nowhere close to common ground on FATCA.
Where do the South American, African, rest of Asia and more eastern European countries stand in all this? Or are they not even worth signing an IGA with?
@Medea:
According to a Reuters article several days ago:
“About 80 countries are in negotiations with U.S. Treasury officials about such pacts, known as intergovernmental agreements (IGAs), analysts said.”
http://www.reuters.com/article/2013/07/08/us-usa-tax-fatca-idUSBRE96705B20130708
Still, with more than 190 countries in the world, 80 IGAs is only about 40%. Then there might be a few issues with getting the other superpowers, China and Russia, to give up some of their sovereignty.
Today’s edition of the on-line newspaper “GenevaLunch” carries an article “Tax implications for Americans abroad: now start thinking ahead”. The story suggests that it is time to be thinking about the future:
“If the worst seems to be over, think again: Americans who live outside the US have been focusing on the past to sort out tax problems, but anyone who has children who grew up outside the States, and young people with US passports, are among those who need to think about their tax future now.”
http://genevalunch.com/2013/07/12/tax-implications-for-americans-abroad-now-start-thinking-ahead/
This story by Amy Feldman was also referenced:
http://www.reuters.com/article/2013/07/11/us-column-taxes-heirs-idUSBRE96A0RM20130711
There’s a new thread at Maple Sandbox where postings can be made on actual account opening experiences in Canada. Or on questions asked or documentation required to open any kind of account.
http://maplesandbox.ca/2013/my-financial-career-a-fatca-chronicle/
Speaking of documentation, but for a different purpose, I’ve sent a bank a certified copy of my CLN and a W-8 to make my account not FATCA reportable. Are there any experts on W-8 here? Am I right in thinking that the form is for the exclusive use of the bank in determining what withholding rate should be applied to US source income and that, in the absence of US source income, this form sits in the bank’s file gathering dust? I would hate to have gone through all the trouble of renouncing US citizenship only to find that the W-8 is a backdoor method for the US to continue monitoring my bank accounts.
@Edelweiss
Well, I’m not an expert on W8, but my understanding is that, yes, it’s for the bank only and has nothing to do with the IRS per se. One of my banks actually requested the CLN and W8 when I informed them that I had renounced my US citizenship. And I also provided those documents voluntarily to another bank, just to make sure they don’t continue reporting on my accounts.
@Edelweiss, “Am I right in thinking that the form is for the exclusive use of the bank in determining what withholding rate should be applied to US source income and that, in the absence of US source income, this form sits in the bank’s file gathering dust?”
Yes. Unless the IRS requests it from the bank (and that’s going to be rare) it just sits in the bank’s file even if you do receive US source income. Some form of W-8 is the main ‘remedy’ for US indicia in the UK/US IGA.
@watcher. I am going for my CLN Monday. What is a W8? I became Canadian citizen in 1993. I have no American assets or income. Do I need to get a w8?
Never heard of one either. I got a W-9 to sign when the bank sent me the papers just after I renounced, but once I sent them my CLN I’ve heard nothing further. Is this something to do specifically with the US-UK IGA?
I think the full name is W-8BEN and it’s basically a document in which you testify that you’re not a US person for tax purposes. It’s on the IRS website.
@all,
It is called a W-8BEN. I do know that all Canadian financial institutions require one for any client who holds U.S. investments and the client is NOT a US person for tax purposes. U.S. tax is then withheld at the ‘treaty’ rate, and that tax gets reported on the Canadian tax return and a foreign tax credit is claimed to recover the tax. I believe the allowable rate in the Canada/US tax treaty is 15%.
#FATCA – Another 6 months for withholding to begin, and FATCA portal of Mordor opening now August 19, 2013 http://bit.ly/18dIuiA
@all, what Tiger said.
US persons get to fill out a W-9. Non-US persons certify their non-US-ness on a W-8BEN. So… before you renounce you should always file a W-9, and never a W-8BEN. And after, always file a W-8BEN and never a W-9. Golden rules.
The W-8BEN is what any regular non-US person has to send to a broker before they can invest in US stocks on the NYSE. That might be a Canadian or a Brit with no US connections and who has never in their life even visited the US. So, filing a W-8BEN is a truly affirmative declaration of your non-US-ness. Relish it!
@Medea, not IGA specific. It’s a standard thing that a UK broker would ask for if you want to hold US stocks. But with the IGA its role is somewhat… extended, to remedy any person who has the dreaded US indicia but is not a US person, whether or not they want to hold US stocks. Really just a self-certification for the UK bank of non-US-ness for cases where there is a ‘taint’ of indicia. Remember that it doesn’t go to the IRS, but just stays with the bank (likely in some dusty vault either forever or until it times out and they have to request a refresher, just in case you’ve been foolish enough to become a US person again — as if!).
Are we surprised? This whole thing is a bad joke, with one-sided rules. Get out while the getting is good — why would you trust anything said from the “homeland?”
Thanks for the additional clarity on the W-8.
It is an IGA thing insofar as a W-8 is part of the requirement to remedy the US indicia of US place of birth.
4. Notwithstanding a finding of U.S. indicia under subparagraph B (1) of this section, a Reporting United Kingdom Financial Institution is not required to treat an account as a U.S. Reportable Account if:
a) Where account holder information unambiguously indicates a U.S. place of birth, the Reporting United Kingdom Financial Institution obtains or has previously reviewed and maintains a record of:
(1) a self-certification that the account holder is neither a U.S. citizen nor a U.S. resident for tax purposes (which may be on an IRS Form W-8 or other similar agreed form);
(2) a non-U.S. passport or other government-issued identification evidencing the account holder’s citizenship or nationality in a country other than the United States; and
(3) a copy of the account holder’s Certificate of Loss of Nationality of the United States or a reasonable explanation of:
(a) the reason the account holder does not have such a certificate despite renouncing U.S. citizenship; or
(b) the reason the account holder did not obtain U.S. citizenship at birth
Should I be concerned by the wording “is not required to treat an account as a US Reportable Account”? Why doesn’t it say “shall not treat an account as a US Reportable Account” which should be the obvious treatment if that person is no longer a US citizen? In other words, the IGA seems to suggest that the FFI can still treat the account as a US Reportable Account but it’s just not a requirement. Given the thousands of hours of “lawyering” that would have gone into a document like this why wouldn’t it be definitive that an account belonging to a documented non-US citizen is not a US Reportable Account?