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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. @calgary411:
    Thanks for the Bloomberg article. The question I have is what prompted these two articles. My best answer is that this is the start of Treasury feeding stories to the media to blame the shutdown on Treasury’s inability to move forward with the FATCA rollout. Treasury is looking to buy time, perhaps another six or 12 months, without looking silly.

    I will go out on a shaky limb by saying that I expect Robert Stack to move on from his current position by the second half of 2014. After being in charge of the FATCA rollout for about six months now, Stack knows it is not implementable and he will move on to save face and what’s left of his reputation by then.

  4. From “Isle of Man FATCA ‘a momentous step'”

    Mr Osborne commented: “The agreement we have now signed with the Isle of Man is a momentous step forward in tax transparency, showing that when we work together we can push the international agenda forward.”

    Mr. Osborne, allow me to FTFY:
    “The agreement we have now signed with the Isle of Man is a momentous step forward in non-reciprocal tax transparency, showing that when we work together we can push the United States’ agenda forward.”

  5. Based on my limited understanding of Obamacare, “everyone” is expected to pay into that system. If you don’t there will be penalties coming your way, Please refer to this. If I am happy with the medical care/insurance from my resident country, how can I obtain an exemption from Obamacare? (Doesn’t this new system remind you of resident-based taxation?)

    Also does anyone know if there will be a Health Care Exchange for people living outside of US?

    I would like to find out everyone’s thoughts on sinking more money into blackhole. 🙂

    Thanks!

  8. @A1 and @bubblebustin, I am glad that American Citizens Abroad recently complained (in your link above) to the IRS about the 3.8% Net Investment Income Tax (commonly called the “Obamacare surtax”.) Because foreign tax credits cannot be used to offset gains those US persons over the income threshold will be double taxed.

    The US was obligated under the tax treaties with Canada, the UK, and probably many other countries to formally advise those countries that the Obamacare surtax contradicts the treaties and to consult with the countries to work out a solution. The US never bothered.

    I am still waiting for Canada Finance to get back to me confirming that it will complain to the US about this treaty violation.

  9. Did nobody read the following in the link that !A1 gave above?

    http://en.wikipedia.org/wiki/Provisions_of_the_Patient_Protection_and_Affordable_Care_Act#Effective_January_1.2C_2014

    I read this as saying that it doesn’t apply to me because my retirement income is below $125,000 and I live in Canada where we have a FEIE agreement with the US. I admit I don’t understand the bit about non-earned income (investments), but the foreign provision surely trumps that anyway?

    Effective January 1, 2013

    Income from self-employment and wages of single individuals in excess of $200,000 annually will be subject to an additional tax of 0.9%. The threshold amount is $250,000 for a married couple filing jointly (threshold applies to joint compensation of the two spouses), or $125,000 for a married person filing separately.[61] In addition, an additional Medicare tax of 3.8% will apply to unearned income, specifically the lesser of net investment income or the amount by which adjusted gross income exceeds $200,000 ($250,000 for a married couple filing jointly; $125,000 for a married person filing separately.)[62]
    Beginning January 1, 2013, the limit on pre-tax contributions to healthcare flexible spending accounts will be capped at $2,500 per year.[63][64][65]
    Most medical devices become subject to a 2.3% excise tax collected at the time of purchase. (The ACA provided for a 2.6% tax, but this was reduced to 2.3% by the Reconciliation Act).[66] This tax will also apply to some medical devices, such as examination gloves and catheters, that are used in veterinary medicine.[67]
    Insurance companies are required to use simpler, more standardized paperwork, with the intention of helping consumers make apples-to-apples comparisons between the prices and benefits of different health plans.[68]

    Effective January 1, 2014

    Insurers are prohibited from discriminating against or charging higher rates for any individual based on pre-existing medical conditions or gender.[75]
    Insurers are prohibited from establishing annual spending caps of dollar amounts on essential health benefits.[6]
    Under the individual mandate provision (sometimes called a “shared responsibility requirement” or “mandatory minimum coverage requirement”[76]), individuals who are not covered by an acceptable health insurance policy will be charged an annual tax penalty of $95, or up to 1% of income over the filing minimum,[77] whichever is greater; this will rise to a minimum of $695 ($2,085 for families),[78] or 2.5% of income over the filing minimum,[77] by 2016.[79][80] The penalty is prorated, meaning that if a person or family have coverage for part of the year they won’t be liable if they lack coverage for less than a three-month period during the year.[81] Exemptions are permitted for religious reasons, members of health care sharing ministries, or for those for whom the least expensive policy would exceed 8% of their income.[82] Also exempted are US citizens who qualify as residents of a foreign country under the IRS foreign earned income exclusion rule.[83] In 2010, the Commissioner speculated that insurance providers would supply a form confirming essential coverage to both individuals and the IRS; individuals would attach this form to their Federal tax return. Those who aren’t covered will be assessed the penalty on their Federal tax return. In the wording of the law, a taxpayer who fails to pay the penalty “shall not be subject to any criminal prosecution or penalty” and cannot have liens or levies placed on their property, but the IRS will be able to withhold future tax refunds from them.[84]

  10. @IRSCompliantForever

    On behalf of Canadians everywhere who are effected by this, thank you for following up with Finance Canada on this matter.

  11. @bubblebustin, re; “Will FATCA with all its flaws and implementation delays be allowed to give way to the OECD plan, therefore allowing the US to save face without being seen as completely abandoning its crusade against offshore tax evasion?”

    Sounds like a plan. After all, the US dominates the OECD anyway, so perhaps they will see it as a way to cut their losses and get what they can via that route. After all, they still have the lawsuit from the Florida and Texas bankers to deal with, and the lack of Congressional authority to provide any even faux US ‘reciprocity’. And as time goes by, their statements that countries are just falling over themselves to sign an IGA becomes ever more disingenuous.

    The shutdown just make the US look incompetent. Who wants to deal with a rapacious superpower that is increasingly desperate for tax dollars and an incredible debt? Canadian federal politicians should see that the US has all the motivation to use its usual might makes right plus the increasing desperation to squeeze everyone else in the world and make them ‘US taxable persons’. Harper should anticipate the giant sucking sound as the US has deemed over 1 million Canadians and many of their Canadian children to be ‘US taxable persons’. Really an interesting approach to taxation – make it worldwide and heritable, detach it from any actual expenditures on any services or benefits rendered. The US worldwide extraterritorial CBT system based on parentage and accident of birthplace is a quintessential ‘free lunch’ at the expense of everyone outside the US.

  12. @Just Me,
    re; “….Let’s face it, America is quite happy to apply a tax on some American’s abroad who can not access the ‘so called benefit” to help pay for ObamaCare for the homelanders who have to[o]”……

    Another course in the free lunch the US is enjoying at the expense of the millions of us abroad, and the rest of the world. Having their cake and eating it too.

  13. The US was obligated under the tax treaties with Canada, the UK, and probably many other countries to formally advise those countries that the Obamacare surtax contradicts the treaties and to consult with the countries to work out a solution. The US never bothered.

    I’m shocked, shocked to find that US treaty violations are going on here!

    More seriously, good on you for trying to get Canada Finance to fess up on this!

  14. @IRSCompliantForever, I echo the thanks for thinking of the followup with Finance Canada.
    Adding this to their failure to get our Canadian registered accounts exempted from US tax under the treaty, and the other gaps in the treaty which allow for US taxation of Canadian assets and primary residences and punitive treatment of Canadian mutual funds and other issues.

    One consequence of this aggressive and relentless US extraterritorial tax grab and crusade against us is that we see the failures of Canada to protect its own citizens, and to settle for some entirely known consequences, but not to acknowledge them so that we could have protected ourselves. They had to have known after the history of the fight to get RRSPs exempted – (although only finally with an annual treaty election) that all the non-retirement registered savings vehicles would meet the same punitive US treatment. Yet they said and did nothing.

    And they had to have known about the US capital gains tax on the sale of our Canadian principal residence.

    It is their duty to protect the assets of Canada and Canadians, and frankly I think they were negligent in this. The more we know, the more I wonder if they didn’t bother if individual Canadians didn’t know, and the US didn’t pursue it agressively, then they just let it slide at Finance Canada. They had to have known that the current Canada/US treaty has some big flaws. And if they didn’t before, they certainly do now.

    It appears that already, in the eyes of the federal government there was a lesser class of Canadians – those born in the US, and also those born in Canada with a US parent. Apparently, that makes it okay to sacrifice us when the US comes calling.

  15. @tdott–I really don’t fault the US for violating or overriding treaties, because as you say this is expected behaviour, but I do fault Canada (and UK etc.) for not complaining or apparently even knowing when this happens.

    Canada Finance needs to be shamed into complaining against the bully.

  16. US says take or leave it re FATCA in talks with India?

    http://economictimes.indiatimes.com/news/nri/visa-and-immigration/us-talks-of-difficulty-in-addressing-indias-visa-concerns/articleshow/24153442.cms

    …”WASHINGTON: The US has spoken about difficulty in addressing India’s concerns over visa issues in its comprehensive immigration reform bill and those related to taxation.

    “Secretary Lew emphasised the difficulty involved, given legal boundaries, on both visas and FATCA (Foreign Account Tax Compliance Act),” a spokesperson of the Treasury Department said after Treasury Secretary Jack Lew met Finance Minister P Chidambaram at the IMF headquarters here.
    …”…”Our Finance Minister raised the concerns that we have with regard to the visa issues, which is presently of great concern to IT companies and also on issues related to FATCA (Foreign Account Tax Compliance Act), which is likely to come to operation shortly as one of the US laws,” Economic Affairs Secretary Arvind Mayaram told PTI.

    “Secretary Lew carefully noted our concerns. They have assured us that within the limitations of the US system and the US laws they will try and see how far they can go to assuage the fears and concerns of the Indians on this,” he said in response to a question…”
    ….Broadly there was understanding that there will be deepening of the bilateral relationship ties, Mayaram said.

    ….”From the US side, Lew raised the issues of taxation and intellectual property rights.
    …”

  18. It sounds as if they’re exactly the type of people the IGA’s were set up to catch. Serves them right!

    Not surprised the US banking system has been slow to respond – because they never thought they’d have to reciprocate. Now they get to feel the pain the rest of the world has been dealing with these last few years. I hope it gives them nightmares and cold sweats.

  19. Crikey, it’s the 11th hour and Congress can’t even decide on a plan to kick the can down the road!

  20. I wonder if the las Vegas bookies are taking bets if the Republicans are going to default the United States of America.

  21. FATCA: a referendum to break the fear.

    So far the Swiss FATCA referendeum has not gotten any English media Coverage, but you can read the above story using google translate…

    “Abroad, the launch of a Swiss referendum against FATCA ( the Foreign Account Tax Compliance Act provides that Switzerland transmit the United States of American tax payers data, note) was the buzz three days already before that it takes place, “notes Lawrence Franceschetti, a consultant in banking organization under the banner of his company SettleNext who also believes that the best allies of the Swiss referendum are the United States, where James George Jatras and website RepealFatca after harvest Signing with a thrill of joy and hope.”

  23. So, US banksters push against IGAs, and non-US banks push for them.
    AND those with big US and non-US presence? Ex. where does TD stand? A Canadian bank with big US presence and lots of US branches “TD Bank is one of the 10 largest banks in the U.S.” http://www.tdbank.com/aboutus/about_us.html .

    I love this part:

    …”More importantly, opposition to the IGAs in Congress is raising broader awareness of the problems of the FATCA legislation….

    ..”In demanding that banks around the world sign on as IRS enforcement agents, FATCA meaningfully undermines the attractiveness of US financial assets, while simultaneously creating extreme difficulties for Americans abroad – and now, calling attention to America’s own business in helping foreigners to avoid having to pay tax. …”
    http://www.international-adviser.com/profiles-and-analysis/analysis/us-banking-lobby-urges-congress-to-challenge

  25. ‘WOCCU – World Council of Credit Unions : U.S., Canadian and Australian Industry Leaders Discuss Collaborative Solutions to Common Challenges’
    10/16/2013 | 10:03am US/Eastern
    ‘CUNA, CUCC and COBA explore collaborative solutions for international credit union system’

    “….Participants presented their country’s top advocacy challenges including taxation, Basel III, anti-money laundering, Foreign Account Tax Compliance Act (FATCA), member business lending and capital. The group identified mutually reinforcing positions and strategies for supporting each other in engaging their respective policymakers. The group collectively discussed directions for World Council’s international advocacy efforts to achieve a better legislative and regulatory outcome for credit unions worldwide.”
    http://www.4-traders.com/news/WOCCU-World-Council-of-Credit-Unions–US-Canadian-and-Australian-Industry-Leaders-Discuss-Coll–17368414/

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