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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”

  1. WhatAmI,

    For me, it’s all obscene, as well as incomprehensible. Thus, my big $$$ paid to professionals from my retirement savings to get me out from under it all (except for the link to my son and his RDSP).

  2. @Calgary411

    Indeed. I’ve had in mind to still be able to enter the US down the road for snowbird purposes (I’m more or less retired now). However, as time goes on I feel now that I couldn’t stomach spending my retirement money in their country. Their loss.

  4. Kal I have seen a credit union association report which states that RRSP will be included in total. Someone as well has said that Royal Investing was sending out w-8 to everyone even if they did not hold US$ accounts.

  5. http://thegavel.democraticleader.house.gov/?p=5433

    In case y’all might have wondered about what one of the parties wants to accomplish (or, in this case what they wanted to accomplish) here is the gavel with address democraticleader.house.gov, and shows obvious links to Pelosi.

    Republicans have voted 13 times:

    —against considering Democratic efforts to prevent or discourage the shipping of American jobs overseas and to crack down on offshore tax havens; and …………

    –Against a measure to help close overseas tax havens by giving the Treasury Department greater powers to investigate offshore tax abuses and crack down on offenders and banks that aid them, which could reduce the deficit by as much as nearly $1 billion. [Vote 344, 6/6/12] (This is MAP-21, including the EX-PATRIOT bill)

    From 2007-2010, Republicans voted eleven times to:

    Protect tax breaks for corporations that ship American jobs overseas.

    Protect off-shore tax havens for corporations and the wealthiest Americans.

    Protect tax loopholes for CEOs’ deferred compensation paid by off-shore companies, foreign tax haven corporations dodging U.S. taxes, and Americans who renounce their citizenship.

    These tax breaks cost American taxpayers over $60 billion

    With that type of rhetoric blasting away at the front of the train, the Repugs have been best to say silent in the media and not to take on such issues head-on.

  7. I don’t see that we have a separate post about France and the U.S. signing the IGA, but I noticed that Jim Calvin posted something about it and when I saw him say this, I had to reply…


    France and U.S. Sign Model 1 IGA

    He said…. “The IRS will reciprocate with similar information about French account holders.”

    HUH? So, I posted this which is in moderation.

    Jim… Did you just copy something wrong, or was that a slip when you said…. “The IRS will reciprocate with similar information about French account holders.”

    With due respect, that statement is absolutely NOT true, and I would expect, that an FATCA expert like you would know that! This is very apparent from a simple read of the standard IGA model 1.. Article 6.

    Right now all they will get is some interest reporting under what I call DATCA lite that is being fought by the Florida and Texas Banking association who have a lawsuit against it in Federal Court. That was just recently reported by Reuters here… http://reut.rs/1i7Y5Cp

    It has also been opposed by influential members of Congress House Ways and Means Committee http://bit.ly/13J05Kd and the House voted in a bi-partisan manner in 2013 to stop the IRS from doing this. http://bit.ly/11RngyN It was not brought to a vote in the Senate, but the opposition remains strong as this recent letter to Secretary Jack Lew shows: http://bit.ly/11iq9h9

    The administration does NOT have authority for full FATCA reciprocity, (DATCA) and will never get it if Congress has it’s way.

    Right now, the Administration is trying by buring some language on page 202 of their 2014 Fiscal year budget, which is currently in negotiation with a bunch of Republicans as a result of the Government shut down. They are very opposed to giving the Treasury more regulatory authority to impose a full blown reciprocal DATCA on the USFIs.

    http://1.usa.gov/12YGdoG

    Right now, all France has only this promise…in Article 6, (1)

    1. Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with France. The Government of the United States is committed to further improve transparency and enhance the exchange relationship with France by “pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic information exchange”.

    and also the meager list of items it will deliver as compared to what the US demands of Frances FIs as shown in Article 2.

    So, there is NO WAY right now, that “IRS will reciprocate with similar information about French account holders.” They are going to try to “advocate and support relevant legislation”, of course, but they have a pesky little problem called Congress who has to vote for that Legislative authority, and even the minor regulatory actions they have taken under IRS bulletin 2012-20 (http://www.irs.gov/irb/2012-20_IRB/ar07.html) are under assault by Congress and the banks!

  8. Correction please, dear moderator, if you are still up back there in Canada.. 🙂

    I meant to say… “when I saw him say this” Not ‘when I say him say this’… duh.

  12. http://investmentwatchblog.com/its-here-crackdown-on-off-shore-tax-evasion-anonymous-off-shore-accounts-and-beginning-of-world-tax/

    This piece was written by “bornatexan” who probably has never ventured beyond the borders of the U.S.A. or spoken to an American living overseas (certainly not about FATCA anyway). I could have challenged it line for line but instead I tried to direct readers there to a better source of information here. (That is, if my comment makes it out of moderation.)

  13. FATCA

    Why it is important for India?

    “The importance of the FIIs inflow not only to the Indian equity market but even for our economy, which is running such high current account deficit, cannot be understated. Therefore any policy domestic or international hampering such flows will definitely hurt our market. Although it is not clear and even difficult to identify what amount of FIIs inflows in India originates from US investors, it is estimated that 40 per cent of such inflows can get impacted. There is still seven months left before we can feel the heat but market intermediaries have already made their presentation to SEBI, which is expected to submit its feedback to finance ministry before the government negotiate and arrive at an Inter Government Agreement.”

    – See more at: http://www.dsij.in/article-detail/articleid/8873/all-you-wanted-to-know-about-foreign-account-tax-compliance-act-fatca-and-its-impact-on-fiis-inflows.aspx#sthash.XA9EhzXz.dpuf

  14. Your bitcoin collection and FATCA, one bloggers opinion concerning reporting:

    “My understanding is FATCHA does not require us to declare assets we hold overseas which are not in an “account”, i.e. Nestmann said we probably do not need to report bullion that we hold in our homes, yet we would need to report (even allocated) bullion in any overseas account.

    Are Bitcoins a private asset or an account? And where do they reside in our possession or in the public ledger? And where does the public ledger reside?

    The problem is that governments (IRS in particular) invariably interprets laws in the way that brings them the most income. So I think they can argue (in their Kangaroo rigged courts) that since the public ledger resides in at least one computer overseas, then it is reportable under FATCHA.

    Okay so no big deal right? Just report it. Well what about all of you who did not report on time already and held an account that was ever worth more than $10,000? You are already liable for 5X the maximum value of the unreported account in penalties plus 5 years jail time.

    And reporting marks us in the IRS computers as “potential tax avoiders”. The chance of audit drastically increases.

    This is one of those issues that caused me to think it just isn’t worth investing in Bitcoin without 100% reliable anonymity.

    I am eager for someone to refute my analysis on this.

    Disclaimer: consult your own tax attorney, I am not providing tax advice, merely discussing this issue.”

    https://bitcointalk.org/index.php?topic=334362.0

  15. For those interested, here is the full text of the IGA with France
    http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/BilateralAgreementUSFranceImplementFATCA.pdf

    Here are the points that caught my attention:
    – Under information to be obtained and exchanged
    “the total gross proceeds from the sale or redemption of property paid or credited to the account during the calendar year or other appropriate reporting period with respect to which the Reporting French Financial Institution acted as a custodian, broker, nominee, or otherwise as an agent for the Account Holder;”

    They want to know if you sold your house and how much you sold it for.
    Note that from the US to France, France is only interested about interests and dividends.

    – Under ARTICLE 4 APPLICATION OF FATCA TO FRENCH FINANCIAL INSTITUTIONS
    “Suspension of Rules Relating to Recalcitrant Accounts. The United States shall not require a Reporting French Financial Institution to withhold tax under section 1471 or 1472 of the U.S. Internal Revenue Code with respect to an account held by a recalcitrant account holder (as defined in section 1471(d)(6) of the U.S. Internal Revenue Code), or to close such account, if the U.S. Competent Authority receives the information set forth in subparagraph 2(a) of Article 2 of this Agreement, subject to the provisions of Article 3 of this Agreement, with respect to such account.”

    I don’t quite understand this one. Recalcitrant accounts are accounts where the holder does not authorize the transfer. In that case, the bank will not withdraw the 30%, but the bank will not close the account if the info is transferred. But it will not if the account is recalcitrant. Meaning that if the US does not receive the info, then the account will be closed?

    “the United States shall not be obligated to begin exchanging information prior to the date by which France is required to begin exchanging information.”
    “Reciprocity. The Government of the United States acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange with France. The Government of the United States is committed to further improve transparency and enhance the exchange relationship with France by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic information exchange.”

    They’re basically agreeing that the US does not have to reciprocate. The French are NUTS!!!!

    Non Compliance.
    “If, in the case of a Reporting French Financial Institution, such enforcement actions do not resolve the non-compliance within a period of 18 months after notification of significant non-compliance is first provided, the United States shall treat the Reporting French Financial Institution as a Nonparticipating Financial Institution.”

    Then there is a whole section on how they determine US indicia and which accounts to report.
    Note that there is NOTHING about how the data will be secured. Nothing about the transfer of data being applicable to residents or non-residents.

  17. @ Mark Twain
    I see on that same USA Today page that they have sent Caroline Kennedy into the Land of Rising Radiation. Is this yet another assassination in the making? As for Timmy, I guess he figures a revolving door can’t smack him on the ass, only propel him into the Land of Perpetual Profiteering.

  18. RE: my comment on November 15, 2013 at 6:25 pm
    After I removed my link to Brock and reposted my comment it finally appeared. So anyone commenting at Investment Watch might want to keep that in mind — NO LINKS. The good news is you can comment as a guest there. That piece doesn’t even get the date for the start of FATCA right and the rest looks like subtle cheerleading for the Gotcha GATCA.

  19. Chris. It just gets weirder. What use does that info have?

    “Residents of France are mostly subject to fixed rates of capital gains tax of 19 percent (an increase from 16 percent in 2010) plus social charges, which increased from 12.3 percent to 13.5 percent on 1 October 2011.

    Non-residents pay tax on French property gains at 19 percent if resident in the EU, Norway or Iceland and do not pay social charges. Until recently, people resident elsewhere paid 33.33 percent, with no social charges, although this has recently been challenged in France by EU nationals living outside the EU, on the grounds of discrimination. Non-residents are exempt from French capital gains tax on most shareholdings, although certain business or property company shareholdings are taxable.”

    Angloinfo

  22. @ Calgary411
    Thank you for putting these up. We can can hope to stop FATCA.

    I have a question.
    If one signs that one is an American person but does not file any US taxes will our Canadian bank take money our ou Canadian source savings and RRSPs and send ro rhe IRS.

    Can the USA do anything to us if we so nor cross the border?

  23. northernstar,

    No, I’d say that our Canadian banks had better not take money from our Canadian source savings and RRSPs to send to the IRS.

    I wait to see if Canada will sign an IGA with the USA on FATCA and if Canadian financial institutions will have power or will to close existing accounts or not open accounts (or only at very high balances maintained) for ‘US Persons’ as some financial institutions in Europe have done.

    Here, again, are some of Canadian Finance Minister James Flaherty’s words:

    According to the guidelines, U.S. taxpayers who owe no U.S. tax are not subject to any penalties for a failure to file a U.S. tax return. In the case of a failure to file an FBAR, where the IRS determines that it was due to reasonable cause, there is no penalty. For more information, visit the IRS website.

    We have also been clear that penalties imposed by the IRS under FBAR will not be collected by the Canada Revenue Agency (CRA) on behalf of the IRS.

    While the Canada‑United States Income Tax Convention contains a provision that allows for the collection of taxes imposed by another country, this does not apply to penalties imposed under laws that impose only a reporting requirement.

    Furthermore, our Government has been clear that CRA does not and will not collect the U.S. tax liability of a Canadian citizen if the individual was a Canadian citizen at the time (whether or not the individual was also a U.S. citizen at that time).

    Many individuals are also concerned that the investment or interest income earned in their Canadian Tax-Free Savings Accounts (TFSAs) and Registered Disability Savings Plans (RDSPs) may be subject to U.S. tax.

    While TFSAs and RDSPs – both introduced by our Government in recent years – do not yet receive an exemption from U.S. income tax under the existing Canada-United States Income Tax Convention, the Government will argue for such an exemption as the Convention is renegotiated with the United States.

    Another piece of U.S. legislation causing concern is FATCA, which is proposed to come into force on January 1, 2014.

    To be clear, Canada respects the sovereign right of the U.S. to determine its own tax laws and combat tax evasion. However, Canada is not a tax haven and people do not flock to Canada to avoid paying taxes. In addition, we have existing ways of addressing these issues with the U.S. through the exchange of information provisions of our bilateral Income Tax Convention.

    That’s why the Government is actively seeking a solution with the U.S. government that both countries will find agreeable. The U.S. has been receptive to the concerns we have raised. This is reflected in the U.S.’s openness to alternative approaches that will minimize the red tape burden, minimize conflicts with privacy and other laws, and improve collaboration between governments.

    We continue to work with our U.S. counterparts towards a fair and reasonable solution that will address the concerns of Canadians and protect their interests.

    We wait and wait and wait.

    Who knows what will be required in the future at the border? I have concern with a lot of the possible (other than IRS-related) US-Canada border talk.

  24. Northern Star. Where do you get these ideas? Think about it!!

    If ‘one signs that one is an American person’, (Why would one?), Canadian banks will be required to report accounts over $50,000. RRSPs will be exempt. Full Stop. Nothing in the proposed IGA about stealing money from your account.

    So what? The IRS is working part time; they are owed hundreds of millions by US federal employees; they gave out Billions ( that’s right Billions) in fraudulent refunds this year. Do you seriously think they will come after you and me?

  25. @KalC
    I would sign if I don’t have my CLN. I don’t want to get kicked off my bank accounts. I refuse to file anymore US tax returns.

    I was concerned that when I withdraw some of my RRSPs that 30 percent of that withdrawn money will be sent to the IRS.

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