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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”

  1. @JustMe, this is exactly what I feared when I first started reading about FATCA. Unfortunately, where America leads others will follow and I can see a complete economic nightmare looming for those who have several nationalities. It’s bad enough for me being US/British and living in Switzerland; what about people with even more nationalities given the fact that more people are marrying outside of their country as it were. The young are going to be particularly suceptible to this, especially if their parents are globe trotters for work or miliary personnel stationed abroad. Depending on how far back in ancestry countries go with citizenship some poor souls could easily end up with 5 or 6 countries all wanting them to pay tax. People would be beggared.

  2. @Medea Fleecestealer…

    Worse that that, because of FATCA, all countries “are realizing we need to know more about who’s receiving the money.” Total financial surveillance is coming!.

    FATCA is providing the “teaching moment” for the world, and the repercussions of all this are just beginning. Thank you America!

    This by American Banker…

    Expect Blowback if KYC Rules Are Expanded

    The uncovering of an alleged $200 million credit card fraud scheme has triggered calls to expand know-your-customer rules. Those who prescribe ever-greater surveillance should be careful what they wish for.

    That is why experts are now pointing to this alleged scheme as justification for the expansion of Bank Secrecy Act and anti-money laundering regulations to include the identification and scrutiny of the recipients of funds associated with high-risk transactions.

    Micah Willbrand, director of AML and compliance for LexisNexis’ North American Financial Services Markets, told a trade publication, “Laws and regulations today only require that the bank have KYC [know your customer] in place for the sender, not the receiver of money.”

    “But card fraud schemes demonstrate why it’s imperative to have KYC controls in place for both senders and recipients,” he adds. As a result of the Foreign Account Tax Compliance Act, “all countries are realizing we need to know more about who’s receiving the money. We need to be more transparent about how money is moving around the world, and that is something everyone is coming around to.”

  3. the antichrist has risen. Carl Levin.

    http://www.sovereignman.com/finance/from-the-man-who-brought-you-the-indefinite-military-detention-clause-10986/

    http://www.govtrack.us/congress/bills/113/s268/text

    Subtitle A–Deterring the Use of Tax Havens for Tax Evasion

    Sec. 101. Authorizing special measures against foreign jurisdictions, financial institutions, and others that significantly impede United States tax enforcement.

    Sec. 102. Strengthening the Foreign Account Tax Compliance Act (FATCA).

    Subtitle B–Other Measures To Combat Tax Haven and Tax Shelter Abuses

    Sec. 111. Country-by-country reporting.

    Sec. 112. Penalty for failing to disclose offshore holdings.

  4. More FATCA fallout muddle

    Final FATCA Regulations Impact Foreign Oil and Gas Traders

    More and more various groups will be waking up to the realization that all of this FATCA Fiasco impacts them if for no other reason than they have to pay attention to see if it applies to them or NOT… See this…

    For this purpose, the term financial assets include commodities that are actively traded. Thus, any foreign investment entity that trades in, or holds itself out as trading in, oil and gas, whether physical or cash settled contracts, is required to register as an FFI and agree to report certain information about its investors and activities to the IRS because it is trading in “financial assets.”

    Then it gets more complex with the IGAs. Does it or does it NOT apply?

    The U.S. Treasury also plans to enter into Model IGAs with most, if not all, of America’s tax treaty partners who have already agreed to share tax information with the IRS pursuant to the terms of those treaties. The purpose of the Model IGAs is to reduce the burden of FATCA compliance on FFIs in those countries.

    However, the definitions contained in such IGAs do not conform with the definitions contained in the final treasury regulations. In the Model 1 and 2 IGA, for example, definition of “financial assets” is more narrowly defined and it is unclear whether oil and gas traders located in a jurisdiction that has executed a Model 1 or 2 IGA will be required to comply with FATCA’s information reporting requirements.

    In the Model 1 and 2 IGAs, the term “investment entity” means any entity that conducts as a business (or is managed by an entity that conducts as a business) one or more of the following activities or operations for or on behalf of a customer:
    (1) trading in money market instrument, foreign exchange, exchange, interest rate and index instruments, transferable securities or trading in commodities futures;
    (2) individual and collective portfolio management; or
    (3) otherwise investing, administering, or managing funds or money on behalf of other persons.

    There is no mention of “financial assets” or “commodities that are actively traded” and, therefore, the definition may exclude an entity that trades physical commodities.

    Based on the distinction between commodities futures contracts and physical commodities, a foreign oil and gas trader in a country with a Model 1 or 2 IGA in place with the IRS could argue that it is not required to comply with FATCA. An oil and gas trader in a jurisdiction with a Model 2 IGA in place could take the position that since it is not an FFI pursuant to the Model 2 FATCA Agreement, it is not required to enter into an agreement with the IRS.

    On the other hand, a foreign oil and gas trader located in a country without a Model IGA would have to comply with FATCA (because it is an FFI under the final Treasury Regulations) or incur a 30% withholding tax on certain U.S. source payments and certain pass thru payments, i.e., payments from another FFI. Treasury has not yet issued final regulations with respect to foreign pass thru payments.

  5. so the trading houses have to register—-and the US traders should have been reporting? FBARs for oil traders? Or what?

  6. @MarkTwain…

    Regard S. 286. That is the Cut the Loopholes Act…

    This amendment can be opposed via PopVox here…

    I probably should read through it, and see what other goodies are buried within?

    mvh

  8. Interesting how much detail is in this article about Canada-Europe banking issues, whereas FATCA gets hardly any; http://www.cbc.ca/news/business/story/2013/02/27/canada-eu-trade-deal.html

    The source is a leaked document:

    ……..”A leaked draft of part of the Canada-Europe trade talks shows that Canada’s vaunted banking system is on the negotiating table.

    The Canadian Press has obtained the Feb. 1 version of the services chapter of the Canada-Europe trade deal that Europe has circulated to its member states.

    It shows Canada is struggling to maintain the traditional stringent standards it imposes to ensure financial stability and protect financial services in Canada from foreign control.

    “EU does not want to exclude financial services from the scope of performance requirements,” says notes written into the draft text.

    The documents also show Canada is resisting European Union attempts to weaken oversight of financial institutions — leading to a heavily contested text that is one more obstacle to completing an agreement with Europe soon.

    Both sides want more access to each other’s financial services markets.

    For Canada, the European market is a huge opportunity for big insurance companies located mainly in Ontario. And Germany in particular has been pushing for more financial services opportunities in Canada.

    But the documents show Canada is taking a cautious approach, and will only allow a more open market if Canadian authorities can block business activity that would put the financial system at risk. Canada’s caution is bumping up against an aggressive European drive for investor protections that have no strings attached.”……… from ‘Weaker bank rules part of Canada-EU trade talks’
    The Canadian Press
    Posted: Feb 27, 2013 1:48 PM ET

    How does the federal government keep such a tight lid on all FATCA news, but documents on the Canada-Europe trade talks leak out?

  9. New article on Reuters… Doing the IRS marketing effort for them…… Making it seem inevitable, but no discussion about what these agreements are or are not. They definitely are not bi-lateral treaties, that we know for sure, but on one seems to care..

    U.S. Treasury closer to inking foreign tax info-sharing deals

    Feb 27 (Reuters) – U.S. tax authorities and foreign governments are on track to conclude dozens of agreements in coming months on the sharing of financial data about citizens, with deadlines nearing for implementation of a sweeping U.S. anti-tax-evasion law, tax experts said.

    The U.S. Treasury on Monday initialed an intergovernmental agreement (IGA) with Germany, for instance. The deal still needs final approval by both countries’ tax officials, but shows progress being made in implementing the Foreign Account Tax Compliance Act (FATCA).

  10. Copy paste this to your rep7Senators:
    ——————————————

    Regarding:

    S. 268: CUT Loopholes Act

    SEC. 102. STRENGTHENING THE FOREIGN ACCOUNT TAX COMPLIANCE ACT (FATCA).

    and other sections

    FATCA is the Worst Law the US has Never Known.

    FATCA must be repealed now. Republicans must begin to publicly stand up for US citizens overseas.

    USA is losing 4x the number of citizens due to renunciations/relinquishments than it has ever lost before.

    S 268 must be eradicated immediately.

    Please send a list of things that are legal for a US Citizen to do when they live overseas—the list will be much shorter than what is illegal.

  12. Will the IRS and US Treasury be able to intrude in the household finances of this high profile UScitizen – non-US citizen marriage? I guess that Janet Jackson, and her Qatari husband won’t be holding any joint accounts, ever. I doubt that his accountants would allow her any signatory or other access to any of his assets. Imagine the FBARs and FATCA form 8938 filings if they did? And will the IRS and US Treasury eventually get access to a Qatari estate if billionaire Wissam Al Mana predeceases Jackson?

    See http://www.reuters.com/article/2013/02/25/us-janetjackson-idUSBRE91O14720130225
    ‘Singer Janet Jackson said on Monday that she married her Qatari businessman boyfriend’

  13. @Badger, I say bring it on baby!! IF they’re going to screw the little man then they can certainly screw the filthy rich too. I won’t stand for double standards…

  15. …..and with respect to double standards lets hope VD,OVDI/P and my special “friend“ the QD gets treated the same regardless of filthy rich or not

  17. @monalisa, unfortunately, the Janet Jacksons and other wealthy US celebrities of this world, will never speak out and protest against US extraterritorial taxation and the effect on their marriage and non-US spouses. They will not assist the rest of us, and instead will just explore a work around, through their lawyers and accountants.

    @Mike, you’re right, US extraterritorial citizenship-based taxation is just wrong in general, no matter what bracket it is applied to. We each breathe a sigh of relief when we are – often through sheer chance or because of specific reporting and tax thresholds, may be exempted from part of the burden, or avoided the biggest penalty pitfalls. Since many of us are learning about this for the first time recently, yet the liabilities are years retroactive, our personal liabilities are often determined by timing, or life events that have already happened (ex. selling a home, buying a non-US mutual fund, investing in a ‘foreign’ registered savings plan for our child’s tuition, getting a raise) which are unremarkable for everyone else, but spell doom in terms of the implacable claims the US imposes on us.

    @ Old & Simple,
    There was mention on a much earlier IBS thread (which I can’t find now) of a credit union in Saskatchewan? (or Manitoba?) that was a Canadian, entirely government owned and operated financial institution, which we thought might be entirely exempt from FATCA as a result.

    Any IBS reader who remembers this? Joe Smith?

    I am curious about whether the ATB Alberta Treasury Branches would be exempt from FATCA, since they are entirely owned by the Alberta Government according to this: http://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada#Government-owned_banks “……… Alberta Treasury Branches, or ATB Financial, is a unique, provincially owned company that provides banking services, but for legal reasons is not considered a bank. It was created during the Great Depression by the government of William Aberhart under the influence of the strongly anti-bank economic ideology called Social Credit. The Social Credit Party of Alberta, won the 1935 election in part on a platform that argued for the nationalisation or abolition of banks. But court cases later determined that the provincial government did not have the powers to do this. The ATB was created as a provincial-government alternative to the private banks. If it were a bank, ATB would be subject to federal legislation; therefore, the institution is never legally referred to as a bank so that it can remain under provincial jurisdiction. However, it offers all services associated with a standard retail bank.[3]”

    “Alberta Treasury Branches, doing business as ATB Financial,[2] is a financial institution and crown corporation owned by the Province of Alberta. ATB operates in Alberta only, providing financial services to 680,000 Albertans and Alberta-based businesses. ATB has 167 branches and 130 agencies, serving a total of 242 communities in Alberta. Wealth management services are offered under the name ATB Investor Services or ATBIS. ATB has more than 5,300 employees.

    Headquartered in Edmonton, Alberta, Canada, with total assets of C$32.0 billion, ATB is the largest Alberta-based financial institution.

    ATB is not a chartered bank, and unlike all banks operating in Canada, ATB is regulated entirely by the Government of Alberta, under the authority of the Alberta Treasury Branches Act, Chapter A-37.9, 1997, and Treasury Branches Regulation 187/97.
    http://en.wikipedia.org/wiki/Alberta_Treasury_Branches http://en.wikipedia.org/wiki/List_of_banks_and_credit_unions_in_Canada#Government-owned_banks

  18. This may be what you were referring to, badger:

    Their home pages says:

    CUETS Financial, a division of The Toronto-Dominion Bank, is the dominant credit union MasterCard credit card issuer in Canada, providing services to credit unions and caisses populaires…

    nobledreamer
    Submitted on 2012/03/20 at 11:50 pm

    @Just Me

    There seems to be a central credit union agency that handles credit cards for the credit unions:

    http://www.cuets.ca/about/ceo_message.html

    “CUETS Financial delivers quality service to cardholders through our network of 375 credit unions and caisses populaires. Headquartered in Regina, Saskatchewan with a service center in Winnipeg, Manitoba and regional sales team members in Vancouver, Calgary, Toronto and Moncton, CUETS Financial values its ability to serve clients coast to coast.”

    Of the three credit unions I deal with, Accelerate Financial (Crosstown Civic Credit Union), Achieva Financial (Cambrian Credit Union), and Outlook Financial (Assinboine Credit Union), only Achieva lists a MC. These companies are all in Winnipeg and consistently offer the highest rates in the RRSP/GIC groups.

    http://www.redflagdeals.com/features/canadian-mortgage-gic-rrsp-savings-rate-comparison

  19. thanks for that @calgary, but I think it was actually a prairie province based and provincial government owned trust or credit union, or farmer’s cooperative rather than one of the credit union service providers. It allowed depositors from out of province, but the IBS author who posted the info mentioned that because it was owned by a Canadian government body- at the provincial level, it might be FATCA exempt – as a government owned entity. I am pretty sure it was in Saskatchewan, or Manitoba. I’ll look to see if it is on one of the threads about the CBA, or on alternatives to using a bank re FATCA reporting FFIs. I think it was not just a credit union per se.

  20. Just got to wondering here about credit unions. Looked around, and there are LOTS of small, rural based CUs out there. Unlike the big ones, many have assets considerably less than $500.000.000 so looks to me like they would not be problemed by FATCA. So why not just close accounts with the big banks and split into accounts with the small CUs? Any comments or info from anyone on this?

  21. If I understand correctly, most Canadian Credit unions outside of Quebec are members of an umbrella association and FATCA wants to consider the total assets of these associations members. In Quebec, Desjardins is having this problem because, as a group they go beyond the limit while the individual caisses do not. The letter sent by their compliance officer to IRS and Treasury was put online by their Washington lawyers, and he refers to this problem and asks for an arrangement.

  23. Guess you have to be a lawyer to understand this stuff. When I look around at the rural based CUs, typically they have around a dozen branches scattered throughout a limited rural area, and they have their own consolidated balance sheets. They appear to make use of some facilities offered by major credit union organizations. You’d have a hard time finding anyone outside their membership who has ever heard of em. I don’t know where this puts em in terms of the “expanded affilliated group” (EAG) mentioned in FATCA. But it would be interesting to find out! Anyone else here able to comment on this?

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