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.
http://www.finance.senate.gov/newsroom/chairman/release/?id=155307cc-638a-4528-adda-40469fe23ba5
The next IRS stooge is selected.
Alright hackers, get to work…
http://www.fsitaxposts.com/2013/12/20/intergovernmental-fatca-xml-schema-1-1/
You can study up on XML files here…
http://www.xmlfiles.com/xml/
Don’t know the date of this, but something to consider…
XML Security Benefits
Our experiences with XML Signature and XML Encryption have generally been positive. They provide more flexibility than prior alternatives, such as TLS and IPSec, which enables advanced e-commerce usecases. The following capabilities are particularly useful.
The ability to selectively encrypt and integrity protect portions of messages.
The ability to integrity protect data without encrypting it.
The ability to construct overlapping digital signatures using different keys.
The ability to digitally sign and encrypt data in either order as application needs dictate.
However, we have encountered a variety of issues relating to the use of XML Signature and XML Encryption both separately and in combination. The rest of this paper discusses these issues. While real problems in the field have been rare to date, it is our expectation that as applications begin to take advantage of the capabilities of these specifications and the ones that use them, problems will become more frequent. Failure to resolve these issues, especially the ones causing spurious validation errors, could lead to abandonment of their use.
A bad week for India-US relations is a good one for FATCA, at least so says Stack-o-lies:
“FATCA continues to gather momentum as we work with partners worldwide to combat offshore tax evasion,” said Deputy Assistant Secretary for International Tax Affairs Robert B. Stack. “This large number of signings in one week alone sends a strong signal to tax evaders everywhere: international support for FATCA is growing.”
http://www.economicpolicyjournal.com/2013/12/theres-is-nowhere-to-hide-your-money.html?showComment=1387499633565
Suggests some Latin American and Caribbean countries will insist on reciprocity:
Some countries in Europe have complained about FATCA’s lack of reciprocity. Although the U.S. government has hinted that it is committed to reciprocal exchanges of information, the reality is that no U.S. law requires domestic financial institutions to provide the same level of information required under FATCA. Countries in Latin America and the Caribbean will most likely pressure the U.S. to negotiate the terms of those reciprocity requirements, if it wants FATCA to be signed in those regions. Surprisingly, though, the Treasury Department said on July 14, 2013, that, due to the overwhelming interest from countries worldwide in entering into agreements with the IRS to comply with FATCA, it would extend the start of the withholding and account due-diligence requirements for six months to allow more time to complete agreements with foreign jurisdictions. This will also provide foreign financial institutions time to comply with FATCA. Despite the delay, the FATCA registration website opened during August 2013. Financial institutions are now able to start testing it by entering information.
http://www.jdsupra.com/legalnews/implications-of-the-foreign-account-tax-67844/
Here’s a question for everyone. Do you really want to “voluntarily” hand over your bank account records (or have your bank do it for you) to the USG after reading this?
http://investmentwatchblog.com/is-the-u-s-government-changing-the-amount-in-peoples-financial-accounts-and-manipulating-financial-systems-with-its-offensive-cyber-capabilities/
Em,
Thanks for that the link and a scary possibility to think about. In a word, NO!
Well I guess it can’t be a ‘myth’ or merely ‘anecdotal’ that banks abroad are closing accounts belonging to US citizens due to FATCA. From Time magazine;
http://world.time.com/2013/12/20/swiss-banks-tell-american-expats-to-empty-their-accounts/ …”…This scenario is all too familiar to another American, Geneva financial adviser Anne Hornung-Soukup. Her accounts – including a pension investment fund – were suddenly closed in recent months by her two banks, each explaining in a letter that its services are no longer available to US citizens.
“This really ticks me off,” says Hornung-Soukup, who adds that the forced early withdrawal of her retirement fund meant she had to pay taxes on it earlier than she had anticipated.”….
…”Due to the financial burden of double taxation – by their country of residence and the U.S.–growing numbers of US citizens take the drastic step of relinquishing their American nationality….”….
,,,”Paradoxically, regulations that were intended to catch and punish tax cheats are making life difficult for ordinary, middle-class people who have always played by the rules. Many, like Hornung-Soukup, have lived overseas for decades, and others, like Ungar, have only tenuous ties to the U.S. — his father is American but he himself was born in Switzerland, never lived in the U.S. at all, and has no plans to move there” …
“So far, no relief is in sight, but in October ACA’s executive director Marylouise Serrato wrote a letter to Robert Stack, IRS’ Deputy Assistant Secretary, noting that while the organization supports the government’s efforts to combat tax evasion, banking services would be more accessible to US nationals abroad if financial accounts located – and taxed – in the country of residence would not be subject to FATCA reporting.
The letter remains unanswered, which means that, for now at least, financial services are one commodity Americans living abroad can no longer bank on.”
My sister-in-law is a Canadian (only) citizen, living and working in Switzerland. She just arrived home last night for the holidays. She said there is a particular bank that Americans must now use in Switzerland, but at least they do have access to banking services. Funny nobody has ever mentioned this here on IBS.
Must Read:
http://www.cucentral.ca/SitePages/Publications/Connections.aspx
see ‘FATCA: Deadlines approach, Details remain elusive’ Dec 17, 2013
http://www.cucentral.ca/SitePages/Publications/Connections.aspx
FATCA: Deadlines approach, Details remain elusive, Dec 17, 2013
“As 2013 comes to a close, we continue to wait for definitive word about compliance requirements for FATCA – the much disliked U.S. legislation that will require financial institutions around the world to report account information about U.S. persons.
Canadian Central continues to attend periodic briefings from Finance Canada and Canada Revenue Agency (CRA) at which we are told that an Inter-Governmental Agreement (IGA) is still under negotiation between U.S. Treasury and Finance Canada officials. We do not expect any announcement until 2014.
Meanwhile, the Organization for Economic Co-operation & Development (OECD) is leading discussions among its 32 member countries, including Canada, about a new international protocol for sharing financial account information in a standardized format – a less burdensome and more sensible approach to combating international tax evasion than FATCA. It does not appear likely, however, that the OECD initiative will convince the U.S. to abandon FATCA.
What are some of the key considerations for credit unions planning their approach to FATCA? The following details are based on “well-informed predictions” by Canadian officials during our briefings.”…….
So all this busyness about an OECD international protocol for sharing financial account information is intended to convince the US to abandon FATCA? My suspicions have been confirmed. The only recognition I’ve read so far by Treasury in response to this initiative is that the OECD sees the value in emulating FATCA through this initiative. Good find, Badger, but heaven help us if the US loses face through something more practical and less burdensome than FATCA!
@bubblebustin,
The US will not give up FATCA for any OECD initiative because no doubt even with its outsized influence there, it will be very difficult for the US to explain to the OECD why it will NOT agree to any US reciprocity – while pretending that somehow FATCA is the ‘model’ that all the rest of the world should follow – which is bs, because the US does NOT want all the rest of the world imposing on it what it is imposing on the globe. And, FATCA is CBT based, and the rest of the world is RBT based (even given some recent attempts to extend that further afield).
Since FATCA was made-in-the-US-for-the-US, reciprocity was never even contemplated. And even now it is just an elusive willothewisp that the US pretends to contemplate in some alternative future universe in order to dangle it as either bait, or as propaganda for the IGA countries to offer up to their subjects when the lack of US reciprocity is raised as an objection.
How will USAmbassador-to-be Baucus explain FATCA’s intrusions to China, where Obama means to send him?
Does he strike you as a diplomat up to that task?
http://www.businessinsider.com/obama-to-nominate-sen-max-baucus-as-ambassador-to-china-2013-12
Better he be sent to China than sent to Canada.
More on newly tapped Ambassador to China Baucus:
http://www.washingtonpost.com/blogs/the-fix/wp/2013/12/18/four-reasons-why-the-white-house-is-sending-max-baucus-to-china/
Will he be explaining why FATCA treats China as a tax haven just like the rest of the world, and demand that the Chinese government automatically report to the IRS and US Treasury?
And what will renunciants experience in a US Embassy in China when Baucus (co-sponsor of FATCA) is Ambassador?
I don’t think the doom sayers have picked up on the importance of this (mercifully brief) missive from Credit Union Central of Canada.
http://www.cucentral.ca/SitePages/Publications/Connections.aspx
If this guy is correct, Canada will have done about as well as anyone could expect under very trying circumstances.
No reporting on existing accounts under 1 million until 2016.
No reporting on accounts under $50K, RRSPs, RRIFs, TFSAs, RDSPs, RESPs.
An IGA of this ilk would be the best way out of this mess for all. Without one, Canadian FIs will feel obliged to register directly with the IRS portal and abide by the IRS regs.
Duke of Devon;
I don’t think we can take for granted that it would be as ‘simple’ as it appears on the surface of that description in that newsletter.
It still would at root, discriminate on the basis of national origin/birthplace, parentage, and national origin of joint account holders. It still would most likely be in serious conflict with Canadian law – unless significant changes to Canadian laws were contemplated – if that was even possible subject to the Charter and Constitution. I do not want the concept of ‘US taxable person’ to be enshrined in Canadian law, and applied by the CRA to Canadian citizens and Canadian tax residents.
Keep in mind that it was already said that to have the CRA monitor and automatically remit all affected account information (balances, activities, deposits, withdrawals, etc.) directly to the IRS would require changes to Canadian law (Income Tax Act?). Also, I believe that the wording or portrayal of the status of the negotiations as described in that newsletter is most likely only what Finance Officials wanted known and as they wanted to sell it – in other words, rationalized in line with what they have already decided to do. I highly doubt that the Ministry of Finance would be completely candid with the credit unions. The CBA and IIAC may have their own additional sources – and political connections.
FATCA is still a bad law. It will still cost ALL Canadian taxpayers very dearly to implement and to maintain – and with NO benefit to Canadians. It will still cost ALL accountholders in additional banking fees to implement and maintain – with NO benefit to the accountholders. It will still be subject to the standard US treaty ‘savings clause’ and ‘last-in-time rule’ that elevates more recent in time US domestic laws over all – and states that the US reserves the right to tax whoever it pleases basically (and as we know, the US definition of a taxable person is very very broad). It would still allow the US to make unilateral changes as it sees fit, while Canada would be bound. It is still based on CBT and not RBT – with all the attendant conflicts and contradictions that are harming us. It is not an agreement between equals. It is not bilateral. It does not bind the US to assistance in collection on US soil most probably, but we’re in real trouble if Canada agrees as part of a FATCA IGA to assist in collection for the US inside Canada – and entrenches that with changes to the Income Tax act to allow for that, etc.
Also remember that FATCA is a different creature than FBAR, deliberately so – it was designed to get around some of the limitations of the FBAR – and is far more powerful in its effects on statute of limitations, etc. That is why it is called the super-FBAR.
And the thresholds for reporting as well as the accounts affected could be subject to changes – as the US sees fit, without agreement by Canada.
It is guaranteed that there WILL be still be lots of opportunity for painful ‘unintended’ consequences. There WILL be errors in reporting. The stakes are high. Banks and institutions WILL err on the side of over inclusion rather than under inclusion – simply because any affected individuals do not have unlimited means and avenues for legal recourse, whereas the US has virtually unlimited means and resources to force its will on us – without any effective recourse.
The US will make changes as it sees fit.
Witness the Obamacare investment tax that we have no protection from under the current US Canada Tax Treaty. We only just escaped being subject to Obamacare itself at the last minute because of dedicated lobbying by the ACA, AARO, etc.
@ Duke of Devon
I think there is a quite a bit of guess work being done by CUCofC in these “well- informed predictions”. Nobody knows what that IGA might actually look like (except Mr. Flaherty and some Finance Canada officials). Banks in Switzerland are so fearful they are pushing all the boundaries to ferret out and ultimately dump USPs. Will that happen here too? Time will tell.
Updated info on the webpage of the largest bank in Scandinavia. A careful reading reveals that they are covering themselves well. Especially with the sentence “US Citizens living abroad may also be deemed “US Persons” under certain rules.” However green card holders, persons married to US persons etc are not mentioned. Not the bank to choose if one is still a club member.I am certain they have many
“US person” customers of various categories and wonder what the next step will be?
“10 Important information for US Persons
The offering, sale and/or distribution of many of the products or services described on this website are not intended to any US Persons. If you intend to obtain any product or service from Nordea or other companies in the Nordea Group that is described on this web site, you must first inform Nordea whether you are a US Person.
This website and its respective contents do not constitute an offer or invitation to purchase or subscribe for any securities or a solicitation of any offer to sell any securities to US Persons. Any brokerage and investment advisory services described herein are not intended for US Persons. Furthermore, any solicitation on this web site of banking services (including accepting and/or soliciting deposits), insurance services, mortgage and/or consumer lending services or credit card services is not intended for US Persons, who are physically in the US.
“US Persons” are generally defined as a natural person, residing in the United States or any entity organized or incorporated under the laws of the United States. US Citizens living abroad may also be deemed “US Persons” under certain rules.
Nordea or other companies in the Nordea Group do not accept any liability whatsoever for any loss howsoever arising from any use of this website or its respective contents or otherwise arising in connection therewith. Nordea or other companies in the Nordea Group cannot be held responsible for any damages or losses that occur from transactions and/or services in violation of the relevant rules of the purchaser’s home jurisdiction”.
@allou,
I am curious as to what the details are re; “US Citizens living abroad may also be deemed “US Persons” under certain rules.”
MAY be deemed?
CERTAIN rules?
Just interesting because the US takes the position that under CBT ALL those deemed US Citizens Abroad, ARE US taxable persons.
What is the distinction being made here?
@WhatAmI:
“My sister-in-law is a Canadian (only) citizen, living and working in Switzerland. She just arrived home last night for the holidays. She said there is a particular bank that Americans must now use in Switzerland, but at least they do have access to banking services. Funny nobody has ever mentioned this here on IBS.”
Generally, new accounts for Americans in Switzerland are accepted at PostFinance (PF), UBS and Credit Suisse (CS), which have set up compliance groups especially for Americans. PF, which is a limited-service retail bank and is owned by the Swiss Federal government, is legally required to accept accounts from anyone living in Switzerland or who has a strong connection to Switzerland (e.g., a Swiss living abroad). PF advised several months ago that they would accept current and savings accounts from Americans resident in Switzerland but nothing more. One of the ongoing issues is that PF does not offer rental deposit accounts and so Americans, who bank at PF and who need a rental deposit account, must buy rental deposit guaranty insurance, which is fairly expensive and not accepted by all landlords. UBS and CS generally are not interested in smaller accounts and so Americans on a budget would normally not bank with them or be able to bank with them.
@ALLOU, BADGER.
Yeah, I’ve watched those. They had them all along, and they’ve indeed been working on them. The Swedbank one — the one that Sophie reported, which blatantly said it did not allow US persons, has also been blatantly worked on to not be so obvious, although I know that the internal policy does not allow US persons.
@WhatAmI, it’s not true that there’s just one bank. As Innocente says the big 3 are still accepting American clients, but you will only get a basic salaryc/checking account and nothing else; no investment, mortgage, etc, unless you’re very rich or very lucky. Also the cantonal banks of Zurich and Basel are still taking Amercian clients I believe.
@Innocente, I disagree to a certain extent as regards UBS and CS. We are in no way “big” account holders, but we have banked with UBS since we moved here in 1998. We were also able to get a mortgage with them a couple of years ago when we bought a house here although many others cannot. It was the last minute problem of my American citizenship regarding said mortgage that alerted me to what was happening regarding FATCA and the future effect it could have on our lives here. Our local branch manager had to ring up and check if we could go ahead with the mortgage and luckily they said yes. But our accounts were handed over to the special American client unit that UBS has so everything since then had to go through them, rather than our local branch manage as before.
Robert Stack shows once again that he is a blowhard. Apparently he counts semi-sovereign jurisdictions as countries, but then he needs to create the appearance that his losing battle is successful – similar to General Westmoreland’s body count statistics in Vietnam. I would count a maximum of two of the six entities signed up for FATCA in his communique as countries: Netherlands and possibly Malta
FATCA Signers with more than 500’000 population and/or with own military:
1) Netherlands, pop.: 16.8 million
2) Malta, pop.: 416’000
FATCA Signers with less than 500’000 population and without own military:
1) Bermuda, pop.: 64,000
2) Jersey, pop.: 98,000
3) Guernsey, pop.: 65,000
4) Isle of Man, pop.: 85,000
Robert Stack is stacking the deck by including these semi-sovereign jurisdictions in his FATCA numbers. It’s par for the course with him. When he delivers China, Russia, Brazil, India and Canada, then he will have accomplished something. Until then, he’s just another bag of hot air working for the USG.