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.
@Badger
the currents article is awesome. I have sent it to all the Cdn Political parties. I would just love it if someone could ask Obama what is FATCA. I never thought in my dying day that I would be grateful that a Republican , Rand Paul, would be trying to get FATCA repealed.
This article does give me some hope on this first day of 2014.
@Badger
I just read the Robert W. Wood article “Americans are Unwanted”. I am glad I read the other one first by Currents, interviewing James Jatras.
In my opinion Robert W. Wood is rooting whole hog for FATCA. It will make him very rich..
Another thought the way he writes in his comments he reminds me of JGutierrez .
@northernstar,
I too would have found it unlikely that I would have reason to find common cause with some of those who are also against FATCA.
The Jatras interview does succinctly address many of the considerations that the Harper government should already be wary of. And since we have been sending this information to Harper, the Finance Department, Minister Flaherty and other MPs, there can be no pleading of ignorance from them if they proceed with an IGA. There is AMPLE proof that they were warned. And AMPLE proof that the Canadian public has NOT been consulted or listened to.
That is one happy consequence of IBS – ample records and documentation of correspondence with officials where we live AND VOTE – in Canada, as well as those doing the same for the US, and the collection of other materials that have surely made implementing FATCA in secret much more difficult than the US might have anticipated.
Even if we are unsuccessful, at least we have that.
Happy New Year to you, and all at IBS.
@Badger
You are so well informed and I am so glad that IBS has all these records with our officials in Canada. If this does go through I would think this can go to our Supreme Court..
I also want to bring to your and the other Brock Members of a new email I just received.
Others may be following Allison Christians blog TAX SOCIETY AND CULTURE.
She has a new article for today.
Cockfied on governance and the international tax regime
http://taxpol.blogspot.ca/2014/01/cockfied-on-governance-and.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+TaxSocietyCulture+(Tax,+Society+%26amp;+Culture)
Not sure where this belongs, if anywhere, but noted there are no comments on this article to the effect that Canadian banks will likely only want to grab SOME immigrants as new customers:
http://www.theglobeandmail.com/report-on-business/canadian-banks-battle-for-hearts-and-minds-abroad/article16139026/#dashboard/follows/
RE: http://www.currentconcerns.ch/index.php?id=2594
“In the end, the purpose is obedience for obedience’s sake.”
@ James Jatras, you sure have that right (and everything else in your Currents interview). Thank you for giving me the antidote to that toxic offering of Robert W. Woods at Forbes who, by the way, forgot one other option — suicide. If you are are reading here, Mr. Jatras, thank you for everything you are doing and please post the Currents link on repealfatca.com. There hasn’t been anything new there since mid-November. I dish out your site’s URL, every opportunity I get.
@northernstar,
Thanks for the heads up on the Christians blog re Arthur Cockfield’s article
http://papers.ssrn.com/sol3/papers.cfm?abstract_id=2357961
I will read it. Not sure I can understand it though! Not that well informed : )
@Badger
it is 55 pages….I just can not understand most of these legal things….IBS is so great at explaining a lot of them. Sometimes with some articles and papers I feel like my head is turning like a top.
@Badger:
At a Christmas party I had a rather interesting discussion with an emigrant American and his European wife concerning the so-called US Programme (FATCA looking backward to mid-2008) as follows:
1) Several years ago the American husband changed companies and was able to transfer capital from his defined benefits pension to the new company, but, in retrospect, he made a mistake…
2) Because there was a delay in starting his new job, he transferred the capital to a bank, in the form of an IRA-like deposit, for about two months, instead of transferring it directly. After two months he moved the funds to his new company’s pension fund. (This is a standard process here if there is a gap in employment although some companies are flexible and will hold pension funds for several months.)
3) Shortly before Christmas he received a letter from the bank, which had held the money for two months, which said that his quick transfer of money in and out of the bank and closure of the account made it appear that he was involved in tax evasion! The bank stated in the letter that he must prove to them that this money has been declared. Otherwise, the bank plans to report the account to the IRS and it also recommended that he join the OVDI program.
4) His wife said that the pension money, which is technically 1/2 hers (for example, in the event of a divorce), was about 100% of their assets. She was livid.
5) He said his tax adviser considered defined-benefit pensions to be non-reportable under FBAR since they are not held in an account in the employee’s name. By transferring the capital to the bank for two months, however, he now suspects that the bank account should have been reported on the FBAR (and probably on 8938). He plans to discuss with his tax adviser whether to file an amended tax return and the possibility of filing a corrected FBAR.
6) One of his frustrations is that his wife is an EU citizen and not Swiss so he cannot apply for Swiss citizenship as her spouse and must wait the full 12 years to apply. He has another year or so before he can apply. (It is common for EU citizens to live here on a permanent residence permit without obtaining Swiss citizenship. Some families do it for generations!)
7) Another comment: Residents of Germany, Switzerland and possibly a few other European countries frequently do not own homes but save for retirement via pensions, insurance annuities, bank deposits, etc. USPs who have saved for retirement in these countries by adding to pensions and through bank accounts are more exposed than they would be if they were in countries where home ownership rates are high and pensions and retirement savings lower. (In addition to the memory of the 1920s hyperinflation in Germany, this is another reason why inflation is not tolerated in these countries the way that it is in the US).
@ DM56
I put a comment up on that Globe & Mail piece.
One gets weary:
http://www.fa-mag.com/news/taxes-might-lead-some-u-s–expats-to-renounce-citizenship-16459.html
This starts off with:
Taxes Might Lead Some U.S. Expats To Renounce Citizenship
December 31, 2013 •
Nobody likes taxes (other than the taxman), but some people hate them to the point of renouncing their citizenship. In a recent poll by the global financial consultancy deVere Group, two-thirds of Americans living abroad said they’ve toyed with the idea of giving up their U.S. citizenship in response to the Foreign Account Tax Compliance Act (Fatca).
@Calgary411
This FA MAG is a financial advisor site. Fear mongerers. These type ofmarticlesmdo not give all the facts on FATCA. They cherry pick and put in what they want to, say which is we don’t want to pay taxes., no mention, about citizen based taxation. I am happy I read the Currents link today. I feel encouraged FATCA may be stopped after reading
it. I am more than weary I am angry.
More than that, they do not fully understand and haven’t delved far enough into the subject. This is a financial advisor, rather than a US tax lawyer or accountant. And, if they are going to ADVISE persons about their financial dealings in Canada or any other country, they need to be fully informed or they can do great harm to the person they are advising. And, their giving advice based on incomplete information makes me very angry!
@Calgary411
I feel they are interested in the profits. Look at the bankers who defrauded thousands of their money. They have no conscious.
@Innocente, thank you for providing that tragic illustration of how FATCA, FBAR and aggressive and careless, ill-informed, and confiscatory US Universal Double Taxation And Penalty Fundraising has made ordinary financial planning and perfectly legal financial savings into dangerous quicksand for ordinary law-abiding people living outside the US.
The US is hurting normal people and families, and eating away at our already post tax or tax exempt savings and security – thus creating only profits for US tax lawyers and accountants, and needlessly creating costs and work for the IRS by hallucinating tax evasion and illegality everywhere – while refusing to look at Delaware and protecting the ‘too big to prosecute and too big to fail’ US banks. Obviously the US has decided that it will do whatever it can to fabricate US tax revenues even where NO US tax is due, and extract penalty revenues in lieu of the US taxes that we do not owe and it cannot assess.
It is very sad that in some countries, the permanent residents cannot achieve non-US citizenship in less than a substantial number of years (ex. the 12 in your example) in order to renounce sooner. Those PRs deemed US citizens living abroad will have to become stateless, or to obtain another citizenship as soon as they can wherever they can, and duals will have to renounce. There appears to be NO future for US citizens living outside the US and it is no longer possible to have a normal life if born and/or living abroad with the shackles of US citizenship.
The US is set on a course of making all US citizens living outside the US renounce or ‘return’ in order to live. Thus making US citizens outside the US an extinct species. And the US too criminally stupid to change direction.
@northernstar and @all,
If you read the Arthur Cockfield article ‘THE LIMITS OF THE INTERNATIONAL TAX REGIME
AS A COMMITMENT PROJECTOR’ that Allison Christians refers to on her blog, you can skip to the most immediately relevant section on FATCA and Canada – starting mostly at page 98. I do recommend you read from 98 to the end.
for example;
see pg 105
…”…FATCA circumvents the U.S.-Canada Tax Treaty and
hence poses a serious challenge to this traditional conception of tax
sovereignty: FATCA requires Canadian and all foreign financial institutions
to provide taxpayer information directly to the Service (instead of
requesting this information from the Canadian government). Taxpayers may
dispute these efforts as they may violate the treaty’s information exchange
provision or the treaty’s nondiscrimination provision (article XXV), which
indicates that neither country can impose taxes that are more burdensome
than the ones imposed on its own nationals (along with certain exceptions
that permit discriminatory treatment to persist). The fact that FATCA and
FBAR focus on reporting and penalties for nonreporting (instead of new tax
measures), however, may mean that the tax treaty, which only covers
taxation measures, will not offer relief to U.S. persons living in Canada….”
……….
….”In addition, FATCA may violate the nondiscrimination provisions
within the North American Free Trade Agreement (NAFTA), as this
agreement prohibits the imposition of tax measures on foreign service
providers (e.g., financial institutions) that are not imposed on domestic service providers under certain circumstances.162 For instance, article
2103(4)(a) of NAFTA extends national treatment to tax measures that relate
to the cross-border purchase or consumption of services, including taxes on
income, capital gains, or the capital of corporations. Under article
2103(4)(b), national treatment in tax measures is extended in a more limited
manner to the actual service providers, including financial institutions, as
they exclude taxes on income, capital gains, or capital of corporations.
Because the penalties under FATCA and FBAR may fall outside of these
taxes (as they are penalties for nonreporting even if no tax liability on
income exists), there may also be grounds for Canadian-based taxpayers to
argue the U.S. reforms contravene NAFTA.163…”….
………….
“the new U.S. laws may violate Canadian federal privacy
legislation that governs the information collection practices of all
businesses operating in Canada, including all banks and other financial
institutions.166″………..
…Canadian financial institutions may raise their administrative
fees for all Canadian customers to help pay for their new compliance costs.
Because all major Canadian financial institutions have announced they will
comply with the new U.S. measures, there are few noncompliant
competitors that can offer lower-cost services, which could otherwise
discourage the major institutions from raising their fees across the board.171…”
…”To enter into compliance, these individuals normally need to
hire Canadian and U.S. tax lawyers and/or accountants. The volume of
client work in this area appears to have led to a windfall gain for the
international tax advisor industry in the U.S.-Canada context. Anecdotally,
tax lawyers and accountants in both countries have raised their fees due to
the increase in client demand for compliance services. According to these
tax advisors, FATCA has resulted in an unexpected windfall gain for their
practices….”
“According to Scott Michel and David Rosenbloom:”….”the U.S. government has not only overplayed its hand, but has enacted an extensive and expensive new regulatory scheme
that defies common sense.”….
……….
…”With respect to the FATCA initiative, the main losers are American
expatriates who must incur higher transaction costs to comply with the new
reporting regime and guard against the risk of overtaxation, while the main
winners appear to be tax advisors and the financial industry, who can raise
fees to account for new legal/consulting compliance functions. One likely
outcome of FATCA is thus a net transfer from individual taxpayers to the
financial industry and tax advisors; whether the United States government
will also reap a benefit depends on whether revenues collected under
FATCA exceed the higher enforcement costs associated with this new
regime…”…….
@badger, it’s not just the treaty with Canada that FATCA breaks. I’m sure there are similar agreements with many other countries whereby the US could request info from a foreign government if they suspected tax evasion. I know there’s such an agreement with Switzerland and it has worked well in the past. But the problem for the US is that they need to offer some proof of their suspicions before said government will provide any info. Which is as it should be. FATCA turns the presumption of innocence into presumption of guilt instead. It forces banks/governments to provide info on perfectly innocent American citizens on the assumption that we’re all trying to avoid paying tax. It’s not only obviously incorrect in the majority of cases, but goes against the fundamental principle of innocent until proven guilty.
Here is the panacea you have been looking for… Think this author has a vested interest in FATCA compliance?
This may have been posted previously, but some fool just put it up on Linkedin. Don’t know if I should bother responding…
http://blog.newgensoft.com/us-citizens-working-abroad-everything-you-should-know-about-fatca
then follows verbatim, Robert Stacks 7 myths..
@ badger
Okay I read the FATCA parts of Arthur Cockfield’s paper but afterwards, with eyes glazed and brain reduced to fuzzy bits, I wondered how it would affect anyone with the power to repeal FATCA (inside the USA) or reject FATCA (outside the USA). This paper has been presented to academics in various locations in the USA and Canada but now what? Will Jim Flaherty ever know of its existence? If so, will it make any difference? What about the FATCA enforcers from Team USA? Will they see it? Would it deflect them in anyway from their mission to make FATCA happen? When does the analysis end and the action begin? FATCA is not simply something which is outside of international norms. It is a bad law, with bad consequences, and it needs to be treated as such. It needs to be gone! And it can take the abomination of CBT with it. Oh well, at least Mr. Cockfield hinted at some ways FATCA can be challenged so maybe those words will reach someone who can do just that … hopefully before enormous damage has occurred.
@JustMe, I posted a long rebuttal to that blog. Maybe he’ll actually go off and do some research of his own as I suggested instead of parroting Mr. Stack.
@MedeaFleecestealer…
Thanks for doing that. I was too tired to bother, but I did do a quick one on Linkedin back to the guy who posted it under the heading.
FATCA – Simplified and Sorted !!
Ah, interesting. My comments re the blog have totally disappeared. What a surprise. Mind you the blog is dated 28th October 2013 so it’s a bit old anyway.
Last tweet for the night…
via @CUNA : Call for #FATCA Repeal Could Gain Momentum http://bit.ly/1d0SCgp About time the @RepubAbroad @RepubAbroadHK are waking up
Some FATCA news:
“Dec. 27 — The American Council of Life Insurers has asked the Internal Revenue Service to delay the July 1, 2014, implementation date of the Foreign Account Tax Compliance Act by another six months.
The IRS should extend the start date at least to Jan. 1, 2015, ACLI said. “A July 2013 implementation date is too early a date for government and withholding agents alike when all aspects are taken into consideration,” the group said in a Dec. 26 comment letter on Notice 2013-43, which announced the first six-month delay to the FATCA start date (138 DTR G-1, 7/18/13).
If the IRS doesn’t delay the program’s start date, “we ask that Treasury and IRS announce that no withholding penalties or other negative ramifications will apply or be imposed until January 1, 2015 for nonparticipating or limited FFIs,” the group said.”
http://www.bna.com/irs-offers-guidance-n17179880993/
On a related topic, FATCA Final Guidance was to be released by December 31, 2013 but I have not been able to find that this occurred.
In a letter to Treasury officials dated November 18, 2013, the American Bankers Association, The Clearing House Association L.L.C., the Institute of International Bankers, and the Securities Industry and Financial Markets Association emphasized the importance of issuing the FATCA Final Guidance timely:
“In summary, we respectfully request that the Phased FATCA Timeline effective dates be delayed as discussed above – -provided that all Final Guidance is released by December 31, 2013.”
http://www.aba.com/Tools/Function/Acct/Documents/FATCAJointTradesLetter111813.pdf
Although we know that time and clocks run differently in Washington DC, Robert Stack missed this deadline. Will the new year brings news of this Deputy Assistant Treasury Secretary’s resignation?
Great information, everyone.
Thanks Badger, for excerpting Mr Cockfield’s paper, as my mind still remains in “fuzzy bits” from all the new year’s eve celebrating I did.
From the start of it, 2014 should prove to be an interesting year. Two judges now find the NSA’s behaviour unconstitutional. This NY Times editorial offers a scathing indictment of the NSA, and calls for the US to offer Snowden clemency:
http://www.nytimes.com/2014/01/02/opinion/edward-snowden-whistle-blower.html?hp&rref=opinion&_r=0