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.
@Innocente
This latest appeal for FATCA delay can be added to the growing list of entities making similar requests, mostly FATCA withholding agents, I believe. But without final guidance as promised, can Treasury stick to their guns that there will be no further delays to FATCA’s effective date, or were they announcing FATCA’s death by making such a statement?
http://www.fsitaxposts.com/2013/12/13/u-s-treasury-delay-fatca-effective-date/
@bubblebustin
I hope 2014 is the year for more truth whistle blowers like snowden. In my youth it was the Pentagon Papers, which I believe ended the Viet Nam military action sooner than the MIC wanted.
I am heartened by the Currents interview with James Jatras. And the recent links that Brockers provided the last few days. I am putting my money other than RRSPs in my local credit union. Not as much interest but I am quite angry at the banks so this gives me a sense of doing something.
I am planning on further FATCA package drops and distribution of Gwevil’s graphic work. January is to be a good time to start.nit would yo hit the media before parliament gets back in session.
Scary reality from a well informed lawyer commenter in a FATCAnatic forum:
I am sorry to say that these days, the substantive law hardly matters. What matters is whether IRS and DOJ see you as a bad person and want to punish you. If so, your legal rights won’t matter unless you are a survivalist who lives in a cabin off the grid in a cashless lifestyle. Because if you live a modern life with bank accounts and credit cards and securities investments, then you probably have assets in financial institutions that do business outside your local village. And if you have assets in financial institutions that do business outside your local village, then the IRS and DOJ can get your bank to give them your money – as Andrew points out by taking the money out of your bank’s assets / correspondent accounts INSIDE the US. And your agreement with your bank undoubtedly provides that if the bank has to pay the IRS on account of something you did (or didn’t do), then the bank is permitted to subtract those funds from your account OUTSIDE the US. Your bank will not fight on your behalf once the IRS / DOJ threatens to freeze the bank’s US accounts. Just look at how many Swiss banks agreed last week to pay massive penalties despite having the opinion they did nothing wrong, simply to avoid being prosecuted by DOJ. Yes, a person can plan to minimize the impact of US taxes. But to say “I don’t have to plan around US taxes, because I live outside the US and so IRS can’t touch me here” is very naive in the current atmosphere.
@Innocente
Is this what you are looking for?
When is something final not final? When the IRS issues it:
“The IRS said that both sets of temporary regulations are expected to be published in early 2014. The release of regulations in temporary form often means changes are anticipated.”
IRS Releases Final FFI Agreement
http://www.fsitaxposts.com/2013/12/27/irs-releases-final-ffi-agreement/
@JustMe, ha this is very funny. My comment on the blog about removing my comments is still up. But the original rebuttal has vanished, never to reappear by the looks of it.
@Bubblebustin:
Thanks for finding the final FFI agreement information and posting it.
According to the joint ABA, Clearing House, IIB and SIFMA letter to Treasury dated November 18, 2013, the “Final Guidance” is:
1) final forms and instructions,
2) final Chapter 4 regulations (including all substantive changes and corrections),
3) the final FFI agreement (and amended QI, WFP and WFT agreements)
4) and to harmonize the rules under Chapters 3, 4 and 61 of the Code (collectively, the “Final Guidance”).
Based on my reading, it appears that Treasury only delivered 3) above so it still has to deliver 1), 2) and 4) to complete the “Final Guidance”.
@Innocente
I only posted it. You did what I couldn’t – which is to decipher it. Thank you!
Treasury says no more delays. Now what?
African & Arab Banks Complain About FATCA
https://taxconnections.com/taxblog/african-arab-banks-complain-about-fatca/
Oh, they should quit moaning, as it is a mere inconvenience! 🙂
…a mere inconvenience – just like OVDI!
@Em, re;
“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?………”
I would think that Minister Flaherty and Harper will be made aware of the implications of Prof Cockfield’s research re FATCA, as addressed in this paper, but most certainly in the research he is doing for the Privacy Commissioner of Canada.
He is also doing this research for the Privacy Commissioner of Canada;
“Organization: Queen’s University, Faculty of Law
Location: Ontario
Funding Amount: $10,000
Project Title: The Privacy Implications of the Foreign Account Tax Compliance Act (FATCA)
Project Leader: Arthur Cockfield
Project Description: The project will review the privacy implications of the U.S. Foreign Account Tax Compliance Act (FATCA) in light of Canada’s Personal Information Protection and Electronic Documents Act. Specifically, the project will review implications on Canadian privacy rights and interests of any new agreement negotiated between Canada and the United States to implement FATCA. The project will also examine the interplay of FATCA with other Canadian laws that protect taxpayer privacy such as the Income Tax Act, the Canada-United States Tax Convention Act and the North American Free Trade Agreement (NAFTA). Finally, the project will review how Canadian banks are trying to comply with all relevant laws, and whether these banks are adopting new information technology systems to help them identify, sort, and transfer financial information to U.S. tax authorities.” http://www.priv.gc.ca/resource/cp/2013-2014/cp_bg_e.asp
And Prof. Cockfield also received a multiyear “Social Science and Humanities Research Council (SSHRC) standard
research grant, 2008-2012. Funding for research on Taxpayer Privacy Issues Arising
from Enhanced Cross-border Tax Information Exchanges” http://law.queensu.ca/facultyAndStaff/facultyDirectory/cockfield/resumewebJuly2011.pdf
and
If I remember correctly, Prof. Cockfield was already interviewed about FATCA and FBARs by the Canadian media (can’t find the video link right now), and his research is very relevant to concerns that we have raised here, with implications for the fate of a Canadian IGA, and Constitutional and Charter issues re FATCA and US extraterritorial demands for our banking, personal and financial information and that of our non-US joint account holders.
@Medea,
I should have made clear that Prof. Cockfield’s paper specifically mentions issues arising from FATCA in the Canadian context, but many of the issues (privacy, assumption of guilt and mass collection of data without cause, etc.) are relevant for other countries too. He does however point out how FATCA is particularly problematic and raises Canadian specific concerns because Canada and the US already exchange the most extensive information for tax purposes. And because of the sheer numbers of ‘US taxable persons’ and dual citizens in Canada due to the long history of cross border flows of people across the shared border.
Sorry that often I am flagging only the Canadian context. It is what I know best, and it has been said that Canada is a very important IGA for the US to crack in order to make other dominoes fall, but it is also the most obviously ridiculous example of US hypocrisy and exceptionalism to argue that over 1 million Canadians and their households and joint account holders and business partners are US tax evading criminals ‘HIDING’ money in ‘SECRET’ ‘FOREIGN’ ‘OFFSHORE’ accounts. It looks very bad, it affects the second largest concentrated population of US citizens (after Mexico), and it provokes an important neighbour and trade partner. We may also see just how many political, media and business figures in Canada are affected – eventually we will hear more about high profile people in Canada renouncing.
You and Innocente, and several others, as well as Christophe, provide very valuable reminders to us as to how this is decimating the savings of those outside the Canadian context – in Europe and elsewhere, and also makes us consider the plight of those recent US immigrants with perfectly legal pre-existing accounts from their country of origin. Thank you for your patience in that respect.
@ badger
It looks like Mr. Cockfield is getting some funding for his research and I know governments often don’t make a move without having studies done. Let’s hope his papers are productive very soon, before the FATCA hammer falls. We had not seen much interest in FATCA from the Privacy Commissioner before this so that Queen’s project is encouraging (well targeted project description). However, judging from the dollar amount assigned to the project, FATCA doesn’t rank terribly high in privacy issues at the OPC.
@Em, yes, it struck me too that the dollar amount assigned to that research was pretty small beans from the Privacy Commissioner of Canada as compared to the other grants. Hope that is not an indication of the relative value the PCC places on the outcome of the research.
http://www.international-adviser.com/news/tax—regulation/irs-unveils-latest-batch-of-fatca
One section of the article mentions PFIC reporting guidelines and raises spectre of new burdens for those with PFICs. See article and links for details and references:
Ex.
……………..” In conjunction with the US Treasury Department, the IRS also released some key temporary regulations (T.D. 9650) and proposed regulations (REG-140974-11), which cover the way passive foreign investment companies (PFICs) are to be reported. These new regulations are considered to have taken effect on 31 December, as this was the date that they were published in the Federal Register.
Areas covered include how the ownership of a PFIC is to be determined; what the annual filing requirements for PFIC shareholders are; and an exclusion that applies to certain filing requirements which is available to shareholders who “constructively own” – that is, own by virtue of some relationship, such as marriage – interests in certain foreign corporations.”
….”… Filing requirements
According to an analysis of the new regulations by KPMG, these new PFIC rules are considered to largely adopt portions of regulations that were first proposed in 1992, with certain revisions being made to reflect statutory changes made during the intervening years.
“However, a third release, (also published in the Federal Register on December 31, 2013), withdraws a portion of the 1992 proposed regulations relating to the definitions of the terms ‘pedigreed qualified electing fund’ and section 1291 fund, shareholder and indirect shareholder,” KPMG said.
It noted that a provision of FATCA added a requirement that a “United States person” who is a shareholder of a PFIC must “file an annual report containing information as may be required by the [Treasury] Secretary”….”…
Just what you have been waiting for, the FATCA Ap. Get it at your I-tunes Ap store…
FATCA in Your Pocket – FATCA App first update for 2014
But remember…
The NSA Reportedly Has Total Access To The Apple iPhone
So, start shopping for your Ap today. The NSA will thank you!
@badger, yes of course you refer things from a Canadian point of view. It’s natural and IBS is mainly aimed at Canadians. I can only reference from the Swiss end, having been out of the UK for many years so have no idea on what’s happening there FATCA-wise. We’re all little pieces in the puzzle, but that helps contribute to the overall picture of what is going on around the world. Views/news from one country helps others to see what may be coming their way as far as FATCA is concerned so they can prepare to fight.
@Badger
A recent comment on the Forbes article from an investment advisor:
“One story that has not been widely reporting on is the imposition of the IRS’s Passive Foreign Investment Corporation (PFIC) rules on offshore investments held in these types of accounts by Americans. Prior to FATCA, there was no practical way to enforce the rules and many expats and their tax advisors are unfamiliar with them. With the implementation of FATCA, however, it will become easier to enforce PFIC rules and unfortunately many overseas Americans may be in for an unpleasant surprise.”
http://www.forbes.com/sites/robertwood/2014/01/01/americans-are-unwanted-worldwide-at-least-by-banks/?utm_source=alertsnewcomment&utm_medium=email&utm_campaign=20140103#comments
Are US citizens living abroad subject to the individual shared responsibility provision (“individual mandate”)?
Yes. However, U.S. citizens who live abroad for a calendar year (or at least 330 days within a 12 month period) are treated as having minimum essential coverage for the year (or period).
http://www.internationalman.com/78-global-perspectives/1023-internationalize-to-escape-obamacare
Does this mean that one cannot visit USA for longer than 35 days without purchasing Obamacare?
@Mark Twain
That might be a good question for American Citizens Abroad.
Confusion (or just dyslexic mistake that most of us have made) of US terms:
FATCA (Foreign Account Tax Compliance Act)
and
FACTA (Fair And Accurate Credit Transaction Act)
It abounds in this article: http://news.co.cr/1231-deadline-for-updating-your-banking-information-in-costa-rica/31012/ and many others.
(This article also seems to support that US Persons retiring to such countries as Costa Rica, Ecuador, Panama, etc., confident that they will be able to live on US social security payments that they will be able to receive there (or remove from a US account through a foreign ATM forever?) and never exceed the rule (as shown here of Costa Rica banking) of balance over $1,000 in an account, may need a clearer plan with FATCA.)
What is a US Person Abroad to do in getting edumacated?
@Em
@bubblebustin
Sorry for the late reply (see bewlow, re Current Concerns, http://www.currentconcerns.ch/index.php?id=2594
). I have to confess, I just haven’t been able to devote much time to FATCA in the past few weeks, between the holidays and the mundane task of trying to make a living.
Em says
January 1, 2014 at 5:31 pm
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.
@ James Jatras
It’s enough to know you are there and I hope you had a nice holiday break — well deserved. 🙂
@bubblebustin, and all,
more info about that PFIC problem (should it go in another thread too?)
‘The Treasury and Service Issue Regulations On Determining Stock Ownership and Annual Filing Requirements Of U.S. Persons Owning Stock in Passive Foreign Investment Companies’
By Jerald David August on January 1, 2014 Posted in Federal Tax Regulations
http://fedtaxdevelopments.foxrothschild.com/2014/01/articles/federal-tax-regulations/the-treasury-and-service-issue-regulations-on-determining-stock-ownership-and-annual-filing-requirements-of-u-s-persons-owning-stock-in-passive-foreign-investment-companies/
“Conclusion
The newly issued regulations, while welcome, still reveal that there are major gaps and uncertainties still present in applying the PFIC rules. Commentators have previously asked for such guidance but the Service has been slow in responding. Perhaps it’s the sequestration. A more extensive look at the regulations and the general rules on the income taxation of U.S. persons owning stock in a Passive Foreign Investment Company will appear soon in the Journal of Business Entities…”
Will this have any effect on the liklihood of Canada signing an IGA re FATCA? Those here have speculated before on whether NAFTA poses problems for the impementation of FATCA in Canada. FATCA certainly privileges US banks over Canadian ones, and presents them with compliance costs and obligations that the US banks do not have.
http://opinion.financialpost.com/2013/12/09/volcker-rule-release-will-be-bankings-test-for-nafta/
“For Canadians, the consequences could be significant if U.S. regulators do not respect NAFTA and Canadian regulatory sovereignty during their implementation of Dodd Frank
The Canada-U.S. Free Trade Agreement and its offspring, the North American Free Trade Agreement, faces a new test. ……….. Yet the 20th anniversary of NAFTA this January may be marred by the most unlikely of issues – banking.
When the Canada-U.S. FTA was enacted on Jan. 2, 1988, key provisions maintained each country’s regulatory sovereignty over banking. Neither the U.S. nor Canada would extend their regulatory reach beyond their borders. When cross-border regulation seemed necessary, harmonized regulation would be negotiated between the countries’ regulators.
……… Canada and the U.S. have significantly different banking systems and oversight traditions. And it gave Canadian banks some confidence that the risk of expanding into the U.S. would be mitigated by the FTA. “
Why are Canadian banks perhaps considering fighting the Volker Rule imposed by the US on their US operations, but urging capitulation to FATCA as imposed on Canadian assets in Canadian accounts, held by Canadians?
http://www.huffingtonpost.ca/2012/01/05/volcker-rule-canada-nafta-challenge_n_1186272.html
‘Volcker Rule: Canada’s Financial Industry Hints At Challenge To U.S. Bank Reform Under NAFTA’
http://opinion.financialpost.com/2013/12/09/volcker-rule-release-will-be-bankings-test-for-nafta/
Both are described as a threat to Canadian sovereignty, both are imposed by the US, both were publicly criticized initially by Finance Minister Flaherty, both are expected to raise costs to Canadian taxpayers and accountholders as well as pose a threat to the Canadian banking system.
So why does the CBA and IIAC support a FATCA IGA and the sacrifice of our Charter and Constitutional rights, and the assets of over 1 million Canadian families deemed by the US to be ‘taxable US persons’, but Canadian bankers consider opposing the Volcker Rule – and consider mounting a NAFTA challenge to it?
http://business.financialpost.com/2013/12/10/volcker-rule-canada-banks/
“….Intense lobbying by senior Canadian officials including federal finance minister Jim Flaherty and former Bank of Canada governor Mark Carney has successfully blunted far-reaching implications for the country’s largest banks from the biggest overhaul of financial regulation in the United States since the Great Depression.
But the final version of the Volcker Rule, a key plank in the U.S. reform that aims to rein in the type of speculative trading by banks that led to the financial crisis, will nonetheless require Canada’s biggest banks to add a layer of costly and time-consuming compliance systems simply because they have operations in the U.S….”….