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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. In light of Eric’s new post, I retract my previous question. So it’s just another meme that incompetent journalists are propagating without doing the slightest investigation as to whether it’s true or not. Typical.

  2. @notamused. Yes it is true, but that statement is misleading. If you are a Chinese national, PR, or long term resident RESIDING in China, then you are subject to tax on worldwide income. This is probably what the Chinese government is after. Note the distinction to the US who taxes on worldwide income by virtue of your citizenship, and not where you live.

    I mostly hear/know China taxation issues from the expat point of view, and in general expats are taxed on worldwide income after 5 years of continuous residence in China. However, in most cases it is as easy as leaving China for a period of over 30 days to “reset the clock” on your five years (in fact I met a guy only last week who was in HK to do just that).

    I think a lot of countries will tax on worldwide or non-residence sourced income, but the key again is RESIDENCE. For example if you are British or Aussie and make money in HK, you are just taxed in HK.

  3. @HKGS
    Yes, taxation on worldwide income based on residence is common, but as you say, it has nothing to do with taxation of worldwide income based on citizenship. Suggesting otherwise (i.e. that the USA and China tax their citizens the same way) is just plain sloppy journalism.

  4. Not an uncommon occurrence with Reuters these days. Anyone can write an op-ed piece which searches and is presented as it were actual news.

  5. Ok, paranoia is back. I just read something at IBS about a Canadian born to Canadian parents while they were students in San Dieg who went back to Canada as a baby and today earns $36,000 had to pay $80,000 to the IRS in order to be released when she crossed the border into the US with her Canadian passport.

    Is this an urban legend?

  6. Urban legend I would think. As far as I know you don’t get fined for travelling without a US passport and how would they be able to make any other calculations if she’s never worked in the US or filed returns?

  7. A funny aside. In 1999 I travelled to Ottawa from NYC and didn’t bother to bring a passport (“Hey… it’s CANADA!”). They didn’t seem to mind so much on the Canadian side and only gave me a little guff on the US side, checking my state driver’s license and letting me off with a warning. I think I actually did say “but Hey… it’s CANADA!”) more than a few times.

    If I tried that today, I’d probably be writing this now from Guantanamo…

  10. Re: Bloomberg… so they snare a former Nazi, and he happens to be a USP? How does that work exactly?

  15. Received this from James Jartas this morning…

    Interesting article. Summary: compliance vendor concerned firms aren’t ponying up for costly compliance services because anti-FATCA lobbyists (damn them!) are creating so much noise and uncertainty about the IGAs:

    Even though the final regulations have been published, the sheer volume of ‘noise’ around Fatca and the ‘will they, won’t they?’ stories regarding the signing of Inter-Governmental Agreements (IGAs) is creating a great deal of uncertainty in the market. This is added to, in no short measure, by the anti-Fatca lobbyists who are succeeding in raising questions about the integrity of the American legislation – particularly following rumours of China refusing to consider an IGA unless they receive more tax information on their citizens with US assets, and Russia becoming the latest state to attack the reach of the regulations.

    But don’t you worry, FATCA’s here to stay, you need to get ready – please, please, please!

    http://www.investmenteurope.net/investment-europe/opinion/2255107/dions-colin-camp-ponders-the-iga-puzzle-in-fatca-developments

  16. I posted this:

    What about Canada?
    There is no way the Canadian government is going to throw 1,000,000 of its citizens under the bus. This will be the final nail in the FATCA coffin.

    Posted by: Joe Smith 15 Mar 2013

  17. 13-03-14 Putting FATCA in context – spying on US citizens banking at home and abroad…
    FATCA has nothing to do with tax collection and everything to do with data collection on US citizens abroad, to match similar programs implemented on US citizens at home. jz

    ___
    Exclusive: U.S. plans to let spy agencies scour Americans’ finances
    The Obama administration is drawing up plans to give all U.S. spy agencies full access to a massive database that contains financial data on American citizens and others who bank in the country, according to a Treasury Department document seen by Reuters.
    The proposed plan represents a major step by U.S. intelligence agencies to spot and track down terrorist networks and crime syndicates by bringing together financial databanks, criminal records and military intelligence. The plan, which legal experts say is permissible under U.S. law, is nonetheless likely to trigger intense criticism from privacy advocates.
    Financial institutions that operate in the United States are required by law to file reports of “suspicious customer activity,” such as large money transfers or unusually structured bank accounts, to Treasury’s Financial Crimes Enforcement Network (FinCEN).
    The Federal Bureau of Investigation already has full access to the database. However, intelligence agencies, such as the Central Intelligence Agency and the National Security Agency, currently have to make case-by-case requests for information to FinCEN.
    The Treasury plan would give spy agencies the ability to analyze more raw financial data than they have ever had before, helping them look for patterns that could reveal attack plots or criminal schemes.
    The planning document, dated March 4, shows that the proposal is still in its early stages of development, and it is not known when implementation might begin.
    http://www.reuters.com/article/2013/03/13/us-usa-banks-spying-idUSBRE92C12720130313

  21. FATCA form filing. 10 red flags. The Practitioners looking to identify you. 🙂

    http://www.gilaberttax.com/2013/02/01/fatca-tax-reporting-10-red-flags/

    1. Your client spends a lot of time outside the U.S.

    2. Your client reports some income or gains or losses denominated in a foreign currency that do not show up on a typical broker’s statement or Form 1099.

    3. Your client receives distributions from a foreign trust.

    4. Your client is a participant in a foreign pension plan (whether or not he or she is receiving current distributions).

    5. Your client received an inheritance or gift from a benefactor who lived or worked outside the U.S.

    6. Your client lived outside the U.S. for many years.

    7. Your client has close relatives living in a foreign country.

    8. Your client or his or her spouse makes an election to be treated as a non resident for U.S. tax purposes under the provisions of a tax treaty.

    9. Your client or his or her spouse makes an election to be treated as a resident alien.

    10. Your client does a lot of business outside the U.S.

  22. LOL on the part about helping practitioners be “better detectives.”

    More comforting though, as I thought it was going to be a summary of what the IRS flags for an overseas return.

  23. A post that is a bit dated from March 3rd and the Miami Herald. Hat tip to @Roger Conklin…

    http://www.miamiherald.com/2013/03/03/v-fullstory/3265081/for-charles-a-intriago-financial.html

    Q: The federal government announced last year it will delay implementing some parts of the Foreign Account Tax Compliance Act, the controversial 2010 law known as FATCA. Why all the fuss about the law?

    We call FATCA the “New Patriot Act.” Bankers shed crocodile tears about it, but they have only themselves to blame. Swiss banks, led by UBS, infuriated the U.S. Congress and the American people by their brazen conspiracy to lure U.S. taxpayers to keep secret Swiss bank accounts with millions of dollars and evade U.S. taxes. FATCA will require foreign banks to tell the IRS of U.S. persons who have accounts of more than $50,000. Failure to comply will expose them to big penalties. It is a just and fair law that seeks to even the playing field for all taxpayers. Who can squawk about that?

    I started to post this reply, until I realized they were using that darn Facebook social plugin, and so I couldn’t comment… If anyone who does facebook wants to make a comment, have at it.

    Re the Statement on FATCA.. “It is a just and fair law that seeks to even the playing field for all taxpayers. Who can squawk about that?”

    Well, I can. It is American Financial Imperialism on steroids and in search of one good intention is wrecking havoc around the world and doing untold collateral damage to the unintended targets, Americans who live abroad.

    Ultimately, it is shooting itself economically in the foot. http://bit.ly/10EACPv

    You don’t need 544 pages of detailed regulation to deal with Tax evasion. Just good ole DOJ work is very effective, without creating conditions for BIG DATA collection with serious security concerns on all U.S. Persons living in 193 countries in the world.

    Canada understands what is wrong with FATCA, even if this attorney with his myopic US homeland focus does not.

    http://bit.ly/10EACPv

  24. A comment from James that would have been a good response, had it been posted…

    It can’t be emphasized enough: If governments want to chase their own actual tax evaders (even if the problem typically is overstated), no one objects. But why should innocent people and institutions be victimized? That’s the problem with Fatca. It doesn’t do a thing to pursue tax evaders. Instead, it requires massive reporting by everyone in the unfounded hope that evaders (who are good at covering their tracks, and will evade Fatca too) will be netted. Under Fatca, a good sized Canadian bank will pay $100M to comply with Fatca (and pass those costs on, and violate a million Canadians’ legal rights in the process) even if *not a single US tax evader* has an account there. Fatca is like Prohibition: mess up everybody else’s life instead of focusing on the few people who are causing problems.

  25. I have a question on FATCA reporting:

    Would the Canadian Banks only report accounts over $50k?

    Would my Canadian RRSP account of $15K go unreported by the bank under the current FATCA regulations?

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