Media and Blog Articles Open for Comments – Part 5 of 11 (Year 2018)
You can access all years at this link: Media and Blog Articles – Links for All Years
If clicking on a link brings you to the wrong page in the comment stream, click here to get to the most recent comments.
Media and Blog Articles
EmBee suggested that it would be good if there was a thread for new articles, so that people would be aware of where to comment. So, I created this permanent page. I’ll make a permanent list of links posted here and keep adding to it, but not deleting, so we’ll end up having sort of a “bibliography” of FATCA/CBT articles. [Note: Some articles are not open for comments]
For more articles on FATCA, enter FATCA into Google then click on the link “more news for fatca” just below the most recent featured article.
Notes:
From JC: To see #FATCA on Twitter for latest breaking news. JC finds that is quite a good source and there even are some international articles that one may read using Google Translate. Others may help certain tweets and articles remain in elevated position by retweeting them.
From Badger: On an important archival note, please use the Internet Archive Wayback machine https://archive.org/web/ (see bottom right ‘Save Page Now’ box to enter URLs of webpages you want saved for posterity, and try to save backup copies of articles and other items of interest in some other form – such as a datastick or external drive. Some important and very significant webpages and the fulltexts of articles are no longer available (although some can be retrieved if someone using the Wayback machine saved them).
Be sure to read the comment stream for this thread — there are usually very recent articles mentioned
2018.12.23
New bill could lessen tax woes for Canadian residents with US citizenship: but the outlook is bleak for thousands grappling with Trump’s repatriation tax, Elizabeth Thompson, CBC News, Canada.
2018.12.21
Tax Fairness for Americans Abroad Act of 2018! Let’s Get This Passed! Anthony Parent, John Richardson, Keith Redmond, IRS Medic. US.
TTFI bill introduced today, great news for Americans living in Canada, Reddit Forum.
FATCA: Significant Relief in New Proposed Regulations, Jeremy Naylor, Amanda H. Nussbaum and Martin T. Hamilton, Mondaq.
2018.12.20
Tax Fairness for Americans Abroad Act, Democrats Abroad.
2018.12.19
TCJA and US Expats, Karen Alpert, Fix the Tax Treaty, Australia.
2018.12.18
Why Banks Have Become Judge, Jury & Prosecutor and will Shut you Down Judged Guilty for Nothing That is Actually Illegal, Patriot Rising.
20`18.12.17
IRS Issues Proposed FATCA Regulations, Adrienne M. Baker, Joseph A. Riley and Jeff J. Kang, Lexology.
2018.12.13
IRS Issues Proposed Regulations on FATCA, Other Reporting Conditions, ABA Banking Journal, US.
2018.12.11
How the IRS as Gutted, Paul Kiel and Jesse Eisenger, ProPublica, US.
2018.12.08
December 2018 International Tax Reform Updates- FATCA -GILTI – TTFI, Anthony Parent interviews Keith Redmond and John Richardson, IRS Medic. (video)
2018.12.05
Explaining GILTI – Individual Impact, Karen Alpert, Fix the Tax Treaty, Australia.
2018.12.03
Luxembourg: Exchange Of Information Vs Data Protection: A Brave New World Of Transparency, Antoine Dupuis and Guilles Sturbois, Mondaq.
2018.12.00 (December 2018 edition)
EU parliament versus FATCA, Financier Worldwide.
Newsletter, Purple Expat.
Articles from earlier in 2018 are in the Media and Blog Articles 2018 Archive. Links to previous years’ archives are also at that link.
“And staggering mountains of data can’t make USCs living outside the US file US tax returns.”
A point I just made to another predatory condor on quora telling all that hiding from the IRS in other nations was over because of FATCA.
Ok, they know about me living in the UK and think I “might” owe US taxes.
Then what?
Nothing, that’s what.
Not unless I was foolish enough to start filling in forms.
They have already forced our FI’s to spy on us. Nothing more is needed to cause us irrepairable harm, though not at the hand of the IRS.
However, having already forced our nations of residence to sign FATCA and our FIs to spy on us, why is it so hard to believe that they can force other consessions from either or both?
What has happened is more likely to happen that what has not happened.
JapanT – They didn’t need to force the banks or the governments to hand over our information.
The banks worried about implementation costs and potential loss of lucrative USC custom.
The governments worried about how to draw up bullet-proof legislation that wouldn’t give grounds for legal action. You can bet your boots none of them worried about the life consequences for the owners of the information being reported. Backs covered? job done!
“why is it so hard to believe that they can force other consessions from either or both?”
Such as?
Wasn’t going to go it to this, but since you asked.
First, some nations were indeed forced, or at least made a good show of being forced. Why did governments need to draw up bullet proof legislation, if not forced to do so? If not forced, why bother changing what they already had in place?
Once this data is being shared, and it already is, then anyone with missing information is going to be flagged for closer inspection. If not already the case, then FIs will hand over anyone with missing information, or be forced to do so by threat of fines, for one example.
Same with mismatched data, data that conflicts with data collected from other sources. This would include wrong information intentially given as well as unintentional errors.
First pass of data correlation, find anyone with a US place of birth that has no recent record of filing US taxes.
Second pass, find anyone with an unregistered place of birth and flag it for closer examination.
Third pass, Find anyone with only a city or state/prefecture/province etc, given as a place of birth and flag for further inquiry.
I suspect much of this and more is already underway.
“First, some nations were indeed forced, or at least made a good show of being forced. Why did governments need to draw up bullet proof legislation, if not forced to do so? If not forced, why bother changing what they already had in place?”
To make it local law.
“Once this data is being shared, and it already is, then anyone with missing information is going to be flagged for closer inspection. ”
FATCA/IGA places obligations on the FIs, not on the accountholder. If the FI fails to identify a USC accountholder and consequently fails to report the account, there may well be consequences for the FI, but not for the accountholder.
It’s the due diligence that causes harm to the USC accountholder, by identifying the person as a supposedly risky customer.
“First pass of data correlation, find anyone with a US place of birth that has no recent record of filing US taxes.”
That information is no use to the IRS.
What might be useful to them is FATCA information on those who are filing. For instance, they’ve explained that one of the ways they’re using FATCA data is to build a database of compliant USC’s pension contributions, so they can track the gain from one year to the next.
[part 1 of 3]
Rather a long post here. It might deserve its own item if a moderator feels like a cut-and-paste job.
Moodys Presentation – 23 June
Alex Marino (youngish US tax lawyer hired by Moodys to work in Calgary) doing his regular two-hour dog-and-pony show. Very charming and funny guy, under different circumstances someone I would absolutely enjoy having a beer with. Audience of 40-50, mostly skewing older; based on questions asked I think a good percentage were Americans who’d moved to Canada (some becoming citizens, others not) rather than Accidentals. Some were compliant and looking to renounce; others non-compliant. Most looked anxious and/or pissed off, as you’d expect.
I have the printed slide deck and attempted to record audio, in addition to my notes.
Some key themes:
Scary, scary, scary! Even when he’s willing to admit that there are limits to US power, he always makes everything sound so big and bad and scary, tremendously complicated, with terrible consequences for any little mistake. Of course he does.
The internet is not your friend. He constantly warns against finding advice online. I think this has less to do with Brock (never mentioned any such groups by name) but rather places where you will learn that all your US tax problems are automatically solved if you performed an expatriating act in 1983 and you need do nothing further, or ads for other less competent practitioners.
Slagging the competition. Lots of funny stories about the expensive messes he has to clean up due to bad advice given by inept lawyers and accountants. On this he’s probably quite right, even though it’s part of the sales pitch. Immigration lawyers without US tax expertise can be very dangerous. (In particular, watch out for anyone claiming to be an attorney in Massachusetts or a CPA in Illinois, because those states will give you a credential after a multiple choice “ethics” exam only – don’t have sex with or steal from your clients, basically.)
He claims that Moodys clients now constitute 9-13 percent of yearly global renunciations. Fair enough, the total numbers are kept artificially low. It’s a global practice with clients everywhere.
Estates, inheritances, executors, beneficiaries. Death and taxes. Always returning to the problems you will leave for the next generation if you don’t renounce or aren’t compliant. Low on specifics, but high on the fear and guilt.
I tried to listen with an open mind, as best I could. One concern I have is that I (and others here) live in an echo chamber, in the resistance bubble. Moodys actually works with clients who renounce and submit tax paperwork and communicate with the US government. They deal with this every day. So when he makes a claim I find questionable, I have to admit to myself that he has direct experience that I do not. In which case all I can do is shut up and report back.
He seems very familiar with skeptical or defiant questions from the audience. If you pin him down on a finer point of the rules, he admits that you are right, but asks if things won’t change for the worse in the future. Historically, he has a point.
[part 2 of 3]
Presentation highlights:
Boris!
Of course there’s a Boris Johnson slide right at the beginning, about how he shot his mouth off and “had” to pay US taxes. I put my hand up and asked a question:
“Boris was an idiot, on this we agree. But if he hadn’t been a political figure, with US income from book deals and speaking fees, how specifically would the US government have forced him to pay taxes, as a UK citizen living in the UK with only UK assets?”
“It’s like you work for Moodys. That’s the subject of my next slide – FATCA.”
“FATCA is about collecting information, not collecting penalties. How exactly could he have been compelled to pay?”
“I get this a lot from Australians. They like telling the US to pound sand.”
God bless the Aussies.
I pushed the point, and raised it again later on in the presentation, and he did willingly admit that under current rules the CRA will not collect on behalf of the US against a Canadian citizen, and that the US cannot put a lien on or otherwise touch Canadian assets. But he did mention something new to me that I need to follow up on, an “article 27” of the tax treaty providing for more extensive collection assistance, which was passed but has not been invoked or enacted or something like that. (I used to think that any attempt by the US to grab money from dual citizens would be met in Canada with great public outrage, but now after reading the comments on the recent CBC pieces, I suspect not, a large slab of the electorate is either too dumb to figure it out, or thinks it’s “fair” and has no problem with it.)
Random highlights
He insists that if you are “caught” by FATCA, you will receive a letter from the IRS, and at that point you cannot go into any sort of amnesty program. I have never heard of anyone receiving such a letter. But this is an area where I have to defer to his experience, because he is a working tax lawyer and I am not. Maybe this never happens and he’s making it up. Maybe it happened once or twice to very wealthy clients and he uses the example to scare up new business. Maybe it happens all the time and we never hear about it. (My hunch is number two.)
Untruthful answers to FATCA questions from banks are “perjury and tax fraud” – I suppose one day I should look up those definitions. He talks about banks asking for place of birth. That doesn’t typically happen in Canada, although it might when you get into the seven figures, but of course he has a global client base so that is true elsewhere.
He did however give a disturbing example of a Canadian client attempting to publish a book on Amazon who was asked not only for her place of birth but also her parents’ places of birth, presumably as part of Amazon’s own procedure to determine whether she needed to complete a W8 or W9.
He made some absurd claims that if you renounce without coming into tax compliance, you will “have a big target on your back” and will get all sorts of attention from the IRS, the attorney general, the FBI, pretty much everything short of a drone strike. This I suspect is scaremongering horseshit, unless maybe your last name is Manafort.
On the other hand, he gave the perfectly sound advice that if you have a taxable event coming up, renounce immediately because you have 12-18 months to get the tax paperwork in order, all past returns plus the 8854 and so on. Don’t wait. He has at least one client who was told by “an Illinois CPA” to enter streamlined (so only three years of returns) then wait two more years to file and get up to five before renouncing; they were of course caught by the transition tax surprise (which he calls the “one-time screw-you tax”) and are now writing a very large cheque to the IRS, and suing the accountant for giving crap advice.
On passports and travel, the interesting point was made that while it is illegal for a US citizen to enter the US with anything but a US passport, the US must also admit any and all of its citizens. You cannot be denied entry if you show up at the airport or border with a Canadian passport alone, or with an expired US. While there is no known punishment for violating the passport law, they will very likely detain you long enough to miss your flight or otherwise cause great inconvenience. Also, as of October 2017 it’s no longer possible to get a US passport without an SSN – you can’t enter all zeros if you don’t have one.
[part 3 of 3]
Renouncing
Lots of talk on the mechanics of renunciation. Apparently Calgary and Toronto are the only two US consulates that allow a US lawyer to be present during renunciation. Even better for his business model.
Moodys thinks you need a lot of expensive coaching to get through your renunciation interview without blowing it and having yourself barred for life from ever setting foot in the US. Of course they do. He claims that if you tell the consul that “I never owe US tax but I’m getting really tired of all the paperwork every year” that will be enough to trigger a “disbarment letter” and you can never cross the border again. (Then a scary slide about the Reed-Schumer Amendment.) I think this claim is ridiculous but again, he’s working on the coal face, he deals with renunciations all day, whereas I am just a crazy person on the internet.
When he was talking about the interview, the woman sitting next to me said quietly “Oh my god, that’s stressful.” I quietly replied “It’s not. I’ve been to one. It was perfectly easy and polite. This is a sales pitch.” She did not reply.
Depending on complexity, Moodys will charge you from $7-8k at the low end to $15-20k at the high end (Canadian dollars I assume) just to assist with renunciation – tax compliance not included. Plus the US fee. My jaw dropped. What the hell? It’s not that complicated.
He talked briefly about the challenges of mental competence (he advises you not to lick the glass during the interview) and the tragedy of people paying tax on an RDSP without being allowed to renounce. Of course, one only pays this tax if one is compliant and chooses to report the account and the income. At this point I put up my hand, and the exchange went something like this:
“As I understand it, under the current regulations, the IGA, all RDSP, RESP, RRSP and I think even TFSA accounts are not reported to the US under FATCA.”
“The US considers them taxable and they need to be reported on FBARs” etc.
“Right, but they are not reported under FATCA, so if you are partially compliant you can simply not report them and not pay that tax.”
“I don’t understand your point, they are reportable.”
“I am suggesting that you cheat.” Laughter in the crowd.
“I hope nobody from CRA is in the room.” Nervous laughter in the crowd.
“Why? This has nothing to do with paying your Canadian tax.”
Other random stuff
Don’t wait for things to change, they will likely only get worse. Sending petitions and letters to US politicians is a complete waste of time (on this I agree).
He has heard from someone in the State Department that the renunciation fee will go up to $4-5k in the next year of two. The express purpose being to discourage renunciation by younger people. I have no idea whether to believe this.
When a non-compliant US person dies, they pass on the problems to the executors, who are legally obliged to bring the estate into US tax compliance even if it means complete liquidation. I doubt that happens very often, and I’m not even sure that it’s true.
Much discussion of the exit tax, and how to avoid it. After renunciation, he claims there is a high likelihood of an 8854 audit, and that all renunciants’ returns are carefully checked. I suspect this might be true for high net worth individuals who are either paying or are close to paying an exit tax.
Conclusion
It’s all about the fear. Non-compliance is not an option. The IRS will find you, and will find a way to collect from you, and you will never be allowed into the US. Even if you don’t have a US birthplace. Unless of course you hire Moodys to take care of this for you.
I wanted to hang around to talk to people afterwards, but I was in two-hour parking and there was a soccer match about to start, so I fled. Whenever there’s a chance I think we should try to have others go and politely ask difficult questions, in addition to pure intelligence gathering. He’s fine with it, he’s seen it all before. It might help some of the folks in the room but I doubt it, they either have a good grasp of what’s going on already, or are far too spooked to listen to the heckler in the back row.
My balanced, open-minded view is that if you have a complex situation – you are worth a lot of money, you have a cross-border business, or you worked for many years in the US before moving to Canada – then it is probably worth your while to seek good, competent professional advice. I’m sure you will get that from Moodys, though it’s not cheap. But if you’re an ordinary sort of person with a modest income and uncomplicated financial affairs, either go the DIY route or just ignore the fearmongering and get on with your life.
I’m sure I could say more but we’re over 2000 words and I’m done here…
Thanks, Nononymous. Very interesting.
To determine the rate at which they should withhold US tax when paying her share from the sales of the book, wouldn’t it be?
This issue (American platforms such as Amazon, AirBnB, TripAdvisor, etc. asking questions about citizenship of non-US-resident payees) is raised in a question to the EU Commissioner (see thread “FATCA and the EU”) and also in the draft Resolution. The EC replied saying it’s not breaking any EU laws and I have to say it seems to me he’s correct. The moral would seem to be, use a home-grown platform for publishing. And if there isn’t one – hey, it’s an opportunity. 🙂
Yeah it’s about withholding. I’ve had to falsely sign W8 forms when doing remote work for US clients, since obviously I’m not going to sign a W9. What’s disturbing about the Amazon thing is that they are smart/paranoid enough to ask about parental birthplace etc. not just self-certification of citizenship or green card status.
Yes – they’re probably liable if they get it wrong, I suppose.
Renunciation for non-US-born offspring looks more and more worthwhile, as I’ve said recently to my descendants in connection with this very issue.
“To make it local law.”
Why, if not forced, would every nation in the world suddenly want to make the law of another nation’s a local law? Or more to the point, what benefit do these nations get from enacting a foreign law as their own?
FATCA/IGA places obligations on the FIs, not on the accountholder. If the FI fails to identify a USC accountholder and consequently fails to report the account, there may well be consequences for the FI, but not for the accountholder.
That’s BS. If it is thought or even just felt that keeping certain kinds of people as clients would cause certain unacceptable risk, those people are shown the door or not even allowed in.
“It’s the due diligence that causes harm to the USC accountholder, by identifying the person as a supposedly risky customer.”
It is a chain, one link pulled and the rest follow. Due diligence as defuned by whom for whom?
“First pass of data correlation, find anyone with a US place of birth that has no recent record of filing US taxes.”
That information is no use to the IRS.
Say what? Sure it does. It helps them identify who has not been filing taxes so that they can apply fees at the very least and threaten with passport revocation and all the rest.
Even if information has no use to them, it doesn’t prevent them from collecting it.
“ what benefit do these nations get from enacting a foreign law as their own?”
What benefit do nations get from signing up to AEOI? They get FATCA/CRS-compliant status and avoid being blacklisted as secrecy jurisdictions complicit in tax evasion, money-laundering, and terrorist financing. They get increased access to information about what their banks are up to. They get, to varying degrees, information about the unreported offshore accounts of their own residents.
“If it is thought or even just felt that keeping certain kinds of people as clients would cause certain unacceptable risk, those people are shown the door…”
Correct. The law requires banks to carry out due diligence to identify US citizens and report their accounts, and punishes mistakes; which in IGA 2 jurisdictions makes USC customers potentially risky for banks and may incline them to refuse USCs as customers; and in IGA 1 may make banks bar USCs from any but the most basic kind of account.
“It helps them identify who has not been filing taxes so that they can apply fees at the very least and threaten with passport revocation and all the rest.”
The existence of money in a non-US bank account is not enough information for the IRS to determine whether the accountholder owes US tax.
“Even if information has no use to them, it doesn’t prevent them from collecting it.”
Certainly doesn’t. 🙁
@Plaxy
“The existence of money in a non-US bank account is not enough information for the IRS to determine whether the accountholder owes US tax.”
No but it is enough to learn of someone who has money in a non-US bank and has not been filing tax or info returns, which is cause for them to dig deeper.
Yes, they must let you in on a US passport but they need not let you leave.
“What’s disturbing about the Amazon thing is that they are smart/paranoid enough to ask about parental birthplace etc. not just self-certification of citizenship or green card status.”
Expect more and more of this.
A former coworker here in Japan tried to publish photos through Gettyimages but decided not to when they required that he provide SSN and other tax documentation. That was three or perhaps more years ago now.
“No but it is enough to learn of someone who has money in a non-US bank and has not been filing tax or info returns, which is cause for them to dig deeper.”
Yes.
“Expect more and more of this.”
I agree. As far as I can see, withholding on the cross-border payment of US-source income is one area of international taxation where they can and probably will enforce US tax law, without any need to rely on treaty partners for assistance in collection.
Yes, but as Amazon has many branches, Amazon UK and Amazon Japan, how is it US based income if one published through one of those companies?
Not so coincidentally, there’s an Illinois CPA running around on Reddit telling accidentals who ask about US taxes to hurry up and go into OVDP because it’ll be ending in September.
“as Amazon has many branches, Amazon UK and Amazon Japan, how is it US based income if one published through one of those companies?”
It looks like the publishing (and the subsequent sales) get done through amazon.com. So it would be a US corporation paying royalties to a nin-US-resident author, and withholding US tax at a certain rate depending on whether the author is or is not a USC. Or so it seems to me.
I said (above):
The issue was raised by means of a proposed Amendment to the draft Resolution (Amendment 8). Turns out that Amendment was withdrawn. See Duality’s post in the “FATCA and the EU” thread.
Nononymous: Thank you so much for the tremendous amount of time and effort that went into your report on the Moody’s seminar. I greatly appreciate it.
A couple of weeks ago I received a letter from the irs about my final filing. They say that if I care to fill out more paperwork (= forms and schedules), then I probably qualify for a refund under the Additional Child Tax Credit, but I’m not inclined to respond. I also never paid any u.s. taxes or into any of its programs, so, technically, I don’t feel I should be able to claim anything. I don’t want their money.
““as Amazon has many branches, Amazon UK and Amazon Japan, how is it US based income if one published through one of those companies?”
It looks like the publishing (and the subsequent sales) get done through amazon.com. So it would be a US corporation paying royalties to a nin-US-resident author, and withholding US tax at a certain rate depending on whether the author is or is not a USC. Or so it seems to me.”
That would do it, I guess.
My husband uses online platforms to sell stock images. Most of them are in the u.s.. As a non-usc seller, he is required to fill out a W-8BEN (I think) to determine whether there is any withholding. I didn’t like him getting involved with any american paperwork, but I understand the need to do business also.
@Eric
Yes, there has been quite a bit of that going around. If Streamlined is mentioned, it’s done so with the threat that it too may end soon. Streamlined will never end as long as the US keeps taxing the residents of other countries, IMO.