Media and Blog Articles Open for Comments – Part 5 of 11 (Year 2018)

1,714 thoughts on “Media and Blog Articles Open for Comments – Part 5 of 11 (Year 2018)”

1. Premature, I know, to comment before reading the whole article, but we have seen similar in the past. We have also seen similar that say that while audits for Stateside taxpayers are down, those of taxpayers abroad had increased.

   Despite their budget woes, the IRS yet again this year raked in another record high amount of revenue, continue to give bonuses to their emoloyees and spend ship loads of money on other nonessential perks.

   They just want more of the budget pie to play with.

2. Auditing is an insanely inefficient enforcement tool.

3. Interesting to look back at 2010 reports of the foreign flag taxation incident.

   Quoting from the ProPublica article:

   In the summer of 2008, William Pfeil made a startling discovery: Hundreds of foreign companies that operated in the U.S. weren’t paying U.S. taxes, and his employer, the Internal Revenue Service, had no idea.

   (Question: how come the IRS had no idea?)

   Professional Mariner said at the time:

   In recent years, an increased number of foreign vessels have applied to enter and work in the OCS,” wrote Keith M. Jones, industry director of Natural Resources and Construction for the IRS. “Our analysis indicates that a significant number of foreign vessels permitted to work in the OCS do not comply with U.S. filing requirements.”

   William Pfeil, a technical adviser for marine shipping in the IRS’s Large and Mid-size Business Division, said the directive involves corporate income taxes, employment taxes and individual withholding taxes. While Pfeil said he couldn’t comment on how many foreign vessels were involved or how much revenue might have been lost, “We suspect the noncompliance has been going on for many, many years.” When asked to be more specific, he replied, “More than five years.”

   Pfeil said the IRS has formed an issue management team to work with foreign companies that have not filed or have not filed properly.

   “We’re looking for voluntary compliance,” he said. “We have had responses of various degrees, saying that one, we didn’t know we had a filing requirement; two, we didn’t realize we were subject to tax; three, we need a period of 60 days to evaluate our situation to determine if in fact we have a tax exposure; four, we’re not sure. … Many of them have gone out and engaged tax representatives to assist them in their determination.”

   http://www.professionalmariner.com/December-January-2010/Foreign-flag-operators-in-the-Gulf-of-Mexico-target-of-stepped-up-US-tax-enforcement/

   Sound familiar?

   From the PP article again:

   Pfeil and the IRS started pursuing the non-U.S. entities. Ultimately, he figures he brought in more than $50 million in previously unpaid taxes over the course of about five years. It was an example of how the tax-collecting agency is supposed to work.

   It’s actually an example of the way the tax-collecting agency fails to collect tax. Why not inform the foreign companies and foreign workers of the tax requirements when they apply for permission to work in the OCS, and ckeck up annually to make sure a return has been filed?

   It’s pathetic. Just as well the old “gotcha” tactics are on the way out. The Palantir approach (https://www.bna.com/palantir-deal-may-n57982093875/) may actually result in less fear, and less damage, for innocent taxpayers.

4. IRS Issues Proposed Regulations on FATCA, Other Reporting Obligations

   https://bankingjournal.aba.com/2018/12/irs-issues-proposed-regulations-on-fatca-other-reporting-obligations/

   The Internal Revenue Service issued a proposal intended to reduce the regulatory burden with respect to the Foreign Account Tax Compliance Act and other reporting requirements. The proposal would eliminate withholding requirements on gross proceeds paid to certain foreign entities from the sales or other dispositions of property that could produce interest or dividends from sources within the U.S. It also includes a delay on pass-through payment withholding requirements; relief from treaty statement documentation; and rules related to refunds and credits of amounts withheld.
   Comments on the proposal are due 60 days after publication in the Federal Register.

5. Posted by Keith Redmond, on American Expatriates Facebook Group, with TTFI expansion by myself:

   Solomon YUE’s Message on TTFI (Territorial Taxation For Individuals [~helps certain qualified people tax resident in other countries get exempt from U.S. double taxation on their nonUS source income]:

   The House of Representatives is NOT likely to vote on the TTFI bill which is still expected to be introduced this month. Congressman HOLDING sent his bill back to LCO (Legislative Commissioner’s Office) to amend. JCT (Joint Committee on Taxation) will have to score it again per new provisions. The bill will be attached to another bigger bill in 2019. If you are unable to wait to renounce, please don’t wait.

   This gives us an opportunity to open the 2nd front on FATCA IGAs (Inter-Government Agreements) non-reciprocity.

   Grover Norquist’s coalition of national conservative organizations in support of Congressman HOLDING’s TTFI legislation is holding together strongly & eager to help our TTFI passage in 2019. I gave the latest TTFI update to over 100 people this week.

   I don’t advise overseas Americans on legal affairs about renouncing. That is the job of John RICHARDSON. I advise GOP leadership in Congress & and The White House on what we need to do on TTFI and FATCA for 9 million overseas Americans. Then I keep you informed & you decide next steps based on your particular circumstances.

   Keith REDMOND’s Message on TTFI:

   The TTFI bill is moving forward. It’s not dead. If it was dead, I would say so. In fact, there are major opportunities in garnering more support for TTFI from various fronts. Addressing the Accidental Americans further is not off the table. These are very good thing.

   If you are able to wait to renounce, please do so and let TTFI run its course. If you are unable to wait, it is understandable.

   Sausage making is a slow process especially on Capitol Hill but this sausage preparation is gong in the right direction.

6. “This gives us an opportunity to open the 2nd front on FATCA IGAs (Inter-Government Agreements) non-reciprocity.”

   I wonder if there is any information about this. e.g. would the aim be to take down the IGAs or to make them reciprocal.

   “The House of Representatives is NOT likely to vote on the TTFI bill which is still expected to be introduced this month. Congressman HOLDING sent his bill back to LCO (Legislative Commissioner’s Office) to amend. JCT (Joint Committee on Taxation) will have to score it again per new provisions. The bill will be attached to another bigger bill in 2019.”

   I wonder if there’s any more information.

   Are there two separate bills?

   (a) TTFI, being possibly introduced this month, and (b) the Holding bill being amended for rescoring and possibly being introduced as part of a larger bill in 2019?

7. ““This gives us an opportunity to open the 2nd front on FATCA IGAs (Inter-Government Agreements) non-reciprocity.”

   I wonder if there is any information about this. e.g. would the aim be to take down the IGAs or to make them reciprocal.”

   Regardless of the aim, recipricocity is the probable outcome.

8. Regardless of the aim nothing’s likely to change. But more information about what the backers of this “2nd front” are aiming for, would be interesting.

9. Interesting commentary on AEOI by a firm of Luxembourg tax advisers.

   “Exchange Of Information Vs Data Protection: A Brave New World Of Transparency”

   http://www.mondaq.com/x/760046/data+protection/Exchange+of+information+vs+data+protection+A+brave+new+world+of+transparency

10. EmBee wrote 12/19/18 on media-and-blog5
    http://patriotrising.com/why-banks-have-become-judge-jury-prosecutor-and-will-shut-you-down-judged-guilty-for-nothing-that-is-actually-illegal/
    Although this article starts out with a reference to the cashless society (another bugbear of mine) the author proceeds to some interesting revelations about banks and in the process he mentions FATCA. Just thought I’d toss this one out for anyone who hasn’t a single other preparation to make for Christmas and is yearning for something to read. BTW, the only Christmas gift I want is for the FATCA and TT nuts to start cracking in the New Year.

11. From the article, this stood out like a sore thumb.

    “If the government can threaten a bank to do what they cannot do directly, they argue they are not the party violating your rights!”

12. @ Mike
    Yep … that’s the US government alright … a worldwide bully. FATCA was a ploy to exert control over all of the banks outside of the USA, not just Americans who dared to leave the plantation. My husband and I are cash users (best for budgeting and not illegal … yet) and hope the day never comes when our accounts are closed because we don’t use a credit card.

13. “From the article, this stood out like a sore thumb.

    “If the government can threaten a bank to do what they cannot do directly, they argue they are not the party violating your rights!””

    I beleive that that is why the FATCA lawsuit was found to have no standing and was thrown out.

    But it brings up another point I keep trying to make, the fact that the US can not do something is not a safeguard if they can force one’s FI to do it for them.

14. Laura Snyder on Facebook:

    Am I the last one to discover that the minimum filing requirement for married filing separately has gone from $4050 (2017) to $5 (2018)? Source: https://www.irs.gov/pub/irs-pdf/i1040gi.pdf p9. Am I the only one to think that this should disproportionately affect US citizens living overseas since they are more likely than homelanders to be married to non-resident non-citizens who are not required to file?

    https://www.facebook.com/groups/AmericanExpatriates/permalink/1155150187984385/

15. @JC – that question (and others she asked me by email) was the inspiration for my recent post

    http://fixthetaxtreaty.org/2018/12/19/tcja-and-us-expats/

16. @Karen

    Presumably this new $5 filing requirement arises from the fact that in the lowest tax bracket, 10% of $5 is $0.50 and so leads to a $1 tax liability. Proof, if further were needed, that nothing is too petty to escape IRS attention.

    The personal exemption elimination for NRAs will be particularly hard on foreign researchers and students on J, F, and similar US visas and who are salaried or who take on perhaps a bit of bar work to make ends meet. For a limited period, two to five years or so, these folk are NRAs for US tax purposes even though they live in the US. In 2017 their US tax on $4,000 of earnings was $0. In 2018 it is $400. (So far this has been almost entirely ignored by the press, but come the 2018 tax filing season, I predict a number of media articles will suddenly ‘discover’ it …)

17. From Congressman Posey’s office today:

    “Rep. Holding will be introducing the “Tax Fairness for Americans Abroad” today. Unfortunately, It is not included in the larger tax bill.”

    John Richardson will be interviewing Solomon Yue of Republicans Overseas today on this development and developments up to date regarding what we should now refer to as the “Tax Fairness for Americans Abroad” legislation.

    Will Americans Abroad get something other than a lump of coal for Christmas? Tune in!

    2018 has been a BIG year of work on #TTFI and tax relief for #Americansabroad. Many people have contributed – thanks to each including @Keith__REDMOND. For an update and summary: @Expatriationlaw interviews @SolomonYue live – 16:00 EST 20 Dec 20 – join us at: https://www.thatchannel.com/

    https://twitter.com/expatriationlaw/status/1075787963286634497?s=21

18. Congressman Holdings TFFAAA discussed on Reddit:

    https://www.reddit.com/r/PersonalFinanceCanada/comments/a89el9/ttfi_bill_introduced_today_great_news_for/

19. @ BB
    Thanks for finding the Reddit discussion.
    I just started watching the IRS Medic video about the Holding bill. I’m posting the link so others don’t miss it.
    

20. 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.

21. “Significant Relief in New Proposed Regulations” (http://www.mondaq.com/unitedstates/x/766196/withholding+tax/FATCA+Significant+Relief+in+New+Proposed+Regulations)

    https://www.irs.gov/pub/fatca/NPRM%20re%20Sections%201441-1474%20Regulations%202018%201212.pdf

    Based on public input, and taking into account the burden-reducing policies described in Executive Orders 13777 and 13789, these regulations propose certain amendments to the regulations under chapters 3 and 4…

    Many U.S. and foreign financial institutions, foreign governments, the Treasury Department, the IRS, and other stakeholders have devoted substantial resources to implementing FATCA withholding on withholdable payments. At the same time, 87 jurisdictions have an IGA in force or in effect and 26 jurisdictions are treated as having an IGA in effect because they have an IGA signed or agreed in substance, which allows for international cooperation to facilitate FATCA implementation. The Treasury Department and the IRS have determined that the current withholding requirements under chapter 4 on U.S. investments already serve as a significant incentive for FFIs investing in U.S. securities to avoid status as nonparticipating FFIs, and that withholding on gross proceeds is no longer necessary in light of the current compliance with FATCA. For these reasons, under the authority provided under section 1473(1) these proposed regulations would eliminate withholding on gross proceeds by removing gross proceeds from the definition of the term “withholdable payment” in §1.1473-1(a)(1) and by removing certain other provisions in the chapter 4 regulations that relate to withholding on gross proceeds. As a result of these proposed changes to the chapter 4 regulations, only payments of U.S. source FDAP that are withholdable payments under §1.1473-1(a) and that are not otherwise excepted from withholding under §1.1471-2(a) or (b) would be subject to withholding under sections 1471(a) and 1472.”

    Seems like the US is trying to fix the FATCA “withholding on non-US-source payments” problem, and at the same time is more or less handing over extraterritorial FATCA for the IGA signer countries to handle.

    Maybe making it easier for any individual IGA1 country to negotiate to bring FATCA due diligence in line with CRS due diligence (i.e. make same-country accounts non-reportable, and/or abandoning the IGA requirement for US-born accountholders to be treated as reportable by default.

    I may be wrong.

22. Jurisdictional restraint! 🙂

23. Lexology article says:

    The United States may be the only developed nation that has not adopted the Organisation for Economic Co-operation and Development’s Common Reporting Standard (“CRS”), which, similar to FATCA, is an automatic intergovernmental exchange of tax and fiscal information system.

    One crucial difference between CRS and FATCA lies in the enforcement mechanism employed by the respective regimes. Under CRS, a financial institution that fails to comply with CRS would be subject to penalties imposed by its jurisdiction of residence, which penalties are generally of a far lesser magnitude than the withholding taxes imposed under FATCA. The elimination of FATCA withholding on gross proceeds narrows the gap in penalties imposed under the two regimes, although the prospect of future foreign passthru payment withholding is disappointing.

    https://www.lexology.com/library/detail.aspx?g=1b8373ce-9e16-4b8a-8eff-40b93a035ee1

24. Democrats Abroad statement on RBT:

    Democrats Abroad welcomes the introduction of H.R. 7358, the Tax Fairness for Americans Abroad Act. H.R. 7358 is not a perfect bill and, coming on the eve of adjournment, it cannot be given serious consideration or debate. That said, it is a milestone for advocates of a switch from the current U.S. system of Citizenship Based Taxation to the globally-accepted norm of Residency Based Taxation (RBT), and raises to attention important issues that Congress must address with hearings in the 116th Congress. The U.S. currently taxes its citizens on their worldwide income, even if they are living abroad. Under RBT, Americans living outside of the U.S. would continue to report their U.S.-sourced income to the Internal Revenue Service but would report income generated in their country of residence – and pay tax on it – only to the local tax authority. Americans living abroad would no longer report income generated in their country of residence to the U.S. Internal Revenue Service. Democrats Abroad has supported a switch to RBT since we were founded over 50 years ago. Over the last two years Democrats Abroad worked in collaboration with other organizations representing Americans abroad to lobby Congress in support of RBT. We are pleased that we now have a framework for building a RBT model that we believe could achieve these important things – facilitate participation by those living abroad temporarily, for decades or for an indeterminate period of time; include provisions for all Americans abroad to transition into “non-residency” status for tax purposes; be revenue-neutral to the federal government; and contain anti-tax avoidance mechanisms to prevent abuse by U.S. taxpayers who are not bona fide residents abroad. We look forward to working with the 116th Congress to develop and introduce a bona fide RBT bill with public hearings into issues impacting Americans abroad ahead of discussions on specific reforms such as the introduction of RBT.

    Democrats Abroad and others have kept potential RBT bill co-sponsors apprised so that they are not at a standing start in January 2019. We are committed to picking up where we left off and carrying on with our work to make the U.S. tax code fairer to Americans living abroad. This not only includes working to introduce RBT, but also to reform the GOP Tax Cuts and Jobs Act to include “transition tax” relief for American owners of small to medium sized businesses abroad and to exempt from FATCA reporting the financial accounts of bona fide Americans abroad in our countries of residence.

    https://www.democratsabroad.org/#menu

25. From https://www.cbc.ca/news/politics/tax-canada-u-s-repatriation-fatca-1.4956687 (as commented on in another thread):

    There are believed to be hundreds of thousands of people with U.S. citizenship living and working across Canada. They include “accidental Americans” who didn’t realize until recently that the fact they were born in a hospital across the border, or to an American parent, meant that they were also supposed to file U.S. tax returns.

    That started to change in 2010 when the U.S adopted the Foreign Account Tax Compliance Act (FATCA). The legislation, adopted to crack down on offshore tax evasion, requires banks and financial institutions around the world to report to the U.S. government the assets of customers who may be Americans for tax purposes.

    In Canada, the banks report that information to the Canada Revenue Agency, which then transfers it to the U.S. The Canadian government has defended the banking record-sharing deal, saying it avoids the prospect of Washington trying to enforce American law in Canada.

    One of the ironies: the Canadian government itself enforced American law in Canada by withholding the Canadian tax refund of Canadian resident Donald Dewees, in order to force him to pay a very large US tax penalty for not filing Form 5471 reporting the Canadian earnings of his Canadian corporation to the IRS.

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