Media and Blog Articles Open for Comments – Part 3 of 11 (Year 2016)

2,818 thoughts on “Media and Blog Articles Open for Comments – Part 3 of 11 (Year 2016)”

1. @Deckard1138,

   I believe it’s trying to calculate how big the fines can be before people will avoid the programs. I had hopped it contained a conclusion about the US programs but it didn’t seem to.

2. http://blogs.angloinfo.com/us-tax/2016/02/17/streamlined-foreign-offshore-latest-scoop/

   In January 2016, the IRS revised the Form 14653, Streamlined Certification of Nonwillfulness for taxpayers residing outside the US as well as the FAQ’s covering the Streamlined Programs.

   “Q. “What facts do I need to include in completing the narrative statement of facts portion of the Form 14653?”

   A. “Provide specific reasons for your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Include the whole story including favorable and unfavorable facts. Specific reasons, whether favorable or unfavorable to you, should include your personal background, financial background, and anything else you believe is relevant to your failure to report all income, pay all tax, and submit all required information returns, including FBARs. Additionally, explain the source of funds in all of your foreign financial accounts/assets. For example, explain whether you inherited the account/asset, whether you opened it while residing in a foreign country, or whether you had a business reason to open or use it. And explain your contacts with the account/asset including withdrawals, deposits, and investment/management decisions. Provide a complete story about your foreign financial account/asset.”

3. @Charl

   So basically write an essay so u won’t be spanked to death on fines but here is the edge of the sword… they will use it against u to suit their purpose… extract more….

   The more people I chat up with… especially retired or about to retire people… have no clues about this tax nonsense… they are american educated… lower to middle class… they have a fantasy of retiring or in the process of… as an american in a foreign country… so their retirement money can stretch… they do not believe me when I tell them about this… some said…. its my money that has been taxed already…. wtf… So I feel better since I am not the only moron who didn’t know any of this…

4. Treasury announces release of 2016 US model income tax treaty with info sharing:

   “The 2016 Model also includes a number of new provisions intended to more effectively implement the Treasury Department’s longstanding policy that tax treaties should eliminate double taxation without creating opportunities for non-taxation or reduced taxation through tax evasion or avoidance.”

   https://www.taxconnections.com/taxblog/treasury-announces-release-of-2016-u-s-model-income-tax-treaty-with-info-sharing/

5. @Bubblebustin – Just landed a comment in there in regards to comments about alleviating double taxation.

   Also, it looks like the 2016 convention for the tax treaty has words in there to permit exchange of information, which also with doublespeak words about not violating member country laws. Maybe these words were about why the US will not reciprocate with FATCA. Or maybe these words are about getting around claims of FATCA tax treaty override.

6. In white text I did not see: Your comment is awaiting moderation.

7. @JC

   Thanks for trying to decipher what the Treasury Department’s trying to do. I wonder what Allison Christians would have to say. Maybe I’ll email it to her in case she hadn’t seen it.

   I don’t know that I’ve ever had any of my comments posted on Marini’s blog.

8. @BB

   Here’s one thing they’re trying to do:

   Article 26 would be broadened to In fact, the provision now would allow such information to be used for other purposes allowed under an MLAT in force between the two Contracting States that allows for the exchange of tax information.

   You know CIA FBI DHS CBP

9. @Bubblebustin,
   Did you find the actual treaty?

10. No, just the blog post referring to it, Neill.

    Frightening, Trish!

11. Looks to be here:

    https://www.treasury.gov/resource-center/tax-policy/treaties/Pages/treaties.aspx

12. Note the new treaty has stuff to punish expatriating companies. Not individuals though.

13. Here is my comment in moderation.

    re: “provide relief from double taxation”

    Here are two circumstances where the tax treaties prevent double taxation:
    (1) US resident with investments overseas
    (2) Non US person with investments in the US.

    In the case of the 8.7 million US persons living overseas, and subjected to US “Citizenship Based Taxation” the tax treaties Guarantee double taxation. For this situation, the overall income and tax liability should be considered. However, this is an area where the tax treaties are profoundly unjust: the tax treaties treat each tax individually and separate from any other type of tax. What this means if that you live overseas in a relatively high tax country, that say your excess of tax you pay on your earnings in that country (Canada, UK, Australia, etc.) over the US rates may not be applied as a credit against taxes the US has that your country does not. Guarantees double taxation: for any tax, any higher tax rate, or any tax by a different name the US tax flows straight on top.

    Why are overseas pensions, paid for with earnings from overseas, taxed by the US? Pure double taxation with disregard for any tax (say Australian tax) paid on the money in the pension fund. The tax treaty also fails in that there is no recognition by Australia for US tax paid on Australian pension because (1) it is Australian source and not foreign to Australia, (2) it is a different name, Australia calls it Superannuation which the US calls it nonqualified pension fund.

    Double Taxation. Compliance is a cost that may be viewed as part of the taxation. You live overseas you don’t have double compliance it is more like compliance squared as the US and the tax treaties oblige the overlay of the 74,000+ US tax code over the tax code of one’s county of residence. The US Taxpayer rights must be amended to include Minimisation of Compliance Costs – as for the US to not consider compliance costs – especially unreasonable compliance costs (and without consideration of $0 in US gov services in exchange) is absurd.

    It is all very unAmerican! It is all a great failure by US “democracy”, US governement, and Congress for US persons living overseas (who are financially forced to renounce US citizenship in increasing numbers by the US government).

    The US should join the rest of the OECD and adapt Residence Based Taxation.

    Also, I see that there are some exchange of information provisions here. No doubt they are attempting to legitimize the information exchange (one way by the way) of FATCA to ameliorate the claim of tax treaty override.

    Any US persons overseas caught up in this must visit the message boards of The Isaac Brock Society.

14. I think it might be this Article 26 excerpt

    ….Notwithstanding the preceding sentences of this paragraph, the competent authority of the Contracting State that receives information under the provisions of this Article may, with the written consent of the Contracting State that provided the information, also make available that information for other purposes allowed under the provisions of a mutual legal assistance treaty in force between the Contracting States that allows for the exchange of tax information.

15. Tricia — yes, the info exchange bit is quite scary.

    Neill — thanks for the link to the full text.

    I’m having trouble parsing Article 17 (pensions) para 2b.

    b) Where a citizen of the United States who is a resident of __________ is a member or beneficiary of, or participant in, a pension fund established in __________, the United States may not tax the income earned by the pension fund as income of the individual unless, and then only to the extent that, it is paid to, or for the benefit of, that individual from the pension fund (and not transferred to another pension fund established in __________ in a transfer that qualifies as a tax-deferred transfer under the laws of __________). In such case, the provisions of paragraph 1 of this Article, which generally is subject to paragraph 4 of Article 1 (General Scope), shall apply.

    It clearly states that the US cannot tax income inside a retirement fund owned by a US expat (resident in the other state, etc). But is that last sentence saying that the US can’t tax withdrawals either (as long as you’re still a resident of that other country)? Paragraph 1 of Article 17 states that pensions can only be taxed in state of residence, and paragraph 4 of article 1 is the savings clause. Why not just generally exempt Article 17 paragraph 1 from the savings clause?

    It’s as clear as mud!

    This is quite different from the current Australia treaty — is it similar to any existing treaties?

16. @Karen. Sounds like taxed when money comes out. Perhaps trying to align with the US system that taxes on the way out. Yet in Australia, there is no tax on the way out unless by lump sum – 10% I believe.

17. JC — I’m not sure what “In such case” refers to. I think what it’s saying is that the US can tax citizens on withdrawals from pension funds (super in Australia), but that the savings clause does NOT operate. If there’s no savings clause, then only the country where you reside can tax pension withdrawals. That is, if you’re resident in Australia when you withdraw from super, then only Australia can tax it. Under current Australian rules, anything you withdraw after age 60 is completely tax free (thanks to John Howard).

    Article 18 paragraph 3 (also excluded from the savings clause) appears to exclude (or allow a deduction for) employer contributions to pension plans (and possibly salary sacrifice employee contributions) from US tax as well.

    So, my quick read is that adopting this model treaty would fix the superannuation problem in the Australian treaty.

    CBT is still morally wrong, but fixing the retirement plan problem will go a long way to getting other governments to look the other way while the US taxes their citizens and residents.

18. 4 Tips for Expats Filing Taxes in 2016
    http://time.com/money/4213768/expat-taxes-2016-fatca-tips/

19. http://www.forbes.com/sites/robertwood/2016/02/18/dear-mrs-obama-why-i-gave-up-my-u-s-citizenship/?utm_source=followingimmediate&utm_medium=email&utm_campaign=20160218#6c0c38d24429

20. Interesting looking book with lots of FATCA mentions:

    Tax Strategy vs. Countermeasures By Naoki Matsuda

    I look to be able to see a lot of it on google books.

21. The biggest loophole of all
    Having launched and led the battle against offshore tax evasion, America is now part of the problem

    http://www.economist.com/news/international/21693219-having-launched-and-led-battle-against-offshore-tax-evasion-america-now-part

22. Professor Christians has been working on an article since the proposed changes treaty changes were released last May, and is now reviewing it in the context of the final version.

    So grateful for her analysis and input.

23. @Tom
    Pisses me off that they speak of Europe being “outfoxed” by America. It was not outfoxed- it was BULLIED into compliance. They never end trying to make America sound benevolent.

24. @charl
    Loved that letter! GREAT.

25. @Polly

    Actually, they sold out to the big banks. They could have easily enough set up their own clearinghouse and they would not need the U.S.A., instead of going through the Continuous Payment Settlement Bank in New York City. CPS Bank has direct accounts with 18 central banks. Without an IGA such a bank could be set up anywhere, and especially operating with the smaller central banks, making their currency liquid anywhere.

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