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The Isaac Brock Society

1,012 thoughts on “FATCA Discussion Thread (Ask your questions) Part One”

  1. http://www.pwc.se/sv/bank-

    • More time for implementing FATCA
    • Less hard documentation demands
    • Sweden financial institutes need not perform witholding such as QI
    • The personal responsibility for a responsible officer disappears

    Because of these easings, has USA indicated that there is room for a further country-specific exception can be approved together with an establishment of IGA.  An example of an exception which is being discussed are the definitions of pension products and pension companies which can be accomodated outside the local pension system.  (???) . .

    Important in connection is that bringing forth these IGA agreements are a political process.  Finance minister Borg and finance market minister Norman have in a common letter from the finance branch organizations have been challenged to react in this errand.  Today, there are not any indications if, how, or when an agreement for Sweden can land in place.  Withoout an IGA, the FATCA rules must be followed as-is according to the requirements (Jan 2013).  The best advice to companies who are affected by FATCA are currently to focus implementation work on the new customer process and customer identification, which applies to both both IGA and the full FATCA.

  2. http://www.swedishbankers.se/web/bf.nsf/$all/DDD0612C903C0738C12579D000413069?open

    Swedish Bankers Association

    First FATCA agreement in place

    UK became the first country which signed
    the agreement with the american IRS.  For other countries it can be difficult if they are missing a bilateral agreement when FATCA comes into place (2013)

    We hope that Sweden also could get an agreement which makes clear whatever is applicable, says the Bank Association tax expert Ulrika Hansoon, and shows a copy of the British agreement which also has a wide reach attachment with
    exceptions.  Now, tax experts around the world have their work cut out to interpret the contents of the law and negotiate with USA so that the bilateral agreement comes into place for the country’s relevant exceptions.

    Sweden prepares negotations with USA of a bilateral agreeement about FATCA and the Swedish Bank Association provides the finance deparment in preparation work, says Ulrika Hansson, which shows how important it is with an agreement.  Without an agreement, it would be 30 % of many transactions witheld whenever US related transactions occur.

    Americans who live and pay tax in Sweden or Swedes who have green cards can be an object for reporting according to FATCA.  USA’s tax principle is built upon the fact that one is tax responsible in USA regardless of where one lives in the world (nationality principle).  IT is therefore important that countries join double tax agreements with USA to avoid double taxation.  A reporting according to FATCA can mean that these persons are foreced into a discussion of their tax rsponsibility in USA despite that they have been (in the end) truly never been responsible to pay USA tax because of the tax treaty.

    The risk is not what these persons could have predicted.  It is an example why we need a new agreement with the exceptions which are acording to Swedish situations so that they don’t take down companies or persons unnecessarily, says Ulrika.

    Sweden is part of EU—couldn’t the EU do the
    agreement with IRS?

    EU has ongoing dialogues with USA regarding FATCA.   But since EU cannot react and decide for
    member states without unanymous approval it is doomed to failure, says Ulrika.

    But why is there so little talk about FATCA in Sweden?

    No one will disturb customers without reason. 
    At the same time, it must be prepared for different scenarios, she says..

    Without a double tax agreement with USA, is the risk large that tax is taken out in different countries and from different principles.  In USA, it is the nationality principle that reigns, which means that citizens are taxed for their income no matter where the income comes from and where they live. 
    In Sweden, like so many countries in the world, there is the residency principle.  This means that one is taxed where one lives.  It is therefore important that countries go into an agreement with USA in order to avoid double taxation.

    The Bank Association and other interest organizations work to get a confirmation that the law shall not be effective so long as negotations are underway.  We want to know what is happening if we don’t have a double tax agreement in place when FATCA comes into place during 2013,
    says Ulrika.

  3. @Mark twain

    I am always amused at how they so causally refer to the IGA “Cram Down” as a bi-lateral agreement.  That is calling that turd in the punch bowl, ice cream. 🙂

    BTW, where did those quotes from Ulrika come from.  They are not on the Link http://www.swedishbankers.se/web/bf.nsf/$all/DDD0612C903C0738C12579D000413069?open

    and the first one….http://www.pwc.se/sv/bank- comes back with 

    Sorry!

    That page doesn’t exist.xist! Please try one of the following:

  4. looks like my cut paste didn’t work out so well, and I can’t find it now.

    I will leaf through the

     http://www.pwc.se/fatca

    to try to find it.  It looks like there is also a survey there, with lots of info about how FATCA work is progressing at Swedish banks as of Jan 2012.  (15% know FATCA either well or very well) Maybe I look through it later

    http://www.pwc.se/sv/radgivning/publikationer/ar-svenska-banker-och-forsakringsbolag-redo.jhtml

     

  6. December 2, 2012 New York Times piece that I missed along the way (but may be here): http://www.nytimes.com/2012/12/03/business/global/03iht-srtaxfatca03.html?pagewanted=all&_r=0

    …
    Even with the penalties, Fatca is not expected to raise significant revenue for the U.S. Treasury; the Congressional Budget Office forecasts a take of $8.7 billion over 10 years. That is barely a rounding error in an annual budget of more than $3 trillion, and accountants and lawyers treat the estimate with extreme skepticism, anyway.

    What Fatca is expected to raise instead of money, tax specialists warn, are confusion and expense. After widespread criticism of the law’s complexities from banks and expatriate groups — American Citizens Abroad warns on its Web site that Fatca will have a “devastating impact” — the I.R.S. announced in October that it would postpone enforcement by one year, to January 2014. The delay will give those affected by the law time to prepare, time they are expected to need.

    “Every foreign financial institution — insurance companies, fund companies, family offices; it isn’t just banks — has to enter into an agreement with the I.R.S. to do an electronic database search to identify Americans,” said Ian Shane, a tax lawyer at the New York firm Golenbock Eiseman Assor Bell & Peskoe. “From the moment it first came out, tax lawyers said it was mind-boggling.”
    …

  8. In the too funny column…  Where else should I put this?  

    White House petition to deport Piers Morgan soars past threshold

    Could not resist this comment:

    Too funny. Great idea….And, once deported, he is still considered a ‘U.S” person until he officially renounces his ‘Green Card’, so we could still track him via FATCA and make him report all his offshore accounts via FBAR and tax him like he was still living in America. A win win for the NRA and the IRS.

  10. Talk of the Day — Taiwan aims to sign tax pact with U.S. on FATCA

    Taiwan is seeking to sign a tax information exchange agreement with the United States to help local financial institutions meet tax-reporting requirements under Washington’s 2010 Foreign Account Tax Compliance Act (FATCA), according to media reports. The reports said the Executive Yuan has authorized the Ministry of Finance to negotiate a pact with the U.S. Treasury Department that will pave the way for the enforcement of the U.S. act that targets offshore tax evasion by American taxpayers.

    An estimated hundreds of thousands of Taiwan residents with U.S. citizenship or green cards may be taxed under FATCA. Some of them have already begun “adjusting assets” by dispersing them legally to reduce their tax liabilities, financial sources said.

  11. Another story on Taiwan

    Gov’t Will Sign Agreement With the U.S. for FATCA

    Taipei, Dec. 25, 2012 (CENS)–To cope with the implementation of the U.S. FATCA (the Foreign Account Tax Compliance Act) from Jan. 1 next year, the Financial Supervisory Commission (FSC) and the Ministry of Finance (MOF) will seek to jointly sign an agreement with the U.S. Department of the Treasury, in emulation of the practice of Japan, hopefully in the first half next year. 

    Chang Sheng-ford, minister of finance, noted yesterday (Dec. 24) that it is still uncertain whether the Executive Yuan (the Cabinet) will instruct the MOF to sign an agreement with the U.S. for exchange of taxation information, adding that the government will not randomly provide the financial data of overseas Chinese with the U.S. nationality even under the agreement. He assured that that exchange of taxation information will be based on the principles of “specific cases and reciprocity” and there will not be large-scale tax check. 

    Interesting comment above.  Maybe he has not read the Model FATCA agreements, and doesn’t know that in this FATCA CRAM DOWN, know his options are limited, OR Maybe this will be a bit of defiance that will force some changes in FATCA.  We shall see.

  12. New tax compliance law may cause companies to renegotiate agreements with vendors and service providers

    Typical FAT CAT and Fair share meme…  Be smart, Comply nonsense!

    Smart companies are wasting no time in getting ahead of the compliance nightmare known as the Foreign Account Tax Compliance Act (FATCA). Nicknamed ‘Fat Cat’, it was enacted in 2010 to crack down on tax cheats who use offshore accounts and foreign bank secrecy laws to avoid giving Uncle Sam his fair share of taxes on their income.

    But then there was this…

    The price tag for the top 30 foreign banks could be $7.5 billion, says James George Jatras, principal with Washington-based government relations firm Squire Sanders Public Advocacy. Jatras, who also manages RepealFATCA.com, complains: ‘The compliance tab alone, for any large bank, could be millions, if not tens of millions of dollars in compliance costs – quite a hammer to drop for less than $1 billion in ‘recovered’ revenue yearly, enough to run the government for about two hours.’

  13. Just coming back to the article above.  

    I noticed this, and thought I would post it.  


    Get vocal. Consider lobbying to modify the rules to reduce significant risk or cost items, either locally or with the IRS or US Treasury. ‘The costs of mounting a broad anti-FATCA education and lobbying program on behalf of US and non-US industry are miniscule compared to the anticipated compliance costs,’ says Jatras.

    This article really opens your eyes to the compliance complexity, cost and risk associated with U.S. Companies that don’t think any of this FATCA fuss applies to them.  They are sadly mistaken.  Just think of a Boeing now, having to comply with all of this?  Surely there is someone there who is good at lobbying!!  🙂

  14. In Preparing For FATCA, American Government Relations Specialist Tells Jamaican Firms: Stop Wasting Your Money

    A senior government-relations specialist in the United States (US) has declared that Jamaican financial institutions should “stop wasting their money” trying to revamp their operations in preparation for the implementation of the new American tax law, the Foreign Account Tax Compliance Act (FATCA).

    The advice from James Jatras, who also manages the US-based websiterepealfatca.com, comes in the wake of a report in the US that the Treasury Department will miss the January 1, 2013, deadline it had set to publish the final regulations that will govern the new legislation.

    This is the second missed deadline for the publication of the final regulations and analysts say it raises doubts as to whether the new law, designed to track American tax-dodgers worldwide, will be in place by June next year.

    STOP PUSHING NEGOTIATION

    “Stop paying accountants and tax lawyers lots of money to become compliant with rules that don’t even exist yet. Why do you spend money complying with rules that don’t even exist, rules that may never even take effect?” Jatras questioned.

    According to him, the delay is an indication that the US is finding it increasingly difficult to convince other countries to sign reciprocal inter-governmental agreements and said financial institutions in Jamaica and the rest of the Caribbean should stop pushing their governments to negotiate a deal with Washington.

    “This is exactly what Washington wants … . Washington knows they cannot enforce FATCA unless your country and other countries agree to put the shackles on themselves,” he said.

    But it appears Jatras’ advice has come too late for some local financial institutions which, according to Earl Jarrett, the general manager of Jamaica National Building Society (JNBS), have already spent “a lot of money” to engage the services of accountants and attorneys “to help get ready for FATCA”.

  15. and the idiocy continues…

    HM Revenue and Customs Issues FATCA GuidanceBy Amanda Banks, Tax-News.com, London26 December 2012

    The UK has published draft regulations and guidance relating to the US Foreign Account Tax Compliance Act, known as FATCA, following an agreement signed in September to implement information reporting and withholding tax measures.

    Financial institutions will have an obligation under FATCA to transfer information to HM Revenue and Customs (HMRC) about accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest. HMRC will then pass this information on automatically to authorities in the USA. A 30% withholding tax is imposed on the US source income of any financial institution that fails to comply.

  16. Tax-News.com: “HM Revenue and Customs Issues FATCA Guidance”

    http://www.tax-news.com/news/HM_Revenue_and_Customs_Issues_FATCA_Guidance____58886.html

    Maybe this was already posted somewhere. If so, here it is again.

    From the article:

    “Pre-existing accounts, defined as those opened on or before December 31, 2013, become reportable at a threshold of USD50,000, or USD250,000 in the case of cash value insurance contracts or annuity contracts. Reporting requirements will be phased in over a three year period starting from 2013.”

  17. Duh, I didn’t see it posted just above by Just Me. Perhaps I had a bit too much holiday cheer or maybe I’m just getting blind in my old age. Sorry for that. 

    JB

  19. @John Brown…

    Been out all day, and just came back to read this HMRC story, and the most important statement, I think, is the last paragraph, where they explain the weaselly way they are getting around the DATA Protection and Fairness Act.  Here is where those in the UK Civil Liberties groups should be taking them to task…

    A second statement published by HMRC explains that the transfer of information will not breach the UK’s Data Protection Act, as it will comply with a legal obligation created by a Statutory Instrument (secondary legislation passed by Parliament). However, the Act’s fairness requirements mean that account holders should be told that details have been or may be passed on.

  24. @John Brown.

    I love it.  You are beating me to it!!  🙂  BTW, I know the author, George Prior and have emailed back and forth with him a few times.  I have asked for permission to republish the entire interview on ISB. I will see what he says.  If not, I will also post links elsewhere on IBS.  

  25. @Just Me,

    Great! I can’t wait to see what happens when James’ interview gets juxtaposed with some of the pro-FATCA propaganda put out by the Accountancy / Compliance Complex FATCISTs.

       

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