Liberty and justice for all United States persons abroad

The Isaac Brock Society

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

  2. Lazy journalists. Not one of the stories I have seen on this topic gives the reader an accurate impression of the whole story.

    Wegelin, in anticipation of a DOJ attack, moved pre-emptively to transfer about CHF 21 billion of the non-US related accounts to a Liechtenstein subsidiary and then sold that subsidiary to Raffeisen for about CHF 500-600 million. (http://www.reuters.com/article/2012/01/29/wegelin-assets-idUSL5E8CT08F20120129) 

    The iexpats story says that Wegelin attracted $1.2 billion from US customers which would have been the part of the bank that was not sold and is the bit that will be ultimately closed. I can’t imagine any scenario where a customer would have left those assets in the less than 5% of Wegelin that remained after the sale of the non-US business.

    “DOJ forces closure of shell company” would probably be a more accurate headline but does nothing to increase the desired level of paranoia.

  3. @Edelweiss

    You make some good points.  I have been reading about this story, and keep looking for the “real reasons” or Leverage point that caused this capitulation and guilty plea.  It certainly make for a good headline, to try to tie FATCA to this, but I don’t think we do ourselves any favor by mis-characterizing something that really had nothing to do with the indictment, IMHO.  Probably should do an entire post on it, and let some legal experts weigh to better educate me. I have been reading the indictment, the SDNY press releases and the Plea agreement, and I still don’t quite understand why the guilty plea to something, that in theory anyway (as I understand it), has no jurisdiction over you.

    and if you want to talk about paranoia, I can imagine there is some discomfort for Homeland Whales who are not inside the OVDP/OVDI programs if they read this from the Plea agreement.

    “Wegelin agrees to preserve all documents, including electronically stored documents, concerning any U.S. taxpayer and any account opened, directly or indirectly, on behalf of a U.S.taxpayer or on behalf of a corporation, foundation, trust, or other entity or structure with a U.S.beneficial owner, including, but not limited to: (a) all account-opening documents; (b) all documents concerning the beneficial owner of any account; (c) all documents reflecting any transactions in any account; (d) all documents reflecting any correspondence or communications concerning the account or transactions in the accounts; and (e) all internal correspondence concerning the accounts, pending further instruction by Wegelin’s primary regulator or other authority. Within three days of the execution of this Agreement, Wegelin shall detail to the Government the manner in which such documents have been preserved.”

  4. @Edelweiss

    Another article on Wegelin

    Guilty plea by Swiss bank with no US presence sets mark in US global tax evasion attack

    Note, how often stories quote Scott Michel.  He is the ‘go to’ guy for all things “offshore” for journalist that don’t want to dig any further.  He was also the one NPR went to, for their story on Havens turning Hellish  I could site many other examples, like the JofA article that doesn’t publish comments without fawning praise for their views.  Just wanted you to note and pay attention when you see his name, as the  both the FCC, (FATCA Compliance Complex) and Journalist both defer to his analysis.

     
    BTW…Same is true for Jeffery Neiman. However, don’t expect any insights on his blog, as he has mostly been silent recently.  Too busy consulting with vicitims of previous indictments and the Offshore Jihad that he inadvertently started when the IRS piggy backed of this success to rollout and market their first OVDP

    “This case shows that the Justice Department can and will go after banks with no footprint in the US, and make life so uncomfortable for them that they decide on a settlement, rather than be a corporate fugitive,” Scott Michel, a tax attorney with Caplin & Drysdale, in Washington, DC, told ACFCS.org.

    “Here you have a Swiss bank pleading guilty to a crime that doesn’t exist in Switzerland,” said Jeffrey Neiman, principal of Neiman Law in Ft. Lauderdale and a former federal prosecutor who played a leading role in the prosecution of the huge Swiss bank, UBS, for luring and harboring more than 50,000 US taxpayers in a plot to evade their US taxes.

    Also notice,  most everything in this story comes directly from the plea agreement, or the SDNY press release. 

  8. @Edelweiss

    In case you didn’t seen this..

    InnocenteJanuary 11, 2013 at 4:13 pm

    An editorial in this week’s “Weltwoche” discusses the Bank Wegelin guilty plea and makes the following comment (translated):

    “Power is the law. Hummler and Bruderer (two lead partners of Bank Wegelin) are the first known victims of a new kind of phenomenon, which indicates a return to the Middle Ages. For the first time a company was destroyed under foreign pressure although the said company had broken no law in the country in which it was located and did business. The territorial sovereignty of the Swiss legal system was out-muscled. The principle of double incrimination was not valid. 

    American power has forced American law into place between Zurich and St. Gallen. It was like it was under feudalism in the Middle Ages: the territory did not determine which law was in force, rather the inescapable personal relationship of the vassal to the liege lord was authoritative, which in this case is the relationship of the American taxpayer to his government.” 

  10. A bit dated, but I don’t think we have it recorded here…  From The Economist….

    Learning the FATCA life

    New rules will bring new problems

    Even what is seen by Conservatives as a Liberal publication calls it right…

    The rules appeared to turn foreign banks and fund managers into a combination of private detectives and stool pigeons. 

  11. *Well, I filed my last US tax return in 1976, right after we became Canadian citizens and took the Canadian citizenship oath which, at that time, included renoucing all other citizenships.  And…I included a letter to the IRS informing them that we were no longer US citizens and that this was to be the last US tax return that I would be filing.  This is all they will be getting from me in the way of paperwork, money, or anything else.  Ever.  Period.

  14. Have you seen this letter?

    http://www2.canada.com/news/canada/featured+letter+canadian+shelters+offer+refuge+from+uncle/7818820/story.html?id=7818820

    ‘”Featured letter: Canadian tax shelters offer no refuge from Uncle Sam” Edmonton

    Published: Monday, January 14, 2013′
    …….”Canada is unlikely to influence the way the U.S. treats its citizens
    abroad, but the Canadian government should not be complicit in making
    life miserable for any of its law-abiding dual-citizen residents. If
    Canada is pressured into implementing the U.S. FATCA regulations, this
    should come with a complete amnesty from the U.S. with respect to past
    foreign trust filing requirements for Canadian government-registered
    TFSA and RESP accounts, and also the opportunity to close all such
    accounts without penalty from either the U.S. or Canada    .”……….

    Finally someone points out in a public newspaper that Minister Flaherty and the Harper government will be COMPLICIT if they enter into an IGA, especially knowing that their pet TFSAs and RESPs (and the other registered savings) are punished by the IRS, and cannot benefit those treated as second class Canadians and permanent residents who the US holds fast and refuses to let live an ordinary life like their fellows here, and inside the US.

  18. Banks Fear Poor FATCA Records Will Cost Them Dear

    Two-thirds of foreign banks fear they might face financial sanctions from the US tax authorities because they cannot identify their clients to comply with FATCA.

    The problem is poor data management by banks and other financial institutions is leaving them with a struggle to identify their clients as the global tax law come into effect.

    They have until January 1, 2014,  to ready themselves for the Foreign Account Tax Compliance Act (FATCA).

    This legislation compels foreign financial institutions (FFI) to register with the Internal Revenue Service (IRS) and reveal details of any US taxpayer with more than £31,000 in their accounts.

    Failure to do so will lead to harsh financial penalties, with US authorities withholding a 30% tax on all transactions related to the FFI involved.

  19. @badger

    Bill Rozeboom made some very good points and also shows some chutzpah in suggesting that Canada when bending over to the extortionate demands of the US, Canada should at least insist that the IRS provide amnesty to USP’s for past non-filing of TFSA and RESP accounts. I suppose this would entail the taxpayer repaying the Canadian government what they saved in tax on these accounts when they are closed? This is a mess of such gargantuan proportion, that no negotiation could ever soften the blow to USP’s in Canada. There will be suicides, I am sure of it.

  20. The following is the beginning of a comment made by Joseph Zernik, originally posted here on this FATCA thread an hour ago.

    However, I moved the entire comment to the”Consulate Report Directory” thread as the subject matter of his question and the bulk of his comment deals with his consulate experiences.

    Please note his summary points (1), (4) and (5) concerning FATCA.

    “13-01-15 Ongoing honest services fraud by the Jerusalem, Jerusalem Consulate of the United States, in re: Adminitration of Oath of Renunciation of US Citizenship.

    Any suggestions would be greatly appreciated.  In particular, I am interested in hearing from others that were denied the right to take the Oath of Renunciation of US Citizenship, and how they may have handled the situation.

    Joseph Zernik, PhD

    Human Rights Alert (NGO)

    123456xyz@gmail.com

    Summary
    The case below shows the real nature of FATCA, a law that has not been promulgated, that conflicts with the laws of other nations, and which promotes lawlessness and deprivation of rights of US citizens abroad.

    1) on January 1, 2013, my accounts in the Israeli Bank HaPoalim, holding some $250,000 were seized.  These accounts had no investments in securities, US or otherwise, and had no reporting duty.  Regardless, the total funds in the accounts were seized by the bank with no basis in the law of either Israel or the United States.

    2) On January 7, 2013 I appeared for a scheduled appointment in the US Consulate, Jerusalem for renunciation of US citizenship.  I was interviewed by a person, who represented himself as “Consul Kirk G Smith”.  Another appointment was scheduled for January 14, 2013, for administration of the oath of renunciation.

    3) On January 14, 2013, I appeared before  “Consul Kirk G Smith” for the administration of the oath of renunciation.  Upon review of the conduct and records, one would conclude that the Consulate in Jerusalem engaged in fraud, through the deliberate administration of invalid oath of renunciation, and the issuance of simulated records.

    4) On January 14, 2013, I tried to open a new account with the Israeli Bank HaPoalim, as a non US citizen, and my request was denied.  The Bank refuses to respond in writing, or on what legal basis.

    5) On January 14, and January 15, 2013, I tried to open a new account with the Israeli Bank Leumi. My request was denied, and the Bank refuses to provide written explanation,why my request is denied.

    Some suggest that it is retaliation for my social activism. Maybe, but such lawless conduct would never have been possible absent the false appearance of legality under FATCA.  The true nature of FATCA has not much to do with tax collection, but as a means to control the banks of other nations and in particular, to unlawfully control US citizens abroad.

    The striking feature of FATCA in this story is how well FATCA works, only days after the date of its purported effectiveness, in conjunction with various other unlawful fraud and retaliation measures by the US government.” … continued on Consulate Report Directory thread.

    The remainder of Joseph’s comment deals with his consulate experience.  So, please reply to that on that thread.  And please reply to the FATCA aspect here. Thanks!

  21. @badger…

    Yes, sadly enough, there will be suicides. It is the unfortunate outcome over overly zealous prosecution which is part of our culture…

    Aaron Swartz’s Unbending Prosecutors Insisted on Prison Time

    Replace ‘Prosecutor’ with IRS and ‘Prison Time’ with OVDP, and come FATCA hunt down, tag and report, we will have some folks whose despair will be so manifest.  More unintended consequences from the righteous and religious furor of the FATCAnatics who think they are on a mission from god in their WOOTE, War On Offshore Tax Evasion. 

  22. *How about the government of Canada doing something useful and compiling a list of all U.S. expatriots (ie those taking the Canadian citizenship oath that explicitly required renouncment of all other citizenships), dumping this on the U.S. State Dept, and requesting that it be recognized under U.S. law (as it presumably is under Canadian law) as a requirement for implementing FATCA?

  23. @Woofy

    Did Canada ever require a person renounce all other citizenships when becoming Canadian? If they had, it would be unilateral and not expected to be recognized by the US as an expatriating act. Just as when someone naturalizes in the US, they renounce all other citizenships but Canada will still recognize them as Canadian citizens. Besides that, Canada would have to be able to withhold something from the US in order to attain any leverage in negotiating FATCA, which the US would probably laugh at.

  24. *FYI,  Just received this update from Democrats Abroad via e-mail:

    Dear
    Fellow Democrat Abroad,

    It
    has been a while since we last reached out to you, but the pressure of the 2012
    election and the holidays did slow us down. And now that we are approaching
    President Obama’s second inaugural, we feel it most appropriate to reach out to
    you with this brief report.

    In
    mid-November, four groups representing overseas Americans (Dems Abroad, Association of Americans Resident Overseas,
    Federation of American Women’s Clubs Overseas and American Citizens Abroad) met
    for an hour with senior IRS and Treasury officials. Joe Green represented Dems
    Abroad and also had meetings with the Taxpayer Advocate and the IRS assistant
    deputy commissioner for service and enforcement.

    As
    you may recall from our previous reports, the IRS has two existing voluntary compliance
    programs for delinquent tax filers; these are intended to reach out to US
    “persons” (a very complicated term indeed!) who may have significant
    unreported income and/or accounts and who wish to avoid potential criminal
    action by paying the fines and penalties imposed by the IRS.  These programs
    are aimed at helping delinquent tax filers who may have considerable unmet tax
    obligations.

    But
    the IRS also understands that there are a number (many, some, at least a few)
    of us whose failure to file does not reach the size or complexity that is
    anticipated by the official voluntary disclosure programs. So, this past August
    (and now in effect for the 2012 tax year) the IRS announced a less onerous
    amnesty program for what the Service calls low-risk non-filers.

    The
    details of this option (called “New Filing Compliance Procedures for
    Non-Resident U.S. Taxpayers”) can be found at the following IRS website:

    http://www.irs.gov/uac/IRS-Announces-Efforts-to-Help-U.-S.-Citizens-Overseas-Including-Dual-Citizens-and-Those-with-Foreign-Retirement-Plans

    “The
    IRS is aware that some U.S. taxpayers living abroad have failed to timely file
    U.S. federal income tax returns or Reports of Foreign Bank and Financial
    Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently
    become aware of their filing obligations and now seek to come into compliance
    with the law. The Service is announcing a new procedure for current
    non-residents including, but not limited to, dual citizens who have not filed
    U.S. income tax and information returns to file their delinquent returns…

    “The
    IRS will determine the level of compliance risk presented by the submission
    based on certain information provided on the returns filed, and based on
    certain additional information that will be required as part of the
    submission.  Low risk will be predicated on simple returns with little or
    no U.S. tax due.  Absent high risk factors, if the submitted returns and
    application show less than $1,500 in [US] tax due in each of the years, they
    will be treated as low risk. In general, the risk level will rise as the income
    and assets of the taxpayer rise, if there are indications of sophisticated tax
    planning or avoidance, or if there is material economic activity in the United
    States. Additional risk factors include any additional history of noncompliance
    with United States tax law and the amount and type of United States source
    income.”

    Slightly
    more detailed, but perhaps more complex “Options Available to Help
    Taxpayers With Offshore Interests” may be found at this IRS website:

    http://www.irs.gov/Individuals/International-Taxpayers/Options-Available-to-Help-Taxpayers-With-Offshore-Interests

    Please
    note the following admonition on the above website: “The IRS reminds
    taxpayers to consult with their professional tax advisor in determining which
    option is the most appropriate given their facts and circumstance.”

    While
    using a tax preparer can be burdensome, and while there are tax-filing sharks
    in the international waters (beware!), we may have to conclude that IRS
    compliance will likely involve a financial cost associated with the privilege
    of living abroad.

    For
    those overseas Americans who have not been filing and who fit within the IRS’s
    definition of low risk, this recently announced option could bring some relief.

    We
    also want to tell you that, while the implementation of the FATCA regulations
    is still being worked out amongst and between the IRS and various foreign
    governments and financial institutions, the threshold for reporting financial
    holdings by overseas Americans has been raised to $400,000 US for single filers
    and to $600,000 for joint filers.

    We
    must reiterate as we close this update that we cannot offer tax advice and
    neither do we maintain a list of tax consultants..

    We
    will bring you further updates as our work with IRS, Treasury and Senate and
    House members and staff continues.

    With
    best regards for peace at home and abroad in the new year,

    Democrats
    Abroad FBAR/FATCA Task Force

     

  25. While using a tax preparer can be burdensome, and while there are tax-filing sharks in the international waters (beware!), we may have to conclude that IRS compliance will likely involve a financial cost associated with the privilege of living abroad.

    or NOT!

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