badger
@all, the article below just appeared in the Hamilton Spectator re ‘voluntary disclosures’ . with a glancing mention of FATCA. The authors are from KPMG.
http://www.thespec.com/news/business/article/694426–americans-in-canada-beware-of-irs-bloodhounds
Tue Mar 27 2012
by Jeffrey Brown and Elena Hanson
(“Jeffrey Brown is a partner and Elena Hanson is a senior manager with KPMG’s US and Cross-Border Tax Group in Hamilton.”)
“Americans in Canada beware of IRS bloodhounds”
“Whether they know it or not, most of the roughly one million “United States persons” who reside in Canada remain subject to US income tax. US persons include US citizens, green card holders and even some “accidental Americans” who don’t realize they are subject to US tax. Non-compliance with US tax laws among US persons in Canada remains widespread, according to analysis by accounting firm KPMG, and has recently become subject to intense enforcement by the Internal Revenue Service (IRS). While the time has come for US persons to “get back into the US tax system”, there are alternative approaches to remedy past non-compliance……………”
“…….US persons abroad can favourably correct past non-compliance but the window of opportunity for doing so is closing. For example, beginning in 2014, a new US law mandates that financial institutions outside of the US disclose to the IRS all accounts held by US persons. To achieve the best possible outcome, non-compliant US persons should review their situation with qualified US tax advisers to map out their best approach for becoming and remaining compliant sooner rather than later.”
It only alludes to FATCA: “After 2010, a foreign account disclosure similar to and in addition to FBAR is a part of the US income tax return….”
I’m relatively new to this misadventure. In this context my only bone to pick with the article is the title. It should read “There are alternative approaches to remedying past non-compliance, all of which cost lots of money and LCU’s”.
Thanks Badger. Nothing new in this article. quite misleading title, though.
It is always the same refrain….”To achieve the best possible outcome, non-compliant US persons should review their situation with qualified US tax advisers to map out their best approach for becoming and remaining compliant sooner rather than later.”
…oh, and btw, we just happen to be a “qualified US tax adviser!”
@royaberg and all, not new, but an artifact of how the situation is covered as another set of deadlines approaches. Unhelpful glancing reference to FATCA, – without identifying it by name, acronym or form # which might have helped people to learn more, gather information, and develop some questions – to prepare for approaching an adviser.
Well, it could be worse.. remember the H&R Block[head] BLANKET advice for people?
Part of the accounting profession’s responsibility is to be skeptical, to have a professional skepticism. This is generally useful to identify financial claims that are erroneous or fraudulent.
I wish the accounting profession would adopt the same skepticism towards the legality, the constitutionality, the enforceability, and the jurisdiction of proposed government regulations.
Instead of a blanket “this is how it is going to be, prepare for it” how about this is how to fight it, and this is how to circumvent it, and this is how to ignore it.
@M
I wish for the same thing. Instead all I hear from the accountants is something like “come on in and I can help you comply, take your money, spend lots of the money you saved for retirement and make sure you are ‘onside’ with the U.S. government”.
I’ve felt so embittered by all this but have concluded that it’s just one of those things. I have already moved my investments in the UK to a US-compliant brokerage account. As I understand it, if I ever wanted to sell it and transfer the proceeds into my local building society account, it would under fatca law automatically be withheld at 30% to the IRS and would havr a job ever getting that back…instead, I’m going to effectively write this money off and ringfence it as what I’ll leave my American niece and nephews as their inheritance.
Any remaining savings will go into my local savings account, though it all has to be declared on fbar and 8938. When my parents die, I understand that I could have 30% of this US-sourced legacy withheld if I try to remit to the UK. Again, I will probanly just keep it in the US, ringfenced for my niece and nephews…
I no longer chase money and am now just living in the moment…you can’t take it with you anyway. I want what came from my family to go back to my family, not the government. If I renounced, I understand that my estate would be taxed by 30% if I leave it to US cutizens. I can live simply, it’s not the end of the world.
@monalisa
http://www.sovereigngroup.com
There are alternatives.
Talk to an offshore specialist like the one above. Money is too important to be left to the governments.
I think you are going to see more and more of this type of stories. PR releases essentially from practitioners looking for business. Here is another, less hyperbolic example from Market watch…
http://www.marketwatch.com/story/new-tax-law-looms-for-us-taxpayers-with-overseas-assets-2012-03-27
PRESS RELEASE
March 27, 2012, 10:15 a.m. EDT
New Tax Law Looms for U.S. Taxpayers With Overseas Assets
Foreign Account Tax Compliance Act — FATCA — Is New This Year, With April 17 Filing Date; It Overlaps, But Doesn’t Duplicate, FBAR, Creating Its Own Complex Requirements and Setting Severe Penalties for Noncompliance
You will then see comments like this…
“In many cases, FATCA and FBAR will duplicate each other — but not always,” Mr. Robbins says. “Taxpayers need to understand the different requirements and make sure they are reporting correctly for each regulation. But it will be difficult for them to do that without professional advice.”
Mr. Robbins is available for interviews and can author a bylined article that discusses the details of the new FATCA requirements and the differences between FATCA and FBAR:
and this…
“Given the complexity of FATCA reporting requirements and the severity of the penalties, taxpayers will be hard-pressed to know their exposure or understand what has to be reported. A consultation with a tax professional is essential,” Mr. Robbins says.
For more information, or to schedule an interview or request a bylined article, contact Katarina Wenk-Bodenmiller of Sommerfield Communications at (212) 255-8386 or katarina@sommerfield.com.
It is the FATCA industrial complex at work drumming up business.
@M, thank you for the link. However, I am simply too scared to do anything apart from a completely compliant, full disclosure. I believe that if I wanted to sell off my assets in the fatca-compliant fund that I could open and transfer the proceeds into a new fatca-compliant deposit account to avoid the 30% withholding.
I could also remit my eventual US inheritance to that account and probably get a debit card so I could enjoy access to the money. I also imagine that within five years that there will be a lot more US-compliant products available for me in the UK so I should be reasonably OK, though will almost certwinly have higher charges than in my local bulding society checking and savings accounts.
It’s a pain having these extra complications imposed on me but I believe I can adapt and manage.
@Monalisa FATCA compliance on the part of the bank is to request from you a W9 form if it believes you are a US tax person, and you must prove you are not by alternatively submitting to them a W8-Ben plus some form of evidence that you are no longer US if you have had a US passport, greencard or were born in the US. Up until now (i.e. pre-FATCA ) if you have been fully compliant you will have been submitting your tax returns and FBARs as required, and this year will have submitted 8938 alongside your return. If you have invested in US assets you will have been asked for form W9. In this case withholding does NOT apply to you. The 30% withholding is ONLY on US sourced money paid to an account where the owner is suspected to be a US person and has declined to prove otherwise it is a penalty that a FATCA compliant FFI is obliged to impose on those ‘recalcitrants’ and any non-participating FFIs they happen to pay US sourced funds. Since you seem to have been fully compliant with the IRS regulations so far, the only way you could incur the penalty is if you open an account in a bank that does not sign up to FATCA, and then transfer your funds/investments into it. At the moment this is impossible, because no FFI can actually be fully FATCA compliant until the first of July 2013, when any agreement signed by an FFI with the IRS comes into effect.