From Accounting Today, Michael Cohn reports that the IRS Issues FATCA Guidance on Reporting Interest Paid to non resident Aliens
The Internal Revenue Service has issued final regulations and guidance on reporting interest paid to nonresident aliens, along with a revenue procedure listing the countries with which the U.S. has a bilateral exchange of information agreement.
So, the speculation that DATCA would not survive might be pre-mature.
The last brick in the foundation of the global Fatca (GATCA) is being cemented in place.
FATCA begets DATCA begets GATCA
I have posted this response. You all are welcome to join in..
Well Michael, I see that DATCA is still not dead. Will be interested to see what the Congressman like Rubio,Boustany,Ron Paul,and the entire Florida delegation that were opposed to this will do. Do I hear “nothing”?
Obviously their letters of protest have had no effect on the IRS or the administration.
As we know, the IRS needs this to make the FATCA reciprocal Tax exchange regime work! In their statements now they are no longer hiding the objective as they were last year. They make it clear that it key to their strategy to overcome FATCA opposition around the world. A global FATCA is being created, and you are one of first and few to know. 🙂
@All, you’re welcome. Once I started, it was very very intriguing. Just Me, it was you who started to point out this train of thought when you referenced the opposition to DATCA in Florida. Had no idea then that Delaware would come up in this context.
p.s. , when you can’t sleep for fear of all this, the internet is always awake.
@Victoria: “If you look at France, for example, they have formally recognized that (gasp!) people leave the country all the time.”
Ah, bring back civil death!
“civil death (the deprivation of civil rights that could be ordered against the emigrant) and on other effects of departure sans esprit de retour, including loss of nationality”
Actually Idaho, New York and Rhode Island still had forms of civil death last time I looked, but that was for the condemned and those sentence to life in prison. Typically they could not marry or execute valid wills.
Some more regarding the State of Delaware as a tax haven inside the US:
http://www.truthdig.com/report/item/bank_of_new_york_case_tests_irs_power_to_halt_foreign_tax_abuses_20120416/?ln
“Bank of New York Case Tests IRS Power to Halt Foreign Tax Abuses”
Posted on Apr 16, 2012
AP/Richard Drew
By Megan Murphy and Vanessa Houlder, Financial Times, and Jeff Gerth, ProPublica
This piece originally appeared at ProPublica.
“In November 2001, Bank of New York, a mid-tier U.S. bank, transferred nearly $8 billion of its own assets to a trust in the small, business-friendly state of Delaware through several layers of newly created companies.”……
http://www.nytimes.com/2012/04/29/business/apples-tax-strategy-aims-at-low-tax-states-and-nations.html?pagewanted=all
How Apple Sidesteps Billions in Taxes
David Calvert for The New York Times
Braeburn Capital, an Apple subsidiary in Reno, Nev., manages and invests the company’s cash. Nevada has a corporate tax rate of zero, as opposed to the 8.84 percent levied in California, where Apple has its headquarters.
By CHARLES DUHIGG and DAVID KOCIENIEWSKI
Published: April 28, 2012
……….”But in Nevada there is no state corporate income tax and no capital gains tax.
What’s more, Braeburn allows Apple to lower its taxes in other states — including Florida, New Jersey and New Mexico — because many of those jurisdictions use formulas that reduce what is owed when a company’s financial management occurs elsewhere. Apple does not disclose what portion of cash taxes is paid to states, but the company reported that it owed $762 million in state income taxes nationwide last year. That effective state tax rate is higher than the rate of many other tech companies, but as Ms. Clausing and other tax analysts have noted, such figures are often not reliable guides to what is actually paid.
Dozens of other companies, including Cisco, Harley-Davidson and Microsoft, have also set up Nevada subsidiaries that bypass taxes in other states. Hundreds of other corporations reap similar savings by locating offices in Delaware.
But some in California are unhappy that Apple and other California-based companies have moved financial operations to tax-free states — particularly since lawmakers have offered them tax breaks to keep them in the state. “…………….
Again, some of the best tax havens are INSIDE the US – in Delaware!
“Hiding Money in Havens Isn’t as Easy as It Used to Be”
By LAURA SAUNDERS
April 5, 2012, 7:55 p.m. ET
http://online.wsj.com/article/SB10001424052702303302504577325991580102990.html
………”For Latin Americans who want to hide money, say experts, the best haven is still is the U.S., using entities with secret ownership often set up in Delaware. The state is also “a favorite location for Eastern Europeans who want to hide or launder money,” Mr. Marchant said. Ms. Sheppard said foreign governments have no access to anonymous ownership information of entities in Delaware. “……….
http://www.financialsecrecyindex.com/2009results.html
“Financial Secrecy Index
Delaware comes in at number 1 – above Luxembourg and Switzerland.
http://www.delawarefirst.org/25075-measuring-impact-carney-jobs-act
“Measuring the impact of Rep. Carney sponsored JOBS Act in Delaware”
By Eve Tahmincioglu
April 5, 2012
“In 2001, 58 percent of Fortune 500 companies were incorporated in Delaware and now the figure is closer to 64 percent. “We’re in first place, but we’re always looking over our shoulder,” he quipped.”….
..”Being the incorporation bigwig has brought Delaware some scorn over the years because critics see the state as being a refuge for companies trying to duck taxes in other states. While companies are often drawn to the state for its business-friendly Chancery Court and its body of corporate law, Delaware also lures businesses because it’s known as “the most secretive financial center,” according to a 2009 New York Times article.
A 2011 paper exploring Delaware’s role as a domestic tax haven published on the Harvard Law School Forum found:
“Delaware is indeed a domestic tax haven in the sense that its corporate laws appear to enable firms to reduce state tax burdens. This reduction comes at the expense of other states and benefits Delaware via nominal franchise taxes and fees.”
To such claims, Geisenberger said, “Every state can write its own tax laws and some states have changed their tax laws. For those states that sit back and say Delaware is taking income from them, my reaction is, ‘change your tax laws.’””….
And if you don’t believe a Global Tax Data Exchange regime (GATCA) is in the making, read this on Ireland. http://bit.ly/JcaSmO
DATCA linked with FATCA, and with mention of what we know – that FATCA was never subjected to a cost/benefit analysis (see GAO site and reports).
“Geithner’s Negligence Appeases Obama”
Tuesday, 01 May 2012 04:12 PM
By Richard Rahn
@Newsmax
and,
“Scaring away investors New IRS regulation will reduce capital available for job creation”
By Nita Ghei
The Washington Times
Friday, May 4, 2012
@Badger…
That Rahn piece was first put up on the Washington Times. I made a comment there too, making the same point on no cost vs benefit analysis done on FATCA either…
thanks @Just Me. It was the first paragraph that really grabbed me :
” “A conscious legislative decision was made not to tax the interest income of foreign citizens – that is, nonresident aliens – and to maintain confidentiality.” “
@All, I’m sometimes not sure what to do with these articles either. I try to fit them into present conversations where there is a connection (and also go back into past threads). Any suggestions welcome, or they could go somewhere else.
@badger…
Well, you have been doing a great job in putting them into appropriate thread streams. I might try adding them as appropriate to an old Media thread I created, just so I have an easy online reference that is not dependent on my operating within my own browser favorites. It won’t be until next week or so. Leaving Sydney tomorrow for LAX and onto SEA, so will be unsettled for a few days.
@Just me
You are amazingly articulate as a writer. I always look forward to reading your comments.
America needs more people like you. Too bad they already lost Petros along with 1,788 others last year. Unfortunately it looks like many more are being forced out the door as well.
Uncle Ben
@Uncle Ben… Thanks for your kind words, but there are many here much more polished than I. I keep reading from them, and try to learn and improve upon my meager efforts.
Has the official push back in Congress really started, or is this just proforma request??
Maybe? We can only hope. If they would kill DATCA, it would really make the birthing of FATCA that much more difficult.
http://bit.ly/JjL1vJ
Congressman Boustany is asking Geithner for answers again. Wonder if he ever got an answer to his first one…??
http://1.usa.gov/ty6cyk
Well, I posed the question before I read the letter…
He responded in an unsatisfactory manner.
Geithner appears to be stonewalling him, just like IRS Commissioner Shulman stonewalled Nina Olson of the TAS when she issued her Tax Advocacy Directive (TAD).
What a classic bureaucratic maneuver. After requiring the entire U.S. Banking industry to report on interest on trillions of dollars of non resident deposits, so it can trade it in the FATCA reciprocal agreement is NOT “a significant regulatory action”, so says Geithner. Only the best and the brightest could come up with that dismissive of a brush off. You can’t make this stuff up!
One wonders, in an election year, if this lack of responsiveness to Congress will become a political issue. One can only hope. The only way to help FATCA be the still born child of Carl Levin, is to remove the reciprocity forceps that this DATCA provides.
This could shape up to be an interesting fight, if Congress has any “you know whats.” 🙂
let me re-post in a thread I can edit… grrr.
@Jefferson. I see you posted a comment at the Accounting Today story on DATCA. Thanks for doing that. Michael Cohn has been very good on consistent reporting on the FATCA/DATCA story, and he deserves well written and measured comments. It shows him that people are reading his efforts. http://bit.ly/JjL1vJ
IRS Non-Resident Reporting Rule Questioned Again by Tax News
This mentions Canadian residents, in connection with US accounts.
@ badger
Did I read that right? They want even Non Resident Aliens to be FATCATed? Wouldn’t that be every Canadian citizen from their perspective? Or do they mean Non Resident Aliens with American spouses? If that is the case then our only alternative is divorce. Or would they keep me in their clutches even then? Maybe my only hope for escape is to catch a Chinese rocket to Mars knowing the USA no longer has the ambition for a manned space flight to that planet. No, that wouldn’t work. They would send drones after me.
Em…
They are talking about the Domestic Version of FATCA (DATCA) to make U.S. banks report to the IRS the interest payments of those depositors in American banks who are non U.S. residents. This so the IRS can turn that information over to other governments to get them to go along with our FATCA requirements…
@ badger
Good to see someone else reporting on this push back besides Michael Cohn of Accounting Today…
Center for Freedom and Prosperity called again for FATCA repeal on the day of the hearings..