Liberty and justice for all United States persons abroad

The Isaac Brock Society

My Big Fat Belizean, Singaporean Bank Account

Posted on by Posted in Issues regarding US persons abroad 19 Comments

Article in the New York Times.

Note final sentence in the quote below.

“Next year, Washington will enact [sic] the most ambitious tax-recovery plan in history, the Foreign Account Tax Compliance Act. Under Fatca, foreign financial firms will have to proactively identify every American account holder with assets of more than $50,000 and report details about their financial activity or face a significant penalty. The move is very unpopular among foreign banks, governments and Americans living abroad, but the more complex rules could actually mean more business for offshore centers. By the time Fatca is in full force, in 2017, truly wealthy individuals and corporations will almost certainly have used their resources to find more intricate loopholes.”

Full-text at:

http://www.nytimes.com/2012/07/29/magazine/my-big-fat-belizean-singaporean-bank-account.html?pagewanted=all

 

19 thoughts on “My Big Fat Belizean, Singaporean Bank Account”

  1. @Northern Shrike

    From my perspective, this story is significant.

    1.  It is written by Adam Davidson, who is the founder of Planet Money blog on NPR.  Planet Money has done some of the best reporting on the Financial Melt down in association with This American life, and their blog is dedicated to learning, teaching and demystifying complex final matters for the rest of us.  If you want an good introduction to their work, and if there is any fogginess in your mind about the Financial Melt down, I would really recommend this program, The Giant Pool of Money.

    2.  For the past year I have been emailing and tweeting them to try to get their attention on FATCA, and this is the first evidence that NPR proper might be taking note (Previous stories like this one have been by PRI, and played on NPR stories.)

    3. Planet Money is a feed news and story source for the most listened to daily radio news reporting in America (Morning Edition and All Things Considered) with even more listernship than Rush Limbaugh. To be fair, it probably is more of a progressive audience which would favor FATCA if they first heard about it. However, it is widely listened to in conservative states like Alaska, or Nebraska as two examples I am aware of.  Also, over time NPR has lost a lot of the Liberal bias that the Conservatives like to blast them for, and they have really worked to be more balanced in their news stories.

    4. I would encourage all of you, so inclined to try to place comments and help with the education of Adam Davidson.  This is a discovery and evolving process for him, as evidenced in the opening paragraphs.  He is real open to persuasive and civil disagreement with his views, or at least that is what I have observed having listened to Planet Money podcasts since 2008.

    I hope some of you will take advantage of this opportunity.

  3. Had to laugh at this *Jack Townsend description (see below) of a comment by Janet Spragens re IRS behaviour – preferring to oppress and harass minnows rather than looking for egregious whales:

    from http://federaltaxcrimes.blogspot.ca/2012/07/tax-justice-network-worlds-elites-hide.html?utm_source=feedburner&utm_medium=email&utm_campaign=Feed:+blogspot/oGeEWy+%28Federal+Tax+Crimes%29

    Jack says,
    *”Readers of this blog will know that there is much concern that the IRS is disproportionately penalizing “minnows.”  

    I am reminded in this regard of the late *Janet Spragens with whom I had the honor of serving with at DOJ Tax Appellate Section in the 1970s.
     She was a tireless advocate for the taxpayer underdog, often chastising the IRS for going after the smaller taxpayer when there were bigger targets.  (As I recall, she characterized the IRS attitude as being “we
    have smaller fish to fry    ,    ” but alas I could not confirm that as an actual quote by a quite Google search.)?”

  4. Here is what I have posted as a comment.  It is in moderation.  They allow only 1500 characters, so I had to focus on a narrow aspect of the story…  Y

    Thank you for exploring this story in a methodical way. I certainly understand the concerns Homeland Americans have for what is perceived to be tax evasion by the Rich in offshore accounts.  It is an easy subject for demagogues to exploit, as if somehow having an account overseas must mean that something nefarious or unpatriotic is going on.

    Not necessarily so. 

    The FATCA solution, you mention, was passed by Congress in the 2010 Hire Act. As they say, “the road to hell is paved with good intentions!” This particular response is now 388 pages of detailed complex regulations in an attempt to force the entire world’s Foreign Financial Institutions (FFIs) to turn over all ‘U.S. Persons’ account data to the IRS. It is an incredible hubristic extra territorial overreach full of unintended consequences and systemic risks.

    Overlooked by Congress, is the unique nature of US citizenship taxation, and how the IRS designates “U.S. persons”.  A U.S. Person is more than just a Homeland Citizen. It includes accidental Americans by birth who don’t know they are American; Non resident green card holders; Expats living abroad for years; and even non resident Foreigners so classified due IRS rules. All are supposed to be filing returns to the IRS, paying taxes, completing FBAR and duplicative FATCA forms. There are Draconian penalties for failure!

    Impacts?  Increased renunciation of Citizenship. FFIs shedding U.S. Clients as Americans become pariahs. Surprised? More to come, I fear.

    PS…  In my rush to get something posted  on the NYTs, I see my mistake in my first comment above which I overlooked.  I meant to say… “demystifying complex financial matters for the rest of us”

  6. @Innocente..

    I was stunned by this comment… “And it’s only going to get better as Fatca comes in to force.”  My first response was, “Are you nuts?”

  7. @Innocente, Ugh. Reading the last paragraph of that Reuters article is a gut punch. IBS hall of shame candidate for sure. He clearly hasn’t taken the time to understand this. What is it with Reuters? I haven’t read a single intelligent article on any of these topics from Reuters. Their coverage over Denise Rich’s renunciation was especially biased with loaded language and flat-out incorrect ‘facts.’

  8. @Innocente…  so I had to respond to that one.  Thanks for the tip that the blog was there…

  9. Here was my comment:   

    Excuse me??

    “And it’s only going to get better as FATCA comes in to force.”

    I am confused. So, what is going to get better? You said in the paragraph above:

    “As far as US individuals are concerned, no one has yet demonstrated to me that there’s some kind of pandemic of rich people opening offshore accounts.”

    So, there is no problem, but it is going to get better?

    Uh?

    How can 388 pages, so far, of FATCA regulations and rules to search out every U.S.Person in the whole wide world, and make every Financial Institution on the face of the globe, to become a tax reporter to the International Revenue Service (IRS), at huge expense to an already shaky global financial economy, possibly be better?

    Geez, most of these BIG organizations can’t follow the KYC and AML rules already. They are now facing Dodd Frank complexity, and now you want to dump an additional 388 pages of FATCA regulations on top of them and assume that it will “get better?” I hope you are not one of those that never saw a rule or regulation you didn’t like.

    Have you seen the new FATCA form that you, as an individual, have to fill out along with the FBAR form? Duplicative, complexity on steroids, and serious penalties for foot faults.

    Then, it is possible you don’t understand what a U.S. Person is, and how onerous these FATCA and FBAR regulations are.

    Here, just consider what the IRS is requiring under FATCA. Let’s examine what a U.S. Person is…

    When Congress designed this FATCA monstrosity, they forgot about the unique nature of US citizenship taxation, where U.S. Persons get taxed no matter where they reside in the world, and they weren’t thinking about how the IRS designates “U.S. persons”.

    A U.S. Person is more than just a Homeland resident U.S.Citizen. It includes accidental Americans by birth who don’t know they are American; Non resident green card holders; Expats living abroad for years; and even non resident Foreigners so classified due IRS rules. All are supposed to be filing returns to the IRS, paying taxes, completing FBAR and duplicative FATCA forms, with draconian penalties for failure!

    BTW, the rest of the world practices a residency based taxation system, just like the 50 States in the Union. And, for a reason. It is simpler to administer. It is understandable, it is logical, and you are taxed where you live and receive services. It is seen as fairer than taxing a person living in a foreign land. California doesn’t tax an Iowan, just because they were originally born in California and them moved away in later life.

    Impacts of FATCA? Increased renunciation of Citizenship. Banks shedding U.S. Clients as Americans become pariahs. Foreigners refusing to enter into partnerships with Americans as they don’t want their account data turned over to the IRS, Investors getting rid of US financial products. Surprised? You shouldn’t be.

    There is a lot more FATCA Fallout and collateral damage and unintended consequences to come, for a problem that may not really be there.

  10. @Just Me: Felix Salmon of Reuters was a member of JournoList, which KeyWiki describes as “an email group of approximately 400 “progressive” and socialist journalists, academics and “new media” activists.
    JournoList members reportedly coordinated their messages in favor
    of Barack Obama and the Democrats, and against Sarah Palin and the
    Republican Party. JournoList was founded in 2007 and was closed down in
    early 2010.” Possibly a blogger who doesn’t let facts get in the way of his journalistic opinions.

    http://www.freerepublic.com/focus/f-bloggers/2560986/posts

  11. *Felix Salmon is in fact a UK expat living in New York. His boss at Reuters(technically a Canadian company) too is someone named Chrystia Freeland who grew up in Edmonton and whose mother was involved in Alberta NDP politics in the 1970s.  Chrystia Freeland is definitely what they call in the US a talking head. Salmon has also been very critical of both Jim Flaherty and Stephen Harper for criticizing a global bank tax saying they weren’t team players. Felix Salmon also appears a lot on BNN TV in Canada and wrote a very critical piece on Eduardo Saverin for which I believe he might already be on the Wall of Shame.

  12. @Innocente

    Thanks for the perspective..  We need a list of journalist coordinating a campaign against FATCA.  🙂   Looking over the list, I recognize quite a few of them.     and Tim, appreciate the additional back ground.  That helps understanding where he comes from…

  16. Just a note…  I just had a comment removed from this Planet Money Blog as not meeting Community standards.  That is the first for me.  See if you can determine what would upset some moderator… Maybe not enough on subject?  (btw, a similar comment was accepted on another thread, so go figure.)

    I am glad PM is dipping its toe into this subject, as the learning curve is steep. It takes a while to understand that ‘offshore’ to America is often ‘onshore’ to someone else, and one must be careful not to paint with too broad a brush.

    Congress in their infinite wisdom has attempted to crack down on what they assume to be offshore evasion by passing laws like FATCA which will affect your new business. FBAR requirements may now come into play as well. Hire a good attorney!

    FATCA, like all regulations, has many many many negative unintended consequences, and is severely impacting Expats Abroad with many being shut out of normal banking activities. Americans are being seen as pariahs and the worlds financial institutions view it as one of the worst pieces of extra territorial over reach coming out of DC in decades. Frankly it has a lot of systemic Risk issues on top of shaky economic times, as institutions decide whether or not to be compliant with such a sweeping regulation. 

    I would encourage Planet Money to do some Podcasts just on FATCA that is probably more sweeping, in an international sense, then Dodd-Frank. Few Americans know anything about it. But ask any Expat, and they would have a strong opinion.  🙂

  17. @JustMe, your comments were very temperate as always. I’m dubious about whether they’ll really dwell on the Delaware as tax haven angle. I was surprised to see that US tax haven example come up on the blog.
     

    Maybe they should really be investigating whether someone deemed a US taxable person/citizen living permanently abroad can get a US bank account. And then, whether a Swiss-born citizen with a US parent, or a Swiss citizen married to a US person – can get a joint account or mortgage in Switzerland? Or how likely it is that anyone deemed a ‘US taxable person’ living abroad can find employers or business partners who don’t mind having their nontaxable non-US accounts detailed on FBARs?

  19. @ The_Animal
    It’s just a spam pingback that got through the filter. Pacifica or someone deletes these things as soon as they find them.

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