Public hearings on FATCA are taking place in Washington on May 15?
http://www.ft.com/intl/cms/s/0/8431a6d0-8d5d-11e1-9798-00144feab49a.html#axzz1taOxefA6
Yearly Archives: 2012
Dutch Finance Secretary sidesteps hostile questions from lawmakers on FATCA
Mondaq.com is running the headline “The Netherlands to join Joint FATCA Statement”. This appears to be lifted from an English-language newsletter issued last week by Amsterdam-based law firm De Brauw Blackstone Westbroek. Don’t get the wrong impression, though — no agreement has yet been negotiated. The most recent news is that Finance Secretary Frans Weekers stated last week (link available in Dutch only) that the Netherlands is open in principle to joining FATCA. But the cross-border services providers have managed to miss (or to bury) the real news. Last week some Second Chamber members submitted written questions to Weekers (also in Dutch only; see here for Google Translate’s rendering). I’ve manually translated some of the interesting bits. I am disappointed by many of Weekers’ responses, both for their attitude towards the democratic process and their apparent lack of understanding about FATCA’s effects on bona fide residents of his country who have no financial connection to the U.S. besides their passports.
A Cautionary Tale
So the U.S. wants to impose a 30% withholding penalty on the U.S. source payments of; interest, dividends and securities transactions that are conducted by non FATCA compliant Foreign Financial Institutions and recalcitrant account holders. Now of course the question is, what happens if there is a mistake that is made by the U.S.? Will you get your money back? I believe that the short answer to that question is, no one knows. What the U.S. may promise to do and what it ends up doing are often two different things. From what I have observed of U.S. policy is that when it comes to returning ill-gotten gains the U.S. doesn’t give everything back. A case in point is the softwood lumber dispute.
In the softwood lumber agreement that was reached between Canada and the U.S. the U.S. only agreed to give back 80% of what it had collected. Now why would you as an investor take a chance that 30% of your rightful financial property could be withheld? What would it cost you in time and effort to get the money that is rightfully yours? What is to stop the U.S. from using this 30% withholding requirement as a means to fund its failed government fiscal policies?
http://www.cbc.ca/news/background/softwood_lumber/
As a person who is not a U.S. citizen this whole legislation introduces a new degree of risk without any financial return possible so why would you expose your precious capital to such a ruinous outcome? With FATCA and of citizenship based taxation the U.S. has just found another way to cripple world capital markets by introducing more regulation and risk. Neither of which will generate a dollar in wealth.
Bank Bailouts in Canada
So now we know that Canadian banks not only received bailout funds (in other words taxpayer money) from Canada but also the US.
Let’s do a thought experiment. What are the implications of this? The loans were repaid, but what if another financial crisis arises and banks have to go begging for money again? Could the US government use it as leverage to force Canadian FIs to comply with not only FATCA but who knows what other crazy laws they come up with?
Thoughts?
Top EPA official resigns over "crucify" comment
Fox news reports that the EPA’s Al Armendariz, after coming under scrutiny for a comment that he made in 2010:
Armendariz made the original remarks at a local Texas government meeting in 2010. He relayed to the audience what he described as a “crude” analogy he once told his staff about his “philosophy of enforcement.” Continue reading
Updated: World Council of Credit Unions on FATCA
Boy unlike the big banks in the FATCA partner countries are they pissed in their comment letter.
A couple of key points:
1. Still very concerned about the remittance issue with credit unions in Central America.
2. Want an almost complete exemption for all credit unions from FATCA.
3. Basically impossible in terms of resources for credit unions to fully comply with FATCA even if they wanted to.
4. Want to be able to accept local resident US Persons without a reporting obligation
5. Significant number of credit unions will be non participating no matter what.
It will be interesting to see how this turns out. The left is always a huge fan of credit unions. I wonder how they will play this.
OVDI video removed – thank God!
In case anybody missed this. The Greenback OVDI video described in this post has been removed.
Good news!
US Senator Rand Paul blocks US Treaty ratification
While this has been metioned prior US Senator Rand Paul has become quite vocal in his opposition to the US Senate ratifying several new tax treaties on what he calls Fourth Amendment grounds. Link below:
Comment gallore
Canada Revenue Agency Competant Authority Services
Hi. I have been meaning to do a post on so called Competent Authority Services office of the CRA in Ottawa. I do suspect there are some limitations in what the CRA can do under the treaty; however, I suspect for those that have renounced (such as Petros) or have lapsed Green Cards I suspect this office can be of some assistance. The CAS office is technically a free service of the CRA; however, it has a reputation for only providing services to the very wealthy and large corporations (something I think is due to the fact they are the only ones that know of its existence). I have linked to several information sheets the CRA has published regarding these services below. The key document to read is CRA information circular IC71-17R5.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmp/wh-eng.html
http://www.cra-arc.gc.ca/E/pub/tp/ic71-17r5/ic71-17r5-e.html#P124_23977
I also linked below to the annual report of CRA CAS below that shows a staff directory of the people who work in this department in Ottawa.
http://www.cra-arc.gc.ca/tx/nnrsdnts/cmp/mp_rprt_2010-2011-eng.pdf
The other key thing to note since 2007 is the US and Canada have a binding arbitration mechanism in their tax treaty. (Historically the US hasn’t liked binding arbitration and Canada is the only country the US has such a mechanism with).
Form 8854, FBAR and the Fifth Amendment
I am making what you could call a “noisy” non-disclosure. I have stated that I do not plan to file FBAR. I am no criminal, but because I’ve not done FBARs in the past, and I plan never to file one, actually filing an FBAR creates a substantial hazard because of its criminal penalties. This is the fatal flaw in the FBAR requirement. If there were only draconian civil penalties, no one could invoke the Fifth Amendment in refusing to file it.