The battle over the domestic DATCA has truly begun in earnest and in public
Two banker groups sued the U.S. challenging rules that require financial institutions to report information on accounts held by nonresident aliens that may be shared with 72 foreign governments.
The Texas Bankers Association and the Florida Bankers Association, in a lawsuit filed today against the Treasury Department and the Internal Revenue Service in federal court in Washington, said the rules are discouraging investment in the U.S. by nonresidents who fear their information may be shared with the governments of countries including Egypt, Pakistan and Venezuela.
The IRS bulletin they are talking about, is the DATCA lite, which was the first step in the push for a domestic DATCA. IRS bulletin 2012-20
Update: April 24, 2013 Here is a link to the PDF lawsuit filing.
Which has now been followed by Treasury’s addition of full FATCA reciprocity (DATCA) in the Obama’s 2014 budget Analytical Perspectives: See page 202 (spacing and highlighting below for clarity)
Provide for reciprocal reporting of information in connection with the implementation of the Foreign Account Tax Compliance Act (FATCA).—In many cases, foreign law would prevent foreign financial institutions from complying with the FATCA provisions of the Hiring Incentives to restore Employment Act of 2010 by reporting to the IRS information about U.S. accounts.
Such legal impediments can be addressed through intergovernmental agreements under which the foreign government agrees to provide the information required by FATCA to the IRS requiring U.S. financial institutions to report similar information to the IRS with respect to nonresident accounts would facilitate such intergovernmental cooperation by enabling the IRS to reciprocate in appropriate circumstances by exchanging similar information with cooperative foreign governments to support their efforts to address tax evasion by their residents.
The proposal would provide the Secretary of the Treasury with authority to prescribe regulations that would require reporting of information with respect to nonresident alien individuals, entities that are not U.S. persons, and certain U.S. entities held in substantial part by non-U.S. owners, including information regarding account balances and payments made with respect to accounts held by such persons and entities.
@ just me … yes I know Allison… actually the link to her blog is :
“The TJN are ideologues, so I fear having a rationale conversation is probably pointless, but we should try”.
The TJN are, as you say, ‘ideologues’ and destined forever to be ’tilting at windmills’…”The phrase is sometimes used to describe confrontations where adversaries are incorrectly perceived, or to courses of action that are based on misinterpreted or misapplied heroic, romantic, or idealistic justifications.”
Why else are they ignoring the real injustice of extraterritorial taxation, unless they believe that every nation should adopt it also?
I just added an update to this post.
It is a link to download the PDF lawsuit filing in DISTRICT COURT FOR THE DISTRICT OF COLUMBIA
Or here is the file if you don’t want to scroll to the top: http://isaacbrocksociety.ca/wp-admin/post.php?post=17782&action=edit
To: Finance Department of Sweden: Anders Borg, Susanne Ackum,
Cc: Tax ledamot: Leif Jakobsson (S), Henrik von Sydow (M), Andrén, Gunnar (FP)Folkpartiet , Pertoft, Mats (MP)Miljöpartiet (Green), Alfsson, Thoralf (SD)Sverigedemokraterna, Ceballos, Bodil (MP)Miljöpartiet, Olle SCHMIDT Folkpartiet, Sophia in ‘t VELD (European Parliament)
cc: Dagens Industri, Aftonbladet, GT Expressen, Sydsvenskan, Göteborgs Posten
Regeringen FATCA negotiations enforce Financial Spy activities upon Sweden & EU
I understand that the one advantage of a FATCA Inter-Governmental Agreement id the benefit that the US threat of punishing Swedish banks with a 30% with-holding fee will not become actual.
However, with the IGA agreement, Swedish banks still incur enormous costs in complying with USA laws.
The next disadvantage is that Sweden will ensure that its dual citizens perform financial espionage upon Swedish persons and institutions. Below is a list of financial spy activities that are required of the US persons living in Sweden. Each of the required espionage activities must be performed by US persons in Sweden, under the penalty structure listed. These penalties are to be collected by Sweden according to the tax treaty regarding collections of USA taxes in Sweden. With FATCA, US PERSONS IN SWEDEN ARE REQUIRED TO PERFORM FINANCIAL ESPIONAGE and report all Swedish confidential information to the IRS. Swedish local law is NO EXCUSE.
FBAR: Penalty: $10,000 per violation (per account per year?, retroactive 6 yrs) if proven that it is not willful. Willful: the greater of $100,000 or 50 percent of the balance in the account
8938, Penalty: $10,000.
Form 8621, Penalty: $10,000
Form 3520, Penalty: greater of $10,000 or: 35% of the gross value
Form 3520a: Penalty: $10,000 or 5% of the gross value. Also criminal
The private financial information of all family members (those who share joint accounts with the US person) will be reported to the IRS, even if they are full Swedish persons and have no US personhood. See section 3 of the FBAR foreign “joint accounts”. Also, trusts which are set up by US persons for elderly Swedish in-laws or any children must be reported.
The private financial information of a Swedish volunteer organization must be reported to the IRS by any US person who may have volunteered to help pay the bills. See sec 4
The private financial information of a Swedish corporation must be reported to the IRS by any officer or person signing corporate checks.
Effect of Swedish jurisdiction laws: The fact that a Swedish jurisdiction would impose a civil or criminal penalty on you if you disclose the required information is not reasonable cause (for not reporting to USA).
Form 8865 –Swedish partners: Penalty: $10,000 failure to file penalty per year per person
Form 5471 –a 10% or more shareholder in a Swedish corporation. Penalty: · $10,000
A US person living in Sweden is required to report the private financial information of the Swedish Company to the IRS, Regardless that the company is majority owned by full-Swedish persons.
Form 926, Penalties: 10% of the property transfer, up to $100,000 although unlimited if to “intentional disregard.”
A US person in Sweden must report loans made to a corporation in Sweden to the IRS, even if owned by full-Swedes.
Don’t forget the a US person is
–A Swedish citizen, born in USA of Swedish parents, while living temporarily in USA
–A Swedish citizen, born in Sweden, with one US parent, who has lived his entire life in Sweden
–A Swedish citizen, not a US citizen at all, who has a green card which he has not paid $450 to USA to renounce
–A Swedish citizen, living in USA, who needs a bank account to receive rent payments upon his rented house while on expatriate work assignment for Volvo in USA
In order to renounce US personhood, one must pay $450 and sign documents under perjury that one has fulfilled all tax obligations for the past 5 years—ie, for a Swedish person to renounce his old USA green card (visa), he must attest that he has performed the above financial spy tasks.
Are you ready for Swedish banks to begin forcing US persons to perform financial espionage in Sweden? Are you fully aware that you are negotiating to REQUIRE FINANCIAL SPYING upon your fully Swedish citizens and full Swedish businesses and volunteer organizations? Are you still getting ready to sign up for the FATCA Intergovernmental Agreement?
oops, wrong window, I’ll go over to the Veld window and repost
Clever argument. I will leave it here too.
@ Swedish Citizen
“–A Swedish citizen, not a US citizen at all, who has a green card which he has not paid $450 to USA to renounce.”
Sorry but that’s not correct. Green card holders do not renounce or pay $450. They are supposed to submit an I-407 (Abandonment of Legal Permanent Residence Status) to the USCIS. Green card holders are “aliens” not U.S. citizens.
oh well, might lose some effect if they actually wanted to check up on the facts. In Sweden, they will go back to the coffee room without bothering to take their thumb out of their a_s
@Bubblebustin just posted this.
More on the Florida and Texas bankers association lawsuit against the IRS and US Treasury, as it relates to this post:
“The rule means the agencies would send account information to foreign depositors’ home governments in a gamble to trade information about U.S. citizens similarly avoiding taxes.”
The US is in a gamble that they’ll receive information about US persons holding foreign bank accounts? Au contraire, mon ami.
It’s interesting to see how this story is developing as the days pass. This article in a Texas newspaper, the Freestone County Times of Texas, makes NO mention of FATCA, no mention that US bank’s requirement to disclose data to the IRS has anything to do with providing reciprocity stemming from US legislation. Of course, to mention FATCA would be to introduce the topic of offshore tax evasion, something I’m sure the Texas Bankers Association would rather not mention in swaying public opinion in their favour. Of course, foreigners would only deposit money in US banks for noble/safety reasons, and the US is happy to accommodate! Have to give it to the US for being the masters of spin.
“The complaint argues specifically that Treasury and the IRS failed to adequately consider the economic impact stemming from the significant outflow of bank deposits from the United States, which will (and already have) been the result of the new regulation.
Many foreign bank customers would rather withdraw their deposits and close their U.S. accounts than be subject to a rule requiring that their personal accounts and investments be reported to the IRS and shared with their home governments as is specifically planned under the new regulation.
Foreign accountholders place money in U.S. banks for several reasons: fear about crime/security in their home countries; lack of trust in their governments or financial institutions in their home countries; and their view that the U.S. is a reliable place to keep their money. For Mexican nationals, there is a fear of their financial information getting into the wrong hands, resulting in kidnapping, extortion and other crimes.”
Florida Bankers Association say it’s not for secrecy, so why do they worry so much about capital flight?
“There is just no need for this across-the-board process of automatic filing and international exchange,” Florida Bankers Association president Alex Sanchez said in a statement. “Interest earned on these deposits is not subject to federal taxation in the United States, and all bank accounts are already subject to IRS and broader governmental access through individual administrative requests.”
Treasury officials have said that the bankers’ fears are overblown. They argue that foreigners put money in U.S. banks for the stability of American financial institutions, not for their secrecy.
Federal officials also claim the rule is needed for reciprocity. A 2010 law requires foreign banks to report interest paid to U.S. depositors, who are then liable for U.S. taxes on that income.
Florida officials estimate that deposits in Florida banks from international customers living abroad top $15 billion. In South Florida, that money represents as much as 30 percent of deposits, bankers say.”
Sorry, actually it’s the US Treasury who argues that it’s not for secrecy that foreign depositors use US banks. I guess, the FBA knows a lot more than Treasury does…
“……..What’s more, some competing banks in Mexico are even advertising the change, and Canadian banks could benefit, too, as they do not have legal obligations to inform Mexico City of depositors’ information……..” http://www.bizjournals.com/austin/blog/morning_call/2013/04/irs-rule-could-impact-up-to-25b-in.html
It will be ironic if Canadian banks profit from DATCA – attracting the accounts that ‘foreign’ depositors pull out of Florida and Texas banks for fear of DATCA.
Do others here agree that this lawsuit is our best hope in derailing FATCA?
“The lawsuit, filed Thursday against the U.S. Department of Treasury and the Internal Revenue Service in the U.S. District Court in Washington, seeks a judgment that the new regulation is in violation of a federal law, the Administrative Procedures Act and Regulatory Flexibility Act, which requires a cost-benefit analysis.
The banking associations in the two states said in a news release that they believe the federal agencies failed to adequately do an economic analysis for the Foreign Account Tax Compliance Act. They also said their members are seeing an outflow of deposits as nonresident customers close their accounts, worried about disclosure of their banking information to their home governments.
The loss of deposits reduces banks’ capacities to make commercial loans, the bankers associations said. They said that in addition to losing deposits, the cost of complying with the federal reporting regulation is considerable because of the paperwork involved.”
Read more here: http://www.miamiherald.com/2013/04/22/3358762/florida-and-texas-bankers-sue.html#storylink=cpy
My uneducated guess is that Congress will be what derails true reciprocity (and thus possibly derailing FATCA). I just cannot see a Republican controlled Congress allowing for such an imposition on US sovereignty.
Nigel Green talks to Jim Jatras:
Where to put this?
More good discussion going on at Maple Sandbox, CBA and Canadian bankers — on both sides of the Canadian / US border:
It is ok here, but I would put it also on the CBA posts like here…
Those go back a ways, but remind you of what the CBA has been saying… 🙂
Thanks, Just Me.
I’ll cross post to those. Cheers!
Pingback: The Isaac Brock Society
Pingback: Banker Groups Sue Treasury, IRS Over Account Reporting Rule or (DATCA) | The Freedom Watch
Pingback: The Isaac Brock Society