Acknowledging the welter of detail and difficulties in the law, part of 2010’s Hiring Incentives to Restore Employment Act, Mr. Cantor said the only people that like FATCA are lawyers and accountants.
“From the perspective of a U.S. international tax attorney, we love FATCA for four reasons: complexity; uncertainty, with all the changes since 2010; change, with all the amendments and reforms to the law; and fear-mongering,” Mr. Cantor said.
“One man told me it was the end of Western civilization as we know it,” Mr. Cantor said, explaining that “No, FATCA is aimed at foreign financial institutions and other financial intermediaries to prevent tax evasion by U.S. citizens and residents through use of offshore accounts.”
Audible despair gripped the hundreds of audience members when Mr. Cantor described eight IRS and Treasury Department forms required by the agency, followed by another five that might be needed.
Penalties are stiff for not filing, he said. For example, falsifying or failing to submit Treasury Department Form 90-22.1 could draw a $500,000 fine and up to 10 years for in prison. Tax evasion, he said, is liable to a $250,000 fine and up to five years. Failing to file a tax return attracted a $100,000 fine and up to one year imprisonment.
Following the presentation, Mr. Cantor, alongside Mr. McTaggart and KPMG partner and “head of tax” Doug Harrell, heard an hour of eager audience questions, most related to complex personal circumstances.
Mr. Cantor told one interlocutor that renouncing U.S. citizenship is unlikely to be effective: “First, you have to have another passport before you can do that. You cannot be stateless.”
An “exit tax” would also apply, he said, describing a law that “started when a certain resident here [Cayman] came from Belize.” Someone seeking to expatriate themselves, he said, could be forced to sell their assets, relinquish any trusts and pay state taxes.
“Until the State Department gives you a certificate [of expatriation], you cannot relinquish your passport, not until all your taxes are paid.”
If that hypothetical covered expatriate was wealthy enough (i.e. like the super rich tax cheats they seem to think we all are…) they could just pay the exit tax out of pocket. Or they could tell the IRS to “pound sand”, as some say around here. Deferral is, as you imply, one of the ugliest alternatives. For any of these alternatives, people are not “forced” to sell any assets.
monalisa, under the rules as they stand, there is no way a person could repatriate just assets. It’s impossible to set up financial accounts in the US if you are not a resident. You would have to go back there to live and though I once thought that maybe that was something the USG wanted, I am no longer convinced.
They want to get as much loot off USP’s as they can and will use whatever means but they don’t want 7 million more people – many of whom have never lived there at all – showing up and taking up residence.
This article was just any another attempt at misinformation. A distraction from the real issue. Perhaps we should concentrate on refuting such things when they come at and then moving on. It pointless to speculate on what the USG might be able to do legally or not because my feeling is that they won’t bother. FATCA, CBT, FBAR are all “smash and grabs”. Take the money and run.
Is it a coincidence that Canada changed its Citizenship Act in 2009 to allow a greater number of people to become Canadian citizens at birth, thereby exempting them from the US exit tax that was enacted the year before?
I also know of one specific circumstance described to me by a lawyer whose wealthy client bailed while in the process of renouncing because of the introduction of the exit tax.
@Yogagirl, you’re correct that it’s now almost impossible for Americans abroad to set up U.S.-based accounts. But it has occurred to me that encouraging Expats to bank in American accounts rather than locally would give the IRS a lot more power over their assets and thus more easily be able to place direct liens if they owed taxes, etc.
It seems we have the worst of both worlds.
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