Senator Rand Paul and Congressman Mark Meadows sent a letter this week to US Treasury Secretary Mnuchin and Director of White House Management and Budget Office Mulvaney.
Co-Leader of the Campaign to Repeal FATCA, Nigel Green, comments that:
“Mark Meadows and Rand Paul Letter to White House and Treasury Urging Executive Action to Nullify FATCA Is a ‘Landmark Moment’ and that “The Foreign Account Tax Compliance Act “has only rolled on because of legally unauthorized ‘intergovernmental agreements,’” so cancelling them would “doom this terrible, toxic law.”
The full text of Mr. Green’s commentary are at PressWire and at ValueWalk.
“Iota, your funds can be seized anytime due to FATCA.”
Fortunately, that’s not the case. Because of the IGA and CRS, banks now ask for information on tax-residence (and proof, in the case of FATCA. It doesn’t let them take your money. That would indeed be a turn-up for the books.
The IRS does a lot of threatening but when it comes to expats they don’t have much power to enforce collection.
@kelly. The countries with little taxation or no taxation has to provide for roads, transportation, garbage collection, sewerage, clean water etc etc. They have indirect taxes, higher prices and VAT which are not tax deductible for US taxes. The best is to repeal FATCA, FBAR and fight for an RBT type system similar to the rest of the world or renounce with your feet as Congress is not going to ever for RBT or maybe even repeal of FBAR or FATCA laws. The compliance condors will never agree to them as there is too much money involved in this for them. Think about it all the compliance industry will shut down forever. I don’t think they will give up ever without an Executive order from DT. Sometimes, the President needs to order actions similar to Syria situation yesterday. 1.5m East Asians are thinking about renouncing and 9 million of Canadian Americans will follow. US passport has become the most toxic passport in the world. Heidi was right in renouncing it five years ago. Costs were low at that time. Now it’s 2350 $ and they make it impossible to surrender which is against the UN principle but when has US govt cared for UN principles?
Iota, this information I posted was per my tax attorney friend. They can seize your account if your bank has a local branch in US. i don’t have the FATCA letter from a Canadian bank but all over the world people are receiving letters from banks which state this in fine print that the account be seized by banks at the direction of US govt. Local banks have to report the account to local IGA for passing it to US authorities.
Iota,
Please read the link here. Canada is at the top of list. http://premieroffshore.com/dealing-with-the-irs/
@Harrison – Its not true. Banks are regulated by local law, not US law. That’s why the IGAs were agreed – to allow the banks to comply without breaking local law.
If you read your country’s IGA, that will tell you exactly what the banks are and are not allowed to do.
@Harrison
That link is classic scaremongering compliance bullshit. Taking the example of Canada, the only way the US can collect anything is with Canadian government assistance for debts incurred by non-Canadian citizens. Dual citizens are protected.
Look at the Pomerantz case, recently discussed here. The IRS can’t even serve the papers in Vancouver, let alone collect penalties.
The idea that banks can freeze accounts under IGAs, or that the US can easily seize foreign assets, is simply not true.
Without knowing the details of your situation, I’d advise you to lie. If you have a non-US passport and a non-US birthplace, tell the banks what they want to hear and forget about FATCA.
Renunciation, in my view, is the best solution, though unfairly expensive and therefore may not be an option.
As I stated before here, I do have a tax attorney friend that I get a friendly advice from time to time. As per him, the IRS can seize from banks that have branches in USA which is stated here in the link. Lying is not an option for me unfortunately as I want to have a clean history before I finally make up my mind to expatriate. I have US born children that I want to pass my inheritances to someday and I simply don’t want them to be penalized for me.
As much as I hate all those condors who try to prey on all of us, I really like CBT to be gone and FATCA repealed as I have my family in US that I like to see often. Unfortunately, I am not a Canadian like you all to enter US visa free and would need a permit or visa even sometimes to enter USA if I do renounce. I was told of all my options recently on an expatriation meeting. I am just waiting if Donald Trump and Congress is finally able to get rid of what Obama started with all his laws. Many of us voted for him in huge numbers and he disappointed us all with his actions. There is this story of an Indian guy who was a US retiree in India who voted for Obama and he had to expatriate due to FATCA, FBAR penalties . He was very upset at Obama and his laws as evident on his webpage. His entire retirement was at stake therefore he had to expatriate.
Between this site, other forums and the Facebook group (over 4,000 members) there has never, to my knowledge, been one single report of assets being seized as you describe. So I would ask your lawyer friend to cite an instance of the a bank outside the US sending a customer’s money directly to the IRS. One single instance.
I simply don’t believe it. If something like that happened, we’d be yelling about it.
@iota, re;
“The difference is that FATCA/FBAR does not, and cannot “allow investigators to seize funds using a seizure warrant…”.”
And also, they are limited in what they can do extraterritorially with FBAR and FATCA.
Thanks for clarifying that in case anyone reading my comments came to that conclusion, which was not my intent. I am not implying that the IRS has the ability to seize the assets of individuals NOT situated in the US using the BSA (ex. for FBAR or for ‘structuring’) or using FATCA. So I apologize if I inadvertently contributed to the fear factor.
Instead my point is that I think that there is good reason for the IRS to be investigated for what looks like their overall abuse of their powers to enforce various parts of the BSA – here we now have two areas of BSA enforcement where they have acted in an extreme and unwarranted manner without cause, even though the individuals affected were NOT the CRIMINALS the BSA was intended for (a point which the TIGTA report emphasizes repeatedly re the ‘structuring’ cases where the IRS seizures of assets were overwhelmingly for the vast majority of cases with no actual criminal activity, action or intent). In both the IRS abuse of their FBAR powers (see multiple Taxpayer Advocate Annual reports to Congress re the OVD and the FBAR or in lieu of penalties), and in the ‘structuring’ cases with civil forfeiture (see TIGTA report), few if any of the victims had the means or expertise to fight the IRS – so the innocent without means paid more or needlessly).
As we know, they have fined but NOT actually prosecuted US banks or banks with US branches in court for BSA money laundering – even where there appeared to be very good cause (see ex. Wachovia https://www.theguardian.com/world/2011/apr/03/us-bank-mexico-drug-gangs and HSBC https://www.rt.com/uk/332135-hsbc-cartels-money-laundering/ ). Instead they focused on prey easy to intimidate and without means for professional counsel – small fry or minnow individuals in the instances of the FBAR and small individuals and small businesses in the ‘structuring’ cases in the TIGTA report.
What struck me was what the IRS has done after they were handed the responsibility to enforce the BSA and additional tools and power to do so. In both the cases of the FBAR and ‘structuring’, it appears that they deliberately chose to pursue low hanging fruit, used threat and intimidation to extract penalties even from individuals who owed the IRS no taxes (or in some FBAR cases in the OVD programs it was de minimis) without prior evidence of willful wrongdoing and in the cases of ‘structuring’ in the TIGTA report ‘Criminal Investigation Enforced Structuring Laws Primarily Against Legal Source Funds and Compromised the Rights of Some Individuals and Businesses’ https://www.treasury.gov/tigta/press/press_tigta-2017-05.htm , there was no evidence whatsoever – other than that they had deposited sums UNDER the 10,000. threshold (they love that 10,000. number don’t they?).
My point was only that the TIGTA report illustrates the general mindset of the IRS – and their willingness to ab/use the powers they were given to enforce the BSA against low hanging fruit/ those who were not engaged in anything criminal/ those without the power or knowledge or money to have legal counsel or be able to fight them – in now at least two general instances; 1. in imposing FBAR penalties on minnows and small fry outside the US (who came forward in the OVD programs after threats publicized re the FBAR laws and penalties) with minimal or no US tax owed (ab/using the NON-willful penalty which was created and given to them at their request ( 2003/04 ) after Treasury gave them the responsibility for FBAR enforcement ( see ex. ‘EVOLUTION OF THE FBAR: WHERE WE WERE, WHERE WE ARE, AND WHY IT MATTERS’, Hale E. Sheppard 2006 HOUSTON BUSINESS AND TAX JOURNAL http://www.hbtlj.org/v07p1/v07p1_sheppard.pdf ) was created in addition to what had already existed) and in ab/using their powers in seizing the legal assets of small businesses and others using civil forfeiture before the fact – WITHOUT ANY EVIDENCE of wrongdoing and WITHOUT any criminal activity.
In both the FBAR and the structuring cases, the IRS foisted the onus of proof onto innocent individuals and required them to prove a negative – in the FBAR that they were NON-willful and had ‘reasonable cause’ (ill-defined) and in the ‘structuring’ cases, that they were NOT deliberately making deposits under the 10.000. threshold to evade US law. So normal ordinary banking with no criminal intent or connections, and no proceeds of crime resulted in threats, intimidation and draconian penalties or asset seizure. Let us not forget that in the instance of the FBAR, new immigrants recently residing in the US, with legal local pre-existing assets in their home countries entered the OVD programs and faced draconian and confiscatory penalties merely for not knowing about the FBAR (ex. see the ordeal of ij or this case http://ovdioptingout.blogspot.ca/2014/06/summary-of-my-ovdi-2011-case.html ). This IRS abuse of immigrants with legal pre-existing accounts took place under the regime of a president who himself lived ‘abroad’, whose father was not from the US, and who has at firsthand the knowledge that immigrants have a legal legitimate pre-existing life outside the US – he has a close relative who became an immigrant to the US ( ex. http://www.insidehalton.com/news-story/6387013-obama-mentions-visit-to-burlington-at-state-dinner-with-trudeau/ http://www.thespec.com/news-story/6746677-burlington-gets-shout-out-from-obama-in-parliament/ http://www.ctvnews.ca/obama-has-personal-professional-ties-to-canada-1.370645 http://www.cbc.ca/news/canada/obama-in-canada-uncle-rocky-and-his-burlington-family-ties-1.771456 ).
My overall point is that the IRS abuses its powers to enforce the BSA to intimidate and extract or attempt to extract legal assets belonging to ordinary people (new immigrants to the US, small businesses and individuals banking inside the US, and those living outside the US with legal local accounts/assets) who were NOT the specified original target of the BSA and who were and are not criminals.
That to me is extra evidence that demonstrates that the US should move to RBT (and do away with the BSA/FBAR as applied to those outside its borders). And that the IRS should be investigated for the way in which it wields its BSA powers – it cannot be trusted to use them against the intended targets – whether inside or outside the US. Same as FATCA – it was supposedly to catch the ‘fatcats’, but instead it is making ordinary people outside the US miserable and costing all of us outside the US our local taxes and hidden banking fees in order to pay for US FATCA enforcement though there is NO evidence that the rest of the world is full of UStaxableperson criminals hiding money from the US.
Instead, there is evidence that the US is happy to remain the biggest tax haven in the world.
If the Democrats had ever enacted that Presidential Commission ( https://www.congress.gov/bill/114th-congress/house-bill/3078/text ) dangled in front of expats, they certainly would have received an earful about MANY issues – but one for sure would have been FATCA and the extraterritorial FBAR crusade of the IRS using the BSA (bolstered by extra powers created under the PATRIOT Act after 9/11).
None of the above applies to US residents, of course. And no pre-FATCA examples like the UBS and other Swiss bank cases, which are a different matter. (Nor Japan T’s decades-long saga about withholding or something.)
Just supply one example of a non-US resident whose money was sent directly to the IRS by their bank under FATCA provisions.
“Lying is not an option for me unfortunately as I want to have a clean history before I finally make up my mind to expatriate.”
Definitely better to renounce cleanly if US heirs are in the picture.
I renounced, and then backfiled six years and filed 8854. It was easy for me, but then I was in no danger of covered expatriate status
I stated here already banks that do have branches in USA they can levy the branch account in USA. For those who don’t have branches in usa are safe. Please read that on the link I sent earlier. However, I have seen a fine print on all FATCA forms these days which are being sent by different banks in each country stating they can hold the amount for IRS as per IGA rules. A WBEN for foreigner or W9 form for US citizen or permanent resident owned account is sent to each account holder . Each bank in each country has different set of forms and some have same.
Kudos to Jim Jatra and his associates for at least trying to something about it although I fear that compliance condor lobby will be in full swing too to stop the repeal process. I am all for repeal to end the compliance condors game forever.
@Kelly
With respect, you sound like Oliver Twist asking for just a little more.
If D T and the Republican party don’t do the right thing then I believe the only choice Americans who are settled abroad have is to renounce in order to live some semblance of a Normal life.
You have an Irish name, maybe you have an Irish grandparent and can claim that citizenship 🙂
But maybe you have a desire to return to the ‘homeland’?
@Kelly: You’re rubbing me even more the wrong way. Your idea of “compromise” is a non-starter. Not only does the entire proposal sound like gobbledegook, but it would be impossible to administer.
Here’s just one little example of why you’re barking up the wrong tree. Take the “low tax” jurisdiction of Hong Kong. Sure, they have “only” 15.5% income tax. But in addition to the property tax that all property owners and renters pay, all must also pay “government rent” (since no one actually owns land in HK, all must “lease” it and pay both tax and “rent”). Think someone at the IRS is going to say, “Hmm, that’s really a tax, so let’s give US expats there credit for that”…? Give me a break! When it comes down to it, there really is no such thing as a “low tax jurisdiction”.
Fine if you want to bring up your convoluted proposal here. But please refrain from planting it in the minds of anyone with any influence. If, as you say, it “passed muster” with Congress, it would only be because it would make an already ugly mess far, far, far uglier, which is how they like things.
@ Barbara my sentiments exactly.
@Harrison
I read the link. It’s conjecture.
Ask your lawyer friend to provide an example.
I’ll go look again to be certain, but will state that the Canadian IGA contains no provisions for seizure of assets, regardless of whether a bank has branches in the US.
“I stated here already banks that do have branches in USA they can levy the branch account in USA.”
Not true. They may be able to seize an expat’s US assets; that’s very different from the notion that the IRS could somehow force a US bank to steal money from an overseas branch of the same bank in order to hand it to the IRS.
” I have seen a fine print on all FATCA forms these days which are being sent by different banks in each country stating they can hold the amount for IRS as per IGA rules.”
Not true. There are no IGA rules allowing banks to steal money from customer’s accounts in order to hand it to the IRS.
“A WBEN for foreigner or W9 form for US citizen or permanent resident owned account is sent to each account holder.”
I would definitely advise renunciants to ask the bank for a different, non-IRS form. Why should a non-US-citizen sign a foreign tax form – under penalty of perjury, indeed! I signed a normal non-US form and even so I scrawled across it in my own words: I confirm that I am tax-resident only in the UK. I understand that [x] bank will not be providing my account information to any other tax jurisdiction directly or indirectly.
Harrison says
April 8, 2017 at 10:00 am
i believe the rich homelanders will always find a way to get around filings and reduce taxations. If you remember Romney vs Obama during 2012 campaigns, Romney’s foreign IBC Bain’s capital was all over the news reducing his taxes legally. Rich will always find a way and I am sure they did that already. FATCA is causing more problems to small fishes and overseas US citizens than to the super rich. Rich will just open up a foreign convuluted structures like Romney and have a nominee appointed by the rich as bank signatory. Then what would FATCA accomplish? Zilch? Zero. Laws are proposed by lawyer teams to congress so they can sell their expensive convoluted structures to the rich. They already have loopholes in the laws to get their clients safe from any legal action. Bain capital case was quite common. It was in the news during the campaign. It’s perfectly legal as per IRS as I was told by a tax attorney friend.
@Harrison,
I don’t know about other countries, so be patient if I (and others) use Canadian examples – which I realize may not apply to where you are, but the IRS is limited in its ability to pursue extraterritorial seizure of local non-US assets and accounts of those living entirely outside the US.
Our government has stated that the tax treaty does NOT compel them to assist with enforcement of the FBAR penalties because it is not a tax under the terms of the Canada US tax treaty (See; https://isaacbrocksociety.files.wordpress.com/2012/03/ba481782.pdf ). Re FATCA, the US can attempt to hold our local financial institutions for ransom via the 30% withholding penalty for non-compliance with FATCA reporting (which is the stick that the IGAs were agreed to in order to avoid, and by threatening to shut any non-compliant non-US financial (and some non-financial) institutions or those doing business with FATCAnon-compliant third parties out of the US financial market but the IGA prevents that. Currently FATCA is more about extracting masses of personal and financial data from the rest of the world, but the US would still have to sift through the masses of data they receive, and make their case for any collection of any assessment of tax or penalties extraterritorially via our non-US courts. Our local banks cannot close our ordinary banking accounts or refuse to open one for a person with “US indicia” just because of their fear of FATCA. They can report, but that is all they can currently do.
If we do not live in the US the IRS cannot seize our local legal non-US accounts and assets extraterritorially.
@badger – I absolutely agree that the anti-structuring law and FATCA both drive a coach and horses through the presumption of innocence principle. I’ll always have to prove I’m not a USC, because I was born there. No moral or ethical justification for it whatever.
I’m not so sure about it being the basis for an investigation, because in practice the IRS evidently are careful _not_ to go after expats for FBAR penalties unless (a) they do indeed have evidence which they expect to stand up in court, and (b) they can actually manage to get the person into a US court, or at least serve the papers (see Pomerantz case).
Iota,
I did state every bank in different countries has its own set of forms some stating they would hold amount if IRS requests it. Some banks from the same country supply a WBEN for foreigners and a W9 for US so everyone in the world is required to file the forms. In case no form is received the account would be reported to IRS automatically. This is the mail that I receive from my bank both by email and mail. Does not give anyone a choice does it? The FATCA form does state that amount can be withheld as per IRS request. I guess each country has a different set of IGA. Some countries are giving out to Treasury dept anything they want. Maybe in Canada or U.K. it’s a different version of IGA to protect its residents as agreed by the respective countries with US
@ badger I agree with you. Canada may have different version of IGA signed.
“This is the mail that I receive from my bank both by email and mail. Does not give anyone a choice does it? The FATCA form does state that amount can be withheld as per IRS request.”
Do you mean your bank is actually threatening to take money from your account?
” I guess each country has a different set of IGA.”
No, there are only two models. But there were very different agreements reached with some (many) Swiss banks, which might well have involved freezing accounts. That’s different from FATCA.
Iota, WBEN is given to all foreigners or entities by local banks in the country I live at these days to be signed. W9 is for existing US citizens who were clients before FATCA began, however they don’t like opening up accounts for US citizens or residents citing compliance problems. Most brokers would deny accounts to anyone with a US taint no matter even if they are dual or tri nationals. They would simply ask you to use your second or third passport (I want clean legal history for possible expatriation in case FATCA is not repealed and CBT is not erased forever) to open up an account and click No for US citizen tick box. This is something I could not agree on.