Hot off the press from GAO – important because it illustrates how this issue is viewed in the Homeland: "Foreign Asset Reporting: Actions Needed to Enhance Compliance Efforts, Eliminate Overlapping Requirements, and Mitigate Burdens on U.S. Persons Abroad" https://t.co/T0k4HKll0j
— U.S. Citizen Abroad (@USCitizenAbroad) April 1, 2019
Question:
The above tweet links to the a report from the Government Accountability office. It is extensive but generally interesting. A quick perusal reveals no evidence that the Government views FATCA and foreign asset reporting as tools to enforce worldwide taxation on people who live outside the United States. Yet, that is the purpose of FATCA and foreign asset reporting in general.
The “Fast Facts” page includes:
How does the government prevent tax dodgers from hiding income in offshore accounts?
A 2010 law requires Americans and foreign banks to report more information to IRS about Americans’ foreign assets. Implementing the law, however, has raised some concerns.
For example, close to 75% of taxpayers reporting foreign assets to IRS also reported them separately to Treasury—indicating potential unnecessary duplication.
Also, some Americans living abroad can’t get services from foreign banks that find the law too burdensome.
Our recommendations to Congress, Treasury, and other agencies address challenges related to foreign asset reporting.
The 2010 Foreign Account Tax Compliance Act, known as FATCA, created new reporting requirements for taxpayers with specified foreign asset
Of initial (and significant) interest is the acknowledgement that:
Also, some Americans living abroad can’t get services from foreign banks that find the law too burdensome.
Recommendations:
The recommendations include the following recommendation that would impact U.S. Treasury, the State Department and the Social Security Administration:
Recommendation: The Secretary of the Treasury should lead efforts, in coordination with the Secretary of State and Commissioner of Social Security, to establish a formal means to collaboratively address ongoing issues—including issues accessing financial services and employment and obtaining SSNs—that U.S. persons living abroad encounter from implementation of FATCA reporting requirements. (Recommendation 5)
Agency Affected: Department of the Treasury
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Secretary of State, in coordination with the Secretary of the Treasury and Commissioner of Social Security, should establish a formal means to collaboratively address ongoing issues—including issues accessing financial services and employment and obtaining SSNs—that U.S. persons living abroad encounter from implementation of FATCA reporting requirements. (Recommendation 6)
Agency Affected: Department of State
Status: Open
Comments: When we confirm what actions the agency has taken in response to this recommendation, we will provide updated information.
Recommendation: The Commissioner of Social Security, in coordination with the Secretaries of State and Treasury, should establish a formal means to collaboratively address ongoing issues—including issues accessing financial services and employment and obtaining SSNs—that U.S. persons living abroad encounter from implementation of FATCA reporting requirements. (Recommendation 7)
Agency Affected: Social Security Administration
This report may contain information of use to the ADCS-ADSC lawyers in the FATCA Canada lawsuit.
At a bare minimum this report includes the views of one U.S. Government Agency on the effects of FATCA and the information reporting that it requires. All of this is contained in the full 82 page report.
For those willing to read the report (in whole or part) your comments would be useful. Appendix V on page 64 (comparing CRS and FATCA) could be of significant interest. (You may recall that in the FATCA trial Canada’s lawyers spent significant time talking about the CRS).
In any case, the results of your collective efforts could be very valuable. When commenting could you please include a reference to the page number of the Report and section.
Finally, please restrict the comments to a discussion of this report. This is not a post where the comments should be used to introduce unrelated topics (to comply or not comply, renunciation, aspects of CBT, FBAR penalites on Mars), etc.
This is bang-on: “A quick perusal reveals no evidence that the Government views FATCA and foreign asset reporting as tools to enforce worldwide taxation on people who live outside the United States.”
“The above tweet links to the a report from the Government Accountability office. It is extensive but generally interesting. A quick perusal reveals no evidence that the Government views FATCA and foreign asset reporting as tools to enforce worldwide taxation on people who live outside the United States.”
Correction:
A quick perusal reveals no evidence that ONE AGENCY, the GOVERNMENT ACCOUNTABILITY OFFICE, views FATCA and foreign asset reporting as tools to enforce worldwide taxation on people who live outside the United States.
Not to sidetrack, last post on the subject I swear, but nope, the US government writ large doesn’t really care about non-compliant non-residents. It will cash the cheques of anyone who volunteers to pay up, and occasionally invents minor (and widely ignored) silliness like the streamlined program, but otherwise it is not a priority. Feel free to ignore.
If there were common sense in the Homeland seems goals could be better achieved by simply and finally aligning taxation law of the US to be based on residence, as the rest of the world, and meeting the parameters of CRS.
Having looked through as much of the GAO report as I can stand, it seems to me to bear certain broad resemblances to the Senate Finance Committee’s 2015 hearings on tax reform. Having identified several issues which negatively impact US citizens living abroad, the best they can come up with as “additional recommendations” on pages 44 and 45 can be summarized as: “Maybe they should do something about the problems faced by US expatriates”. Actual words: “The Commissioner of Social Security, in coordination with the Secretaries of State and Treasury, should establish a formal means to collaboratively address ongoing issues…” An empty, meaningless statement. Nothing comes even close to a concrete proposal. Pretty much the same as the SFC’s “maybe we should do something someday” in their report.
As much as it heartens me to see one US government office actually admitting that there are problems, the vagueness of its guidelines doesn’t give Treasury much to work with. Hence, I see little coming from this report.
On the positive side, at least it gives us something to cite from a US government source to indicate that problems exist. Could be useful to extract a few quotes for use in letters to lawmakers.
On a side note…
MODS: please consider moving Japan T’s extremely off-topic cascade of posts (wow, that didn’t take long, after Pacifica’s announcement yesterday) to where they belong, in the “Your experiences in Banking thread.” I really, really dream of the day when a post like this one about the GAO, which contains much food for discussion, can actually remain on topic. Cheers.
@Barbara
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Thanks for your thoughts. You are absolutely right about the parallel between the 2015 report from the Senate Finance Committee and this report from the GAO. It’s worth noting that the comments to the Senate Finance Committee were made in the context of a tax reform that contemplated some sort of “repatriation tax” for CFCs. Of course, at that time, the whole discussion was in the context of multi-nationals. Then in 2017, like magic, the repatriation tax was rolled out with great fanfare and was interpreted by the tax compliance community to apply to Canadian Controlled Private Corporations.
It may be that the failure of the GAO Report to propose any concrete suggestion (like for example ending citizenship-based taxation) may be one more message from that people should renounce ASAP.
The following article https://www.accountingtoday.com/news/irs-seeing-difficulties-with-fatca-reporting-data from Accounting Day has a bit more to say about the problems of Americans abroad:
The article in Accounting Today, referenced above by USCitizenAbroad, also brings up an interesting tidbit of information which has often been the subject of discussion here. It says, “…the IRS lacks access to consistent and complete data on foreign financial assets and other data reported in tax filings by U.S. individual taxpayers, partly because some IRS databases don’t store foreign asset data reported from paper filings”. I, for one, find it comforting to know that all the paper filings I submitted, for streamlined and then as on-going compliance until relinquishment, are probably not stored digitally anywhere to be cross-referenced with FATCA data or anything else. There’s been a lot of talk that this is the case, but I’ve never seen it written in a public article relating to any official government agency.
From ACA:
ACA has been (and continues to be) a long time advocate for tax reform for Americans abroad. Their involvement in this report can only be a positive thing.
Following
@ Barbara,
The money order posts are now moved to the new “Banking Issues” thread. Sorry I missed seeing them yesterday — the mods have been juggling much more than usual the past few days as we’re working out a few ways to keep threads focused (without inadvertently creating new problems). I made a new “Banking Issues” thread, I noticed our old one from 2014 had “Canadian Banks” in the title.
Along the lines of what Barbara noted above, with my emphasis added:
From the GAO report, p. 41: “Treasury currently lacks a collaborative mechanism to coordinate efforts with other agencies to address these issues, ****and Treasury officials said they do not plan to establish them.**** Without effective collaborative mechanisms to monitor and share information and implement cross-agency solutions, future efforts to address such issues will continue to be fragmented and less effective than they otherwise could be”
Along with other commenters here, I appreciate that this US Government report *does* acknowledge our difficulties and goes to some length to make recommendations for needed change. However, as long as the GAO’s sister agencies lack the will to implement its recommendations, we’re stuck in the same rut we’ve been in for years. As evidenced in the quote above, Treasury, for one, says it really doesn’t care.
@Petlover My tax adviser requests that I mail the return in, including 8938, as they say they are not a US based agent and can not lodge electronically. That is the only paper FATCA forms I may imagine, as under FATCA IGA, governments have to report that data electronically.
@MuzzledNoMore: I missed that part you quoted on page 41, in which Treasury basically lifted a middle finger to everyone else. It has come to the point where such actions on the part of the USA no longer trigger rage in me, only sadness.
If I can find the patience, though, I want to go through the entire report and save those sections that can be cited when contacting US lawmakers. They’re more likely to pay attention to the GAO than to political or special interest groups like ACA, RO, DA, etc.
The fact that Treasury refuses to cooperate or to do anything to mitigate the situation can actually work in our favor in lobbying efforts, as in: “See how dysfunctional the government is? You need to change the laws!”
Thanks to @Barabara and @MuzzledNoMore for finding these highly interesting and relevant sections of the report. Please keep the analysis coming.
Key point: The USG (collectively) is aware of the problems affecting Americans abroad.
Barbara: You are so right! This GAO report is a goldmine of usable material for us as we go forward. Proof that the US government knows about the problem (as USC said) and proof that there is foot-dragging (and/or downright unwillingness) on the part of US government agencies to make the necessary changes.
Yes one agency knows and other agencies don’t care. More or less like one member of Congress got the message but other members of Congress don’t care. Or the IRS’s Taxpayer Advocate understands but people who wield power don’t care.