Author Archives: swisspinoy

By Amy Feldman

NEW YORK | Mon Jan 28, 2013 3:25pm EST

(Reuters) – When Andrew Winfield applied to become a U.S. citizen in 2011, he realized he owed taxes on accounts he had left behind in his native England.

So he paid what he believed he owed — $2,800 in back taxes, plus the estimated interest and penalties – and entered the U.S. Internal Revenue Service’s overseas disclosure program.

But when the IRS assessed its penalty in November, Winfield was stunned to learn that it would be $28,000 — 10 times the amount of tax he owed from 2003 to 2010.

“My first reaction was: ‘There’s no way in hell I’m going to pay that,'” the 39-year-old Wake Forest, North Carolina, resident says. “It’s kind of crazy when you look at the numbers and compare the penalty to the $2,800 (in back taxes) due.”

The IRS has been aggressively seeking out taxpayers with offshore assets, asking them to come in on their own to avoid further prosecution and requiring foreign financial institutions to send information about American accounts.

But the voluntary disclosure programs have lumped together overseas Americans and immigrants with relatively small accounts and those trying to evade taxes by putting their money offshore….

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Do you live somewhere other than America, are an American citizen and sell junk on eBay for the fun of it?  Welcome to Section 6050W.

Under new rules added to the US Tax Code in January 2012, credit card processing companies must now collect and verify the tax identification number (TIN) and legal name associated with that number for each merchant customer.

Section 6050W of the US Internal Revenue Code now requires merchant-acquiring entities in the US such as American Express to document the status of any US or foreign business they settle transactions with….

The new law represents another effort by the US government to boost transparency and possible tax collection for Americans overseas.

More in Regional merchants face new US withholding tax [Caribbean News Now, Grand Cayman, Cayman Islands]

Well, that’s great, so how might IRC Section 6050W affect you?  On this, PayPal writes:

PayPal will track the payment volume of your account(s) to check whether your payment volume exceeds both of these levels in a calendar year:

•   $20,000 USD in gross payment volume from sales of goods or services in a single year
•   200 payments for goods or services in the same year

You may be asked to add your tax ID number, such as a Social Security Number (SSN) or Employer Identification Number (EIN), to your existing account(s), if you don’t already have one on file.

If you cross the IRS thresholds in 2012, PayPal will send Form 1099-K to you and the IRS for the 2012 tax year in early 2013.

Everything you need to know about IRC Section 6050W

So, if you live in China and sell 200 pencils to 200 customers for 200 Renminbi, add form 1099-K to the many other forms your expensive tax preparer will be delighted to fill out for you.

Tina Turner ‘to become Swiss, give up US passport’
25 January 2013 – 10H41

US singer Tina Turner arrives for the Emporio Armani fashion show in Milan, on February 26, 2011. Turner — who has been living in Switzerland since 1995 — will soon receive Swiss citizenship and will give up her US passport, according to Swiss media reports.

AFP – US pop legend Tina Turner, who has been living in Switzerland since 1995, will soon receive Swiss citizenship and will give up her US passport, Swiss media reported Friday.

“I’m very happy in Switzerland and I feel at home here. … I cannot imagine a better place to live,” Turner told German language daily Blick….

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Makes sense.  She’s lived in Switzerland for the past 20 years, so she might as well continue doing so under the same conditions as any other Swiss citizen.  Switzerland is a great place for celebrities, since they can go about their normal lives without people making a big deal out of such.

Having stumbled upon this article, I had to check the date to see when it was printed because it seemed quite similar to the current situation today.  Where have we heard this before?  This suggests that there is no hope that the US government will ever learn from its mistakes:

Americans Abroad Angry About Tax Snare
Dec. 20, 1979.  By R. C. Longworth. Chicago Tribune.

After living for nearly 20 years in Switzerland, Cartoonist Hank Ketcham faced the crucial choice – either return to the United States or become a Swiss citizen.  Many of his American friends in Geneva were taking Swiss citizenship, but eventually the creator of Dennis the Menance returned to California.

“I had to think about Dennis,” Ketcham said at the time.  “How would it look if the all-American boy had a Swiss father?”

There are two points to this story – that Dennis’ “daddy” would even consider giving up his American citizenship, and that some Americans he knew had already done so.

This is a sharp change in the history of Americans overseas.  Normally, no American, no matter how expatriated he became, ever considered giving up his citizenship.

The change is traceable to one factor – a new American tax law that can raise the taxes of Americans abroad well above what they would pay at home.  At the very least, the law produces extra work and confusion.  At the worst, it penalizes the American or, often, the company that sent him abroad.

The evidence that Americans are increasingly becoming ex-Americans  comes mostly from informal reports from abroad.  The State Department says it keeps no statistics on the matter.

But Bill William, editor of the Brazil Herald and a 20-year resident of Rio de Janeiro, wrote recently that “taxes were one of many elements” that led him to take Brazilian citizenship.  He is not alone, he added.

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“The proposed approaches across the globe simply won’t work. They won’t mesh. They won’t interact. They will cause conflicts,” Pearson said at the meeting. “Washington, we have a problem,” he said.
Business Week

Patrick Pearson, a European Commission official, warned that many of the US rules “won’t work”.
The Financial Times

European hedge funds face arguably the worst – whether to break their local rules or those in the US. The way new OTC trading rules in each jurisdiction are written, it appears they will be subject to both, but will only be able to comply with one or the other… “If you put a European hedge fund in a situation where it has to choose between complying with US or European rules, it may avoid the swap transaction altogether because it will not want to risk being non-compliant,” says Wayne Pestone, chief regulatory officer at FXall in Washington, DC. “Putting hedge funds in this position just doesn’t make any sense.”
Risk.net

There is a lack of clarity on the various steps that need to be taken and the delays in implementation have led to further confusion. Imposing additional overseas (i.e., US) rules could be duplicative and also lead to jurisdictional conflicts. Non-US regulators may also be concerned about such an approach. Cost could be another important factor.
CPI Financial

The US Foreign Account Tax Compliance Act (FATCA) has been described as “a kind of US backward imperialism”
Guardian

FATCA Act could violate American banks… “there is concern about possible violations to the American legal orders (bank secrecy, taxation, consumer protection) with the implementation of the law”
Noticieros Televisa

This is only a bit of many recent news articles that I quickly put together in a few minutes.  More stateside Americans seriously need to spend more time reading international media!

This article was written by Giles Gibson in Hong Kong.  The article is not bad, better than most and certainly the best I’ve seen at huffingtonpost, but he seems to think that FATCA is only a concern for wealthy American citizens abroad (a typical Huff problem).  I used to think so too, until I personally learned otherwise.   The article could use some additional commentary about the types of people FATCA is having an impact upon and the innocent being harmed by “IRS’s relentless pursuit of U.S. tax evaders abroad, whatever the cost”.  The concept of “whatever the cost” could be used to justify crimes against humanity and FATCA is certainly a case of national origin discrimination (which is a federal crime in the US).

FATCA: The U.S. Flexes Its Waning Economic Muscle Abroad
11/06/2012 11:36 am

The Foreign Account Tax Compliance Act (FATCA). Typical of the taxman’s inimitable use of the English language worldwide, the title doesn’t exactly sound particularly menacing. However, the shockwaves from this recent piece of legislation from the U.S. Internal Revenue Service (IRS) are being felt around the financial world.

FATCA is aimed at targeting tax avoidance by U.S. citizens and entities abroad. Unlike most countries, American expatriates are still expected to pay tax at home on their income earned abroad. The IRS feels that many Americans are not taking this responsibility seriously enough. Their plan is simple: bring in tough new legislation to force foreign financial institutions to give up details about their U.S. citizen clients, leaving potential tax evaders with nowhere to hide….

http://www.huffingtonpost.com/giles-gibson/fatca-foreign-accounts_b_2081118.html

As you know, the clowns of the demorepublican dictatorship didn’t mention the estimated 6 million Americans living abroad in their political campaign not one single time.  Some even personally expressed to me that they neither had the time nor interest to campaign to those Americans living abroad that they are supposed to represent.

“Mexico, a country facing 100,000 deaths, neighbor to the United States, didn’t deserve one single mention tonight. A disgrace.”1

In the debates, the demorepublican candidates expressed, 34 times, their unconditional support for their beloved Israel with its apartheid practice in the nation of Palestine 2, but they didn’t once mention the approx. 2 million Americans living in Mexico and Canada in spite of their serious banking concerns and despite the historic violence playing out in Mexico, much of it along the 2,000-mile border that the US shares, which has already cost 60’000 lives.1

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This reminds me of the t-shirt that I used to wear as a kid to protest the war in Iraq.  It had all of the flags of the world with the US flag crossed out.  Not much has changed since, apparently.  But, what more can one expect from a two-party system?

Robert W. Wood
10/25/2012 @ 11:05PM |141 views

It’s cute to see movie portrayals of clumsy but good-natured Americans not fitting into some über sophisticated situation. But hearing big banks say thanks but no thanks to opening a checking, savings or investment account? Not cute. Being turned down for a mortgage because you’re American? That’s even worse. See Wary Swiss Banks Shun Yanks.

Sure, we might think a South American drug lord who is turned down is getting his just desserts. But these days, anyone but Americans seems likely to be welcomed into foreign banks. Welcome to FATCA, the global U.S. law that applies in earnest in 2013. Americans everywhere are facing ostracism and some are voting with their feet…

Read more Forbes

 

Show your support to the contributor and comment away.  The article currently only has one comment from American abroad:

It is unbelievable that Americans living and working overseas are now being refused bank accounts and even mortgages, all over the world. The US system of citizenship taxation is completely wrong and has extremely negative effects, not only on Americans living overseas but on the US economy itself.

Imagine if California taxed every person ever born in the state of California, even those who had long ago moved to New York, Louisiana or Texas. That’s citizenship-based taxation.

And if California made every bank in every state of the whole country report directly to the California authorities the names and addresses of any client of that bank who had been born in California. That’s FATCA.
And if California imposed heavy fines and penalties on anyone who they discovered had NOT been reporting their income and their bank accounts to California, even if that person didn’t owe any taxes to California because they were paying hefty taxes to, say, New York. That’s the FBAR scandal.

FATCA should be repealed as quickly as possible before it blows up the world financial sector and even worse, has an extremely negative impact on the US economy overall, as foreigners pull out of US ventures and investments and take their money elsewhere.

October 23, 2012,
Singapore

I never thought I’d see the day. Two years since the HIRE Act, FATCA, and Dodd-Frank became law and threw global finance into a tailspin, two foreign banks have finally stood up to Uncle Sam…

Bottom line, it’s more reporting, more registration, more paperwork, more hassle…

Yet just yesterday, DBS Bank in Singapore stood up to the US government, indicating that they would not be registering with US authorities for at least for one Dodd Frank provision pertaining to swaps. Nordea Bank in Sweden made a similar statement.

This is an interesting turn of events which could evidence a bigger trend.

We’ve already been seeing signs that US financial influence is waning. The dollar is being slowly displaced in international markets. Countries around the world are starting to increase their reserves of China’s renminbi, as well as accept renminbi in international trade settlements.

We’ve also seen foreign companies like McDonalds issuing debt denominated in renminbi, the launching of renminbi-denominated commodity futures contracts, and the trading of renminbi assets in foreign exchanges.

All of that used to be dominated by the dollar. But now the dollar’s share is gradually fading.

If more banks follow DBS and Nordea in standing up to the US government, it will be the clearest sign yet that this trend is taking hold… perhaps accelerating the dollar’s decline…

Banks Deny US Student an Account

October 7th 2012

From T. Hirsekorn – No account for pocket change: Out of fear from lawsuits, Swiss banks turned a 16 year old US student away.

The 16 year old was rejected by many banks and doesn’t want her face to be shown (image: 20 Minutes)

The tax dispute with America released a strong defensive response from several Swiss banks.  Some banks are following a compromise-free path to avoid any conflict with the IRS, such as with the case of Christina (16).  The exchange student, who lives in Zurich, wanted to open up an account so that her parents could give her an allowance of 60 CHF per month.  But Raiffeisen abruptly turned her away by stating that no Swiss banks accept US persons anymore.  “Unbelievable! Given that I’m not even taxable in the US” stated Cristina annoyed.

Raiffeisen justified itself by stating that it is currently not accepting US citizens as new customers.  “We cannot come to the conclusion if kids are taxed in the US or not”, explained speaker Jens Wiesenhütter.   After the Wegelin affair, banks are avoiding any possible risk that could derive from US business relations, assumes the economic professor, Walter Wittmann.

The Zurich cantonal bank, Coop bank  and Clientis also refused to open an account for Cristina.  Credit Suisse didn’t even want to reveal its business policy.  “Every bank can, according to their policy and contract flexibility, decide with whom they are willing to do business”, explained Rebeca Garcia from the Swiss Bankers Association.  More liberal are UBS, Postfinance and Migrosbank.  “Christina may have an account with us as an exchange student”, confirmed the UBS spokesperson.

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I quickly translated this during my lunch break, so please excuse any mistakes

Source: 20 Minuten Online