The vice-president of Samsung Family Office wrote an article in the Korea Economic Daily a couple of weeks ago discussing the effects of FATCA. Samsung Family Office is a division of Samsung Life Insurance which markets products and services to customers with more than three billion won in assets — that is to say, people who would be “covered expatriates” if they are U.S. Persons. Of interest: his report that South Korea’s legislature is already considering amendments to tax laws in order to pave the way for an inter-governmental agreement.
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Tag Archives: FATCA
Breaking FATCA news from Hong Kong: banks and tax consultancy firms are still shills
Following in the grand media tradition of running biased reports about old news in an attempt to generate a feeling of consensus and progress about the issues of the day, Hong Kong’s Headline News — one of the half-dozen Metro clones you can grab for free to read on the train to work — printed a FATCA article this morning, apparently apropos of nothing. There’s no new developments to report, so they just repeat the same old half-truths in an increasingly skewed manner.
The article features interviews with diverse sectors of society such as banks and tax consultancy firms. Only a few unimportant voices are missing, such as the government bureau which is allegedly supposed to be formulating the policy response to FATCA, or accountholders who might be affected. Unfortunately it’s the first news we’ve seen here in months, so I’ll translate it anyway as part of the ongoing project of Kremlinology in trying to figure out what exactly my adopted hometown’s response to FATCA is going to be. Continue reading
Taiwan seeks help from other Pacific Rim governments on FATCA?
Tsai Hong-tu of Taiwan’s Cathay Financial Holdings has brought up the issue of FATCA in the APEC (Asia-Pacific Economic Cooperation) Business Advisory Council, and suggested the establishment of a working group to formulate a response to the issue. It’s rather ambiguous exactly what Tsai’s goal is for his proposed multilateral FATCA discussions, but at least it’s more encouraging than the craven surrender by Taiwan’s Bankers Association.
Possibly of interest to the Canadians in the audience: ABAC is not just an Asia-focused organisation — its membership list includes representatives from a number of countries on the western eastern side of the Pacific Rim, including Chile, Mexico, Peru. and Canada (as well as the U.S. itself). And even though it ABAC is not a finance-specific organisation either, two out of Canada’s three representatives to ABAC are in the finance industry:
- Mrs. Isabelle Courville, President of Hydro-Québec Distribution
- Mr. V. Paul Lee, Managing Partner of VanEdge Capital Partners Ltd.
- Mr. Philip Leong, Vice President & Director, Chairman’s Council, RBC Dominion Securities
Maybe this will be a roadblock, or at minimum a speedbump, in the way of the U.S’ “divide-and-conquer” FATCA strategy. I translated a radio report about Tsai’s proposal after the jump. Continue reading
It’s all Congress’ fault?
Defenders of the executive branch claim that U.S. Persons abroad should direct their anger at Congress, and not the IRS, for the current holy crusade against people who dare to live and save outside of the United States. But over at Tax, Society & Culture, tax prof Adam Rosenzweig makes an interesting argument which points to the hole in that logic:
Conventional wisdom seems to hold that Congress must act for there to be any reform of the taxation of “carried interest” (the type of fees earned by investment fund managers such as Mitt Romney) But if the goal is to tax carried interest at the same rate as, say, salary earned by auto workers, Congress need not act at all. Rather, the Treasury Department could accomplish this on its own today.
This somewhat surprising conclusion comes from the fact that the Code already authorizes the Treasury Department to prevent taxpayers from using partnerships to convert certain types of income that would have been taxed at the ordinary 35% rate into income taxed at the preferential 15% tax rate. For somewhat technical reasons, carried interest requires a partnership to be used for tax purposes. Thus, Treasury could simply issue a regulation disallowing the 15% rate for carried interest. Voila! Carried interest fixed.
So what other ridiculous aspects of the U.S. tax system might Treasury be able to fix through its power to issue regulations? Perhaps something related to U.S. Persons abroad?
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Taiwan banks order government to sell dignity, sovereignty to Washington
Next Tuesday, two bankers who now work for Taiwan’s executive branch will meet some people from the Bankers Association (yes, that’s their official name, not Bankers’ Association) in order to get recommendations on how to help banks deal with FATCA. Unsurprisingly, the Bankers Association is recommending complete and total surrender, without even asking for anything in return from the IRS. And the worst part is, the media are barely paying any attention to it. The only coverage I’ve seen at all is an article in Taiwan’s Apple Daily earlier this week, which I’ve translated below.
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NPR’s, “All Things Considered”, Finally Does a Story on Offshore Tax Evasion Crack Down
Well, not a perfect story. But, any story at this stage, is better than nothing. It provides opportunity.
Tax Evaders Beware! Money’s Getting Harder To Hide
The narrative is fairly predictable, and while not wrong, the emphasis is NOT where I would like it. However, it is the conventional wisdom (CW) version, and arises out of all the partisan focus on Romney’s tax situation, Swiss Bank Accounts and the battle over his lack of tax return disclosure. (see preceding story)
FATCA gets a passing mention which is significant as it is the first time since it was passed in 2010 that it has been uttered on NPR. Also, since this is only a 4 minute story, I understand that they would not get into the peripheral issues that impact you and I.
Have a listen, and see what you think. I am still pondering a 1200 character response on their web site. That is their limit. Now, the question is, how to use this opportunity to expand their understanding of a BIGGER story of unintended consequences on immigrants and expats.
741 tax returns filed from single Florida address, IRS sent back over $1 million in refunds
That is the sensational headline from this Huffington Post story last night Here is how the more sedate Accounting Today reports it..
Billions in ID Theft–Related Tax Fraud Undetected by IRS
The report, by the Treasury Inspector General for Tax Administration , noted that the IRS reported that it detected 938,664 tax returns totaling $6.5 billion in fraud for processing year 2011 tax returns. Using the characteristics of confirmed identity theft, TIGTA identified approximately 1.5 million additional undetected tax returns with potentially fraudulent tax refunds totaling in excess of $5.2 billion. TIGTA estimates that the IRS could issue $21 billion in fraudulent tax refunds over the next five years
So, instead of solving these serious issues of fraud and tax collection shortfalls in the homeland, let’s launch offshore and spend all our limited resources chasing an estimated $800 million a year instead on world wide FATCA effort, shall we? That makes sense. Let’s deploy a distraction strategy to get people to look far away, rather than up close, at home, where the real problems lie. Don’t look behind the curtain, Dorothy! Continue reading
Israel to establish governmental committee on FATCA compliance
So reports a new article in The Jerusalem Post. Compared to some of his fellow journalists, Nadav Shemer (Twitter: @NadavShemer82) could easily win an Olympic gold medal in translation for this article; instead of parroting Treasury’s Orcish-language press releases about “US taxpayers” and claiming that’s just a mirror image of “Israeli taxpayers”, Shemer gets to the crux of the matter right in the subhead, in plain English:
A committee to establish how Israeli institutions can conform to the US foreign tax act will be headed; will force US citizens abroad to pay tax … FATCA, passed in 2010, requires all foreign financial institutions (FFIs) to become compliant by June 30, 2013. It will give the United States more power than ever to force American citizens and green-card holders residing abroad, including an estimated 200,000 to 300,000 in Israel, to become tax-compliant … At least one bank has confirmed to [CPA Philip L.] Stein that it will begin asking new customers about where they hold citizenship.
Of course, he misses out on the exact scope of that tax: not just an ordinary Form 1040 like everyone else in the country, but Form 1116 and 2555 at minimum, plus a six-page Form 3520 for your “foreign” retirement account, another six-page Form 8621 for your “foreign” ETFs, a seven-page Form 8865 for your “foreign” business, etc.
Incidentally, in a new blog post over at the WSJ, Laura Saunders notes that one of the names in this quarter’s freedom list was that of Israeli Supreme Court justice Daphne Barak-Erez.
More FATCA Fallout: Miami’s international banking clients move money to protect financial privacy – DATCA impacts
The Miami Herald had this story in the Sunday paper. (Hat tip to Roger Conklin)
Under new IRS disclosure regulations, details about U.S. bank accounts held by foreign nonresident depositors could be shared with their home governments. As a result, bankers say hundreds of millions of dollars have left Florida since April.
What is interesting to me about this story is this: While they talk about the global crackdown on tax evasion, and reference the history of UBS, and the IRS voluntary disclosure program, there is no mention of FATCA anywhere. Not sure if that is intentional, or if the journalist doesn’t understand the connection between FATCA, and this domestic effort which I call DATCA (my shorthand).
As Christophe pointed out here, Congress recently voted to delay this IRS regulation. So, the battle is becoming more public, and wonder how long this will remain non political in this silly season.
For the likes of Debbie Wasserman Schultz , Chair of the Democratic National Committees, she is now in a tough place. She voted for FATCA, and then voted to delay DATCA, the IRS reciprocity fall out of her first vote. Ah, sweet irony! 🙂
I continue to record the history of this developing story here
US Treasury Issues Model Intergovernmental FATCA Agreement
US Treasury Issues Model Intergovernmental FATCA Agreement
by Mike Godfrey, Tax-News.com, Washington
27 July 2012
The United States Treasury Department has published a model intergovernmental agreement to implement the information reporting and withholding tax provisions of the Foreign Account Tax Compliance Act (FATCA), together with a joint communique with France, Germany, Italy, Spain and the United Kingdom endorsing its text.
See:
Addendum: Here is another report which includes links to the model agreements:
http://www.advisorone.com/2012/07/26/treasury-releases-model-agreement-for-foreign-tax
