With all the focus on American emigrants’ issues here at the Isaac Brock Society, it’s worth remembering that Doug Shulman’ whale-hunting efforts are also ruining the lives of immigrant minnows who keep some assets in their home countries. A major South Korean business newspaper reported earlier this month that some Korean Americans with accounts at South Korean banks are closing those accounts for fear of ridiculous IRS fines. I’ve been busy so I’m just getting around to translating this now.
Tag Archives: FATCA
European banks shut Americans out over U.S. FATCA tax rules
@CanuckDoc found this story and suggests that it should be given a separate post, as it is a mainstream story about Banks shutting out Americans Abroad.
The story was originally posted at USA Today and then picked up at ABC News. It will be interesting to watch today to see if it starts showing up elsewhere. It it ever gets discussed on Brian Williams NBC nightly news, so my 86 year old mother sees it, you will know the story finally came back to the homeland! I don’t expect to hear or see it there, however.
US Treasury now negotiating with at least 40 countries for FATCA tax information-sharing pacts
From Sept 13 Reuters article:
In February, in the face of industry complaints, the U.S. Treasury Department said some countries could comply by collecting required financial data from their home-country institutions and forwarding it to the United States.
Initially, Treasury said that France, Germany, Italy, Spain and the United Kingdom would be allowed to take this “intergovernmental approach.” Japan and Switzerland were later added to that list under a different model.
The UK on Friday became the first country to finalize a tax information-sharing pact with the United States under FATCA.
The U.S.-UK agreement, pending approval by Parliament, spares UK banks, funds and other financial companies from reporting client information directly to the United States.
Treasury is now negotiating with at least 40 countries for FATCA tax information-sharing pacts, tax lawyers said.
A Treasury FATCA negotiating team is scheduled to meet with foreign financial businesses on Thursday in Paris and on September 26 in Singapore on tax information exchanges.
Bilateral agreements to implement FATCA are “a workaround,” said Mark Matthews, a lawyer at Caplin & Drysdale and former head of the criminal investigation division at the Internal Revenue Service.
Source:
http://www.reuters.com/article/2012/09/18/us-usa-tax-facta-idUSBRE88H15X20120918
Note: Caplin & Drysdale, mentioned above, is home to Scott D. Michel and H. David Rosenbloom, who have written important articles on FATCA. Michel has also testified before the Canadian House of Commons Finance Committee on tax related issues.
Australia and FATCA
From the Government of Australia Treasury:
The Foreign Account Tax Compliance Act (FATCA) was enacted by the United States Congress in March 2010. It is intended to assist US efforts to improve compliance with US tax laws and will impose certain due diligence and reporting obligations on foreign (non-US) financial institutions.
In response to concerns about the impact of these obligations on Australian financial institutions and the Australian economy as a whole, the Australian Government is exploring the feasibility of an intergovernmental agreement with the US. The objective of such an agreement would be to minimise compliance costs for Australian stakeholders while enhancing the existing tax cooperation arrangements between Australia and the US.
Source: Intergovernmental agreement to implement FATCA
Samsung Life Insurance warning high net-worth clients about FATCA, FBAR
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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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.