Monday, February 3, 2014

Administration Insists that FATCA Will Not Be Further Delayed (1/3/14)

See Patrick Temple-West, U.S. IRS chief says no delay in tax-dodger law; some have doubts (Reuters 1/31/14), here.  Excerpts:
The chief of the U.S. Internal Revenue Service said on Friday that a new law meant to fight offshore tax dodging by Americans will not be delayed again beyond its July 1 effective date, despite a clamor among banks asking for more time and guidance. 
* * * * 
 It will require foreign banks, insurers and investment funds to send the IRS information about Americans' offshore accounts worth more than $50,000. 
Foreign businesses that do not comply with the law can be effectively frozen out of U.S. capital markets because of a 30-percent withholding tax on U.S. source income.
The article reports practitioner concerns about delays in implementing forms.  There is some practitioner thought that the IRS will have to delay the effective date because the forms will not be timely available.  But, note that the buzz is not about repeal of FATCA but delay of some of its components.
But given strong assurances from the Obama administration that the law will not be delayed again, "it would take something extraordinary" for the administration to waiver, he said. 
A source familiar with the Obama administration's position on FATCA said the White House will not allow another delay.


  1. "A source familiar with the Obama administration's position on FATCA said the White House will not allow another delay."

    Yes, and didn't they take that same position on rolling out the ObamaCare Web site?

  2. The US is so heavily obsessed with its desire to harm the innocent, that it is seeking to give credit unions hell simply because they service local customers:

    "Woccu's Edwards points out that for the 50% of credit unions smaller than the median in the US of $22 million, these compliance burdens under Fatca are particularly unwelcome. "This is just one more law, one more regulatory compliance requirement that will be piled on to many others that exist, and since most people who are credit union members are local citizens, it's going to be a lot of work without a lot of tax compliance benefits coming out of it."

  3. Obama doesn't care because he's stinking rich and doesn't need to refinance a mortgage. Thus, he's far too wealthy to feel the pain of his actions and little people are suffering from.

  4. Jack here is more FATCA evidence that discrimination is openly happening ..... now in France.

    AXA Bank closes Americans accounts.

  5. For non-French speakers, in a letter to a US-born Frenchman, AXA is saying that as of July 1, 2014 FATCA requires French financial establishments to report accounts of Americans to the US IRS, and therefore it has chosen to stop doing business with Americans (citizens or residents.)

  6. This is a link to the full article:
    It states that among 720,000 clients it has 250 US clients with more than $50K balance and it's not worth the bother to undertake heavy compliance expenses over a fistful of US clients and it's better off closing their accounts. The gentleman whose account is being closed called the US embassy and was told there is a 5-month wait to renounce US citizenship.

  7. OECD proposes data exchange norm in tax evasion crackdown:

    Here is the most relevant information:

    “The OECD’s top official for financial issues, Pascal Saint-Amans, said
    the OECD’s proposed standard is in effect a multilateral version of the
    US FATCA, or Foreign Account Tax Compliance Act.

    One major difference, however, is that the OECD standard will be based
    on a residency test rather than nationality, according to OECD

    It will cover not only bank deposits, but interest paid and capital gains.

    It will also require reporting of the ultimate beneficiary, which should
    hinder the use of trusts and shell companies to evade tax liabilities.

    Saint-Amans acknowledged, however, that gold and other precious metals
    will escape the system as banks aren’t forced to open their vaults and
    safe deposit boxes, and this could pose a problem.”

    US needs to scrap FATCA and adopt the OECD system. As long as FATCA
    lives, with the withholding threats, discrimination of Americans will
    continue, even with a global OECD GACTA.

  8. Yup. FATCA has birthed the OECD GATCA. Of course we will have to learn a new acronym.. AEOI.

    Note that GATCA is based upon Residency, and the U.S. Taxes based upon Citizenship.

    I don't think a two standard global model works. The U.S. needs to adopt the international norm, and not keep trying to impose the U.S. exception under sanction threats. I think what they are doing with FATCA and the IGAs, is just doing themselves great harm, and frankly citizenship taxation as rigorously enforced by the US since since 2009, is just transferring wealth out of other countries GNP and back into the U.S. Treasury.

    At some point, countries will begin to see that.

    So, FATCA, born of a good intention has birthed a global GATCA. I can almost guarantee you, to the degree anyone in Congress knew they were voting for it, they had NO Idea that this was a consequence of these actions. It was NOT their intention! It has, however, put a strong wind into the OECD sails, and one of the Chief architects of FATCA implementation strategies and the IGAs is Jesse Ergart, who has left Treasury and gone to work for OCED in Paris. What do you think he is working on. Lunch schedules for the elites at the OECD cafeteria?

    So, what will this GATCA result in? You could say, if it forces the U.S. to drop its sanctions threats and endorse the GATCA model instead of their IGA, (even if I disagree with it) at least it would put Americans on a level playing field with residency based taxation, like everyone else.

    It would end the pressure that many average folks living around the world are feeling to dump their U.S. citizenship, and you could operate like Kiwis or Australians who go abroad to work or start business, unimpeded by any form filing penalties, or taxation reporting back to the country of their lottery birth. That would be a BIG positive for America competitiveness, imho.

    I do know that residency based taxation is being given serious consideration in the Senate Finance budget committee and the proposals got a lot of attention in the House Ways and Means. If this Global GATCA adds pressure for that change, then that is a good outcome, although I am not sure that another global data collection (surveillance) program is generally good for any of us, but that is another subject.

  9. ‘We had to exit Americans because of FATCA’: UTI International

    Funds Europe reports on the decision by UTI International (Singapore)
    to “remove” its American investors because of FATCA’s compliance

    UTI International (Singapore) chief executive officer Praveen Jagwani says the asset manager had to remove American investors because of the compliance burden Foreign Account Tax Compliance Act (Fatca) brings.
    The regulation requires financial institutions to use enhanced due diligence to identify US citizens that have invested in either non-US financial accounts or non-US entities.

    Fatca, which will become effective this year, was launched with the intention to keep US citizens from hiding income. Asset managers face severe consequences if they fail to enter an agreement with the Internal Revenue Service.
    The intent behind Fatca is to keep US persons from hiding income and assets overseas.

    Speaking at a recent Funds Global Asia roundtable in Singapore, Jagwani says Fatca is the single most difficult act of regulation for the asset management industry.
    “We offer a Guernsey-domiciled Indian equity fund and because of six
    American investors, our compliance cost has gone up significantly,”
    Jagwani says. “In order not to penalise the remaining investors, we have unfortunately had to decide to exit the American investors.”
    UTI International is a subsidiary of one of India’s largest asset managers, UTI Asset Management Company.

    Margaret Harwood-Jones, managing director and global head of
    investors and intermediaries, Standard Chartered, another roundtable
    participant, says there is no place in the world where businesses can
    hide from the impact of any foreign regulation.

    “Even when it is only half a dozen investors buried somewhere in a
    particular fund, they have to be fully identified and properly treated
    in order to comply with Fatca,” Harwood-Jones says. “The obligation to
    report, to comply with the plethora of new regulation is important yet
    onerous indeed.”


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