ExPats rejoice!

[NYEXPAT]

It appears that FATCA is on hold for now! The IRS Announcement 2012-42, dated 24 Oct 12, defers the implementation timelines for withholding agents and foreign financial institutions to complete due diligence requirements of the HIRE Act. The financial institutions will have until 1 Jan 2017 to start withholding taxes from US taxpayers’ source income and until 1 Jan 2014 to put in place the reporting requirements mandated under the HIRE Act provisions.
This is a direct response to the many issues raised by tax professionals and foreign bankers who have challenged the various provisions of the law.

[pb4uski]

So you're celebrating an extension of time for people to cheat on their US taxes?

I know there are some legitimate issues and concerns with FATCA, but there is also a whole lot of cheating going on.

[Alan]

Quote:

Originally Posted by pb4uski So you're celebrating an extension of time for people to cheat on their US taxes? I know there are some legitimate issues and concerns with FATCA, but there is also a whole lot of cheating going on.

My thoughts exactly, and as always it is always more difficult to catch those folks who don't want to be caught.

So far the only difference FATCA has made to me is more forms and complexity when I file my US taxes. I can see why it is a lot more complicated for foreign companies to comply. When my UK bank and UK company start reporting my income to the IRS it won't make any difference as I already report and pay taxes on all of my foreign pension and interest.

The companies abroad administering pensions are objecting because FATCA requires them to determine which of their pensioners are US citizens, and that is quite a task. Of the 2 UK companies I have pensions with, one of them is a Megacorp but the other is 100% UK based with no offices outside the UK, and in both cases my pensions are paid directly into a UK bank account so they would have to be proactive to determine that since the time I worked for them I have become a US citizen. They could write to every one of their pensioners and ask if they are a US citizen but I don't know whether FATCA requires more effort (and cost) than this, as anyone who is evading US taxes can simply say "No".

[NYEXPAT]

Quote:

Originally Posted by pb4uski So you're celebrating an extension of time for people to cheat on their US taxes? I know there are some legitimate issues and concerns with FATCA, but there is also a whole lot of cheating going on.

No, just the legitimate "issues and concerns" retirees face when obtaining residency or buying a house in a country (outside the USA)!

[traineeinvestor]

Quote:

Originally Posted by Alan The companies abroad administering pensions are objecting because FATCA requires them to determine which of their pensioners are US citizens, and that is quite a task. ..... They could write to every one of their pensioners and ask if they are a US citizen but I don't know whether FATCA requires more effort (and cost) than this, as anyone who is evading US taxes can simply say "No".

This is tip of the iceberg. FATCA's compliance burden is extensive one. Many banks and brokers that I work with out here in Hong Kong will no longer take US persons as clients. At least some of them have asked existing US clients to take their business elsewhere - the regulatory burden exceeds the benefits to the banks/brokers of having them as clients. Account opening documents now include a standard warranty that the applicant is not a US person.

[pb4uski]

Quote:

Originally Posted by traineeinvestor This is tip of the iceberg. FATCA's compliance burden is extensive one. Many banks and brokers that I work with out here in Hong Kong will no longer take US persons as clients. At least some of them have asked existing US clients to take their business elsewhere - the regulatory burden exceeds the benefits to the banks/brokers of having them as clients. Account opening documents now include a standard warranty that the applicant is not a US person.

Understood - so what is the problem? - just move your accounts to another bank or broker who can handle it.

[pb4uski]

Quote:

Originally Posted by NYEXPAT No, just the legitimate "issues and concerns" retirees face when obtaining residency or buying a house in a country (outside the USA)!

Ok - so deal with them or move back. It seems to me that the benefits of curbing the cheaters more than offsets the inconvenience to the non-cheaters.

[NYEXPAT]

Quote:

Originally Posted by pb4uski Ok - so deal with them or move back. It seems to me that the benefits of curbing the cheaters more than offsets the inconvenience to the non-cheaters.

With the legislation essentially dead, there is nothing to deal with, hence the rejoicing!

[growing_older]

Outside of the US, the banks who no longer want to deal with Americans because of the onerous reporting and liability are not going to change policies because of this delay. This pushes the problem down the road a short time, but changes nothing.

[Alan]

Quote:

Originally Posted by traineeinvestor This is tip of the iceberg. FATCA's compliance burden is extensive one. Many banks and brokers that I work with out here in Hong Kong will no longer take US persons as clients. At least some of them have asked existing US clients to take their business elsewhere - the regulatory burden exceeds the benefits to the banks/brokers of having them as clients. Account opening documents now include a standard warranty that the applicant is not a US person.

Transferring money from the UK to the US got more expensive to me when HiFx sent me an e-mail saying that it can no longer work with US clients.

Quote:

Originally Posted by growing_older Outside of the US, the banks who no longer want to deal with Americans because of the onerous reporting and liability are not going to change policies because of this delay. This pushes the problem down the road a short time, but changes nothing.

I agree.

[traineeinvestor]

Quote:

Originally Posted by growing_older Outside of the US, the banks who no longer want to deal with Americans because of the onerous reporting and liability are not going to change policies because of this delay. This pushes the problem down the road a short time, but changes nothing.

+1

As supported by a highly scientific poll* of one private banker I had a coffee with this morning. No US clients - it will be too hard to offload them when someone decides that FATCA or something similar should be imposed "for the greater good".

*Margin for error +/- 1

[timeasterday]

Quote:

Originally Posted by growing_older Outside of the US, the banks who no longer want to deal with Americans because of the onerous reporting and liability are not going to change policies because of this delay. This pushes the problem down the road a short time, but changes nothing.

Another +1. This may complicate my retirement plans to move to my wife's home country. If I can't get my money into local currency cheaply then it doesn't work. Perhaps with my wife being a citizen there it may helps things, but she is also a US citizen too. I still have a ways to go so maybe things will change eventually.

[theOAP]

Foreign banks and governments have resisted the implementation of FATCA since they would suffer all the costs of establishing systems and reporting accounts (verses none for the US). In order to make FATCA work, the IRS has been forced to negotiate IGAs (Intergovernmental Agreements) with other foreign nations. Those foreign nations have their own different individual demands, and the length of the negotiations are the factor driving the timeline back.

Two outcomes:
1. Many foreign nations are demanding 'reciprocity'. The IRS has issued a rule that ALL US financial institutions (and understand how many different types of services fit this definition) must report the accounts of any foreign national, resident in the foreign country, who have accounts in the US. Foreign FIs only have to worry about US Persons. For FIs in the US, they will have to discover and report on all individuals from each foreign country that has negotiated an IGA.

That becomes quite a (costly) task for the US FIs. For those Americans resident in the US, you might ask who is going to pay the cost for this? Several Congresscriters have already breached the subject with the IRS. There is also the fear that a large amount of money invested in the US (the US is one of the worlds largest tax havens for foreigners) by foreign nationals will be relocated to other locations.

2. The UK is the only foreign country to have already agreed to implement FATCA (by use of an IGA). It has yet to be sanctioned by the House of Commons, and work on the final agreement is taking place now. The outcome as regards UK citizens living in the US is unclear, but it appears that UK building societies (deemed compliant) will be forced to abandon all US Persons not resident in the UK. The actions to be taken by UK banks is, as yet, unclear.

Will FATCA eventually happen? Probably yes, in some form, but perhaps not as we know it today.

[MichaelB]

Part of the issue undoubtedly is the IRS and Trreasury are also not ready. I suspect this will lead to a rewrite that is less onerous and will be welcomed, but the core intent will remain.

[ratto]

There was an article about 2 weeks ago about this FATCA topic, and it's available at Wary Swiss Banks Shun Yanks - WSJ.com.

I agree with theOAP's analysis that the keyword is 'reciprocity'. It's not simply bringing someone's business to somewhere else. It's unrealistic to expect other countries to abide our unilateral demand unconditionally and instantly. Also, for rich tax cheaters, they can always find alternative vehicles to disguise their wealth in different forms, aided by an array of army of lawyers, accountants, lobbyists and politicians who're on their payrolls. So in the end, just like what theOAP summarized:

Quote:

Will FATCA eventually happen? Probably yes, in some form, but perhaps not as we know it today.

[george76]

Quote:

Originally Posted by pb4uski Ok - so deal with them or move back. It seems to me that the benefits of curbing the cheaters more than offsets the inconvenience to the non-cheaters.

My CPA charges $500 for my regular tax return. He said if I move abroad, he would have to charge me another $500 just to deal with FBAR and FATCA.

Yes, I suppose I can cancel my dreams of living abroad just so we can go after the cheaters. Personally I think there ought to be better ways to go after the cheaters than basically forcing honest Americans to stay within their borders. I'm not pleased to see my fees to my CPA double.

[Alan]

Quote:

Originally Posted by george76 My CPA charges $500 for my regular tax return. He said if I move abroad, he would have to charge me another $500 just to deal with FBAR and FATCA. Yes, I suppose I can cancel my dreams of living abroad just so we can go after the cheaters. Personally I think there ought to be better ways to go after the cheaters than basically forcing honest Americans to stay within their borders. I'm not pleased to see my fees to my CPA double.

That's always the issue when trying to catch tax evaders. It all depends on how much extra revenue is brought in and if it will mean a savings in your overall tax bill of >$500

If an extra $500/year in expenses means that you can't afford to live abroad then I would seriously reconsider whether moving abroad is right for you.

[george76]

Quote:

Originally Posted by Alan That's always the issue when trying to catch tax evaders. It all depends on how much extra revenue is brought in and if it will mean a savings in your overall tax bill of >$500 If an extra $500/year in expenses means that you can't afford to live abroad then I would seriously reconsider whether moving abroad is right for you.

My response was a general statement to the other person who stated "deal with them or move back". You don't my know situation, so I won't comment on your statement.

I just find FATCA irritating as so many other expats do.

[marko]

This site constantly confuses me!

On one hand there's accusations of 'cheating' on FATCA and those who 'manipulate asssets' to get Medicare-paid nursing home care, yet there are entire threads discussing manipulating income to get Obamacare subsidies with nary a peep.

Jus' sayin'...

[Ed_The_Gypsy]

Actually, it makes life much harder for honest expats trying to make it with a small business. It seems to me to penalize the wrong people.

The owner of allchilenet runs a business with his wife in Chile. As an American, he is subject to onerous reporting and problems with his local bank because of FATCA.

Chile Forum: Chile Forum

How about making the US a friendlier place to do business? Then, fewer people would seek their fortune elsewhere.