IRS Goes Global

As Just Me predicted months ago, IRS Goes Global.
The author asks if this is Clark Kent to Superman. No, it’s actually more Lex Luthor out to dominate the world and the universe.
Interestingly, the article asks Who Is A US Taxpayer and gives this answer:

Under the US Internal Revenue Code, individuals may be deemed US taxpayers if any of the following descriptions fit: A US passport holder ;Green Card holder;Individual who spends 183 days in the US in one year; or 122 days a year for three consecutive years.

I’m happy with that definition.  It leaves out huge groups: Anyone born in US or anyone born to a parent who was born in US.
As IRS Goes Global, more countries are hopping on board the FATCA train. Denmark and US Have Signed IGA.  Here is the actual Agreement Between US and Denmark.
I would be surprised if many Danes living in Denmark have income in US banks. But, I suspect many banks in southern states are hopping mad that US and Mexico Have Signed IGA.  I have not been able to find a copy of the actual agreement, but what does the following in the article mean?

An IGA “does not contain any exemption from FATCA, but, instead, a model for information sharing is offered based on existing bilateral tax treaties and allowing FFIs to report the necessary information to their respective governments rather than to the Internal Revenue Service.”

And, while I don’t agree with this, finally someone cheering on FATCA Negotiations promotes FATCA for what it is:

It has been established to prevent US citizens living abroad from avoiding the payment of taxation due on their foreign financial assets and offshore accounts. With US National Debt approaching $16.3 trillion at the time of writing, the recently re-elected President Barack Obama will be keen to get national finances under some semblance of control. Clearly, generating revenue from the 5.5 million Americans living abroad who do not file tax returns should be one of his priorities.

All along we’re been told FATCA is after the fat cat Americans living in US and the rest of us are just caught up in that snare.  But, this says any American living outside US is the target. I’m not sure what person or organization is the author of this, but it is from fatcaregulations.com blog.
 
 
 
 

21 thoughts on “IRS Goes Global

  1. Well, gee whiz, that does clarify things doesn’t it?
    Took me while but I finally came to agree with Roger Conklin – homelanders DO want to tax us. They are going to make us pay for “abandoning’ them.
    I was very surprised that they signed something with Mexico. Any more info about this?

  2. @Victoria: “The hardest thing in the world to understand is the income tax.” (Albert Einstein). Einstein didn’t know about FATCA.
    However, you, Einstein (if he were still alive) and others can learn more at FATCA For Dummies in Puerto Vallarta Mexico this Friday. You will even receive one free cocktail, canapes, a notebook and pen. Maybe we should all hop on a plane and meet there! We can cry into our free cocktail together in a warm and sunny climate.
    http://www.vallartaescapes.com/go/2012/11/fatca-for-dummies-mexico-u-s-and-world-economic-outlook/
    @Tim: Do you have any idea what the statement about the tax treaty may mean relating to the Mexico IGA? If not, do you think we would learn it in Puerto Vallarta?
    Isn’t it just dandy that the Australian FATCA cheerleader thinks Barack Obama should nab Americans living outside US. I wonder what she would say if she was living in US as a US citizen and Australia was demanding information on her personal finances so Australia could do a tax grab.
    Renouncecitizenship has nailed it once again with How The Term “US Person” will give US “DeFATCA” Control Over Other Nations. Meanwhile, they slumber on or jump on the FATCA bandwagon.
    http://renounceuscitizenship.wordpress.com/2012/11/26/how-the-term-us-person-will-give-the-us-de-fatca-control-over-other-nations/

  3. Here’s another comment that indicates the reason for FATCA:
    “The debt-ridden U.S. government needs money. That is why the Internal Revenue Service (I.R.S.) is targeting seven million Americans who live abroad, including one million Americans living in Canada.”
    Tweeted by US Citizen Abroad
    I can’t make up my mind here. On the one hand, I can believe that many in Congress did not read the bill and so on. But I have always suspected there were some who understood exactly how this would affect us. Likely they have the same bias against us as the rest of Homelanders. It would appear the IRS certainly “got it.”
    http://www.thestarphoenix.com/business
    /pursues+Americans+living+abroad/7608929/story.html

  4. Former Canadian Prime Minister Brian Mulroney says social media is a revolution affecting politics. That’s exactly why we are using it to fight FATCA.
    The Prime Minister who gave us free trade also said “The sovereignty of a country is in large measure determined by the strength of its economy,” he said. “Only if you can defend your interests in all areas can you call yourself a full-fledged nation.”
    I wonder what Mulroney thinks about FATCA. It doesn’t matter, of course, because the present Conservative government has no interest in the former Conservative Prime Minister (nor do they seem to have much interest in Canadian citizens who had the misfortune to be born in US).

  5. Here is the Mexican FATCA Agreement. Based on my reading of this, Mexico will report to US on total value of accounts and income in Mexico held by any US person–including those living in Mexico.
    http://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement-Mexico-11-19-2012.pdf
    US will report only on the income from accounts in US held by Mexican residents.
    As with the other agreements, there is no true “reciprocity.” I can hardly wait to hear what the banks in southern US states have to say.

  6. You are correct and that it is not unexpected. My sense though is if and when we get an agreement we will start to hear more from the opposition parties. The word on the street is Flaherty has thrown in the towel both on this issue and his own political career. Do not expect to see him run in the next election or perhaps even more shockingly be Finance Minister come Febuary. One rumor is Baird is going to take over. The other rumor is if Flaherty is going to be out it should be up to his sucessor to pick the next governor of the Bank of Canada and as I have said earlier it has been said for many months Harper is going to prorogue and do a major cabinet shuffle after the holidays.
    I would get back in touch with the Privacy Commissioner on this issue. She still has a lot of moral authority and from the most recent press articles indicates she is still following the issue closely. Also remember that simply signing an agreement is not the same as ratification or actually changing the law in the House.

  7. Well, I don’t seem to be able to influence change on FATCA, but my vocabulary is growing. First, it was learning clusterfuck is a military term and not the racy image I had in my mind.
    A couple of weeks ago, I added opprobrium.
    Yesterday, I discovered schtum. Spell check does not recognize schtum, so I can conclude I am not alone in not knowing that term.
    UK Territories Keep Schtum on Son of FATCA. http://www.international-adviser.com/news/uk/uks-territories-keep-schtum-on-son-of-fatca
    If anyone else does not know schtum, here are two definitions:
    1. schtum: silent, tacit
    2. schtum: Complete and total garbage; a pile of sh*t; having absolutely no useful qualities whatsoever. Usually used when referring to a particularly bad piece of code.
    I will use the two meanings of schtum in two sentences.
    1. Flaherty and Canadian Civil Liberties Association have kept schtum on FATCA for too long.
    2. FATCA is schtum.

  8. Further to Tim’s reply just above, I agree there is no point in expecting the opposition parties to do much until they (and we) have the text of an actual agreement in front of them on which to comment. In fact, that Finance Department call for comments on the negotiations (buried well down in their website) is rather silly window-dressing; how can one comment on something unless there is a draft or at least a point summary of what you’re supposed to be commenting on? The Harperites are so contemptuous of the public and of parliament that they can’t even be bothered to hide their contempt, the way they’re playing this game.
    Interesting what Tim reports about word on the street. I live in Ottawa, but I’m not even remotely wired to the street (politically speaking) any more since I retired, so I can’t elaborate or comment on the word. However, IMO proroguing parliament (as opposed to merely adjourning for the holidays) is one more contempt of democracy. I believe that re-sets the agenda back to zero on everything, doesn’t it? And how can anyone in opposition ask questions about or speak out against an IGA, never mind the Canada-China agreement that has draconian implications, if they are sprung to sleepy media on December 21 or 28 and they somehow get signed before parliament reconvenes. How can parliament do anything when the government has a majority of seats and iron control over their own caucus?
    Though I’m not a conservative, I grew up surrounded by conservatives, the real ones not the “reform” types we’re stuck with, and I can’t imagine how a real conservative can stomach Harper and his crowd. But then I’ve never voted for them, and especially after the past 18 months of Harperhood I never will.
    Maybe even Flaherty can’t stomach Harper and his syncophants in the PMO any more. Wouldn’t surprise me, and if that’s true, he gains a bit more respect in my eyes. Not a lot (I remember the Mike Harris days), but a bit.

  9. @Schubert: There’s another new term added to Canadian vocabulary. Prorogue. Most of us had never heard of prorogue a few years ago. Now, we all know what a sham prorogue can be to democracy. In fact, I place it right up there with definition number 2 for schtum
    The thought of Baird as Finance Minister is terrifying. I have a reluctant respect for Flaherty for his steady, solid performance as Finance Minister. Despite his recent silence on FATCA, Flaherty did speak out earlier and his recent letter was fairly strong (although weaker than the original). Perhaps he is being pressured by Harperites to shut up.
    Baird, on the other hand, is volatile and erratic. I think he would be a disaster as Finance Minister. Mark Carney heading to the UK (Flaherty was actually in tears at the press conference!) and Flaherty himself possibly on the way out does not bode well for the Canadian economy.
    In the past few minutes, I have found yet one more term relating to FATCA: “US connected person.” We went from US citizen to US person and now an article about British charities talks about “US connected persons.”
    According to the following article, UK charities may be considered Financial Institutions because they receive money. (What?!?) In addition: Those charities that have “US connected persons” will have their details passed to the IRS by the banks via HMRC, and will have to provide documentation relating to these US connections.
    http://www.civilsociety.co.uk/finance/news/content/13922/us_tax_evasion_law_could_add_red-tape_burden_for_uk_charities
    Yep, IRS Goes Global. No question about it. How can any responsible government agree to this?!?

  10. I am trying to find a link to the article that discussed Flaherty possible career plans. The article made note of the fact the only two logical sucessors to Flaherty were John Baird and Tony Clement. I will take Baird over Clement any day. I am not sure I actually agree with tenor of the article I actually think Ted Menzies who has been Flaherty’s junior minister for many years would be a logical sucessor. The primary reason for prorogation at least this time from what I have heard is for a MAJOR cabinet shuffle with Vic Toews getting a judicial appointment in Manitoba. I guess the question is whether Parliament would still come back with a new throne speach at its normal schedule.
    I think there is a lot of blame to go around on this mess on the Canadian side and it doesn’t just fall on Flaherty. I oppose and continue to oppose an IGA strongly however, I have a hunch at least one of things being negotiated is a full exemption for credit unions and caisses and to that degree if the large chartered banks that do business in the US are disadvantaged vis a vis credit unions too bad for them they could have fought this harder and they didn’t, tough. Note: The large chartered banks if credit unions get an exemptions won’t just lose the business of USP’s in Canada they will also lose the business of many Canadians that absolute abhor the possiblity of their personal financial information being sent to a foreign government. I do know one speech Flaherty made on this issue many months ago he said he couldn’t fight this battle alone and the banks needed to step up. Well I guess they haven’t or didn’t so as I said to bad for them vis a vis CU’s.

  11. Blaze:
    To your point about UK Charities from my understanding if a UK charity does all of its banking with a Credit Union they will be exempt from all the paper work(because the credit unions will be fully exempt). I suspect a lot of charities in the UK and Canada will be switching their banking relations away from the chartered banks to CU’s and Caisse’s.

  12. @Tim: I have had TD on alert for months. They know some of my assets are already with a credit union. A switch of the rest there or to another CU would be a snap.
    Joe Smith advised all along to go credit union. However, CEO of my credit union said they could be affected because they have assets (i.e. mutual funds, etc.) in US. Do you think CUs like that will still have to report?

  13. Financial Post is reporting Flaherty plans to remain as Finance Minister until 2015. I hope Harper agrees with those plans.
    The article also says Flaherty “is one of the most fiery politicians in Ottawa and at international meetings of the Group of 20, where he has earned a reputation as a tough-talking negotiator.”
    http://natpo.st/WzbUMA
    Mr. Flaherty, please put those tough-talking negotiation skills to work on FATCA! Set FATCA on fire!

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