11 Reasons Why FATCA Must Be Repealed from Tax Management International Journal is one of the best assessments about everything that is wrong with FATCA that I have seen from a professional perspective.
There is not much new in this for many of us, but it’s great to see professionals taking such a strong stand. After a blunt and thorough assessment, the authors conclude:
The bottom line is that FATCA is sheer idiocy and
must be repealed as soon as possible. The world
economy has enough problems as it is without having
inane reporting requirements imposed upon it.
They hope there will be some “profile in courage” in US Treasury who “stand up and declare that FATCA is madness” and push for its repeal. Unfortunately, Treasury and Congress have already shown where they stand on the “sheer idiocy” of FATCA.
Excellent find, Blaze!
Make that 12 Reasons (at least). Courtesy of Just Me, at the end of this comment:
11. The United States Is Not Willing to Provide the Same Information on a Reciprocal Basis. Perhaps the strongest reason why FATCA is sheer idiocy is because the United States is not willing to subject U.S. FIs to the same types of reporting burdens that it is imposing on foreign FIs. This is simply outrageous.
In Article 6(1) of the reciprocal Model I FATCA IGA, the United States said it ‘‘acknowledges the need to achieve equivalent levels of reciprocal automatic information exchange’’ with its FATCA partners and ‘‘is committed to further improve transparency and enhance the exchange relationship . . . by pursuing the adoption of regulations and advocating and supporting relevant legislation to achieve such equivalent levels of reciprocal automatic exchange.’’51 (Emphasis supplied.) It is clear, however, that the U.S. Treasury Department has now backed off from this commitment.
This was made abundantly clear in a letter of Oct. 10, 2012, from Mark Mazur, Assistant Secretary of the Treasury for Tax Policy, to Sen. Rand Paul (RKy.), 52 in response to the Senator’s concerns about reporting that might be required of U.S. FIs as a result of the Joint Statement of Feb. 8, 2012 (which indicated the United States planned to enter into FATCA IGAs with France, Germany, Italy, Spain, and the United Kingdom). In his letter, Assistant Secretary Mazur states, ‘‘The United States cannot expect foreign governments with shared policy goals and practices regarding transparency and fairness to facilitate the reporting of the information required under FATCA by their financial institutions if we are unwilling to help address tax evasion under their tax systems.
We think the most straightforward approach would be to share information, in appropriate circumstances, that pursuant to existing law already must be reported to the IRS about accounts held by their residents in the United States.’’ (Emphasis supplied.) He then goes on to state the following:
The information that the United States would agree to exchange under the reciprocal version of the Model Agreement differs in scope from the information that foreign governmentswould agree to provide to the IRS. In fact, the information specified to be exchanged by the IRS under the reciprocal version of the Model Agreement is limited to the information that U.S. financial institutions will be required under existing regulations to report to the IRS about nonresident accounts for 2013. While the reciprocal version of the Model Agreement includes a policy commitment to pursue equivalent levels of reciprocal automatic exchange in the future, no additional obligations will be imposed on U.S. financial institutions unless and until additional laws or regulations are adopted in the United States.53 [Emphasis supplied.]
At the very least every country should demand, if considering signing an IGA with the US, that it will not do so until additional US law and regulations are adopted in the United States!
As well, Just Me, gives the 12th reason FATCA must be repealed:
And, Sulolit Mukherjee, Tax Manager, Operations at E*TRADE. http://bit.ly/WetLKr
In answer to the question, “What are the risks?”, he replied…
what are the risks associated with this?
SM: “Identity theft is the biggest and most prominent risk of information sharing, whether within the USA or at a global level. In today’s world of electronic exchange of sensitive information, a customer’s personal information is ever at risk of being hacked into when moved between systems and institutions. Proper procedures must be developed by financial institutions to guard against such scenarios.
Also, even though the global financial sphere is more cohesive now than ever before, there still exists many discrepancies in information collection, storage rules and procedures in different countries. Also, several countries have unique privacy laws that forbid personal customer information collection. In light of this, globalized standards threaten creation of multiple standards of information collection and can result in inconsistent application of FATCA regulations. This is already visible through amended information collection and certification requirements spelled out in the recently released FATCA Intergovernmental Agreement models (IGAs), where financial institutions in certain countries can avoid levels of scrutiny while others are not so fortunate.”
So, security risks, from my standpoint, is item number 12, to this list of what is wrong with FATCA!!!
Number 12. Unacceptable security risk to Americans Abroad.
Check out Maclean’s magazine tonight top political editor Paul Wells did an article today on citizenship based taxation.
http://www2.macleans.ca/2012/12/17/belgium-to-largish-french-movie-idols-welcome/
Here’s another professional article from Tax Law Community Blog critical of FATCA: IGA Flurry Shows US Is Locking Down On FATCA. (Actually I’m not sure four agreements is a “flurry,” but the article posted by Allison Christians is definitely worth a read).
http://www.lexisnexis.com/community/taxlaw/blogs/taxlawblog/archive/2012/12/12/iga-flurry-shows-u-s-is-locking-down-on-fatca.aspxhttp://bit.ly/VVSRf5
She suggests FATCA’s “hubris is breathtaking” in expecting laws in other countries to be broken for US.
Professor Christians also suggests: “US is tying its own hands against the possibility of making any different deal for any other country. Now why on earth would they do that?
Purely, I think, to drive home the unilateral message. Information sharing is no longer going to be multilateral, engaged in through international dialogue and consensus. Information is a commodity, the US can apparently afford to extract it on a unilateral basis and without regard to “issues” like other countries’ domestic laws, and there will be no spoils for any other country that can’t or won’t submit to the US standard, even if they themselves are victims of the US’ own bank secrecy & notorious apathy when it comes to things like anonymous incorporation.”
So, what does this mean for all those countries that haven’t signed an IGA yet?
Tim. what’s your take on what the “most favored nation” clause may mean for Canada?