FATCA Refocusing On Country Partnerships (Reuters)

Reuters is reporting Overseas Tax Dragnet (FATCA) Is Refocusing On Country Partnerships.

According to this,US Department of Treasury is now negotiating with 40 countries.  It sounds like each could have it’s own specific agreement. What a bureaucratic nightmare for IRS, which can’t even deal with its own bureaucracy now.

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.

“It is clearly less airtight and bulletproof. But the (FATCA) statute as written was wholly unachievable,” he said.

I would say “unachievable” is a bit of an understatement.

I personally don’t care whether it’s direct reporting to IRS or an IGA.  My private financial information is not going to be reported to a foreign government by either my bank or my government.  They are not even going to be given information on my place of birth.

 

22 thoughts on “FATCA Refocusing On Country Partnerships (Reuters)

  1. This is how McQuaig co-author defended their support of FATCA.

    Not entirely satisfactory…

    Thanks for passing this along.
    I appreciate all the difficulties that recent changes in US tax law and enforcement practices have caused US citizens living abroad. We obviously were not dealing with any of those issues in the book.
    Our broad point was quite simple – in order for modern income taxes to be enforceable, particularly against the wealthy, every financial institution in the world should have to report the income earned by depositors to the country in which those depositors might be liable to pay tax. There is no question that we are very very slowly moving in that direction and FACTA turned out to be an incredibly important initiative in achieving that objective. A number of countries are now entering into reciprocal arrangements with the US to exchange this financial information.
    It is the case that US taxes on the basis of citizenship, but that is an entirely different issue. It would be odd to argue (I think) that if one is opposed to that basis of tax jurisdiction that therefore you should be opposed to all efforts to prevent the evasion of the rule – including efforts that might go some way to reducing the evasion of taxes on the more than $21 trillion of assets held in tax havens around the world.
    Be well,
    Neil

  2. Blaze

    You should take a look a my post on Brock regarding the famous Canadian writer Linda McQuaig coming out in favor of FATCA. In fact its going to get worse I am hot on the trail of whether Canadian unions such as OPSEU and PSAC(along with charities such as the Salvation Army of Canada) are giving their members union dues to lobby in favor of FATCA down in DC and against the Canadian Government.

    http://isaacbrocksociety.ca/2012/09/22/linda-mcquaig-and-neil-brooks-traitors-to-canada-on-fatca/

    McQuaig actually crictized the Canadian Bankers Association and Flaherty saying they were on the side of the “rich” and the “powerful” while saying those in favor of FATCA where trying to help the poor and hungry.

  3. @Hazy2 Scary stuff. I hope Tim will comment on what that UK provision could mean for Canada.

    Asian FFIs are now upset about FATCA. http://www.risk.net/asia-risk/feature/2207706/asia-financial-institutions-unhappy-about-scope-of-fatca

    According to this, FATCA regs require FFIs to determine why customers abandoned US citizenship. I don`t know where that information came from. My understanding is the regs allow for a CLN or proof of non-US citizenship and a reasonable explanation of renunciation of US citizenship. I haven`t seen anything that says the customer must provide a reason why to their bank.

    This also says it is illegal in Hong Kong to close an account.

  4. The complaints regarding loss of sovereignty because Canada has agreed to share a few embassies with the UK should give some hope that the much more serious issue of FATCA implementation and its implications will create a much much greater hullabaloo.

  5. @Hazy2
    Good that you picked up on that. I really doubt the U.S. would put that in an agreement if they thought there was any chance they would have to honour it, down the road. Doesn’t look very promising that Canada would end up with a better agreement.

  6. For those hoping for a more benign Canada -US IGA please note Article 7
    of the UK-US Agreement. In a request for consultations on the agreement by UK Treasury paragraph 3.59 states:

    Article 7 contains what is generally referred to as “most favoured nation provision” This means that if another FATCA Partner jurisdiction obtains more favorable terms in their bilateral agreement than those included in the UK-US Agreement then the UK can also obtain these benefits”.

    So essentially, if Canada or another country gets a better deal, then the UK gets it also.

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