1. James Kronenberg EA CPA says:

    Michael – “Kudos” to you for the “nitty gritty” tax disclosure issues for both FATCA & FBAR !! I’m wondering if you anticipate IRS eventually creating required “Due Diligence” procedures for Tax Preparers to follow similar to EIN (IRS form 8867) ? Seems likely in my humble professional opinion !

    • Mike says:

      Thanks, James. Very interesting observation about whether the IRS will eventually create “due diligence” procedures for tax preparers to follow. I haven’t given it much thought but that’s certainly not outside the realm of possibility. When you think about it, FinCEN has issued due diligence procedures for individuals who work in the AML sector. Who’s to say that the IRS may not take a page out of their playbook? We’ll just have to wait and see.

  2. A. Question says:

    To apply the description “shrewd diplomacy by President Obama and his Treasury Department” to a 30% economic sanction is just unbelievable. THAT’S your big stick and it has nothing to do with diplomacy.

    And your analogy of financial institutions as Labrador Retrievers rolling over after getting a treat is incorrect. They are rolling over to prevent another beating (30% economic sanction).

    • Mike says:

      My apologies for the late response. You make a good point. With a 30% withholding hanging over their heads like the sword of Damocles, I agree that foreign financial institutions are between a rock and a hard place. Very simply, they have little choice but to comply. Thanks for weighing in.

  3. A. Question says:

    People of the world are being deemed “US persons” whether they actively sought that title or had it forced unwillingly upon them. FATCA was brought in with little or no thought to the 7 million US persons abroad and it’s starting to make their lives unbearable to the point where the vast majority have considered going through the long and expensive process of renouncing citizenship. Not all will do it (or can afford it), but the numbers have drastically increased since news of FATCA has started to be covered by the media. The US is making renouncement even more out of reach by increasing the fee to $2,350.

    If you really care about “the poor, the forgotten and damned”, don’t publish these “just take it because it’s not going away” articles and start getting behind the litigation to stop this horrible law forced on countries around the world.

    • Mike says:

      First, my apologies for the late response. Second, as surprising as this might sound, I don’t disagree. As a matter of fact, readers like you have done an exceptional job presenting the other side of the argument. And that has caused me to change some of my views about FATCA. To be sure, I want to be clear that I was not a cheerleader for FATCA at the time I wrote this blog. My purpose was merely to shine some light on this law and to provide some background information about its implementation. But because of how controversial it is, I got more than I bargained for.

      In any event, I thought the first sentence of your comment was very insightful. Thanks for weighing in.

  4. Bill says:

    Hey Mr. DeBlis, how many foreign countries do you file tax returns and FBAR’s to? That is, countries where you don’t live or earn income. How would you like your private financial accounts sent to those countries’ tax agencies (for unjust tax and penalties)?

    The USA fought its War of Independence over the very injustice that it is now committing – unjust taxation abroad of people that it considers its property. The hypocrisy and criminality of the Obama administration is stunning. You have a lot to learn.

    • Mike says:

      I get the point. I know how passionate people are when it comes to expressing their frustration about FATCA. I’ve addressed some of the issues that you’ve raised in earlier comments that I’ve responded to.

      I will say this: the debate that we’re having is very healthy. It has caused me, an attorney who does not easily change his mind after he makes up his mind, to rethink his position on FATCA. That’s not to say that I was a cheerleader for the law before I wrote this blog. On the contrary, I had misgivings about it. But many of the arguments raised by these comments have been compelling enough to cause me to do a 180. That was the inspiration behind the blog that I wrote a few days later.

  5. Guest says:

    “Very simply, virtually every financial institution is complying.”

    Not really. The updated list of FFIs for Sept. was just published, containing approx. 100000 FFIs, up only 4000 from August. Considering the potential number of FFIs across the world, compliance is actually quite low.

    “2. Countries Around the World are Complying”

    Well, yes and no. Many are actually complying, but quite a large number of them have simply been “deemed compliant” by the US treasury, thus inflating the numbers and making them look much more impressive than they actually are.

    “3. Even Our Arch Nemeses Russia and China Have Agreed to FATCA”

    It really remains to be seen whether Russia and China will actually be compliant. I strongly suspect that they will not be, and that they’re just bluffing at the moment to buy them some time.

    “9. Forget Repeal or Dismantling FATCA”

    Maybe, maybe not. The US govt. is clearly discregarding it’s own constitution, its own laws as well as international law and the UN human rights charta. It remains to be seen how long they will get away with it. Also, when other countries begin to realise that the USA has no intention of holding up their end of the reciprical reporting agreements, compliance with FATCA is likely to plummet. Also, the fact that the USA is actively hindering people from freeing themselves of their “US person” status by quintupling the fee from $450 to $2350 is bound to entail some hefty blowback. What the USA is doing simply doesn’t fit in with the image of a free, democratic society governed by law. The USA will not be able to fool the rest of the world forever.

    “But for now, FATCA is here to stay.”

    How long is “now”? 😉

    • Mike says:

      First, my apologies for the late response. Second, I agree with your first two comments. Another reader directed me to Professor Byrnes’ article about September’s lackluster FFI compliance rate. Based on those statistics, I changed my position and retracted the comments that I made earlier pertaining to “every financial institution is complying.”

      With respect to your comment on number 9, you make a good point. I agree that there is seemingly a double standard and that other countries may begin to “push back” in the event that the U.S. does not honor their end of the reciprocal reporting agreements. However, only time will tell. And yes, the fact that the cost of renouncing citizenship has gone up exponentially doesn’t endear the U.S. to these “partner” countries.

      Lastly, I have no idea how long “now” is.

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