Archive for FATCA

Is FATCA Aimed At Resident Americans, Residents Of Other Countries, Or Both? (Part 3 – Notice 2023-11)

Is FATCA Aimed At Resident Americans, Residents Of Other Countries, Or Both? (Part 3 - Notice 2023-11)

Summary – The Reader’s Digest Version …

Although FATCA was clearly motivated by the behaviour of US citizens resident in the United States, Treasury did NOT interpret the “purpose” as being limited to prevent abuses by “residents of the United States”. Rather Treasury appears to have interpreted the purpose of FATCA (very broadly) to target residents of other countries.

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Non-U.S. Banks May Be Forced To Sever Ties With US Citizen Clients Because Of FATCA (Part 2 – Notice 2023-11)

Non-U.S. Banks May Be Forced To Sever Ties With US Citizen Clients Because Of FATCA (Part 2 – Notice 2023-11)

Introduction – The Readers’ Digest Version

This is Part 2 of a series of posts discussing the world of FATCA and how IRS Notice 2023-11 is likely to impact it. (Part 1 is referenced in the above tweet.) In Part 1 I described how Notice 2023-11 imposes significant additional obligations on both non-US banks and the IGA Model 1 governments. (This post will be best understood by first reading Part 1 and understanding the additional compliance burdens imposed on non-US banks as a result of Notice 2023-11.) The purpose of this post (Part 2) is to suggest that the overall context of FATCA, the FATCA IGAs and US citizenship taxation will incentivize non-US banks to purge US citizen clients. It is reasonable to conclude, that US citizen clients are a clear and present danger to their businesses.

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How The World Should Respond To The US FATCA Driven Attack On The Tax Base Of Other Countries

How The World Should Respond To The US FATCA Driven Attack On The Tax Base Of Other Countries

This purpose of this post is to continue the general theme of focusing on the difference between what a law says and what the law means in application and effect. Yesterday’s post (The Pandora Papers, FATCA, CRS And How They Have Combined To Create Tax Haven USA) focused on the role that the 2010 US FACTCA law played in in facilitating the rise of Tax Haven USA. (To be clear, I am not saying that FATCA was the sole cause.) That said, the unwillingness of the USA to sign the CRS (“Common Reporting Standard”) has also played a role in the growth of the US as a tax haven.

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A Landscape PAINting Of The Effects Of U.S. Citizenship-Taxation On U.S. Citizens Living Outside The U.S.

A Landscape PAINting Of The Effects Of U.S. Citizenship-Taxation On U.S. Citizens Living Outside The U.S.

Introduction:

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Written by | Posted in Citizenship Based Taxation • FATCA • FBAR • PFIC • TaxConnections

The $50,000 FATCA Question: Are Accounts Less Than $50,000 USD Reportable Under The US Canada IGA?

The $50,000 FATCA Question: Are Accounts Less Than $50,000 USD Reportable Under The US Canada IGA?

Part I – What does the $50,000 threshold for FATCA reporting mean in practice?

This post is focused ONLY on accounts held by (1) individuals who (2) are “US Persons” within the meaning of the FATCA IGA who (3) have been identified as “US Persons” and who (4) have been unable to “self-certify” that they are not “US Persons”. There are tens of thousands of US citizens in Canada and other countries that carry on normal banking activities with their “USness” undetected. Their accounts are not being forwarded to the USA.

This post is NOT intended to apply to entity accounts or any other kind of account.

The Context …

As a result of the FATCA IGA, Canadian financial institutions are required to report any accounts owned by “US Persons” to the Canada Revenue Agency. The definitions section of the IGA stipulates that the definition of “US Person” is determined by the US Internal Revenue Code. Therefore, all countries who have signed FATCA IGAs have allowed the United States to define any of their citizens or residents as “US Persons” now and in the future. (I wonder whether this is a reason why China has not signed a FATCA IGA.)

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The USA Of The 21st Century Is Like Britain In The 19th Century

John Richardson And FATCA

(Reposted as a top blog on TaxConnections during 2019)

In 2018 Professor Lucy Salyer of the University of New Hampshire published “Under the Starry Flag” – a book largely about the 1868 Expatriation Act. The book describes a period in American history where Britain treated its “subjects” as having perpetual loyalty to the British Crown. To put it simply: One could NOT emigrate to America and expatriate. No matter what one did, those who were born British Subjects were destined to die British Subjects.

The above tweet links to an interview of Professor Lucy Salyer conducted on February 9, 2019. The interview is about Professor Salyer’s new book “Under the Starry Flag”. It is a fascinating (brilliantly researched) work. The publisher describes the book as:

The riveting story of forty Irish Americans who set off to fight for Irish independence, only to be arrested by Queen Victoria’s authorities and accused of treason: a tale of idealism and justice with profound implications for future conceptions of citizenship and immigration.

In 1867 forty Irish American freedom fighters, outfitted with guns and ammunition, sailed to Ireland to join the effort to end British rule. Yet they never got a chance to fight. British authorities arrested them for treason as soon as they landed, sparking an international conflict that dragged the United States and Britain to the brink of war. Under the Starry Flag recounts this gripping legal saga, a prelude to today’s immigration battles.

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The #FATCA Is Americans Abroad Are Subjected To A Far More Punitive Tax System Than Homeland Americans

JOHN RICHARDSON- FATCA, Form 3520-A

The purpose of this post is to continue the discussion generated by the “Open Letter To Democrats Abroad” (discussing the notion that “revenue neutrality” should be part of the “citizenship taxation” debate) and the “13 Reasons Why” (describing why Americans abroad are being forced to renounce U.S. citizenship.

Neither of those posts really described that fact that as ridiculous and unfair as “citizenship-based taxation” is, Americans abroad are “in effect” subject to a separate tax system than are Homeland Americans. A more extensive version of this post appeared at Tax Connections on March 13, 2019.

There are many instances where a U.S. citizen living abroad who earns his salary abroad, owns his assets abroad, has his pension abroad and is married to a non-U.S. spouse will pay higher U.S. taxes on income that is local to him than a comparable Homeland American would pay on income that is local to him.

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Written by | Posted in FATCA • Form 3520/3520-A

Survey Dispels Myth Of Wealthy Americans Abroad And Why Middle Class Americans Abroad Are Forced To Renounce U.S. Citizenship

John Richardson On FATCA

Introduction

This blog post features the research of Laura Snyder. It is (I believe) the single and most comprehensive study of (1) the U.S. legislation that is understood to apply to Americans abroad and (2) the disastrous impact this legislation has on them. To put it simply, Congress is forcing Americans Abroad to renounce their U.S. citizenship.

The bottom line is that for Americans Abroad:
“All Roads Lead To Renunciation!”

And now over to Laura Snyder with thanks.

“I Feel Threatened by My Very Identity:”

US Taxation and FATCA Survey

Introduction

In autumn 2018 I worked with a France-based association of Americans living overseas to organize an online survey addressing the topics of FATCA and US taxation. The survey was open for participation for a period of about six weeks, from late September to early November. The survey was conducted using the open source software LimeSurvey.

Approach and Methodology

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Written by | Posted in Americans Abroad • FATCA • United States Taxes

How Could The IRS Find Out That I Am Not Tax Compliant As An Expat?

Olivier Wagner

You’re living your adventure and you’re settled in your new home, having non-US bank accounts, a non-US employer and a non-US social life. You have limited ties with the US and since the people who pay you (banks, employer) are not in touch with the IRS, you consider simply not filing US tax return. What could go wrong?

As you might know, on some level… US citizens are required to report their worldwide income on a US tax return, regardless of where they live.

Think AGAIN…

IRS has a few proven ways they use to track people down.

Below you will find the most common ways that IRS can track you down and check if you filed your US tax return, no matter where you live in the World.

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Written by | Posted in Expatriate • FATCA • FBAR Filing

Dutch Tax Minister: U.S. Won’t Take Immediate Action Against Banks Over FATCA Info Shortcomings

Dutch Tax Minister, FATCA

Dutch tax minister Menno Snel has said that his country’s banks and financial institutions should not feel a need to panic over those of their so-called “Accidental American” account-holders who lack U.S. Social Security numbers and other key data soon to be required by the U.S. tax authorities, as he has been assured that any repercussions for failing to comply with the regulations in question could be delayed by as long as several years.

Snel’s comments came in a 16-page update to fellow Dutch lawmakers, written in Dutch, on various tax matters. He also made similar comments in recent briefing of Dutch MPs, according to DutchNews.nl, an English language news website based in the Netherlands.

Snel’s reading of the situation is likely to be viewed with interest and in some cases, relief by expat “accidentals” who lack Social Security numbers and who have been warned that they stand to lose their bank accounts by Dec. 31, or earlier, because of this. That’s the date when a “grace period,” during which non-U.S. banks and financial institutions have not had to report to the U.S. internal Revenue Services the Tax Information Numbers (TINs) of all of their American citizen account holders, ends.

U.S. authorities have not been forthcoming on the matter, nor have most non-U.S. financial institutions, beyond telling their clients that they need to get a Social Security number as soon as possible if they are not to lose their accounts. As many as 300,000 accidental Americans are believed to live in the European Union alone, according to European Parliament estimates, of which around 1,000 have been estimated to live in the Netherlands.

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Presumptions Of Tax Residency In A FATCA World

John Richardson

Introduction – All The World Is A Multiple Choice Test

Q.1 – A tax resident of the United States is taxable on his worldwide income. According to the Internal Revenue Code of the United States, which one of the following is NOT a tax resident of the United States of America?

(A) A Congresswoman “Born In The USA”, head of her household, who does not and has never had a U.S. Passport
(B) An unmarried Green Card Holder who has never filed an FBAR who lives in El Paso Texas
(C) A fifty year old U.S. citizen who is divorced has never set foot in the United States, doesn’t have a U.S. Social Security Number and lives in and pays full taxes in Germany
(D) A citizen of only Canada who lives four months a year in Florida with his U.S. citizen wife, in a house he owns where he parks a car he owns with Florida license plates
(E) A citizen of Grenada who lives full time in the USA with an E1 visa operating a fast food franchise

For help in finding the answer see …

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IRS Provides Limited Tax Relief For Certain Individuals Renounced(ing) After March 18, 2010

John Richardson On Renouncing U.S. Citizenship

In what appears to be a response to how FATCA issues affect “accidental Americans” living outside the United States, the IRS has introduced a procedure providing limited tax relief, penalty relief and certainty for accidental Americans who need to renounce U.S. citizenship in a FATCA world. The problem is described in this recent article by Helen Burggraf at American Expat Finance. Note that March 18, 2010 was the date that the HIRE Act (of which FATCA was a revenue offset) was enacted – making it clear that this relief is tied to FATCA and NOT to “citizenship-based taxation” per se.

In a nutshell, it appears (I will read this in more detail again) to say that Individuals who:

1. Have NEVER filed a 1040 U.S. tax return

2. Have relinquished/renounced U.S. citizenship after March 18, 2010

3. File the five tax years in the year prior to relinquishment

4. File a tax return in the year of relinquishment

5. Have a net worth of less than 2 million USD at the time of relinquishment AND at the time of filing

6. Have a total of less than $25,000.00 in U.S. tax liabilities over the five year period

7. Certify that their failure to file was non-willful.

can file, avoid paying the U.S. taxes owed and NOT be a covered expatriate.

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