(This blog is continued from a longer set of posts which you can find here: Part 1: Introducing FATCA – What Does It Mean In Your Life? and Part 2: FATCA: How Does The Meadows Bill Interact?)
I was asked to answer the question:
“What exactly would it mean to repeal FATCA?”
The short answer to the question is:
“We make FATCA go away by reversing all the changes to the Internal Revenue Code that collectively comprise FATCA.”
(This is a continuation of a previous post by John Richardson titled, “Introducing FATCA – What Does It Mean In Your Life?” It gives a great summary of FATCA and leads directly into this article.)
First, About the FATCA legislation …
2012 – The world according to FATCA – For the compliance industry: “The Gift That Just Keeps on Giving.”
Be patient. Settle in for the ride. Historians will write much about the role FATCA played in eroding America’s role as a world power.
There is no legislative record which explains the purpose of FATCA. FATCA appeared as an “offset provision” in the HIRE Act which was signed into law by President Obama in March of 2010. Some claim that FATCA was for the purpose of preventing Homeland Americans from “stashing their wealth” in unreported “foreign bank accounts” outside the United States.
The context: Form 8938 was created by the IRS to meet the reporting requirements mandated by Internal Revenue Code S. 6038D. S. 6038D was mandated by S. 511 of the HIRE Act.
On March 18, 2010, the “Hiring Incentives to Restore Employment Act” or “HIRE Act” was signed into law. Section 511 of the HIRE Act created I.R.C. § 6038D. This section requires specified individual taxpayers with an interest in “specified foreign financial assets” to file Form 8938 if the aggregate value of those assets exceeds the applicable reporting threshold. The applicable reporting threshold is generally $ 50,000, but higher asset thresholds apply to U.S. taxpayers who file a joint tax return or who live abroad.
Tax practitioners dread Form 8938 in large part because it means more, and often times duplicate, reporting. For example, a taxpayer with more than $ 10,000 in an offshore account already must file a Report of Foreign Bank and Financial Accounts (FBAR) with the IRS. But in a post-Form 8938 world, that same taxpayer must file a separate Form Read More
Creeping up to the New Year, the Internal Revenue Service (“IRS”) showed an uncharacteristic sign of holiday goodwill. On December 30, 2013 the IRS issued Temporary Treasury Regulations providing guidance with regard to so-called “passive foreign investment companies” (“PFIC”). The areas covered in the Regulations include guidance in determining ownership of a PFIC (specifically, attributing ownership of PFIC stock through partnerships, estates and trusts), the annual filing requirements for shareholders of PFICs and guidance on the exception to the requirement for certain shareholders of foreign corporations to file Form 5471, “Information Return of U.S. Persons with Respect to Certain Foreign Corporations.’
Broadly speaking, the US tax laws impose a special tax and interest charge on a US person that is a shareholder of a PFIC when the investor receives an “excess distribution” from the Read More