FATCA the disaster waiting to happen

[ikarus]

I make this post because of the cheers from another message board. The truth is that IRS opened on August 17 the portal where foreign financial institutions (FFI) are supposed to register . Those who will not do it until April 2014 will be subject to sanctions. Te IRS is supposed to publish the first list of registered FFI in June 2014 and enact sanctions by July 2014. None of the Thai banks , as of today, can register with IRS, since current Thai legislation would not allow them to do so.
As a matter of fact, I have a number of various relationships with several FFI and NONE OF THEM so far asked for my TIN (tax identification number). What it means is that those FFI either:
1. Do not plan to register with IRS
2. Plan to close my accounts with them
If your Thai bank will not register with IRS, each of your transfer to this bank from any bank in US will be subject to 30 percent of withholding tax starting July 2014. And it is just the beginning. Only total idiots among US expats can cheer in this regard, cause there is absolutely no way for Thai banks to comply with FATCA under current conditions.



http://www.accountingtoday.com/news/FAT ... 007-1.html (http://www.accountingtoday.com/news/FATCA-Losing-Way-68007-1.html)

[Yraen]

Ikarus, do some research into BitCoin. This might be the answer to the USian Govt's grab-all.
Self-respecting banks in other countries should "flip the bird" to the US. It seems only USian citizens will be penalised. I cannot see that lasting too long.

[billyhouston]

This may be relevant, or it mat be out of date:

http://www.telegraph.co.uk/finance/currency/10210022/Bitcoins-banned-in-Thailand.html

[Up2U]

I doubt if Thai banks will need to ask for your TIN as they have your passport number and that is all IRS computers need to link a taxpayer and Thai financial reporting. I have three Thai bank accounts and I doubt none of them will ask for my TIN. For those Americans who are asleep and haven't followed FATCA reporting requirements, they might be in for a rude awakening as the IRS finally catches up with the nonreporting tax cheaters. Of course, money laundering and catching tax cheaters was the purpose of FATCA.

[ikarus]

I doubt if Thai banks will need to ask for your TIN as they have your passport number and that is all IRS computers need to link a taxpayer and Thai financial reporting. I have three Thai bank accounts and I doubt none of them will ask for my TIN. For those Americans who are asleep and haven't followed FATCA reporting requirements, they might be in for a rude awakening as the IRS finally catches up with the nonreporting tax cheaters. Of course, money laundering and catching tax cheaters was the purpose of FATCA.
Indeed, Americans are in for rude awakening (see e.g.http://money.cnn.com/2013/09/15/news/ba ... index.html (http://money.cnn.com/2013/09/15/news/banks-americans-lockout/index.html)) but "nonreporting tax cheaters" should not worry: the earliest year for which foreign banks supposed to report is 2014. Not only that: the threshold of reporting has been raised several times and now in most of the cases only accounts with the balance of million dollars or more are supposed to be reported. The law has never been about tax cheaters (it is just official pretext) and in reality is about making it difficult , if not impossible for Americans to keep their assets offshore: just in case bankrupt government needs more funds to fund growing army of mostly worthless government functioners.
As for TIN, you can try to persuade yourself that banks do not need it. E.g. I have accounts with foreign branches of CITIBANK and they send usual 1099 form
to IRS: of, course, they ask for my Social security number. I am also aware of a couple asset management offshore firms who plan to comply with whatever US government throwing their way and they already asked all their US customers about TIN.
The problem is that you simply not familiar with facts: you see, reading IRS website will not help you to understand what is going on. In any case, after July 1, you will for sure find out...

[2lz2p]

I posted on another message board the latest news I have seen on the subject related to Thailand. It was from the Bangkok Post noting that the Thai Cabinet was entering into an Intergovernmental Agreement with US and the Ministry of Finance will take responsibility for reporting the information required. Further, the Ministry is in process of preparing a law for the Thai Parliament to enact that will allow disclosure of the information. There is also a US Gov't website that has the latest "model agreements" (it appears one is for governmental agreements and the other is between US and individual banks). In the intergovernmental agreement, it shows the information to be reported. Since most of us have depository accounts here, it appears the information will be for those type accounts: name, address, and TIN (Taxpayer Identification Number), account number, account balance as of the end of the relevant calendar year or other reporting period, and gross amount of interest paid or credited. An appendix to the model agreement identifies the due diligence process to be done to identify reportable accounts - the appendix excludes from reportable accounts "depository" accounts unless they have the equivalent of over US$50,000 at the end of the year (or other reporting period).

Bangkok Post article:
Americans face tax disclosure Published: 6 Sep 2013 at 00.00 Newspaper section: Business The Finance Ministry has prepared a draft law stipulating financial institutions report on the financial... Please credit and share this article with others using this link:http://www.bangkokpost.com/business/news/368264/americans-face-tax-disclosure

The model agreements can be found here:

http://www.treasury.gov/resource-center/tax-policy/treaties/Pages/FATCA.aspx

Can we hope all the Americans in Thailand will soon be headed home, never to return?

[Oliver]

The joys of colonialism...economic colonialism. This sounds like a couple of nineteenth century memsahibs discussing how to get the cheapest and yet most reliable
cha-wallah.
And then wondering why they spit in the tea.

[Nirish guy]

An article on the BBC news site about FATCA and how it's shaping up to be a pain in the ass for Expats the world over it seems.

http://www.bbc.co.uk/news/magazine-24135021

[ikarus]

It is not related to FATCA but I thought I can add it here, because it can affect US expats in a quite unexpected way. Beside FATCA, there is another new law,
the so-called Dodd-Frank-another pearl of psychopathic congressional minds. While I am not expert on it (and am not going to waste my time reading literally thousands pages of new regulations related to it), at least one of its aspects effects international wire transfers from US . Big US banks started adjust to it which in some cases
(CITIBANK,HSBC, Chase) already effected the ability of their retail customers to make international transfers from US. I would not be surprised if some of the US expats will start to find out that their favorite route for such transfers is no longer working for them...

[bobsaigon2]

For international transfers from personal accounts (not business accounts), Bank of America now requires that international repetitive wire transfers be sent in the currency of the receiving account, and that the purpose of the payment be indicated, e.g., family support, capital injection, goods, employee compensation, etc. This appears to be related to FATCA.

For international transfers from personal accounts (not business accounts), Bank of America now requires that international repetitive wire transfers be sent in the currency of the receiving account, and that the purpose of the payment be indicated, e.g., family support, capital injection, goods, employee compensation, etc. This appears to be related to FATCA.Any idea how they can verify the reason that you give?

[ikarus]

The way I understand Dodd-Frank, it requires that US bank provides to the customer exact exchange rate when the international wire transfer is made. For example,if transfer is made to the US Dollar account in foreign bank in US Dollars, it should not create any problems. However, if transfer is made in US Dollars to Thai bank to the account in Thai baht, it may create problems, because exchange rate should be provided in advance by Thai bank, which is frankly unrealistic due to fluctuations of exchange rates. It may explain why bank of America requires the transfer (in this case) in Thai baht. It is, however, a well known fact that Thai banks give much better exchange rates than US banks. Besides, if transfer is made in Thai baht from overseas to Thai banks, they usually impose extra fees.
I use instantaneous me to me transfers through HSBC and CITIBANK. Both banks imposed restrictions on transfers in certain currencies (e.g. Malaysian ringit in HSBC) for such trans fers because technically they cannot guarantee exchange rates in the time of transfer.

[Jellybean]

For international transfers from personal accounts (not business accounts), Bank of America now requires that international repetitive wire transfers be sent in the currency of the receiving account, and that the purpose of the payment be indicated, e.g., family support, capital injection, goods, employee compensation, etc. This appears to be related to FATCA.Any idea how they can verify the reason that you give?
Having worked тАШon the other sideтАЩ BrisbaneGuy, I would say that such declarations only become an issue when they are subject to a detailed enquiry and the tax authorities press you to provide proof of the nature of the transfer. If you cannot or it is found that the declaration was, in fact, false, then it casts suspicion on all your tax affairs. Then, I suspect in the case of the IRS, (which I had occasion to work with on several occasions) our US members could end up in deep doo-doo.

So the answer Jellybean is "they cant". If your already under investigation your probly screwed anyway.

[Nirish guy]

I think BG while you're right that they 'can't" I think the completion of that statement should perhaps read "for now" as I'm guessing it's the same as the UK's money laundering rules when you deposit several thousand pounds in cash ( or certainly over ┬г10,000 most definitely by law) they invite you and "request" that you make a declaration as to the where the money came from with that information then being passed on by the Inland Revenue and just as Jellybean describes it's not that they necessarily care about "actually" checking where each transaction is linked ( which I'm sure they'd deny ) but it's more a case of them inviting you to drop yourself in it at some later date in the future, when perhaps for some other reason they maybe have reason to speak with you about your tax affairs and THEN they start digging and find your old declarations and then jump on you to ask you to back up each and every claim you've made perhaps in the last 10 years and all accompanied with full evidential records of each financial transfers to back up and justify every statement you had previously made. Then if and when you can't do that successfully they may launch a FULL tax investigation on you ( if they haven't already as you've already said), which of course would be both a pain in the ass admin wise and also hugely expensive in accountancy fees if the persons affairs weren't in order (or legitimate).

So, yes bottom line in the short term anyway is as you say "no they can't" - but as I say I think the term "for now" should be added to the end of that - and THAT'S the unspoken threat and risk implied with treating their request lightly ( and I'm not suggesting you are debating doing that in any way there by the way of course).

Surely the important part is "if they've come looking for you you're screwed already". After all if we're practicing Buddhists (we are all practicing Buddhists in this forum aren't we, I mean I read guys saying this all the time here) then either we won't have accumulated material possessions or our attitude towards them is one of detachment?

[Dboy]

These are the first stages of US capital controls. They want Americans and their money to stay in America...someone has to work to pay for drone attacks and assassination programs. So lets see FATCA for what it actually is, in order to learn how to best deal with this threat. Bitcoin, as mentioned above, has its uses. It also has weaknesses (volatility, thinly-traded market, obvious threat to the USD). Do different things depending on your needs. For instance, I would not use Bitcoin for holding large amounts of wealth for the long term (perhaps use a combination of non-US bonds for that...such as Aussie Mortgages (FAX , US-traded ETF is paying around 6% right now). If you want to hold physical gold, consider Hong Kong or Singapore (check out Free Port Singapore). Gold is not a reportable asset to the f-ing IRS, nor is foreign real estate. Or consider keeping a % of assets in a US brokerage account, and staying outside the US most of the year in order to capture the $97,000 income exclusion, and play their game for now. Americans are going to have to learn to think the way the East Germans used to in order to survive. That means practicing good OPSEC, only enter an airport with a CLEAN laptop. Consider photocopying any financial documents you need and storing it in the "cloud" (encrypted of course) rather than moving anything like that through an airport. If the airport thugs take your laptop for searching, once they return it consider the laptop useless, and destroy it. Consider the US to be a criminal state (which it is) and learn to deal with them on those terms. Things will continue to change as the US govt gets more desperate over time. Tactics will need to change as their "laws" change, but guaranteed there will always be a way around what they are doing.

Dboy

I love reading loopy conspiracy theorists. Thanks Dboy.

[bobsaigon2]

Last week I called Bank of America to do an international wire transfer to an associate, using my business account. This was a non-repetitive transaction. I was asked to provide the purpose of the transfer, to which I replied "personal expenses". Afterwards, I checked the status of the transfer online and I saw that the transfer purpose was included in the notes.

The same day, I used my business account to do several non-repetitive wire transfers to an overseas account in my own name, but was not asked for the purpose of transfer.