“Poor America...” writes a French friend. “It’s not the land of the free anymore. Now, it’s the land of slaves.”
The FATCA law (Foreign Account Tax Compliance Act) will force banks across the globe to collaborate with the IRS. Here's an explanation of the huge repercussions this legal precedent will have on banks and banking clients...
Once FATCA — Foreign Accounts Tax Compliance Act — is enacted on January 1, 2013, banks worldwide will find themselves subject to the American tax administration bureau known as the IRS (Internal Revenue Service). Adopted in March, 2010, FATCA is a facet of the broader Hiring Incentives to Restore Employment (HIRE) Act which is designed to promote employment opportunities in the United States. In order to finance the HIRE Act, fighting tax evasion is even more in the spotlight than it has been in the past and Washington wants to use its political clout to get its message across this time. What this really means is that foreign banks — or FFIs (Foreign Financial Institutions) — will be obliged to conform to a long series of procedures designed to identify US Persons (US citizens & Green Card holders) subject to American taxes. This naturally concerns American citizens but likewise extends to American nationals’ foreign spouses. However, the long arm of the US administration will even be going so far as to include foreigners residing outside American borders, some of whom may have never even set foot on US soil. This is due to the fact that non-American banks will be obligated to report portfolios which include American assets even if they belong to foreigners with no ties to the US.
“We used to be so happy when we got to the US,” said another European. “We felt we could breathe more freely. The country was so big...so prosperous...and so open.
“That was what I remember from about 20 years ago. But now it is quite different. I dread coming to the US. We came through US customs in Atlanta a few weeks ago. My wife had a half-eaten sandwich in her bag...which she had forgotten about. They put us in a special room and treated us like we were criminals. It was ridiculous...and humiliating.
“But there’s always something. Someone is always yelling at you. Everything is illegal or forbidden. It just doesn’t seem like the same country it was a few years ago. So, we only come here when we have to for business reasons.”
*** “There goes the republic,” says an article at Truthdig, by Robert Scheer.
The defense authorization bill that Congress passed and President Obama had threatened to veto will soon become law, a fact that should be met with public outrage. Human Rights Watch Executive Director Kenneth Roth, responding to Obama’s craven collapse on the bill’s most controversial provision, said, “By signing this defense spending bill, President Obama will go down in history as the president who enshrined indefinite detention without trial in US law.” On Wednesday, White House press secretary Jay Carney claimed “the most recent changes give the president additional discretion in determining how the law will be implemented, consistent with our values and the rule of law, which are at the heart of our country’s strength.”What rubbish, coming from a president who taught constitutional law... Sadly, this flagrant subversion of the constitutionally guaranteed right to due process of law was opposed in the Senate by only seven senators, including libertarian Republican Rand Paul and progressive Independent Bernie Sanders.
Regards,
Bill Bonner
for The Daily Reckoning Australia
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About the Author
Best-selling investment author Bill Bonner is the founder and president of Agora Publishing, one of the world's most successful consumer newsletter companies. Owner of both Fleet Street Publications and MoneyWeek magazine in the UK, he is also author of the free daily e-mail The Daily Reckoning.
Comment by Chris Bennett on 20 December 2011:
Eh Fellas,
I read Bills story on FATCA law (Foreign Account Tax Compliance Act). I wonder if the all important buracratic terminoligy section would be - Foreign Account Tax Compliance Act Terminology). Or better known as the FATCAT law.
Perhaps Bill should use the old terminology Fat Cats rather than Zombies, as it seems the Zombies err Fat Cats seem to prefer this.
Keep up the good work boys,
Cheers,
Chris
Comment by Tom on 21 December 2011:
FATCA is a human rights issue, especially for Americans who committed the "crime" of actually falling in love with someone residing in another country. This law is causing thousands of people to renounce their citizenship so that their foreign spouse isn't caught up in the confusing US tax system and under obligations that they don't even understand. This has nothing to do with tax evasion. There are laws in place for that and agreements can be made with governments easily. It's as if the US government is trying to force foreignors to abide by US law when they have never even entered the US. Literally, the Obama administration, Carl Levin and Shulman are giving the world the finger. The arrogance is mind-blowing.
Comment by Andrew in Canada on 22 December 2011:
This has become a huge issue in Canada, where up to one million "US citizens" are thought to live, many of them dual citizens. Through FATCA, the US hopes to seize most of our savings and pensions. They are vulnerable because they have not filed US income tax and -- most crucually -- reported their foreign financial assets. This is because a) they didn't know they had to file, or b) they didn't know they are US citizens. On the latter question, the US regards you as a US citizen if:
- You were born in the US, even if your parents are not US citizens and you have never lived there
- You have taken out citizenship in another country but have not formally renouced US citizenship
- You were born outside the US and your parents are, say, Australian, but at least one parent is a dual citizen (US)
- You have a permanent green card entitling you to work in the US.
Penalty for non-reporting on "foreign" financial accounts is $10K per year per account (savings, chequing acct, pension, life insurance, etc.). This is for "unwillful" failure to file. For willful failure, the penalty is $100K per accout per year or 50% of the account per year, whichever is larger. These are cumulative and may exceed the size of the account. The Canadian government will not collect these penalties, which is where FATCA comes in. Banks etc. must remit 30 percent withholding tax to the IRS from "recalcitrant" accounts, i.e. accounts of persons suspected of being US citizens, even if they live in Canada. If they refuse to cooperate, they will be hit with a 30% surcharge on all US business, effectively closing them out of the US market.
The same story holds for Australia, I trust.
FATCA, by the way, is almost totally an initiative of the Democrats and is based upon earler legislation, never passed, co-sponsored by then-Senator Barack Obama.
No decent country take such predatory action against its "citizens". This is the action of a country slipping into fascism.
Comment by Andrew in Canada on 22 December 2011:
My apologies. Out of carelessness, I garbled a couple of things I tried to say. Here is an improved version:
==========================
This has become a huge issue in Canada, where up to one million "US citizens" are thought to live, many of them dual citizens. Through FATCA, the US hopes to seize most of their savings and pensions. They are vulnerable because they have not filed US income tax and -- most crucually -- they have not reported their foreign financial assets. They have not done so because a) they didn't know they had to file, or b) they didn't know they are US citizens. On the latter question, the US regards you as a US citizen if:
- You were born in the US, even if your parents are not US citizens and you left as an infant.
- You are a US citizen, have taken out citizenship in another country but have not formally renouced US citizenship
- You were born outside the US and your parents are, say, Australian, but at least one parent is a dual citizen (US)
- You have a permanent green card entitling you to work in the US.
These are not tax cheats. For the most part, they do not owe taxes. In many cases, they are not US citizens in any sense except the legal one utilized in predatory fashion by the US. They have simply failed to do some onerous and rather pointless paperwork. What are the consequences?
Penalty for non-reporting on "foreign" financial accounts is $10K per year per account (savings, chequing acct, pension, life insurance, etc.). This is for "non-willful" failure to file. For willful failure, the penalty is $100K per accout per year or 50% of the account per year, whichever is larger. These are cumulative and may exceed the size of the account. The Canadian government will not collect these penalties, which is where FATCA comes in. Banks etc. must remit 30 percent withholding tax to the IRS from "recalcitrant" accounts, i.e. accounts of persons suspected of being US citizens, even if they live in Canada. If the banks refuse to cooperate, they will be hit with a 30% surcharge on all US business, effectively closing them out of the US market.
The same story holds for Australia, I trust.
FATCA, by the way, is almost totally an initiative of the Democrats and is based upon earler legislation, never passed, co-sponsored by then-Senator Barack Obama. So much for the hope I placed in the new president!
No decent country take such opportunistic, predatory action against its "citizens". This is the action of a country slipping into fascism.
Comment by shortchanged on 31 December 2011:
For those in the insidious position as Andrew in Canada, there are countries that do not kowtow to the US. I can't tell you where, but sometime ago i came across a web site for just such an event. A little time on google will, I am sure, bring results.
As to Australia, where i live, we have an organisation called centrelink, which is more powerful than any police force in this country. Acting as a government social security department (why don't they call themselves that?) they know everything about anyone whom has had any pension or benefit, including child benefit.This includes all those whom earn up to $150,000 a year. Your bank account/s are available to them, your medical records, doctors you visit, and every time you exit and or reenter the country your name is "flagged" at centrelink. If you leave Australia without their permission a letter is sent to your address, (a bit stupid really, you're not there are you?) and your Pension if you are a pensioner is stopped. That seems to be their answer to everything.It's even written on all letters,,Failure to comply and your pension will be stopped.
Every penny you have they know about, and to top it all off, centrelink now can access your Tax records, which are supposed to be confidential.There is more, but I can't think anymore, it makes my blood boil to see what has happened to this once great and free country. What Gillard has in store next, will probably be some thing like the US FACTA, after years of wasteful spending Australia is now broke.
After 40 years i am now thinking of going back to my birth country, at least there I won't have to give my passport number to get a mobile phone.
Rant over.
Happy New Year To All
Comment by American Expat on 10 January 2012:
FATCA: The Betrayal of a Revolution
America’s Founders and Signers of the Declaration of Independence are rolling in their graves over the ignorant hypocrisy of the US Government.
America would not exist if great men like George Washington, Thomas Jefferson, Benjamin Franklin, Patrick Henry, Thomas Paine, John Hancock, Paul Revere, John and Sam Adams and others had bowed to the tyranny of the British Empire.
Today’s politicians in the city bearing Washington’s name are a disgrace in taxing Americans abroad who have no representation in US Congress and receive no benefits from the US Government. They are completely ignorant of their own country’s history.
Americans abroad do not use US highways, bridges, dams, schools, hospitals, fire, police, courts etc. They do not ask for or receive unemployment benefits. They receive NOTHING from the US government other than a travel document, which they pay for.
The battle cry of the American Revolution was No Taxation without Representation!
Like the British Stamp Act and other Intolerable Acts, FATCA and all the other legislation coming out of US Congress targeting Americans abroad will inevitably result in tidal wave of Renunciations of US Citizenship.
Americans abroad are awakening to the true nature of the US government. Like the colonialists in America, some will accept it, but many will not and make their own Declarations of Independence.
The increase in Renunciations of US Citizenship will be ignored at first, but before long, it will become a major source of embarrassment. Former US Citizens are already comparing themselves to East Germans jumping over the Berlin Wall.
The politicians in Washington need to study their own country’s history. As George Santayana wrote, “Those who cannot remember the past are condemned to repeat it.”