economy_1

A read to share:

http://finance.yahoo.com/news/heres-...193226792.html

Pollyana

Moved to the US forum as I can't really see why it's been posted in Australia....

Bob

Not really a surprise story... Was bigger news when the Zynga chap gave it up before the company went public.

Michael

The law also allows the Attorney General to declare that the person renounced their citizenship for tax purposes and ban them from ever entering the US again. For some such as CEOs, CFOs, investment bankers, or just about any senior executive of a company, that could possibly cause them a problem not being able to attend meetings, conferences, or company functions in the US and if they lose their job in the foreign country, the US market is not available to them. Even if the Attorney General does not declare an individual renounced their citizenship for tax purposes, the person has to be careful abut entering the US because when they renounce their citizenship, they have to declare all assets and pay an exit tax. If all assets weren't declared, they could be taken into custody for tax evasion when entering the US.

Some in congress want to impose even stiffer penalties such as not allowing companies partially or fully owned by people declared by the Attorney General not be allowed to conduct business in the US similar to financial institutions that don't comply with FATCA reporting.

Some in the article said it was more about the reporting than the taxes which is pure bull unless they have shell companies, secret accounts, or other types of financial vehicles to try to hide their assets. FATCA reporting should take less than 10 minutes to complete unless someone is illegally hiding assets.

I think the article primarily shows is that rich US citizens have been evading taxes for a long time and even after the amnesty given for secret Swiss bank accounts, many still continue to illegally hide assets but with FATCA, it is getting more and more difficult to illegally hide assets since foreign financial institutions (including the Swiss with about 35% of their financial business done in the US didn't have much of an option but to sign the FATCA agreement) want to do business in the US. So most foreign institutions have agreed to do FATCA reporting and if the individuals FATCA reporting doesn't match the foreign financial institutions FATCA reporting, that person could be in big trouble with the IRS.

theOAP

You do know that for an individual living abroad, their US return which would only be 3 pages if living in the US can be 50 to 100 pages when filed from abroad? Returns of 100 to 200 pages long are not unusual. It takes me more than 45 minutes just to run copies of the PDFs for form 8938 (true story ).

Michael

Unless an American has accounts scattered in financial institutions around the world, I would find it hard to understand that more than about 10 pages would be necessary. For the average American living abroad, I can understand forms 1040, 2555 and/or 1116, maybe one 8938, and possibly a few others depending on his/her situation. However since I was an expatriate myself that was under tax equalization policy, my company hired and expensive accounting firm to do my taxes (both Swiss and American) and some way they did seem to create a lot of pages but I never got a copy of either one (in fact I never even saw the Swiss tax return or signed it and I believe that I only was shown form 1040 for the US return).

However I do believe that even 400 pages or more is not unusual for people such as Romney. However my question is why does he have so much assets scattered around the world when he could be investing in the same securities through US brokerages, hedge funds, and/or investment banks? It seems strange that a blind trust would go to such extremes and expense unless something was being hidden. If US financial institutions were used, those 400 pages would likely be reduced significantly since US financial institutions are required to report 1099s to the IRS and FATCA reporting is unnecessary by either the financial institution or the individual. For Americans living abroad, FATCA reporting is unnecessary if a US financial institution or an account in a branch of a foreign financial institution located in the US is used.

theOAP

Michael, I'm off for a good country pub lunch right now, so I'll get back in 4 hours.

Just three thoughts:
1) Consensus among expats is that this is a poorly written article, and most of the expats who attempt to clarify the situation usually aren't even bothering with this one. (Tooo many uninformed and narrow minded commenters.)
2) Bear in mind that the treatment of US Companies and US Expats are completely different. Companies are getting away with murder, individual expats are being slaughtered.
3) There are 'Homelanders' who are being caught up in this (like Romney), and there are expats who have 'local' accounts. Unfortunately, those accounts are in a foreign country. Easy to have 8 to 10 'local' accounts (or more).

Shouldn't you be in bed anyway? It's 3:30 AM in CA.

Michael

When I was in Switzerland, I had one account with UBS. Yes I should be asleep but I'm an insomniac and just got out of bed since I couldn't sleep.

The law was written to try to stop the big tax evaders and not the small fries. Even if all the small fries living overseas evaded 100% of the taxes owed, that would probably be less than 1% of the total tax evasion and that would be a drop in the bucket. Unfortunately rich people with expensive accountants that can create schemes and shell companies to skirt the law if the law isn't extremely specific so unfortunately, the small fry has to report also. FATCA had to be passed if the US wanted to reduce tax evasion since FBAR wasn't working because FBAR depended solely on reporting by the individuals and if an individual was evading taxes, why would he/she report income from an account in a country with bank secrecy laws when it would be highly unlikely that the IRS would ever get access to that account. With FATCA, the IRS probably has the tools to make expensive tax accountants to be more careful and possibly even scare them into reporting more accurate income. There are still loopholes in FATCA since most tax haven Caribbean islands haven't signed on to FATCA but if other sanctions are passed, they may have to sign on. Most tax haven Caribbean islands have shell companies to pass money to other places but if there isn't a name associated with the money, it will be difficult for the IRS to follow the trail. However maybe countries such as Switzerland. Luxembourg, or Singapore will not accept the money for fear of breaching the FATCA agreement.

A good example is Dodd/Frank which was implemented to stop speculation with depositor's money (took over a year working with financial institutions to write the rule) but because it wasn't 100% specific about what could and could not be done with depositor's money, the banks still speculate and when things go wrong, they call it a hedge. Obviously hedges had to be allowed since that reduces the risk.

theOAP

Michael, I don't know where to start on this, so let me declare my hand before we go on. We are probably not far away from each other in our opinions. I file a 1040 (and associated forms like 8938) and FBAR (only I hear it's not FBAR anymore) as an expat and have for the past 30+ years. I could pay $3,000 or $4,000 a year to have it done by a professional, but instead have become a boring, screen-eyed geek who spends all their time scouring the internet for the latest 'whims' of Congress and the IRS in order to protect my meager financial survival. If anyone has the right to be upset by US tax evaders, it's me!

Your views are from a 'Homelander' (please excuse my pre-judging) position even though you have spent time abroad. First, my question would be: were you in Switzerland as a long term expat (15+ years), or a shorter time company aligned expat? It makes all the difference in the world. The viewpoints regarding FATCA et al separate at the point of length of residence and ties to the US or to the other country. If you intend to return to the US permanently at any point in your life, then you will not renounce.

The numbers given in the article are grossly understated. They are supposed to reflect those who have renounced, relinquished, and surrendered a green card. In no way is that number as insignificant as several thousand.

The first point of understanding is those renouncing are not people living in the US. By and large, they are ordinary people who have lived abroad for a number of years and have a second citizenship. They are not 'traitors' acting out of greed. The most heart breaking examples are those who tell of going through the Renunciation Oath at an Embassy with tears streaming down their cheeks. They do not WANT to renounce. They are being FORCED to renounce.

My opinion is that FATCA is a terrible, ill-conceived law, and was the result of politically motivated people looking for an easy mantra (Let's get those tax evaders!). It is supported and encouraged by two strong lobbying groups: the financial industry (That's OUR money) and the compliance industry (Let's make it impossible to follow, and they'll have to use our services).

I'll pause here. This post could go on for pages and pages of this thread. I do understand your viewpoint. But while FATCA attempts to tackle the very real problem of Homelanders sending money abroad to evade tax, it also creates unsurmountable problems for US expats living abroad. It's a bad law, and will eventually harm the US of A to a great degree. It would be better to implement the OECD or EU proposals to monitor the movement of money. The US will not go along with these as the US would also be required to report on 'foreign' investors (and Delaware, Texas, Florida, and Nevada would succeed from the Union). We could eventually discuss topics as varied as the 'bait and switch' of the OVDP, to the highly questionable legality of the IRS negotiating treaties with foreign powers (and enemies) without the advise and consent of the Senate.

To the OP, some better reading:
http://online.wsj.com/article/SB1000...Tabs%3Darticle
Colleen Graffy was evidently a high ranking official in the Department of State.

http://thehill.com/blogs/congress-bl...terribly-wrong
Both Victoria and Lynn have expat blog sites dealing with the problems created by FATCA, citizenship based taxation, etc.

theOAP

A note to the casual reader or some passerby glancing at this thread; if you are contemplating returning to the UK in the future, a dual US/UK citizen, a green card holder, or a UK person who has immigrated to the US, the topics that could be discussed in this thread could have a major impact on your financial future.

MiniBrit

What's the GBP threshold for this? I thought you only had to pay tax back to the US if you earnt over a certain amount in the UK, is this still the case?

Caruthers

85k

MiniBrit

ah ok thanks. I think I could manage to stay safely below that

robin1234

Hang on though. Surely the important thing is not just whether you owe tax to the US, but whether you have to file a tax return, a FBAR, and comply with all kinds of arcane, complicated, and potentially expensive filing and informational requirements. Never mind that you don't owe tax at the end of the day..

MiniBrit

Oh. For some reason I presumed you only had to complete one if you qualified to owe US tax. Silly me, that would be far too sensible