FATCA: Will America’s toxic tax act come into effect on schedule?

03 Jul

In under six months’ time Washington is hoping to implement its highly contentious and, in my view, utterly toxic Foreign Account Tax Compliance Act (FATCA).

FATCA, as you’ve probably heard by now, will require every foreign financial institution (FFI) in the entire world to report all their American clients’ financial activities to the IRS. Failure to do so by any FFI will mean that they will face heavy penalties and effective exclusion from the US financial system.

Like many people – including Republican Senator and possible 2016 presidential candidate, Rand Paul, and James Jatras, a former US Diplomat, who runs a Washington-based legal firm that specialises in international affairs, amongst other high profile individuals – I have been publicly championing the campaign to have this damaging piece of legislation repealed by the White House.

So, with half a year to go, how likely is it that FATCA will be rolled out?

At the moment, it is a hard one to judge. The US Treasury Department is, alongside its FATCA allies, pushing ahead with the intergovernmental agreements (IGAs) that will force the foreign financial institutions (in those countries whose leaders have signed the IGA) to report on their American clients’ financial activities. There are now about a dozen countries worldwide which have agreed to FATCA’s, frankly, unreasonable demands.

However, the fact is that the process to have all the major nations, including the vitally important economic powerhouses of Russia and China, sign up to FATCA remains achingly slow. As a result of this, and because those who have rubber-stamped the IGA might still not be ready to effectively introduce what is required in January, it could mean that Washington will miss its New Year target.

At the moment, I would be inclined to agree with James Jatras, who recently argued that it is “50/50” whether the FATCA era will begin on 1/1/14.

Nigel Green deVere Group

Blog written 3rd July

Another significant glimmer of hope is that the House of Representatives could block the Treasury from promising the world’s governments a (supposed) ‘reciprocity’ for signing the IGA. If this ‘tool’ were removed then governments can no longer pretend that they are cowing to the US to get something back in return. Their spinelessness on this issue would, in effect, be exposed.

Read again here why I’m opposed to FATCA.

 

2 Comments

  1. http://www.theglobeandmail.com/news/politics/canadas-information-sharing-deal-with-us-under-fire/article12913617/comments/

    You may be interested in this Globe and Mail article yesterday as well as the comments. Most Canadians don’t know about FATCA yet and those that are learning about it are up in arms. I don’t just mean “U.S. persons” in Canada. I mean every day Canadian citizens. This hasn’t even really hit the average news and sunk in with Canadians yet, when it does Harper will be harpooned over this!

    This IS a Charter of Rights violation and he is creating two tiers of Canadian citizens. Those protected by our Charter and those who will be asked to sign away their rights or not be able to bank in this country. Let me tell you average Canadians already sensitive about the influence of the “elephant” to the south will be livid. For one thing the Charter of Rights in Canada is held the same as the constitution is in the U.S. Add to that, that FATCA doesn’t just affect “U.S. persons” but, everyone else they share any account with even Canadian citizens who are not dual and you have a the makings of a big, big problem for our government here.

    Read the comments, read the article. The comments are actually better as citizens are getting informed there on this issue. Three hundred comments in one day and precious few in favour. Harper better listen. He should have drawn a line in the sand on this but, he did not. The banks were set to go ahead with it and be sued for doing so the second they asked a place of birth in order to offer or not offer services.

    Canada will NOT collect FBAR fines for the treasury of the U.S. This entire thing is causing so much ill will up here and Washington is blind to it. Do they really want to make Canadians feel even more hard feelings towards the U.S. Some snowbirds are talking about not bothering to spend their time in Arizona or Florida when they can spend it in Costa Rica or other places without so much worry about being claimed for “tax purposes. I think the U.S. stands to lose far more than it will gain with this legislation.

  2. To even think that China and Russia might sign up to FATCA is pure fantasy. It is truly delustional that the biggest debtor nation on the planet turn to its creditor nations and issue imperital edicts. Reminds me of a certain notorious Roman Emperor fiddling whilst all around him is burning.

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