If so there could be a not so nice tax bill waiting for you and them from the American Internal Revenue Service (IRS) under the terms of the Foreign Account Tax Compliance Act.
The Foreign Account Tax Compliance Act (FATCA), enacted in 2010 as part of the Hiring Incentives to Restore Employment (HIRE) Act, is an important development in U.S. efforts to combat tax evasion by U.S. persons holding investments in offshore accounts.
Under FATCA, U.S. taxpayers holding financial assets outside the United States will report those assets to the IRS. In addition, FATCA will require foreign financial institutions to report directly to the IRS certain information about financial accounts held by U.S. taxpayers, or by foreign entities in which U.S. taxpayers hold a substantial ownership interest.
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Expats Call For FATCA Repeal → forbes.com/sites/robertwood/ … ca-repeal/
FATCA requires foreign banks to report U.S. account holders to the IRS starting in 2013. After identifying U.S. account holders, the institutions must impose a 30% tax on payments or transfers to account holders who refuse to identify themselves. As announced by IRS Commissioner Doug Shulman, to soften the blow, the IRS issued Notice 2011-53 to phase in the law. Foreign financial institutions (FFIs) and U.S. withholding agents are given extra time to implement systems to comply.
To avoid withholding, an institution must enter into an agreement with the IRS to:
Foreign institutions that don’t sign an IRS agreement will face withholding on U.S.-source interest and dividends, gross proceeds from the disposition of U.S. securities, and pass-through payments.
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US demands tax tolerance of foreign financial groups - Gillian Tett → ft.com/intl/cms/s/0/4e6e31a6 … ab49a.html
This summer, the senior management of one of Asia’s largest financial groups is quietly mulling a potentially explosive question: could it organise some of its subsidiaries so that they could stop handling all US Treasury bonds?
Their motive has nothing to do with the outlook for the dollar. Nor does it reflect fears about the US debt ceiling (or the risk that the US will soon default if it fails to raise the legal limit on bond issuance).
Instead, what is worrying this particular Asian financial group is tax. In January 2013, the US will implement a new law called the Foreign Account Tax Compliance Act (Fatca), that forces all global financial companies to report details to the IRS, the US tax authority, of any clients linked to the US with more than $50,000 in an account.
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Irish citizens should also be alarmed, the Irish government will not be unaware that a substantial amount of Irish citizens money is held abroad because of the lack of trust in the zombie banks here, and will want to get that money back…
alex_a
September 21, 2011, 8:53pm
2
Could someone explain how the US government can force foreign institutions to implement this. It is an overhead for the financial institution and I can’t work out how the US has any jurisdiction over banks in Ireland for example?
When I originally heard of this initiative I thought the US were offering some kind of commission for identifying these accounts but this article implies that this is mandatory requirement for all foreign banks now.
alex_a:
Could someone explain how the US government can force foreign institutions to implement this. It is an overhead for the financial institution and I can’t work out how the US has any jurisdiction over banks in Ireland for example?
When I originally heard of this initiative I thought the US were offering some kind of commission for identifying these accounts but this article implies that this is mandatory requirement for all foreign banks now.
If the bank or any closely related company wants to operate in the US or do business with US companies they will have no choice but to comply. That is the way it has works for other measures where the US has sought to impose laws outside its own borders (trade embargoes on Cuba/Iran, anti-bribery legislation and anti-cartel legislation). From memory Siemens ended up paying a huge settlement for an offence that had no bearing on the US except it might have given them advantage over US companies in bidding for foreign contracts. I think Mercedes has been snagged on something like that too.
EDIT:guardian.co.uk/business/2008 … al-bribery news.bbc.co.uk/2/hi/business/8600241.stm
alex_a:
Could someone explain how the US government can force foreign institutions to implement this. It is an overhead for the financial institution and I can’t work out how the US has any jurisdiction over banks in Ireland for example?
When I originally heard of this initiative I thought the US were offering some kind of commission for identifying these accounts but this article implies that this is mandatory requirement for all foreign banks now.
Australia and Japan have told them to get lost. I can probably guess what the Irish department of finance are going to do.
https://www.dogtrainingavenue.com/images/teach_a_dog_to_roll_over.jpg
US tax legislation
Certain proposals emerged earlier this year to change the international corporate tax framework under which the subsidiaries of American companies operate worldwide.
Clearly we have an interest in this and my Department has been tracking this closely through our Embassy in Washington DC and a senior IDA executive has been assigned to the Embassy to monitor developments. We talk regularly with the US Government and members of Congress, including contacts at the highest level.
Of course, US businesses - including many here today - have been involved in this engagement and it appears that these efforts have achieved substantial success in convincing Congress that such changes will have complex effects that require careful consideration. The report of the President’s Tax Reform Advisory Panel, Chaired by Paul Volcker, in early December may provide some guidance on the shape that will take. There are also other legislative developments we are tracking including the recent introduction of the ‘FATCA’, the Foreign Account Tax Compliance Act bill. Our door will always be open to you in terms of discussing any of these issues or concerns you may have.
It is, of course, entirely up to the United States how it structures its tax system. We believe nevertheless, that we have a perspective to feed into those considerations - that the current system of tax deferral is not a loophole and is not about tax evasion or avoidance. Ireland can be a positive example for US business:
acting as a base for substantive US operations in which they can expand their operations and improve their productivity; accessing the European and regional market; and enabling the worldwide success of US firms creating the wealth to fund new investment and new business opportunities.
We want Ireland to mean a business partnership that delivers jobs here as well as more jobs in the US. That’s the message we are giving our friends in the US and will continue to give. I believe it is an important part of the debate on our economic future
Americans must declare assets by end of month - Niamh Hennessy → irishexaminer.ie/business/am … 63259.html
The 12,000-plus Americans living in Ireland have been warned that they must declare their income or assets before the end of the month.All US citizens or green card holders living outside the US are obliged to file a tax return every year regardless of whether they are employed or not working, married or single or paid from a US-based or foreign source.www.taxback.com these people have just four weeks to own up to any foreign assets or they run the risk of losing up to 40% of their value.
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plus theres always the chance of a draft to send you off to Iran, Nigeria, Chad, Syria, Venezuela,…
Bertie has been preparing us for this for years… eh, in FACTA, you have to pay taxes to the IRS…
Irish banks’ interpretation of data laws investigated - Vincent Ryan-> irishexaminer.com/technology … 69611.html
The Data Protection Commissioner is investigating Irish banks’ interpretation of data protection legislation that requires customers to give the bank photo identification
A number of banks have recently been sending letters to customers demanding that they supply their bank with proof of identity.
In a letter to customers, AIB said that they were required by law to hold copies of either a passport, driver’s licence or European National Identity card on file.
“AIB’s legal obligation to obtain and hold copies of identification documentation for all customers,” a letter seen by the Irish Examiner states.
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