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  #41  
Old 26.07.2012, 17:06
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Re: US IRS helps itself to Swiss income

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attack your motherland, never
Exercising one's freedom of speech is not 'attacking your motherland'. By criticizing constructively, there is hope for change. This is the only patriotic thing to do. With the current course more and more highly skilled Americans will be renouncing. This is NOT in the best interests of America. America needs to have its overseas citizens promoting it, not being treated likes 2nd class citizens.
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  #42  
Old 26.07.2012, 17:09
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Re: US IRS helps itself to Swiss income

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Exercising one's freedom of speech is not 'attacking your motherland'. By criticizing constructively, there is hope for change. This is the only patriotic thing to do. With the current course more and more highly skilled Americans will be renouncing. This is NOT in the best interests of America. America needs to have its overseas citizens promoting it, not being treated likes 2nd class citizens.

I was referring to corbets comment about my country being next, America wouldn't attack its mother country (england)
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  #43  
Old 26.07.2012, 17:11
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Re: US IRS helps itself to Swiss income

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I haven't taken a poll so I can't say what criteria tax plays in an American's decision to take on an employment opportunity here or not. Increased taxation does make an American overall more expensive than a citizens of any other country. I also agree with your other points and I am more than happy to pay taxes here where I live and work even a television tax. I'm getting less commercials than in America ! What I'm contesting is the insane US additional citizenship based taxation. And it isn't only the taxes, but the whole compliance issue. Do you realize if you make a mistake on a FBAR or FACTA form you can get fined USD 50'000. Do you know that if you have a signing authority in the company where you work you have to report the company's finances to the IRS. If you go on a joint venture, as an American you have to report everything as well?
The fine you mention is not entirely accurate. It can be applied but never has.

FBAR for example will not penalise if all income has been reported from those accounts. You won't be penalised 50k for making a mistake.

Then there is a whole criteria for wilfull vs non wilfull and threshold levels depending on balances. But sure the sum is there to scare you into getting it right.
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  #44  
Old 26.07.2012, 17:13
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Re: US IRS helps itself to Swiss income

This has nothing to do with the Swiss government and given their reluctance to really stick their nose into everyone else's business I can't see them fighting this one.

The Swiss government doesn't lose any tax revenue, the US just takes more.

I dont agree with the concept but if I was not returning to the US (my wife is american) I would give back the passport. I would tell them to stick their exit tax up their .....

In terms of double taxation on pensions. You pay the US year by year I think as the pension is non conforming. You would just leave Switzerland before cashing it in. In this case the Swiss would miss out on tax revenue.

This tax rule has been around for a long time so you can't really blame Obama or GW Bush for this. Given the climate in the USA do you really think they are going to be passing laws to the benefit of the expats making more than 120-150k living overseas?

If you can't live with it financially, move back to the USA, which is what we may have no choice but to do.

If you have dual citizenship and haven't lived in America given it up shouldn't really be that hard a decision.
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  #45  
Old 26.07.2012, 17:24
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Re: US IRS helps itself to Swiss income

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The fine you mention is not entirely accurate. It can be applied but never has.

FBAR for example will not penalise if all income has been reported from those accounts. You won't be penalised 50k for making a mistake.

Then there is a whole criteria for wilfull vs non wilfull and threshold levels depending on balances. But sure the sum is there to scare you into getting it right.
Yes the draconian fines are not always implemented. If the IRS officer is in a good mood and shows discretion they he/she won't fine you to the max. I have the impression that the IRS wants to inventory ALL one's assets so that the next time the US congress on a whim makes its next tax change, it is easier to tap into this wealth. With budget constraints it is just too tempting to view US expats as 'Selbstbedienungsladen'. I don't know how to translate this - kid in a candy shop maybe?
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  #46  
Old 26.07.2012, 17:30
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Re: US IRS helps itself to Swiss income

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Yes the draconian fines are not always implemented. If the IRS officer is in a good mood and shows discretion they he/she won't fine you to the max. I have the impression that the IRS wants to inventory ALL one's assets so that the next time the US congress on a whim makes its next tax change, it is easier to tap into this wealth. With budget constraints it is just too tempting to view US expats as 'Selbstbedienungsladen'. I don't know how to translate this - kid in a candy shop maybe?
That's why you need a good experienced accountant familiar with foreign issues and able to argue reasonable cause exemptions.

There is a whole criteria for this.

But then comes the compliance fees! But hey, mans got to live
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  #47  
Old 26.07.2012, 17:33
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Re: US IRS helps itself to Swiss income

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That's why you need a good experienced accountant familiar with foreign issues and able to argue reasonable cause exemptions.

There is a whole criteria for this.

But then comes the compliance fees! But hey, mans got to live
As they say in America, I guess you are laughing all the way to the bank ?
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Old 26.07.2012, 17:37
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Re: US IRS helps itself to Swiss income

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That's why you need a good experienced accountant familiar with foreign issues and able to argue reasonable cause exemptions.

There is a whole criteria for this.

But then comes the compliance fees! But hey, mans got to live
Do you offer these services to individuals? You seem to know a good deal about American taxes and I'm perpetually over my head when it comes to this stuff.
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  #49  
Old 26.07.2012, 17:42
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Re: US IRS helps itself to Swiss income

I have both CH/US passports. The minute my banks close my accounts is the minute I renounce. Period.

I don't like paying taxes to the US since I have not lived there for over a decade, but it was bearable until a couple of years ago.

I feel that it is a shame to renounce over taxation since a strong US dollar significantly reduces one's worldwide US dollar income. When the franc was 1.8 to the dollar ten years ago, filing US taxes was just a formality. Heck, one year I got a refund!

But then the financial crisis hit, tax laws changed and all of a sudden I am paying thousands of dollars a year. My Swiss living costs have not changed so basically I have to hand over my savings to the US. After a few years of that, you start to ask yourself some really hard questions...

I have no plans to return to work there. And I can wait in line with the "foreigners" at customs when I enter the US. And use those tax savings to shop and stay in luxury hotels. Hmmmmmmmm.......
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Old 26.07.2012, 17:51
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Re: US IRS helps itself to Swiss income

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I have both CH/US passports. The minute my banks close my accounts is the minute I renounce. Period.

I don't like paying taxes to the US since I have not lived there for over a decade, but it was bearable until a couple of years ago.

I feel that it is a shame to renounce over taxation since a strong US dollar significantly reduces one's worldwide US dollar income. When the franc was 1.8 to the dollar ten years ago, filing US taxes was just a formality. Heck, one year I got a refund!

But then the financial crisis hit, tax laws changed and all of a sudden I am paying thousands of dollars a year. My Swiss living costs have not changed so basically I have to hand over my savings to the US. After a few years of that, you start to ask yourself some really hard questions...

I have no plans to return to work there. And I can wait in line with the "foreigners" at customs when I enter the US. And use those tax savings to shop and stay in luxury hotels. Hmmmmmmmm.......
The 'Question du jour' would be will the situation improve, stay the same, or further deteriorate ???
On the positive side I was encouraged that the IRS announced a new programme in Sept 2012 where 'recalcitrants' can backfile without penalties. On the negative side new FATCA laws are making the situation untenable with Americans being blacklisted from banks, etc. Wohin fahrt der Schiff?
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Old 26.07.2012, 18:24
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Re: US IRS helps itself to Swiss income

If you have no property in the US and do not plan to return, what recourse does the IRS have for not paying them? For example, if you worked for a multinational would they be able to garnish your CHF wages? Would the Swiss government allow the IRS to extradite for not filing a tax return, which is not a crime in Switzerland as I understand it (as opposed to filing a fraudulent return, which is)?
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  #52  
Old 26.07.2012, 18:37
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Re: US IRS helps itself to Swiss income

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If you have no property in the US and do not plan to return, what recourse does the IRS have for not paying them? For example, if you worked for a multinational would they be able to garnish your CHF wages? Would the Swiss government allow the IRS to extradite for not filing a tax return, which is not a crime in Switzerland as I understand it (as opposed to filing a fraudulent return, which is)?
Well if the US couldn't get their hands on Mark Rich I dont think they are going to bother with any of us.
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  #53  
Old 26.07.2012, 19:41
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Re: US IRS helps itself to Swiss income

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attack your motherland, never

My point is, you know the score, yet you still work abroad, there is a reason for that (better lifestyle? more money? less americans?) you make your choices and pay for them
Actually I didn't know the score until I found this website and started reading some threads about FATCA. I never knew about this law and certainly haven't been told about it by any US agency. Someone did say in another thread on FATCA that it was mentioned in the passports so I checked all the ones I have and it's only the most recent (2007) that says anything about this; the previous ones don't. I left US while still at school so how am I supposed to know of such a law?

And you don't always have a choice; I'm a trailing spouse of a British citizen - whose income by the way (I don't have any of my own) is likely to be taxed by the US simply because I have signature rights on our joint accounts. He doesn't want to live/work in the US and, as we've bought a house here, Switzerland will be our home until we retire/die unless circumstances change dramatically.
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Old 26.07.2012, 19:57
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Re: US IRS helps itself to Swiss income

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And you don't always have a choice; I'm a trailing spouse of a British citizen - whose income by the way (I don't have any of my own) is likely to be taxed by the US simply because I have signature rights on our joint accounts.
Are you sure about that because I find it extremely hard to believe. FATCA is about reporting bank accounts and trying to catch Americans avoiding the existing tax rules which DO NOT tax your husbands income.

The solution would be easy enough. You are withdrawn as a signatory from these accounts and you start another account in your name and keep enough in there to satisfy your needs (the smaller the better). If you can find a bank that will open you an account as an American that is. If not your husband opens you a separate small account in his name and you are signatory on that.

But I am virtually certain the US are not going after your husbands income.
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Old 26.07.2012, 20:25
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Re: US IRS helps itself to Swiss income

Issues can arise usually because the US spouse may be given power of attorney over the non US spouse accounts for security and many other reasons.
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Old 26.07.2012, 21:47
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Re: US IRS helps itself to Swiss income

FATCA is (or rather: will be) a set of rules under which the foreign banks have to report certain information. The issue in this thread relates to the individual's duty to report foreign bank accounts, which is neither new nor related to FATCA. This duty to file the so-called FBAR form has become much more widely-known in recent years, but it was there before.

"If you have a financial interest in or signature authority over a foreign financial account, including a bank account, brokerage account, mutual fund, trust, or other type of foreign financial account, the Bank Secrecy Act may require you to report the account yearly to the Internal Revenue Service by filing Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR)." Details: http://www.irs.gov/businesses/small/...148849,00.html

So, yes, an American has to report an account over which he holds a PoA. My brother lives in the US. My dad and I cannot give him a PoA over our accounts, because he would then have to declare them in his tax return, even though we have nothing to do with the US. This is an issue because children who emigrated to the US cannot get a PoA over their aging parents' accounts to support their parents in their financial matters.

Last edited by Idgie; 26.07.2012 at 21:57. Reason: Clarification
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Old 26.07.2012, 21:52
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Re: US IRS helps itself to Swiss income

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Are you sure about that because I find it extremely hard to believe. FATCA is about reporting bank accounts and trying to catch Americans avoiding the existing tax rules which DO NOT tax your husbands income.

The solution would be easy enough. You are withdrawn as a signatory from these accounts and you start another account in your name and keep enough in there to satisfy your needs (the smaller the better). If you can find a bank that will open you an account as an American that is. If not your husband opens you a separate small account in his name and you are signatory on that.

But I am virtually certain the US are not going after your husbands income.
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Issues can arise usually because the US spouse may be given power of attorney over the non US spouse accounts for security and many other reasons.
Yes, I remember it was a power of attorney form which I signed when we changed my husband's UBS account years ago.

And I found this at www.iexpats.com the other day:

What does FATCA say about joint accounts with non-US taxpayers?

If a US taxpayer holds an offshore account with a non-US taxpayer, FATCA still treats the accounts as belonging to the US taxpayer.

I read offshore as foreign as well so unless I get dropped from the accounts as far as I can see they want to know.
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Old 26.07.2012, 22:34
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Re: US IRS helps itself to Swiss income

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If I'm not mistaken its about 5 Billion which isn't large compared to the entire US budget but 2 points:
1) Due to the foreign tax credits allowed, the double taxation hits the countries with low income tax harder. This includes Switzerland, the Gulf countries, etc.
I.e., the less income tax in country of residence, the more to the US
This is not fair as we have in addition a national VAT which the US doesn't have. Because of the large number of high qualified US expats here, I think there is a cost to the Swiss economy.
2) The US has gradually increased the taxes for overseas residents already(i.e., stacking taxation concept) and this could get worse. Eliminate of the Foreign Exclusion has already been proposed in the US Congress.

If Republicans and Democrats cannot agree on extending Bush-era tax cuts this year, the repercussions for high-earning US expats will be big.

If FEIE gets repealed, that will be the last straw that breaks the camel's back in terms of US citizens with other passports deciding on whether to renounce or not.
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Old 26.07.2012, 22:39
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Re: US IRS helps itself to Swiss income

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Yes, I remember it was a power of attorney form which I signed when we changed my husband's UBS account years ago.

And I found this at www.iexpats.com the other day:

What does FATCA say about joint accounts with non-US taxpayers?

If a US taxpayer holds an offshore account with a non-US taxpayer, FATCA still treats the accounts as belonging to the US taxpayer.

I read offshore as foreign as well so unless I get dropped from the accounts as far as I can see they want to know.
Which means you have to report the account. Doesn't make your husbands income taxable.
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Old 26.07.2012, 22:44
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Re: US IRS helps itself to Swiss income

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If you have no property in the US and do not plan to return, what recourse does the IRS have for not paying them? For example, if you worked for a multinational would they be able to garnish your CHF wages? Would the Swiss government allow the IRS to extradite for not filing a tax return, which is not a crime in Switzerland as I understand it (as opposed to filing a fraudulent return, which is)?
Don't forget that the US and CH are finalizing a FATCA compliance agreement which would essentially change Swiss Banking Laws in that tax evasion will be considered a crimne for US citizens.

Pity Swiss are allowing their tax base to erode and are subjecting their financial institutions to draconian US extraterritorial tax laws. This "tax base erosion" will sting even more once FATCA compliance penalties start to kick in and the Swiss government will have no recourse unless they adopt reciprocity laws targeting US institutions moving money in and out of Switzerland (not sure that will be likely unfortunately as Switzerland's economy is too small to penalize the US; if we are talking about BRIC countries, it would be a whole different ballpark US companies cannot ignore).

Biggest irony is that US law forbids US financial institutions from reporting to foreign governments information on accounts helf by these same foreign citizens, regardless if they even reside or not in the US.
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