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Old 20.03.2010, 13:59
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New US law Impacts Americans Abroad [US tax reporting]

The following is from Swiss Info. It was signed as part of another law but it will have impacts here on Americans with Swiss bank accounts. Some banks have said if this passes they will no longer do business with US citizens due to "onerous reporting requirements" This was included as part of "Jobs act"

New US tax law could have “disastrous effects”

A United States law forcing foreign financial firms to reveal details of American clients could force banks to stop trading across the Atlantic, observers believe.

The law, passed by the US Senate this week, is unworkable in its present form and could have “disastrous effects”, according to the Swiss-American Chamber of Commerce. US citizens living in Switzerland also criticised the law.

The Foreign Account Tax Compliance Act (FATCA) is the latest attempt by the US to crack down on tax evaders, who are costing the economy billions of dollars in unpaid revenues.

Swiss bank UBS was forced to pay a $780 million (SFr828 million) fine last year and hand over confidential details of clients after admitting to aiding tax evaders in the US. The bank announced in 2008 that it would stop offshore activities in the US.

UBS was found to have exploited loopholes in tax compliancy regulations, known as the Qualified Intermediary (QI) accord. FATCA is partly designed to close those loopholes, which the US believes will bring in $8.5 billion in extra tax revenues over the next ten years.


Kinks need to be ironed

Read the entire article here

Last edited by evilshell; 20.03.2010 at 14:16. Reason: Please don't post entire articles, that's a breach of the owner's copyright
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Old 20.03.2010, 14:04
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Additional information on what will have to be provided

March 18, 2010

Congress Enacts Obama's Anti-Offshore Jobs Bill

In a recent blog entry, I described how the Obama administration is working simultaneously on three fronts to crack down further on U.S. citizens and residents who invest offshore.
One of those efforts has now come to fruition. Today, President Obama signed the latest incarnation of the "Foreign Account Taxpayer Compliance Act." It's neatly tucked into a jobs bill, cleverly entitled the Hiring Incentives to Restore Employment (HIRE) Act, H.R. 2847.
Here's a summary of the offshore-related portion of this legislative train wreck:
Imposes a 30% withholding tax on many types of U.S-source income and gross sales proceeds to foreign financial institutions (FFIs). The definition of a FFI and includes every conceivable foreign investment vehicle. The only way to avoid the tax is for the foreign institution to enter into an information reporting agreement with the IRS. Information the IRS would receive includes your name, address, Social Security number or other taxpayer identification number, account number, and the account balance or value. This provision comes into effect on Jan. 1, 2013.
Imposes a separate 30% withholding tax on payments made from the United States to certain non-financial foreign entities.

Read the entire blog entry here

Last edited by evilshell; 20.03.2010 at 14:17. Reason: Please don't post entire articles, that's a breach of the owner's copyright
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Old 20.03.2010, 14:15
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Re: Additional information on what will have to be provided

The new laws will pre-empt inconsistent tax treaties. They will be difficult to enforce and will make criminals of low-paid residents of foreign countries who happen to have American citizenship.

In fact, the IRS will not look for such people, and will not willingly prosecute those brought to their attention who have no real connection to the USA but happen to pass through the country on occasion. The problem is that any such law that depends on administrative or prosecutorial discretion for its implementation is bound to cause disrespect for all tax laws and DECREASE compliance overall. Of course the increasing use of plastic cards and wire transfers for financial transactions is making it easier to enact and enforce such laws, at least for persons living in the USA. Already the use of cash subjects people (outside of Switzerland anyway) to a presumption of money-laundering.

The privacy implications (and the weapon now being given to disgrunted ex-spouses who can easily get court-ordered access to their ex's tax return) are striking.
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Old 08.04.2010, 04:15
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Re: New US law Impacts Americans Abroad [US tax reporting]

the ACA website has an update on the New law. Included at the bottom of the link is a presentation that talks about what are the implications. It is worth reading. One thing my accountant told me is that I have to keep track of all currency transfers and the rate in USD. This means that every time I get paid in CHF, I have to record the rate in USD. This will need to be reported. For any currency transfers, I have to record the rate in USD. I then have to record where the money came from that I transfered and the rate in USD where it was earned and then report any "gain" for tax.

http://www.aca.ch/joomla/index.php?o...d=378&Itemid=2

The Treasury Department fiscal year 2011 proposed requirements to “report certain transfers” (pages 62-64) effectively means that every transaction by U.S. citizens living overseas will have to be reported by the taxpayer AND the financial institution holding the account. ALL foreign currency amounts that are to be reported will have to be translated to US$ at the daily rate of exchange

Last edited by MrMert; 08.04.2010 at 04:17. Reason: fix formating for link
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Old 08.04.2010, 09:44
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Re: New US law Impacts Americans Abroad [US tax reporting]

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the ACA website has an update on the New law. Included at the bottom of the link is a presentation that talks about what are the implications. It is worth reading. One thing my accountant told me is that I have to keep track of all currency transfers and the rate in USD. This means that every time I get paid in CHF, I have to record the rate in USD. This will need to be reported. For any currency transfers, I have to record the rate in USD. I then have to record where the money came from that I transfered and the rate in USD where it was earned and then report any "gain" for tax.

http://www.aca.ch/joomla/index.php?o...d=378&Itemid=2

The Treasury Department fiscal year 2011 proposed requirements to “report certain transfers” (pages 62-64) effectively means that every transaction by U.S. citizens living overseas will have to be reported by the taxpayer AND the financial institution holding the account. ALL foreign currency amounts that are to be reported will have to be translated to US$ at the daily rate of exchange
So this means not only every time you get paid, but when you take out cash from your bank account, pay for your groceries, electric bill, etc. you've got to convert and report it? That is insane....
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Old 08.04.2010, 10:11
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Re: New US law Impacts Americans Abroad [US tax reporting]

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So this means not only every time you get paid, but when you take out cash from your bank account, pay for your groceries, electric bill, etc. you've got to convert and report it? That is insane....
No, that is not what it means. Read the report yourself and don't rely on overblown and exaggerated "arguments" by lobbying groups. Here is the link to the actual proposals: http://www.treas.gov/offices/tax-pol.../greenbk10.pdf. The aca refers specifically to pages 62-64. So, for example, the reporting requirement "would not apply if the cumulative amount or value of transfers, and the cumulative amount or value of receipts that would otherwise be reportable for a given year were each less than $50,000." (page 62)
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Old 08.04.2010, 10:12
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Re: New US law Impacts Americans Abroad [US tax reporting]

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So this means not only every time you get paid, but when you take out cash from your bank account, pay for your groceries, electric bill, etc. you've got to convert and report it? That is insane....

come on...say it ain't so!
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Old 08.04.2010, 10:23
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Re: New US law Impacts Americans Abroad [US tax reporting]

Evilshell

How this is to be implemented is not known yet but is being worked in committee. I can not think any Swiss bank will keep US citizens if this holds up.

I read through the presentation and the text and was truly shocked. The penalties and fines for not reporting accounts, late filing of FBAR (10000$) and for anyone who did not file by March 18th your 2009 tax return,(which I did not, as this was the date this clause became law) you are then liable for a new 6 year statute of limitations for severe new penalties if they find a material amount not properlydeclared (5000$) and this applies to previous returns as well. I am not talking money laundering or fraud but even if my accountant made a mistake. They also added in that the tax payer will be held to the higher prosecution and penalties even if the accountant acknowledges the error.

My US tax return is thick with all the forms we are required to fill out and I am not an accountant. I believe it is correct but with all the changing of rules and reporting I think it is even difficult for my accountant. In reading through this material for the new law, it truly has me worried about what is the objective behind this that gives IRS such power to go after the average tax payer abroad.
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Old 08.04.2010, 10:28
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Re: New US law Impacts Americans Abroad [US tax reporting]

so I guess this also applies when I'm here based on my EU citizenship but still have US citizenship yes?
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Old 08.04.2010, 10:32
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Re: New US law Impacts Americans Abroad [US tax reporting]

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No, that is not what it means. Read the report yourself and don't rely on overblown and exaggerated "arguments" by lobbying groups. Here is the link to the actual proposals: http://www.treas.gov/offices/tax-pol.../greenbk10.pdf. The aca refers specifically to pages 62-64. So, for example, the reporting requirement "would not apply if the cumulative amount or value of transfers, and the cumulative amount or value of receipts that would otherwise be reportable for a given year were each less than $50,000." (page 62)
Reading the proposal does seem to confirm what I said.

From page 63:

Quote:
A U.S. individual would be required to report, on the individual’s income tax return, any transfer of money or property made to, or receipt of money or property from, any foreign bank, brokerage, or other financial account by the individual...

...This reporting requirement would not apply if the cumulative amount or value of transfers, and the cumulative amount or value of receipts that would otherwise be reportable for a given year were each less than $50,000....

...Failure to report a covered transfer would result in the imposition of a penalty equal to the lesser of $10,000 per reportable transfer or 10 percent of the cumulative amount or value of the unreported covered transfers. No penalty would be imposed for a failure to report due to reasonable cause. The Treasury Department would receive regulatory authority to issue rules to prevent abuse of the reporting exemptions and to provide exceptions to the reporting requirement....
The only thing I can figure from reading this is they are counting only transfers between foreign and American banks. At least I hope that's the case, as it does seem as dire as the ACA has said.

Perhaps I've misread it, but that's what it seems to be saying to me...
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Old 08.04.2010, 11:06
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Re: New US law Impacts Americans Abroad [US tax reporting]

Do I understand this correctly, that anyone with cumulative credits or cumulative debits flowing through a bank account is mandated to report all individual transactions?

Heck, that would mean if your salary is over 50,000 you are stuck.

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Nobody likes paying taxes but you can't deny that as a US citizen, you owe them. Until now people might have been skirting by not paying whatever they might owe due to lax enforcement. But it's not like the US government is suddenly out of line for stepping up their collection efforts for what is owed to them.
I would expect that the majority of US citizens holding foreign accounts are people just like me - law abiding taxpayers who happen to live overseas.

Such onerous reporting mandates could make impossible for a US citizen resident overseas to go about his or her daily business.

Foreign bank account holders are simply a convenient political target - after all, we are not counted in the census, and even our votes are rarely counted. We are sitting ducks, politically. Our politicians and the media have convinced Joe Public than anyone with money overseas must be a shady tax-dodging billionaire. (Who eats babies for breakfast, no doubt.)

Many US citizens move overseas, like my husband, on the request of their US employers. The work my husband does here generates profits for a US company, generates investment in the US, creates US jobs. I am tired of being treated like a criminal simply because I live overseas.

Oh, and I pay a boatload of taxes to Uncle Sam. He already gets every friggin' penny owed. And probably more than what he is owed, as the tax laws are so complex that I'm sure I have missed many legitimate deductions. And in return I get... what?

I am seriously starting to wonder if living overseas is worth the hassle...
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Old 08.04.2010, 11:08
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Re: New US law Impacts Americans Abroad [US tax reporting]

Melloncollie,
I believe the law for the transaction reporting goes into place in 2012 and the details will be communicated as they have to be worked out.
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Old 08.04.2010, 11:29
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Re: New US law Impacts Americans Abroad [US tax reporting]

I sympathize with everybody here when it comes to paying taxes as an expat. But the reporting required under the new scheme isn't THAT bad. How many transfers home do you make a year? I get paid CHF to a swiss account and I might wire back 5-6 times to so I can pay bills in the states. Even if you did more, you can just ask for the records from your bank or even download them yourself.

My parents are small business owners back in the states and i can assure you that their reporting obligations are a LOT worse.
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Old 08.04.2010, 11:35
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Re: New US law Impacts Americans Abroad [US tax reporting]

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I sympathize with everybody here when it comes to paying taxes as an expat. But the reporting required under the new scheme isn't THAT bad. How many transfers home do you make a year? I get paid CHF to a swiss account and I might wire back 5-6 times to so I can pay bills in the states. Even if you did more, you can just ask for the records from your bank or even download them yourself.

My parents are small business owners back in the states and i can assure you that their reporting obligations are a LOT worse.
That's what is unclear to me from the legislation, or perhaps I didn't read it carefully enough. If it is transfers back to the US, well, for me it would have no impact as my ties there are restricted to personal ones, not financial ones.
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