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Tom Zachystal of IAM – Best Places In The World To Retire User Account
FATCA seeks to turn non-US financial institutions into reporting agencies for the IRS. In essence, the regulation  mandates that foreign (ie. non-US) financial institutions (FFIs) check their accounts for "indicia of US ties". That is, the FFIs need to identify their account holders who may be subject to US tax and report certain information regarding these accounts to the IRS.
 
FATCA can affect US persons living overseas in four ways (and one of these points also pertains to non-US persons with accounts in the US):
  • In certain instances, the FFI will choose to get rid of all their US clients in order to avoid having to deal with FATCA - so American clients will be asked to transfer their accounts.
  • In other cases, the FFI will comply, in which case there may be a request for certain information from the account holder. For most people who are not trying to hide their identity, this is not a big deal.
  • Most of the FATCA agreements signed to date are reciprocal; that is, the participating country has agreed to send information on Americans' bank accounts held there to the IRS but the US has in turn agreed to provide information on the country's citizens and residents that have accounts in the USA. This is going to be a real mess and could mean that US financial institutions will be much less likely to deal with non-US residents. Also, it will mean that US financial institutions will be sharing account data with foreign governments, which may lead to taxation by the foreign governments on these accounts.
  • Finally, there is a personal requirement under FATCA in that there is a new (for 2011 tax year) IRS form to be completed to report a US taxpayer's foreign holdings - form 8938. Check with your tax advisor on whether you need to complete this form.
     
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Jay Butler of Asset Protection Services International, Ltd – Best Places In The World To Retire User Account
What the FATCA is the Foreign Account Tax Compliance Act?
 
Like a thief in the night, President Barack Hussein Obama enacted Public Law 111-147 (H.R. 2847) just after midnight at 00:01 hours on March 18th, 2010. This law provides the "fiscal transparency" promised under an Obama administration - but just not from the government; it is the citizenry who are subject to such scrutiny.
 
On February 8th, 2012 the Internal Revenue Service (IRS) released the Proposed Regulations for
 the FATCA implementation and subsequent instructions on how and when to file Form 8938 stating, "U.S. taxpayers with specified foreign financial assets that exceed certain thresholds must report these assets to the IRS".
 
On the same day, the U.S Treasury released a 'Joint Statement' with the governments of France, Germany, Italy, Spain and the United Kingdom "Regarding an intergovernmental approach to improving international tax compliance and implementing FATCA".
 
So what the FATCA just happened? In layman's terms, "The U.S. government has once again increased its power and scope of authority to intrude, investigate and regulate virtually every sizable international financial transaction you make starting in 2013."
 
The focus of this answer is to look at House Resolution 2847, or the HIRE Act (Hiring Incentives to Restore Employment Act). And within the legislation, under Title V "Offset Provisions", we shall examine one section of Subtitle A, which is where you can go to find more on how to get FATC "Foreign Account Tax Compliant".
 
Here are some highlights of "Change You Can Believe In". When Americans wish to send money offshore next year, we find it reads in Part 1, Section 501(a), Chapter 4, Section 1474(a):
 
"In the case of any withholdable payment to a foreign financial institute which does not meet the requirements of subsection (b), the withholding agent with respect to such payment shall deduct and withhold from such payment a tax equal to 30 percent of the amount of such payment."
 
The aggregate amount for foreign financial assets has initially been set exceeding $50,000. Eerily, the federal income tax started at a mere 3% wartime tax, was never repealed, and has brackets today well over 40%. History has demonstrated governments will expand their power and attempt to lower this $50,000 threshold.
 
The term "withholdable payment" is broad and covers virtually all salaries, wages, dividends, annuities, periodical gains, profits, and income; or gross proceeds from the sale of property which can produce interest or dividends from sources in the United States.
 
The term "foreign financial institution" does not refer to just offshore institutions, but any financial institution which does not meet the requirements of subsection (b) to "comply with such verification and due diligence procedures as the Secretary may require with respect to the identification of U.S. accounts." And if any financial institution is not in compliance with these yet to-be-determined procedures required by the Secretary before 2013 (some by 2014) then such financial institutions shall be considered "foreign".
 
The term "withholding agent" refers to the bank who is sending the money and is responsible for deducting the payment. Generally, banks charge a fee to send a wire transfer and are not designed to be an administrative body capable of determining if the receiving financial institution has a tax-sharing agreement with the IRS and is currently in compliance with the requirements of subsection (b).
 
Under this law, foreign financial institutions shall be pressured to report the name, address, and Tax Identification Number (TIN) of each account which has a United States person as a beneficial owner, including foreign entities. Banks will be forced to disclose account numbers, balances, receipts, withdrawals and payments.
 
So, in short, Obama has turned your bank and financial institutions around the world, into tax policemen. Since banks will not assume any liability for failing to withhold the 30% from your transactions, they will likely turn these payments over to the IRS or will begin refusing to comply with the disclosure requirements altogether and close-out the accounts of American citizens as has Hong Kong, Switzerland and other prominent jurisdictions.
 
Americans have never had so many reasons to protect their assets than with the passage of this Draconian bill.
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Mike Cobb of ECI Development – Best Places In The World To Retire User Account
FATCA (or the HIRE Act) requires US citizensStreet signs pointing to Facta and the facts – Best Places In The World To Retire – International Living to file a new form on their tax returns called the 8938.   It is a disclosure form of all foreign financial assets, and includes everything but property held in your own name and gold held in your own name.   All other financial assets, trusts, companies, LLC's, stocks, partnerships, etc., must be disclosed on this form. 
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Terry Bradford of Origen Real Estate Consultants, Inc. – Best Places In The World To Retire User Account
The US government feels that there are people who have left the country who have not paid the lawful taxes owed to them. That obviously does not affect me or my husband, because we do not owe taxes to the US government, but I am sure that there are people over the years who have left the US owing everything from child support to taxes. The US government wants their taxes. So in order to oversee that, you need to file a Foreign Account Tax Compliance Act (FATCA) form and if you do not do it, the bank does it for you. So if you have a bank here in Panama, the bank will fill out the FATCA form and has to turn it into the US government.
 
That has taken place as of July 15th but it  is still not effective to this point yet. It became a law in March 2010, but has not been put in place yet. We spoke with our banker two or three weeks ago and they told us that they have filled out the form, so now the bank will know if you own a house and if there is any mortgage on it, so the US government can go after assets in another country in the event that money is owed in the United States.
 
Because of the problem with that, the expats who feel that they do not want to disclose this information to the US government can go to places other than Panama and open up accounts that do not comply with FATCA. But at this point, in Panama, they have not filled out the paperwork on our bank accounts  For people who have offshore assets, any of the countries that comply with FATCA will have to comply with United States law.

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