Thursday, January 2, 2014

"FACTA" - New U.S. Tax Regime is "Devastating," Experts Say- Jan. 01, 2014

What is FATCA? {More Money for the FAT-CATS}

New U.S. Tax Regime is "Devastating," Experts Say

By Alex Newman

January 01, 2014 "Information Clearing House - Already facing “pariah” status worldwide due to onerous IRS requirements, millions of Americans living and working abroad are preparing to deal with a deluge of even bigger problems in 2014, when a byzantine new tax regime starts going into effect. Known as the Foreign Account Tax Compliance Act, or FATCA, the deeply controversial and incredibly complex scheme is supposedly aimed at preventing tax evasion and gathering extra funds for the federal government. In reality, it will prove to be devastating, experts say — especially for middle-class Americans overseas and the U.S. economy.

Opposition to the draconian scheme, however, is mounting quickly even before FATCA has been fully implemented. Among the growing chorus of critics: the business community, bankers, Americans abroad, some members of Congress, investors, and even the Republican National Committee. More than a few trade associations and voluntary organizations are now either urging lawmakers to repeal FATCA entirely, or at least calling on the Obama administration to delay implementation and enforcement until the fiasco can be sorted out.

Around the world, outrage about the scheme is mounting as well, with foreign governments and financial institutions pointing out that the new tax regime essentially makes them unpaid agents of the IRS. About a dozen national governments have inked unconstitutional “agreements” with the Obama administration so far, laying the foundation for a global tax-information sharing regime. International bureaucrats working fiendishly for planetary taxation are celebrating, along with some attorneys and accountants hoping to profit, but serious concerns about the pseudo-treaties are more:

American Citizens Abroad - The Voice of Americans Overseas


What is FATCA?

FATCA also requires US citizens who have foreign financial assets in excess of $50,000 (higher for bona fide residents overseas –

 $200,000 for single filers and $400,000 for joint filers – see the IRS website for more details) to report those assets on a new Form 8938 to be filed with the 1040 tax return. Instructions for form 8938 were published in December 2011 and can be found on the IRS website.

Many Americans residing overseas are reporting banking lock-out. Many foreign financial institutions have simply chosen to eliminate their US citizens and US person client basis in order to minimize their exposure to FATCA reporting requirements, withholding fees and potential penalties.

The US Treasury has entered into Intergovernmental Agreements (IGAs) with a limited number of countries which will facilitate the transfer of information. The IGA agreements do include a non-discriminatory clause that is aimed at helping to alleviate issues of lock-out of banking services US citizens and US persons.

To learn more about FATCA and how it might impact you, you can consult the IRS website or speak to your tax advisor for more information.

(Updated August 2013):

1 comment:

  1. Foreigners tend to forget paying taxes in their homeland because they are basically paying in the country where they are. If they don't have the time to prepare their tax reports, they can always search for expatriate tax services that can do it for them.