General Forum

General Forum

  1. Joined
    31 Aug '13
    Moves
    9611
    03 Jan '16 03:35
    The USA has set out on a mission to force all US persons globally to file US Tax returns and pay US Tax. Virtually every bank and financial institution on the planet has agreed to cooperate with the USA by carrying out intensive searches for possible US connections (such as a US Green Card, a place of birth in the USA, a US phone number, payments being made to a US bank account and so on). The bank and other financial institutions are duly reporting all such persons to the US Government unless concrete evidence exists that they are not a US person for tax purposes (i.e. the usual american "guilty until proven innocent" concept).

    Fair enough. That's the law. Americans living overseas are liable for US tax. Those that were born in the USA are US citizens, even if they left the country as a baby never had a US passport, and never visited the country again. The FATCA regime has brought these and thousands of other non-resident US citizens into the US tax net. Most probably knew that they should have been filing US tax returns.

    So far there is limited sympathy for these Americans. If they didn't previously pay all their taxes, they are now paying their fair due (plus a penalty).

    CERTAIN NON-US PERSONS TO BE LIABLE FOR 30% OF THEIR USD ASSETS:

    Before you brush this off as a problem for American tax payers, please read on. You could be affected, especially if your bank classifies you as "recalcitrant".

    Wealthy and not so wealthy individuals around the world, -who have nothing to do with the USA - are facing a tax-grab by the Americans.

    The tax-grab, amounting to 30% of the proceeds of every dollar asset you sell and 30% of every dollar payment you make, will apply if you are a "recalcitrant" account holder.

    What's a "recalcitrant" account holder? It could be anyone in the world who hasn't proven his non US status.

    Mostly non-American private individuals living outside the USA will be OK as the banks may assume they are non-US persons in the absence of any of the US indicia mentioned above (indicia include things like a US phone number, or payments being made to a US account).

    On the other hand, those who will suffer are millions of privately owned non-US companies and trusts. These entities, often very small in size, will be considered to be "recalcitrant" unless they have signed valid forms (typically a W-8BEN-E or w-8IMY), plus additional forms required by the banks.

    It doesn't matter that neither you nor anyone connected to your company has anything to do with the USA. You have never been a US citizen and never even visited the country. If you are a trust or a company the forms must be correctly completed.

    Now that may not sound like a big deal. But it is. The problem is that the form W-8BEN-E is almost impossible for even a highly intelligent person to understand and complete. Most lawyers, accountants trustees and bankers can't understand it. Furthermore, your banker, who is asking for the form, isn't permitted to help you complete it, even if he understood it -which he generally doesn't. The W-8BEN-E form runs to 8 pages of tightly written gobboldy-gook instructions and questions that only an American Tax lawyer can understand.

    The Trust or Company which is completing the form has to select what type of entity it is from one of 32 categories with names such as "Participating FFI, Reporting Model 1 FFI, Active NFFE, Passive NFFE" and so on. Depending on that selection, further questions must be answered.

    If you don't fill the forms in, or if you get the answers wrong, you will be treated as "recalcitrant". Simply speaking that means your bank will hand over 30% of your dollar assets to the Americans.

    The forms are in English. God help those living in China, or anywhere else where the level of English is weak.

    Deadline: The hard deadline for completion of the forms is 30th June 2016. Practically banks are saying that if you want them to meet that deadline and take you out of the US tax system, you need to get the form back to them by the end of this month (January). Early signs are that many companies and trusts will miss the deadlines. As of December 2015 many banks had received less than 30% of the required forms and of those received, more than 30% are invalid due to errors.

    Here is a quote from the IRS website:
    www.irs.gov

    "30% U.S. withholding tax will apply to any gross proceeds from the sale or other disposition after December 31, 2018 of any property of a type that can produce the U.S. source income described above (dividends, interest, insurance premiums).

    U.S. withholding tax will apply to foreign passthru payment to a recalcitrant account holder or a nonparticipating FFI that is made after the later of December 31, 2018 or the date of the publication of final Treasury Regulations defining the term foreign passthru payment."

    ".....All limited FFI and limited branch registrations will be placed in registration incomplete status on their online FATCA account after December 31, 2015. Limited FFIs and limited branches that seek to continue such status during the 2016 calendar year must edit and resubmit their registrations after December 31, 2015, on the FATCA registration website."

    Does it affect you? Yes! It doesn't matter that you have a small trust with a UK settlor and UK beneficiaries. Failure to complete the forms will force you to become an involuntary US Tax payer. The banks will just hand your money over to the USA as soon as you buy or sell a US Share, bond, or fund or even make a dollar payment.
  2. Joined
    31 Aug '13
    Moves
    9611
    03 Jan '16 03:58
    Amongst the banks and financial firms agreeing to comply with FATCA are 13 banks in Afghanistan, over 1000 banks in China, 900 banks in India, over 25'000 banks, trusts and investment companies in the UK, 3600 Australian institutions, 161 in Vietnam and 1400 in Russia.

    When will we get the RMB and EUR as reserve currencies?
  3. Joined
    14 Mar '04
    Moves
    97094
    03 Jan '16 16:48
    I've moved all my money (cash) out of my offshore bank accounts and now it is "safely" hidden in the various mattresses throughout my home.
  4. Joined
    10 May '07
    Moves
    10128
    03 Jan '16 16:51
    Originally posted by Great Big Stees
    I've moved all my money (cash) out of my offshore bank accounts and now it is "safely" hidden in the various mattresses throughout my home.
    Careful with the matches...
  5. Joined
    10 May '07
    Moves
    10128
    03 Jan '16 17:03
    The post that was quoted here has been removed
    I have no idea but if he does...
  6. Joined
    14 Mar '04
    Moves
    97094
    03 Jan '16 17:17
    The post that was quoted here has been removed
    Used to when I was a lot younger but it's harder to get the match to light now.
  7. Joined
    14 Mar '04
    Moves
    97094
    03 Jan '16 17:32
    The post that was quoted here has been removed
    Come on baby.
  8. Subscribersonhouse
    Fast and Curious
    slatington, pa, usa
    Joined
    28 Dec '04
    Moves
    52770
    03 Jan '16 17:43
    Originally posted by Great Big Stees
    I've moved all my money (cash) out of my offshore bank accounts and now it is "safely" hidden in the various mattresses throughout my home.
    I don't think there is a lot of interest in that method.....
  9. Joined
    14 Mar '04
    Moves
    97094
    03 Jan '16 23:01
    Originally posted by sonhouse
    I don't think there is a lot of interest in that method.....
    Exactly my point. I don't want the "tax people" interested in me or my money.
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