The Little Red #FATCA Book – (Review, Identify and Report on “U.S. Persons”) – How FATCA affects the non-U.S. World

About FATCA – The “worst law nobody has heard of” …

FATCA (The Foreign Account Tax Compliance Act) was signed into law – as a revenue offset provision to the Hire Act – in March of 2010. It is doubtful that Congress even knew that FATCA was part of the HIRE Act (“Hiring Incentives To Restore Employment”). Yet, FATCA has created havoc in banking systems around the world, has destroyed the lives of the citizens and residents of other nations (who just happen to have been born in the United States), led to many Americans abroad renouncing their U.S. citizenship and forced banks to waste tens of millions (and this is conservative) of dollars in compliance fees. Interestingly FATCA has also led to other countries actually changing their domestic laws (overriding their own constitutions) to “hunt” for people with a U.S. birthplace. FATCA has generated significant hatred of America and has severely eroded America’s “moral capital” during a time when China is challenging the United States for global supremacy.

FATCA has recently been part of an inquiry by the Government of France into the “overreaching” of U.S. laws. Nigel Green of the Devere Group has joined with Jim Jatras to lobby for the repeal of FATCA.

2012 – The world according to FATCA  – For the compliance industry: “The Gift That Just Keeps on Giving” …

2014 – At Home In Canada – The genesis of the ADSC Lawsuit – Opposition Rising …

2015 – Meanwhile, In The Homeland – The Bopp FATCALegalAction.com Lawsuit begins …

Interestingly, in August 2016, Dr. Stephen Kish, a plaintiff in the Bopp lawsuit and Chair of the Alliance For the Defence of Canadian Sovereignty renounced his U.S. citizenship.

Listen to the legal arguments …

 

December 2016 – Advocacy For Americans Abroad Fails: U.S. Treasury refuses proposed FATCA Same Country Exemption for Americans Abroad (but not for “Accidental Americans”) …

To be clear, much of the FATCA harm caused to “some” Americans abroad could be alleviated with the FATCA Same Country exemption (proposed by “ACA” and “Democrats Abroad”). FATCA SCE could be achieved by regulation. In December of 2016, U.S. Treasury refused to support a regulation creating the FATCA Same Country Exemption. This means that, the Obama administration was:

1. Aware of the harm that FATCA was causing to Americans abroad (leaving aside the harm to the rest of the world); and

2. Refused to provide relief for Americans abroad!

2017 – The world according to FATCA  – Hearings in Washington, D.C. …

 

On April 26, 2017, at the initiative of Congressman Mark Meadows and Senator Rand Paul, “FATCA Hearings” will take place in Washington, DC. Although FATCA has been the subject of much discussion outside of the United States, there has been little discussion of FATCA inside the United States. In fact, FATCA is NOT well known in the United States.

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The “Little Red FATCA Book” Documenting the “Worldwide Hunt” for “U.S. Persons” …

The “Little Red FATCA Book” is a collection of posts that I created over an 18 month period. I have decided to collect the individual posts and organize them in one place. I have grouped the individual posts into three broad chapters which I will call Chapter A, Chapter B and Chapter C. This is a “work in progress”. Some of the posts are incomplete.

FATCA which is essentially the enforcement mechanism of U.S. “Place of Birth Taxation” is a controversial topic. Feel free to post your thoughts and comments.

John Richardson

Chapter A – How FATCA impacts the non-U.S. world: Describing The Harm and Impact – Parts 1 – 25

Prologue: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #Americansabroad and forced renunciation of US citizenship

Part 1: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – “Entity Edition”

Part 2: “What God Hath Wrought” – Interpreting the IGA: Definitions incorporated by reference reveal the true intent of the FATCA IGA

Part 3: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – “Active or passive NFFE”?

Part 4: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Imposing FATCA on the world in two steps

Part 5: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – The FATCA IGA and the “Entity Inquisition”

Part 6: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Breaking open the Family Trust one country at a time

Part 7: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Which country decides the nature of the “Entity”?

Part 8: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – The Canadian “not for profit” and other FATCA Free Entities/Zones

Part 9: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – “Place of birth”, the Canadian teenager and the new account

Part 10: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – But only those “Born In The USA”

Part 11: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – But reciprocity?

Part 12: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Including US residents who are citizens of France and other nations!

Part 13: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Colonizing other nations by imposing US taxation on the world

Part 14: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – FATCA and the rise of @TaxHavenUSA

Part 15: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – @RepealFATCA on: Why the Canadian banks supported the #FATCA IGA

Part 16: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Why the IGA allows the banks to report “US Person” accounts that are exempt

Part 17: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Retirement accounts are exempt from FATCA reporting in all cases

Part 18: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Responding to the #FATCA Letter

Part 19: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – How to “self certify” your non-US status under the #FATCA IGA

Part 20: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #FATCA warfare, psychological harm and #Americansabroad

Part 21: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #FATCA results in denial of bank accounts for #ESL Teachers who @TeachAbroad

Part 22: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – Oh my God! #FATCA affects even a Paypal account!

Part 23: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #FATCA and the unsuspecting French civil servant

Part 24: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – #FATCA and #Americansabroad with life insurance

Part 25: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – What if the 8 month year old Canadian is a “US Person”?

Chapter B – The Canadian Response – The Alliance For The Defence Of Canadian Sovereignty and the FATCA Lawsuit Against The Government of Canada – Parts 26 – 27

Part 26: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – The Canadian Government #FATCA hearings or why the @ADCSovereignty lawsuit is necessary

Part 27: What God Hath Wrought – The #FATCA Inquisition (Review, Identify and Report on “U.S. Persons”) – The @ADCSovereignty lawsuit #lawstudents edition

Chapter C – The Meadows Bill: What Does FATCA Repeal Actually Mean? – Part 28

Part 28: Searching for Uncle #FATCA: Where is he? What does he do? Why is he a danger to America? Can Congressman Meadows and Senator Paul save America?

 

15 thoughts on “The Little Red #FATCA Book – (Review, Identify and Report on “U.S. Persons”) – How FATCA affects the non-U.S. World

  1. Gary

    FATCA reporting requirements are not mandated just by birth in the United States but are also required and mandated from day one of birth of your child (if one of the parents is unfortunately a US Citizen when your poor child is borne anywhere OUTSIDE the USA. I have watched in HORROR has my grandchildren have been subjected to FATCA criminal reporting requirements from their first date of birth as they had established foreign educational accounts greater than $10,000 established by their grandparents for their future educational needs. Now these grandchildren are citizens of their birth country in Central America and can’t renounce their US Citizenship and shed their FATCA and other reporting requirements until they reach 18 years of age. The USA Embassy refused to issue USA VISA’s in their foreign Passports and mandated all four grandchildren register their foreign births in the USA Embassy and obtain USA Passports. I am watching my older children one-by-one renounce their USA Citizenship after obtaining a foreign Citizenship in their new home (a better) Country that respects its Citizens as human beings and not cattle to be sheared. I am soon to follow in their path of renouncing.

  2. Trish Moon

    @Gary

    It is incredible to me that the US Embassy forced your grandchildren to register. I am not 100% sure but this may be the first time I have heard of it being forced in such a way.This is one of those areas where I think the U.S. MUST be challenged. US law belongs in the US. I expect this will become a point of contention more and more; many are already NOT registering their kids.

    “…. after obtaining a foreign Citizenship in their new home (a better) Country that respects its Citizens as human beings and not cattle to be sheared. I am soon to follow in their path of renouncing.”

    The numbers continue to rise-You are not alone!

    1. Gary

      Trish

      My four grandchildren were born in the Republic of Panama to the Panamanian wife’s of my two sons (of US Citizenship). All four grandchildren obtained their Panamanian Passports and through their parents requested US Tourist Visas so that they could travel with their parents for a Christmas Trip to visit relatives. The Embassy first issued one child a US VISA but later canceled it upon knowledge the father was a US Citizen and all of the grandchildren were reused US Visas in their Panamanian Passports because the Embassy stated they were denied travel to the USA unless it was a travel on a USA Passport and then stated the foreign births of the four children MUST be registered in the US Embassy in Panama and USA Passport issued to travel on which were forced upon the children and their parents. This poor children are now subject to FATCA and all the other reporting requirement with NO option except at age 18 to renounce their unwanted USA Citizenship.

      1. Fred (B)

        Each family is different. However I will share 2 things I have done with my kids, non-US born, but with US citizenship.

        A child, citizen of X (not the US), born in X to a mother from X, should get a bank account in his name, under his mother’s authority, in a new bank, which need not know anything else. It need not know about US implications, or the US father. The kids are just like any other of their local peers.
        I chose a bank that had nothing to do with me. My wife opened accounts for my boys, without me. They are local, as as far as the bank is concerned, pure 100% EU. There is no reason for these accounts to ever show up anywhere, except in the country where they are 100% legal and local.
        Few kids have $10000 anyway so there is no reason to start filing forms for the children, if these accounts are safe and local. When the kids are adults, they will decide what to do. If they choose to stay US citizens, they will at least be able to act proactively and avoid trouble. If they renounce I will help them with the cost.

        Another remark is that I had to prove that I was in the US enough time (childhood and adulthood) to make my children US citizens. I documented all this precisely and was actually a bit short before the birth so I went to the US an extra week. My point is maybe your sons don’t have enough time on US soil (or cannot prove that they do, hint, hint) so your grandchildren might not “qualify” for US citizenship! I.e. apply for it and have it refused…

        Good luck.

        1. Trish Moon

          Fred (B)

          I think Gary mentioned that the over $10k accounts for education have already been established. I don’t know if it is possible to somehow move them into a new bank in the way you describe. But new accounts, for sure!

          1. Gary

            Trish

            As a result of being forced to register the foreign births of these children in the Embassy and USA Passports being issued their parents went the extra step to get social security numbers issued and established accounts in the USA moved the funds to the USA and now no more FATCA reporting requirements for the children.

      2. Trish Moon

        @Gary,

        I understand the frustration at having to wait. Perhaps there are some ways to avoid prompting US interference…

        You sound well-informed. Perhaps you already know this but just in case:

        http://www.citizenshipsolutions.ca/2016/02/29/the-s-877a-dual-citizen-exemption-must-certify-tax-compliance-for-the-five-years-prior-to-relinquishment/
        7. The S. 877A “Dual Citizen” exemption: “MUST certify tax compliance for the five years prior to relinquishment”

  3. Nononymous

    The situation sucks, but let’s be clear, the families were only forced to register the births and obtain passports and all that because they wanted to visit the US. Had they opted not to take the trip, they could have walked back out of the embassy and done nothing further, and the children would have remained off the US radar. (It’s possible that the kids might have been able to obtain visas if the applications were made solely by the mothers, but this could have caused problems on entry to the US if accompanied by the fathers with US passports.)

    Indeed, many expats are not registering the birth of children abroad to avoid the taint of unwanted US citizenship, but the price of this strategy is taking risks when traveling back to the US with the children. I’ve been lucky with my daughter the few times we’ve crossed the border but I’ve used a Canadian passport with US birthplace and the uniforms haven’t noticed or asked questions about my citizenship; it’s not something I’d care to try with a US passport. We don’t require visas so no need to endure extra scrutiny of an embassy visit.

    Really the safest strategy for dealing with unwanted US citizenship is to avoid the US altogether. I don’t see how moving the savings accounts to the US improves the situation – it avoids FATCA but of course puts the children on the IRS radar because interest income is reported. Instead, they could have set up accounts in Panama independent of the US citizen parent, as they don’t have a US birthplace to identify them for FATCA reporting. Although they have now been dragged into the US system, all is not necessarily lost, they could take this approach going forward, provided they have no plans for future dealings with the US.

    1. Gary

      Bank interest income received in Panama is tax exempt in Panama but for USA citizens all forms of foreign passive income including interest, rents etc are required to be reported and are subject to USA taxation just the same as the interest received on the USA bank accounts.

      1. Nononymous

        Right, but if accounts had been opened for the children as Panamanian citizens only, there would be no FATCA reporting and no need for US tax compliance. Without a US birthplace the children can easily remain off the US radar.

        This approach isn’t recommended if they plan to later work or study in the US or otherwise utilize their citizenship, but if they want to avoid the place forever, they can do so.

        1. Gary

          You are correct in that if a foreign born persons birth outside the USA where one parent is a USA citizen and their parents choose not to register the birth and never travel to the USA necessitating the registration and USA passport, it’s possible to stay under the radar but NOT office of the screen of risk. The unregistered person is still a USA citizen under USA law and subject to all reporting requirements and/or subject to USA criminal laws for failure to file and/or comply to all the laws and regulations governing every USA citizen living in a foreign country. He or she is a dual citizen whether registered or not. It caught my attention about four years ago when I was given a first hand account of a Swiss Citizen that was terminated from a large Swiss Bank because the compliance department of the bank had discovered (after a 20 year career at the bank) that he was a unregistered USA citizen which arose from the fact that his birth mother was a USA Citizen at the time of his birth in Switzerland and she had renounced her USA citizenship 3 months after his birth and because a naturialized Swiss Citizen as the same as her husbands nationality. This person had never traveled to the USA and had no idea that he was considered a USA citizen. The Swiss Bank gave him two choices ti either renounce his USA Citizenship and/or face termination. After a trip to the US Embassy and being told it would require 20 years of tax returns and other requirements he then returned to the Bank and choose termination. The Swiss Bank closed all USA citizen bank accounts and then terminated all USA Citizens in their employment leaving “no stone unturned” in their effort to purge everything USA from their bank as they checked everyone heritage and linage and cleaned house. This occurred sometime back after the USA actions against various Swiss Banks. I certainly don’t want to witness my children and grandchildren being subject to FINCEN reporting requirements or trying to fly under their radar in violation of the USA laws.

  4. Gary

    Approximately 2014 that the story was conveyed to me. I know the current requirement for a USA Citizen renouncing is the prior five years of tax returns and six years of FATCA reports but I assume this individual might have been treated differently because he was not registered as a foreign birth in the US Embassy in Switzerland and they had no record of him (as he was off the radar). He was not a low level bank employee and it was a big shock at the time to his coworkers.

    1. Nononymous

      Actually there’s no tax compliance requirement for renunciation – you simply renounce and a few months later your CLN arrives in the mail. The tax returns and FBARs are necessary if you want to make a clean exit from the US tax system. Those who don’t care, don’t bother.

      1. Gary

        I just assisted one of my children through the renunciation process and I found it interesting that their last USA IRS 1040 filing requirement date was the date the US Embassy received is renunciation form and oath and not the later date that it was accepted and approved by the US Secretary of State office in their CLN. When the 1040 was filed along with all the other required forms and disclosures along with notice of final return it was only thought the end date of taking and filing the oath. It would appear that the CLN is just another formality but not the official date of the end of filing requirements as the earlier date of completion of the applicants acts seems to be govern the ending date.

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