The Foreign Account Tax Compliance Act (FATCA) is having a negative impact on the U.S. economy, U.S. financial markets, American businesses operating abroad and American citizens who work and reside overseas.
Key provisions of FATCA
http://americansabroad.org/issues/fatca/fatca-bad-america-why-it-should-be-repealed/
FATCA requires foreign financial institutions (FFI) of broad scope - banks, stock brokers, hedge funds, pension funds, insurance companies, trusts - to report directly to the IRS all clients’ accounts owned by U.S. Citizens and U.S. persons (Green Card holders).
Starting July 1, 2014, FATCA will require FFIs to provide annual reports to the Internal Revenue Service (IRS) on the name and address of each U.S. client, as well as the largest account balance in the year and total debits and credits of any account owned by a U.S. person.
If an institution does not comply, the U.S. will impose a 30% withholding tax on all its transactions concerning U.S. securities, including the proceeds of sale of securities.
In addition, FATCA requires any foreign company not listed on a stock exchange or any foreign partnership which has 10% U.S. ownership to report to the IRS the names and tax I.D. number (TIN) of any U.S. owner.
FATCA also requires U.S. citizens and green card holders who have foreign financial assets in excess of $50,000 (higher for those who are bona-fide residents abroad) to complete a new Form 8938 to be filed with the 1040 tax return, starting with fiscal year 2011.
Those affected by FATCA
FATCA will have serious negative ramifications on the entire U.S. economy and more specifically on
• U.S. financial markets and financial institutions
• U.S. businesses operating in global markets
• American citizens residing overseas
• American citizens with legitimate investments overseas
The dangerous ramifications of FATCA
FATCA constitutes a breathtaking extension of U.S. legislative overreach, purporting to impose upon every foreign financial institution, corporation and partnership the obligation to examine whether and to what extent it must adhere to the application of U.S. law. In many cases, entities electing to comply with FACTA will find themselves in violation of local privacy laws. The cost for this massive reporting bureaucracy is estimated in the billions of dollars for foreign and U.S. financial institutions as well as for Americans residing overseas, not to mention for the IRS itself. Much more significant than the cost and time burden, FATCA creates a direct financial and legal threat to all foreign financial institutions.
After much complaint over the direct transfer of information from FFIs to the IRS, the Treasury Department created "Intergovernmental Agreements" or IGA’s. This is a system intended to allow FFIs to release client account information via government to government exchange so that FFIs will not need to violate privacy laws by directly releasing information to the IRS. FFIs must still register with the IRS to abide by FATCA, whether or not the government signs an IGA, to avoid the 30% withholding. An anti-discriminatory clause has also been included in the IGA agreements in order to minimize the possibility of banking lock-out for U.S. citizens and U.S. persons. Nonetheless, U.S. citizens and U.S. persons continue to experience banking lock-out and reduction of services. Many FFIs have simply not referenced FATCA as the reason, citing only "private banking policy." Suddenly, after years of not calling into question banking policy, U.S. citizen clients are having their accounts closed, access limited, or being denied services all together. FATCA is definitely the cause.
I’m just saying.
Bring American jobs back. GOP support American companies, hiring Americans.
Stop buying everything from China.
FACTA is indeed an over-reach, a horrifically short-sighted bill with no good intentions attached and likely Unconstitutional in the general sense, but this bill isn’t going to cause the collapse of the American dollar anytime soon.
If anything the tax breaks for employers is going to help more than hurt.
This is just a scare tactic to get people to invest in this company’s bonds. We see it all the time on TV with the gold bugs.
I searched FR and only found one short vanity thread on this topic from April 5th.
Here is a link to the video that started this story. I am not a catastrophist, but this does make some good points.
http://pro.stansberryresearch.com/1310PSIEANEW/PPSIQ465
bfl
How can Congress legally require foreign entities to do anything? Treaty?
FATCA is killing US jobs, NOT a myth A FACT.
During the normal course of my business I interact with individuals raising capital.
I know of one on-going instance were a company has raised money ~4mm from a Swiss investor but is having trouble getting assess to the cash here because of the reporting requirements of FATCA.
They have not been able to pay their employees without this cash that they had budgeted for.
So what do you do? Lay people off or promise to pay them later which is a violation of our state, Florida’s Law.
I don’t have this answer but it is hurting real folks due the incompetence of our government.
To all those on FR that want to bring back jobs from overseas have you never heard of ITAR? that is the real reason these jobs stay overseas.
Been hearing about the imminent collapse of the United States since at least the 1950’s; let’s hope they’re wrong this time, too.
Seems to me that under current law, if you file a form 1040
with the IRS, you are already required to disclose any
foreign investments, or holdings, on an annual basis, or
it’s a felony.
Require businesses to hire Americans, not illegal aliens.