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Author Topic: Who's FATCA anyway? Should anyone be afraid of FATCA?  (Read 10576 times)

Offline Art, just a re(tired) Fil-Am

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Who's FATCA anyway? Should anyone be afraid of FATCA?
« on: June 06, 2014, 11:38:55 AM »
http://research.bworldonline.com/publications/story.php?id=394&title=Who%E2%80%99s-afraid-of-FATCA

Ready or not, Philippine banks registered with the US Internal Revenue Service (IRS) as “foreign financial institutions” (FFIs) under the Foreign Account Tax Compliance Act (FATCA). A few did as early as January but questions over how the US law would affect their operations made most hesitate, even fearful. Some signed up in the next three months but majority did so on May 5 when it became apparent the IRS would no longer give another deadline extension and was set implementing the FATCA more than four years after it was passed.
Many banks’ questions are still unanswered but what is clear is they don’t want to be branded as non-compliant or pay the 30% withholding tax on their US-sourced income.

Now, they need to confront issues on bank secrecy while think of how procedures should be changed --"both at their front end and back end --" to accommodate the requirements of FATCA
"Life is what we all make it to be"!
"It's always a matter of money"!
"Do on to others as they would do on to You, but do it first"!
"Different strokes for different folks"!
"Que Sera Sera"!

Offline Tally J

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #1 on: June 07, 2014, 09:13:36 AM »
Beware! This law also affects certain foreign resident US tax payers.  At a minimum you may be subject to filing two new forms - Form 8938, Statement of Specified Foreign Financial Assets and FinCen Form 14, Report of Foreign Bank and Financial Accounts (FBAR).  I am currently trying to assess the impact of this on me, but as with all IRS information it is slow going.

Offline Lee2

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #2 on: July 02, 2014, 05:58:42 AM »
If a US person never had over US $10,000 or its equivalent in any and all foreign banks, then IMO there is nothing to fear from any and all accounts being reported to the US, as there was never a requirement for US persons in the past to report foreign accounts to the US unless all your foreign accounts equaled over US $10,000 and there still is no requirement that I know of as long as all your foreign accounts stay below a total of US $10,000 in total.

What all this is now, is that the US is insisting on all banks reporting all accounts, thus then having the ability to check them against FBAR reports of the past and FinCEN reports for 2013.

 Who Must File an FBAR  http://tinyurl.com/m9ds7d8
United States persons are required to file an FBAR if:
The United States person had a financial interest in or signature authority over at least one financial account located outside of the United States; and
The aggregate value of all foreign financial accounts exceeded $10,000 at any time during the calendar year to be reported.
United States person includes U.S. citizens; U.S. residents; entities, including but not limited to, corporations, partnerships, or limited liability companies, created or organized in the United States or under the laws of the United States; and trusts or estates formed under the laws of the United States.

Also the withholding can be waved by those who are in good tax standing.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline Lee2

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #3 on: July 02, 2014, 07:25:01 AM »
I really do not know what if anything they might do to you for failure to file during those years. Below is what I find when I look it up.

http://www.irs.gov/irm/part4/irm_04-026-016.html

I guess it might be best you talk to an accountant or lawyer who handles those types of matters to get the correct answer.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline Gray Wolf

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #4 on: July 02, 2014, 10:06:55 PM »
If you're lucky penalties might only be a warning letter.  See highlights in red below:

4.26.16.4  (07-01-2008)
FBAR Penalties

    The IRS has been delegated authority to assess FBAR civil penalties.

    There are civil penalties for negligence, pattern of negligence, non-willful, and willful violations.

    Whenever there is an FBAR violation, the examiner will either issue the FBAR warning letter, Letter 3800,or determine a penalty.  See IRM 4.26.17 for the Letter 3800procedures .

    Penalties should be asserted only to promote compliance with the FBAR reporting and recordkeeping requirements. In exercising their discretion, examiners should consider whether the issuance of a warning letter and the securing of delinquent FBARs, rather than the assertion of a penalty, will achieve the desired result of improving compliance in the future.

    FBAR civil penalties have varying upper limits, but no floor. The examiner has discretion in determining the amount of the penalty, if any. Examiner discretion is necessary because the total amount of penalties that can be applied under the statute can greatly exceed an amount that would be appropriate in view of the violation.

    Examiners are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted and the total amount of penalties to be asserted. Because FBAR penalties do not have a set amount, IRS has developed penalty mitigation guidelines to assist examiners in the exercise of their discretion in applying these penalties. The mitigation guidelines are only intended as an aid for the examiner in determining an appropriate penalty amount. The examiner must still consider whether a warning letter or a penalty amount that is less than what would be called for under the mitigation guidelines would be more appropriate given the facts and circumstances of a particular case. For example, if an individual failed to report the existence of five small foreign accounts with a combined balance of $20,000 for all five accounts but the income from each account was properly reported and the taxpayer made no effort to conceal the existence of the account, it may be more appropriate to issue a warning letter rather than assert penalties under the mitigation guidelines.

    FBAR penalties are determined per account, not per unfiled FBAR, for each person required to file. Penalties apply for each year of each violation. As noted above, however, examiners are expected to exercise discretion, taking into account the facts and circumstances of each case, in determining whether penalties should be asserted and the total amount of penalties to be asserted.

    There may be multiple FBAR civil penalty assessments arising from one account. FBAR civil penalties can apply to each person with a financial interest in, or signature or other authority over, the foreign financial account. Thus there may be multiple penalty assessments if there is more than one account owner or if a person other than the account owner has signature or other authority over the foreign account. Each person can be liable for the full amount of the penalty.

Louisville, KY USA - Bagong Silang, Caloocan City, PH

Offline Steve & Myrlita

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #5 on: July 03, 2014, 11:40:47 AM »
In other words....Report it or we take it.....Don't like it? Too bad.....It doesn't matter.....We are the IRS and you now work for us...... :D Couldn't resist that one. God Bless.....
Thank you...God Bless...
Bro Steve & Sis Myrlita
Bacolod City, PH
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Offline Gray Wolf

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #6 on: July 04, 2014, 03:11:48 AM »
That just about sums it up, brother Steve!   :)
Louisville, KY USA - Bagong Silang, Caloocan City, PH

Offline swandivr

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #7 on: September 01, 2014, 11:18:03 AM »
Ok.Late to the party.

What is all this gibberish anyway?Does this pertain to any business interests we might have in the PI?The IRS is just wanting to make sure everyone "pays up" (excluding Exxon GE Westinghouse etc.)? This takes effect in 2015? I have an inheritance coming in the next few months.I want to deposit it in my bank here,but I sure as heck don't want it confiscated.

Anybody?

Offline coleman2347

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #8 on: September 01, 2014, 01:14:02 PM »
The way I see it, is if your married to a Philippine citizen and you trust them (why would you get married if you didn't) then just put everything in their name.  Problem solved..If your not, Im sure there are ways....think, for the most part things here are not on computer, most of the stuff I run into here is kept in a file drawer somewhere..
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Offline Lee2

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #9 on: September 01, 2014, 08:14:41 PM »
I had filed those reports numerous times over the years when buying or paying off our condos in the Philippines and to date I have had no issues. I believe they look for much larger sums. which IMO would be over $100,000, even though they require reports on $10,000. IMHO if the money comes from legitimate sources, then I feel there is nothing to worry about, in relations to filing the proper forms. I feel we would have to worry if we did not file the required form since the govt could then confiscate our money or possibly toss us into jail. Why take the chance is my opinion, file the report and not have to look over your shoulder the rest of your life waiting for the hammer to possibly fall.

I suspect the govt could also confiscate your social security to cover the taxes or fees for violations that they feel was due them. I know of an expat in the Philippines who had half his ss taken to pay back child support that was from way in the past, so if they could do it for that, I am sure they could also do it for a fine or back money owned them.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline bigrod

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #10 on: September 01, 2014, 10:40:38 PM »
Lee,

Child support/alimony deductions can go up to 65% of your social security.  Deductions for back taxes, student loans, and other federal agency garnishments are capped at 15%.

Chuck








« Last Edit: September 02, 2014, 12:34:59 AM by Diba »
Life is  to short not to live it right the first time

Offline Art, just a re(tired) Fil-Am

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #11 on: September 01, 2014, 10:50:53 PM »
Chuck,
I have none of those you listed! Sorry for those who do! Ouch! :)
Child support
Alimony
Back taxes
Student loan
Garnishments
"Life is what we all make it to be"!
"It's always a matter of money"!
"Do on to others as they would do on to You, but do it first"!
"Different strokes for different folks"!
"Que Sera Sera"!

Offline Lee2

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #12 on: September 02, 2014, 12:22:31 AM »
Lee,

Child support/alimony deductions can go up to 65% of your social security.  Deductions for back taxes, student loans, and other federal agency garnishments are capped at 15%.

Chuck


Chuck while I agree with you that those numbers are probably real, failure to declare under that law can mean stiff penalties and the govt somehow always manages to get their money by locking peoples accounts that have accounts in the US, or by putting liens on property they have in the US, or possibly by taking some of their income, to what degree we will never know until it happens, as I do not know anyone where their SS was taken for that but there can always be a first time if it has never happened yet.

Quote
A penalty for failing to file the Form TD F 90-22.1 (Report of Foreign Bank and Financial Accounts, commonly known as an “FBAR”). United States citizens, residents and certain other persons must annually report their direct or indirect financial interest in, or signature authority (or other authority that is comparable to signature authority) over, a financial account that is maintained with a financial institution located in a foreign country if, for any calendar year, the aggregate value of all foreign accounts exceeded $10,000 at any time during the year. Generally, the civil penalty for willfully failing to file an FBAR can be as high as the greater of $100,000 or 50 percent of the total balance of the foreign account per violation. See 31 U.S.C. § 5321(a)(5). Non-willful violations that the IRS determines were not due to reasonable cause are subject to a $10,000 penalty per violation.

Beginning with the 2011 tax year, a penalty for failing to file form 8938 reporting the taxpayer’s interest in certain foreign financial assets, including financial accounts, certain foreign securities and interests in foreign entities, as required by I.R.C. §6038D. The penalty for failing to file each one of these information returns is $10,000, with an additional $10,000 added for each month the failure continues beginning 90 days after the taxpayer is notified of the delinquency, up to a maximum of $50,000 per return.
There is more at the link. http://tinyurl.com/9oolgde
« Last Edit: September 02, 2014, 02:24:07 AM by Gray Wolf »
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.

Offline trev.

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #13 on: September 02, 2014, 01:30:24 AM »
After reading these posts my question is... Say for instance you buy a condo or build a house with legal funds from the U.S. say with money from a retirement fund, IRA or what ever. You paid taxes on the withdrawals. So now you sell the condo or house and you have a large amount in the bank. Remember every thing is done legit. I am just curious on how the government would look at that. The Ph. government and the U.S. (IRS).
I imagine one would need to explain where all the money comes from?
« Last Edit: September 02, 2014, 02:24:40 AM by Gray Wolf »

Offline Lee2

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Re: Who's FATCA anyway? Should anyone be afraid of FATCA?
« Reply #14 on: September 02, 2014, 04:40:12 AM »
After reading these posts my question is... Say for instance you buy a condo or build a house with legal funds from the U.S. say with money from a retirement fund, IRA or what ever. You paid taxes on the withdrawals. So now you sell the condo or house and you have a large amount in the bank. Remember every thing is done legit. I am just curious on how the government would look at that. The Ph. government and the U.S. (IRS).
I imagine one would need to explain where all the money comes from?

In the Philippines, when you sell a home or condo, they charge you a straight tax on the sale price, it does not matter if you made a profit or lost your butt.
http://real-estate-guide.philsite.net/taxes.htm
Quote
The SELLER pays for the:
Capital Gains Tax equivalent to 6% of the selling price on the Deed of Sale or the zonal value, whichever is higher. (Withholding Tax if the seller is a corporation)
Unpaid real estate taxes due (if any).
Agent / Broker's commission.

As for the US, if you made a profit then you would supposedly have to declare it but as far as the money, as long as you had proof where it came from and proof of the profit or loss, then you would be covered having it but for exact details on how it would be declared, then possibly a member who sold one could answer that for us?

As for FATCA you would have to declare the money any year that you had $10,000 or over in any account or accounts outside the US and in any currency totaling a value equal to US $10,000 or more.
:) Happily married since 1994 & live part of the year in Cebu and the rest in S. Florida.