# "US will not swap Fatca for common reporting standard"



## underation (Oct 25, 2018)

> The US is not likely to abandon its Foreign Account Tax Compliance Act (Fatca), according to the latest General Accounting Office report from Congress.
> [..]
> Although CRS was largely based on the US legislation, it focuses on tax residence rather than citizenship.
> [..]
> ...


https://international-adviser.com/us-will-not-swap-fatca-for-common-reporting-standard/

Not true, actually: the CRS allows each country to define who is "tax-resident" in their jurisdiction. The erstwhile French resident with US citizenship and an account in Germany would find their account getting reported to all three countries, should the US sign up to CRS.

The big difference (as I understand it) would be that a US-born accountholder with merely notional US citizenship and no US financial involvement would be able to self-certify, instead of having to buy a CLN. 

Innocent until proved guilty, rather than the FATCA guilty-unless-proved-innocent stance.

The irony is that in the years since the IGAs were launched, the IRS has received account information belonging to many hundreds of thousands of US-born individuals - most of whom would be tax-compliant in the residence country but not US-tax-compliant - but the IRS can't do anything with this mountain of information because no tax has been evaded, no crime has been committed.


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## underation (Oct 25, 2018)

underation said:


> ....the CRS allows each country to define who is "tax-resident" in their jurisdiction. The erstwhile French resident with US citizenship and an account in Germany would find their account getting reported to all three countries, should the US sign up to CRS.


Confirmed in a letter from Moscovici responding to an enquiry from MEP Sophie in't Veld on various FATCA-related matters (https://mobile.twitter.com/SophieintVeld/status/1124038891168829440/photo/1,
https://mobile.twitter.com/SophieintVeld/status/1124038891168829440/photo/2)

Moscovici also says he asked the French AA association for numbers on how many of their members genuinely have no links with the US (have never worked there as adults, never applied for a US passport, never used their US citizenship to enter the US, etc), but received no reply. I suspect the numbers, if supplied, might be very low if not zero. 

Similarly, Moscovici says he hasn't received evidence of more than a few complaints about bank accounts being refused. It may be that most of those being refused are unwilling to sign a W-9 or supply their SSN. Understandable, but it wrecks any claims of being refused banking services on the basis of national origin.


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## Bevdeforges (Nov 16, 2007)

What's kind of ironic here is that even FATCA (and their Bi-lateral agreements) call for "exchange" of banking information. From what I can tell, the US doesn't reciprocate by providing foreign tax authorities with information about non-residents holding financial accounts in the US. 

I guess there are enough ways around the FATCA and FBAR stuff that most folks don't bother complaining to national or EU authorities. Also, if I'm not mistaken, the CRS calls for exchange of income information on the reported accounts, not just the balance information the US asks for under FATCA.


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## underation (Oct 25, 2018)

Bevdeforges said:


> What's kind of ironic here is that even FATCA (and their Bi-lateral agreements) call for "exchange" of banking information. From what I can tell, the US doesn't reciprocate by providing foreign tax authorities with information about non-residents holding financial accounts in the US.


The US provides some information, to IGA1 "reciprocal" countries, but not as much as the partner countries send to the US. Moscovici comments on it in the letter.



> I guess there are enough ways around the FATCA and FBAR stuff that most folks don't bother complaining to national or EU authorities.


I suspect plenty of us complained vehemently to our MPs, but that doesn't have much effect. And it costs money to take it to court. Cheaper to renounce.

And, of course, the actual tax cheats that brought FATCA down on us are in America, not in the IGA countries.


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## Bevdeforges (Nov 16, 2007)

underation said:


> I suspect plenty of us complained vehemently to our MPs, but that doesn't have much effect. And it costs money to take it to court. Cheaper to renounce.


How expensive it is to renounce has quite a bit to do with the tax treaty with the country of residence. If you're in a country with a tax treaty that gives the right to tax US SS to the country of origin (i.e. the US), renouncing will put you into the 30% bracket on 85% of the benefit you receive (and that's AFTER the $2350 to renounce). And that they will withhold before they'll remit it to you.


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## underation (Oct 25, 2018)

Bevdeforges said:


> How expensive it is to renounce has quite a bit to do with the tax treaty with the country of residence. If you're in a country with a tax treaty that gives the right to tax US SS to the country of origin (i.e. the US), renouncing will put you into the 30% bracket on 85% of the benefit you receive (and that's AFTER the $2350 to renounce). And that they will withhold before they'll remit it to you.


However, a USC who is receiving US income at a lower rate of withholding due to their citizenship, is a USC who is genuinely tax-resident in the US, in the same way a UK expat in Spain who receives UK-taxable income is genuinely tax-resident in both countries and will get their accounts reported to both countries.

It's a completely different situation from that of a USC who has no US-taxable income but is treated by the FATCA IGA as reportable to the IRS, purely because of their birthplace.


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## Bevdeforges (Nov 16, 2007)

Technically speaking a USC is ALWAYS "tax resident" in the US, no matter where in the world they live.

But for the banks, it's purely a CYA maneuver to report any and all customer accounts where the customer has a US birthplace - whether or not they have the customer's US SSN. They're only protecting their own interests.


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## underation (Oct 25, 2018)

Bevdeforges said:


> Technically speaking a USC is ALWAYS "tax resident" in the US, no matter where in the world they live.


It's just another piece of American deeming. It's not actually true, any more than the exit tax garage sale is real. 




> But for the banks, it's purely a CYA maneuver to report any and all customer accounts where the customer has a US birthplace - whether or not they have the customer's US SSN. They're only protecting their own interests.


Unfortunately, it's required by UK law. That may not seem offensive to US expats who identify as American, but it's _extremely_ offensive to some of us who don't.


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