# FATCA in a Nutshell



## FFMralph

*Foreign Account Tax Compliance Act FATCA*
The Foreign Account Tax Compliance Act (FATCA) became law in March 2010 and is focused on identifying American citizens with interests in foreign assets and possible evidence of tax evasion. 

*How FATCA works*
FATCA utilizes two main pillars to accomplish it's intended goal:

Foreign financial institutions with branches located in the U.S are required to report information about American's with foreign accounts or signature authority over foreign accounts annually to the IRS. Financial institutions that are not compliant face large penalties directed toward the local branches operating within the U.S.. 
Furthermore, the U.S. has signed agreements with over 50 countries agreeing to exchange account information about expats and their foreign financial accounts.
*What gets reported*
As of September 2014 foreign financial institutions are require to report the following: 

Account holder’s name 
Account holder’s U.S. taxpayer identification number (SSN/TIN)
Account holder’s address
Account number
Account balance or value
Furthermore, in September 2016 foreign financial institutions will be require to report any payments made in connection with these assets (e.g. interest, dividends).
Individual transactions are not reported. They may however, be requested by the IRS if suspicion of tax evasion exists.

*Further resources*
Foreign Account Tax Compliance Act


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## maz57

Ummm, not quite correct FFMralph. 

FATCA requires ALL foreign financial institutions to do a search of their customer's data to determine if any of those customers have "US indicia". Those banks must then turn over the information on those US account holders directly to the IRS or, alternatively, to the government of the country in which the bank is located which will then forward it to the IRS. The method of data transmission depends on the details of the IGA signed between the US and the other country. If there is no IGA the financial institution must sign up directly with the IRS and agree to rat out their US customers or they will be deemed non-compliant by the IRS.

This has nothing to do with whether or not those institutions have US situated branches or subsidiaries. The leverage the US government has on foreign institutions (even those with no US presence) is the threat of 30% withholding on ALL of their payments which pass through the US system. (Note this is 30% of the transaction TOTAL, and not just the interest, dividends, or whatever.) Any inter-bank payment which involves US dollar denominated assets would generally fall into that category because of the system (called SWIFT IIRC) of settling international payments located in New York. The US government would not have this leverage if it were not for the fact that the US dollar is the world reserve currency. No foreign bank can afford to not have access to that international payments system nor can they afford that 30% tax. It would wipe out any profits and reduce them to being a paltry local player. 

FATCA is the legislative response to the fact that the CBT practised by the US is essentially unenforceable. FATCA attempts to force foreign countries and foreign banks to assist the US in this enforcement. Many foreign banks are simply choosing instead to get rid of their US customers because of the high cost (and risk) of FATCA compliance; a business decision, pure and simple. Although the original intention of FATCA was to force foreign banks to track and report the foreign accounts of US residents, the devastating effects on US expats are only now beginning to be felt.


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## FFMralph

Thanks for the correction. I'll update my draft.


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## BBCWatcher

maz57 said:


> FATCA is the legislative response to the fact that the CBT practised by the US is essentially unenforceable.


That's not the _whole_ story or even necessarily the most interesting part. Congress also had in mind lots of other financially-oriented crimes in designing the FATCA legislation. For example, if you're trafficking in heroin the fact you're probably also evading income taxes isn't actually the most interesting part of your financial situation.

Regarding "unenforceable"... uh, no. The IRS comprehensively estimated tax compliance rates back in 2006 and determined that they collect about 85.5% of U.S. taxes legally owed. That's across all the taxes they collect: corporate income, personal income, self-employment tax, inheritance, etc. That 85.5% rate is among the best in the world, probably the best in the world, easily exceeding Europe's best. (The U.K. is very good but is down around 77%, for comparison.)


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## Nononymous

BBCWatcher said:


> Regarding "unenforceable"... uh, no. The IRS comprehensively estimated tax compliance rates back in 2006 and determined that they collect about 85.5% of U.S. taxes legally owed.


I assume that is for all US taxpayers, resident and non-resident. What is the estimated compliance rate for non-resident only? That might better the point about CBT being essentially unenforceable.


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## Bevdeforges

Nononymous said:


> I assume that is for all US taxpayers, resident and non-resident. What is the estimated compliance rate for non-resident only? That might better the point about CBT being essentially unenforceable.


To have that statistic, they'd have to know about all income "theoretically" subject to IRS taxation - and I'd say that number is more or less unknowable.

The US doesn't actually know how many US citizens are resident overseas - they have no way of knowing, as they don't count them in any census, nor do they have any way of knowing of "accidental Americans" born overseas to a US parent eligible to transmit their citizenship, unless the birth is registered at the Consulate. And lots of births aren't registered at the Consulate. There are also deaths of Americans resident overseas that are never reported to the consulate or to the IRS. And plenty of sources of income overseas that are never reported as being paid to a "US person" plus some foreign sources of income that may or may not be subject to US taxes.

Any and all estimates of the IRS success rate are just that, "estimates."
Cheers,
Bev


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## BBCWatcher

It's at least 94% compliance because that's the estimated percentage of U.S. citizens residing outside the United States that owe zero (or less) in U.S. income tax. Assuming even half of the remainder are compliant then that'd be 97%.


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## Bevdeforges

BBCWatcher said:


> It's at least 94% compliance because that's the estimated percentage of U.S. citizens residing outside the United States that owe zero (or less) in U.S. income tax. Assuming even half of the remainder are compliant then that'd be 97%.


We're still talking "estimates" here in any event. And, do you count those who owe nothing, but have no idea they are considered US citizens in need of filing, or even those who know they are citizens, but don't realize they are supposed to file?

What's that about "figures don't lie, but liers sure can figure"? Not saying anyone here is lying, but it does seem like a "definitional approach" to the issue to me. (But I'll play, too: if the US were to drop the CBT altogether, than they could claim 100% compliance...:yo: )
Cheers,
Bev


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## FFMralph

I think the IRS is going to run into the same problem as the State Department. "who is going to process all that data? Manually impossible, digitally it will require a lot of programming which probably hasn't all been funded yet.


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## Bevdeforges

FFMralph said:


> I think the IRS is going to run into the same problem as the State Department. "who is going to process all that data? Manually impossible, digitally it will require a lot of programming which probably hasn't all been funded yet.


And, even when they manage to process all the new incoming data and the computer spits out reams and reams of paper showing mismatches between what was reported by the banks vs. by the taxpayers themselves, how do you think the IRS will approach the data?

I'm seriously betting that they're going to go after the "big, obvious" tax evaders first and leave the small fish for later - much, much later, if at all.
Cheers,
Bev


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## maz57

BBCWatcher said:


> Regarding "unenforceable"... uh, no. The IRS comprehensively estimated tax compliance rates back in 2006 and determined that they collect about 85.5% of U.S. taxes legally owed. That's across all the taxes they collect: corporate income, personal income, self-employment tax, inheritance, etc. That 85.5% rate is among the best in the world, probably the best in the world, easily exceeding Europe's best. (The U.K. is very good but is down around 77%, for comparison.)


Regarding enforcibility, Fatca will likely help the IRS to hunt down US residents who are not declaring/paying taxes due on their foreign holdings. Fair enough. 

For folks who do not live in the US the results will be totally different. Imagine the Canadian born 50 years ago on US soil who has lived in Canada as a Canadian their entire life. What will they do if/when they get that IRS letter? I expect a lot of those letters will go into the garbage which is certainly what I will do. What, exactly, is the IRS going to do about it?

By the way, I wouldn't trust any statistic the IRS comes up with. By definition they don't even know about taxes that are owed but not paid. That 85% (if it's true) is more a testimony to the basic honesty of the American people than the efficiency of the IRS. The US government doesn't even know how many of it's citizens live out of the country. How can they cite the rate of tax compliance of people they don't even know exist.


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## maz57

Bevdeforges said:


> I'm seriously betting that they're going to go after the "big, obvious" tax evaders first and leave the small fish for later - much, much later, if at all.


I'm not so confident that it will work that way. Going after the big fish is problematical for the IRS because the first thing people like that do is to bring on the accountants and lawyers. That, in turn, ties up lots of very limited IRS resources as the case gets bogged down in IRS procedure or even in the courts. It's true that the IRS likes to score a couple of "big fish" victories every spring during the run-up to tax time, but I suspect they get better bang for the buck by targeting numerous small fry who are more likely to be scared into compliance.

Don't misunderstand me. I'm hoping you're right and I'm wrong.


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## Bevdeforges

Actually, back when I was still living in the US, it was well known that the various IRS agents work to a standard that requires them to "keep their average recoveries up." Meaning that they need to recover unpaid taxes on audits averaging a certain amount over the year. So if they harass someone over $100 worth of miscalculated or "evaded" tax, they have to find someone with much, much more "possibility of recovery" to audit if they're going to meet their performance standards for the year.

There is such a thing as a "compliance" audit - where they simply rip apart every line of your return and make you prove everything. However, the latest rounds of budget cutting have hit the IRS pretty hard, and they are under pressure to show a dollar-denominated return on the time spent on audits.
Cheers,
Bev


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## BBCWatcher

If you have some solid evidence that the best available estimates are inaccurate, great, let's explore that. "I don't believe that number" is not solid evidence.


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## Bevdeforges

BBCWatcher said:


> If you have some solid evidence that the best available estimates are inaccurate, great, let's explore that. "I don't believe that number" is not solid evidence.


I think you only have to take a look at just what those "best available estimates" are based on to develop a certain level of skepticism. How many expats are they estimating are out there? And of those, how many actually might owe taxes in any significant amount? (For that matter, how many of the estimated expats out there are estimated to have a filing obligation?) What are the estimates of the amounts and sources of income that the folks who "should" be filing have coming in? And what loopholes, deductions and exclusions and treaty provisions can be estimated to apply against that estimated income?
Cheers,
Bev


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## BBCWatcher

The 85.5% estimate for tax recovery comes straight from the IRS based on their most recent comprehensive study of tax year 2006, released in 2012. (One has to wait a few years to estimate properly the total tax recovery for a particular year, so that's the most recent such data available. If the IRS holds to past pattern they'll release the next such study in 2017 for tax year 2011.)

The 94% figure (of U.S. persons living overseas that owe zero or less U.S. income tax, thanks to the Foreign Earned Income Exclusion, Foreign Housing Exclusion, Foreign Tax Credit, personal exemption, standard deduction, and other aspects of the U.S. tax code) is an estimate that J. Richard Harvey at Villanova University calculated and published recently.

Take a look at those sources if you'd like more details.


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## CdnAllTheWay

When the US government can't even honestly report renunciation and relinquishment figures, ALL figures given by any department of the US government are highly suspect.

As to Bev's comment regarding mismatches in the overwhelming data they are about to receive at the IRS, I've often wondered just what they plan to do with all that data with no SSN or ITIN attached to it. It's going to be a gong show. LOL


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## BBCWatcher

CdnAllTheWay said:


> When the US government can't even honestly report renunciation and relinquishment figures, ALL figures given by any department of the US government are highly suspect.


Oh come on. What, the National Weather Service isn't reporting precipitation totals in Topeka accurately? Please.

If you've got another reputable data source, or a specific, informed criticism of the data, let us know.


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## Bevdeforges

CdnAllTheWay said:


> As to Bev's comment regarding mismatches in the overwhelming data they are about to receive at the IRS, I've often wondered just what they plan to do with all that data with no SSN or ITIN attached to it. It's going to be a gong show. LOL


Actually, I'm fairly sure that what they're going to do with all that data is more or less the same thing they do with all those 1099s they receive from the US banks. To be honest about it, that's what they are asking for - 1099s from the foreign banks. 
Cheers,
Bev


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## BBCWatcher

IRS Form 1099 is an interest or dividend report, typically. FATCA IGAs will produce FBAR-like high balance data, as I understand it. They're not really the same. The latter is actually more "useful and interesting" because a U.S. person's failure to report foreign accounts (above thresholds) is, all by itself, a violation subject to penalties. The IRS and Treasury have nothing hard to do -- they're "easy pickings." No hard stuff involved like calculating income tax owed. They just match and send failure to report penalty collection notices if they wish, and I predict they wish.


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## FFMralph

BBCWatcher is right, "easy pickings". The real question however, is what are they looking for?
I don't think "forgetting" to claim passive income for a few $100 will spark any attention. At least not yet. I think the IRS is more interested in accounts in excess of, say, $100k. At least in the beginning. Remember several hundred of thousands (if not millions) of W9s will be pouring in over the next few years. These need to be sorted and processed. If it was me, I would look at the large accounts first and double check them with the account holders 1040. 
But still, "forgetting" is no longer an option. 

Remember, not only banks but all financial institutions (i.e. banks, brokers, pension trusts and some insurances) will be reporting so there are a lot of traps out there which are easy to forget when reporting.


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## Bevdeforges

I'll admit I didn't read the agreements too carefully, but at least the ones I read indicated that they would be reporting interest paid information and balance information at year-end. Not exactly like a 1099, but the same basic principle. And their main value will be in enabling the IRS to match up reported income via social security numbers. 

It's entirely possible that someone could have a few hundred dollars in interest income and, with no other income to their name, simply not have an income tax reporting requirement. Even with a rather large balance bank account - say, lower 6 figures. (Given today's interest rates, it's unlikely even a $500,000 account would generate enough income to require a retiree to file if they had little or no other income.)

The FATCA reporting is simply one more weapon in the IRS arsenal - and frankly, they're far more likely to use it to locate big time tax evaders rather than the odd expat who might possibly owe $100 or so in back taxes. They will most certainly use it, however, in cases where there is "something funny" about whatever you did file and they think your foreign assets might lead them to where you've stashed your big bucks.
Cheers,
Bev


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## BBCWatcher

You didn't mention FinCEN Form 114, Bev. That's the easy one for Treasury. Really, really easy.


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## Bevdeforges

BBCWatcher said:


> You didn't mention FinCEN Form 114, Bev. That's the easy one for Treasury. Really, really easy.


That's the one most folks still think of as the FBAR. And no, I don't think they're planning on swooping down on anyone with a mere $10,001 in a foreign account to exact the maximum penalty for failure to report. Deadline for filing the 2014 version of that one isn't until June 30th, so again, don't put it off, but don't get panicky about getting it in within the next 24 hours or so.
Cheers,
Bev


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## BBCWatcher

Bev, I think they're going to "work the list." FBAR is easy -- violations are very cut and dried -- so letters will start flying before long. How sternly worded they are, and who's first on the mailing list, are yet to be determined, but I predict -- and it's very safe to predict -- that some letters will fly. They already have in the wake of Bradley Birkenfeld's whistleblowing, in IRS/Treasury priority order.


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## Bevdeforges

The first round of FATCA reporting from the foreign banks will be on 31 December 2014 balances - so technically folks have until June 30th to "get legal" and file their FBARs (or whatever you want to call them). And even at that point, I still expect that the IRS will start devoting resources to sending out their letters in "top down" priority.

It would be fun to know how many really big accounts (i.e. in the millions) get reported by foreign banks that don't match up first time around. I'm betting there will be plenty of those to keep our civil servants busy and out of trouble for the near term. Besides, accounts in the millions, tens of millions or more, are far more likely to reveal taxes potentially due/evaded than a $100,000 account that didn't get reported because someone didn't realize they were supposed to file.

But I guess we'll find out in the second half of 2015.
Cheers,
Bev


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## CdnAllTheWay

Bevdeforges said:


> I'll admit I didn't read the agreements too carefully, but at least the ones I read indicated that they would be reporting interest paid information and balance information at year-end. Not exactly like a 1099, but the same basic principle. *And their main value will be in enabling the IRS to match up reported income via social security numbers. *


And what will they do with the copious amounts of foreign FATCA-related financial data, with no SSNs or ITINs to use for matching purposes? As I said, it will be a gong show. I supplied no identifying number when I submitted my "exit" tax form, as I refused to apply for a tax number with a foreign government. Never had a SSN, since State told me decades ago I was NOT a US citizen. I did not supply my Canadian SIN. If my financial institutions were to send my data, which they are not, it wouldn't contain a US identifying number to match to anything, unless I provided one to the institution. It's unlikely "recalcitrant" account holders would go through the ridiculous process of obtaining a US tax identifying number of any kind, unless they wish to be considered US serfs.

As for the trust-worthiness of US numbers, BBCWatcher, the discussion of the inaccuracy of renunciations, and non-reporting of relinquishments, has been held here before.


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## Bevdeforges

Not sure what your situation is - but for those with a non-US birthplace, it's unlikely the foreign banks will provide any information to the IRS. If you have a US birthplace, but no US SSN, I'm not sure how (or if) they will be able to match up your data. 
Cheers,
Bev


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## maz57

The fatal flaw in FATCA is that it absolutely depends on employees of foreign financial institutions for it's success. Once these people figure out what the real deal is (namely going to a whole bunch of trouble to rat out their customers to the IRS for the sole benefit of the US government) I think they are going to be less than enthusiastic about the whole thing. 

Imagine destroying the long term relationship with one of your best customers for no good reason just because some foreign government halfway around the world says so. Heck, a lot of these people don't even speak or write English, don't have a SSN, don't have a US birthplace, and have nothing to do with the US. I'm betting the bank folks will go through the motions and call it done. How is the IRS going to determine whether they have done a complete job or not?

I have a hunch some of these bank employees will instead tip off their customers and help them edit out any US-tainted personal info on file. Wow...a new service they can offer their customers; FATCA proofing!


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## BBCWatcher

You've just described HSBC's behavior, as an example -- the bank that catered to drug cartels and their money laundering needs. It only cost HSBC $1.9 billion.

FATCA includes a mighty big stick. That stick remains. The IRS also offers big cash rewards to not-as-well-paid bank employees who want to become whistleblowers. Who knows. Maybe your "friendly" bank employee co-conspirator will help you in your mischief *and* turn you (and others) in for a reward. That's much more profitable. Plus the banks have got their own regulators to worry about.

As for not having SSNs, "not a problem." Anybody ever heard of entity analytics? Not new stuff. Yes, the IRS and Treasury have it.

The IRS and Treasury will have lots of low hanging fruit to pick for many years to come.


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## maz57

We are not talking about drug cartels and money laundering. We talking about having a checking account at the local bank down the street so you can pay your rent or the phone bill. Hardly big time tax evasion. 

I'll believe it if and when HSBC gets hit for aiding and abetting a pensioner to hide his paltry $1000 a month government pension check. Historically people find ways to get around oppression. FATCA won't be any different. You and a handful of Congressmen may like it; most of the world doesn't appreciate it one bit.


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## BBCWatcher

maz57 said:


> Hardly big time tax evasion.


Exactly. Now why on earth would a bank clerk (or a bank manager) want to break the rules in that circumstance? It ain't worth it.

For the scenario you described to hold, the incentives to cheat have to be big, the risk-adjusted penalties associated with that cheating have to comparatively small, and the rewards for whistleblowing have to be small. Does that combination sound like it would apply to many account holders at many financial institutions?



> ....most of the world doesn't appreciate it one bit.


Every IGA is bidirectional, and _every_ government cares about revenue. Tax evasion and financial crimes are bigger problems in Europe, for example, than in the United States. I think it's reasonable to assume there are a number of governments that are even more enthusiastic about receiving financial data than the United States government is. They just aren't admitting it. 

Just pause to think about this for half a second. Do you think there are many Americans stashing their cash in (pick some small random country)? No. However, _compared to that country's tax base_, the reverse is much more interesting. Trust me, there are scores of governments salivating at the prospect of getting quality financial data on their citizens and residents from the world's largest economy. This is great stuff for them.

Of course publicly governments will huff and puff, but do you really see any serious pushback? The U.S. Treasury seems to be having no problem inking intergovernmental agreements for data sharing. No problem at all. Now why do you think that is? 

Pass the popcorn.


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## CdnAllTheWay

Too bad the US hasn't guaranteed reciprocity in the IGAs, isn't it? If it ever does fulfill the reciprocity "promise", be prepared for substantial capital flight out of the US.

As for "foreign" banks and their employees gleefully turning their customers over to the IRS, due to "law", fake treaty, or carrots, I think you're being more than a little US-centric there, BBCWatcher. My Canadian bank had no interest in my US birthplace, nor later in my CLN.


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## Bevdeforges

I think the real problem here is that you're thinking "Canadian" only. 

As it is, many banks already report considerable customer information (including movements of funds in and out of accounts) to their national banking authority. In those countries, all FATCA does is add a flag for "US person" and the SSN of the person to this information. It's then up to the national banking authority as to how, if and how much they strip off their records to "share" with the American authorities.

I do note that, in the French IGA at least, the US is promising to "share" with France all payments of interest (or other income) to "French persons" (however defined) exceeding $10 in a given year. While, true, overseas interest is reportable on French tax declarations, the US-French tax treaty makes it taxable only in the source country (i.e. the US) so it's debatable how interested the French fisc is in having this information. (The amounts of overseas income do figure into the income tax calculation, even if specifically not taxable.)

There remain a couple significant pools of "US persons" who are likely to remain unidentified as such. I'm thinking specifically of those born outside the US, who either have US nationality through a parent (whether or not they are aware of it) or who took US nationality while living there, but who have returned to their home countries. Normally, their banks would have no reason to suspect them of being "US persons" and even ask for their US SSN (which, in some cases, they may not even have). 

I note, too, that my bank has yet to make any sort of request for a W9, though they have "FATCA warnings" posted on the bank website. This may be because they are one of the banks specifically exempted from reporting, or because my accounts do not yet total the reporting threshold ($50,000) or because I had asked them to change my nationality in their records when I took French nationality.

I guess we'll see how things roll out over 2015 and 2016. 
Cheers,
Bev


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## BBCWatcher

Bevdeforges said:


> ....it's debatable how interested the French fisc is in having this information.


My best guess, for what it's worth, is they'll be "moderately" interested.(*) Each country is different, and because of the way the French tax laws work in conjunction with the treaty, the direct revenue collection isn't a factor, as you point out.

_However_ -- and it's a big however! -- French authorities would be mighty interested in who among its residents has large amounts of wealth stashed overseas in the U.S. "How did that 30K euro/year office clerk end up with that tidy sum?"

Bev, you're just not thinking creatively enough.  Every country has an underground economy, and France's is pretty substantial.

(*) How do we know French authorities are at least somewhat interested? Because they asked for the data! They didn't have to, and the U.S. wasn't going to volunteer the data in an IGA with France unless France asked for it (because it costs the U.S. at least a dollar to compile the data and send it to France).


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## Bevdeforges

The French government is more interested in its residents with large accounts in Luxembourg, Liechtenstein or Switzerland. But yeah, sure, they'll take whatever additional information they happen to get from the IRS. (There is already a requirement here to report foreign bank accounts and assurance vie.)

There has been a long-standing arrangement between the US and France to exchange information on bank accounts for estate tax (succession) purposes. 
Cheers,
Bev


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## maz57

BBCWatcher said:


> Exactly. Now why on earth would a bank clerk (or a bank manager) want to break the rules in that circumstance? It ain't worth it.


Simple. It's their neighbor, friend, long time customer, or a relative. They know instinctively that it is the right thing to do. They resent a foreign country ordering them how to run their bank. They know there is virtually no risk to themselves personally and it eliminates permanently any "confusion" regarding their fellow countryman. They know it is wrong for the US to attempt to help itself to their country's wealth.

This is not hypothetical; it is already happening.


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## maz57

BBCWatcher said:


> Of course publicly governments will huff and puff, but do you really see any serious pushback? The U.S. Treasury seems to be having no problem inking intergovernmental agreements for data sharing. No problem at all. Now why do you think that is?)


Because the US government threatened them with financial ruin if they didn't. These IGA's aren't "agreements". They are a capitulation to US extortion.


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## maz57

BBCWatcher said:


> Every IGA is bidirectional, and _every_ government cares about revenue. Tax evasion and financial crimes are bigger problems in Europe, for example, than in the United States. I think it's reasonable to assume there are a number of governments that are even more enthusiastic about receiving financial data than the United States government is. They just aren't admitting it.


I'm sure they're smacking their lips. Too bad they won't be getting any data from the US. In the IGAs the US promises to "move towards" reciprocity. The question is, in which lifetime.

The US is a very large offender when it comes to helping foreigners evade their home county tax. To actually make good on those vague reciprocity promises in the IGAs would be bad for US business. Substantial lobbying by US institutions and their pet Congressmen will guarantee the US remains one of the world largest tax havens.


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## BBCWatcher

I'm sure fraud and illegal activity are happening and will continue to happen. Who said otherwise?

So what would you propose, Maz? Money laundering, financing of terrorism, tax evasion -- these are big, global problems. I'd like to see a universal, standard, UN-steered system of financial reporting that also, among other things, eliminated FBAR and FATCA. (Much like ICAO set passport and other air travel safety standards.) That didn't and hasn't happened.

At least the U.S. government is trying to solve or at least reduce these problems. Maybe hamfistedly, but that's no excuse for not acting to resolve these problems.

So what's the plan in what alternate universe? "I don't like FATCA" isn't a plan. I don't like FATCA either, but I like financial crimes even less. Maybe, just maybe, the world's #1 economy/superpower really had to spur further action here?


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## diharv

Just call it what it is . The world's # 1 economy/superpower is a financial basketcase. They can't get their own fiscal house in order , can't spend less than they take in , yet they want to have their cake and eat it also but they don't want to pay for it bacause they don'y have the guts to tax their own residents enough. A cornered hungry animal is desperate and so it lashes out and goes after the easy pickings , the low hanging fruit so to speak -us. All under the guise of fighting money laundering and financing terrorism .Yeah I'm sure US citizens are financing terrorism , give me a break . And how much extra revenue from expats will all these draconian measures bring in ? A few extra billion per year ? Probably not much more than the US gov't piddles away wastefully in a few days . Just my last rant for 2014 . I wish everyone here a Happy New Year and hope for all the best in 2015 as so things should really start shaking out this upcoming year. For me it should see me exiting from under the thumb of financial and accounting tyranny once and for all when my 8854 is sent off by next summer.


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## BBCWatcher

diharv said:


> The world's # 1 economy/superpower is a financial basketcase. They can't get their own fiscal house in order , can't spend less than they take in , yet they want to have their cake and eat it also but they don't want to pay for it bacause they don'y have the guts to tax their own residents enough.


I don't do politics, sorry.

Stick to facts, please. (Goodness knows I try.) Most developed economy governments run budget deficits and have national debts. Among developed economy governments the United States federal government has a comparatively low national debt, a declining budget deficit, _enormous_ untapped taxing power, a declining workforce (by about 600,000 during the current Obama Administration), and comparatively favorable demographics, _objectively_. Just as one example, Canada's national debt is currently just a bit above 86% of GDP according to the statistics I can find. The United States national debt is currently about 74% of GDP. Oh, and the U.S. federal government also just raised taxes recently. The top marginal income tax rate rose to 43.4% (including the Medicare surtax), up from 35%. The payroll tax increased. The estate tax increased (to 40% on estates well north of $5 million). State and local governments have also raised taxes. For example, California raised its top marginal income tax rate to 12.3%.

Rarely has so much factual falsity been packed into so few words. Well done! 

OK, but some might try to argue the U.S. figures are masked by state and local government deficits and debt, a problem in other countries. (Sicily's regional government has more debt load than the Italian national government as a percentage of GDP last I checked.) Nope. Something like 48 out of the 50 states (might even be 49) are legally barred from running budget deficits, so it's very difficult for them to accumulate much debt. It's actually a policy problem they don't borrow much because their fiscal policy then becomes pro-cyclical (like households and businesses), and it should be anti-cyclical.

I realize it's popular to bash the United States in this forum, and sometimes I join that party. But I try to anchor my arguments in facts and reality, and yours simply aren't, at least on this occasion, sorry.



> Yeah I'm sure US citizens are financing terrorism , give me a break.


First of all the U.S. government wants all governments, at least in the developed world, to exercise reasonable oversight over the financial transactions of its residents and citizens. Many do, some even better than the United States does. (Bev frequently mentions France as an example, and France is a good example. The French government maintains fairly good monitoring of financial transactions to identify potential financial crimes.)

But to your point, yes they are, some. Indeed, the United Kingdom rather publicly and frequently accused U.S. citizens of financing the Irish Republican Army. (Look it up.) And you know what? The U.K. government was right! U.S. citizens were the biggest source of foreign financial assistance to the IRA.



> Just my last rant for 2014.


And what a rant it was.


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## diharv

Ok so US residents are already taxed to death and there is still ENORMOUS untapped tax revenues out there for the taking so a rosy future with surpluses is just ahead. But first the FATCA spigot is going to be left on until that well is dry .I expect and hope that they will find that the well is not too deep.
Also I don't think that there is anything false about the GENERALIZATIONS I made in the first two sentences of the rant . The last minute averting of federal govt shutdowns because they've run out of money has almost comically become a regular occurence (another generalization so I don't need the exact statistics spewed back at me ). So yeah they're in great shape .Regular joe households should emulate govt fiscal behavior , oh wait , they are . And then the govt chasitizes the amounts of household debt. 
Wait a minute how'd I get off on such a tangent ?


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