# What a mess.



## chuck846 (Jan 15, 2016)

Sent off our taxes early last week. Made my wife's SEP contribution and made the April 15th pre-payment.

About a month ago I received 10 reports (5 each for myself (50%) and my wife (50%)) from Banamex (our Mexican bank) - which is owned by US Citibank. Why there were so many I have no idea. Those reports show Nominal Interest / Real Interest / Losses / and Taxes paid to Mexico. I took all that info and reported (on 1099 INTs I fabricated myself) Nominal Interest - any loss as Interest and whatever taxes I paid for a foreign tax credit. Those reports make no mention of the transactions they cover or holdings.

Today I received 14 - 1099-B forms which apparently cover _some_ of the monies reported on the Mexican reports. There is no mention of taxes paid (nor losses). When I add it all up the total basis is higher than the total proceeds. The basis was $5600 USD and the proceeds like $5500. We have lived in Mexico for going on four years and I have never received a US tax form from any of our other banks. And - the US tax form looks to be reporting amounts in Mexican pesos. The forms cover 3 of the possible 20 or so holdings we had throughout the year.

Fortunately - we closed the Banamex account in February of this year.

What is crazy is perhaps 90% of our monies are invested in a government entity which - according to the US/Mexican FATCA agreement is exempt fro reporting info to the US.


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## chuck846 (Jan 15, 2016)

The figures on the 1099-B are in fact US dollars. Our basis was 98,037 and our proceeds was 93,856 (a loss) - but we moved the money from one investment to another several times during the year. The 1099-INTs I fabricated certainly reported a lot more 'earnings' than the US forms we received today are reporting.


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## Bevdeforges (Nov 16, 2007)

You can always amend your filing. 

And just because an account is exempt from reporting under the bilateral agreement doesn't mean it won't be reported. Some banks are just doing a data dump because for them it's easier than extracting just the records they "have" to report.
Cheers,
Bev


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## chuck846 (Jan 15, 2016)

Thanks - but if I were to file an amended return - with my hand on a bible - it looks like it would only increase the size of our refund this year (since the net of the 1099-Bs is a loss). I have no way of extracting the 1099-Bs figures from the monies reported on the Mexican statements. At this point I'm just going to let it be.

What business does a Mexican bank have in reporting DIRECTLY to the IRS ? I thought the FATCA agreement was that they would report to the Mexican Treasury which would interface with the US Treasury. They seem to be making a TERRIBLE situation even WORSE ! I doubt they are sending a gazillion 1099-B forms to the Mexican tax authorities - but if they are that has to be quite a pile of junk data.


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## Bevdeforges (Nov 16, 2007)

I always assumed the FATCA legislation required the banks to report to the IRS, but in the bi-lateral agreements, many countries opted to have their banks report in to the national bank, which would then forward the information on to the IRS. 
Cheers,
Bev


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## iota2014 (Jul 30, 2015)

FIs in countries with Model 1 IGAs report to the local tax authority. Those in countries with Model 2 IGAs report to the IRS.

It's kind of ironic. Mexico wrote to the US Treasury back in 2009 asking for "...the same exchange of information terms the United States has with Canada. That's significant because Canada is a special case when it comes to cross-border tax enforcement. Despite possessing one of the world's most comprehensive tax treaty networks, the United States has meaningful information exchange with only one country: Canada." Tax Analysts -- News Analysis -- How the U.S. Is a Tax Haven for Mexico's Wealthy (Hat tip: Badger at IBS)



> Carstens's letter is a direct admission that Mexican tax authorities, like other tax agencies around the world, are frustrated in their attempts to tax their own residents. They've run into a brick wall when trying to collect taxes due and owing from income earned in U.S. bank deposits. Their frustration bears a striking resemblance to the IRS's in trying to tax U.S. residents with offshore accounts in Swiss banks. (For related coverage, see p. 744.)
> 
> Replace the nationalities mentioned in the letter, and you've replicated the UBS affair point for point. We see the same fact pattern and the same grievance about beggar-thy-neighbor tax practices. One country is trying to tax its own residents on their investment income but is getting nowhere because of another country's banking and tax rules. Just as the United States spent the last year demanding that Switzerland give ground on its bank secrecy regime, Mexico now wants the U.S. Treasury Department to yield on its own bank secrecy.


Along came FATCA, and the purportedly reciprocal Model 1 IGA, and Mexico jumped at the chance, becoming the third country to sign. (After Canada and the UK I think.). Doesn't seem to have troubled the US tax havenry though. Maybe the new wake-of-Panama-Papers Treasury rules will make a difference.


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## chuck846 (Jan 15, 2016)

You seem to know a lot on the subject (much more than I do) - as Mexico is a Model 1 IGA - why would my Mexican bank report info to the IRS directly - and why would they send me completed IRS forms (1099-Bs). Not only that - they sent me one 1099-B for MANY of the individual transactions throughout the year - but only for a handful of 'funds'. One is even for 1 share at a value of around $10 USD - a fund similar to a money market account - daily liquidations. Each 1099-B arrived in its own envelope...

What bothers me is that the Mexican bank sent me Mexican 'year-end-statements' - just like all the other 3 or 4 Mexican firms we do business with. It is only Banamex that sent us 1099-Bs as well. Actually - I kind of like the idea of standardized reporting - but then lets everyone play by the same rules.


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## iota2014 (Jul 30, 2015)

Banamex is a US bank, isn't it?

The FATCA legislation is about making banks located outside the US report US taxpayers' foreign accounts. Foreign branches of US banks are included in that, but I hazard a guess they may also have extra obligations to report direct to the IRS about US taxpayers' accounts - as presumably Citibank itself does. 

You say you closed the account - maybe that's something to do with the multiple forms? Why not ring Banamex and ask them?


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## chuck846 (Jan 15, 2016)

At one time there was a Banamex US - but I believe they got shutdown for laundering...
From their website : "Banamex USA has decided to close and will cease banking operations shortly"

Banamex Mexico - while owned by Citi - is a Mexican Bank. Citi does seem to be keeping a tight leash eg the US Citi VP visits our local branch periodically and if the monies are enough (7 figures) Citi will open a US account for a Non-US resident - but the vetting process is MONTHS - and the fees not so little.

The principal reason we closed the account was because of how painful an experience it was - and that was their 'premium services" group. We already had a sit down with our old account rep and asked her 'why 10 reports for our Mexican account'. She explained what the forms were and what we needed to do with them. I'm afraid if I open up another conversation I will open up another can of worms (probably more US tax forms).


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