# Treasury rules out FATCA Same Country Examption



## iota2014

> Comments requested that the definition of a U.S. account exclude accounts held by U.S. individuals resident in the same jurisdiction as the FFI with which the account is held. This comment is not adopted


https://s3.amazonaws.com/public-inspection.federalregister.gov/2016-31601.pdf p.47

As reported on the Isaac Brock Society website


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## Nononymous

Yeah well not a huge surprise. Much more interesting is the prospect of the (otherwise completely appalling in my view) Trump administration using executive orders to cancel the IGAs and thereby cripple FATCA.


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## iota2014

I wonder what the banks would do, if America suddenly unilaterally withdrew from all the IGAs...


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## Bevdeforges

Then again, when asked about his taxes, the president-elect says he doesn't pay any taxes because he's "smart." Perhaps we should all consider being "smart" like him. It's pretty clear that the new administration is not going to increase the IRS funding and they're already rather strapped to follow up on big time offenders....
Cheers,
Bev


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## iota2014

I'm just wondering, would the FATCA due diligence continue, if the US withdrew from the IGAs.

The FATCA legislation would still be on the books, mandating withholding, until/unless repealed. And in many countries, including France, UK, and Canada, CRS due diligence would carry on. I'll bet many banks would carry on with FATCA due diligence also, just in case. Bank secrecy is over, it seems - except in the US of course. Bet Trump won't be changing that.


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## Nononymous

I've been "smart" since I found about this mess five years ago, and I intend to remain "smart" until such time as it's dumb to do so.

Even if the laws are not changed, the odds of their being enforced are likely to go down. So I'm sticking to the plan: no compliance, no renunciation, no disclosure of US citizenship to Canadian financial institutions.


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## iota2014

Unfortunately my UK passport reveals my place of birth, so it looks like I'll be stuck with proving non-USness till the day I die - and on through probate.


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## Nononymous

iota2014 said:


> Unfortunately my UK passport reveals my place of birth, so it looks like I'll be stuck with proving non-USness till the day I die - and on through probate.


As does my Canadian passport, but thus far Canadian financial institutions have not asked to see any documentation when they ask about US personhood; you currently do not need to prove non-citizenship.

First line of defence: only tell the bank that you're Canadian. 

Second line of defence, if the first one fails: assume that any eventual FATCA reporting will disappear into a void if the amounts involved are not huge (note that most registered tax-protected accounts are excluded by the IGA) and you'll never hear from the IRS.

Third line of defence, if the second one fails: the US government cannot touch a Canadian citizen living in Canada, so ignore any letters you might receive.


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## celticweb

This news doesn't surprise me in the least bit. I was a realist from day one of finding out about this stuff. as long as I saw some future benefit, i would shoulder on but I actually applied for renunciation in December. This stuff is just putting too much strain on my marriage. It would be different if I were single. 

They actually gave me a renunciation date right away, That means I won't need to file anything next year except the form 8854 because I won't have earned enough in this month to have to file for 2017. 

I wanted to plan it this way too, to do a full year 2016 and just the form 8854 for 2017 next year. of course i am not going to be subject to the exit tax being born a dual citizen of the UK and being resident in the UK and also certifying the past 5 years etc.


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## iota2014

Whatever works. I'm happy to have renounced. My only remaining niggle is having to fetch out the CLN whenever I open a new account.

I actually don't have any need to open any more accounts but it's still mildly annoying I couldn't open one if I did want one, without jumping through IRS hoops.


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## iota2014

celticweb said:


> This news doesn't surprise me in the least bit. I was a realist from day one of finding out about this stuff. as long as I saw some future benefit, i would shoulder on but I actually applied for renunciation in December. This stuff is just putting too much strain on my marriage. It would be different if I were single.
> 
> They actually gave me a renunciation date right away, That means I won't need to file anything next year except the form 8854 because I won't have earned enough in this month to have to file for 2017.


Congratulations


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## celticweb

I think for a lot of us when we were first asked by our banks about our tax status, we didn't know about the CBT and all the implications so it never occurred to us to lie. I almost did inadvertently lie because I didn't understand the Fatca letter. i always thought of myself as solely a UK resident. in reality that's what we really are wherever we may be. The US tried to brainwash people to thinking otherwise but I am not an American working abroad. I am a UK citizen and I am home! The fact that I was born abroad when my parents were working doesn't change the definition for me.

Of course whatever works is right!


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## blkflm6888

Okay im sorry but im young and begun planning a expat retirement. I just learned about FATCA is this something i should plan for as a future expat? 

Sent from my SCV32 using Tapatalk


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## Bevdeforges

I suppose it all depends on your bank and how "diligent" they are. When I opened my French bank account here, I only had the US nationality so had no choice. As FATCA was starting to bubble up to the surface, I had reason to talk to my "conseiller" at the bank and, because I had recently gotten my French nationality, asked him to change that in my account record. The bank counselors here are young and eager to help, so he did, no problem. I have heard nothing from my bank about confirming my US nationality nor about asking for my US SSN - but my bank is a small, local bank and may not bother with any of that anyhow as the IGA specifically exempts such banks from reporting.

With all this talk about renouncing, the other big factor to keep in mind is consideration of your financial ties to the US. If you have accounts or investments in the US (including an IRA or other tax deferred savings) or might someday have (say, due to an inheritance) or if you qualify for US SS benefits that you will depend on in retirement then you have to carefully consider your options in light of the vulnerability of your US assets.
Cheers,
Bev


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## iota2014

blkflm6888 said:


> Okay im sorry but im young and begun planning a expat retirement. I just learned about FATCA is this something i should plan for as a future expat?


FATCA is relevant for US Persons: basically those with US citizenship or a Green Card. If you don't have either (and take care not to acquire either) you can ignore FATCA. 

FATCA is not the only cross-border information exchange regime. It all depends where you are resident and where you have accounts / financial activity.


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## iota2014

Bevdeforges said:


> I suppose it all depends on your bank and how "diligent" they are. When I opened my French bank account here, I only had the US nationality so had no choice. As FATCA was starting to bubble up to the surface, I had reason to talk to my "conseiller" at the bank and, because I had recently gotten my French nationality, asked him to change that in my account record. The bank counselors here are young and eager to help, so he did, no problem. I have heard nothing from my bank about confirming my US nationality nor about asking for my US SSN - but my bank is a small, local bank and may not bother with any of that anyhow as the IGA specifically exempts such banks from reporting.


If I recall correctly, the Model 1 IGA doesn't require banks to investigate the citizenship of pre-existing accounts if they don't already have it on record. None of my banks here in the UK have ever mentioned FATCA to me; it's only when I try to open a new account that FATCA rears its head.



> With all this talk about renouncing, the other big factor to keep in mind is consideration of your financial ties to the US. If you have accounts or investments in the US (including an IRA or other tax deferred savings) or might someday have (say, due to an inheritance) *or if you qualify for US SS benefits that you will depend on in retirement* then you have to carefully consider your options in light of the vulnerability of your US assets.


Renouncing _per se_ doesn't affect entitlement to US SS benefits - though, depending on treaty provisions, it might affect the taxation.


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## JustLurking

iota2014 said:


> FATCA is relevant for US Persons: basically those with US citizenship or a Green Card. ...


Not just citizens or green card holders, but also *any* _non_-citizen _non_-green card holders who spend too long in the US, under the "substantial presence" test. Best avoided.


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## celticweb

iota2014 said:


> Congratulations


Thanks Iota
I renounce on Wednesday January 18th in London. I am due to start a company directorship soon and things could get tricky so it's for the best. plus the whole thing is putting so much stress on my marriage. We have joint accounts with somewhat substantial amounts in them, mainly his money from his job. that's probably why I got the Fatca letter as an existing client. over $50,000 threshold?

Also re the news here about the treasury shutting the door. I don't see this as the worst news possible. it would have been worst if they shut the door to changing to residence taxation under the new administration. Fatca isn't the real problem, it's the combination of Fatca and CBT. However I am a realist about these things and we will just have to see how things play out.


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## iota2014

celticweb said:


> We have joint accounts with somewhat substantial amounts in them, mainly his money from his job. that's probably why I got the Fatca letter as an existing client. over $50,000 threshold?


Yes, perhaps. My pre-existing accounts were way below threshold, maybe that's why my banks never asked me about citizenship.



> Also re the news here about the treasury shutting the door. I don't see this as the worst news possible. it would have been worst if they shut the door to changing to residence taxation under the new administration. Fatca isn't the real problem, it's the combination of Fatca and CBT.


Some say FATCA enables enforcement of CBT. To me it seems the other way round: CBT enables enforcement of FATCA, thus cracking bank secrecy wide open - everywhere except America. 

Whichever - to me it just seems very unlikely that legislation to make expat USPs exempt from US tax is ever going to happen. ICBW.



> However I am a realist about these things and we will just have to see how things play out.


Indeed so.


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## Bevdeforges

iota2014 said:


> Renouncing _per se_ doesn't affect entitlement to US SS benefits - though, depending on treaty provisions, it might affect the taxation.


Correct, but being subject to a 30% withholding provision as a non-citizen withdrawing funds from the US can hurt. Same applies to IRAs, 401Ks and the like. In many cases, treaty provisions specify that they apply only to US citizens resident in the treaty country. (Then again, the UK is one of the countries where I think US SS benefits are taxed by the taxpayer's country of residence rather than the US. There's something to that effect in the IRS publication on SS benefits.)
Cheers,
Bev


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## celticweb

iota2014 said:


> Yes, perhaps. My pre-existing accounts were way below threshold, maybe that's why my banks never asked me about citizenship.


I think it had a lot to do with our account balances. My spouse also got the Fatca letter and he has absolutely no ties at all to the USA (except being married to me). When it arrived, he said what is this rubbish all about! and we ignored it for a few weeks until i happened to come across it again while tossing out junk mail. we all know the rest of the story. So i think my banks policy was to check status on accounts over a certain threshold and new accounts opening.

The Fatca without the CBT would be requiring people living in the USA or have residence status through the physical presence test to report off shore accounts. these accounts would really be off shore. Of course without the CBT, they might have never implemented Fatca because the real reason is to enforce the CBT. Anyway i am checking out of this chaos now with no regrets.


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## iota2014

Bevdeforges said:


> ...the UK is one of the countries where I think US SS benefits are taxed by the taxpayer's country of residence rather than the US.


Correct. It depends on the treaty provisions.


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## iota2014

> The Fatca without the CBT would be requiring people living in the USA or have residence status through the physical presence test to report off shore accounts. these accounts would really be off shore. Of course without the CBT, they might have never implemented Fatca because the real reason is to enforce the CBT.


They don't, though, in practice, enforce CBT on expats, do they? They'll take the money, from those who need or want to comply, but the overwhelming majority of USCs abroad simply don't - FATCA or no FATCA. And the US can't compel them to do so, in most cases.

IMO, the real reason for FATCA was to stop foreign banks inviting US taxpayers to deposit their money abroad rather than in Delaware. It's all about attracting capital to the US.

Competition for tax haven money, in other words.


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## gairloch

iota2014 said:


> Unfortunately my UK passport reveals my place of birth, so it looks like I'll be stuck with proving non-USness till the day I die - and on through probate.


Why not get a US passport?


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## iota2014

gairloch said:


> Why not get a US passport?


Just got rid of the dratted thing - paying $2350 to do so. 

Unfortunately, I can't get rid of my US place of birth. That marks me as a US citizen (and therefore US tax-resident), unless I prove otherwise. Which fortunately I can, by presenting my very expensive Certificate of Lost Nationality.

It's only a minor nuisance though. I'm just grumbling.


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## Nononymous

iota2014 said:


> They don't, though, in practice, enforce CBT on expats, do they? They'll take the money, from those who need or want to comply, but the overwhelming majority of USCs abroad simply don't - FATCA or no FATCA. And the US can't compel them to do so, in most cases.


That's always been my argument, and why I have a difficult time getting too worked up about the FATCA lawsuit here. If you're a Canadian citizen living in Canada with Canadian assets only, you're basically bulletproof - at least for now.

The people I feel sorry for are long-term expats without a second citizenship, they can't easily escape or ignore CBT, and depending on the country of residence they can have serious difficulties with banking service.

I did have one FATCA enquiry from a financial institution where I was an existing customer. It shouldn't have been an issue as I only had registered retirement accounts that are exempt from reporting, but as it's an investment firm that normally deals with far wealthier folks than little old me, I expect they were being especially proactive. Anyway, after some back and forth along the lines of "why are you asking if the accounts are not reportable?" we did a little wink and nod and agreed that I was Canadian only.


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## iota2014

Nononymous said:


> That's always been my argument, and why I have a difficult time getting too worked up about the FATCA lawsuit here. If you're a Canadian citizen living in Canada with Canadian assets only, you're basically bulletproof - at least for now.


It will be interesting to see the outcome of the FATCA lawsuit. A particularly interesting side-issue, it seems to me, is Canada's imminent adoption of CRS. Once CRS has been implemented, in theory Canadian banks will be reporting accounts held in Canada by anyone who is tax-resident in any other CRS member country - some of whom will no doubt have Canadian citizenship. 

If the court rules that reporting dual US-Canadian accountholders to the US violates the Charter, it would seem to follow that reporting, say, a dual Canadian-French accountholder to France, would also violate the Charter.


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## Bevdeforges

Interesting example you've proposed there - because France has a somewhat different method of dealing with the whole "foreign accounts" thing. (The advantages of NOT doing CBT, I guess.) Simpler, and actually neater IMHO - but it still gets the job done.
Cheers,
Bev


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## iota2014

Bevdeforges said:


> Interesting example you've proposed there - because France has a somewhat different method of dealing with the whole "foreign accounts" thing. (The advantages of NOT doing CBT, I guess.) Simpler, and actually neater IMHO - but it still gets the job done.
> Cheers,
> Bev


I should coco. I think CBT is just about the world's worst! What's the French method?

As I understand it, the FATCA lawsuit is about the reporting - not the potential consequences of the reporting - because the reporting is facilitated by Canadian law (the IGA).


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## Nononymous

iota2014 said:


> It will be interesting to see the outcome of the FATCA lawsuit. A particularly interesting side-issue, it seems to me, is Canada's imminent adoption of CRS. Once CRS has been implemented, in theory Canadian banks will be reporting accounts held in Canada by anyone who is tax-resident in any other CRS member country - some of whom will no doubt have Canadian citizenship.
> 
> If the court rules that reporting dual US-Canadian accountholders to the US violates the Charter, it would seem to follow that reporting, say, a dual Canadian-French accountholder to France, would also violate the Charter.


Wouldn't it then be the case that under CRS Canada would report the Canadian accounts of a dual Canadian-French citizen only if they were tax-resident in France, not Canada? Whereas currently with FATCA they report the acounts of dual Canadian-US persons who are resident in Canada, not the US. For all intents and purposes US citizens are always tax-resident, insofar as they are required to filed; proving non-residence only gains you the FEIE.


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## iota2014

Nononymous said:


> Wouldn't it then be the case that under CRS Canada would report the Canadian accounts of a dual Canadian-French citizen only if they were tax-resident in France, not Canada?


Yes. Does the Charter only apply to Canadian citizens while they're resident in Canada?



> Whereas currently with FATCA they report the acounts of dual Canadian-US persons who are resident in Canada, not the US.


As I understand it, an account at a Canadian bank, held by a dual Canadian-US citizen living in the US, would be reportable to the US under FATCA if over the threshold. Am I wrong? That's what started this whole business - offshore accounts held by US residents and not reported to the IRS. FATCA is supposed to fix that.



> For all intents and purposes US citizens are always tax-resident, insofar as they are required to filed; proving non-residence only gains you the FEIE.


Yes, USCs living in Canada are tax-resident in both the US and Canada. 

If the US joined CRS, accounts in US banks held by dual Canadian-US citizens living in Canada would be reportable to Canada; and accounts at Canadian banks held by dual Canadian-US citizens living in the US would be reportable to the US. But accounts at French banks held by dual Canadian-US citizens would be reportable to the US but not to Canada because the person would not be tax-resident in Canada.

I think I've got that right... Lol


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## Bevdeforges

OK, as mentioned, a Canadian account held by a French national is only reportable if the French national is resident in France. On your French tax declaration each year, you are asked to provide a list of all foreign bank accounts and "insurance contracts" (i.e. assurance vie) that you hold. Obviously, you're expected to report interest or other income from these accounts, but the reporting of the accounts only requires you to list the financial institution and account number, not any balance information.

From everything I've heard, they don't seem to do much with the information - until you die. And at that point, if a previously undeclared foreign account turns up in your estate, all the fines and penalties for "non-declaration" are then taken from the account before it can be passed to any of your heirs (if there is anything left). 
Cheers,
Bev


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## iota2014

Bevdeforges said:


> OK, as mentioned, a Canadian account held by a French national is only reportable if the French national is resident in France. On your French tax declaration each year, you are asked to provide a list of all foreign bank accounts and "insurance contracts" (i.e. assurance vie) that you hold. Obviously, you're expected to report interest or other income from these accounts, but the reporting of the accounts only requires you to list the financial institution and account number, not any balance information.
> 
> From everything I've heard, they don't seem to do much with the information - until you die. And at that point, if a previously undeclared foreign account turns up in your estate, all the fines and penalties for "non-declaration" are then taken from the account before it can be passed to any of your heirs (if there is anything left).
> Cheers,
> Bev


The UK requirements are similar, I believe. (I've never had a foreign account so I could be wrong.) The advent of CRS reporting may change things however.


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