Foreigners' accounts in U.S. banks eyed in tax crackdown
The Obama administration may soon ask Congress for the power to require more disclosure by U.S. banks of information about foreign clients' accounts to those clients' home governments, as part of a crackdown on tax evasion, sources said on Monday.
In a move facing resistance from some in the U.S. banking industry, two tax industry sources said the administration was considering asking Congress in an upcoming White House budget proposal for the authority to require more disclosure from U.S. banks.
...At the heart of FATCA is a law requiring more disclosure by non-U.S. banks of information about Americans' accounts to the Internal Revenue Service, with the goal of exposing Americans' efforts to dodge U.S. taxes through secret offshore accounts.
As Treasury has implemented FATCA, some countries - possibly including France, Germany and China - were said to be driving a hard bargain. They have been saying that if their banks have to tell the IRS about Americans' secret accounts, then U.S. banks should have to reciprocate by disclosing more information about the U.S. accounts of French, German and Chinese nationals.
...China has been publicly dismissive of FATCA, but it is talking with U.S. officials behind the scenes, sources said.
...France and Germany "have been asking for something more like full reciprocity," said Jonathan Jackel, a lawyer with the law firm of Burt Staples & Maner LLP in Washington, D.C.The story says that "The IRS this year started disclosing to some foreign governments information about bank interest payments earned by their citizens with U.S. bank accounts."--but I am not sure that that is true, given that the only country currently on the list for automatic info sharing on portfolio interest is Canada-and Canada was already on that list anyway.
The story quotes Itai Grinberg, who has to be the foremost expert on the legislation and really ought to be listened to on the underlying principles:
"The United States should be moving toward full reciprocity," said Georgetown Law School Professor Itai Grinberg, a former Treasury official, adding it would be "deeply hypocritical" of the United States to ask for U.S. taxpayer information "without offering some kind of reciprocity."
Progress, perhaps. But this is America, so here comes a lawsuit:
The Texas Bankers Association is considering a lawsuit against the government to stop accountholder information sharing with Mexico, said Eric Sandberg, the group's president.Why, what s the problem? Well, you see, it's financial privacy.
"We are concerned with Latin American countries like Mexico," said Fran Mordi, senior tax counsel at the American Bankers Association. "In the past, U.S. banks didn't report interest payments to non-resident aliens ... IRS is now saying you have to report that."Translate how you will. I think it's a clear illustration of the state at war with itself over how to gain the maximum advantage from a combination of cooperation and competition with other states on taxation. Information sharing is going to benefit the US more in terms of dollars in the economy if it is one-way street that catches US shirkers but doesn't prevent taking advantage of other countries' ignorance about the location of their own taxpayers' resources. I think the mercenary state will prevail in the end--cooperate in principle, defect in practice--but I am very much hoping to be wrong.
Just to let you know I suggested you as a witness to the Parliamentar Finance Committee in Ottawa regarding their upcoming hearings about tax havens and tax evasion. I was told that all witnesses have already been selected(something I am not happy that there was no public notification about)however, your name is on standby if someone falls through.ReplyDelete
On Thursday H. David Rosenbloom of NYU will be a witness via video conference. I wonder if he will talk about the US' soveriegn "right" to enact FATCA and citizenship based taxation and that Canadian criticism of these policies are in fact a Canadian infringement on the US soveriegn right to conduct its own tax policies. I can't see what else he could talk about other than FATCA and yes I sent my own personal corresponce to the clerk of the committee this evening.
Todays hearing were pretty boring no discussion of FATCA. Basically Canada Revenue Agency for dummies. All discusion was about on request information exchange which I personally thing is rather passe at this point.
Nice of you, and thanks for the updates. I still haven't gone to see if I can watch a recording. I'll be interested to see the rest of the hearings. I probably should post the schedule.Delete
Unfortionately for now it seem that they will have audio only no video. Tommorow/Thursday is David Rosenbloom of NYU.Delete
David Rosenbloom represented Liechtenstein in their TIEA negotiations with the US. Rosenbloom says FATCA is probably very offensive to other countries in including Canada.Delete
A few comments. I thought David Rosenbloom did a really good job unfortionately the MPs on the committee did not and for that reason I will re-iterate my request that you be invited. I fact liked the fact that Rosenbloom actually critized the committee members for being disorganized and unfocused however, as a non Canadian was I think a little unwilling to be tooDelete
My impression is the MPs of all parties on the committee are basically engaging in CYA on the subject tax evasion more than actually wanting to do something about it. FATCA did come up and Rosenbloom was very critical of FATCA from a strictly US point although he admitted to be moderately in favor of the IGA's which he stated were not actually contemplated in the legislation. Another witness by videoconference from the US was strongly in favor of FATCA but did not seem at all aware of any of the difficulties involving the legislation. Very little followup on the part of MPs.
Just to make some further comments about the hearing.ReplyDelete
Several questions about transfer pricing which was good. Again that is why is why I suggested you as a prospective witness.
Discussion of Automatic Information Exchange:
Currently Canadian government policy views it as an aspiration not a current goal. Currently focused on TIEA and traditional tax treaties. Did mention automatic information exchange takes place between US and Canada on US and Canadian "residents" respectively along with select others countries. Current CDN government views AIE as "burden" on countries who have made a decision not to have an income tax. No basis under current international norms to force AIE on countries without income tax systems. No discussion of FATCA or FATCA reciprocity by Brian Ernewein(who in addition to testifying today)who I happen to know is Canada's point man on FATCA. Interesting
Interesting that automatic information exchange is still viewed as basically a punishment some states inflict on other states they deem fiscal parasites. That is one major difference from FATCA: it doesn't distinguish. That has good and bad aspects. Bad in that, hey, come on, Canada here? Good in that the US is not writing up a naughty list that in effect singles out small and/or poor countries and/or colonized territories to line them up for necessary public beatings like the OECD harmful tax practices initiative did. On the other hand you could say FATCA did write up a naughty list, and every country in the world except the US is on the list. In that case, the naughtiness being punished with automatic information exchange is being "not USA."Delete