Volume 4, Number 9 What’s News— 10 Facts About FATCA, America's Manifest Destiny Law Changing Banking Worldwide For full article, click link above. Never heard of FATCA? You will. FATCA—the Foreign Account Tax Compliance Act—is America’s global tax law. It was quietly enacted in 2010, and after a four-year ramp up, it’s finally in effect. What is most amazing is not its impact on Americans—although that is considerable—but its impact on the world. Yes, the whole world. Never before has an American tax law attempted such an astounding reach. And it’s clear FATCA has succeeded, after shrewd diplomacy by President Obama and his Treasury Department. (There are probably some congratulatory emails somewhere!) FATCA requires foreign banks to reveal Americans with accounts over $50,000. Non-compliant institutions could be frozen out of U.S. markets, so everyone is complying. Here are 10 facts about FATCA: 1. FATCA Blew In On a Perfect Storm. FATCA grew out of a controversial rule. America taxes its citizens—and even permanent residents—on their worldwide income regardless of where they live. In 2009, the IRS struck a groundbreaking deal with UBS for $780 million in penalties and American names. Recently, Credit Suisse took a guilty plea and paid a record $2.6 billion fine. Since then, with over a hundred Swiss banks taking a DOJ deal and many other developments, banking is now more transparent than could ever have been imagined. FATCA was enacted in 2010, when only some of those developments were unfolding. The idea was to cut off companies from access to critical U.S. financial markets if they didn’t pass along American data. And boy did that idea work. 2. Everyone Around the World is Complying. More than 80 nations and over 77,000 financial institutions have signed on. Countries must throw their agreement behind the law or face dire repercussions. Even tax havens have joined up. The IRS has a searchable list of financial institutions. See FFI List Search and Download Tool and a User Guide. Countries on board are at FATCA – Archive. 3. Even Russia and China Agreed to FATCA. If you think money anywhere can escape the IRS, think again. Even notoriously difficult China and Russia are on board. Which is more amazing? Probably Russia. The U.S. and Russia were negotiating a FATCA deal until March, 2014, but Russia’s annexation of Crimea caused the U.S. to suspend talks. That meant Russian financial institutions faced being frozen out of U.S. markets. Russia took last minute action to allow Russian banks to send American taxpayer data to the U.S. when President Vladimir Putin Signed a Law in the 11th Hour to Satisfy U.S. Treasury. 4. FATCA is America’s Big Stick. Cleverly, FATCA’s 30% tax and exclusion from U.S. markets would be so catastrophic that everyone has opted to comply. Foreign financial institutions must withhold a 30% tax if the recipient isn’t providing information about U.S. account holders. The choice is simple, and that’s why everyone is complying. 5. Everyone is on the Lookout for American Indicia. Foreign Financial Institutions (FFIs) must report account numbers, balances, names, addresses, and U.S. identification numbers. For U.S.-owned foreign entities, they must report the name, address, and U.S. TIN of each substantial U.S. owner. And in what is a kind of global witch hunt, American indicia will likely mean a letter. Don’t ignore it. 6. FBARs Are Still Required. FBARs predate FATCA, but get ready for duplicate reporting. FATCA just adds to the burden, including Form 8938, but it doesn’t replace FBARs. The latter have been in the law since 1970 but have taken on huge importance since 2009. U.S. persons with foreign bank accounts exceeding $10,000 must file an FBAR by each June 30. These forms are serious, and so are the criminal and civil penalties. FBAR failures can mean fines up to $500,000 and prison up to ten years. Even a non-willful civil FBAR penalty can mean a $10,000 fine. Willful FBAR violations can draw the greater of $100,000 or 50% of the account for each violation–and each year is separate. The numbers add up fast. Court Upholds Record FBAR Penalties, Exceeding Offshore Account Balance. 7. FATCA is Compelling Compliance. U.S. account holders who aren’t compliant have limited time to get to the IRS. The IRS recently changed its programs, making its Offshore Voluntary Disclosure Program a little harsher. Yet for those not willing to pay the 27.5% penalty—which rose to 50% August 4, 2014 for some banks—the new IRS’s Streamlined Program may be a good option for those who qualify. 8. Banking Will Never Be the Same. FATCA is making banking transparent worldwide. With Swiss bank deals, prosecutions, summonses, and FATCA, the IRS has quicker, better and more complete information than ever. 9. Forget Repeal or Dismantling FATCA. Republicans have mounted a lackluster repeal effort, but there’s no serious push to repeal FATCA. At least not one that’s getting traction. (No hate mail please, but honest, repeal now isn’t likely.) Some say FATCA will be like prohibition, lasting for a time but doomed. We’ll see, but it sure doesn’t look that way now. 10. Don’t Count on Other Passports. Some dual nationals or U.S. Green Card holders think they can bypass FATCA—and other U.S. tax rules—by using a non-U.S. passport and non-U.S. address with their foreign bank. Don’t. You may just make it worse, handing the IRS another badge of willfulness. Your bank and the IRS will likely find out eventually, even if not right away.	Click on any headline below to read more: Top Stories of September 2014 TAX EVASION Manny Pacquiao Lands $75 Million Blow In Tax Evasion Case Boxer Manny Pacquiao is fighting the IRS with one fist, the Philippine tax man with the other. A court ruling hands him a $75 million victory—for now.  For Lionel Messi Or 'Hot Lips' Kramer, Secrecy Can Spell Tax Evasion Code words, cash, bearer shares, traveler’s checks and other stealth moves can be self-defeating, making your conduct look far more culpable. Avoiding tax evasion is all about transparency.  EXPATRIATION ISSUES Dear Son, Why You Should Leave America Now On high school graduation, you might not expect a father to tell his son to leave America. But here is one father's advice to his dual U.S./Canadian citizen son. Canadians Attack U.S. Expat Rules, Decrying 'Accidental Americans' A Canadian group has lawyered up over 'accidental Americans' caught in the IRS global tax net. They can't comply and they can't renounce, so what's next? Hire a lawyer.  U.S. Hikes Fee To Renounce Citizenship By 422% Renunciations of U.S. citizenship are at an all-time high. The State Department is feeling overworked and is hiking the fees to renounce by 422%.  EMPLOYEE VS. INDEPENDENT CONTRACTOR FedEx Misclassified Drivers As Independent Contractors, Rules Ninth Circuit Ninth Circuit slams FedEx Ground, ruling that drivers are employees, not "independent contractors." The case is seismic for IRS, worker status and more. Here's why.  CORPORATE TAXATION Race Sales? LA Clippers, Now Atlanta Hawks, & IRS Wins Big First Donald Sterling's racial insensitivity led to banning and a $2 billion sale. Now, Atlanta Hawks owner Bruce Levenson is selling out too. And the biggest winner is the IRS. Burger King's 'Not About The Taxes' Whopper? Playboy For The Articles Burger King is buying Tim Hortons and moving to Canada. But not for lower taxes, says the CEO.  Buffett's 'Burger Tim' Inversion Adds Tax Bonus For Shareholders—Think Free Curly Fries Warren Buffett's Burger King deal with Canada's Tim Hortons is magical, a cross-border mashup with treats for every taste bud. But what if they run out of fries?  Whopper Reason Shareholders Should Hate Inversions? (Hint, It's Not About Patriotism) Inversions may be tax efficient, but for whom? Not for shareholders, who can be taxed even if they get shares and even if they don't sell out. Forget patriotism, it can be a raw deal.  SETTLEMENTS BP 'Grossly Negligent' In Gulf Spill, Eyes $18 Billion Penalty—And Tax Deduction British Petroleum is found to be ‘grossly negligent’ in causing the Deepwater Horizon disaster. Huge penalties that may reach $18 billion to follow. BofA Grabs $12 Billion Tax Write-Off From $17 Billion Mortgage Settlement Bank of America is paying $17 billion over bad mortgages, but deftly avoided tax deduction restrictions in settling. It's saving at least $4 billion in taxes, maybe more. ESTATE TAX Bid On Michael Jackson Treasures, Help Estate Fight IRS Too Michael Jackson’s estate is selling some of his belongings. What's at stake for his estate and millions allegedly owed to the IRS?  TAX RETURNS Best Tax Excuse Ever? 'Phobia Of Bureaucracy' Tax excuses can get stale. But a French minister used "administrative phobia" for why he failed to pay taxes for years.  $100 Million Later, The Ice Bucket Challenge May Not Lower Your Taxes After All The ALS ice bucket challenge generated unprecedented hype and $100 million in a month. But some people may run afoul of IRS donation rules.  Driving Ferrari But Reporting Low Income To IRS Gets Ticket To Jail Reporting minimal income to IRS but living like a king can land you in jail. And you can't drive your Ferrari in prison.  Tax Refund Scam From Prison Yields More Prison Some tax return refund scams are run from prison, embarrassing for the IRS and prison authorities. Perpetrators to stay in prison much longer. TAX LIENS Serious Lessons From Comedian Chris Tucker's $14 Million IRS Bill Chris Tucker owes millions in taxes, and interest and penalties make it worse. Here's what you need to avoid following the same path.  Vanessa Williams Slapped With Six Figure IRS Tax Lien Vanessa Williams' tax lien may be a mistake, and some liens are wrong. But usually they mean the IRS will get paid, period.  IRS CONTROVERSY IRS Employee Charged With Tax Fraud Over Refund Skim First there was 'IRS employees gone wild.' Now, an IRS employee stands accused of a tax refund scam where he shared client refunds.  Lost & Found IRS Emails Suggest Smidgen Of Confusion, Or Worse Over a year into the IRS targeting scandal, it turns out those lost Lois Lerner emails may exist after all. At a minimum, after all the platitudes, it's a smidgen embarrassing.  Are 'Expendables 3' & IRS Equally Expendable? The IRS has a tough job fit for a team of action stars. But the IRS should get along or it may be more expendable than IRS leadership seems to think.  TAX DEDUCTIONS Can 1.3 Million Walmart Workers Deduct 'Uniforms' On Their Taxes? Walmart's dress code means workers may need to go out of pocket, but does that mean tax deductions? Not necessarily.  TAXABLE INCOME Monet Found In German Suitcase Part Of Nazi Loot More Nazi art suggests more claims by victims of Nazi Germany. But who pays taxes on recovered art? FEDERAL TAXES Payroll Taxes Can Bring IRS To Your Door, Even Land You In Jail Payroll taxes are especially sensitive since employers are withholding from wages. Failing to send it to the IRS can land you in jail, especially if you do it repeatedly. Paying Tax With Art Is Legal In UK & Mexico, Why Not In US? The tax man in U.K. and Mexico accepts art, so why not in the U.S.?  When Payroll Taxes Pyramid It Means Penalties, Even Jail Payroll taxes are pursued aggressively by the IRS, with personal liability for owners, officers, and check signers. And some violations mean jail.  STATE TAXES $21.5 Million In Marijuana Taxes Just Went Up In Smoke Colorado was counting all the tax revenue it would collect from legal marijuana. But how did $33.5 million become $12 million? Turns out the black market is alive and well. Marijuana Taxes Are Upheld, But Paying Them Could Incriminate You As marijuana goes mainstream, taxes are big business. But even paying them could be self-incrimination since federal law still says selling or buying the drug is a crime.  Texas Governor Rick Perry Is Indicted Texas Gov. Rick Perry has been urging companies to move to low-tax Texas. However, he now faces criminal charges for coercion.
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