An intelligent response which reinforces the #FATCA (sorry fact) that that the real problem is US @CitizenshipTax. The Decision in Belgium underscores that the sole purpose of the FATCA IGAs is to ensure Americans cannot leave the USA and acquire rights denied to US residents.
As the @DemsAbroadTax statement states/implies this problem can be solved ONLY if the US joins the world in adopting residence as the criterion for @TaxResidency. Citizenship would no longer be relevant for taxation. But, this is NOT part of any legislative proposal.
A second solution would be “A Regulatory Fix For Citizenship Taxation” Which would define “individual” as resident. As published by @TaxNotes here … taxnotes.com/featured-analy…
A third solution would be to suspend the tax treaty #savingclause which would allow #Americansabroad to become treaty nonresidents in an #FBAR and #FATCA world. Perhaps @TaxNotes would be interested in this upcoming article.
@TaxNotes So, the above tweets suggest three ways the US could respond to solve this #FATCA problem. Notice that the suspension of the #savingclause for #Americansabroad does not require any change in the US Internal Revenue Code or Treasury Regulations. #JustDoIt!
It’s likely #GDPR will renew the discussion for #FATCA “same country exemption“. SCE would likely increase the work for FFIs. It also deflects from the problem of @CitizenshipTax. It’s time to confront whether the US can claim residents of other countries as U.S. tax residents
Now let’s consider options for Belgium. #FATCA is that to send data to IRS violates Belgium law. But to not send data to IRS violates FATCA IGA which is US law. So, how does Belgium avoid violating the laws of either country? What follows are my suggestions …
The key is to never have reportable data. #FATCA IGA does not require reporting of “depository’ accounts < $50,000 USD. So (1) restrict US citizens to “depository” accounts (2) program computers to close account at the moment (based on exchange rate) balance reaches $49,999.
Second way to avoid having reportable accounts is to simply close all accounts of US citizens. Probably makes the most sense. But Europeans have a legal right (apparently) to a bank account. Perhaps create a separate #FATCA institution for US citizens (with special rules).
Third way for Belgium to avoid conflict between #FATCA + #GDPR: avoid having US citizens residing in Belgium. Harsh, but hey, Belgium relinquished it’s sovereignty to the USA by agreeing to #FATCA and the #savingclause in the US/Belgium tax treaty. (What were they thinking?)
A fourth way for Belgium to avoid conflict between #FATCA + #GDPR: Belgium ceases to be a foreign country relative to USA. It could become a US territory. (Crazy yes, but demonstrates how @CitizenshipTax can be used to "colonize" other countries and lower standard of rights.)
A country that (1) signs tax treaty with US that includes #savingclause (giving US right to always tax @USCitizenAbroad living in treaty country) + (2) signs #FATCA IGA (giving US sole right to define who is US citizen) has ceded total sovereignty to US. home.treasury.gov/system/files/1…
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How #FATCA IGAs relate to legislation in IRC: To be consistent with FATCA law and avoid the 30% US sanction, IGAs must require the FFIs to close the account of "US Persons" who fail to supply required data (without regard to local #GDPR law). Solutions? law.cornell.edu/uscode/text/26…
As the @DemsAbroadTax statement and @SEATNow_org states/implies this problem can be solved ONLY if the US joins the world in adopting residence as the criterion for @TaxResidency. Citizenship would no longer be relevant for taxation. NOT part of any current legislative proposal.
@AmerIronCurtain asks: 1. What would it take for Belgium to get out of the #FATCA IGA? 2. What would it take to get out of the #savingclause? 3. Does the Belgium decision mean that the #FATCAIGA is illegal? Interesting questions ...
1. Article 10 of #FATCA IGA contains a notice provision that allows each country to withdraw from the agreement. But, withdrawing from the agreement leaves Belgium "subject" (pun intended) to the direct application of FATCA rules in the IRC (1471 - 1474) home.treasury.gov/system/files/1…
2. Par 4 of Article 1 of US/Belgium treaty contains #savingclause. Belgium agrees US can tax US citizens (with exceptions) regardless of treaty. Change requires treaty amendment. But US could suspend and allow US citizens to be treated as nonresidents. irs.gov/pub/irs-trty/b…
Ending @CitizenshipTax would mean fewer #Americansabroad caught in this #FATCA, #FBAR enforcement dragnet. What's truly "criminal" is unwillingness of US Gov to allow US citizens who live outside USA with @TaxResidency in other countries to avoid being caught in this crossfire.
Report goes on and on about Dan Horsky and a "The Family" (US residents) who used Credit Suisse to (presumably) evade US taxes. It concludes a vast conspiracy and uses this to condemn @DualCitizenship (pp 33 - 337)and justify the hiring of more IRS agents. finance.senate.gov/imo/media/doc/…
What is really disturbing is how the Report focuses on US citizenship and NOT residence. This should be of great concern to #Americansabroad. Remember also how dissent by Justice Barrett in the Bittner #FBAR case focuses ONLY on US citizenship with NO other circumstance relevant!
Canada’s new #FHSA has different kinds. US citizens resident in Canada should avoid those administered by trustee (possibly creating foreign trust for US tax purposes). Stick with the basic “bank account” FHSA with no trustee and no (#PFIC) mutual funds. canada.ca/en/revenue-age…
General features of Canada’s new #FHSA: max contribution $8000 per year and $40,000 lifetime. Contributions tax deductible. Growth in plan not taxable. Distribution not taxable if used to buy first home. US citizens in Canada will need special planning. canada.ca/en/revenue-age…
A ”self-directed” #FHSA is possible which does NOT appear to be a “trust”. This would be good for US citizens (and all CDN residents) who want to invest in individual stocks. US citizens must avoid CDN mutual funds. canada.ca/en/revenue-age…
Although @RepBrianHiggins is reinforcing the image of "The Ugly American" by his bullying tactics and viewing the world ONLY through his interests, this may be an opportunity to bring a discussion of US @citizenshiptax and #FATCA as applied to CDN residents into public domain.
Post from @1040abroad (includes) attempts to define who is an ”Accidental American” (not defined in US law). US Treasury has made consistent attempts to help them without defining them. How should “Accidental American” be defined? taxconnections.com/taxblog/being-… via @TaxConnections
The first recognition of the problem of "Accidental Americans" is found in the 2015 Obama budget proposal discussed here ... See the screen shots for what was proposed. citizenshipsolutions.ca/2015/02/08/the…
The second recognition of the problems of "Accidental Americans" appeared to result in the 2019 "IRS Relief Procedures For Former Citizens" as discussed here ... citizenshipsolutions.ca/2019/12/18/irs…