new US offshore banking rules

I found this today on one of the financial blogs:

Guest Post: Do I Have To Report My Offshore Gold...?from Zero Hedge by Tyler Durden
Via Simon Black of Sovereign Man blog,

Let’s do a little math problem today.

As you probably know, in 2010 the US government passed one of the most arrogant, destructive, poorly conceived pieces of legislation in history, now known as the Foreign Account Tax Compliance Act (FATCA).

FATCA heaps all sorts of reporting requirements on US taxpayers with foreign financial accounts. This is in ADDITION to form TDF 90-22.1, which is due to the Treasury Department each year by June 30th, and IRS form 1040 schedule B.

(Nothing says ‘government’ like passing along the same information on different forms to the same department multiple times…)

Another major provision of the law requires ALL financial institutions on the PLANET to share personal customer information with Uncle Sam.

The hubris is overwhelming. Imagine what would happen if the Chinese government passed a law requiring US banks to share customer information with Beijing. People would go nuts. But in the Land of the Free, it’s normal. Crazy.

It gets worse. FATCA was a mere 18 pages of poorly worded legislation that failed to define critical terms. For example, two terms that are used over and over again are “foreign financial institution” and “foreign financial account“.

The terms are ambiguous, to say the least. Does an account with an offshore gold depository like GoldMoney constitute a foreign financial account? Does a Swiss insurance company constitute a foreign financial institution? It’s not intuitively obvious.

Congress solved this problem in the most confusing way; they use the terms to define each other. It’s like saying, “What’s a dog? The opposite of a cat… OK, so what’s a cat? The opposite of a dog.”

Needless to say, this “who’s on first” legislation sent shockwaves through the global banking system. Many banks simply dropped US customers, erroneously believing that it would get them off the hook from having to abide by this bizarre, destructive law.

Enter the IRS.

After the law was passed in 2010, it became the responsibility of the IRS to figure out Congress’s intent in implementing FATCA. It has taken them nearly THREE YEARS to do so, and they will be releasing the final regulations next week.

So here’s the math problem: How many pages of regulations did the IRS issue? I’ll show you using the special arithmetic that only exists in government–

18 pages of law + 33 months x 1 government agency (IRS) = X

Give up?

The answer is a mind numbing 544 pages…

Unbelievable, no? Eighteen pages of law turn into 544 pages of regulation.

What’s more, in all of those 544 pages, there is not a single mention of the words, “gold”, “silver”, or “precious metals”. So there’s still quite a bit of mystery with respect to the question, “Do I have to report my offshore gold…?”

I’m still having my team go through the rules; after an initial read, though, the language of the regulation does suggest that custodial gold institutions (like GoldMoney, etc.) should be reported. Offshore safety deposit boxes (like Das Safe) do not.

Here’s the bright side of all this nonsense: now that the rules are finally settled, it’s now going to be much, much easier for US taxpayers to open foreign bank accounts.

Over the past three years, the opacity of FATCA was too risky for banks. Today, while the final rules are cumbersome, they’re at least settled. So the banks know how to operate.

I’m hearing from a number of overseas banker contacts, from Singapore to Panama to Malta, that they’re once again opening their doors to US customers. More to follow on this development.

Here is the link to above article:
http://www.sovereignman.com/finance/do-i-have-to-report-my-offshore-gold-10521/

Just remember the form you fill out for June if you have over 10KUSD invested
overseas is a treasury department form not an IRS form. This means the taxpayer
bill of rights doesn't apply. I imagine all these new regulations and forms will be
treasury department stuff also. Tread carefully incorrect answers for treasury
department forms can be serious. Ask the nieve folks who exported something
they should not have. Not trying to panic or anything but Treasury is different
from IRS and they have no sense of humor at all.

So do I have it right that these new forms when implemented will be Treasury forms?
I see both organizations mentioned. I know the June form is.

Z

Zedinmexico wrote:Just remember the form you fill out for June if you have over 10KUSD invested
overseas is a treasury department form not an IRS form. This means the taxpayer
bill of rights doesn't apply. I imagine all these new regulations and forms will be
treasury department stuff also. Tread carefully incorrect answers for treasury
department forms can be serious. Ask the nieve folks who exported something
they should not have. Not trying to panic or anything but Treasury is different
from IRS and they have no sense of humor at all.

So do I have it right that these new forms when implemented will be Treasury forms?
I see both organizations mentioned. I know the June form is.

Z

How would this form be made available and how would people know about it? Why do they want to know?

I think there's going to be a lot of people saying screw the Treasury Department.

Having delt with the IRS, they don't have a sense of humor either

Thanks for the information on the 1040 Schedule B, JRM. Any interest income I receive annually except for the insignificant interest I earn with a savings account in a Mexican bank, a few measly pesos actually, I earn in IRA accounts and, as you know, those interest earnings are not taxable until funds are drawn down from the IRAs. Thus, I never complete a 1040 Schedule B since retiring to Mexico and would not have done so again this year had you not alerted me to that last section in PART 111 on Foreign Accounts and Trusts. Our checking and savings account in Mexico are simply for local living expenses and bill paying so they never reach the $10,000 USD reporting level required by the Treasury´s TDF 90 22.1 which is filed with the Treasury and not the IRS. In Schedule B, one must answer the inquiry as to whether one has any foreign financial accounts and, in my case the answer is in the affirmative but aggregate balances during the year have no exceeded $10,000 USD to the best of my knowledge. Thanks to you, I am submitting Schedule B this year for the first time in years as I think the financial accounts question is a new requirement..

This reporting of accounts with aggregate balances of $10,000USD or more in foreign bank accounts at any time during the reporting year seems quaintly old fashioned to me. Perhaps when the law was inacted, $10,000USD was a more important sum of money than it is today. They're out to snare people like Mit Romney, not middle-class retirees living on social security and some cheesy IRA accounts in a foreign land who set up bank accounts for convenience. Balances aggregating $10,000USD for God´s sake? How about $100,000USD as the starting point.

By the way, I don´t get physical bank statements any more and bank with my Mexican and U.S. banks electronically without ever reviewing bank statements available to me on line because that has not been important to me until now. The tentacles of the IRS and U.S. Treasury Department keep reaching out to encircle us even though we have faithfully paid our taxes and complied with all governmental regulations since the 1960s but now have the temerity to live full time in Mexico.

I Highly doubt I'll have to fill out ANY forms for the Treasury since I don't file an income tax and have peanuts in the bank here, just basic living expenses.

jrm30655 wrote:Having delt with the IRS, they don't have a sense of humor either

Ah Treasury has negative humor factor at least the IRS being at zero rates it higher.

Z

joec wrote:

Zedinmexico wrote:Just remember the form you fill out for June if you have over 10KUSD invested
overseas is a treasury department form not an IRS form. This means the taxpayer
bill of rights doesn't apply. I imagine all these new regulations and forms will be
treasury department stuff also. Tread carefully incorrect answers for treasury
department forms can be serious. Ask the nieve folks who exported something
they should not have. Not trying to panic or anything but Treasury is different
from IRS and they have no sense of humor at all.

So do I have it right that these new forms when implemented will be Treasury forms?
I see both organizations mentioned. I know the June form is.

Z

How would this form be made available and how would people know about it? Why do they want to know?

I think there's going to be a lot of people saying screw the Treasury Department.

I make this blunt. Because if you don't fill out these forms and you have more than so many dollars out of the country you will be breaking the law.
Most folks want to know about it. I have never ever seen a Federal Law that allows ignorance to be an excuse. We may have other forms to fill out
in the future. Right now we need to do our fed and state taxes and if we have some money out of the US over 10K I think you have to fill out the
June form. Can't wait to see what they come up with for us next! The United States has horrible tax policies for unearned income for us outside the
country. They treat earned income outside the US much nicer.

Z

This whole thing is just a tax grab but they are serious.

The thing is, if you are citizen of the US and you make money anywhere in the world, you are supposed to file a US tax return yearly. If you go to France and marry a Frenchman and live in France, you have to file a return.

I watched a MX citizen with dual citizenship go back to the US to have her baby so it would have dual citizenship. Dumb move. If that kid never goes to the US ever in its life, it is supposed to file US tax returns and all those Treasury forms.

It is stupid and wrong, but that is the law...

Okay, I have a question. I know a fair amount about tax laws, etc, as I did go to school for business accounting in the US. I don't currently make enough to *have* to file a tax return (aka, I make under the amt that is somewhere between $8000-9000usd). I do make money here in Mexico, and I pay my taxes here in Mexico. If I don't make enough to have to file, do I really have to file with these new regulations?

saege007 wrote:Okay, I have a question. I know a fair amount about tax laws, etc, as I did go to school for business accounting in the US. I don't currently make enough to *have* to file a tax return (aka, I make under the amt that is somewhere between $8000-9000usd). I do make money here in Mexico, and I pay my taxes here in Mexico. If I don't make enough to have to file, do I really have to file with these new regulations?

The June filing is for having more than 10,000USD in your Bancomer, Multiva, etc etc acount. This is not about income but bank accounts and such
outside the US. The June form tracks it for some reason. Your state and federal forms take care of your income tax requirements. Expect more
forms in the future as the banks will be required to make sure that money you bring down here has taxes paid if needed. The nicest part is it looks
like the banks can't be held responsable for improper withholding and they get to make money from stealing your money and at this point it looks
legal. And you probably have to wait for income tax time to recover it. Lovely lovely lovely.

Z

I'm not trying to hijack the thread, but what happened to the 30% withholding on any money transferred from the US to Mexico? Someone way more knowledgeable than me can answer.

joec wrote:I'm not trying to hijack the thread, but what happened to the 30% withholding on any money transferred from the US to Mexico? Someone way more knowledgeable than me can answer.

We pay a 30% withholding on all funds transferred form the U.S. by my wife who is a French citizen and a 10% withholding on funds I transfer from the U.S. as an American citizen and that withholding has been in effect for about two years. Before that withholding requirement by Federal Decree in the U.S., we paid no withholding whatsoever.

You, John, have previously written here that you and your partner live strictly on social security benefits and that you are not required, therefore, to file an income tax return at all and also incur no annual Federal income tax. I agree with your assessment that, if your sole source of income is social security benefits, that you pay no U.S. income tax and are not required to file income tax returns so they may not subject your benefits to withholding. I wouldn´t count on that though. I think that, if it comes to pass that they actually start withholding 30% of social security benefits from U.S. citizens living in Mexico, this will impose a serious hardship on those fully dependent on those benefits alone and would be grossly unfair. This new withholding requirement, if actually initiated on social security benefits, will be very detrimental to U.S. citizens retiring in Mexico dependent primarily on social security benefits but the U.S. gestapo doesn´t really give a damn one way or the other.

For a number of years, I worked for a U.S. Government regulatory agency regulating federally chartered national banks. They, generally speaking - meaning federal regulators in all fields - are spineless cowards and are more concerned about their bi-weekly salary checks than your financial discomfort, especially if you are not part of some civic organization with political clout so lay low and keep your fingers crossed. The wolf is lurking at your door.

The June filing is for having more than 10,000USD in your Bancomer, Multiva, etc etc acount. This is not about income but bank accounts and such
outside the US.
Z[/quote]

That means the equivalent of $10,000USD in aggregate in all Mexican (foreign) financial accounts of any type under which you are a signatory on deposit at any one point in time in any one calendar year based on the currency exchange rate of dollars to peso value at that point in time even if your current balance is peanuts. This form must be sent to the U.S. Treasury Department by June 30th of the following year but now, as earlier discussed, you must report any and all financial accounts to the IRS on your Federal income tax return on or before April 15th of the following year no matter the dollar equivalency of the balances in those accounts held in any foreign country or a branch of any foreign bank in the U.S.

Uncle Scrooge is after you for daring to move out of the U.S. at retirement.

Meanwhile, Uncle Scrooge let inflation solve some of his problems while making it damn difficult to retire with a decent lifestyle in the Mother Country.

Plus, the real estate debacle and scare tactics re Mexico made it possible to buy a Mexican house, sell it for less than you paid for it but get stuck reporting the cash you get for it when it's done. Not sure how that works, but it looks like you'd have to pay a nice pile of pesos to get some help on your tax return, to boot.

So, despite my having maybe $100usd in my Mexican account, and not making enough income to file, I'd still have to file, just to tell them I have $100 outside of the US? I get 1099'd on some online work I do, that is paid to me in US dollars. It's not enough to have to file. IF I do file it, I am subject to 1/2 the SE income tax, because being self employed, your taxes are not exempted with the Foreign Tax Credit. So, if I file, I owe them money, even though if I lived in the US, they would tell me not to file because the amount is too small. What absolute BS.

BTW:

If you had a banking account in the US, and you wrote yourself a check and deposited it in your Mexican banking account, sure it would take 7 business days for the funds to become available, but they would not withhold 30%.

saege007 wrote:So, despite my having maybe $100usd in my Mexican account, and not making enough income to file, I'd still have to file, just to tell them I have $100 outside of the US? I get 1099'd on some online work I do, that is paid to me in US dollars. It's not enough to have to file. IF I do file it, I am subject to 1/2 the SE income tax, because being self employed, your taxes are not exempted with the Foreign Tax Credit. So, if I file, I owe them money, even though if I lived in the US, they would tell me not to file because the amount is too small. What absolute BS.

BTW:

If you had a banking account in the US, and you wrote yourself a check and deposited it in your Mexican banking account, sure it would take 7 business days for the funds to become available, but they would not withhold 30%.

The 30% deal was a with holding on funds going out of the US to a foreign bank if the foreign bank refused to report accounts held by Americans. It was supposed to go into effect 1/1/13 but has been moved to 1/1/14.

The way the actual law read, it was supposed to be only on taxable money or potentially taxable money. If you had a $100,000 CD and made $1000, the $1000 was to be considered taxable and the $100,000 would not. However, if the bank screwed up, they were potentially liable for any tax so the banks were taking the position of all money might be taxable, taking 30% and let the customer and the IRS sort it out.

The law is supposed to go into effect 1/1/14 unless delayed again. If you want to move money out of the US, this is the year to do it.

[

[/quote]

The 30% deal was a with holding on funds going out of the US to a foreign bank if the foreign bank refused to report accounts held by Americans. It was supposed to go into effect 1/1/13 but has been moved to 1/1/14.
[/quote]

I beg to differ. Our reputable and nationwide brokerage firm in the United States withholds 30% of my wife´s funds going from her account at the brokerage firm from IRA drawdowns into our joint checking account at the same U.S. brokerage firm also domiciled in the U.S. just because she is a French citizen living in Mexico and they take a 10% withholding from my account even though I am a U.S. citizen because I live in Mexico. You are completely misinformed and spreading false information on this website. I repeat; the funds being transferred are being transferred from one account to another account both domiciled in the United States at the same United States based financial institution. Don´t be surprised when they descend on your butt but, in the meantime, don´t mislead people reading this forum .

Of course, what this means is we are getting a huge income tax refund every year in the spring but that also means the United States Government is getting an interest free compulsory loan from us annually for up to 15 months by fiat and that is criminal. The "land of the free and home of the brave" my ass. Glad to be out of there.

hound dog quote - "I wouldn´t count on that though. I think that, if it comes to pass that they actually start withholding 30% of social security benefits from U.S. citizens living in Mexico, this will impose a serious hardship on those fully dependent on those benefits alone and would be grossly unfair. This new withholding requirement, if actually initiated on social security benefits, will be very detrimental to U.S. citizens retiring in Mexico dependent primarily on social security benefits but the U.S. gestapo doesn´t really give a damn one way or the other."

I wonder how that would work for those like myself/ouselves who have their SS check deposited into a US bank account and change their SS address back to a US address. We have a legitimate US address which is my partners nephew's address in Mass.

Hey Dawg
This is is a new screw and it is delayed util 1/14 if it ever happens. It basically puts on the banks the right and demand to withhold if the bank thinks any
tax obligation. Now you know since they are responsable for taxes due they will withhold everybody until we class action lawsuit them to show that
they didn't even try to see if something had a tax obligation. This is how they are getting there fingers into our accounts early like Mexico. They will
just start taking money out before the end of year like earned payroll taxes or Mexican interest paid. You were being screwed by the old screw and
while this will continue if you have an IRA in US or something like that they will take 30% out under the new rule IF IT HAPPENS even if you don't owe
any taxes cause you are income poor and tax defered.

The new boss kinda looks like the old boss don't he (The who)

So we have federal, state, treasury in June, and next year we will have to beg our bank to not steal 30% if you are taking it out of IRA/401K/72T and
wait til the following year to get it back. And I am sure we will have new forms so they can't take the money and I am sure these new forms will be
rejected as no bank has the staff to verify tax obligation correctly. This is very unfair to the banks and the bitching going on is what delayed it after all
the government listens to the banks still.

Ain't we special!!

Z

hound dog wrote:[

The 30% deal was a with holding on funds going out of the US to a foreign bank if the foreign bank refused to report accounts held by Americans. It was supposed to go into effect 1/1/13 but has been moved to 1/1/14.
[/quote]

I beg to differ. Our reputable and nationwide brokerage firm in the United States withholds 30% of my wife´s funds going from her account at the brokerage firm from IRA drawdowns into our joint checking account at the same U.S. brokerage firm also domiciled in the U.S. just because she is a French citizen living in Mexico and they take a 10% withholding from my account even though I am a U.S. citizen because I live in Mexico. You are completely misinformed and spreading false information on this website. I repeat; the funds being transferred are being transferred from one account to another account both domiciled in the United States at the same United States based financial institution. Don´t be surprised when they descend on your butt but, in the meantime, don´t mislead people reading this forum .

Of course, what this means is we are getting a huge income tax refund every year in the spring but that also means the United States Government is getting an interest free compulsory loan from us annually for up to 15 months by fiat and that is criminal. The "land of the free and home of the brave" my ass. Glad to be out of there. [/quote]

Different law. That is normal tax with holding. The new one will be because of money crossing out of the US.

jrm30655 wrote:

hound dog wrote:[

The 30% deal was a with holding on funds going out of the US to a foreign bank if the foreign bank refused to report accounts held by Americans. It was supposed to go into effect 1/1/13 but has been moved to 1/1/14.

I beg to differ. Our reputable and nationwide brokerage firm in the United States withholds 30% of my wife´s funds going from her account at the brokerage firm from IRA drawdowns into our joint checking account at the same U.S. brokerage firm also domiciled in the U.S. just because she is a French citizen living in Mexico and they take a 10% withholding from my account even though I am a U.S. citizen because I live in Mexico. You are completely misinformed and spreading false information on this website. I repeat; the funds being transferred are being transferred from one account to another account both domiciled in the United States at the same United States based financial institution. Don´t be surprised when they descend on your butt but, in the meantime, don´t mislead people reading this forum .

Of course, what this means is we are getting a huge income tax refund every year in the spring but that also means the United States Government is getting an interest free compulsory loan from us annually for up to 15 months by fiat and that is criminal. The "land of the free and home of the brave" my ass. Glad to be out of there. [/quote]

Different law. That is normal tax with holding. The new one will be because of money crossing out of the US.

[/quote]

This is the most confusing quote/no quote I've read......ever......Please someone explain who said what, and, why!

Thank You in advance.

Jim W. and jrm:

Now we´re all confused. All I really know is that, in 2011, our U.S. brokerage firm and also commercial banker where we domicile our joint checking account rolled into one, told us that, from then on, despite the fact that they had historically allowed us to make the election on tax withholding, if any, for the IRS (and we traditionally since 2001 had requested that no funds be withheld at all) , they were compelled , by U.S. Government decree, to withhold 30% of any distributions from my wife´s IRA accounts because she was a French citizen living in Mexico full time and 10% of my IRA distributions because I was a U.S. citizen living in Mexico full time. Keep in mind that the IRA distributions of which we speak are from IRA accounts held in the U.S. to our joint checking account also held in the U.S. The only thing that sets us apart is that our personal address is in Mexico and our accounts are handled by the brokerage firm under international customer designations.

Had I to do it over again and understood the ramifications of living full time in Mexico insofar as tax implications are concerned, we could have maintained a phony permanent address in Alabama with relatives and never faced this bureaucratic nightmare.

My French citizen wife lived in the United States, made a fine living there and faithfully paid federal income taxes due starting in 1971 and has paid every year since in significant amounts through 2011 so far. Yet, she is looked at as a possible tax cheat because she is a French citizen. I guess we are being penalized because there are so many tax cheats out there. The law abiding citizens or legal permanent immigrants always pay for the behavior of the miscreants in the U.S.


So be it. I´ll not lose sleep over this as I have a really nice tax refund coming my way in a couple of months. To bad they don´t pay a market interest on those funds they steal temporarily from us for a few months . Really makes you miss the land of the free and the home of the brave.

hound dog wrote:Jim W. and jrm:

Now we´re all confused. All I really know is that, in 2011, our U.S. brokerage firm and also commercial banker where we domicile our joint checking account rolled into one, told us that, from then on, despite the fact that they had historically allowed us to make the election on tax withholding, if any, for the IRS (and we traditionally since 2001 had requested that no funds be withheld at all) , they were compelled , by U.S. Government decree, to withhold 30% of any distributions from my wife´s IRA accounts because she was a French citizen living in Mexico full time and 10% of my IRA distributions because I was a U.S. citizen living in Mexico full time. Keep in mind that the IRA distributions of which we speak are from IRA accounts held in the U.S. to our joint checking account also held in the U.S. The only thing that sets us apart is that our personal address is in Mexico and our accounts are handled by the brokerage firm under international customer designations.

Had I to do it over again and understood the ramifications of living full time in Mexico insofar as tax implications are concerned, we could have maintained a phony permanent address in Alabama with relatives and never faced this bureaucratic nightmare.

My French citizen wife lived in the United States, made a fine living there and faithfully paid federal income taxes due starting in 1971 and has paid every year since in significant amounts through 2011 so far. Yet, she is looked at as a possible tax cheat because she is a French citizen. I guess we are being penalized because there are so many tax cheats out there. The law abiding citizens or legal permanent immigrants always pay for the behavior of the miscreants in the U.S.


So be it. I´ll not lose sleep over this as I have a really nice tax refund coming my way in a couple of months. To bad they don´t pay a market interest on those funds they steal temporarily from us for a few months . Really makes you miss the land of the free and the home of the brave.

The land of the free is long gone. Hillary told the Afgans "We tax everything that moves and everything that doesn't"

It used to be that if you withdrew from an IRA, you could certify that you wouldn't have to pay any taxes and they would with hold zero. Sometime over the past few years they changed that. That is simply to collect taxes on IRA/401k withdrawals.

The US also slipped in a provision in the HIRE bill a couple of years ago about money going out of the US. Unless the foreign bank had a reporting agreement, the sending bank was supposed to withhold enough to handle any taxes up to 30%. Since banks had no way of knowing, they were setting up to just withhold 30% of any foreign transfers.

It was supposed to start 1/1/13 but it was put off for a year. No one knows what will happen next year.

The US wanted every bank in the world to report on every account held by any American citizen worldwide. Most of the banks told the IRS to take a hike. They weren't in the business of keeping track of American citizens money.

There's something like 168 countries in the world. I wonder what would happen if those countries demanded that every bank in the US report on each foreign citizen using their bank.