During public comments several tax officials expressed doubt about the positive impact of FATCA for the United States, but comments won’t change the FATCA train from rolling forward.
Jeffrey S. Freeman, J.D., LL.M
Thanks to technology public comments can spread like wildfire across the globe, but whether you agree or not the FATCA train has left the station and is not returning. Doubts were expressed by several well known officials, but these comments cannot change what has already occurred and can only offer speculations on the future impact of FATCA.
The IRS policy states that penalties should be objectively proportioned to the offense, but Ms. Nina Olson, a National Taxpayer Advocate, raised doubts if this is actually the case. A taxpayer could be charged penalties for failing to disclose a foreign account for $10,000 and a separate penalty up to $50,000 for failing to disclose the account after being notified by the IRS. Ms. Olson questioned the rationale of this penalty if the account balance was below the $60,000 fine. “Why are we doing this to folks? Why are we tormenting them in this way?”
The impact of the tax policies have sent many citizens running to other countries and revoking their citizenship. In 2013 more than 3,000 documented citizens renounced their U.S. citizenship and the trend is continuing as there has been a 221% increase this year of citizens either renouncing their citizenship or terminating their long-term U.S. residency. The impact of this trend is yet to be seen as individuals choose to leave their citizenship and tax responsibilities behind.
Financial Sector Burden
More policies and strict regulations has huge business impact for the financial sector. Former acting IRS Commissioner Steven Miller, now of Alliantgroup, expressed doubts over the balance of the burden placed upon the financial instutions and the amount of revenue that will actually come into the treasury. It is yet to be seen if ” this is going to be a revenue-positive event for the United States.”
Mr. Miller also commented that FATCA repeal is not a realistic possibliity, but individuals seeking to evade their tax responsibilities will have to become more creative and spend much more money to effectively hide their assets offshore.
The playing field has been leveled and where Swiss banks used to profit on Americans seeking to cheat the U.S. government all are paying large sums of money to clean up their act. FATCA will continue to roll forward and seek to keep that level ground.
About Freeman Tax Law
Freeman Tax Law (FTL) is a boutique law firm consisting of a multi-disciplinary team of tax professionals including tax attorneys, CPAs and a professional staff that have vast experience with foreign tax compliance and regulatory matters for financial institutions. FTL consults with both FFIs and USFIs with regard to Foreign Account Tax Compliance Act (FATCA) and related regulatory matters and assists them developing procedures on how to comply with these laws.
Compliance with FATCA needs a distinctive approach. A simple change of processes or leveraging new IT infrastructure may not suffice. FTL has partnered with Newgen Software (Newgen) to offer a unique end to end solution for our clients to offer a comprehensive compliance strategy. Newgen buildings on two decades of domain expertise in Banking and Compliance along with its market leading BPM, Case Management, ECM and CCM applications. Utilizing Newgen’s FATCA Compliance Software along with the creation of proper procedures and training offered by FTL of the financial organization staff, allows for the creation of systematized approach to negotiating the finer aspects of FATCA.
With FATCA, the stakes of non-compliance are simply too high. Contact us today for a consultation to discuss how to further integrate your technology with the legal requirements of FATCA.
Freeman Tax Law