web analytics
December 27, 2014 / 5 Tevet, 5775
 
At a Glance
Blogs
Sponsored Post
8000 meals Celebrate Eight Days of Chanukah – With 8,000 Free Meals Daily to Israel’s Poor

Join Meir Panim’s campaign to “light up” Chanukah for families in need.



FACTA Hurts Everyone, Especially Americans

FATCA imposes an obligation on foreign financial institutions to register with the IRS if they have depositors or conduct financial transactions with U.S. citizens or businesses.
Goldstein 485x300

What could be wrong with Congress trying to catch the bad guys, in this case, folks who use offshore tax havens to avoid paying their fair share of taxes?

It seems as if the legislation meant to catch tax evaders caught a lot of other folks in its net, too.

While it seems like a law designed to catch tax cheaters is a good idea, it’s implementation is making life difficult for the tens of thousands tax-abiding Americans residing abroad (including Israel) who now are facing difficulties at banks and foreign investment houses.

The Foreign Account Tax Compliance Act of 2010 (FATCA), imposed upon foreign banks and financial institutions the obligation to identify American account holders or face a 30% tax penalty.

Backdrop to FATCA

The U.S. government needed to raise revenues, and thought it had a good target: levying taxes on money hidden in accounts in foreign banks and financial institutions.

In order to go after these concealed assets, America needed to go after the banks and financial institutions that help hide them. Who would have thought it possible that America could flex its muscles overseas and force foreign banks to report their customers to a foreign government? Apparently the threat of extracting taxes and fines on the foreign institutions itself was a great motivator and Uncle Sam managed to remove the veil of secrecy on Swiss accounts when it successfully negotiated a settlement with UBS. In order to avoid criminal prosecution by the Justice Department, UBS paid a large fine and disclosed details about thousands of the bank’s American depositors.

The FATCA Legislation

FATCA imposes an obligation on foreign financial institutions to register with the IRS if they have depositors or conduct financial transactions with U.S. citizens or businesses. Registration includes an agreement to identify and report information about American-held accounts directly to the IRS.

Critics of the legislation, and particularly the foreign financial institutions, view it as an improper extension of the enforcement powers of the IRS into foreign countries. However, France, Germany, Italy, Spain, and Great Britain were the first nations to lend legitimacy to FATCA by agreeing to comply with the legislation’s mandates.

Impact of FATCA on Americans Living Abroad

Foreign banks are concerned about the additional costs to them associated with complying with FATCA disclosure rules. Rather than incur these expenses, foreign financial institutions are closing their doors to Americans living abroad.

As a result, it’s difficult for many American expatriates to find a bank or financial institution that is willing to do business with them. Americans living in foreign countries for legitimate reasons are being lumped with tax evaders and tax cheats by foreign banks that are wary of subjecting their institution to FATCA disclosure requirements. These Americans are being treated as criminals by foreign banks seeking to avoid FATCA.

In the end, the law-abiding American expats and foreign financial institutions are the biggest losers from the FATCA legislation, since the bad guys will probably find a way around the system anyway.

American expatriates (olim included) are being subjected to many new regulatory requirements by Uncle Sam. My new book, The Expatriates Guide to Handling Money and Taxes, discusses how expats can become compliant with the IRS and gives strategies for dealing with common financial problems faced by expats. Jewish Press readers can get the book at a discount by using the discount code JPRESS.

About the Author: Douglas Goldstein, CFP®, is the director of Profile Investment Services, Ltd, a financial planning and investment services firm located in Jerusalem. He specializes in working with clients who live outside of the United States and want to maintain a U.S. brokerage account. Doug’s newest book, co-authored with Susan Polgar, about how using chess strategies to improve your finances, Rich As A King can be purchased at www.richasaking.com. He is a licensed financial professional both in the U.S. and Israel. Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, FSI. Accounts held at Pershing LLC., Member NYSE/SIPC, a subsidiary of The Bank of New York Mellon Corporation. Neither Profile nor PRG gives tax or legal advice. Before immigrating to Israel, it is advisable to consult with a tax attorney who is knowledgeable about Israeli law. Contact at doug@profile-financial.com


If you don't see your comment after publishing it, refresh the page.

Our comments section is intended for meaningful responses and debates in a civilized manner. We ask that you respect the fact that we are a religious Jewish website and avoid inappropriate language at all cost.

If you promote any foreign religions, gods or messiahs, lies about Israel, anti-Semitism, or advocate violence (except against terrorists), your permission to comment may be revoked.

No Responses to “FACTA Hurts Everyone, Especially Americans”

Comments are closed.

SocialTwist Tell-a-Friend

Current Top Story
Ayala Shapira, 11, is fighting for her life after suffering burn wounds when an Arab terrorist threw a Molotov cocktail at the car in which she was riding.
‘Slight Improvement’ in Life-threatening Condition of Firebomb Victim
Latest Blogs Stories
Stairway to success!

My stairs had been built, big and strong-BUT ON THE WRONG SIDE OF THE APARTMENT!

HaTnua Party Meeting

Is his article satire? Or does Kai Bird really think Tzipi Livni heads a “center-right” party?

Shabbat Table

Much as I’d like to see the Jewish nation fully observant forcing Shabbat on people is NOT the way.

Loyalty seems to be a lost trait in Israeli politics, whether it’s to ideals, principles or parties.

Apartment hunting is kinda like dating: You go see anything that looks right on paper-and pray.

Latest headlines say that Prime Minister Bibi Netanyahu’s Likud may only make third place if…

What are the roles of leadership and communication in running a “tight ship”?

Sabraman: Israel’s first superhero, combining the courage of the Sabra and the faith of Abraham.

Is Haredi open-ended learning on charity better than earning a living that would obviate that?

Hanuka is the miracle of emunah- belief in the L-rd of Israel and the light of our faith.

Limiting Jewish success and revival is that the anti-Jewish, anti-History Left rules here in Israel

The crisis in Jewish education is of existential importance. How should it be resolved?

BBC GUIDELINES ON TERRORISM: The word “terrorist” itself can be a barrier rather than an aid…

Discussion with entrepreneur William Heinecke on how he became a young, successful businessman

Did Cuba apologize for their spies the way Israel apologized for Pollard?

More Articles from Doug Goldstein, CFP®
Doug Goldstein

What are the roles of leadership and communication in running a “tight ship”?

Doug Goldstein

Discussion with entrepreneur William Heinecke on how he became a young, successful businessman

Get a straight answer from Edward de Bono to the question: What is lateral thinking?

How does the new U.S. tax amnesty affect American citizens living in Israel and abroad?

Emerging adulthood and how young adults can achieve economic independence in today’s financial world

Doug talks with Steve Repak about the nature&meaning of wealth and how you can eliminate your debts.

How can you turn your physical books into E-books?

Printed from: http://www.jewishpress.com/blogs/goldstein-on-gelt/facta-hurts-everyone-especially-americans/2013/03/15/

Scan this QR code to visit this page online: