web analytics
March 5, 2015 / 14 Adar , 5775
At a Glance
Blogs
Sponsored Post


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.

Current Top Story
An Arab sheikh hands out flowers in a gesture of brotherhood and good will.
Haifa U Research Confirms, ‘Think Good & It Will Be Good!’
Latest Blogs Stories
Palestinian Authority Funded Terror

The Palestinian Authority, led by the “moderate” Abbas, and murderous terrorism are synonyms.

Obama Bedelia

Kerry…and Bide…and EVERY DEMOCRAT just happened to be unavailable to meet with Netanyahu.

Doug Goldstein

Why is it necessary to be accountable in business and in life? And how does it differ from guilt?

Americans have a more favorable view of Netanyahu than they do of Obama.

I’d rather you label me a concerned Jew, an Israeli. Someone who cares about the future of my nation

Goldberg chose to believe two impossible things before I had breakfast this morning.

The State Department claims Bibi revealing details of the bad Iranian deal to Americans would be a “betrayal”.

“Please stop shushing me” They kept shushing! Shushing seems to be how Leftists do Israeli politics!

Labor-Livni post-Zionist party’s campaign based on their claim they know how to keep the US happy

Mentioning genocide in the same breath as Susan Rice crosses a redline about Obama’s foreign policy

What are the ramifications of giving up your US citizenship? Would it effect your visiting the US?

Chasidim believe that Metzitza B’Peh (MbP) is an essential part of the circumcision ritual.

AMERICAN INTERFERENCE in ISRAELI ELECTIONS is IMMORAL and 1000% CHUTZPADIK!

Extremism from Jews is considered a “danger;” Arab extremism and anti-Jewish terror is “legitimate”

It was in fact Israel, not Palestinians or journalists, who began spreading the older photos, in order to generate credibility for the “slander” angle.

Next week we celebrate Purim, more relevant and illuminating in light of current events than ever

More Articles from Doug Goldstein, CFP®
Doug Goldstein

Why is it necessary to be accountable in business and in life? And how does it differ from guilt?

Doug Goldstein

What are the ramifications of giving up your US citizenship? Would it effect your visiting the US?

Big questions this week: Does materialism make people happy? Can one be happy with what they have?

The necessity for setting financial goals and how to realize your life’s dreams.

Discussing the connection between speech and thought and how a foreign language affects decisions?

Can a business trying to find solutions to world problems be profitable?

In our second podcast this week, Doug meets James Clear, entrepreneur and expert on personal habits. How easy is it to change your behavior to achieve your goals? And how can you improve your financial habits if they are deeply ingrained? Listen to your favorite personal finance show for the answers to these questions and […]

Does wealthy always equal healthy, and how do personal relationships affect your financial success?

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: