Man is an animal suspended in webs of significance that he himself has spun...

Monday, July 15, 2013

FATCA: A Project Audit

Awareness of the implications of the U.S. law, FATCA (Foreign Account Tax Compliance Act) is growing.  For FATCA supporters the past few weeks has seen both domestic (US) opposition to reciprocity and the Intergovernmental Agreements (IGAs), and yet another delay in implementation.  For FATCA detractors this is good news but it's too soon to tell where this is all going and I wouldn't break out the champagne just yet.

Whenever there is a lull in the action, smart strategists take the time to reassess.  FATCA, the law, is a reality.  It was passed by the U.S. Congress and, come hell or high water, the U.S. Treasury and the IRS have to come up with some way to make it stick.  That's their job.  But what began as a law to force foreign banks to disclose their U.S. Person account holders has become something else altogether.  

What we are seeing right now is the creation of a very complex worldwide financial reporting system - what Marvin Van Horn has dubbed "GATCA" (Global Account Tax Compliance Act).  Is this what the U.S. Congress had in mind back in 2010?  I really doubt it. U.S. lawmakers are not terribly concerned about other countries and their problems with tax compliance.  Some are even horrified that their very own foreign investors might be deemed another country's tax evaders and they are resisting any attempt to make U.S. banks report those accounts to their respective governments.

Allison Christians made this very pertinent observation the other day on her blog, "It's really, really difficult to get an international tax regime going on a unilateral basis. There is a story in this about the difference in making a unilateral rule first, and then repeatedly changing it to fix all the problems that inevitably arise, versus sitting around in international networks trying to make sure the rule will work first, before trying to implement it internationally."

My background is in the management of large information systems for multi-nationals.  What Professor Christians  is describing feels a lot like some of the global projects I've worked on where company HQ decides unilaterally to impose a new system on its subsidiaries around the world.  What appears  straightforward, logical and necessary to the home office in Houston or Paris is often completely illogical and unworkable when it hits the ground in Tokyo or Sao Paulo.  When a multi-national company tries to run a project in this manner, it inevitably has to make many changes and the end result is all too often a system that is overly complex, late, and costs far more than HQ ever intended to spend.

A much better way is to gather the requirements ahead of time and build a core model that takes local conditions and perspectives into account.  Equally important in the "Gather Requirements" phase is what I call "evangelization" - building support for the project one country or region at a time.  Yes, all this takes time but it's worth it because implementation will then go much more smoothly and the project is much more likely to be a success.

Whatever the merits or demerits of FATCA the law,  it's worth looking at FATCA/GATCA from this perspective.  If this were an IT or engineering project and a consultant was asked to do an audit, what might he or she say about it?

Failure to identify all the stakeholders:   FATCA was originally thought of as something between foreign banks and the U.S. government.  But at every stage of implementation new stakeholders keep popping up:  foreign governments and their tax authorities, the compliance industry, U.S. Persons abroad and so on.  Now the World Council of Credit Unions is chiming in as well as regional authorities like the European Union.  As the final system takes shape some U.S. lawmakers have become major stakeholders as well.  Yes, Treasury did ask for comments when preparing the final regulations and did take them into account.  However, this did not suffice as a forum for discussing all of the concerns and questions.  This has led to mounting criticism and both legal and political challenges which are slowing down the implementation and might even stop it.

Failure to do a proper assessment of the impact and the risks:  FATCA has already had many unintended consequences that could have been foreseen.  A few (like banking discrimination) were considered but then set aside as unlikely to occur.  Surprise!  The cost issue was raised pretty much after the fact and the U.S. Congress never asked for, to my knowledge, any estimate of how much FATCA would cost to implement, nor was there any realistic cost/benefit analysis.  For the money spent building the system, not to mention the recurring support costs, just how much net revenue will the U.S. get in the end? No one knows.  Even today there are only vague promises of "putting a halt to tax evasion" but there are no hard numbers from a credible source.

Lack of success criteria:  One of the signs of a very poorly conceived project is that the original objectives were either fuzzy to begin with or become completely lost in the frenzy to get the project in.  What exactly would have to happen for FATCA to be considered a "success"?    To date the only scorecard we are seeing is the number of intergovernmental agreements signed.  But the original project goal wasn't about making these kinds of agreements - in fact the IGAs are something that came into the game rather late.  The fact that they are now being used as a measure of success should trouble everyone.    A perfect example of "mission/scope creep" and one could argue that Representative Posey's letter to Treasury and Senate opposition is just the Steering Committee (such as it is) trying to rein in the project team's attempt to broaden the scope of the original project objectives.

An out of control Core Model:   FATCA was originally a few pages in the 2010 Hire Act. Today it has become a monster with over 500 pages of regulations and eight signed intergovernmental agreements. In the recent announcement by the IRS that FATCA is once again being delayed, they say, "The Department of the Treasury (Treasury Department) and the Internal Revenue Service (IRS) intend to incorporate the rules described in this announcement in final regulations under sections 1471 through 1474."   As I understand it, as the IGAs are signed, changes are fed back into the Core Model (the regulations).  Since only a few countries have actually signed IGAs to date, this raises the question of what future changes may have to be included as Treasury negotiates with the remaining 180+ countries in the world.

This not only increases both the uncertainty about what the final system will look like, it adds to the complexity and the costs.  Today one can see the outline of what the system will look like but is that good enough for those who must modify processes, laws and information systems?  As my friend JJ says:   “Walking on water and developing software from a spec are easy if both are frozen.”   Trying to deploy a Core Model without having the vast majority of the requirements already taken into account, and making ad hoc changes during implementation and deployment,  is a recipe for disaster.  If I were an IT manager running a FATCA compliance project I would be very very nervous because the ice looks pretty thin to me.

Complexity:  FATCA begets GATCA and as the system becomes more and more complex with more and more components (people, processes, information systems, legal and political systems) it is rapidly becoming a bowl of spaghetti the kids are trying to eat on a white couch.   Charles Perrow, author of Normal Accidents, has a lot to stay about high-risk systems and "inevitable accidents."   It's not so much about original design flaws as it is the way the components interact in new and surprising ways as the system starts working and doing what it was meant to do.  
"We start with a plant, airplane, ship, biology laboratory, or other setting with a lot of components (parts, procedures, operators).  Then we need two or more failures among components that interact in some unexpected way.  No one dreamed that when X failed, Y would also be out of order and the two failures would interact so as to both start a fire and silence the fire alarm."   
And that's why the house burns down or the system crashes.  Efforts to make the system safer and more robust only add to the complexity thus making it,  Perrow says, even more likely to fail.

FATCA is becoming such a system;  highly complex and more and more "tightly coupled" (a change or failure in one component means sending ripples through the entire system).   More components mean more danger.  A good example of this are the IGAs - an attempt to make a poorly-written, dangerous and unworkable law "safer" and less likely to have catastrophic consequences.  

But are they really making the system more secure or have they introduced new risks?    If Treasury cannot get the IGAs signed in sufficient numbers by next year then the choices are 1.  Start the 30% withholding which could be interpreted as starting a financial war with the rest of the world;  2.  Step back and get the law revised or delayed yet again;  3. Give up.   

If Treasury succeeds, on the other hand, it could be even worse because no one really knows what is going to happen when the system goes live in July of 2014.  Already other countries are looking at the opportunities inherent in FATCA.  The U.S. could very well end up with the short end of the stick if other countries use it to for their own ends - ends that are in direct opposition to U.S. interests.  

Any one of these outcomes would be a huge blow against the credibility and prestige of the U.S.   Stepping back and looking at it very coldly, FATCA may represent one of the riskiest projects the U.S. has ever tried to push on the international stage.

Can this project be saved?  As someone who would be more than happy to see it fail, I am not well-placed to objectively answer that question. 

What is clear is that no one - not the proponents or opponents of this law or the lawmakers and bureaucrats around the world making policy or even the average person mindlessly cheering on the "fight against tax evasion" - has any idea of what the FATCA/GATCA landscape will look in the years ahead and if it will be a deemed a great victory or a catastrophic failure. 

Perhaps both.   Because, as every experienced project manager knows, "If you don't know where you're going, any road will take you there."

32 comments:

Betty Jackson said...

Excellent analysis, Victoria. Dealing with the worms now that the can is open is proving pretty tricky, as this latest delay confirms.

Blaze said...

As usual, superb assessment.

Steven Mopsick,(a tax lawyer in private practice now, but with 30 years IRS experience)told us all the FATCA information will "blow a fuse" when it begins to be received.

Unfortunately, as we know all too well, when US "blows a fuse," it's the rest of the world left in the dark with no power.

Shadow Raider said...

Hi, Victoria, great post as always. Since you live in France, you may find this interesting:
http://www.enfantsdupays.org
http://www.impots-francais-de-monaco.com
http://www.senat.fr/seances/s201201/s20120124/s20120124003.html#par_277

In summary, France has a tiny version of citizenship-based taxation (only in Monaco), those affected have been fighting against it in the courts, recently had a partial victory, and a senator representing the French abroad is helping them.

Blaze said...

Yikes! Since my earlier post, I have read these two articles about direction from NSA Chief to "Collect the whole haystack..Collect it, tag it, store it."

This is truly chilling. If we look at FATCA in the same context, it's clear what we're dealing with.

FATCA isn't about tax evasion. It's about power.

http://www.washingtonpost.com/world/national-security/for-nsa-chief-terrorist-threat-drives-passion-to-collect-it-all/2013/07/14/3d26ef80-ea49-11e2-a301-ea5a8116d211_story_1.html

http://www.guardian.co.uk/commentisfree/2013/jul/15/crux-nsa-collect-it-all

Just Me said...

Brilliant write up.

Don't forget the domestic DATCA of USFI reciprocity on the way to that GATCA! That could turn into 535 kids each with their separate bowls of spaghetti on a white couch!

Eric Walravens said...

Is tax policy (or any policy for that matter) usually conceived in a the rational, forward looking fashion that you wish for ? It should, but most of the time it isn't. Lawmakers react to something, and if necessary adapt the law - which is never pure or perfect.
In this case, lawmakers reacted to the stubborn, shameful refusal of foreign banks, foreign countries to pass on legitimate tax information. Was it a bold move ? Yes it was. But it was renedered necessary by decades of non-cooperation by tax havens and the like.
Will FATCA end up being what lawmakers had in mind in the first place ? Probably not. The IGAs are starting to shape a multilateral, reciprocal system of information exchange. It think that it is the right direction.

DAvS said...

Victoria, Thank you for this beautiful analysis from someone not standing to profit from FATCA.

I keep thinking that your most recent post is your best, but you go up and up and up!

Victoria FERAUGE said...

@Shadow Raider and Blaze , Ah, thank you so much for the links.

@Eric, You are correct, of course, about laws (and projects) never being perfect. However, I've worked on many a project that was an attempt to "make it up as we went along" and they didn't turn out too well. Best to start with a good base and at least some consensus.

Is FATCA fatally flawed or just something that can be adjusted over time to create the multilateral, reciprocal system of information exchange you support? I don't know. No one knows. Hard to think of it as going in a good or bad direction when right now we are all wondering "s'il y a un pilote dans l'avion."

But looking at the growing US domestic opposition to FATCA reciprocity it is clear that this is going to be a FEROCIOUS fight because some very important people and some very powerful interest groups will do everything in their power to stop it. They are not interested in "multi-lateral" or "reciprocal" or any of the other things you would like to see. They could care less about your tax evaders - the only ones that count are America's own.

If the IGA process implodes and goes back to being a uni-lateral, one-sided, one-way automatic information exchange from the rest of the world to the US, would you still support it?

There is a very high risk that this will indeed happen. At the very least I would strongly urge EU countries to get the US to officially confirm reciprocity once and for all so there is no longer any doubt about it. Not Treasury or the IRS but the highest levels of the US government - maybe even Obama himself. My .02.


Victoria FERAUGE said...

And here is an interesting take on it from the UK

http://www.international-adviser.com/mobile/articleview?apath=/Tax---Technical/has-the-irs-gone-fishing

I particularly liked this part - also about the "state of the project" from Geoff Cook:

"Just to be clear I have no issue with fighting tax evasion, cheating on taxes means the rest who are honest have to carry a heavier burden; fair taxes and a commitment to paying them are hallmarks of civilisation and a matter of civic duty.

But whenever spending taxpayers cash there has to be some eye to cost benefit. If you spend as much or more than you are getting back, it isn't a wise use of resources. Where is the cost benefit analysis on US FATCA? I think the answer is one hasn't been done or if it has it hasn't been made public.

Other countries are bearing the weight of US tax administration with no clear idea at all as to the overall cost benefit other than they absorb the costs and the US gains the benefit. What is frustrating for other countries is that having got themselves and their institutions lined up to comply we are faced with a moving target with IT, legal, and regulatory resources put in place on the assumption that we are working to a given timetable, only to find that timetable has become a moving target....

The reality is they have significantly underestimated the impact on the US IRS, its computer systems, its personnel and its administrative capability, and are not in a position to process FFI registration nor implement IGAs.

We too are comitted to fighting financial crime, we have signed up to US FATCA, UK FATCA, G5 Multilateral, and OECD Multilateral, but just as we reasonably expect taxpayer's to be honest; friends joining hands to fight this problem should be honest with each other."

P. Moore said...

Absolutely superb post. In my career I have seen some of these 'run away' IT projects and FATCA is an excellent comparison, except it is much bigger and with no consideration for financial accountability, likely much more destructive.

Blaze said...

@Eric: I don't know if you have any distant connection to US. If you do, you would understand the nightmare many of us have been living.

As I understand it, FATCA was originally intended to find people resident in US but hiding assets and income off shore. In other words, the intent was to ensure US residents were paying tax on their world-wide income. A reasonable goal.

However, millions of Americans and former Americans living outside US, their "foreign" spouses and families are not being targeted by IRS as "tax cheats," "tax evaders, "criminals" and "traitors."

Most of us are none of those things. We are mainly, law-abiding, responsible, honest citizens, residents and taxpayers of the countries we have chosen to call home.

In my case, US Consulate told me clearly, firmly and directly that I was "permanently and irrevocably" relinquishing US citizenship when I swore an oath of allegiance to Canada in 1973.

For 40 years, I have had every reason to believe I was Canadian and only Canadian. That is until US decided to suddenly change the rules of the game. I am now a "US person" by their definition simply because I was born in US.

As I am now in early retirement, they demand my bank provide them with information on all of my assets and financial transactions or close my account if I refuse.

This is despite the fact all my assets were entirely earned, saved invested and taxed in Canada. Not one penny was from US source income.

Canada and US have a long-standing effective tax treaty which provides for exchange of information on income for the other country's residents. This treaty could serve as a model to the world in true reciprocity.

Instead, US is demanding Canadian banks and Canadian government violate this nation's banking, privacy and human rights laws and even our Constitution for that to happen.

Let me assure you. Canada is NOT a tax haven.

Are you concerned at all that information on EU citizens living in their European country of birth with a US citizen (or former citizen) spouse will now be submitted to US?

Ellen said...

Great post and readers' comments!

bubblebustin said...

FATCA may prove Churchill was being too optimistic when he said “We can always count on the Americans to do the right thing, after they have exhausted all the other possibilities”.

Mind boggling good analysis, Victoria. Thank you for sharing your thoughts and expertise with us.

Tim said...

On a somewhat related note if I am ever feeling down and pessimistic about FATCA I watch the following video on Youtube on the demise of the Meech Lake Accord.

I have always viewed the killing of Meech(and Charlottetown) as inspiration for killing FATCA.

https://www.youtube.com/watch?v=oA2-Ch4vC4k

Tim said...

The issue that comes to mind is no one on the US side gave very little thought particularly was the impact FATCA would have in Canada. This has put all of the effected parties in quite a bind. On the one hand the US doesn't want to look weak so the best thing for the US to do is to try to steamroll Ottawa especially if the rest of the world ex US and Canada seems supportive. However, despite the fact Canada is a relatively small country there are very unquantifiable risks in the steamroll strategy such as court challenges and messy political fights.

As an alternative the US could cave to Canada but then the US would look weak. Even more importantly though countries such as France and the UK(and are much bigger than Canada) that signed up for FATCA enthusiastically will look weak and "played" and furthermore will not be in the mood to help the US out of a jam in the future. (A historical equivalent would be the US unwillingness to help France in Vietnam in 1954).

Eric Walravens said...

Of course, one should distinguish between what is desirable in a perfect world and what is politically feasible. The prospect of a multilateral information exchange system might be just as unrealistic as a balanced UN security council, but that doesn't mean that those ideas should be dropped altogether. Whenever I have doubts about that, I try to think about when the welfare state was built out the the shambles of Europe after WWII. What a massive piece of work it must have been.
@victoria: would I still support FATCA if it went back to being a unilateral law ? No, I don't see any reason why the rest of the world should again be bullied by the US, as it so often is
@Blaze: I'm not an American, just a (somehow idealistic) European. I can understand how unfair the current situation is for Americans living abroad. But wouldn't you agree that the problem is citizenship-based taxation, rather than information exchange per se ?

Victoria FERAUGE said...

@Eric, Thank you very much for your comments and for answering here. Reading them I think our viewpoints are not that far apart.

Yes, I'm against tax evasion. I live in France and pay quite a lot in taxes. I'm not terribly happy to hear that some French politician stashed his money away in Switzerland for the express purpose of evading French taxes. If those are the people you want to catch, then we are definitely on the same side.

Furthermore I believe that some sort of reciprocal information exchange is going to happen. I've made it pretty clear what I think of FATCA but that doesn't mean I would automatically be against any other proposal. I'd have to see it. What I would ask for is that the making of such a policy be carefully considered, that the discussions were open to the public and that we all carefully balance people's right against the need for such information to be sent across borders. To be honest with you, I have much more faith that the EU could create such a system than the US and that is a sad sad commentary on what I think of the US (my) government.

Daniel Kuettel said...

Excellent analysis which makes it all the more difficult for me to think of some excuse to justify FATCA!

Blaze said...

@Eric: As I said, Canada and US have a long-standing effective tax treaty for information exchange on residents of each country with income in the other country.

The world could use that as a model instead of US hitting people financial institutions and governments around the world with a sledge hammer.

Yes, citizenship-based taxation is a huge part of this issue (including them now demanding information on those of us who relinquished decades ago).

Many European countries supported UN resolution to condemn Eritrea for citizenship-based taxation. Why aren't they doing the same to US--specially relating to FATCA for people who are dual EU-US citizens?

Adding to all of this anxiety is the fact IRS has massive problems with identity theft and fraudulent refunds. Yet, they decide to FATCA honest Americans Abroad while sending billions of dollars in refunds to prisons and phony addresses every year.

I'm shocked Europe is not in an uproar over these demands on European banks and governments.

Remember, it is not just income information IRS wants. It is total assets, account numbers, all transactions and other identifying sensitive information. How is that about stopping tax evasion?

A broken man on a Halifax pier said...

@Eric -

Arthur Cockfield, a Canadian tax prof who knows more about this kind of thing than I do, sees the *only* reason for the US to impose FATCA on Canada as a way of imposing a penalty-based (as opposed to tax-based) revenue system on US persons here.

There's really no other reason for it, other than just imperial consistency - Canada isn't a tax haven, and has existing tax information exchange systems with the US.

Christophe said...

Here is one of the first articles that talks about the disproportionate penalties administered by the IRS and how this is a problem under FATCA.
Sorry... it's in French. Google Translate works decently.

http://www.bilan.ch/argent-finances-les-plus-de-la-redaction/vers-une-derive-du-fisc-americain

Christophe said...

Excellent article about FATCA in the Wall Street Journal entitled:

How to Lose Friends, Citizens and Influence

http://online.wsj.com/article/SB10001424127887323848804578607472987119796.html#articleTabs%3Darticle

She got it... no wonder: she's affected.

Anonymous said...

WSJ: "How to Lose Friends, Citizens and Influence" is a great article indeed!

http://online.wsj.com/article/SB10001424127887323848804578607472987119796.html?mod=WSJ_article_comments&cb=logged0.8966756892383331#articleTabs%3Darticle

Hits the nail right on the head!

Victoria FERAUGE said...

Wow, what a great conversation. Thank you all for reading and for sharing your thoughts. Some great links too. Here is another from Tax Notes about the destruction caused by the IRS "amnesty" programs.

http://taxanalysts.com/www/features.nsf/Articles/8E6965DFA3441ADF85257BAA0048E526?OpenDocument

Is it my imagination or are we FINALLY seeing an uptick in articles about and interest in the human side of all this nonsense (FATCA, CBT, FBAR fiasco)?

As I said before eggs are being broken in the making of the FATCA omelet. As one of the eggs, it is really distressing to hear people tell me that I must shut up and submit for the greater good....

bubblebustin said...

@Victoria

"Submit to the greater good".
Kool-aid has never a great accompaniment to omelet -except maybe in America.

bubblebustin said...

How should one should eye anything touted as a final solution? With suspicion and fear.

Anonymous said...

Such excellent analysis and writing Victoria. It is very clear that even from the US point of view, any 'success' of FATCA can not result from merely overwhelming the rest of the world by its use of brute and unilateral force and 'might makes right'. It becomes clearer and clearer to all that the US is not and will not provide any true 'reciprocity'. And, because FATCA was so ill conceived to begin with, the US has only itself to blame when it either fails because of resistance from outside, or from resistance inside the US. They cannot apply patches to each problem as it arises, and already, they have forced themselves into a position where their face is at stake - compromising their stated goal.

It reminds me that already, the shaky basis for this - the storied 'international tax gap' was based only on an opinion in a personal letter - contents not publicly published, along with other imaginary numbers of US 'taxable persons' and citizens 'abroad'. The IRS and Treasury, and GAO, etc. have already admitted in numerous reports and documents that they have NO good statistics on the numbers of US taxable persons or citizens abroad, much less any basis for deriving a 'tax gap' attributable to the same.

There was never any robust basis for the figures they tossed about as the justification for FATCA.

There was never any serious attempt to even quantify the number of US citizens abroad - the US decided that it wasn't worth even trying to include us in the census. That was abandoned as not cost effective or even necessary. So, how could there even be any true cost-benefit analysis?

That is in combination with the seriously flawed US assumption that if we're not paying taxes to the US, then it is tax that would have been owed to them. Seems that many US politicians conveniently forget about the FEIE and Foreign tax credits, or, more likely, would prefer to abolish them - on the basis that we should 'pay for the privilege' of US citizenship, and the 'privilege' of living 'abroad' by paying US tax on top of what we pay where we actually live, are often dual citizens, and where we actually receive government goods and services - which is NOT something the US provides. The US is in favour of double taxation - proof is in the terms of its tax treaties - with the last in time rule and the savings clause.

FATCA built on top of that seriously flawed base could never be anything but an even greater monster than citizenship (and greencard) based extraterritorial taxation already is.

I am hopeful that CBT will of necessity be dragged out into the light of day because the essential conflicts between the US system and that of all the rest of the world is an inescapable part of the problems with FATCA, which any serious scrutiny by the EU and others must confront.

The systems cannot be reconciled.

Anonymous said...

And I am also convinced that since all the literature on FATCA seems to deliberately ignore that the assets, accounts and data often involve NON-US persons - joint account holders, spouses, etc. that this is another serious flaw. When has a tax system ever been built on taxing a mere marital or familial relationship which is not based on any other economic connection to the taxing authority?

Conveniently, the UK policies that banks and other FFIs are working on DO NOT address that problem.

The US is content to run roughshod over the rights of people who are US citizens and 'US taxable persons', AS WELL AS NON-US persons.

But when it comes right down to the nitty gritty, how can the EU justify or defend that position? They can state that if those EU non-US spouses and joint account holders do not wish to be subject to FATCA, they can refrain from holding joint accounts, but that is a totally unworkable proposition, and becomes an obviously absurd thing for the EU to advise its citizens as a reasonable 'remedy'for having their data subjected to a foreign = US domestic law.

It is absurd enough for the US to ignore that, but since it hasn't any concerns about even the appearance of fairness or legality, the US doesn't care if other countries allow it to abuse their citizens. In Canada, it is absurd consider the remaking our privacy and human rights laws to allow the US to subject the accounts of Canadians to a US foreign law, which abridges the rights of a NON-US person in Canada to disclosure of their account and personal information solely on the basis of some joint accounts.

Anonymous said...

Everyone must read this two part interview with comments from retired IRS Senior Counsel Yates:
http://blogs.angloinfo.com/us-tax/2013/07/22/residence-based-taxation-interview-with-bill-yates-former-attorney-office-of-associate-chief-counsel-international-irs-2/

See excerpts below:

"...Let’s talk about US tax: The RBT Proposal also talks about FATCA’s onerous compliance requirement resulting in foreign banks either refusing US customers, dropping current account holder and even causing many Americans and green cardholders to expatriate. Did you know about that?

Yates: Oh, yes. We knew. We even received a letter from a U.S. taxpayer who’s foreign bank account had been closed without an explanation from the bank. The taxpayer wanted to know why. Eventually, a response went out to the effect that we simply didn’t know why the bank closed the individual’s account. Politically, that’s all we could say.

As for expatriations, I received lots of calls from practitioner friends of mine all over the world telling me that Americans are getting out. We even heard that the wait list to make an appointment to expatriate at some U.S. consulates was over one-year long......"

Let’s talk about US tax: This may be a little premature, but what did you think about FATCA from a policy standpoint at that time?

Yates: I thought it was bad policy. We shouldn’t be pushing U.S. citizens towards expatriation. But, having said that, I was less sympathetic towards foreign banks...".....

".....What Congress has to realize is that the current citizenship-based taxation creates a serious competitive disadvantage for the United States and that if FATCA remains, CBT for Americans living and working abroad has to go. Otherwise, having a US passport overseas is simply too much of a liability to keep. Over 80% of Americans abroad are long-term overseas residents, married to foreigners, working abroad. Many have dual nationality – some even born with it. Why should they have to continue to double file, double pay when all of their governmental services come from the country where they reside?"

http://blogs.angloinfo.com/us-tax/2013/07/22/residence-based-taxation-interview-with-bill-yates-former-attorney-office-of-associate-chief-counsel-international-irs-2/

Part One of the interview is here:
http://blogs.angloinfo.com/us-tax/2013/07/01/fatca-interview-with-bill-yates-former-attorney-office-of-associate-chief-counsel-international-irs/

Victoria FERAUGE said...

That is a GREAT interview. One to spread far and wide. Really shows how some of the consequences of FATCA were seen and then dismissed.

JuliaSmith said...

This article is very well stated,thanks for sharing....Internal Audit Service Bangalore

Ex Democrate said...

It will be like Obamacare...a big mess to keep the IRS and NSA employees busy so they can pay their mortgages