To you money managers out there...

[DeE]

I'm on a Government pension for the rest of my life---have been for the last ten years. Now I read this article and suddenly I am not singing "Happy Days Are Here Again"

Can someone explain what this article is saying/suggesting?

"The Foreign Account Tax Compliance Act, or Fatca, is forcing millions of Americans living abroad to reconsider their U.S. citizenship, a lawyer, Colleen Graffy, writes in the Wall Street Journal.

"The legislation is Fatca, the Foreign Account Tax Compliance Act. To appreciate its breathtaking scope along with America's unique "citizen-based" tax practices, imagine this: You were born in California, moved to New York for education or work, fell in love, married and had children. Even though you have faithfully paid taxes in New York and haven't lived in California for 25 years, suppose California law required that you also file your taxes there because you were born there."

Continues... http://www.weeklystandard.com/blogs/due ... 39896.html

[Bob]

Much ado about nothing. The act mainly relates to what financial institutions have to report and has little to do with individuals.

If and only if you have foreign accounts totalling $10,000 or more at any one time of the year, you need to file a form with the US Treasury by the end of June of the following year. And, if you have foreign accounts totalling $60,000.00 or more at any one time of the year, you need to file another form with your US tax return. Both forms are easy to fill out. And, besides that, you have to do nothing (other than file your US and state income tax returns annually if you're required to do so).

Those renouncing their US citizenship simply don't want to pay taxes on their income stashed/earned overseas. But, US citizen or not, if you make income in the US (like a pension), you're obligated to file returns and pay whatever's due.

[shamahan]

Much ado about nothing..

Khun Bob is terribly wrong on that one. Not only his numbers are wrong but he simply does not understand Fatca. The reason why many expats do not feel the full draconian nature and total idiocy of this law is quite simple. Obama administration keep postponing implementation of this law and so far only one small part was implemented,namely new foreign assets form. The other parts of the law are so crazy that it is not really clear how to implement it. To give you some idea see:
http://thehill.com/blogs/congress-blog/ ... ibly-wrong
for example. By the way, notice that some very respected Thais (the most respected one is mentioned in the cited article) are "US persons" as it is defined in this law and hence, technically speaking needs to comply ( I wonder how in this case).

[Gaybutton]

I'm a believer in "Don't worry until you have something to worry about." I'm not worried about this at all. So far, Thai banks do comply with US regulations. Those who receive pensions from a US government source, and I'm one of them, via direct deposit into a Thai bank are probably well aware that up to a few years ago the money was deposited into your account and that was that.

Then, a few years ago, all of a sudden it didn't work that way anymore. Now the deposit has to go into a receive-only account and you can't touch it until you personally go to the bank and either withdraw the money or transfer it into a second "regular" account. That's inconvenient, but not exactly a major problem. It was Bangkok Bank that contacted me and told me about this and gave me three months to open the receive-only account. I didn't know about it until I was contacted by the bank. In other words, the US came up with that requirement and Bangkok Bank, at least, complied. I have no reason to believe they won't continue to comply with US regulations. It might be expensive for them to comply, but that's nothing compared to how expensive it would be for them if they have to deal with sanctions. Also, I don't see any reports of Thai banks raising a fuss over this. I'll do my worrying if and when something happens to prevent me from being able to receive my money.

And some are saying it will force Americans to renounce their citizenship. Suppose you do that. Now you'll become a citizen of where? You'll have a valid passport from where? It's close to impossible to become a citizen of Thailand. Even if you could, as far as IRS is concerned you're still a citizen of the USA as long as you live. Under US law, no one can touch your retirement pension for any reason - except IRS. I fail to see what good it would do to renounce your US citizenship.

[Bob]

Much ado about nothing..

simply does not understand Fatca.

Actually, I do (and have read a good chunk of it). As usual, your "sky is falling" prediction isn't true now and won't ever come true. FATCA requires foreign banks (and some other institutions) to file reports with the US (IRS/Treasury) about US citizens and has only been implemented by agreements (called intergovernmental agreements or IGA's) between the US and a given foreign country. Only a handful of countries have signed on to the deal as yet - and THAILAND IS NOT ONE OF THEM.

As noted, for any US citizen who has bank accounts or whatever in Thailand, much ado about nothing. Doesn't require you personally to do anything and, unless and until Thailand agrees to and signs an intergovernmental agreement with the US, doesn't compel any Thai financial institution to do anything. If/when Thailand and the US do make an agreement about this, all it will ultimately mean is that Thai financial institutions will annually file "1099-type" documents with the IRS regarding US citizens. No big deal at all (except, perhaps, for US citizens who are hiding funds in Thailand or not reporting income/interest on their US tax returns).

[shamahan]

Much ado about nothing..

simply does not understand Fatca.

Actually, I do (and have read a good chunk of it).

Well, and you are saying that you read the law. What you are suggesting is simply factually wrong. If Thai government will not enter the agreement, it will not
take Thai banks of the hook. There is a deadline by which any foreign financial institution should enter the agreement with IRS. Currently, July 2014. This deadline keeps changing but it still exists. Thus, if Thai government does not enter the agreement by the deadline, any Thai bank which will not enter the individual agreement will be deemed non-compliant. For you, personally, the obvious ramification will be: try to transfer funds to such a bank from US and 30 percent of your transfer will be withheld to IRS. There are rather ramifications too. But even if Thai government will sign such an agreement , it does not mean that Thai bank will not close your bank account with them. The thing is you do not understand the law. At least, do not try to pretend that you do: you are confusing people. I want to emphasize that it is not just conservatives recognize that the law is total idiocy. There have been numerous articles , including in Bloomberg and NT by liberal authors indicating this.

[shamahan]

And some are saying it will force Americans to renounce their citizenship. Suppose you do that. Now you'll become a citizen of where? You'll have a valid passport from where? It's close to impossible to become a citizen of Thailand. Even if you could, as far as IRS is concerned you're still a citizen of the USA as long as you live. Under US law, no one can touch your retirement pension for any reason - except IRS. I fail to see what good it would do to renounce your US citizenship.

GB, the law does not force anybody to renounce citizenship. Even in the worst case scenario, if it will be impossible for US citizen to have an account in Thailand
or one needs to pay withholding tax on money transfers, there will be an option to use US ATM card to withdraw money in Thailand. However, people who need to invest, take mortgage in offshore banks may have a problem (and many already have). Say, if you wish to buy a condo in Thailand obviously you need to make a transfer of funds etc (currently,of course, it is not problem). People who renounce citizenship, already have a second passport. There is a special exit procedure after which one should no longer pay US taxes (but if one is wealthy while renouncing citizenship, one should pay a hefty one time exit tax).

[Gaybutton]

GB, the law does not force anybody to renounce citizenship.

I didn't say the law did. I was referring to the line in the OP that says, ""The Foreign Account Tax Compliance Act, or Fatca, is forcing millions of Americans living abroad to reconsider their U.S. citizenship, a lawyer, Colleen Graffy, writes in the Wall Street Journal."

There is a deadline by which any foreign financial institution should enter the agreement with IRS. Currently, July 2014.

In that case, I'd say to wait until July 2014 before hitting the panic button. Thailand has agreed to all the US requests and demands so far. At this point I don't see any reason to think Thailand will refuse.

There is a special exit procedure after which one should no longer pay US taxes

Good luck with that one. That isn't my understanding of the way it works. If anyone is going to actually renounce their US citizenship, I suggest consulting a tax attorney first.