Bank of Israel implementing FATCA rather than waiting for data exchange agreement
Last week, I reportd that the Bank of Israel was going to enter into a
data exchange agreement with the US Internal Revenue Service to spare the banks having to report information on US citizen accounts in Israel to the American authorities. Now, apparently stung by US investigations into the activities of the Swiss branches of Israeli banks, the Bank of Israel has decided to
implement FATCA immediately.
The banks must apply FATCA by mapping their US customers and having
them sign the appropriate forms. The Bank of Israel is ordering the
banks to appoint an officer responsible for the matter, establish work
procedures, and reporting processes to management. The banks will also
examine the need to sign an agreement with the US authorities and to set
procedures for handling uncooperative customers - including "the option
of refusing to provide banking services to a customer who does not
cooperate with the implementation of the provisions."
Most, if
not all, of Israel banks are ready to implement FATCA and have signed
their US customers on the forms. As a consequence, the banks have lost
quite a few customers, who decided to withdraw their money and close
their accounts. "Globes" has estimated that more than $4 billion have
been withdrawn from accounts in Israeli banks.
Last week, "Globes" reported that the Ministry of Finance
is in advanced talks with the US Department of the Treasury on an
agreement for the sharing of information on bank accounts held by
foreign residents, and that the economic social cabinet will discuss the
agreement soon.
The agreement will supersede the US government's
demand that Israeli banks will report directly to the US authorities.
Instead, the banks will send the information about US customers to the
Israel Tax Authority, which will send it to the IRS. Despite the
advanced stage of the talks, it is unclear whether an agreement will be
signed before FATCA comes into effect in July.
The Bank of Israel is
demanding that the banks prepare to implement FATCA whether or not the
agreement is signed. "A financial institution that does not cooperate
with the US authorities is liable to various sanctions, including a 30%
deduction from payments originating in the US," it says.
For the record, if you're a US citizen, you're a US customer. And that's making a lot of Americans
give up their US citizenship.
Facing an increasingly out-of-control federal government
in Washington, D.C., record numbers of Americans are giving up their
U.S. citizenship in an effort to escape onerous requirements enforced by
the IRS — which apply no matter where in the world a citizen lives.
Because the IRS requirements have already become so bad, a growing
number of banks around the world are refusing to even accept American
customers in an effort to avoid U.S. government bullying and mountains
of regulations. Following a trend in recent times, with citizenship
renunciations continuing to hit new records, some members of Congress
are slowly starting to take notice.
According to official figures and experts cited by the Wall Street Journal,
almost 2,400 people so far this year have either given up their U.S.
citizenship or turned in their green cards. That means the numbers thus
far are up by at least 33 percent over 2011, when 1,781 did so, more
than twice as many as in preceding years. In 2012, meanwhile, almost
2,000 people reportedly decided to permanently sever Uncle Sam’s grip,
and experts say the real numbers are even higher. By comparison, just
742 renounced their citizenship in 2009.
The exodus is widely expected to continue or even accelerate —
especially among the wealthy and mobile — unless and until Congress
takes action to rein in the IRS and reduce the draconian burdens imposed
on Americans abroad. The U.S. government, of course, is almost unique
in the world in that it demands that citizens pay U.S. taxes and file
massive amounts of complex paperwork no matter where on the planet they
reside and work. According to reports, the only other government in the
world to seek tribute from citizens abroad is the one ruling Eritrea.
Does the American government want us to give up our citizenship? It sure feels that way.
Labels: Bank of Israel, dual citizenship, Internal Revenue Service, Israeli banks, Israeli taxes, Swiss bank account, taxation
Uncle Sam wants YOU and the government of Israel is going to help him get you
If you're an American citizen living in Israel, the IRS wants to try to put the squeeze on you to pay for Obamacare, and
the government of Israel is going to help them.
The agreement will be an alternative to the provisions of the US
Foreign Account Tax Compliance Act (FATCA), which requires non-US
financial institutions to sign the agreement directly with the US
authorities to send them information about American customers.
As
"Globes" has reported, the new agreement will be reciprocal. "The
agreement will include an option under which, subject to certain
conditions, information will be sent from the US tax authorities to the
Israeli tax authorities about the income of Israeli residents in the
US," states the document.
The document predicts that the
agreement will boost Israel's tax revenues, because the Tax Authority
will obtain information about Israelis' financial assets in the US. It
cautions, however, that the amount of these revenues cannot be
estimated.
It seems, however, that the sharing of information between Israel and
the US is not equitable. While the Israeli authorities will
automatically send the US all information about US persons, the US
authorities will only send information to Israel in special cases.
Israel is not the first country to sign such an agreement: the US has
similar agreements with the UK, Denmark, France, Japan, and Spain, and
more countries have expressed a willingness to sign such agreements in
the future. The agreement with Israel will include provisions for
protecting the information's confidentiality and for restricting its use
by the IRS, due to privacy concerns.
If you're a US citizen living in Israel, you have a choice. You can give up your American citizenship. There's been
a lot of that since President Hussein Obama took office. But if you need to travel to the US for any reason, you may not want to give up that citizenship after all. There's recently been an
80% increase in rejections of applications from Israelis for US tourist visas.
Labels: dual citizenship, Internal Revenue Service, Israeli banks, Israeli taxes, taxation
Wow! Republicans to pass resolution calling for repeal of FATCA
The Republican party is expected to pass a resolution on Friday
calling for the repeal of the Foreign Account Tax Compliance Act (FATCA) (Hat Tip: Memeorandum).
If adopted, the anti-FATCA resolution would
reflect the party's political priorities for the time being but would
not change its presidential campaign platform, according to the RNC.
Approved
in 2010 after a tax-avoidance scandal involving a Swiss bank, FATCA
requires most foreign banks and investment funds to report to the U.S.
Internal Revenue Service information about U.S. customers' accounts
worth $50,000 or more.
Criticized
by banks, libertarians and some Americans living abroad as a costly and
unneeded government overreach, FATCA is on the books, but its effective
date has been delayed repeatedly, with enforcement now set to start on
July 1.
Repeal seems unlikely, but
more political heat from Republicans could further complicate and delay
implementation, said financial industry lobbyists.
Moreover,
Republicans are eager to use FATCA as a campaign and fundraising issue
against Democrats ahead of the congressional mid-term elections in
November, RNC members said.
"I see FATCA just like Obamacare," said Solomon
Yue, an RNC official from Oregon who is leading the party's FATCA repeal
effort. "It will attract American overseas donors."
The act, which as noted is intended to prevent Americans from hiding money in foreign bank accounts, is the bane of the existence of many Americans residing abroad. Here in Israel, for instance, if you are a US citizen, unless you live here full time, you cannot open a bank account, and if you had one, you were probably forced to close it. Moreover, if you're a dual citizen living here and open a bank account, you must now give your US social security number.
Yes, this issue resonates with Americans overseas - at least with the ones who haven't already given up their US citizenship to avoid issues like this one.
Labels: Israeli banks, money laundering, Republican party, Swiss bank account
After November 17, how will you collect fees from the US?
Are you an Israeli? Do you earn money from the US and have it wired to you? If you do, you probably receive that wire from JP Morgan Chase Bank. As of November 17, Chase says that it's
getting out of the international wire transfer business. 'To better serve our customers,' of course. You don't think all that over-regulation from the Obama administration has anything to do with it, do you?
This is the letter that we received directly from Chase. This is not secondhand information.
The letter clearly states that beginning November 17:
• All international wire transfers will be disallowed.
•
All cash activity, including cash withdrawals and deposits, will be
halted at "$50,000 per statement cycle." How are businesses who deal
with a lot of cash (such as restaurants) supposed to function under such
restrictions?
Chase Bank representatives told Natural News "everything is fine"
We called and spoke with Chase Bank to ask why these capital controls were being implemented on November 17th.
Their
response was that these changes were being implemented "to better serve
our customers." They did not explain how blocking all international
wire transfers would "better serve" their customers, however.
Chase
Bank specifically denied any knowledge of problems with cash on hand,
or government debt or any such issue. They basically downplayed the
entire issue and had no answers for why capital controls were suddenly
being put into place.
The article goes on to claim that this is the first step in a massive US government default. In effect, the article claims, Chase is admitting that your money is not safe.
Read the whole thing.
From my perspective, a large chunk of my income comes via wire transfers made through JP Morgan Chase, which is the
correspondent bank for most Israeli banks.
But Forbes says
it's not so.
JPM says that’s not what’s happening here.
First, a quick visit to the bank’s business banking website shows that international transfers are still available–you just have to pay up for them.
The bank’s basic business account, Chase Total Business Checking,
does not allow outgoing international wire transfers (it does allow them
to come in) and cash activity is indeed limited to $50,000 per month.
Cash activity means withdrawals and deposits. The account has a $10
monthly fee which is waived with a $1,500 minimum daily balance.
Need to withdraw or deposit more than $50k? You can but you’ll have to pay more in monthly fees to do so.
Upgrade to Chase’s Performance Business Checking and there’s no cash
activity limit. Plus, you get two domestic wires transfers per month at
no charge and international wires are available for an additional fee.
Of course, there’s a $20 monthly fee that’s waived if you can maintain
$50,000 balance.
Upgrade even higher to the Chase Platinum Business Checking and get
four outgoing wires per month at no charge and reduced pricing on
additional wires. Again, no cash activity limit here but the Premium
account has a whopping $95 monthly fee that is waived if deposit
balances are $100,000 or more.
But let’s get back to that basic business account. Chase says you can
still exceed the $50,000 cash activity limit but do it four times in a
rolling calendar year and you’ll get automatically upgraded to the next
level account.
So, no, there is no cash activity limit in the
Performance Business and Platinum level accounts but you’ll have to
maintain higher balances to avoid the larger monthly fees.
Sounds a lot like my Israeli bank, which just raised fees on my small business account.... But then, Israel is the only country in the world whose banks make the bulk of their income from household checking accounts.
Labels: Israeli banks, personal stuff, US economy, world economy
Moody's downgrades Israel's outlook
Moody's, the US credit rating agency, has
downgraded Israel's banking system's outlook from stable to negative.
The Moody’s report cited an expected slackening in Israel’s economic growth as well as the economic and security challenges facing the country as the reason for the negative rating. The report also said that there is a problem with the asset quality of Israeli banks due to a high concentration of domestic lending to large corporations.
“The negative outlook reflects the projected slowdown in economic growth and the country’s challenging operating environment which will continue over the 12-18 month outlook period,” Moody’s wrote in a press release.
The agency tempered its downgrade, though, saying Jerusalem had proven itself capable of weathering economic storms before.
“Moody’s acknowledges that Israel’s economy has proven resilient to repeated shocks in the past,” it wrote.
I wish the rating agencies would get on the banks here for fleecing the small consumer. This is the only country in the world where the banks make most of their money on family accounts like yours and mine.
Labels: credit ratings, Israeli banks
Best Facebook Status I've seen in a long time
The best Facebook status I've seen in a while comes from English Israeli Jonathan Cohen (Hat Tip:
Mrs. Carl).
On my way to the bank to stand in line to get the replacement for my credit card which expires this month. The replacement credit card for my London account arrives in the post. But then my London account doesn't cost me anything either. That's probably the reason.
I have to do the same thing this week....
Labels: Israeli banks
Obama turning foreign banks into enforcers of US tax code
Somehow, in all the confusion when Obamacare was passed, I managed to miss
this little gift from the US government to its citizens residing abroad.
FATCA, or the Foreign Account Tax Compliance Act, comprises sections 1471 – 1474 of the U.S. Internal Revenue Code (IRC). The code sections were passed into law in March of 2010 as part of H.R. 2847, a job creation bill known as the HIRE Act. The law attempts to ensure that U.S. persons don't move money abroad without paying any taxes owed on it to the U.S. government.
The law is an attempt by the United States government to force both U.S. persons utilizing foreign financial institutions, as well as the foreign financial institutions themselves, into enforcing U.S. tax laws. The primary mechanism to force compliance is through the use of a 30 percent withholding tax on all U.S. dollar transactions that pass through a U.S. Federal Reserve Bank and are sent to a non-compliant financial institution.
Foreign Financial Institutions (or FFIs), regardless of whether their national jurisdiction has entered into a Tax Information Exchange Agreement (TIEA) with the United States, will be forced to enter into a Private Sector Agreement with the U.S. IRS, or risk losing the U.S. and dollar-denominated markets, by becoming a “non-compliant” FFI.
Every individual bank now must determine how it plans to operate vis-à-vis U.S. persons after January 1, 2013, when the new act takes effect. Because the law requires retroactive information sharing, an individual bank must decide how it plans to operate and give notice to its clients in 2011, so they have an opportunity to close or move their accounts prior to January 1, 2012.
...
If the bank decides to continue serving U.S. clients after January 1, 2013, then it must further decide whether or not to be compliant with the provisions of FATCA.
The choice is to either provide the information required by the U.S. IRS to be compliant, and thereby waive bank privacy to those U.S. clients, or maintain bank privacy and thereby be in noncompliance with the IRS as a FFI. Noncompliance would subject the bank to a 30 percent back-up withholding tax on any funds moving to that FFI.
If the bank chooses to enter into a private agreement as a compliant FFI, it will be required to gather a wide range of information on both individual and entity accounts, to determine whether there is U.S. ownership of the account. The bank will also require that the client sign a waiver of any restrictions (such as Belize’s bank privacy laws) that would prohibit the bank from reporting to the IRS on the client and their activities.
The law also requires extra due diligence on high-value accounts over $500,000, as well as annual retesting of those accounts beginning in year three of the FFI Agreement. Additionally, each bank entering into a FFI will be asked to certify that it did not engage in any activity or have any formal or informal policies and procedures in place directing, encouraging or assisting account holders with respect to strategies for avoiding identification of their accounts as U.S. accounts.
According to the friend who told me about this, Switzerland has told the US to **** off. Israel, on the other hand, has decided to comply. Of course, Israel forced non-Israeli resident US citizens to close their accounts in all Israeli banks about a year ago, which means that the only people this will affect are American citizens residing in Israel.
I can't wait to see what the banks will charge us for their costs of complying with this legislation. Of course, the HIRE act was passed along with Obamacare and is probably meant to finance it as well.
What if we all just
give up our US citizenship? What could go wrong?
Read the whole thing.
Labels: HIRE act, Israeli banks, Obamacare
