Aug 9, 2012, 7:41 AM
Post #1 of 5
Tax to be withheld on transfers from the US overseas
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this is from International Living, an online newsletter I subscribe to.
Dear Live and Invest
"I think most Americans are going to wake up one day, not too far in the future," began international tax attorney Joel Nagel, "and be shocked to find that it has become difficult or even impossible to move money out of the United States.
"For well over 200 years," Joel continued, "the United States has stood for the free flow of ideas and capital. The very sad reality is that this is no longer the case.
"Thanks to the Foreign Account Tax Compliant Act. FATCA.
"Capital moves where it's treated best. For a long time, capital has been treated pretty well in the United States. And lots of foreign investors have taken positions as a result. Now they're taking their money and going elsewhere.
"Americans, like those of us in this room today, who are paying attention...they're moving their money, too. They...that is, we are looking for places to take our capital where it will be treated better.
"The FATCA legislation was signed into law by President Obama in March 2010 at 12:01 a.m. No Rose Garden ceremony. No signing celebration. No one realized what was going on until it was too late.
"And, still, today, 2 ½ years later, no one has taken credit for drafting Section V of the HIRE Act, where the FATCA legislation is to be found. No one knows who wrote this language, but my guess is that it was not written by any congressman. Sections of this law are too sophisticated, too smart to have been written by your typical politician. This law was drafted by someone who knows how the offshore world works.
"Playing the thing out, you realize that it is no longer going to be possible for any financial institution anywhere in the world to work with Americans in the dollar world without becoming compliant according to the new IRS requirements. Banks have three choices.
"They can refuse to comply and stop dealing in the dollar world.
"They can refuse to comply and stop working with Americans.
"Or they can comply.
"Some banks are already making their decision. Every week, more banks around the world are deciding that the way out for them is to kick out all their existing American clients and not to allow any new ones.
"However, I predict that, over the next five years, most all banks worldwide will decide to comply. I don't see any other practical outcome.
"If we could believe that this FATCA legislation were the end, well, then, ok, we could figure out how to navigate the new global fiscal landscape...and move on with our lives.
"But I don't think there's any reason to think this is the end. I believe this is the start. The start of capital and exchange controls in the United States that are going to have an enormously negative effect on that country's future..."
Joel was followed by another tax expert, Mark Nestmann, who took the podium, faced the audience, and explained, simply:
"The United States is waging an offshore tax vendetta.
"You think you're compliant in your reporting to the IRS? Wait two months. Chances are, if you are compliant now, you won't be then.
"I believe this is intentional. The IRS is working consciously to create fear among Americans, to scare them into thinking that offshore activities are wrong...bad...illegal.
"I'm here, along with all my fellow speakers and presenters over these three days, to assure you that they are not.
"Investing offshore, banking offshore, incorporating a business offshore...these things are all completely legal.
"All these things, though, now come with ever-expanding reporting requirements. I can imagine straightforward offshore structures that require six, seven, eight annual filings to the IRS. This is the price we Americans must now pay for the 'privilege' of investing offshore.
"It's hard to believe that this is anything but by design.
"Take out some Kleenex," Mark continued, "and I'll walk you through what you need to know to be compliant today.
"If you're an American, you want to be moving what you've got offshore. But you want to do it in full compliance with IRS code...as follows..."
(This was from International Living)