Stupid New Washington Law Blocks Americans From Opening Bank Accounts Abroad
Here's a fun new Obama-era law you may not have heard about: It's called FATCA (get it???), or the Foreign Account Tax Compliance Act. The New York Times has a story out about the wonderful things Uncle Sam is demanding of the rest of the world, in the name of scrounging maybe an extra $800 million a year for the I.R.S.:
The law demands that virtually every financial firm outside the United States and any foreign company in which Americans are beneficial owners must register with the Internal Revenue Service, check existing accounts in search of Americans and annually declare their compliance.
Noncompliance would be punished with a withholding charge of up to 30 percent on any income and capital payments the company gets from the United States. Under the law, for example, if Deutsche Bank, having agreed to register with the United States authorities in compliance with the law, were to transfer $25 million to a noncompliant Polish bank, Deutsche Bank would be required to withhold part of that sum, transferring it to the I.R.S. The Polish recipient would then have the option of challenging that withholding by filing an American tax return, claiming the money, despite not being an American citizen. […]
"They're trying to force every financial institution in the world to sign onto this regime," said Denise Hintzke, who heads the global tax compliance initiative at Deloitte in New York.
Well, that's OK, right? I mean who cares about stupid foreigners! Whoops….
[B]eginning in 2012, many American expatriates — already the only developed-nation citizens subject to double taxation from their home government — must furnish the I.R.S. with detailed personal information on their overseas assets. […]
"The Fatca legislation treats all Americans with overseas bank accounts as criminals, even though most of them are honest, hard-working individuals who happen to be living and working or retired abroad," said Jacqueline Bugnion, a director of American Citizens Abroad.
The article doesn't really get into it, but one totally predictable consequence of this has already been that banks in foreign countries–particularly the ones that, unlike China, actually give a rip about maintaining good relations with U.S. regulatory authorities–are just stone cold not allowing Americans to open up bank accounts. This was told to me by numerous Swiss bankers I talked to last month during a week-long junket to Switzerland paid for by the American Swiss Foundation, a nonprofit that boosts relationships between the two countries while not (they organizers say) taking money from their respective governments. Grain of salt, etc., but it's all a timely reminder that no amount of your tax money is too trivial for the I.R.S. to hunt down, and no amount of total international outrage at our idiotic ideas is enough to derail a shameleslly populist and outrageously expensive law.
