Sun | Jul 25, 2021

The fate of the USA's FATCA law

Published:Thursday | July 17, 2014 | 12:00 AM

Ramesh Sujanani, Guest Columnist

The fate of 'FATCA' now hangs in the balance. Arranged to be a January 2014 regulation, it is now a July-planned regulation, ostensibly to give the FFIs (Foreign Financial Institutions) time to get their house in order and then register and be accepted. Internal Revenue Service Notice 2013-14 authorises the decision, and that is supported by the US Treasury Department, administered by Treasury Deputy Robert B. Stack.

The reason given for the delay is that the FFIs are overwhelmed by closures of accounts by consumers and customers all over the world. Apparently, FATCA is a law that everyone seems to dislike, and most need the time to be compliant (ref: Forbes magazine, December 2013, and January 2014). In and out of the USA, banks and other FFIs must report account numbers, balances, names and addresses, US tax identification numbers and Jamaican, of course, of any and every substantive owner with a US status, bank account, and other US income sources.

At the very outset, when this law was being introduced, I was of the impression it was further control of the bandits that operate in our region, with drugs, guns and ammunition, and human traffic, and I calculated that all that was required of a Jamaican FFI was a complete and accurate source of funds of any client; but that is only a mask. What is more important to the US government, and by collaboration within foreign governments, who would have equity in the various incomes, is the matter of taxes, or rather tax evasion in the USA; and then, by association, tax evasion in Jamaica or any country.

deplorable, dishonest

What is deplorable and dishonest is that the presentation made to business people like myself four years ago was that this was a major criminal search. In part perhaps, but basically intended for one having any type of asset - money, property, whether personal or belonging to a spouse - not declared but still taxable to make it worthwhile for the US government to extract more. (Spouses no longer should make decisions to have joint accounts for fear of being incorporated into a wider issue.)

It appears now that the IRS has made dual taxation agreements called IGAs (intergovernmental agreements) and will swap information about Jamaicans and Americans, and has made this pact with 50 other countries, still pursuing the matter with 80 others. IGAs are the preferred instrument with larger countries, for instance the G8 countries. Yet, I do not understand how they can circumvent the laws of Jamaica and pass an act that defies the constitution of this or any country.

If a business does not approve the changes, nor complies with instructions by declaring and accepting the terms of FATCA, then 30 per cent of outstanding funds and assessments will be held in lieu of any declaration; another frightening thought. We are now liable to pay for someone else's tax evasion.

Finally, anyone who contradicts this rule can be charged as a voice for tax evasion. Many Americans cannot open new accounts, for failure to close old ones. Americans and expatriates face an impossible situation, as their mortgages are being called or denied. To the extent that an expatriate faces an obligation to IRS, the efforts of his local employer may come under scrutiny.

economic totalitarianism

So it now seems we have a form of economic totalitarianism!

Today's business news also indicates the Financial Services Commission are now able, like the RPD, the FID, the Bank of Jamaica, to have improved their position to 'police' the business public for funds, precious metals, documents and titles of cars, land and buildings wherever they might be situated. But all of this without DUE PROCESS; for the report clearly says "compel companies to turn over records, enter premises, issue cease and desist orders, bar attorneys, auditors, accountants, from participating in ongoing investigations."

Perhaps we should now ask the emerging conglomerate (FATCA, et al) whether they will invest in private sector companies with their various billions.

(Ref: Computer Governance Services 20/02/2014; Jamaica Gleaner February 2014)