FATCA: how Taiwan banks respond

Legal Taxes
21

[quote=“Cardinal”][quote=“JeffG”]Well, the article provides some legal gray area, but… for those with lots and lots of money they are not going to have much choice, so hopefully they are compliant.

The Taiwan banks may have their own reporting thresholds but remember than the US taxpayer threshold is “total foreign assets”, so opening multiple bank accounts (or a bank account in multiple countries) does not change the taxpayers obligation to add all those accounts together and report any amount over US$10,000 on FinCen form 114 (replaces form 90.22-1). Stock, bond, mutual fund investment accounts held overseas also are a part of that asset pool.
Also crazy is you must report if you have an interest in an account. So if you are named on your rich father-in-law’s foreign account (even if you are a poor guy teaching in Taiwan and have NT$6,017 in your account, better get some advice on how to file.

The form is confusing because it is not a paper form. Electronic only. So it only shows space to put it one financial account. If you have multiple accounts you must click on the + sign and add another financial institution. You must be careful to insert the info in the correct section:
Part II is for Financial Accounts owned separately
Part III is for Financial accounts owned Jointly
Part IV is for those accounts that you have some type of authority over but not financial interest in
Part V is for Consolidated Reports

The legal loopholes…. are foreign real estate and precious metals. If a US taxpayer owns foreign real estate or an overseas safe deposit box stuffed with gold, silver and/or platinum these holdings need not be reported.

This is heavy stuff. Penalties are $100,000 or 50% of account balance per year! So failure to file the form for 2 years and the IRS can confiscate the whole account. If the ‘oversight’ was tax avoidance, you can add a potential 10 year stay in Federal prison.[/quote][/quote]

Oh, I am quite familiar with how all this works, but now with FATCA, there are going to be more issues because what is reported on FBAR and what is reported by the banks will totally not match up, it’s a total CF. One is 10,000 and the other is 50,000, and yet another form for 250,000, it makes absolutely no sense. Leave it to the US government to complicate an already complicated tax code. I am hoping this forum will start opening other’s eyes though as there are so many still not aware of FBAR requirements, nor about FATCA. Until they go to open a new account perhaps.

And yes, stock,mutual funds, insurance savings, etc etc etc all have to be reported on FBARs. And yeah if you have signature authority or are named on an account, yep you have to report that also. and they could tax that account and penalize you if you don’t. It’s insane!

To be fair the electronic version of FBAR is a little more easy to understand than the paper form, but it is still confusing nevertheless. The instructions are also a disaster. Here’s a great article, and a way to send your nasty thoughts about FBAR right to the US government. thefranco-americanflophouse.blog … ments.html

As for your comments on precious metals, my response is “not yet” But in the future, beware. Bitcoin so far is off the books too, but I suspect it won’t be long until the IRS has its hands in that also.

Here are the breakdown of penalties. This is a link to ACA’s letter to congress last year address the tax issues, on the bottom you will find the list of penalties. americansabroad.org/files/7513/7 … 3_copy.pdf

22

Yes, seems real estate is excluded except when held by a financial entity for you. Well, I guess the IRS is just going to trust you to pay the tax when you sell the real estate. That is mighty nice of them…so trusting they are of us expats. :raspberry:

23

“totally not match up”

That is true, but the IRS is not looking for FATCA/FBAR identical matches like they do for W-2s or 1099s.
You report US$8000 in MegaBank. And the IRS receives no foreign bank info. No flag.
You report US$8000 in MegaBank and US$60000 in Fubon Bank. IRS receives only 1 bank notice of ~$60000 in Fubon. No flag.
You report US$8000 in MegaBank. IRS receives a bank notice of US$60000 in Fubon Bank. Red Flag
You make no report. IRS receives a bank notice from ChinaTrust of US$780,000. Big Red Flag!

24

Well, yes, but we don’t know how exactly this is all going to play out. Because if you report $55,000 in Fubon on FBAR, but Fubon bank doesn’t report it, what will the IRS do? This is only one example of the CF that will unfold shortly.

The lucky thing is that for this year they only cared about the balance of your accounts on June 30. If the balance was under 50,000 they will not report. I have no idea what next year will be like though…

What is more troubling is that those who do not report FBARs but do have an account over 50,000, there will be a red flag and potentially huge penalties and criminal prosecution for simply not knowing they had to file the FBAR… A total trainwreck and CF…

25

“criminal prosecution for simply not knowing they had to file the FBAR”

I agree. The saying used to be “ignorance of the law is no excuse”, but I think we have reached a point of information saturation where maybe a person should be given some slack for not being aware of 10000 new laws and the million pages of legalize.
Where politicians admit that they sign 1000 page laws that they have never even read. It is getting impossible to intimately know your own profession,
pay your taxes properly, buy a house, work on your car, know the latest in child rearing, and still remember to take out the garbage. Information overload.

26

I got a pissed off earlier this year when I asked FBAR help center about FBAR double counting my funds. By that I mean, I had 2,000,000 in my “A” bank account. However, later to get more interest I simply moved to another account “B” at same bank (uses different account number). From FBAR perspective I must report the 2,000,000 twice as is two separate/different accounts. The lady answering me recognizes this is double reporting of same funds but they don’t care. If that is the case, appears I have 4,000,000 in one bank…

Well, I think the IRS now recognizes that they are causing us a lot of trouble so they started the new amnesty plan. However, this is all too much. They should issue 100% amnesty for all overseas taxpayers holding less than $5M in funds. Then implement simple rules starting in 2015.

27

I was asked to sign a W9 at Cathay United for a credit card application.

28

Bananas…thank you for the info. I am expecting FATCA to affect many of us in different ways…so I am curious to hear what aspects of FATCA Americans bump into in Taiwan.

I am really surprised to hear their request of you. That is absolutely ridiculous. This sounds like the IRS wants to track any financial related activity. I can only hope Cathay United simply did not understand what they need to request and report…or is it they are just taking the conservative approach and asking all Americans to fill in the form? Well, can’t blame them.

29

I asked Bananas to post here as he posted in one of my other threads. In order to keep a list of everything going on, I told him to post here also.

Cathay Bank just simply doesn’t want any trouble, so they are insuring that in the future they won’t have any problems. Credit cards are not for saving money, perhaps they think that is what we will do… As far as I know credit card transactions are not tracked by anyone but the bank.

I am quite sure Cathay knows exactly why they are doing it as they are a financial holding company, and the largest of such in Taiwan. Something that many people do not know. I suspect many banks here will be following whatever they decide to do, which is not a good thing.

30

JeffG…thanks. I will add new events to my initial post in this thread.

31

China Trust bank called me and asked me to fill out a W-9 form for FATCA related compliance on their part. I am going to provide to them.

I chatted a long time with the bank manager. He said the bank is trying to track down all Americans with accounts…but seems some accounts they are not sure if are Americans. They are calling those they suspect might be American.

We talked about all of the Taiwanese with dual citizenship. He said the IRS is trying to do as much “mapping/matching” of data as possible to find the Taiwanese with U.S. citizenship/green cards.

I suspect the IRS will eventually start asking overseas banks to withhold taxes from any interest or other payments. I think they will put in rule that all overseas U.S. residents must have withholding taxes deducted from income and provided to IRS directly. If so, you will see a dramatic decline in job opportunities for Americans overseas.

32

Why are you going to provide the W-9 to them? Are they going to close your account without providing it to them? You are under no obligation to do so. So far I have not bee contacted by anyone, but I will refuse to do it. From my understanding the banks will not close your account, if they do threaten, then at that time you may need to do it.

So far the IRS has no authority to ask banks to withhold taxes and interest in foreign countries. But it may not be long before they do. It is a severe overstep in power. And indeed you are right, job opportunities for Americans abroad will decrease, but not to fear, ALL countries will have less opportunities for all non-citizens of countries in the future due to the OECDs GATCA which will be taking effect within the next few years.

33

I am going to provide W-9 as at least to IRS seems I am trying to cooperate. Bank manager told me they must report reason why customer refused to provide W-9. This all gets very messy soon. Before I have reported this new China Trust acccount on FBAR (for 2014 reporting) ChinaTrust will probably send their data to IRS. Will IRS note that this is a new account which does not need to be reported until 2015?

The IRS is already overstepping their authority in several areas. If they can get specific companies to withhold taxes why not asl banks to do so?

34

The bank manager might be incorrect, or just telling you a fib to get you to sign that W9. I am not aware that the IRS will be asking such details. My information tells me that if people do not sign the W9 IF the IRS comes back and wants to know more information on an account, then they will ask. In addition if there are a bunch of people who are over the 50,000 limit who did not sign the W9, the bank will simple lump all the money together and send the information to the IRS, if the IRS wants to know more, then they will ask the bank, and of course even without your permission the bank will still send the information to them. Banks in Taiwan have already collected what they needed to collect for all of 2014 on June 30 or July 1. they will not check balances again until next year at least this is what I have been told.

I am not following your question on the FBAR issue, can you elaborate? I have no idea if they will note it is a new account or not. I opened several new accounts in 2014 as I was worried some accounts might be closed due to FATCA. So far that has not happened, but it still might.

Companies and banks work differently. If banks start doing this, I think there will be an uproar. But IRS seems to think it has authority to do whatever it wants, so who knows.

35

To me the W9 is a duplication of the same information I am providing on other forms. My main concern is providing my social security number to the bank. This is a risk.

As for FBAR, my concern is the timing of documents arriving at IRS. Perhaps China Trust informs IRS of my bank account before I do in 2015. Well, all of this is a mess.

On top of this my accountant informed me of the “self-employment tax” I have to pay now that I am working freelance. Never heard of it as never was in this position before. Well, add another form to my already lengthy tax forms…

36

[quote=“Flakman”]To me the W9 is a duplication of the same information I am providing on other forms. My main concern is providing my social security number to the bank. This is a risk.

As for FBAR, my concern is the timing of documents arriving at IRS. Perhaps China Trust informs IRS of my bank account before I do in 2015. Well, all of this is a mess.

On top of this my accountant informed me of the “self-employment tax” I have to pay now that I am working freelance. Never heard of it as never was in this position before. Well, add another form to my already lengthy tax forms…[/quote]

I think it’s not going to matter, because what you write on FBAR and what the banks are reporting are still going to be different no matter if you sign that W9 or not. And the reason is because the FBAR is 10,000 aggregate and highest amounts in accounts whereas FATCA the banks need to report over $50,000, so the CF will begin soon as the IRS cannot make heads or tails of the data they are getting from both citizens and foreign banks. As for timing, it appears this isn’t going to matter, because it’s still going to be a total CF.

I’ve been doing the Self-employment tax stuff for years, it’s a straight 15%, and if the money is earned in Taiwan it still counts as foreign earned income, but you still have to pay the self-employment tax on it. I am not an accountant, I am just telling you what my accountants have been doing. It seems to be correct.

My tax return is now 18 pages, not including the other 12 pages of general information I get in a PDF file from my accountant, and I don’t even earn that much money.

37

In Belgium some banks just tell you to look for another bank if you are an American citizen, have a green card, have double nationality … no discussion, thanks for your business in the past but now please just go.

38

In Europe yes, many banks are indeed telling Americans clients just that.

39

My tax form is now 32 pages. Add FBAR and others on top of that…

I haven’t paid social security taxes in the last 25 years…so when I was hit with this self-employment tax I was surprised and unhappy. I doubt if I will ever receive any social security benefits from the taxes I start paying in.

40

Well yeah, not including FBAR, mine is quite long also, but yours seems more, depends on your work, how you invest your money, etc. But I am finding it getting longer and longer every year, it’s insane. The self-employment tax has been around for a long while, but your accountants before may not have known about, no surprise there, as most of them have no idea how to do our taxes, or they think they do, but … if RBT is passed it may help these sorts of things, but, i don’t see that happening.