FATCA: how Taiwan banks respond

Legal Taxes
1

Now that FATCA has arrived in Taiwan, I am curious how each bank in Taiwan (local or international) responds to the U.S. IRS request for information. For those of you who have been contacted by your local bank or have knowledge of how specific banks are handling FATCA please do submit.

Taipei Fubon
Method: Called to say that the bank will provide to IRS a list of their U.S. clients whose bank account exceeds NT$1,500,000 on June 30. Fubon said after June 30 list provided to IRS, next time to do this will be December 2015.
My comment: I am surprised there was no need for client to sign release form. I thought for old customers they would at least ask the client if they could release their name to IRS…if client rejected then close the account.

From other Forumosans…

Cathay United
Requested customer to sign W9 form to apply for credit card.
Result: customer declined to sign.

2

[quote=“Flakman”]Now that FATCA has arrived in Taiwan, I am curious how each bank in Taiwan (local or international) responds to the U.S. IRS request for information. For those of you who have been contacted by your local bank or have knowledge of how specific banks are handling FATCA please do submit.

Taipei Fubon
Method: Called to say that the bank will provide to IRS a list of their U.S. clients whose bank account exceeds NT$1,500,000 on June 30. Fubon said after June 30 list provided to IRS, next time to do this will be December 2015.
My comment: I am surprised there was no need for client to sign release form. I thought for old customers they would at least ask the client if they could release their name to IRS…if client rejected then close the account.[/quote]

I honestly think most banks have no idea what they are supposed to do.

And yes, I have confirmed with my banking friend on Wednesday this week, that what they care about is your bank balance on June 30! If on June 30th your balance is above US$50,000 they will report your information. If your account balance is below US$50,000 on that day they will not report you. It appears for 2014 this is how it is going to work. But it is better to keep ALL of your accounts way below the US$50,000 mark for the entire year in order to avoid any issues.

They will ask you to sign that form after July 1. I opened a new account today and I flat out refused to sign it, and they told me I will need to sign later, I shock my head, and I told them don’t worry, I will keep my account below US$50,000 and the problem was solved.

I will flat out refuse to sign any further document or W-9 for ANY of my accounts in Taiwan, and generally speaking they will not close your account if you are an existing customer. However, after July 1, you will be required to do so or they will refuse to open an account for you.

I have been saying it now for months, clean up whatever you have to BEFORE June 30, that means you have about 3 days. And today is Friday… For those not following any of these threads and who know nothing about FATCA, good luck to all of them, it is a shame that this law is a secret… if we do not all band together to fight this it will be here to stay…

These forums should light up in a few weeks/months as people start getting letters from their banks. As right now I only have time to check the tax forum, if someone posts something about this in another thread, please send me a pm and let me know so I can comment on it.

3

Well, since I surpassed the limit I will be filing form 8938 for this year.

Well, the madness has reached Taiwan.

4

Keeping accounts below $50,000 might help according to Carl Levin, but you cannot avoid paying taxes on it. That will save a bit more hassle when your FBAR and your FATCA reporting is completely different. Because each one of us will end up with this same problem due to the MAXIMUM account balance issues… 8938 seems to be $250,000 right? Provided you have stayed overseas 365 days… or is that 300 days now… I can’t remember… Too many bad tax codes to recall…

And cool, I got a cool little Shakespeare thing on my account now… hahaa

5

It’s important to keep in mind that you’re dealing with a country in which everything is illegal to one degree or another. For example, what you’re proposing is actually also a violation of U.S. tax and money laundering laws known as structuring – breaking down financial transactions/amounts specifically in order to avoid reporting requirements.

6

Indeed you are probably right. However, this method has been proposed by Carol Levin in public — blogs.angloinfo.com/us-tax/2014/ … committee/ However, I as I am not an accountant or lawyer, who knows what they will think if you do that and just because wrote it doesn’t mean anything. There is probably a strategy that could be used that would not set off alarm bells, but I am no expert, nor am I advising to avoid paying taxes.

7

I think the best one can hope for when dealing with the U.S.S.A. when it’s on the warpath is finding some legal gray area. One FATCA gray area may be that it may not be strictly illegal to keep any amount of offshore money in a safe deposit box or safe without having to report it annually. Have to be careful though because two or more people of any nationality merely agreeing to violate any U.S. law is in and of itself a felony under U. S. law - criminal conspiracy - even if nothing is acted on.

Strong arming foreign financial institutions into becoming branch offices of the International Revenue Service and running roughshod over the laws of other nations is a violation of national sovereignty the U.S. would never stand for if the tables were turned. The alienating effect of threatening foreign nationals with FATCA drone strikes will have longterm consequences for the U.S. as a financial center and clearinghouse.

8

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 US is going to have many issues over this, it is a trainwreck.

9

In Belgium some banks ask Americans and people that have some kind of residency in the US and have to file with the IRS to be so kind and look for another bank. :astonished: :ponder:

10

In Europe this is becoming a problem. I have heard many people talking about this issue, not only rejecting their business, but also closing their accounts. And I am not surprised. It is easier for them not to have American customers, so they don’t have to deal with the FATCA reporting. In Asia so far I have not heard that specifically. Only big US and other big int’l banks are doing this kind of thing in Taiwan so far. The local banks are just asking us to sign the W9 so far.

11

I thought the amount was US$10,000? Now it’s US$50,0000 (or NT$1,500,000)? Was this changed or has the amount always been US$50,000? Is there a link you can provide? I have been very careful for the last year trying to avoid exceeding US$10,000!!!

12

I would guess more Asian banks would start dropping US customers once the reality of FATCA and what it will mean to them finally sinks in. These banks will have to incur the administrative cost for data collection and reporting according to FATCA guidelines. If they fail to comply to all of the FATCA terms their US asset transactions will be subject to a 30% charge of value. I doubt many banks will be willing to risk such a large gouge on their US assets in order to keep a few US account holders. It will be easier and safer just to drop them altogether. Another possible scenario would be that foreign banks start pulling their money out of the US to avoid the risk of steep penalties. But I still think it will be easier for them to just refuse US customers.

13

I would guess more Asian banks would start dropping US customers once the reality of FATCA and what it will mean to them finally sinks in. These banks will have to incur the administrative cost for data collection and reporting according to FATCA guidelines. If they fail to comply to all of the FATCA terms their US asset transactions will be subject to a 30% charge of value. I doubt many banks will be willing to risk such a large gouge on their US assets in order to keep a few US account holders. It will be easier and safer just to drop them altogether. Another possible scenario would be that foreign banks start pulling their money out of the US to avoid the risk of steep penalties. But I still think it will be easier for them to just refuse US customers.[/quote]

You might be right. And this is one of the reasons why I opened several accounts before July 1. I am still concerned that banks may start closing our accounts. But a bank friend told me, basically right now they have no plans to do so.

I would venture to say that many local banks will start closing their US branches and pulling their investments out of the USA. And this is what is going to start causing more economic woos for the US. I believe some countries are already planning or have started doing it.

It will indeed be easier for them to just close our accounts. I guess at that point we have an excuse not to pay US taxes, we have no way to send them money! But of course the IRS won’t accept that excuse, nor will congress every admit they caused it… They all don’t give a s$$t about us.

14

Quite possible. Some foreign banks already hinted that if FATCA is ever implemented they may choose to exchange their US holdings for investment in other markets.

Things could get interesting :cactus:

15

I thought the amount was US$10,000? Now it’s US$50,0000 (or NT$1,500,000)? Was this changed or has the amount always been US$50,000? Is there a link you can provide? I have been very careful for the last year trying to avoid exceeding US$10,000!!![/quote]

The $50,000 is linked to Form 8938 for IRS. The reporting threshold amount varies depending on whether living aboard, marital status and if filing jointly/separately.

See this link on IRS site:
http://www.irs.gov/Businesses/Corporations/Summary-of-FATCA-Reporting-for-U.S.-Taxpayers

$10,000 amount is linked to Form TD F 90-22-1 (FBAR) for Treasury Dept. which is now filed online.

Taiwan banks like all banks just do what IRS requests from them. In some countries like Switzerland must do much more. A bank manager here told me that they have gone through all of the training to comply with IRS and are not sure how “deep” the IRS will dig into Taiwan accounts later.

16

I thought the amount was US$10,000? Now it’s US$50,0000 (or NT$1,500,000)? Was this changed or has the amount always been US$50,000? Is there a link you can provide? I have been very careful for the last year trying to avoid exceeding US$10,000!!![/quote]

The $50,000 is linked to Form 8938 for IRS. The reporting threshold amount varies depending on whether living aboard, marital status and if filing jointly/separately.

See this link on IRS site:
http://www.irs.gov/Businesses/Corporations/Summary-of-FATCA-Reporting-for-U.S.-Taxpayers

$10,000 amount is linked to Form TD F 90-22-1 (FBAR) for Treasury Dept. which is now filed online.

Taiwan banks like all banks just do what IRS requests from them. In some countries like Switzerland must do much more. A bank manager here told me that they have gone through all of the training to comply with IRS and are not sure how “deep” the IRS will dig into Taiwan accounts later.[/quote]

Thank you and what a freakin’ headache! I guess I was doing the right thing as far as keeping things under US$10,000 with FBAR. I’m close with the company accountant luckily, and so I can make special requests when needed (which is not often but the situation does arise when bonuses are handed out).

17

Besides banks the stock trading arms of financial institutions have signed onto FATCA. I am curious if in future U.S. citizens will have any place in Taiwan to buy/sell in Taiwan stock exchange…my guess is providing related documentation to IRS might just be too much trouble for them to want to service U.S. citizens. Well, just my guess.

18

Ha! Great question! I have opened a stock account before June 30 specifically for this reason. Not that they can’t go and close my account, and they might. I think it will be up to the share holder to translate all the documents for the IRS. The exchange is not going to provide that sort of information and they surely are not going to do so in English.

19

Seems the rules for stock trading companies is more complicated…well, that is what I gleaned from articles I read. I expect Taiwan stock brokers will just not accept U.S. clients (which seems to be the trend in other countries) or at least report a list of U.S. clients who have accounts (so IRS can see if reported or not).

20

[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.