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Be wary of your investments -- the TAXMAN is watching

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  • Originally posted by chainbolt View Post
    It's not the NTA that becomes active. What I wanted to say is that the tax authority in our home country would probably not waste its time to report some minor interest payments or capital gains.
    Right and where we differ is in what we consider "minor" but I really don`t care. I`m confident if there was anything particularly worrisome to US citizens living abroad it would have been reported here:
    http://www.aca.ch/joomla/index.php?o...tpage&Itemid=1

    I`m much more concerned with potential changes to the US Foreign Exclusion Act.
    Last edited by Ken44; 2012-05-29, 11:00 PM.

    Comment


    • Note that automatic information exchange programs are being set up, for automatic reporting of bank interest between governments. The IRS is trying to get US banks to report automatically on non-resident account holders to them, so that they can exchange this info with other governments for similar information from them. It may not be happening yet, but may happen quite soon.

      Just a thought.

      Comment


      • Originally posted by jtij View Post
        ....It may not be happening yet, but may happen quite soon.
        When NTA starts requesting that US citizens filing in Japan include a US Social Security number you`ll know the IRS is closely watching. To stay up-to-date with US tax laws pertaining to Americans living aboard you should bookmark this site:
        http://www.aca.ch/joomla/index.php?o...tpage&Itemid=1

        Comment


        • Well, we kind of already know the IRS is closely watching because they ask you to report your foreign bank accounts, account numbers, and maximum balances (along with your SSN) in the TDF-90-22.1 (FBAR) form. So if you have to fill out one of those hateful forms, you've already given the IRS much of the relevant information pertaining to you and your accounts.

          Note the qualifier "if" up there. If you don't fill out one of these forms its arguably, slightly, more difficult for the IRS to collect the info they want.

          Comment


          • Originally posted by Ken44 View Post
            When NTA starts requesting that US citizens filing in Japan include a US Social Security number you`ll know the IRS is closely watching. To stay up-to-date with US tax laws pertaining to Americans living aboard you should bookmark this site:
            http://www.aca.ch/joomla/index.php?o...tpage&Itemid=1
            Yes, I know about ACA. If you have been following them, you know about FATCA (note, Majestic, there is not just FBAR now, but also potentially Form 8938 to file). Check out the following little story:

            2012”N4ŒŽ20“ú†1–ʁ@FATCAAV˜g g‚Ý‚ÅŒˆ’…•ûŒü‚Ö

            “ú•Ä­•{‚ªÜÕA‹à—Z‹@Š ‚Ì•‰’S‘啝ŒyŒ¸

            “ú•Ä—¼‘‚̐­•{ŠÔÜÕ‚Å A•Ä‘‚ÌŠO‘ŒûÀÅ–±ƒRƒ ƒvƒ‰ƒCƒAƒ“ƒX–@iFATCAj‚Ì“± ü‚É”º‚¤“ú–{‚Ì‹à—Z‹@ŠÖ Ì
            •‰’S‚ª‘啝‚ÉŒyŒ¸‚³‚ê‚ éŒ©’Ê‚µ‚Æ‚È‚Á‚Ä‚«‚½B ˆ’…”ZŒú‚ȐV‚µ‚¢˜g‘g‚Ý‚ ́AØŒ”E•ÛŒ¯E“ŠMˆÏ‘õ‰ ŽÐ‚È‚Ç‚àŠÜ
            ‚ށh‘S‹à—Z‹@ŠÖŽQ‰Áh‚ð‘O ñ‚ɁAŽQ‰Á‹@ŠÖ‚ð•Ä“à‘ Γü’¡iIRSj‚Ƃ̌•ʌ_–ñ ª•s—v‚ȁu‚Ý‚È‚µ‡ŽçFFIi O‘‹à
            —Z‹@ŠÖjv‚Æ‚µAIRS‚Ö‚Ì•Ä ‘lŒûÀ‚Ì’¼Úî•ñ’ñ‹Ÿ ðŒ¸‚ç‚·B
            Source: http://www.nikkin.co.jp/articles/show/1204190000237562

            No details are given, but this look similar to deals being worked out with some European countries for banks to report on non-resident account holders to their local governments, with governments then automatically exchanging data with each other. This saves non-US banks from having to report to the IRS directly. Of course, as reciprocity, the US is offering to do the same in reverse.

            Anyway, expect changes soon.

            Comment


            • If you are a taxpayer living abroad you must file if:
              • You are filing a return other than a joint return and the total value of your specified foreign assets is more than $200,000 on the last day of the tax year or more than $300,000 at any time during the year; or
              • You are filing a joint return and the value of your specified foreign asset is more than $400,000 on the last day of the tax year or more than $600,000 at any time during the year.



              http://www.irs.gov/businesses/corpor...251217,00.html

              Comment


              • Originally posted by Majestic View Post
                Well, we kind of already know the IRS is closely watching because they ask you to report your foreign bank accounts, account numbers, and maximum balances (along with your SSN) in the TDF-90-22.1 (FBAR) form. So if you have to fill out one of those hateful forms, you've already given the IRS much of the relevant information pertaining to you and your accounts.
                Originally posted by jtij View Post
                Yes, I know about ACA. If you have been following them, you know about FATCA (note, Majestic, there is not just FBAR now, but also potentially Form 8938 to file).

                I was thinking more about wages earned in Japan and should the IRS elect to verify overseas income in a similar manner as it does within the US.

                If so, they (NTA) would need my SS# to provide a smooth transfer of information


                About the banks:

                1. Maybe 5-6 years ago I was required to submit my SS# to my Citibank branch in Tokyo which I did. However, given that I transfer funds back to the States almost every month I`ve never earned much more than $2-3 a year in interest. (I supply the information to my accountant but I think interest earned under $10 does not need to be reported.)

                2. Back in the late 1990`s until around 2003 I had well over $10,000 in a J-bank. These funds were reported yearly to the IRS and thus when the time came for me convert the yen into US$ and transfer (some $225,000) to my U.S. bank there were no flags raised. None of the up-dated US banking laws pertain much to me given that I keep almost no money outside the U.S.

                My main concerns are potential changes to the foreign exclusion requirements and if NTA were to suddenly to require that US citizens supply their SS# when filing here in Japan.
                Last edited by Ken44; 2012-06-02, 05:19 PM.

                Comment


                • Originally posted by Ken44 View Post
                  I was thinking more about wages earned in Japan and should the IRS elect to verify overseas income in a similar manner as it does within the US.

                  If so, they (NTA) would need my SS# to provide a smooth transfer of information
                  They might, or they might not. The NTA knows your passport number (or can find out via your alien registration, I assume), and the US passport office knows your SS #, so...

                  In any case, I think the IRS efforts are currently focused on non-US bank accounts, not foreign earned income. At least, that is what recent legislation is all aimed at. Eventually, your Japanese bank (if you have one other than Citi) will ask for your SS#, I believe, even if NTA doesn't directly.

                  About the banks:

                  1. Maybe 5-6 years ago I was required to submit my SS# to my Citibank branch in Tokyo which I did. However, given that I transfer funds back to the States almost every month I`ve never earned much more than $2-3 a year in interest. (I supply the information to my accountant but I think interest earned under $10 does not need to be reported.)

                  2. Back in the late 1990`s until around 2003 I had well over $10,000 in a J-bank. These funds were reported yearly to the IRS and thus when the time came for me convert the yen into US$ and transfer (some $225,000) to my U.S. bank there were no flags raised. None of the up-dated US banking laws pertain much to me given that I keep almost no money outside the U.S.

                  My main concerns are potential changes to the foreign exclusion requirements and if NTA were to suddenly to require that US citizens supply their SS# when filing here in Japan.
                  I thought the concern was about the NTA learning about non-Japanese bank accounts, not the IRS learning about non-US ones (at least in the context of this thread). My only point was that it looks like there are automatic information-sharing agreements being set up now between the US and Japan to transfer such information both ways automatically. I.e., the NTA would get sent something like a 1099 for your US accounts. (And the IRS one for your Japanese accounts.)

                  I agree that being asked for your SS# by the NTA or your Japanese bank would be a sure sign of information-sharing activity. But, I'm not certain that would be necessary for information-sharing to proceed.

                  I also agree that the status of the Foreign Earned Income Exclusion is the real issue to worry about! (I declare all accounts, so don't care about that issue as long as my bank doesn't shut me out for being a paperwork hassle.)

                  Comment


                  • Originally posted by jtij View Post
                    ... My only point was that it looks like there are automatic information-sharing agreements being set up now between the US and Japan to transfer such information both ways automatically. I.e., the NTA would get sent something like a 1099 for your US accounts. (And the IRS one for your Japanese accounts.)

                    Please post a link to info. which suggest the IRS may in the future share something like a 1099 with foreign tax authorities as a matter of course.

                    Comment


                    • [QUOTE=jtij;1253138]...
                      I agree that being asked for your SS# by the NTA or your Japanese bank would be a sure sign of information-sharing activity. But, I'm not certain that would be necessary for information-sharing to proceed.]

                      They (NTA) would need the SS# if information-sharing was something on-going (not unlike Citibank requiring the SS#.) It`s ridiculous to think NTA and the IRS would do so on a regular basis without a SS#.

                      Comment


                      • Originally posted by Ken44 View Post
                        Please post a link to info. which suggest the IRS may in the future share something like a 1099 with foreign tax authorities as a matter of course.
                        http://taxjustice.blogspot.jp/2012/0...automatic.html
                        "FATCA: progress towards automatic information exchange"

                        The modus operandi of FATCA was changed substantially by a Joint Statement on February 8, 2012 by the Government of the United States, and five foreign governments (gFATCA Partnersh): France, Germany, Italy, Spain and the United Kingdom. The Joint Statement said:

                        gFATCA, however, has raised a number of issues, including that FFIs established in these countries may not be able to comply with the reporting withholding and account closure requirements because of legal restrictions. An intergovernmental approach to FATCA implementation would address these legal impediments to compliance, simplify practical implementation, and reduce FFI costs. Because the policy objective of FATCA is to achieve reporting not to collect withholding tax, the United States is open to adopting an intergovernmental approach to implement FATCA and improve international tax compliance.

                        In this regard the United States is willing to reciprocate in collecting and exchanging on an automatic basis information on accounts held in US financial institutions by residents of France, Germany, Italy, Spain and the United Kingdom. [...]
                        ...for example. Automatic information sharing between countries is also a future goal of the people who drafted the FATCA legislation, according to a paper written by one of them:

                        http://papers.ssrn.com/sol3/papers.c...act_id=1969123

                        Comment


                        • Originally posted by Ken44 View Post
                          Originally posted by jtij View Post
                          ...
                          I agree that being asked for your SS# by the NTA or your Japanese bank would be a sure sign of information-sharing activity. But, I'm not certain that would be necessary for information-sharing to proceed.
                          They (NTA) would need the SS# if information-sharing was something on-going (not unlike Citibank requiring the SS#.) It`s ridiculous to think NTA and the IRS would do so on a regular basis without a SS#.
                          Possibly so. In any case, I would be (and am) expecting a request for SS# to come any day now. I have already had an inquiry about US citizenship from one financial institution.

                          Comment


                          • http://www.mahanyertl.com/mahanyertl...ur-money/1605/

                            The new banking law is not only unpopular but is questionable how much additional money it will bring in. If my accountant wants to file my J-bank information as well as Citibank that`s fine with me. I don`t see this affecting me one way or the other.

                            However, I`ve read nothing which leads me to believe that NTA will end up with a copies of my two 1099 anytime soon without first running an audit. Those who helped put together FATCA might think it`s a good idea for the IRS to freely give out personal tax information as a matter of policy but I doubt Congress is going to go along with it esp. given the current uproar over the new law. Supplying information requested by a foreign tax authority is one thing but to simply share such sensitive taxpayer information is another. My feeling is the new banking law is more likely to be watered down (esp. if Obama is out this November) than become more draconian.


                            Originally posted by jtij View Post
                            Possibly so. In any case, I would be (and am) expecting a request for SS# to come any day now. I have already had an inquiry about US citizenship from one financial institution.
                            From a financial institution yes and this happened with me and Citibank.

                            Or are you saying you expect such a request from NTA?
                            Last edited by Ken44; 2012-06-03, 07:55 AM.

                            Comment


                            • Originally posted by Ken44 View Post
                              http://www.mahanyertl.com/mahanyertl...ur-money/1605/

                              The new banking law is not only unpopular but is questionable how much additional money it will bring in. If my accountant wants to file my J-bank information as well as Citibank that`s fine with me. I don`t see this affecting me one way or the other.

                              I`ve read nothing which leads me to believe that NTA will end up with a copies of my two 1099 anytime soon without first running an audit. Those who helped put together FATCA might think it`s a good idea for the IRS to freely give out personal tax information as a matter of policy but I doubt Congress is going to go along with it esp. given the current uproar over the new law. Supplying information requested by a foreign tax authority is one thing but to simply share such sensitive taxpayer information is another. My feeling is the new banking law is more likely to be watered down (esp. if Obama is out this November) than become more draconian.
                              Remember that Congress passed these laws to begin with. And screwing US citizens abroad is one of the few ideas that enjoys full bipartisan support. So I wouldn't hold my breath hoping that things might change after any election.

                              From a financial institution yes and this happened with me and Citibank.

                              Or are you saying you expect such a request from NTA?
                              No, it was from my Japanese broker. Got a phone call from them out of the blue asking, "hey, you wouldn't happen to be an American by any chance, would you?" I said that I was, and they said, "Um, are you aware you are supposed to be filing US tax returns?" I said yes, and that I report their account every year. They said, "Oh, ok. Carry on then. Anything else we can help you with?" Uh, no, you called me, after all...

                              My interpretation is that that they were evaluating their exposure to the upcoming FATCA regulations. Sooner or later I expect them, and my bank, to ask me for my SS#. Or else close my account...

                              If the upcoming FATCA agreement between the US and Japan turns out to be anything like the US/UK/France/etc. agreement, then I expect my bank and brokerage to file reports with the NTA, which will then be forwarded to the IRS. I don't necessarily expect the NTA to separately ask for my SS#, since as I said, the current IRS focus seems to involve non-US financial accounts, not foreign earned income. But, hey, that may come too.

                              Anyway, my point is simply that the viability of "flying under the radar" (in either direction) looks to have a limited lifespan.
                              Just trying to issue a warning, is all. Accept or ignore as you will.
                              Last edited by jtij; 2012-06-02, 11:33 PM.

                              Comment


                              • Originally posted by jtij View Post
                                Remember that Congress passed these laws to begin with. And screwing US citizens abroad is one of the few ideas that enjoys full bipartisan support. So I wouldn't hold my breath hoping that things might change after any election.
                                This law is getting hammered from everywhere plus there's really not much in the way of a payoff either. While nothing is certain my guess is if Obama goes business regulations such as FATCA he helped to implement will either be repealed or be weakened. Hell, even if Obama wins I think enough pressure will build from both the business and banking communities around the world to put a damper on it. Without a lot of money to be found there just isnft a whole lot of upside to FATCA

                                Originally posted by jtij View Post
                                ...I don't necessarily expect the NTA to separately ask for my SS#, since as I said, the current IRS focus seems to involve non-US financial accounts, not foreign earned income. But, hey, that may come too.
                                Sure it may come but given the myriad of problems FATCA has helped to create do you really think the law will become more draconian? In any event I am not hiding my J-salary. What I am concerned with is the IRS electing to pass along tax documentation which I file each year to a foreign country (Japan in this case) without it being requested.

                                Originally posted by jtij View Post
                                ...Just trying to issue a warning, is all. Accept or ignore as you will.
                                And I am always keen on keeping abreast of what's going on.

                                So be sure to let me know when the IRS states it will begin reporting information such as the 1099 to various foreign tax authorities as a matter of course.

                                Until then I'll continue to fly under the radar and keep my US investments separate from NTA.
                                Last edited by Ken44; 2012-06-03, 08:00 AM.

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