Guess Who Folded Now?

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Banking privacy
is dead. Completely, totally dead. Murdered, really. The US government
is the assailant, and FATCA is the murder weapon.

We’ve
talked about this a few times before– FATCA is the heinously
insidiously piece of legislation that the Honorable Barrack Hussein
Obama passed into law in 2010 as part of the “Hiring Incentives
to Restore Employment Act”.

There were
no hiring incentives, and there was no restoration of employment.
But any vestiges of banking privacy were destroyed.

In brief, FATCA
has two key concepts. First, it requires an additional (and completely
unnecessary) layer of reporting from all US taxpayers who have ‘foreign
financial accounts’ at ‘foreign financial institutions.’
Though as we have discussed before, both of these critical terms
are ridiculously and flagrantly ambiguous, putting the onus entirely
on the taxpayer.

Without clarifying
what constitutes foreign financial accounts and institutions, Congress
has effectively created decades of debate in tax court… a move
that will undoubtedly ruin the lives of the unfortunate folks who
get dragged into the fight.

The second
key issue is that FATCA puts a burden on ALL foreign financial institutions
worldwide to enter into an information-sharing agreement with the
IRS; this essentially obliges every bank on the planet to submit
reports and customers’ private data to the IRS.

Banks who don’t
enter into this information sharing agreement will have a 30% tax
withheld on funds that originate from, or go through, the US banking
system. Further, banks who enter into the information sharing agreement
are obliged to withhold the 30% tax on transfers to other banks
who do NOT enter into the agreement.

Such provisions
are absolutely, 100% impossible. And it’s becoming clear that
FATCA was passed with no intention of being enforceable. It’s
inconceivable that every institution on the planet could enter into
an agreement. And it’s inconceivable that every institution
on the planet could possibly know whether every other institution
has entered into the agreement.

The only thing
FATCA has accomplished is scaring the living daylights out of non-US
banks. So much so that foreign banks have approached their governments
to ask for help.

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