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Author Topic: FATCA  (Read 4012 times)
LegalEagle (OP)
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October 06, 2012, 02:45:00 AM
 #1

Wasn't sure where to post this, so I thought I would post it here

If you guys haven't heard about FATCA, you should look it up.  It's major US legislation, set to go into effect in January 2013, that requires all International Financial Institutions with American account holders to report account information to the IRS.  It's a pretty big deal, but it has gotten relatively little attention from the media.  Anyway, the purpose of this is to crack down on US tax evaders.

I wanted to see how you guys think this will affect BitCoin as tax cheats start looking for alternative ways to evade taxes.

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October 06, 2012, 02:46:24 AM
 #2

I think we should boycott the US and impose trade sanctions.

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October 06, 2012, 02:47:40 AM
 #3

Wasn't sure where to post this, so I thought I would post it here

If you guys haven't heard about FATCA, you should look it up.  It's major US legislation, set to go into effect in January 2013, that requires all International Financial Institutions with American account holders to report account information to the IRS.  It's a pretty big deal, but it has gotten relatively little attention from the media.  Anyway, the purpose of this is to crack down on US tax evaders.

I wanted to see how you guys think this will affect BitCoin as tax cheats start looking for alternative ways to evade taxes.



If you want to avoid tax cheats, get rid of the IRS and just get all your money from sale tax. Other than that, it's an invasion of financial privacy and everybody who vote for the law should be persecuted for treason.

LegalEagle (OP)
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October 06, 2012, 02:53:31 AM
 #4

I think we should boycott the US and impose trade sanctions.

The reporting agreement with the IRS is reciprocal (meaning that the US gives other countries information on their account holders with US accounts).  Compared to the rest of the world, the US has relatively fewer tax evaders with offshore bank accounts.  Thus the US is effectively lending the force of its financial markets for the global crackdown of tax cheats world-wide. 

Most countries are expected to enter into inter-governmental agreements with the US, meaning the international banking landscape will become more connected.  In 5 years, it will be extremely difficult to hide money in the traditional banking system.
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October 06, 2012, 05:08:43 AM
 #5

I wanted to see how you guys think this will affect BitCoin as tax cheats start looking for alternative ways to evade taxes.

John Matonis just wrote an article and addressed FATCA in it:

 - http://www.forbes.com/sites/jonmatonis/2012/10/04/bitcoin-prevents-monetary-tyranny

Forbes- "Bitcoin Prevents Monetary Tyranny"
 - http://bitcointalk.org/index.php?topic=115445.0

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kwoody
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October 06, 2012, 06:00:23 AM
 #6

The US just wants to squeeze as much money out of people as it can, even if it means spending federal money.
More incentive for people to dump fiat and go Bitcoin if you ask me. Bitcoin isn't a financial institution, unless Gavin fucked that one up for us with TBF.
Mike Hearn
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October 06, 2012, 01:50:08 PM
 #7

Given the tremendous costs of compliance for even one countries FACTA-like laws, the chances of reciprocity actually happening seems very low to me.

Firstly, most countries don't have the ridiculous citizen-based taxation the US has, so there's nowhere near the same level of issues with foreign tax evasion. Secondly when US banks realize they've been signed up to figuring out the citizenships of every single one of their customers, they will squeal and the USG will let them off the hook. This will not violate any of the agreements that are being signed because they merely "allow" for information sharing, not actually require it, and agreements signed by the US Treasury have no force of law. Congress won't pass any laws that require US banks to give information to foreign governments, and other countries won't try the viral withholding tax trick either given the lack of incentive (point one).

At any rate, the impact of these sorts of tax issues on Bitcoin (and vice versa) is almost zero. You can't really hide assets in Bitcoin unless you plan to live your retirement largely within the Bitcoin economy, which would make you probably the most optimistic risk taker in the whole world.
kuzetsa
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October 06, 2012, 02:05:17 PM
 #8

Wasn't sure where to post this, so I thought I would post it here

If you guys haven't heard about FATCA, you should look it up.  It's major US legislation, set to go into effect in January 2013, that requires all International Financial Institutions with American account holders...



I just tried to fact check your statement about facta:



Quote from: WIKIPEDIA search for FACTA
The FAIR AND ACCURATE CREDIT TRANSACTIONS ACT OF 2003
 (abbreviated FACT Act or FACTA, Pub.L. 108-159) is a United States federal law, passed by the United States Congress on November 22, 2003,[1] and signed by President George W. Bush on December 4, 2003,[2]

((...snip...))

^ So uhm... cool story, bro.

When did you say this was going into effect? Roll Eyes  Huh  Cheesy  Cool


Edited to add:

Actually no, wait... Is there some other law you're referring to? I'm confused now Sad Already bummed out about the GLBSE situation and don't think my ability to fact check random laws that screw up my fun even EXISTS right now Sad
deadserious
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October 06, 2012, 02:14:43 PM
 #9

Secondly when US banks realize they've been signed up to figuring out the citizenships of every single one of their customers, they will squeal and the USG will let them off the hook.

The legislation applies to banks worldwide dealing with US Citizens.  Theoretically of course, other nations don't fall under US jurisdiction and wouldn't have to comply, but the USA has been strong arming countries around the world into compliance.  They've hit nearly every "tax haven" and convinced them that it's better to cooperate.  They have agreements from Switzerland, Panama, Belize, Caymans and most other well known offshore banking jurisdictions.
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October 06, 2012, 04:05:40 PM
 #10

Quote
FATCA has three main parts:
    It requires foreign banks to find any American account holders and disclose their balances, receipts, and withdrawals to the US Internal Revenue Service (IRS), or be subject to a 30% withholding tax on income from US financial assets held by the banks.[1][2]
    Owners of these foreign-held assets must report them on a new Form 8938 along with US tax returns if they are worth more than US$50,000; a higher reporting threshold applies to overseas residents.[3] Account holders would be subject to a 40% penalty on understatements of income in an undisclosed foreign financial asset.[1]
    It closes a tax loophole that investors had used to avoid paying any taxes on dividends by converting them into dividend equivalents.[4]

I don't think Romney would be pleased  Grin
DeathAndTaxes
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October 06, 2012, 04:22:07 PM
 #11

Wasn't sure where to post this, so I thought I would post it here

If you guys haven't heard about FATCA, you should look it up.  It's major US legislation, set to go into effect in January 2013, that requires all International Financial Institutions with American account holders...



I just tried to fact check your statement about facta:

So uhm... cool story, bro.
When did you say this was going into effect? Roll Eyes  Huh  Cheesy  Cool

You reversed the letters.

Not FACTA - Fair and Accurate Credit Transactions Act of 2003
FATCA - Foreign Account Tax Compliance Act of 2010

Smiley  The US has so many laws they are running out of abbreviations.

http://www.irs.gov/Businesses/Corporations/Foreign-Account-Tax-Compliance-Act-(FATCA)
http://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act

An interesting factoid.  Belize has refused to comply with the provisions of FATCA.  They also don't respect the authority of any foreign courts when it comes to subpoena of financial information. Wink
deadserious
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October 06, 2012, 04:36:37 PM
 #12

An interesting factoid.  Belize has refused to comply with the provisions of FATCA.  They also don't respect the authority of any foreign courts when it comes to subpoena of financial information. Wink

As a US expat living in Belize, I can say that this is explicitly not true.  The banks here are already asking US customers to provide updated documentation or face closure of their accounts. They are complying.  And I'm terribly disappointed in my adopted country.
kuzetsa
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October 06, 2012, 04:36:43 PM
Last edit: October 06, 2012, 04:51:12 PM by kuzetsa
 #13

You reversed the letters.

Not FACTA - Fair and Accurate Credit Transactions Act of 2003
FATCA - Foreign Account Tax Compliance Act of 2010

Oh damnit.  Sorry, and thanks for pointing out that my google-fu is weak (and also, thanks for linking to the appropriate "newer, actually new new law" in question)

... Bloody dyslexia.





Edited to add:

more easy-good to remember more-better and fun-like if we call it:

FATCACTUS: Fair and Accurate Credit Transactions... (FATC) + ACT + US

kuzetsa
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October 06, 2012, 04:55:30 PM
 #14

((...snip...))

more easy-good to remember more-better and fun-like if we call it:

FATCACTUS: Fair and Accurate Credit Transactions... (FATC) + ACT + US

((...snip...))

aww damnit, really?

FATCACTUS - Foreign Account Tax Compliance + Act of 2010 (in the  US)
The_Duke
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October 06, 2012, 04:55:46 PM
 #15

You reversed the letters.

Not FACTA - Fair and Accurate Credit Transactions Act of 2003
FATCA - Foreign Account Tax Compliance Act of 2010

Oh damnit.  Sorry, and thanks for pointing out that my google-fu is weak (and also, thanks for linking to the appropriate "newer, actually new new law" in question)

... Bloody dyslexia.





Edited to add:

more easy-good to remember more-better and fun-like if we call it:

FATCACTUS: Fair and Accurate Credit Transactions... (FATC) + ACT + US



I loled. Kudo's for such a great comeback after earlier epic sillyness Tongue

Edit: Oh, just saw the update. So basically you just exponentially increased your fail? Well, extra kudo's for that tbh! Tongue

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Donate to the BitKitty Foundation instead! -> 1Fd4yLneGmxRHnPi6WCMC2hAMzaWvDePF9 <-
kuzetsa
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October 06, 2012, 05:10:17 PM
 #16

@The_Duke

yeah uh... that was fractal wrongness fail to do it yet again. I'd rather not even count how many that was... Let's not speak of my fail (in this thread / perhaps the off-topic forum sections needs cats or something. feel free to talk about my fail there I guess?) I'm blushing so hard my face hurts.

*clears throat*



FATCACTUS is really screwed up. Will cost more to implement than it brings in as revenue, and much of the implementation cost will be paid by foreign entities. I do not like this. Even more, it makes the US look like nosey overreaching bullies more than we already do. bitrustica (virtual country) wouldn't even provide protection from this sort of nonsense even in the event of renunciation of US citizenship. it's a really yucky law.

@OP

Thanks, I'll watch this law closely (or at least closer than my previous level of "zero")
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October 06, 2012, 05:30:03 PM
 #17

At any rate, the impact of these sorts of tax issues on Bitcoin (and vice versa) is almost zero. You can't really hide assets in Bitcoin unless you plan to live your retirement largely within the Bitcoin economy, which would make you probably the most optimistic risk taker in the whole world.

I disagree and think the impact is material. Bitcoin is moving the Freeline in all three areas of cost (money, time and privacy) and therefore currently in charge of the currency market change.



FATCA increases the cost of using USD for both tax compliant and non-compliant by (1) increasing privacy and time costs by having to spend time filling out reports of foreign financial accounts and disclosing the balances. These costs are born by both the tax compliant and non-compliant.

In terms of money, for those that are non-compliant the penalties and increased probability of being caught evading taxes raises the cost or risk adjusted cost in terms of money. But even for the tax compliant Bitcoin reduces the money costs in terms of processing fees and risk adjusted counter-party risk (bank failure, MF Global type embezzlement, etc.).

Because Bitcoin is moving the Freeline and is in control of the currency market change therefore it will continue pulling in capital and increasing the network effects which increases the probability that you could 'live your retirement largely within the Bitcoin economy'.

Economics guides behavior and behavior shapes culture. Bitcoin has fundamentally changed the economics of the currency market and is begininning to have an effect on individual behavior. As network effects take place and individual behavior begins changing on an increasingly exponential scale this will result in a change of culture. And it is this fundamental change in economics that is the real threat from Bitcoin to the establishment.




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October 07, 2012, 09:59:48 PM
 #18

As a US expat living in Belize, I can say that this is explicitly not true.  The banks here are already asking US customers to provide updated documentation or face closure of their accounts. They are complying.  And I'm terribly disappointed in my adopted country.

Yes indeed. One of the interesting things about FATCA is it sidesteps national governments entirely by using a recursive withholding tax. Banks that have US assets or operations have to comply or be punished with what are effectively massive fines (called "taxes" but they are actually proportional fines). But once a bank comes into compliance, they then have to impose the withholding tax on any non-compliant financial institution they deal with, even if that institution has no links with the USA at all and doesn't want them!

As the financial system is so interlinked this trick effectively makes every financial institution in the world subject to arbitrary US laws, or indeed the laws of any country with a big enough economic footprint that has the balls to try and do it.

It's really one of the most horrible laws I've encountered in a long time, in that it is basically a way to subject everyone to US law without national governments even being able to stop it. If you think about it, surviving without a bank account these days is extremely hard in most western countries. So if the US can control foreign banks, which FATCA is proving they can, then they can effectively control anyone by changing the requirements around who can or cannot have bank accounts.

It's just one small step away from global empire.
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October 07, 2012, 10:21:25 PM
 #19

As network effects take place and individual behavior begins changing on an increasingly exponential scale this will result in a change of culture. And it is this fundamental change in economics that is the real threat from Bitcoin to the establishment.

Yes, 100 times. Also, any intimation of that threat by any establishment entity will only increase Bitcoin's viability and further decrease the value of their paper. For them to counter Bitcoin at all would require a scorched earth policy on the net. I don't think they're willing to do that yet.

Great job on Wenzel's show, btw. I think he'll come around if he hasn't already.
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October 10, 2012, 09:21:13 AM
 #20


Quote
Offshore tax havens Guernsey, Jersey and the Isle of Man are working towards an agreement with the US government on FATCA, the incoming regime to prevent tax evasion.

Read more: http://www.investmentweek.co.uk/investment-week/news/2215771/tax-havens-jersey-guernsey-and-isle-of-man-sign-up-to-fatca#ixzz28szvrR00
Investment Week - News and analysis for investment advisors and wealth managers. Claim your free subscription today.

Looks like it in the UK they aren't big fans of it:

Quote
FATCA is expected to bring in $8-$10bn in revenues for the IRS over the next ten years. However the estimated global implementation cost of FATCA is $500bn and annual running costs will be of the order of $10bn. Therefore in 10 years, $10bn of tax revenue will be collected by the US at an implementation cost of $600bn. Most of the implementation and running costs - $600bn - will be borne by non US financial institutions, while all the $10bn revenues will flow directly to the US tax authorities.

Read more: http://www.investmentweek.co.uk/investment-week/news/2215771/tax-havens-jersey-guernsey-and-isle-of-man-sign-up-to-fatca#ixzz28t0svswl
Investment Week - News and analysis for investment advisors and wealth managers. Claim your free subscription today.

 - http://www.investmentweek.co.uk/investment-week/news/2215771/tax-havens-jersey-guernsey-and-isle-of-man-sign-up-to-fatca

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