Dominican banks required to report on US citizens' holding

[bob saunders]

It's not as simple as you make out Dread. There are several million American Citizens that have never evaded taxes that are subject to penalties for not filing IRA tax returns that have never earned any of that money in the USA and are paying taxes in their country of residence. Most of these people are dual Citizens. Trust me there are millons around the world that have no desire to become Americans. An American/Canadian that renouces their American citizenship would still be entitled to go to the usa WITHOUT a Visa.

 

[kimbjorkland]

Reading this thread, I'm reminded how a little bit of patriotism and a little bit of knowledge can result in a lot of damage. Your opinion on American citizenship being a 'privilege' is irrelevant and not material to this discussion. Although for many people American citizenship is becoming a burden - especially if they want to live outside the country.

Here's the crux of the argument:

1. At the age of 3, your parents moved to Canada
2. You grew up in Canada, and made 50K/annum for the past 25 years, paid your taxes, and saved
3. You have retirement funds, you have savings accounts all in Canada
4. Because you didn't earn over $91K/annum, you owe nothing to the IRS
5. Canada and USA already have a tax treaty - that governs how you won't get 'double taxed', ie. if you pay tax in one country, it counts as tax paid in the other in most circumstances. The tax treaty is also a robust TIEA type arrangement where the tax authorities share information freely.
6. The treaty has been in place for decades
7. America starts going bankrupt (some privilege you speak of!)
8. The IRS starts sabre rattling about boogie men tax cheats, anything to get some extra cash to feed the beast
9. The new rule is, everyone - inside or outside the country has to report their bank holdings outside the country by Feb 2011
10. If you miss the Feb 2011 deadline, there's a per account penalty ($2K? or $5k? can't rem remember) for every account not reported after 2011
11. 90% of extranjeros didn't 'get the memo' because
a) they live outside the country
b) they heard something but decided, since they don't owe anything, who cares
12. When 2013 comes, all foreign banks have to report assets held by American citizens outside the country
13. So all those 90% of law abiding people, all of a sudden become 'tax cheats' because they owe something to the IRS
14. Said 90% who want to just give up their American citizenship? not allowed until they pay the imaginary penalty.
15. The Canadian authorities are up in arms - saying - hold on, we're not some rogue Caribbean state that won't share information with you, we have a tax treaty, if you think someone's cheating their taxes here, just give us a request for info and we'll help, don't just carte blanche paint everyone as a tax cheat
16. Naturally the shoot first ask questions later approach generates more cash for the treasury, which keeps the obamacare, and all the other government scams propped up - SOME MALDITA PRIVILEGE!

 

[greydread]

So file the 1099's, square away the paperwork and then renounce your US citizenship. It costs the price of a stamp. This appears to be a minor inconvenience. Why all the bother? You know that you haven't done anything wrong and in short order the IRS will know it as well.

 

[kimbjorkland]

Seriously. It is amazing what computers can do sifting data, and how far back they can go when they find something unusual.

Yes it's true. Computers can be used to find out all types of interesting patterns about historical money flow. But where does it stop tomas? Do you want the government having a camera on every street block? watching over your shoulder? the same argument can be applied - if you have nothing to hide, why are you nervous about it? (by the way, the UK has that, and it's a disgusting violation of civil liberties!).

There's already a system called fintrac, where each transaction over $10K that you do, has to get reported to the government. also don't try to break it into smaller transactions because it's 10K per month from the same bank now. fintrac reporting is already good enough to fingerprinting illicit money flows. But where do you want the government to stop?

Do you want an FBI agent showing up because you wired 15K from phili to santo domingo to buy a car?
When you start spying on people to the microlevel, all forms of innocent things can get interpreted to being malicious activity. Then what? we're all watching over our backs worried the government is going to round us up or reach conclusions about us in abstentia?

Sorry is this America or communist cuba/russia?

Ademas, the most important thing you're missing is this:

* Some countries hold bank secrecy in paramount importance in their laws
* In Switzerland, if you break bank secrecy as a banker or lawyer, you can go to jail for 20+ years
* This has a historical basis because when the Jews were running away from Europe and being persecuted, Swiss banks provided refuge for their funds from the bastard Nazi's
* Switzerland, a democracy, has free elections and the people in their land vote to affirm this historical law that bank secrecy is of paramount importance
* This doesn't mean they aid and support drug trafficking, they have signed TIEA agreements where if a foreign tax authority shows up with evidence of money laundering, terrorism, narco trafficing, etc, they will disclose information
* The approach is 'innocent until proven guilty' - you show me who's guilty, and i'll give you their info. this strikes a balance and avoids fishing expeditions - you know things like 'tomas sent 15K to santo domingo, we want to know more'. Sorry, banking info is secret. IF you know tomas is a narco and have proof, okay, but otherwise, go fish somewhere else.
* The bottom line is:

Can the swiss not be allowed to organize their affairs the way they want? Do they have no sovereignty? Why should swiss banks report activity on american citizens to the IRS? the IRS has no jurisdiction in Switzerland. Basic sovereign rights should mean something....

 

[kimbjorkland]

So file the 1099's, square away the paperwork and then renounce your US citizenship. It costs the price of a stamp. This appears to be a minor inconvenience. Why all the bother? You know that you haven't done anything wrong and in short order the IRS will know it as well.

you missed the memo. after feb 2011, it's not that simple. now to renounce you have to:

* file the 1099
* pay the 15K-25K penalty (even if your income was 1K/year) it's a penalty PER account!!
* then renounce

 

[greydread]

you missed the memo. after feb 2011, it's not that simple. now to renounce you have to:

* file the 1099
* pay the 15K-25K penalty (even if your income was 1K/year) it's a penalty PER account!!
* then renounce

They pay coming in, you pay going out. The US Treasury needs money. You didn't sign up for the draft, didn't vote, didn't contribute to the Nation of your birth in any other way. Now's your big chance. US citizenship isn't just a priviledge.

It's a blessing...and a curse.


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[bob saunders]

Americans Abroad Renounce U.S. Citizenship Due to Tax and Reporting Reasons - Hong Kong - WSJ

 

[greydread]

U.S. National Debt Clock : Real Time

Rats scurrying off a sinking, burning ship...

 

[RG84]

Did I read this right?

As long as you paid your taxes then you are ok, right?

Example: You made money through the sell of stocks, investments won the lotto, etc. You reported your gain, paid your capital gain taxes and other local taxes. Now you took what's left over and put it into a RD bank. The US gov can't tax that amount or any interest earned on that money, right?

 

[belmont]

Example: You made money through the sell of stocks, investments won the lotto, etc. You reported your gain, paid your capital gain taxes and other local taxes. Now you took what's left over and put it into a RD bank. The US gov can't tax that amount or any interest earned on that money, right?

Wrong, you are free to invest whatever, wherever. But, if it earns interest, the interest is reportable and taxes are due.

 

[RG84]

Wrong, you are free to invest whatever, wherever. But, if it earns interest, the interest is reportable and taxes are due.

Whattttt??? I can understand interest earned from a US generating vehicle, but outside the US? So if I open a business in DR ( wouldn't do that just asking) and it made money, that income would have to be reported and taxed? I guess it's kinda like what Charles Rangle was doing. But he was an american entity bringing the money back to the US

 

[belmont]

Whattttt??? I can understand interest earned from a US generating vehicle, but outside the US? So if I open a business in DR ( wouldn't do that just asking) and it made money, that income would have to be reported and taxed? I guess it's kinda like what Charles Rangle was doing. But he was an american entity bringing the money back to the US

Don't believe me, believe the IRS. Or don't believe them and see what happens.

Income from Abroad is Taxable

Many United States (U.S.) citizens and resident aliens receive income from foreign sources. There have been recent reports about the interest of the Internal Revenue Service (IRS) in taxpayers with accounts in Liechtenstein. The interest of the IRS, however, extends beyond accounts in Liechtenstein to accounts anywhere in the world. Consequently, the IRS reminds you to report your worldwide income on your U.S. tax return.

If you are a U.S. citizen or resident alien, you must report income from all sources within and outside of the U.S. This is true whether or not you receive a Form W-2 Wage and Tax Statement, a Form 1099 (Information Return) or the foreign equivalents. See Publication 525, Taxable and Nontaxable Income for more information.

Additionally, if you are a U.S. citizen or resident alien, the rules for filing income, estate and gift tax returns and for paying estimated tax are generally the same whether you are living in the U.S. or abroad.

Hiding Income Offshore

Not reporting income from foreign sources may be a crime. The IRS and its international partners are pursuing those who hide income or assets offshore to evade taxes. Specially trained IRS examiners focus on aggressive international tax planning, including the abusive use of entities and structures established in foreign jurisdictions. The goal is to ensure U.S. citizens and residents are accurately reporting their income and paying the correct tax.

Foreign Financial Accounts

In addition to reporting your worldwide income, you must also report on your U.S. tax return whether you have any foreign bank or investment accounts. The Bank Secrecy Act requires you to file a Form TD F 90-22.1, Report of Foreign Bank and Financial Accounts (FBAR), if:

You have financial interest in, signature authority, or other authority over one or more accounts in a foreign country, and
The aggregate value of all foreign financial accounts exceeds $10,000 at any time during the calendar year.
More information on foreign financial account reporting requirements is in News Release FS-2007-15, Foreign Financial Accounts Reporting Requirements and Publication 4261, Do You have a Foreign Financial Account?

Consequences for Evading Taxes on Foreign Source Income

You will face serious consequences if the IRS finds you have unreported income or undisclosed foreign financial accounts. These consequences can include not only the additional taxes, but also substantial penalties, interest, fines and even imprisonment.

Reporting Promoters of Off-Shore Tax Avoidance Schemes

The IRS encourages you to report promoters of off-shore tax avoidance schemes. Whistleblowers who provide allegations of fraud to the IRS may be eligible for a reward by filing Form 211, Application for Award for Original Information, and following the procedures outlined in Notice 2008-4, Claims Submitted to the IRS Whistleblower Office under Section 7623.

Income from Abroad is Taxable

 

[RG84]

Don't believe me, believe the IRS. Or don't believe them and see what happens.
Income from Abroad is Taxable

Damn, just read it. Don't agree, but it's the law. Thanks for the info.

 

[windeguy]

Whattttt??? I can understand interest earned from a US generating vehicle, but outside the US? So if I open a business in DR ( wouldn't do that just asking) and it made money, that income would have to be reported and taxed? I guess it's kinda like what Charles Rangle was doing. But he was an american entity bringing the money back to the US

The US is the only major country that does this kind of taxation.

 

[belmont]

Whattttt??? I guess it's kinda like what Charles Rangle was doing. But he was an american entity bringing the money back to the US

Not really. The income from the property wasn't brought back to the US. It was used to pay the mortgage on the property here in the DR. So even though he never pocketed any of the cash, it was converted to equity in the property by paying down the mortgage. He neither reported the income or the asset on his tax returns or disclosure forms.

 

[RG84]

Not really. The income from the property wasn't brought back to the US. It was used to pay the mortgage on the property here in the DR. So even though he never pocketed any of the cash, it was converted to equity in the property by paying down the mortgage. He neither reported the income or the asset on his tax returns or disclosure forms.

Was it an american company that held the loan? Maybe it doesn't matter but if you make a loan through a RD bank and you pay back that loan to a RD bank it doesn't seem fair to have to report it on your US tax.

 

[Ken]

You should be looking into foreign income exclusion:

Google

If you are an expat, you may be able to exclude quite a bit of foreign earned income by filing the appropriate form with your tax filing

 

[Fabio J. Guzman]

Starting on 1 July 2013, banking entities in the Dominican Republic will be asked to report on accounts held by United States citizens in the Dominican Republic. This is part of the Foreign Account Tax Compliance Act (FACTA) that went into effect in March 2010.

In Santo Domingo, financial consulting firm Deloitte will be holding a workshop to explain the implications of the act to US citizens living in the Dominican Republic. Richard Troncoso of Deloitte says that this law could mean the 30% retention of payments such as interest, dividends or payments that come from a United States source. According to an article in today's El Nuevo Diario, Troncoso says that every institution which is catalogued as a Foreign Financial Institution and Non-Financial Foreign Entity must accept the documentation of all of their foreign owners or account holders and implement the IRS report requirements beginning on 1 July 2013. This disposition covers every type of financial or moneynrelated business, whether it is banking, finance or stocks and even insurance companies. Deloitte will be holding a seminar on the FACTA implication on 22 November at the Hilton Hotel in Santo Domingo.

The 22 November breakfast will present the implications of the new ruling: FATCA: Banking and stocks secrecy, obligations of Dominican Financial System with the IRS and consequences of non-compliance. Denise Hintze, tax director for Deloitte New York and Bismarck Rodriguez of Deloitte Panama will be attending. To attend, contact Paula Benzo at 809 563-5151, ext 4723 or email: pbenzo@deloitte.com

The FATCA is requiring foreign financial institutions to report directly to the IRS certain information about financial accounts held by US taxpayers, or by foreign entities in which US taxpayers hold a substantial ownership interest. Under this agreement a "participating" FFI is obligated to:

(1) Undertake certain identification and due diligence procedures with respect to its accountholders;

(2) report annually to the IRS on its accountholders who are US persons or foreign entities with substantial US ownership; and

(3) withhold and pay over to the IRS 30-percent of any payments of U.S. source income, as well as gross proceeds from the sale of securities that generate US source income, made to (a) non-participating FFIs, (b) individual accountholders failing to provide sufficient information to determine whether or not they are a US person, or (c) foreign entity accountholders failing to provide sufficient information about the identity of its substantial US owners.

Notice 2011-53 provides the phased-in timeline of key FATCA implementation dates for FFIs. It is important to note that many details of the new reporting and withholding requirements pertaining to FFIs must be developed through Treasury regulations that are expected to be proposed by 31 December 2011. Published IRS Notices accessible from this FATCA Internet site provide currently available information and guidance.

Chief compliance officers, tax reporting heads and other key players within your organization will need to evaluate the potential impact of these regulations and develop a plan for managing and remediating any potential risk associated with Foreign Account Tax Compliance Act (FATCA) non-compliance.

Under newly proposed U.S. Treasury Code Sections 1471 through 1474, effective for payments after December 31, 2012, all foreign financial institutions (FFIs) will be required to enter into disclosure compliance agreements with the U.S. Treasury, and all non-financial foreign entities (NFFEs) must report and/or certify their ownership or be subject to the same 30 percent withholding. This new reporting and withholding regime will ultimately impact current account opening processes, transaction processing systems and "know your customer" procedures utilized by foreign banks.

It is not clear from this post how a US statute, the Foreign Account Tax Compliance Act (FACTA), can force a Dominican bank to report to the IRS. American laws are not binding on Dominican banks in the DR. As a matter of fact, the Dominican Banking Association is actually fighting the tax authorities (DGII) in court over a regulation enacted recently that orders banks to report to the DGII all deposits made by Dominican companies!

 

[Fabio J. Guzman]

What I'm saying is that, at present, there is not in place any legally binding obligation on Dominican banks to do this, since they are outside the jurisdiction of US laws. An American citizen, of course, is bound by American laws; Dominican banks and citizens are not, with certain exceptions that are not relevant here.
Under international law, these type of arrangements are and should be made only government to government; for example, a treaty is signed by the US and the DR whereby each government agrees to provide the other with information regarding certain matters, in this case, bank accounts held by their citizens. Under an agreement of this type, it would be the DR government that would require DR banks to provide the information, and then relay to the US. , as it should be.
The existing reciprocity treaty on information between the DR and the US only deals with specific requests on specific individuals; neither country is bound to provide the other with lists of accounts held by their citizens.

 

[kimbjorkland]

What I'm saying is that, at present, there is not in place any legally binding obligation on Dominican banks to do this, since they are outside the jurisdiction of US laws. An American citizen, of course, is bound by American laws; Dominican banks and citizens are not, with certain exceptions that are not relevant here.
Under international law, these type of arrangements are and should be made only government to government; for example, a treaty is signed by the US and the DR whereby each government agrees to provide the other with information regarding certain matters, in this case, bank accounts held by their citizens. Under an agreement of this type, it would be the DR government that would require DR banks to provide the information, and then relay to the US. , as it should be.
The existing reciprocity treaty on information between the DR and the US only deals with specific requests on specific individuals; neither country is bound to provide the other with lists of accounts held by their citizens.

You're assuming the United States government gives a rat's ass about international law or any treaties that it's signed...

I guess you haven't been following what the US did to UBS in Switzerland?

Basically they trample over foreign sovereignty using the classic strong-arm tactics. They could do what was threatened to UBS - okay you either comply with us (in contravention to your own laws), or we will bar you from doing any business in America. No Foreign remittances mister BHD, no inbound or outbound wires to/from USA mister Banco Popular, etc.