Answers to the AXFNJ's twelve FATCA quiz questions
1. New York Senator Charles Rangel (then House Ways and Means Committee chairman) and Montana Senator Max Baucus (then Senate Finance Committee chairman)
2. China, Haiti, Parguay, Peru and Niguraga, according to the U.S. Treasury Department. The status of Russia and Monaco, among others, is unclear
3. Form 8938 ("Statement of Specified Foreign Financial Assets")
4. FATCA reporting thresholds vary, based on whether you file a joint income tax return or live abroad, according to the IRS. And FATCA forms are filed by banks and other "FFIs"; citizens file FBARs and and, as noted in question 3, above, Form 8938s.
If you're single or file separately from your spouse, you must submit a Form 8938 if you have more than US$200,000 worth of "specified foreign financial assets" at the end of the year, and you live abroad; or more than US$50,000, if you live in the United States. If you file jointly with your spouse, these thresholds double.
Because pension assets are counted, younger expats often don't have to file an 8938, though most older expats with maturing pensions do.
Someone is considered to live abroad if they are one of the following: A U.S. citizen who has been a bona fide resident of a foreign country or countries for an uninterrupted period that includes an entire tax year; or a U.S. citizen or U.S. resident who is present in a foreign country or countries at least 330 full days during any period of 12 consecutive months that ends in the tax year being reported. (The last part of the second definition means that taxpayers cannot use the higher threshold in the year they move abroad unless they moved on Jan. 1 of the year in question.)
5. Then-Canadian Finance Minister Jim Flaherty (in a letter, sent to several major U.S. publications, including the New York Times, the Washington Post and the Wall Street Journal, sought to protest at the way the U.S. was ramping up its information reporting obligations, which some Canadian banks and financial institutions had warned Canadian government officials would have potentially "profound" implications for their businesses)
6. IRS Commissioner Charles P. Rettig (in a 2016 paper, “Why the Ongoing Problem with FBAR Compliance?”, written before he became IRS commissioner in 2018)
7. According to the IRS, failure to file a Form 8938 when one is required can result in a fixed US$10,000 penalty (and the statute of limitations for the IRS to audit the entire return will never expire, we're told). However, as this publication and others have reported, thus far just one person has been found guilty of "conspiring to defraud the United States by failing to comply" with FATCA, in the more than seven years the law has been in force. The case was decided in September, 2018.
8. Answer: c. – "Between 25,000 and 45,000" (39,327 is the latest number, based on U.S. Treasury data published quarterly in the Federal Register; this is a revised total because, as reported, discrepancies about name duplications have recently arisen...)
9. Singapore. (To see the announcement, click here; to see the Superseding Model 1 Agreement, click here. (Note: There are FATCA experts who say that in spite of this apparent change, the U.S. is not in fact actually providing Singapore with the U.S. bank account data of U.S.-resident Singaporeans that Singapore banks are obliged, under the agreement, to provide the U.S. with.)
10. Foreign (non-U.S.) retirement accounts are not exempt from the need to be reported by their individual account beneficiaries. For Form 8938 purposes, they are considered a "specified financial asset." A reporting exemption does apply, however, to the financial institutions that manage American citizens' foreign (non-U.S.) pensions.
11. FFI = Foreign Financial Institution: FATCA created this new category of non-U.S. financial services institution, that, in order to look after the assets of U.S. citizens, must register with the U.S. Internal Revenue Service and agree to report to it, in the words of the IRS, “certain information about their U.S. accounts, including accounts of certain foreign entities with substantial U.S. owners”. Examples of the types of institutions considered to be FFIs by the U.S. definition include banks and other depositary institutions, mutual funds and other custodial entities, and such investment structures as hedge funds or private equity funds. Certain types of insurance companies that have cash value products or annuities may also be considered FFIs.
Unless otherwise exempt, FFIs that do not both register and agree to report to the IRS on their American clients’ holdings face a 30% withholding tax on certain U.S.-source payments made to them.
MFJ = Married filing jointly, and MFS = Married filing separately: More than previously, after the introduction of FATCA, those married couples consisting of one American citizen married to a non-American have had to file their tax returns and otherwise set up their assets to account for the way the U.S. taxes its overseas citizens. Prior to the introduction of FATCA, many expatriate Americans weren't aware of their U.S. tax obligations, or if they were, the extent of the way the U.S. system affects the way they should be saving for retirement, owning property, etc.
CLN = Certificates of Loss of Nationality (of the United States), aka Form DS-4083, are issued by the U.S. State Department and represent the official documentation of the “relinquishment” of an individual's U.S. citizenship. CLNs are applied for and issued by U.S. consulates and embassies around the world. As the U.S. citizenship renunciation data over the past 12 years has shown, Americans resident abroad have been giving up their U.S. citizenships in far greater numbers than they did before FATCA was introduced, peaking in 2020, when more than 6,000 individuals' names appeared on the Federal Register's quarterly list.
(These and other essential financial acronyms for Americans living abroad may be found by clicking here.)
12. It's called the Common Reporting Standard (CRS).
The reason expat citizens of countries other than the U.S. don't find it as damaging, even life-changing, as American expats have found FATCA to be is because other countries, unlike the U.S., don't tax their citizens on the basis of citizenship; so if they are not resident in their home countries, they aren't expected to file tax returns, or pay taxes, in the same way that American expats are.
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- Questions being asked of EU officials about continued silence over FATCA's GDPR compatibility concerns
- Dutch news website picks up on anti-FATCA feeling in Europe
- Dems Abroad TTF in move to open door to discussions on FATCA's future
- ACA: 'TIGTA report on FATCA is further proof that Congressional hearings are needed now'
- U.S. TIGTA report finds 'actions needed' to fix FATCA compliance