This article, which provides perspective on FATCA from Russia is a very interesting read.
FATCA: A new generation of American laws – Of particular interest is a characterization of FATCA that:
It belongs to a new generation of American laws , which can be called extraterritorial . These are the laws that apply to a number of other countries , and sometimes even the whole world . These are laws that help build Washington Pax Americana.
FATCA: A new role for the IRS – The IRS Commissioner will govern the world
We are witnessing a unique alignment of the global system, “head” which is the U.S. agency , and all financial and banking organizations formally sovereign states coming under the administrative control of this department .
The article referenced in the tweet from FATCA_fallout is written in Russian by a Russian. I don’t understand Russian so I ran it through Google Translate. Assuming the accuracy of the translation, the article is revealing. I have bolded some of the more interesting parts.
Will FATCA ever be imposed on the world? The author wishes for no more FATCA delays. He claims, as only a Homelander could that: “Foreign institutions were blatantly assisting U.S. taxpayers in hiding assets from the IRS.”
But here is the gist of it:
I’ve argued before that the original delay of FATCA was disturbing from a separation of powers perspective and that a second delay would only call into question whether Treasury and the IRS will ever start enforcing withholding. Practitioners and effected taxpayers will always be clamoring for more guidance, more clarity, more safe harbors, and more time to comply. They will never be satisfied, no matter how many thousands of pages of regulations Treasury releases on New Year’s Eve or how many sets of detailed instructions the government puts together for revised forms. The tax community is seldom completely satisfied with guidance. It always wants more or different answers.
And the reality is that the IRS will probably never be done issuing FATCA regulations or form revisions. The law is very broad, with many moving parts. It is evolving as Treasury (rightly or wrongly) changes its implementation by using IGAs. If IRPAC and the financial industry want Treasury to wait for all the significant guidance to be finalized before the withholding regime is put into force, FATCA will be waiting a very long time to become law.
“There has been a lingering question about the US tax treatment of Canadian Mutual Funds in taxable accounts. This discussion does not apply to investments in RRSP accounts. In early 2010, the Internal Revenue Service issued a determination that most Canadian Mutual Funds are corporations for US tax purposes, even though they are organized as trusts under Canadian law. Because they are corporations, most Canadian Mutual Funds are Passive Foreign Investment Companies (PFIC).
A PFIC investor has burdensome US tax reporting as well as potentially confiscatory taxation. If a PFIC provides certain required information, the tax burden can be lessened, but this is not practical for must Canadian Mutual Funds.
There are two solutions—one short-term and one permanent. On a short-term basis you can report income on a “marked to market” basis in your US income tax return. This means that the change in value during the year will be reported as ordinary income. This, of course will, require additional valuation information each year, but it will avoid potential tax and interest charges that have the potential to exceed 100% of the income from the investment.
The second solution, and the one I recommend is divest your portfolio of all foreign mutual funds and invest in individual security issues. While this may not sound like a sensible solution for the Canadian investor, but it is the price of being a U.S. taxpayer.”