10% Problem (and Solution)

FATCA implementation may be delayed again. Let's hope we get a Christmas present of yet another delay to some of the worst legislation ever created. Here is a little blurb from the nice folks at Forbes:

 Will FATCA Ever Go Into Effect? - Forbes

http://news.google.com Thu, 12 Dec 2013 15:42:10 GMT

Channel TelevisionWill FATCA Ever Go Into Effect?ForbesThe Foreign Account Tax Compliance Act seems to be revolutionizing the way governments share tax information. Other nations are using intergovernmental agreements to piggyback on FATCA informatio ...

Read more ...

But this is an aside.  The real reason I am writing this is because it's near the end of the year and even though Christmas is upon us, you need to know a little something for planning purposes.  A number of times I've been presented with tax situations that have been complicated by the fact that the US citizen involved owns 10% (or more) of a company, whether it's an S.A., Sp.A., Limitada or other.  Ten percent seems to be a magic number in several different ways and I'd like to point out that you will save yourself a lot of trouble if you only own 9.99% instead.  Tax law and regulations seem to look for 10% over and over again.  If you want specifics, subscribe to my free update service.  I'll be explaining things in more detail with my next broadcast.

FATCA Woes

FATCA is a slow implementation.  Much like Obamacare, FATCA is off to a slow start.  If you remember, the idea is to collect taxes on money that has previously evaded taxes.  The operative word is, 'evaded'.  In the US tax system, evasion is a crime, avoidance is not.  The difference is that the latter uses the regulations and tax law itself to reduce taxes through various means.  Evasion ignores the law.  The US has indicated it expects to recover something like $87 billion over the next ten years.  Likely the loss of taxes on falling international trade (as a result of FATCA compliance difficulties) will more than offset any gain.  For a good take on things read this link:  International Tax Evasion Crackdown: Slow, Tricky, And Only First Step in ... - International Business Times

http://news.google.com Wed, 30 Oct 2013 18:17:40 GMT

InsideCounselInternational Tax Evasion Crackdown: Slow, Tricky, And Only First Step in ...International Business TimesAttempts to implement the 2010 Foreign Account Tax Compliance Act (FATCA) have repeatedly stalled, partly because the sweeping law r ...

Read more ...

I'm hearing more and more stories of people renouncing their US citizenship because of the business difficulties caused by FATCA.

In my humble opinion, FATCA is bad law whose intended purposes cannot be realized without massive damage to international trade.  It needs to be repealed.