Comments on: Exchange controls in the United States?

By: Jan

Jan — Thu, 01 Apr 2010 13:20:20 +0000

The government wants everyone to stay at home in the US where the Americans are much easier to herd about – spy on – control and tax

One might call it: “Keeping the Slaves on the Plantation”.

Cheers,

Jan

By: lf

lf — Wed, 31 Mar 2010 22:14:25 +0000

It turns out that I was wrong in my previous post. I asked a highly qualified person in DeLoitte Tax LLP the question below and I got totally devastating response which I also post here. Yes, definitely FATCAT act is a capital control law and will have very dire consequences to all Americans with offshore investments or accounts.
Since the most devastating provisions will not be enacted before the end of 2012, American public will not realize the scope of damage which has been done until new presidential elections are over.
It seems to me that people in the community should try to do their best
to explain the rest of Americans the Orvellian nature of this monstrous new law.
My question to DeLoitte TAX LLP:
Suppose I have a banking account in offshore bank which did not enter the required by new law agreement with IRS. Does any funds which I hold in this account (or any new funds I will send to this account after December 31, 2012) subject to 30 percent withholding tax by IRS? If this is the case how IRS is going to withhold it?
Response by DeLoitte TAX LLP:
Generally, the 30 percent gets withheld unless the foreign financial institution enters into an information reporting agreement with Treasury, in which case Treasury can obtain the account information that it wants. Consistent with other provisions in present law, the withholding obligation is imposed in the “withholding agent.” A withholding agent is defined broadly to include any U.S. or foreign person that has the control, receipt, custody, disposal, or payment of an item of income of a foreign person subject to withholding. Treas. Reg. sec. 1.1441-7(a).

So, yes. In the case you hypothesized withholding would occur if a bank or other withholding agent transferred the money out of the U.S. to a non-qualified institution.

The entire point of all this is to address an issue raised by a number of highly-publicized transactions in which U.S. citizens exploited foreign bank secrecy rules to hide significant wealth and income. The clearest path to avoiding the withholding is to deal with foreign banks that agree to the necessary disclosures.

By: lf

lf — Wed, 31 Mar 2010 17:11:12 +0000

Well,
it is already very difficult for US citizens to have brokerage accounts in
offshore banks (even without new legislation). E.g. HSBC (and even CITIBANK) do not allow it in offshore branches. New legislation, in my opinion, will make it very difficult for Americans to have retail accounts in offshore banks. But then Americans will do what Mark Faber (and Simon)
recommended for ages: buy and keep physical gold in offshore vaults.
In this way, Obama will deprive America of any kind of investment and any kind of tax revenue from offshore holdings.

By: Faith

Faith — Wed, 31 Mar 2010 16:28:21 +0000

Question — Simon — I am new at all the topics you are discussing and was particularly interested in finding out more about the use of self-directed IRAs to buy real estate overseas. Could you suggest a well-regarded company that handles self-directed IRAs? Also interested in getting a copy of your Panama Black Report and couldn’t locate more info on your web site. Is a current edition available and if so, how do I access the order process? Thanks so much in advance for your assistance.

By: Jan

Jan — Wed, 31 Mar 2010 12:41:53 +0000

They are already dumping US customers in Israel.
http://www.haaretz.com/hasen/spages/1155130.html

Cheers,
Jan

By: lf

lf — Tue, 30 Mar 2010 19:23:31 +0000

The way I understand new law is that US account holders in offshore
banks are not subject to 30 percent withholding tax on their assets
(even if assets originated in US and the bank does not comply with IRS requirements). If it were the case, then it would be a form of capital control. On the other hand, any offshore bank, brokerage or other financial institution dealing with US (e.g. getting any dividends from US securities or bonds) will need to comply with IRS requirements or face 30
percent withholding tax on their US originated income. I believe that vast majority of institutions will be forced therefore to comply with the law. But then many simply dump US customers to reduce the cost of compliance…
As usual US citizens will be the major victims.

By: Joe

Joe — Tue, 30 Mar 2010 17:32:42 +0000

Simon,
Some of us (including myself) weren’t able to sign up for your email before the deadline to obtain the info on second passports. (I finally was able to sign up but after the deadline.)
Couyld you email this to all your subscribers?
Thanks!!!!

By: CM

CM — Tue, 30 Mar 2010 17:04:20 +0000

I hold euros and dollars in Croatian bank accounts. Bureaucracy is such there that the IRS would probably throw in the towel before they had the time, patience, and resources to want to deal with them and their woeful lack of computerized data and 19th-century reliance on paper. They are also stubborn – can’t see them putting up with being unpaid spies for the US government. No matter their own economic outlook. They don’t trust the entire idea of personal credit – cards and straightforward mortgages/loans – so they have no interest in following the US with more exotic financial instruments.