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Transcription of interview with Jim Jatras on August 5, 2013.
Douglas Goldstein, CFPÆ, Financial Planner & Investment Advisor
Jim Jatras is a government relations and media specialist and a former senate staff and US
States department official.
He is an expert on FATCA.
Douglas Goldstein, financial planner & investment advisor, interviewed Jatras on Arutz Sheva
Radio.
Douglas Goldstein: Can you give us a little background about FATCA?
Jim Jatras: FATCA stands for Foreign Account Tax Compliance Act that was passed in 2010
and what it basically does is besides requiring US persons which include not just Americans
abroad but even lots of people who are citizens of other countries who donít even know they
are considered US persons under American law to not only provide a very detailed personal
financial information to the IRS, but purports to force foreign financial institutions that
are not even under US jurisdiction to provide very detailed private financial information
and if they fail to do so they would have 30% penalty or really a confiscation of any
payments coming to that institution from the United States taken away from them.
So itís really an unprecedented extra territorial reach by US law into foreign countries.
Douglas Goldstein: Wasnít the purpose of the law in order for the US to catch the international
tax dodgers and money launderers?
Jim Jatras: If you read the law, there is not a single provision of the FATCA law that
actually singles out tax evasion activity and seeks to detect or police it in anyway.
In fact, I was talking to the economic section of one of the foreign embassies here in Washington
recently and the treasury department told them specifically that they donít really
expect to catch tax evaders and what they want is information and control over the financial
activities of Americans abroad or Americans who have accounts abroad.
Douglas Goldstein: Are you differentiating between FATCA and FBAR?
Jim Jatras: FBAR is a requirement that has been around for a very long time and the treasury
department has been stepping up enforcement of the requirement that Americans who had
foreign accounts filed that.
FATCA imposes a redundant to some extent requirement on top of FBAR, but even additional and more
detailed reporting than the FBAR requires, but then in addition to that as I say, the
foreign institutions supposedly would also then have to report to the IRS.
Douglas Goldstein: A
lot of people are not aware that they really have this obligation and sometimes they are
not even aware that they are US persons or green card holders Is ignorance an excuse
in this case?
Jim Jatras: It never is and the compliance issue for the individual American or US person
or accidental American or dual citizen or spouse of an American and other people who
will be pulled into this net is an important problem.
The other big problem of course is for the financial institutions themselves that there
are lot of banks, insurance companies, pension funds in Israel and other countries that are
being told by a foreign government namely the government of the United States, ìYou
must comply with this act and provide us information.
ìin many cases, in violation of local data protection and privacy laws or youíll be
subject to this confiscatory penalty.
I think thatís where the real rob comes in, in terms of the international system which
is why the treasury department has been trying to strong arm foreign governments into signing
so called IGA (intergovernmental agreements) under which they would be deputized by the
IRS to enforce FATCA against their own institutions and their own citizens and thatís where I
think things really get very questionable.
FATCA as itís written, many experts including FATCAís supporters understand it is not enforceable.
They need to have these foreign governments enforce FATCA upon themselves about those
agreements and that procedure is not even provided for or authorized within FATCA.
Douglas Goldstein: One of the reasons I think that the United States got so excited about
passing this law is because a few years ago they went to Switzerland, the bastion of secrecy
and were able to squeeze out of UBS the names of thousands of Americans who are hiding money
there.
From the American standpoint, thatís pretty good business.
Jim Jatras: I donít think so.
There are always going to be some people who engage in tax evasion, thatís given and I
think a vigorous enforcement activity is designed to find actual tax evaders.
There is one great tax attorney here in Washington calls FATCA I think three times in a very
large article ìsheer idiocy.î The stupid thing about FATCA is it does not target the
tax evaders instead it will net a lot of innocent people who are just minding their own business
and impose literally billions and billions of dollars of cost on consumers and tax payers
globally while real honest to God tax evaders will slip in it.
The thing about tax evaders is they lie.
They provide false information.
FATCA will not do anything to actually address that problem which is you point out as a legitimate
serious problem.
The weird thing is that will not protect them from FATCA because itís that simple, all
the institution will have to do is send a letter to the IRS and say ìNo Americans here.
We donít accept Americans accounts.î Thatís not good enough.
The IRS under FATCA will demand, ìDo you have a ëdue diligenceí in place to show
you have detected any American accounts to our satisfaction.î Thatís would expense
comes in.
Douglas Goldstein: One of the things weíve seen with the developments of the these treaties
is that a lot of the foreign countries are pretty happy that now they can make a demand
on the United States which is actually known as a tax haven for people from other countries.
Jim Jatras: They are not treaties.
There is no authority under US law for these agreements.
Secondly, that reciprocity will not take place from the American side.
There is nothing in FATCA about reporting from American institutions.
In fact just recently, there was a letter from Congressman Bill Posey from Florida and
several other members support this against any imposition of FATCA like demands on American
Institutions reporting to foreign governments so they can claim they are going to get that
information but they are not going to.
This is purely a one way street.
Iíd almost been liking it to the league of nations.
We come up with this great idea, the rest of the world signs up for and then we just
turn around and say, ìYeah, Iím sick and tired, weíd rather not.î
Douglas Goldstein: You sound a little bit negative about FATCA.
Anything good you can say about the legislation?
Jim Jatras: I really donít think I can say anything good about this legislation.
I think if youíre interested in tax evasion and policing that and apprehending evaders
and making them pay their fair share or their penalties, there are much better ways to go
about this and in fact the IRS has actually gotten pretty good at that.
This is a different kind of law entirely.
I think it was very ill-fought out.
Itís completely unworkable and the only thing you can do is scrap it.
Douglas Goldstein: The Americans who are living overseas, by filing the FBAR and by realizing
now that there are very strict regulations or penalties if they donít do it, thatís
bringing a lot of them into compliance.
This sort of atmosphere of compliance that this new law seemed to be creating, in some
way, they must be helping the IRS because itís not so easy to find a guy who is hiding
but people who are just sort of ignoring the law now are really being brought back into
the fold.
Jim Jatras: I think that probably depends on what you mean by being brought back into
the fold and as you know, this is a specific problem because the United States alone in
the world along with Eritrea, taxes the income of all Americans anywhere they are in the
world even when they are living abroad.
In many cases the Americans who are being brought back into the fold are paying thousands
and thousands of dollars in penalties for non-filing when in fact, they didnít know
any tax anyway.
I think thatís also part of the control mechanism here.
Letís get everybody in the loop, letís make them jump through a lot of hoops, file a bunch
of papers, pay a bunch of penalties even though they really didnít know any tax at all.
We have people who are so-called accidental Americans.
In Canada, I say there about a million of them who may have been born in the United
States or had a parent born in the United States and suddenly find out when they are
80 years old, they are subject to thousands of thousands of dollars worth of penalties
because they didnít file tax returns over the last 50 years.
Douglas Goldstein: Is there any possibility that the law is going to be repealed or changed?
Jim Jatras: I think thereís a very good possibility.
I think it did happen one of two ways.
I was told by somebody from one of the industry associations here not long ago that he expected
3 or 5 years from now, FATCA will not exist but only after itís caused a global catastrophe
in the financial system and then kind of like provision you say ìThis is not working.
We need to figure out something else.î The other school of thought and what I hope for
is that once it becomes clear, there would be no reciprocity from the American side that
the whole process of the intergovernmental agreement will break down, the treasury department
will see they are trying to enforce FATCA as written would cause that catastrophe and
we will rethink this and put a FATCA repeal into a tax reform package which probably will
happen sometime in 2014 or 2015 before the global catastrophe occurs.
Douglas Goldstein: One of the words that youíve used a lot is giving the government information
and power but not even necessarily taxation.
In other words, they are not looking for the money, they just want control.
Is that their motivation?
Jim Jatras: I think thereís a certain enforcement mentality.
I remember at a conference where there are people from the IRS there who were just puzzled
why anybody would not think this is a good thing because from a the point of view of
a government bureaucrat having everybody living in a fishbowl in his underwear so we can see
exactly what you have and exactly what you do all the time, ìWhat youíve got to hide
if youíre not up to no good.î I think they literally do not understand why a normal person
doesnít think he should be subjected to that kind of a treatment unless he has really done
something wrong or thereís a probable cause that heís done something wrong.
If you want to go and find terrorist, go find terrorist, why click everybodyís emails and
phone calls to go find somebody else.
Douglas Goldstein: How can people follow you work?
Jim Jatras: They could find us at www.repealfatca.com or they can email me at repealfatca@gmail.com
and frankly if you just Google Repeal FATCA our information will come up.
Douglas Goldstein, CFPÆ, is the director of Profile Investment Services and the host
of the Goldstein on Gelt radio show (Monday nights at 7:00 PM on www.israelnationalradio.com.
He is a licensed financial professional both in the U.S. and Israel.
Securities offered through Portfolio Resources Group, Inc., Member FINRA, SIPC, MSRB, NFA,
SIFMA.
Accounts carried by National Financial Services LLC.
Member NYSE/SIPC, a Fidelity Investments company.
His book Building Wealth in Israel is available in bookstores, on the web, or can be ordered
at: www.profile-financial.com (02) 624-2788 or (03) 524-0942.
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