THE FATE OF THE U.S.A.’S “FACTCA” LEGISLATION

The fate of ‘”FATCA”” now hangs in the balance. Arranged to be a January 2014 regulation, it is now a July planned regulation, ostensibly to give the F.F.I’s (Foreign Financial Institutions) time to get their house in order and then register and be accepted.  Internal Revenue Service Notice 2013-14 authorizes the decision, and that is supported by the U.S. Treasury Dept., administered by Treasury Deputy Robert B. Stack.

The reason given for the delay is because the FFI’s are overwhelmed by closures of accounts by consumers and customers all over the world. Apparently FATCA is a law that everyone seems to dislike, and everyone needs the time to be compliant (ref: Forbes Mag., Dec 2013, and Jan 2014). In and out of the USA, Banks and other FFI’s must report account numbers, balances, names and addresses, US tax identification numbers and Jamaican of course, of any and every substantive owner with a U.S. status, bank account, and other US Income sources.

At the very outset, when this law was being introduced, I was of the impression it was further control of the bandits that operate in our region, with Drugs, Guns and Ammunition, and human traffic, and I calculated that all that was required of a Jamaican FFI was a complete and accurate source of funds of any client, which is true: But that is only a mask. What is more important to the US Government, and by exchange with Foreign Governments,  their equity in the various incomes, is the matter of Taxes, or rather Tax Evasion in the USA; and then by association Tax Evasion In Jamaica or any country.

What is deplorable and dishonest is that the presentation made to business people like myself four years ago that this was a major criminal search; in part perhaps, but basically intended for one having any type of asset, money, property, whether personal or belonging to a spouse, not declared but still taxable to make it worthwhile for Governments to extract more. Spouses no longer should make decisions to have joint accounts for fear of being incorporated into a wider issue.

 It appears now that the IRS has made dual taxation agreements called IGAs, meaning Intergovernmental agreements, and will swap information about Jamaicans vs. Americans, and has made this pact with 50 other countries, and pursuing the matter with 80 others. IGAs are the preferred instrument with larger countries, for instance the G-8 countries. Yet I do not understand how they can circumvent the laws of Jamaica and pass an act that defies the constitution of the Country.

If a business does not approve the changes, nor comply with instructions by declaring and accepting the terms of FATCA , then  30% of outstanding funds and assessments will be held in lieu of any declaration; another frightening thought. We are now liable to pay for someone else’s tax evasion.

Finally, anyone who contradicts this rule can be charged as a voice for Tax Evasion. Many Americans cannot open new accounts, for failure to close old ones. Americans and Expatriates face an impossible situation, as their mortgages are being called or denied. To the extent that an expatriate faces an obligation to IRS, the efforts of his local employer may come under scrutiny.

Do we now have a form of economic totalitarianism?

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FLAW, FLAWED, AND FLAWLESS

 

 

          

   I have to say that matters in Jamaica are often taken casually, ignoring serious problems that will affect the countries’ economy and social life: Like the banker who waives the claims made against him, saying “’Much ado about nothing”’, or the academic who quickly asserts a study to be ‘”flawed”’.

So let us look at the latter flaws, perhaps they made be converted to flawless. First, let us congratulate the JCF for doing an extraordinary task. It seems 54 schools were targeted, 18 schools provided most of sample, a size of 894 students in the sample. It does not mention the size of the population of the schools. If the sample size of 894 is correct, and data obtained from that sample size, it is close to a number that is the total population of 18 schools; the sample size is large enough to provide data (representative sample), and it becomes unnecessary to find the “characteristics “of the population if the right questions are asked.

There is the reference of 43 disappearing women that I cannot understand, so I will omit and carry on.

Then there is a comment about prison schools, and failing schools, which I appreciate, but calling them names does not oppose the data, so that  irrelevant. Thereafter a query is made that filling out a questionnaire is supposed to be more than five minutes per person hence the data is subject to error, is not an acceptable comment. Given a question sheet, to which the most answers may be ‘no”, and a skilled interviewer asking the questions, it is possible to achieve the result. Did the commenter see the list of questions to make that conclusion?

I also note the fears of the commenter that exposure of the report might affect the reputation of the students (or teachers} who participated in the interview. It is going to more public exposure as a result of the queries by the academics, and the commentators. The Minister reported the matter in Parliament, and brought it into the public domain, and the matter reflects an aspect of crime prevention which is very much a public matter. It does not affect the accuracy of the data, nor the conclusion.

Finally the last paragraph complains that students can’t get a job because of where they live. I have to contest that statement, and refer to working persons who commute to work daily. Employers generally tend to employ the nearest resident employee or qualified person for a job; then after a review of his/her qualifications, working experience, and the result of a simple test, the employer will select the applicant. Kingston and St. Andrew does not occupy a large area, and many persons travel from end to end in the course of a day. In most places one will find violence, or the proximity thereof. I do not believe this is a factor in selecting an employee, save to say his boss might want to know, where does the employee live?

A final observation; our community will need to try solutions in many ways, and with variations. Confronting an idea will delay and frustrate its implementation. Any approach to a problem like this might require help, not criticism, and may be tried on a limited scale before application so that the proper decision is realized.

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