It's Official - America Now Enforces Capital Controls

[Jingthing]

If the 30 percent is withheld, do you think that will be recorded as an IRS tax payment that you could receive back as a refund when you file your taxes assuming you don't owe it? Worst case of course is Thai banks closing our accounts. Bad case is the withholding. I guess I could deal with the withholding if I could get the money back later, but if they are basically going to steal the money, I would go back to the US (not happily).

Edited March 30, 2010 by Jingthing

[BEENTHEREDONETHAT]

For some reason Bangkok Bank is the only bank authorized to have your SS money sent . I agree with Jingthing we would hardly be missed if we had to leave because of IRS rules.

I shouldn't think the US would want a lot of expats returning and putting further burden on medicare. But I doubt is that side of it is considered by the US govt.

I'm sure we will survive it but it is a pain in the a$$ to have more red tape wrapped around us.

[Naam]

this is the tip of the iceberg for whats coming. I had been warned by several people for the last year, one of them being Naam. There are more things in the works, america is desperate and the econmy is in the tank. They have maxed out their credit card and now can't even pay the minimum payments

it's not limited to the U.S., for Europeans the writing is on the wall as well. until now we Europeans enjoyed being tax free if living out of €U-land in countries which levy no or very low taxes. but i am sure our politicians are eager to copycat the U.S. taxing citizens on their worldwide income no matter where they live. although it might take years to get that legislation passed, provisions/preparations should be made now and not in the last minute when the sh*t has hit the fan.

Correct. I think some or even many "offshore" schemes are probably going to come undone as well.

a number of offshore solutions which were perfect a decade ago (corporation and corporate account/portfolio) are since long obsolete. even though the shareholders are anonymous, virtually no bank establishes a corporate account without detailed information (passport scan and proof of residency) of the beneficiary. there are off course still venues to protect the identity of the beneficiary but it takes a lot of guts to accept the risks involved.

[flying]

I shouldn't think the US would want a lot of expats returning and putting further burden on medicare. But I doubt is that side of it is considered by the US govt.

I should think that small burden on medicare would be heftily offset by

having all those folks back & paying for things in US prices

But that aside I am really amazed at the worry over a storm in a teacup.

It is more an insult than a worry

Every bank you have an account with in the US already has your SS#

Ultimately does anyone sending money from the US via SWIFT

think it possible that the US does not already know full well what you have sent... to where & when?

In the end it will come down to whether or not the Foreign Banks want to be burdened with the extra work being asked of them by the US....

IE: Report to the US what the US already knows full well.

Knowing this ultimately it appears this is just another tactic to discourage folks from sending those $$$ out of country.

As to the 30% that seems to have the SS crowd living check to check in a hissy fit.....It reads...

Deduct the 30% from any intermediary account where the foreign entity is a bank not in compliance.

It will not be long to know which banks say <deleted> to the US over this. So you will not use those. Hopefully one will still be available for you & hopefully it is Bangkok Bank. Which is the main choice of those SS check folks for obvious reasons.

A betting person would bet BB will comply as they probably do get a nice chunk of business from it. But.... dont be surprised to be charged for the work in one way or another.....

Oh no I feel a 300 THB ATM charge thread coming :D

[Jingthing]

I am offended that this is being trivialized. I would like to suggest that people maintain a respectful tone to people who are concerned about how they may be impacted by this new law. Worse case, this really could mess up a lot of people, including the timing and mechanics of their Thai extension applications. As it is new, I don't think anyone really knows precisely what this is going to mean in practice, no matter if you fully understand the text of the law or not. I admit I do still do not understand even the text of it, for example the part about about the intermediary bank and also what happens to your money if they do withhold it (which doesn't seem to be in the text).

Edited March 30, 2010 by Jingthing

[JimGant]

I am going to wire 40k USD into my Thai account in a few days and I will report if there is any change from before (i.e. no questions on amounts below 50k and asking me what I was using it for on amounts over that).

This new law doesn't go into effect until January 2013.

If the 30 percent is withheld, do you think that will be recorded as an IRS tax payment that you could receive back as a refund when you file your taxes assuming you don't owe it?

Sure. That's why they explicitly call it "withholding." It's just as they do for non resident aliens earning dividends in the States -- withhold 30%. Then, if this is wrong due to tax treaty (as it would be with Thailand, where the treaty says, I believe, 10%), you file your tax form to recoup the overwithholding amount. Yes, you're inconvenienced -- and not paid interest for their use of the money. But you do get it back -- assuming you're not a tax cheat.

The beauty of this is that tax cheats won't be filing. But they're now new members of the 30% tax bracket....up from zero.

And the Thai-US tax treaty does provide for sharing information with the IRS. So, don't look for Thailand digging in like Switzerland, with US-owned accounts no longer welcomed.

And, if Thailand is sharing the information with the IRS -- and you're sharing the required information with your Thai bank -- there shouldn't be any 30% withholding. Only if the IRS now sees suspicious activity, and/or now notes your name coincides with a stack of 1099s with no matching tax return, will you become interesting enough to require a 30% pledge against your next tax filing.

[Jingthing]

Where is it written that it doesn't go into effect until 2013?

As far as the Thai bank info, don't they need our SS numbers to comply with the law?

BTW, I am not a tax cheat and understand they are doing this to catch tax cheats, but it still seems over the top to involve foreign banks in internal US tax matters.

Edited March 30, 2010 by Jingthing

[JimGant]

I am offended that this is being trivialized...........

.......while others of us are amazed at the "sky is falling" mentality.

Unless you're a tax cheat -- with a $50k account -- please chill out.

[Naam]

But that aside I am really amazed at the worry over a storm in a teacup.

It is more an insult than a worry

Every bank you have an account with in the US already has your SS#

Ultimately does anyone sending money from the US via SWIFT

think it possible that the US does not already know full well what you have sent... to where & when?

you are forgetting something Flying because you focus too much on procedures in the GNoE™.

example: a U.S. citizen wants to transfer USD from his Singapore account to his account in Thailand because the family buffalo is again sick, his partner's granny needs dentures or the school fees of the little brother are due. the SIN bank has his SS-no. and has until now duly reported all income and transactions to the IRS. what is the bank supposed to do if the afore-mentioned case crops up?

[Jingthing]

I am offended that this is being trivialized...........

.......while others of us are amazed at the "sky is falling" mentality.

Unless you're a tax cheat -- with a $50k account -- please chill out.

I will chill out when I fully understand the law. I am not even close to that point, sorry. Not everyone who is dealing with this is super sophisticated on such matters.

For example, this text --

In brief, the Provision requires that foreign banks not only withhold 30% of all outgoing capital flows (likely remitting the collection promptly back to the US Treasury) but also disclose the full details of non-exempt account-holders to the US and the IRS.

implied withholding on ALL transfers. BTW, what makes an account holder non-exempt?

Edited March 30, 2010 by Jingthing

[Naam]

Where is it written that it doesn't go into effect until 2013?

As far as the Thai bank info, don't they need our SS numbers to comply with the law?

BTW, I am not a tax cheat and understand they are doing this to catch tax cheats, but it still seems over the top to involve foreign banks in internal US tax matters.

bu this is already the case since the qualified intermediary agreement exists.

[JimGant]

Where is it written that it doesn't go into effect until 2013?

See HERE, Page 11

As far as the Thai bank info, don't they need our SS numbers to comply with the law?

Yeah -- or your passport number, which I think I gave them when I opened my account.

it still seems over the top to involve foreign banks in internal US tax matters.

Yeah, Switzerland feels your pain. However, most tax treaties involving the US incorporated provisions for sharing information to help identify tax cheats.

[flying]

you are forgetting something Flying because you focus too much on procedures in the GNoE™.

example: a U.S. citizen wants to transfer USD from his Singapore account to his account in Thailand because the family buffalo is again sick, his partner's granny needs dentures or the school fees of the little brother are due. the SIN bank has his SS-no. and has until now duly reported all income and transactions to the IRS. what is the bank supposed to do if the afore-mentioned case crops up?

Well yes I did not think about the sick kwai via singapore.

But , again since you use a US citizen I am guessing his money got to that Sing account via swift & the US godfathers already know all about it.

I think the world banks should say do your own paper work to the US....After all Mr Obama promised jobs & there is a few more eh?

:D

As for the worried about their Thai visa extensions etc...Sheesh I thought you were "legally" suppose to have your $$ in your account 3 months prior.

Seems many are living so shoe string

But like Jim said folks should chill out because one that is so worried about Visa's never had a 50k account to begin with & is a speck on the radar not worth the time of the US godfathers to look at ...as per their law/words

Edited March 30, 2010 by flying

[Naam]

But , again since you use a US citizen I am guessing his money got to that Sing account via swift & the US godfathers already know all about it.

that the money got there by SWIFT is not necessarily the case. Americans do have portfolios in SIN which generate proceeds. even assuming that these proceeds were already sent with 1099 to the IRS what about compliance with the new regulation?

[Naam]

I think the world banks should say do your own paper work to the US

fact is that the "world banks" are scared sh*tless if they have a branch in the US which some Federal Judge might close down for any period thus causing losses which could amount to hundreds of millions.

[cloudhopper]

I suspect that the Thai banks have already been fully cooperating with the US and predict that we will see no effect whatever here.

I am going to wire 40k USD into my Thai account in a few days and I will report if there is any change from before (i.e. no questions on amounts below 50k and asking me what I was using it for on amounts over that).

Yes, please report. Some questions. I assume your Thai bank doesn't have your US SS number, correct? Has your account gone over 50K in the year and will it with this wire? What Thai bank? Does your US bank send through a second US based Thai bank?

I don't recall them ever asking for it but they certainly have my passport details. My account at KTB has exceeded (in Baht) well over 50k USD on many occasions, and I submit the required treasury report form every year. I have no idea how the funds are actually routed from my US bank to here.

[Lost in LOS]

this is the tip of the iceberg for whats coming. I had been warned by several people for the last year, one of them being Naam. There are more things in the works, america is desperate and the econmy is in the tank. They have maxed out their credit card and now can't even pay the minimum payments

it's not limited to the U.S., for Europeans the writing is on the wall as well. until now we Europeans enjoyed being tax free if living out of €U-land in countries which levy no or very low taxes. but i am sure our politicians are eager to copycat the U.S. taxing citizens on their worldwide income no matter where they live. although it might take years to get that legislation passed, provisions/preparations should be made now and not in the last minute when the sh*t has hit the fan.

i heard from someone that england just made a new law that if an englishman living overseas stays one day a year in england they are responsible for taxes.

[chiang mai]

this is the tip of the iceberg for whats coming. I had been warned by several people for the last year, one of them being Naam. There are more things in the works, america is desperate and the econmy is in the tank. They have maxed out their credit card and now can't even pay the minimum payments

it's not limited to the U.S., for Europeans the writing is on the wall as well. until now we Europeans enjoyed being tax free if living out of €U-land in countries which levy no or very low taxes. but i am sure our politicians are eager to copycat the U.S. taxing citizens on their worldwide income no matter where they live. although it might take years to get that legislation passed, provisions/preparations should be made now and not in the last minute when the sh*t has hit the fan.

i heard from someone that england just made a new law that if an englishman living overseas stays one day a year in england they are responsible for taxes.

Incorrect.

[Naam]

this is the tip of the iceberg for whats coming. I had been warned by several people for the last year, one of them being Naam. There are more things in the works, america is desperate and the econmy is in the tank. They have maxed out their credit card and now can't even pay the minimum payments

it's not limited to the U.S., for Europeans the writing is on the wall as well. until now we Europeans enjoyed being tax free if living out of €U-land in countries which levy no or very low taxes. but i am sure our politicians are eager to copycat the U.S. taxing citizens on their worldwide income no matter where they live. although it might take years to get that legislation passed, provisions/preparations should be made now and not in the last minute when the sh*t has hit the fan.

i heard from someone that england just made a new law that if an englishman living overseas stays one day a year in england they are responsible for taxes.

Incorrect.

that might be incorrect. correct however is that a German citizen may "qualify" being liable to pay income tax even though he has not set a foot for years on the soil of his Vaterland

[deejah]

i dont get it

this is about sending money overseas (to thialand) from a bank account in the usa, no?

how is tracking that the same as finding untaxed income, dividend, or interest?

it is when the money is deposited into the usa account that the question should arise: where did this money come from, not when it goes out!!!

what is the real purpose behind this bill?

to track money leaving the usa?

why?

terrorism? 555

i dont get it

maybe i am missing something

[flying]

i dont get it

this is about sending money overseas (to thialand) from a bank account in the usa, no?

how is tracking that the same as finding untaxed income, dividend, or interest?

it is when the money is deposited into the usa account that the question should arise: where did this money come from, not when it goes out!!!

what is the real purpose behind this bill?

to track money leaving the usa?

why?

terrorism? 555

i dont get it

maybe i am missing something

In many ways your right.....

It is no different than the boys they have at the airports now.

You know the ones that ask if you are leaving America with more than 10k?

If so sign this form..... Patriot Act <sic> & all that ya know

But with this banking check... they also find accounts outside the US that have 50k or more in them....supposedly

Yes believe it or not if you make interest on that money outside the US they still want their cut.

Edited March 31, 2010 by flying

[BEENTHEREDONETHAT]

since this is part of the "Hiring Incentives to Restore Employment Act" I imagine that it accomplishes increasing the employment by hiring more govt employees to wade through the tons of paper and information this law provides. They will be lucky to make the cost of all the new employees.

In three years time the people with meaningful amount of money will have moved it into gold or property or other areas that will make it disappear from the bankers hands and the IRS's grasp.

[flying]

since this is part of the "Hiring Incentives to Restore Employment Act" I imagine that it accomplishes increasing the employment by hiring more govt employees to wade through the tons of paper and information this law provides. They will be lucky to make the cost of all the new employees.

In three years time the people with meaningful amount of money will have moved it into gold or property or other areas that will make it disappear from the bankers hands and the IRS's grasp.

True & also as a side....Job report this Friday should look real good....

They hired 1.4 million folks to collect the Census & GPS folks front doors this year.

Edited March 31, 2010 by flying

[Jingthing]

If the Thai bank closes your account without warning that could certainly create a big problem for people using their Thai bank account to qualify for extensions, depending on the timing of the account closure. There are also mechanical issues. Moving the closed account money to a new Thai bank account would not be a foreign import of the money which immigration may require (in other words such scenarios could result in rejected extensions of stay). Alternatively, it is sometimes impossible to wire the money out of Thailand if you wanted to export it from the closed account (if you had warning) and then import it back into a new Thai bank account.

Again, disrespectful insults about people that may possibly be impacted by these new laws are not appreciated and have no place here. This should be a sober discussion about how these new laws impact (or don't impact) American expats in Thailand. People of different wealth levels require financial services. Also people have different comprehension levels in different subject areas.

I have for years now patiently explained the retirement visa rules to many people who have come across as totally confused about the rules. Why insult people just because they aren't as smart or up to date as you in a specific subject area? Isn't the ideal here for the smarter more informed people in a subject area to help those less with it and to bloody well be POLITE about it?

This civility request has less to do with me (because I am able to ignore rude insults and keep at it trying to get more information so that one day maybe I will be the one explaining it politely to others) but rather I wonder how many other posters that the smug elitist rudeness scares away from asking questions and expressing concerns that may be mocked.

Back to the subject of this new law. For the Thai bank to have your passport number does not mean they have your SS number. Yes the US banks have your SS number. But the text of the law seems to imply that the foreign bank must have and supply your SS number. In that vein, as time goes by (is there consensus here this doesn't actually come into effect until 2013?) could people please report if their Thai banks are asking for their SS numbers, either on opening the Thai bank account, or later? Also, what other information they may be asking for that they didn't ask for in the past.

Edited March 31, 2010 by Jingthing

[OxfordWill]

Is there a way in which non us citizens can be affected by this if they are receiving USD, given that usd always goes through the US and most banks have american account holders?

[Naam]

Is there a way in which non us citizens can be affected by this if they are receiving USD, given that usd always goes through the US and most banks have american account holders?

i don't think so. besides, it would be the banks responsibility to act immediately should an error occur.

[chiang mai]

Is there a way in which non us citizens can be affected by this if they are receiving USD, given that usd always goes through the US and most banks have american account holders?

We would be/are classified as "exempt" by virtue of our nationality, a classification referred to in the OP.

[JimGant]

Effective Date. The effective date of provisions imposing the new tax has been amended. The tax is now proposed to apply to payments made after December 31, 2012 (rather than December 31, 2010).

Yet another source. So, yes, 2013, as the proposal was adopted into the final bill.

And, again, there are only two scenarios where the 30% withholding would take place: 1. If your Thai bank said "no" to sharing information with the IRS and 2. If they *do* share information, but you refuse to provide your particulars to the Thai bank (the "recalcitrant" factor).

First, if your account is with Bangkok Bank -- and because of their presence in New York (and the QI factor Naam talks about), they'll certainly cooperate with the IRS. And most likely all Thai banks will cooperate, probably not even requiring a nudge from the government (Thailand doesn't want or need a "tax haven" handle).

And what if you, deciding to make a stand against 'revenuer medlin', decide not to provide your particulars? Well, maybe they already have all the particulars they need -- assuming the IRS would accept your passport number, which would easily provide your TIN. Surely, if this would save time, money and effort, they would go along.

Or, maybe being under $50k, nobody even cares. (But if they do, and you don't provide what they ask for, it's probably cheaper to just close your account.)

So, unless you're a rich dude with an attitude, there's nothing to worry about.

Interestingly, any money subject to this new withholding law is supposed to be "Fixed or Determinable Annual or Periodical (FDAP) income. In other words, money that has -- or is subject to -- 1099 reporting. But such money, if it is filtered first through your US checking account, loses such identity. So, yeah, as someone asked, how does this new law apply to SWIFT wires from our checking or savings accounts? Good question.

But, since none of us is likely to be subject to this new withholding, it's academic. I guess if you were a tax cheat, raised enough flags, and became a "person of high interest," they'd find a way to put a 30% withhold on any money you send abroad. However, if such money had generated 1099's -- but there was no matching tax filing (or no TIN provided), then the law already calls for automatic "backup withholding." So this new law has an element of overkill.

Will be interesting to see what happens in 2013 with money being wired to Switzerland from the US........

[NovaBlue05]

".....So, unless you're a rich dude with an attitude, ........"

I gave up on that aspiration when I realized it was out of reach....at least the "rich" part.

[jfchandler]

Thanks Jim Gant for bringing some facts and common sense to the discussion on this subject.

Clearly, what the law and the U.S. government is after is closing the loopholes that allowed deals like Switzerland to exist as tax havens for sneaky U.S. citizens for many years....

However, the provisions of the law certainly don't make me think that "the sky is falling" for regular folks living here in Thailand and moving funds from the U.S. to Thailand through normal channels--even if there may/will be new reporting and regulatory schemes.

Someone raised a good question above, and I'm not sure I caught an answer. I see the provisions in the law that talk about the types of funds that are covered, including salaries, dividends, sales of property, etc etc....

But it wasn't clear to me whether those provisions would apply to regular commercial bank deposit funds in U.S. accounts, and the transfer of those funds to foreign accounts.... After all, those funds are already tied to my SSN number for tax purposes and all the earnings in those accounts already get 1099d to the U.S. government... So???