It's Official - America Now Enforces Capital Controls

[ding]

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........

Ahhhh

So, If I rent out my US house and the money goes into my US checking account. Then I withdraw from that US checking account my ATM card in Thailand - I don't get nicked. Correct?

[JimGant]

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???

For most, if not all of us Yanks here, the money we SWIFT/ACH is from our checking/savings/credit union accounts. And this money is mainly from pensions, dividends, interest, cap gains, etc -- all of which the IRS can trace from its source -- and match for compliance with our annual tax filings. Yeah, there might be a $200k inheritance from Aunt Martha (no 1099) -- which if wired to Thailand might raise someone's eyebrow. But if we're under the radar screen for everything else, it's doubtful this would be pursued. The IRS is after fat cat income tax evaders -- not us po' honest folks.

But, even fat cat tax cheats, under this new law, won't have 30% withheld -- if the country of their foreign account cooperates with the IRS in providing requested information. However, if no cooperation, and thus 30% withholding applies on FDAP income, you can bet the IRS will investigate any wires from the tax cheat's bank account -- and note no 1099/W2 data trail for the money in the account. I would suspect this would allow for a 30% withholding -- if the tax cheat had no valid explanation. You and me, however *do* have adequate, and documented, explanations for the funds in our accounts. Thus, I can never see any situation where we would have our wires subject to the 30% withholding rule.

Particularly when you add all the other reasons previously mentioned as to why we need not sweat the 30% withholding law.

[longball53098]

Thanks JG for the cool head in this. I think you are right on. Those of us po' folk that pay our taxes and stay high up on the radar have no worries about this new law and added chapter to the IRS code

[hhgz]

The text of the entire bill, and the specific areas that seem to have some TVers upset, are available online. The OP chose the sections very carefully, and made it impossible for you to distinguish what is applicable to a hiring company, a bank, or an INDIVIDUAL. I think that William Shakespeare wrote a play about this, "Much Ado About Nothing".

[manarak]

The 18th century was the century of conquest of liberty, and the 21st century will be the century of loss of many liberties and the birth of the "transparent citizen".

The global crisis makes this evolution inevitable.

The governments will take the money where it is.

Now they introduce spying mechanisms which are totally out of proportion, but will use them at first only on the biggest fraudsters.

The global spying on financial information will develop even further, until the governments will have their eyes everywhere.

At this point, starting 2015 - 2018, and coinciding with the arrival of the first baby-boomers in the pension age, the governments will increase fiscal pressure until and beyond outright THEFT.

And most people will have nowhere to run.

[gregb]

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.

Hi Jim.

Can you provide a link to the full text of an actual bill that shows that? I have been through the complete text of the bill that I think was passed. But I still can not find any reason to believe this.

The only place I can find this date mentioned is here:

(d) EFFECTIVE DATE.—

(1) IN GENERAL.—Except as otherwise provided in this subsection,

the amendments made by this section shall apply to

payments made after December 31, 2012.

But the "section" in this case is section 1474. The really nasty stuff that this bill is all about is described in section 1471.

I don't mean to suggest that what you are saying is not true, only that I can not confirm your statement. Can you give me a clear, authoritative, written bill or government memo that supports your contention that the terms of section 1471 are not by law due to be implemented any earlier than December 31, 2012?

[JimGant]

gregb,

The recently enacted Hiring Incentives to Restore Employment Act (the "HIRE Act") imposes new withholding and information reporting requirements on certain cross-border payments. Of note, the HIRE Act:

* Creates new U.S. Internal Revenue Code Section 1471, which imposes a 30 percent withholding requirement on certain payments to a non-U.S. financial institution that does not enter into an agreement with the Secretary of the U.S. Treasury to provide information regarding any U.S. account holder of the institution and to withhold on certain pass-through payments the financial institution makes. This provision applies to payments made beginning in 2013. Payments beneficially owned by non-U.S. governments are exempt from this provision.

Obvious why this goat rope can't be implemented 'soonest.' Here's a partial quote from the Canadians' plead before Congress, at a time when the proposed implementation date was earlier (2011):

We strongly believe that the implementation of the Act’s requirements with respect to the identification and reporting of certain foreign accounts will require a substantially longer timeframe, especially given that much of the detail about implementation will be contained within regulations to be developed by Treasury, and within the FFI Agreements to be negotiated between FFIs and the IRS.

And some more from our neighbors, who obviously show more smarts than Congress:

We are extremely concerned that compliance with the Act will impose a significant level of additional cost and operational risk on FFIs that will be disproportionate to the amount of additional U.S. tax revenue generated. In particular, we are concerned that many FFIs will not find it economically feasible to enter into agreements with the IRS

Duh...

Full testimony HERE

[mogoso]

It is possible that the banks say the hel_l with it, we don't want to do the IRS's book keeping for them, we will close all US passport holders accounts. So you would have no way to get your money into thailand or be able to cash your SS check.

Any thoughts on what to do if that happens? Short of moving.

I would think that having your SS check deposited into a US bank and the drawing it out through an ATM machine would be still availible. Wouldn't get anywhere near the money limits

[BEENTHEREDONETHAT]

"I would think that having your SS check deposited into a US bank and the drawing it out through an ATM machine would be still availible. Wouldn't get anywhere near the money limits"

Mogoso

That would probably work if I had a US bank account. Closed my last one in 1984 and have had no need for one since. Will open one only as a last resort. So I will wait and see if it ever becomes a problem.

Thanks for the suggestion.

[Barack]

I have just stumbled across this old thread and as American the subject is of interest to me. I have been asked for advice by an American friend who is planning retirement to Thailand in a few short years. If I understand correctly SS transfers from Bangkok Bank would not be subject to the 30% withholding because they are under the 50k threshold. However, If in 2013, my friend purchases a condo here for let's say 150,000 USD, then in fact, he would need to transfer almost 215,000 USD because of the 30% withholding. Is this correct? Could he make multiple transfers of less than 50k to avoid the withholding?

[cloudhopper]

I have just stumbled across this old thread and as American the subject is of interest to me. I have been asked for advice by an American friend who is planning retirement to Thailand in a few short years. If I understand correctly SS transfers from Bangkok Bank would not be subject to the 30% withholding because they are under the 50k threshold. However, If in 2013, my friend purchases a condo here for let's say 150,000 USD, then in fact, he would need to transfer almost 215,000 USD because of the 30% withholding. Is this correct? Could he make multiple transfers of less than 50k to avoid the withholding?

The Thai banks are and will be playing ball with the US so there will be no withholding IMO but what use could this advice possibly be now?

[Barack]

I have just stumbled across this old thread and as American the subject is of interest to me. I have been asked for advice by an American friend who is planning retirement to Thailand in a few short years. If I understand correctly SS transfers from Bangkok Bank would not be subject to the 30% withholding because they are under the 50k threshold. However, If in 2013, my friend purchases a condo here for let's say 150,000 USD, then in fact, he would need to transfer almost 215,000 USD because of the 30% withholding. Is this correct? Could he make multiple transfers of less than 50k to avoid the withholding?

The Thai banks are and will be playing ball with the US so there will be no withholding IMO but what use could this advice possibly be now?

True, no withholding now but it may by advisable to buy now before 2013 unless somebody has an idea for a work-around after 2013?

[cloudhopper]

I have just stumbled across this old thread and as American the subject is of interest to me. I have been asked for advice by an American friend who is planning retirement to Thailand in a few short years. If I understand correctly SS transfers from Bangkok Bank would not be subject to the 30% withholding because they are under the 50k threshold. However, If in 2013, my friend purchases a condo here for let's say 150,000 USD, then in fact, he would need to transfer almost 215,000 USD because of the 30% withholding. Is this correct? Could he make multiple transfers of less than 50k to avoid the withholding?

The Thai banks are and will be playing ball with the US so there will be no withholding IMO but what use could this advice possibly be now?

True, no withholding now but it may by advisable to buy now before 2013 unless somebody has an idea for a work-around after 2013?

There will be no withholding of wire transfers from the US to major Thai banks after 2013. This news has been misinterpreted.

[Barack]

Ok, you seem very confident.