With recent market weakness, I'm amazed that supposedly factual, informative and unbiased (cough cough) news television isn't pondering the markets recent weakness being at all tied to FACTA.
The Foreign Account Tax Compliance Act ("FATCA"), enacted in 2010, imposes a variety of requirements on foreign banks however foreign banks that do not report such information may be subject to a 30% withholding tax on payments they receive from U.S. sources. In order to avoid this withholding, beginning July 1, 2014, certain foreign banks will be required to report information to the IRS about U.S. account holders with accounts of $50,000 or more.
Let that sink in a moment. That's HUUUGE money we're talking about.
Beginning July 1st, there will be penalties for non-reporting so if you were big business with large corporate cash storage, or even a gas pipeline worker located in Saudi Arabia, would you shift your investments? Why not? The market's at all time new highs. Better to do it now.
Do you really want the IRS to see where you've hidden all your dough?
Would you expatriate yourself from the U.S. altogether?
Many individuals, in fact, have been doing just that. (click graphic to enlarge) Paying the tax and expatriating themselves from the U.S. Damn those nasty taxes and regulations. Of course things of this nature are mysteriously not mentioned by CNBS CNBC but with everyone pointing fingers at reasons for the recent market sell off, I have to wonder if FACTA isn't having more of a global impact in corporate (hide the peanut) cash storage that's not being said.
Graphic courtesy of ActionAmerica
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