Additional Problems for Americans in Hong Kong Due to FATCA

1. Additional Problems For Americans In Hong Kong Due to FATCA

2. What Is FATCA? Taxpayers from the United States who are living or working in other countries have continued to face negative consequences of the Foreign Accounts Tax Compliance Act (FATCA). The law was passed in 2010 and went into effect in July of 2014. It basically requires foreign financial institutions around the world to comply with strict information reporting requirements regarding all account holders who are U.S. taxpayers.

3. FATCA Requirements Banks, investment groups, and even insurance companies are now required to report on qualifying US accounts and face strict penalties for failing to comply. So far, nearly five hundred jurisdictions throughout the world have signed agreements with the IRS, but some areas and institutions continue to hold out.

4. The Better of Two Evils Rather than dealing with the significant financial and operational burden of organizing the necessary processes, training, and personnel for handling the U.S. reporting requirements, many institutions are choosing to simply drop account holders from the United States. Some refuse to open accounts or enter into business with American citizens, and others have chosen to close such accounts.

5. Inter-Governmental Agreement Hong Kong signed an inter-governmental agreement with the IRS last year, and since then, many banks based in Hong Kong have refused to open new accounts for American citizens and companies. In effect, the individual financial institutions have weighed the requirements and found it more favorable to deny the extra business rather than navigate the strict FATCA requirements

6. The Results of The Agreement It is estimated that there are nearly 50,000 U.S. citizens living in Hong Kong and as a result of these recent decisions, many are seeking to relinquish their U.S. citizenship so they can continue to work and operate their businesses in Hong Kong without dealing with the ongoing headache of FATCA financial policy and politics or fear of being shut out of their Hong Kong-based accounts.

7. ABOUT FREEMAN TAX LAW Freeman Tax Law is a boutique tax law firm with national exposure equipped to handle all domestic and international tax law matters. At Freeman Tax Law, the attorneys and professional staff have vast experience with foreign tax compliance, international tax planning, and resolving tax controversies involving offshore banking matters. Freeman Tax Law helps taxpayers and foreign entities become in compliance with laws such as Foreign Account Tax Compliance Act (FATCA) and Offshore Voluntary Disclosure Program (OVDP). In addition to handling complex tax controversies, the Freeman Tax Law team has extensive expertise in assisting clients with wealth management and estate planning.

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