U.S. FATCA bites in Israel
November 4th, 2010
November 4th, 2010
We recently wrote about the U.S. Foreign Account Tax Compliance Act, describing it as a form of (albeit one-way) automatic information exchange, to help the U.S. tax authorities ferret out tax cheats.
A new Reuters story (hat tip: Offshore Watch) highlights one of the effects:
Leumi (LUMI.TA), Israel’s biggest bank, is requiring U.S. clients to declare their deposits to the Internal Revenue Service, amid heightened scrutiny of offshore accounts by U.S. authorities. The bank is asking its clients to declare that they are not U.S. clients, or to reveal their accounts to U.S. authorities, according to a letter to clients obtained by Reuters.
. . .
“No longer will a bank turn a blind eye to whether their customer is a U.S. taxpayer,” said Bryan Skarlatos, a lawyer for wealthy individuals whose firm has clients that have received the letter.”
Well, this is progress. And this is not a limited case.
“Other foreign banks are sending clients similar warnings, according to private attorneys. “Most banks will have to do this sort of thing,” said Scott Michel, a lawyer for wealthy clients with cases before the IRS
Israel is a pretty secretive secrecy jurisdiction, ranked 20 according to our index.
In Jersey, they are finding transparency “onerous,” however. As one practitioner says:
There will be a requirement for finance industry firms in Jersey and Guernsey to amend their account opening procedures, there will be significant challenges to existing IT systems and the measures will impact on product development.”
One has to ask, then, what they have been doing in Jersey until now. Allowing U.S. taxpayers to operate in secrecy?
Originally published on the Tax Justice Network blog.
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