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New Law Aims To End Individual Foreign Bank Accounts

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The name of the bill is the Hiring Incentives to Restore Employment Act (H.R. 2487) commonly known as the HIRE Act. This is the jobs incentive bill that was signed by the President on March 18th amid little fanfare.

Relatively small by Washington standards (“just” an $18 billion stimulus package) the bill was drafted to provide incentives to employers to hire more people but contains some very disturbing language concerning the ownership and transference of money to any overseas account. The truly galling part of the bill is that it attempts to require “foreign financial and non-financial institutions to withhold 30% of payments made to such institutions by U.S. individuals unless such institutions agree to disclose the identity of such individuals and report on the bank transactions”. Think about this – the U.S. government is attempting to strong arm foreign financial and non-financial institutions (think banks and law firms) to either withhold 30% of the transactions in a U.S. individual’s account (and presumably remit this to the U.S. Treasury) or disclose the account details to the U.S.. The language of the bill addresses both bank accounts and any foreign trusts (i.e. Private Interest Foundations).

But what if a foreign, sovereign country has laws against the disclosure of this information? Well, the bill contemplates this as well. Here’s the actual language from the bill:

‘‘(F) in any case in which any foreign law would (but for a waiver described in clause (i)) prevent the reporting
of any information referred to in this subsection or subsection (c) with respect to any United States account maintained by such institution—
‘‘(i) to attempt to obtain a valid and effective waiver of such law from each holder of such account,
and
‘‘(ii) if a waiver described in clause (i) is not obtained from each such holder within a reasonable period of time, to close such account.”

In other words, under this legislation, a U.S. citizen having an account with a foreign institution will be required to waive the privacy protection afforded by local law. If they fail to do this, the financial or non-financial institution is required to close the account.

And what information do they want. Here again is the actual language of the bill:

‘‘(c) INFORMATION REQUIRED TO BE REPORTED ON UNITED STATES ACCOUNTS.—
‘‘(1) IN GENERAL.—The agreement described in subsection (b) shall require the foreign financial institution to report the following with respect to each United States account maintained by such institution:
‘‘(A) The name, address, and TIN of each account holder which is a specified United States person and, in the case of any account holder which is a United States owned foreign entity, the name, address, and TIN of each substantial United States owner of such entity.
‘‘(B) The account number.
‘‘(C) The account balance or value (determined at
such time and in such manner as the Secretary may provide).
‘‘(D) Except to the extent provided by the Secretary, the gross receipts and gross withdrawals or payments from the account (determined for such period and in such manner as the Secretary may provide).

Keep in mind, this is not proposed legislation. This is already law.

There is much, much more in this bill. Attached is a PDF file containing the language of the bill. The important information can be seen if you scroll down to section on page 27 of the bill entitled:

TITLE
V—OFFSET PROVISIONS
Subtitle A—Foreign Account Tax Compliance
PART I—INCREASED DISCLOSURE OF BENEFICIAL OWNERS
SEC. 501. REPORTING ON CERTAIN FOREIGN ACCOUNTS.

As we have suspected for some time, the U.S. government is closing the window for U.S. citizens to protect their assets by moving them offshore. It won’t be long before it will be punitively expensive to move any amount of money overseas for any purpose.

Download HIRE Act of 3-18-10

http://mjgroup.com

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