A new set of IRS laws will supposedly freeze the bank accounts of quite a few American millionaires. That’s what the world’s largest wealth-management firms are saying ahead of Washington’s carrying out of the Foreign Account Tax Compliance Act, known as Fatca, seeking to stop tax evasion by Americans with offshore bank accounts. HSBC, Deutsche Bank, Bank of Singapore and DBS Group all say they will not open accounts for U.S. Citizens.
“I don’t open U.S. accounts, period,” states Su Shan Tan, director of private banking at Singapore-based DBS, Southeast Asia’s biggest lender, who mentioned that regulatory attitudes toward U.S. clients are “Draconian.”
The 2010 law, to be phased in on Jan. 1, 2013, requires that banks based outside the United States obtain and report info regarding income and interest payments on the accounts of U.S. clients. This will result in extra compliance charges for financial institutions and less investment options and financial planners for all U.S. citizens living overseas, which could make it difficult to get tax returns.
“In the long run, if Americans have less and less opportunities to invest overseas, it would be a disadvantage,” Marc Faber, the fund manager and publisher of the Gloom, Boom and Doom report, said last month in Singapore.
The nearly 400 pages of suggested rules proposed by the IRS in February will cause “unnecessary burdens and costs,” according to Institute of International Bankers and the European Banking Federation. The IRS is having a hearing on May 15 and may ammend how and when certain parts of the rules are imposed. It can’t, however, rescind the law.
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