Tag: FOI

A glimpse into FATCA reporting….

In the post-FATCA world, Australia’s reporting financial institutions (RFIs) are required to report financial account data on Australian resident US citizens that is ultimately transmitted to the IRS.  Through past Freedom of Information (FOI) requests for aggregate FATCA reporting statistics, we learned that the IRS must be drowning in large volumes of FATCA data of questionable accuracy.   

The lack of publically accountable governance and oversight associated with a program of FATCA’s scope and huge cost[1] is mind blowing.  Furthermore, one of the most disturbing elements of FATCA is that financial reporting on Australian residents is being made to a foreign government with no statutory notification regarding the reported information back to the person being reported on.   How can one know what is being reported regarding their financial affairs and whether it is accurate and correct? 

I decided to find out!  I made use of our FOI regime to request copies of all information being reported to the IRS regarding my personal Australian domiciled accounts so that I could determine if the data is complete and accurate. 

Before I get into my experience, note that we’ve attempted this in the past.  In 2016, Karen made an FOI request seeking disclosure of all reported FATCA data specific to her accounts and learned that for her specific case no records were available, presumably as her financial institutions had yet to identify her as a US citizen.   In early 2017, “Sam” made a similar request and the ATO came back and said that they could not make a decision on whether to release the information without first consulting with the IRS which included providing the IRS with Sam’s personal details.    Sam was understandably unwilling to draw attention to himself given the complexity of taxation of foreign assets and promptly withdrew his request.

In my case, I was pleased to discover that the ATO now seems to be past the “consult with the IRS” nonsense and dealt with my FOI information request within the prescribed period.  Interestingly, they stated they only had reported FATCA information on me for calendar year 2017 with nothing reported in prior years.  This is not surprising as I am still, to this date, receiving requests from Financial Institutions to verify our tax residency as required by FATCA and CRS.

For those interested in the specifics, my report was in the form of a table (presumably from a relational database) that contains the following fields:

  • msg_bet_id: unknown field
  • atchd_doc_ref_id:  a long alphanumeric code that includes the name of the financial institution and perhaps an RFI identifier number?
  • FirstName:  my first name and, sometimes, my middle name
  • LastName: Last name
  • Address:  my address of record
  • Account Type:  listed as NULL on my reports
  • AccountNumber:  “CAPAU#########” where ######### is the account number
  • Amount Balance Cur:  Currency, AUD in my case
  • Amount Balance:  balance (in AUD as above)
  • Account Number Closed Indicator:  NULL in my case as no accounts closed
  • Account Number Type:  unknown but listed as NULL in my reports
  • Payment Amount:  a dollars.cents number
  • Payment_type:  listed in all my accounts as “Interest”
  • TIN:  Taxpayer Identification Number, in this case my social security number
  • TIN Country:  Listed as “US”
  • RFI Name:  name of the RFI

I maintain detailed and accurate financial records using financial personal accounting software.  Cross-checking the reported information against my records suggests that the reported information is reasonable but not precise.  Reported year-end account balances were spot-on, perfectly matching my financial records.  Account numbers and my TIN were also correct.  The reported calendar year interest was generally correct or within reason.  Where our numbers did not perfectly match, I was unable to discover a reason why (for example dropping or adding shoulder interest payments made in the first or last days of the calendar year), however the reported numbers were within 10% and therefore considered acceptable.

I also made a few interesting observations:

  1. All account figures in the report are clearly Australian dollar denominated while the FATCA IGA calls for reporting in US dollars using published spot rates.   The report also provides calendar year-end balances not maximum account balances.  This is interesting as both IRS Form 8938 and FINCEN FBAR reporting require reporting of the maximum account balance during the year in US dollars which no doubt will make automated matching and exception identification more challenging.
  2. In my case, the Australian RFIs have reported all accounts, even when the YE account balance of one account is well below the FATCA reporting threshold and there is no interest income.  For example, one RFI reported the YE balance of a transactional banking account that had a year-end well under $1,000 and no interest income.  Presumably this is due to the rules requiring RFIs to aggregate accounts when testing against the US$50k reporting threshold.   
  3. One of my reported account is a brokerage account yet only the cash account and related interest earnings were reported.  Calendar year dividend income or aggregated share values were not reported in my case, despite the FATCA IGA requiring the custodial account to report total gross dividends, amongst other reporting obligations.

Overall, I was pleased that I was able to obtain this information from the ATO with minimal fuss.  I plan to seek updates on an annual basis and I encourage you to do likewise so that you also understand what personal financial information about you is being reported to the IRS.  Although I presume that government bureaucracies will strive to improve FATCA and CRS reporting systems, it is also apparent that in terms of identifying compliance exceptions, these systems currently have significant deficiencies and are unlikely to trigger widespread enforcement activities for years to come.    

[1] Australia is estimated to spend A$482 million over ten years on FATCA implementation and maintenance; sourcehttp://ris.pmc.gov.au/sites/default/files/posts/2014/05/08_RIS_accessible.pdf

What did we learn from our ATO FOI request?

While the 2014 FATCA information transfer to the IRS was widely reported, since then we have had no idea how much data has been flowing from the ATO to the IRS. To get a better idea of the scope of the data exchange, Carl sent an FOI request to the ATO for a summary of the data sent to the IRS under FATCA for all three reporting years that have now been completed (2014, 2015, and 2016). The ATO complied with this request in a timely manner, sending us a pdf file of a printout of an excel worksheet that spans several pages both vertically and horizontally. [1]

FATCA requires Australian financial institutions (very broadly defined) to report account holder details as well as account balance, dividends, interest and other income paid, and gross proceeds from sale or redemption to the ATO for transmittal to the IRS. It is evident from the graphs below that the amount of data going to the IRS has exploded since the initial data transfer of 2014 data (transferred 30 Sept 2015).

Continue reading “What did we learn from our ATO FOI request?”

FOI Take 2

Just over a week ago, I received a message through this website from someone who had submitted an FOI request to the ATO. “Sam” expected that one of his accounts had been reported because the bank had identified him as a US Person and the balance was above the bank’s reporting threshold. The response from the ATO puzzled Sam, and it puzzled me as well. The ATO response stated that they needed to consult with a “foreign government” about whether Sam’s FATCA records were exempt from FOI under Section 33 of the FOI Act: Continue reading “FOI Take 2”

FOI Request

On 29 November I submitted a Freedom of Information request to the ATO requesting copies of all data about my accounts that was sent to the IRS under FATCA. The fact that I had to ask is outrageous – account holders should be automatically notified when their data is sent overseas. But, current Australian privacy law does not require any notification. Continue reading “FOI Request”