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taxmanrog
taxmanrog, Certified Public Accountant (CPA)
Category: Tax
Satisfied Customers: 741
Experience:  Licensed CPA, MA, MST with 31 years' experience. Teach Accounting and Tax courses at Masters level.
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I read the below article Is there an information exchange

Customer Question

I read the below articlehttps://www.dlapiper.com/en/us/insights/publications/2012/04/treasury-finalizes-controversial-nonresident-ali__/Is there an information exchange agreement in between the US and Turkey for nonresident alien bank accounts?
Submitted: 2 months ago.
Category: Tax
Expert:  taxmanrog replied 2 months ago.

Welcome to Just Answer! Thank you for giving me the opportunity to assist you! I will do my best to help!

Expert:  taxmanrog replied 2 months ago.

This is an area that I specialize in, working with expats and foreign nationals for the past 30+ years.

In answer to your question, yes, there is an information sharing arrangement between the United States and Turkey. Under the Foreign Account Tax Compliance Act, or "FATCA", the United States has entered International Governmental Agreements, IGAs, with many countries, including Turkey. Turkey's was signed on 7/29/2015. Here is a copy of Turkey's IGA:

https://www.treasury.gov/resource-center/tax-policy/treaties/Documents/FATCA-Agreement%E2%80%93Turkey-7-29-2015.pdf

While I hate to quote Wikipedia as a source, it does contain a list of the countries that the US has IGAs with. The list is substantial, and includes over 100 major and minor countries, with the large exception being Russia.

The list is here: https://en.wikipedia.org/wiki/Foreign_Account_Tax_Compliance_Act

I hope this answers your questions. If you have any more please feel free to ask and I will be happy to answer.

Thanks! Have a great weekend!

Roger

Customer: replied 2 months ago.
FATCA is for Turkey sharing US citizens bank information with IRS. Does that work the other way: US shares automatically with Turkey the bank accounts of Turkish citizens in US banks?
Customer: replied 2 months ago.
US is not fully reciprocating, right?
Expert:  taxmanrog replied 2 months ago.

I believe that the US is reciprocating. If you read the 4th paragraph of the agreement, it says:

"Whereas, the Government of the Republic of Turkey and the Government of the United States are supportive of applying the underlying policy goal of FATCA on a reciprocal basis to improve tax compliance"

The sixth paragraph further states that " the Government of the United States of America collects information regarding certain accounts maintained by U.S. financial institutions held by residents of the Republic of Turkey and is committed to exchanging such information with the Government of the Republic of Turkey and pursuing equivalent levels of exchange, provided that the appropriate safeguards and infrastructure for an effective exchange relationship are in place"

So basically the agreement says that both governments agree that a reciprocal sharing of information is needed, and that the US collects information on Turkish residents in US banks, so they will be sharing this information.

Customer: replied 2 months ago.
I know that they collect this via IRS form w8. However, the US shares this with the foreign governments conditionally. I found out that Turkey is not in that list, can you pls confirm?
Customer: replied 2 months ago.
http://twrblog.com/2017/04/07/irs-updates-list-of-countries-subject-to-bank-interest-reporting-requirements/
Expert:  taxmanrog replied 2 months ago.

I do not believe that this is what you are looking for. This is for reporting interest under IRC §6049, which requires withholding on certain types of interest paid to nonresident aliens. The FATCA intergovernmental agreement applies to all accounts, not just the ones that pay interest under IRC §6049.

The IRS historically will not reveal the details about what it shares with whom, as this would make it easy for those who want to evade taxation.

Customer: replied 2 months ago.
Why then there's a huge discussion about US not being part of CRS? The Economist article talks about how US is refusing to be reciprocate intergovernmental foreigner accounts sharing
Customer: replied 2 months ago.
https://www.economist.com/news/international/21693219-having-launched-and-led-battle-against-offshore-tax-evasion-america-now-part
Customer: replied 2 months ago.
Any update?
Expert:  taxmanrog replied 2 months ago.

If you read the article, it said that America did not join the CRS. It did not say that America was not sharing information. It said that America was not giving account balances, but was giving interest amounts and other earnings. So while America is not giving everything (and I do have doubts about the accuracy of the article, and it is over a year and a half old) they are giving enough so that if someone had an account in an American bank, the earnings at least would be reported to the foreign country. It does not take much to extrapolate average balances, given the average interest rates that persist.

Finally, this is not a news article - it is an editorial. Not once in Mr. Fry's long diatribes does he once give a source or reference to back up his claims that "American is not interested joining the CRS. Who gave him that information? Is he privy to the thoughts of the IRS and other agencies as to what they think? Even if he was, the thoughts of one particular government official are not indicative of the entire country. Who is branding America a hypocrite? Mr Fry and his fellow workers at the Economist? Again, no facts, just supposition and innuendo. Where does he come up with the number $1 trillion to $30 trillion offshore? Again, no facts. I have never heard of this number, and did a quick search while writing this reply, and found nothing with these numbers. He does mention an investigation by Bloomberg (who has been in the news as a source of "fake news, by the way) about money managers who benefit from moving money to America. I am sure that if the investigators looked, they could also find money managers who benefit from moving money to the Isle of Man, the Cayman Islands, the Turks & Caicos, Switzerland, and many other countries.

In short, the article you cite is an opinion piece of questionable value with no sources or hard facts. It is also outdated - the Trump administration has already changed many Obama administration policies. And it does state that some information (enough to get someone caught) is being exchanged.

As a CPA whose ethics and license require me to follow the law, I do not see any lack of complete information exchange as a problem. America's tax system is based on voluntary compliance. We rely on taxpayers to do the right thing and not cheat or commit fraud. So unless someone is trying to cheat or commit fraud, the level of information sharing should be a moot point, as I would only encourage someone to be completely open and honest when reporting income. I would also withdraw from any engagement where the client was trying to hide information or evade tax, because this is unlawful and unethical.