A question was posted on BoqueteNing.com about whether FATCA will require banks to withhold 30% of Social Security Deposits made to Banks in Panama that as not signatories to FATCA. Steven Mopsick, the tax attorney who spoke in Boquete earlier this year did some investigation on this and here is the information from him.
Hello to Lee and all my friends in Boquete:
I finally heard back from my contacts in the IRS National Office on the question of whether payments to recipients of Social Security benefits living abroad will be subject to 30% FATCA withholding. In other words, is there withholding on people who are now receiving their Social Security checks by either direct deposit to a foreign bank, (as in a bank in Boquete) or getting the checks mailed directly to them?
I knew the answer was “no,” but I wasn’t sure of the legal authority for it.
The proposed FATCA Regulations say, at §1.1471-2(a) “….. a withholding agent must withhold 30 percent of any withholdable payment made after December 31, 2013, to a payee that is” a Foreign Financial Institution (FFI.)
Since the payee on Social Security checks is the person receiving the benefit and not an FFI, no withholding is required.
Best regards,
Steve Mopsick
Federal Tax Attorney
Not admitted in California
Practice Limited to Matters before the
Internal Revenue Service
United States Treasury Department
United States Tax Court
On the Web | Steve’s Blog | LinkedIn | Twitter
3600 American River Drive, Suite 220
Sacramento, California 95864
t 916-550-5363 f 916-550-5059
This is a super bit of information. I was wondering if our IRS was so screwed up and out-of-touch it would try something like withholding a social security check. It’s already bad enough if we earn some outside income while on SS, we are taxed on it. Think about it…our SS reflects some of the taxes we paid in prior years and we get taxed on the income. We are taxed on a tax! If they also made foreign banks withhold and extra 30% it would be totally outrageous. Let’ get the fair tax and forget about the IRS bureaucrats!
I would love to see a National sales tax, but only if income tax is done away with. The only exemptions would be food, and non-elective medical/medicine.That would cause everyone to “pay thier fair share”. BUT that is exactly why it will not fly. The rich want to stay rich, and the poor want more “entitlements”. Anyone in between, well … some one has to pay the bills. The rich give to PAC’s, and the poor get a bus ride to vote. Man I am so wanting to git off this roller coaster…lol
So I’m still confused … If I move money from my checking account in the US by writing a check to myself and depositing it in a bank in Boquete, what is the difference. The money is coming to me, not the financial institution. Will the IRS tax the transfer?
NO.
If you become a resident in Boquete/Panama and have their health plan,can you stop the medicare withdrawals from your SS Check?
I want need the double insurance payments.
Mary