Expat Community > Ecuador

bentparrot
Joined 2010
Posts: 286

HIRE Act & 30% withholding provision.

13 years ago

Does anyone have any recent, reliable information as to how the IRS plans to strong arm banks, either in the USA or abroad, into withholding monies from offshore account holders?

As I understand it, the purpose of the Act is to prevent multimillionaires from hiding large sums of money in offshore accounts so as to avoid paying taxes. Fine! But like everything else the IRS does, it becomes so complicated and unmanageable for the parties to comply that the little guys just take their lumps while the big guys let a team of high priced lawyers and CPAs go to bat for them.

For example, if I need $700 from my US account to pay for rent in Ecuador, must I ask for $1000, knowing that, like a 401K withdrawal 30% will be withheld for the IRS?

Or, will the onus be on the offshore bank to withhold 30% of every dollar deposited by US account holders, and for that bank to pay the IRS directly?

If it is the above scenario, I can see very few banks will want to accept US account holders and the problems they bring with them.

Regardless, even if the money could be expected to be refunded upon filing an annual tax return, anyone living on US social security and/or a pension would always have 30% of his funds on loan, INTEREST FREE, to the IRS. For most, myself included, that would be an untenable situation.

Some years back I tinkered with on-line poker. It was a constant game of cat and mouse to maintain an offshore account. So much so, that I finally gave in. The effort became simply not worth the trouble.

Now, depending on what type of scenario unfolds, CASH may be the only way to go. Gold is too difficult to carry or convert. But I guess I could leave the US with just under $10000 and bury it in a mattress for further use upon arrival.
What a risk that would be carrying that kind of money!

Or, if Ecuadorian banks will be expected to withhold money for the IRS on all US held accounts, I suppose I could let the BW open an account using her French passport.

I wish I knew what the answer is. Perhaps one of you out there does. I do know that today is TAX DAY, and I just sent the IRS a check for several hundred dollars. I wouldn't mind so much, except that GE didn't pay a dime on 14B profits. Now I'm pissed!

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