FATCA is major issue for US expats !
06
Nov
As America goes to the polls to decide its next president, one of the Obama administration’s most controversial pieces of legislation, the Foreign Account Tax Compliance Act, known by its acronym ‘FATCA’, is once again generating headlines.
One of FATCA’s most outspoken critics, Peter Dunn, the founder of the web-based American expat discussion platform, the Isaac Brock Society, who renounced his US citizenship last year, tells iexpats.com today that FATCA has effectively exiled him from his land of birth.
“I could conceivably be charged with failure to file FBARs [treasury forms which need to be filed annually] that the US required while I was still a US citizen. I am therefore now wondering if I will be arrested if I return to the United States,” he says.
Like a growing number of the 6 million US expats, Dunn feels that FATCA, which requires foreign financial institutions (FFIs) to declare the financial activities of their American clients to the US Internal Revenue Service (IRS), pushes overseas finance organisations into acting as ‘defacto’ snooping agents for the IRS. I’m inclined to agree.
As he points out in iexpats.com article, FATCA not only adversely affects American expats due to its complex and costly reporting and because they are being turned away by FFIs, it could also jeopardise the fragile US economy and that it breaches several major international agreements.
As such, on the Isaac Brock Society site today, Dunn is urging Americans to make their disdain for FATCA felt in the elections.
He comments: “While campaigning, Obama said to a crowd booing Romney, ‘Get revenge. Vote.’ Well, US expats who have suffered the indignities of beingtreated like criminals without probable cause through the requirement of revealing private information, threats of imprisonment and excessive fines, can get revenge.”
Whether its Barack Obama or Mitt Romney who wins the keys to the White House, and at this stage it’s looking like it’ll be a fight to the finish, the effects of FATCA on American expats and foreign financial institutions and governments across the world will continue long after the last vote is counted.
Nigel Green deVere Group Blog written on 6th of November
The Isaac Brock Society are working hard to get the message out, but the sad truth is that most US expats are not aware of FATCA and all its implications.
We really need thousands of these sites and communities across the globe highlighting what the US government is trying to do, and how it will affect you.
I feel if more people know about FATCA and FBAR then the US citizenships will be getting thrown in the bin in tens of thousands.
I think it is pretty clear that the intention of Congress with FATCA was to crack down on Homeland Tax evaders. It was passed, following the successful prosecution of UBS for soliciting tax evasion schemes on American shores. It had nothing to do with Expats living abroad at the time. I doubt Congress ever gave Expats a thought, or considered that the US is alone in the OECD world in taxing its citizens (US Persons) no matter where they live and reside in the universe.
Every other country taxes on residency, just like the 50 states in the Union. If you are born in California, and move to Nevada, California doesn’t continue to tax and penalize you for the rest of your life.
US Persons includes accidental Americans by birth and have never touched foot on American soil. It also includes many married dual citizens who have been living outside of America, far offshore, like in Canada where ~1,000,000 Americans call home. It also includes a lot of Greencard carrying immigrants who have returned to their homeland, but not officially renounced their US residency.
None of these were the targets of FATCA when first written into law, in my opinion, but given how the IRS functions and prosecutes it duties, Expats like those that blog on Isaac Brock, have become but one of the many negative unintended consequences of an ill conceived bill. Sadly few in the homeland have an idea what FATCA or FBAR is. If anything, when you mention them in conversation, you get an “FWHAT?” response.
So, the collateral damage just piles up, mostly ignored in the US media. It never got a mention in the election debates, and it will probably will continue under the radar until the FATCA Fallout damage is beyond repair. For all the good intentions to stop homeland offshore tax evasion, in application, it is a fiasco, plain and simple.
@Just Me
I agree that it is likely Congress did not intend the havoc that has been created however, there are many players in the debacle that do know what is going on, could do something to stop it and they do nothing. IRS gloats over their 38,000/$5.5bn and refuses to break down those figures. I can’t wait to see the reaction of the Homelanders who are cheating when IRS catches up to them. Maybe then some will understand what we have been trying to say but as you indicate, it will be too late. Especially for those of us who had to protect our families from the gross overreach of the IRS and gave up what is so basic a part of our identity – the land of our birth. I am still angry and sad and will never forgive them.
I am in the process of renouncing my US citizenship over this slap in the face. I am paid up in full with the tax agency of the country where I live and work permanently. The US is morally bankrupt and is preying on its citizens abroad – because they have no representation, and are vulnerable because they have no voice. We are being held hostage to the insatiable appetite of the US – to service a debt -which came from services we did not receive and cannot qualify for.
We barely escaped paying into Obamacare though we couldn’t use it where we live – outside the US. It was to apply like US taxation, to ALL US citizens no matter where they were – even if we didn’t qualify for the services, and also paid for healthcare in the countries where we live and have another citizenship.
No other country except Eritrea taxes citizens who are non-resident, and who have no economic relationship. Or makes those whose only connection is citizenship inherited from a parent, or through accident of birthplace, liable lifelong for double taxation, and subjects them to the empty, complex and expensive annual ritual of proving that their legal post-tax savings aren’t criminal moneylaundering, terrorfunding, enterprises.
No other country judges that their citizens living and/or born abroad are criminals until proven innocent – every year for the rest of their lives – and their children too.
I am renouncing my US citizenship as soon as I am able – no matter what the cost. My non-US family members and employer and church and community voluntary organization, all have their bank accounts subject to IRS reporting – if I can co-sign on the accounts. These accounts are registered and overseen by the government and tax agency where we live. My country of residence is not a ‘tax haven’. It is a major trading partner and ally of the US.
Nevada, Florida, Texas, Arizona – are all domestic tax havens. The state of Delaware – VP Biden’s state has the largest number of Fortune 500 companies incorporated there, in order to minimize or avoid US taxes. A Harvard study found that the US itself is the largest tax haven in the world. Florida banks have been found guilty of aiding the money laundering by S.American drug lords. Texas hides accounts belonging to Mexican drug lords and criminals. They are resisting the disclosure of these accounts to the US government – because they’d lose all those accounts.
Meanwhile, my tiny everyday savings accounts – registered with my country’s tax number, and taxed accordingly, is the subject of annual scrutiny by the US under the Bank Secrecy Act.
I used my family’s savings to become US tax ‘compliant’ – with the same result as always – no US tax owed, no illegal bank accounts, no money laundering, no tax evasion, no terror-funding. And I would spend thousands for the rest of my lifetime doing the same – every year till I die. And then prove it after I’m dead via my estate. And so would my child – born outside the US – if I had lived in the US long enough to convey my US status burden on to the next generation – which many have.
We are constantly vilified in the US press by Shulman and Geithner – as cheats, evaders, criminals who aren’t ‘paying their fair share’. Well, they deliberately omit that we’ve already paid once – where we actually live and earn – outside the US.
We are leaving the US behind as soon as we can – because the US is harming us and our non-US families. The US is forcing us to renounce. And we will, ASAP.