FATCA: American expats’ living nightmare
I’m pleased to see the world’s most read online news source is flagging up the horrors and flaws of America’s controversial Foreign Account Tax Compliance Act, or ‘FATCA’.
An article in the New York Times written by Stu Haugen, an American marketing, sales and general management expert, describes FATCA as an ‘American Tax Nightmare’. And, as you might know by now, I couldn’t agree more.
FATCA, described by critics as ‘the worst law most Americans have never heard of’, was rolled out last summer with the purported aim of catching tax cheats. But as I have stressed previously, FATCA’s dragnet approach means it cannot and will not be effective.
FATCA forces foreign banks and financial institutions to report all of their American clients’ financial information to the IRS. Those institutions that do not comply with the requirements could be slapped with a 30 per cent withholding tax on monies generated in the U.S.
The bureaucracy involved in this onerous reporting has led a high number of banks to disregard American clients, who are seen to be more trouble than they are worth.
One such example of this and the disastrous consequences of FATCA, as quoted in this New York Times article, involves “An American couple, living in Australia for many years, who received notice that the merchant banking account for their chain of retail stores was to be cancelled, as FATCA reporting demands overwhelmed their bank’s capabilities. Without banking and credit card facilities, their business would be doomed.”
Therefore with no appeal process, American expats are being forced to repatriate back to the U.S., uprooting families and abandoning careers in the process, or be forced to renounce their citizenship. Which is, understandably, something they are extremely loathed to do.
As is stands, we have only so far scratched the surface of what this abhorrent law could mean for middle-class Americans living abroad, who are in full compliance of U.S. tax laws and their obligations, not the wealthy tax evaders who, according to FATCA proponents, ‘trade in their passports for tax savings.’
It is because of FATCA’s expensive and privacy-infringing requirements that deVere Group has been crusading against this controversial law, which has negatively impacted such a high number of American expats and organisations around the world.
My public outrage about FATCA and the fact that I have been unashamed in speaking out against it, has recently won me the ‘Ops Business Person of The Year’ award, by prominent U.S. media group FTF News last month, for which I am delighted, as it will act as a vehicle for us to speak out more on tax and personal finance matters that impact our clients.
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