Dear Democrats Abroad member,
Your FBAR/FATCA Task Force has been working steadily to seek relief for overseas Americans facing onerous tax reporting burdens. This is an update on developments related to taxation of overseas Americans and on our advocacy work.
A New IRS Program for those who have not filed
The Internal Revenue Service has made a significant concession to overseas voters who present little or no risk to tax avoidance. On Tuesday June 26, 2012, the IRS announced it will provide a new option to help some U.S. citizens and others residing abroad who haven’t been filing tax returns and provide them a chance to catch up with their tax filing obligations if they owe little or no back taxes. The new procedure will go into effect on Sept. 1, 2012. See these postings on the IRS website for the details of the new program:
www.irs.gov/businesses/small/international/article/0,,id=256772,00.html and
www.irs.gov/newsroom/article/0,,id=258431,00.html
[Auther’s Note: the above urls are correct, but if you cannot open them directly when you lick the hyperlink, simply copy and paste the addresses in your browser window.]
We believe our submission to the IRS, Joe Green’s testimony at the IRS hearing and our joint advocacy with other organizations of overseas Americans were at least in part responsible for the new IRS program. It seems that some of our concerns are being addressed.
FATCA has come into effect
FATCA reporting has come into effect for the current filing year; i.e., to be submitted with the 2011 US tax return. The good news is that the threshold for reporting under the FATCA regime (Form 8938) has been raised from $50,000 to $200,000 for individual-filing Americans living abroad (to $400,000 for Americans living abroad filing jointly). That will bring relief from this filing obligation to a significant number of overseas Americans.
Many of us living outside of the U.S. will likely need to continue to seek professional help for filing the various tax forms required of us. We have heard some pretty horrendous stories about Americans being fleeced by unscrupulous tax preparers, so we urge that you use caution in finding professional financial help.
Overseas Americans Surveyed for FBAR/FATCA impacts
As you know, in April of this year, Democrats Abroad issued a survey for overseas Americans to establish data around the impacts of existing and new tax reporting requirements. The survey results through to May have been analyzed and they paint a rather bleak picture of the struggles we face dealing with tax and foreign account filing requirements. As a result, they have been very useful in our discussions with government!
They suggest that too many of us:
- understand too little about our tax filing obligations;
- harbor considerable fears about fines and penalties that the U.S. government agencies responsible for tax reporting and collection have imposed and are proposing;
- are negatively impacted by the fact that that, in a growing number of countries banks, brokers and other financial institutions are refusing to open new accounts for American citizens and, in some cases, closing existing ones; and
- may choose to remain or go underground in relation to tax filing, or even consider giving up cherished American citizenship.
None of the respondents, most of who insist on anonymity because of their fears, believe that our government’s serious attempts to root out fraud, money laundering and tax evasion are unwarranted. Indeed, expat Americans cheer such efforts.
The survey results are compelling and we thank Gary Suwannarat and Amanda Klekowski von Koppenfels for their excellent work preparing the survey report. The survey is still open and we welcome you a) to participate if you have not already done so and b) to send the survey to other overseas Americans. This is the link to the survey:
http://surveymonkey.com/FATCA_FBAR
Overseas Tax Filers invited to submit their Expat Tax Stories
The stories told on our Expat Tax Stories website (www.expattaxstory.us) give personal expression to data in the FBAR/FATCA survey. Thanks to Alex Sirota for building the website which is creating a flesh and blood record of the experience of overseas tax filers. The website is still live and we encourage you to use it to tell your individual story about US tax compliance or read the stories submitted by others.
Our advocacy work
In our discussions with political and bureaucratic officials we go to great lengths to express our support for the Government’s crack down on money launderers and tax cheats before explaining the adverse impacts and outlining our recommendations for making FATCA less harmful to overseas Americans.
Democrats Abroad has recommended the following reforms to FATCA to offer relief to law-abiding citizens living abroad and to enhance FATCA’s intended function as a tax evasion deterrent:
- 1. Define a foreign or offshore account as an account in a country other than one’s country of residence or the US, thereby recognizing the legitimate need for local banking services;
- 2. Raise the FATCA reporting threshold to $1 million to put the focus on taxpayers with wealth sizeable enough to justify the costly and complex investment structures normally used to conceal assessable earnings;
- 3. Index the reporting threshold to inflation so that it goes up every year just as the Section 911 income exclusion does;
- 4. Add a provision that excuses anyone who does not owe taxes (because of the Section 911 exclusion or any other exemption or a tax treaty) from the obligation to file form 8938, regardless of the threshold reporting;
- 5. Merge the FBAR reporting requirement with the developing FATCA legislation to eliminate duplication in filings; and
- 6. Offer amnesty to overseas Americans who are delinquent taxpayers, inviting them to pay what they may owe and restore their status as tax-compliant citizens. (See our opening remarks for our success in this area.)
So, ladies and gents, while we have made some progress in in ameliorating the toxic (or is that tax-ic) issues that the Task Force was created to address, we continue to discuss our concerns with the governmental bodies that are charged with implementation. When the time is right (not in the midst of the federal election campaign), we are optimistic that we will achieve more – or perhaps all – of our goals. And, when appropriate, we will get back to you with specific actions that you may be able to take.
But, as we move forward toward November 6, please bear in mind that, as troubling as our tax issues are now, conditions would be much worse (taxes and way beyond) with a Romney presidency, a tea party House and a Senate without a filibuster-proof majority. Imagine a right wing activist Supreme Court for thirty years (despite the welcome news about the President’s historic health care initiative)!
Let’s Get Out The Vote!
Your DPCA FBAR/FATCA Task Force,
Joe Green (Canada) Chair, Stanley Grossman (UK), Maureen Harwood (Canada), Carmelan Polce (Australia), Maya Samara (Switzerland) and Joe Smallhoover (France)
@badger & all, if you’re on Facebook there are a couple of groups where we access Canadians in the US:
‘Canadians working in the USA’
https://www.facebook.com/groups/106203622743102/
‘Canadians living in the US’
https://www.facebook.com/groups/canadianslivingintheUS/
They aren’t very big groups, but there are even more groups for Canadians living in various states found on Fb. Even with few members, we know this kind of news travels fast and far.
@Everyone
To my original point if there was an actual politician in the US that would come and promise to at least do “something” in all likelihood after the election I would have greater reason optimism. However, I believe certain individuals in the US Senate Majority Leaders Office and the White House are ordering ALL elected officials within the US Democratic Party to not under ANY circumstances entertain ANY discussion of changing current policy. I happen to believe the same thing is occuring on the Republican side with House Speaker John Boehner’s office I whatever effort’s Republicans Abroad is engaging in I suspect to be futile also.
@Eveyone
Which ever member of Congress decides to take the lead on this issue should also be someone OTHER than Carolyn Maloney.
Dear Mr. Green,
My son, an American citizen, is white and lives in Switzerland with his one year old son and girlfriend. He supports all the members of his family from his salary as a truck driver. Unfortunately he is disallowed all deductions for his son and girl friend on his income US taxes because neither are US Persons or resident in America.
Recently I was quite dismayed when I came across further evidence of racism in the Democratic party. You see it appears that dark skinned Hispanic illegal immigrants committing massive fraud and are receiving over $4billion per year in fraudulent claims from the IRS. Furthermore, it appears that the IRS and the Democratic party (in charge of the executive branch) of aware of this and yet consistently fail to take any action to prevent this fraud.
So when the US government violates international laws against the illegal treatment of its predominately white expatriates, the Democrat party does nothing. But when confronted with massive fraud by mostly dark skinned Hispanic illegal immigrants the Democratic parties solution is to grant amnesty.
I am sure you are aware that the Democratic party has a multiple century long history of support for Jim Crow laws and slavery, and only in the last 50 years has been able to put most of that despicable legacy behind it. As the father of an expat son who is being discriminated against by the US government on multiple levels, I would ask you to please explain the meaning of the equal protection clause of the 4th amendment to the US constitution. And could you please provide an estimate of how long it will take before the Democratic Party grows up and stops its policies of racial discrimination and race baiting?
Kindest Regards,
CH
@ConfederateH; re “…….So when the US government violates international laws against the illegal treatment of its predominately white expatriates….”
There are no robust statistics collected on US expatriates. Therefore, a detailed and definitive analysis of subcategories is not possible – i.e. based on race or other characteristics.
“Exactly how many people are part of this trend is hard to say.
Precise emigration figures have never been easy to come by in the United
States. “It’s been an implicit assumption that people come here to
stay, not to come and go,” says Mike Hoefer, head of the Office of
Immigration Statistics at the Department of Homeland Security. The
government’s last trial effort to count Americans overseas, in 1999, was
deemed inordinately expensive. Elizabeth Grieco, chief of immigration
statistics at the U.S. Census Bureau, puts it bluntly: “We don’t count
U.S. citizens living abroad.” from http://www.usnews.com/news/articles/2008/07/28/a-growing-trend-of-leaving-america
US deemed ‘taxable persons’ ‘abroad’ in general however are discriminated against based solely on their residence outside the US – because they cannot use the types of deductions, tax credits, and tax incentives (ex.deferred tax savings accounts) created for US residents, (nor those encouraged by their non-US country of residence) and because they must report to two tax authorities; through more complex, onerous and burdensome reporting requirements, while facing enhanced jeopardy from draconian and layered penalty regimes that place their families at risk in ways that residents do not.
*@badger is right, though a number of other countries collect data on Americans along with other immigrants.
It bears repeating, though, that there is an unknown but certainly very large number of US citizens abroad who are in no sense expatriates from the United States, having never lived there.
@ brokenman, thanks for adding that important note re those who were too young to exercise ‘expatriation’ , or who were born abroad, who have never lived or set foot in the US, and have no US connection whatsoever, except for the inheritance of US citizen status through a parent. Those born ‘accidentally’ in US border hospitals, should also not be included as ‘expatriates’, but have the status imposed on them.
Those born ‘abroad’ include those with a US parent PLUS a non-US parent. To elevate the inherited US status above that of the non-US citizenship of their other parent, or of the country of their birth makes any discussion of subcategories necessarily more complex.
*re: “not under ANY circumstances entertain ANY discussion”: I have spoken to a few of the volunteers at my 2 FLorida Senators and representative’s call centers, and all are ignorant about FATCA and uninterested. Of my 12 letters, I have 3 responses, all similar to this “Dear Mr. ___, Thank you for contacting me regarding legislative efforts to require voters to show government-issued photo identification.” Ignorance, disintest, overload, and incompetence are no longer viable arguments for their responses.
After 3 years, NPR is the first to partially report the issue????? How ridiculous is this?
*@Badger: I know a little about expats in Europe and I only know of one black US expat in Switzerland (a die-hard democrat who steadfastly maintained that he didn’t need to file). I’ll bet of IBer’s the vast majority are white, which would make sense because Canada is predominately white. Anyone who pays attention to Democrat party racism knows full well that to them Asians are “white”. So do you think that there are a large number of US expats in Asia with Hispanic and/or African descent? That would leave the pool of expats of Hispanic or African descent living in the Carribean, South America and Africa. Well we know that US immigrants from those continents tend to be made up of a large proportion of illegals whose vote by default belongs to the Democrats anyway, who already directly benefit to Democrat racism, and who are likely similar to the Mexicans in the clip I attached to my original post (watch it please). But ones who were in the US illegally and later returned home seem to be more important to the Democratic party then the type of people (I say mostly white expats) who post at IB. Now you may categorically rule out racism, but this president and his cabinet and his czars have made race baiting an art form. Every issue that they start losing suddenly becomes about race, but not enforcement of FBAR and OVDI????
@ConfederateH
You actually quite WRONG on this. There several people of African descent who are Canadian IBS members and are some of the HARSHEST critics of the US on this. Having said that I do have to admit many homelander Americans don’t tend to think of Canada is a place where many people of African descent reside including many Americans I suspect who would consider themselves quite “progressive.”
@Confederate: “Pit race against race, religion against religion, prejudice against prejudice. Divide and conquer! We must not let that happen here.” (Eleanor Roosevelt)
*Good news? Good news comes within the Obama circle when you fall within the 99%, AND the 98% (those that live in the USA), AND the 87% (those that are not immigrants and whose savings are only in USA). (0.99*0.98*0.87=85%) Whoa, seems the noose just gets tighter and tighter, doesn’t it?
@MarkTwain
You need to ask whoever you talk to about this on Capital Hill to contact Benjamin Chevat in Congresswoman Maloney’s office. He is literally one of the only people dealing with this issue on a day to day basis. Tell any other Member of Congress aide they need to talk to him first.
Sorry if I’m slightly off-topic because I haven’t read the whole thread but suffice to say that I’m hoping things will improve for us no matter who wins the next election…Though I dread the idea of renouncing, I am still reserving it as my nuclear option if it becomes obvious that I’m not going to be able to survive in England without doing so. I am going to see how things evolve over the next two or three years, me thinks, before I decide anything further. It’s heartbreaking to even have to consider it but obviously if things become impossible, I won’t have any choice because I’m going to remain in the UK for the rest of my life. It’s just that I still love America in spite of my dismay with the government.
*thanks for the tip. It’s hard to motivate the phone people who actively don’t care. A unified 2% voting block should have been more interesting in the arena.
*ConfederateH,
You are really closed minded. From attacking Mr. Mopsick to telling us facts (without and proof) about where expats of different races reside. You should go back to whatever you were doing before you started commenting on here.
@annoyed, I think by his nom de plume he’s from a place south of the Mason Dixon line somewhere. Seriously @ConfederationH, what is the ‘message’ you’d like to ‘spread’?
@bubblebustin’: I think Confederate is trying to spread the stereotypical image of The Ugly American.
@bubblebustin and @Blaze
I am so glad I’m not alone in my thoughts!
@Blaze, he claimed in a previous post he has a message to spread. It would be interesting to hear what it is (at least to me it would be). Put it all out there.
Re: confederate
Most places refer to that sort of behavior as trolling. It’s almost as if you want to come here and spew this nonsense with the sole purpose of trying to discredit us as a group. If you happen to be a REAL breathing expat, then you’re not exactly making yourself look any better.
For the record, I don’t agree with anything you have spewed so far, whether it’s about paying in cash, which carries the risk of carrying cash, OR arbitrarily lumping people into groups based on skin tone.
Peter, I recommend that you lock this down and make it so no posts can be put without first being approved. Then at least you can screen a little better or revoke rights, etc… I’m actually posting this from new computer, so there’s no login or anything else necessary.
@ConfederateH; while relative privilege, based on class, race, gender, dis/ability, ethnicity, religion, sexuality and other factors can be significant in analyzing a social and political issue, that is not where I think you’re coming from in your post. What sector has the least clout, but also some assets we can confiscate? That is what the US and the IRS wants to know. They aren’t concerned with ethics or justice, or the entirely legal and post-tax (in our countries of residence) status. They don’t give a fig for us, or the countries where we live. Their question is – how can we tap those outside the country (with little or no domestic influence or power) to pay for our internal debt crisis? How can we get around the FEIE, and the Foreign Tax credit to generate funds – using whatever unjust or unethical means, no matter the damage to those affected. They don’t care who we are, they just want to invent a new way to generate revenues, and since most of us wouldn’t owe any actual US taxes, they had to continue to obfuscate in public, and rationalize, and pretend that this was actually about discovering some imaginary masses of US millionaires abroad – which thankfully is being contradicted by Canada at least.
@geez… trolling, interloper whatever we want to call it, there are unfortunately way too many other places confederation could go to where he’d feel a lot more welcome, yet he seems to want to belong here for some reason (as annoying as you are ConfH). Maybe we would have more of possibility of contaminating him then he of us? Just a thought.
Perhaps he’s a mole of sorts! 😛
@All
For whatever its worth I do believe ConfederateH has a day job that involves FATCA and not a particularily pleasant one at that. Previous Comment:
My Cantonal Bank Banker told me on Friday that the Swiss Post Bank had just changed their rules and were no longer accepting any new bank accounts for US persons. The Post had been about the last hold out, but they are now also IRS squeelers.
I work in IT at a large Swiss bank and today I had a meeting with my HR representative. They are upset because I will not accept their new “austerity” contract that includes making every one born in my birth year (late 1950′s) or later have to work 2 years longer until retirement. I told him that when I accepted the job the contract specified retirement at 62 and that I would not accept the new conditions.
Anyway, I am sick of the job anyway. The last 10 years have been only compliance work: Sarbanes Oxely, AML (anti-money laundering), Lexidia (legal case tracking), Cosima (Name checking for PEP (politically exposed people), Business Continuity, and our latest piece de resistance: Business Rules Compliance Engine.
You see, these major banks spend a major portion of their IT (and other) budgets on US compliance. Year in and Year out many major IT projects are US Compliance related. I know for a fact that there are hundreds of US tax lawyers living in Zürich in 4 and 5 star hotels on full TDY. Some of these lawyers get paid a thousand dollars and hour or more. It is all about the black hole known as compliance. A good Swiss friend of mine leads up a team doing mostly Email forensics. Their job is to datamine emails and other bank databases in response to US tax inquiries. The work closely with US lawyers staying in fancy hotels like the Dolder.
But the bank pissing millions away every year on compliance is only the minor part of the problem. Since the bailouts in 2008-2009 the bank owes its very existence to the Fed and the crony US banks. Over the last few years there has been a creeping takeover of the entire bank by the US based subsidiary. First it was the entire legal department and its IT applications (the security on the legal database is one of the most stringent in the bank, care to guess why?), then HR and now the entire IT management. This major Swiss bank is now more American the Swiss.
So now the newest IT management team, based out of Stamford Conneticut, has decided that the “industrialiazion” (their words) of IT has to continue. They are broadening the matrix organization to 500 developers in one “pool” and they want to continue the “re-badging” process where bank employees are forced to resign and start working for companies like Wipro and Infosys. This is the kiss of death because these Indian IT companies only want to suck as much application specific knowledge as they can before they let the employee go.
But even worse than all of the above, this large, nominally Swiss, but in reality US, international bank has so little regard for its IT employees that it is cramming them into the “office of the future”. I kid you not. In this new office no IT employee has a fixed desk, but a little filing cabinet on wheels and every morning they are expected to compete with the early risers for a desk. And just as with discount airlines the desks are often over-booked. We are forced into gigantic rooms with a 100 and even more IT employees elbow to elbow talking on phones and discussing arcane IT solutions to some stupid US compliance tax issue. It is simply not to be believed.