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)
@ConfederateH, sounds like your workplace was taken over by the Borg from Star Trek! This is appalling, but these aren’t the words of the racist jerk you’ve been around here. And why vent your racist rants here, where you’re obviously not gaining any traction?
@ Geeez, et al.
The most abusive thing that Confederate has done is attack Steven. I was happy to see that Steven took it in stride, because he developed a tough skin over the years as there were a lot of people who have said really bad things about him because he worked for the IRS.
I don’t agree that the Obama administration is trying to attack whites through this expat jihad. That’s obviously wrong: we all suffer equally, as men or women, Republicans, Democrats, independents, whites, blacks, asians, gay, straight, Christian, atheist, Hindu, Jewish, and Muslim, hippies and rednecks–or name any other division, we are all suffering as a result of this extraterritorial jihad against US expats. So Confederate, it’s a dead issue. It is terrible what is happening to your son. But it’s not because he’s white. It’d be happening to him if he was black or asian or a woman.
I think that while Confederate is quite upset (we all are) about expat issues, yet his views seem to me to represent his sincere beliefs. In that sense, he’s not just trying to troll and get a reaction, but he is using the anonymity of the internet to express his more or less honest opinion but incorrect view.
Confederate’s views don’t “discredit” the Isaac Brock Society: (1) because he’s just a commenter, not a regular writer; (2) because a lot of people here express their disagreements with him, which shows that we have a clear diversity of opinion. His views in the comments don’t discredit the Isaac Brock Society any more than the ugly views of the readers of McClatchy discredits that news agency. So let’s just all relax a little. Hard opinions, even insults, are not atypical of comment streams.
This blog has certain editorial positions (on expat issues) within a broad range of political views. One editorial position regards censorship, which is what you are asking me to do; we have started out as a blog that wanted open discussion. That means that people will express opinions that others will disagree with. So far, that discussion has been particularly amazing and tolerant, and that pleases me greatly. But in order to have that kind of discussion, we have to put up with views like Confederate’s, that are sometimes rude, somewhat shocking and sometimes out of the mainstream of opinion.
I and the other editors are prepared to step in when he or anyone else crosses the line. For example, if a person commits defamation of character and the defamed person objects, we will would do what is necessary to rectify the matter. In that case, the libel would be intolerable to the character, potentially damaging the professional reputation of the person involved. Steven did not complain and said quite clearly that he could tolerate Confederate’s potentially defamatory statements. Steven came out the big winner in that exchange, not least of all in my opinion of him. But in case he had objected, we would have to step in. So please, we ask that no one post defamatory comments against any of the real people on this blog.
@ Blaze
I’m thinking of this actually…
http://en.wikipedia.org/wiki/Troll_(Internet)
*I honestly don’t get it. I left the US because I had no job, couldn’t find work and needed money to pay debt payments. Instead of collecting unemployment checks, I found work abroad where I have been since. So, I’m not wealthy, my income has been taxed and my retirement savings is legal. So, I’ve only filed one FBAR in the 20 years that I’ve been abroad, but one is enough to show that I’ve nothing to show. My parents never filed FBAR’s or tax returns for the 20+ years that they were abroad, and nobody cared. Now, if I understand this properly, the IRS is saying that I’ll might be punished for being innocent if I don’t prove that nothing exists to prove wrong-doing? I’ll give them a call. I’ll be more than happy to burden the American taxpayer with unnecessary documentation if they insist on spending money for no reason. One would think that America would want to focus on spending less, rather than more.
Sorry guys, way too little too late. It’s already 2012 and here’s the reality: the Democratic Party is now a tired old organ grinder and Democrats Abroad is a sad little monkey on a leash holding out a tin cup for donations. No one is buying your act this time around, especially not expats who’ve been through a grinder of their own. Actions speak much louder than words and the only action that counts right now is the complete, unequivocal repeal of citizenship-based taxation. Anything else is just another sideshow.
*”Good News”: Just ignoring the risk for penalties, the intrusion of privacy, and the narrowness of the low-compliance risk” band, the good news is that it will only take about 100 hrs of digging up old bank statements and backfiling 1040x’s with the help of a $5000 accountant bill.
@Tim
Why not Carolyn Maloney? I have no opinion one way or another. Most of the Americans Abroad Caucus members seem like “chess club” members (i.e. they are in members because it looks good on the college application). Maloney is the only member I’ve see doing anything, so I was favourable to her.
Jim DeMint is quite possibly mad, but he is the only senator I know of who has proposed wiping out citizenship based taxation. Besides, being mad is not unique in the senate: it may even be a pre-requisite. Longevity requires that you become corrupt, so most of the senior members are mad and corrupt.
So, here is the Dems latest campaign ad, and what does that imply about those living abroad having “offshore” accounts? And that Joe Green, is what you are asking Dems Abroad to have patience about, an ad that broad brushes you as “unamerican” for having an offshore account, which as we all know is perfectly legal!
@Tim
why are you saying that if a congress person took up our cause, it shouldn’t be Carolyn Maloney? I thought she was quite on our side?
I knew that I would be labeled a racist for being so bold as to call the Obama administration racist. But all of you should be able to figure out that if calling someone a racist makes one a racist, then what does that make you?
The Chicago way is not just about corruption and cronyism, it is also about squelching your opposition. If you had been paying attention to the actions of this gang of Chicagoans you would have noticed that how good they are a punishing opposition. Look what happened to Palin, Scott Brown, Chris Christie, etc. Look at the assault on the second amendment and the fire arms industy (Fast and Furious) and the black caucus walk-out. Look at the assault on the teaparty as being a bunch of racists. Look at the assault on opponents of Obamacare being called racist. Look at what Obama has done to the oil industry and natural resource companies that traditionally have supported his opposition. Look at the frigging Keystone Pipeline!
I know how socialist Canada has become (I lived there as a teenager for 3 years in the ’70s) and that most of you here probably think Canada’s socialist health care system is great. IMO this is the path that lead directly to me being forced to expatriate. The socialist welfare state has, as Margaret Thatched put it, run out of other peoples money. In the US the Democrats have clearly been the party of big government. If you oppose the socialist government getting so big that it is forced to double tax expats then it is YOU who are racist. Its that simple. And when it gets so bad that the IRS turns its eyes away from or even possibly abets illegal immigrants stealing money from the taxpayer (because they are future Democrats), while punishing expats with double taxation and form-nation hell, then yes, I will call that racism too.
Did even anyone bother too look at the clip I attached?
@Just Me
There are so many prejudices about expats and off-shore accounts that we become easily targeted by politicians. That ad sickened me.
It not only painted us with a broad brush, but it implied that off-shore accounts = tax evasion. Even for homelanders, off-shore accounts are ordinary and should be.
A book I recently read (The Real Crash, and it’s not that great), said that Americans formed their opinions about expat life from the 1950’s and 60’s when America was a prosperous nation and our currency was strong. Since then, the dollar has had a 50 year decline and even at it’s currently low level, it is inflated because of its reserve currency status.
Now, the idea of a lavish expat life is laughable. To a Bangladeshi, a 10,000 USD pa salary means you’re rich, but a Bangladeshi living in the US at 10k pa is very poor. By the same token, Americans on-shore think that someone making 250k USD pa in Switzerland is rich.
Both parties exploit this prejudice. What matters is whether the system and country has the morality and foresight understand that expropriating from its diaspora is wrong. America has neither of these.
@Confed
I didn’t buy the premise, so I haven’t looked at the video or really followed the conversation. I see no link. It’s wrong that the US does not recognize our spouses and adoptive children in the tax code. It is not only unequal, it is seriously confiscatory when it comes to inheritance taxation. However, it has nothing to do with illegal aliens on-shore or skin color.
@Confederate, Just shrug. It’s ok. People have responded to you in kind. Calling you a racist is not harmful in this case because you are not using your real name so it has no affect on your personal reputation. It is just the back and forth of the internet.
For what it is worth, I did not say you were racist. I did not see too many views from you that have not also appeared at the American Thinker, which is edited by Dr. Thomas Lifson, a PhD and a former Harvard academic, and where I have published three of my articles (the first with Monty Pelerin). Many of the writers for American Thinker are conservatives with PhDs in their field–thus, they are not just mainstream, but also bright. If I understand correctly, your opinions are not too far outside this sort of mainline conservative publication, but for some people, who are mostly exposed to the legacy media, that is pretty extreme. At American Thinker, a number writers have expressed the view that the Obama Administration has been creating a deeper divide between the races. So far so good. Eric Holder, for example, refused to prosecute the Black Panthers who were caught intimidating voters and also put a bounty on George Zimmerman (see http://www.washingtontimes.com/news/2012/apr/10/holders-black-panther-blind-spot/ ).
But your view that the Expat Jihad is a racist program aimed to destroy whites abroad is untenable. The Expat Tax Jihad is an equal opportunity abuser. So the first thing is that commenters notice that you are incorrect. But furthermore, you are incorrect in a brash and outspoken manner that reproduces a badly applied view that is not part of the mainstream that they are used to. Maybe some are little aware of the frustrations caused by affirmative action programs for those who become its victims. As a half Korean man, I am acutely aware of how affirmative action discriminates against “Asians”. First of all, no Asian has ever become president. How is that right? We built the railroads. But I can guarantee you this: If an Asian ran for president, do you think he would be ashamed to show the world his academic transcripts? Perhaps he or she would have had a tiger mom. Most democrat candidates in recent past have not really been proud enough of their academic record to do that, despite how smart the Democrat media says that they are. Joe Green, who is himself an academic, probably voted for Al Gore, John Kerry and Barack Obama, thinking that they were a lot smarter than their opponent. Turns out Al Gore was academically challenged (flunked Seminary and law school), John Kerry’s grades were no better than Bush’s (i.e., very average), and Barack Obama, well let’s say that he’s the only person ever to be the editor of the Harvard Law Review who never actually himself wrote an article for it–plus he still hasn’t ever released his transcripts. So yes, I believe that there is reverse discrimination in United States (and Canada), but it doesn’t apply to expat tax issues. It’s not racism. This is class warfare, because if you have no savings and you don’t have a job, you don’t have to renounce your citizenship.
Here’s my advice: Try to study the problem and understand the issues better; be less brash, be respectful, and people will be less antagonistic towards you. Be reticent to attribute the problem to racism or any other issue without adequate evidence.
It’s all about American Exceptionalism and the US government wanting to punish those who dare to live a life overseas. I don’t buy the racism argument at all, especially seeing as US senators have held the view that those who go abroad are “not paying their fair share” since the mid 19th century and it is not at all a new phenomenon. Some quotes from Renunciation Guide below. You could be excused for thinking that these are comments that were made just yesterday, but look at the date!
“If a man draws his income from our public debt, or from property here, and resides in Paris, skulking away from contributing his personal support to the Government in this day of its extremity, he ought to pay a higher income tax.”
– Senator Jacob Collamer (Rep., Vt.), 1862
“[The point of citizenship-based taxation is so that] if an American citizen went abroad and carried the protection of his country, of his citizenship with him, he did not escape its burdens… There are a great many people, I am sorry to say, who go abroad for that very purpose, and some of them went abroad during the late [Civil W]ar. They lived in luxury, at the same time at less cost, in a foreign capital; they had none of the voluntary obligations which rest upon citizens, of charity, or contributions, or supporting churches, or anything of that sort, and they escaped taxation.”
– Senator George Hoar (Rep., Mass.) , 1894
So, while the US government complains that Americans abroad have off-shore bank accounts, it freely donates billions to illegal immigrants. Next, Romney will show that he is tougher on off-shore accounts than democrats and more generous to illegal immigrants, while Americans abroad continue to renounce in record numbers.
@Don, great quotes. But furthermore, it was a way in which the US government would carry on wars, popular or unpopular, and anyone who did not agree couldn’t just simply walk away and say, “I’m not gonna fight for you; I’m leaving”. It’s the same thing all over again. But today, the emphasis on paying one’s “fair share”. But it is sick and abusive, because the fair share pays the food stamps, welfare, social security, and now Obamacare for a population so used to low taxes and politicians who promise them everything except to raise their taxes (i.e., the majority). Listen Prof. Green, if you want your Democrat party to fix American, they have to promise both to raise taxes on the common worker to lower the debt, and to cut spending to about 1/2 of current expenditures. But your Democrat party is just as sick as the Republicans who want to cut spending (maybe just a little) but who don’t want to raise taxes. Your country is spending 1.5 trillion more than it brings in. This is childish and can’t continue. You heard that right, the US needs grown-ups to start running the country, who will make the tough decisions. Both the Democrats and the Republicans are mostly made up of adult children who have never grown up. The grown-ups are few and far between.
Do you realize how childish it is to expect expats to carry even a part of your big fat spoiled budget?
Petros wrote: “This is class warfare, because if you have no savings and you don’t have a job, you don’t have to renounce your citizenship”
Nobody has to renounce, but various factors encourage such, including finances. I view it more as being the result of a two-party system representing a population that knows little and cares little about life beyond US borders. 50% of Americans don’t have passports, 70% Americans have never left America, American abroad votes are heavily diluted among the 50 States and thus American politicians have no reason or motive to do anything for Americans abroad. The massive debt and the lack of political representation makes us prime candidates for tax without representation. It’s kind of like the Mafia.
@Tim and @zuludogm, I noticed that you mentioned representative Carolyn Maloney, her aide Benjamin Chevat, and senator Jim DeMint. I had never heard of them. Could you compile a list of people in Congress sympathetic to the issues? I live near Washington, DC so I suppose it would be relatively easy for me to contact them. (I already contacted Marylouise Serrato, director of ACA, and she said that we can meet when she comes to Washington later this year.)
@Swiss, It is perfectly like a the mafia. Why should we pay? As Don’s quotes show, we benefit from the protection of the United States. Well the USA has become the biggest threat to my well being. Thus, I need protection FROM the United States, and I pledged to the Queen of Canada in hopes that she would protect me. Stephen Dunn said he could not do that because of what happened in the events leading 1776. Well, things have changed.
@All
I have nothing against Congresswoman Maloney its just there needs to be more people involved other than her or this is never going anywhere. If some other members of Congress got involved and said they too are going to do something about this that would be a very good sign. Additionally the ACA Caucus has other issues they are involved with other than FBAR and Tax you need someone to specialize just in FBAR and tax.
*To the Democrats Abroad. First, thanks for the major push that your group is doing. Your take at the FATCA hearing was quite unique and personal. I cannot see that Republicans Abroad has been nearly so upfront on the issue.
Democrats Abroad must be somewhere up in the top 53 democratic groups–DC and Puerto Rico must be in there somewhere also. How can such a numerically powerful group not have one single iota of response from the mainline party? How can you not be granted a status someplace near to the status of, at least, say Rhode Island or North Dakota?
Note that Democrats Abroad issues are not at all diluted such as they might be in various states—what with abortion or guns or health care or family values or crime or drugs or Homeland Security or whatever is at the top of the list. FATCA is a very large portion of a very large group.
Do they not talk to you? Is it because you have coodies?
@Shadow Raider,
you can find a list of the people in Congress sympathetic to the issues on the “American Citizens Abroad” website, click on “american abroad caucus” (on the left handside). You might want to check with ACA first if this list is still current.
@Shadow Raider
There is another aide in Congresswoman Maloney’s Office that may be somewhat less busy and more accessable on this issue too named Elizabeth Darnall than her chief of staff Benjamin Chevat. I would tend to view them though as the most logical starting point on Capital Hill.
@shadow – i got my info from ACA.CH. On DeMint, that also came from ACA, but quite a few years ago. I think he proposed a bill that would have the letter G removed from the alphabet so that the word Gay would no longer exist and he wanted citizenship based taxation abolished as a rider to the bill. 😉 Which, if you think about it, is really the opposite of what a Democrat would do. Democrats propose sane ideas for the main bill and put the crazy stuff (like FATCA) as a rider.
@ShadowRaider
The other name I’ll throw out there who isn’t even someone in the Americans Abroad Caucus is Connecticut Congressman Jim Himes(Who represents the southwestern portion of the state i.e. Greenwich, Stamford, and Bridgeport). This is totally based on personal information some of which came from constituent conversations people had with his office. There are a lot of expats that used to live in Greenwich/Stamford/Darien etc.
(Capitol Steps, You Don’t Bring Me FLoricultrually Diverse Polyfragrant…..any more)
Could an expatriate apply for protection as an endangered species? Could he also get a Nobel Prize?