Representatives from American Citizens Abroad (ACA) and other groups advocating for overseas Americans are convening in Washington D.C. this week for the annual Overseas Americans Week (OAW). ACA and its sister groups will be discussing a Residency-Based Taxation (RBT) proposal with lawmakers and members of the Administration.
Geneva, Switzerland (PRWEB) February 12, 2013
Representatives from American Citizens Abroad (ACA) and other groups advocating for overseas Americans are convening in Washington, D.C. this week for the annual Overseas Americans Week (OAW). ACA and its sister groups are pushing for major tax reform for the estimated five to seven million Americans living outside of the United States. The groups’ proposal for Residency-Based Taxation (RBT), introduced to Washington D.C. legislators last November, will be discussed in detail with members of Congress this week. In meetings with legislators, ACA will stress that this vital tax reform would increase U.S. exports and create more jobs in the United States.
“We intend to explain to leaders in Washington that current U.S. tax legislation is severely penalizing Americans overseas, making it more and more difficult for them to grow their businesses and sell their products. This has a huge negative impact on U.S. exports and job creation back home,” says ACA Tax Director Jackie Bugnion, one of the participants in Overseas Americans Week.”
“To discuss Residency-Based Taxation, we have meetings scheduled with key legislative members and staff as well as the offices of the Joint Committee on Taxation and the Ways & Means and Senate Finance Committees”, Bugnion explained.
One issue of great concern which ACA will raise with members of Congress is the increasing difficulty of Americans living overseas to create and maintain normal banking access, because of specific U.S. laws. Banks in the United States are closing the accounts of U.S. citizens with overseas addresses, because of restrictions imposed by the Patriot Act. At the same time, banks overseas are closing the accounts of U.S. citizens living abroad, because of the complexity and expense of implementing the Foreign Account Tax Compliance Act (FATCA).
FATCA, a complex law passed in 2010 whose implementation is being phased in over a number of years, requires banks worldwide to report information directly to the United States Government on any accounts held by American citizens or green card holders, or face punitive fines on U.S. investments. Because of FATCA rules, American individuals and companies operating overseas are being shut out of partnerships and some are being forced to close thriving operations and businesses.
“Americans living overseas need basic financial tools to live and work, just like their fellow citizens living in the United States”, says ACA Executive Director Marylouise Serrato, who will also participate in the meetings. “Without access to bank accounts, Americans overseas simply cannot survive,” she concluded.
Legislative changes to alleviate these problems are being sought by all groups involved in OAW and by numerous members of Congress, led in particular by the Americans Abroad Caucus, which is chaired by Rep. Carolyn Maloney (D-NY). Rep. Maloney has introduced legislation (HR 597) that calls for the creation of a Presidential Commission to investigate how current U.S. legislation is negatively affecting American citizens working overseas.
For more information on events during the week of OAW, please visit the website: http://www.overseasamericansweek.com or contact:
Marylouise Serrato +1 202 322 8441 or info(at)americansabroad(dot)org
I wish them luck. The problem here is that “homelanders” have no capacity to imagine life or a world outside the U.S. It’s not their fault. They just can’t do it. Furthermore, the US has a fundamental hatred for anything outside the U.S.
Assuming citizenship-based taxation is to remain:
The best proposal would be the following:
Just charge every U.S. citizen abroad $1000 a year to maintain US citizenship. No comples filing required – just a payment of a fee. This would make life simpler for all. Those who didn’t want to pay the fee could renounce or go home. Those who did fine. I suspect the the US could get more revenue this way. They wouldn’t have the costs associated with the returns.
This would be too simple for the U.S. government. Furthermore, it does NOT recognize the U.S. hatred of “foreign spouses” and children who are NOT U.S. citizens.
Therefore, to facilitate complications and in recognition of the “impure” family and to maintain the marriage penalty, I would suggest:
1. A 50% surcharge for having a foreign spouse
2. A 25% surcharge for each child who was not a U.S. citizen
3. A 10% surcharge for each foreign mutual fund or other kind of PFIC
4. A $25 charge per foreign bank account
5. A $25 charge for any car owned that was not made by GM, Chrysler of Ford
6. In the event of travel to the U.S. a requirement that one fly on an airline that had its head office in the U.S.
7. In the event of attending of university/college outside the U.S. a demonstration that no U.S. university/college was available
Or just $1000 per year per person – wouldn’t that be easier?
Although not fair to U.S. citizens abroad, it would at least be less unfair.
This would be a recognition that (although the US government provides no services) that the US. by its very nature benefits its citizens.
Unfortunately, the IRS will just turn around and say look at how much money we’ve already raked in by cracking down on “tax evaders” and we’ll get even more when FATCA is implemented. Their hearts are in the right places, but they’re just wasting their time.
US banks closing accounts for those with overseas addresses is mentioned a lot but I have never had an issue with this. What exactly is in the Patriot Act that is being read as license to close accounts? Or is it just a loophole that some financial institutions chose to read a certain way to shed offshore customer accounts.
@ USCitizenAbroad
Your plan has simplicity going for it (I love simplicity) but my American husband (in a holding pattern awaiting Canadian citizenship) would say his American citizenship isn’t worth a single loonie to him right now. The USA has been so tyrannical in its treatment of its overseas citizens that IF there were such a thing as justice, the USA would completely cease its tax, penalty and form assault and then compensate its extortion victims with an annual gratuity to encourage them to retain their US citizenship. That way, perhaps someday, some of their former victims might condescend to return to the USA, bringing with them the benefit of their overseas experience. Okay, this comment is snarky but the USA is guilty of some very bad behaviour and I don’t want to see it rewarded, I want to see it pay a price for this.
Hurray for the ACA. These are the only people who are fighting for the rights of US persons overseas.
Note that the Commission legislation, first discussed here is back… http://bit.ly/Z8cwQ5
H.R.597 has been re-submitted by Rep Maloney..
http://1.usa.gov/Z8c1Fy
Latest Title: To establish a commission to study how Federal laws and policies affect United States citizens living in foreign countries.
Sponsor: Rep Maloney, Carolyn B. [NY-12] (introduced 2/8/2013) Cosponsors (1)
Latest Major Action: 2/8/2013 Referred to House committee. Status: Referred to the Committee on Oversight and Government Reform, and in addition to the Committees on Financial Services, Ways and Means, the Judiciary, House Administration, Energy and Commerce, and Education and the Workforce, for a period to be subsequently determined by the Speaker, in each case for consideration of such provisions as fall within the jurisdiction of the committee concerned.
@a, my understanding of it is that the Patriot Act requires that an American living abroad has a US address or US address history in order to have a US bank account. Without having lived in the US, it is difficult or even impossible for an American living abroad to open a US bank account without flying over to the US to prove their identity (assuming that they can do so without a US address). Banks may only allow for a US address to be entered into their system, and thus it might not be possible at all for an American living abroad to have a US bank account with or without funding a mail forwarder. Bank of America told me that I had to fly to the US to open up a bank account. Schwabs said that I could not open up a US account as a US person living abroad. The best way to learn more about this is to call US banks and to ask them if one can open up a US bank account without having a US address if one flies over to the US and shows a US passport to prove one’s identity at the counter.
In other words, it is probably easier for a US person to open up a bank account in Iran than in the US, assuming that Iran continues to reject FATCA. Yet, then US government would probably send the US person to jail for having a legal bank account in Iran.
@Medea;
” Their hearts are in the right places..”
?
I don’t think they’re ignorant of what they have wrought. By now, there is more than enough evidence, and the published public word of the Taxpayers’ Advocate to establish that they are and have tormented lots of ordinary people living outside the US, including those born duals, who have entirely legal accounts, and who owe the US no tax. There are the many entirely compliant ones who are denied banking services. There are the entirely compliant ones who are telling the US that compliance is very difficult and getting more so. They cannot be described as ‘tax evaders’ in any sense. IRS and Treasury know this, but are ‘willfully’ continuing down the same path – with possible tweaking a bit behind the scenes due to Canadian pushback or bad press leaking out in small dribs and drabs. These are not the methods of someone who has a heart, much less one in the right place.
I think that they don’t really want to catch the true homeland resident evaders. If they did, they would focus their limited resources first on those living inside the US.Wouldn’t you think their priority would be US residents with actual ‘offshore’ accounts in the Caymans and other known tax havens? But that would include very prominent US figures – and no doubt quite a few politicians – as well as their funders. Who is banking at Ugland House? See Bloomberg Markets. August 2004. 61. ‘The $150 Billion Shell Game’ by David Evans http://preview.tinyurl.com/an8jq9s and more recently, http://www.washingtonpost.com/opinions/obamas-hypocrisy-on-jack-lew-and-his-cayman-investment/2013/02/11/4382c754-73e9-11e2-95e4-6148e45d7adb_story.html http://ctj.org/ctjinthenews/2012/01/foreign_policy_house_of_19000_corporations.phphttp://www.uglandhouse.ky/ It’s not us.
So the IRS and Treasury apply their methods to ‘jaywalkers’ – and subject the non-willful minnows who came forward to rigorous methods – instead of looking at those more likely to actually be big time evaders. It’s like fishing by throwing a grenade into a tank of small fry.
If their results were so successful at catching big time evaders, don’t you think they’d break down those figures they keep announcing of the revenue they’re bringing in? And respond to the FOIs asking how much was actual US tax owed, and how much was FBAR and similar financial reporting penalties levied on entirely legal ‘foreign’ accounts?
I find it very hypocritical that NO individual US bank executives have gone to jail or been punished – and NO US bank has been prosecuted in court – the banks all settled out of court – though it is well established that they were actively courting illicit funds, shady depositors from money laundering drug lords, and aiding other financial crimes – but the IRS and Treasury doesn’t pursue them to the max. The US banks go on merrily to their next scheme, because even after they pay the settlement costs, they still came out ahead. Geithner considered them ‘too big to fail’.
They write us off, because we’re outside the US, and have no clout. Who cares what the fallout is for us?
The one thing that we can still do is to be politically active where we actually live with a non-US citizenship, and try and throw a wrench into US crossborder interests, and to vote with our feet – and renounce/relinquish where that is possible – and publicize the rising numbers who have renounced.
@badger, reminds me of that college party in the US that I went to as a kid. After the police broke up the party, they allowed all the drunks to drive home while hiding behind the trees to catch the 20 year old kids who walked a block home. That was the only time in my life that I got thrown into a detox center for drinking a half a cup of watered down beer prior to walking home. Funny enough, when I was 16, I didn’t even bother drinking beer in Switzerland, being legal at that age as it was.
@badger – I meant the ACA’s hearts were in the right place. The government has no heart at all.
Swiss, Ah, got it. So banking in the homeland then is more accessible for those who have only recently emigrated or who travel there regularly enough to periodically check on things in person. I guess that would be why some foreigners are able to use the US as a haven from their own countries taxes (an ironic fact that I don’t image many homelanders are aware of).
Badger, you make a good point about focusing resources to catch homeland evaders and that really not being the point. If they were to focus on homelanders, the PR fallout would bubble up and that wouldn’t be good. Keeping it outside the borders allows them far more freedom though the media is so much in love with Obama that I doubt that even a jihad against homeland tax “evaders” would stir them to print truth about him. Though the little criticism there is goes largely unnoticed or is simply dismissed as “tea party” nonsense.
$1000 per year? What an insult! I’d rather be Canadian!
But, I have to wait a couple more years before I can apply for Canadian citizenship.
So, what does that mean? Do I pay this $1000 extortion money for a document that I do not even want, just to fund a tyrannical bully? Or am I supposed to return ‘home’ behind the financial Berlin Wall, to a country that I now consider alien, and abandon my spouse?
I want to be free! I want to be at peace with my family! In Canada! There is nothing that the US can do to get me to want to come back anymore. I’m gone. I intend to renounce as soon as I can.
Furthermore, maybe some rich person can throw $1000 down a bottomless pit every year without breaking a sweat. I don’t have that luxury. That $1000 has to feed my family. Why should I give that up in exchange for nothing?
@a, while being accused by one blind commenter of being a “tax cheat”, I once mentioned to a homelander (retired military reporter?) that I have a US bank account and that the bank told me that they didn’t have to send me any tax information after I had inquired why the link to tax information stated that such was unavailable to me. The homelander stated something along the lines of this being wrong and that I needed to fix the situation so that I wouldn’t be a tax cheat in the eyes of the IRS. Since then, the only thing that has changed is that I’m no longer a US citizen. I guess that I’m still a “tax cheat”, except that I earn no interest to be taxed. Now, if the account earned interest, would the tax link then work? Maybe I should find out, given that 50 cents in interest every year might eventually get me a free snickers bar, if it is not taxed by 90% prior to bank fees!
@mjh49783, 2012 will be my last year of filing 1040 without paying more than $100 in filing fees. If I get audited for renouncing, then you’ll read about it. In my view, free-filing is a must if global double-taxation is supposed to be justified.
Swiss, US banks no longer supply tax info for accounts that earn less the X amount of interest a year. I am not sure what the amount is but given that many checking accounts aren’t interest earning and savings vehicles are pitiful b/c of the Fed’s stranglehold on ridiculously low interest rates, I would guess that many homelanders no longer get tax info on their accounts either. Then have to save their end of year statements were the year’s interest is stated for their filing and record keeping. It’s not an in or out of country thing.
MJH, that’s kind of the problem. People of disposable income means are not going to be hurt really regardless of what ends up happening. They can afford to file and comply or they can afford to pay a luxury tax to live outside the country. The question becomes – what is the US willing to do for those who cannot move back, aren’t really owing taxes to the US anyway and yet aren’t in a position to renounce yet or ever? Why are we paying for the so-called sins of the “wealthy tax evaders”? I mean really. What is this actually about? I don’t believe for a minute that tax evasion has suddenly b/c this huge issue for the US via expats. Something else is going on. It’s not tax evasion or even the chance to scoop up a bit of bonus cash via scaring people into playing tax filing catch up so they can be fined.
Sigh, sometimes I just wish for a zombie apocalypse to hit the US, so they will leave us all alone.
mjh49783, you sound a lot like me. I’m just waiting for my naturalization paperwork to move further along. I might [doubt it] be able to wait until everything is approved and then I relinquish instead of renounce. I don’t know about you, but I just got so tired of mentioning the issue to “US-resident citizens”. With the their day-to-day lives, they just don’t care and I doubt ever will. Everything they put in the media is a distraction to the real issues. Remember when Obama won and some people were threatening secession? I already forgot what the the new “distractions” were, but surely they came around like clockwork and you no longer hear about people wanting to secceed. The US = major headjob, in my opinion.
Just one last one before I clock out for tonight: Years ago… maybe 13-15 years ago, I was in Europe. Clinton ordered a strike on the Serbs. The Serbs shot down a STEALTH FIGHTER! It was ALL OVER the news in Europe. I called my parents to see if they had seen it. Their response “What are you talking about?” as if I were making the story up. The event is in Wikipedia, so it’s even more confirmed that it really happened. But why not so much as a peep in the US media? The US is a master at putting just the right ingredients into the pot at the right time to get their desired outcome. We definitely know how they try to spin the expat issue.
I wonder if the Stepford Wives (Dems Abroad for those unfamiliar with the nickname) will show up to say just how wonderful things continue to be for Americans living abroad with their man remaining at the helm.
@mjh49783, Try TaxAct for filing, free online software (for the current year) for those who are in lower income brackets, provided you don’t own any foreign mutual funds, and most of your income is “earned income” it should be no problem using this program. See http://isaacbrocksociety.ca/2012/04/25/my-2011-taxes-taxact-free-online-preparation/
I find that the Overseas Americans Week position papers (appear to have been written in conjunction with AARO and FAWCO) are not harsh enough with respect to the banking problems we face abroad and their effects. The position paper on “Banking” http://www.overseasamericansweek.com/documents/2013/oaw2013banking.pdf only mentions problems dealing with US domestic banks, while the FATCA position paper (http://www.overseasamericansweek.com/documents/2013/oaw2013fatca.pdf) does not stress that even modest USPs aborad are losing current accounts, rental deposits, credit cards including especially pre-paid, and even jobs, spouses, and families.
The residence-based taxation position paper mentions FATCA and that people are increasingly being forced to renounce in order to live a normal life, but does not mention the double taxation of welfare, unemployment, disability, and retirement pension benefits as “unearned income” outside of the FEIE: http://www.overseasamericansweek.com/documents/2013/oaw2013rbtonepagesummary.pdf
Unfortunately, in efforts to make the position papers simple, a lot of very important arguments and examples have been omitted. This is very disappointing.
@Badger You write:
This is a bit off subject to the thread headline, but since you mentioned it, I thought you might be interested in watching this Frontline program, which is exactly on the subject you mentioned.
http://www.pbs.org/wgbh/pages/frontline/untouchables/
Unfortunately, the ACA proposal contains a weird exit tax proposal—-in order to try to pre-empt the critics. It ads a lot of confusing discussion, while also it is not a good position
@USCitizenAbroad Love, love, love your suggestion.
@Just me. Thank you for the reference to that program. I know it is getting off topic here, but here is additional discussion of this (both re large US banks and large banks elsewhere). …”Having different “justice systems” for citizens based on their status, wealth, power and prestige is exactly what the US founders argued most strenuously had to be avoided (even as they themselves maintained exactly such a system). But here we have in undeniable clarity not merely proof of exactly how this system functions, but also the rotted and fundamentally corrupt precept on which it’s based: that some actors are simply too important and too powerful to punish criminally.”…. from http://www.guardian.co.uk/commentisfree/2012/dec/12/hsbc-prosecution-fine-money-laundering http://www.telegraph.co.uk/finance/newsbysector/banksandfinance/9743839/Banks-are-too-big-to-prosecute-says-FSAs-Andrew-Bailey.html
What is related to IBS, and the ACA activities during American Citizens Abroad week is that it is becoming publicly acknowledged and entrenched that the largest US banks are not only now ‘too big to fail’, but now, there is public acknowledgement by lawmakers that they are also deemed ‘too big to prosecute’. That further entrenches the discrimination against ordinary individual US citizens and ‘taxable persons’ living outside the US, because the US is admitting that it cannot and will not prosecute banks and large financial entities under the BSA for money laundering, yet it will prosecute individuals with legal local ordinary post-tax bank accounts if they live ‘abroad’ and merely have not filed FBARs and the FATCA form. The ACA may not be able or willing to point this out, but the US hypocrisy is glaring – US corporations can hold their assets ‘offshore’ to actively avoid paying US tax on it – and thus profit from keeping it all outside the US. US Treasury secretary Geithner can avoid being penalized while having owed substantial sums to the IRS over a stretch of multiple years. US politicians can park money in the Cayman Islands. US domestic banks can assist non-resident depositors to money launder, and profit off it.
But ordinary citizens/duals born and/or living outside the US, and green-card holders with ordinary bank accounts outside the US, where they live, are suspect and persecuted.
@Mark,
ACA needs to propose something that is possibly seen as benefitting lawmakers (this is how Congress works, lawmakers only understand the language of keeping office; remember, the US congress has become a gerontocracy as there is no constitutional term limit). If ACA were to take a hardline position, it would have no audience in its talks.
ACA is proposing something which in Congress’ view has the potential benefit heavily reducing the number of Americans renouncing citizenship, particularly middle-class Americans, which also would be tax revenue beneficial and which would also weaken the argument for resource and budget hikes at the IRS.
Open criticism of renunciants (particularly wealthy ones) by congressmen goes to show that the US government does not have the political courage to publicly examine the root cause and that these renunciations are in fact politically embarrassing (citizenship renunciations are a very rare phenomenon in true developed democracies, apart from Depardieu, an actor pulling an act; relinquishments are an exception).
Note how not one congressman said a word about Tina Turner and she probably won’t be the last iconic American to say goodbye. This is a political minefield that clueless politicians in the US want to avoid. Citizenship-based taxation as it stands can start to become a political liability in the US. Those that lobby this point hard will succeed in having the current system replaced.
ACA gets coverage from Geneva Lunch article on the Swiss signing of the IGA…
US-Switzerland sign controversial Fatca agreement (update)
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