An impressive new article by Jason van Steenwyk for NerdWallet Investing. Jason, a freelance writer living in Fort Lauderdale, provides a well-informed and sympathetic portrayal of FATCA’s looming threat to US Persons worldwide. No comments yet, so I might suggest that we offer our feedback and encouragement. Nice to see another homelander get it right.
@Deckard1138, great article…I wished he would have also mentioned snowbirds from Canada and how they will be affected….
It’s amazing how rational an article can be when patriotism doesn’t enter the picture.
An excellent article really. Thanks for that Deckard1138. Surprising to see as rational an evaluation of the situation as that.
There are , as always, a few errors. When he talks about pension plans I don’t think he has registered plans in mind.
His analysis of the chances of congress changing anything is spot on.
Another good article from @OutsiderClub. He lives in the US but apparently a friend of his in Ecuador renounced US citizenship recently.
http://www.outsiderclub.com/should-you-renounce-your-citizenship
“The fix does not seem to be on Congress’s radar at this point.” Disagree. The fix would be moving to a residence based taxation like the rest of the civilized world enjoys. The Committee on Ways and Means for tax reform is considering doing just that:
http://www.finance.senate.gov/issue/?id=0587e4b4-9f98-4a70-85b0-0033c4f14883
Part IV
BB Don’t hold your breath.
@KalC
Acknowledged.
@all
Please feel free to move this if its in the wrong place. In trying to follow the link for this article, I got a bit lost on the site, so searched it for FATCA and found the following petition which seems very relevant:
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“Subject: Repeal FATCA
Hi,
American citizens abroad are being disproportionately punished by laws aimed at money launderers and people using offshore investment for the purposes of tax evasion. FATCA and FBAR are unfair and unconstitutional when applied to citizens resident abroad.
That’s why I signed a petition to The United States House of Representatives and President Barack Obama.
Will you sign this petition? Click here:
http://petitions.moveon.org/sign/repeal-fatca?source=s.em.cp&r_by=8750191
Thanks!”
———–
I signed it with the following (rather long) comment. Will take the liberty of pasting it here too…. and now I’m off to try again to find the original article, as it sounds interesting.
Here’s my reply to the petition:
I can remember once praising the US federal tax system to a lawyer acquaintance, and enthusing about its fairness and clarity. But that would cetainly NOT be the case today.
Over the past decade, US rules relating to overseas holdings and their related penalties have been astronomically expanded, with many gross injustices resulting, such that many overseas Americans now live in fear of the land they love, and are prevented from taking jobs, making plans, opening bank accounts, or even marrying.
The new rules (which were directed at deliberate tax evasion schemes) have inadvertently caused normal overseas families (many of whom owe not one single dollar of US tax) to be compelled into filing extremely complex US tax returns (100 pages is not unusual) or face incredibly severe penalties, and they also face paying thousands of dollars to tax preparers to help them through the mountain of forms and complex instructions.
Penalty amounts are astronomical for forms such as the fbar and the 3520, and can total hundreds of thousands of dollars, even when not a penny of actual tax is owed and in circumstances where a comparable stateside resident would face no penalty at all. Proportionality has gone “out the window” to be replaced by a vicious, intimidating bullying.
KEY ISSUE NO. 1: A major root of the problems is that the US rules consider a bank to be “foreign” (as in “they stashed it offshore….”), without regard to the fact that a bank account in one’s country of residence is a necessity of life that has to do with depositing one’s paycheck and paying the water bill, as is one’s work pension account. It would be a huge improvement if the definition of “foreign” could be altered to exclude the country in which one lives as well as the US. Such a recognition of reality would avert many of the most severe problems.
KEY ISSUE NO. 2: These rules are enforced by threats of huge penalties completely unrelated to tax owing, and are therefore experienced as unjust, and even as criminal. They will not be respected until they are made proportionate to the tax owed.
KEY ISSUE NO. 3: The methods used (for situations such as capital gains tax) are also often structured so as to produce grossly unfair outcomes due to fluctuations in exchange rates. (Where else can one sell one’s house at a loss and then have to pay capital gains tax on the loss?)
These problems remain invisible to the majority of homeland residents, for various reasons but they can have life-shattering impact on their kin living overseas, and are also undermining the US’s claims relating to “liberty and justice” which are so crucial as to who we are.
For example, the same US person living stateside and having an income too low even to file a 1040 can in identical circumstances overseas face penalties in the tens of thousand of dollars simply by having saved for retirement in a local bank or pension system, or – even when possessing no money at all – by acting as power of attorney for a incapacitated parent. Some of the most heinous results come from the fbar rules, but there are many other situations too where rules written in haste to catch deliberate cheats are making life hellish for ordinary people.
It’s a very sad fact that even after payingt tax consultants thousands of dollars to prove they owe nothing, overseas US citizens can live in daily fear that still more may be required.
And if that feeling is true for those who know and love the US, what must be the feelings of those many persons who have by the expansion of these laws been arbitrarily designated “US persons” compelled to pay taxes to a country they have seldom or never entered and which they have no reason to love. (Their lot seems more suited to a grotesque sci fi novel than to the country which espouses “liberty and justice for all”).
Where once the decency of the system created love and loyalty, now it provokes fear, worry, and even loathing.
I strongly urge you to consider the three “key issues” identified above as clues toward resolving this sad situation. Thank you.
Thanks Deckard1138 for this splendid article!
Jason van Steenwyk presents a powerful account of our plight, in a fair, even-handed and authoritative manner – such that a homeland reader might really be swayed by his words.
(It was SUCH a relief to encounter this, that I slept really well for the first time in months the night after reading it. There is perhaps hope after all that the world “out there” can “get it” about our plight.)
Now, how do we get them to read the article???
Hello, everyone, and thanks very much for your feedback and kind comments!
With regard to the registered pension plans, you are quite correct.. I didn’t have those in mind. Honestly, I don’t think I know anything about them! I was simply thinking of ERISA plans.
Best of luck to all my countrymen in Canada. Send more Andre Brunet fiddle recordings!!!
Jason