“The “Same Country” Exemption, sometimes referred to as “Safe Harbor” Rule, is the product of collaborative work among several groups representing Americans abroad. A detailed description was prepared by ACA and draws upon ideas and work of the other groups – which ACA greatly acknowledges. ACA is solely responsible for its content. This paper (attached) was drafted by Charles M. Bruce, Legal Counsel, ACA. Questions and comments are invited”
An individual residing in a foreign country could elect, but would not have to elect, to have an account treated as a “Same Country” Account by providing an election to the relevant FFI (such as, the individual’s bank) and attaching a copy to his or her regular Form 1040 or Form 1040NR. The FFI would then be relieved from the requirement to treat the account in question as a US account and to process and report information with respect to it.9
The “same country” exemption would not affect in any way the requirement to file a Form 1040 or 1040NR. Nor would the “same country” exemption affect in any way negate the requirement to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).
An American taxpayer subject to the Form 8938 filing requirements, who had elected to have one or more accounts treated as a same country account by filing the above-mentioned election, could omit the account(s) from his or her Form 8938. The account would not count for purposes of determining whether or not one of the reporting thresholds, set forth in the Instructions to the Form, are met. IF AN INDIVIDUAL ONLY OWNED ACCOUNTS AS TO WHICH HE OR SHE HAD MADE A “SAME COUNTRY” ELECTION, THERE WOULD BE NO REQUIREMENT TO FILE THE FORM 8938
And what if I only file taxes in my country of residence? The problem remains. Safe Harbour or not, the U.S. Government needs to abolish citizenship-based taxation now; they are looking increasingly stupid and incompetent by the minute.
And how does this make USP’s any less of a hassle for FFI’s?
Its lipstick on a pig meaning its still a pig
The longer I am embroiled in this the more cynical I become.
In order to claim SCE one has to be tax compliant. This is a sneaky way to get all of those non-compliant on the books.
The banks have never agreed that this method will lighten their burdens/penalties allowing them to keep banking available to USCs.
The DA, ACA needed to appease their constituents without ruffling the feathers of the DNC. This is a half baked attempt to appear to be do something to soothe our rage. They assume we are ignorant enough to be grateful.
I don’t understand where one is supposed to send those questions and comments ACA is supposedly inviting. Not that I would send anything but someone here might want to. They can call this submission anything they like but I still think their “Safe Harbor” is loaded with sea mines.
The exemption accomplishes nothing at all other than to give the appearance of the U.S. having done something and of expats having been heard. I don’t see any reason why the U.S. would adopt this modification to FATCA since it would put the U.S. right back into the position of relying on individuals to self report. Which is exactly what the U.S. believed was one of the problems.
We either go for RBT or nothing at all. Same country exemption is nothing but CBT light. It isn’t worth any kind of serious consideration because it really doesn’t change anything with regards to the extraterritorial application of U.S. tax law and its restrictions on mobility freedoms of the U.S. individual.
They have been repeatedly admonished since their “Door Knock” campaign pushing this waste of time, often quite harshly, on FB. (https://www.facebook.com/americancitizensabroad?fref=nf ) If you go there you will notice that the newest entry regarding SCE has no comments. BUT….if you scroll down a bit there is the very same entry regarding this with a LOT of negative, really smart comments. Ummmm wonder why they reposted it? OH, I guess any new comers to the site will see no comments, not bother to scroll down far and believe everyone thinks this is totally groovy. They NEVER respond to the comments. (As you can see I have my crabby pants on today….again!)
Loaded with sea mines???? More like loaded with stealth nuclear submarines trying to ferret out anything hiding in them there waters.
Thanks for pointing out the facebook thing… u are right… at the beginning…. posts all look stepford like… next post will be… how to iron a shirt for perfect look… here is my solution… take it to the cleaners… I don’t iron…
Here is one suggestion much easier (than ACA’s remarkably quick and easy) to put in place / what Shadow Raider suggested in his submission to the Senate Finance Committee (http://isaacbrocksociety.ca/2015/04/09/for-the-senate-finance-committees-attention-and-study-common-sense-suggestions-for-tax-reform-to-remedy-the-fatca-discrimination-of-us-defined-us-persons-who-reside-abroad/:
This SCE proposal is designed only to deal with a supposed unintended consequence of FATCA, namely the denial of banking services to overseas Americans. However, as other comments have noted, is this really a practical solution from the FFI’s point of view? Would the USP have to certify every year (with a new 1040) that they qualify for SCE or is it one time only? If not every year then the USP could fall out of tax compliance and not be penalized for doing so. If every year, then the FFIs still have a huge risk in having USP accounts.
I would also think that every IGA would have to be amended to include SCE language – surely not a small undertaking and its doing of no advantage to the non-USA party to the IGA.
So let me get this straight: I supply even more private personal information to the bank in order for them to not report my account? Which adds another layer of compliance burden and cost to the bank, so that if they’re not yet fed up enough with having US customers, this will be the back-breaking straw?
The Democrats Abroad are geniuses: solving a problem by making it worse!
This servile and thoroughly unworkable Same Country Exemption proposal perfectly reflects what America has become: a myopic wasteland mired in self-defeating technocratic laws and incapable of perceiving, let alone correctly responding to, the bigger international picture. I marvel at the tremendous amount of energy that ACA, DA and all the other unnamed participants have expended on a project of such breathtaking deficiency and futility.
This half-baked, half-a-loaf idea merely transforms tax slaves into indentured tax servants, still unworthy of true justice or freedom from CBT and forced to pay continued tribute to the plantation until God finally calls them home to the one place where they might finally be free of American tyranny.
Those who promote this flawed idea are acting strictly out of narrow self-interest at the expense of a far larger group of US Persons who will never find their own relief from the IRS and American government if this proposal becomes enshrined in yet more bad law as some magical fairy-dust solution to the FATCA problem.
Sorry, but only the complete demolition of CBT will suffice and I will go to my own grave fighting on the right side of history. Beware the siren song of “Safe Harbour Rules” and other obfuscating nonsense which would offer only illusory freedom for a very few while legitimizing and condoning the fundamental injustice of citizenship-based taxation.
One does not rout injustice by seeking accommodation with it and that is all this morally-bereft, “peace for our time” ACA proposal offers. It is a sad testament to an organization that I used to believe had a greater understanding of what freedom really means and of the true sacrifices which must be made to defend it.
They think EVERY USP wants to hand a copy of their 1040 to every FFI they are clients of, every year — seriously? Really it’s too ridiculous for words. Of course, they would also have to come up with a system to verify that the 1040s are not fake 1040s and the IRS doesn’t do the equivalent of a Notice of Assessment like Canada does … it’s beneath them to give anyone a smidgen of peace of mind.
I got the wrong party in my first comment — should be ACA not DA. I went to the ACA FB page (thanks Charl) and found it interesting that at the top, fixed in place, is their condor list. And why the big clock? Tax time for Overseas Americans is June 15, not April 15. Anyway after scrolling way down I found the comments on SCE and they are GOOD. You can eliminate the scrolling and the clocks by going here:
I am reminded of the wonderful Will Rogers quote that Lynne posted over at Sandbox:
“The difference between death and taxes is that death doesn’t get worse every time Congress meets.”
Replace “Congress meets” with “every time ACA or DA open their mouths about ‘fixing’ FATCA.”
This is mind-bogglingly pathetic. And it doesn’t even affect me … but I’m still stunned by how thoughtlessly stupid this is. One doesn’t know whether one should laugh or weep.
ACA thinks that a position of “incrementalism” will like lead to RBT but that is flawed. DA is captive to party policy.
I am not seeing how Safe Harbour Exception will relieve banks from their compliance or compliance penalty burden. They still have to vet all there accounts, any new accounts, and perhaps repeatedly existing accounts periodically to make sure no USP got in there. THEREFORE, it appears that no burden has been lifted on banks so the same pressures of lock out remain. NO BENEFIT.
However, there could be this addition to “Safe Harbor Exception” I have not heard talked about. You live in the same country then you are relieved of FBAR and 8938 penalty burden as then these accounts are not treated as “foreign accounts.” So where is mention of this?
Wrong about 8938. Says don’t have to submit 8938 for accounts in country of residence. Therefore no 8938, therefore no 8938 penalty for not reporting. For people who think they are compliant/strive to be compliant this is a big relief. On that nasty 8938 form, one needs to break down any income from an account and also say on there what line of the 1040 this income shows up. I say this is a good change, as well as the removal of the 8938 penalty.
Yet there is this contradiction: one has accounts that under FATCA are considered non reportable because not “foreign” but fully reportable under FBAR as if “foreign” and with “foreign FBAR” non report penalties still to apply in full. I say it all should go a step further: for accounts in country of residence then FBAR penalties should not apply as they would for “foreign” accounts. Of course, FBAR penalties are unconstitutional as they represent excessive fines, and should be massively rolled back in the first place for those US persons tax resident overseas.
@JC I say it all should go a step further and SCE should require a one time one line notification to the IRS stating: I do not live in the US I will notify you if and when I return. This would only be required if one gets notification from the IRS inquiring about tax obligations. (I think it is called residency based taxation but maybe they would buy it if we didn’t actually use that nasty term and they could save face).
This would be a bit better than nothing, but I’ll remain as a non-US citizen.
This proposal deputizes the bank to be an IRS official. Review, scan, and copy the 1040, and save for future kidnappings.
Charles M. Bruce, Esq……. American Bar Association (Section of Taxation, Committee on Foreign Activities of U.S. Taxpayers),
Bloomberg BNA is a leading source of legal, tax, regulatory and business information, delivering essential, innovative solutions to professionals.
OK, same-country exception is a piece of junk.
Not to mention that in the EU it is as common to have bank accounts in different countries as it is in the US to have accounts in different states.
The only same-country exception that would help would be to treat accounts in your country of residence the same as US accounts for a US resident. That is, they would not be reportable, neither by the holder nor by the bank. E.g. if I live in France, none of my French banking is reportable (and by extension none of my EU banking). But my accounts in Hong Kong remain subject to FATCA.
In effect this would help people who live simply and long term in another country.
But this would still be farcical in the case of someone moving around a lot. Leaving France for Hong Kong would make the French accounts reportable, but shelter those in HK.
Oh, never mind.
Agreed, EmBee, a filled in 1040 is not proof of tax compliance!
Very inspiring, passionate comment, Deckard1138. Thank you.
RBT is the only logical and just solution. Any proposal that allows the U.S. to save face is still going to be a variation of CBT. The I.S. has no right to put an ankle bracelet on expats. U.S. law for U.S. territory.