As a solution to the problems caused by FATCA, American Citizens Abroad (ACA) proposes that FATCA be tweaked by imposing on “US citizens” abroad a “Same Country Exemption with mandatory IRS compliance” (SCEWMIC). SCEWMIC is likely to make the unjust FATCA law even more harmful.
Go to the links below for info and also read: “Why ACA supports Same Country Exemption (SCE) rather than repeal of FATCA, and why SCE will work to correct banking lockout by Foreign Financial Institutions.”
If you don’t like SCEWMIC then tell ACA exactly what you think in an email.
E-mail Mr. Charles Bruce, ACA Legal Counsel, at info@americansabroad.org
You can ALSO comment at ACA’s FB site: https://www.facebook.com/americancitizensabroad
[OF COURSE, you can argue that an email to Mr. Bruce, or to ACA, will not change their minds on SCE, but are you really so certain that when an organization claiming to represent “YOU” makes a bad proposal that will cause you harm — the best way to proceed is to remain silent and not confront that organization? Those who feel that all U.S. laws are irrelevant should not read further.]
So… here’s what you would have to do to make the SCEWMIC election:
“…An individual would complete the election on a 1-page, front and back, IRS form providing the individual’s name, address, Taxpayer Identification Number [Everyone has one?], and country of residence, and listing the “Same Country” accounts (name and address of bank and name, number and type of account, i.e., depository, custodian, etc.). The individual would certify that this information is correct. Also, the individual would state that he or she is a resident of X foreign country and the bank(s) are licensed and regulated under the laws of X country of residence (the same country where the individual is a resident). One copy of the election would be given to the bank; a second would be attached to the individual’s federal income tax return; a third would be retained by the taxpayer [NOTE TRANSITION IN PARAGRAPH FROM “INDIVIDUAL” TO “TAXPAYER”]. Instructions would be included on the form. Taxpayers would be warned that filing the election does not excuse them from having to report any income on the account on their tax return or from having to file an FBAR, provided in both instances they meet the applicable thresholds…”
Mr. Bruce explains to Bob Stack at Treasury why the ACA proposal is a really good deal for the IRS:
“In addition to benefiting American citizens abroad and foreign banks, the “Same Country” exemption will benefit the IRS. Americans abroad, in order to get the benefit of greater access to banking services, will need to come forward and file their US tax return, with the “Same Country” election attached. This will help address the nagging problem of noncompliance.”
Read Mr. Bruce’s letter to Treasury and ACA’s SCEWMIC HERE and HERE.
— and take a few minutes to email your thoughts to Mr. Bruce…
Here are two responses just received from ACA regarding SCE concerns:
“Thank you for contacting ACA.
Same Country Exemption is not a replacement for Residence-based taxation.
ACA continues to advocate for Residence-based taxation (RBT). And, in fact, ACA is the only organization that has developed a proposal for RBT. None of the other overseas advocacy organizations, either non-profit nor party affiliated, have developed a fully written and considered proposal.
ACA’s RBT proposal has been cited in a variety of the tax writing committee reports; Joint Committee of Taxation, Senate Finance and Ways & Means.
See our complete proposal and work here: https://www.americansabroad.org/taxation/
ACA conducted a FATCA survey with the University of Nevada at Reno. The results of that survey indicate that Americans overseas believe that SCE would alleviate the problems of banking lock-out. See: http://acaglobalfoundation.org/PressAndMedia/3748196
As ACA has explained before, Repeal of FATCA would require Congressional vote. ACA does not believe that the Congress, in its efforts to combat tax evasion legislatively, will achieve the majority vote to repeal FATCA. SCE would help alleviate the bank lock-out problem and is achievable as it does not require Congressional vote but simply a regulatory change. This knowledge is a result of our long standing work directly speaking with Congressional offices and committees involved in tax evasion legislation.
As noted in our Mission statement, “ACA works to find practical solutions to resolve issues impacting overseas US Citizens and communicates results to constituents stateside and abroad,” (https://www.americansabroad.org/about/ ). ACA’s proposal for SCE was not developed solely with Europe or Americans living in Europe in mind. ACA does not believe that working toward repeal of FATCA is a practical way forward in getting Americans overseas immediate relief from FATCA. Please see our statement on this here: https://www.americansabroad.org/…/why-aca-supports-sce….
ACA as well has spoken with Foreign Financial Institutions (FFIs) on the viability of SCE to alleviate the bank lock-out problem and reported on our findings here: https://www.americansabroad.org/…/Treasury_Ltr_Same…
ACA regrets that you do not appreciate our work on behalf of Americans living and working overseas, however ACA will continue to support it’s efforts with RBT and SCE.“
The above ACA email was just posted on American Expatriates.
AND:
“Thank you for contacting ACA.
For a full explanation as to why ACA believes that Same Country Exemption is workable and why ACA believes that a repeal of FATCA is not achievable please see: https://www.americansabroad.org/…/why-aca-supports-sce…
ACA”
The above ACA email was posted on: https://www.facebook.com/groups/citizenshiptaxation/
Here is the writer’s response to ACA (posted at the above website):
“Thank you, for your email reply. I have read the documentation you provided. My net takeaway, from your piece, “Why ACA supports Same Country Exemption (SCE) rather than repeal of FATCA, and why SCE will work to correct banking lockout by Foreign Financial Institutions,” is simply that rather than attempting to help American expatriates, by taking the more difficult road, the ACA would rather take the easy way out that does not rock the boat or risk displeasing the US political elites. So, I’m left wondering why the ACA calls itself “American Citizens Abroad.”
With whom, in what countries, and how many American expatriates has the ACA spoken, to come up with its SCE position? Why should American expatriates have to file anything with their banks or the IRS relating to what, for us, are our local bank accounts, when homeland Americans do not have to do this (even those hiding their assets in Delaware Corporations)? Why should we have any confidence that our being “locked out” of FFI services would improve? My reading, of your document, which may be incorrect, tells me that the ACA proposal might make the whole situation, with FFIs even more convoluted, and perhaps expose us to even more discrimination. I would think that you should include, in your paper, something from a significant number of FFIs (not just a few), from varying geographies, indicating that they endorse your views and will treat us more fairly. Did I miss this?
At the end-of-the-day, we expatriates simply want to be treated, in our relationships, with our local banks (which may also include, for good reason, banks in neighboring countries, just like US banks, in neighboring States) no better, nor no worse, nor no different than the relationships that our fellow homeland American citizens have with their banks in and across the US. That seems, to me, to be a pretty reasonable request for support, from an organization like the ACA. Isn’t the real problem that FATCA is an unjust attempt to circumvent the 4th Amendment to the US Constitution? I recall when I opened my accounts, nearly two decades ago (well before FATCA), having to sign a form authorizing my bank to give the IRS full access, to my accounts, upon production of “probable cause.” FATCA shifts the burden of “probable cause,” from the US government to the FFIs and finally to the expatriate Americans. This is an unfair and non-equal treatment of US citizens, under the US Constitution.
Your paper claims that, “ACA works to find solutions to problems facing the overseas community that can be easily implemented.” Sometimes, the less easy and more difficult road is the right road. I know quite a few American expatriates, who would rather take the risk of working for something right, than settle for something wrong, or just easy. That’s why I would rather the ACA work tirelessly for the best solution, as opposed to coming up with something that appears to me to be an easy convoluted way of maintaining the status quo. Having fought and lost is better than not having fought at all. What would have happened to the Colonists, had they just looked for an easily implemented solution to what were actually far smaller issues, back in 1776?
Respectfully,”
I honestly can’t see how a bank or other financial institution will make head or tail of a U.S. tax return. Schedule B and FBAR maybe, but the insured amount at U.K. banks is well under the 8938 limit, so nobody should have that much money in a single institution. Also, people will just hide.
I can’t fathom why anyone would think a bank would accept a US tax return as being filed. We don’t even hear back from the IRS. Taking in a return, even with a proof of postmark does not equal proof of filing. Besides, has any bank indicated they would be willing to add more to their load? SCE is ridiculous.
@PatCanadian, re; “.it seems the USA acts as an empire and treats Canada and other countries as colonies subject to its tax law.”
And those other countries bow to the emperor – naked or not.
Now we have a proposal for NON-US banks to see even more personal and private data – US returns and accompanying reporting forms (since total US ‘compliance’ means compliance with each and every one of all the myriad of punitive additional reporting forms for those ‘abroad’, like the 3520, 3520A, etc.). This would be in addition to NON-US banks being arbiters of who is or is not a USperson and whether an explanation of why one doesn’t have a CLN or wasn’t a US citizen at birth despite a US birthplace. Anything else the ACA and the US will want our local ‘foreign’ banks to oversee and pronounce on?
How about whether those of the requisite ages have registered for the US military? Why not throw that into the mix too?
@badger says: “How about whether those of the requisite ages have registered for the US military? Why not throw that into the mix too?”
How cool would it be to have a Selective Service equivalent of FATCA to search for “Pre-Draft Evaders” who are shirking their duty by hiding out in Canada posing as Canadians? Both the US government and Justin Trudeau know they are really just “American Citizens Residing In Canada.” When Congress speaks, our Canadian government listens.
Honestly, I can’t wait for the ADCS lawsuit to proceed.
Can someone point me to the part of this proposal that says that the US citizen has to present their entire US tax return to the non-US bank? From my reading, admittedly a bit brief, it seemed that they are supposed to file a copy of the SCE ‘certificate’ with the bank, and attach another copy of it to their US tax return.
Not to say this isn’t an unhelpful proposal overall. It’s just that I couldn’t find the requirement for non-US banks to vet full US tax returns in it, and if that’s absent then there’s no gain in focusing on it as a large objection.
@Watcher
In Switzerland, banks were asking to see past and present copies of Fbars and proof of posting.
I would think that banks themselves would only be concerned with Fbar reporting as that is where the risk of a 30% withhold lies.
Main issue in the ACA paper, and its last line: “Nor would the “same country” exemption affect in any way the requirement to file FinCEN Form 114, Report of Foreign Bank and Financial Accounts (FBAR).”
Therefore SCE as proposed is “poudre aux yeux”, powder in the eyes, or, in English, pure obfuscation.
The only good SCE I would accept would be one in which accounts in the country I live in are completely ignored and not concerned by FATCA in any way, and not regulated any more than accounts in New York are for a person living in New York. This would mean no FBAR, no obligations for the banks, nothing. Apparently I am not to hold my breath waiting for this.
All this will probably push up the desirability of renunciation. I suggest adjusting it to $5000, on the way to even more (sarcasm).
Let me get this straight.
The banks are excused from reporting US person accounts IF they can prove their American customers are resident in said ‘foreign’ country.
US persons living and banking abroad are still responsible for filing FBARS.
Banks will have to check if the US person accounts have a local residential address AND if they have filed their Fbars like good, obedient Americans let out on parole.
Looks like even more paperwork for the banks and still the risk of the 30% withhold for them.
Whoever said FATCA was only intended for fat cat tax dodgers and wasn’t also intended for innocent Americans abroad just trying to live their lives in peace?!
@heidi
Some banks certainly can — and have, and likely will — elect to go above and beyond, so who knows what SCE enforcement by non-US banks might look like. Swiss banks more so than others, for obvious reasons. I just don’t see anything in this proposal though, mandating that non-US banks deal with anything other than a one-page(*) same country certification form. Maybe I missed a detail somewhere.
(*) Of course, once the IRS has had a few years to ‘improve’ said form it will morph, as they always do, into something that is far from one-page. And we can rely on the odious ‘under penalty of perjury’ jurat so beloved of the US, no matter what else might go on it. If I were a bank I don’t think I’d be impressed by this proposal.
@Heidi, @Watcher
I have a question:
Suppose an individual has 3 accounts at Bank X; with account 1 being $30,000, account 2 being $25,000, and account 3 being $15,000. Doesn’t the UK IGA, for example, require Bank X to report all 3 accounts due to an aggregate sum of over $50,000 held by that bank?
Given the details of Mr. Bruce’s proposal:
An individual would complete the election on a 1-page, front and back, IRS form providing the
individual’s name, address, Taxpayer Identification Number, and country of residence, and listing the
“Same Country” accounts (name and address of bank and name, number and type of account, i.e.,
depository, custodian, etc.>/b>).
(and the ‘etc.’ becomes very important, the only part missing is the max account balance.)
In order to file for SCE, wouldn’t the individual now be filing a ‘glorified’ form 8938, even though the aggregate amount is below $200,000 (MFS)? Wouldn’t SCE now expand (via a simulated 8938) FATCA reporting to those who may not have been required to file 8938 before since they were below the $200,000 (MFS) threshold, but want to prevent the security risk of the bank filing FATCA info?
Granted, it would aid the bank from FATCA reporting (and ease all our minds regards security as well as the problem of account closures), but the reporting onus is now transferred to the individual. Provided, of course, the individual presents the SCE form to the IRS. What is to prevent the individual from providing the bank with the form, but not the IRS? This is where I would agree that by the time the IRS has a hand in the regulations, something such as the ‘acknowledgement of filing’ E-mail from FINCEN would likely be required along with the ‘submitted – no change allowed’ copy of the FBAR (with the accounts listed) be presented to the bank for verification.
I agree with Watcher, Mr. Bruce’s proposal does not require the bank to ‘see’ a 1040, but without some verification via either the IRS/Treasury (114) or the bank, I can’t imagine the SCE proposal to be fully tamper proof and thereby acceptable to the IRS/Treasury.
One additional question; IF verification is required by the banks, wouldn’t that need to be done on a yearly basis? Heidi, how is that handled by the Swiss banks that require FBARs?
@OAP
Yes, I would suppose that bank x would need to report all 3 accounts.
I remember reading a post by an IT expert, that it is much easier for banks to report all accounts of US persons (not just those over $50,000) as the software needed would be less expensive and cumbersome. I believe they have the choice and why not go with the cheaper, easier option?
I am not sure that SCE would prevent account closures, the banks will still have to do their ‘due diligence’ to discern whether the US person was really resident or just using an address of convenience. Wouldn’t that 30% withhold still loom over their heads for not reporting a non compliant US person account holder.
@ OAP
Not sure how it’s handled now as I am no longer a US person.
In the past, as part of the non prosecution agree they made with the devil, Swiss banks were demanding to see copies of past fbars dating back to 2008. Even that didn’t satisfy most of them, as I and many others lost their accounts.IThey decided it was much safer not to deal with US persons rather than take any risk. I believe that only 3 banks now accept US infected people. Post Finance, Credit Suisse and UBS. They all seem to have employed a special compliance office to deal with US persons.
@Heidi
“I am not sure that SCE would prevent account closures, the banks will still have to do their ‘due diligence’ to discern whether the US person was really resident or just using an address of convenience.”
Agreed. It seems likely that more banks, not fewer, will be tempted to lock out all US customers if the additional verification were to be required. Some larger banks, as with those few in Switzerland, will likely agree, allowing them exclusive access to a restricted group of individuals. But at some point, someone is going to end up paying (or collecting) for that access to bank accounts. I can’t see a small building society or credit union ’employing a special compliance office’. 🙂
@OAP
Those US persons resident in Switzerland already pay much higher account fees and receive a much more limited service. Non resident US persons cannot hold any accounts, even those with vacation homes to maintain or elderly parents to care for.
We’ve known all along that the uber-rich would not be FATCA-affected. They are now storing gold in privacy-assured underground vaults in Switzerland (no doubt other places too). I don’t believe the FATCA designers intended to target the uber-rich who they knew would have enough money to slither out of any adverse situation … it’s all the rest of us they were really after. Control and confiscation is their aim.
http://www.govtslaves.info/secret-swiss-military-bunkers-being-filled-with-gold-by-billionaires-seeking-alternatives-to-bank-deposits/
@Embee
Gee- I find that really hard to believe. Because guarding something like that seems almost impossible- and with one little guard with a bulletproof vest? And gold is such a volatile commodity. I dunno. Do you think this is real?
the US has administrative and discretionary authority to mitigate CBT and FATCA effects on expats.
President Obama has used executive orders to suspend deportations of certain illegal immigrants and the arrest and prosecution for minor drug crimes.
the chief of the IRS has the discretionary authority exempt classes of taxpayers
have not done so, will not do so, because they do not want to, besides they would not dare
too many politicians are heavily invested in the lie that everyone with foreign account are drinking
champagne on their yachts
the IRS has discretionary authority for extortion and the creation of legally dubious IGA
to force compliance the FATCA
a better proposal would be to exempt dual citizens who are tax compliant residents in the country of other citizenship, and extend the exemption to tax compliant in their country of residency after 3 years from all CBT, FBAR and FATCA requirements. Provide optical and legal cover for any official provide this exemption
there has never been any cost-benefit analysis of a diaspora tax program for generating tax revenue
CBT along with FBAR and FATCA generate penalties not taxes
the wildly over optimistic estimates for FATCA have been completely refuted
if a diaspora tax regimes were effective at generating revenue, every country with a proportionally larger
diaspora than the US would have enacted one (Ireland, Poland for example)
@Patricia, the alternative and what I believe to be the proper way to correct this is through the tax treaties and the section on Definitions. The Ireland/US treaty states; “i) the term “national” in relation to a Contracting State, means any citizen of that State and any legal person, association or other entity deriving its status as such from the laws in forcein that State;”
In my opinion I believe that it is obvious that an Irish Citizen resident in Cork can only be IRISH. This glaring fact goes back to the Master Nationality Rule that the USA USA USA did not sign.
The tax treaties all need a simple amendment that states something like;
“A national possessing the nationalities of both signatories shall be considered to solely be a national in the country that they are permanently resident.”
Presto chango fixed.
As Don says, “The thought process behind JASTA draws some comparison to FATCA.”
Couldn’t help but notice this:
http://www.huffingtonpost.com/james-zogby/jasta-irresponsible-and-d_b_12269448.html
Which states: “Congress’ vote to override President Obama’s veto of the Justice Against Sponsors of Terrorism Act was both embarrassing and irresponsible. The bill, known as JASTA, amends the Foreign Sovereign Immunities Act allowing U.S. citizens to sue foreign governments and entities for damages resulting from acts of terrorism committed on U.S. soil on or after September 11, 2001.” And “The president’s second concern was that in passing this bill, Congress upends the long standing principle of foreign sovereign immunity.”
Of course one sympathizes with families of 9/11 victims. But this looks like more USA overreach concerning the sovereignty of other countries to me. A parallel with FATCA.
@ Polly
RE: secret gold vaults in Switzerland for the uber-rich. Do I think this is real? Yes, it seems totally plausible to me. Some countries are hoarding gold too … China and Russia, for instance. That, to me, seems like a wise strategy given the ethereal nature and vulnerability of our digitized currency. Other countries, like Canada for some inexplicable reason, have sold off all their stored gold. Not that Canada had much stored to begin with but maybe Trudeau thinks there’s enough gold in them thar Canadian hills that we can mine enough if we need it someday. Of course Canadian companies are notorious for their deplorable gold minining practices in poorer countries. Really I don’t understand what Trudeau’s fuzzy thinking on this gold sell-off might be.
@Embee
It sounds so James Bond to me. Besides- the banks had to give up information going backwards, so removing money and turning it into gold doesn’t seem like a good idea when the bank account information is turned over anyway. But who knows what the überrich are up to.
You may find this email extract of interest:
_______________________________________________
Mr Charles Bruce,
The proposition of Same Country Exemption to FATCA reporting is insanity and ignores the fact of life that around the world people may not trust the Governments of countries within which they live to be fair and reasonable custodians of their savings and lives. This is NOT a tax matter but a safety and security of family matter. If YOU lived in Greece or Turkey or Syria or Lebanon or Iraq or Iran or Afghanistan or Israel or Egypt or Libya or Zimbabwe or Nicaragua or Venezuela or Cuba … or … Would you not feel it essential to safeguard your savings in safe zones like say Switzerland or Cayman or Channel Islands or Bahamas or the United Kingdom or Canada or even the biggest money laundry and tax haven in the world, the USA?
Please end the political dance and recognize that FATCA (and Citizenship based taxation and Common Reporting Standard) endangers people’s lives and the financial security of families around the world whilst empowering Dictatorships and disadvantaging potential refugees.
I myself am NOT a US Citizen and not a US Resident and I do not invest in the US but my life is being disrupted and made more costly where I live. Costs of Compliance are cumulative and ripple through the world economy pushing up the prices of everything.
I will be forwarding this email to others.
@nervousinvestor: Be aware that Mr. Bruce is part of what one famous diaspora tax victim called the FCC (FATCA Compliance Complex). The ACA have been body snatched by tax practitioners who have every interest that the rules remain as complex as possible. When I first got bitten by FATCA discrimination and got actively involved, I used to hold the ACA in high regard. I was soon warned by someone on one of the lawsuits about the ACA being taken over by tax practitioners. When their ED relayed to me the opinion of a Congressman that “US citizens like myself should have gotten permission from the corporations before going abroad,” that was pretty much the end of their position of high regard as far as I was concerned. OK, a Congressman may well have said that, but one expects a modicum of intellect from those sent to lobby — the retort should have been instantaneous, one that made the Congressman realize immediately the idiocy of what he just said.
Writing to Mr Bruce is therefore not likely to sway his opinion much. The government machine has a way of turning apparent allies into obstacles one must climb over or go around in getting relief. You can watch it happen in real time.