For those of you who are not members of ACA, and not on their email list, I wanted to alert you to the April edition of the ACA News Update for some interesting new information. The top item on the list is this:
ACA Participates in Meeting with Departments of IRS, Treasury,Financial Crimes Enforcement Agency (FINCen) and the Office for Terrorist Financing and Financial Crimes (TFFC)
Let me quote from this report:
On April 17th, 2012 ACA Executive Director, Marylouise Serrato along with Charles Bruce, ACA Washington, DC Counsel and representatives from Association of Americans Resident Overseas (AARO), Federation of American Women’s Clubs Overseas, Inc. (FAWCO), Democrats Abroad and Republicans Abroad met for two hours with 14 representatives from the offices of the IRS, Treasury, FinCEN and TFFC. The meeting was a result of initiatives taken by Congresswoman Maloney, the Co-Chair of the Americans Abroad Caucus, and the ongoing work of overseas American organizations.
The meeting discussion centered on four general areas; 1) FATCA/FBAR problems in general -bank account closures, offshore voluntary disclosure initiative (OVDI), penalty applications; 2) FATCA/FBAR/Tax compliance as related to family and women/dual nationals; 3) Patriot Act problems (bank closures state-side); and 4) general tax compliance (burden, cost, penalty applications).
The IRS, Treasury, FinCEN and TFFC acknowledged that there are problems with regard to tax compliance and FATCA/FBAR filing requirements that are having severe negative consequences for Americans legitimately living and working overseas and that these problems need to be addressed.
ACA and its sister organizations have now opened a dialog and have created an environment where overseas organizations will provide IRS/Treasury with recommendations for correcting problems, facilitating filing, etc., and will meet again on an ongoing basis to work on these issues.
A major success for ACA in the meeting was the acknowledgment from Treasury that the recent increase of the threshold for FATCA reporting was directly related to ACA’s on-going communications to Treasury about its concerns over the FATCA legislation. This outcome shows that having ACA advocating for overseas Americans in Washington has made an important impact, which can directly affect policies.
You may read the entire April News letter at the ACA web site. Here is the direct link to the Report, sited above.
@JustMe, your response to Al Lewis’s vomit is appreciated. Another commenter-Gavrikon-wrote: Tax-dodgers are proudly un-American
“Yep. I got a letter from my bank in Zurich telling me they were not willing to do the required paperwork and reporting to the US IRS so they are closing my account. It only had a couple thousand Swiss Francs in it, but I had that account since 1997 when I lived there. And this is even though I dutifully reported the account to the IRS every year. I live in Germany now, but it was sort of nice to have that account in case I am every transferred back to Switzerland. Of course, that isn’t likely to happen because I’d need another “B” visa. Unless, I were to become a German. Hmmm . . .
BTW, Al, you are a Dick. I DREAM of making a 6-figure income. But there are lots of reasons besides money to renounce, you pompous prik.”
Just me, since you have an account with Market Watch, I was going to suggest you link him to the Dems Abroad survey that asked about Americans and banking services, but they seem to have closed it. Would you let him know that he can tell his banking story at http://www.expattaxstory.us/ ?
PS did you catch the comment involving lighter fluid?
I think ACA is doing a wonderful job; but meeting with the government agencies above is only addressing the symptoms.
Hopefully they can get access to key members in congress (friends and foes alike) to provoke a meaningful debate within the legislative branch.
Citizenship-based taxation is eating away at ex-pats like cancer and must be ended once and for all.
The very existence of US citizens abroad is at stake.
“… where overseas organizations will provide IRS/Treasury with recommendations for correcting problems, facilitating filing, etc., and will meet again on an ongoing basis to work on these issues.”
Oh no, I don’t want the IRS “correcting” anything. It could mean another 10,000 pages of tax code! I want the US citizenship based taxation to be abolished … PERIOD.
The problem is that to change to a residency based tax system from the current perspective of US politics would be the equivilent of politicians pouring gasoline over themselves and lighting a match.
However for politicians in Canada to along with FATCA would be the same as pouring gasoline over themselves and lighting a match too. I don’t post the comment letter from CBA but they specifically mention to implement FATCA without an intergovernmental agreement requires changes to both federal AND PROVINCIAL legislation. Do you think and of NDP controlled pronvinces(lets say like an Adrian Dix NDP) or really any provincial government like Alison Redford’s PC’s or Dalton McGuinty or going to go along with FATCA.
“The problem is that to change to a residency based tax system from the current perspective of US politics would be the equivalent of politicians pouring gasoline over themselves and lighting a match.”
And that’s a problem? Sounds like a solution to me — especially if they were holding the FATCA legislation in their hands at the time.
@Tim, not to mention the fact that as those being persecuted by the US, the crisis we find ourselves in demonstrates the true nature of any relationship with the US and the IRS. Current and past behaviour is an excellent predictor of future behaviour: they’ve amply demonstrated an imperialistic and narcissistic overreach, and amply shown how they’re unjust, unethical, untrustworthy, exploitative, and will change the rules at any time to suit whatever irrational beliefs they espouse – no matter how illogical.
I haven’t been back on Marketwatch. Was afraid I would pick up a virus! 🙂
I will go back and see what new comments have come in, and see if they allow links in their comments. Often sites like this do not..
They do that too. This meeting was set, if I am not mistaken, up by one of the Congresspersons that they are actively working with. They work with the key Senators and Congressman in the Key committees on Taxation issues. Surprisingly, there are Key Staff members that are dual citizens and/or have lived overseas. They do get these issues, so they work it the best they can, realizing they don’t have the lobby power and money that a GE, or the AARP has to influence legislation.
Can someone clarify “the recent increase of the threshold for FATCA reporting”. Is it the minimum account balance to trigger FATCA reporting?
BB Under new proposed rules accounts under 50k are exempt from reporting by the foreign financial institution (FFI), between 50k and 1 million are subject to ‘electronic search’ for ‘US indicia’ such as address, PO box, place of birth ( but only if known); more than 1 million , someone in the FFI is supposed to vet the account and certify that it is non US. These limits are increased from the earlier proposals. It is very likely that RSPs will also be exempt.
N.B. these regs are what the FFIs are supposed to do. What the individual is supposed to do is rather different.
@Chester thanks. A nicer, softer witch hunt?
@bubblebustin; or just easing into things? If FBAR is for 10,000. aggregate, then why not eventually FATCA the same threshold within an institution? Like on another thread – maybe just cooking the frog by heating up the water gently at first – working up to the boil.
First they came for those with indicia.
How can this be called a victory, when those with US birthplaces and wealth are being ferreted out, leaving those without indicia to fly under the radar?
Are those of us with US birthplaces gifts to appease the FATCA gods?
The point I keep making, and apparently ACA doesn’t seem to get is that in order to vet their accounts of US persons, banks will need to have ALL of their customers prove that they AREN’T US persons, because as we are all painfully aware, some of us show no outward signs.
Frankly folks, all of this talk about subversion really bugs me. How can you make real and effective efforts for change if you’re hiding? Why keep your money in a bank because you can stay undetected? Why not protest with your feet and move it to where FATCA has no jurisdiction? I don’t have anything to worry about, our banker knows we’re American. He also knows his is not the only financial institution in town.
Ok, I decided to take my rant-of-the-day to those it should be directed to, the ACA. I got an immediate response that may be of interest here:
FATCA (From ACA web page-new)
Message: I have recently read about ACA’s accomplishments during its April 17th meeting with the IRS, US Treasury, FINcen and TFFC. I appreciate the effort that your organization makes with the intention of improving the conditions of US citizens living abroad. However, I find one paragraph disturbing:
I do not share your enthusiasm. FATCA is wrong in any form. With the concessions ACA has put forward, it is not only wrong, it is discriminatory.
Firstly, in this form it discriminates against people with accounts over a certain balance. It may target US persons with a US birthplace and other “indicia”. Persons it would not detect would be those without indicia. They could be: naturalized Americans and green card holders who no longer live in the US, the offspring of US born citizens who attained citizenship through a parent and do not live in the US, persons who are required to file a US tax return having met the US substantial presence test- anyone with no outward signs of being a US person. These tens, or even hundreds of thousands of individuals may easily pass undetected. One could say “the absence of evidence is not evidence of absence”.
For this reason, all foreign financial institutions should require each of their customers to prove that they aren’t US persons, in order for FATCA to be implemented without discrimination. For example, any customer with a non-US birth certificate should be required to produce the birth certificates of his parents to prove that he is not a US citizen through either of them. He should provide documents to prove that he never had permanent residency status or became a naturalized citizen in the US. Customers would have to produce exit and entry documents proving they did not overstay their time in the US. More ridiculously, customers who were born of intro fertilization will have to prove that neither the egg or sperm donors are US citizens.* In other words, all bank customers would have to prove a negative, which is impossible to do, in order for the process to be fair to those who are overtly US citizens.
This is what makes FATCA so wrong- It can never be properly, fairly and effectively implemented without trampling on everyone’s rights and requiring them to do the impossible.
Your organization should be making it clear to the US government what these absurdities and fatal weaknesses are, not accommodating it in some other form. Impossible as it was before it was tinkered with, it at least didn’t discriminate on the basis of income. I am one such person who will be flagged for investigation by my bank. I have a balance over the manual search threshold, and I can’t change where I was born. Under these terms I feel like I’m being presented as a gift to appease the FATCA gods, while those hundreds of thousands of others like me go free.
For me, OVDI has already revealed everything about my bank accounts. My banker already knows I am a US citizen. I’m bringing this up because FATCA under any form is unworkable and a waste of resources.
Yours truly, (Bubblebustin) * http://www.usatoday.com/news/world/story/2012-03-19/in-vitro-citizenship/53656616/1
Thank you for your email. ACA has raised the issues that you noted in your email to both the IRS and Treasury as well as the legislature. Please remember that, the IRS and Treasury can not “repeal” or “eliminate” FATCA only the Congress can do this. The IRS and Treasury are aware that the legislation is not practical and very unworkable.
ACA works on educating those in Congress of the very destructive nature of this legislation and we are actively working with various legislators who have strongly opposed the legislation. In the absence of having someone in the legislature who will seek the repeal of FATCA, ACA does consider that working with the IRS and Treasury to try and find carve outs for individuals (maybe even some that you mention), more simplified filing, elimination of penalties for non-willfull filing errors and other revisions to the existing legislation is a step forward.
Thank you again for contacting ACA and we will take note of your comments and concerns.
Legislators who oppose but will not seek the repeal?
Actually I made an error- I only meet the threshold for an electronic search. Wish is was the other.
You’re absolutely right that some will be able to be less recognizable than others of us showing a US place of birth on our other-than-US passports, many within the same family units. To be truly non-discriminatory, proof should go deeper for FATCA, at an enormous cost to all countries.
Neither of my children show a US place of birth. My daughter should easily be able to renounce as soon as her school year is completed, so she will eventually be OK. As I don’t have the right to renounce on behalf of my (developmentally-delayed) son, he will always be at some risk. Since I am the Holder of his Canadian tax protected accounts, once I’m out from under the US, bank accounts I hold for him may be protected from FATCA.
The easy way out for the US without losing too much face seems logically to change to citizenship-based taxation. It could stop the insanity before there is no turning back.
@Calgary. The renunciations are such a loss for the US. As you imply, the problem is not with the citizen, but with citizenship based taxation. It must go. Did you notice in the ACA response that IRS and Treasury are aware that FATCA is unworkable? How do we work harder to get to congress, mine (Posey) is already against it.
Thank you for posting that very interesting e-mail from the ACA.
I remember that in that hearing, Shulman seemed to say to Carolyn Maloney re ‘offshore’ banking and VD, and FBARs burdens, that the intent came from Congress. But, as we know, the IRS can decide how to implement – and chooses to continue to make it impossible – AND CHOOSES to justify it publicly in every press release – full of false generalities about those ‘abroad’, and disingenuous blanket characterizations of us as ‘evaders’, ‘cheats’, and people who owe taxes – based on absolutely no evidence.
So, even if the underlying legislation originated from Congress – the IRS and Treasury (ex. Emily McMahon) can choose to ‘willfully’ mis-characterize and slander ALL those abroad – and they consistently choose to do so. So, it is not as if all ability to mitigate the current situation is only up to Congress. Shulman and Geithner and McMahon have some leeway in their speech and actions – and they have been consistent in maintaining the same false postures over time.