A memo from Demsabroad is posted on the Ask your FATCA Question thread. It is copied here for broader distribution.
Marie
*FYI, Just received this update from Democrats Abroad via e-mail:
Dear Fellow Democrat Abroad,
It has been a while since we last reached out to you, but the pressure of the 2012 election and the holidays did slow us down. And now that we are approaching President Obama’s second inaugural, we feel it most appropriate to reach out to you with this brief report.
In mid-November, four groups representing overseas Americans (Dems Abroad,Association of Americans Resident Overseas, Federation of American Women’s Clubs Overseas and American Citizens Abroad) met for an hour with senior IRS and Treasury officials. Joe Green represented DemsAbroad and also had meetings with the Taxpayer Advocate and the IRS assistant deputy commissioner for service and enforcement.
As you may recall from our previous reports, the IRS has two existing voluntary compliance programs for delinquent tax filers; these are intended to reach out to US “persons” (a very complicated term indeed!) who may have significant unreported income and/or accounts and who wish to avoid potential criminal action by paying the fines and penalties imposed by the IRS. These programs are aimed at helping delinquent tax filers who may have considerable unmet tax obligations.
But the IRS also understands that there are a number (many, some, at least a few) of us whose failure to file does not reach the size or complexity that is anticipated by the official voluntary disclosure programs. So, this past August (and now in effect for the 2012 tax year) the IRS announced a less onerous amnesty program for what the Service calls low-risk non-filers.
The details of this option (called “New Filing Compliance Procedures for Non-Resident U.S. Taxpayers”) can be found at the following IRS website:
“The IRS is aware that some U.S. taxpayers living abroad have failed to timely file U.S. federal income tax returns or Reports of Foreign Bank and Financial Accounts (FBARs), Form TD F 90-22.1. Some of these taxpayers have recently become aware of their filing obligations and now seek to come into compliance with the law. The Service is announcing a new procedure for current non-residents including, but not limited to, dual citizens who have not filed U.S. income tax and information returns to file their delinquent returns…
“The IRS will determine the level of compliance risk presented by the submission based on certain information provided on the returns filed, and based on certain additional information that will be required as part of the submission. Low risk will be predicated on simple returns with little or no U.S. tax due. Absent high risk factors, if the submitted returns and application show less than $1,500 in [US] tax due in each of the years, they will be treated as low risk. In general, the risk level will rise as the income and assets of the taxpayer rise, if there are indications of sophisticated tax planning or avoidance, or if there is material economic activity in the United States. Additional risk factors include any additional history of noncompliance with United States tax law and the amount and type of United States source income.”
Slightly more detailed, but perhaps more complex “Options Available to Help Taxpayers With Offshore Interests” may be found at this IRS website:
Please note the following admonition on the above website: “The IRS reminds taxpayers to consult with their professional tax advisor in determining which option is the most appropriate given their facts and circumstance.”
While using a tax preparer can be burdensome, and while there are tax-filing sharks in the international waters (beware!), we may have to conclude that IRS compliance will likely involve a financial cost associated with the privilege of living abroad.
For those overseas Americans who have not been filing and who fit within the IRS’s definition of low risk, this recently announced option could bring some relief.
We also want to tell you that, while the implementation of the FATCA regulations is still being worked out amongst and between the IRS and various foreign governments and financial institutions, the threshold for reporting financial holdings by overseas Americans has been raised to $400,000 US for single filers and to $600,000 for joint filers.
We must reiterate as we close this update that we cannot offer tax advice and neither do we maintain a list of tax consultants..
We will bring you further updates as our work with IRS, Treasury and Senate and House members and staff continues.
With best regards for peace at home and abroad in the new year,
Democrats Abroad FBAR/FATCA Task Force
@Deckard1138
It’s called toeing the party line. I don’t know why we should expect otherwise, but if they’re disseminating incorrect information that harms American taxpayers they should be held accountable.
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There’s some light in the tunnel of darkness:
star writes:
“This really is very sad. As a lifelong Democrat I chose not to vote in the most recent election as I could not vote for a party that victimizes Americans living overseas.”
Same here. Lifelong Democrat, boycotted last election because I cannot vote for people who are trying to destroy my family’s ability to survive.
“How can Democrats Abroad live with their cowardly stance?”
I had hoped that Democrats Abroad served to represent the interests of, you know, Democrats abroad, to the Democratic party. Instead, they seem to serve to sell the Democratic party line to Democrats abroad.
As for why they don’t stand up and at least fight back in self-defence, I have to conclude that most of them are abroad merely as tourists, temporarily off on some sort of personal adventure, and don’t actually have real lives at stake where they reside.
foo….
Had I knew then what I know now, I would not have voted in the last election, either. I used to be a Democrat, but I also feel betrayed by their actions towards expats like myself. There have been plenty of times where I wish I could take my vote back, but without stumbling onto a site such as this, it would’ve been next to impossible to find any sort of meaningful information on how the politicians in the homeland feel about people like us.
Nowadays, there seems to be no political party in the USA that represents me, and I feel completely disenchanted with the whole political process. Fortunately for me, I’m a pauper, so filing the stupid IRS forms in order to be ‘compliant’ won’t be too much of a burden. However, the damage has already been done. Thanks to FATCA, I can no longer have a normal banking relationship with my wife, and we had to go get separate accounts so that the IRS will stay out of her business. But what about my rights? There is no way in Hell I’m going to bother with a tax preparer who could just as well screw me over, given all of the FUD that is out there, just so that I can pay up the ass, for the privilege of living abroad. I’m filing it myself, and I’m taking my chances. Meanwhile, I’m counting the days until I can relinquish so I can simply go back to banking like normal married couples do.
I had never voted for the demorepublican dictatorship, yet would have been willing to vote for either party if they had given me a reason to not renounce my US citizenship. Yet, no reason was given and thus I’m no longer a US citizen. They told me that they don’t have any time for American abroad issues. Americans living abroad have no representation.
The USG interest in expats only extends to their finances for shakedown purposes. I didn’t vote in the last election and wish I’d abstained in 2008 as well. I am not happy being put into a position where I must choose between my home and by birthplace but since I have been, I choose my home. And the USG throwing us under the bus just makes it easier.
Things might change. Germany just announced it is repatriating all its gold from the NYC Fed Bank back to Germany and this is interesting b/c it means that the centrals banks in other countries have no confidence in the US. Things are afoot. Enough of the world might stand up for their sovereignty yet, however, I fear that being a US “person” is still going to be too much of a stigma outside the homeland to live freely and have a normal life.
This “privilege” meme really still rankles.
SwissPinoy, a….
Yeah, I’m definitely not going to bother to vote next time around, that’s for sure.
Meanwhile, I’m not happy with having reached the decision to give up US citizenship once I become Canadian, but it’s the US government that has basically forced me to make this choice that I will end up having to live with for the rest of my life. A free society wouldn’t demand this of its citizens! Alas, I now see them as more of a threat than anything, and if I’m placed in a position to where I have to defend my spouse from their snooping around her banking info, then there’s no way I can also consider myself ‘loyal’ to that government. The two actions are mutually exclusive, and I’m going to be looked at as a traitor anyway, just for choosing my wife over the US, so to hell with them.
*mjh49783, I don’t think that anyone is happy about this. It’s unfortunate and shouldn’t have to be. But, it is how it is and thus we have to make the best out of the given situation. I estimate that in about 700 years, the US government will recognize that it made a serious mistake, apologize and become expat-friendly. Of course, we’ll have died hundreds of years before then, so they will build some kind of a memorial in our honor, like a huge bridge built like how they were made “back then”. 🙂
*mjh49783
Do not worry, Canada will grow on you. Besides the USA is one of the most vilified nations on earth. Be glad you’re outta there!
American FATCA punishes law-abiding Canadians
I don’t see anything in any of the news articles about FATCA’s final regs that indicates there’s been a change in the reporting threshold for F8938, as stated by Dem’s Abroad that there has been.
@bubblebustin
Haven’t you read all 544 pages to find it? 🙂
Good tax symposium now streaming with opportunities for questions or advice on FATCA using twitter.
http://new.livestream.com/pepperdinesol/lawreviewsymposium
And follow live tweets using the #ObamaTaxAdvice hashtag via @SoCalTaxProf, @PeppLawReview, and @TaxAnalysts. Questions for speakers can be tweeted to @PeppLawReview.
Here is my last.
https://twitter.com/FATCA_Fallout/status/292330660444643328
they are talking now about a requirement that private individuals must supply their tax returns. Interesting requirement. It seems familiar, where have I Heard such language Before?
@just me
No, but I read Innocent’s post
http://blog.kpmg.ch/financial-services/fatca-final-regulations-surprises/
Relaxed or clarified provisions
*Thanks for posting the live stream of the symposium. Americans talk funny 😉
@Marie
RE: Demsabroad Memo — Would it be possible for you to ask them about the statement they made below? I would like them to provide a source for their assertion that the “threshold for reporting financial holdings” (that would be form 8938 I presume) has been raised. I cannot find anything to confirm these numbers myself. If it has been raised, in which tax year does this take effect?
“We also want to tell you that, while the implementation of the FATCA regulations is still being worked out amongst and between the IRS and various foreign governments and financial institutions, the threshold for reporting financial holdings by overseas Americans has been raised to $400,000 US for single filers and to $600,000 for joint filers.”
@Marie and bubblestin. I have asked @Demsabroad via a tweet.
Form 8938 Instructions for Tax Year 2012, dated January 9, 2013:
Thresholds for taxpayers abroad:
1) Single person:
$200,000 last day of year
$300,000 highest balance during the year
2) Married, filing together:
$400,000 last day of year
$600,000 highest balance during the year
http://www.irs.gov/pub/irs-pdf/i8938.pdf
@ Innocente
Thanks, I really think Demsabroad got things mixed up and they need to make a correction. People could go seriously awry if they follow that memo.
@Em
I used your words without attribution! Too few characters allowed
https://twitter.com/FATCA_Fallout/status/292374599033839616
@ Just Me
That was tweet of you. Amazing how you can go long or short and everywhere all at once.
@Em..
It is simple. Ignore all the other tasks I have to do around here. Now, I have to run, and come back for the 1:45p session on International Tax issues with Christians. That should be interesting…
http://isaacbrocksociety.ca/2013/01/18/big-tax-law-conference-later-today-will-discuss-fatca/comment-page-1/#comment-146939
@Em, in the memo, Demsabroad wrote:
It is important to note here that neither Demsabroad nor anyone else other than possibly an expensive “professional tax advisor” understands the complexity of the US tax code. Thus, I find it normal for Demsabroad to be as clueless as everyone else on the issue. I never had a “professional tax advisor”. I once inquired the concept with one, but he kindly advised me that I didn’t earn enough for the cost to be worth the effort.