You can read it at the Americans Citizens Abroad site. Highlights include:
In denying the request for SCE, the Treasury Department’s final FATCA regulations focused solely on the risk of US tax avoidance. “The Treasury Department and the IRS have also decided that the risk of U.S. tax avoidance by a U.S. taxpayer holding an account with an FFI exists regardless of whether the U.S. taxpayer holds an account in his or her foreign country of residence or another foreign country.” The regulations say nothing about the problem of lock-out. They fix only on the unquantified and un-weighted risk that what must be a relatively small population of US taxpayers residing in a foreign country and banking at their local bank might evade US tax. The regulations do not say whether, and, if so, to what extent, Treasury Department took into consideration the widely-admitted fact that FATCA continues to put the community of 8 million Americans overseas at risk of lock-out from access to financial accounts needed for the management of basic living expenses (paying bills, paying rent, receiving paychecks). The problem of foreign financial account lock-out exists, and it has been proven that the FATCA rules are one of the root causes. The Congressional Americans Abroad Caucus, the National Taxpayer Advocate, and ACA, as well as other overseas organizations, have testified to the existence of the problem and have asked for redress by the adoption of SCE. ACA believes that Treasury Department either missed the point or failed reasonably to balance the considerations.
Updates January 6, 2017: From Treasury Regulations AKA “The Horse’s Mouth”
1. DEFINITION OF U.S. ACCOUNT
Comments requested that the definition of a U.S. account exclude accounts held by U.S. individuals resident in the same jurisdiction as the FFI with which the account is held. This comment is not adopted. The U.S. federal income tax system largely relies on voluntary compliance, and third party information reporting of the financial accounts of U.S. taxpayers is used to encourage voluntary compliance. For this reason, U.S. financial institutions are generally required to report under chapter 61 U.S. and foreign source investment income paid to account holders that are U.S. individuals. However, before FATCA, FFIs (in particular, non-U.S. payors) generally were not required to report foreign source payments made to U.S. taxpayers. The information reporting required by FATCA is intended to address the use of foreign accounts to facilitate tax evasion, and also to strengthen the integrity of the voluntary compliance system by placing U.S. taxpayers with accounts held with FFIs in a comparable position to U.S. taxpayers with accounts held with U.S. financial institutions. This is the case even for U.S. taxpayers resident abroad, since U.S. citizens and U.S. resident aliens are subject to U.S. income tax on their worldwide income regardless of where they reside and regardless of whether their accounts are maintained by U.S. financial institutions or FFIs. The Treasury Department and the IRS have also decided that the risk of U.S. tax avoidance by a U.S. taxpayer holding an account with an FFI exists regardless of whether the U.S. taxpayer holds an account in his or her foreign country of residence or another foreign country.” https://www.federalregister.gov/documents/2017/01/06/2016-31601/regulations-relating-to-information-reporting-by-foreign-financial-institutions-and-withholding-on
No, the administration of Barack Obama did NOT miss the point. The point is a simple one:
Unfortunately it’s the proponents of the FATCA Same Country Exemption Proposal who are missing the point! It’s simple: “All Roads Lead To Renunciation“.
******* UPDATE THURSDAY JAN 5, 2017
US Treasury Dept ‘slams door on Same Country Exemption’ for expat Americans https://t.co/MTbVdCzl0E via @intlinvestment
— Patricia Moon (@nobledreamer16) January 5, 2017
Great article on this here Brock gets a mention (and link to earlier one)
‘Final indignity’ Among the places expats turned to vent their anger on Wednesday, as the news about the Same Country Exemption came out, was the Isaac Brock Society website, where a regular blogger who goes by the name USCitizenAbroad referred to the decision as the “final indignity perpetrated by…Barack Obama”. The Isaac Brock Society is a Canadian website that was founded in 2011 by a number of Canadian-Americans who were fed up with the way FATCA and other relatively new US laws aimed at curtailing tax evasion were costing them money and causing them problems. President Obama had signed FATCA into law in March, 2010, in the wake of the global financial crisis.
DoT & IRS as well as US Homelanders:
ALL GREEDY SONS OF BITCHES!!!
Let them eat cake.
Actually I’m glad the door was slammed on the ACA’s SCE. It was a faulty portal designed to fix only one aspect of extraterritorial taxation vexation and more than likely would have made it even more difficult to bring an end to this monstrosity. The self pat-a-backs would have said that the problem is solved, no need to do more.
@EmBee, I fully grasp what you are saying……that said we have had the door slammed hard in our face AGAIN.
Some may be familiar with the term “limited hangout”. It’s a propaganda tool — drip out a bit of truth but continue on with the deluge of lies. Well the SCE was a “limited handout”. It was a ploy to make it seem like they cared but they didn’t. May the SCE RIP and let’s pursue a complete and reasonable solution instead.
I thought with the incoming admistration calling for FATCA repeal we’d heard the last of SCE.
Why in the hell would ACA want to give the Republican admistration the impression that Americans living overseas prefer SCE?
ACA does not represent me!
@Bubbles
Exactly! While I know a lot of good things have been done in the past by ACA, I get rather irritated that the presumption is that they represent me (either)!
I still think it is absolutely abhorrent that accepting SCE simply ignores the hideous reality that FATCA dumps on the rest of the world.
Am I the only one who caught the terms “tax avoidance” and “tax evasion” used as to be the same. I think this, as well as the other points mentioned, is very important.
I agree that the door has been slammed in our faces again, but it’s nothing more than a last “F— you!” from the Obama administration. Well, in return, Obama gets two pairs of middle fingers in his face every time he appears on TV in this household. Begone, ye demon!
I also agree that it’s a good thing SCE was rejected. As EmBee said, the greatest danger if SCE were implemented was that the powers-that-be would use that as an excuse to claim they’ve done enough.
What’s more, it’s good that ACA failed with SCE. Maybe, just maybe, they’ll see the error of their ways and turn their attention to where they claim it is: lobbying for RBT.
(God, I just luv using all these acronyms. I feel like a scientist.)
@ Barbara et al. “Maybe, just maybe, they’ll see the error of their ways and turn their attention to where they claim it is: lobbying for RBT.”
I agree that SCE is no solution. But in fairness to ACA:
“On December 5, 2016, American Citizens Abroad (ACA) published a detailed description of its Residency-Based Taxation (RBT) proposal….”
https://www.americansabroad.org/news/aca-publishes-detailed-descr-of-its-rbt-proposal-and-announces-coalition-to-score-rbt-proposal/
See also Dec 1, 2016:
https://www.americansabroad.org/media/files/files/ad2154e6/Residency-Based_Taxation_ACA_Proposal_Side-By-Side_Comparison_161201_Final.pdf
Methinks ACA missed the point- and this is that America finally has found a way to enforce citizenship-based taxation! It was impossible to do before FATCA. Maybe this is why so many nations abandoned CBT ( I think the last being Japan a few decades ago) because it was unenforceable. And what with ever more expats due to the global nature of our times- this is a huge tax base for America to gather revenue from. And this is why homelanders see expats as tax evaders. Everybody who has a US passport should be paying their taxes. This is about CBT and always has been. It isn’t just about some rich guy in New York having a hidden account in Zurich. This is about every hardworking expat who didn’t pay their taxes because they figured they couldn’t be found.
@Shovel et al.
That ACA RBT proposal is a loser. It requires all sorts of bureaucracy and forms, with standard penalties for missing a form. It doesn’t allow RBT until you’ve been out of the country for 5 years, but repeals the Foreign Earned Income Exclusion for the intervening years. AND it has an exit tax with no grandfathering for those who have been out of the country for decades.
Can you tell that I don’t like it?
Innocente has informed us on another thread (already disappeared from the recent comments section) that the final 2016 figures from the FBI NICS show that 5337 people renounced their US citizenship during the year.
Might it be a good idea for everyone at IBS to use that figure, AND ONLY THAT FIGURE, as the “official” number of renunciants for 2016? Each and every IBS post and comment, every communication outside the IBS site (comments to Forbes articles, comments in other media, letters to Ways and Means Committee, etc.), when mentioning numbers of renunciants, could very simply state: 5337 people renounced their US citizenship in 2016. The IBS site could insert as a prominent feature in its right hand column: 5337 people renounced their US citizenship in 2016.
No comparison needs to be made with the Federal Register numbers, no mention of the NICS; just the figure. It is a specific number, unrounded, and if enough people use it, others will remember it. If the “others” don’t question it, they might accept it. If they question it, they might look to see where it comes from, and might have a better chance of agreeing with it.
It could be a good gauge of the reach of IBS presence and influence. If everyone at IBS were to play the “information game” in this way, we might be surprised to see some “others” using the same figure. At least they would have their facts right.
Just an idea….
@Polly – IF the US starts rigorously enforcing CBT, then perhaps our home countries will finally understand that their tax base is being pillaged by the US.
My position is that Australian-source income of Australian residents should be taxable ONLY by Australia (and the same for every other country in the world). We need to make this the underlying principle behind all tax treaties. The treaties can then divvy up the right to tax income earned OUTSIDE of one’s country of residence only (plus all the stuff about who is a resident, and how to deal with business income, temporary residents, etc).
FBI NICS statistics for December 2016 show 430 renunciations. For the full twelve months of 2016, 5,337 US citizens renounced their US citizenship.
2016 was a banner year for US citizens seeking their freedom.
@Karen
I agree 200%
The problem with SCE and some RBT proposals is the complexity. Governments have become incapable of making simple rules, especially the US Government.
Same Country Exemption should mean that none of your accounts in the country or zone (i.e. the EU) you reside in are reportable to the US.
RBT should mean that when you stop residing in the US you stop being subject to taxation (except things like real estate taxes on property you own in the US, obviously).
All you need is a (simple) definition of residence and the understanding that when you move away in 2017 you still file for 2017.
But they’re never going to make it simple. ACA’s RBT proposal (drafted principly by Charles M. Bruce) contains mind-boggling junk such as having to apply for a departure certificate (has a nice Soviet-era ring to it) AND:
Any individual claiming Residency-Based Taxation must file an annual
certification stating under oath that he/she is a US citizen or resident alien,
fulfils the residency requirements for the taxable year (including the 5-year
rule, above), and does not have income related to a “restricted country”.
Failure to file annual certification terminates status as non-resident
American.
AND
One-time IRS User Fee of $5,000 for Departure Certificate. Individuals
qualifying for the special 3-year rule for individuals residing abroad, above,
are not subject to this User Fee.
AND …
FBAR Filing Requirement: “same as current law”.
With friends like these…
When I do a search of this quote (which ACA has placed in quotes without attribution)(searching by whole or by parts) I find nothing.
“The Treasury Department and the IRS have also decided that the risk of U.S. tax avoidance by a U.S. taxpayer holding an account with an FFI exists regardless of whether the U.S. taxpayer holds an account in his or her foreign country of residence or another foreign country.”
When I search for “Final FATCA regulations” I don’t find any recent documents, I find “Final Regulations” from 2013.
Has the treasury department been confirmed to have addressed SCE?
Is this ACA release #RealNews ?
“The Treasury Department and the IRS have also decided that the risk of U.S. tax avoidance by a U.S. taxpayer holding an account with an FFI exists regardless of whether the U.S. taxpayer holds an account in his or her foreign country of residence or another foreign country.”
@JapanT
The choice of the word “avoidance” did not go unnoticed by me. The Treasury Department is intent on including non-residents in the FATCA sweep, but fall short of accusing us of out and out tax evasion – optics?
@Mark Twain
Still, it sounds like something Treasury would say – specifically Mythster Stack.
A Little More About Treasury’s Disallowment of SCE
To All: With Fear and Loathing of all things FATCA.
REAL relief and support is on the way: Read On.
From the Official Republican Party Platform:
https://prod-cdn-static.gop.com/media/documents/DRAFT_12_FINAL%5B1%5D-ben_1468872234.pdf
“The Fourth Amendment:
Liberty and Privacy
Affirming the Fourth Amendment “right of
the people to be secure in their houses, papers,
and effects, against unreasonable searches and
seizures,” we call for strict limitations on the use of
aerial surveillance on U.S. soil, with the exception of
patrolling our national borders for illegal entry and
activity. We oppose any attempts by government
to require surveillance devices in our daily lives,
including tracking devices in motor vehicles.
In recent years, technology companies have
responded to market demand for products and
services that protect the privacy of customers
through increasingly sophisticated encryption
technology. These increased privacy protections
have become crucial to the digital economy. At the
same time, however, such innovations have brought
new dangers, especially from criminals and terrorists
who seek to use encryption technology to harm us.
No matter the medium, citizens must retain the
right to communicate with one another free from
unlawful government intrusion. It will not be easy
to balance privacy rights with the government’s
legitimate need to access encrypted information.
This issue is too important to be left to the courts.
A Republican president and a Republican Congress
must listen to the American people and forge a
consensus solution.
The Foreign Account Tax Compliance Act
(FATCA) and the Foreign Bank and Asset Reporting
Requirements result in government’s warrantless
seizure of personal financial information without
reasonable suspicion or probable cause. Americans
overseas should enjoy the same rights as Americans
residing in the United States, whose private
financial information is not subject to disclosure
to the government except as to interest earned.
The requirement for all banks around the world
to provide detailed information to the IRS about
American account holders outside the United States
has resulted in banks refusing service to them. Thus,
FATCA not only allows “unreasonable search and
seizures” but also threatens the ability of overseas
Americans to lead normal lives. We call for its repeal
and for a change to residency-based taxation for
U.S. citizens overseas.”
Recommendations from Congressman Mark Meadows and Senator Rand Paul , both House and Senate now take up Repeal FATCA, with several co sponsors.
Even MORE important and anticipated :
IN ADDITION, action President Trump will take in first 100 days :
https://meadows.house.gov/first-100-days
Scroll down to:
234 Internal Revenue Service:
Information Reporting by Foreign
Financial Institutions and
Withholding on Certain Payments
to Foreign Financial Institutions
and Other Foreign Entities
26 CFR Parts
1 and 301
1/28/2013 Implementation
Costs
U.S. citizens living abroad and
Senator Rand Paul, argue that IGAs
and certain FATCA provisions are
unconstitutional.
https://www.regulations.gov/document?D=IRS-2012-0009-0267
For those worried about the SCE and Treasury pronouncements , look for real action and real relief within the next 100 days of President Trump’s Administration.
@Mark Twain – see this comment by Haydon Perryman (https://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-4-of-4/comment-page-1/#comment-7777992) – it provides a link to proposed regulations to be published on Friday.
I have been discussing with Haydon Perryman and my conclusion is not what I first thought:
for me, here is why it doesn’t work:
While it may be arguable that dual citizens can be dual residents unless I misunderstand, such a person must also be treated as a non-resident alien (which we are not ). Nonresident aliens only have to report their US income.
They are discussing dual residency, not dual citizenship. Included in the definition of dual resident:
Because of the tie breaker rules, the tax treaty would in the end, see us as citizens first, not residents of another country.
I definitely could be wrong but after initial excitement I don’t think we get relief……
Tricia – unfortunately, that’s my reading as well (https://isaacbrocksociety.ca/media-and-blog-articles-open-for-comments-part-4-of-4/comment-page-1/#comment-7778123).
@Karen
totally missed the reference to the later pages.
So does it mean we are saying the same thing?
will go read………
Oh, I see what is different. I did not go back and read the cited regulation (§301.7701(b)-7(a)(1). I only read pp 9-10 and when first reading your comment on the other thread, expected to see the cited regulation on pp 105-106.
Either which-way, I think we both have come to the same conclusion……..