Category Archives: Issues regarding US persons abroad

This was proposed by Just Me and seconded by a few others so I thought we could take a shot at it together.

The basic idea is to create a one page (maybe two) tract that could be used as a template – something that could be adapted to the local circumstances.  It could be sent to journalists, passed out during demonstrations or just emailed to people we know who are still very confused about what FATCA is, what it means, and why they should care.

Here are the latest updates as of  September 17, 21:51  Paris time.

What is FATCA?

The Foreign Account Tax Compliance Act (FATCA)  is an extra-territorial U.S. law that demands that all financial institutions in the world report to the United States’ Internal Revenue Service (IRS) the confidential account information of millions of people it classifies as “U.S. persons”.

What is a U.S. Person?

A U.S. Person can be a U.S. citizen, a Green Card Holder, or the citizen of another country who has a connection to the United States.

Here’s how you may have a US connection:

* born in the USA
* born outside the USA with one or two American parent(s)
* lived in the USA for a number of years
* visited too long in the USA in any given year
* married to a US person
* share signing authority on an account with a
US person

Chances are very good that you, or someone you know, is a U.S. Person.   That means FATCA affects you personally.   Millions of people worldwide who do not consider themselves to be U.S. citizens are still considered U.S. Persons by the U.S. government even if they have never lived or worked in the U.S., are citizens of another country, and have never held a U.S. passport or Green Card.

But I’m not a tax evader or a U.S. citizen or Green Card Holder!

Under FATCA you are presumed to be guilty until proven innocent.

If your local bank suspects you are a U.S. Person, they will require that you prove you aren’t.

If you clearly are a U.S. Person, and your country has signed an agreement with the United States (called an “IGA”), then your local bank will send your account information to your local government who will then turn it over to the United States.

Under these agreements, this will happen even if your country has strict laws protecting personal privacy.  So far the following countries have either signed these agreements or have agreed to do so:  UK, France, Germany…..

What will the United States do with that information?

Under American law U.S. Persons are also U.S. taxpayers.  Those who live outside the United States are required to file tax returns, bank account reports and pay American taxes.  This is true even if the U.S. Person earns no income and has no assets in the United States.

You might consider yourself a responsible tax-paying citizen of another country but the United States sees it differently. If they think you are a U.S. Person then they feel they have the right to add you to the American tax base.

There are others ways they could use that information.  If enough countries are bullied into complying then the United States government will have a master list in their databases of all the people (and their assets)  in the world who have any connection however innocent to the United States of America.   That sounds a lot like the recent NSA scandals where the United States spied on citizens of other countries.

FATCA is spying by other means.

But I thought FATCA and all those reporting rules only applied to the rich?

Not true.  FATCA impacts ALL U.S. Persons:  rich, middle, or low income .

The filing threshold for one form, the  FBAR (Foreign Bank Account Report), is only 10,000 USD.  This threshold is the total of all that person’s accounts (checking, savings, and retirement) combined – not the value of any one account.  This means that even very low-income U.S. Persons must file and face stiff penalties – up to 500,000 USD and 5 years in jail – if they fail to do so.  The American IRS can impose these fines even if the U.S. Person is too poor to file a tax return and doesn’t owe any tax.

I’m not a U.S. Person and I don’t have any connection to the United States. What does FATCA have to do with me?

FATCA impacts ALL citizens in ALL countries in three ways:

1.  All  financial institutions worldwide are affected by FATCA.  The billions they will spend in compliance costs will be passed along to customers in all countries through higher FEES.

2.  Local governments and local taxpayers will bear the cost of the staff and information systems required to implement FATCA in that country.

3. Existing privacy and anti-discrimination laws will have to be downgraded in every country in order to facilitate FATCA.  This means that citizens everywhere can expect less protection of their privacy from their local government.

Part IV (What they can do about it)

Some ideas for this section:

Here I would point them to Isaac Brock first as a resource.  As them to join us or pass the link around to people they know who are affected by FATCA.

Then we can list the other sites we think they would find useful:  Maple Sandbox, ACA, AARO and so on.

US government handed over intercepted communications likely to contain phone calls and emails of American citizens. The agreement places no legally binding limits on the use of the data.

American citizen, the US government is eager to donate your privacy to any nation in the world, so that they may use it as they please.  Welcome to FATCA!

The disclosure that the NSA agreed to provide raw intelligence data to a foreign country contrasts with assurances from the Obama administration that there are rigorous safeguards to protect the privacy of US citizens caught in the dragnet

Source: NSA shares raw intelligence including Americans’ data

HONG KONG, CHINA (Catholic Online) – As Americans live and work overseas, they find themselves facing onerous tax reporting requirements designed to crack down on tax evaders. However, the paperwork and reporting requirements are exhausting.

For a few Americans, it is easier to renounce their citizenship and escape the burden.
Catholic Online

Also, from Jamaica:

Growing number of Americans giving up US citizenship

…US embassy in Kingston said it could not provide such figures as it wasn’t the Department of State that maintains statistics on renunciations and relinquishment of citizenship.

It said, too, that it couldn’t comment on the reasons people choose to renounce their citizenship as these were “individual and personal decisions”.

“A person who renounces US citizenship may, but is not required to, disclose his/her motivation for doing so,” the embassy told the Jamaica Observer by e-mail.

It explained that the Federal Register lists included persons who made renunciations in the presence of a consular officer, as well as those who lost citizenship by “performing another potentially expatriating act voluntarily and with the intent to relinquish US citizenship”.

“For example, if a US citizen voluntarily naturalises in another country and affirmatively represents to a consular officer that this was his/her intent to relinquish US citizenship at the time he/she naturalised, he/she would lose his/her US nationality and would be listed in the Federal Register”…

Jamaica Observer

AtticusinCanada and WhiteKat were a successful anti-FATCA presence at Finance Minister Jim Flaherty’s press conference in Ottawa yesterday.

Besides handing out leaflets, they spoke with people, one of whom was Globe and Mail reporter Bill Curry, who – although the event was held to announce a three year freeze in unemployment insurance premiums – asked Minister Flaherty about FATCA.

WhiteKat’s sign  said:  “FATCA:  Sequel to the War of 1812” on one side and “FATCA = Extortion by USA of All Canadians” on the other.  Atticus’ sign said:  US Bullying violates Canadian Charter:  Stop FATCA” on one sign and “Google isaacbrocksociety.ca” on the other.

Minister’s Flaherty’s reply is on CTV, beginning around 4.25 min.

WhiteKat and Atticus’ conversation with reporter Curry also resulted in a Globe and Mail article.

Thank you, WhiteKat and Atticus!

It all began with WWII.  During the war, my father was assigned the role of a flamethrower and refused to burn living human beings, regardless if they were Nazis, Jews, Americans or anyone.  Being a conscious objector during the war, the Swiss government gave him two choices.  Either he could go to jail or he had to leave the country. So, my father went to Canada and then later to America where he is still living today.  That’s where I come into the picture.

In 2001, I was working in America and wrote an email to my spouse, who was living in Hong Kong and waiting for approval to join me in America, that there were no job openings in America but that Swiss companies were hiring.  Accidently, my employer saw the email and I was fired the next day as well as being kicked out of two financial services (my retirement funds were taxed and cashed without my approval), causing my wife’s immigration application to be resubmitted all over again.  It was during the Dot-Com crisis and my chances of finding a job in the US were non-existant.

Laid-off technology experts, such as computer programmers, found a glutted job market. University degree programs for computer-related careers saw a noticeable drop in new students. Anecdotes of unemployed programmers going back to school to become accountants or lawyers were common.
Wiki

At the time, I was working on getting a college degree and sent my resume to over a hundred companies which mostly didn’t respond.   Nevertheless, I was able to find a new job locally within a few weeks and was invited to Switzerland for an interview.

So, I flew to Switzerland and was hired by two large international firms at the same time within a few weeks, both offering double the pay and with better benefits.  I had to choose.  Months later, my spouse joined me there.

11 years later, I learned that Swiss banks were rejecting little people simply because they had US citizenship and as a result of US policy.  Since I already had experience of getting kicked out of banks and since I had no reason or motive to work in America, it was clear that the US citizenship had to go.

Living in the US, I did various jobs for many companies and didn’t always have a bad experience.  Life in America is not always as grand as it may be believed to be and I often struggled to make a living there.  Once I worked on an onion field, earning about $1/hour.  Then I delivered papers for about $2/per hour with lots of shoulder pain from the heavy load when helping out other routes.  Later, I washed dishes for about $3.5/hour and quit since they refused to give me a 10 cent pay raise, even though I was the fasted and most efficient dish washer they ever had. Prior to that, I was promoted to busboy and then demoted again the same day since my cute Mexican coworker lied about me since I didn’t look Mexican.  The customers absolutely loved me and gave me many tips that day.  Another time, I was fired from a library because I once made a single 10 cents copy.  Ironically, I was hired the next day across the street as a paper copier!  In the Army, I worked hard and was rewarded with a punishment to set an example for others, since my ride was late, I got a traffic ticket and my former Mexican roomate who stole my things lied about me in defense of his crimes.   Afterwards, I was promoted 3 times in only 6 months but my military spirit had died.  Overall, I find that the American job market is often trigger-happy, overreacting to strongly to non-issues.   In Switzerland, on the contrary, I’m trusted, my skills and motivation are respected and appreciated and my minor human errors are forgiven.

My advice to anyone thinking about working in America is to think again.  It is not for everyone.

An impressive new article by Jason van Steenwyk for NerdWallet Investing.  Jason, a freelance writer living in Fort Lauderdale, provides a well-informed and sympathetic portrayal of FATCA’s looming threat to US Persons worldwide.  No comments yet, so I might suggest that we offer our feedback and encouragement.  Nice to see another homelander get it right.

FATCA Hassles: Feds Cracking Down on Overseas Tax Evasion

The following claims were made by Tick-Tock-Tick-Tock – US Swiss Tax Deal Imminent:

• Time is running out.
• A willful failure to file is considered a felony punishable by five years in prison.
• Holders of unreported foreign accounts have more than jail to fear.
• the IRS has proven itself very adept at finding taxpayers that have not filed an FBAR.
• Those that are caught can expect both a tax bill and a penalty assessment of the greater of $100,000 or half the highest balance in the account.
• Making things worse for taxpayers is next year’s looming FATCA law.
• If the IRS thinks you moved or renamed your account to avoid detection, chances of criminal prosecution increase dramatically.
• The Quiet Disclosure strategy not only doesn’t work, it sets up taxpayers for a huge interest and penalty bill.
• The IRS publicly states on their amnesty website that those who try to quietly send any missing FBAR forms to the Service Center may find themselves in hot water.

Eritreans can feel themselves lucky.  Their government is far less criminal against its diaspora.