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American Citizens Abroad urges same country exception from FATCA
| Published: | 16 Aug at 6 PM |
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In a burst of common sense, the ACA organisation has urged the US Treasury to grant FATCA exemptions to US expats living in foreign countries.
The plea, issued just before the final FATCA regulations are to be announced by the US Treasury, recommends exemptions from foreign financial institutions’ compulsion to report on the bank accounts of US citizens living abroad. Penalties for banks and other financial institutions’ failure to comply are severe and include withholdings of 30 per cent of US-sourced income payments.
As a result, US expats are finding it extremely difficult to retain the services of foreign banks, most of which fear the consequences of a simple mistake in the complicated reporting procedure. ACA’s letter to the US Treasury suggests that US citizens legally residing in foreign countries and holding local bank accounts should be considered as non-US taxpayers, thus exempting foreign financial institutions from compliance with the Form 8938 Statement of Specified Foreign Financial Assets.
According to the ACA, inserting this provision in the final draft of FATCA regulations would be surprisingly easy to do. A simple form to be sent to foreign financial institutes and the Internal Revenue Service by individual expats could be made brief and to the point by the inclusion of an ‘electing in’ section.
Also mentioned in the ACA's letter was the undeniable fact that US expat customers of foreign banks have been seeing an increasing lockout as a result of FATCA’s onerous regulations. A ‘same country exception’ as proposed, the letter added, would help solve expats’ problems as it addresses the major concerns of foreign financial institutions as regards FATCA.
Should ACA’s suggestion be accepted, it would benefit the administration of the voluntary compliance system in the USA. Americans resident overseas would find it far easier to access their local banking and other financial services and might well feel happier about the controversial need to submit annual tax returns. The move might even help solve the present-day difficulties caused by non-compliance.
The plea, issued just before the final FATCA regulations are to be announced by the US Treasury, recommends exemptions from foreign financial institutions’ compulsion to report on the bank accounts of US citizens living abroad. Penalties for banks and other financial institutions’ failure to comply are severe and include withholdings of 30 per cent of US-sourced income payments.
As a result, US expats are finding it extremely difficult to retain the services of foreign banks, most of which fear the consequences of a simple mistake in the complicated reporting procedure. ACA’s letter to the US Treasury suggests that US citizens legally residing in foreign countries and holding local bank accounts should be considered as non-US taxpayers, thus exempting foreign financial institutions from compliance with the Form 8938 Statement of Specified Foreign Financial Assets.
According to the ACA, inserting this provision in the final draft of FATCA regulations would be surprisingly easy to do. A simple form to be sent to foreign financial institutes and the Internal Revenue Service by individual expats could be made brief and to the point by the inclusion of an ‘electing in’ section.
Also mentioned in the ACA's letter was the undeniable fact that US expat customers of foreign banks have been seeing an increasing lockout as a result of FATCA’s onerous regulations. A ‘same country exception’ as proposed, the letter added, would help solve expats’ problems as it addresses the major concerns of foreign financial institutions as regards FATCA.
Should ACA’s suggestion be accepted, it would benefit the administration of the voluntary compliance system in the USA. Americans resident overseas would find it far easier to access their local banking and other financial services and might well feel happier about the controversial need to submit annual tax returns. The move might even help solve the present-day difficulties caused by non-compliance.
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