American Citizens Abroad, a Geneva-based expat group, is organizing a campaign to repeal U.S. tax legislation that the organization says will destroy the lives of average, honest and hard working Americans no matter where they live.
The issue is the Foreign Account Tax Compliance Act, known as FATCA. The expat organization is one of several groups that oppose the law. “Reporting on foreign bank accounts, pension plans, annuities, and property just because you hold these assets overseas is discriminatory,” said American Citizens Abroad.
A.M. Costa Rica reported in January that the organization, the Association of American Residents Overseas, based in Paris, and the Federation of American Women’s Clubs Overseas submitted comments criticizing the reporting proposals.
Non-willful reporting penalties can quickly amount to $50,000 for simply forgetting to list an asset on the proposed form, said American Citizens Abroad.
The law also puts a burden on foreign banks, whose employees have to report the assets of U.S. citizens.
Starting in 2014, foreign financial institutions will be required by the U.S. government to report information regarding accounts of U.S. citizens to the Internal Revenue Service, said American Citizens Aboard. This law requires foreign financial institutions such as a local bank, stock brokers, hedge funds, pension funds, insurance companies, trusts, and others to report directly to the tax agency all their clients who are U.S. persons.
That includes U.S. citizens and green card holders living in the United States or abroad, it noted.
The American Citizens Abroad organization said that a survey by a major international accounting firm said that only 36 percent of foreign financial institutions will comply with the U.S. law. The others are considering dumping any U.S. securities they hold as well as U.S. customers.
The form, No. 8938, that U.S. citizens will be forced to use to report foreign financial assets still is in draft form.
The Internal Revenue Service published instructions Sept. 30.
The current draft requires calculating the values of financial assets that it defines as bank accounts, stocks, securities, interests, and financial instruments, A.M. Costa Rica reported Friday. Detailed information about the assets such as names of trusts, corporations, and account numbers must also be provided.
The Internal Revenue Service will order U.S. banks to withhold up to 30 percent of assets of foreign financial institutions for failing to comply.
American Citizens Abroad proposes a letter-writing campaign and has prepared a detailed report on the law. That report is HERE! In a letter to members of Congress, the organization said “How can the United States expect to be competitive in the global economy when its own legislation destroys the investment confidence of the rest of the world and makes it impossible for its own citizens and companies to operate internationally on a level playing field?”
Said the organization on its Web page:
“Legislators want you to believe that FATCA is about tax evasion, but it isn’t. It is about destroying U.S. jobs and economic well being. Write to your congressmen and encourage all of your American friends in the United States as well as those residing overseas to support a massive write-in campaign. ACA has prepared a model letter www.aca.ch/fatcaml.txt.”