An advocacy group for overseas Americans said its representative met earlier this month with U.S. Treasury and Internal Revenue Service officials. The discussion was aimed at pointing out the problems with new legislation covering citizens who live in foreign countries.
The organization, American Citizens Abroad, said that it continued to highlight the serious ramifications that the Foreign Account Tax Compliance Act legislation and Report of Foreign Bank and Financial Accounts were causing, primarily in the denial of foreign financial services for Americans living overseas.
Much of the discussion centered on technical requirements and changes that might make these reporting requirements easier for U.S. citizens, said the organization.
American Citizens Abroad and other overseas organizations also strongly recommended that an ongoing dialogue for these issues is necessary and suggested that a working group or advisory panel be created where members of the overseas organizations, and other Americans living outside the U.S., along with Treasury Department and IRS representatives could meet on a regular basis to review and discuss the workings of the U.S. tax and foreign assets reporting system as applied to Americans abroad. The goal would be to identify areas of concern and to develop solutions that can be implemented with the help of both taxpayers and the government, it said.
American Citizens Abroad said that it was pleased to see that following the meeting, the Treasury Department issued an updated agreement that includes easing measures for overseas financial institutions that will allow them to maintain American clients.
As Forbes magazine explained, the Foreign Account Tax Compliance Act, was enacted in 2010 and requires foreign banks to report U.S. account holders to the IRS. Plus, the institutions must impose a 30 percent tax on payments or transfers to account holders who refuse to identify themselves.
To avoid withholding, an institution must enter into an agreement with the IRS to: identify U.S. accounts, report certain information to the IRS, and withhold 30 percent on certain payments to those unwilling to provide the required information.
American Citizens Abroad and other expat advocacy organizations have been opposing the law that goes into full effect next year.
According to American Citizens Abroad, the new version of the agreement contains provisions that in certain cases require a foreign financial institution to avoid policies or practices that discriminate against opening or maintaining accounts for Americans overseas.
This modification is aimed at small financial institutions with essentially a local client base, the organization said.