Expat advocate groups take the battles to Washington

Overseas American week ends Friday, but that does not mean there is an obligation to take an overseas American to lunch.

This is the time of year when advocate for overseas Americans meet with U.S. lawmakers and staffers to discuss problems confronting expats.

One group will be meeting with U.S. House Ways and Means Committee staffers to deal with banking and taxes. Others will be discussing passport services with the U.S. State Department, according to American Citizens Abroad.

That group is joined by Association of Americans Resident Overseas and the Federation of American Women’s Clubs Overseas.

There are many issues, but the overriding one is current U.S. tax policy that seems to suspect every expat of being a tax criminal.

A.M. Costa Rica’s tax columnists addressed this issue Wednesday. The  Foreign Account Tax Compliance Act creates additional reporting requirements for U.S. taxpayers and another form to do it. Those expats who own corporations, either for businesses or to protect assets like a car or house, face additional reporting.

The law known as FATCA is the U.S. policy that has caused foreign banks to cancel the accounts of U.S. citizens because of U.S. government requirements. Even in Costa Rica foreigners are having trouble opening bank accounts if they do not have residency.

Ostensibly the policy is to reduce money laundering, but like many U.S. security measures they impose hardship indiscriminately on expats.

There are expats in Costa Rica living in fear that the U.S. Internal Revenue Service will bring criminal charges against them because of the confusing and difficult ways to comply with FATCA.
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.

Banks that will not do this face penalties.

The three organizations also are pushing for a residency-based tax system. The United States is one of a few countries that taxes income that its citizens earn overseas.  A major impediment for Americans living and working around the globe is their present double tax liability under the current citizenship-based taxation, the organizations said on an Overseas Americans Week Web site.

The organizations say that by taxing Americans just on money earned in the United States actually would mean more tax income. The system also would make Americans more competitive in the international labor force, they said.

There are other issues that cause headaches for expats. Among these are certain rules regarding citizenship of offspring. Then there is Social Security and Medicare, which is not available for overseas Americans.

The issues, many of them complex, are discusssdHERE!

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