An expat advocate group is promoting what is being called a same country exception to the burdensome financial reporting rules that have been imposed on U.S. citizens overseas.
The change, if adopted by the U.S. Treasury Department, would exempt U.S. citizens living overseas from making financial reports each year on the bank accounts that they maintain to lead their daily life.
The organization, American Citizens Abroad, sent the suggestion to top Treasury Department legal officials. The organization noted that the rules incorporated in the Foreign Account Tax Compliance Act are there mainly to catch persons living in the United States who seek to hide money overseas. The act is called FATCA for short.
Said the organization:
“The FATCA withholding tax rules apply to U.S. taxpayers residing in a foreign country who, because of their requirements of everyday living, have nearby checking and savings/portfolio accounts. Their owning these accounts is no different from people in Kansas or California, or some other place in the United States, owning accounts that they use to conduct their daily affairs. These accounts and the individuals owning them should not be the subject of the FACTA reporting and enforcement rules”
“Most U.S. individuals living outside the U.S. are not using accounts with foreign banks and other foreign institutions to hide anything, the organization added.
A country where an individual is entitled to remain based under local immigration or similar rules should be considered the foreign country of residence as long as the person is not present in the United States for more than 183 days a year, it said.
Instead of the complex reporting required under FATCA, Americans Abroad suggests that the U.S. citizen living overseas simply provide a copy of a valid residency visa or work permit.
U.S. citizens are having trouble in many countries because of the reporting requirements imposed on local banks by the U.S. government. If banks do not comply, U.S. authorities withhold 30 percent of any of the bank’s money that passes through the United States.
Consequently banks overseas have tightened up their rules, and some do not open accounts for U.S. citizens of entities under the control of U.S. citizens, like corporations. If implemented, the proposed rule would help alleviate the problem of financial services lock-out currently being experienced by American residents overseas, the organization said.