The bureaucratic burden of identifying, verifying and reporting has caused many banks to regard American clients, particularly those of moderate means, as more trouble than they are worth
wrote
Stu Haugen in May as the former head for Republicans Abroad in France called the Foreign Account Tax Compliance Act (Fatca) "a massive breach of the Fourth Amendment, which forbids unreasonable search and seizure."
Middle-class Americans living abroad are losing bank accounts and home mortgages and, in some cases, having their retirement savings exposed to debilitating taxes and penalties.
There is no recourse and no appeal process. Those impacted are left with the choice of uprooting their families (including foreign spouses and children), careers and businesses to re-establish a life in the United States; or to make the painful decision to renounce their citizenship.
Without significant and timely changes, that will only be the tip of the iceberg as foreign financial institutions continue their search for unprofitable American accounts. Remember, the vast majority of those renouncing citizenship are not wealthy tax evaders trading their passport for income tax savings; they are middle-class Americans, living overseas, fully compliant with their U.S. tax and reporting obligations.
A week later, the International Chairwoman of Democrats Abroad,
Katie Solon, responded:
Stuart Haugen’s article
on the Foreign Account Tax Compliance Act is an accurate portrayal of
Fatca’s failings but gives an incomplete account of nonpartisan efforts
to limit its impact to the tax cheats who are the intended targets.
Democrats
Abroad and several nonpartisan organizations of Americans overseas have
been lobbying for four years for a “Same Country Safe Harbor” proposal
to provide relief to law-abiding citizens and lessen the burden on
financial institutions without giving cover to those hiding taxable
assets in third-country accounts. The Same Country Safe Harbor plan
would exempt from Fatca reporting the accounts of American citizens who
are legal residents in the country in which the accounts are held.
The
Democratic National Committee called for Fatca reform eight months ago.
The Treasury Department could implement the exception without
legislation, which Mr. Haugen and the sponsors of repeal admit is
unlikely to happen in this Congress or the next.
If
the Fatca Legal Action lawsuit is ever to succeed, it will take years.
Right now, the Same Country Safe Harbor proposal is the best hope for
urgent Fatca relief.
