American expats are hoping that final Foreign Account Tax Compliance Act (FATCA) regulations will ease their problems with finding a bank overseas.
The US Treasury and Internal Revenue Service (IRS) are expected to release the final draft of the controversial law soon.
FATCA has seen thousands of American expats shunned by foreign banks and financial institutions.
Waving goodbye to American customers means saving on compliance costs that require banks to identify every US national controlling an account and reporting their personal financial affairs to the IRS every year.
Meanwhile, many US expats cannot open a bank account or take out a credit card, loan or mortgage in the new country where they live.
Same country exemption call
American Citizens Abroad (ACA), a lobby group for expats, is urging the US Treasury to give US citizens overseas an escape clause from FATCA by exempting them from the reporting rules.
The Same Country Exemption is simple to implement, says the ACA in a letter to Robert Stack, the Deputy Assistant Secretary for International Tax Affairs.
“A same country exemption for accounts of US taxpayers residing in a foreign country would help relieve the lock-out problem and the problem of unnecessarily burdensome reporting. It is also remarkably quick and easy to put in place,” said the letter.
“With respect to accounts as to which an American account holder had made a same country election, the bank could ignore the fact that the individual was American and treat the account as if it were owned by a non-American. As a result, there would be no reason for the bank to turn away this customer.”
FATCA and US expats
More than 100 countries and 200,000 foreign financial institutions have signed up for FATCA reporting.
The IRS demands any foreign financial institution tells them about the wealth of US residents with accounts with balances of more than $50,000 or US expats with balances exceeding $200,000.
If they fail to do so, the financial institution can be hit with withholding taxes or expulsion from the US money markets.
The US government expects to raise up to $10 billion over a number of years in undeclared taxes from the measure.
Has any foreign bank said that they are willing to develop the procedures to implement Same Country Exception? It’s much simpler just to deny accounts!