Banks are threatening to close accounts of British expats living in the USA if they fail to complete piles of paperwork to comply with the Foreign Account Tax Compliance Act (FATCA).
Millions of US expats worldwide are already caught by the law which requires foreign financial institutions to supply details of bank balances and earnings from investments to report the information to the Internal Revenue Service (IRS).
Now banks in Britain and other countries that have customers living in the US are telling customers to file proof of identity and other financial information or their accounts will be shut.
HSBC has reportedly given British expats in the US 90 days to supply the information or to find somewhere else to bank.
However, in many cases, the expats have already given the information to the IRS and are being asked to pass the same paperwork to their banks to send back to the IRS.
Customers turned away
Trade body the British Bankers Association sympathises with the plight of British expats in the USA but explained the banks have no option but to obey FATCA regulations.
“The banks have no choice but to ask for the information,” said a spokesman.
“The British government has an agreement with the US government that lays out the rules the banks must follow to comply with FATCA and this includes identifying any customers living in the US who hold offshore bank accounts or investments.”
For some banks, the backlash from expats about FATCA and the cost of implementing systems to meet the law has led to them turning away customers caught by the rules.
Many financial firms in the UK have turned away their US clients because of FATCA and now British expats are facing the same treatment.
What is FATCA?
FATCA is a US law aimed at identifying US taxpayers with cash and assets overseas and who have failed to disclose any earnings and capital gains on which they should have paid tax.
The rules not only apply to US citizens, but British expats who hold a green card.
FATCA only indirectly affects taxpayers because the financial institutions with which they do business have to make reports about customers each tax year, while the customers have no obligation to make any tax filing under the act.
However, the financial institutions they deal with have a duty to identify any customers who are US taxpayers, which is where the burden of giving banks paperwork comes in. The IRS then compares reports from the banks with personal filings to ensure the right amount of tax is paid.
Time For America to Join the Rest of The Developed World and Adopt: Residence Based Taxation.
Americans in the US trumpet how great their freedom is. However the freedom of Americans is inferior to the freedom enjoyed by citizens of many countries such as Australia, Canada, and the UK and this freedom is this: the freedom to work and live in another country, and the freedom to leave one’s country (except when these nonUS persons live in the US).
America’s tax and compliance laws have increasingly acted to keep Americans in by punishing harshly those who have left.
Those impacted very much are part of the 99%, most part of the lower and middle class. If you are a US person living overseas, and there are 8.7+ million, then you are already getting taxed in the country where you live and receive government services. You receive $0 in US government services, other then those paid for on a fee basis.
The US with Citizenship Based Taxation wants to tax you as if you live in the US. The US allows tax credits for your taxes paid in your country of residence. The conundrum comes in where the US has taxes that your country does not, then this flows on top of all taxes paid as double taxation. A more technical term for this is ‘tax treaty gaps.’ Most US persons already live in relatively high tax countries such as Australia, Canada, and the UK, and the US taxes representing double taxation get put on top; so these people pay way higher total tax than US persons with the same income living in the US.
US persons living overseas are tremendously disadvantaged by US tax and compliance policies.
All other countries of the OECD practice Residence Based Taxation. As a result while US persons overseas are tripped up by double taxation, reporting all their accounts, and onerous compliance and penalties; nationals from all other countries are free from such interference from their home countries.
Double Taxation Without Representation, With Excessive Compliance Cost, With Excessive Compliance Penalties, Without a care for one’s well being by the US government, and for $0 in US government services in exchange is TYRANNY!
The US has ignored its founding principles in regards to US persons living overseas.
How bad is it all? It is so bad that US persons overseas are increasingly taking the drastic step of renouncing their US citizenship.
Any US persons living overseas caught up in all this must visit the message boards of The Isaac Brock Society, whose motto is: Liberty and Justice for all United States Persons Abroad. Obviously British expats in the US are caught up in this and the British government should speak out in regards to the rights of these people and British residents who are US persons.
FATCA benefits only America and is to the detriment of the citizens of every other country.
STOP FATCA.
The US is getting overly invasive on this tax issue. It is making life impossible for people it deems to be “US persons” even if they live abroad for their whole lives with another passport and pay taxes and have their financial life elsewhere.
I live in the EU with an EU passport since 1997. All I have is a US birthplace. One bank found that and threw me out, closed my accounts, didn’t want to deal with a US person.
Some banks will allow me a basic checking account, but I’m not allowed to have simple mutual funds. It’s crazy. I wave my French passport, they don’t care. Born in the US, prove to us you have renounced, they say. To renounce I need to pay $2350 to the US (they hiked the fee to discourage renunciations). It truly is a type of iron curtain. Not only do they persecute you abroad, but they keep you from giving up your passport. Imagine a family of 4 or 5, with that fee.
I pay way more taxes in Belgium than I ever would in the US. No matter, I am not truly protected from double taxation, not allowed to invest, save, and have to do costly yearly tax returns, which get ever more complex. I also have to report my ordinary lowly bank accounts to the Financial Crimes Enforcement Network, exclusively online, thus throwing my account info and social security number and birth date and address out onto the internet, in a time when hacking of the US government is well-documented.
I used to be a proud ambassador of the US, now my passport is a hindrance.
I have more bad news for you, should this ever be read. In Belgium employers are increasingly using a loop-hole in order to reduce taxation for employees on certain types of pay and bonuses. The usual one is to pay a bonus in to a SICAV (open ended investment trust) and guess what is right there in the bullet points? You guessed it, “no US persons”. So, I get the SICAV tax advantage, the American gets screwed through payroll. The effects of FATCA run deep and are a disaster for normal people working and living normal lives overseas if they happen to be tainted with “US person” status. Heck, you don’t even need to be American for the USA to claim you as a tax payer.
Born in America, resident in the UK for 50 years, I am one of the millions of low income individuals whose lives are being destroyed by the consequences of a crude law passed by the US government to catch the unpaid taxes of the super-rich.
If FATCA was simply this, a federal law focused upon illegal offshore profits, than political attempts to ameliorate its heinous effect upon decent, law-abiding citizens, would have been put in place at the outset. However, it is not this simple law. FATCA with its acronym echoing the slang word FATCAT as cover for the envious, is a bridgehead intended to create a global legal structure that will electronically enslave every human being on earth to a centralised banking oligarchy.
GATCA is their next step and as these New World Order lunatics are running out of easy money with which to keep their ideological Grand Plan oiled up and running at full steam, the implementation of their worldwide taxation control and command regime will be imposed with increasing brutality and increasing speed.
Expect a worldwide media campaign for the abolishing of paper money and the outlawing of personal holdings in precious metals as the next step.
Relinquishing US citizenship will simplify the lives of dual citizens. It will alleviate the burdens that presently mean such citizens cannot save, have shared accounts, give help to their children, run a small business or be a signing director in a large one and risk being made homeless and bankless by the Fincen police of the IRS. However, it will not save any of us from what is coming next: global fiscal tyranny by the 1%.
The stark choice we all face is where do we feel we owe heart loyalty, what patch of earth do we wish to protect, and amongst which people do we wish to face this oppression.
To relinquish US citizenship in the context of this corrupt reality, know that you may never, ever be able to go back. If that is at all painful, return to the States.
Be assured, there will be a third world war as a consequence of this Imperial overreach.