Bahamas Weekly is reporting American Citizens Abroad Blasted FATCA at the Ways and Means Committee of U.S. Congress this week.
While focusing on the particular damage FATCA does to U.S. citizens living abroad, ACA pulls no punches in spelling out the broader harm this 2010 law (now pending implementation) threatens to inflict on the American economy as a whole, while failing in its stated purpose of curbing offshore tax evasion.
Plus, ACA spoke about international reactions:
“Foreign governments worldwide are furious that the U.S. Congress has the arrogance to exercise financial imperialism, to unilaterally impose its laws on the rest of the world, to require foreign financial institutions to spend tens of billions of dollars to comply with U.S. law and to require FFIs to break privacy laws in their own country in order to comply with FATCA, exclusively for the benefit of the United States with no reciprocity, let alone any prior negotiation.”
You Go ACA! Will Congress listen? If past response is any indication, we shouldn’t count on it.
ACA was quoted in this recent article: http://www.nytimes.com/2013/04/06/your-money/rules-aimed-at-tax-evasion-abroad-trip-up-average-americans.html
Mrs Serrato from ACA: “many wealth, social and value-added taxes in Europe were not eligible for credits or deductions on American taxes. ‘They could be a significant part of your foreign tax bill, but you can’t apply them to your U.S. taxes, so you just pay them,’ she said.”
It is good to see that the mainstream press is covering the FBAR / VDP issues surrounding foreign retirement accounts, however, there is some misinformation in the article, such as: “Americans who spend their entire career working abroad will probably not be eligible for much, if anything, from Social Security since they cannot contribute to it while working abroad.” This is not true if the country in question has a Social Security totalization agreement with the US. In such cases, it would be possible to draw Social Security benefits later in the US based upon what was paid in social security to the foreign country.
Nonetheless, foreign social security contributions and other payroll taxes are not deductible from US taxes although their US equivalents are. Another example of discrimination.
Please, Sandboxers, do SWAT the article with your comments:
http://bucks.blogs.nytimes.com/2013/04/05/financial-lessons-for-american-expatriates/?comments#comments.
IBS Thread: http://isaacbrocksociety.ca/2013/04/07/nyt-article-overseas-finances-can-trip-up-americans-abroad/
@Jefferson: Good to have you back here again.
Victoria has also posted on her blog that the disability income she received in France from the French government while she was fighting cancer is not taxable in France, but is taxable in U.S. and does not qualify for foreign earned income exemption. (Do I have that correct, Victoria?)
Likewise, the disability tax credit Canadians with disabilities receive as a recognition of high costs associated with those disabilities is not recognized by U.S. Then, of course, there are the concerns Calgary411 and others have about their adult disabled children’s registered disability savings plans where parents are trying to provide for their children’s financial future.
Of course, we shouldn’t forget this is the same country that expects Calgary411 to register her developmentally disabled son for the selective service, but won’t allow her to renounce citizenship for him.
How low can U.S. go? Do we really have any question about that?
Hi Blaze, yes, I remember Victoria stated that somewhere else as well (maybe at IBS). And she actually paid it. When I heard that, I was really upset for her. Here she is on disability because she is doing chemo and she has to pay extra tax to the US even though she’s been paying French taxes for years to get those benefits. If she had made more money, but as a salary, the FEIE would count.
It does not make sense to penalize people with higher taxes when they are in unfortunate situations and actually earning less! Preposterous!!!
Somebody should take this to the European court of human rights!!
And Calgary411 registering the disabled son for Selective Service… what!? The CCLA should write the Selective Service System an aggressive nastygram on that.
US policy is so low, nasty, discriminatory and unconstitutional that compliance itself is almost a crime. That is what all of these firms that sell compliance services are: criminals aiding and abetting highway robbery.
@blaze I wonder if there is already any caselaw in the European Court of Human Rights database that would support our position: http://www.echr.coe.int/ECHR/EN/Header/Case-Law/Decisions+and+judgments/HUDOC+database/
I found the Darby v. Sweden case interesting. The guy lived partially in Finland and was getting hit with Swedish church tax. The Court found for him, and he got at least 58’000 kroner (10 grand or so).
@Jefferson: So essentially, France paid taxes to U.S. for Victoria’s income which she received during chemotherapy.
No Calgary did NOT register her son for selective service. However, under American law, she was required to do that as her Canadian-born and raised disabled son had the same obligation as all other U.S. male citizens 18 to 25.
“Dual nationals of the U.S. and another country are required to register, regardless of where they live, because they are U.S. nationals.”
Plus, “Disabled men who live at home must register with Selective Service if they can reasonably leave their homes and move about independently. A friend or relative may help a disabled man fill out the registration form if he can’t do it himself.
“Men with disabilities that would disqualify them from military service still must register with Selective Service. Selective Service does not presently have authority to classify men, so even men with obvious handicaps must register now, and if needed, classifications would be determined later.”
http://www.sss.gov/fswho.htm
Calgary did not know of this requirement until I pointed it out to her a few months ago. Thankfully, he was beyond the age requirement by then or this could have caused more stress for her in looking out for his interests.
I know a blind man who moved to Canada during Vietnam era. I don’t think he would have actually have been drafted, but he wasn’t taking any chances!
Jatras also has a post on the ACA paper.
I especially like the footnote : “The client is put into a position of no choice. Account closure of “recalcitrant” persons with U.S. citizenship would not only mean that they would be placed in a category of “closer scrutiny” by the IRS but would, in effect, result in their not being able to live a normal life outside the territory of the United States—this in clear violation of Article 13, paragraph 2 of the Universal Declaration of Human Rights, ensuring that: “Everyone has the right to leave any country, including his own, and to return to his country.”
Jatras post: http://www.repealfatca.com/index.asp?idmenu=4&title=News&idsubmenu=121
@Blaze, Jefferson
I believe the you are referring to is the US tax Victoria paid on her French unemployment benefits:
An American Abroad Pays Her Annual Tribute to the U.S.
http://thefranco-americanflophouse.blogspot.ca/2012/11/an-american-abroad-pays-her-us.html
I too was curious about the outcome and asked her about it back in February “Inquiring minds would like to know, Victoria: Did you in the end pay US taxes on your unemployment income?”
Her response was “Good question. To be honest I still haven’t figured it out.
I read the tax treaty and then went looking for the form that one reader proposed. I didn’t find it.
I think the vast majority of what I owed was in fact due to capital gains (grossly inflated by changes in the exchange rate over time). To know for sure I would need to turn to another tax expert who could over the returns with me. After already sending off thousands of dollars to the US treasury I find that I’m not really motivated to spend more.
I think this is a common problem. It’s just too damn complicated and too damn costly to be 100% sure.”
I did not realize our son “should have” registered. By the time we knew, he was already 26. At the time, he did not intend to renounce and had entertained the idea of attending another round of grad school. It was very disappointing to discover he would not be eligible for any kind of financial assistance (and this is not the Sel Serv but from Financial Aid orgs themselves).
http://www.finaid.org/students/selectiveservice.phtml
“Male students who fail to register with Selective Service before turning age 26 are ineligible for Federal student loan and grant programs, including Pell Grants, Federal Work Study, and Stafford Loans. (Parents who want to borrow a PLUS loan do not have to satisfy the registration requirement.) Several states have also made Selective Service registration a prerequisite for state financial aid and for matriculation at public colleges and universities.
Even if you disagree with the requirement, you should register. Failure to register can have a serious negative impact on your ability to obtain a driver’s license, qualify for financial aid, pursue an education, or obtain employment. “
Hi Folks,
What bubblebustin said. 🙂 It was unemployment, not disability, though this tax year I do have disability and am really curious about how that will be treated. I will of course talk about it on the blog whatever the damage.
Don’t mean to whine here but last year was a real nightmare on so many levels. It wasn’t just the money we had to pay out, it was also trying to manage the tax returns and FBAR’s while I was going through chemo. Months after the chemo was over, I’m still dealing with diminished cognitive function which is a known side-effect of the treatment. I’m still amazed that my posts managed to be reasonably coherent during that period. All this to say that when I considered getting a second opinion or doing more research on last year’s tax returns, I just did not have the “courage”, I didn’t want to spend more money and I sure didn’t want to trigger an audit by submitting a revised return. It’s quite possible that I and my accountant missed something and that I overpaid last year. Exactly the sort of thing that TAS has already spoken out about.
@Victoria
Who can blame you for not wanting to put good energy after bad after all of what you’ve been through? Hasn’t the IRS stolen enough from us? I wish my mind work half as well as yours did on chemo 🙂
@nobledreamer
Not registering for the draft used to have much more serious consequences than they have today, so much so that the US government was forced to realize that the prosecutions and trials themselves were responsible for the decline in registration. Sound familiar??? They decided instead to deny the offenders programs and services such as you mentioned.