The Foreign Account Tax Compliance Act (FATCA)

In a move that could ultimately affect the ability of all Americans abroad to use basic banking services, beginning in 2014, foreign financial institutions will be required by the US government under the Foreign Account Tax Compliance Act (FATCA) to report information regarding accounts of US citizens to the IRS. This law requires foreign financial institutions such as local banks, stock brokers, pension funds, insurance companies, etc. to report to all their clients who are “US persons” (citizens and green card holders whether living in the USA or abroad) directly to the IRS.

FATCA also requires US citizens who have foreign financial assets in excess of $50,000 to report those assets on a new Form 8938 to be filed with the 1040 tax return starting fiscal year 2011.

If you are an Americans abroad or know any Americans abroad, write to your Congressmen and encourage all of your American friends in the United States as well as those living abroad to join the massive write-in campaign lead by American Citizens Abroad. Click on the link for a model letter.

Middle class Americans abroad targeted by IRS

Tax compliance bill drives expat to despair of US http://on.ft.com/mTaZg3 #americansabroad—
Peter Dahlen (@peterdahlen) June 14, 2011

If you know an American abroad, pls spread the word. Your Rights as an American Abroad: http://t.co/RVIjK2r—
Peter Dahlen (@peterdahlen) June 04, 2011

Your Rights as an American Abroad

Inexplicably, Americans abroad are not counted in the US Census and there is no up-to date estimate of the size of the overseas US citizen population.

Determining the size of our population will help in lobbying the federal government in support of our rights and issues that impact us, and it is absolutely crucial to improving access to voting, social security and consular services.

The dedicated team at Overseas Vote Foundation is working together with international and domestic organizations in the Overseas Citizens Count Project with the goal of determining the number of Americans living abroad and how they are dispersed geographically.

This is a tremendously important project, so please sign-up and be counted today!

Make your voice heard inside the Beltway

Right now, Americans abroad can get the biggest bang for their buck by contributing to Democrats Abroad and recent election successes assure Democrats Abroad greater clout when arguing for legislative issues that significantly impact all Americans living abroad, regardless of their political ideology.

Banking Access Issues Abroad? Let ACA Know

American Citizens Abroad (“ACA”) has been asked by the office of Rep. Carolyn Maloney, co-chair of the Americans Abroad Caucus and a member of  the House Committee on Financial Services, whether the banking access issue is solely a concern for civilians or whether there are examples of military families (or their dependents) or federal contractors who are finding their access to foreign or domestic banking services restricted.

If you serve in the military or are a federal contractor or employee and have had banking access issues abroad, or if you are aware of banking access issues among folks in these categories, or for military retirees abroad, please let ACA know as soon as possible.

ACA is preparing for hearings in Congress to discuss these problems. So if you have had banking and/or tax problems because of US government policies with regard to overseas Americans ACA wants to hear about it. You can submit your personal story online and specify the degree to which your personal details will be shared.

IRS Finally Allows Americans Abroad to use Free File

On Friday, the IRS announced that Americans abroad can now use the IRS FreeFile system to file their tax returns. As we are one of the few countries that requires our citizens abroad to file taxes when they live abroad, this is a welcome — if long overdue — government service.

If you use this new government service, let us know how it goes.

Completing Tax Returns Online

Tax time is approaching again, and Americans abroad get a double-whammy as they have to file tax returns where they live and back home. And if the hassle and burden of filing taxes in two countries is not bad enough, the leading online tax preparation software in the US, TurboTax, hasn’t  allowed payment using foreign credit cards in years past. Will they pay attention to the 6 million plus Americans abroad who are customers or potential customers and allow international payments this year? Alternatively, are any of their competitors planning to target the market.

Right now, the strategy seems akin to ignoring a state with 6 million inhabitants and making it more difficult for the residents of that state to complete their taxes using the best software available. I don’t get it.

American Citizens Abroad Wants Your Taxation Testimonials

The Internal Revenue Service’s (IRS) Taxpayers Advocate Service (TAS) has developed an online service for reporting systematic tax filing problems, SAMS (Systemic Advocacy Management System). TAS cannot address tax policy issues, which is the domain of Congress, but can address practical issues related to filing which affect groups of taxpayers, Overseas Americans being one such group.

Comments submitted can only be submitted on behalf of a group of taxpayers and not by individual taxpayers.  American Citizens Abroad (ACA) has already submitted a report concerning the IRS’ across the board application of penalties with regard to omissions and errors in FBAR (FBAR stands for Report of Foreign Bank and Financial Accounts) filing ($10,000 per instance or 20% of the highest account value) regardless of whether of not taxes were owed.  This is a severe interpretation of the FBAR regulations that is causing catastrophic financial repercussions for some individuals.

It is important to register complaints with SAMS because these become official communication on which the NTA (National Taxpayers Association) can build a case with the IRS for modifications.

ACA is urging Americans overseas to contact us with their testimonials and stories related to overseas tax filing and problems related to IRS and Treasury reporting so that we can submit comments on behalf of overseas American taxpayers.  Please forward us your comments, problems and concerns on tax filing issues, increased costs and complexities of filing, inconsistencies in filing requirements, paperwork, as well as, cases of double taxation, levying of penalties and fees.

If you have a case to report please do so by visiting our website input page at http://www.aca.ch/persexp.php.  You will find a prompt for this link on the ACA homepage under “News Headlines,” Problems with banking and taxes.

ACA will all use these testimonials to advance this issue to the Americans Abroad Caucus and the US Congress.

Constitution Day

Better late than never… Friday, September 17 was Constitution Day, if you missed it, take a moment to read this excellent post by two American educators living abroad, Marina Mecl and Gladys Cagle Pieniazek. As Marina and Gladys point out, Consitution Day is a good time to read through this historic and vibrant document which is the embodiment of the founding fathers vision for our country. Given today’s political climate and the lack of civil public discourse on public policy, it’s also important to remember that this historic consensus was reached only after much heated debate and compromise.