This is not a choice American citizens should have to make. But thanks to a tax law passed in 2010, it’s one those living abroad are having to face.
The Foreign Account Tax Compliance Act will require international financial institutions to give the Internal Revenue Service information on their U.S. account-holders. The first reporting and withholding deadline is July 1, 2014.
The goal is to ferret out Americans who are living overseas and who may be evading taxes or who may be sheltering offshore accounts and assets.
FATCA will not impact just the rich and famous. Those with more than $50,000 in their accounts at the end of the year will have to comply, too.
Some overseas financial institutions, which face penalties if they don’t comply, are closing U.S. citizens’ accounts, refusing to open new ones, and denying them loans and mortgages. More and more American expatriates are relinquishing their U.S. passports to keep their non-U.S. citizen spouses and partners from having to turn over financial information to a foreign country, i.e. the United States.
Last month, a group of Canadians issued a letter seeking the repeal of FATCA. And there are efforts to repeal the sweeping tax law in the U.S., among them a bill introduced by Sen. Rand Paul, R-Ky., who has said, “FATCA is a textbook example of a bad law that doesn’t achieve its stated purpose but does manage to unleash a host of unanticipated destructive consequences.”
Paul is right on this one. Americans shouldn’t have to give up their citizenship, and foreigners, foreign financial institutions and governments shouldn’t have to kowtow to the U.S. government, which has no problem spying on its own citizens’ emails and phone calls, much less snooping on foreign bank accounts.
This law stands not only to force U.S. citizens to forsake their homeland; it could cause bad blood between one of our most important allies and trading partners.
— Albuquerque Journal