All posts tagged Taxes

Families torn apart

by waybeyondthebeltway on May 13, 2013 in Americans Abroad, General Interest, Government, Politics, Taxes with No comments

There are many, many reasons to repeal the Foreign Account Tax Compliance Act (FATCA), but one of the most jarring is its destructive impact on families.

The Findings and Recommendations of the Americans Resident Abroad Working Group (PDF) highlight the fact that both the Report of Foreign Bank Accounts (FBAR) and FATCA require disclosures to the Internal Revenue Service of information about joint financial accounts even if only one spouse is a U.S. citizen. The findings note that:

Several distraught American wives described the anguished dilemmas they faced in such cases. For those who were not aware of, and had not previously filed, the necessary FBARs, they will have to declare these joint accounts with their non-American spouses and be subjected to heavy penalties, possibly on their joint life savings, something their non-U.S. husbands may be reluctant to accept. The tragic choices facing the women can boil down to divorce, renunciation of U.S. citizenship, the sale of businesses and investments they helped build, or living “on a cash basis”—which would put them and their children at risk under local law.

Anecdotal evidence suggests many are opting for divorce, which is a tragic and self-defeating outcome from both a human and a public policy perspective. Our laws should strengthen families, not weaken them by offering incentives to destroy them. There is a tragic analog to this in the legacy of our flawed welfare system, which historically prevented families in need from receiving benefits if the father remained a part of the household.

What is more, 900 Americans, or about 5% of the dual-national American-Swiss residing in Switzerland, renounced their U.S. citizenship in Switzerland in 2012 — double the number in 2011.  And as many have noted,  Switzerland is the canary in the coal mine with respect to the repercussions of FBAR enforcement and FATCA implementation.

Ultimately, unless the shortcomings in these laws are addressed, increasing numbers of Americans will be forced into the awful situation of having to decide whether to destroy their families or to renounce their citizenship. Decisions that none of us should be coerced into making by our own government.

You’re having an impact on tax reform

by waybeyondthebeltway on April 7, 2013 in Americans Abroad, General Interest, Taxes, Washington with 1 Comment

American Citizens Abroad (ACA) reports that our comments on tax reform are having an impact and members of Congress and the media have taken note of the fact that more than one-quarter of the submissions to the House Ways and Means International Tax Reform Working Group have come from ACA members and supporters. And leading up to the April 15th deadline for comments, we want to keep the pressure on by:

  1. Submitting comments to the International Tax Reform Working Group in support of Residency-based taxation (RBT); and
  2. Submitting comments to the Financial Services Tax Reform Working Group opposing the Foreign Account Tax Compliance Act (FATCA).

See the ACA website for pre-formatted letters for each working group as well as supporting documents from ACA, which you may attached to your submissions.

Update: American Citizens Abroad (ACA) members and supporters submitted a record number of comments to the House Ways & Means Committee – See the ACA press release (PDF).

Make tax equality a reality

by waybeyondthebeltway on March 31, 2013 in Americans Abroad, General Interest, Government, Representation, Taxes, Washington with No comments

The House Committee on Ways and Means is crafting a comprehensive tax reform proposal. As part of that process, Chairman Camp (R-MI) and Ranking Member Levin (D-MI) created 11 bi-partisan tax reform working groups and, significantly, they asked stakeholders to submit tax reform proposals and suggestions before April 15, 2013.

Gathering input from citizens and other stakeholders is fundamental to our legislative process. Indeed, Congress has a duty to gather such information and opinions as they construct a record on which to base any legislation being considered. And, when citizens express their opinion to their respective representatives, it makes an impression.

You can make your voice heard on tax equality and support American Citizen’s Abroad’s (ACA) residence-based taxation (RBT) proposal by writing to the Ways & Means Committee’s International Tax Reform Working Group, chaired by Devin Nunes (R-CA) and Earl Blumenauer (D-OR) at: tax.reform@mail.house.gov following the guidelines below under: Details for the Submission of Written Comments to the Tax Reform Working Groups. Naturally, you can send your own suggestions for tax reform, but ACA has drafted an easy to use pre-formatted letter that supports the ACA position on taxation and allows for personalization as well (the ACA pre-formatted letter is here).

The ACA proposal — Residency-based taxation (RBT) — would eliminate the serious difficulties caused by the combination of citizenship-based taxation, Report of Foreign Bank and Financial Accounts (FBAR) filing requirements and FATCA. Under the ACA proposal, Americans abroad would be taxed like non-resident aliens. If enacted, Americans abroad would enjoy unencumbered access to foreign financial institutions again and would not be subject to filing a 1040 and FBAR or FATCA reporting.

Details for the Submission of Written Comments to the Tax Reform Working Groups

1. Any person(s) and/or organization(s) wishing to submit comments can email tax.reform@mail.house.gov.

2. In the subject line of the email, please indicate “Comments: (name of) Tax Reform Working Group” (note: be sure to specify the name of the working group in the subject line – e.g., Energy Tax Reform Working Group).

3. Attach your submission as a Word document.

4. In addition to the Word document attachment, please include in the body of the email a contact name, physical address, phone number and email address.

5. For questions, or if you encounter technical problems, please call (202) 225-3625 or (202) 225-1721.

Taxpayer Advocate’s Annual Report

by waybeyondthebeltway on March 18, 2013 in Americans Abroad, Representation, Taxes, Washington with No comments

The National Taxpayer Advocate’s 2012 Annual Report to Congress is a must read for anyone deeply interested in the taxation of Americans abroad.

For those unfamiliar with Nina Olson, the National Taxpayer Advocate, she is a fierce advocate for taxpayers generally and Americans abroad in particular. This can be seen, for example, in her reference to the erosion of taxpayer trust that has taken place:

At its most basic level, insufficient funding drives the IRS to reduce its meaningful interaction with taxpayers and replace it with automated enforcement mechanisms. This approach can erode fundamental taxpayer rights and protections. We see evidence of this erosion in the IRS’s … insistence on draconian penalties against taxpayers with overseas accounts, irrespective of their benign purpose…

There are many other references to problems of American taxpayers abroad. It’s well worth a read.

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