ACA in the News 2014 and Older
Time (Dec. 20, 2013)
"...in October ACA’s executive director Marylouise Serrato wrote a letter to Robert Stack, IRS’ Deputy Assistant Secretary, noting that while the organization supports the government’s efforts to combat tax evasion, banking services would be more accessible to US nationals abroad if financial accounts located – and taxed – in the country of residence would not be subject to FATCA reporting."
International Business Times (Dec. 20, 2013)
" 'What we're seeing is that many banks, regardless of the inter-governmental agreements, just seem to be taking a decision that it's just easier not to provide services to American clients,' the ACA Executive Director told International Business Times, 'Definitely in the last year and a half we've seen an escalation of banking denial.' "
CNN (November 14, 2013)
The rule, which goes into effect July 2014 [FATCA], requires foreign banks to identify and scrutinize Americans with accounts containing at least $50,000 and either report those accounts to U.S. tax authorities or withhold 30% of dividends, interest, and other payments and send that money to the U.S. Treasury. The law, widely hated by Americans living and working abroad, has made it tough to do simple financial things abroad.
Marylouise Serrato, the executive director of American Citizens Abroad, a Geneva-based lobby for expats, said recently in an email that "individuals with legitimate need of banking services will be locked out" of many foreign countries.
The New York Times (November 14, 2013)
The law [FATCA], approved in 2010, faced widespread criticism from the start. Foreign banks said it was overly broad and would be costly to implement, and some financial groups termed it a heavy-handed effort to impose American tax laws around the world.
Expat groups like American Citizens Abroad blame Fatca and other complex tax-filing requirements for a continuing uptick in the number of people renouncing their citizenship.
The Economist (October 13, 2013)
With a tax system based on citizenship rather than residence, America is the only advanced country that chases its nationals—even those who have long had no links to their homeland—for a slice of their worldwide earnings. Many of the 7.2m living abroad end up owing nothing, because they get credit for payments to foreign exchequers, which are often higher. But they still have to fill out the forms—or, more likely, pay someone to help. Even in simple cases this can cost $2,000 or more, says Marylouise Serrato of American Citizens Abroad (ACA), an advocacy group.
Filing requirements have grown stricter since 2008. The “tipping point”, says Ms Serrato, was the Foreign Account Tax Compliance Act (FATCA) of 2010, which will take effect next year. This imposes an array of new reporting obligations, especially on foreign financial institutions that serve Americans. Title of article: “Overtaxed and over there”.
CNN Money (Sep. 15, 2013)
That's only a small sample of banks that are refusing to do business with Americans, who now face a "banking lockout problem," said Marylouise Serrato, executive director of American Citizens Abroad.
It's already a challenge to keep existing accounts open, and it's getting harder to open new ones. Americans are being refused financial services such as mortgages, insurance policies, and pension plans, she said.
"I mean, how do you function without a bank account or a charge card?" she said. "If you can't put your name in an account because a bank doesn't want an American, how do you even rent an apartment to live?"
Bilan (July 25, 2013)
"L'un des problèmes liés à FBAR est que la personne concernée doit également déclarer les comptes sur lesquels elle a la signature à titre professionnel", relève Jackie Bugnion, administratrice d'ACA où elle est responsable des questions de taxation au niveau mondial. Les sociétés américaines elles-même sont réticentes: "Cela leur coûte deux à trois fois plus cher de faire venir quelqu'un des Etats-Unis que d'engager un étranger sur place". Pire, Jackie Bugnion cite le cas d'un Américain établi en Allemagne et forcé de quitter son emploi.
Jusqu'à il y a une douzaine d'années, les expatriés vivaient assez bien avec une législation déjà étouffante, parce qu'ils pouvaient encore se permettre de l'ignorer, l'administration ne se donnant pas véritablement les moyens de la faire appliquer.
Le vent a tourné à partir de 2001 et surtout de 2009, "après le scandale d'UBS", précise Jackie Bugnion qui relativise l'impact des trois Voluntary disclosure programs lancés par l'IRS en 2009, 2011 et 2012. Il y aussi une Streamlined Filing Procedure instituée en septembre 2012 par l'IRS qui ajoute encore à la complexité du choix auquel sont confrontés les expatriés, car l'IRS n'offre pas une amnistie véritable, ni une garantie d'immunité. Dans le meilleur des cas, le spectre de la prison est écarté au prix de 27,5% des actifs détenus à l'étranger.
Deux-tiers des Américains à l'étranger n'ont pas rempli leurs obligations, le plus souvent par ignorance, et "ils ne savent pas comment rentrer dans le système", explique Jackie Bugnion. S'annoncer à l'IRS est une démarche qui peut mal tourner et se solder par la ruine totale, car même les comptes de 2e pilier doivent être déclarés et sont donc susceptibles d'être frappés d'une pénalité de 300%...
International Adviser (June 25, 2013)
American Citizens Abroad, a Geneva-based advocacy organisation, said it could not independently verify reports that expats had been asked to close or move retirement accounts, but said it could confirm hearing from some “who have been rejected for accounts or had limitations put on accounts held by Fidelity, Scottrade, Sharebuilder, ETrade and TD Ameritrade”.
The organisation has struggled to get much traction on the issue, it added, because American legislators “throw it back at the private banks/brokerage firms, and they in turn quote corporate policy”.
Bloomberg BNA (April 16, 2013)
“We've had positive discussions with both the Ways and Means and Finance committees," Marylouise Serrato, ACA's executive director, told BNA. (...)
About 7 million Americans live and work abroad, ACA said. Serrato said as many as 1 million of those are in Canada.
In most cases, Serrato said, Americans living and working in other countries do not owe taxes to the United States because credits for foreign taxes paid and the foreign income exclusion cancel out any U.S. tax liability. About 82 percent of Americans who live abroad and file a Form 1040, U.S. Individual Income Tax Return, do not owe taxes to IRS, the group said; in most cases, foreign countries' tax rates are higher than those of the United States.
But Americans working abroad still must file a U.S. income tax return.
ACA estimated that Americans abroad contribute about $6.3 billion annually to the U.S. Treasury in taxes but noted that other estimates range from $3 billion to $4 billion.
Because filing taxes is complicated for Americans living in other countries – with currency conversions and other idiosyncrasies adding wrinkles to the process – most Americans hire tax professionals who are knowledgeable in both nations' tax systems, which is expensive and, in some places, hard to find, the group said.
In addition, Americans working abroad are subject to FATCA and FBAR and face penalties for noncompliance.
Those requirements, aimed at Americans who evade taxes through the use of foreign accounts, discourage foreign banks from doing business with ordinary Americans living and working in their countries, Serrato said.
“If you're an American, they just don't want you. They don‘t want your business,” she said.
Under the ACA proposal, Americans in foreign countries would be taxed on the same basis as nonresident aliens. They would not be subject to US. taxation on foreign source income. Nonresident Americans with U.S. source investment income, Social Security income, pension income, rents, and royalties would be subject to U.S. withholding tax.
Nonresident Americans would no longer be subject to FBAR and FATCA, the group said.
Serrato said ACA has been working on the issue for 18 months, including pressing a congressional Americans Abroad caucus chaired by Reps. Carolyn Maloney (D-N.Y.) and Joe Wilson (R—S.C.).
While Serrato said meetings with congressional staff have been positive, one analyst told BNA the
issue may have a long way to go.
The Hill (April 11, 2013)
The group American Citizens Abroad, which is headquartered in Geneva, Switzerland, is organizing the letter-writing campaign in a bid to change how U.S. expatriates are taxed.
Marylouise Serrato, the group’s executive director, said citizens living abroad want to be heard as lawmakers on Capitol Hill debate closing loopholes and deductions to lower tax rates.
“Our experience has showed that our members get behind our causes. They want to make their Congressman listen. They want to write to Washington,” Serrato said. (...)
“We want to empower Americans who are going overseas who create economic opportunities. We are just not doing that with citizenship-based taxation,” said Serrato, who is helping run the organization out of her Maryland home after moving back from Switzerland last year. “You pay taxes in the jurisdiction where you have earned the income. ... You shouldn’t be taxed twice on the same income.” (...)
American Citizens Abroad is also pushing hard against the Foreign Account Tax Compliance Act (FATCA), which requires foreign banks to report U.S.- citizen-held accounts to the U.S. government. The law was created to crack down on offshore tax evasion, but expatriates have complained of foreign banks denying them service due to FATCA’s strict rules.
Serrato said Americans residing in foreign countries should not be subject to the law.
“An American living in France having a French bank account is not an overseas account,” Serrato said. “Let’s exclude those in- home accounts.” (...)
Serrato said business groups are also concerned about how individuals are taxed. She pointed to a U.S. Chamber of Commerce letter to Ways and Means that said, “no other country taxes its citizens working abroad ... any transition to a territorial tax system should take this into consideration and end this damaging practice.” (...)
“There is tax reform on the table. It doesn’t come around every day. … It’s an once in a lifetime opportunity,” Serrato said. “We are telling our membership that Ways and Means has given you a platform. Take it and use it.”
New York Times (April 5, 2013)
There is also the issue of other countries’ taxes that the United States does not recognize. Marylouise Serrato, executive director of American Citizens Abroad, a lobbying group, said 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. (...)
Ms. Serrato said her group had heard of many instances of Americans abroad having their accounts closed in the United States because the banks did not want to deal with the reporting requirements. On the other end, she has heard that opening accounts in different countries has become more difficult.
“We support the crackdown on tax evasion, but there has been a lot of blanket legislation put out there that can hit the unknowing or the unwitting,” she said.
Foreign pension plans, for instance, are not considered tax-exempt under American law. Americans are required to report the plans to the I.R.S. as they would bank or investment accounts. Failure to do so carries harsh penalties.
“If you’re a person who didn’t know your pension account needed to be reported but you reported your checking and savings account,” Ms. Serrato said, “now you’re faced with criminal penalties for a filing error and you could end up paying a penalty that could wipe out 50 percent of that account.”
Time (Jan. 31, 2013)
“FATCA is the straw that broke the camel’s back,” says Jackie Bugnon, director of American Citizens Abroad (ACA), a Geneva-based expatriate advocacy group. Because this legislation forces local banks to invest in expensive new infrastructure in order to comply with the IRS rules, “access to foreign financial institutions is being shut off and Americans abroad are treated like criminals,” she adds. (...)
One way to stave off the surge in renunciations, ACA’s Bugnon points out, is to tax expatriates on the same basis as nonresident aliens, who maintain a tax home in a foreign country and benefit from the same tax laws as American citizens within U.S. territory. That’s the proposal the ACA will push during the Overseas Americans Week, to be held in Washington, D.C., the week of Feb. 11.
Huffington Post (Nov. 9, 2012)
“For the most part, it is in reaction to the complexity of the legislation and the tax situation that affects Americans,” said Marylouise Serrato, executive director of American Citizens Abroad, an advocacy group for Americans who live overseas.
International Adviser (Sep. 10, 2012)
Marylouise Serrato, executive director of ACA, said the report seeks to educate those running for office about the problems their overseas constituents, and other Americans living overseas, are facing as a result of such recent US legislation as the Foreign Account Tax Compliance Act, which was intended to crack down on Americans who hide assets in overseas bank accounts.
As the town hall meetings revealed, Serrato said, “many [expatriate Americans]... are finding that banks overseas are applying FATCA in a way that makes life very difficult for average, law-abiding American citizens who live and work overseas.”
She noted that marriages between Americans and non-Americans “are coming under great stress, because the non-American partner is understandably reluctant to share joint account information” with the US tax authorities.
New York Times (July 30, 2012)
Marylouise Serrato, executive director of American Citizens Abroad, welcomed the proposal.
“We’re not asking for anything but just sit down and investigate these policies,” Ms. Serrato said. “It’s a very neutral, very nonpartisan initiative.”
Bloomberg (June 26, 2012)
The IRS announcement recognizes anger building among U.S. taxpayers around the world because of the government’s enforcement efforts, said Charles Bruce, tax counsel of American Citizens Abroad, an advocacy group.
“They need to lance the boil a bit and let off some of the bad feelings, so they’re doing something,” said Bruce, who said the changes don’t go far enough. “This program, the way it exists and the way it’s slightly amended, is too scary. They’ve scared away people from getting into compliance and this is going to continue to scare people.”
Non-resident taxpayers disclosing their information to the IRS will be required to file three years of past tax returns and other paperwork showing their account holdings for six years.
The U.S., unlike most other countries, requires its citizens to pay U.S. taxes on the income they earn around the world. They can receive tax credits for payments to other governments.
The IRS news release said some taxpayers have recently become aware of their obligations. That can happen to people who didn’t realize that they became U.S. citizens because they were born in the country.
Such situations are common, said Bruce, mentioning a client who is a physicist in Switzerland and hadn’t been filing the right paperwork based on her understanding of past conversations with an embassy official.
“It’s not in their minds, nor is there an H&R Block (HRB) around the corner telling them they have to do this,” said Bruce, who practices in Washington and in Lausanne, Switzerland.
Bloomberg Businessweek (May 1, 2012)
American Citizens Abroad, a Geneva-based organization that campaigns for taxation based on residency, said the government doesn’t always distinguish between U.S.-based tax dodgers with offshore accounts and expatriates that need foreign banking services.
“The perception is that any American living overseas is there for a nefarious reason,” said Marylouise Serrato, executive director of the organization that has members in 90 countries. “There isn’t a deep understanding in the U.S. of why American citizens would move overseas.”
Taxing Americans resident overseas is a “hangover from the Civil War” and the introduction of federal income tax in 1861, according to Jackie Bugnion of American Citizens Abroad. The rules make it harder for Americans to hold foreign bank accounts and gain access to mortgages, she said.