Foreign Account Tax Compliance Act (FATCA)
The Foreign Account Tax Compliance Act, known as FATCA, was passed in 2010 as part of the HIRE act. FATCA requires foreign financial institutions (FFIs) such as local banks, stock brokers, hedge funds, insurance companies, trusts, etc. to report the accounts of all US citizens (living in the US and abroad), US "persons," green card holders and individuals holding certain US investments, to the IRS or to the government of the bank's country for further transmission to the US through Intergovernmental Agreements (IGAs) or be subject to a 30% withholding on their US investments. ACA's Position on FATCA - American Citizens Abroad (nationbuilder.com)
FATCA also requires US citizens who have foreign financial assets in excess of $50,000 (higher for bona fide residents overseas – $200,000 for single filers and $400,000 for joint filers – see the IRS website for more details) to report those assets every year on a new Form 8938 to be filed with the 1040 tax return.
ACA advocates for a Same Country Exemption (SCE) to alleviate the problem of “lock-out” whereby some Foreign Financial Institutions (FFIs) refuse to do business with Americans because of FATCA reporting requirements. Same Country Exemption would exclude the reporting of accounts owned by US citizens overseas where the account is with a Foreign Financial Institution in the same country where the individual is a resident. This would alleviate the filing burden for FATCA on US citizens as well as the identification and disclosure of these accounts by the Foreign Financial Institution; see our 2015 letter and 2016 letter Why ACA supports SCE why-aca-supports-sce-final.pdf (nationbuilder.com)
ACA submitted testimony to the House Subcommittee on Government Operations at its April 26th hearings ”Reviewing the Unintended Consequences of the Foreign Account Tax Compliance Act (FATCA)," summary provided here. The Government Accountability Office (GAO) Report on Workplace Retirement Accounts touched on FATCA and ACA's is footnoted in their report. ACA was also footnoted in the Tulane Law School Academic Abstract on Offshore Tax Enforcement