https://www.americansabroad.org/advocacy/campaigns/same-country-exemption/
“Same Country Exemption” for FATCA Reporting
American Citizens Abroad, Inc. (ACA) has proposed (April 2015) that the Treasury Department amend the FATCA regulations to exempt Americans residing in a foreign country from the rules in FATCA requiring banks and other foreign financial institutions to report on US account holders’ accounts. Where a US taxpayer truly resides in a foreign country and has a normal financial account at a bank or similar institution in the same country, the account would be taken out from under FATCA. The bank could treat it as if it belonged to someone who is not a US taxpayer, and the US taxpayer would not have to list the account on tax form 8938.
As is widely recognized, Americans living abroad are experiencing problems with “lock-out” from some foreign financial institutions. Banks are turning away American customers or asking existing American customers to find another bank. This development is attributable, at least in part, to the relatively new FATCA rules. These institutions (primarily banks) say they cannot afford the costs of complying with the FATCA rules, including the costs of conducting FATCA-mandated payee identification procedures and reporting to the IRS on US account holders.
Commenting on the problem, Marylouise Serrato, Executive Director of ACA, “If the account in question is a garden-variety bank account and it sits in a bank down the street in the same country, it’s realistic to assume that this account is used for normal, everyday purposes: To buy groceries, to pay the rent, to pay for vacation travel, and so forth. This type of account should not be affected by FATCA. With this exemption, foreign bankers could relax a bit when dealing with their American customers. And Americans living outside the US would not need to feel that they are being unfairly targeted.”
The “Same Country” Exemption, sometimes referred to as “Safe Harbor” Rule, is the product of collaborative work among several groups representing Americans abroad. A detailed description was prepared by ACA and draws upon ideas and work of the other groups – which ACA greatly acknowledges. ACA is solely responsible for its content. This paper (attached) was drafted by Charles M. Bruce, Legal Counsel, ACA. Questions and comments are invited.
American Citizens Abroad, Inc. is a nonprofit, nonpartisan section 501(c)(4) organization that promotes the interests of Americans residing abroad. Its sister organization, American Citizens Abroad Global Foundation (ACAGF) is a tax-exempt charitable organization qualified under section 501(c)(3). Both ACA, Inc. and ACAGF are headquartered in Washington, DC.