This blog is eclectic in topic, but we regularly do stories on expat Americans, who have had their lives hurt or destroyed because of FATCA (Foreign Account Tax Compliant Act) shutting them out of financial markets where they live. The cartoon is from the Isaac Brock Society which is fighting back.
Arlene (named change to protect her) is asking why she is being persecuted by the US.
Her ancestors were on the Mayflower. She was once proud of her birth country.
Now she is afraid of it.
Here is her story.
In 1975 she left the US to marry and stayed in her husband’s country, where she lived and paid all taxes due the Canadian government where the money was earned.
Forty years later she is a widowed senior citizen living off a VERY modest retirement savings. All of her money was earned outside the US. Now she could be subject to paying up with unbelievable penalties on money that never touched US soil.
Only recently did she learn about the Citizen Based Taxation (CBT), which means that US citizens living outside the US must report and are taxable on every cent earned all over the world.
She also learned about FATCA, a US law that demands that banks all over the world report American accounts, just in case there is an American who is not reporting it to the IRS.
The banks face huge fines if they don’t obey. Countries even have changed their laws under US pressure to make sure they are not shut out of the international banking system.
The US is the only industrialized country to practice CBT. These taxes, with only a few exceptions, are also payable in the country of residence meaning Arlene is doubled taxed on her meager retirement earnings.
After learning about CBT and FATCA, she said she, “spiraled instantly into terror, rage and untold depression. These feelings remain today. It was as if my entire world had crumbled beneath me.”
Many forms American expats have to file are sent the Financial Crimes Enforcement Network even though they have done nothing wrong.
She said that the US has ,“made me into a criminal and was out to financially destroy me. Me, an almost 70 year old, whose only criminal activity to date had been a few parking tickets.”She is trapped.
- She cannot afford the high rates for a professional to put her in compliance. Most often these charges run in the four and sometimes five figures.
- She cannot afford the $2,350 renunciation fee and would still have to file five years of back tax forms even if she owes nothing and five years of Fbars reporting her bank accounts.
She is afraid to:
- Renew her US passport
- Enter her bank who may close her account
- Visit her children in the US
- Attend the funeral of a US friend
- Visit the graves of her US parents
Arlene is not paranoid nor alone. FATCA and CBT are threatening the financial security of 8.7 million expats in various degrees.
She asks, “Why are you doing this to me?”
There is no good answer.