FATCA (Foreign Account Tax Compliance Act) is the tool, the US uses to bully non-US banks, investment services and insurance companies into reporting every American ex-pat to the IRS. These organizations have spent billions identifying Americans and kicking them out far more than was ever collected. Americans became toxic customers.
How did the US do it? How did the turn banks all over the world into their private tax reporting agencies?
With a 35% of assets fine if they miss an American and the threat of being shut out of the international monetary system.
These organizations looked at Americans and said, "You're not worth the risk." Opening or keeping a bank account, a mortgage or an investment method became almost impossible.
In some cases it was also impossible to keep a job, especially if the expat had financial responsibilities with the company. The business did not want all their private financial information sent to the US.
Obligatory pension companies with firms, could no longer provide retirement services and the employee had to be let go (or not hired, if it were a potential new hire). Even an American expat treasurer on a local sporting organization or other charity, could no longer serve because that group's finances would be reported to the IRS.
Weird things resulted. The head of an American Chamber of Commerce in one country couldn't have a bank account, for example. Hard to promote a country that is making one's job next to impossible.
Expats found their mortgages called: no banking relationships normal or otherwise were possible.
Marriages broke up when the non-US spouse refused to have his/her private financial information be sent to the US when there was a joint account.
The American spouse would put everything into the non-American's spouse's name so the family could retain a bank account, which was fine as long as the non-American spouse lived and/or didn't walk out on the American leaving him/her stranded financially, which happened with frightening frequency..
Under the auspices of the Overseas Republicans, Attorney James Bopp, Senator Rand Paul and six others including myself sued.The issues included the 14th Amendment, which addresses citizenship rights and privacy issues. Expats were being treated differently from homelanders. Having indepth details of bank accounts reported to the US was not being done to people living stateside. Paul claimed he was denied his right at a senator to vote on the FATCA treaties.
The question of "standing" came up. The court felt that the expats weren't hurt by the IRS but by ourselves. We'd chosen to live overseas. If banks didn't want to do business with us, Tough Sh-T!!! Okay, that is simplified.
Many dual citizens decided being American wasn't worth not having a normal financial life.
Accidental Americans were especially hurt. These are people born in the US, but did not live there. The US is the only industrialized country with Citizens Based Taxation. All other countries practice Resident Based Taxation. Expats are subject to both. In a way the US is stealing money earned in foreign countries that should be used in the country where it is earned so American expats can meet their US tax obligations. As for Accidental Americans, those born in the US, even if they stay only five minutes, are subject to US tax for every cent they earn even if they live to be 100.
The same people who were suing also appeared before Congress. FATCA and other legislation is supposedly to stop:
1. Money Laundering
2. Tax avoidance
3. Drug trafficking
4. Sex trafficking
The implication was the most of the 9 million expats were involved in these things. In reality most of the illegal money laundering and overseas accounts are held by people living in the US, and they have access to banks and investments that their overseas countrymen are being denied. The idea all expats are rich, is false. Most are average middle class people trying to have normal lives.
We worked our way up the court system to the Supreme Court. On Monday, the court refused to hear the case.
We lost, even if we got further than most people thought. There will be another step. We just don't know what it is.
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4 comments:
The concept of loss is in the eye of the beholder. The US Supreme Court may have turned its back against Americans living abroad, but that is the court's loss, not that of the people. The people may have lost an expedited path to justice, but there are still other paths to take, which might just take a little longer. Yet, the Court proved that it doesn't take the time or have the interest to hear the unrepresented people. This is a terrible loss for the Court from which it may never recover.
Yes Daniel is right. This is the beginning. We love this country and we want it to be a country that is generous and kind.
This law is like communism, only good at confiscating private properties and rights.
as an "accidental citizen" I am totally stunned by this surprise compliance from my bank of 50+ years.
I've never lived or worked in the US and do not have a SSN. Yet now some how all my savings, pension and home is subject to the US tax scrutiny. This affects millions of Canadians including the first nations. Is this what happened prior to 1776, the brits wanted every citizen as a cash cow....
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