Democrats Abroad (DA), the overseas arm of the Democratic Party, has issued the results of its 2014 global survey, which demonstrates the growing concerns about taxation and financial reporting facing Americans living outside the United States, and in particular the consequences of the Foreign Account Tax Compliance Act (FATCA).
FATCA was enacted in 2010 to target non-compliance by US taxpayers using foreign accounts. It requires US financial institutions (FIs) to withhold 30 percent of certain payments made to foreign FIs that do not agree to identify and report information on US account holders.
DA confirmed that it has been working to alleviate the unintended consequences of FATCA. While noting that the Act “was enacted to stop Americans living in the US from hiding money from the taxman in overseas accounts, it has meant that one in six citizens who responded to the survey have had their financial accounts closed because their foreign FIs did not want to incur the cost of annual reporting on American customers’ accounts to the US Internal Revenue Service.”
In addition, the survey results are said to “show the intense impact FATCA is having on overseas Americans. Their financial accounts are being closed, their relationships with their non-American spouses are under strain (21 percent reporting that they either no longer have joint accounts or are thinking of moving to separate accounts), some Americans are being denied promotion or partnership in business because of FATCA reporting requirements, and some are planning or contemplating renouncing their US citizenship.”
The latest survey was carried out in June and July 2014 to examine experiences related to FATCA. There were 6,552 responses from Americans hailing from all 50 states and the District of Columbia, who are now living outside the US in locations across six continents.
Carmelan Polce (Democrats Abroad in Singapore), Chair of DA’s FATCA Task Force, said: “We are so pleased with the enormous response to our survey from Americans living abroad. The remarks they have provided suggest Americans, no matter where they live, support policies that fight tax evasion. They want this policy to work and have participated in the study in order to express the problems they face.”
In its meetings in Washington, DA stressed that it has always insisted that “most Americans living abroad are ordinary citizens living middle class lives after moving abroad for employment, a relationship or retirement, and are not the intended target of the FATCA legislation.”
“We believe that the unintended consequences of FATCA raised by this survey – an unfair burden for Americans abroad – can be relieved without undermining the enforcement power of the law,” added Kathryn Solon (Democrats Abroad in Germany), DA’s International Chair.
