Robert J. Fedor, Esq., L.L.C.

Expatriates negatively impacted by FATCA

Expatriates negatively impacted by FATCA

Since its enaction in 2010, there's been much discussion about the Foreign Account Tax Compliance Act and its effect on both foreign financial institutions and U.S. citizens with foreign assets. Under the provisions of FATCA, U.S. citizens with foreign-held assets in excess of $50,000 are required to provide detailed information related to those accounts and assets. In addition to self-reporting guidelines, FATCA requires foreign governments and financial institutions to also provide information related to identified individuals and assets.

While the U.S. federal government is quick to defend FATCA, citing the need to crackdown on tax evasion by foreign account holders, a recent report by the nonprofit Democrats Abroad details some of the negative and likely unforeseen consequences of FATCA for expatriates.

For the report, roughly 6,600 expatriates provided information about the personal, professional and financial impact that FATCA has had on their lives. Approximately one out of every six respondents reported having a "financial account closed by a bank or brokerage house." In more than 75 percent of these cases, the balances on these closed accounts did not exceed $10,000.

Additionally, more than 5 percent of expatriates reported experiencing negative professional repercussions resulting from FATCA as employers increasingly view employing U.S. citizens as being "too costly, complicated and dangerous." The personal relationships of many expats have also suffered as a result of FATCA as the finances of non-U.S. spouses have come under increased scrutiny or been seized.

Many of FATCA's main provisions formally went into effect this past July. Despite growing complaints and concerns posed by foreign account holders, expatriates, foreign financial institutions and foreign countries; it's highly unlikely that the U.S. government will take action anytime soon to address or revise FATCA.

Individuals with foreign assets who are facing IRS scrutiny or criminal charges would be wise to consult with an attorney who handles criminal IRS matters. An attorney can assist in dealing with the IRS and also ensure an individual's rights are respected and protected.

Source: The Wall Street Journal, "Tax-Evasion Crackdown Has 'Intense' Impact on Expats," Laura Saunders, Sept. 22, 2014

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