Democrats Abroad (DA), is the overseas arm of the Democratic Party. This week, DA issued detailed reports analyzing the results of its 2014 global survey conducted in June and July 2014 examining the experiences of Americans abroad as they relate to the “Foreign Account Tax Compliance Act” (FATCA). Over 6500 responses were received from Americans living across six continents with each US State and the District of Columbia being represented by respondents to the survey.
The DA reports highlight the significant concerns and problems faced by Americans living overseas due to FATCA. DA has already sent the reports to various members of Congress, US Treasury and Internal Revenue Service (IRS) officials. DA is in continuous discussions with each of them about the urgent need for reform of the tax and financial information reporting imposed on overseas Americans and to alleviate the unintended FATCA fallout.
Detailing the impact FATCA has had on the typical overseas American, the data shows how far-reaching its effects have been. Significant percentages of Americans have had their financial accounts closed because their non-US financial institutions did not want to incur the economic burden associated with annual reporting of their American customers’ accounts to the IRS. The data reveals that the value of the accounts being closed are small and thus, likely affecting the middle-class American who needs that account for daily functioning or retirement. Over two-thirds of the checking accounts closed had a balance of less than $10,000 when the account was closed, as did 40.4% of the savings accounts. Over half (58.9%) of the investment/brokerage accounts had a value of less than $50,000, as did over two-thirds (69.3%) of the dedicated retirement accounts.
Other Americans reported being denied promotions or business opportunities because their non-US employers or potential business partners did not want to implicate any FATCA reporting requirements; others reported that they are actively looking into renouncing their US citizenship, presumably because they can no longer function in a FATCA-world.
Up Close and Personal
The data revealed that marital relationships with non-American spouses are under a heavy strain because of FATCA. Twenty-four percent (24%) do not share any financial accounts with a non-US partner; twenty-one percent (21%) have or may move to separate financial accounts because of FATCA; two percent (2%) have actually separated or divorced, or may do so, due to FATCA’s financial reporting.
Here are some of the sadder commentaries:
“Because banks now require for you to sign a form that allows them to put the account on escrow upon US request, my (non-American) wife forced me to place all of our joint accounts on her name alone.”
“My husband and I were forced to reorganize our finances totally. He opted not to give me joint ownership of our home, he closed our joint account. Even the bank was shocked when I explained that I was required to report 100% of the amount in the joint account which was created with his money. My future is less secure financially thanks to this.”
“My German ex refused to marry an American because of filing requirements. So we split up.”
“The FATCA has caused enormous friction in my marriage. My non-US spouse is refusing to let the US government know about his salary/earnings/savings (I am unemployed, a stay-at-home mother) and I therefore cannot fill out all the necessary paperwork. Moving to separate bank accounts would leave me very vulnerable as I have no income of my own and according to Belgian law would have no right to access my spouse’s accounts. It is very stressful to be so beholden to my husband as well not in compliance with my own government.”
“The tax filing is ridiculous. Causes annual arguments with my British husband and is expensive.”
“Family trusts will exclude me, and assets go straight to my children, putting me at risk were my marriage to end.”
“My husband refuses to share a main savings account with me now, which puts me at a disadvantage in the event that something should happen to me, as I would have no legal access to that account. It has put great stress on my marriage.”
The Executive summary can be found here.
Detailed Research report “FATCA Affecting Everyday Americans Every Day” can be found here.
Data can be found here.
Follow me on Twitter: @VLJeker