Posted inRegulation

Campaign group calls for Fatca exemption for US expats

American Citizens Abroad (ACA), a campaign group for US citizens living overseas, has called on the US Treasury Department to amend Fatca regulations which would allow US expats to hold bank accounts exempt from the stringent reporting standards.

In a letter to Robert Stack, the deputy assistant secretary for international tax affairs, ACA urges the US tax authorities to apply same country exemption (SCE) to the current Foreign Account Tax Compliance Act (Fatca).

Under the SCE, US citizens who are long term residents in a foreign country are able to hold a local bank account exempt from Fatca and the US reporting standards.

“We understand that Treasury Department is working on final versions of the Fatca regulation packages. This would be an ideal time to insert the much-discussed ‘same country’ exemption,” wrote non-profit group’s legal counsel.

It comes as the US Treasury and Internal Revenue Service (IRS) are expected to release the final draft of the controversial law later this year.

Fatca ‘lock out’

Changes introduced in July 2014 require foreign financial institutions (FFIs) from around the world to report the finances of all their American clients – around six to eight million US citizens living permanently abroad – to US tax authorities.

As a result, US expats have found themselves “locked out”, unable to open simple bank accounts or apply for credit cards with foreign banks, many of which stopped offering banking services to US citizens due to the cost meeting the new regulations.

Marylouise Serrato, executive director of ACA, hopes introducing the SCE clause will improve access to banking services for Americans based overseas.

“If the account in question is a garden-variety bank account and it sits in a bank down the street in the same country, it’s realistic to assume that this account is used for normal, everyday purposes: To buy groceries, to pay the rent, to pay for vacation travel, and so forth. This type of account should not be affected by Fatca.

“With this exemption, foreign bankers could relax a bit when dealing with their American customers. And Americans living outside the US would not need to feel that they are being unfairly targeted,” she said.

Swiss agreement

In March, Switzerland and the US authorities signed an agreement which allows bank accounts held by the lawyers or notaries of US taxpayers living in Switzerland to be exempt from the regulations.

Part of the Mark Allen Group.