can be forgiven for forgetting about Gershwin, and thinking the IRS and Treasury are tone deaf, as they meet the Foreign Accounts Tax Compliance Act (Fatca). Which has induced over a thousand Americans to renounce their citizenship rather than be subject to it.
A new law called the Foreign Accounts Tax Compliance Act (Fatca) will, from 1 July next year, require all financial institutions around the world to report directly to the US Internal Revenue Service (IRS) all the assets and incomes of any US citizens with $50,000 (£31,000) on their books. The US could withhold 30% of dividends and interest payments due to the banks that don't comply.
It's an attempt by the US authorities to recover an estimated $100bn a year in unpaid taxes on US citizens' assets overseas.The inconveniences to American citizens being in the way? Screw em!
[For 'Bridget'] It became so complicated to do her tax return that she turned to professionals, at an annual cost of nearly $2,000 (£1,250), with the prospect of Fatca raising the price to $5,000. Also, fewer tax lawyers were taking on American clients, she says, and some banks were even turning away American money.$5,000 just to prove you don't owe the IRS any tax. And furthermore;
And the official American reaction;
- [Genevieve] Besser, who is self-employed, says her investment options are restricted, because most German banks will no longer open brokerage accounts for US citizens. She can't be joint owner of the house she shares with her German husband. Nor can she have signature authority over their retirement savings account because, she says, the bank would close the account.
- "A property that was bought and sold at the same euro price during a period when the euro strengthened relative to the dollar would generate a 'phantom' profit - and a tax liability to the US government, even though I would have no benefit from it," she says. "Fatca is an arrogant piece of legislation that penalises US citizens for living abroad and violates the two principles of law: 'innocent until proven guilty' and 'the punishment should fit the crime'."
In a statement on its website, Robert Stack, deputy assistant secretary for international tax affairs, rebuts certain "myths".
"Fatca provisions impose no new obligations on US citizens living abroad... US taxpayers, including US citizens living abroad, are required to comply with US tax laws," he says.
"Individuals that have used offshore accounts to evade tax obligations may rightly fear that Fatca will identify their illicit activities. Yet a decision to renounce US citizenship would not relieve these individuals of prior US tax obligations."I.e., Screw the SOBs, whose money is it anyway. We can't let the troubles of a few little people amount to a hill of beans in this world.